Document:

Exhibit

EXECUTION COPY

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
ENGINE SALE AND 
PURCHASE AGREEMENT
Dated as of January 27, 2020
between
CONTRAIL AVIATION LEASING, LLC 
as Seller
and

ALF V LLC 
as Buyer
for

One (1) CFM56-7B22 Engine
Manufacturer’s Serial Number 889727

	
			
	 
	 
	 

 

TABLE OF CONTENTS

	
				
	 
	 
	Page

	Section 1.
	

	Definitions and Construction
	1

	1.1
	

	Defined Terms
	1

	1.2
	

	Construction
	3

	Section 2.
	

	Sale of Engine
	3

	2.1
	

	Delivery
	3

	2.2
	

	Deposit; Purchase Price
	3

	2.3
	

	Place of Delivery and Delivery
	4

	2.4
	

	Title and Risk of Loss
	4

	2.5
	

	Warranties
	4

	Section 3.
	

	Delivery Conditions
	4

	3.1
	

	Conditions to Buyer’s Obligations
	4

	3.2
	

	Conditions to Seller’s Obligations
	5

	Section 4.
	

	Taxes, Indemnities and Insurance
	5

	4.1
	

	Sales Taxes
	5

	4.2
	

	Seller Indemnity
	5

	4.3
	

	Buyer Indemnity
	6

	4.4
	

	After Tax Basis
	7

	4.5
	

	Insurance
	7

	4.6
	

	Survival
	7

	Section 5.
	

	Excusable Delay
	7

	5.1
	

	Excusable Delay
	6

	Section 6.
	

	Representations and Warranties
	7

	6.1
	

	Representations and Warranties of Seller
	7

	6.2
	

	Representations and Warranties of Buyer
	9

	6.3
	

	Limitation of Warranties and Agreements
	10

	Section 7.
	

	Miscellaneous
	10

	7.1
	

	Notices
	10

	7.2
	

	Assignment
	11

	7.3
	

	Headings
	11

	7.4
	

	Brokers’ Commissions
	11

	7.5
	

	Survival of Representations, Warranties and Indemnities
	12

	7.6
	

	Governing Law; Jurisdiction
	12

	7.7
	

	Entire Agreement
	12

	7.8
	

	Waivers
	12

	7.9
	

	Unenforceability
	13

	
			
	 
	i
	 

TABLE OF CONTENTS
(continued)
Page

	
				
	7.10
	

	Counterparts; Signatures
	13

	7.11
	

	Expenses
	13

	7.12
	

	Confidentiality
	13

	7.13
	

	No Third-Party Beneficiaries
	13

	7.14
	

	Limitation of Damages
	13

	7.15
	

	Cape Town Convention
	14

Exhibits and Attachment
	
		
	 
	 

	Exhibit A
	Warranty Bill of Sale

	Exhibit B
	Insurances

	Exhibit C
	Technical Acceptance Certificate

	Exhibit D
	Acceptance Certificate

	Exhibit E
	QEC Listing

	
			
	 
	ii
	 

ENGINE SALE AND PURCHASE AGREEMENT
THIS ENGINE SALE AND PURCHASE AGREEMENT (“Agreement”) is entered into as of January 27, 2020 between CONTRAIL AVIATION LEASING, LLC, a Wisconsin limited liability company (“Seller”) and ALF V LLC, a Delaware limited liability company (“Buyer”).
RECITALS
WHEREAS, Seller is the owner of one (1) used CFM56-7B22 engine bearing manufacturer’s serial number 889727, in QEC configuration as detailed in Exhibit E, including all appliances, parts, accessories and other equipment installed on, or attached thereto, and any loose equipment specific thereto, all records, logs, technical data and manuals in the possession of Seller and one Dedienne model D71STA00005G02 engine stand bearing serial number MCC190345-3-1 (collectively, the“Engine”); and
WHEREAS, subject to the terms and conditions of this Agreement, Seller and Buyer have agreed that Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Engine.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, Buyer and Seller hereby agree as follows:
Section 1.Definitions and Construction.
1.1    Defined Terms.  The following terms, when capitalized as below, shall have the following meanings when used in this Agreement:
“Acceptance Certificate” means an Acceptance Certificate substantially in the form shown on Exhibit D.
“Business Day” means a day, other than a Saturday or a Sunday, on which banks are open for business in New York, New York and Chicago, Illinois, U.S.A.
“Buyer Guarantee” means the guarantee of all of Buyer's obligations under this Agreement, issued by the Buyer Guarantor in favor of Seller.
“Buyer Guarantor” means Residual Based Finance Corporation, an Illinois corporation. 
“Buyer Indemnitee” means Buyer, Buyer Guarantor, any financier for Buyer in relation to the Engine, their respective affiliates and their respective shareholders, partners, members, managers, officers, directors, employees, agents, representatives, successors and assigns.
“Cape Town Treaty” means, collectively, the official English language text of the Convention of International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment each adopted on November 16, 2001 at a diplomatic conference in Cape Town, South Africa.
“Claims” shall have the meaning given to such term in Section 4.2.

	
			
	 
	 
	 

Engine Sale and Purchase Agreement

“Delivery” means, on the Delivery Date, the concurrent occurrence of the events enumerated in Section 2.1.
“Delivery Date” means the date on or before the Final Delivery Date on which the Delivery occurs.
“Delivery Location” shall have the meaning given to such term in Section 2.3.
“Dollars” and the sign “$” means the lawful currency of the United States of America.
“FAA” means the Federal Aviation Administration of the U.S. Department of Transportation.
“Final Delivery Date” means January 31, 2020, unless a later date is agreed to by the parties in writing.
“Government Entity” means any (a) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign, or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (d) multinational organization or body; or (e) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, regulatory, or taxing authority or power of any nature.
“International Registry” has the meaning ascribed thereto in the Cape Town Treaty.
“Lien” means liens, security interests, mortgages, encumbrances, pledges, charges, leases, rights of first offer, rights of first refusal and any other claims of a similar nature, and any public filing, registration or recordation evidencing or purporting to evidence any of the foregoing.
“Purchase Price” means [                                               ] Dollars (US $[            ]).
“Sales Taxes” shall have the meaning given to such term in Section 4.1.
“Seller Indemnitees” means Seller, Contrail Aviation Support, LLC, Old National Bank, and each of their respective affiliates, members, managers, officers, directors, employees, agents, representatives, successors and assigns.
“Seller’s Additional Insureds” means Contrail Aviation Support, LLC, Old National Bank, Sapphire Finance I Holding Designated Activity Company, Avolon Aerospace Leasing Limited, Wells Fargo Trust Company, N.A., Wells Fargo Bank, N.A., CIT Aerospace International, Glencar Investments VI Designated Activity Company, Sapphire Aviation I Limited, Sapphire Aviation Finance I (US) LLC, Phoenix American Financial Services and their respective successors and permitted assigns and their respective affiliates, officers, directors, managers, employees, agents, partners and shareholders or members of the ownership structure of the Engine howsoever denominated.

	
			
	 
	2
	 

Engine Sale and Purchase Agreement

“Technical Acceptance Certificate” means a Technical Acceptance Certificate in substantially the form shown on Exhibit C.
“Warranties” means any and all warranties and/or indemnities given by the manufacturer or any other person in relation to the Engine or any part thereof, in each case to the extent subsisting and capable of assignment.
“Warranty Bill of Sale” means a bill of sale in the form of Exhibit A.
1.2    Construction.  Any agreement referred to in this Section 1 means such agreement as from time to time modified, supplemented and amended in accordance with its terms.  References to sections, exhibits and the like refer to those in or attached to this Agreement unless otherwise specified.  “Including” means “including but not limited to” and “herein”, “hereof”, hereunder”, etc. mean in, of, or under, etc. this Agreement (and not merely in, of, under, etc. the section or provision where that reference appears).
Section 2.    Sale of Engine.  Subject to the provisions of this Agreement, Seller agrees to sell the Engine to the Buyer and Buyer agrees to purchase the Engine from the Seller, for the Purchase Price on the Delivery Date in an “as is, where is” condition with all faults.
2.1    Delivery.  On the Delivery Date, the concurrent occurrence of each of the following events shall constitute Delivery of the Engine:
(a)    Seller shall deliver, or cause to be delivered, the Engine to Buyer at the Delivery Location;
(b)    Seller shall sell and transfer to Buyer title to the Engine pursuant to the execution and delivery by Seller of the Warranty Bill of Sale, provided Seller has received the Purchase Price.
2.2    Deposit; Purchase Price.
(a)    No deposit is required under this Agreement. 
(b)    On or prior to Delivery, and in any event prior to the delivery of the Warranty Bill of Sale, payment of the Purchase Price shall be made in immediately available funds by wire transfer to:
	
		
	Bank:
	Old National Bank
1 Main Street
Evansville, IN  47708

	ABA No.
	[         ]

	Beneficiary
	Contrail Aviation Leasing, LLC
435 Investment Court
Verona, WI  53593

	Account No.:
	[         ]

	SWIFT Code:
	[        ]

	Ref:
	ESN 889727

	
			
	 
	3
	 

Engine Sale and Purchase Agreement

or to such other account as Seller may specify in writing to Buyer on or prior to the date upon which such amount is due and payable.
Upon execution of this Agreement, Seller will remove the Engine from the market and shall cease any negotiations to sell the Engine to any third parties, unless and until this Agreement becomes null and void.
2.3    Place of Delivery and Delivery.  Delivery of the Engine shall occur on the Delivery Date at Tucson, Arizona (“Delivery Location”).
2.4    Title and Risk of Loss.  Upon the execution and delivery of the Warranty Bill of Sale, title and risk of loss with respect to the Engine shall pass to Buyer. 
2.5    Warranties.  Seller hereby assigns to the Buyer, as of Delivery, and to the extent assignable, all of the Seller’s right, title and interest in and to the Warranties and agrees that it shall take commercially reasonable steps to effect such assignment.
Section 3.    Delivery Conditions.
3.1    Conditions to Buyer’s Obligations.  Buyer’s obligation to buy the Engine shall be subject to the satisfaction of, or waiver by Buyer of, the following conditions:
(a)    Seller shall have tendered delivery of the Engine (including, for the avoidance of doubt, the related records, logs, technical data and manuals) to Buyer at the Delivery Location;
(b)    Receipt by Buyer of the fully executed Warranty Bill of Sale following receipt by Seller of the Purchase Price;
(c)    The Engine shall be in the same condition as its condition as of the date of Buyer’s execution and delivery of the Technical Acceptance Certificate, ordinary wear and tear of storage excepted;
(d)    Each of the representations and warranties of the Seller contained herein  shall be true and correct in all material respects as of Delivery (except to the extent that such representations and warranties relate solely to an earlier date, in which case they shall be true in all material respects as of such earlier date);
(e)    Buyer shall have received copies of all historical bills of sale with respect to the Engine back to the manufacturer;
(f)    Buyer shall have received copies of all non-incident/non-accident statements with respect to the Engine covering the entire period from the initial delivery of the Engine from the manufacturer to the first owner or operator thereof to the Delivery Date;
(g)    Buyer shall have received an FAA8130 release certificate from the facility at which the Engine was kept immediately prior to the Delivery;

	
			
