CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
Exhibit 10.18
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ AGREEMENT DCT-006/2003
BETWEEN
EMBRAER - EMPRESA BRASILEIRA
DE AERONAUTICA S.A.
AND
REGIONAL AIRCRAFT HOLDINGS LTD.
INDEX
ARTICLE PAGE
------- ----
1. DEFINITIONS.................................................. 3
2. SUBJECT...................................................... 5
3. PRICE........................................................ 5
4. PAYMENT...................................................... 6
5. DELIVERY..................................................... 7
6. CERTIFICATION................................................ 7
7. ACCEPTANCE AND TRANSFER OF OWNERSHIP......................... 8
8. STORAGE CHARGE............................................... 9
9. DELAYS IN DELIVERY........................................... 9
10. INSPECTION AND QUALITY CONTROL............................... 11
11. CHANGES...................................................... 11
12. WARRANTY..................................................... 13
13. PRODUCT SUPPORT PACKAGE...................................... 13
14. ASSIGNMENT................................................... 13
15. RESTRICTIONS AND PATENT INDEMNITY............................ 13
16. MARKETING PROMOTIONAL RIGHTS................................. 14
17. TAXES........................................................ 14
18. APPLICABLE LAW............................................... 14
19. JURISDICTION................................................. 14
20. TERMINATION.................................................. 15
21. OPTION FOR THE PURCHASE OF ADDITIONAL AIRCRAFT............... 16
22. INDEMNITY.................................................... 17
23. NOTICES...................................................... 18
24. CONFIDENTIALITY.............................................. 18
25. SEVERABILITY................................................. 19
26. NON-WAIVER................................................... 19
27. INTEGRATED AGREEMENT......................................... 19
28. NEGOTIATED AGREEMENT......................................... 19
29. WAIVER OF JURY TRIAL......................................... 19
30. WAIVER OF IMMUNITY........................................... 19
31. PAYMENTS IN US DOLLARS....................................... 20
32. COUNTERPARTS................................................. 20
33. ENTIRE AGREEMENT............................................. 20
Page 1
ATTACHMENTS
"A" - AIRCRAFT SPECIFIC CONFIGURATION, FINISHING AND REGISTRATION MARKS
"B" - FERRY EQUIPMENT AND PRODUCT SUPPORT PACKAGE
"C" - WARRANTY CERTIFICATE - MATERIAL AND WORKMANSHIP
"D" - PRICE ESCALATION FORMULA
"E" - **Material Redacted**
"F" - **Material Redacted**
"G" - **Material Redacted**
"H" - PERFORMANCE GUARANTEE
Page 2
PURCHASE AGREEMENT DCT-006/2003
THIS AGREEMENT IS ENTERED INTO THIS ____ DAY OF MAY, 2003, BY AND BETWEEN
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A. AND REGIONAL AIRCRAFT HOLDINGS
LTD., FOR THE PURCHASE AND SALE OF EMBRAER AIRCRAFT.
THE SALE COVERED BY THIS AGREEMENT SHALL BE GOVERNED SOLELY BY THE TERMS AND
CONDITIONS HEREIN SET FORTH, AS WELL AS BY THE PROVISIONS SET FORTH IN THE
ATTACHMENTS HERETO.
THIS AGREEMENT SHALL NOT BE EFFECTIVE UNLESS AND UNTIL IT IS SIGNED BY AN
AUTHORIZED OFFICER OF REGIONAL AIRCRAFT HOLDINGS LTD. AND EXECUTED BY TWO
AUTHORIZED OFFICERS OF EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
1. DEFINITIONS
For the purpose of this Agreement, the following definitions are hereby
adopted by the Parties and, unless otherwise expressly provided, the
singular includes the plural, the masculine includes the feminine and
neutral genders:
1.1 "Actual Delivery Date" shall mean, with respect to each Aircraft, the
date on which Buyer obtains title to that Aircraft
in accordance with Article 7.
1.2 "AD's" shall mean Airworthiness Directives issued by
either the CTA or the Air Authority, in connection
with and with respect to the Aircraft.
1.3 "Agreement" or shall mean this Purchase Agreement DCT-006/2003
"Purchase Agreement" together with all attachments, supplements and
exhibits hereto, all as modified and amended from
time to time.
1.4 "Air Authority" shall mean the Autoridad de Aviacion Civil ("AAC")
of Panama, or a successor to the AAC from time to
time charged with the administration of civil
aviation in Panama.
1.5 "Aircraft Basic Price" shall mean the Aircraft price, as defined in
Article 3.1.
1.6 "Aircraft Purchase shall mean, in respect of an Aircraft, the
Price" Aircraft Basic Price, escalated up to the
Contractual Delivery Date of such Aircraft in
accordance with and by application of the
Escalation Formula.
1.7 "Aircraft" shall mean the EMBRAER 190LR aircraft
(certification designation ▇▇▇ ▇▇▇-▇▇▇ ▇▇) (▇▇▇
"EMBRAER 190 Aircraft"), manufactured by Embraer
according to the Preliminary Technical Description
PTD-190-Rev.3 dated November 2002, (which,
although not attached hereto, are incorporated
herein by reference) and the Aircraft Specific
Configurations, Finishing and Registration Marks
described in the Attachment "A", for sale to Buyer
pursuant to this Agreement, equipped with two
engines GE CF-34-10E5A1, manufactured by
Page 3
General Electric Company, all cases in the
condition and configuration required hereunder,
and shall include Firm Aircraft and Option
Aircraft unless the context requires otherwise.
1.8 "Buyer" shall mean Regional Aircraft Holdings Ltd., a
company with its address ▇/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ Numero 51 Piso 11,
Panama, Rep of Panama.
1.9 "Business Day(s)" shall mean a day other than a Saturday or Sunday
on which banks are open for business in Sao ▇▇▇▇
dos ▇▇▇▇▇▇, Sao Paulo, Rio de Janeiro, New York
and Panama.
1.10 "Contractual Delivery shall mean the delivery date referred to in
Date" Article 5.
1.11 "CTA" shall mean the Aerospace Technical Center of the
Brazilian Ministry of Aeronautics.
