Document:

Exhibit 10.10

 

 

ASSET REPRESENTATIONS REVIEW AGREEMENT

 

among

 

FORD CREDIT AUTO LEASE TRUST 2018-B,
 as Issuer

 

FORD MOTOR CREDIT COMPANY LLC,
 as Servicer

 

and

 

CLAYTON FIXED INCOME SERVICES LLC,
 as Asset Representations Reviewer

 

Dated as of September 1, 2018

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I   USAGE AND DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.1.
    	
Usage and Definitions
    	
1
    
	
Section 1.2.
    	
Additional Definitions
    	
1
    
	
Section 1.3.
    	
Review Materials and   Test Definitions
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II   ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER
    	
2
    
	
 
    	
 
    	
 
    
	
Section 2.1.
    	
Engagement; Acceptance
    	
2
    
	
Section 2.2.
    	
Confirmation of Status
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE III   ASSET REPRESENTATIONS REVIEW PROCESS
    	
3
    
	
 
    	
 
    	
 
    
	
Section 3.1.
    	
Review Notices
    	
3
    
	
Section 3.2.
    	
Identification of   Review Leases
    	
3
    
	
Section 3.3.
    	
Review Materials
    	
3
    
	
Section 3.4.
    	
Performance of Reviews
    	
3
    
	
Section 3.5.
    	
Review Reports
    	
4
    
	
Section 3.6.
    	
Review Representatives
    	
5
    
	
Section 3.7.
    	
Dispute Resolution
    	
5
    
	
Section 3.8.
    	
Limitations on Review   Obligations
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE IV   ASSET REPRESENTATIONS REVIEWER
    	
6
    
	
 
    	
 
    	
 
    
	
Section 4.1.
    	
Representations and   Warranties
    	
6
    
	
Section 4.2.
    	
Covenants
    	
7
    
	
Section 4.3.
    	
Fees and Expenses
    	
7
    
	
Section 4.4.
    	
Limitation on Liability
    	
8
    
	
Section 4.5.
    	
Indemnification by   Asset Representations Reviewer
    	
8
    
	
Section 4.6.
    	
Indemnification of   Asset Representations Reviewer
    	
9
    
	
Section 4.7.
    	
Review of Asset   Representations Reviewer’s Records
    	
9
    
	
Section 4.8.
    	
Delegation of   Obligations
    	
10
    
	
Section 4.9.
    	
Confidential Information
    	
10
    
	
Section 4.10.
    	
Personally Identifiable   Information
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE V   RESIGNATION AND REMOVAL; SUCCESSOR ASSET REPRESENTATIONS REVIWER
    	
13
    
	
 
    	
 
    	
 
    
	
Section 5.1.
    	
Eligibility   Requirements for Asset Representations Reviewer
    	
13
    
	
Section 5.2.
    	
Resignation and Removal   of Asset Representations Reviewer
    	
13
    
	
Section 5.3.
    	
Successor Asset   Representations Reviewer
    	
14
    
	
Section 5.4.
    	
Merger, Consolidation   or Succession
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE VI   OTHER AGREEMENTS
    	
15
    
	
 
    	
 
    	
 
    
	
Section 6.1.
    	
Independence of Asset Representations   Reviewer
    	
15
    
	
Section 6.2.
    	
No Petition
    	
15
    
	
Section 6.3.
    	
Limitation of Liability   of Owner Trustee
    	
15
    
	
Section 6.4.
    	
Termination of   Agreement
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE VII   MISCELLANEOUS PROVISIONS
    	
15
    
	
 
    	
 
    	
 
    
	
Section 7.1.
    	
Amendments
    	
15
    
	
Section 7.2.
    	
Assignment; Benefit of   Agreement; Third Party Beneficiaries
    	
16
    
	
Section 7.3.
    	
Notices
    	
16
    
	
Section 7.4.
    	
GOVERNING LAW
    	
17
    
	
Section 7.5.
    	
Submission to   Jurisdiction
    	
17
    
	
Section 7.6.
    	
WAIVER OF JURY TRIAL
    	
17
    

 

i

 

	
Section 7.7.
    	
No Waiver; Remedies
    	
17
    
	
Section 7.8.
    	
Severability
    	
17
    
	
Section 7.9.
    	
Headings
    	
17
    
	
Section 7.10.
    	
Counterparts
    	
17
    
	
 
    	
 
    	
 
    
	
Schedule   A — Review Materials
    	
 
    
	
Schedule   B — Representations and Warranties and Tests
    	
 
    

 

 

ASSET REPRESENTATIONS REVIEW AGREEMENT, dated as September 1, 2018 (this “Agreement”), among FORD CREDIT AUTO LEASE TRUST 2018-B, a Delaware statutory trust, as Issuer, FORD MOTOR CREDIT COMPANY LLC, a Delaware limited liability company, as Servicer, and CLAYTON FIXED INCOME SERVICES LLC, a Delaware limited liability company, as Asset Representations Reviewer.

 

BACKGROUND

 

In the normal course of its business, the Titling Companies purchase leases and leased cars, light trucks and utility vehicles from motor vehicle dealers.

 

In connection with a securitization transaction sponsored by Ford Credit, the Titling Companies issued a 2018-B Exchange Note to Ford Credit that is secured by a 2018-B Reference Pool of Leases and Leased Vehicles.  Ford Credit sold the 2018-B Exchange Note to the Depositor, who sold it to the Issuer.

 

The Issuer has granted a security interest in the 2018-B Exchange Note to the Indenture Trustee, for the benefit of the Secured Parties, as security for the Notes issued by the Issuer under the Indenture.

 

The Issuer has determined to engage the Asset Representations Reviewer to perform reviews of certain Leases for compliance with the representations and warranties made by Ford Credit and the Depositor about the Leases in the 2018-B Reference Pool.

 

The parties agree as follows.

 

ARTICLE I
 USAGE AND DEFINITIONS

 

Section 1.1.                                 Usage and Definitions.  Capitalized terms used but not defined in this Agreement are defined in Appendix 1 to the 2018-B Exchange Note Supplement, dated as of September 1, 2018 (the “Exchange Note Supplement”), to the Second Amended and Restated Credit and Security Agreement, dated as of July 22, 2005, as amended and restated as of December 1, 2015 (the “Credit and Security Agreement”), among the CAB East LLC and CAB West LLC, as Borrowers, U.S. Bank National Association, as Administrative Agent, HTD Leasing LLC, as Collateral Agent, and Ford Motor Credit Company LLC, as Lender and Servicer, or in Appendix A to the Credit and Security Agreement.  Appendix 1 and Appendix A also contain usage rules that apply to this Agreement.  Appendix 1 and Appendix A are incorporated by reference into this Agreement.

 

Section 1.2.                                 Additional Definitions.  The following terms have the meanings given below:

 

“Confidential Information” has the meaning stated in Section 4.9(b).

 

“Contract” has the meaning stated in Schedule A.

 

“Information Recipient” has the meaning stated in Section 4.9(a).

 

 

“Indemnified Parties” has the meaning stated in Section 4.6(a).

 

“Issuer PII” has the meaning stated in Section 4.10(a).

 

“Personally Identifiable Information” or “PII” has the meaning stated in Section 4.10(a).

 

“Review” means the performance by the Asset Representations Reviewer of the testing procedures for each Test and each Review Lease according to Section 3.4.

 

“Review Fee” has the meaning stated in Section 4.3(b).

 

“Review Materials” means, for a Review and a Review Lease, the documents and other materials listed in Schedule A, as applicable.

 

“Review Report” means, for a Review, the report of the Asset Representations Reviewer as described in Section 3.5.