	 
	4
	 

Engine Sale and Purchase Agreement

(h)    Buyer shall have received a copy of the maximum performance run parameters post-last flight, which should include the takeoff EGT margin rated at 7B22 power;
(i)    Buyer shall have received FAA and International Registry searches with respect to the Engine and shall otherwise be satisfied that the Engine is free and clear of any Liens; and
(j)    Buyer shall be satisfied that the Delivery of the Engine at the Delivery Location shall not result in the imposition of any Sales Tax.
3.2    Conditions to Seller’s Obligations.  Seller’s obligation to sell the Engine shall be subject to the satisfaction or waiver by Seller of the following conditions:
(a)    receipt by Seller of the Purchase Price;
(b)    receipt by Seller of certificates from Buyer’s designated insurance broker evidencing Buyer’s compliance with the insurance provisions of Section 4.5 hereof in a form reasonably satisfactory to Seller; 
(c)    receipt by Seller of an executed Technical Acceptance Certificate (at the time of the execution of this Agreement), an executed Acceptance Certificate (at the time of Delivery), and an executed Buyer Guarantee in a form reasonably acceptable to Seller;
(d)    each of the representations and warranties of the Buyer contained herein shall be true and correct in all material respects as of Delivery (except to the extent that such representations and warranties relate solely to an earlier date, in which case they shall be true in all material respects as of such earlier date); and
(e)    Seller shall be satisfied that the Delivery of the Engine at the Delivery Location shall not result in the imposition of any Sales Tax.
Section 4.    Taxes, Indemnities and Insurance.
4.1    Sales Taxes.  Buyer and Seller shall cooperate with each other in all reasonable respects to lawfully mitigate or eliminate the imposition of any sales, use, excise, stamp, transfer, value added, gross receipts or any other similar taxes, duties, fees or charges (collectively, “Sales Taxes”) that may be imposed on Seller, Buyer or the Engine by any Government Entity in any jurisdiction as a result of the sale or purchase of the Engine under this Agreement.  The Purchase Price does not include the amount of any Sales Taxes that may be imposed by any Government Entity in any jurisdiction as a result of the sale of the Engine under this Agreement.  Buyer shall be solely responsible for and promptly pay when due, and will on demand indemnify and hold harmless Seller on a full indemnity, after-tax basis from and against, all Sales Taxes, and all penalties, fines, additions to tax and interest thereon, which may be levied by any Government Entity in the jurisdiction of the Delivery Location as a result of the sale of the Engine at Delivery, excluding any taxes based upon any Seller Indemnitee’s income.
4.2    Seller Indemnity.  Seller agrees to indemnify, defend, save and hold harmless each Buyer Indemnitee, in full and on demand from and against any and all Claims (defined infra) 

	
			
	 
	5
	 

Engine Sale and Purchase Agreement

which may be asserted by a third party against a Buyer Indemnitee (regardless of when same are suffered or incurred):  (a) arising directly or indirectly out of or in any way connected with the purchase, registration, performance, transportation, management, leasing, replacement, removal or redelivery, ownership, possession, control, use, operation or other activity of the Engine by Seller or any operator or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters to the extent attributable to the period prior to Delivery or (b) as a result of the breach by Seller of any of its obligations, representations or warranties hereunder or any documents entered into in connection herewith;
Provided that the indemnities from Seller contained in this Section 4.2 shall not extend to any Claims to the extent that such Claims:
(i)    arise out of any act, omission, event or circumstance occurring in respect of the Engine after Delivery;
(ii)    are caused by the willful misconduct or gross negligence of any of the Buyer Indemnitees; or
(iii)    are the result of a failure by Buyer to comply with any of its obligations under this Agreement or any representation or warranty of Buyer contained in this Agreement not being true and correct.
4.3    Buyer Indemnity.  Buyer agrees to indemnify, defend, save and hold harmless each Seller Indemnitee, in full and on demand from and against any and all losses, liabilities, actions, proceedings, penalties, fines, judgments, damages, fees, costs, expenses, claims, obligations, or other liabilities (“Claims”) which may be asserted by a third party against a Seller Indemnitee (regardless of when same are suffered or incurred):  (a) arising directly or indirectly out of or in any way connected with the purchase, registration, performance, transportation, management, sale, inspection, testing, delivery, leasing, replacement, removal or redelivery, condition, ownership, maintenance, service, repair, overhaul, improvement, modification or alteration, possession, control, use, operation or other activity of the Engine by Buyer or any operator, or relating to loss or destruction of or damage to any property, or death or injury to any person caused by, relating to or arising from or out of (in each case whether directly or indirectly) any of the foregoing matters to the extent attributable to the period from and after Delivery or (b) as a result of the breach by Buyer of any of its obligations, representations or warranties hereunder or any documents entered into in connection herewith;
Provided that the indemnities from the Buyer contained in this Section 4.3 shall not extend to any Claims to the extent that such Claims:
(i)    arise out of any act, omission, event or circumstance occurring in respect of the Engine before Delivery;
(ii)    are caused by the willful misconduct or gross negligence of any of the Seller Indemnitees; or

	
			
	 
	6
	 

Engine Sale and Purchase Agreement

(iii)    are the result of a failure by Seller to comply with any of its obligations under this Agreement or any representation or warranty of Seller contained in this Agreement not being true and correct.
4.4    After-Tax Basis.  Any payment or indemnity made under Section 4.2 or 4.3 shall include any amount necessary to hold the relevant indemnitee harmless on an after-tax basis from all withholding taxes and other taxes, fees and other charges required to be paid with respect to such payment or indemnity under all applicable laws.  Each party shall give prompt written notice to the other party of any liability for which it is, or may be, liable under this provision; provided, however, failure to give such notice will not terminate any of the rights of such indemnitee hereunder.  
4.5    Insurance.  Buyer shall comply with each of the provisions of Exhibit B hereto, which provisions are hereby incorporated by reference as if set forth in full herein.
4.6    Survival.  The parties further agree and confirm that their obligations and agreements with respect to insurance and indemnification set forth herein shall survive the execution and delivery of this Agreement and the payment of the Purchase Price for the Engine hereunder.
Section 5.    Excusable Delay.
5.1    Excusable Delay.  Neither party hereto shall be responsible for, nor be deemed to be in default or breach of, this Agreement as a result of any delay in Delivery due to injunction against sale or any causes beyond its control and not occasioned by its negligence or willful misconduct, including, but not limited to, acts of God or the public enemy, acts of government, civil wars, insurrection or riots, fires, floods, explosions, earthquakes or other casualties, strikes or labor troubles causing cessation, slowdown or interruption of work.  Any party failing to perform its obligations under this Agreement as a result of an event described in this Section 5.1 shall use commercially reasonable efforts perform its obligations hereunder.
Section 6.    Representations and Warranties.
6.1    Representations and Warranties of Seller.  Seller hereby makes the following representations at execution and delivery of this Agreement, and at Delivery:
(a)    Organization, Etc.  Seller is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to enter into and perform its obligations under this Agreement.
(b)    Authorization.  Seller has taken, or caused to be taken, all necessary company or organizational action (including, without limitation, the obtaining of any consent or approval of any of its members or any managers required by its certificate of formation, limited liability company agreement or other charter documents) to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.
(c)    No Violation.  The execution and delivery by Seller of this Agreement, the performance by Seller of its obligations hereunder, and the consummation by Seller on the date 

	
			
	 
	7
	 

Engine Sale and Purchase Agreement

hereof and on the Delivery Date of the transactions contemplated hereby, do not and will not (i) violate or contravene any provision of any certificate of formation or other charter documents of Seller, (ii) violate or contravene any law applicable to or binding on Seller, or (iii) violate, contravene or constitute any default under, or result in the creation of any Lien under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, loan or other material agreement, instrument or document to which Seller is a party or by which Seller or any of their respective properties is or may be bound or affected.
(d)    Approvals.  The execution and delivery by Seller of this Agreement, the performance by Seller of its obligations hereunder, and the consummation by Seller on the date hereof and on the Delivery Date of the transactions contemplated hereby, do not and will not require the consent, approval or authorization of, or the giving of notice to, or the registration with, or the recording or filing of any documents with, or the taking of any other action in respect of, (i) any trustee or other holder of any debt of Seller, or (ii) any Government Entity.
(e)    Valid and Binding Agreement.  This Agreement has been duly authorized, executed and delivered by Seller and, assuming the due authorization, execution and delivery by any other party or parties thereto, this Agreement constitutes the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with the respective terms thereof, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting the rights of creditors generally and general principles of equity, whether considered in a proceeding at law or in equity.
(f)    Title.  Upon delivery of the Warranty Bill of Sale by Seller to Buyer, Seller shall transfer full good and marketable legal and beneficial title to the Engine to Buyer free and clear of all Liens.
(g)    Litigation.  There are no pending or, to the actual knowledge of Seller, threatened actions or proceedings against Seller before any court, administrative agency or tribunal which, if determined adversely to Seller, would adversely affect the ability of Seller to perform any of its obligations under this Agreement.
(h)    Solvency.  Seller is solvent and not subject to any bankruptcy proceedings.
(i)    Sanctions.  Neither Seller nor any of its affiliates is:  (i) a target of U.S., European Union, United Kingdom, or other economic, financial or trade sanctions in force from time to time; (ii) named, identified or described on any blocked persons list, specially designated nationals list, prohibited persons list, or other official list of restricted persons with whom U.S., European Union or United Kingdom persons, or persons otherwise subject to the jurisdiction of the U.S., the European Union or the United Kingdom may not conduct business, including, but not limited to, restricted party lists published or maintained by (A) U.S. Treasury Department’s Office of Foreign Assets Control, (B) the U.S. Department of Commerce, (C) the U.S. Department of State, (D) the European Union or (E) Her Majesty’s Treasury of the United Kingdom; or (iii) owned or controlled by, or an actor on behalf of, any person described in clauses (i) or (ii).

	
			
	 
	8
	 

Engine Sale and Purchase Agreement

6.2    Representations and Warranties of Buyer.  Buyer hereby makes the following representations at execution and delivery of this Agreement, and at Delivery:
(a)    Organization, Etc.  Buyer is duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation and has the power and authority to enter into and perform its obligations under this Agreement.
(b)    Corporate Authorization.  Buyer has taken, or caused to be taken, all necessary company or organizational action (including, without limitation, the obtaining of any consent or approval of any of its members or any managers required by its certificate of formation, limited liability company agreement or other charter documents) to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder.
(c)    No Violation.  The execution and delivery by Buyer of this Agreement, the performance by Buyer of its obligations hereunder and thereunder, and the consummation by Buyer on the date hereof and on the Delivery Date of the transactions contemplated hereby and thereby, do not and will not (i) violate or contravene any provision of the constitutive documents of Buyer, (ii) violate or contravene any law applicable to or binding on Buyer, or (iii) violate, contravene or constitute any default under, or result in the creation of any Lien under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, lease, loan or other material agreement, instrument or document to which Buyer is a party (other than an interest in a general debenture relating to the Buyer’s general financing arrangements with its banking syndicate) or by which Buyer or any of its properties is or may be bound or affected.
(d)    Approvals.  The execution and delivery by Buyer of this Agreement, the performance by Buyer of its obligations hereunder and thereunder, and the consummation by Buyer on the date hereof and on the Delivery Date of the transactions contemplated hereby or thereby for such date, do not and will not require the consent, approval or authorization of, or the giving of notice to, or the registration with, or the recording or filing of any documents with, or the taking of any other action in respect of, (i) any trustee or other holder of any debt of Buyer, or (ii) any Government Entity.
(e)    Valid and Binding Agreement.  This Agreement has been duly authorized, executed and delivered by Buyer and, assuming the due authorization, execution and delivery by the other party or parties thereto, this Agreement constitutes the legal, valid and binding obligations of Buyer and is or will be enforceable against Buyer in accordance with the respective terms thereof, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting the rights of creditors generally and general principles of equity, whether considered in a proceeding at law or in equity.
(f)    Sanctions.  Neither Buyer nor any of its affiliates is:  (i) a target of U.S., European Union, United Kingdom, or other economic, financial or trade sanctions in force from time to time; (ii) named, identified or described on any blocked persons list, specially designated nationals list, prohibited persons list, or other official list of restricted persons with whom U.S., European Union or United Kingdom persons, or persons otherwise subject to the jurisdiction of the U.S., the European Union or the United Kingdom may not conduct business, including, but not limited to, restricted party lists published or maintained by (A) U.S. Treasury Department’s 

