EXHIBIT 10.2
AIRCRAFT ACQUISITION AND SALE AGREEMENT
dated as of November 13, 2001
among
THE AMOR TRUST,
WILMINGTON TRUST COMPANY,
as Owner Trustee
▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as Indenture Trustee
and
SOUTHWEST AIRLINES CO.
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Nineteen Boeing Model 737-7H4 Aircraft
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*** PURSUANT TO 17 CFR 240.24B--2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO A CONFIDENTIAL TREATMENT APPLICATION FILED WITH THE COMMISSION.
TABLE OF CONTENTS
(continued)
PAGE
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Section 1. Definitions................................................................................1
Section 2. Acquisition of the Aircraft by the Trust...................................................4
Section 3. Sale of the Aircraft to Southwest..........................................................7
Section 4. Southwest's Representations...............................................................12
Section 5. Southwest's Covenants.....................................................................16
Section 6. Repairs and Modification..................................................................18
Section 7. Miscellaneous.............................................................................18
Schedule I - Aircraft Economics
Schedule II - Aircraft
Exhibit 1 - Form of Manufacturer's Warranty ▇▇▇▇ of Sale
Exhibit 2 - Form of Acceptance Certificate
Exhibit 3 - Form of Trust's Warranty ▇▇▇▇ of Sale
Exhibit 4 - Form of Delivery Receipt
Exhibit 5 - Form of Storage Agreement
Exhibit 6 - Form of BFE ▇▇▇▇ of Sale
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AIRCRAFT ACQUISITION AND SALE AGREEMENT dated as of November 13, 2001
among THE AMOR TRUST, acting through the Owner Trustee (the "TRUST"), WILMINGTON
TRUST COMPANY, not in its individual capacity except as expressly provided
herein but solely as Owner Trustee of the Trust (the "OWNER TRUSTEE"), ▇▇▇▇▇
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its individual capacity but
solely as Indenture Trustee (the "INDENTURE TRUSTEE"), and
SOUTHWEST AIRLINES
CO. ("SOUTHWEST").
WHEREAS the Trust has been organized by the Owner Participant for the
purpose of causing the Trust to purchase and acquire title to the Aircraft from
the Manufacturer, financing the Acquisition Cost and Transaction Costs through
issuance of the Certificates, arranging for storage of the Airframes and the
Engines until the Deferred Delivery Dates and then selling the Aircraft to
Southwest; and
WHEREAS Southwest consents to the sale of the Aircraft to the Trust
pursuant to the Purchase Agreement Assignment and this Agreement and agrees to
purchase each Aircraft from the Trust on the relevant Deferred Delivery Date for
the relevant Deferred Purchase Price.
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
SECTION 1. Definitions. All terms not otherwise defined in this
Agreement shall have the meanings given such terms by the Certificate Purchase
Agreement and the Indenture. The following terms shall have the meanings set
forth below:
"ACCELERATED DEFERRED DELIVERY EVENT" shall have the meaning set forth
in Section 3(b) hereof.
"ACCEPTANCE CERTIFICATE" shall mean, with respect to each Aircraft, an
aircraft receipt in the form set out in Exhibit 2 to this Agreement executed by,
or on behalf of, the Trust.
"ACQUISITION COST" for any Aircraft shall mean the Purchase Price
Balance for such Aircraft.
"AIRCRAFT" shall mean each complete aircraft, including related
Engines, listed on Schedule I hereto and referred to in the Purchase Agreement
Assignment and the Purchase Agreement as the Boeing Model 737-7H4 aircraft
required to be manufactured by the Manufacturer and delivered to the Trust or
Southwest, as the case may be, together with any alterations, modifications or
additions permitted by Section 6 hereof.
"AIRFRAME" shall mean with respect to any Aircraft the airframe and
other equipment and parts required by the Purchase Agreement to be included
therein, exclusive of Engines, together with any alterations, modifications or
additions permitted by Section 6 hereof.
"AIRLINE PROGRESS PAYMENTS" shall have the meaning specified in Section
3(a)(i)(A).
"BFE" shall mean, with respect to each Aircraft, the buyer furnished
equipment installed on such Aircraft and listed on Schedule I to the relevant
BFE ▇▇▇▇ of Sale.
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"BDSC" shall mean Boeing Domestic Sales Corporation, a Washington
Corporation.
"BDSC AIRCRAFT" shall mean the Aircraft bearing manufacturer's serial
number 29818.
"BFE ▇▇▇▇ OF SALE" shall mean, with respect to each Aircraft, a
warranty ▇▇▇▇ of sale in the form set forth in Exhibit 6 to this Agreement
executed by Southwest in favor of the Trust and covering the BFE relating to
such Aircraft.
"DEFERRED DELIVERY DATE" with respect to an Aircraft shall mean the
Payment Date falling in the calendar month set opposite such Aircraft in Column
(C) of Schedule I hereto; provided that if any such day is not a Business Day,
such day shall be the next succeeding Business Day in the same calendar month
and, if there is no such day, shall be the next preceding Business Day. The
Deferred Delivery Date for any Aircraft may be accelerated as provided in
Section 3(b) hereof.
"DEFERRED DELIVERY LOCATION" shall mean the Storage Contractor's
facility in Mojave,
California.
"DEFERRED PURCHASE PRICE" with respect to each Aircraft shall mean the
amount specified in Column (H) of Schedule I hereto with respect to such
Aircraft, which amount shall be (i) reduced, Dollar-for-Dollar, by the amount
that the Purchase Price Balance paid by the Trust for such Aircraft is less than
the Maximum Purchase Price Balance for such Aircraft and (ii) adjusted, if
necessary, pursuant to Section 3(c) hereof.
"DELIVERY DATE" with respect to an Aircraft shall have the meaning
specified in the Purchase Agreement Assignment.
"DELIVERY RECEIPT" shall mean, with respect to each Aircraft, a
delivery receipt in the form set forth in Exhibit 4 to this Agreement executed
by Buyer and Seller and covering such Aircraft.
"ENGINE" shall mean each of the two engines (as such term is defined in
the Purchase Agreement) which the Manufacturer is required under the Purchase
Agreement Assignment and the Purchase Agreement to deliver with respect to each
Aircraft.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
as amended from time to time.
"EXCESS PURCHASE PRICE" with respect to any Aircraft shall mean the
amount by which the Purchase Price Balance for such Aircraft exceeds the Maximum
Purchase Price Balance for such Aircraft.
"INDENTURE" shall mean the Trust Indenture and Security Agreement dated
as of the date hereof among the Trust, Wilmington Trust Company (in its
individual capacity and as Owner Trustee) and the Indenture Trustee, as the same
may be supplemented, modified or amended from time to time.
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"LUV TRUST" shall mean the special purpose trust formed pursuant to the
Trust Agreement dated as of August 29, 1995 between Spectrum Capital, Ltd. and
Mitsubishi Trust & Banking Corporation (U.S.A.), as Trustee.
"MANUFACTURER" shall mean The Boeing Company, a Delaware corporation.
"MANUFACTURER'S BILLS OF SALE" shall mean, with respect to each
Aircraft or Airframe, the Manufacturer's FAA ▇▇▇▇ of Sale and the Manufacturer's
Warranty ▇▇▇▇ of Sale with respect thereto.
"MANUFACTURER'S FAA ▇▇▇▇ OF SALE" shall mean, with respect to each
Aircraft or Airframe, an AC Form 8050-2 ▇▇▇▇ of sale executed by the
Manufacturer or, in respect of the BDSC Aircraft, BDSC in favor of the Trust and
covering such Aircraft or Airframe.
"MANUFACTURER'S WARRANTY ▇▇▇▇ OF SALE" shall mean, with respect to each
Aircraft, a full warranty ▇▇▇▇ of sale in the form set forth in Exhibit 1 to
this Agreement executed by the Manufacturer or, in respect of the BDSC Aircraft,
BDSC in favor of the Trust and covering such Aircraft.
"MAXIMUM PURCHASE PRICE BALANCE" with respect to any Aircraft shall
mean the amount specified for such Aircraft in Column (G) of Schedule I hereto.
"OTHER PROGRESS PAYMENTS" with respect to any Aircraft shall mean the
progress or advance payments made by Southwest under the Purchase Agreement and
which are in the amounts specified for such Aircraft in Column (D) of Schedule I
hereto.
"PLAN" means an employee benefit plan (within the meaning of Section
3(3) of ERISA and including any multiemployer plan within the meaning of Section
3(37)(A) of ERISA) which has been established or maintained or to which
contributions are or have been made, by Southwest or an affiliate in which
Southwest has a beneficial ownership of at least 50 percent.
"PROGRESS PAYMENTS" with respect to any Aircraft shall mean the
progress or advance payments made by the Luv Trust under the Purchase Agreement
and which are in the amounts specified for such Aircraft in Column (E) of
Schedule I hereto.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement No. 1810 dated
as of January 19, 1994 between Southwest and the Manufacturer together with all
letter agreements and supplements thereto as in effect on the date hereof, as
the same may be modified, amended or supplemented in accordance with the terms
thereof and, if in respect of the Aircraft, of the Purchase Agreement
Assignment.
"PURCHASE AGREEMENT ASSIGNMENT" shall mean the Purchase Agreement
Assignment dated as of the date hereof between Southwest and the Trust, as the
same may be modified, amended or supplemented from time to time.
"PURCHASE AGREEMENT COSTS" shall mean all amounts, costs, indemnities
and obligations under the Purchase Agreement which have been assigned to and
assumed by the Trust pursuant
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to the Purchase Agreement Assignment, including any Excess Purchase Price but
excluding any Deferred Purchase Price.
"PURCHASE PRICE BALANCE" shall have the meaning specified in the
Purchase Agreement Assignment.
"REIMBURSABLE COSTS" shall mean all costs, expenses, obligations and
liabilities incurred by the Trust or the Trust Estate pursuant to Section 6.05
of the Trust Agreement, Section 8 of the Certificate Purchase Agreement and
Section 8.01 of the Indenture or incurred by the Owner Participant pursuant to
Sections 5.03, 6.07, 7.01 and 7.02 of the Trust Agreement.
"REQUIRED INSURANCE" shall mean insurance with respect to each Aircraft
meeting the requirements of Section 4.10 of the Indenture.
"STORAGE AGREEMENT" shall mean the aircraft storage and maintenance
agreement dated as of the date hereof among the Trust, the Storage Contractor
and Southwest substantially in the form of Exhibit 5 hereto.
"STORAGE CONTRACTOR" shall mean Avtel Services, Inc.
"SUPPLEMENTAL PROGRESS PAYMENTS" shall mean the payments required to be
made by Southwest under Section 3(a)(i)(C) hereof.
"TRANSFER TAXES" shall have the meaning specified in Section 3(a)(iii).
"TRUST'S BILLS OF SALE" shall mean, with respect to each Aircraft, the
Trust's FAA ▇▇▇▇ of Sale and the Trust's Special Warranty ▇▇▇▇ of Sale with
respect thereto.
"TRUST'S FAA ▇▇▇▇ OF SALE" shall mean, with respect to each Aircraft,
an AC Form 8050-2 ▇▇▇▇ of sale executed by the Trust in favor of Southwest and
covering such Aircraft.
"TRUST'S SPECIAL WARRANTY ▇▇▇▇ OF SALE" shall mean, with respect to
each Aircraft, a ▇▇▇▇ of sale in the form set forth in Exhibit 2 to this
Agreement executed by the Trust in favor of Southwest and covering such
Aircraft.
SECTION 2. Acquisition of the Aircraft by the Trust.
(a) (i) (i) Assignment and Sale. Subject to the satisfaction
of the conditions specified in Sections 4 and 5 of the Certificate
Purchase Agreement, on the Closing Date, Southwest will assign and sell
to the Trust its rights under the Purchase Agreement with respect to
the Aircraft pursuant to the Purchase Agreement Assignment.
(ii) Progress Payments. Subject to the satisfaction
of the conditions specified in Sections 4 and 5 of the Certificate
Purchase Agreement, as part of the assignment and sale contemplated by
the preceding clause (i), the Manufacturer will certify the amounts of
the Progress Payments and Other Progress Payments paid in respect of
the Aircraft under the Purchase Agreement, the Trust will repay to the
Luv Trust on the Closing Date the Progress Payments, Southwest will
assign to the Trust its
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rights in the Other Progress Payments and the Trust will thereupon have
to its credit under the Purchase Agreement progress payments in like
amounts in respect of the Aircraft. The payment to the Luv Trust shall
be made in immediately available funds to the account of Mitsubishi
Trust & Banking Corporation (U.S.A.) at Bankers Trust, New York, ABA
number ▇▇▇▇▇▇▇▇▇, Account number ▇▇-▇▇▇-▇▇▇, Reference: Luv Trust.
