UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
Amendment #1 to Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
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For the fiscal year ended Commission file number
December 31, 1995 1-6512
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AIRBORNE FREIGHT CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware 91-0837469
(State of Incorporation) (I.R.S. Employer Identification No.)
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Airborne Freight Corporation
3101 Western Avenue
P.O. Box 662
Seattle, WA 98111
(Address of principal executive offices)
Registrant's telephone number including area code: 206-285-4600
Securities registered pursuant to Section 12(b) of the Act:
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Name of each Exchange
Title of each class on which Registered
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Common Stock, Par Value New York Stock Exchange
$1.00 per share Pacific Stock Exchange
6 3/4% Convertible Subordinated New York Stock Exchange
Debentures Due August 15, 2001
Rights to Purchase Series A New York Stock Exchange
Cumulative Preferred Stock
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Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.(X)
As of February 26, 1996, 21,124,239 shares (net of 315,150 treasury shares)
of the registrant's Common Stock were outstanding and the aggregate market value
of the voting stock held by non-affiliates of the registrant (based on the
closing price on that date on the New York Stock Exchange) was approximately
$571,987,939.(1)
Documents Incorporated by Reference
Portions of the 1995 Annual Report to Shareholders are incorporated by
reference into Part I and Part II.
Portions of the Proxy Statement for the 1996 Annual Meeting of Shareholders
to be held April 23, 1996 are incorporated by reference into Part III.
(1) Excludes value of shares of Common Stock held of record by non-employee
directors and executive officers at February 26, 1996. Includes shares
held by certain depository organizations. Exclusion of shares held by any
person should not be construed to indicate that such person possesses the
power, direct or indirect, to direct or cause the direction of the
management or policies of the registrant, or that such person is controlled
by or is under common control with the registrant.
AIRBORNE FREIGHT CORPORATION
Amendment #1 to 1995 Form 10-K
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K dated
December 31, 1995, as set forth in the pages attached hereto:
Item 14(a)3: Exhibits
Exhibit 10(n) - Other Material Contracts: Used Aircraft Sales Agreement
entered into as of December 22, 1995 between ABX Air, Inc. and KC-One, Inc.;
KC-Two, Inc., and KC-Three, Inc. has been amended to include Schedule 1 to
Exhibit A of the agreement. Confidential treatment has been requested for
confidential commercial and financial information, pursuant to Rule 24b-2
under the Securities Exchange Act of 1934.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
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AIRBORNE FREIGHT CORPORATION
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Date: June 21, 1996 By /s/ Roy c. Liljebeck
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Roy C. Liljebeck
Executive Vice President,
Chief Financial Officer
Date: June 21, 1996 By /s/ Lanny H. Michael
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Lanny H. Michael
Senior Vice President,
Treasurer and Controller
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AIRBORNE FREIGHT CORPORATION
1995 Form 10-K Annual Report
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Index to Exhibits
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Exhibit Number
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10(n)(1) Amended Used Sales Aircraft Agreement
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EXHIBIT 10 (n)(1)
USED AIRCRAFT SALES AGREEMENT
BETWEEN
ABX AIR, INC.,
a Delaware corporation
AND
KC-ONE, INC.
KC-TWO, INC.
KC-THREE, INC.,
each a Japanese corporation
Relating to Nine BOEING Model 767-281 Aircraft
TABLE OF CONTENTS
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Page
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ARTICLE 1. Subject Matter of Sale............................ 1
1.1 Aircraft........ ................................. 1
1.2 Sale of the Aircraft.............................. 2
1.3 Further Documents or Necessary Action............. 2
ARTICLE 2. Delivery of the Aircraft, Title and Risk of Loss . 2
2.1 Time of Delivery.................................. 2
2.2 Place of Delivery................................. 3
2.3 Title and Risk of Loss............................ 3
2.4 Documents of Title................................ 3
2.5 Acceptance Certificate............................ 3
2.6 Tax Indemnity..................................... 3
ARTICLE 3. Purchase Price and Payment Terms.................. 4
3.1 Purchase Price.................................... 4
3.2 Deposits.......................................... 4
3.3 Standby Letter of Credit.......................... 5
3.4 Payment for the Aircraft.......................... 6
3.5 Payment in U.S. Funds............................. 7
3.6 Guaranties........................................ 7
3.7 Adequate Assurances............................... 8
ARTICLE 4. Condition of Aircraft............................. 9
4.1 General Condition................................. 9
4.2 Condition of Airframe............................. 9
4.3 Condition of Controlled Components................ 10
4.4 Condition of Installed Engines.................... 10
4.5 Satisfaction of Condition Requirements............ 10
4.6 Effect of Delivery Conditions..................... 10
ARTICLE 5. Representations and Warranties.................... 10
5.1 Seller's Representations.......................... 10
5.2 Purchaser's Representations... .................. 11
5.3 Disclaimer of Other Warranties or Representations. 12
ARTICLE 6. Covenants......................................... 13
6.1 Covenants of Seller............................... 13
6.2 Covenants of Purchaser............................ 14
i
ARTICLE 7. Conditions to Purchaser's Obligation to Purchase . 16
7.1 General Conditions Precedent to Obligations
of Purchaser................................. 16
7.2 Specific Conditions Precedent to Obligations
of Purchaser................................. 17
7.3 Effect of Failure of Conditions................... 20
ARTICLE 8. Conditions to Seller's Obligation to Sell......... 20
8.1 General Conditions Precedent to Obligations
of Seller.................................... 20
8.2 Specific Conditions Precedent to Obligations
of Seller.................................... 21
ARTICLE 9. Termination....................................... 22
9.1 Termination by Purchaser.......................... 22
9.2 Termination by Seller............................. 22
9.3 Event of Termination.............................. 23
9.4 Excusable Delay................................... 25
9.5 Effect of Termination by Purchaser................ 26
9.6 Effect of Termination by Seller................... 27
9.7 Marketing of Aircraft............................. 27
ARTICLE 10. Miscellaneous..................................... 28
10.1 Costs and Fees.................................... 28
10.2 Indemnity Against Brokers and Finders............. 28
10.3 Governing Law..................................... 28
10.4 Consent to Jurisdiction, Waiver of Immunities..... 28
10.5 Inspections....................................... 28
10.6 Notices........................................... 29
10.7 Entire Agreement.................................. 30
10.8 Assignment........................................ 30
10.9 Time.............................................. 30
10.10 Paragraph Headings................................ 31
10.11 Severability...................................... 31
10.12 Counterparts...................................... 31
10.13 Attorneys' Fees................................... 31
10.14 Disclosure of Terms............................... 31
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Exhibits
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Exhibit A - Used Aircraft Identification
Exhibit B - Bill of Sale
Exhibit C - Acceptance Certificate
Exhibit D - Standby Letter of Credit
Exhibit E - Document Escrow Letter
Exhibit F - Funds Escrow Agreement
Exhibit G - Airborne Guaranty
Exhibit H - Itochu Guaranty
Exhibit I - Aircraft Documentation
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ii
USED AIRCRAFT SALES AGREEMENT
RELATING TO NINE BOEING MODEL 767-281 AIRCRAFT
THIS USED AIRCRAFT SALES AGREEMENT is made as of the 22 day of December,
1995 (hereinafter called the "Agreement") by and between ABX AIR, INC., a
corporation organized and existing under the laws of Delaware of the United
States of America and having its principal office at 145 Hunter Drive,
Wilmington, Ohio 45177, U.S.A. (hereinafter referred to as the "Purchaser") and
KC-ONE, INC. ("KC1"), KC-TWO, INC. ("KC2"), and KC-THREE, INC. ("KC3"), each a
corporation organized and existing under the laws of Japan and having its
principal office at 5-1, Kita-Aoyama 2-Chome, Minato-ku, Tokyo 107-77, Japan
(hereinafter referred to collectively as the "Seller").
W I T N E S S E T H
WHEREAS, Seller is the owner of nine (9) Boeing Model 767-281 used
aircraft, each of which is currently being leased to, operated, and maintained
by All Nippon Airways, Co., Ltd. ("ANA"),
WHEREAS, subject to the terms of this Agreement, Seller desires to sell to
Purchaser, and Purchaser desires to purchase from Seller, all nine (9) of the
aircraft as hereinafter set forth,
WHEREAS, Itochu Corporation ("Itochu") will provide a guaranty of the
Seller's obligations under this Agreement, and
WHEREAS, Purchaser is on this date entering into an Used Aircraft Sales
Agreement with Marubeni Airleasing (U.K.) Ltd. ("Marubeni") with respect to the
purchase of three (3) Boeing Model 767-281 used aircraft, which used aircraft
are also being leased to, operated and maintained by ANA (as amended, the
"Marubeni Purchase Agreement").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good valuable consideration, the parties
hereby agree as follows:
ARTICLE 1.
Subject Matter of Sale.
1.1 Aircraft. For the purpose of this Agreement the term "Aircraft" shall
mean each of nine (9) Boeing Model 767-281 used aircraft bearing Manufacturer's
Serial Numbers provided in Exhibit A hereto, (i) including with respect to each
Aircraft, two (2) General Electric Model CF6-80A engines, (ii) the equipment,
accessories, parts and other property installed in or
page 1
appurtenant to each Aircraft at the time of delivery thereof to Purchaser, and
(iii) all related Aircraft Documentation, as such term is defined in Section
6.1(a) hereof. "Aircraft" may, where the context so indicates, also refer to
all of the Aircraft to be sold hereunder.
1.2 Sale of the Aircraft. Subject to the terms and conditions of this
Agreement, Seller shall sell and deliver to Purchaser and Purchaser shall
purchase and accept from Seller each of the nine (9) Aircraft in accordance with
this Agreement.
1.3 Further Documents or Necessary Action. Purchaser and Seller shall
each take (and, except as provided herein, at such party's own expense) all such
actions as may be reasonably necessary or appropriate in order to effectuate the
transactions contemplated hereby provided that this Section 1.3 shall not
prejudice the provisions of Section 9.4 hereof.
ARTICLE 2.
Delivery of the Aircraft, Title and Risk of Loss.
2.1 Time of Delivery.
a. Exhibit A hereto sets forth the anticipated month for delivery of
each Aircraft ("Target Month"), which represents Seller's current best estimate
of the likely month such Aircraft will be available for delivery to Purchaser.
The delivery date for each Aircraft shall be a day, other than a Saturday or a
Sunday, on which banks are neither authorized nor required to close in London,
Tokyo or New York (such a day being a "Business Day").
b. Seller shall notify Purchaser in writing of the actual delivery
date of each Aircraft ("Delivery Notice") at latest [ * ] calendar days prior to
the first day of the relevant Target Month for such Aircraft.
c. Seller shall have the right to reschedule the delivery date of
each Aircraft for up to [ * ] calendar days after the end of the relevant Target
Month in which such delivery is scheduled hereunder. If Seller elects to
reschedule the delivery date, written notice will be provided to Purchaser at
the latest [ * ] calendar days prior to the date set forth in the Delivery
Notice. Such notice, provided by Seller to Purchaser, will include the new
delivery date for such Aircraft. No rescheduling of a delivery date with
respect to any Aircraft shall necessarily modify any subsequent Target Month or
delivery date with respect to any other Aircraft.
d. The delivery date may also be rescheduled pursuant to Excusable
Delay as provided under Section 9.4 hereof. Seller
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 2
shall give Purchaser notice of the rescheduled delivery date (being a date after
the event of Excusable Delay has been corrected or waived).
2.2 Place of Delivery. The Aircraft shall be delivered to Purchaser at an
ANA maintenance facility in Japan or at such alternate site(s) mutually
acceptable to Purchaser and Seller (an "Other Location").
2.3 Title and Risk of Loss. Title to and risk of loss or damage to each
Aircraft shall pass from Seller to Purchaser upon the delivery of such Aircraft
to Purchaser in accordance with this Agreement and receipt by Seller of the full
Purchase Price with respect to such Aircraft.
2.4 Documents of Title. In connection with delivery of each Aircraft,
Seller shall release or caused to be released to Purchaser: (i) a bill of sale
on AC Form 8052-2 (or its successor form) for each such Aircraft executed and
delivered by Seller in favor of Purchaser in form suitable for filing and
recording with the Federal Aviation Administration of the United States ("FAA");
and (ii) a bill of sale, in form attached hereto and made a part hereof as
Exhibit B.
2.5 Acceptance Certificate. Upon conclusion of the inspection of the
Aircraft as provided under Section 7.2(d), Purchaser shall execute an acceptance
certificate (the "Acceptance Certificate"). The Acceptance Certificate shall be
in the form of Exhibit C attached hereto. Purchaser shall not unreasonably
withhold execution of the Acceptance Certificate and such execution shall
constitute acknowledgment of satisfaction by Seller of the Delivery Conditions
set forth in Section 4 with respect to such Aircraft.
2.6 Tax Indemnity. Purchaser agrees to pay any and all taxes,
assessments, duties, and charges (including, without limitation, any sales,
value-added, transfer or consumption taxes, withholding taxes and stamp or
similar duties) with respect to the execution and delivery of this Agreement or
any of the documents contemplated hereby, the sale or purchase of any Aircraft,
and the payment of the Purchase Price for any Aircraft or any deposit or other
payment made or to be made to Seller under or pursuant to this Agreement other
than any tax imposed on Seller by Seller's home jurisdiction on the income of
Seller arising out of the sale of any Aircraft pursuant to this Agreement (an
"Indemnified Tax"). In the event that Purchaser fails to pay any Indemnified
Tax and such Indemnified Tax is levied upon, assessed against, collected from,
or otherwise imposed on the Seller, Purchaser shall immediately upon demand
indemnify, protect, defend and hold the Seller harmless from and against all
such Indemnified Taxes, together with any interest,
page 3
penalties or other additions to such tax, and other costs (including, without
limitation, attorneys' fees and other professional fees) incurred by Seller in
connection with such Indemnified Tax or its enforcement of this Section 2.6.
Seller agrees to provide reasonable assistance and cooperation to Purchaser with
respect to obtaining tax exemptions reasonably available.
If a written claim is made by any tax authority against Seller with respect
to any Indemnified Tax, Seller shall promptly notify Purchaser. If reasonably
requested by Purchaser in writing (and if requested by Seller, after Purchaser
shall have delivered to Seller (i) an opinion of counsel for Purchaser
reasonably satisfactory to Seller that there is a reasonable good faith basis
for a contest and (ii) assurances from Purchaser in form reasonably satisfactory
to Seller to indemnify Seller if the claim is adversely decided), Seller shall,
at the expense of Purchaser (including, without limitation, all legal and
accountants' fees and disbursements, penalties and interest), at Purchaser's
direction and using counsel acceptable to Purchaser, contest in the name of
Seller or, if requested by Purchaser, contest in the name of Purchaser, if
permissible under applicable law (or permit Purchaser, if desired by Seller, to
contest in the name of Purchaser) the validity, applicability or amount of such
Indemnified Tax by (i) if permitted by applicable law without adverse
consequences to Seller, resisting payment thereof, (ii) paying under protest, if
protest is necessary or proper, and (iii) if payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings. If Seller shall obtain a refund of all or any part of the
Indemnified Tax paid by Purchaser, Seller shall pay Purchaser the amount of such
refund, plus, on an after tax basis, any interest thereon obtained by Seller
from the taxing authority if fairly attributable to such Indemnified Tax. If
such tax contest shall cause Seller undue hardship or burden, Seller and
Purchaser shall consult in good faith concerning any tax contest to be
undertaken hereunder.
ARTICLE 3.
Purchase Price and Payment Terms.
3.1 Purchase Price. The purchase price of each Aircraft is set forth in
Exhibit A attached hereto (as to each Aircraft, the "Purchase Price").
3.2 Deposits. Except as provided in Section 3.3 below, Purchaser has made
or shall hereafter make the following non-refundable deposits (collectively, the
"Deposits") to the account of Seller as and when set forth below:
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 4
a. Purchaser has delivered to Seller the sum of [ * ] (the "First
Deposit"), receipt of which is acknowledged by Seller;
b. Upon execution of this Agreement, Purchaser shall immediately pay
to Seller the sum of [ * ] (the "Second Deposit");
c. By no later than [ * ], Purchaser shall pay to Seller the sum of [
* ] (the "Third Deposit") (the First Deposit, Second Deposit and Third Deposit
is referred to collectively as the "Final Delivery Deposit");
d. Purchaser shall pay to Seller the sum of [ * ] (the "Fourth
Deposits"), representing [ * ] per Aircraft, which sum shall be paid as follows:
[ * ] shall be due upon execution of this Agreement, [ * ] shall be due on or
before [ * ], and the balance of [ * ] shall be due on or before [ * ]; and
e. Purchaser shall pay to Seller the sum of [ * ] (the "Fifth
Deposits"), representing [ * ] per Aircraft, which sum shall be paid as follows:
[ * ] shall be due upon execution of this Agreement, and [ * ] shall be due on
or before the first day of the month [ * ] prior to the relevant Aircraft's
Target Month provided, however, that if any Deposit would otherwise be due in
[ * ] of any year, Purchaser shall not be required to pay such Deposit until the
fifteenth (15th) day of January.