1.12 "Day(s) shall mean natural calendar day(s).
1.13 "Embraer" shall mean Embraer - Empresa Brasileira de
Aeronautica S.A., a Brazilian corporation with its
principal place of business at ▇▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ - Putim, Sao ▇▇▇▇ dos ▇▇▇▇▇▇, Sao
Paulo, Brazil.
1.14 "Escalation Formula" shall mean the escalation formula contained in
Attachment "D".
1.15 "Firm Aircraft" shall mean the firm order Aircraft referred to in
Article 2.1
1.16 "Initial Deposit" shall mean the initial non-refundable deposit
referred to in Article 4.1.1.
1.17 "Major Changes" shall mean the changes to the design or approved
specification of the Aircraft, as defined in
Article 11.2.2.
1.18 "Mandatory Service shall mean the service bulletins applicable to the
Bulletins" Aircraft, which are issued by Embraer to implement
the AD's referred to under Article 11.4.
1.19 "Minor Changes" shall mean the changes to the design of the
Aircraft defined as per the terms and conditions
of Article 11.2.1.
1.20 "Option Aircraft shall mean the unit price of the Option Aircraft,
Basic Price" as per the terms and conditions of Article 21.2.
1.20 "Option Aircraft shall mean the initial deposit referred to under
Initial Deposit" Article 21.1.
1.21 "Option Aircraft shall mean the Option Aircraft Basic Price
Purchase Price" escalated in accordance with and by application of
the Escalation Formulas **Material Redacted** as
per the terms and conditions of Article 21.3.
Page 4
1.22 "Option Aircraft" shall be the additional Aircraft that Buyer shall
have the option to purchase as per the terms of
Article 21.
1.23 "Parties" shall mean Embraer and Buyer.
1.24 "Product Support shall mean the products and Services to be
Package" provided by Embraer as per Article 13.
1.25 "Scheduled Inspection shall mean the date on which a certain Aircraft
Date" hereunder is available for inspection and
acceptance by and subsequent delivery to Buyer, as
per the terms and conditions of Article 7.1.
1.26 "Services" shall mean the familiarization and on-site support
for the Aircraft, part of the Product Support
Package, as specified in Attachment "B".
1.27 "Technical shall mean the technical documentation pertaining
Publications" and related to the Aircraft as listed in Exhibit 1
to Attachment "B".
1.28 "USD" or "US$" shall mean the legal currency of the United States
of America.
1.29 "Working Day(s)" shall mean a day, other than Saturday, Sunday, or
holiday, on which Embraer in Sao ▇▇▇▇ dos ▇▇▇▇▇▇,
▇▇, Brazil is open for business.
References to Articles or Attachments in the main body of this Purchase
Agreement shall be deemed to be references to Articles of or Attachments to this
Agreement, respectively, except as the context requires otherwise.
2. SUBJECT
Subject to the terms and conditions of this Agreement:
2.1 Embraer shall sell and deliver and Buyer shall purchase and take delivery
of ten (10) Firm Aircraft;
2.2 Embraer shall provide to Buyer the Services and the Technical
Publications; and
2.3 Buyer shall have the option to purchase up to twenty (20) Option Aircraft,
in accordance with Article 21.
3. PRICE
3.1 Buyer agrees to pay Embraer, in United States dollars, the Aircraft Basic
Price of USD**Material Redacted** for each EMBRAER 190 Aircraft **Material
Redacted**.
3.2 The Services and Technical Publications are to be provided **Material
Redacted** to Buyer. Additional technical publications as well as other
services shall be billed to Buyer in accordance with Embraer's rates
prevailing at the time Buyer places a purchase order for such additional
technical publications or other services.
3.3 The Aircraft Basic Price shall be escalated according to the Escalation
Formula. Such price as escalated shall be the Aircraft Purchase Price and
it will be provided to Buyer **Material Redacted** months prior to each
Aircraft Contractual
Page 5
Delivery Date.
4. PAYMENT
4.1 The prices specified in the previous Article shall be paid by Buyer by
wire transfer in immediately available United States dollars funds, to a
bank account to be timely informed by Embraer to Buyer, as follows:
4.1.1 The Initial Deposit of **Material Redacted** per Aircraft is due and
payable **Material Redacted**.
4.1.2 A **Material Redacted** percent (**Material Redacted**%) **Material
Redacted** progress payment in respect of each Aircraft **Material Redacted** is
due and payable **Material Redacted** prior to the relevant Aircraft Contractual
Delivery Date, or upon the execution of this Agreement, whichever occurs later.
4.1.3 A **Material Redacted** (**Material Redacted**%) **Material Redacted**
progress payment in respect of each Aircraft **Material Redacted** is due and
payable **Material Redacted** prior to such relevant Aircraft Contractual
Delivery Date, or upon the execution of this Agreement, whichever occurs later.
4.1.4 A **Material Redacted** (**Material Redacted**%) **Material Redacted**
progress payment in respect of each Aircraft **Material Redacted** is due and
payable **Material Redacted** prior to each relevant Aircraft Contractual
Delivery Date, or upon the execution of this Agreement, whichever occurs later.
4.1.5 The balance of the Aircraft Purchase Price in respect of an Aircraft,
shall become due and payable upon acceptance of such Aircraft by Buyer.
4.2 Late Payments:
In respect of any amounts which are or may become due and payable pursuant
to Articles 4.1.1 through and including 4.1.4 which amounts are not paid
within **Material Redacted** and payable as set forth in Article 4.1,
interest shall accrue on the relevant amount at the rate of **Material
Redacted** per annum (the "Default Rate") following the Due Date and
ending on the date the relevant amount is received by EMBRAER In respect
of accounts which may become due and payable pursuant to Article 4.1.5,
interest shall accrue thereon at the rate set forth herein above. Without
prejudice to Embraer's rights set forth in Article 4.3 below, interest
accrued will be invoiced by Embraer on a monthly basis, beginning one
month after **Material Redacted**, and payment thereof shall be made by
Buyer in accordance with the instructions contained therein.