 

“Test” has the meaning stated in Section 3.4(a).

 

“Test Complete” has the meaning stated in Section 3.4(c).

 

“Test Fail” has the meaning stated in Section 3.4(a).

 

“Test Pass” has the meaning stated in Section 3.4(a).

 

Section 1.3.                                 Review Materials and Test Definitions.  Capitalized terms or terms or phrases in quotation marks used in the Tests, if not defined in Appendix 1 to the Exchange Note Supplement, Appendix A to the Credit and Security Agreement or in this Agreement, including Schedule A to this Agreement, refer to sections, titles or terms in the Contract or other Review Materials.

 

ARTICLE II
 ENGAGEMENT OF ASSET REPRESENTATIONS REVIEWER

 

Section 2.1.                                 Engagement; Acceptance.  The Issuer engages Clayton Fixed Income Services LLC to act as the Asset Representations Reviewer for the Issuer.  Clayton Fixed Income Services LLC accepts the engagement and agrees to perform the obligations of the Asset Representations Reviewer on the terms in this Agreement.

 

Section 2.2.                                 Confirmation of Status.  The parties confirm that the Asset Representations Reviewer is not responsible for (a) reviewing the Leases for compliance with the representations and warranties under the Transaction Documents, except as described in this Agreement, or (b) determining whether noncompliance with the representations or warranties constitutes a breach of the Transaction Documents.

 

2

 

ARTICLE III
 ASSET REPRESENTATIONS REVIEW PROCESS

 

Section 3.1.                                 Review Notices.  On receipt of a Review Notice from the Indenture Trustee according to Section 7.2 of the Indenture, the Asset Representations Reviewer will start a Review.  The Asset Representations Reviewer will not be obligated to start a Review until a Review Notice is received.

 

Section 3.2.                                 Identification of Review Leases.  Within ten Business Days after receipt of a Review Notice, the Servicer will deliver to the Asset Representations Reviewer and the Indenture Trustee a list of the Review Leases.

 

Section 3.3.                                 Review Materials.

 

(a)                                 Access to Review Materials.  The Servicer will give the Asset Representations Reviewer access to the Review Materials for all of the Review Leases within 60 days after receipt of the Review Notice in one or more of the following ways: (i) by providing access to the Servicer’s receivables systems, either remotely or at an office of the Servicer, (ii) by electronic posting to a password-protected website to which the Asset Representations Reviewer has access, (iii) by providing originals or photocopies at an office of the Servicer where the Lease Files are located or (iv) in another manner agreed by the Servicer and the Asset Representations Reviewer.  The Servicer may redact or remove Personally Identifiable Information from the Review Materials without changing the meaning or usefulness of the Review Materials for the Review.

 

(b)                                 Missing or Insufficient Review Materials.  The Asset Representations Reviewer will review the Review Materials to determine if any Review Materials are missing or insufficient for the Asset Representations Reviewer to perform any Test.  If the Asset Representations Reviewer determines any missing or insufficient Review Materials, the Asset Representations Reviewer will notify the Servicer promptly, and in any event no less than 20 days before completing the Review.  The Servicer will have 15 days to give the Asset Representations Reviewer access to the missing Review Materials or other documents or information to correct the insufficiency.  If the missing Review Materials or other documents have not been provided by the Servicer within 15 days, the related Review Receivable will have a Test Fail for the Test or Tests that require use of the missing or insufficient Review Materials.  If the Contract for any Review Receivable is not provided or is illegible, the Asset Representations Reviewer will be unable to perform any Tests and the related Review Lease will have an overall Test Fail for all Tests.  In either of these cases, the Test or Tests will be considered completed and the Review Report will report a Test Fail for the related Review Lease or applicable representation or warranty and the reason for the Test Fail.

 

Section 3.4.                                 Performance of Reviews.

 

(a)                                 Test Procedures.  For a Review, the Asset Representations Reviewer will perform for each Review Lease the procedures listed under “Tests” in Schedule B for each representation and warranty (each, a “Test”), using the Review Materials necessary to perform the procedures as stated in the Test.  For each Test and Review Lease, the Asset Representations Reviewer will

 

3

 

determine if the Test has been satisfied (a “Test Pass”) or if the Test has not been satisfied (a “Test Fail”).  If a Test or part of a Test cannot be performed for a Review Lease because the Test circumstances do not apply to the Review Lease, the Test will be considered to be satisfied and will be reported as a Test Pass.

 

(b)                                 Review Period.  The Asset Representations Reviewer will complete the Review of all of the Review Leases within 60 days after receiving access to the Review Materials under Section 3.3(a).  However, if missing or additional Review Materials are provided to the Asset Representations Reviewer under Section 3.3(b), the Review period will be extended for an additional 30 days.

 

(c)                                  Completion of Review for Certain Review Leases.  Following the delivery of the list of the Review Leases and before the delivery of the Review Report by the Asset Representations Reviewer, the Servicer may notify the Asset Representations Reviewer if a Review Lease is paid in full by the Lessee or reallocated from the 2018-B Reference Pool by the Sponsor, the Depositor or the Servicer according to the Transaction Documents.  If such a notice is received, the Asset Representations Reviewer will immediately terminate all Tests of such Lease and the Review of the Lease will be considered complete (a “Test Complete”).  In this case, the Asset Representations Reviewer will report a Test Complete for the Lease on the Review Report and the related reason.

 

(d)                                 Previously Reviewed Lease; Duplicative Tests.  If a Review Lease was included in a prior Review, the Asset Representations Reviewer will not perform any Tests on it, but will report the results of the previous Tests in the Review Report for the current Review and note that the results relate to a prior Review.  If the same Test is required for more than one representation or warranty listed on Schedule B, the Asset Representations Reviewer will only perform the Test once for each Review Lease but will report the results of the Test for each applicable representation and warranty on the Review Report.

 

(e)                                  Termination of Review.  If a Review is in process and the Notes will be paid in full on the next Payment Date, the Servicer will notify the Asset Representations Reviewer and the Indenture Trustee no less than ten days before that Payment Date.  On receipt of notice, the Asset Representations Reviewer will terminate the Review immediately and will not be obligated to deliver a Review Report.

 

Section 3.5.                                 Review Reports.  Within five days after the end of the Review period under Section 3.4(b), the Asset Representations Reviewer will deliver to the Sponsor, the Depositor, the Issuer, the Servicer and the Indenture Trustee a Review Report indicating for each Review Lease whether there was a Test Pass or a Test Fail for each Test, or whether the Review Lease was an overall Test Fail (for a missing or illegible Contract) or a Test Complete.  For each Test Fail, overall Test Fail or Test Complete, the Review Report will indicate the related reason.  The Review Report will contain a summary of the Review results to be included in the Issuer’s Form 10-D report for the Collection Period in which the Review Report is received.  The Asset Representations Reviewer will ensure that the Review Report does not contain any Issuer PII.  On reasonable request of the Servicer, the Asset Representations Reviewer will provide additional detail on the Test results.

 

4

 

Section 3.6.                                 Review Representatives.

 

(a)                                 Servicer Representative.  The Servicer will designate one or more representatives who will be available to assist the Asset Representations Reviewer in performing the Review, including responding to requests and answering questions from the Asset Representations Reviewer about the Review Materials or Tests, access to Review Materials on the Servicer’s originations, receivables or other systems, obtaining missing or insufficient Review Materials and/or providing clarification of any Review Materials or Tests.

 

(b)                                 Asset Representations Reviewer Representative.  The Asset Representations Reviewer will designate one or more representatives who will be available to the Issuer and the Servicer during the performance of a Review.