Except as provided in Sections 9.5 and 9.6 below, the Deposits are
nonrefundable and Purchaser shall have no right to return of any Deposit after
payment thereof to Seller. All interest earned on the Deposits shall be
property of the Seller. Except as provided in Sections 9.5 and 9.6 below, under
no circumstances shall Seller be required to refund or return any Deposit to
Purchaser.
3.3 Standby Letter of Credit. As an alternative to paying the Deposits in
cash as described in Sections 3.2 (b), (c), (d) or (e), Purchaser may provide,
as of the dates required for the payment of the relevant Deposit, irrevocable
standby letter(s) of credit (as to each, including any renewals and reissuances
of any such letter of credit, a "Standby Letter of Credit"), naming Seller as
beneficiary and drawable in amounts equal to such
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 5
Deposit, in form substantially as set forth in Exhibit D hereto and otherwise
acceptable to Seller, issued by first class financial institution(s) selected by
Purchaser and acceptable to Seller. Seller agrees that first class financial
institutions that at the time of issuance and throughout the term of the Standby
Letter of Credit that maintain at least an "A" rating by Standard & Poor's shall
be acceptable to Seller. If Purchaser intends to provide a Standby Letter of
Credit, Purchaser will give Seller written notice no less than [ * ] days (or
shorter period in the case of Standby Letters of Credit to be delivered within [
* ] days of execution of this Agreement) prior to the relevant date of Deposit,
which notice shall identify the proposed financial institution and contain the
proposed form of Standby Letter of Credit. In no event shall Purchaser be
entitled to deliver a Standby Letter of Credit in lieu of a cash Deposit if
Purchaser is then in default in the performance of any of its obligations
hereunder or under the Marubeni Purchase Agreement. Each Standby Letter of
Credit shall be drawable at any time after issuance, and shall have an expiry
date no earlier than [ * ] months after issuance provided that any Standby
Letter of Credit with respect to delivery of a particular Aircraft shall not, in
any event, require an expiry term in excess of [ * ] days following the end of
the relevant Target Month for such Aircraft, as the same may be extended for all
periods of Excusable Delay with respect to the relevant Aircraft. Not later
than the date that is [ * ] days prior to the expiry date of each Standby Letter
of Credit, Purchaser shall (a) cause such Standby Letter of Credit to be renewed
and reissued in each case in the same amount and form as the Standby Letter of
Credit originally issued and (b) cause such renewed and reissued Standby Letter
of Credit to be delivered to Seller. Such renewed and reissued Standby Letter of
Credit shall be drawable at and after the time of expiration of the Standby
Letter of Credit it replaces and shall have an expiry date no earlier than the
date which is [ * ] months from the expiry date of the Standby Letter of Credit
it replaces. In the event that any Standby Letter of Credit issuing bank becomes
unacceptable to Seller, or the validity or enforceability of such Standby Letter
of Credit becomes uncertain, then Purchaser shall within [ * ] Business Days of
demand therefor by Seller, against return by Seller of the original Standby
Letter of Credit, provide to Seller a cash Deposit in the amount equal to such
Standby Letter of Credit or a replacement Standby Letter of Credit of like
amount which shall be in a form, and shall be issued by a financial institution,
acceptable to Seller.
3.4 Payment for the Aircraft. At least [ * ] Business Days prior to the
relevant delivery date of each Aircraft, the parties shall establish a document
escrow (the "Document Escrow") and a funds escrow (the "Funds Escrow") pursuant
to a Document Escrow Letter and Funds Escrow Agreement
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 6
substantially in the forms of Exhibit E and Exhibit F attached hereto. Crowe &
Dunlevy (or such other FAA counsel located in Oklahoma City and acceptable to
Purchaser and Seller) (the "Document Escrow Agent") shall be the Document Escrow
Agent under the Document Escrow and one or more financial institution(s) located
in New York, New York selected by Seller and reasonably acceptable to Purchaser
(the "Funds Escrow Agent") shall be the Funds Escrow Agent under the Funds
Escrow. At least [ * ] Business Day prior to the applicable delivery date for
such Aircraft, Purchaser and Seller, as the case may be, shall place into the
Document Escrow and the Funds Escrow, the funds and documents required to be
placed into escrow by them under the Funds Escrow Agreement and Documents Escrow
Letter. The Funds Escrow Agent shall promptly notify Seller when all funds have
been deposited into the escrow account and will disburse such funds as provided
in the Funds Escrow Agreement. Seller shall credit towards the Purchase Price
the Fourth and Fifth Deposits applicable to such Aircraft to the extent such
Deposits are made in cash and held by Seller provided that in the case of the
ninth (9th) Aircraft to be delivered hereunder, Seller shall also credit the
portion of the Final Delivery Deposit to the extent such Deposits are made in
cash and held by Seller towards the Purchase Price of said Aircraft. All costs
and fees of the escrow agents shall be for the Purchaser's account.
3.5 Payment in U.S. Funds. All payments (including payments of the
Deposits) hereunder shall be paid in United States Dollars by telegraphic
transfer in immediately available funds to a bank account designated by Seller.
Purchaser shall comply with all applicable monetary and exchange control
regulations, and shall obtain any necessary authority from the governmental
agency administering such regulations in order to enable Purchaser to make
payments at the time and place in the manner and medium specified herein.
Purchaser shall pay all charges and expenses including but not limited to all
bank charges and assessments as well as Indemnified Taxes and fees in relation
to the payment to be made hereunder. Without limiting the foregoing, all
payments to be made to Seller hereunder shall be made free and clear of, and
without regard to, any and all Indemnified Taxes and other setoffs,
counterclaims, withholdings or other deductions of any kind or nature
whatsoever, unless Purchaser is required by law to make any withholding for
taxes, in which case Purchaser shall (a) immediately pay to Seller such
additional amount as shall be required so that Seller shall receive, on the date
such payments are due, the net amount it would have received had such
withholding for taxes not been required and (b) promptly pay such taxes and
provide to Seller evidence of such payment.
3.6 Guaranties. All obligations of Purchaser under this Agreement shall
be fully guaranteed by Airborne Freight
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 7
Corporation ("Airborne") pursuant to a guaranty substantially in the form of
Exhibit G attached hereto (the "Airborne Guaranty"). The obligations of Seller
under this Agreement shall be guaranteed by Itochu pursuant to a guaranty
substantially in the form of Exhibit H attached hereto (the "Itochu Guaranty").
3.7 Adequate Assurances.
a. Triggering Event. For purposes of this Agreement, a "Triggering
Event" shall mean the failure of Airborne to meet either of the following
financial covenants: (i) the ratio of Consolidated Funded Debt to Consolidated
Total Capital shall at any time exceed [ * ], or (ii) Consolidated Net Worth
shall at any time be less than [ * ]. For purposes of this Agreement: (w)
"Consolidated Funded Debt" means, without duplication, (1) all obligations of
Airborne and its Consolidated Subsidiaries for borrowed money, (2) all
obligations of Airborne and its Consolidated Subsidiaries evidenced by bonds,
debentures, notes or other similar instruments; and (3) all obligations of
Airborne and its Consolidated Subsidiaries to pay the deferred purchase price of
property or services other than trade accounts payable arising in the ordinary
course of business; (x) "Consolidated Net Worth" means the shareholders' equity
of Airborne and its Consolidated Subsidiaries as set forth or reflected on the
most recent consolidated balance sheet of Airborne and its Consolidated
Subsidiaries; (y) "Consolidated Total Capital" means, at any time, the sum of
(1) Consolidated Net Worth and (2) Consolidated Funded Debt; and (z)
"Consolidated Subsidiary" means at any date any subsidiary of Airborne or other
entity the accounts of which, in accordance with generally accepted accounting
principles consistently applied ("GAAP"), would be consolidated with those of
Airborne in its consolidated financial statements as of such date. Purchaser
shall promptly notify Seller of any Triggering Event. Further, on a quarterly
basis, Purchaser shall deliver to Seller copies of Airborne's 10-Qs and annual
reports to shareholders, as applicable, along with an officer's certificate
evidencing that as of the date of the statements, a Triggering Event had not
occurred.
b. Provision of Assurances. Upon a Triggering Event, Purchaser shall
be obligated, within [ * ] days of written notice from Seller, to deliver to
Seller either (a) (i) evidence satisfactory to Seller that Purchaser has
obtained a firm commitment from one or more financiers selected by Purchaser and
reasonably satisfactory to Seller to provide financing for at least 80% of the
Purchase Price of the Aircraft next scheduled to be delivered to Purchaser
hereunder ("Committed Financing") which Committed Financing shall not be subject
to any material condition other than documentation and (ii) evidence reasonably
satisfactory to Seller that Purchaser is capable of providing the funds
necessary to provide any portion of the Purchase Price for
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 8
the Aircraft that is not to be provided by third-party financiers under the
Committed Financing; or (b) such other evidence reasonably satisfactory to
Seller that Purchaser has the ability to pay the Purchase Price of the next
scheduled Aircraft to be purchased hereunder. The obligation hereunder shall be
a rolling obligation and shall apply so long as such Triggering Event remains
outstanding. If Purchaser shall at any time fail to provide the assurances
required hereunder, such failure shall constitute a breach of this Agreement.
ARTICLE 4.
Condition of Aircraft.
4.1 General Condition. At the time of its delivery to Purchaser, each
Aircraft shall (a) be in flyable condition; (b) be maintained in compliance with
ANA's maintenance and repair program as authorized by the JCAB (hereinafter
called the "ANA's Maintenance Program"); (c) be in compliance with and have a
valid airworthiness certificate issued by the JCAB; and (d) be in compliance
with all applicable outstanding mandatory Airworthiness Directives ("A.D.'s")
affecting the Aircraft as issued by the FAA which have a compliance deadline on
or prior to the date of delivery of such Aircraft to Purchaser. The Aircraft
shall not otherwise be required to comply with Federal Aviation Regulations
(including specifically, but without limitation, to TCAS and wind shear
detection).
4.2 Condition of Airframe. At the time of its delivery to Purchaser, each
Aircraft shall meet the requirements and shall have such hours and cycles
remaining under ANA's Maintenance Program, as set forth below:
(a) have accomplished immediately after removal from service and
prior to delivery the scheduled "C" check or its equivalent in accordance with
ANA's Maintenance Program;
(b) have at least [ * ] life remaining to the next complete
restoration interval for the main and the nose landing gears in accordance with
FAA's Maintenance Review Board Report ("MRBR"). Either cycles, hours or
calendar days, whichever is applicable in the MRBR on the date [ * ] years prior
to the delivery date of the relevant aircraft shall be applied to the delivery
condition for those landing gears (for example, if the current restoration
interval in the MRBR is [ * ] cycles, then at the time of delivery to Purchaser,
the landing gears shall have at least [ * ] cycles remaining before the next
complete restoration, as less than [ * ] cycles would have been used since the
last complete restoration);
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 9
(c) have at least "C" check interval remaining before the next due
corrosion prevention and control program and SSI program in accordance with
ANA's Maintenance Program; and
(d) have accomplished all outstanding deferred maintenance items
which relate to JCAB airworthiness or are required to be corrected in accordance
with ANA's Maintenance Program.
4.3 Condition of Controlled Components. At the time each Aircraft is
delivered to Purchaser, all components (other than engines but inclusive of the
APU) which are time controlled under ANA's Maintenance Program as of the date of
this Agreement shall have a minimum service life of [ * ] hours and or [ * ]
cycles and or [ * ] months remaining, whichever is applicable under ANA's
Maintenance Program provided, however, that should a component be limited by
more than one factor, all pertinent limits shall apply. The condition described
in this Section 4.3 shall not be applied to the components required only for
passenger aircraft and that not required for cargo aircraft.
4.4 Condition of Installed Engines. At the time of its delivery to
Purchaser, each Aircraft's installed engine shall have [ * ] cycles remaining to
the next schedule engine removal and shall be serviceable as determined by a
borescope inspection and full power run-up at "on wing" condition conducted
during Purchaser's inspection under Section 7.2(d) and performed in accordance
with ANA's Maintenance Program.
4.5 Satisfaction of Condition Requirements. An Aircraft satisfying the
delivery conditions contained in this Article 4 on its respective delivery date
shall be regarded as being in "Delivery Condition."
4.6 Effect of Delivery Conditions. Upon acceptance of an Aircraft by
Purchaser hereunder, the Delivery Conditions with respect to such Aircraft shall
in all respects be deemed met and satisfied. Under no circumstances shall
Seller assume liability to Purchaser or any other person or entity with respect
to the condition of any Aircraft after the same has been accepted by Purchaser
hereunder.
ARTICLE 5.
Representations and Warranties.
5.1 Seller's Representations. Seller represents and warrants to Purchaser
as follows (which representations and warranties shall, unless otherwise stated,
be deemed made on and as of the date hereof and as of the relevant delivery date
of each Aircraft):
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 10
a. Organization and Standing. KC1, KC2, KC3 and Itochu are each
corporations duly organized, validly existing and in good standing under the
laws of Japan. Purchaser acknowledges that neither KC1, KC2 nor KC3 shall be
required to maintain its corporate existence after delivery of all Aircraft to
be delivered by such corporation hereunder provided no such action shall relieve
Itochu of its obligations under the Itochu Guaranty.
b. Corporate Power and Authority. Seller has all requisite power and
authority to execute and to deliver this Agreement and the other documents
required hereunder, and to carry out the transactions contemplated herein and
therein. Itochu has all requisite power and authority to execute and deliver
the Itochu Guaranty and to carry out the transactions contemplated herein.
c. Due Authorization; Binding Obligation. This Agreement has been
duly authorized by Seller and is valid, binding and enforceable against Seller
in accordance with its respective terms. The Itochu Guaranty has been duly
authorized by Itochu and is valid, binding and enforceable against Itochu in
accordance with its terms.
d. Title to Aircraft. At delivery of each Aircraft in accordance
with this Agreement, and upon release by the Document Escrow Agent of the Bills
of Sale to Purchaser, Seller shall convey to Purchaser good title to each
Aircraft, free and clear of any and all mortgages, pledges, trusts, liens
(including tax liens), charges, leases or other security interests or
encumbrances of any kind whatsoever ("Liens") other than any Liens created by
Purchaser or arising as a result of any action or inaction of Purchaser.
e. No Conflict. The execution, delivery and performance by Seller of
this Agreement and by Itochu of the Itochu Guaranty does not contravene its
articles of incorporation or bylaws and does not contravene the provisions of or
constitute a default under any agreement or instrument to which such person is a
party or by which such person or any of its properties may be bound or affected.
5.2 Purchaser's Representations. Purchaser represents and warrants to
Seller as follows (which representations and warranties shall, unless otherwise
stated, be deemed made on and as of the date hereof and as of the relevant
delivery date of each Aircraft):
a. Organization and Standing. Each of Purchaser and Airborne are
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware.
page 11
b. Corporate Power and Authority. Purchaser has all requisite power
and authority to execute and to deliver this Agreement and the other documents
required hereunder, and to carry out the transactions contemplated herein and
therein. Airborne has all requisite power and authority to execute and to
deliver the Airborne Guaranty and to carry out the transactions contemplated
herein.
c. Due Authorization; Binding Obligation. This Agreement has been
duly authorized by Purchaser and is valid, binding and enforceable against
Purchaser in accordance with its respective terms. The Airborne Guaranty has
been duly authorized by Airborne and is valid, binding and enforceable against
Airborne in accordance with its respective terms.
d. No Conflict. The execution, delivery and performance by Purchaser
of this Agreement and by Airborne of the Airborne Guaranty does not contravene
its articles of incorporation or bylaws and does not contravene the provisions
of or constitute a default under any agreement or instrument to which such
person is a party or by which such person or any of its properties may be bound
or affected.