4.3 Termination for failure to make payments:
Withoutprejudice to the payment of interest on late payments set forth
above, should Buyer fail to make any payment on or before the due date,
Embraer shall have the right, at its sole discretion, to either (i)
postpone, the relevant Aircraft Contractual Delivery Date; or (ii)
terminate this Agreement in relation to the affected Aircraft in
accordance with Article 20.3, if such failure shall not have been cured
within **Material Redacted** Days after the date on which Embraer has
issued a written notice to Buyer of such failure.
4.4 Net payments:
4.4.1 All payments to be made by Buyer under this Agreement shall be made
without set-off or withholding whatsoever (except for Embraer Taxes, as defined
in Article 17). If
Page 6
Buyer is obliged by law to make any deduction or withholding from any such
payment (other than for Embraer Taxes), the amount due from Buyer in respect of
such payment shall be increased to the extent necessary to ensure that, after
the making of such deduction or withholding, Embraer receives a net amount equal
to the amount Embraer would have received had no such deduction or withholding
been required to be made.
4.5 Payment Date
Unless otherwise agreed by the Parties in writing, payment of the amounts
referred in Articles 4.1.2, 4.1.3, and 4.1.4 shall be made by Buyer on
**Material Redacted** Day of the month on which each of such payments is
due.
5. DELIVERY
5.1 Aircraft: Subject to payment in accordance with Article 4 and the
provisions of Articles 7 and 9, the Aircraft shall be tendered by Embraer
to Buyer in the condition required hereunder, by means of a written
notice, for inspection, acceptance and subsequent delivery in Fly Away
Factory condition (i.e., Ex works (Incoterms 2000), with the Aircraft to
be flown away by Buyer), at Sao ▇▇▇▇ dos ▇▇▇▇▇▇, State of Sao Paulo,
Brazil, according to the following schedule:
Aircraft Number Contractual Delivery Date
1 **Material Redacted**/2006
2 **Material Redacted**
3 **Material Redacted**
4 **Material Redacted**
5 **Material Redacted**
6 **Material Redacted**
7 **Material Redacted**
8 **Material Redacted**
9 **Material Redacted**
10 **Material Redacted**/2008
5.2 **Material Redacted**
6. CERTIFICATION
6.1 By **Material Redacted**, the Embraer 190LR model aircraft shall be type
certified by the Brazilian Airworthiness Authority (CTA) and type
validated by (a) USA FAA in accordance with 14 CFR FAR 25 Amendment 25-84
effective 10 July 1995 and (b) by the Airworthiness Authority of Panama
("AAC"), provided that **Material Redacted**.
6.2 The Aircraft shall be delivered to Buyer in conformity with **Material
Redacted** and with the requirements set forth herein. Embraer will
provide Buyer with an export certificate of airworthiness issued by CTA,
which will certify that, as of the date of its issuance, the Aircraft has
been inspected and found to conform in all respects to the CTA / AAC
approved Type Design and in a condition **Material Redacted**. The
condition of the Aircraft on delivery and the documentation delivered with
the Aircraft, including the above mentioned export certificate of
Page 7
airworthiness, shall **Material Redacted**. Subject to the above, it shall
be Buyer's responsibility to obtain such certificate of airworthiness for
and the registration of the Aircraft, at Buyer's sole expense. **Material
Redacted**
7. ACCEPTANCE AND TRANSFER OF OWNERSHIP
7.1 Unless Buyer is notified of any delay in delivery in accordance with and
in conformity with the terms and conditions of this Agreement, the
Aircraft shall be delivered in accordance with all of the provisions and
schedules specified in Article 5 and otherwise in such condition as
required under this Agreement. Embraer shall give Buyer **Material
Redacted** Days advance facsimile notice of the date on which Embraer
considers that each Aircraft will be ready for inspection, acceptance and
subsequent delivery. Upon successful completion of ground and flight tests
performed by Embraer, Buyer will receive a written confirmation of the
Scheduled Inspection Date, on which date Buyer shall promptly start
inspecting such Aircraft.
7.2 Buyer shall have up to **Material Redacted** Days, as necessary, to
inspect and conduct an acceptance flight of each Aircraft prior to its
delivery. Embraer will provide the fuel and insurance for the Aircraft's
acceptance flight in accordance with Embraer insurance policy.
7.3 If Buyer finds an Aircraft acceptable, Buyer shall promptly pay any and
all amounts then due and payable pursuant to this Agreement, including but
not limited to all amounts referred to under Articles 4.1, 4.2, 7.8 and 8
as applicable and accept delivery of such Aircraft, whereupon the
necessary title and risk transfer documents shall be executed and
exchanged in order to effect title transfer, subject to all express
warranties set forth in this Agreement that by their terms survive
delivery.
7.4 Buyer may decline to accept an Aircraft, which does not materially comply
with the requirements of Article 6, the specification set forth in
Attachment "A" or is not in an airworthy condition. For the purposes of
**Material Redacted**, an Aircraft shall be deemed not to be materially
compliant when one or more of the Aircraft characteristics identified in
Article 11.2.1 **Material Redacted** are adversely affected by such
non-compliance vis-a-vis the specification set forth in Attachment A.
7.5 If Buyer declines to accept an Aircraft, Buyer shall immediately give
Embraer written notice including its reasons for such refusal and Embraer
shall have **Material Redacted** Days, commencing on the first Working Day
after receipt of such notice, to take all necessary actions in order to
resubmit the Aircraft to Buyer for re-inspection.
7.6 Buyer shall be allowed **Material Redacted** Days to re-inspect the
Aircraft, starting immediately upon receipt of notice from Embraer that
all necessary actions were taken. The period required for inspection as
well as the one mentioned in Article 7.5 shall not be considered as part
of the **Material Redacted** Day grace period provided for in Article
9.2.1. In the event Buyer declines to accept an Aircraft after **Material
Redacted**, the Parties shall convene promptly after final refusal to
accept the Aircraft in order to negotiate possible solutions. If within
**Material Redacted** Days counted from the date in
Page 8
which Embraer receives notice of such final refusal to accept the
Aircraft, Embraer and Buyer fail to reach an agreement, then **Material
Redacted**.