(iii) Aircraft and BFE. Subject to satisfaction or
waiver of the relevant conditions precedent set forth in Section 2(d)
hereof, the Trust will pay to the Manufacturer or, in respect of the
BDSC Aircraft, BDSC on the Delivery Date for each Aircraft the
Acquisition Cost (which shall include any Excess Purchase Price) for
such Aircraft by wire transfer of immediately available funds to the
account of the Manufacturer at The Chase Manhattan Bank, New York, New
York, ABA number ▇▇▇▇▇▇▇▇▇, Account number ▇▇▇-▇-▇▇▇▇▇▇, Reference:
Southwest Airlines. Upon receipt of such payment for any Aircraft, the
Manufacturer or, in respect of the BDSC Aircraft, BDSC will transfer
legal and equitable title to such Aircraft to the Trust on the Delivery
Date therefor (but in no event later than the Commitment Termination
Date) free and clear of all Liens, and Southwest will transfer legal
and equitable title to the BFE installed on such Aircraft to the Trust
on such Delivery Date free and clear of all Liens. Each sale of an
Aircraft shall be evidenced by (x) the Manufacturer's or, in respect of
the BDSC Aircraft, BDSC's delivery to the Trust of a Manufacturer's
Warranty ▇▇▇▇ of Sale with respect to such Aircraft and (y) Southwest's
delivery to the Trust of a BFE ▇▇▇▇ of Sale with respect to such
Aircraft.
(b) Acquisition Cost Final. Notwithstanding any provision to
the contrary contained in the Purchase Agreement or otherwise, the
Acquisition Cost for each Aircraft shall be final and binding on the
Manufacturer, BDSC and the Trust. It is intended that the purchase of
each Aircraft by the Trust shall satisfy all of Southwest's obligations
to pay the Manufacturer or, in respect of the BDSC Aircraft, BDSC for
such Aircraft under the Purchase Agreement and the Purchase Agreement
Assignment.
(c) Southwest as Trust's Agent. The Trust hereby appoints
Southwest to act as its agent (1) to accept physical delivery of each
Aircraft from the Manufacturer or, in respect of the BDSC Aircraft,
BDSC on the Delivery Date therefor and to act as the Trust's authorized
representative in connection therewith, (2) to administer and enforce
claims which may arise in respect of the exceptions report referred to
in Section 7(c) hereof and the warranty and support arrangements under
the Purchase Agreement as assigned pursuant to the Purchase Agreement
Assignment, (3) to administer and give and receive all notices under
the Storage Agreement, the Certificate Purchase Agreement and the
Indenture, (4) to perform the obligations set forth in the Storage
Agreement, (5) to perform all of the Trust's obligations under Article
IV of the Indenture and (6) to perform the obligations of the Trust
under paragraphs 1, 2, 3 and 7 of Section 2(d) hereof. Subject to the
Granting Clause of the Indenture, the Trust hereby delegates to
Southwest as its agent the power and the right on behalf of the Trust
to enforce the obligations of the other parties to the aforesaid
agreements, to pursue any claims which the Trust may have for any
payment, reimbursement or indemnity payable to the Trust by any of such
other parties and to exercise on behalf of the Trust, but subject and
subordinate the rights
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granted to the Indenture Trustee under the Indenture, the options or
rights granted to the Trust under the Storage Agreement, Sections 8,
10, 11 and 12 of the Certificate Purchase Agreement and the definition
of Permitted Investments in, and Sections 2.11, 2.12, 2.13, 3.07 and
4.03, of the Indenture. Southwest agrees to perform such services as
agent at its own cost and expense in view of its prospective purchase
of the Aircraft pursuant to this Agreement. The appointment of
Southwest hereunder shall be effective only so long as no Indenture
Event of Default shall have occurred and be continuing.
(d) Conditions Precedent. The obligations of the Trust to take
the actions required by Section 2(a)(iii) hereof on each Delivery Date
shall be subject to satisfaction or waiver by the Trust, the Indenture
Trustee and (so long as there is no Indenture Event of Default
continuing) Southwest of the following conditions precedent:
1. Notice. The Trust shall have delivered to all
other parties hereto written notice of such Delivery Date at least five
Business Days prior to such date.
2. Inspection. The Trust shall have been afforded the
opportunity to inspect the Aircraft to be delivered on such Delivery
Date for a minimum period of 48 hours.
3. Acceptance Certificate. After completion of the
aforesaid inspection, the Trust shall have executed an Acceptance
Certificate pursuant to the Purchase Agreement acknowledging that the
Aircraft subject to delivery on such Delivery Date meets the
specifications set forth in the Purchase Agreement, with any exceptions
noted, provided that the Trust shall not execute such Acceptance
Certificate with respect to any Aircraft unless the Loan Participants
have approved the list of exceptions, if any, noted on such Acceptance
Certificate.
4. Certificate Purchase Agreement Closing. The
conditions precedent set forth in Sections 4 and 5 of the Certificate
Purchase Agreement shall have been satisfied or waived to the extent
that such conditions are required to have been met on such Delivery
Date.
5. Closing Documents. Each party to this Agreement
shall have received, or waived the right to receive, execution copies
of all documents, certificates, instruments, and opinions required to
be delivered to the Loan Participants under the Certificate Purchase
Agreement, with the exception of the opinion of counsel to the Loan
Participants.
6. Excess Purchase Price. Any Excess Purchase Price
and Purchase Agreement Costs payable with respect to the Aircraft to be
delivered on such Delivery Date shall have been paid.
7. Resale Certificate. The Trust shall execute and
deliver to the Manufacturer a resale tax exemption certificate.
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SECTION 3. Sale of the Aircraft to Southwest.
(a) Airline Progress Payments; Agreements to Purchase and
Sell; Supplemental Progress Payments. (i) (A) Airline Progress
Payments. Southwest hereby irrevocably and unconditionally covenants
and agrees with the Trust that on each Payment Date it will pay to the
Trust progress payments in an amount equal to the sum of (x) all
accrued interest due and payable on the Certificates on such Payment
Date and (y) all accrued Commitment Fees due and payable on such
Payment Date (collectively, the "AIRLINE PROGRESS PAYMENTS").
(B) Deferred Purchase Prices. Southwest hereby
irrevocably and unconditionally covenants and agrees with the Trust
that it will on the Deferred Delivery Date for each Aircraft purchase
such Aircraft from the Trust on an "as-is, where-is" basis by paying to
the Trust an amount equal to the Deferred Purchase Price for such
Aircraft. Subject to the Trust acquiring each Aircraft pursuant to
Section 2 and Southwest paying the Deferred Purchase Price therefor
together with any Purchase Agreement Costs or Transfer Taxes then due
and payable, the Trust hereby covenants and agrees with Southwest that
it will on the Deferred Delivery Date for each Aircraft transfer,
convey and sell all of its right, title and interest in and to such
Aircraft to Southwest on an "as-is, where-is" basis without
representation or warranty. The Trust will deliver each Aircraft to
Southwest at the Deferred Delivery Location. In connection with the
sale of an Aircraft, the Trust shall execute and deliver to Southwest
at Southwest's expense the Trust ▇▇▇▇ of Sale for such Aircraft, and
Southwest shall execute and deliver to the Trust the Delivery Receipt
for such Aircraft together with a common carrier tax exemption
certificate for such Aircraft.
(C) Supplemental Progress Payments. Southwest hereby
irrevocably and unconditionally covenants and agrees with the Trust to
pay as and when due all Various Amounts, Purchase Agreement Costs,
Reimbursable Costs and Excess Purchase Price.
(ii) Manner of Making Payments; Payment to
Indenture Trustee. All payments pursuant to this Agreement shall be
made, and the obligation in respect thereof shall be discharged, if
received by the recipient thereof by 11:00 a.m. New York time on the
date payment is due in Dollars and in immediately available funds (and,
if received after such time on such date, such payment shall be deemed
to have been received on the next succeeding Business Day). If any
Deferred Delivery Date is not a Business Day, then payment shall be due
on the next succeeding Business Day. At least two Business Days prior
to each Deferred Delivery Date, the Indenture Trustee on behalf of the
Trust shall deliver to Southwest an invoice setting forth the amount of
the Deferred Purchase Price as of such Deferred Delivery Date in
reasonable detail, which invoice shall be conclusive absent manifest
error. All payments of Airline Progress Payments, Deferred Purchase
Price and Supplemental Progress Payments and all other amounts payable
hereunder shall be paid by Southwest to the Trust at the Owner
Trustee's office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, or as the Trust may otherwise direct from time to time
in writing; provided, that so long as the Indenture shall not have been
discharged pursuant to Section 11.01 thereof, the Trust hereby
irrevocably directs, and
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Southwest agrees, that all payments of Airline Progress Payments,
Deferred Purchase Price and Supplemental Progress Payments and all
other amounts payable hereunder shall be paid directly to the Indenture
Trustee at its office at ▇▇▇▇▇ Fargo Bank Northwest, National
Association, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ABA
number ▇▇▇▇▇▇▇▇▇, Account number 0510922115, Reference: Southwest
Airlines Amor Trust, Attention: Corporate Trust Services, or as the
Indenture Trustee may otherwise direct, at such time so as to be
received by the Indenture Trustee prior to 11:00 a.m. New York time on
the date of payment (and, if received after such time on such date,
such payment shall be deemed to have been received on the next
succeeding Business Day). Notwithstanding the foregoing, all Excess
Purchase Price and Purchase Agreement Costs shall be paid by Southwest
to the Manufacturer or its order. Any amounts payable by Southwest
under this Section 3(a) not paid when due shall bear interest at the
Past Due Rate, payable upon demand.
(iii) Transfer Taxes. Southwest shall be
responsible for and shall indemnify the Trust for, from and against all
Taxes of any nature levied, assessed, charged or collected in
connection with the sale and purchase of the Aircraft hereunder and
under the Purchase Agreement and under the Trust's Bills of Sale and
the Manufacturer's Bills of Sale (such Taxes are collectively referred
to herein as "TRANSFER TAXES").
(b) Deferred Delivery Dates. The date for the purchase and
sale of each Aircraft under Section 3(a) hereof shall be the earliest
of the following:
1. The Deferred Delivery Date for such Aircraft;
2. The date on which (A) the Allocated Balance of the
Certificates in respect of any Aircraft becomes due and payable as a
result of the occurrence of an Event of Loss in respect of such
Aircraft or (B) the Certificates become due and payable by acceleration
or otherwise under the Indenture as the result of an Indenture Event of
Default; provided that Southwest shall have received at least five
Business Days' prior written notice of such due date in the case of an
Indenture Event of Default not caused by a breach by Southwest of its
express obligations under the Operative Agreements or any other event
involving Southwest which is an Indenture Event of Default; and
3. Subject to Section 2.11(b) of the Indenture, the
date specified by Southwest in a written notice delivered to the
Indenture Trustee and the Trust at least five Business Days prior to
such date on which Southwest wishes to purchase such Aircraft pursuant
to this Agreement in advance of such Aircraft's scheduled Deferred
Delivery Date (any such acceleration of the Deferred Delivery Date of
an Aircraft shall be referred to as an "ACCELERATED DEFERRED DELIVERY
EVENT"); provided that no Accelerated Deferred Delivery Event in
respect of an Aircraft may occur prior to the Delivery Date for such
Aircraft.
In the case of Section 3(b)(2)(b) above, if the Delivery Date for any Aircraft
shall not have occurred on or prior to the occurrence of such Indenture Event of
Default, notwithstanding the provisions of such Section, the Trust shall have no
further obligation to purchase such Aircraft
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from the Manufacturer under the Purchase Agreement, and Southwest shall have no
further obligation to purchase such Aircraft from the Trust hereunder.
(c) Certain Amounts to be Credited. The Deferred Purchase
Price payable by Southwest for each Aircraft shall be reduced to the
extent of any of the following:
1. In the case of any Aircraft that is subject to an
Event of Loss, the amount of insurance or condemnation proceeds
(excluding liability insurance in respect of any Indemnitee) received
and retained by the Indenture Trustee (as loss payee or as assignee of
the Trust) or, after the Indenture shall have been discharged, the
Trust; and
2. In the case of the last Aircraft to be purchased
by Southwest, an amount equal to the amounts on deposit in the
Collateral Account on the last Deferred Delivery Date.
(d) Assignment of Warranties and Other Rights. Effective upon
the sale of each Aircraft by the Trust to Southwest, the Trust hereby
assigns, sells, transfers and conveys unto Southwest all claims or
rights with respect to insurance (other than with respect to liability
coverage for the Indemnitees), requisition or condemnation proceeds or
indemnities or claims of any kind against any person relating to such
Aircraft and all covenants, warranties, service plans, support
arrangements and other obligations of the Manufacturer and the Engine
Manufacturer with respect to such Aircraft under this Agreement and the
Purchase Agreement to the extent the same have been assigned to the
Trust under the Purchase Agreement Assignment. In consideration for
such assignment, Southwest hereby accepts its obligations and agrees to
be bound by the limitations set forth in such covenants, warranties,
service plans, support arrangements and other obligations of the
Manufacturer and the Engine Manufacturer. Notwithstanding the
foregoing, no such assignment shall relieve or diminish the obligation
of the Manufacturer or the Engine Manufacturer with respect to any
indemnity or other obligations to the Indemnitees. The Trust further
agrees that upon the purchase of each Aircraft by Southwest and the
discharge of the Lien of the Indenture with respect to such Aircraft,
Southwest shall succeed to all of the Trust's rights with respect to
such Aircraft as against all of the parties to this Agreement and the
Certificate Holders under all of the Operative Agreements, and the
Trust agrees, at Southwest's expense, to execute and deliver any and
all such further instruments and documents and take such further action
as Southwest may reasonably request in writing in order to obtain the
full benefit of this reassignment.