5.3 Disclaimer of Other Warranties or Representations.
Except for Seller's obligation with respect to title as provided in
Sections 2.4 and 5.1(d), EACH AIRCRAFT WILL BE SOLD AND DELIVERED TO PURCHASER
IN THE THEN "AS IS, AND WHERE IS" CONDITION THEREOF WITH ALL DEFECTS AND FAULTS
WHETHER LATENT OR PATENT, WHETHER KNOWN OR UNKNOWN, WITH PURCHASER HAVING HAD
FULL OPPORTUNITY AND RIGHT OF INSPECTION AND DETERMINATION, AND SELLER MAKES NO
WARRANTIES TO PURCHASER EXCEPT AS TO TITLE, AND PURCHASER HEREBY WAIVES ALL
OTHER WARRANTIES OF SELLER OR ITS AFFILIATES OR ASSIGNS, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, USE,
PURPOSE, FITNESS, AIRWORTHINESS, VALUE OF DESIGN, AND WAIVES, RELEASES AND
RENOUNCES ANY RIGHTS, CLAIMS OR REMEDIES AGAINST SELLER AND ITS AFFILIATES OR
ASSIGNS WITH RESPECT TO DIRECT DAMAGES, LOSS OF LIFE OR INJURY TO PERSONS OR
PROPERTY, LOSS OF USE OR OTHER SECONDARY OR CONSEQUENTIAL DAMAGES WHICH WOULD
OTHERWISE ARISE WITH RESPECT TO THE WARRANTIES WAIVED BY PURCHASER UNDER THIS
ARTICLE 5. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE TERM "DIRECT DAMAGES"
AS USED HEREIN INCLUDES WITHOUT LIMITATION, LOSS, DESTRUCTION OR DAMAGE BEYOND
REPAIR OF THE AIRCRAFT.
page 12
ARTICLE 6.
Covenants.
6.1 Covenants of Seller.
a. Aircraft Documentation. Concurrent with the delivery of each
Aircraft, and except as has been previously furnished to Purchaser by ANA,
Seller shall furnish to Purchaser in their "AS IS" condition the aircraft
documentation (collectively, the "Aircraft Documentation") as described in
Exhibit I hereto.
b. Cooperation in Assignment of Warranties and Contract Rights. At
Purchaser's request, Seller shall assign to Purchaser effective upon the
delivery of the relevant Aircraft, any and all of Seller's rights with respect
to any manufacturer warranties or repair or maintenance agreements relating to
such Aircraft to the extent such rights are assignable by Seller. Further,
Seller shall request that ANA, at Purchaser's request, assign to Purchaser
effective upon the delivery of the relevant Aircraft, any and all of ANA's
rights with respect to any manufacturer warranties or repair or maintenance
agreements relating to such Aircraft to the extent such rights are assignable by
ANA. Purchaser shall reimburse Seller for all out of pocket costs, if any,
incurred by Seller or ANA in connection with this Section 6.1(b).
c. Cooperation on Export. Seller agrees to provide Purchaser with
reasonable assistance and coordination in connection with the export of any
Aircraft from Japan.
d. Cooperation. Without prejudice to Section 9.4 hereof, Seller will
use reasonable efforts to take, or cause to be taken, such action and to execute
and deliver or cause to be executed and delivered such additional documents and
instruments and to do, or cause to be done, all such things reasonably
necessary, proper or advisable under the provisions of this Agreement and
applicable law to consummate and carry out all transactions contemplated by this
Agreement.
e. Material Alteration. To the extent Seller may exercise such
rights under its lease with ANA (and except to the extent required to permit the
Aircraft to comply with applicable law, regulations, aviation authority
directives or ANA's fleet policy with respect to its entire 767 fleet), Seller
agrees to direct ANA to correct prior to the relevant delivery date of an
Aircraft all material alterations to such Aircraft that have not been approved
by Purchaser.
page 13
6.2 Covenants of Purchaser.
a. Insurance. From and after delivery of each Aircraft to Purchaser
and with respect to each delivered Aircraft for a period of at least [ * ],
Purchaser shall, at its own cost and expense, maintain insurance for such
Aircraft as set forth below in such form and with such insurers as may be
selected by Purchaser and be reasonably acceptable to Seller:
(1) Liability Insurance Policies.
Aviation Liability Insurance Policies, Including "Passenger legal
liability" (if applicable), "Third Party legal liability,"
"Aviation Products, Residual or Completed Operations Legal
Liability," "Freight Legal Liability," which shall include the
following endorsements, amendments or extensions of coverage:
(a) Seller, ANA, Itochu, and each of their respective
subcontractors, parents, affiliates and successors and their
respective officers, directors, agents, assignees, servants
and employees (collectively, the "Seller Insureds") shall be
named as additional insureds under the above mentioned
aviation liability policies to the extent required by this
Agreement, which policies shall have limits reasonably
satisfactory to Seller. Without limitation, the third party
legal liability policy shall have limits of not less than
United States Dollars [ * ].
(b) The Seller Insureds shall be named as additional
insureds with both way cross liability clause.
(2) Hull Insurance Policies.
Hull Insurance Policies (including "War Risk" in the event such
Aircraft may be operated outside of the United States) shall
cover for an amount at least equal to the full Purchase Price for
each Aircraft and shall include a subrogation waiver clause in
favor of the Seller Insureds and its insurers in form reasonably
acceptable to Seller.
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 14
(3) General Requirements.
Purchaser further agrees that insurance polices required in this
Section 6.2(a) shall contain the following endorsements,
amendments or extensions or coverage:
(a) Insurers shall provide, with respect to the above
mentioned, 30 days written notice to Seller prior to the
effective date of cancellation or termination whether or not
such cancellation or termination is instituted by the
insurers or Purchaser.
(b) It is understood and agreed that the insurance afforded
by the above mentioned policies shall not be invalidated or
impaired as regards the interest of any Seller Insured by
any action or inaction of Purchaser, Airborne or any other
person including illegal use of any Aircraft or arising from
any violation or breach of any representation, warranty,
declaration or condition.
(c) Insurers agree that the Seller Insureds shall not be
liable for any insurance premiums of Purchaser arising out
of or resulting from this Agreement. Insurers further agree
that there will be no set off against any claims that may be
payable to the Seller Insureds.
(d) The above mentioned liability policies shall be primary
and contributory and not excess with respect to any other
insurance which may be available for the protection to the
Seller Insureds.
(e) All of the provisions of the above mentioned policies,
except the limits of liability, shall operate in the same
manner as if there were in respect of each Aircraft a
separate policy covering each Seller Insured.
(f) The above mentioned policies shall apply worldwide and
have no territorial limits (except, that War Risk shall
apply only outside of the United States and Allied Risk,
which shall apply to the fullest extent available in the
international insurance market and in any case shall apply
in each
page 15
jurisdiction from, over and to which any Aircraft shall
operate).
(4) [ * ] days prior to the delivery date of each Aircraft,
Purchaser agrees to provide "Insurance Certificates" which
certify that all insurance policies as required under this
Section 6.2(a) are in effect with respect to such Aircraft.
b. Indemnification. From and after delivery and transfer of title of
each Aircraft to Purchaser, Purchaser shall defend, indemnify and hold Seller,
ANA, Itochu, and their respective affiliates, parents, successors and assigns,
and each of their officers, directors, shareholders, employees, and agent and
assigns (as to each, an "Indemnitee") harmless from and against all loss,
damage, liability, fees (including attorney's fees), cost, expense, demand,
claim, suit, settlement or judgment whether by Purchaser, or any third party or
parties, including any Indemnitees, and whether for death or injury to any
person or persons whomsoever or for the loss of, damage to or destruction of any
property whatsoever, including but not limited to any Aircraft or any property
of Purchaser, that shall be suffered or incurred by or asserted against or
imposed on any such Indemnitee arising out of or in any way connected with the
Aircraft or any engine or any part or document sold and transferred to Purchaser
hereunder, including, without limitation, in connection with the ownership,
maintenance, repair, overhaul, modification, storage, control, operation or use
of the Aircraft by Seller, ANA, Itochu, any other Indemnitee, Purchaser or any
third party, whether or not arising in tort or occasioned in whole or part by
the fault or negligence of an Indemnitee except to the extent caused by the
willful misconduct or gross negligence of such Indemnitee (the "Exception") and
provided that such Exception shall not affect Purchaser's indemnification
obligations with respect to any other Indemnitee.
c. Cooperation. Purchaser shall use its reasonable efforts to take,
or cause to be taken, such action and to execute and deliver or cause to be
executed and delivered such additional documents and instruments and to do, or
cause to be done, all things reasonably necessary, proper or advisable under the
provisions of this Agreement and applicable law to consummate and carry out all
transactions contemplated by this Agreement.
ARTICLE 7.
Conditions to Purchaser's Obligation to Purchase.
7.1 General Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser to purchase any Aircraft is subject to the following
conditions having been met or
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 16
satisfied, except as provided below, on or prior to December 27, 1995:
a. Execution of Agreement. Seller shall have executed and delivered
to Purchaser this Agreement.
b. Marubeni Purchase Agreement. Marubeni shall have executed and
delivered to Purchaser the Marubeni Purchase Agreement.
c. Itochu Guaranty. Itochu shall have executed and delivered to
Purchaser the Itochu Guaranty.
d. Opinion. Seller shall have delivered to Purchaser an opinion of
counsel to Seller confirming the due authorization and execution of this
Agreement by Seller and of the Itochu Guaranty by Itochu provided that Seller
shall have until February 10, 1996 to deliver said opinion.
7.2 Specific Conditions Precedent to Obligations of Purchaser. The
obligations of Purchaser to purchase a particular Aircraft is subject to the
following conditions having been substantially met or satisfied in all material
respects on or prior to delivery to Purchaser of said Aircraft (or such other
date as provided herein):
a. Accuracy of Representations and Warranties. The representations
and warranties of Seller set forth in this Agreement with respect to said
Aircraft shall be true in all material respects as though made on and as of the
relevant delivery date.
b. Taking or Total Loss. As of the relevant delivery date of the
Aircraft, the Aircraft shall not then be subject to an event of Taking or Total
Loss. "Taking" means, with respect to an Aircraft, the requisition of title,
confiscation or forfeiture; or requisition for use by or for any governmental or
quasi-governmental entity or authority or the theft of the Aircraft. "Total
Loss" means an actual, constructive, compromised, arranged or agreed total loss
of the Aircraft or any damage to the Aircraft that would cost in excess of [ * ]
of the relevant Purchase Price of such Aircraft to correct.
c. Aircraft Condition. The relevant Aircraft shall have been
tendered in Delivery Condition.
d. Inspection. Purchaser, and except as provided below, at its sole
cost and expense, may inspect the relevant Aircraft as provided below:
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 17
1. Ground Inspection. The Aircraft including the Aircraft
Documentation shall be made available to Purchaser for ground inspection by
Purchaser at an ANA facility in Japan or at an Other Location acceptable to the
parties. Such inspection shall take place in connection with the "C" check
Delivery Condition as described in Section 4.2(a) above and shall occur
approximately seven (7) working days immediately prior to the date of delivery
of such Aircraft to Purchaser or such other date mutually agreed upon by Seller,
Purchaser and ANA provided that the ground inspection by Purchaser shall not
interfere with the implementation and performance of ANA's maintenance work.
Seller will provide Purchaser with at least [ * ] days notice prior to
commencing the final "C" check with respect to the Aircraft. Seller shall
direct ANA to open the areas of the Aircraft to perform the necessary checks to
verify compliance with the Delivery Conditions set forth in Article 4 to the
extent within the scope of the "C" check in order to determine that the Aircraft
including the Aircraft Documentation is in Delivery Condition provided that the
ground inspection by Purchaser shall not interfere with ANA's performance of its
maintenance operations. The ground check which is required in the scheduled "C"
check before delivery shall include but not be limited to: (a) an oil and fuel
filter inspection on all engines, accessory gearboxes and engine accessory
filters; and (b) detailed internal and external inspections of the main gear
fittings, the bulkheads, belly skins and other areas Purchaser reasonably
requests during the "C" check required herein. Seller shall direct ANA promptly
to correct any bona fide material discrepancies from the conditions required
under Article 4 which are observed during such inspection and are communicated
in writing by Purchaser to ANA and Seller prior to completion of such "C" check
provided that such discrepancies are with respect to items of the type described
in Section 4.2(d) hereof. Purchaser may re-inspect the relevant area of the
Aircraft to insure compliance with this Agreement after ANA performs the
corrective repairs.
2. Operational Test Flight. After completion of any corrections
required under Section 7.2(d)(1), Seller shall direct ANA to test fly such
Aircraft, using qualified flight test personnel, for not more than one (1) hour
in the vicinity of an ANA facility in Japan (or at an Other Location acceptable
to the parties), for the purpose of demonstrating to Purchaser the satisfactory
operation of such Aircraft and its equipment. During such test flight command,
care, custody, and control of the Aircraft shall remain at all times with ANA.
Three (3) of Purchaser's employees may participate in such flight as observers.
Said flight shall be flown using ANA's standard operational test flight
procedures. Upon completion of such operational flight testing, Seller shall
direct ANA promptly to correct any bona fide material discrepancies from the
conditions
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 18
required by Article 4 which are observed during such flight and are communicated
in writing to Seller and ANA provided that such discrepancies are with respect
to items of the type described in Section 4.2(d) hereof. The period of such
correction shall constitute Excusable Delay. If ANA's Maintenance Program
requires ANA to test fly such Aircraft after such corrections, Seller shall
direct ANA to conduct such a test flight.
3. Purchaser's Correction. Any discrepancies referred to in
Sections 7.2(d)(1) or d(2) above which were not corrected prior to delivery of
the Aircraft to Purchaser, may be corrected, after notice to and agreement by
Seller, by Purchaser or its designee, and Seller shall reimburse Purchaser, at
Purchaser's or its designee's normal charges (and without markup). Payment of
the correction of such discrepancies shall be made by Seller within [ * ] days
of Seller's receipt of Purchaser's invoice and reasonably acceptable supporting
evidence covering the discrepancies corrected, with a breakdown of the costs of
correction. If Seller disputes the charges, Seller and Purchaser shall consult
in good faith in an effort to agree as to the propriety of the cost and work
done, failing which the matter shall be resolved by an appropriate third party
mutually acceptable to the parties (such as the Boeing Company). Seller shall
have the right, upon prior notice to Purchaser, to send, at Seller's expense, a
representative to review the work.
4. Purchaser's Acceptance. Upon satisfactory completion of the
ground inspection and operational test flight(s) in accordance with Section
7.2(d) herein, Purchaser shall forthwith give to Seller the Acceptance
Certificate. Delivery of the Acceptance Certificate shall constitute
irrevocable agreement that the relevant Aircraft is in Delivery Condition except
with respect to the items to be corrected as provided under Section 7.2(d)(3).
5. Costs. The flight tests pursuant to Section 7.2(d)
(including any subsequent flight tests) shall be performed at Seller's expense,
including for the costs for fuel, oil, airport fees, insurance, takeoff/landing
fees, ground handling charges and airways communication charges. Purchaser
shall be responsible for its costs incurred with respect to Purchaser's (or its
agent's) personnel (such as travel expenses, food, hotel, etc.) in connection
with the ground inspection and flight tests.
6. Effect of Discrepancies. Regardless of any discrepancies
noticed or not noticed by Purchaser or required or not required by Purchaser to
be corrected, Purchaser acknowledges that after delivery of the Aircraft to
Purchaser, the Aircraft shall be subject, without limitation, to acceptance
under Section 4.6, the disclaimers of Section 5.3 and the
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 19
indemnification obligations of Section 6.2(b) and, except as provided in said
sections, the sole remaining consequence of Section 7.2(d) with respect to said
Aircraft shall be the obligation of Seller to provide certain reimbursement
payments as provided in Section 7.2(d)(3).
e. De-registration. After receipt of notice from the Funds Escrow
Agent that the full Purchase Price (other than the relevant cash Deposits) is in
escrow under the Funds Escrow Agreement and after confirmation from the Document
Escrow Agent that the documents to be delivered by each party pursuant to the
Document Escrow Letter have been delivered into escrow, and subject to notice
having been delivered by Purchaser that the FAA is prepared to permit the
registration of the Aircraft, Seller and ANA shall promptly take such steps as
may be necessary to permit the de-registration of the relevant Aircraft from
Japanese registration.
f. Escrow Agreements. (1) Seller and the Funds Escrow Agent shall
have duly executed and delivered to Purchaser the Funds Escrow Agreement; (2)
Seller and the Documents Escrow Agent shall have duly executed and delivered to
Purchaser the Documents Escrow Letter; and
(3) Seller shall have delivered to the Documents Escrow Agent all documents to
be delivered by Seller as provided under the Documents Escrow Letter.