	
			
	 
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Engine Sale and Purchase Agreement

Office of Foreign Assets Control, (B) the U.S. Department of Commerce, (C) the U.S. Department of State, (D) the European Union or (E) Her Majesty’s Treasury of the United Kingdom; or (iii) owned or controlled by, or an actor on behalf of, any person described in clauses (i) or (ii).
6.3    Limitation of Warranties and Agreements.  THE ENGINE, THE PARTS THEREOF, AND ANY OTHER THING DELIVERED, SOLD OR TRANSFERRED HEREUNDER ARE BEING SOLD AND TRANSFERRED TO BUYER AND ACCEPTED BY BUYER HEREUNDER “AS-IS, WHERE-IS,” WITH ALL FAULTS.  BUYER UNCONDITIONALLY AGREES THAT AS BETWEEN BUYER AND SELLER THE ENGINE AND EACH PART THEREOF IS TO BE SOLD AND PURCHASED IN AN AS IS, WHERE IS, WITH ALL FAULTS CONDITION AS AT THE DELIVERY DATE, AND, EXCEPT AS TO TITLE WARRANTIES CONTAINED HEREIN AND IN THE WARRANTY BILL OF SALE, NO WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND HAS BEEN ACCEPTED, MADE OR IS GIVEN BY SELLER OR ITS SERVANTS OR AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF THE ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF THE ENGINE RECORDS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN OR OTHER PROPRIETARY RIGHTS; AND ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.
Section 7.    Miscellaneous.
7.1    Notices.  Every notice, request, demand or other communication (collectively, “Notice”) under this Agreement shall:
(a)    be in writing delivered personally or by prepaid courier or other similar services or by electronic mail;
(b)    be deemed to have been received, in the case of an e-mail upon the earlier of (i) confirmation of receipt of such e-mail by the addressee; or (ii) on the fifth day after sending, provided the sender thereof has not received actual notice of failed delivery, and, in the case of a Notice delivered personally or by courier service, when delivered (provided that if delivery is tendered but refused, such Notice shall be deemed effective upon such tender); and

	
			
	 
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Engine Sale and Purchase Agreement

(c)    be sent:
to Seller at:
Contrail Aviation Leasing, LLC 
435 Investment Court 
Verona, WI 53593 
E-mail:  Steve@contrail.com 
Attention: Steve Williamson
with a copy to:
Boardman & Clark LLP 
One South Pinckney, Suite 410 
Madison, WI 53703 
E-mail:  fsutherland@boardmanclark.com 
Attention:  Frank C. Sutherland
to Buyer at:
ALF V LLC 
c/o RESIDCO 
70 W Madison, Suite 2200 
Chicago, IL 60602-4275 
Attention:  Treasury & Control 
Email: treasurycontrol@residco.com
or to such other address or facsimile number as is notified by one party to the other party under this Agreement.
7.2    Assignment.  This Agreement may not be assigned by either party without the prior written consent of the other party hereto; provided that the Buyer may assign this Agreement to an affiliate.  In the event of such assignment, Buyer and the assignee, jointly and severally, will be responsible to Seller for all obligations and liabilities as the buyer of the Engine to be delivered hereunder, and Seller may enforce its rights accordingly.
7.3    Headings.  All headings in this Agreement are for convenience only, and are not a substantive part of this Agreement.
7.4    Brokers’ Commissions.
(a)    Buyer agrees to indemnify each Seller Indemnitee from and against all claims, demands, liabilities, damages, losses and judgments (including reasonable attorneys’ fees, consultants’ fees and court costs) which arise out of Buyer’s actions with respect to agents or brokers.

	
			
	 
	11
	 

Engine Sale and Purchase Agreement

(b)    Seller represents that it has not engaged any agent or broker entitled to any compensation as a result of the transactions contemplated by this Agreement.  Seller agrees to indemnify each Buyer Indemnitee from and against all claims, demands, liabilities, damages, losses and judgments (including reasonable attorneys’ fees, consultants’ fees and court costs) which arise out of Seller’s actions with respect to agents or brokers.
7.5    Survival of Representations, Warranties and Indemnities.  Each of the representations, warranties and indemnities of the parties hereto shall survive the execution and delivery of this Agreement and the Delivery of the Engine.
7.6    Governing Law; Jurisdiction.  
(1)      THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, U.S.A. APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE WITHOUT REGARD FOR CONFLICT OF LAW PRINCIPLES (OTHER THAN THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
(a)    The parties agree that the federal courts located in New York, New York (in the Borough of Manhattan) are to have non-exclusive jurisdiction to settle any disputes in connection with this Agreement and the other documents related hereto and irrevocably submit to the jurisdiction of such courts in connection with this Agreement and the other documents related hereto.
(b)    Each party hereto:
(i)    waives objection to such courts on grounds of inconvenient forum, venue or otherwise as regards proceedings in connection with this Agreement and other documents related hereto; and
(ii)    agrees that (subject to permitted appeals) a judgment or order of such a court in connection with this Agreement or the other documents related hereto is conclusive and binding on it and may be enforced against them in the courts of any other jurisdiction.
7.7    Entire Agreement.  This Agreement shall constitute the entire agreement between the parties with respect to the transactions contemplated herein, supersede any prior or contemporaneous agreements, whether oral or in writing, between the parties, and this Agreement shall not in any manner be supplemented, amended or modified except by a writing executed on behalf of the parties by their authorized representatives.  This Agreement shall not be interpreted or construed against any party to this Agreement because that party or attorney for that party drafted the Agreement or participated in the drafting of this Agreement, and the parties expressly waive any law, common law or court decision to the contrary.
7.8    Waivers.  The waiver of performance of any term of this Agreement in a particular instance shall not constitute a waiver of any subsequent breach or preclude either party from thereafter demanding performance thereof according to the provisions hereof.

	
			
	 
	12
	 

Engine Sale and Purchase Agreement

7.9    Unenforceability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.
7.10    Counterparts; Signatures.  This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but both of which together will constitute one and the same agreement, and which shall be sufficiently evidenced by any one of such original counterparts.  A facsimile or PDF copy signature on any counterpart hereto will be deemed an original for all purposes.
7.11    Expenses.  Except as otherwise expressly provided herein, each party shall be responsible for and shall pay the costs and expenses incurred by it in connection with the negotiation and drafting of this Agreement and the consummation of the transactions contemplated hereby, including attorneys’ fees and expenses and technical, inspection and/or appraisal costs. Seller will, however, be responsible for any FAA counsel or registration fees associated with the transactions contemplated under this Agreement.
7.12    Confidentiality.  The parties each acknowledge that the commercial and financial information contained in this Agreement is considered confidential.  The parties each agree that it will treat the contents and subject matter of this Agreement as confidential and will not, without the prior written consent of the other, disclose this Agreement or the subject matter hereof to any third party except to their respective affiliates and its and their respective owners, employees, officers, directors, managers, partners, members, professional advisors, potential financing sources, insurance brokers, auditors and or other agents (“Representatives”), or as may be required by applicable law or rule or regulation of any stock exchange or the SEC, or as may be required to enforce the terms of this Agreement.  Upon disclosure required by any applicable law, rule or regulation, such disclosing party shall use its commercially reasonable efforts to secure confidential treatment from all recipients of such confidential information and shall cooperate with the efforts of the other party to ensure such treatment; provided that this sentence shall not apply where such disclosure makes the previously confidential information publicly available.  Each party shall inform its Representatives that it expects them to comply with the provisions of this Section 7.12 and each party shall be responsible for any breach of the provisions of this Section 7.12 by any of its Representatives.
7.13    No Third Party Beneficiaries.  Except as provided in Sections 4 and 7.2 hereof, no third party is intended to benefit from, nor may any third party seek to enforce any of the provisions of, this Agreement.
7.14    Limitation of Damages.  No party will in any event be liable to any other party for any indirect, special, consequential or punitive damages arising out of any breach or otherwise in respect of this Agreement or the subject matter hereof, except, for the avoidance of doubt, to the extent the indemnification provisions hereunder require an indemnity in respect of such damages which are recoverable by a person not a party hereto against a Seller Indemnitee or a Buyer Indemnitee, it being understood that this provision shall not limit or expand the scope or content of such indemnification provisions.

	
			
	 
	13
	 

Engine Sale and Purchase Agreement

7.15    Cape Town Convention.  Once legal title to the Engine has duly passed to Buyer pursuant to the Warranty Bill of Sale, Seller, at its cost, will consent to the registration at the International Registry of a contract of sale registration with respect to the Warranty Bill of Sale.
[Signature page follows.]

	
			
	 
	14
	 

Engine Sale and Purchase Agreement

IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the date first above written.
	
		
	CONTRAIL AVIATION LEASING, LLC, 
as Seller

By:   /s/ Joseph G. Kuhn_____________ 
   Name:  Joseph G. Kuhn 
   Title:    CEO
	ALF V LLC
as Buyer

By:  ALF II, Inc., its Manager

By:   /s/Glenn P. Davis______________ 
   Name:  Glenn P. Davis 
   Title:  President

	
			
	 
	 
	 

F:\DOCS\WD\53544\110\A3682196.DOCX

Engine Sale and Purchase Agreement

EXHIBIT A
WARRANTY BILL OF SALE
___________________, 2020
CONTRAIL AVIATION LEASING, LLC (“Seller”) owns full legal and beneficial title to one (1) used CFM56-7B22 engine bearing manufacturer’s serial number 889727, in QEC configuration as detailed in the Purchase Agreement, including all appliances, parts, accessories and other equipment installed on, or attached thereto, and any loose equipment specific thereto, all records, logs, technical data and manuals in the possession of Seller and one Dedienne model D71STA00005G02 engine stand bearing serial number MCC190345-3-1, all as more particularly described in the Purchase Agreement (the “Engine”).
For good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Seller hereby sells, grants, transfers and delivers to ALF V LLC (“Buyer”), full legal and beneficial  title and interest in and to the Engine.
This Warranty Bill of Sale is delivered pursuant to the Engine Sale and Purchase Agreement, dated as of _____________ ___, 2020 (the “Purchase Agreement”), between Seller and Buyer.
The undersigned hereby warrants to Buyer (and Buyer’s successors and assigns) that Seller conveys to Buyer full good and marketable legal and beneficial title to the Engine, free and clear of all Liens (as defined in the Purchase Agreement) and that Seller shall warrant and defend such title against any claims and demands; provided, that the Engine is otherwise conveyed “AS IS”, “WHERE IS” AND “WITH ALL FAULTS” AND (EXCEPT AS PREVIOUSLY PROVIDED IN THIS PARAGRAPH OR IN SECTION 6.1(f) OF THE PURCHASE AGREEMENT, IN EACH CASE SPECIFIC TO TITLE) WITHOUT REPRESENTATION OR WARRANTY OF ANY TYPE OR KIND, EXPRESS OR IMPLIED, WITH RESPECT THERETO (INCLUDING, WITHOUT LIMITATION, AS TO CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE) and is subject to each and every disclaimer contained in the Purchase Agreement.
THIS WARRANTY BILL OF SALE IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, U.S.A. APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE WITHOUT REGARD FOR CONFLICT OF LAW PRINCIPLES (OTHER THAN THE PROVISIONS OF SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).
[Signature page follows.]