(e) Obligations Unconditional. The obligations of Southwest
under Section 3(a) shall be absolute and unconditional and shall not be
affected by any fact, circumstance, condition or event whatsoever
including, without limitation, any of the following:
1. The condition or location of any Aircraft,
Airframe or Engine, any defect in the title thereto or in the
registration, airworthiness, design, operation or fitness for use of
any Aircraft or any Engine or any Part or the existence of any Lien
thereon or any damage to, or loss, theft, taking, requisition,
condemnation, confiscation, or
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destruction of any Equipment or any inability to deliver possession of
any Equipment for any reason whatsoever.
2. Any failure by the Manufacturer, BDSC, the Engine
Manufacturer, the Trust, the Trust Company, the Owner Participant, the
Indenture Trustee or the Storage Contractor to perform any of their
obligations under this Agreement, the Purchase Agreement, the Purchase
Agreement Assignment, the Storage Agreement, any other Operative
Agreement or any other contract.
3. The occurrence of any Event of Loss or Indenture
Default.
4. Any insolvency, bankruptcy, reorganization,
moratorium or similar case or proceeding by or against any party to the
Operative Agreements.
5. Any set-off, counterclaim, recoupment, defense or
other right which any party to the Operative Agreements may have
against any other party to the Operative Agreements for any reason
whatsoever whether arising as the result of the transactions
contemplated thereby or otherwise.
6. Any misrepresentation by any of the parties to the
Operative Agreements, including without limitation the representations
of the Trust Company or the Owner Trustee in Section 3(f) hereof.
7. Any invalidity or unenforceability or
disaffirmance of this Agreement or any other Operative Agreement, or
any provision hereof or thereof, in each case whether against or by
Southwest or otherwise.
8. The inability, for any reason whatsoever, of the
Trust to deliver the Trust's Bills of Sale referred to in Section 3(a)
hereof.
The obligations of the Trust to sell any Aircraft on the
applicable Deferred Delivery Date shall be conditioned only on the receipt by
the Trust of the Deferred Purchase Price and all other amounts due in respect of
such Aircraft.
If for any reason whatsoever this Agreement shall be
terminated in whole or in part by operation of law or otherwise except as
specifically provided herein, Southwest nonetheless agrees to pay an amount
equal to each Airline Progress Payment and Deferred Purchase Price payment at
the time such payment would have become due and payable in accordance with the
terms hereof had this Agreement not been terminated in whole or in part. All
amounts of Airline Progress Payment and Deferred Purchase Price payable by
Southwest shall be paid without notice or demand (except as otherwise expressly
provided) and without abatement, suspension, deferment, deduction, diminution or
proration by reason of any circumstance or occurrence whatsoever. Southwest
hereby waives, to the extent permitted by applicable law, any and all rights
which it may now have or which at any time hereafter may be conferred upon it,
by statute or otherwise, to terminate, cancel, quit or surrender this Agreement
or any part hereof, or to any abatement, suppression, deferment, diminution,
reduction or proration of Airline Progress Payment and Deferred Purchase Price
except in accordance with the express terms hereof. Each payment of Airline
Progress Payment and Deferred Purchase
10
[Aircraft Acquisition and Sale Agreement]
Price made by Southwest shall be final as to Southwest and the Trust. Southwest
will not seek to recover all or any part of any such payment of Airline Progress
Payment and Deferred Purchase Price for any reason whatsoever. In addition,
except as provided in Section 2(a)(ii) hereof, under no circumstance shall the
Trust (or any assignee thereof) be liable to Southwest for any Progress
Payments, Other Progress Payments or any other advance payments made under the
Purchase Agreement. Southwest covenants that it will remain obligated under this
Agreement in accordance with its terms and will take no action to terminate,
rescind or avoid this Agreement solely as a result of the bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding-up or other similar proceeding affecting the Trust or the Owner
Participant or any other action with respect to this Agreement which may be
taken in any such proceeding by any trustee or receiver of the Trust or the
Owner Participant or by any court.
(f) Absence of Warranties. NONE OF THE TRUST, THE OWNER
TRUSTEE (IN ITS INDIVIDUAL OR ITS TRUST CAPACITY), THE INDENTURE
TRUSTEE, THE OWNER PARTICIPANT OR ANY LOAN PARTICIPANT MAKES, HAS MADE
OR SHALL BE DEEMED TO MAKE OR HAVE MADE, AND EACH HAS AND WILL BE
DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, CONDITION,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY
PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO
THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS
TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF,
except that the Owner Trustee (in its individual and its trust
capacity) (A) represents and warrants that on each Delivery Date, the
Trust shall have received whatever title to any Aircraft as is conveyed
to it by the Manufacturer, or, in respect of the BDSC Aircraft, BDSC,
(B) represents and warrants that on each Deferred Delivery Date, the
Aircraft conveyed to Southwest by the Trust shall be free of Liens
attributable to the Trust Company in its individual capacity, (C)
covenants that the Trust Company shall not directly or indirectly
create, incur, assume or suffer to exist any Lien attributable to it in
its individual capacity on or with respect to any Aircraft, any
Airframe or any Engine or any portion of the Trust Estate and that the
Owner Trustee shall not in its trust capacity create any Lien on any
Aircraft, Airframe or Engine other than the Lien of the Indenture
without Southwest's consent and (D) represents and warrants that the
Trust Company is on the date hereof, and on the Delivery Date it will
be, a "citizen of the United States" as defined in Section 40102(a)(15)
of the Federal Aviation Act and the rules and regulations of the FAA
thereunder, and agrees that if at any time it shall obtain actual
knowledge that it has ceased to be a "citizen of the United States" as
defined in Section 40102(a)(15) of the Federal Aviation Act, it shall
promptly notify Southwest and the Indenture Trustee.
(g) No Effect on Other Warranties, etc. None of the provisions
of Section 3(e) or (f) or any other provision of the Operative
Agreements shall amend, modify, waive or otherwise affect the
representations, warranties or other obligations
11
[Aircraft Acquisition and Sale Agreement]
(express or implied) of the Manufacturer or the Engine Manufacturer or
any subcontractor or release the Manufacturer, the Engine Manufacturer
or any subcontractor from any such representation, warranty or
obligation.
(h) Certain Proceeds to Southwest. Upon the fulfillment by
Southwest of all of its obligations to purchase the Aircraft pursuant
to Section 3(a) above and the discharge of the Lien of the Indenture,
any funds remaining in the Collateral Account and any proceeds of, or
claims with respect to insurance, liquidated damages, requisition,
condemnation, indemnities, warranties or other amounts relating to the
Aircraft (including any obligations of the Manufacturer to bear any
costs included in the Deferred Purchase Price but excluding insurance
or indemnity claims in respect of liabilities of any Indemnitee) shall
belong to Southwest and shall, if held or received by either of them,
be immediately distributable to Southwest by the Trust and the
Indenture Trustee.
(i) Liquidated Damages. If Southwest shall, for any reason,
fail to pay in full the Deferred Purchase Price for any Aircraft on any
Deferred Delivery Date (or, if earlier, the date specified in Section
3(b) hereof), the Trust shall be entitled to sell or otherwise dispose
of such Aircraft or any part thereof (including any Engine), at public
or private sale and with or without notice to Southwest or
advertisement, as the Owner Trustee may determine, and Southwest shall
pay to the Trust, on the date of such sale, as liquidated damages for
loss of a bargain and not as a penalty, an amount equal to the sum of
(i) the excess, if any, of the Deferred Purchase Price for such
Aircraft, over the net proceeds of such sale, after deduction of all
expenses incurred in connection with such sale, plus (ii) interest, to
the extent permitted by applicable law, at the Past Due Rate on such
Deferred Purchase Price from such Deferred Delivery Date (or earlier
such date) to the date of actual payment plus (iii) all Supplemental
Progress Payments theretofore due and payable.
SECTION 4. Southwest's Representations. Southwest covenants, represents
and warrants to and with each Certificate Holder, the Owner Participant, the
Trust, the Owner Trustee in its individual capacity and as Owner Trustee, and
the Indenture Trustee, in its individual capacity and as Indenture Trustee, that
on each Delivery Date:
(i) Southwest is a corporation duly organized and
validly existing in good standing under the laws of the State of Texas,
is a "citizen of the United States" and an "air carrier" within the
meaning of the Act operating under a certificate issued pursuant to
Section 401 thereof and of the type referred to in 11 U.S.C. Section
1110, holds an air carrier operating certificate under the Act, has the
full power, authority and legal right to own its properties or hold
such properties under lease and to enter into and perform its
obligations under each Operative Agreement to which it is a party, in
accordance with the provisions thereof, and is duly qualified to do
business as a foreign corporation in good standing in all jurisdictions
in which the nature of the business conducted by it makes such
qualification necessary and where failure to so qualify would have a
material adverse effect on the financial condition of Southwest and its
subsidiaries taken as a whole;
12
[Aircraft Acquisition and Sale Agreement]
(ii) the execution, delivery and performance by
Southwest of each Operative Agreement to which it is a party, in
accordance with the provisions thereof, have been duly authorized by
all necessary corporate action on the part of Southwest, do not require
any stockholder approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of Southwest, and do not and
will not contravene any law, judgment, governmental rule, regulation or
order currently in effect or in effect at the time of execution and
delivery of such document and binding on Southwest or any of its
subsidiaries or the certificate of incorporation or by-laws of
Southwest or any of its subsidiaries or contravene the provisions of,
or constitute a default under, or result in the creation of any Lien
upon the property of Southwest under, any indenture, mortgage, bank
credit agreement, note or bond purchase agreement, long-term lease,
license or other agreement or instrument to which Southwest or any of
its subsidiaries is a party or by which it or any of its subsidiaries
may be bound or affected;
(iii) neither the execution and delivery by Southwest
of the Operative Agreements to which it is a party, nor the
consummation by Southwest of any of the transactions contemplated
thereby in accordance with the provisions thereof, requires the consent
or approval of, the giving of notice to, or, except as described in
clause (vi) of this Section 4, the registration with, or the taking of
any other action in respect of, the United States Department of
Transportation, the FAA, the Securities and Exchange Commission or any
other federal, state or foreign government authority or agency or the
taking of any other action under any applicable law;
(iv) the Operative Agreements to which Southwest is a
party each constitute legal, valid and binding obligations of Southwest
enforceable in accordance with the terms hereof and thereof, except as
such enforceability may be limited by general equitable principles and
by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally;
(v) the unaudited consolidated balance sheet of
Southwest and its consolidated subsidiaries as of June 30, 2001, the
audited consolidated balance sheet of Southwest and its consolidated
subsidiaries as of December 31, 2000 and the related consolidated
statements of operations, common stockholders' equity and cash flows
for the periods then ended (copies of which have been furnished to each
Loan Participant) have been prepared in accordance with generally
accepted accounting principles, fairly set forth in all material
respects the financial position of Southwest and its consolidated
subsidiaries as of said dates and the results of operations and cash
flows for such periods; since December 31, 2000, except for matters
disclosed in the financial statements referred to above or in its
reports on Forms 8-K and 10-Q delivered prior to the date of this
Agreement (copies of which have been furnished to each Loan
Participant), there has been no material adverse change in the
financial condition of Southwest or its ability to perform its
obligations under the Operative Agreements;
(vi) except for (A) the registration of the Aircraft
in the name of the Trust pursuant to the Act, (B) the filing for
recording pursuant to the Act of the Manufacturer's FAA Bills of Sale,
the Trust Agreement, the Indenture (with the Trust Agreement attached
as an exhibit) and each Indenture and Trust Agreement Supplement,
13
[Aircraft Acquisition and Sale Agreement]
(C) the filing of the financing statements referred to in the
Certificate Purchase Agreement under the applicable Uniform Commercial
Code and (D) the taking of possession by the Indenture Trustee of the
original counterpart of this Agreement, no further action, including
any filing or recording of any document, is necessary or advisable in
order to establish and perfect the Trust's title to and interest in any
Equipment, or to perfect the first mortgage Lien on any Equipment and
the Indenture Estate in favor of the Indenture Trustee and the
assignment of this Agreement to the Indenture Trustee pursuant to the
Indenture in any applicable jurisdiction in the United States;
(vii) neither Southwest nor any subsidiary of
Southwest is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act
of 1940, as amended;
(viii) there are no legal or governmental actions,
suits or proceedings or, to Southwest's knowledge, investigations
pending to which Southwest is a party or of which any of its property
is subject other than: (A) as set forth in the financial statements and
quarterly and annual reports referred to in clause (v) of this Section
4, or (B) legal or governmental actions, suits or proceedings which
would not, in Southwest's reasonable opinion, in the aggregate have a
material adverse effect on the financial condition of Southwest and its
subsidiaries taken as a whole or Southwest's ability to perform its
obligations under the Operative Agreements to which it is a party; and
no such actions, suits or proceedings are known by Southwest to be
threatened or contemplated by government authorities or threatened by
others;
(ix) none of the transactions contemplated by the
Operative Agreements (including, without limitation, the use of the
proceeds from the issuance of the Certificates) will violate or result