7.7 Should Buyer fail to perform the acceptance and accept transfer of title
to an Aircraft **Material Redacted** provided for and in accordance with
this Article 7, Embraer shall be entitled, at its reasonable discretion,
to either re-negotiate the terms of this Agreement with Buyer or terminate
this Agreement with regard to the affected Aircraft pursuant to Article
20.3. **Material Redacted**
7.8 Notwithstanding the provisions of Article 7.7 and in addition to Embraer's
rights pursuant to Article 20.3 and **Material Redacted** should Buyer
fail to perform the acceptance and transfer of title to the Aircraft
within the time period specified in Articles 7.2, 7.5 and 7.6, as
applicable **Material Redacted**, interest will accrue at the rate of
**Material Redacted** over the unpaid balance of the relevant Aircraft
Purchase Price, prorated from the date **Material Redacted** Days after
**Material Redacted**. Without prejudice to Embraer's rights set forth in
Article 7.7, interest accrued will be invoiced by Embraer on a monthly
basis, beginning one month after the date on which the Aircraft acceptance
or transfer of title should have been performed, and payment thereof shall
be made by Buyer in accordance with the instructions contained therein.
8. STORAGE CHARGE
8.1 A storage charge equal to USD**Material Redacted** per Day shall be
charged by Embraer to Buyer commencing on: 8.1.1 Buyer's failure to
perform inspection or re-inspection of an Aircraft, per the date or time
period properly specified in writing by Embraer, according to Articles 5
and/or 7, as applicable.
8.1.2 Buyer's acceptance of an Aircraft when Buyer defaults in the fulfillment
of any payment due and in taking title to such Aircraft promptly thereafter.
8.1.3 Buyer's failure to remove an Aircraft from Embraer's facilities after
title transfer has occurred.
8.2 If however, Buyer notifies Embraer in writing **Material Redacted** Days
in advance of its expected delay in the performance of its obligations set
forth in Articles 8.1.1, 8.1.2 and 8.1.3, the storage charge shall
commence on the **Material Redacted** Day after the occurrence of the
events set forth in Articles 8.1.1, 8.1.2 or 8.1.3, as applicable.
8.3 In the event that an Aircraft Contractual Delivery Date must be extended
by Embraer from that which is designated in Article 5, due to Buyer's
failure to perform any action or provide any information contemplated by
this Agreement other than the ones specified in Article 8.1, the storage
charge shall commence on the **Material Redacted** Day after the
Contractual Delivery Date relative to such Aircraft.
8.4 Buyer shall pay the storage charge as set forth in Articles 8.1. or 8.3,
as applicable, in United States dollars, per each month of delay or
prorated for part thereof, within **Material Redacted** Days after the
presentation of each invoice by Embraer.
9. DELAYS IN DELIVERY
Page 9
9.1 Excusable Delays:
9.1.1 Embraer shall not be held liable or be found in default for any delays in
the delivery of an Aircraft or in the performance of any act to be performed by
Embraer under this Agreement, resulting from, but not restricted to, the
following events or occurrences (hereinafter referred to as "Excusable Delays"):
(a) force majeure (including, but not limited to acts of God, war or state of
war, civil war, insurrection, fire, accident, explosion, flood, act of
government, requisition, strike, labor disputes causing cessation or
interruption of work, including but not limited to walkouts, sick-outs, protests
or slowdowns), (b) inability despite due and all commercially reasonable efforts
to procure any materials, equipment, accessories, parts or means of transport,
or (c) any delay resulting from any failure by Buyer to perform any action or
provide any information contemplated by this Agreement or, (d) delays resulting
from any other cause to the extent it is beyond Embraer's control or does not
result from Embraer's fault or negligence.
9.1.2 Within **Material Redacted** Days after the occurrence of any Excusable
Delay, Embraer undertakes to send a written notice to Buyer including a
description of the details involved and an estimate of the effects
expected upon the timing of the performance of its contractual
obligations.
9.1.3 Any such delays shall extend the time for delivery of an Aircraft
**Material Redacted** by the same number of Days required for the cause of
delay to be remedied, subject in all cases to the provisions of Article
9.1.4. Embraer undertakes to use all commercially reasonable efforts to
avoid or remove any cause of Excusable Delay and to minimize its effect on
the Contractual Delivery Date of an Aircraft **Material Redacted**.
9.1.4 If the cause of such Excusable Delay is such as to last longer than
**Material Redacted** Days or to render the performance of this Agreement
impossible, then Buyer shall have the right to terminate this Agreement
without liability to either Party, except as provided for in Article 20.2.
9.1.5 **Material Redacted**
9.2 Non-Excusable Delays:
9.2.1 If the delivery of an Aircraft is delayed for any reason that does not
constitute an Excusable Delay (hereinafter a "Non-excusable Delay") by
more than **Material Redacted** Days after the Contractual Delivery Date
for such Aircraft, Buyer will be entitled to claim from Embraer and
Embraer shall pay to Buyer liquidated damages equal to **Material
Redacted** up to the date that the Aircraft is available for inspection
and acceptance by, and delivery to Buyer in conformity herewith, it being
understood that such liquidated damages will not, in any event, exceed
**Material Redacted** and that it will only be due and payable by Embraer
to Buyer within **Material Redacted** Days after Buyer pays to Embraer the
total Aircraft Purchase Price, **Material Redacted**.
9.2.2 Upon the occurrence of any event, which constitutes a Non-excusable Delay
in delivery of an Aircraft, Embraer undertakes to send a written notice to
Buyer, within **Material Redacted**, including a description of the delay
and an estimate of the effects expected upon the delivery of the Aircraft.
9.2.3 It is agreed between the Parties that if, with respect to a delayed
Aircraft,
Page 10
Embraer does not receive a claim for liquidated damages pursuant to
Article 9.2.1, from Buyer, within **Material Redacted** Days after the
Actual Delivery Date of such Aircraft, Buyer shall be deemed to have fully
waived its right to such liquidated damages.