	
			
	 
	1
	 

Engine Sale and Purchase Agreement

IN WITNESS WHEREOF, Seller has caused this Warranty Bill of Sale to be executed in its name as of the date first written above.
	
		
	 
	CONTRAIL AVIATION LEASING, LLC, as Seller 
By:    _______________________   
   Name:  Joseph G. Kuhn 
   Title:    CEO

	
			
	 
	2
	 

Engine Sale and Purchase Agreement

EXHIBIT B
INSURANCES

Section 1.  Insurances.  From Delivery and continuously thereafter until two (2) years following Delivery, Buyer will carry or cause to be carried with respect to the Engine comprehensive aviation legal liability insurance including but not limited to aircraft third party, property damage, passenger, baggage, cargo, mail and airline general third party (including products) legal liability insurance including without limitation, war risk and allied perils, (I) in an amount of not less than (a) if the Engine is being operated, Five Hundred Million Dollars ($500,000,000), or (b) when the  Engine is removed from service, during such period, Buyer shall in place of the requirements above procure general liability insurance and aviation products liability insurance for no less than Ten Million Dollars ($10,000,000) for any one occurrence and in the aggregate with respect to products liability, (II) of the type usually carried by similar corporations engaged in the same or a similar business, and which covers risks of a kind customarily insured against by such corporations, (III) which is maintained in effect with insurers of recognized reputation and responsibility, and (IV) which names Seller and Seller’s Additional Insureds as additional insureds under the policy or policies comprising this insurance coverage with all such requirements satisfactory to Seller, acting reasonably.

Buyer shall endeavor that this insurance shall contain a waiver of subrogation in favor of Seller Indemnitees.

Section 2.  Terms of Insurance Policies.  Any policies carried in accordance with Section 1 hereof covering the Engine, and any policies taken out in substitution or replacement for any such policies, (i) name the Seller Indemnitees as additional insureds (but without imposing on any such party liability to pay premiums with respect to such insurance), (ii) provide that if the insurers cancel such insurance for any reason whatever, or if the same is allowed to lapse for non-payment of premium or if any material change is made in the insurance which adversely affects the interest of any Seller Indemnitee, such lapse, cancellation or change shall not be effective as to any Seller Indemnitee for thirty days (seven days in the case of war risk and allied perils coverage) after written notice by such insurers to Seller of such lapse, cancellation or change, provided, however, that if any notice period specified above is not reasonably obtainable, such policies shall provide for as long a period of prior notice as shall then be reasonably obtainable, (iii) expressly provide that all of the provisions thereof, except the limits of liability, shall operate in the same manner as if there were separate policy covering each insured, and (iv) provide that the insurers will waive any right to any setoff.

On or before the Delivery Date for the Engine, the Buyer shall provide to Seller a certificate of insurance evidencing the coverage obtained pursuant to this Exhibit in a form reasonably satisfactory to Seller and shall provide to Seller, upon request, an updated certificate of insurance upon each renewal of the coverage described in this Exhibit B.

	
			
	 
	Exhibit B
Page 1
	 

Engine Sale and Purchase Agreement

EXHIBIT C
FORM OF TECHNICAL ACCEPTANCE CERTIFICATE
As of ____________, 2020, ALF V LLC (“Buyer”), technically accepts one (1) used CFM56-7B22 engine bearing manufacturer’s serial number 889727, in QEC configuration as detailed in the Agreement, including all appliances, parts, accessories, and other equipment installed on, or attached thereto as of the date hereof and all records, logs, technical data and manuals in the possession of Seller and made available to Buyer for inspection and one Dedienne model D71STA00005G02 engine stand bearing serial number MCC190345-3-1 (“Engine”) pursuant to the terms of that certain Engine Sale and Purchase Agreement dated as of _____________ __, 2020 (the “Agreement”) between Buyer and CONTRAIL AVIATION LEASING, LLC (“Seller”).  Capitalized terms used but not defined herein have the meanings ascribed thereto in the Agreement.
Buyer hereby unconditionally and irrevocably acknowledges and agrees that the Engine and its records are technically acceptable to Buyer without exception as of the date hereof.
Engine Total Flight Hours:
Engine Total Flight Cycles:
Take Off EGT Margin:    
Post Delta Turbine Rear Frame Work Borescope Inspection:
FAA 8130 Release Certificate Post Delta Turbine Rear Frame Work issued by AIM, LLC:
	
		
	 
	ALF V LLC
as Buyer

By:  ALF II, Inc., its Manager

By:   __________________    
   Name: 
   Title:

	
			
	 
	Exhibit C
Page 1
	 

Engine Sale and Purchase Agreement

EXHIBIT D
FORM OF ACCEPTANCE CERTIFICATE
As of ____________, 2020, ALF V LLC (“Buyer”), accepts one (1) used CFM56-7B22 engine bearing manufacturer’s serial number 889727, in QEC configuration as detailed in the Agreement, including all appliances, parts, accessories, and other equipment installed on, or attached thereto as of the date hereof and all records, logs, technical data and manuals in the possession of Seller and one Dedienne model D71STA00005G02 engine stand bearing serial number MCC190345-3-1 (“Engine”) pursuant to the terms of that certain Engine Sale and Purchase Agreement dated as of _____________ __, 2020 (the “Agreement”) between Buyer and CONTRAIL AVIATION LEASING, LLC (“Seller”).  Capitalized terms used but not defined herein have the meanings ascribed thereto in the Agreement.
Buyer hereby unconditionally and irrevocably acknowledges and agrees that the Engine and its records are acceptable to Buyer without exception as of the date hereof.
	
		
	 
	ALF V LLC, 
as Buyer

By:  ALF II, Inc., its Manager

By:  _____________________     
   Name: 
   Title:

	
			
	 
	Exhibit D
Page 1
	 

Engine Sale and Purchase Agreement

EXHIBIT E
QEC LISTING
[See attached.]

	
							
	AIRCRAFT INSPECTION & MANAGEMENT, LLC
2481 W. Poppy Avenue, Tucson, Arizona  85705 - Office (520) 399·6489  Fax (520) 579·8855
FAA CRS # 8AIR305B / EASA 145.6258
.Specializing Worldwide in
CFMS6-3/5/7 Surgical Strike Repair I Modular Maintenance Borescope Inspections  LPT & HPC Boroblend Repairs
Top & Bottom Case Repairs  Engine Runs  Removal & Installation of Engines & APU's
8130 Dual Release Serviceable Tags  Equipment Rental Records Review
   AIMFAAMRO COM    FAA & EASA CERTIFIED REPAIR STATION

	WORK ORDER #:   19-10-30-01R

CUSTOMER: Contrail Aviation Support, LLC.
                                                         ESN:   889727                                                                                           CFM56-7 SERIES

ENGINE MODEL:   CFM56-7822                                                                             QEC INVENTORY REPORT 
                  DATE:   25-Nov-2019

	Description of Component
	Typical Part Number(s)
	Manual References
	Qty
	Part No.
	Serial No.
	Installed? Y/ N

	ATA 24 ELECTICAL POWER

	INTEGRATED DRIVE GENERATOR ((IDG)
	S281A001-101
	71-00-02-22-050
	1
	761574B
	2435
	Y

	QUAD RING
	762075
	71-00-02-22-080
	1
	99167-762246
	2229
	Y

	ATA 26 FIRE PROTECTION

	FIRE DETECTOR UPPER FAN
	S332T100-44
	71-00-02-28-005
	1
	S332T100-44
	3419
	Y

	FIRE DETECTOR LOWER FAN
	S332T100-30
	71-00-02-28-010
	1
	Not Visible
	Not Visible
	Y

	FIRE DETECTOR LH CORE
	S332T100-43
	71-00-02-28-015
	1
	Not Visible
	Not Visible
	Y

	FIRE DETECTOR RH CORE
	S332T100-38
	71-00-02-28-020
	1
	Not Visible
	Not Visible
	Y

	ATA 29 HYDRAULIC SYSTEM

	HYDRAULIC PUMP VICKERS
	10-62167-3
	71-00-02-20-1-015
	1
	N/A
	N/A
	N

	HYDRAULIC PUMP ABEX
	10-62167-2
	71-00-02-20-2-015
	1
	66087
	K0866
	Y

	HYDRAULIC FILTER
	10-60555-7
	71-00-02-21-005
	1
	Not Visible
	Not Visible
	Y

	HYDRAULIC PRESSURE HOSE
	S332A210-21
	71-00-02-21-225
	1
	155012-12-21
	4258
	Y

	HYDRAULIC SUPPLY HOSE
	S332A210-22
	71-00-02-21-300
	1
	155016-20-11
	2,571
	Y

	FITIING QUICK RELEASE
	S332A210-20
	71-00-02-20-020
	1
	Not Visible
	Not Visible
	Y

	ATA 30 ICE & RAIN PROTECTION

	TAI VALVE
	S332A239-2
	71-00-02-27-225
	1
	59364/3215618-4
	6413
	Y

	TAI PRESSURE SWITCH
	21SN41-52
	71-00-02-27-060
	1
	Not Visible
	Not Visible
	Y

	TAI DUCT ASSY
	332A2390-48
	71-00-02-27-100
	1
	Not Visible
	Not Visible
	Y

	ATA 36 PNEUMATICS

	STARTER DUCT ASSY  LOWER
	332A2313-1
	71-00-02-25-100/250
	1
	332A2313-1
	N/A
	Y

	STARTER DUCT ASSY  UPPER
	332A2310-4
	71-00-02-25-100 I 250
	1
	332A2310-4
	N/A
	Y

Page 1 of 4

	
							
	STARTER ASSY
	1851M36P06
	80-11-10-01-010
	1
	1851M36109
	A4561C
	Y

	STARTER VALVE ASSY
	S322A002-2
	71-00-02-25-175
	1
	S332A002-2
	15576
	Y

	PRE COOLER CONTROL VALVE
	10-62008-33
	71-00-02-14-075
	1
	3289562-5
	681C
	Y

	HIGH STAGE AIR REGULATOR
	10-62008-39
	71-00-02-14-150
	1
	10-62008-42
	11753
	Y

	BLEED AIR REGULATOR
	10-62008-40
	71-00-02-14-250
	1
	N/V
	N/V
	Y

	DUCT ASSY 5TH STAGE
	332A2323-10
	71-00-02-16-105
	1
	332A2322-54
	N/A
	Y

	IP CHECK VALVE 5TH STAGE
	10-62008-1
	71-00-02-16-250
	1
	3202222-1
	S043
	Y

	DUCT ASSY 9TH STAGE
	332A2321-10
	71-00-02-16-200
	1
	1896M69G01
	N/V
	Y

	HIGH STAGE VALVE
	10-62008-32
	71-00-02-16-150
	1
	10-62008-32
	11060
	Y

	DUCT ASSY INTERSECTION MANIFOLD
	332A2322-54
	71-00-02-16-300
	1
	N/V
	N/V
	Y

	PRESSURE REGULATING & SHUTOFF VALVE
	10-62008-30
	71-00-02-18-005
	1
	10-62008-30
	4534
	Y

ATA 71 POWERPLANT	
							
	FORWARD ENGINE MOUNT ASSY
	310A2020-10
	71-00-002-02-215
	1
	310A2020-10
	240904
	Y

	THRUST LINK ASSY LH
	310A2041-9
	71-00-02-31-005
	1
	310A2041-9
	240905
	Y

	