in a violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulations issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the
Federal Reserve System, and none of the proceeds from the sale of the
Certificates will be used, directly or indirectly, to purchase, or to
refinance any borrowing, the proceeds of which were used to purchase,
any "security" within the meaning of said Securities Exchange Act;
(x) Southwest is not in default in the performance of
any term or condition of the Purchase Agreement;
(xi) no governmental approval of any kind is required
of the Owner Participant, the Trust Company, the Loan Participants, the
Trust or the Indenture Trustee for their respective execution and
delivery of or performance under the Operative Agreements by reason of
any fact or circumstance of Southwest, the nature of the Aircraft or
Southwest's, the Trust's or the Manufacturer's proposed operations or
use of the Aircraft;
14
[Aircraft Acquisition and Sale Agreement]
(xii) on each Delivery Date and each Deferred
Delivery Date, all Transfer Taxes then due with respect to the relevant
Aircraft then being transferred have been paid;
(xiii) Southwest has filed all income tax returns
which are required to be filed, and has paid all taxes due and payable
and all tax assessments received by it, except for taxes: (A) being
contested in good faith by appropriate proceedings for which adequate
reserves have been recorded in Southwest's books in accordance with
generally accepted accounting principles as reasonably determined by
Southwest and its accountants in good faith; or (B) the nonpayment of
which would not have a material adverse effect on the financial
condition of Southwest and its subsidiaries taken as a whole;
(xiv) assuming the truth of the representations
contained in Section 6(e) of the Certificate Purchase Agreement,
Southwest has not engaged in any transaction in connection with which
Southwest could be subjected to either a material civil penalty
assessed pursuant to Section 502(i) of ERISA, or a material tax imposed
by Section 4975 of the Code; no material liability to the Pension
Benefit Guaranty Corporation has been incurred by Southwest with
respect to any Plan; there has been no event or condition which
presents a material risk of termination by the Pension Benefit Guaranty
Corporation of any Plan currently maintained or contributed to by
Southwest or any affiliate; Southwest and each affiliate has fulfilled
its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan; neither Southwest nor
any affiliate has sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan; no
material amount of "withdrawal liability" as that term is used in
Section 4201 of ERISA, has been or is expected to be incurred by
Southwest nor has Southwest or any affiliate of Southwest been notified
by any multiemployer Plan that such multiemployer Plan is in
reorganization or insolvency within the meaning of Section 4241 or
Section 4245 of ERISA or that such multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA;
(xv) there are no broker's or underwriter's fees
payable in connection with the transactions contemplated in the
Operative Agreements other than as specified in the Certificate
Purchase Agreement;
(xvi) Southwest and its authorized agents have not
offered Certificates or beneficial interests in the Trust Estate for
sale by means of any form of general solicitation or general
advertising, and have not offered to sell (A) the Certificates to any
persons other than the Loan Participants and not more than 50 other
institutional investors, each of whom was offered a portion thereof at
a private sale for investment or (B) beneficial interests in the Trust
Estate to any persons other than the Owner Participant; and in the case
of each offering by Southwest and its authorized agents, Certificates
and beneficial interests in the Trust Estate have been offered solely
as bank loans in the ordinary course of business or for investment and
not for resale or distribution and the offeree has been a person
considered to have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and
15
[Aircraft Acquisition and Sale Agreement]
to have such financial position as to be capable of bearing the risks
of an investment in the Certificates and beneficial interests in the
Trust Estate; Southwest agrees that it has not offered, and neither it
nor any authorized person acting on its behalf will hereafter offer,
any of the Certificates or the beneficial interests in the Trust Estate
for sale to, or solicit any offers to buy any of the Certificates or
the beneficial interests in the Trust Estate from, or otherwise
approach or negotiate in respect thereof with, any person or persons
whomsoever, so as thereby to result in the making and delivery of the
Certificates or the creation and distribution of the beneficial
interests in the Trust Estate being in violation of the provisions of
Section 5 of the Securities Act of 1933, as amended; as used in this
subparagraph, the term the "Certificates" means the Certificates
initially to be delivered to the Loan Participants or any similar
security or securities;
(xvii) Southwest has delivered to special New York
counsel to the Loan Participants a true, correct and complete copy of
the Purchase Agreement with respect to the Aircraft; and
(xviii) there stands to the credit for the Aircraft
Price (as defined in the Purchase Agreement) of each Aircraft under the
Purchase Agreement the Progress Payments and the Other Progress
Payments specified for such Aircraft in Schedule I hereto.
SECTION 5. Southwest's Covenants. Southwest covenants and agrees as
follows (which agreements shall be performed at Southwest's cost and expense):
(i) Southwest will cause to be done, executed,
acknowledged and delivered each and every further act, conveyance and
assurance as the Trust, the Indenture Trustee or any Certificate Holder
shall reasonably require for accomplishing the purposes of the
Operative Agreements. Southwest, forthwith upon delivery of each
Aircraft or Airframe to the Trust, shall cause such Aircraft or
Airframe to be duly registered, and at all times thereafter to remain
duly registered, under the Act in the name of the Trust, shall promptly
take such action with respect to the recording, filing, rerecording and
refiling of the Trust Agreement and the Indenture and the supplements
thereto as is necessary to maintain the interests and rights of the
Trust in and to the Aircraft and the perfection of the security
interests created by the Indenture and shall furnish to the Trust such
information (other than information which the Manufacturer has agreed
to provide and other than with respect to the citizenship of the Owner
Participant and the Trust) as may be required or desirable to enable
the Trust to make application for such registration under the Act, and
shall promptly furnish to the Trust such information (other than
information which the Manufacturer has agreed to provide and other than
with respect to the citizenship of the Trust) as may be required to
enable the Trust timely to file any reports required or desirable to be
filed by it with any governmental authority because of the Trust's
ownership of the Aircraft.
(ii) Southwest will cause each Manufacturer's FAA
▇▇▇▇ of Sale, each affidavit of citizenship, the Trust Agreement, the
Indenture and each Indenture and Trust Agreement Supplement to be
promptly filed and recorded or filed for recording, to the extent
required or permitted under the Act, or required under any other
16
[Aircraft Acquisition and Sale Agreement]
applicable law. The following documents shall be filed for recording
with the FAA on the Delivery Date in the following order of priority:
first, on the Closing Date, the Trust Agreement, second, the
Manufacturer's FAA ▇▇▇▇ of Sale for the Airframe delivered on such
Delivery Date and third, the Indenture (filed on the Closing Date) and
the Indenture and Trust Agreement Supplement with respect to such
Airframe, to be effected by so filing the Indenture with the Trust
Agreement and the Indenture and Trust Agreement Supplement attached as
exhibits thereto. Southwest upon request shall provide photocopies of
file stamped copies of documents filed and recorded with the FAA.
(iii) Southwest shall at all times maintain its
corporate existence. Southwest will do or cause to be done all things
necessary to preserve and keep in full force and effect its rights
(charter and statutory) and franchises; provided, however, that
Southwest shall not be required to preserve any right or franchise if
Southwest shall reasonably determine that the loss thereof will not
materially adversely affect Southwest's business or financial condition
or Southwest's ability to perform its obligations under the Operative
Agreements.
(iv) Southwest also agrees to furnish following the
date of this Agreement to the Trust, the Owner Participant, each
Certificate Holder and the Indenture Trustee (A) within two months
after the end of the first, second and third quarterly accounting
periods in each fiscal year of Southwest, a consolidated balance sheet
of Southwest and its consolidated subsidiaries prepared by it as of the
close of the accounting period then ended, together with the related
consolidated statements of operations, common stockholders' equity and
cash flows for the quarter then ended and reinvested earnings for such
accounting period certified by the Treasurer, the chief accounting
officer or a financial vice president of Southwest, (B) within three
months after the close of each fiscal year of Southwest, a consolidated
balance sheet of Southwest as of the close of such fiscal year and the
related consolidated statements of operations, common stockholders'
equity and cash flows and reinvested earnings for the fiscal year then
ended as prepared and certified by nationally recognized certified
public accountants, including their opinion, (C) promptly upon
transmission thereof, copies of all regular and periodic reports
furnished by Southwest to its stockholders, (D) promptly after filing
with the Securities and Exchange Commission, copies of Southwest's
annual reports on Form 10-K (including all corresponding annual reports
to shareholders), quarterly reports on Form 10-Q and current reports on
Form 8-K, including any amendments of such reports, (v) immediate
telephonic advice after Southwest obtains knowledge that there has
occurred an Event of Loss or that there exists an Indenture Event of
Default, confirmed promptly by an officer's certificate describing such
default in reasonable detail, and (vi) from time to time such other
information as the Trust, any Certificate Holder or the Indenture
Trustee may reasonably request. Southwest's obligations pursuant to
clauses (A) and (B) of the foregoing sentence may be satisfied by
furnishing to the Trust and the Indenture Trustee the reports on Forms
10-K and 10-Q in accordance with clause (D) of the foregoing sentence.
(v) Southwest will not directly or indirectly create,
incur, or suffer to exist any Lien on or with respect to any Aircraft,
any Airframe or any Engine or the Trust's title thereto or any other
part of the Trust Estate except Permitted
17
[Aircraft Acquisition and Sale Agreement]
Encumbrances. Southwest will promptly, at its own expense, take or
cause to be taken such action as may be necessary to discharge any Lien
which is prohibited by this paragraph (v).
(vi) Southwest will not carry or otherwise maintain
insurance in respect of any Aircraft other than in the manner set forth
in Section 4.10(d) of the Indenture.
(vii) Southwest agrees to duly and punctually
perform, or shall ensure that the Trust duly and punctually performs,
all of the Trust's obligations under Article IV of the Indenture.
SECTION 6. Repairs and Modification. From the Delivery Date through the
Deferred Delivery Date for each Aircraft, Southwest shall be allowed to make any
repairs to or modifications of the Aircraft required by the FAA or under the
warranties and support arrangements contained in the Purchase Agreement or, so
long as no Indenture Event of Default is continuing, as are desired by Southwest
as preservice modifications. Such repairs and modifications shall be effected in
a manner which conforms to the requirements of the Indenture. Repairs and
modifications required by the FAA or desired by Southwest shall be performed by
the Storage Contractor or Southwest and shall be at the sole cost and expense of
Southwest.
SECTION 7. Miscellaneous.
(a) Governing Law. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
(b) Counterparts; Amendments; Successors and Assigns. This
Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement may be terminated, amended, supplemented,
waived or modified only by an instrument in writing signed by all of
the parties hereto. So long as no Indenture Event of Default shall have
occurred and be continuing, the Trust shall not enter into any
amendment to any Operative Agreement without Southwest's prior written
consent (which consent shall not be unreasonably withheld or delayed).
The terms of this Agreement shall be binding upon and shall inure to
the benefit of each of the parties to this Agreement and their
successors and assigns.
(c) Assignment to Indenture Trustee. The parties to this
Agreement acknowledge that all of the Trust's rights and interests
under this Agreement and the other Indenture Documents (including,
without limitation, all rights of the Trust to execute any election or
option, to give any notice, consent, waiver or approvals or to enforce
any right or remedy) have been assigned and transferred to the
Indenture Trustee pursuant to the Indenture as security for the
Certificates and the other obligations of the
18
[Aircraft Acquisition and Sale Agreement]
Trust to the Indenture Trustee and the holders under the Operative
Agreements and, so long as the Lien of the Indenture remains in effect,
all rights and remedies of the Trust hereunder and under the other
Indenture Documents shall be exercised exclusively by the Indenture
Trustee without the consent of the Trust. Each party hereto consents to
the foregoing assignment and transfer and acknowledges receipt of a
copy of Indenture and all of the terms thereof. All notices and other
communications to the Trust hereunder, and under the other Indenture
documents shall be copied to the Indenture Trustee.
(d) Trust Capacity. The Owner Trustee is executing this
Agreement on behalf of the Trust solely as trustee under the Trust
Agreement, except as expressly provided herein, and the Indenture
Trustee is entering into this Agreement solely as trustee as provided
in the Indenture and, except as expressly provided herein, not in its
individual capacity, and, except as expressly provided herein, in no
case whatsoever shall either of them be liable in its individual
capacity for any of the statements, representations, warranties,
agreements or obligations of the Trust or the Indenture Trustee, as the
case may be, hereunder or for any loss in respect thereof, as to all of
which the parties agree to look solely to the Trust Estate and the
Indenture Estate respectively; provided, however, that the Owner
Trustee and the Indenture Trustee in their respective individual
capacities shall be liable hereunder for gross negligence or willful
misconduct. The Trust Company in its individual capacity hereby
covenants to Southwest that it will promptly remove any Owner's Liens
on the Trust Estate arising by, through or under the Trust Company.