9.2.4 **Material Redacted**
9.3 Delay Due to Loss or Structural Damage of the Aircraft: Should any
Aircraft be destroyed or damaged before acceptance to the extent that it
becomes commercially useless, Buyer may, **Material Redacted**, either
take a replacement Aircraft at a later delivery date to be agreed by the
Parties, or terminate this Agreement with respect to such Aircraft by
notice to Embraer given in accordance with Article 23, without any
liability to either Party. If this Agreement is terminated **Material
Redacted**, such termination shall discharge the Parties from all
obligations and liabilities of the Parties hereunder with respect to such
Aircraft and Services **Material Redacted**.
10. INSPECTION AND QUALITY CONTROL
10.1 In order to effect inspection and acceptance of the Aircraft as set forth
in Article 7, Buyer shall send one or more authorized representatives to
Embraer's facilities in order to verify that the Aircraft was manufactured
in accordance with the procedures, specifications and other requirements
specified in this Agreement and according to all applicable quality
control standards.
10.2 Buyer shall communicate to Embraer the names of its authorized
representatives, by means of written notice, at least thirty (30) Days
prior to the earliest delivery date specified in Article 5.
10.3 Such representatives, or other representatives indicated by Buyer, shall
be authorized and duly empowered to sign the acceptance and documents and
accept delivery of the Aircraft pursuant to Article 7.
10.4 For the purposes subject of this Article 10, Embraer shall provide
communication facilities (telephone and facsimile) for Buyer's authorized
representatives, as well as the necessary tools, measuring devices, test
equipment and technical assistance as may be necessary to perform
acceptance tests.
10.5 Buyer's authorized representatives shall observe Embraer's administrative
rules and instructions while at Embraer's facilities.
10.6 Buyer's authorized representative shall be allowed exclusively in those
areas related to the subject matter of this Article 10 and Buyer
furthermore agrees to hold harmless Embraer from and against all and any
kind of liabilities in respect to such representatives, for whom Buyer is
solely and fully responsible under all circumstances and in any instance.
11. CHANGES
11.1 In addition to the requirements of Article 6, each Aircraft will comply
with the standards defined in Attachment "A" and shall incorporate all
modifications which are classified as AD's mandatory by CTA or the Air
Authority as provided in Article 11.4, or those agreed upon by Buyer and
Embraer in accordance with this Article.
11.2 The Parties hereby agree that changes can be made by Embraer in the design
of
Page 11
the Aircraft, the definition of which and its respective classification
shall be in compliance to the Aircraft type specification, as follows:
11.2.1 Minor Changes: defined as those modifications which shall not adversely
affect the Aircraft in any of the following characteristics:
**Material Redacted**
11.2.2 Major Changes: defined as those modifications which affect at least one
of the topics mentioned in Article 11.2.1.
11.3 Embraer shall have the right, but not the obligation (except to the extent
required by the CTA or applicable Aviation Authorities), to incorporate
Minor Changes in the Aircraft still in the production line at its own
cost, without the prior consent of Buyer.
11.4 Embraer shall convey those Major Changes that are classified as AD's by
means of service bulletins approved by the Air Authority and/or CTA, as
appropriate. Service bulletins that implement such ADs shall be referred
to as Mandatory Service Bulletins. Embraer shall incorporate Mandatory
Service Bulletins as follows:
11.4.1 Compliance required before Actual Delivery Date: Embraer shall
incorporate Mandatory Service Bulletins at Embraer's expense in a
reasonable period of time if the compliance time for such Mandatory
Service Bulletins is before the Actual Delivery Date. Embraer shall not be
liable for **Material Redacted** resulting from incorporation of Mandatory
Service Bulletins when the Aircraft has already passed the specific
production stage affected by the incorporation of said change.
11.4.2 Compliance required after Actual Delivery Date: During the applicable
Aircraft warranty coverage periods as specified in Attachment "C", Embraer
shall provide parts kits for Mandatory Service Bulletins that are issued
either (i) before the relevant Aircraft's Actual Delivery Date but with a
compliance time after such date or (ii) after the relevant Aircraft's
Actual Delivery Date. Such kits shall be provided **Material Redacted**,
excluding **Material Redacted** labor charges for installation of such
Mandatory Service Bulletins **Material Redacted**. Embraer shall not be
liable for any downtime of delivered Aircraft that may be necessary for
the incorporation of any changes. When flight safety is affected, such
changes shall be immediately incorporated. If warranty coverage is not
available or applicable pursuant to Attachment "C", the provisions of
Article 11.5 shall apply.
For the avoidance of doubt, the **Material Redacted** shall **Material
Redacted** pursuant to **Material Redacted**.
11.5 Major changes, (other than those which are AD's mandatory per Article
11.4), any change developed by Embraer as product improvement and any
change required by Buyer, including those changes required by Panamanian
authorities as a consequence of alterations, amendments and/or innovations
of its present applicable regulations, shall be considered as optional
and, pursuant to Buyer's request, the corresponding cost proposals shall
be submitted by Embraer to Buyer for consideration and approval. Should
Buyer not approve any such change, it shall not be incorporated in the
Aircraft.
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11.6 Any Major Change to the Aircraft, made in accordance with the foregoing
paragraphs, which affect the provisions of Attachment "A", shall be
incorporated in said Attachment by means of an amendment.
11.7 Except as concerns AD's and Minor Changes, the Aircraft shall, on the
Scheduled Inspection Date, comply with the terms and conditions of
Attachment "A" as from time to time amended pursuant to Article 11.6.
Determination of such compliance shall be made by Buyer pursuant to
Article 7.
12. WARRANTY
The materials, design and workmanship relative to the Aircraft subject to
this Agreement, will be warranted in accordance with the terms and
conditions specified in Attachment "C". If Buyer intends to place the
Aircraft on lease to another Party or to assign, transfer or novate the
rights and obligations except as specified in Article 14, it is Buyer's
responsibility to obtain the prior written consent of Embraer, which
consent shall not be unreasonably withheld or delayed, as well as to
provide Embraer written notice of any changes as to Buyer's designated
lessee or assignee complying with item 5 of Attachment "C".