THRUST LINK ASSY RH
	310A2041-10
	71-00-02-31-010
	1
	31OA2041-10
	240906
	Y

	AFT ENGINE MOUNT
	310A2030-11
	71-00-02-03-005
	1
	310A2030-25
	B2215
	Y

	IDG AIR/OIL COOLER
	JA538551-3 I S332A260-1
	71-00-02-23-1-05
	1
	UA538551-3
	31536R
	Y

ATA 72 ENGINE	
							
	Compressor Inlet Cone
	N/R
	72-30-00
	1
	N/V
	N/V
	Y

	ACCESSORY  GEARBOX- AGB
	340-046-503-0
	72-00-00-45-710
	1
	340-046-602-0
	EB077533-A
	Y

	TRANSFER GEARBOX - TGB
	340-050-704-0
	72-00-00-45-700
	1
	335-300-501-9
	EB144680-T
	Y

	STATOR  ALTERNATOR
	87006-5
	72-00-00-35-390
	1
	87006-9
	13455
	Y

	ROTOR ALTERNATOR
	85465-2
	72-00-00-35-440
	1
	NV
	N/V
	Y

	ID  RATING PLUG
	390-550-003-0
	72-00-00-92-020
	1
	390-660-501-0
	F0301
	Y

	HARNESS J5
	390-550-003-0
	72-00-00-10-200
	1
	325-034-902-0
	YH218148-B
	Y

	HARNESS J6 (SAC)
	325-026-101-0
	72-00-00-10-190
	1
	325-035-003-0
	YH223158-C
	Y

	HARNESS J7 (SAC)
	325-025-701-0
	72-00-00-10-240
	1
	325-025-702-0
	YH714699-2
	Y

	HARNESS J8
	325-025-801-0
	72-00-00-10-250
	1
	325-025-803-0
	YH230990 -T
	Y

	HARNESS J9
	325-025-201-0
	72-00-00-10-020
	1
	325-043-401-0
	YH237151-1
	Y

	HARNESS J10
	325-025-301-0
	72-00-00-10-040
	1
	325-043-501-0
	YH240767-6
	Y

ATA 73 FUEL & CONTROL	
							
	EEC
	1853M33P02
	72-00-00-15-380A
	1
	1853M33P06
	LMDN5517
	Y

	FUEL PUMP
	828300-4
	72-00-00-35-360B
	1
	340-402-105-0
	YA010356-3
	Y

	FUEL DIFFERENTIAL SWITCH
	QA07670ISS1
	72-00-00-35-080
	1
	QA079951SS-3
	RC3-8775
	Y

	SERVO FUEL HEATER
	45731-1381
	72-00-00-35-180
	1
	45731-1382
	YB003855-H
	Y

	FUEL FLOW TRANSMITTER
	8TJ167GHW1
	72-00-00-23-250
	1
	8TJ167GHM1
	GDB3605M
	Y

Page 2 of 4

	
							
	FILTER FUEL NOZZLE
	FA00631C
	73-11-45-01-10
	1
	FA00631C
	YP932591-3
	Y

	FUEL NOZZLES
	6840023M1
	72-41-00-01 -350
	20
	N/V
	N/V
	Y

	HMU
	442124
	72-00-00-35-140
	1
	442355
	BECW1620
	Y

	BURNING STAGING /SELECTION VALVE (SAC)
	44E64-8
	72-00-02-25-790
	1
	N/A
	N/A
	N

	FUEL SUPPLY INLET HOSE
	S332A280-5
	71-00-02-12-010
	1
	S332A280-5
	3081
	Y

	ATA 74 IGNITION
	 

	IGNITER PLUG - UPPER
	9044035-1
	74-00-00-01-300
	1
	N/V
	N/V
	Y

	IGNITER PLUG - LOWER
	9044035-1
	74-00-00-01-300
	1
	N/V
	N/V
	Y

	IGNITION EXCITER BOX - LOWER
	10-631045-2
	72-00-00-15-010
	1
	10-631045-2
	UNNE8678
	Y

	IGNITION EXCITER BOX -UPPER
	10631045-2
	72-00-00-15-010
	1
	10-631045-2
	UNJL9056
	Y

	IGNITION LEAD (SAC)
	9059110-1
	74-00-00-01-320
	2
	9059110-1
	KCM465 I KV4884
	Y

	ATA 75 AIR

	HPT AAC VALVE
	3291186-5
	75-22-10-01-10
	1
	3291186-6
	GRTG9446
	Y

	LPT ACC VALVE
	C24937001-1
	75-23-10-01-10
	1
	C24937001-1
	YR011484-N
	Y

	TRANSIENT BLEED AIR VALVE
	3291390-1
	75-21-10-05-10
	1
	3291390 -1
	GRTM9213
	Y

	VBV ACTUATOR LH
	7074-200
	75-32-20-01-10
	1
	340-401-604-0
	YU02616-1
	Y

	VBV ACTUATOR RH
	7074-200
	75-32-20-01-50
	1
	340-401-604-0
	N/V
	Y

	VSV ACTUATOR LH
	1211313-008
	75-32-10-01-10
	1
	121313-230
	RPM-PH502
	Y

	VSV ACTUATOR RH
	1211313-008
	75-32-10-01-110
	1
	1211313-230
	NV
	Y

	ATA 77 INDICATING

	N1 SPEED SENSOR
	320-862-401-0
	77-12-10-01-10
	1
	320-862-401-0
	YJ185078K
	Y

	N1 VIBRATION TRANSDUCER
	6237M117A
	77-31-30-01-10
	1
	N/V
	N/V
	Y

	N2 SPEED SENSOR
	320-549-002-0
	77-11-1-01-10
	1
	320-549-004-0
	YJ194606-J
	Y

	T3 SENSOR
	8TC19AAN1
	77-23-10-01-010
	1
	8TC19AAN1
	GDBY661G
	Y

	TS SENSOR
	TC292-01
	77-22-10-01-010
	1
	TC296-02
	YC084231
	Y

	T12 PROBE
	RP235-00
	72-00-00-10-150
	1
	RP235-00
	N/V
	Y

	TEMP CPRSR DISCH SENSOR
	8TC19AAN1
	77-23-10-01-10
	1
	8TC19AAN1
	GDBY661G
	Y

	T49.5 PROBE LH UPPER
	TC296-02
	77-21-10-01-10
	1
	TC296-02
	YC08430-T
	Y

	T49.5 PROBE LH LOWER
	TC296-02
	77-21-10-01 -10
	1
	TC296-02
	N/V
	Y

	T49.5 PROBE RH UPPER
	TC296-02
	77-21-10-01-10
	1
	TC296-02
	YC084223-4
	Y

	T49.5 PROBE RH LOWER
	TC296-02
	77-21-10-01-10
	1
	TC296-02
	YC064304-GR
	Y

	ATA 78 EXHAUST

	Exhaust Plug Assembly
	314A2620-1
	PPBU 71-00-02-32-05
	1
	314A2620-5
	2075
	Y

	Exhaust Nozzle Assembly
	314U2100-72
	PPBU 71-00-02-26-25
	1
	314A2610-1
	2075
	Y

	ATA 79 OIL

	FUEL I OIL HEAT EXCHANGER
	45332-8036
	79-21-20-01-010
	1
	47731-1382
	YB003855-H
	Y

	OIL QUANTITY TRANSMITTER
	8TJ146CFA1
	79-31-00-01-010
	1
	8TJ146CFA1
	YE012321-R
	Y

	OIL SCAVENGE FILTER
	340-400 -302-0
	72-00-00-35-050
	1
	N/V
	N/V
	Y

Page 3 of 4

	
							
	LUBRICATION UNIT
	340-400-004-0
	72-00-00-35-010
	1
	N/V
	N/V
	Y

	IDG OIL COOLER
	45731-1392
	72-00-00-23-840
	1
	45731-1393
	YB91955-C
	Y

	OIL ANTI LEAK VALVE
	340-400-203-0
	72-23-00-05-520
	1
	340-400-203-0
	YT017269-G
	Y

	OIL PRESSURE SWITCH
	APTE8A20007BARD
	79-32-10-01-10
	1
	APTE8A20007BARD
	K-15824
	Y

	OIL TANK
	340-403-802-0
	79-11-20-01-010
	1
	340-403-802-0
	YTO11725-L
	Y

	OIL CLOGGING TRANSMITIER
	QA07656ISSP3
	79-21-40-01-110
	1
	N/V
	N/V
	Y

	OIL TEMPERATURE SENSOR
	RP238-00
	79-31-40-01-10
	1
	RP235-00
	NV
	Y

INSPECTOR #1:(SIGN)            STAMP:            DATE:

_________________________________        AIM 5 INSP.            11/25/19

INSPECTOR #2:(SIGN)            STAMP:            DATE:

_________________________________        AIM 26 INSP.            11/25/19

18629729v1jcg-ex101_6.htm

Exhibit 10.1

EXECUTION VERSION

 

 

J. CREW GROUP, INC.

 

 

January 26, 2020

 

 

VIA EMAIL

Jan Singer

 

 

Dear Jan:

Pursuant to our discussions regarding your employment with J. Crew Group, Inc. (the “Company”), we thought it would be useful to lay out the terms and conditions of our agreement in this letter agreement (this “Agreement”) for all parties to sign.  This Agreement will be effective as of the date hereof, with your employment to commence on February 2, 2020 (the “Commencement Date”).

In consideration of the premises and mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you and the Company hereby agree as follows:

	
1.
	
Employment

1.1Position and Duties.  You will be employed as Chief Executive Officer of the Company with responsibility for the J. Crew lines of business (“J Crew”), including but not limited to J. Crew Retail and J. Crew Factory, but excluding all Madewell lines of business and operations (“Madewell”) as described in the Chinos Holdings, Inc. Form S-1 originally filed with the Securities Exchange Commission on September 13, 2019, as amended from time to time, and you hereby agree to serve in such capacity, commencing effective as of the Commencement Date and ending on your Termination Date (as defined below) (such period, the “Employment Period”).  The consummation of any transactions whereby Madewell is separated from J. Crew Group, Inc. is referred to as the “Madewell Separation.”  You will have the duties, authority and responsibilities commensurate with such position.  You will report directly to the Board of Directors of the Company (the “Board”).  At all times during the Employment Period, you will be appointed to, and shall serve as a member of, the Board (or any successor thereto).  Your employment will be located at the Company’s headquarters in New York, New York.

1.2Outside Activities.  During the Employment Period, you shall devote substantially all of your business time and energy, attention, skills and ability to the performance of your duties and responsibilities hereunder and shall faithfully and diligently endeavor to promote the business and best interests of the Company and its Affiliates (as defined below).  Accordingly, you may not, directly or indirectly, without the prior written consent of the Company, operate, participate in the management, operations or control of, or act as an employee, officer, consultant, agent or representative of, any type of business or service (other 

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than as an employee of the Company); provided, that it shall not be a violation of the foregoing for you to act or serve as a director, trustee or committee member of any civic or charitable organization or, with prior written consent of the Board, one privately-held for-profit organization that is not competitive with the Company or its Affiliates, or to manage your personal, financial and legal affairs, so long as such activities do not interfere with the performance of your duties and responsibilities to the Company and its Affiliates as provided hereunder.  For purposes of this Agreement, except as otherwise expressly provided herein, “Affiliate” means any entity or person directly or indirectly controlled by or in common control with the Company.  For the avoidance of doubt, except with respect to Section 4.3 of this Agreement, “Affiliate” does not include any other portfolio company or investment fund associated with TPG Capital or Leonard Green Partners, other than the Company and its subsidiaries.