 

(c)                                  Questions About Review.  The Asset Representations Reviewer will make appropriate personnel available to respond in writing to written questions or requests for clarification of any Review Report from the Indenture Trustee or the Servicer until the earlier of (i) the payment in full of the Notes and (ii) one year after the delivery of the Review Report.  The Asset Representations Reviewer will not be obligated to respond to questions or requests for clarification from a Noteholder or any other Person and will direct such Persons to submit written questions or requests to the Indenture Trustee.

 

Section 3.7.                                 Dispute Resolution.  If a Lease that was Reviewed by the Asset Representations Reviewer is the subject of a dispute resolution proceeding under Section 3.4 of the Exchange Note Sale Agreement, the Asset Representations Reviewer will participate in the dispute resolution proceeding on request of a party to the proceeding.  The reasonable expenses of the Asset Representations Reviewer for its participation in any dispute resolution proceeding will be considered expenses of the requesting party for the dispute resolution and will be paid by a party to the dispute resolution as determined by the mediator or arbitrator for the dispute resolution according to Section 3.4 of the Exchange Note Sale Agreement.  However, if such expenses are not paid by a party to the dispute resolution within 90 days after the end of the proceeding, the expenses will be paid by the Issuer according to Section 4.3(d).

 

Section 3.8.                                 Limitations on Review Obligations.

 

(a)                                 Review Process Limitations.  The Asset Representations Reviewer is not obligated to:

 

(i)                                     determine whether a Delinquency Trigger has occurred or whether the required percentage of the Noteholders has voted to direct a Review under the Indenture, and may rely on the information in any Review Notice delivered by the Indenture Trustee;

 

(ii)                                  determine which Leases are subject to a Review, and may rely on the lists of Review Leases provided by the Servicer;

 

(iii)                               obtain or confirm the validity of the Review Materials, and may rely on the accuracy and completeness of the Review Materials and will have no liability for any errors in the Review Materials;

 

5

 

(iv)                    obtain missing or insufficient Review Materials from any party or any other source; or

 

(v)                       take any action or cause any other party to take any action under any of the Transaction Documents or otherwise to enforce any remedies against any Person for breaches of representations or warranties about the Review Leases.

 

(b)                                 Testing Procedure Limitations.  The Asset Representations Reviewer will only be required to perform the testing procedures listed under “Tests” in Schedule A, and will not be obligated to perform additional procedures on any Review Lease or to provide any information other than a Review Report.  However, the Asset Representations Reviewer may provide additional information in a Review Report about any Review Lease that it determines in good faith to be material to the Review.

 

ARTICLE IV
 ASSET REPRESENTATIONS REVIEWER

 

Section 4.1.                                 Representations and Warranties .  The Asset Representations Reviewer represents and warrants to the Issuer as of the Closing Date:

 

(a)                                 Organization and Qualification.  The Asset Representations Reviewer is duly organized and validly existing as a limited liability company in good standing under the laws of the State of Delaware.  The Asset Representations Reviewer is qualified as a foreign limited liability company in good standing and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of its properties or the conduct of its activities requires the qualification, license or approval, unless the failure to obtain the qualifications, licenses or approvals would not reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under this Agreement.

 

(b)                                 Power, Authority and Enforceability.  The Asset Representations Reviewer has the power and authority to execute, deliver and perform its obligations under this Agreement.  The Asset Representations Reviewer has authorized the execution, delivery and performance of this Agreement.  This Agreement is the legal, valid and binding obligation of the Asset Representations Reviewer enforceable against the Asset Representations Reviewer, except as may be limited by insolvency, bankruptcy, reorganization or other similar laws relating to the enforcement of creditors’ rights or by general equitable principles.

 

(c)                                  No Conflicts and No Violation.  The completion of the transactions  contemplated by this Agreement and the performance of the Asset Representations Reviewer’s obligations under this Agreement will not (i) conflict with, or be a breach or default under, any indenture, mortgage, deed of trust, loan agreement, guarantee or similar document under which the Asset Representations Reviewer is a debtor or guarantor, (ii) result in the creation or imposition of a Lien on the Asset Representations Reviewer’s properties or assets under the terms of any indenture, mortgage, deed of trust, loan agreement, guarantee or similar document, (iii) violate the organizational documents of the Asset Representations Reviewer or (iv) violate a law or, to the Asset Representations Reviewer’s knowledge, an order, rule or regulation of a federal or State court, regulatory body, administrative agency or other governmental instrumentality having

 

6

 

jurisdiction over the Asset Representations Reviewer or its properties that applies to the Asset Representations Reviewer, which, in each case, would reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under this Agreement.

 

(d)                                 No Proceedings.  To the Asset Representations Reviewer’s knowledge, there are no proceedings or investigations pending or threatened in writing before a federal or State court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Asset Representations Reviewer or its properties (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the completion of the transactions contemplated by this Agreement or (iii) seeking any determination or ruling that would reasonably be expected to have a material adverse effect on the Asset Representations Reviewer’s ability to perform its obligations under, or the validity or enforceability of, this Agreement.

 

(e)                                  Eligibility.  The Asset Representations Reviewer meets the eligibility requirements in Section 5.1.

 

Section 4.2.                                 Covenants.  The Asset Representations Reviewer covenants and agrees that:

 

(a)                                 Eligibility.  It will notify the Issuer and the Servicer promptly if it no longer meets the eligibility requirements in Section 5.1.

 

(b)                                 Review Systems; Personnel.  It will maintain business process management and/or other systems necessary to ensure that it can perform each Test and, on execution of this Agreement, will load each Test into these systems. The Asset Representations Reviewer will ensure that these systems allow for each Review Lease and the related Review Materials to be individually tracked and stored as contemplated by this Agreement.  The Asset Representations Reviewer will maintain adequate staff that is properly trained to conduct Reviews as required by this Agreement.

 

(c)                                  Maintenance of Review Materials.  It will maintain copies of any Review Materials, Review Reports and other documents relating to a Review, including internal correspondence and work papers, for a period of two years after the termination of this Agreement.

 

Section 4.3.                                 Fees and Expenses.

 

(a)                                 Annual Fee.  The Issuer will, or will cause the Administrator to, pay the Asset Representations Reviewer as compensation for acting as the Asset Representations Reviewer under this Agreement an annual fee separately agreed to by the Issuer and the Asset Representations Reviewer.  The annual fee will be paid as agreed by the Issuer and the Asset Representations Reviewer until this Agreement is terminated.

 

(b)                                 Review Fee.  Following the completion of a Review and the delivery to the Indenture Trustee of the Review Report, or the termination of a Review according to Section 3.4(e), and the delivery to the Servicer of a detailed invoice, the Asset Representations Reviewer will be entitled to a fee of $175 for each Review Lease for which the Review was started (the

 

7

 

“Review Fee”).  However, no Review Fee will be paid for any Review Lease which was included in a prior Review or for which no Tests were completed before the Asset Representations Reviewer received notice of termination of the Review according to Section 3.4(e) or due to missing or insufficient Review Materials under Section 3.3(b).  If a detailed invoice is submitted on or before the first day of a month, the Review Fee will be paid by the Issuer starting on or before the Payment Date in that month.  However, if the Review is terminated according to Section 3.4(e), the Asset Representations Reviewer must submit its invoice for the Review Fee for the terminated Review no later than five Business Days before the final Payment Date to be reimbursed no later than the final Payment Date.

 

(c)                                  Reimbursement of Travel Expenses.  If the Servicer provides access to the Review Materials at one of its properties, the Issuer will reimburse the Asset Representations Reviewer for its reasonable travel expenses incurred in connection with the Review on receipt of a detailed invoice.