13. PRODUCT
SUPPORT PACKAGE Embraer shall supply to Buyer the Product Support Package
described in Article 2 of Attachment "B", which includes Embraer's spare
parts policy, the Technical Publications and the Services.
14. ASSIGNMENT
Buyer's rights and obligations hereunder may not be assigned, transferred
or novated without the prior written consent of Embraer, which shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing, Buyer
may immediately before delivery assign the rights to take delivery of an
Aircraft and Buyer's rights pursuant to **Material Redacted** to any
related person or entities or to any trust created by it or such persons
or to any financing party whether by way of security in connection with
the financing or the sale/leaseback of any Aircraft to be operated by
Compania Panamena de Aviacion, S.A.
Embraer's rights and obligations hereunder may not be assigned or
delegated without the prior written consent of Buyer, which shall not be
unreasonably withheld or delayed.
15. RESTRICTIONS AND PATENT INDEMNITY
This sale does not include the transfer of designs, copyrights, patents,
and other similar rights to Buyer. Embraer warrants that the Aircraft and
all systems, accessories, equipment, items and parts manufactured by or at
the direction or utilizing designs of Embraer do not infringe any patent,
copyright or other proprietary right of any person. Subject to Buyer's
duty to promptly advise Embraer of any alleged infringement (it being
understood that any failure to so notify Embraer shall only relieve
Embraer of its obligations pursuant hereto to the extent of actual
prejudice suffered by Embraer as a direct result of such failure), Embraer
shall indemnify, defend, protect and hold Buyer harmless with respect to
any claims, suits, actions, judgments, liabilities, damages and costs,
including
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reasonable attorney fees and expenses arising out of or in connection with
any actual or alleged infringement by any Aircraft or any system,
accessory, equipment, item or part installed on any Aircraft at the time
of delivery of such Aircraft or thereafter, at Embraer's direction. In the
event of any such infringement, and in addition to the foregoing
obligations of Embraer, Embraer shall promptly, at its sole option and
expense, either: (i) procure for Buyer the right to use the system,
accessory or equipment or part; (ii) replace such system accessory,
equipment or part with a non-infringing item or part; or (iii) modify such
system, accessory, equipment or part to make it non-infringing. This
indemnity shall not apply to Buyer-furnished equipment, nor to aircraft
engines or APUs, nor to any system, accessory, equipment or part that was
not manufactured to Embraer's detailed design, nor to any system,
accessory, equipment or part manufactured to Embraer's detailed design
without Embraer's consent.
16. MARKETING PROMOTIONAL RIGHTS
Embraer shall have the right to show for marketing purposes, free of any
charge, the image of Buyer's Aircraft, painted with Buyer's colors and
emblems, affixed in photographs, drawings, films, slides, audiovisual
works, models or any other medium of expression (pictorial, graphic, and
sculptural works), through all mass communications media such as
billboards, magazines, newspaper, television, movie, theaters, as well as
in posters, catalogues, models and all other kinds of promotional
material. **Material Redacted** Embraer **Material Redacted**. In the
event such Aircraft is sold to or operated by or for another company or
person, Embraer shall be entitled to disclose such fact, as well as to
continue to show the image of the Aircraft, free of any charge, for
marketing purposes, either with the original. If accepted, said
prohibition, however, shall in no way apply to the promotional materials
or pictorial, graphic or sculptural works already existing or to any
contract for the display of such materials or works already binding
Embraer at the time of receipt of the notification. **Material Redacted**.
17. TAXES
Embraer shall pay all taxes **Material Redacted** as may be imposed under
Brazilian laws. All other taxes, **Material Redacted** as may be imposed
on the transactions subject of this Agreement, shall be borne by Buyer.
18. APPLICABLE LAW
This Agreement shall be construed in accordance with and its performance
shall be governed by the laws of the State of New York, USA without regard
to any conflict of law rules other than General Obligations Law 5-1401 and
5-1402.
19. JURISDICTION
All disputes arising in connection with this Agreement shall be finally
settled in the courts of the United States District Court for the Southern
District of New York located in the county of New York, provided that if
such court lacks jurisdiction, disputes shall be resolved in the state
courts for the state of New York sitting in the Borough of Manhattan, City
of New York. The Parties hereby waive any other court of Jurisdiction that
may be competent for settlement of disputes arising from this Agreement.
Page 14
**Material Redacted**
20. TERMINATION
20.1 Should either Party fail to perform its obligations hereunder, the other
Party shall be entitled to give notice of such failure and to require that
such failure be remedied within the period specified in that notice, which
period shall not be less than **Material Redacted** Days. Should such
failure not be remedied within the period so specified, then the Party who
gave notice of such failure shall be entitled to terminate this Agreement
**Material Redacted**. The foregoing provision shall not apply in any
circumstance where a specific right of termination is made available
hereunder or will be made available hereunder upon the expiration of a
specific period of time. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY IN ANY
CIRCUMSTANCE UNDER THIS AGREEMENT FOR ANY CONSEQUENTIAL OR PUNITIVE
DAMAGES WHICH MAY ARISE OUT OF, OR BE CONNECTED TO, ANY BREACH OR DEFAULT
UNDER OF ANY TERM, CONDITION, COVENANT, WARRANTY, OR PROVISION OF THIS
AGREEMENT, AND WHICH EITHER PARTY WOULD OTHERWISE BE ENTITLED TO UNDER ANY
APPLICABLE LAW, INCLUDING BUT NOT LIMITED TO ANY CLAIMS SOUNDING IN
CONTRACT, TORT, EQUITY OR STATUTE.