(e) Notices. Unless otherwise specifically provided herein,
all notices required or permitted by the terms hereof or the other
Operative Agreements shall be in writing and shall be delivered
personally, sent by overnight express, or, if promptly confirmed as
provided above, dispatched by telegram, telex or other written (i) if
to the Indenture Trustee, addressed to it at its office at ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Services (telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), (ii) if to the Owner Trustee, the
Trust or the Trust Company, addressed to it at its office at 1100 North
Market Street, ▇▇▇▇▇▇ Square North, Wilmington, Delaware 19890,
Attention: Corporate Trust Department (telecopy: (▇▇▇) ▇▇▇-▇▇▇▇), or
(iii) if to Southwest, addressed to it at its office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President and Treasurer
(telecopy: (▇▇▇) ▇▇▇-▇▇▇▇).
(f) Consent to Jurisdiction. Any legal action or proceeding
arising out of or relating to this Agreement or any other Operative
Agreement may be instituted in the United States in the courts of the
United States for the Southern District of New York (or, absent
jurisdiction in such Federal courts, in the courts of the State of New
York located in New York, New York), and each of the Trust, the Owner
Trustee, the Indenture Trustee and Southwest, in respect of itself and
its properties and revenues, irrevocably submits to the jurisdiction of
these courts in any such action or proceeding. Each of the Trust, the
Owner Trustee, the Indenture Trustee and Southwest agrees that final
judgment against it in any legal action or proceeding arising out of or
relating to this Agreement or any other Operative Agreement shall be
conclusive and may be enforced in any other jurisdiction within or
outside the United States by suit on the judgment, a certified or
exemplified copy of which judgment shall be conclusive evidence thereof
and of the amount of its indebtedness, or by such other means provided
by law.
19
[Aircraft Acquisition and Sale Agreement]
EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL IN ANY
PROCEEDING REFERRED TO ABOVE. The agreement set forth in this Section
7(f) is given solely for the benefit of the parties hereto and such
agreement is not intended to and shall not inure to the benefit of any
other Person.
* * *
20
[Aircraft Acquisition and Sale Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Aircraft
Acquisition and Sale Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
THE AMOR TRUST, by Wilmington Trust
Company, not in its individual capacity,
but solely as Owner Trustee
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: VICE PRESIDENT
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: VICE PRESIDENT
▇▇▇▇▇ FARGO BANK NORTHWEST NATIONAL
ASSOCIATION,
as Indenture Trustee
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Title: VICE PRESIDENT
SOUTHWEST AIRLINES CO.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Title: VP FINANCE & TREASURER
21
[Aircraft Acquisition and Sale Agreement]
EXHIBIT 1
▇▇▇▇ OF SALE
KNOW ALL MEN BY THESE PRESENTS:
THAT [THE BOEING COMPANY/BOEING DOMESTIC SALES CORPORATION] (SELLER), a
Delaware corporation, is the owner of the full legal and beneficial title to
that certain Boeing Model 737-7H4 aircraft manufactured by The Boeing Company
bearing Federal Aviation Administration Registration Identification Number
N_____ and manufacturer's serial number _____, together with two (2) CFM
International CFM56-7 engines installed thereon manufactured by CFM
International, Inc. bearing manufacturer's serial numbers _____ and _____,
respectively, together with all appliances, parts, instruments, appurtenances,
accessories, furnishings, or other equipment or property installed on or
attached to said aircraft and engines, other than Buyer Furnished Equipment
(BFE).
THAT for and in consideration of the sum of $1.00 and other valuable
consideration SELLER does this ___ day of __________, 200_, grant, convey,
transfer, bargain and sell, deliver, assign and set over pursuant and subject to
the terms and conditions of Purchase Agreement No. 1810, dated January 19, 1994,
all of SELLER's right, title and interest in and to the above described
aircraft, engines, appliances, parts, instruments, appurtenances, accessories,
furnishings and/or other equipment or property (other than BFE) to THE AMOR
TRUST (BUYER), a Delaware Business Trust formed pursuant to the Trust Agreement
dated as of November 13, 2001, between Wilmington Trust Company and Amor
Aircraft Corporation, as Owner Participant, and unto its successors and assigns
forever.
THAT SELLER hereby warrants to BUYER, its successors and assigns, that
there is hereby conveyed to BUYER on the date hereof, good, marketable and
sufficient legal and beneficial title to the aforesaid aircraft, engines,
appliances, parts, instruments, appurtenances, accessories, furnishings and/or
other equipment or property (other than BFE), free and clear of all liens,
encumbrances and rights of others, and that it will warrant and defend such
title forever against all claims and demands whatsoever.
THIS ▇▇▇▇ OF SALE IS DELIVERED BY SELLER TO BUYER IN, AND GOVERNED BY
THE LAW OF, THE STATE OF WASHINGTON.
IN WITNESS WHEREOF, Seller has caused this ▇▇▇▇ of Sale to be executed
this _____ day of _________, 200_.
[THE BOEING COMPANY/BOEING
DOMESTIC SALES CORPORATION]
By:
------------------------------
Title:
EXHIBIT 1
Page 1
[Aircraft Acquisition and Sale Agreement]
EXHIBIT 2
ACCEPTANCE CERTIFICATE
EXHIBIT 2
Page 1
[Aircraft Acquisition and Sale Agreement]
EXHIBIT 3
▇▇▇▇ OF SALE
KNOW ALL MEN BY THESE PRESENTS:
THAT THE AMOR TRUST (SELLER), a Delaware Business Trust formed pursuant
to the Trust Agreement dated November 13, 2001, between the Wilmington Trust
Company and Amor Aircraft Corporation, as Owner Participant, received on
__________ __, 200_ (i) a ▇▇▇▇ of Sale from The Boeing Company with respect to
that certain Boeing Model 737-7H4 aircraft bearing Federal Aviation
Administration Registration Identification Number N_____ and manufacturer's
serial number _____, together with two (2) CFM International CFM56-7 engines
installed thereon bearing manufacturer's serial numbers _____ and _____,
respectively, together with all appliances, parts, instruments, appurtenances,
accessories, furnishings, or other equipment or property installed on or
attached to said aircraft and engines and (ii) a BFE ▇▇▇▇ of Sale from
Southwest
Airlines Co. with respect to certain Buyer Furnished Equipment (BFE).
THAT for and in consideration of the sum of $1.00 and other valuable
consideration SELLER does this ____ day of ___, 200_, grant, convey, transfer,
bargain and sell, deliver, assign and set over all of SELLER's right, title and
interest in and to the above described aircraft, engines, appliances, parts,
instruments, appurtenances, accessories, furnishings, BFE and/or other equipment
or property to
SOUTHWEST AIRLINES CO. (BUYER), it being understood and agreed
that SELLER is hereby conveying to BUYER all of the right, title and interest
conveyed to it by [The Boeing Company/Boeing Domestic Sales Corporation] and
BUYER, if any, but without representation or warranty of any kind whatsoever.
THIS ▇▇▇▇ OF SALE IS DELIVERED BY SELLER TO BUYER IN, AND GOVERNED BY
THE LAW OF, THE STATE OF
CALIFORNIA.
IN WITNESS WHEREOF, Seller has caused this ▇▇▇▇ of Sale to be executed
this ____ day of ___, 200__.
THE AMOR TRUST, by Wilmington Trust
Company, not in its individual
capacity, but solely as Owner Trustee
By:
-------------------------------------
Title:
EXHIBIT 3
Page 1
[Aircraft Acquisition and Sale Agreement]
EXHIBIT 4
DELIVERY RECEIPT
SOUTHWEST AIRLINES CO. hereby accepts and acknowledges receipt from THE
AMOR TRUST in accordance with the terms and conditions of the Aircraft
Acquisition and Sale Agreement dated as of November 13, 2001 between the parties
thereto of one Boeing Model 737-7H4 aircraft bearing manufacturer's serial
number ______, together with two (2) CFM International CFM56-7 engines installed
thereon bearing manufacturer's serial numbers ______ and _____ in Mojave,
California, on [date] at ____ [a.m./p.m. (PST/PDT)].
SOUTHWEST AIRLINES CO.,
as Buyer
By:
-----------------------------
Title:
THE AMOR TRUST,
by Wilmington Trust Company,
not in its individual capacity but solely as Owner
Trustee,
as Seller
By:
-----------------------------
Title:
EXHIBIT 5
Page 1
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and
Southwest Airlines Co.
--------------------------------------------------------------------------------
EXHIBIT 5
STORAGE AGREEMENT
--------------------------------------------------------------------------------
AIRCRAFT STORAGE AND MAINTENANCE
AGREEMENT
#01-0280
--------------------------------------------------------------------------------
BY AND BETWEEN
AVTEL SERVICES, INC.
AND
THE AMOR TRUST
AND
SOUTHWEST AIRLINES CO.
DATED AS OF
NOVEMBER 13, 2001
FAA REPAIR STATION NO.: LVTR751K
EXHIBIT 5
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and
Southwest Airlines Co.
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Section Page
------- ----
INTRODUCTION....................................................................................1
ARTICLE 1: SCOPE OF AGREEMENT..............................................................................1
ARTICLE 2: TERM OF AGREEMENT...............................................................................2
ARTICLE 3: STANDARD OF SERVICE.............................................................................2
ARTICLE 4: CUSTOMER FURNISHED DATA.........................................................................3
ARTICLE 5: REPRESENTATION..................................................................................3
ARTICLE 6: DELIVERY........................................................................................4
ARTICLE 7: REDELIVERY......................................................................................4
ARTICLE 8: FLIGHT OPERATIONS...............................................................................5
ARTICLE 9: EXCUSABLE DELAYS................................................................................5
ARTICLE 10: INSURANCE AND INDEMNIFICATION...................................................................5
ARTICLE 11: WARRANTY........................................................................................6
ARTICLE 12: PAYMENT.........................................................................................7
ARTICLE 13: MISCELLANEOUS...................................................................................9
Appendix Page
-------- ----
A: STATEMENT OF WORK.............................................................................A-1
B: RATES / TERMS AND CONDITIONS..................................................................B-1
C: FORM OF WORK ORDER REQUEST....................................................................C-1
D: FORM OF REDELIVERY NOTICE.....................................................................D-1
EXHIBIT 5
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
INTRODUCTION
This Agreement, dated as of November 13, 2001 and between AVTEL Services, Inc.,
hereinafter referred to as "AVTEL", The Amor Trust, acting through Wilmington
Trust Company, not in its individual capacity but solely as Owner Trustee,
hereinafter referred to as "Owner/Operator" and Southwest Airlines Co.,
hereinafter referred to as "Southwest".
Whereas, AVTEL is an FAA-approved Repair Station #LVTR751K, which maintains and
operates certain facilities located at the East ▇▇▇▇ County Airport (Mojave
Airport), Mojave,
California, (hereinafter referred to as "Facility") for the
maintenance, modification, repair, overhaul, storage, and functional testing of
aircraft, parts, and components; and
Whereas, the Owner/Operator desires to enter into an agreement with AVTEL for
the maintenance and/or storage of certain B-737-600/700/800/900 aircraft which
together with the engines, components, aircraft historical records, parts and
equipment installed thereon, including any replacements, or substitutions
therefore, are singularly and collectively referred to herein as the "Aircraft";
and
Whereas, AVTEL is willing to perform such services for the Owner/Operator
pursuant to the RATES, TERMS AND CONDITIONS hereinafter described and as set
forth in Appendix B attached hereto:
Now, therefore, in consideration of the stated premise and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE 1. SCOPE OF AGREEMENT
AVTEL shall perform certain storage services (the "Basic Services") for
Owner/Operator as specified in writing by the Owner/Operator and stated in
Appendix A hereto.
Any maintenance performed on the Aircraft by AVTEL shall be in accordance with
the maintenance program/documentation for the Aircraft as supplied in writing by
the Owner/Operator and performed at the rates as set forth in Appendix B and
subject to the following conditions:
(a) Upon specific prior approval and written authorization of the
Owner/Operator, pursuant to a work order request in the form set forth in
Appendix C hereto, AVTEL shall perform additional work, services,
maintenance, repair or replacement resulting from either additional
requirements revealed during the performance of the Basic Services or from
additional requirements of the Owner/Operator (hereinafter the "Additional
Services"). Such Additional Services shall be accomplished in accordance
with the provisions of this article and shall be subject to all the terms
and conditions contained in this Agreement. All such Additional Services
shall be fully documented.