 

(d)                                 Dispute Resolution Expenses.  If the Asset Representations Reviewer participates in a dispute resolution proceeding under Section 3.7 and its reasonable expenses for participating in the proceeding are not paid by a party to the dispute resolution within 90 days after the end of the proceeding, the Issuer will reimburse the Asset Representations Reviewer for such expenses on receipt of a detailed invoice.

 

(e)                                  Payments by Issuer.  All amounts payable by the Issuer under this Section 4.3 will be payable according to the priority of payments in Section 8.2 of the Indenture.

 

Section 4.4.                                 Limitation on Liability.  The Asset Representations Reviewer will not be liable to any Person for any action taken, or not taken, in good faith under this Agreement or for errors in judgment.  However, the Asset Representations Reviewer will be liable for its willful misconduct, bad faith or negligence in performing its obligations under this Agreement.  In no event will the Asset Representations Reviewer be liable for special, punitive, indirect or consequential losses or damages (including lost profit), even if the Asset Representations Reviewer has been advised of the likelihood of the loss or damage and regardless of the form of action.

 

Section 4.5.                                 Indemnification by Asset Representations Reviewer.  The Asset Representations Reviewer will indemnify each of the Issuer, the Depositor, the Servicer, the Owner Trustee, the Delaware Trustee and the Indenture Trustee and their respective directors, officers, employees and agents for all fees, expenses, losses, damages and liabilities (including the fees and expenses of defending itself against any loss, damage or liability and any fees and expenses incurred in connection with any proceedings brought by that Person to enforce the indemnification obligations of the Asset Representations Reviewer) resulting from (a) the willful misconduct, bad faith or negligence of the Asset Representations Reviewer in performing its obligations under this Agreement or (b) the Asset Representations Reviewer’s breach of any of its representations or warranties in this Agreement.  The Asset Representations Reviewer’s obligations under this Section 4.5 will survive the termination of this Agreement, the termination of the Issuer and the resignation or removal of the Asset Representations Reviewer.

 

8

 

Section 4.6.                                 Indemnification of Asset Representations Reviewer.

 

(a)                                 Indemnification.  The Issuer will, or will cause the Administrator to, indemnify the Asset Representations Reviewer and its officers, directors, employees and agents (each, an “Indemnified Person”), for all fees, expenses, losses, damages and liabilities resulting from the performance of its obligations under this Agreement (including the fees and expenses of defending itself against any loss, damage or liability and any fees and expenses incurred in connection with any proceedings brought by the Indemnified Person to enforce the indemnification obligations of the Issuer and the Administrator), but excluding any fee, expense, loss, damage or liability resulting from (i) the Asset Representations Reviewer’s willful misconduct, bad faith or negligence or (ii) the Asset Representations Reviewer’s breach of any of its representations or warranties in this Agreement.

 

(b)                                 Proceedings.  If an Indemnified Person receives notice of a proceeding against it, the Indemnified Person will, if a claim is to be made under Section 4.6(a), promptly notify the Issuer and the Administrator of the proceeding.  The Issuer or the Administrator may participate in and assume the defense and settlement of a proceeding at its expense.  If the Issuer or the Administrator notifies the Indemnified Person of its intention to assume the defense of the proceeding with counsel reasonably satisfactory to the Indemnified Person, and so long as the Issuer or the Administrator assumes the defense of the proceeding in a manner reasonably satisfactory to the Indemnified Person, the Issuer and the Administrator will not be liable for fees and expenses of counsel to the Indemnified Person unless there is a conflict between the interests of the Issuer or the Administrator, as applicable, and an Indemnified Person.  If there is a conflict, the Issuer or the Administrator will pay for the reasonable fees and expenses of separate counsel to the Indemnified Person.  No settlement of a proceeding may be made without the approval of the Issuer and the Administrator and the Indemnified Person, which approval will not be unreasonably withheld.

 

(c)                                  Survival of Obligations.  The obligations of the Issuer and the Administrator under this Section 4.6 will survive the resignation or removal of the Asset Representations Reviewer and the termination of this Agreement.

 

(d)                                 Repayment.  If the Issuer or the Administrator makes a payment to an Indemnified Person under this Section 4.6 and the Indemnified Person later collects from others any amounts for which the payment was made, the Indemnified Person will promptly repay those amounts to the Issuer or the Administrator, as applicable.

 

Section 4.7.                                 Review of Asset Representations Reviewer’s Records.  The Asset Representations Reviewer agrees that, with reasonable advance notice not more than once during any year, it will permit authorized representatives of the Issuer, the Servicer or the Administrator, during the Asset Representations Reviewer’s normal business hours, to have access to and review the facilities, processes, books of account, records, reports and other documents and materials of the Asset Representations Reviewer relating to (a) the performance of the Asset Representations Reviewer’s obligations under this Agreement, (b) payments of fees and expenses of the Asset Representations Reviewer for its performance and (c) a claim made by the Asset Representations Reviewer under this Agreement.  In addition, the Asset Representations Reviewer will permit the Issuer’s, the Servicer’s or the Administrator’s

 

9

 

representatives to make copies and extracts of any of those documents and to discuss them with the Asset Representations Reviewer’s officers and employees.  Any access and review will be subject to the Asset Representations Reviewer’s confidentiality and privacy policies.  The Asset Representations Reviewer will maintain all relevant books, records, reports and other documents and materials for a period of at least two years after the termination of its obligations under this Agreement.

 

Section 4.8.                                 Delegation of Obligations.  The Asset Representations Reviewer may not delegate or subcontract its obligations under this Agreement to any Person without the consent of the Issuer and the Servicer.

 

Section 4.9.                                 Confidential Information.

 

(a)                                 Treatment.  The Asset Representations Reviewer agrees to hold and treat Confidential Information given to it under this Agreement in confidence and under the terms and conditions of this Section 4.9, and will implement and maintain safeguards to further assure the confidentiality of the Confidential Information.  The Confidential Information will not, without the consent of the Issuer and the Servicer, be disclosed or used by the Asset Representations Reviewer, or its officers, directors, employees, agents, representatives or affiliates, including legal counsel (each, an “Information Recipient”) other than for the purposes of performing Reviews of Review Leases or performing its obligations under this Agreement.  The Asset Representations Reviewer agrees that it will not, and will cause its Affiliates to not (i) purchase or sell securities issued by Ford Credit or its Affiliates or special purpose entities on the basis of Confidential Information or (ii) use the Confidential Information for the preparation of research reports, newsletters or other publications or similar communications.

 

(b)                                 Definition.  “Confidential Information” means oral, written and electronic materials (regardless of its source or form of communication) furnished before, on or after the date of this Agreement to the Asset Representations Reviewer for the purposes contemplated by this Agreement, including:

 

(i)                           lists of Review Leases and any related Review Materials;

 

(ii)                        origination and servicing guidelines, policies and procedures, and form contracts; and

 

(iii)                     notes, analyses, compilations, studies or other documents or records prepared by the Servicer, which contain information supplied by or on behalf of the Servicer or its representatives.

 

However, Confidential Information will not include information that (A) is or becomes generally available to the public other than as a result of disclosure by an Information Recipient, (B) was available to, or becomes available to, an Information Recipient on a non-confidential basis from a Person or entity other than the Issuer or the Servicer before its disclosure to the Information Recipient who, to the knowledge of the Information Recipient is not bound by a confidentiality agreement with the Issuer or the Servicer and is not prohibited from transmitting the information to the Information Recipient, (C) is independently developed by an Information Recipient without the use of the Confidential Information, as shown by the Information Recipient’s files

 

10

 

and records or other evidence in its possession or (D) the Issuer or the Servicer gives permission to the Information Recipient to release.