20.2 Buyer and Embraer shall have the right to terminate this Agreement in
respect to the relevant Aircraft, upon the occurrence of any Excusable
Delay of **Material Redacted** Days or longer, unless otherwise agreed in
writing by the Parties, and Buyer shall have the right to terminate this
Agreement in respect to the relevant Aircraft upon the occurrence of any
Non-excusable Delay of **Material Redacted** Days or longer after the
relevant Aircraft Contractual Delivery Date, such rights to be exercisable
by written notice from one Party to the other to such effect no earlier
than such **Material Redacted** Day, as applicable. Upon receipt of such
notice of termination by Buyer or Embraer, as the case may be, **Material
Redacted**. It is hereby agreed by the Parties that, in either case, no
other indemnity shall be due by Embraer to Buyer. **Material Redacted**
20.3 If Buyer terminates this Agreement before the Actual Delivery Date of an
Aircraft (except as provided in Article 20.1 and 20.2) or if Embraer
terminates this Agreement in relation to an Aircraft, pursuant to Articles
4.3 or 7.7, Buyer shall pay to Embraer (i) damages in an amount equal to
**Material Redacted**. For these purposes Embraer may **Material
Redacted**. It is hereby agreed by the Parties that upon the receipt by
Embraer of the amounts set forth above, no other indemnity shall be due by
Buyer to Embraer.
**Material Redacted**
20.4 If Buyer terminates this Agreement in respect to an Aircraft pursuant to
Article 7.6, Embraer, shall **Material Redacted**, with no other penalty
or indemnity being due by Embraer to Buyer in this case.
**Material Redacted**
20.5 **Material Redacted**
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21. OPTION FOR THE PURCHASE OF ADDITIONAL AIRCRAFT
Buyer shall have the option to purchase twenty (20) additional Option
Aircraft, to be delivered in accordance with the following Option Aircraft
contractual delivery date:
Option **Material Option
Aircraft Delivery month Redacted** Aircraft Delivery month Exercise Date
-------- -------------- ---------- -------- -------------- -------------
1 **Material Redacted** **Material 12 **Material **Material
Redacted** Redacted** Redacted**
2 **Material Redacted** 13 **Material
Redacted**
3 **Material Redacted** **Material 14 **Material
Redacted** Redacted**
4 **Material Redacted** 15 **Material **Material
Redacted** Redacted**
5 **Material Redacted** **Material 16 **Material
Redacted** Redacted**
6 **Material Redacted** 17 **Material
Redacted**
7 **Material Redacted** 18 **Material **Material
Redacted** Redacted**
8 **Material Redacted** 19 **Material
Redacted**
9 **Material Redacted** **Material 20 **Material
Redacted** Redacted**
10 **Material Redacted**
11 **Material Redacted**
The Option Aircraft will be supplied in accordance with the following terms and
conditions:
21.1 **Material Redacted** is due and payable by Buyer to Embraer in accordance
with **Material Redacted**.
21.2 The unit basic price of the Option Aircraft shall be equal to the unit
Aircraft Basic Price, provided that such Option Aircraft be delivered
within the delivery period above mentioned and in the same configuration,
specification and installations specified in Attachment "A", as it is
written on the date of signature of this Agreement, determining the Option
Aircraft Basic Price.
21.3 The unit basic price of each relevant Option Aircraft above mentioned
shall be escalated according to the escalation formula subject of
Attachment "D", determining the Option Aircraft Purchase Price.
21.4 The payment of the Option Aircraft Purchase Price shall be made according
to the
Page 16
following:
21.4.1 **Material Redacted** shall apply **Material Redacted**.
21.4.2 A progress payment of **Material Redacted** percent (**Material
Redacted**%) of the unit Option Aircraft Basic Price less the relevant
Option Aircraft Initial Deposit is due and payable **Material Redacted**
prior to each relevant Option Aircraft contractual delivery date.
21.4.3 A progress payment of **Material Redacted** percent (**Material
Redacted**%) of the unit Option Aircraft Basic Price is due and payable
**Material Redacted** prior to each relevant Option Aircraft contractual
delivery date.
21.4.4 A progress payment of **Material Redacted** percent (**Material
Redacted**%) of the unit Option Aircraft Basic Price is due and payable
**Material Redacted** prior to each relevant Option Aircraft contractual
delivery date.
21.4.5 The balance of each relevant Option Aircraft Purchase Price is due and
payable upon acceptance of each relevant Option Aircraft by Buyer.
21.4.6 The provisions of Article 4.3 through 4.5 shall apply mutatis-mutandis,
to the payments to be made by Buyer towards the Option Aircraft.
21.5 Buyer has the option to purchase the Option Aircraft in **Material
Redacted**. Exercise of each **Material Redacted** shall be accomplished
by means of a written notice from Buyer delivered to Embraer by mail,
return receipt requested, express delivery or facsimile, no later than the
"Exercise Date" **Material Redacted**, otherwise **Material Redacted**. On
the **Material Redacted** Exercise Date, Buyer shall inform Embraer
**Material Redacted** will be exercised or not. In the event on the
Exercise Date Buyer elects to not exercise **Material Redacted**, Buyer's
options **Material Redacted**. If, however, in the Exercise Date Buyer
elects to exercise its option in **Material Redacted**, Buyer will
**Material Redacted**, provided however **Material Redacted** in Embraer's
**Material Redacted**.
21.6 If the options are confirmed by Buyer as specified above, (a) an amendment
to this Agreement shall be executed by and between the Parties within
thirty (30) Days following the Option Aircraft option exercise date,
setting forth the terms and conditions applicable to, if any, exclusively
to the Option Aircraft and (b) the **Material Redacted** shall **Material
Redacted**.
21.7 For the avoidance of any doubt, the terms and conditions contained in this
Agreement shall also apply to any exercised Option Aircraft, with the
exception that the product support package to be applied to the exercised
Option Aircraft shall be as described in Article 2 of Attachment "B".
22. INDEMNITY
Buyer agrees to indemnify and hold harmless Embraer and Embraer's
officers, agents, employees and assignees from and against all
liabilities, damages, losses, judgments, claims and suits, including costs
and expenses incident thereto, which may be suffered by, accrued against,
be charged to or recoverable from Embraer and/or Embraer's officers,
agents, employees and assignees by reason of loss or damage to property or
by reason of injury or death of any
Page 17
person resulting from or in any way connected with the performance of
services by employees, representatives or agents of Embraer for or on
behalf of Buyer related to Aircraft delivered by Embraer to Buyer,
including, but not limited to, technical operations, maintenance, and
training services and assistance performed while on the premises of
Embraer or Buyer, while in flight on Buyer-owned Aircraft or while
performing any other service, at any place, in conjunction with the
Aircraft operations of Buyer, except to the extent caused by Embraer's
willful misconduct or gross negligence.