1
EXHIBIT 5
Page 1
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
In the event Additional Services are requested by Owner/Operator, AVTEL
shall submit a written proposal or proposals to the Owner/Operator for the
performance of such Additional Services. Each proposal shall include, but
not be limited to: a description of the service(s); an estimated price for
labor and materials; and the effect, if any, the performance thereof shall
have upon the redelivery date of the Aircraft, or on any of the other terms
and conditions of this Agreement. All Additional Services will be performed
through AVTEL at its Facility.
(b) The Owner/Operator's Authorized Representative (AR) shall be empowered to
make all decisions in the Owner/Operator's name and may authorize additional
work on-site and only in writing. The signature or initials of the AR shall
represent the official authorization of the Owner/Operator and shall authorize
AVTEL to proceed with the Additional Services and purchase whatever parts are
required to complete the authorized Additional Services. Work may proceed on
such authorization only on written acceptance, endorsed by initials or signature
of an AVTEL Planning Manager, or his/her designee. Southwest, as
Owner/Operator's agent hereunder, hereby appoints ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ as
the Authorized Representatives for purposes of this Agreement. Owner/Operator
reserves the right to change the Authorized Representatives of Owner/Operator
(each, an "AR") on written notice to AVTEL.
(c) Repair items generated as a result of inspection, modification and/or
maintenance are considered non-routine items and not considered Additional
Services and shall be handled on an individual basis. The signature or initials
of the Owner/Operator's AR shall constitute the official authorization for AVTEL
to proceed with such repair items.
ARTICLE 2. TERM OF AGREEMENT
This Agreement shall be effective as of the 13th day of November 2001 and shall
continue in effect until the 31st day of May 2003, unless extended or terminated
as provided in Article 13.
ARTICLE 3. STANDARD OF SERVICE
The Services, Additional Services and other work performed by AVTEL pursuant to
this Agreement shall be performed in accordance with applicable U.S. Federal
Aviation Administration Regulations (FARs), Owner/Operator's provided and
approved maintenance program, manufacturers's maintenance standards and/or any
special instructions furnished by Owner/Operator in writing and accepted by
AVTEL. AVTEL, with the prior written consent of Owner/Operator, may subcontract
to other qualified repair or overhaul facilities some of the services to be
provided to Owner/Operator. AVTEL shall at all times, during the term of this
Agreement, maintain all licenses, permits and authorizations, including without
limitation its FAA Repair Station license, reasonably required in connection
with its performance of the Basic Services and Additional Services.
Nothing contained herein shall require either party to act contrary to any law,
regulations or order of any governmental body or officer having jurisdiction
hereof, or contrary to any permit or authorization
EXHIBIT 5
Page 2
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
granted to either party by any government or governmental body, or contrary to
any arrangement pursuant to which AVTEL operates or utilizes any of its
facilities, or in any manner that would cause AVTEL's insurance to be
invalidated.
To allow for adequate set up time, AVTEL's Planning Department requires all
Owner/Operator furnished pertinent data under Article 4 ten (10) days prior to
aircraft induction into maintenance. Owner/Operator recognizes that failure to
provide data in a timely manner may affect AVTEL's ability to deliver the
Aircraft in an efficient and timely manner.
Owner/Operator shall have the option to provide technicians, subcontractors,
advisors, or any other person to perform services that are beyond AVTEL's
capabilities while Aircraft is under AVTEL's custody with prior written
authorization from AVTEL.
ARTICLE 4. CUSTOMER FURNISHED DATA
The Owner/Operator shall furnish AVTEL with the following technical data, as may
be required, prior to delivery of each Aircraft for storage:
-Approved Maintenance Manuals/IPC/SRM and Wiring Diagrams
-Flight Operations Manual
-Routine Work Cards, as applicable
These documents will be completed as necessary and in accordance with all
regulatory requirements and, in addition to all technical data such as all
manuals, will be returned to the Owner/Operator when the Aircraft is redelivered
with all other data returned to the Owner/Operator within seven (7) days after
Aircraft is redelivered. Unless otherwise directed by Owner/Operator, all
manuals and records will be returned to Southwest, attention Manager Aircraft
Records, at the address set forth in Article 13 hereof.
Upon delivery of the Aircraft, the Owner/Operator shall make available for
AVTEL's inspection at the Facility, the current maintenance flight log. This
will remain with the work documents described above and will be returned to the
Owner/Operator at redelivery.
ARTICLE 5. REPRESENTATION
Owner/Operator hereby appoints Southwest to act as its agent to administer and
give and receive all notices under this Storage Agreement and to perform the
obligations of Owner/Operator set forth herein. This agency may be revoked by
ten (10) days prior written notice to AVTEL.
EXHIBIT 5
Page 3
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
The AR shall be available at all times, either on-site or via telephone, while
work is being performed on the Owner/Operator's Aircraft. The AR is authorized
to act for and on behalf of Owner/Operator and Southwest for all purposes under
this Agreement. Owner/Operator recognizes that the unavailability or
unwillingness to make a decision on the part of the designated AR may result in
a work slow down or stoppage and possible charges for standby time. AVTEL shall
provide the AR access to the premises where work is performed at all times that
work is taking place on the Aircraft and at the risk and peril of the
Owner/Operator. AVTEL shall provide the designated AR office space, as
available, while work is being performed on the Aircraft. Long distance phone
calls and/or telefax transmissions by the AR shall be billed to the
Owner/Operator in accordance with Appendix B.
ARTICLE 6. DELIVERY
Delivery means the delivery of the Aircraft by the Owner/Operator to AVTEL prior
to storage and/or commencement of maintenance service on the Aircraft. AVTEL and
an Authorized Representative of Owner/Operator shall endorse the delivery of
Aircraft and authorize the requested storage and/or maintenance services by the
execution of a "Delivery Receipt" in the form attached hereto as part of
Appendix A. All deliveries shall be at the Facility. AVTEL shall conduct, upon
delivery of all storage aircraft, an inventory of loose equipment (to include
aircraft historical records) and record avionics serial numbers.
ARTICLE 7. REDELIVERY
Upon receipt of at least ten (10) days notice from the Owner/Operator in the
form attached hereto as Appendix D (the "Redelivery Notice"), AVTEL shall
redeliver the Aircraft identified in such Redelivery Notice to Southwest, on the
date set forth in such Redelivery Notice. If Southwest fails to take redelivery
of any Aircraft on the date set forth in a Redelivery Notice, Southwest shall
remain obligated for any charges arising from the continued storage of such
Aircraft until redelivery.
AVTEL shall redeliver the Aircraft to the Owner/Operator and both parties hereto
shall evidence the redelivery of Aircraft by the execution of a "Redelivery
Receipt" in the form attached hereto as part of Appendix A.
AVTEL SHALL MAKE THE AIRCRAFT AVAILABLE TO OWNER/OPERATOR AT MOJAVE AIRPORT FOR
DETAILED INSPECTION IN ORDER TO VERIFY THAT THE CONDITION OF THE AIRCRAFT AS IS
SET FORTH HEREIN AND THAT THE AIRCRAFT DOCUMENTS HAVE BEEN MAINTAINED AS
PROVIDED HEREIN REGARDING THE CONDITION, MAINTENANCE, STORAGE AND HISTORY OF
THE AIRCRAFT DURING AVTEL'S POSSESSION.
At all times while the Aircraft is being flown, either for a functional test
flight, acceptance test flight, or ferry flight, the Owner/Operator will be
presumed to have accepted the Aircraft into its care, custody and control even
in the event a receipt has not been effected.
EXHIBIT 5
Page 4
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
ARTICLE 8. FLIGHT OPERATIONS
During or upon completion of storage or the Services and/or any Additional
Services on the Aircraft, but prior to redelivery thereof, the Owner/Operator or
its designee, may conduct one or more test flights. (These flights may be for
any purpose which may include maintenance test, demonstration, training, etc.).
Each flight shall be at the option and expense of the Owner/Operator. Following
the flight, AVTEL shall correct those items identified during such flight that
the Owner/Operator requires and authorizes to be corrected.
Following each test flight, a formal post-flight debriefing will be held between
AVTEL, the Owner/Operators' Flight Crew and the AR.
ARTICLE 9. EXCUSABLE DELAYS
AVTEL shall not be liable for any delay in the delivery of any Aircraft if the
delay is caused by forces beyond the reasonable control of AVTEL including, but
not limited to, delay by Owner/Operator in providing the necessary
specifications, data, material or approvals which is a direct cause of AVTEL's
delay in performance.
Neither party shall be liable for delay or failure in the performance in whole
or in part of this agreement if such failure is caused by Acts of God or public
enemy, fire, flood, strikes or other labor disputes (whether at the Facility or
elsewhere), riots, insurrection, war governmental orders or actions, failure of
transportation, delays occasioned by suppliers or subcontractors, failure by the
other to comply with the terms hereof, or any cause beyond the control of such
party whether or not specifically mentioned herein, such causes being termed
"force majeure".
ARTICLE 10. INSURANCE AND INDEMNIFICATION
AVTEL shall, at all times while the Aircraft is in its possession pursuant to
the Agreement, maintain in full force and effect policies of insurance issued by
responsible carriers and affording the following coverages: (i) airport premises
liability, including hangarkeeper's liability, (ii) products liability and
completed operations coverage and, (iii) workmen's compensation coverage as
required by law. The Owner/Operator shall, during the term of this Agreement,
maintain or cause to be maintained all risk hull and liability insurance on the
Aircraft. AVTEL shall name the Owner/Operator as additional insured party as
regards premises liability only. A certificate of insurance will be sent to
Owner/Operator within ten (10) days after execution and delivery of this
Agreement.
The Owner/Operator shall name AVTEL as an additional insured party with waiver
of subrogation for all in-flight operation of the Aircraft. In-flight operations
shall include flight testing, demonstration flights, flight instruction and/or
crew training, and the entire period of the delivery/redelivery flight.
Owner/Operator at its sole cost, shall provide reasonable Aircraft liability
insurance for the Aircraft, including bodily injury and property damage
liabilities. Such insurance shall include public liability, passenger liability,
and property damage liability coverage and shall name AVTEL as an additional
insured party therein. Owner/Operator shall furnish evidence of all such
insurance to be obtained by it in form reasonably satisfactory to AVTEL prior to
the date flights are participated in or conducted by AVTEL.
EXHIBIT 5
Page 5
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
The insurance policies referred to in this Article shall provide that they may
not be canceled unless at least thirty (30) days prior written notice of such
cancellation is provided to Owner/Operator and AVTEL, respectively. Only 30 days
notice of cancellation will be provided if underwriters cancel the policy(ies).
The policies referred to in this Article shall also provide that there will be
no recourse against AVTEL for payment of premiums.
ARTICLE 11. WARRANTY
(a) AVTEL hereby warrants that its workmanship for the Services and Additional
Services performed on the Aircraft to be free from defects for a period of 180
days from the date of redelivery of the Aircraft.
(b) AVTEL obligations and liabilities under this warranty are applicable only to
the Aircraft, parts, and components which are the result of AVTEL's defective
workmanship.
(c) The obligations and responsibilities of AVTEL pursuant to this warranty for
the Services and Additional Services shall be limited to: (i repair, (ii)
replacement of parts, or (iii) reimbursement to the Owner/Operator for
Owner/Operator's reasonable costs related directly to the necessary repair or
replacement to remedy defect(s). If any condition that, upon inspection, is
found to be defective, it shall be limited to either the repair or the
re-overhaul of the Aircraft thereupon all at AVTEL's option. Owner/Operator will
ship at its expense and risk the warranted equipment for correction to and from
AVTEL.
(d) AVTEL's obligations and responsibilities under the warranty are expressly
limited to an amount not to exceed the service charge made for the Service or
Additional Service originally performed by AVTEL for the particular Aircraft.
(e) Obligations and responsibilities of the Owner/Operator: (i Owner/Operator is
obligated to give written notice to AVTEL of a malfunction, claimed to be within
the scope of this warranty, within thirty (30) days of discovery thereof. (ii)
Warranty work performed without the prior approval of AVTEL shall be at the sole
expense of the Owner/Operator. (iii) Defects resulting from improper maintenance
or misuse of the Aircraft by the Owner/Operator are not covered by this
warranty. (iv) In the event that investigation discloses no defects in
workmanship by AVTEL, the Owner/Operator shall pay AVTEL for expenses incurred
in the teardown, investigation, reassembly, and test of the condition in
question at AVTEL's standard labor and material rates.
(f) THE WARRANTIES OF AVTEL AND REMEDIES OF THE OWNER/OPERATOR SET FORTH ABOVE
ARE EXCLUSIVE AND IN SUBSTITUTION FOR, AND THE OWNER/OPERATOR HEREBY WAIVES,
RELEASES, AND RENOUNCES ALL OTHER WARRANTIES OF AVTEL AND RIGHTS, CLAIMS, AND
REMEDIES OF THE OWNER/OPERATOR AGAINST AVTEL FOR ANY OTHER WARRANTY, EXPRESS OR
IMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY DEFECT IN THE AIRCRAFT
OR AVTEL'S WORKMANSHIP, INCLUDING, BUT NOT LIMITED TO, (I) ANY IMPLIED WARRANTY
OF MERCHANTABILITY OR FITNESS FOR USE, AND (II) ANY IMPLIED WARRANTY ARISING
FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE. IN NO EVENT
SHALL AVTEL BE LIABLE UNDER THIS WARRANTY FOR SPECIAL, CONSEQUENTIAL, OR
INCIDENTAL DAMAGES, INCLUDING LOSS OF USE OR LOSS OF PROFITS.