 

(c)                                  Protection.  The Asset Representations Reviewer will take reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of Confidential Information, including those measures that it takes to protect its own confidential information and not less than a reasonable standard of care.  The Asset Representations Reviewer acknowledges that Personally Identifiable Information is also subject to the additional requirements in Section 4.10.

 

(d)                                 Disclosure.  If the Asset Representations Reviewer is required by applicable law, regulation, rule or order issued by an administrative, governmental, regulatory or judicial authority to disclose part of the Confidential Information, it may disclose the Confidential Information.  However, before a required disclosure, the Asset Representations Reviewer, if permitted by applicable law, regulation, rule or order, will use its reasonable efforts to notify the Issuer and the Servicer of the requirement and will cooperate, at the Servicer’s expense, in the Issuer’s and the Servicer’s pursuit of a proper protective order or other relief for the disclosure of the Confidential Information.  If the Issuer or the Servicer is unable to obtain a protective order or other proper remedy by the date that the information is required to be disclosed, the Asset Representations Reviewer will disclose only that part of the Confidential Information that it is advised by its legal counsel it is legally required to disclose.

 

(e)                                  Responsibility for Information Recipients.  The Asset Representations Reviewer will be responsible for a breach of this Section 4.9 by its Information Recipients.

 

(f)                                   Violation.  The Asset Representations Reviewer agrees that a violation of this Agreement may cause irreparable injury to the Issuer and the Servicer and the Issuer and the Servicer may seek injunctive relief in addition to legal remedies.  If an action is initiated by the Issuer or the Servicer to enforce this Section 4.9, the prevailing party will be reimbursed for its fees and expenses, including reasonable attorney’s fees, incurred for the enforcement.

 

Section 4.10.                          Personally Identifiable Information.

 

(a)                                 Definitions.  “Personally Identifiable Information” or “PII” means information in any format about an identifiable individual, including, name, address, phone number, e-mail address, account number(s), identification number(s), any other actual or assigned attribute associated with or identifiable to an individual and any information that when used separately or in combination with other information could identify an individual.  “Issuer PII” means PII furnished by the Issuer, the Servicer or their Affiliates to the Asset Representations Reviewer and PII developed or otherwise collected or acquired by the Asset Representations Reviewer in performing its obligations under this Agreement.

 

(b)                                 Use of Issuer PII.  The Issuer does not grant the Asset Representations Reviewer any rights to Issuer PII except as provided in this Agreement.  The Asset Representations Reviewer will use Issuer PII only to perform its obligations under this Agreement or as specifically directed in writing by the Issuer and will only reproduce Issuer PII to the extent necessary for these purposes.  The Asset Representations Reviewer must comply with all laws applicable to PII, Issuer PII and the Asset Representations Reviewer’s business, including any

 

11

 

legally required codes of conduct, including those relating to privacy, security and data protection.  The Asset Representations Reviewer will protect and secure Issuer PII.  The Asset Representations Reviewer will implement privacy or data protection policies and procedures that comply with applicable law and this Agreement.  The Asset Representations Reviewer will implement and maintain reasonable and appropriate practices, procedures and systems, including administrative, technical and physical safeguards to (i) protect the security, confidentiality and integrity of Issuer PII, (ii) ensure against anticipated threats or hazards to the security or integrity of Issuer PII, (iii) protect against unauthorized access to or use of Issuer PII and (iv) otherwise comply with its obligations under this Agreement.  These safeguards will include a written data security plan, employee training, information access controls, restricted disclosures, systems protections (including intrusion protection, data storage protection and data transmission protection) and physical security measures.

 

(c)                                  Additional Limitations.  In addition to the use and protection requirements described in Section 4.10(b), the Asset Representations Reviewer’s disclosure of Issuer PII is also subject to the following requirements:

 

(i)             The Asset Representations Reviewer will not disclose Issuer PII to its personnel or allow its personnel access to Issuer PII except (A) for the Asset Representations Reviewer personnel who require Issuer PII to perform a Review, (B) with the consent of the Issuer or (C) as required by applicable law.  When permitted, the disclosure of or access to Issuer PII will be limited to the specific information necessary for the individual to complete the assigned task.  The Asset Representations Reviewer will inform personnel with access to Issuer PII of the confidentiality requirements in this Agreement and train its personnel with access to Issuer PII on the proper use and protection of Issuer PII.

 

(ii)          The Asset Representations Reviewer will not sell, disclose, provide or exchange Issuer PII with or to any third party without the consent of the Issuer.

 

(d)                                 Notice of Breach.  The Asset Representations Reviewer will notify the Issuer promptly in the event of an actual or reasonably suspected security breach, unauthorized access, misappropriation or other compromise of the security, confidentiality or integrity of Issuer PII and, where applicable, immediately take action to prevent any further breach.

 

(e)                                  Return or Disposal of Issuer PII.  Except where return or disposal is prohibited by applicable law, promptly on the earlier of the completion of the Review or the request of the Issuer, all Issuer PII in any medium in the Asset Representations Reviewer’s possession or under its control will be (i) destroyed in a manner that prevents its recovery or restoration or (ii) if so directed by the Issuer, returned to the Issuer without the Asset Representations Reviewer retaining any actual or recoverable copies, in both cases, without charge to the Issuer.  Where the Asset Representations Reviewer retains Issuer PII, the Asset Representations Reviewer will limit the Asset Representations Reviewer’s further use or disclosure of Issuer PII to that required by applicable law.

 

(f)                                   Compliance; Modification.  The Asset Representations Reviewer will cooperate with and provide information to the Issuer regarding the Asset Representations Reviewer’s

 

12

 

compliance with this Section 4.10.  The Asset Representations Reviewer and the Issuer agree to modify this Section 4.10 as necessary for either party to comply with applicable law.

 

(g)                                  Audit of Asset Representations Reviewer.  The Asset Representations Reviewer will permit the Issuer and its authorized representatives to audit the Asset Representations Reviewer’s compliance with this Section 4.10 during the Asset Representations Reviewer’s normal business hours on reasonable advance notice to the Asset Representations Reviewer, and not more than once during any year unless circumstances necessitate additional audits.  The Issuer agrees to make reasonable efforts to schedule any audit described in this Section 4.10 with the inspections described in Section 4.7.  The Asset Representations Reviewer will also permit the Issuer during normal business hours on reasonable advance notice to audit any service providers used by the Asset Representations Reviewer to fulfill the Asset Representations Reviewer’s obligations under this Agreement.

 

(h)                                 Affiliates and Third Parties.  If the Asset Representations Reviewer processes the PII of the Issuer’s Affiliates or a third party when performing a Review, and if such Affiliate or third party is identified to the Asset Representations Reviewer, such Affiliate or third party is an intended third-party beneficiary of this Section 4.10, and this Agreement is intended to benefit the Affiliate or third party.  The Affiliate or third party may enforce the PII related terms of this Section 4.10 against the Asset Representations Reviewer as if each were a signatory to this Agreement.

 

ARTICLE V
 RESIGNATION AND REMOVAL;
 SUCCESSOR ASSET REPRESENTATIONS REVIWER

 

Section 5.1.                                 Eligibility Requirements for Asset Representations Reviewer.  The Asset Representations Reviewer must be a Person who (a) is not Affiliated with the Sponsor, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee, the Delaware Trustee or any of their Affiliates and (b) was not, and is not Affiliated with a Person that was, engaged by the Sponsor or any Underwriter to perform any due diligence on the Leases prior to the Closing Date.

 

Section 5.2.                                 Resignation and Removal of Asset Representations Reviewer.