23. NOTICES
All notices permitted or required hereunder shall be in writing in the
English language and sent, by recognized international courier service or
facsimile, to the attention of the Director of Contracts as to Embraer and
of the CEO as to Buyer, to the addresses indicated below or to such other
address as either Party may, by written notice, designate to the other.
All notices shall be deemed to have been duly made, given and received,
only when properly addressed (as set forth below): (i) on the date
received by personal delivery; or (ii) on the date received when deposited
with a internationally recognized courier service; or (iii) five business
days after sending, when sent via Certified Mail, Return Receipt Request;
or (iv) upon receipt when sent via facsimile (with a second copy sent via
Mail) to the facsimile number set forth below and a confirmation of
receipt is received by the sending Party:
23.1 EMBRAER:
EMBRAER - Empresa Brasileira de Aeronautica S.A.
▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
12.227-901 Sao ▇▇▇▇ dos ▇▇▇▇▇▇ - SP - Brasil
Telephone: (▇▇▇ ▇▇) ▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇ ▇▇) ▇▇▇▇-▇▇▇▇
23.2 BUYER:
REGIONAL AIRCRAFT HOLDINGS LTD.
▇/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ Numero 51 Piso 11
Panama, Rep of Panama
Fax: ▇▇▇-▇▇▇-▇▇▇▇
24. CONFIDENTIALITY
Neither Buyer nor Embraer shall disclose the terms of this Agreement
except as needed to its officers, employees, auditors, insurers (brokers)
and legal advisors and except (a) as required by law or legal process, (b)
to a prospective financing party in connection with the financing of
Aircraft (limited to assignable provisions), or (c) with the prior written
consent of the other party. In addition, Buyer and Embraer may disclose
the terms of this Agreement to shareholders who hold more than ten percent
(10%) of their respective common shares, provided that (i)
Page 18
such shareholders are not, in the case of Buyer, competitors or affiliates
of competitors of Embraer in the business of manufacturing aircraft, or in
the case of Embraer, competitors or affiliates of competitors of Compania
Panamena de Aviacion, S.A. in the business of a scheduled airline, and
(ii) such shareholders, to the extent not officers of a Party shall have
executed a confidentiality agreement with the other Party. Without
limiting the foregoing, in the event either Party is legally required to
disclose the terms of this Agreement, each Party agrees to exert its best
efforts to request confidential treatment of the articles and conditions
of this Agreement relevantly designated by the other as confidential.
25. SEVERABILITY
If any provision or part of a provision of this Agreement or any of the
Attachments shall be, or be found by any authority or court of competent
jurisdiction to be, illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall not affect the other provisions or
parts of such provisions of this Agreement, all of which shall remain in
full force and effect.
26. NON-WAIVER
Except as otherwise specifically provided to the contrary in this
Agreement, any Party's refrain from exercising any claim or remedy
provided for herein shall not be deemed a waiver of such claim or remedy,
and shall not relieve the other Party from the performance of such
obligation at any subsequent time or from the performance of any of its
other obligations hereunder.
27. INTEGRATED AGREEMENT
All attachments and exhibits referred to or delivered in connection with
this Agreement and/or attached hereto are, by such reference or
attachment, incorporated in this Agreement to the same extent as if fully
set forth herein.
28. NEGOTIATED AGREEMENT
Buyer and Embraer agree that this Agreement, including all of its
Attachments, has been the subject of discussion and negotiation and is
fully understood by the Parties, and that the rights, obligations and
other mutual agreements of the Parties contained in this Agreement are the
result of such complete discussion and negotiation between the Parties.
29. WAIVER OF JURY TRIAL
EACH OF EMBRAER AND BUYER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING TO WHICH THEY ARE BOTH PARTIES INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE)
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT.
30. WAIVER OF IMMUNITY
To the extent that either party may in any jurisdiction in which
proceedings may at any time be taken for the determination of any question
arising under or for the enforcement of this Agreement be entitled to
claim or otherwise be accorded for itself or its respective property,
assets or revenues immunity fro suit or attachment (whether in aid of
execution, before judgment or otherwise) or other legal process, and to
the extent that in any such jurisdiction, there may be
Page 19
attributed to either party, or its respective property, assets or revenues
such immunity (whether or not claimed), both Parties hereby irrevocably
agree not to claim and waive such immunity to the fullest extent permitted
by the law of such jurisdiction.
31. PAYMENTS IN US DOLLARS
All amounts to be paid hereunder shall be paid in United States dollars
("Dollars"), in immediately available funds. The specifications of Dollars
in this transaction is of the essence. The obligations of either party in
respect of payments to be made hereunder shall not be discharged by an
amount paid in another currency, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on prompt conversion to
Dollars under normal banking procedures does not yield the amount of
Dollars owing to the party receiving the same. If a party receives an
amount in respect of the other party's liability under this Agreement or
if such liability is converted into a claim, proof, judgment or order in a
currency other than Dollars, the party liable for payment will indemnify
the party to whom payment is to be made an in independent obligation
against any loss arising out of or as a result of such receipt or
conversion. If the amount received by such party, when converted into
Dollars (at the market rate at which the receiving party is able on the
relevant date to purchase Dollars in New York with that other currency) is
less than the amount owed in Dollars the party liable for such payment
hereunder will, forthwith on demand, pay to the party entitled to receive
such payment an amount in Dollars equal to the deficit.
32. COUNTERPARTS
This Agreement may be signed by the Parties in any number of separate
counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument and all of which when taken together shall
constitute one and the same instrument.
33. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement of the Parties with
respect to the matters contained herein and supersedes all previous and
connected negotiations, representations and agreements between the
Parties, whether in writing or other form. This Agreement may not be
altered, amended or supplemented except by a written instrument executed
by the Parties.
Page 20