7.3 Effect of Failure of Conditions. If a condition in Section 7.1 shall
not have been met or waived by Purchaser, this Agreement shall terminate as
provided under Section 9.1(b) and shall be subject to Section 9.5. If a
material condition in Section 7.2 shall have not been substantially met or
waived by Purchaser for reasons other than the acts or omissions of Purchaser or
the occurrence of any Excusable Delay, Purchaser shall have the right under
Section 9.1(b) to terminate its obligation to purchase the particular Aircraft
(and the relevant Deposits shall be returned to Purchaser as provided under
Section 9.5), but Purchaser shall, subject to the terms of this Agreement,
remain obligated to purchase, and Seller shall remain obligated to sell, all
remaining Aircraft.
ARTICLE 8.
Conditions to Seller's Obligation to Sell.
8.1 General Conditions Precedent to Obligations of Seller. The
obligations of Seller to sell any Aircraft is subject to the following
conditions having been met or satisfied on or prior to December 27, 1995:
a. Execution of Agreement. Purchaser shall have executed and
delivered to Seller the Agreement.
page 20
b. Guaranty. Airborne shall have executed and delivered to Seller
the Airborne Guaranty.
c. Deposits. Purchaser shall have made all of the Deposits to be made
as of execution of this Agreement.
d. Opinion. Purchaser shall have delivered to Seller an opinion of
counsel to Purchaser confirming the due authorization and execution of this
Agreement by Purchaser and of the Airborne Guaranty by Airborne.
e. Marubeni Purchase Agreement. Marubeni shall have executed and
delivered to Purchaser the Marubeni Purchase Agreement.
8.2 Specific Conditions Precedent to Obligations of Seller. The
obligations of Seller to sell any specific Aircraft is subject to the following
conditions having been substantially met or satisfied in all material respects
on or prior to delivery to Purchaser of such Aircraft (or such other date as
provided herein) provided that Seller shall have the right to require strict
compliance with any matter with respect to the Deposits, the Standby Letters of
Credit, or the payment of the Purchase Price for any Aircraft:
a. Accuracy of Representations and Warranties. The representations
and warranties of Purchaser set forth in this Agreement shall be true in all
material respects as though made on and as of the delivery date.
b. Taking or Total Loss. As of the relevant delivery date of the
Aircraft, the Aircraft shall not then be subject to an event of Taking or Total
Loss.
c. Excusable Delay. No event of Excusable Delay shall preclude
Seller from performing its obligations hereunder.
d. Deposits. All Deposits required under Section 3.2 have been made
as and when due.
e. Escrow Agreements. (1) Purchaser and the Funds Escrow Agent shall
have duly executed and delivered to Seller the Funds Escrow Agreement; (2)
Purchaser and the Documents Escrow Agent shall have duly executed and delivered
to Seller the Documents Escrow Letter; and (3) Purchaser shall have delivered to
the Funds Escrow Agent and Documents Escrow Agent all funds and documents to be
delivered by Purchaser under the Funds Escrow Agreement and Document Escrow
Letter including, without limitation, the Purchase Price for such Aircraft as
and when due.
page 21
ARTICLE 9.
Termination.
9.1 Termination by Purchaser. This Agreement may be terminated and
abandoned by Purchaser solely as follows:
a. Event of Termination. With respect to the Agreement as a whole,
upon an Event of Termination by Seller or Itochu.
b. Non-Fulfillment of Conditions. With respect to a particular
Aircraft, but no others, and except to the extent subject to an Excusable Delay,
if any condition to Purchaser's obligation to purchase said Aircraft in Section
7.2 hereof has not been substantially and materially satisfied, unless waived by
Purchaser or extended by agreement of the parties or caused by the acts or
omissions of Purchaser.
c. Termination for Delay. With respect to a particular Aircraft, but
no others, due to delay as provided in Section 9.4(b) below.
d. Breach of Undertakings. Except to the extent excused or delayed
under Section 9.4 hereof, with respect to a particular Aircraft, Seller shall
materially and substantially fail to perform or maintain any of its obligations
hereunder and such failure is not cured within [ * ] Business Days of written
notice to Seller.
e. Total Loss or Taking. With respect to a particular Aircraft, but
no others, and subject to Section 9.4 (including extensions of time to cure) due
to a Total Loss or Taking of the Aircraft. Notwithstanding the above, Seller
shall have the right, but not the obligation, to deliver a Substitute Aircraft
(being a comparable Model B767 aircraft that meets the requirements of this
Agreement and may include, without limitation, acceleration of delivery of other
Aircraft to be delivered hereunder).
f. Excusable Delay. With respect to a particular Aircraft, but no
others, due to Excusable Delay as provided and subject to Section 9.4(b).
9.2 Termination by Seller. This Agreement may be terminated and abandoned
by Seller solely as follows:
a. Event of Termination. With respect to the Agreement as a whole,
upon an Event of Termination by Purchaser or Airborne.
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 22
b. Non-Fulfillment of Conditions. With respect to a particular
Aircraft, but no others, if any condition to Seller's obligation to sell said
Aircraft in Section 8.2 hereof has not been materially and substantially
satisfied by the applicable delivery date, unless waived by Seller or extended
by agreement of the parties provided that nothing herein shall limit Seller's
right to terminate as provided under Section 9.2(e) below.
c. Total Loss or Taking. With respect to a particular Aircraft, but
no others, and subject to Section 9.4 (including extensions of time to cure) due
to a Total Loss or Taking of the Aircraft.
d. Excusable Delay. With respect to a particular Aircraft, but no
others, due to Excusable Delay as provided and subject to Section 9.4.
e. Breach of Undertakings. With respect to a particular Aircraft or,
at Seller's election, this Agreement as a whole, upon the occurrence of any of
the following:
1. Purchaser shall fail to perform or maintain any of its
obligations under Sections 3.2, 3.3, 3.4, 3.7 or 6.2(a) hereof;
2. Purchaser shall fail to materially and substantially perform
any of its other obligations hereunder and such failure is not cured within [ *
] Business Days of written notice to Purchaser;
3. Purchaser shall fail to take delivery of any Aircraft
tendered for delivery in Delivery Condition; or
4. Purchaser shall default under its obligations under the
Marubeni Purchase Agreement.
9.3 Event of Termination. For purposes of this Agreement, an "Event of
Termination" shall mean with respect to Itochu (except with respect to subclause
(c) below, which shall not apply to Itochu), Seller, Purchaser or Airborne, as
the case may be:
a. Voluntary Bankruptcy; Insolvency. Such person shall (i) suspend
or discontinue its business, or (ii) make an assignment for the benefit of
creditors, or (iii) generally not be paying its debts as such debts become due,
or (iv) admit in writing its inability to pay its debts as they become due, or
(v) file a voluntary petition in bankruptcy, or (vi) become insolvent (however
such insolvency shall be evidenced), or (vii) file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 23
of debt, liquidation or dissolution or similar relief under any present or
future statute, law or regulation of any jurisdiction, or (viii) petition or
apply to any tribunal for any receiver, custodian or any trustee for any
substantial part of its property, or (ix) be the subject of any such proceeding
filed against it which remains undismissed for a period of sixty (60) days, or
(x) file any answer admitting or not contesting the material allegations of any
such petition filed against it, or of any order, judgment or decree approving
such petition in any such proceeding, or (xi) seek, approve, consent to, or
acquiesce in any such proceeding, or in the appointment of any trustee,
receiver, custodian, liquidator, or fiscal agent for it, or any substantial part
of its property, or an order is entered appointing any such trustee, receiver,
custodian, liquidator or fiscal agent and such order remains in effect for sixty
(60) days, or (xii) take any formal action for the purpose of effecting any of
the foregoing or seeking the its liquidation or dissolution;
b. Involuntary Bankruptcy. An order for relief is entered under the
applicable bankruptcy laws or any other decree or order is entered by a court
having jurisdiction in the premises and such decree or order continues
undismissed and in effect for a period of sixty (60) days (i) adjudging the
person bankrupt or insolvent, or (ii) approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the person under applicable bankruptcy or similar laws, or (iii) appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the person or of any substantial part of the property of
any thereof, or (iv) ordering the winding up or liquidation of the affairs of
the person;
c. Cross Default. With respect to any indebtedness of such person
for borrowed money in a principal amount which exceeds [ * ] (or its equivalent)
or which, when combined with all other such indebtedness, exceeds [ * ] (or its
equivalent), (i) such person shall fail to pay when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) any such
indebtedness or any interest or premium thereon and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such indebtedness (except such indebtedness as may be
subject to a good faith dispute), or (ii) such person shall fail to perform any
term or covenant on its part to be performed under any agreement or instrument
relating to any such indebtedness and required to be performed and such failure
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such failure to perform is to
accelerate or to permit the acceleration of the maturity of such
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 24
indebtedness (except such indebtedness as may be subject to a good faith
dispute), or (iii) any such indebtedness shall be declared to be due and payable
or required to be prepaid (other than by regularly scheduled required
prepayment) prior to the stated maturity thereof (except such indebtedness as
may be subject to a good faith dispute) provided that with respect to any
period of good faith dispute by a party, such party shall take all steps as may
be reasonable to resolve such dispute and, in any event, with respect to matters
described in subclause (iii) hereof, such default is fully cured within [ * ]
days after declaration that such indebtedness is due and payable or required to
be prepaid prior to the stated maturity thereof.
9.4 Excusable Delay.
a. General. Seller shall not be responsible or be liable for any
damages (upon termination by Purchaser or otherwise) or deemed to be in default
on account of, inability to or delays in the delivery of any Aircraft or any
Aircraft Documentation or the failure of any other act to be performed by Seller
hereunder due to any of the following causes: acts of God, war, warlike
operations, insurrections or riots, fires, floods or explosions, earthquakes or
serious accidents, epidemics or quarantine restrictions, any acts of government
or governmental priorities, strikes or labor troubles causing cessation,
slowdown or interruption of work, failure of or delay in transportation, or
inability, after due and timely diligence, to procure materials, accessories,
equipment or parts, Damage, or arising out of any other cause to the extent it
is beyond Seller's reasonable control and not occasioned by Seller's fault or
negligence (any such event being, an "Excusable Delay"). Without limitation,
the failure of ANA to perform any of its obligations under the relevant lease
between Seller and ANA or due to any other action or inaction of ANA, shall
constitute an Excusable Delay. In the event of any Excusable Delays, Seller
shall advise Purchaser concerning the nature and approximate extent thereof and
shall thereafter from time to time advise Purchaser concerning the current
status of such delays. Seller further agrees to use reasonable efforts to cause
ANA to remedy such Excusable Delay, to the extent Seller may require ANA to
remedy such event under the relevant lease with ANA.
b. Excusable Delay - Termination. During the period of Excusable
Delay which affects the delivery of an Aircraft, the time for delivery of such
affected Aircraft shall be extended. In the event delivery of any Aircraft
shall be delayed due to any one or more Excusable Delays for a period of more
than [ * ] calendar days after the end of the relevant Target Month in which
such delivery is otherwise required hereunder (the "Initial Period"), and if it
is reasonable to believe that the relevant events of Excusable Delay will be
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 25
rectified, Purchaser shall have the right, up to two times, to extend the
obligations of Purchaser and Seller hereunder with respect to such Aircraft, by
delivering written notice (the "Extension Notice") to Seller no later than [ * ]
days prior to expiration of the Initial Period or the expiration of the first
Extension Period, as the case may be. The period of extension (the "Extension
Periods") shall not be longer than the time reasonably calculated as necessary
for the relevant event of Excusable Delay to be corrected provided that the
first Extension Period shall not, in any event, exceed [ * ] calendar days and
the second Extension Period shall not, in any event, exceed [ * ] calendar days.
In addition, Purchaser shall have no right to request a second Extension Period
if Seller in good faith reasonably believes the matter will likely not be
rectified within such second Extension Period. If the Aircraft shall not be
delivered to Purchaser within the Initial Period or Extension Periods, as the
case may be, then the rights and obligations of the parties hereunder with
respect to that Aircraft, but not others, shall terminate and Seller shall,
within [ * ] days from such termination, return to Purchaser the Deposits and
Standby Letters of Credit therefore received from Purchaser under Section 3.2
hereof with respect to that Aircraft (but in any event shall not return the
Final Delivery Deposit, or Standby Letters of Credit applicable thereto, except
if such event of Excusable Delay shall relate to the final Aircraft to be
delivered hereunder).
c. Excusable Delay - Damage. For purposes of this Agreement,
"Damage" means: (i) material damage to the Aircraft which affects the ability of
the Aircraft to satisfy the Delivery Condition of Article 4 hereof; (ii) which
has not been corrected as of the date of the "C" check to be performed under
Section 7.2(d) hereof; and (iii) which has been determined by ANA's insurers (or
such other third party as may be acceptable to Seller, Purchaser and ANA) not to
give rise to Total Loss of the Aircraft. The parties acknowledge that Damage
is an event of Excusable Delay. Without limiting any other provision hereunder,
Seller agrees to give prompt notice to Purchaser of any event of Damage and
further agrees to use all reasonable efforts to cause ANA to repair the Aircraft
in a timely and efficient manner.
9.5 Effect of Termination by Purchaser. If Purchaser shall have properly
terminated this Agreement in whole pursuant to Section 9.1(a), then all
remaining Deposits (except with respect to Aircraft that have been delivered
prior to the date of termination) and Standby Letters of Credit shall be
returned to Purchaser and Purchaser may pursue any remedies it may have under
applicable law. If Purchaser shall have properly terminated this Agreement with
respect to a particular Aircraft, then the relevant Deposits and relevant
Standby Letters of Credit made with respect to said Aircraft (other than any of
the Final
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 26
Delivery Deposit and/or relevant Standby Letters of Credit with respect thereto
unless said termination is with respect to the ninth (9th) Aircraft) shall be
returned to Purchaser. Further, if termination with respect to an Aircraft
resulted from events or actions within the reasonable control of Seller and were
not excused by Excusable Delay, Purchaser may pursue any remedies it may have
under applicable law with respect to said Aircraft, but Purchaser shall remain
obligated to purchase and Seller shall remain obligated to sell all remaining
Aircraft in accordance with the terms of this Agreement. In no event shall
Seller be liable to Purchaser for consequential or punitive damages, each of
which is hereby expressly waived. The parties acknowledge, however, that
Purchaser shall be entitled to a remedy of specific performance with respect to
such matters within the reasonable control of Seller and not excused by
Excusable Delay.
9.6 Effect of Termination by Seller. If Seller shall properly terminate
this Agreement in whole, then Seller shall be entitled to retain as liquidated
damages the amount of all Deposits paid or which should have been paid by
Purchaser as of the date of termination. Without limitation, Seller shall be
entitled to make immediate demand under any Standby Letter of Credit, and the
financial institutions shall make payment thereunder without regard to whether
there is a dispute between Seller and Purchaser concerning the propriety of
demand thereunder. The parties hereby acknowledge that it would be difficult,
if not impossible, to assess the damages which would be suffered by Seller as a
result of termination of this Agreement, and therefore agree that in the event
of any such failure or refusal by Purchaser, Seller shall be entitled to the
Deposits as liquidated damages, which is not intended as a penalty but is a
reasonable estimate of Seller's actual damages under those circumstances. If
Seller shall have properly terminated this Agreement with respect to a
particular Aircraft, Seller shall remain obligated to sell and Purchaser shall
remain obligated to purchase all remaining Aircraft in accordance with the terms
of this Agreement. Further, unless termination with respect to a particular
Aircraft shall be effected by Seller under Section 9.4(b) hereof, Seller may
retain all Deposits with respect to such Aircraft (and draw under the relevant
Standby Letters of Credit) as full compensation as its sole remedy for the
damages caused hereunder. Purchaser waives any right to challenge Seller's
right to collect liquidated damages. In the event of such challenge, however,
Purchaser acknowledges and agrees that such amounts constitute, among other
things, a reasonable fee to Seller for committing to sell the Aircraft to
Purchaser in accordance with this Agreement and deferring marketing efforts for
the Aircraft.