 

(a)                                 No Resignation.  The Asset Representations Reviewer will not resign as Asset Representations Reviewer unless it determines it is legally unable to perform its obligations under this Agreement and there is no reasonable action that it could take to make the performance of its obligations under this Agreement permitted under applicable law.  The Asset Representations Reviewer will notify the Issuer and the Servicer of its resignation as soon as practicable after it determines it is required to resign and stating the resignation date, including an Opinion of Counsel supporting its determination.

 

(b)                                 Removal.  If any of the following events occur, the Issuer may remove the Asset Representations Reviewer and terminate its rights and obligations under this Agreement by notifying the Asset Representations Reviewer:

 

13

 

(i)                           the Asset Representations Reviewer no longer meets the eligibility requirements in Section 5.1;

 

(ii)                        the Asset Representations Reviewer breaches of any of its representations, warranties, covenants or obligations in this Agreement; or

 

(iii)                     an Insolvency Event of the Asset Representations Reviewer occurs.

 

(c)                                  Notice of Resignation or Removal.  The Issuer will notify the Servicer, the Owner Trustee and the Indenture Trustee of any resignation or removal of the Asset Representations Reviewer.

 

(d)                                 Continue to Perform After Resignation or Removal.  No resignation or removal of the Asset Representations Reviewer will be effective, and the Asset Representations Reviewer will continue to perform its obligations under this Agreement, until a successor Asset Representations Reviewer has accepted its engagement according to Section 5.3(b).

 

Section 5.3.                                 Successor Asset Representations Reviewer .

 

(a)                                 Engagement of Successor Asset Representations Reviewer.  Following the resignation or removal of the Asset Representations Reviewer, the Issuer will engage a successor Asset Representations Reviewer who meets the eligibility requirements of Section 5.1.

 

(b)                                 Effectiveness of Resignation or Removal.  No resignation or removal of the Asset Representations Reviewer will be effective until the successor Asset Representations Reviewer has executed and delivered to the Issuer and the Servicer an agreement accepting its engagement and agreeing to perform the obligations of the Asset Representations Reviewer under this Agreement or entered into a new agreement with the Issuer on substantially the same terms as this Agreement.

 

(c)                                  Transition and Expenses.  If the Asset Representations Reviewer resigns or is removed, the Asset Representations Reviewer will cooperate with the Issuer and take all actions reasonably requested to assist the Issuer in making an orderly transition of the Asset Representations Reviewer’s rights and obligations under this Agreement to the successor Asset Representations Reviewer.  The Asset Representations Reviewer will pay the reasonable expenses of transitioning the Asset Representations Reviewer’s obligations under this Agreement and preparing the successor Asset Representations Reviewer to take on the obligations on receipt of an invoice in reasonable detail from the Issuer or the successor Asset Representations Reviewer.

 

Section 5.4.                                 Merger, Consolidation or Succession.  Any Person (a) into which the Asset Representations Reviewer is merged or consolidated, (b) resulting from any merger or consolidation to which the Asset Representations Reviewer is a party or (c) succeeding to the Asset Representations Reviewer’s business, if that Person meets the eligibility requirements in Section 5.1, will be the successor to the Asset Representations Reviewer under this Agreement.  Such Person will execute and deliver to the Issuer and the Servicer an agreement to assume the Asset Representations Reviewer’s obligations under this Agreement (unless the assumption happens by operation of law).

 

14

 

ARTICLE VI
 OTHER AGREEMENTS

 

Section 6.1.                                 Independence of Asset Representations Reviewer.  The Asset Representations Reviewer will be an independent contractor and will not be subject to the supervision of the Issuer or the Owner Trustee for the manner in which it accomplishes the performance of its obligations under this Agreement.  Unless authorized by the Issuer or the Owner Trustee, respectively, the Asset Representations Reviewer will have no authority to act for or represent the Issuer or the Owner Trustee and will not be considered an agent of the Issuer or the Owner Trustee.  Nothing in this Agreement will make the Asset Representations Reviewer and either of the Issuer or the Owner Trustee members of any partnership, joint venture or other separate entity or impose any liability as such on any of them.

 

Section 6.2.                                 No Petition.  Each of the parties agrees that, before the date that is one year and one day (or, if longer, any applicable preference period) after payment in full of (a) all Secured Obligations, including all Exchange Notes, and any other Securities, (b) all securities issued by the Depositor or by a trust for which the Depositor was a depositor or (c) the Notes, it will not start or pursue against, or join any other Person in starting or pursuing against, (i) either Titling Company or either Holding Company, (ii) the Depositor or (iii) the Issuer, respectively, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any bankruptcy or similar law.  This Section 6.2 will survive the termination of this Agreement.

 

Section 6.3.                                 Limitation of Liability of Owner Trustee .  This Agreement has been signed on behalf of the Issuer by The Bank of New York Mellon not in its individual capacity but solely in its capacity as Owner Trustee of the Issuer.  In no event will The Bank of New York Mellon in its individual capacity or a beneficial owner of the Issuer be liable for the Issuer’s obligations under this Agreement.  For all purposes under this Agreement, the Owner Trustee will be subject to, and entitled to the benefits of, the Trust Agreement.

 

Section 6.4.                                 Termination of Agreement.  This Agreement will terminate on the earlier of (a) the payment in full of all outstanding Notes and the satisfaction and discharge of the Indenture and (b) the date the Issuer is terminated under the Trust Agreement.

 

ARTICLE VII
 MISCELLANEOUS PROVISIONS

 

Section 7.1.                                 Amendments.

 

(a)                                 Amendments. The parties may amend this Agreement:

 

(i)                           to clarify an ambiguity, correct an error or correct or supplement any term of this Agreement that may be defective or inconsistent with the other terms of this Agreement or to provide for, or facilitate the acceptance of this Agreement by, a successor Asset Representations Reviewer, in each case, without the consent of the Noteholders or any other Person;

 

15

 

(ii)                        to add, change or eliminate terms of this Agreement, in each case, without the consent of the Noteholders or any other Person, if the Administrator delivers an Officer’s Certificate to the Issuer, the Owner Trustee and the Indenture Trustee stating that the amendment will not have a material adverse effect on the Noteholders; or

 

(iii)                     to add, change or eliminate terms of this Agreement for which an Officer’s Certificate is not or cannot be delivered under Section 7.1(a)(ii), with the consent of the Noteholders of a majority of the Note Balance of each Class of Notes Outstanding (with each affected Class voting separately, except that all Noteholders of Class A Notes will vote together as a single class).

 

(b)                                 Indenture Trustee Consent.  No amendment to this Agreement that could have a material adverse effect on the rights or responsibilities of the Indenture Trustee will be effective without the consent of the Indenture Trustee.

 

(c)                                  Notice of Amendments.  The Administrator will notify the Rating Agencies in advance of any amendment.  Promptly after the execution of an amendment, the Administrator will deliver a copy of the amendment to the Rating Agencies.

 

Section 7.2.                                 Assignment; Benefit of Agreement; Third Party Beneficiaries.

 

(a)                                 Assignment.  Except as stated in Section 5.4, this Agreement may not be assigned by the Asset Representations Reviewer without the consent of the Issuer and the Servicer.

 

(b)                                 Benefit of Agreement; Third-Party Beneficiaries.  This Agreement is for the benefit of and will be binding on the parties and their permitted successors and assigns.  The Owner Trustee and the Indenture Trustee, for the benefit of the Noteholders, will be third-party beneficiaries of this Agreement and may enforce this Agreement against the Asset Representations Reviewer and the Servicer.  No other Person will have any right or obligation under this Agreement.

 

Section 7.3.                                 Notices.