	
2.
	
Compensation and Benefits

2.1Base Salary.  During the Employment Period, your annual base salary (the “Base Salary”) shall be not less than $1,250,000; provided, that the Base Salary may be reduced below such amount in connection with a general reduction in base salary applicable to senior management of the Company generally.  The Base Salary will be paid pursuant to regular Company payroll practices for the senior management of the Company and shall be reviewed annually by the Company.

2.2Bonuses

(A)Annual Bonus.  In addition to the Base Salary, you will have the opportunity to earn an annual bonus (the “Annual Bonus”) for each fiscal year during the Employment Period, with a target amount equal to one hundred fifty percent (150%) of the Base Salary, subject to the Company’s achievement of certain performance goals (determined by the Company for each fiscal year in accordance with the Company’s bonus plan) and/or your achievement of those individual performance goals as may be established by the Company.  Notwithstanding the Company’s and/or your individual performance, your Annual Bonus for the Company’s fiscal year ending January 30, 2021 shall be no less than your target Annual Bonus of $1,875,000.  Except as otherwise provided in Section 3.4, you will be eligible to receive any Annual Bonus hereunder only if you are actively employed with the Company and not in breach of this Agreement, in each case, as of the date of payment of such bonus.

(B)Sign-On Bonus.  The Company shall pay you a sign-on bonus (the “Sign-On Bonus”) of $2,500,000, payable in a single lump sum within thirty (30) days following the Commencement Date, provided you are actively employed with the Company and not in breach of this Agreement on such date of payment.  If your employment is terminated for Cause or you resign without Good Reason (as each such term is defined below) on or prior to the first (1st) anniversary of the Commencement Date, you must repay one hundred percent (100%) of the Sign-On Bonus ($2,500,000) within thirty (30) days following the Termination Date.  If your employment is terminated for Cause or you resign without Good Reason on or prior to the second (2nd) anniversary of the Commencement Date, you must repay fifty percent (50%) of the Sign-

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On Bonus ($1,250,000) within thirty (30) days of the Termination Date.  If you become eligible for Severance Payments (as defined below) in connection with a termination of your employment (i) occurring on or prior to the first (1st) anniversary of the Commencement Date, such Severance Payments shall be reduced by an amount equal to fifty percent (50%) of the Sign-On Bonus ($1,250,000), and (ii) occurring after the first (1st) anniversary of the Commencement Date but on or prior to the second (2nd) anniversary of the Commencement Date, such Severance Payments shall be reduced by an amount equal to twenty-five percent (25%) of the Sign-On Bonus ($625,000) (the reduction described in clauses (i) and (ii) of this sentence, as applicable, the “Offset”).  The total amount of any Offset shall be taken in equal installments from the Severance Payments made to you over the first twelve (12) months following the Termination Date and, to the extent such Severance Payments do not satisfy the Offset, you must repay any amount that is not so satisfied to the Company within thirty (30) days of its written request for such repayment. 

(C)Performance Incentive Bonus. During the Employment Period, you will be eligible to earn an additional bonus (the “Performance Incentive Bonus”) in an aggregate amount of $15,000,000, earned in three tranches of $5,000,000 each based upon the achievement of performance goals established by the Board in good faith within ninety (90) days of the Commencement Date.  Each such performance goal shall be determined on a trailing twelve (12) fiscal month basis and must be sustained for a period of at least two full fiscal quarters following the initial achievement.  The measurement period for the Performance Incentive Bonus shall begin as of your Commencement Date. Payment of any tranche of the Performance Incentive Bonus shall be made as soon as reasonably practicable following the Company’s determination that the applicable performance goals have been achieved with respect to such tranche, but in no event later than two and one-half (2.5) months following the end of the fiscal year in which such applicable performance goals have been achieved.  Except as otherwise provided in Section 3.4(D), you will be eligible to receive payment of any tranche of the Performance Incentive Bonus hereunder only if you are actively employed with the Company and not in breach of this Agreement, in each case, as of the date of such payment.  

2.3Equity Award.  As soon as reasonably practicable following the Madewell Separation, you will be granted an award of restricted common equity (the “Equity Award”) representing four percent (4%) of the fully diluted equity of any entity or other holding company of the successor to the Company which shall issue equity to management of J Crew following the Madewell Separation (“Equity Issuer”), subject to approval of the board of Equity Issuer and the terms and conditions of the applicable company formation documents, equity incentive plan and equity award agreement thereunder (collectively, the “Equity Documents”).  Fifty percent (50%) of the Equity Award will be subject to time-based vesting (the “Time-Based Award”), and will vest in equal installments on each of the first (1st), second (2nd), third (3rd) and fourth (4th) anniversaries of the date of grant.  Fifty percent (50%) of the Equity Award will be subject to performance-based vesting (the “Performance-Based Award”), and will vest as to (i) one-third (1/3) of the Performance-Based Award upon the achievement of Adjusted EBITDA of the successor to the Company (“J Crew EBITDA”) of no less than $100,000,000, (ii) as to an additional one-third (1/3) of the Performance-Based Award upon the achievement of J Crew EBITDA of no less than $150,000,000 and (iii) as to the remaining one-third (1/3) of the 

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Performance-Based Award upon the achievement of J Crew EBITDA of no less than $200,000,000.  In each case, J Crew EBITDA achievement shall be determined by the Board in good faith on a trailing twelve (12)-fiscal month basis beginning after the date of grant (with the first such determination occurring at the end of the fiscal month following first anniversary of the date of grant) and each EBITDA target level must be sustained for a period of at least two full fiscal quarters following the initial achievement.  For this purpose, J Crew EBITDA shall be determined in accordance with J Crew’s financial statements, as determined by the Board in good faith.  Following the date hereof, the Board shall adjust the foregoing J Crew EBITDA targets equitably and in good faith to reflect the consequences of any future acquisitions or dispositions (other than the Madewell Separation).  Except as otherwise provided in Section 3.4, each portion of the Equity Award will vest only if you are actively employed with the Company and not in breach of this Agreement, in each case, as of the applicable vesting date.  Notwithstanding the foregoing, if the Madewell Separation does not occur on or prior to January 30, 2021, the Board, after consultation with you, will approve an alternative equity-based award in Chinos Holdings, Inc., or such other entity as the Board shall determine, of an aggregate value and subject to performance vesting terms, in each case, reasonably comparable to those described above (in which case references to the Equity Award shall refer to such alternative award).

2.4Employee Benefits.  During the Employment Period, you will be entitled to participate in the Company’s benefit package made generally available to other senior management of the Company, subject to the applicable terms of each benefit plan.  Currently, the Company’s benefit package includes twenty-two (22) paid time-off days, holidays, life insurance, medical insurance, a matching 401(k) tax-deferred savings plan, a flexible spending account, and the associate discount.  The Company reserves the right to change these benefits at any time in its sole discretion.  You will be entitled to vacation in accordance with the Company’s paid time-off policy, such paid time-off to be taken at your discretion, subject to the needs of the business.

2.5Business Expense Reimbursement.  The Company will promptly reimburse you for all reasonable business expenses you incur in connection with the performance of your duties and responsibilities hereunder, subject to your presenting statements of such expenses in accordance with the Company’s applicable policies and procedures as may be in effect from time to time.

2.6Relocation Benefits.  In connection with your relocation to the New York metropolitan area, expected to occur in the summer of 2020, the Company shall pay or reimburse you for your reasonable and actual relocation expenses, up to a maximum amount of $200,000 (inclusive of any taxes imposed on the amounts paid or reimbursed) (the “Relocation Benefits”).  In addition, the Company shall pay or reimburse you for reasonable travel and short-term housing expenses prior to such relocation, up to a maximum reimbursement of $125,000.  In each case, such payment or reimbursement is subject to your presenting statements of such expenses in accordance with the Company’s applicable policies and procedures as may be in effect from time to time.  If your employment is terminated for Cause or you resign without Good Reason (i) on or prior to the first (1st) anniversary of the Commencement Date, you must repay one hundred percent (100%) of the Relocation Benefits, or (ii) after the first anniversary of the Commencement Date but on or prior to the second (2nd) anniversary of the Commencement 

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Date, you must repay fifty percent (50%) of the Relocation Benefits, in each case, within thirty (30) days of the Termination Date.

	
3.
	
Termination of Employment

3.1Manner of Termination.  Your employment with the Company hereunder may be terminated upon the earliest to occur of the following events:  (i) your death or Disability (as defined below); (ii) your resignation without Good Reason (as defined below) on at least three (3) months’ prior written notice (and you hereby acknowledge and agree that no limitation or restriction of your authority, duties or responsibilities during such notice period shall, in any event, constitute Good Reason); (iii) your resignation for Good Reason (as defined below); (iv) termination of your employment by the Company without Cause (as defined below); or (v) termination of your employment by the Company for Cause.  The date on which your employment is terminated hereunder for any reason is referred to herein as the “Termination Date.”

3.2Certain Definitions.  For purposes of this Agreement, the following terms shall have the meanings set forth below.

“Cause” shall mean (i) any act of material dishonesty, or your willful misconduct or gross negligence, in connection with your duties or responsibilities hereunder; (ii) your conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, embezzlement or any or act of moral turpitude; (iii) your willful and material breach of this Agreement, including without limitation the refusal to perform your duties and responsibilities hereunder (other than as a result of illness), provided, that the Company shall give you written notice specifying such breach and, to the extent it is reasonably susceptible to cure, thirty (30) days to cure it; (iv) your fraudulent act or omission adverse to the reputation of the Company or any of its Affiliates; (v) your willful disclosure of any material Confidential Information (as defined below) to persons not authorized to know the same; or (vi) your willful violation of or failure to comply with (a) any material Company policy, including without limitation the Code of Ethics and Business Practices, or (b) any legal or regulatory obligations or requirements, including, without limitation, failure to provide any certifications as may be required by law, provided, in each case, that to the extent such violation or failure to comply is reasonably susceptible to cure, you shall be given thirty (30) days to cure it.  Notwithstanding anything to the contrary in this Agreement, if the Board determines within thirty (30) days following your Termination Date that your employment could have been terminated for Cause if not for its termination for another reason, and disregarding any notice or cure provisions set forth in this definition, your employment shall be deemed for all purposes hereunder to have been terminated for Cause as of such Termination Date, and the Company shall be entitled immediately to cease providing any Severance Benefits to you or on your behalf and to recover any payments in the form of Severance Benefits made to you or on your behalf prior to such determination.

“Change in Control” shall have the meaning given to such term in the Equity Documents; provided that such transaction also constitutes a “change in control event” within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations.  For the avoidance of doubt, the Madewell Separation will not result in a Change in Control for purposes of this Agreement

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“COBRA” shall mean Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as amended.

“Disability” shall mean your incapacity due to physical or mental illness or injury that results in your being unable to perform your duties hereunder for at least ninety (90) days out of any consecutive one hundred eighty (180)-day period, as determined by the Board.