9.7 Marketing of Aircraft. If the Agreement is terminated in whole or
with respect to a particular Aircraft, whether by
page 27
Seller, Purchaser or both, and regardless of fault and notwithstanding any right
or remedy either party may have arising therefrom, Seller shall be free of any
further obligation to sell all remaining Aircraft (in the case of termination of
this Agreement in whole) or such Aircraft (in the case of termination with
respect to a particular Aircraft) to Purchaser hereunder. Without limitation,
Purchaser shall have no further right to or interest in said Aircraft and Seller
may market or otherwise dispose of said Aircraft without interference or
objection by Purchaser.
ARTICLE 10.
Miscellaneous.
10.1 Costs and Fees. Except as otherwise expressly provided in this
Agreement, Purchaser and Seller shall each pay its own fees and expenses
incident to the negotiation, preparation and execution of this Agreement and the
obtaining of necessary approvals thereof.
10.2 Indemnity Against Brokers and Finders. Each party hereto shall
indemnify and hold the other party harmless against any claim for broker's and
finder's fees based on alleged retention of a broker/finder by the indemnifying
party.
10.3 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Washington, exclusive of
choice of law rules.
10.4 Consent to Jurisdiction, Waiver of Immunities. Each party hereto
irrevocably submits to the jurisdiction of any State or federal court sitting in
Seattle, King County, Washington, in any action or proceeding brought to enforce
or otherwise arising out of or relating to this Agreement and irrevocably waives
to the fullest extent permitted by law any objection which it may now or
hereafter have to the laying of venue in any such action or proceeding in any
such forum, and hereby further irrevocably waives any claim that any such forum
is an inconvenient forum. Each party agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by law.
Nothing herein shall impair the right of one party to bring any action or
proceeding against another or its property in the courts of any other
jurisdiction and each party irrevocably submits to the non-exclusive
jurisdiction of the appropriate courts sitting in any place where property of
such party is located.
10.5 Inspections. In addition to Purchaser's inspection rights under
Section 7.2(d) hereof, Seller shall use its reasonable efforts to permit
Purchaser, upon reasonable notice
page 28
and at reasonable times and at its own expense, to inspect the Aircraft and
Aircraft Documentation provided that such inspections shall not interfere with
ANA's usual operations.
10.6 Notices. All notices, requests, demands and other communication
required or permitted to be given by any party hereunder ("Notices") shall be in
writing and shall be sufficiently given if delivered personally or by a
reputable over-night delivery service or by telex or telecopier or similar
facsimile transmission or if sent by registered or certified mail, postage
prepaid, to the following address:
<TABLE>
<CAPTION>
<S> <C>
Seller: KC-ONE, INC.
KC-TWO, INC.
KC-THREE, INC.
c/o ITOCHU AirLease Corporation
NXB Aoyama Building, 5F
26-37, Minami-Aoyma 2-chome
Minato-ku, Tokyo 107
Japan
Attention: Manager
Facsimile: 011-813-3497-8145
Telex: 2423154 TKAFC J
With a copy to: Davis Wright Tremaine
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Telefax No.: (206) 628-7040
Attention: Joseph D. Weinstein
Purchaser: ABX AIR, INC.
145 Hunter Drive
Wilmington, Ohio 45177 U.S.A.
Attention: President
Facsimile: 513-382-2452
Telex: 214317AIRBN-EXP-WIMI
With a copy to: AIRBORNE FREIGHT CORPORATION
Corporate Secretary/Counsel
3101 Western Avenue
Seattle, WA 98121
U.S.A.
Telefax No.: (206) 281-1444
</TABLE>
page 29
Notice shall be deemed given, made or received when received. Any party
may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section for the giving of notice.
10.7 Entire Agreement. This Agreement, along with all exhibits and
schedules hereto, contains the entire understanding among the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained, including,
without limitation, the term sheet dated October 26, 1995. The express terms
hereof control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof. This Agreement may not be modified
or amended other than by an agreement in writing.
10.8 Assignment. This Agreement shall inure to the benefit of and be
binding upon each of the parties hereto and their respective successors and
assigns, but neither the rights nor the duties of either party under this
Agreement may be voluntarily assigned (including, without limitation, by merger,
consolidation, or reorganization), in whole or part, by either party without the
prior written consent of the other party (which consent may be withheld in such
party's sole discretion) provided that: (a) neither party may withhold consent
unreasonably in connection with an assignment by merger, consolidation or
reorganization or voluntary sale of all or substantially all of such party's
assets; and (b) Seller may assign or novate all or any part of its rights and
obligations under this Agreement, including its title to or any interest in any
Aircraft or other items to be delivered hereunder and its right to receive
moneys hereunder, in favor of or to an affiliate or to a wholly-owned subsidiary
of Itochu, and such assignee shall have the rights and obligations of Seller
hereunder provided that absent the consent of Purchaser after good faith
consultations with Seller, Seller may not assign to an affiliate or subsidiary
organized under the laws of a country other than Japan or the United Kingdom if
such assignment would, at that time, subject Purchaser to materially increased
indemnity obligations under Section 2.6 hereof than would have been the case if
the assignee's home jurisdiction were that of Japan or the United Kingdom.
10.9 Time. Time is of the essence with respect to the performance by
either party of their obligations hereunder. Further, for purposes of this
Agreement, all references to time and dates shall be to Pacific Standard Time.
page 30
10.10 Paragraph Headings. Paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not effect its
interpretation.
10.11 Severability. Should any one or more of the provisions of this
Agreement be determined to be invalid, unlawful or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions hereof
shall not in any way be affected or impaired thereby.
10.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original; but such counterparts
shall together constitute but one and the same instrument.
10.13 Attorneys' Fees. In any action or proceeding brought by any party
against the other arising under or in connection with this Agreement or any
other documents related hereto, the prevailing party shall, in addition to other
allowable costs, be entitled to an award of reasonable attorneys' fees.
10.14 Disclosure of Terms. Seller and Purchaser agree that they will not
disclose to any third party except ANA the terms of this Agreement except (i) to
such party's professional advisors; (ii) as required by applicable law or
governmental regulation, or (iii) with the prior written consent of Seller or
Purchaser.
page 31
<TABLE>
<CAPTION>
EXECUTED in duplicate as of the day and year first above written.
<S> <C>
PURCHASER: ABX AIR, INC.
By /s/ Carl Donaway
---------------------------
Its President
---------------------
SELLER: KC-ONE, INC.
By /s/ Yoshinori Izumida
---------------------------
Its Director
---------------------
KC-TWO, INC.
By /s/ Haruhiko Terui
---------------------------
Its Director
---------------------
KC-THREE, INC.
By /s/ Toahiyuki Nagamatau
---------------------------
Its Director
---------------------
</TABLE>
page 32
EXHIBIT A
USED AIRCRAFT IDENTIFICATION
<TABLE>
<CAPTION>
Aircraft
Registration Serial
Owner Number No. Target Month Purchase Price
----- -------- ----- ------------ --------------
<C> <C> <C> <C>
<S>
KC1 JA8479 22785 April, 1997 USD [ * ]
KC1 JA8480 22786 June, 1997 USD [ * ]
KC2 JA8481 22787 January, 1998 USD [ * ]
KC2 JA8484 22790 October, 1998 USD [ * ]
KC3 JA8485 23016 March, 1999 USD [ * ]
KC3 JA8486 23017 May, 1999 USD [ * ]
KC3 JA8487 23018 September, 1999 USD [ * ]
KC3 JA8489 23020 April, 2000 USD [ * ]
KC3 JA8490 23021 August, 2000 USD [ * ]
</TABLE>
AIRCRAFT CONFIGURATION DESCRIPTION
The Aircraft shall be delivered to Purchaser in the configuration defined
by Boeing detail Specification D6T103001NH, dated March 1, 1979 as applicable
(Detail Specification), as amended and supplemented and as the Aircraft has been
modified from the date of its delivery as new by Boeing to ANA to the date of
delivery to Purchaser. Certain aspects of the current specifications of the
Aircraft are described in Schedule 1 attached hereto.
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 33
SCHEDULE 1
----------
APPENDIX 1 - SELLER FURNISHED EQUIPMENT (SFE)
---------------------------------------------
CHAPTER 23 - COMMUNICATIONS
---------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
VHF COMMUNICATIONS (ARINC 716)
-----------------------------
1 3 Antenna 23-104
Dorne Margolin DC2
DM C50-17
INTERPHONE
----------
2 1 Audio Accessory Unit DC3
Boeing
285T0001-17
3 2 Speaker (Flight Compartment) DC2
Matsushita DC3
S222T100-102
4 4 Handset, Attendant's VB101- 01-107
VB106 B1252-064
5 5 Handset, Attendant's VB107 & on B1252-064
6 1 Handset, PA/Interphone DC3
(Flight Compartment)
7 1 Pilot's Call Panel 23-143
Boeing 01-107
2B5T0024-20 DC3
8 4 Panel, Audio Selector(With selector 23-130
switches left to right, VHFL, VHFR, 23-104
HFL, HFR, PA, INT) B1251-026
B1251-032
9 4 Handheld Microphone with XLR-4 Plug 23-109
Electrovoice CO1
602TR-4182
</TABLE>
BOEING page I-23-1
APPENDIX 1 - SELLER FURNISHED EQUIPMENT (SFE)
---------------------------------------------
CHAPTER 23 - COMMUNICATIONS -- (Continued)
------------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
GROUND CREW CALL
----------------
10 1 Horn DC2
Faraday
430 M1
PASSENGER ADDRESS
-----------------
11 52 Speaker - 6-12 Inch (Passenger 01-102
Compartment) DC2
Matsushita CO2
RDAM8003
12 6 Speaker - 6-1/2 Inch (Attendant) DC3
Matsushita
S222T101-201
13 2 Speaker - 6-1/2 Inch (Galley) DC3
Matsushita
S222T101-101
PASSENGER ENTERTAINMENT/
PASSENGER SERVICE SYSTEM
------------------------
14 2 Decoder, Column Timer 01-107
15 101 Decoder, Passenger Service Unit 01-107
16 101 Box, Seat Electronics (SEB) 01-107
17 1 Multiplexer Unit, Main 23-127
18 2 Sub-Multiplexer Unit - Zone 23-127
19 1 Antenna, TV 23-121
20 4 Tray, Mounting, ARINC 404A 23-121
21 1 Coupler, Antenna 23-121
</TABLE>
BOEING page I-23-2
APPENDIX 1 - SELLER FURNISHED EQUIPMENT (SFE)
---------------------------------------------
CHAPTER 31 - INDICATING/RECORDING SYSTEMS
-----------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ---------------------------- ------- ---------
<S> <C> <C> <C> <C>
1 2 Clock, Electronic 31-102
Jaeger, S.A. 01-102
S231T120-1 B1251-026
2 1 Module, Warning Electronics
Boeing
3 2 Computer, EICAS B1251-012
Collins
4 2 Display Unit, EICAS (Pilots') B1251-012
Collins
S242T404-601
5 1 Panel, EICAS Display Select (Pilots') B1251-012
Collins
6 1 Indicator, Standby Engine B1251-012
General Electric
7 2 Loudspeaker, Warning/Caution
8 1 Indicator, Flap Position
Gull Airborne
9 2 Indicator, Stabilizer Position
10 1 Indicator, Rudder Trim
Gull Airborne
</TABLE>
BOEING page I-31-1
APPENDIX 1 - SELLER FURNISHED EQUIPMENT (SFE)
---------------------------------------------
CHAPTER 31 - INDICATING/RECORDING SYSTEMS -- (Continued)
--------------------------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
STALL WARNING
-------------
11 2 Stick Shaker 01-102
DC2
FLIGHT RECORDER (ARINC 717 AND 573)
----------------------------------
12 1 Panel, Control
13 1 Sensor, Acceleration
</TABLE>
BOEING page I-31-2
APPENDIX 1 - SELLER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION
-----------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
INERTIAL REFERENCE SYSTEM
(ARINC 704 MARK II)
-------------------------
1 3 Inertial Reference Unit
Honeywell
2 1 Control Panel, Inertial Ref Mode 01-102
Honeywell
CG1093AA01
ELECTRONIC HORIZONTAL
SITUATION INDICATOR
---------------------
3 2 Indicator, Electronic Horizontal 01-102
Situation
Collins
4 2 Panel, EFIS Control (Full & Partial 01-102
Compass Rose Sections) 34-135
Collins
5 3 Symbol Generator, EFIS 01-102
Collins
ELECTRONIC ATTITUDE
DIRECTOR INDICATOR
-------------------
6 2 Indicator, Electronic Attitude 01-102
Director
Collins
</TABLE>
BOEING page I-34-1
APPENDIX 1 - SELLER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION -- (Continued)
--------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
VOR NAVIGATION/MARKER BEACON 02-102
(ARINC 711)
----------------------------
7 1 Antenna, VOR Dual
8 1 Antenna, Marker Beacon
9 2 Control Panel, VOR/DME VB101- 01-102
Boeing VB113 DC6
285T0554-1
10 2 Control Panel, VOR/DME VB114 & on DC6
Boeing
285T0554-1
RADIO DISTANCE MAGNETIC INDICATOR
(RDMI)
---------------------------------
11 2 Indicator, Radio Distance Magnetic
Collins
INSTRUMENT LANDING SYSTEM (ILS)
(ARINC 710)
-------------------------------
12 2 Antenna, Localizer (Dual)
Boeing
13 2 Antenna, Glideslope (Dual)
Sensor
14 1 Control Panel, ILS VB101- DC3
Boeing VB113 DC5
285T0524-1
15 1 Control Panel, ILS VB114 & on DC5
Boeing
285t0553
</TABLE>
BOEING page I-34-2
APPENDIX 1 - SELLER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION -- (Continued)
--------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
DISTANCE MEASURING EQUIPMENT
(ARINC 709)
----------------------------
16 2 Antenna, L-Band DC2
AUTOMATIC DIRECTION FINDER (ADF) 34-186
(ARINC 712)
--------------------------------
17 2 Control Panel VB101- DC6
Boeing VB113
285T0027-14
18 2 Control Panel VB114 & on DC6
Boeing
285T0556-1
RADIO ALTIMETER (ARINC 707) 01-102
---------------------------
19 3 Antenna, Transmit
20 3 Antenna, Receive
FLIGHT MANAGEMENT COMPUTER SYSTEM
(ARINC 702)
---------------------------------
21 2 Computer, Flight Management
Sperry
22 2 Unit, Control, Display
Sperry
</TABLE>
BOEING page I-34-3
APPENDIX 1 - SELLER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION -- (Continued)
--------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
AIR DATA SYSTEM (ARINC 706)
---------------------------
23 2 Computer
Sperry
24 4 Probe, Pitot-Static
25 1 Probe, Aspirated Total Air Temperature
26 2 Probe, Angle of Attack
27 2 Indicator, Altimeter 01-102
Sperry 34-131
TBD
28 1 Indicator, Standby Altimeter, 3AT1
29 2 Indicator, Mach/Airspeed
30 1 Indicator, Standby Airspeed, 3AT1
-- -- (Indicator, Total Air Temperature 01-102
deleted)
</TABLE>
BOEING page I-34-4
APPENDIX 1 - SELLER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION -- (Continued)
--------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
ATC RADAR BEACON (ARINC 730)
----------------------------
31 1 Control Panel, Dual VB101- 01-102
Boeing VB113 DC6
285T0026-10
32 1 Control Panel, Dual VB114 and DC6
Boeing on
285T0555-1
33 2 Antenna, L-Bamd 01-102
GROUND PROXIMITY WARNING (ARINC 728) 01-102
------------------------------------
34 1 Computer, Ground Proximity
MISCELLANEOUS
-------------
35 1 Compass, Standby Magnetic 01-102
Ametek-U.S. Gauge, C51-1 DC3
(See Appendix 1, Chapter 22 for DC2
Autoland Status Display)
36 1 Indicator, Standby Attitude, 4AT1 DC3
SFENA
S231T110-5
37 1 Standby Attitude Static Inverter/ILS DC3
Processor
SFENA
S231T110-103
38 2 Indicator, Vertical Speed DC3
Sperry
S231T102-1
</TABLE>
BOEING page I-34-5
APPENDIX II - BUYER FURNISHED EQUIPMENT (BFE)
---------------------------------------------
GENERAL NOTES
-------------
1. This appendix lists all of the equipment items that are to be furnished
by the Buyer for use on the airplane(s) described in this Detail
Specification.
2. Buyer Furnished Equipment shall be in accordance with the requirements of
the Purchase Agreement and Paragraph 2-53-00 of this Detail Specification.