 

(a)                                 Notices to Parties.  All notices, requests, directions, consents, waivers or other communications to or from the parties must be in writing and will be considered received by the recipient:

 

(i)                           for overnight mail, on delivery or, for registered first class mail, postage prepaid, three days after deposit in the mail properly addressed to the recipient;

 

(ii)                        for a fax, when receipt is confirmed by telephone, reply email or reply fax from the recipient;

 

(iii)                     for an email, when receipt is confirmed by telephone or reply email from the recipient; and

 

16

 

(iv)                    for an electronic posting to a password-protected website to which the recipient has access, on delivery of an email (without the requirement of confirmation of receipt) stating that the electronic posting has been made.

 

(b)                                 Notice Addresses.  A notice, request, direction, consent, waiver or other communication must be addressed to the recipient at its address stated in Schedule A to the Indenture, which address the party may change by notifying the other parties.

 

Section 7.4.                                 GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF NEW YORK.

 

Section 7.5.                                 Submission to Jurisdiction.  Each party submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State Court sitting in New York, New York for legal proceedings relating to this Agreement.  Each party irrevocably waives, to the fullest extent permitted by law, any objection that it may now or in the future have to the venue of a proceeding brought in such a court and any claim that the proceeding has been brought in an inconvenient forum.

 

Section 7.6.                                 WAIVER OF JURY TRIAL.  EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN LEGAL PROCEEDINGS RELATING TO THIS AGREEMENT.

 

Section 7.7.                                 No Waiver; Remedies.  No party’s failure or delay in exercising a power, right or remedy under this Agreement will operate as a waiver.  No single or partial exercise of a power, right or remedy will preclude any other or further exercise of the power, right or remedy or the exercise of any other power, right or remedy.  The powers, rights and remedies under this Agreement are in addition to any powers, rights and remedies under law.

 

Section 7.8.                                 Severability.  If a part of this Agreement is held invalid, illegal or unenforceable, then it will be deemed severable from the remaining Agreement and will not affect the validity, legality or enforceability of the remaining Agreement.

 

Section 7.9.                                 Headings.  The headings in this Agreement are included for convenience and will not affect the meaning or interpretation of this Agreement.

 

Section 7.10.                          Counterparts.  This Agreement may be executed in multiple counterparts. Each counterpart will be an original and all counterparts will together be one document.

 

[Remainder of Page Left Blank]

 

17

 

EXECUTED BY:

 

	
 
    	
FORD   CREDIT AUTO LEASE TRUST 2018-B,
    
	
 
    	
as Issuer
    
	
 
    	
 
    
	
 
    	
By:
    	
THE   BANK OF NEW YORK MELLON, not in its individual capacity, but solely as Owner   Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
FORD   MOTOR CREDIT COMPANY LLC,
    
	
 
    	
as Servicer
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Jason   C. Behnke
    
	
 
    	
 
    	
Title:
    	
Assistant   Treasurer
    
	
 
    	
 
    
	
 
    	
CLAYTON   FIXED INCOME SERVICES LLC,
    
	
 
    	
as Asset Representations Reviewer
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Asset Representations Review Agreement]

 

 

Schedule A

 

Review Materials

 

1.                                      A copy of the Lease File that includes the following documents, if applicable:

 

(a)                                 The motor vehicle lease agreement or similar document as amended that evidences the Lease.

 

(b)                                 The following documents related to the Lease (collectively, the “Amendments”):

 

(i)                                     Any correction notices to the Lease prior to the Cutoff Date, and

 

(ii)                                  Any modification agreements completed by the parties to the Lease prior to the Cutoff Date;

 

(c)                                  The certificate of title, motor vehicle lien statement, application for title, application for registration for motor vehicle, certificate of origin or manufacturer statement of origin for a vehicle, or other evidence (including eAtlas reporting for electronic titling states) showing the security interest in the Leased Vehicle (collectively, the “Title Documents”);

 

(d)                                 Proof of insurance;

 

(e)                                  Any ancillary documents for credit insurance, service contracts or other products and services (collectively, the “Ancillary Documents”);

 

(f)                                   Military orders; and

 

(g)                                  State specific documents related to the Lease.

 

2.                                      Copies of applicable Ford Credit procedures, as of the date of the Lease, including:

 

(a)                                 Ford Credit’s procedure listing approved lease forms as of the date of the Lease (the “List of Approved Contract Forms”);

 

(b)                                 Ford Credit’s procedure listing acceptable name variations of Ford Credit, Lincoln Automotive Financial Services, CAB East LLC, CAB West LLC, CABT and  HTD Leasing LLC (the “List of Acceptable Name Variations”); and

 

(c)                                  Ford Credit’s procedure listing approved providers and form numbers for credit insurance, service contracts and other products and services (the “List of Approved Products”).

 

SA-1

 

3.                                      A copy of the Red Carpet Lease Assignment with the Dealer that originated the Lease (the “Dealer Assignment”).

 

4.                                      Applicable screen prints from Ford Credit’s receivables systems.

 

SB-2

 

Schedule B

 

Representations and Warranties and Tests

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
Section 3.3(a) — Origination of Leases.   The Lease was originated by a Dealer in the United States and has a garaging   location in an Eligible State. The Lease was originated by a Dealer for the   retail lease of a Leased Vehicle in the ordinary course of the Dealer’s   business. The Lease was signed by the parties to the Lease. The Lease was   purchased by a Titling Company qualified to hold the Lease and the related   Leased Vehicle and was validly assigned by the Dealer to that Titling   Company.
    	
 
    	
Test 3.3(a) — 1: Dealer Address    
   Observe the address of the Dealer on the Lease and confirm it is in the   United States.

Test 3.3(a) — 2: Garaging Location
   Observe the Lease account in Ford Credit’s receivables systems and confirm   the state in the garaging address on the date of the Lease corresponds to the   correct Titling Company as stated in the applicable Ford Credit procedure.

Test 3.3(a) — 3: Lease Signed
   Observe the Lease and confirm signatures are present for the Dealer and the   Lessee.

Test 3.3(a) — 4: Lease Form
   Observe the form number and revision date on the Lease and confirm they are   on the List of Approved Contract Forms.

Test 3.3(a) — 5: Qualified Titling Company
   Observe the Lease and confirm the Titling Company identified as the Holder is   qualified to do business in the state of the Dealer’s address.

Test 3.3(a) — 6: Valid Assignment
   Observe the Lease and confirm the Dealer’s signature is present to assign the   lease to a Titling Company.

Test 3.3(a) — 7: Dealer Confirmation
   Observe the Dealer name on the Lease and confirm it matches the Dealer name   on the Dealer Assignment.
    
	
 
    	
 
    	
 
    
	
Section 3.3(b) — New Vehicle.   The Leased Vehicle was a new car, light truck or utility vehicle according to   the Underwriting Procedures at the beginning of the related Lease.
    	
 
    	
Test 3.3(b) — 1: New Vehicle
   Observe the Lease account in Ford Credit’s receivables systems and confirm   that the Leased Vehicle is identified as “new” or “demo.”
    
	
 
    	
 
    	
 
    
	
Section 3.3(c) — Monthly Payments.   The Lease (if not an Advance Payment Plan Lease) provides for monthly   payments in U.S. dollars in an amount equal to the sum of (i) a level   scheduled payment that provides a fixed internal rate of return and amortizes   the Adjusted Capitalized Cost stated in the Lease to the Contract Residual   Value of the related Leased Vehicle over the term of the Lease, plus   (ii) other fees and taxes on the Lease.
    	
 
    	
Test 3.3(c) — 1: Monthly Payments
   Observe the Lease and confirm it reflects monthly payments.