(g) The warranties are exclusive to the Owner/Operator and not assignable or
transferable to any other party without the prior written consent of AVTEL,
which consent shall not be unreasonable withheld.
(h) The responsibility for processing and pursuing warranty claims against
manufacturers and other vendors shall rest with Owner/Operator. AVTEL agrees to
assign such warranties to Owner/Operator to
EXHIBIT 5
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AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
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the extent assignable and/or to cooperate with and assist Owner/Operator in
processing and pursuing such warranties.
ARTICLE 12. PAYMENT
Owner/Operator or, pursuant to Article 7, Southwest shall pay, or cause to be
paid, to AVTEL in accordance with the payment terms set forth in Appendix A and
Appendix B for each Aircraft. Invoices shall be mailed to the following:
The Amor Trust
C/O Wilmington Trust Company, as Owner Trustee
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
With copies to:
Southwest Airlines Co.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Director of Maintenance Contracts
And
The Boeing Company
▇.▇. ▇▇▇ ▇▇▇▇
Mail Code 21-34
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Vice President - Contracts
Owner/Operator will provide notice of any dispute to AVTEL promptly following
identification of the dispute. Each notice of dispute shall be in writing and
set forth the disputed amount(s), the invoice number(s) to which the amount(s)
relate and, in reasonable detail, the basis of the dispute.
The Owner/Operator or, pursuant to Article 7, Southwest shall pay to AVTEL for
the Basic Services, Additional Services, and non-routine services as indicated
in Appendix B "Rates / Terms and Conditions".
Any work performed by AVTEL on a time and material basis (T&M) will be subject
to the following guidelines:
T&M work will usually consist of non-routine and customer requested items. T&M
estimates are not firm, fixed price (FFP) quotes. Some T&M tasks will be
completed in less time than estimated and some will be completed in more time
than estimated. AVTEL will work the T&M tasks to the best of its ability under
conditions that may exist on the aircraft after the estimate is made and
approved. Actual work
EXHIBIT 5
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AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
conditions may not conform to the conditions assumed by the person making the
estimate initially. AVTEL will invoice T&M tasks for the actual hours incurred.
All payments to AVTEL, unless otherwise specified in Appendix B, under the
amount of $1,000,000.00 USD, shall be made by check or bank draft directly to
AVTEL at the following address:
AVTEL Services, Inc
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Accounts Receivable
Payments under the amount of $1,000,000.00 USD may be made by wire transfer as
specified in the next paragraph.
All payments to AVTEL, unless otherwise specified in Appendix B, in excess of
$1,000,000.00 USD, shall be made by wire transfer to the following bank:
U.S. Bank (formerly Santa ▇▇▇▇▇▇ Bank) Checking Account #: 153491811763
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ Routing #: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ACH Routing #: ▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If this Agreement is terminated under conditions other than those expressly
stated herein, and other than for breach of this Agreement by AVTEL,
Owner/Operator shall be responsible for the payment of all charges incurred up
to and including the date of termination.
In the event that AVTEL shall not have received any payment due hereunder within
ten (10) days after written notice of non-payment, AVTEL shall have the right to
deem such non-payment to be a "STOP WORK AUTHORIZATION."
EXHIBIT 5
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AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
ARTICLE 13. MISCELLANEOUS
Material Disposition
Prior to redelivery of Aircraft, Owner/Operator shall instruct AVTEL regarding
the disposition of Owner/Operator's materials from the Facility. All
Owner/Operator's materials not removed within ninety (90) days shall be
considered abandoned, and AVTEL shall be entitled to dispose of such materials
at Owner/Operator's expense.
Notices and Requests
All notices and requests in connection with this Agreement shall be given in
writing and may be given by telecopy, overnight courier or certified U.S. mail,
postage prepaid, return receipt requested communication addressed as follows:
AVTEL Services, Inc
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Contracts
(▇▇▇) ▇▇▇-▇▇▇▇ / (▇▇▇) ▇▇▇-▇▇▇▇ (F)
or to such other address or addressee and AVTEL shall from time to time
designate in writing for this purpose, and in the case of notice to
Owner/Operator, addressed to:
The Amor Trust
Wilmington Trust Company, Trustee
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
(▇▇▇) ▇▇▇-▇▇▇▇ / (▇▇▇) ▇▇▇-▇▇▇▇ (F)
With copies to:
Southwest Airlines Co.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Director of Maintenance Contracts
(▇▇▇)▇▇▇-▇▇▇▇ / (▇▇▇)▇▇▇-▇▇▇▇ (F)
or to such other address or addressee as Owner/Operator may from time to time
designate in writing for this purpose.
EXHIBIT 5
Page 9
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
Assignment
Neither this Agreement nor any Basic Service nor Additional Service to be
provided hereunder shall be assigned or delegated by AVTEL without the prior
written consent of the Owner/Operator. Consent by the Owner/Operator to such
assignment in one instance shall not constitute consent to any other assignment.
AVTEL acknowledges that this Agreement has been assigned by Owner/Operator to
▇▇▇▇▇ Fargo Bank Northwest, National Association, Indenture Trustee as Security.
AVTEL does hereby, waive its rights under Sections 9790 et seq. of the
California Business and Professions Code, Sections 3051 et seq. of the
California Civil Code and Sections 1208.61 et seq. of the
California Code of
Civil Procedures with regard to the Aircraft. AVTEL hereby grants to the
Owner/Operator or its agent an irrevocable power of attorney, coupled with an
interest, to sign such documents, effect such filings (including, without
limitation, with the FAA and the
California Secretary of State) and take such
other action as the Trust or its agent shall deem necessary or useful to clear
any materialmen's mechanic's, workmen's repairmen's or other like liens from the
aircraft, or to establish that none exists. Notwithstanding any provision of
this Agreement to the contrary, AVTEL will not terminate this Agreement or
exercise any rights or remedies it may have hereunder, without providing at
least ten (10) days advance written notice to the Owner/Operator.
Severability
Should any part of this Agreement be found invalid or unenforceable by competent
authority, the balance of this agreement to the extent that it is not held
invalid and unenforceable shall continue in full force and effect to the fullest
extent permitted by law.
Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
the State of
California.
Attorneys' Fees
In the event an action is brought to enforce or construe the provisions of this
Agreement, the prevailing party in such action (including any bankruptcy
proceeding) shall be awarded costs and reasonable attorney's fees as part of the
judgment in such action.
Termination
In the event a party hereto defaults in the observance or performance of any of
its obligation herein contained, the other party may terminate this Agreement
upon fifteen (15) days written notice to the defaulting party, specifying the
default and requiring that the same be remedied. Termination shall become
effective provided such default continues for said fifteen-day period.
EXHIBIT 5
Page 10
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
In the event of termination of this Agreement by either party, as provided in
this Article, other than by default of AVTEL, Owner/Operator shall pay AVTEL for
any expenses AVTEL may have incurred on behalf of the Owner/Operator for work in
process and items ordered from vendors.
Entire Agreement And Changes
This Agreement constitutes the full and complete Agreement of the parties and
supersedes any other agreement, understanding or representation whether verbal
or in writing by or between AVTEL and the Owner/Operator. Any changes amendments
or other modifications to the Agreement shall be in writing and executed by both
parties hereto.
Independent Contractor
The parties hereto shall not have the authority to obligate the other parties
hereto in any manner whatsoever without the prior written consent of such other
parties having been obtained, it being understood that the relationship of the
parties is that of independent contractors. Without limiting the foregoing, the
parties shall have no authority to sign or contract for, or commit the other
parties in any way, or accept any contract, or make any warranty, representation
or agreement on behalf of the other parties. Nothing herein is deemed to create
a partnership or joint venture between the parties hereto.
Counterparts
This Agreement may be signed in any number of counterparts, each of which will
be an original, and all of which together will constitute the same instrument.
Right to Audit
AVTEL shall, upon request by Owner/Operator, make available such of its books
and records during normal business hours, as are reasonably required to verify
hours worked, the cost of materials, subcontractor fees and charges, and other
information reasonably relevant to time and material charges invoiced under this
Agreement.
Trust Capacity
Wilmington Trust Company is executing this Agreement on behalf of The Amor Trust
solely as Owner Trustee under the Trust Agreement dated as of November 13, 2001
with Amor Aircraft Corporation as Owner Participant and, except as expressly
provided herein, not in its individual capacity, and, except as expressly
provided herein, in no case whatsoever shall it be liable in its individual
capacity for any of the statements, representations, warranties, agreements or
obligations of The Amor Trust hereunder or for any loss in respect thereof, as
to all of which the parties agree to look solely to The Amor Trust; provided,
however, that Wilmington Trust Company in its individual capacity shall be
liable hereunder for its gross negligence or willful misconduct.
EXHIBIT 5
Page 11
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day set forth in the "Introduction" to this Agreement.
AVTEL SERVICES, INC. THE AMOR TRUST
By Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By: By
------------------------------------ ----------------------------
Name: ▇▇▇ ▇▇▇▇▇▇ Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President, Title: Vice President
Business Development & Contracts
Date: November 13, 2001 Date: November 13, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
By:
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President-Finance and Treasurer
Date: November 13, 2001
EXHIBIT 5
Page 12
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
APPENDIX A
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
STATEMENT OF WORK
Owner/Operator shall from time to time deliver Aircraft to AVTEL under this
Agreement. Owner/Operator will use its commercially reasonable efforts to
provide AVTEL a delivery schedule, which delivery schedule may be modified from
time to time by Owner/Operator. Upon delivery of an Aircraft and execution of a
Delivery Receipt as set forth in Article 6 of the Agreement, the Aircraft
identified in such Delivery Receipt shall become subject to the Agreement and
AVTEL shall perform the Basic Services set forth in this Appendix A with respect
to each such Aircraft under the terms set forth in this Agreement.
DESCRIPTION OF BASIC SERVICES/PRICING
The Basic Services to be performed in connection with each Aircraft delivered
hereunder, and the prices for such Basic Services, are described below. The
storage maintenance tasks performed as part of the Basic Services shall be in
accordance with the Boeing 737-600/700/800/900 D6633A101-SWA, Aircraft
Maintenance Manual, Part II, as supplied to AVTEL by Southwest Airlines,
including the Prolonged Parking, APU and Power Plant Maintenance Practices set
forth in such manual. The Basic Services will be provided on a firm, fixed price
(FFP) basis as set forth in the table below. The FFP includes labor only. All
Additional Services will be performed in accordance with the rates stated in
Appendix B. All parts and materials will be provided in accordance with the
rates stated in Appendix B.
The parties hereto agree that AVTEL shall perform the Basic Services during the
term of this Agreement for up to 19 Boeing 737-600/700/800/900 Aircraft if
delivered by Owner/Operator. AVTEL acknowledges and agrees that nothing in this
Agreement obligates Southwest or the Owner/Operator to provide any minimum
number of Aircraft to AVTEL hereunder or to store any Aircraft for any minimum
period of time.
TASK FFP
---- ----------
Park, Receive Aircraft and Ground Handling - Per Occurrence $ 1,444.80
Incoming Inspection, Inventory, Video - Per Occurrence $ 722.40
10-12-02-550-802 (Induction into Storage) - Per Occurrence $14,936.25
10-12-02-620-802 (7-Day Repetitive Check) - Per Occurrence $ 225.75
10-12-02-620-803 (7/14-Day Repetitive Check) - Per Occurrence $ 496.65
10-12-02-620-804 (7/14/30-Day Repetitive Check) - Per Occurrence $ 1,038.45
10-12-02-620-805 (7/14/30/60-Day Repetitive Check) - Per Occurrence $ 1,941.45
10-12-02-620-806 (7/14/30/60-Day Repetitive Check) - Per Occurrence $ 6,456.45
10-12-02-620-807 (7/14/30/90-Day Repetitive Check) - Per Occurrence $ 2,122.05
10-12-02-620-808 (7/14/30/60/90/180-Day Repetitive Check) - Per Occurrence $ 7,901.25
10-12-02-620-809 (7/14/30/60/90/180/365-Day Repetitive Check) - Per Occurrence $12,235.65
10-12-02-550-801 (Reactivation from Storage) - Per Occurrence $16,931.25
Venting Aircraft (Outside Air Temperature Exceeds 85 Degrees Fahrenheit) No Charge
Monthly Parking Fee (Each Aircraft) $ 200.00
A-1
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
APPENDIX A - CONTINUED
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
STATEMENT OF WORK
STORAGE CONDITIONS
The following conditions will be met for each Aircraft:
o AVTEL will park the aircraft on a hard-packed surface (Unused Taxiway).
o AVTEL will park the aircraft together as a group, segregated from other
commercial aircraft in AVTEL's storage facility.
o AVTEL will cordon off the area where the Aircraft are parked and access
will be limited to those qualified maintenance personnel performing storage
tasks on the aircraft.
o AVTEL will have a spotter assist the driver any time mechanical equipment
is operated in the immediate vicinity of the aircraft.
o AVTEL will store aircraft records in a dedicated, segregated, secure
location.