<TABLE>
<CAPTION>
CONTENTS
--------
<S> <C>
SECTION
-------
11-11 PLACARDS AND MARKINGS
11-23 COMMUNICATIONS
11-25 EQUIPMENT/FURNISHINGS
11-34 NAVIGATION
11-35 OXYGEN
</TABLE>
BOEING page II-1
APPENDIX II - BUYER FURNISHED EQUIPMENT
---------------------------------------------
CHAPTER 23 - COMMUNICATIONS
---------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
INTERPHONE
----------
(Boom Microphone/headsets to be 23-137
installed by Buyer after airplane
delivery.)
(Handheld Microphone deleted, added to 23-109
Appendix I) DC3
PASSENGER ADDRESS (ARINC 560)
-----------------------------
1 1 Tape Reproducer, Entertainment VB101- 23-127
(including 4 channels selectable VB109 CO2
boarding music, 8 channels CO3
entertainment, 4 mono, 2 stereo)
Matsushita, RD-AX7001
2 1 Tape Reproducer, Entertainment VB110 & on 23-127
(including 4 channels selectable CO2
boarding music, 8 channels CO3
entertainment, 4 mono, 2 stereo)
Matsushita
RD-AX7001-01 (RD-AX7001 optional)
3 1 Amplifier, Passenger Address (ARINC 01-102
715)
Collins
622-5342-001
VOICE RECORDER (ARINC 557)
--------------------------
4 1 Recorder CO2
Fairchild
93-A100-80
5 1 Control Unit (including area CO2
microphone), Fairchild
93-A152-50
</TABLE>
BOEING page II-23-1
APPENDIX II - BUYER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 23 - COMMUNICATIONS
---------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
VHF COMMUNICATIONS (ARINC 716)
------------------------------
6 3 Transceiver VB101- 23-104
Collins, 622-5219-001 VB116 23-125,
CO5
7 3 Transceiver VB117 & on CO5
Collins
622-5219-004
622-5219-001 (optional)
(SB 1, 2, 3, 5 Required)
(SB 4, 7-12, 14, 15, 16 Optional)
8 3 Control Panel VB101- 23-104
Collins VB110 23-125
622-5390-001 CO4
9 3 Control Panel VB111 & on CO4
Collins, 622-6831-001
622-5390-001 (optional)
PASSENGER ENTERTAINMENT (VIDEO)
-------------------------------
10 1 Television Camera, Forward Terrain 23-102
Viewing (includes remote control unit) CO2
Sony, XC-3
11 1 Television Camera, Downward 23-102
Terrain Viewing (includes remote CO2
control viewing)
Sony, XC-4
12 1 Monitor, TV 23-121
with ARINC 404A Adapter CO2
Sony
PVM-6020AL-1
</TABLE>
BOEING page II-23-2
APPENDIX II - BUYER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 23 - COMMUNICATIONS -- (Continued)
------------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
PASSENGER ENTERTAINMENT (VIDEO) (Continued)
-------------------------------
13 1 Cassette Player 23-121
with ARINC 404A Adapter CO2
Sony
SLP-313AL
14 2 Projector, Color Video 23-121
(including projector mounting hardware CO2
contained in installation drawing C- CO3
0516-007-1 sheets 1 & 2)
Sony
VPH-421W
15 1 Video Control Distribution Unit 23-121
with ARINC 404A Adapter CO2
Sony
SCU-120-AL
16 2 Screen, Rigid, Curved 23-121
52x27x4 inches CO2
Sony
VPS-421W
17 1 Tuner, TV 23-121
with ARINC 404A Adapter CO2
Sony
VTU-5100AL
18 1 AM Radio Receiver/Tuner B1233-020
Matsushita
RD-AR9001
19 1 AM Radio Coupler B1233-020
Matsushita
RD-AR9012
</TABLE>
BOEING page II-23-3
APPENDIX II - BUYER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 31 - INDICATING/RECORDING SYSTEM
----------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
1 1 Acquisition Unit, VB101- 31-120
Digital Flight Data (DFDAU) VB113 CO2
Teledyne CO5
2227000-1
2 1 Acquisition Unit, VB114 & on CO5
Digital Flight Data (DFDAU)
Teledyne
2227000-1
Program Revision A
Unit Status: No Revision
3 1 Panel, Flight Data Entry (FDEP) ALL 31-120
Teledyne CO2
2227814
4 1 Recorder, Digital Flight Data ALL 31-120
(DFDR) (With underwater locator DC2
beacon) CO2
Lockheed Air Service
10077A500-803
5 1 Recorder, Quick Access (QAR) ALL 31-120
(Size 1/2 ATR Short) CO2
Lockheed Air Service
10119A100-103
</TABLE>
BOEING page II-31-1
APPENDIX II - BUYER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION
-----------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
WEATHER RADAR (ARINC 708)
-------------------------
1 1 Transceiver VB101- 01-102
Bendix RTA-4A VB116 CO5
2041217-0403
2 1 Transceiver VB117- CO5
Bendix RTA-4A VB124 CO6
2041217-0407
3 1 Transceiver VB125 & on CO6
Bendix RTA-4A, 2041217-0413
4 1 Antenna, X-Band, 30-inch ALL 01-102
Flat Plate 34-101
Bendix REA-4B, 2041446-0402 DC3
5 1 Control Panel ALL
Bendix CON-4A, 2041213-0402
6 1 Mount, Transceiver ALL 01-102
Bendix MBA-4A, 2041213-0405
7 1 Antenna Drive Unit ALL DC3
Line-of-site Stabilization System
Single System
Bendix DAA-4A, 2041444-0405
ATC RADAR BEACON (ARINC 730) 34-178
----------------------------
8 2 Transponder VB101- CO2
Collins VB121 CO5
622-5446-101
9 2 Transponder VB122 & on CO5
Collins
622-5446-101
(622-5446-102 optional)
</TABLE>
BOEING page II-34-1
APPENDIX II - BUYER FURNISHED EQUIPMENT
---------------------------------------
CHAPTER 34 - NAVIGATION -- (Continued)
--------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
AUTOMATIC DIRECTION FINDER (ADF) 34-186
(ARINC 712)
--------------------------------
10 2 Receiver VB101- 02-102
Bendix DFA-75A, 2041168-7506 VB103 CO2, CO3
11 2 Receiver VB104 & on CO3
Bendix DFA-75A, 2041168-7512
12 2 Antenna VB101- 34-186
Bendix ANA-75 VB105 02-102,
2041683-7502 CO2
B41008-4,
CO4
13 2 Antenna VB106- B41008-4
Bendix ANA-75, 2041683-7503 VB110 CO4
14 2 Antenna VB111 & on CO4
Bendix ANA-75, 2041683-7504
INSTRUMENT LANDING SYSTEM (ILS) 02-102
(ARINC 700) 01-102
-------------------------------
15 3 Receiver, ILS ALL CO2
Bendix RIA-35A, 2041230-3514
VOR NAVIGATION/MARKER BEACON 02-102
(ARINC 711) 01-102
----------------------------
16 2 Receiver, VOR ALL CO2
Bendix RVA-36A, 2041231-3608
</TABLE>
BOEING page II-34-2
APPENDIX II - BUYER FURNISHED EQUIPMENT (BFE)
---------------------------------------------
CHAPTER 34 - NAVIGATION -- (Continued)
--------------------------------------
<TABLE>
<CAPTION>
AIRPLANE
ITEM QTY DESCRIPTION MODEL PART NUMBER USED ON REFERENCE
- ---- --- ----------------------------- ------- ---------
<S> <C> <C> <C> <C>
DISTANCE MEASURING EQUIPMENT
(ARINC 709)
-----------------------------
17 2 Interrogator Unit, DME ALL 02-102
Collins DME-700 01-102
622-4540-001
RADIO ALTIMETER (ARINC 707) 02-102
---------------------------
18 3 Transceiver, RA ALL CO2
Bendix ALA-52A
2041166-5206
</TABLE>
BOEING page II-34-3
EXHIBIT B
BILL OF SALE
[KC-ONE, INC.] ("Seller"), a Japanese corporation, in consideration of One
Dollar and other good and valuable considerations, receipt of which is hereby
acknowledged, does hereby grant, bargain, sell and assign to ABX AIR, INC.
("Purchaser"), a Delaware corporation, the following described property
(including all appliances, parts, instruments, appurtenances, accessories,
furnishings, or other equipment or property installed on or attached to said
aircraft and engines):
<TABLE>
<CAPTION>
Aircraft Aircraft
Manu- Aircraft Manu- Engine Engine
facturer's Registration facturer's Manufacturer's Manufacturer's
Model No. Model No. Serial No. Model No. Serial Nos.
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
(1)
(2)
</TABLE>
TO HAVE AND TO HOLD said property to the Purchaser its successors and
assigns, to its and their own use forever.
The interest of the Seller in said property, and the interest transferred
by this Bill of Sale, is that of absolute ownership.
THAT SELLER hereby warrants to Purchaser its successors and assigns, that
there is hereby conveyed to Purchaser on the date hereof, good title to the
aforesaid aircraft, engines, appliances, parts, instruments, appurtenances,
accessories, furnishings and/or other equipment or property, free and clear of
all Liens and that it will warrant and defend such title forever against all
claims and demands whatsoever.
This Bill of Sale shall be governed by the laws of the State of Washington.
This Bill of Sale is subject to the terms and conditions of that certain Used
Aircraft Sales Agreement dated as of ---------- (the "Sales Agreement") and in
the event of any conflict, the terms of the Sales Agreement shall prevail.
Capitalized terms not otherwise defined herein have the meanings given in the
Sales Agreement.
page 34
IN WITNESS WHEREOF, Seller has caused its corporate name to be subscribed
hereto by its duly authorized representative this --- day of ---------, ----.
KC-ONE, INC.
By
-----------------------------
Its
------------------------
page 35
EXHIBIT C
USED AIRCRAFT AND AIRCRAFT DOCUMENTATION
ACCEPTANCE CERTIFICATE
ABX AIR, INC. ("Purchaser") hereby confirms to [KC-ONE, INC.] ("KC1") in
accordance with the terms and conditions of that certain Used Aircraft Sales
Agreement dated as of December ---, 1995 (as amended, the "Sales Agreement), by
and between, [KC1, KC-TWO, INC. and KC-THREE, INC. (collectively, "Seller"),
that one (1) Boeing Model 767-281 Used Aircraft;
Registration Markings:
Manufacturer's Serial Number:
with two (2) installed General Electric Model CF6-80A engines, Manufacturer's
Serial Numbers:
Position (1)
Position (2)
together with the Aircraft Documentation applicable to the Aircraft as described
on Attachment 1 hereto and made a part hereof and with the operating times and
cycles as accumulated on the Aircraft up to the time of delivery as described on
Attachment 2 hereto and made a part hereof is accepted by Purchaser under the
Sales Agreement. Further, except as noted on Attachment 3 hereto, the Aircraft
and Aircraft Documentation is in Delivery Condition.
ABX AIR, INC.
By
---------------------------
Its
----------------------
Attachments 1 and 2
page 36
Attachment 1 to
Exhibit C to
AIRCRAFT DOCUMENTATION
<TABLE>
<CAPTION>
Identification
Title/Description Number Quantity
----------------- ----------------- -----------------
<S> <C> <C>
</TABLE>
page 37
Attachment 2 to
Exhibit C to
AIRCRAFT HOURS AND CYCLES
as of -------------,
--BOEING MODEL 767-281
Registration Markings ----------Serial Number ----------
A. Airframe:
<TABLE>
<CAPTION>
<S> <C>
Aircraft Total Time (Hours
------------
Aircraft Total Landings (Cycles)
------------
Aircraft (& Engine) "A" Check - Time to next check
------------
Aircraft (& Engine) "C") Check - Time to next check
------------
Aircraft Special Check(s) - Time to next check
------------
</TABLE>
B. General Electric Engine - Model CF6-80A:
<TABLE>
<CAPTION>
Cycles to next
Cycles Since Replacement of
Serial Total Engine Total Last Shop Lowest Life
Position Number Cycles Time Visit Limited Part
- -------- ------ ------ ------ ------------ --------------
<S> <C> <C> <C> <C> <C>
1
2
</TABLE>
C. Garrett APU - Model GTCP331-20A:
<TABLE>
<CAPTION>
Cycles to Next
Serial Total Total Hours Since ANA's Replacement of Lowest
Number Hours Cycles Last Overhaul Life Limited Part
- ------- ------- ------- ------------ -----------------
<S> <C> <C> <C> <C>
</TABLE>
page 38
D. Landing Gear:
<TABLE>
<CAPTION>
Hours/Cycles Hours/Cycles
Serial Total Since to Calendar
Number Hours/Cycles Overhaul Date Overhaul
------- ------- ------- -------------
<S> <C> <C> <C> <C>
Nose Landing Gear
Right Main Gear
Left Main Gear
</TABLE>
E. Maintenance Schedule As of [ * ]:
<TABLE>
<CAPTION>
<S> <C>
Accomplish "A" Check [ * ]
Accomplish "C" Check:
System Maintenance
Requirements (SYMR): [ * ]
Structure Maintenance
Requirements (STMR): [ * ]
Accomplish Heavy Maintenance [ * ]
Accomplish Engine Repair [ * ]
Accomplish HSI [ * ]
Accomplish CSI [ * ]
Accomplish APU Overhaul [ * ]
Accomplish Landing Gear Overhaul [ * ]
</TABLE>
* Sampling Structural Inspection program and Corrosion Prevention and Control
Program in accordance with ANA's Maintenance Program
* Blank space contained confidential information which has been filed separately
with the Securities and Exchange Commission pursuant to Rule 24b2 under the
Securities Exchange Act of 1934.
page 39
Attachment 3 to
Exhibit C to
DISCREPANCIES LIST
page 40
EXHIBIT D
IRREVOCABLE STANDBY LETTER OF CREDIT
[ISSUER]
-------------------
--------------------
Date:
------------
Irrevocable Standby Letter of Credit No. ------------
[KC-ONE, INC.]
c/o ITOCHU AirLease Corporation
NXB Aoyama Building, 5F
26-37, Minami-Aoyma 2-chome
Minato-ku, Tokyo 107
Japan
Ladies and Gentlemen:
We hereby establish in your favor our Irrevocable Standby Letter of Credit
number --------------- for the account of:
Airborne Freight Corporation; and
ABX Air, Inc.
145 Hunter Drive
Wilmington, Ohio 45177
U.S.A.
Funds under this Standby Letter of Credit are available to you against your
sight draft(s) in the form of Exhibit A, attached hereto, drawn on us up to the
aggregate amount of --------- (US$---------), stating on their face the number
and date of this Standby Letter of Credit. Drafts must be accompanied by a
signed certificate in the form of Exhibit B, attached hereto, dated the date of
your draft.
Presentation of such draft(s) and certificate(s) shall be made at ---------
- ------- (address and facsimile number) by means of telefacsimile and we shall be
entitled to rely thereon as if such draft(s) and certificate(s) had been
presented in person. In addition, any draft or certificate may be presented as
described above by mail, express mail or in person, effective upon our receipt
thereof.
page 41
We hereby agree that each draft drawn under and in conformity with the
terms of this Standby Letter of Credit will be duly honored by us upon due
delivery of the certificates, if presented as described above on or before the
expiration date.
Each draft presented hereunder in conformity with the terms hereof shall be
duly honored by us by payment to you of the amount of such draft in immediately
available funds:
(a) not later than 3:00 p.m., [issuing bank city] time, on the day
such draft is presented to us as aforesaid, if such presentation is
made to us at or before 9:00 a.m., [issuing bank city] time, or
(b) not later than 3:00 p.m., [issuing bank city] time, on the
business day following the day such draft is presented to us as
aforesaid, if such presentation is made to us after 9:00 a.m.,
[issuing bank city] time.
Partial drawings under this Standby Letter of Credit are permitted.
This Standby Letter of Credit shall expire on (date).
This Letter of Credit is subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce,
Publication No. 500 (the "Uniform Customs"). This Letter of Credit shall be
deemed to be made under the laws of the State of --------------, including
Article 5 of the Uniform Commercial Code, and shall, as to matters not governed
by the Uniform Customs, be governed by and construed in accordance with the law
of the State of -------------.
Notwithstanding Article 48 of the Uniform Customs, this Letter of Credit
may be transferred.