“Good Reason” shall mean the occurrence of any of the following without your prior consent:  (i) any action by the Company that results in a material diminution in your position, authority, duties or responsibilities, as described herein (including any failure to appoint you to, and continue your seat on, the Board); (ii) a reduction by the Company in your Base Salary (except in the event of a reduction applicable to senior management generally) or your Annual Bonus opportunity, or a material failure by the Company to pay you any such amounts when due; (iii) a relocation of your principal place of employment to a place more than thirty-five (35) miles from the location of Company’s corporate headquarters as of the Commencement Date; (iv) a Restructuring (as defined below); or (v) a material breach of this Agreement or of your equity award agreement described in Section 2.3).  Termination of your employment for Good Reason shall not be effective (other than pursuant to clause (iii) above) unless you deliver to the Board written notice specifically identifying the Company’s conduct that you believe constitutes “Good Reason” within ninety (90) days of your knowledge of the first occurrence of such conduct, you provide the Board and the Company at least thirty (30) days to cure such conduct following the Board’s receipt of such written notice and, if such conduct is not cured, you terminate your employment within thirty (30) days following the expiration of such cure period.  For the avoidance of doubt, the occurrence of the Madewell Separation will not result in a basis for a resignation for Good Reason pursuant to this Agreement.

“Restructuring” shall mean a bankruptcy of the Company or similar out-of-court restructuring with respect to the Company’s indebtedness (but not, for the avoidance of doubt, a merger, a recapitalization, reorganization, sale of substantially all of the stock or assets or other disposition), in either case, that results in investment funds associated with TPG Capital and Leonard Green Partners directly or indirectly owning less than one third (1/3) of the Company.

3.3Payment of Accrued Obligations.  Upon termination of your employment for any reason, the Company shall provide you (or your estate) any Base Salary earned but unpaid as of the Termination Date, reimbursement of any remaining expenses in accordance with Sections 2.5 and 2.6, and payment of vested benefits under any applicable employee benefit plan, program or arrangement, in each case, according to its terms.  The Equity Award shall be treated in accordance with the terms and conditions of the applicable limited liability company agreement, equity incentive plan and equity award agreement thereunder, except as expressly provided below.

3.4Severance Payments.  Subject to Section 3.5, you shall become eligible for the following severance payments and benefits (collectively, the “Severance Payments”) on the terms and conditions described below.

(A)Upon Termination Due to Death or Disability.  If your employment is terminated due to your death or by the Company due to Disability, (i) the Company shall 

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pay you (or your estate) the Annual Bonus earned for the fiscal year immediately prior to the fiscal year in which the Termination Date occurs, to the extent not previously paid (the “Prior-Year Annual Bonus”); (ii) the Company shall pay you (or your estate) the Annual Bonus that you would have earned, had the Employment Period not so terminated, based on actual performance for the fiscal year in which the Termination Date occurs, multiplied by a fraction the numerator of which shall be the number of days you were employed during such fiscal year and the denominator of which shall be the number of days in such fiscal year (the “Pro-Rated Annual Bonus”); and (iii) the Time-Based Award shall vest on a pro-rated basis with respect to the portion of the applicable vesting period completed as of the Termination Date.  The Prior-Year Annual Bonus and the Pro-Rated Annual Bonus each shall be payable when bonuses are generally paid to employees of the Company with respect to the applicable fiscal year to which such bonus relates, but in no event later than the date that is two and one-half (2.5) months following the end of the fiscal year in which the Termination Date occurs.

(B)Upon Termination Without Cause or Resignation for Good Reason.  If your employment is terminated by the Company without Cause (and other than due to death or Disability) or you resign for Good Reason, other than in the circumstances described in Section 3.4(C) or Section 3.4(D), (i) the Company shall pay you the Prior-Year Annual Bonus and the Pro-Rated Annual Bonus as provided in Section 3.4(A); (ii) the Time-Based Award, to the extent it remains outstanding and unvested, shall become vested as to the portion of the Time-Based Award that ordinarily would have become vested if you had remained in active employment with the Company for eighteen (18) months following the Termination Date (disregarding any accelerated vesting provisions), subject to the terms of the Equity Documents; (iii) the Performance-Based Award, to the extent it remains outstanding and unvested, shall remain outstanding and eligible to vest based on performance for twelve (12) months following the Termination Date, subject to the terms of the Equity Documents; (iv) provided you timely elect COBRA coverage to continue participation in the Company’s group medical, dental and/or vision plans (including, if applicable, continued participation for your spouse and dependents), the Company shall pay or reimburse you, on a monthly basis, an amount equal to the employer-paid portion of premiums for active employees who elect the same type of coverage, until the earlier of the date that is eighteen (18) months following the Termination Date and the date you become eligible for group health coverage from another employer (and you hereby agree that you shall notify the Company immediately upon obtaining new employment and provide all information regarding medical coverage reasonably requested by the Company) (the “COBRA Subsidy”); and (v) the Company shall pay you an amount equal to one and one-half times (1.5x) the sum of (x) the Base Salary and (y) your target Annual Bonus, payable in equal monthly installments in accordance with the ordinary payroll practices of the Company over eighteen (18) months following the Termination Date, provided, however, that such payments shall be reduced by the Offset.

(C)Upon Termination Without Cause or Resignation for Good Reason Following a Change in Control.  If your employment is terminated by the Company without Cause (and other than due to death or Disability) or you resign for Good Reason, in either case, within the twenty-four (24) months following a Change in Control, (i) the 

-7-

 

Company shall pay you the Prior-Year Annual Bonus and the Pro-Rated Annual Bonus as provided in Section 3.4(A); (ii) the Time-Based Award, to the extent it remains outstanding and unvested, shall immediately vest in full; (iii) the Performance-Based Award, to the extent it remains outstanding and unvested, shall remain outstanding and eligible to vest based on performance for twelve (12) months following the Termination Date, subject to the terms of the Equity Documents; (iv) the Company shall pay or reimburse you the COBRA Subsidy as provided in Section 3.4(B); and (v) the Company shall pay you an amount equal to one and one-half times (1.5x) the sum of (x) the Base Salary and (y) your target Annual Bonus, payable in a single lump sum on the earliest date provided under Section 3.5, provided, however, that such payments shall be reduced by the Offset.

(D)Upon Resignation for Good Reason Due to a Restructuring.  If you resign for Good Reason in connection with a Restructuring, (i) the Company shall pay you the Prior-Year Annual Bonus and the Pro-Rated Annual Bonus as provided in Section 3.4(A); (ii) the Time-Based Award, to the extent it remains outstanding and unvested, shall immediately vest in full; (iii) the Performance-Based Award, to the extent it remains outstanding and unvested, shall remain outstanding and eligible to vest based on performance for twelve (12) months following the Termination Date, subject to the terms of the Equity Documents; (iv) the Company shall pay or reimburse you the COBRA Subsidy as provided in Section 3.4(B); and (v) the Company shall pay you an amount equal to two times (2.0x) the sum of the Base Salary and your target Annual Bonus, payable in a single lump sum on the earliest date provided under Section 3.5 if such Restructuring is also a “change in control event” within the meaning of Section 1.409A-3(i)(5) of the Treasury Regulations and in equal monthly installments in accordance with the ordinary payroll practices of the Company over eighteen (18) months following the Termination Date otherwise, provided, however, that such payments shall be reduced by the Offset; and (vi) you shall be eligible to receive payment on any tranche of the Performance Incentive Bonus upon the Company’s determination within the twelve (12) months following the Termination Date that the applicable performance target has been achieved and sustained as described in Section 2.2(C), which payment shall be made as soon as reasonably practicable, but in all events within thirty (30) days, following such determination.

3.5Conditions to Severance Payments.  Notwithstanding anything to the contrary in this Agreement, the Severance Payments are wholly subject to and conditioned upon your (or, as applicable, your estate or beneficiary’s) execution and non-revocation of a separation agreement, including a general release and waiver of claims and, if requested by the Company, restrictive covenants that are of no broader scope and no longer duration than those included in Section 4 of this Agreement, in a form provided by the Company, which agreement must become effective and irrevocable within sixty (60) days following the Termination Date, and continued compliance with the provisions of Section 4.  Subject to the foregoing conditions and to Section 6.2, the Severance Payments shall commence on the Company’s first regular payroll date that is at least five (5) business days following the date on which such separation agreement becomes effective and irrevocable, with the first payment retroactive to the Termination Date; provided, however, that if the applicable sixty (60)-day period spans two (2) calendar years, the Severance Payments shall not commence until the second (2nd) calendar year.  Except as 

-8-

 

expressly set forth herein, the Company shall have no obligation to pay you any severance, termination pay or other similar compensation or benefits.

3.6Repayment of Sign-On Bonus and Relocation Benefits.  As described in Sections 2.2(B) and 2.6, you must repay one hundred percent (100%) of the Sign-On Bonus and the Relocation Benefits within thirty (30) days following the Termination Date if your employment is terminated for Cause or you resign without Good Reason, in either case, on or prior to the first (1st) anniversary of the Commencement Date, and you must repay fifty percent (50%) of the Sign-On Bonus and the Relocation Benefits within thirty (30) days following the Termination Date if your employment is terminated for Cause or you resign without Good Reason, in either case, after the first (1st) anniversary of the Commencement Date but on or prior to the second (2nd) anniversary of the Commencement Date.

	
4.
	
Additional Agreements; Confidentiality

4.1Non-Competition.  During the Employment Period and for a period of twelve (12) months thereafter, you shall not, directly or indirectly, (i) engage in (either as owner, investor, partner, employer, employee, consultant or director) or otherwise perform services for any business that competes with the Company or any of its Affiliates, provided, that the foregoing restriction shall not prohibit you from owning a passive investment of (a) not more than five percent (5%) of the total outstanding securities of any publicly traded company or (b) not more than two percent (2%) of any non-publicly traded entity through mutual funds, private equity funds, hedge funds or similar passive investment vehicles; or (ii) solicit, or cause any other person or entity to solicit, any customers or suppliers of the Company or any of its direct or indirect subsidiaries to terminate or otherwise adversely modify their relationship with the Company or applicable subsidiary.

4.2Non-Solicitation of Employees.  During the Employment Period and for a period of twenty-four (24) months following the Termination Date, you shall not, directly or indirectly, solicit or hire, or seek to influence the employment decisions of, any employee (other than your executive assistant) or other service provider of the Company or any of its Affiliates on behalf of any person or entity other than the Company.  Notwithstanding the foregoing, this provision shall not be violated by your providing a personal reference or by you posting a general advertisement not directed specifically at employees or other service providers of the Company.

4.3Confidentiality.  You agree that during the Employment Period and thereafter you shall hold in strict confidence any proprietary or Confidential Information (as defined below) related to the Company, except to the extent that such Confidential Information (i) becomes a matter of public record or is published in a newspaper, magazine or other periodical available to the general public, other than as a result of your act or omission; (ii) is required to be disclosed by any law, regulation or order of any court, other tribunal, regulatory commission or administrative agency, provided, that to the extent legally permitted, you give prompt notice of such requirement to the Company to enable the Company to seek an appropriate protective order prior to such disclosure; or (iii) is required to be used or disclosed by you to perform properly your duties under this Agreement.  For purposes of this Agreement, the term “Confidential Information” shall mean all information of the Company, in whatever form, that is not generally known to the public, including without limitation customer lists, trade 

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practices, marketing techniques, fit specifications, design, pricing structures and practices, research, trade secrets, processes, systems, programs, methods, software, merchandising, distribution, planning, inventory and financial control, store design, and staffing.  Upon termination of your employment for any reason, you shall not take, without the prior written consent of the Company, any drawing, specification or other document or computer record (in whatever form) of the Company embodying any Confidential Information and shall return any such information (in whatever form) then in your possession.  Notwithstanding the foregoing, nothing in this Agreement shall limit, restrict or in any other way affect your communicating with any governmental agency or entity, or communicating with any official or staff person of a governmental agency or entity, concerning matters relevant to such governmental agency or entity (without, in each case, prior notice to the Company).  You shall not be held criminally or civilly liable under any federal or state trade secret law for disclosing a trade secret in confidence to a government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or for disclosing a trade secret in a complaint or other document filed in a lawsuit or other proceeding, so long as such filing is made under seal.