A-2
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
APPENDIX A - CONTINUED
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
STATEMENT OF WORK
AIRCRAFT DELIVERY / REDELIVERY RECEIPT (FRONT)
[AVTEL SERVICES, INC. LOGO]
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ F.A.A. REPAIR STATION NO. LVTR751K
=========================================================================================================
---------------------------------------------------------------------------------------------------------
AIRCRAFT DELIVERY
---------------------------------------------------------------------------------------------------------
CUSTOMER:
PROPOSAL/CONTRACT NUMBER:
AIRCRAFT MAINTENANCE AGREEMENT IN EFFECT?
---------------------------------------------------------------------------------------------------------
LOCATION DATE (MM-DD-YY) TIME
---------------------------------------------------------------------------------------------------------
MOJAVE
--------------------------------------------------------------------------------------------------------
AIRCRAFT TYPE REGISTRATION NUMBER MFG. SERIAL NUMBER
--------------------------------------------------------------------------------------------------------
ENGINE NUMBER/TYPE MFG. SERIAL NUMBER FUEL LOAD
--------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
BY: BY:
-------------------------------------- ------------------------------------
CUSTOMER/DELIVERY AVTEL SERVICES, INC./RECEIVING PARTY
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
AIRCRAFT REDELIVERY
---------------------------------------------------------------------------------------------------------
LOCATION DATE (MM-DD-YY) TIME
---------------------------------------------------------------------------------------------------------
MOJAVE AM/PM
---------------------------------------------------------------------------------------------------------
FINANCIAL CLEARANCE:
-------------------------------------
AVTEL FINANCE DEPARTMENT
BY: BY:
-------------------------------------- --------------------------------------
CUSTOMER/RECEIVING PARTY AVTEL SERVICES, INC./DELIVERYING PARTY
---------------------------------------------------------------------------------------------------------
COMPLETION OF FORM - PROCEDURE/DISTRIBUTION
AIRCRAFT DELIVERY: COMPLETE TOP SECTION, AND OBTAIN CUSTOMER SIGNATURE. PROVIDE ONE (1) COPY TO
CUSTOMER, ONE (1) COPY TO FINANCE, AND ONE (1) COPY TO CONTRACTS.
AIRCRAFT REDELIVERY: COMPLETE BOTTOM SECTION, AND OBTAIN CUSTOMER SIGNATURE. PROVIDE ONE (1) COPY
TO CUSTOMER, ONE (1) COPY TO FINANCE, AND ONE (1) COPY TO CONTRACTS.
---------------------------------------------------------------------------------------------------------
A-3
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
APPENDIX A - CONTINUED
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
STATEMENT OF WORK
AIRCRAFT DELIVERY / REDELIVERY RECEIPT (BACK)
[AVTEL SERVICES, INC. LOGO]
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ F.A.A. REPAIR STATION NO. LVTR751K
=========================================================================================================
---------------------------------------------------------------------------------------------------------
AIRCRAFT DELIVERY COMMENTS
---------------------------------------------------------------------------------------------------------
INSPECTION
Removed A/C Library
Log A/C Library
Removed A/C Certificates
Performed A/C Video
---------------------------------------------------------------------------------------------------------
AIRCRAFT REDELIVERY COMMENTS
---------------------------------------------------------------------------------------------------------
INSPECTION
Re-present A/C Library
(Customer must sign)
Re-place A/C Certificate
Present Redelivery Sheet to
Finance for Release
Record departing fuel load
---------------------------------------------------------------------------------------------------------
A-4
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
APPENDIX B
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
RATES / TERMS AND CONDITIONS FOR ADDITIONAL SERVICES
The Services and Additional Services performed hereunder shall be carried out at
the following prices and rates set forth below.
LABOR RATES PER HOUR
----------- --------
Mechanic/Inspector (See Note 1) $43.00
Mechanic/Inspector Overtime $60.00
Backshop $60.00
Drop-In Maintenance $62.50
Non Destructive Test (NDT) $65.00
Engineering $70.00
Note 1: Inspection (Buy Back) hours will be included in the
non-routine estimate for labor hours. Per Hour rate is for
storage related maintenance only.
MATERIAL AND OUTSIDE SERVICES RATES
Parts and Materials Cost + 17%
Outside Services Cost + 17%
Customer Furnished Parts and Materials No Charge
Freight Cost
Miscellaneous Small Parts (<$2.00) 2.5% of Total Labor Dollars
General Note: All prices are in U.S. Dollars (USD)
PAYMENT TERMS
Invoiced monthly for each aircraft and payable within 30 days of invoice date.
In the event the Owner/Operator requests a significant amount of work, AVTEL
reserves the right to request payment of an estimated amount prior to
commencement of services.
If, at the time of receipt by AVTEL of a Redelivery Notice for an Aircraft, any
invoices under this Agreement are then past due, prior to Redelivery of such
Aircraft, Owner/Operator shall pay to AVTEL all such past due invoices under
this Agreement, together with all known and estimated fees and costs hereunder
for such Aircraft being redelivered.
B-1
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
GENERAL
In the event a single part, material or outside service is procured by AVTEL in
excess of $25,000.00, AVTEL may submit an invoice to owner/operator on a "net
15" basis.
Late charges will be assessed in the amount of 1% per month or portion of each
month on the outstanding balance.
EXPEDITE FEE
AVTEL will negotiate with Owner/Operator on a case-by-case basis an expedite fee
to reduce the overall time necessary to complete a specific task, as requested.
B-1
AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT
AVTEL Services, Inc. and The Amor Trust and Southwest Airlines Co.
--------------------------------------------------------------------------------
APPENDIX C
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
FORM OF WORK ORDER REQUEST
--------------------------------------------------------------------------------------------------
[AVTEL SERVICES, INC. LOGO] World Wide Aviation Maintenance and Support
--------------------------------------------------------------------------------------------------
CUSTOMER REQUEST
--------------------------------------------------------------------------------------------------
CUSTOMER: REPRESENTATIVE NAME: TAIL NO: DATE:
--------------------------------------------------------------------------------------------------
DESCRIPTION
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
CUSTOMER SIGNATURE: EST. HOURS: DATE:
--------------------------------------------------------------------------------------------------
PARTS REQUIREMENTS
--------------------------------------------------------------------------------------------------
DESCRIPTION PART NO:
[ ] YES:
[ ] NO:
--------------------------------------------------------------------------------------------------
MAINTENANCE DISPOSITION
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
AVTEL MAINTENANCE SUPERVISOR SIGNATURE: EST. HOURS: DATE:
--------------------------------------------------------------------------------------------------
CONCURRENCE
--------------------------------------------------------------------------------------------------
CUSTOMER REPRESENTATIVE TASK HOURS: AVTEL REPRESENTATIVE: DATE:
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
PRODUCTION CONTROLLER
--------------------------------------------------------------------------------------------------
TRACKING NO: WO NO: CONTROLLER NAME: STAMP: DATE:
--------------------------------------------------------------------------------------------------
[ILLEGIBLE] [ILLEGIBLE]
C-1
[Aircraft Acquisition and Sale Agreement]
APPENDIX D
TO AIRCRAFT STORAGE AND MAINTENANCE AGREEMENT #01-0280
FORM OR REDELIVERY NOTICE
THE AMOR TRUST
C/O WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
, 200
---------------- --
AVTEL Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Contracts
Re: Aircraft Storage and Maintenance Agreement #01-0280 dated as of
November 13, 2001 among AVTEL Services, Inc., The Amor Trust and
Southwest Airlines Co. (the "Agreement")
Ladies and Gentlemen:
REFERENCE IS MADE TO THE ABOVE-CAPTIONED AGREEMENT.
CAPITALIZED TERMS USED AND NOT DEFINED HEREIN SHALL HAVE THE MEANING GIVEN SUCH
TERMS IN THE AGREEMENT. PURSUANT TO ARTICLE 7 OF THE AGREEMENT, THE
OWNER/OPERATOR HEREBY INSTRUCTS AND AUTHORIZES YOU TO REDELIVER THE AIRCRAFT
IDENTIFIED BELOW TO SOUTHWEST AIRLINES CO. ON THE DATE(S) INDICATED BELOW.
MANUFACTURER'S
AIRCRAFT SERIAL NO. U.S. REGISTRATION NO. REDELIVERY DATE
-------- -------------- -------------------- ---------------
Sincerely,
THE AMOR TRUST
By: WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
D-1
[Aircraft Acquisition and Sale Agreement]
EXHIBIT 6
BFE ▇▇▇▇ OF SALE
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned, SOUTHWEST AIRLINES CO., a Texas
corporation ("Seller") is the owner of the full, legal and beneficial title to
the equipment (as more fully described on Schedule I attached hereto) delivered
or caused to be delivered to The Amor Trust ("Buyer") for installation on that
certain Boeing model 737-7H4 aircraft bearing manufacturer's serial number _____
and described as "Buyer Furnished Equipment" relating to such aircraft under the
Purchase Agreement No. 1810 dated as of January 19, 1994 between Seller and The
Boeing Company (such equipment referred to herein as the "BFE").
THAT for and in consideration, of the payment by Buyer of an
aggregate principal amount of One Dollar ($1.00) and other good and valuable
consideration, Seller does this ___ day of ________, 200_, grant, convey,
transfer, bargain and sell, deliver and set over all of its right, title and
interest in and to the BFE unto Buyer.
THAT SELLER hereby warrants to Buyer, its successors and
assigns, that there is hereby conveyed to Buyer on the date hereof good title to
the BFE, free and clear of all liens, encumbrances and rights of others and
Seller agrees with Buyer, and its successors and assigns, that Seller will
warrant and forever defend such title so conveyed against all claims and demands
whatsoever.
THIS ▇▇▇▇ OF SALE IS DELIVERED BY SELLER TO BUYER IN, AND
GOVERNED BY THE LAW OF, THE STATE OF WASHINGTON.
IN WITNESS WHEREOF, Seller has caused this instrument to be
duly executed this day of _________, 200_.
SOUTHWEST AIRLINES CO.
By:
----------------------------
Its: Vice President and Treasurer
EXHIBIT 6
Page 1
[Aircraft Acquisition and Sale Agreement]
SCHEDULE I
[List of BFE]
EXHIBIT 6
Page 1
[Aircraft Acquisition and Sale Agreement]
SCHEDULE I
(A) (B) (C) (D) (E) (F) (G) (H)
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
*** *** *** *** *** *** ***
SCHEDULE I
Page 1
[Aircraft Acquisition and Sale Agreement]
SCHEDULE II
Aircraft
--------------------------------------------- ------------------------------------------------------
Aircraft Engines Delivered with Aircraft
--------------------------------------------- ------------------------------------------------------------------------
Estimated
Serial Delivery
N Number Make Model Number Make Model Serial Number Date
--------------------------------------------- ------------------------------------------------------------------------
409WN Boeing 737-7H4 27896 CFM International CFM56-7B22 888457 888561 12/19/01
410WN Boeing 737-7H4 27897 CFM International CFM56-7B22 888557 888562 11/13/01
411WN Boeing 737-7H4 29821 CFM International CFM56-7B22 889577 889590 11/13/01
412WN Boeing 737-7H4 29818 CFM International CFM56-7B22 888582 888585 11/13/01
413WN Boeing 737-7H4 29819 CFM International CFM56-7B22 888589 888592 11/13/01
414WN Boeing 737-7H4 29820 CFM International CFM56-7B22 888605 888606 11/13/01
415WN Boeing 737-7H4 29836 CFM International CFM56-7B22 889631 889632 11/13/01
416WN Boeing 737-7H4 32453 CFM International CFM56-7B22 888650 888183 11/13/01
417WN Boeing 737-7H4 29822 CFM International CFM56-7B22 889677 888651 11/13/01
418WN Boeing 737-7H4 29823 CFM International CFM56-7B22 888662 888668 11/13/01
419WN Boeing 737-7H4 29824 CFM International CFM56-7B22 888711 888708 12/01
420WN Boeing 737-7H4 29825 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 1/02
421LV Boeing 737-7H4 32452 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 2/02
422WN Boeing 737-7H4 29826 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 3/02
423WN Boeing 737-7H4 29827 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 3/02
424WN Boeing 737-7H4 29828 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 3/02
425LV Boeing 737-7H4 29829 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 3/02
426WN Boeing 737-7H4 29830 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 4/02
427WN Boeing 737-7H4 29831 CFM International CFM56-7B22 ▇▇▇ ▇▇▇ 4/02
SCHEDULE II
Page 1