Except as expressly stated herein, this undertaking is not subject to any
agreement, requirement or qualification. The obligation of ----------Bank under
this Credit is the individual obligation of ------------- Bank and is in no way
contingent upon reimbursement with respect thereto, or upon our ability to
perfect any lien, security interest or any other reimbursement.
This Letter of Credit sets forth in full the terms of our undertaking and
shall not in any way be modified, amended or amplified by reference to any
documents, instruments or agreements referred to herein, or in which this Letter
of Credit is referred to or to which this Letter of Credit relates and any
page 42
such reference shall not be deemed to incorporate herein by reference any
documents, instruments and agreements.
Very truly yours,
By
------------------------
Name:
Title:
page 43
EXHIBIT A
SIGHT DRAFT
Date of Draft:
Drawn Under: Irrevocable Standby Letter of Credit No. [----]
To the Order of: [Seller]
Pay --------------------------- United States Dollars AT SIGHT by wire transfer
of immediately available funds in such amount to the account of Seller as
follows:
[Describe account details]
[Seller]
By:
---------------------------
Its:
---------------------------
Attachment: Certificate for Drawing
page 44
EXHIBIT B
CERTIFICATE FOR DRAWING
The undersigned, hereby certifies to ------------- (the "Bank"), with
reference to the Irrevocable Standby Letter of Credit No. ------- (the "Letter
of Credit") issued by the Bank in favor of [KC-ONE, INC.] ("Seller"), that:
(i) Seller is presenting a signed sight draft herewith to draw funds under
the Letter of Credit in the amount of US$----------.
(ii) Demand for payment under the Letter of Credit is being made prior to
the expiration thereof.
(iii) Seller is entitled to draw on the Letter of Credit, in the amount
stated in paragraph (i) above, under that certain Used Aircraft Sales
Agreement, dated as of [-----------], 1995 (as amended, the "Agreement").
IN WITNESS WHEREOF, Seller has executed and delivered this Certificate as
of the ----- day of ----------, ----.
[KC-ONE, INC.]
By:
------------------------
Title:
------------------------
page 45
EXHIBIT E
DOCUMENT ESCROW LETTER
----------------, 1995
Messrs. Crowe & Dunlevy
1800 Mid-America Tower
20 North Broadway
Oklahoma City, Oklahoma 73102-8273
ATTENTION: Robin D. Jenson
Re: Boeing 767-281 Aircraft, MSN --------------
Dear Ms. Jenson:
The undersigned [KC-ONE, Inc.], a Japanese corporation ("Seller"), and ABX
Air, Inc.. a Delaware corporation ("Purchaser"), have agreed to deliver to you
the following executed original documents with respect to the above referenced
aircraft (the "Aircraft"), to be held in escrow and distributed in accordance
with these instructions:
A. Documents Deposited by Seller:
1. Original executed Bill of Sale with respect to the Aircraft;
2. Original executed FAA Bill of Sale on Form 8052-2; and
3. ---- original Standby Letters of Credit as described below:
<TABLE>
<CAPTION>
<S> <C>
Issuer Face Amount
a.
b.
c.
</TABLE>
B. Documents Deposited by Purchaser:
1. Original executed Used Aircraft and Aircraft Documentation Delivery
Receipt; and
2. Insurance Certificate with respect to the Aircraft naming Seller and
its affiliates as an additional insured.
page 46
Collectively, the documents delivered to you by the Seller are the "Seller
Documents", and the documents delivered to you by the Purchaser are the
"Purchaser Documents".
When you have received both all of the Purchaser Documents and the Seller
Documents, please confirm these facts to Purchaser and Seller via facsimile.
Upon receipt by you of confirmation that the Federal Aviation
Administration ("FAA") has received notification from the Japanese Civil
Aviation Board ("JCAB") that the Aircraft has been de-registered from Japanese
Registration ("De-Registration Notice"), you are instructed and authorized to
notify -------- to release the $---------- of funds (the "Escrow Funds") to
Seller's account (the "Release Notice"). This notice shall be via facsimile or
telephone conference call.
Upon receipt by you of confirmation from ---------- (the "Funds Bank") that
the Funds Bank has received the Escrow Funds for the benefit of Seller, you are
instructed and authorized to (a) file the Form 8052-2 with the FAA, (b)
distribute the remaining Seller Documents to Purchaser, and (c) distribute the
Purchaser Documents to Seller.
If the conditions to delivery by you of the Release Notice contained
in the prior paragraphs have not been met or waived in writing within seven
calendar days of the date of this letter, you are irrevocably authorized and
instructed to return the Seller Documents to Seller and the Purchaser Documents
to Purchaser. Without limitation, you understand that Purchaser shall have no
right to restrain or delay return of the Seller Documents to Seller under such
circumstances.
We hereby confirm to you that you are entitled to act in accordance
with this letter upon receipt of a copy of the releases by facsimile unless
instructed otherwise, and hereby further confirm that you are entitled to act
upon joint written instructions signed or orally communicated by Seller and
Purchaser that may vary from the terms of this letter.
The Purchaser hereby confirms to you that it will be responsible for
and hereby agrees to pay for fees and expenses incurred in connection with
acting as document escrow agent, and in connection with the preparation and
delivery of an opinion to Purchaser with respect to title.
The notices that we have requested that you deliver pursuant to this
agreement, and any delivery of the Seller or Purchaser Documents in accordance
with this letter, should be delivered to the following:
page 47
<TABLE>
<CAPTION>
<S> <C> <C>
If to Seller: [KC-ONE, INC.]
c/o ITOCHU AirLease Corporation
NXB Aoyama Building, 5F
26-37, Minami-Aoyma 2-chome
Minato-ku, Tokyo 107
Japan
Attention: Manager
Facsimile: 011-813-3497-8145
Telex: 2423154 TKAFC J
With a copy to: Davis Wright Tremaine
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Telefax No.: (206) 628-7040
Attention: Joseph D. Weinstein
If to Purchaser: ABX AIR, INC.
145 Hunter Drive
Wilmington, OH 45177
U.S.A.
Attention: President
Facsimile: 513-382-2453
Telex: 214317AIRBN-EXP-WIMI
With a copy to: AIRBORNE FREIGHT CORPORATION
Corporate Secretary/Counsel
3101 Western Avenue
Seattle, WA 98121
U.S.A.
Telefax No.: (206) 281-1444
</TABLE>
Thank you for your assistance.
<TABLE>
<CAPTION>
<S> <C>
SELLER: [KC-ONE, INC.]
By
-----------------------------
Its
-----------------------------
PURCHASER: ABX AIR, INC.
By
-----------------------------
Its
-----------------------------
</TABLE>
page 48
EXHIBIT F
FUNDS ESCROW AGREEMENT
WITH RESPECT TO AIRCRAFT --------
THIS FUNDS ESCROW AGREEMENT (the "Funds Escrow Agreement") is made and
entered as of this ---- day of ----------, ----, by and among [KC-ONE, INC.], a
Japanese corporation ("Seller"); ABX AIR, INC., a Delaware corporation
("Purchaser"); and -------------------------- ("Escrow Agent").
RECITALS
A. Purchaser and Seller, [KC-TWO, INC., and KC-THREE, INC.] are parties to
that certain Used Aircraft Sales Agreement dated as of December ---, 1995 (as
amended, the "Sales Agreement").
B. This Funds Escrow Agreement is established in connection with the
delivery of Aircraft -------- (the "Aircraft").
C. Under the Sales Agreement, Purchaser and Seller are required to place
certain funds in escrow with Escrow Agent in connection with delivery of the
Aircraft, and to provide for their disbursement upon satisfaction or waiver of
the conditions contained in the Sales Agreement. In connection therewith,
Purchaser, Seller and [Crowe & Dunlevy] (the "Document Escrow Agent") have
established with respect to delivery of the Aircraft a document escrow pursuant
to a Document Escrow Letter of even date herewith (the "Document Escrow
Agreement").
NOW, THEREFORE, in consideration of the promises and mutual
representations, warranties, covenants and agreements contained in this Funds
Escrow Agreement, the parties agree as follows:
AGREEMENT
1. Definitions. Capitalized terms not otherwise defined herein shall have
the meaning given in the Sales Agreement.
2. Establishment of Escrow. In accordance with the provisions of Section
3.4 of the Sales Agreement, Purchaser shall, at least one Business Day prior to
the delivery date for the Aircraft established under the Sales Agreement, place
on deposit with Escrow Agent an amount, immediately available dollars, equal to
the sum of (a) $--------------, plus (b) the
page 49
fees of the Escrow Agent established in Section 9 hereof (such sum, the "Escrow
Funds"). Escrow Agent hereby agrees that the Escrow Funds shall be held,
invested and disbursed for the benefit of the parties and their respective
successors and assigns as provided in this Funds Escrow Agreement.
3. Sales Agreement Controls. This Agreement shall not modify, amend or
otherwise alter the duties, obligations, liabilities, rights or benefits of
Seller or Purchaser under the Sales Agreement.
4. Investment of Escrow Funds. The Escrow Funds may be invested by Escrow
Agent in certificates of deposit issued by banks or trust companies, short term
United States debt instruments or short term debt instruments guaranteed by the
United States or agencies of the United States, or money market funds consisting
of debt instruments of the United States or agencies of the United States, in
accordance with instructions, from time to time given in writing to Escrow Agent
by Purchaser. Escrow Agent shall not incur any liability in acting in accordance
with this Funds Escrow Agreement, and in good faith in making investments herein
authorized. All income earned and received from the investments shall be
applied first to the fees payable to Escrow Agent, and any remainder shall be
paid to the Purchaser.
5. Disbursement of Escrow Funds.
5.1 Disbursement to Seller. Immediately upon satisfaction of the
conditions contained in Section 6.1 and 6.2 hereof (the "Disbursement
Conditions"), Escrow Agent shall pay to Seller, its successors or assigns, the
entire balance of the Escrow Funds less the fees of Escrow Agent and any
interest or profit earned in respect thereof, which shall be paid to the
following account of Seller (the "Seller Account"):
[Details for Seller's account.]
5.2 Return of Funds to Purchaser. In the event that the Disbursement
Conditions have not been met on or before seven (7) calendar days after date
hereof, the Escrow Funds and any interest or profit earned in respect thereof
(less the fees of Escrow Agent) shall be returned to Purchaser. When all moneys
held by Escrow Agent have been finally distributed in accordance herewith, this
Funds Escrow Agreement shall terminate.
6. Conditions to Disbursement of Escrow Funds.
6.1 Deposits by Purchaser. Purchaser shall have deposited with
Escrow Agent the full amount of Escrow Funds.
page 50
Escrow Agent shall, immediately upon receipt of the Escrow Funds, notify
Purchaser and Seller.
6.2 Authorization of Release. Escrow Agent shall have received
notification from the Document Escrow Agent that all conditions to release of
the Escrow Funds have been met or waived (the "Release Notice"). The Release
Notice may be delivered via facsimile or telephone conference call.
7. Liability of Escrow Agent.
7.1 Conflicting Demands. Escrow Agent shall be obligated to perform
only such duties as are expressly set forth herein and need not take notice of
any provisions of the Sale Agreement. In case of conflicting demands upon
Escrow Agent, it shall be entitled, at its option:
(a) to refuse to comply therewith as long as such disagreement
continues and to make no delivery or other disposition of any
funds or property then held (and Escrow Agent shall not be or
become liable in any way for such failure or refusal to comply
with such conflicting or adverse claims or demands); and
(b) to continue to refrain and to so refuse to act until all
differences shall have been adjusted by agreement and Escrow
Agent shall have been notified thereof in writing signed jointly
by Seller and Purchaser or
(c) to interplead the portion of Escrow Funds in dispute.
7.2 No Obligation to Take Legal Action. Escrow Agent shall not be
under any obligation to take any legal action in connection with this Funds
Escrow Agreement or for its enforcement, or to appear, prosecute or defend any
action or legal proceeding which, in its opinion, would or might involve it in
any costs, expense, loss or liability unless and as often required by it, it
shall be furnished with security and indemnity satisfactory against all such
costs, expenses, losses or liabilities.
7.3 Status of Escrow Agent. Escrow Agent is to be considered and
regarded as a depository only and shall not be responsible or liable (except for
its failure to exercise due care) for the sufficiency or correctness as to form,
manner of execution, or validity of any instrument deposited in this escrow,
nor as to the identity, authority or rights of any person executing the same.
Its duties hereunder shall be limited to the safekeeping, investing and/or
delivery of such money and
page 51
instruments received by it as Escrow Agent and for the disbursement of same in
accordance with the written Escrow Instructions given it in accordance with this
Funds Escrow Agreement.
7.4 Written Instructions of the Parties. Notwithstanding anything
herein contained to the contrary, Escrow Agent shall, at all times, have full
right and authority to pay over and disburse the Escrow Funds in accordance with
the joint written [or oral] instructions of Seller and Purchaser.
8. Indemnity. The Seller and Purchaser agree to and hereby do waive any
suit, claim, demand or cause of action of any kind which they or it may have or
may assert against the Escrow Agent arising out of or relating to the execution
or performance by the Escrow Agent of this Funds Escrow Agreement, unless such
suit, claim, demand or cause of action is based upon a breach of this Funds
Escrow Agreement by the Escrow Agent or the willful misconduct or gross
negligence or bad faith of the Escrow Agent. They further agree to indemnify
the Escrow Agent against and from any and all claims, demands, costs,
liabilities and expenses, including reasonable counsel fees, which may be
asserted against it or to which it may be exposed or which it may incur by
reason of its execution or performance of this Funds Escrow Agreement other than
(a) usual and customary overhead expenses and (b) claims, demands, costs,
liabilities and expenses arising out of a breach of this Agreement by the Escrow
Agent or the willful misconduct or gross negligence or bad faith of the Escrow
Agent. Such agreement to indemnify shall survive the termination of this Funds
Escrow Agreement until extinguished by any applicable statute of limitations.
9. Escrow Agent's Fee. Escrow Agent shall be entitled to receive a fee of
$---------- for services to be rendered hereunder.
10. Miscellaneous Provisions.
10.1 Parties in Interest. This Agreement is not intended, nor shall
it be construed, to confer any enforceable rights on any person not a party
hereto. All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
10.2 Attorneys' Fees. In the event of any action to enforce any
provision of this Agreement, or on account of any default under or breach of
this Agreement, the prevailing party in such action shall be entitled to
recover, in addition to all other relief, from the other party all attorneys'
fees incurred
page 52
by the prevailing party in connection with such action (including, but not
limited to, any appeal thereof).
10.3 Entire Agreement. This Agreement constitutes the final and
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior arrangements or understandings.
10.4 Notices. All notices, requests, consents and other
communications provided for herein to any party shall be deemed to be sufficient
if contained in a written instrument either: (a) delivered in person or by
facsimile or telex; or (b) sent by first-class registered or certified mail,
postage prepaid, addressed to the party at the address set forth below, or such
other address as may be hereafter be designated in writing by the party.
<TABLE>
<CAPTIONS>
<S> <C> <C>
If to Seller: [KC-ONE, INC.]
c/o ITOCHU AirLease Corporation
NXB Aoyama Building, 5F
26-37, Minami-Aoyma 2-chome
Minato-ku, Tokyo 107
Japan
Attention: Manager
Facsimile: 813-3497-8145
Telex: 2423154 TKAFC J
With a copy to: Davis Wright Tremaine
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Telefax No.: (206) 628-7040
Attention: Joseph D. Weinstein
If to Purchaser: ABX AIR, INC.
145 Hunter Drive
Wilmington, OH 45177
U.S.A.
Attention: President
Facsimile: 513-382-2452
Telex: 214317AIRBN-EXP-WIMI
With a copy to: AIRBORNE FREIGHT CORPORATION
Corporate Secretary/Counsel
3101 Western Avenue
Seattle, WA 98121
U.S.A.
Telefax No.: (206) 281-1444
</TABLE>
page 53
If to Agent: --------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Notice shall be deemed given, made or received when received. Any party
may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section for the giving of notice.
10.5 Changes. The terms of this Agreement may not be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
except pursuant to the written consent of all the parties.
10.6 Severability. If any term or provision of this Funds Escrow
Agreement or the application thereof as to any person or circumstance shall to
any extent be invalid or unenforceable, the remaining terms and provisions of
this Funds Escrow Agreement or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable shall not be affected thereby thereto and each term and provision
of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
10.7 Facsimile. This Agreement and the Releases may be executed by
facsimile signature, with the original to be mailed by U.S. mail thereafter.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument. All such counterparts together shall constitute but one Agreement.