4.4Documents; Intellectual Property.  You agree to deliver promptly to the Company upon termination of your employment for any reason, or at any other time that the Company may so request, all documents (and all copies thereof), whether written, electronic or in any other form, relating to the business of the Company, and all property associated therewith, which you may then possess or have under your control; provided, that notwithstanding anything herein to the contrary, you may retain your calendar, contacts, personal correspondence, compensation documents and all information reasonably needed for tax return preparation.  You agree that all sketches, drawings, samples, design samples, designs, patterns, methods, processes, techniques, themes, layouts, mechanicals, trade secrets, copyrights, trademarks, patents, ideas, specifications, business or marketing practices, concepts, strategies, and techniques, and any other material or work product (individually and collectively, “Intellectual Property”) created, developed or assembled, whether or not by you, during and in connection with your employment with the Company, shall become the permanent and exclusive property of the Company, to be used in any manner it sees fit in its sole discretion, and that all rights to the Intellectual Property are vested in the Company.  You shall not communicate to the Company any ideas, concepts, or information of any kind (i) which were communicated to you in confidence by any third party prior to the date hereof; (ii) which you know or have reason to know are the proprietary information of any third party; or (iii) which are subject to any claim of proprietary interest by any third party.  Further, you shall adhere to and comply with the Company’s Code of Ethics and Business Practices.  All Intellectual Property created or assembled, whether or not by you, during and in connection with your employment with the Company, shall be the permanent and exclusive property of the Company.  You and the Company mutually agree that all Intellectual Property and work product created in connection with this Agreement which is subject to copyright shall be deemed to be “work made for hire,” and that all rights to such copyrights shall be vested in the Company.  If for any reason the Company cannot be deemed to have commissioned any such “work made for hire,” and its rights to copyright therefore are in doubt, then you agree not to claim to be the proprietor of such work prepared for the Company, and to irrevocably assign to the Company, at the Company’s expense, all rights in such copyright of the work prepared for the Company.  You further agree to execute any documentation reasonably necessary to assign over or vest any Intellectual Property in the Company.

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4.5Cooperation.  You agree that during the Employment Period and thereafter, in the event that you are served with legal process or other request purporting to require you to testify, plead, respond, defend or produce documents, in each case, in connection with any legal or governmental proceeding, threatened proceeding, investigation or inquiry involving the Company or any of its Affiliates or their respective officers, directors, members, executives or associates, you shall, if legally permitted:  (i) provide testimony or Company documents only if served with a subpoena, court order or similar process from a regulatory agency or with the prior written consent of the Company; (ii) within three (3) business days or as soon thereafter as practical, provide oral notification to the Company’s General Counsel of your receipt of such process or request to testify or produce documents; and (iii) provide the Company’s General Counsel by overnight delivery service a copy of all legal papers and documents served upon you.  You further agree that in the event you are served with such process, you shall meet and confer with the Company’s designee(s) in advance of giving such testimony or information.  You also agree to cooperate reasonably with the Company or any of its Affiliates or, at the Company’s written request, their respective officers, directors, members, executives or associates, in connection with any existing, future or threatened litigation or governmental proceeding, investigation or inquiry involving the foregoing parties, whether administrative, civil or criminal in nature, in which and to the extent the Company deems your cooperation reasonably necessary.  You shall not be required to cooperate against your own legal interests.  The Company agrees to promptly reimburse you for your reasonable out-of-pocket expenses incurred in connection with the performance of your obligations under this Section 4.5 (including, to the extent permitted by applicable law, reasonable attorney fees incurred in the event you and the Company mutually agree that independent counsel is appropriate), subject to your presenting statements of such expenses in accordance with the Company’s policies and procedures as may be in effect from time to time.

4.6Enforcement.  You also agree that breach of the provisions in this Section 4 would cause the Company to suffer irreparable harm for which money damages would not be an adequate remedy and, therefore, if you breach any provision in this Section 4, the Company shall be entitled to seek an injunction restraining you from violating such provision without the posting of any bond.  If the Company institutes any action or proceeding to enforce the terms of any such provision, you hereby waive the claim or defense that the Company has an adequate remedy at law, and agree not to assert such claim or defense in such action or proceeding.  The foregoing shall not prejudice the Company’s right to seek to require you to account for and pay over to the Company the compensation, profits, monies, accruals and other benefits derived or received by you as a result of any transaction constituting a breach of any of the provisions set forth in this Section 4 if such breach occurs during the twenty-four (24) month period following your Termination Date.  Without limiting the foregoing, you further agree that, in the event your employment is terminated for any reason and you fail to comply with Section 4 of this Agreement, the Company shall have the immediate right to cease making any severance payments under Section 3.3 of this Agreement and shall have the right to require you to repay any severance payments that had been paid to you prior to the date of such breach.

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5.
	
Representations

The parties hereto hereby represent and warrant that they each have the authority to enter into this Agreement and perform their respective obligations hereunder.  You hereby represent and warrant to the Company that (i) the execution and delivery of this Agreement and the performance of your duties hereunder shall not constitute a breach of or otherwise violate any other agreements, arrangements or commitments with any other party to which you are a party or by which you are bound; and (ii) you shall not use or disclose any confidential and/or proprietary information or trade secrets obtained by you in connection with any former employment with respect to your duties and responsibilities hereunder.  You further represent that you are not aware of any facts or circumstances that would adversely affect your ability to serve as Chief Executive Officer.

	
6.
	
Miscellaneous

6.1Notices.  Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and shall be deemed to be given when delivered personally or four (4) days after it is mailed by registered or certified mail, postage prepaid, return receipt requested, or one (1) day after it is sent by a reputable overnight courier service and, in each case, addressed as follows:

If to the Company:J. Crew Group, Inc.

225 Liberty Street

New York, NY 10281

Attention:  General Counsel

With copies to:TPG Global, LLC

301 Commerce Street, Suite 3300

Fort Worth, TX 76102

Attention:  Adam Fliss

and

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199

Attention:  Loretta Richard

If to you:To the address on file with the Company.

Or to such other address as any party may designate by notice to the other.

6.2Section 409A.  Notwithstanding anything to the contrary in this Agreement, it is the intent of the parties that this Agreement shall be interpreted and administered in a manner such that each payment or benefit hereunder either complies with, or is exempt from, the requirements of Section 409A of the Code and the regulations and guidance promulgated 

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thereunder (together, “Section 409A”).  Each installment payment provided hereunder shall be treated as a separate payment.  Any payment or benefit to be made or provided upon termination of your employment shall be made or provided only upon a “separation from service” within the meaning of Section 409A.  If any payment or benefit to be made or provided upon termination of your employment is determined to constitute “nonqualified deferred compensation” and you are determined to be a “specified employee,” each such term within the meaning of Section 409A, then such payment or benefit shall not be made or provided until the Company’s first regular date following the six (6)-month anniversary of the Termination Date or, if earlier, your death, and the payment made upon such payroll date shall include the aggregate of all payments that would have been paid prior to such payroll date if not for the operation of this sentence.  The amount of expenses eligible for reimbursement or in-kind benefits provided during any calendar year shall not affect the amount of expenses eligible for reimbursement or in-kind benefits provided during any other calendar year.  Reimbursement of any expense eligible for reimbursement shall be made no later than the last day of the calendar year following the calendar year in which such expense was incurred.  The right to reimbursement or any in-kind benefit shall not be subject to liquidation or exchange for any other benefit.  Notwithstanding the foregoing, in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expense that you may incur on account of any noncompliance with Section 409A.

6.3Legal Fees.  The Company shall pay or reimburse you for your reasonable and actual legal fees incurred in connection with the negotiation and execution of this Agreement, up to a maximum amount of $25,000, subject to your presenting statements of such expenses in accordance with the Company’s applicable policies and procedures as may be in effect from time to time.

6.4Withholding.  The Company may withhold from any amounts payable to you hereunder all federal, state, city or other taxes that the Company reasonably may determine are required or permitted to be withheld pursuant to any applicable law or regulation (it being understood that you shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

6.5Entire Agreement; Amendment and Waiver.  This Agreement constitutes the entire agreement and understanding between you and the Company with respect to the subject matter hereof, and supersedes any and all prior and contemporaneous communications, agreements and understandings relating thereto.  No provision of this Agreement may be modified, amended or waived unless such modification, amendment or waiver is specifically agreed to in writing and signed by you and an duly authorized officer of the Company.  The failure by either you or the Company at any time to require the performance by the other of any provision hereof shall in no way affect the full right to require such performance at any time thereafter, nor shall the waiver by you or the Company of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the provision itself or a waiver of any other provision of this Agreement.

6.6Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon you and the Company and each of your and its respective successors, executors, administrators, heirs and permitted assigns.  You may not assign any of your rights or duties 

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hereunder to any other party, other than the assignment to your beneficiaries (or estate) of any amounts due to you following your death.  The Company may assign any or all of its rights under this Agreement to any of its Affiliates or to any successor to all or part of J Crew, including following the Madewell Separation.  Any assignment by the Company of its rights or obligations hereunder to any such Affiliate or successor shall not be a termination of the Employment Period for purposes of this Agreement, shall not, by itself, constitute Good Reason under this Agreement and following any such assignment, references to the Company and J Crew shall refer to such Affiliate or successor (or one of its Affiliates) and references to the Board shall refer to the board of directors or board of managers of such Affiliate or successor (or one of its Affiliates).

6.7Construction.  You and the Company acknowledge and agree that each of you has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision.  Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.  Rather, the terms of this Agreement shall be construed fairly as to both parties and not in favor of or against either party.  The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

6.8Severability.  If any provision of this Agreement (or portion thereof) is deemed invalid, illegal or unenforceable in any jurisdiction, such provision shall, as to such jurisdiction and subject to this Section 6.8, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering such provision or any other provisions of this Agreement invalid, illegal or unenforceable in any other jurisdiction.  If any covenant is deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that its scope is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable.

6.9Governing Law.  This Agreement is a New York contract and shall be governed and construed in accordance with the internal laws of the State of New York, without regard to any conflict of laws principle that would result in the application of the laws of any other jurisdiction; provided, however, that, notwithstanding the foregoing, the Equity Agreements shall be subject to the governing law provisions contained therein.  Each party hereto hereby agrees to and accepts the exclusive jurisdiction of any court in New York County or the U.S. District Court for the Southern District of New York in connection with any action or proceeding arising from this Agreement or relating to the subject matter hereof, and hereby waives and agrees not to assert in any such action or proceeding, by way of motion, as a defense or otherwise, any defense relating to jurisdiction or forum non conveniens, and consents to service of process in any such action or proceeding by U.S. certified or registered mail.

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6.10Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

 

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If the terms of this Agreement meet with your approval, please sign and return one copy to me.

 

	
 
	
J. CREW GROUP, INC.

	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ LYNDA MARKOE

	
 
	
Name:
	
Lynda Markoe

	
 
	
Title:
	
Chief Administrative Officer

 

 

 

 

	
Accepted and agreed:
	
 

	
 
	
 
	
 

	
 
	
 
	
 

	
/s/ JAN SINGER
	
 

	
Jan Singer
	
 

	
 
	
 
	
 

	
Date: January 27, 2020
	
 

 

[Signature Page to Employment Agreement]

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