10.9 Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington without regard
to the principles of conflicts of laws.
10.11 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, affiliates,
successors and assigns. Except as set forth above, nothing in this Agreement,
express or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
page 54
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth above.
<TABLE>
<CAPTION>
<S> <C>
SELLER: [KC-ONE, INC.]
By
----------------------------
Its
----------------------------
PURCHASER: ABX AIR, INC.
By
----------------------------
Its
----------------------------
AGENT:
----------------------------
By
----------------------------
Its
----------------------------
</TABLE>
page 55
EXHIBIT G
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") is made as of this ---- day of
December, 1995 by AIRBORNE FREIGHT CORPORATION, a Delaware corporation
("Guarantor") in favor of each of KC-ONE, INC., KC-TWO, INC. and KC-THREE, INC.
(referred to as to each and collectively, the "Seller") in order to induce the
Seller to enter into that certain Used Aircraft Sales Agreement of even date
herewith (as amended, the "Sales Agreement") with ABX AIR, INC. ("Purchaser").
Capitalized terms not otherwise defined herein have the meanings used in the
Sales Agreement.
1. Guaranteed Obligations. The Guarantor absolutely and unconditionally
guarantees each and every obligation of Purchaser to Seller (or any one of them)
now or hereafter arising under or related to the Sales Agreement (or any other
document now or hereafter entered into in connection therewith), whether
presently existing or hereafter arising (collectively, the "Obligations"),
including, without limitation, obligations with respect to Deposits, payments,
indemnities, damages and costs of collection. Guarantor guaranties the
Obligations without set-off, counterclaim, recoupment or deduction of any
amounts owing or alleged to be owing by Seller (or any one of them) to
Purchaser.
2. Guarantor's Consent. The Guarantor hereby consents to all terms and
condition of the Sales Agreement and further consents that the Seller (or any
one of them) may without further consent or disclosure and without affecting or
releasing the obligations of Guarantor hereunder: (a) amend or modify the Sales
Agreement or any other document now or hereafter entered into in connection
therewith; (b) waive or delay the exercise of any rights or remedies of the
Seller against the Purchaser; (c) waive or delay the exercise of any rights or
remedies of the Seller against any surety or guarantor (including, without
limitation, rights or remedies of the Seller against Guarantor under this
Guaranty); (d) waive or delay the exercise of any rights or remedies of the
Seller in respect of any collateral (including any Deposit) now or hereafter
held; (e) release any surety or guarantor; or (f) renew, extend, waive or modify
the terms of any Obligation or the obligations of any surety or guarantor, or
any instrument or agreement evidencing the same.
3. Guarantor's Representations. Guarantor represents and warrants to
Seller that it has reviewed such documents and other information as it has
deemed appropriate in order to permit it to be fully apprised of Purchaser's
financial condition and operations and has, in entering into this Guaranty made
its own
page 56
credit analysis independently and without reliance upon any information
communicated to it by Seller. Guarantor expressly waives any requirement that
Seller advise, disclose, discuss or deliver notice to Guarantor regarding
Purchaser's financial condition or operations. Seller shall provide
concurrently to Guarantor copies of any notices of default delivered to
Purchaser provided that the failure to deliver such notice to Guarantor shall
not release Guarantor of its obligations hereunder.
4. Guarantor's Waiver. The Guarantor agrees that it shall not be
necessary for Seller to institute suit or exhaust its legal remedies against
Purchaser in order to enforce this Guaranty.
5 Unconditional Guaranty. The obligations of the Guarantor under this
Guaranty are absolute and unconditional without regard to the obligations of any
other party or person. The obligations of the Guarantor hereunder shall not be
in any way limited or effected by any circumstance whatsoever. Guarantor hereby
waives all defenses of a surety to which it may be entitled by statute or
otherwise. The obligations of Guarantor hereunder are independent of the
Obligations of Purchaser, and a separate action or actions may be brought and
prosecuted against Guarantor whether or not any action is brought against
Purchaser or whether or not Purchaser is joined in any such action or actions.
6. Continuing Guaranty. This Guaranty is a continuing one and shall be
binding upon the Guarantor regardless of how long before or after the date
hereof any Obligation was or is incurred. This Guaranty shall be valid and
enforceable and shall not be impaired or affected by the occurrence of any of
the following, all whether or not Guarantor shall have had notice or knowledge
of any of them: (a) any failure to enforce or agreement not to enforce any
right, power or remedy with respect to any Obligation; (b) the stay or enjoining
by order of court, operation of law or otherwise of the exercise of any such
right, power or remedy; (c) any waiver of any right, power or remedy or of any
default with respect to an Obligation; or (d) an Obligation at any time being
found to be illegal, invalid or unenforceable in any respect.
7. Waiver of Subrogation. Guarantor hereby irrevocably waives all claim
it has or may acquire against Purchaser in respect of the Obligations, including
rights of exoneration, reimbursement, contribution and subrogation. Guarantor
agrees to indemnify Seller, and hold it harmless from and against all loss and
expense, including legal fees, suffered or incurred by Seller as a result of
claims to avoid any payment received by Seller from Purchaser, or for its
account or from collateral, with respect to the Obligations of Purchaser
guaranteed herein.
page 57
8. Fees and Expenses. In the event of any action to enforce any of the
terms or conditions of this Guaranty, the prevailing party in such action and
any appeal resulting therefrom shall be entitled to recover from the other party
reasonable attorney fees fixed as part of the cost by the court in which such
action shall be pending.
9. Payment in U.S. Funds; Taxes. All payments to be made by Guarantor
hereunder shall be paid in United States Dollars free and clear of all
Indemnified Taxes. In the event that Guarantor fails to pay any Indemnified Tax
and such Indemnified Tax is levied upon, assessed against, collected from, or
otherwise imposed on the Seller, Guarantor shall immediately upon demand
indemnify, protect, defend and hold the Seller harmless from and against all
such Indemnified Taxes, together with any interest, penalties or other additions
to such tax, and other costs (including, without limitation, attorneys' fees and
other professional fees) incurred by Seller in connection with such Indemnified
Tax or its enforcement of this Section 9.
10. Seller's Remedies. No delay in making demand on the Guarantor for
satisfaction of the obligations of the Guarantor hereunder shall prejudice
Seller's right to enforce such satisfaction. All of Seller's rights and
remedies shall be cumulative, and any failure of Seller to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any time.
11. Notices. All notices, requests, demands and other communication
required or permitted to be given by any party hereunder ("Notices") shall be in
writing and shall be sufficiently given if delivered personally or by a
reputable over-night delivery service or by telex or telecopier or similar
facsimile transmission or if sent by registered or certified mail, postage
prepaid, to the following address:
<TABLE>
<CAPTION>
<S> <C> <C>
Seller: KC-ONE, INC.
KC-TWO, INC.
KC-THREE, INC.
c/o ITOCHU AirLease Corporation
NXB Aoyama Building, 5F
26-37, Minami-Aoyma 2-chome
Minato-ku, Tokyo 107
Japan
Attention: Manager
Facsimile: 813-3497-8145
Telex: 2423154 TKAFC J
page 58
With a copy to: Davis Wright Tremaine
2600 Century Square
1501 Fourth Avenue
Seattle, WA 98101
Telefax No.: (206) 628-7040
Attention: Joseph D. Weinstein
Guarantor: Airborne Freight Corporation
Corporate Secretary/Counsel
3101 Western Avenue
Seattle, WA 98121
U.S.A.
Telefax No.: (206) 281-1444
</TABLE>
Notice shall be deemed given, made or received when received. Any party
may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this
Section for the giving of notice.
12. Governing Law. This Guaranty shall be governed by and construed in
accordance with the internal laws of the State of Washington.
13. Consent to Jurisdiction, Waiver of Immunities. The Guarantor hereby
irrevocably submits to the jurisdiction of any State or federal court sitting in
Seattle, King County, Washington, in any action or proceeding brought to enforce
or otherwise arising out of or relating to this Guaranty and irrevocably waives
to the fullest extent permitted by law any objection which it may now or
hereafter have to the laying of venue in any such action or proceeding in any
such forum, and hereby further irrevocably waives any claim that any such forum
is an inconvenient forum. The Guarantor agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by law.
Nothing herein shall impair the right of the Seller to bring any action or
proceeding against the Guarantor or its property in the courts of any other
jurisdiction and Guarantor irrevocably submits to the non-exclusive jurisdiction
of the appropriate courts sitting in any place where property of the Guarantor
is located.
14. Assignment; Amendment. This Guaranty shall inure to the benefit of
Seller and its successors and assigns. This Guaranty shall be binding upon the
Guarantor and its permitted successors and assigns. Guarantor may not assign or
otherwise transfer all or any part of its rights or obligations hereunder
without the prior written consent of Seller. The provisions of this Guaranty
may be amended or modified only by the written agreement of Seller and the
Guarantor.
page 59
15. Severability. Any provision of the Guaranty which is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
IN WITNESS WHEREOF the Guarantor has caused its duly authorized offers to
execute and deliver this Guaranty as of the date first above written.
<TABLE>
<CAPTION>
<S> <C>
GUARANTOR: AIRBORNE FREIGHT CORPORATION
By
----------------------------
Its
----------------------------
</TABLE>
page 60
EXHIBIT H
[ITOCHU CORPORATION]
December 22, 1995
ABX Air, Inc.
145 Hunter Drive
Wilmington, Ohio 45177
U.S.A.
Re: Used Aircraft Sales Agreement dated December ----, 1995, (the "Sales
Agreement") by and between ABX AIR, INC. ("Purchaser") and KC-ONE, INC., KC-TWO,
INC. and KC-THREE, INC. (collectively, "Seller").
Dear Sirs:
This letter of guaranty (the "Guaranty") is issued by Itochu Corporation, a
Japanese corporation ("Guarantor"), pursuant to Section 3.6 of the above
referenced Sales Agreement. Capitalized terms not otherwise defined herein have
the meanings given in the Sales Agreement.
The Guarantor hereby unconditionally and irrevocably guaranties for the
benefit of Purchaser the obligations of Seller under the Sales Agreement.
Neither the transfer of any Aircraft from and among Seller, or any other
affiliate of the Guarantor, nor the liquidation of Seller, shall relieve or
discharge Guarantor of its obligations to Purchaser hereunder. Under no
circumstances shall Guarantor be liable for consequential or punitive damages.
The Guarantor consents to all terms and conditions of the Sales Agreement
and further consents that the Purchaser may, without further agreement or
disclosure and without affecting or releasing the obligations of Guarantor
hereunder, amend or modify the Sales Agreement or any other document now or
hereafter entered into in connection therewith. Guarantor represents and
warrants to Purchaser that Seller are subsidiaries of Guarantor and Guarantor
will receive benefit from Purchaser's entry into and performance of the Sales
Agreement. Guarantor waives all surety defenses. Nor does Purchaser need to
fully exhaust its remedies against Seller in order to enforce this guaranty.
page 61
The provisions of this Guaranty constitute the entire agreement between
Purchaser and Guarantor. No provisions of this Guaranty may be waived except in
writing. The benefits of this Guaranty may not be assigned or transferred
except as permitted under Section 10.8 of the Sales Agreement.
This Guaranty is governed by the laws of the State of Washington. Any
dispute concerning this Guaranty shall be subject to the non-exclusive
jurisdiction of the federal and state courts located in Seattle, Washington, and
Guarantor hereby consents to the selection of such forum and waives all
objections in connection therewith.
Sincerely,
ITOCHU CORPORATION
By
----------------------------
Its
----------------------------
page 62
EXHIBIT I
AIRCRAFT DOCUMENTATION
A. AIRCRAFT RECORDS
1. All historical records for aircraft and engines.
2. APU historical records and schedule of overhaul (if applicable).
3. Maintenance and inspection program planning manual including work task
cards. MR - Maintenance requirement manuals.
4. Airframe and engines current inspection status and operating times
including structural sampling inspection records of inspections performed
on other of Lessee's aircraft where credit for such inspections were
applied against the Aircraft.
5. Current status of APU inspection and operating times.
6. List of all installed components (LRU's) showing part number, serial
number, manufacturer and accumulated operating time (hours, cycles,
calendar time).
7. List and status of life limited parts - aircraft and engines.
8. Airworthiness Directive compliance list for aircraft, engines, and
equipment. List to include date, method, and degree of compliance. Copy of
Engineering Order or Technical order accomplishing A.D. to be made part of
record. If the original work document (E.A., Work Card, etc.) which was
signed by the person accomplishing the A.D. is unavailable, then a blank
copy of the document (in English) will be provided indicating the date and
aircraft time of accomplishment and signature of authorized Q.C. person
certifying work was accomplished per that document.
9. List of manufacturer's service bulletins incorporated and method of
incorporation (i.e. repetitive inspections, interim fix or termination
action).
10. List of modification and/or alternations (excluding manufacturer's
service bulletins if accomplished pursuant to the manufacturer's
instructions) accomplished on the aircraft, engines, and equipment together
with one copy of each modification, alternation, engineering order and
associated drawings and/or data with all major changes to be provided in
English. ANA will assist in interpretation from Japanese to English.
page 63
11. List of FAA Supplemental Type Certificates (STC's) and/or foreign
aviation authority approved modifications incorporated, together with a
copy of each certificate and/or associated data except STC's are to be
provided in English.
12. FAA approved Airplane Flight Manual.
13. Flight (operations) manual currently used by present operator.
14. Weight and balance document, including last weighing report.
15. Weight and balance supplement - equipment list.
16. Wiring diagram manual, including wiring diagram equipment lists.
17. Electrical load analysis report.
18. Manufacturer's maintenance manuals - aircraft and engines.
19. Manufacturer's operations manuals - aircraft and engines.
20. Manufacturer's overhaul manuals - airframe and engines.
21. Manufacturer's structural repair manual.
22. Manufacturer's illustrated parts catalog - airframe and engines.
23. Manufacturer's tool catalog (if applicable).
24. Miscellaneous documents or manuals pertaining to aircraft storage,
engine handling, aircraft recovery and ground crew training (if
applicable).
25. Cross reference parts catalog (Listing of aircraft manufacturer's part
numbers corresponding to parts manufacturer's and current operator's part
numbers for the same parts).
page 64
26. Flight test reports - list flight accomplished prior to delivery.
27. Last accomplished flight recorder calibration (if the aircraft is to
be delivered before any calibration is required to be accomplished, ANA is
to provide the record of the initial certification of the flight recorder).
28. List of non-United States manufactured parts, components and/or
equipment installed on the Aircraft after the date such Aircraft was
delivered new by the Aircraft Manufacturer to the initial owner which
parts, components or equipment have not been approved or certified by the
FAA.
29. Inventory list of aircraft loose equipment.
30. Letter detailing any major incident and/or accidents involving each
aircraft (if none, the letter should so state).
31. All records initiated by ANA required to comply with the ANA's
aviation regulatory authorities and/or initiated by ANA for ANA's own
benefit.
32. List of current equipment in passenger and flight crew compartments
and/or current interior arrangement diagram.
* Copy to be provided in English for each Aircraft when available.
33. Deferred and carryover maintenance logs (engineering deviation list).
34. Serviceable tags/shop work cards for those items requiring overhaul
per operators maintenance program.
35. Summary of all major inspections accomplished to aircraft.
36. Aircraft master log (time and cycle status).
37. Serviceable tags or shop work cards for installed time controlled and
time tracked components including engines.
38. Aircraft log books.
page 65
39. Aircraft and engine historical records, logs, shop records, etc.,
including work packages for inspections, repairs, routine and non-routine
work scopes up to two (2) years before delivery of each Aircraft.
Inspection cards and landing gear overhaul shop cards up to two (2) years
before delivery of each Aircraft.
B. ENGINE RECORDS
1. Engine log books.
2. Status engine life limited parts with time data (certified by Q.C.).
Need records traceable back to TSN - 0 - Need time (hours and cycles) trail
providing a record of continuous time in service (History Proof List).
3. Engine historical records - last work package and shop visit records.
For ST&D, need combustion can classification and shop repair records.
4. Engine test cell records.
5. Engine condition monitoring data.
6. FAA Form 337 or shop release statement for last EHM and shop visit.
Spare engines also.
7. List of accomplished service Bulletins (by engine serial number).
8. Statement regarding the use of O.E.M. parts and approved repairs.
9. Airworthiness directive compliance list and supporting data.
10. Engineering Orders and Engineering Alterations.
page 66