Test 3.3(c) — 2: U.S. Dollars
   Observe the Lease and confirm it is payable in U.S. dollars.

Test 3.3(c) — 3: Level Monthly Payments
   Observe the Lease and confirm it reflects a level scheduled payment.

Test 3.3(c) — 4: Rate of Return
   Observe the Lease and confirm the sum of “Depreciation and other Amortized   Amounts” and “Rent Charge” divided by “Lease Payments” equals “Base Payment.”

Test 3.3(c) — 5: Amortization
   Observe the Lease and confirm “Adjusted Capitalized Cost” minus the product   of “Lease Payments” multiplied by “Base Payment” minus “Rent Charge” equals   “Residual Value.”
    

 

SB-1

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
 
    	
 
    	
Test 3.3(c) — 6: Total Payment
   Observe the Lease and confirm “Base Payment” plus other fees and taxes equals   “Total Payment.”
    
	
 
    	
 
    	
 
    
	
Section 3.3(d) — Certificate of Title.   The Leased Vehicle was titled, or the Servicer has started procedures that   will result in the Leased Vehicle being titled in a manner acceptable to the relevant   governmental authority.
    	
 
    	
Test 3.3(d) — 1: Garaging Location
   Observe the Lease account in Ford Credit’s receivables systems and confirm   the state in the garaging address on the date of the Lease matches the state   on the Title Documents.

Observe the Title Documents and confirm they reflect   the Titling Company as stated in the applicable Ford Credit procedure, using   a name included in the List of Acceptable Name Variations, as the Owner.

Test 3.3(d) — 2: Title Verification
   Observe the Holder on the Lease and confirm it matches the Owner on the Title   Documents.

Observe the vehicle identification number on the   Lease and confirm it matches the vehicle identification number on the Title   Documents.
    
	
 
    	
 
    	
 
    
	
Section 3.3(e) — No Government Lessee.   The Lease is not an obligation of the United States or a State or local   government or any agency, department, instrumentality or political   subdivision of the United States or a State or local government.
    	
 
    	
Test 3.3(e) — 1: No Government Lessee
   Observe the Lease and confirm the Leased Vehicle is leased for personal use   or, if not, confirm the Lessee is not a government Lessee. If the name of the   Lessee contains a word indicating it may be a government Lessee, use online   sources to confirm the Lessee is a commercial business and not a government   Lessee.
    
	
 
    	
 
    	
 
    
	
Section 3.3(f) — No Commercial Lessee.   The Lease is not a commercial lease contract, master lease contract or fleet   vehicle lease contract, but the Lease may have been entered by a business   entity and the Leased Vehicle may be used for commercial purposes.
    	
 
    	
Test 3.3(f) — 1: Lease Form
   Observe the form number and revision date on the Lease and confirm they are   on the List of Approved Contract Forms.
    
	
 
    	
 
    	
 
    
	
Section 3.3(g) — Insurance.   The Lease requires the Lessee to have physical damage insurance covering the   Leased Vehicle.
    	
 
    	
Test 3.3(g) — 1: Insurance
   Observe the Lease and confirm it contains an agreement from the Lessee to   insure against loss of or risk to the Leased Vehicle.
    
	
 
    	
 
    	
 
    
	
Section 3.3(h) — Compliance with Underwriting   Procedures. The Lease was underwritten according to the   Underwriting Procedures in effect at the time in all material respects.
    	
 
    	
Test 3.3(h) — 1: Lease Form
   Observe the form number and revision date on the Lease and confirm they are   on the List of Approved Contract Forms.

Test 3.3(h) — 2: Leased Vehicle Description
   Observe the Lease and confirm the description of the Leased Vehicle,   including the vehicle identification number, year, make and model, new, used   or demo and use, matches the vehicle information for the Lease account in   Ford Credit’s receivables systems.

Observe each Ancillary Document, if any, and confirm   any information describing the Leased Vehicle matches the corresponding   information on the Lease.

Test 3.3(h) — 3: Fees and Additional Products
   Observe the fees, if any, included in the “Amounts Due At Lease Signing or   Delivery” section of the Lease and confirm they do not exceed the limits 
    

 

SB-2

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
 
    	
 
    	
stated in the applicable Ford Credit procedure.

Observe the Lease and confirm the amount the   acquisition fee is the amount required by Ford Credit procedure and, if it is   an advance payment lease, confirm the acquisition fee is listed in the   “Amounts Due At Lease Signing or Delivery” section.

Observe the amount for each additional product, if   any, included in the “Itemization of Gross Capitalized Cost” section of the   Lease and confirm each amount does not exceed the advance cap amount stated   in the applicable Ford Credit procedure.

Test 3.3(h) — 4: Lease Signed
   Observe the Lease and confirm signatures are present for the Dealer and the   Lessee.

 

Test 3.3(h) — 5: Insurance
   Observe the insurance section of the Lease and confirm the minimum limits   meet the requirements as stated in the applicable Ford Credit procedure.

Confirm the Lease File contains proof of insurance   as stated in the applicable Ford Credit procedure.

 

Test 3.3(h) — 6: Dealer Confirmation
   Observe the Lease and confirm that the Dealer name matches the Dealer name on   the Red Carpet Lease Assignment.

Test 3.3(h) — 7: Additional Document   Requirements
   Observe the Lease account in Ford Credit’s receivables systems and confirm   that no additional document requirements are indicated for origination or, if   so, confirm all required documents are in the Lease File.

Test 3.3(h) — 8: Notice to Co-Signer
   Observe the Lease and confirm the “Vehicle Use” is personal and if so,   confirm if a “Notice to Cosigner” document is required by the applicable Ford   Credit procedure and if so, confirm a signed and dated “Notice to Cosigner”   document is in the Lease File.

Test 3.3(h) — 9: Odometer Disclosure Statement
   Observe the Odometer Disclosure Statement and confirm it is completed and   signed as stated in the applicable Ford Credit procedure.

 

Test 3.3(h) — 10: Finance Company and Holder
   Observe the Lease and confirm the “Finance Company” and “Holder” section is completed   as stated in the applicable Ford Credit procedure.
    
	
 
    	
 
    	
 
    
	
Section 3.3(i) — Valid Assignment.   The Lease was originated in, and is subject to the laws of, a jurisdiction   which permits the sale and assignment of the Lease and the related Leased   Vehicle to the Titling Company. The terms of the Lease do not limit the right   of the owner of the Lease to sell the Lease.
    	
 
    	
Test 3.3(i) — 1: Lease Form

Observe the form number and revision date on the   Contract and confirm they are on the List of Approved Contract Forms.
    
	
 
    	
 
    	
 
    
	
Section 3.3(j) — Compliance with Law.   At the time it was originated, the Lease complied in all material respects   with all 
    	
 
    	
Test 3.3(j) — 1: Lease Form

Observe the form number and revision date on the   Lease and confirm they are on the List of Approved Contract Forms.
    

 

SB-3

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
requirements of law in effect at the time.
    	
 
    	
Test 3.3(j) — 2: Legibility of Lease
   Observe the Lease and confirm all printed sections are legible and aligned on   the correct line.

Test 3.3(j) — 3: Additional Product Provider   and Form
   Observe the provider name, form number and revision date on each Ancillary   Document, if any, and confirm they are on the List of Approved Products.

 

Test 3.3(j) — 4: Lease Signed
   Observe the Lease and confirm signatures are present for the Dealer and the   Lessee.

Test 3.3(j) — 5: Total of Payments
   Observe the “Total of Payments” on the Lease. Calculate the “Total of   Payments” using the “Amount Due at Lease Signing or Delivery” plus “The total   of Your monthly payment is” minus “Your first monthly payment of” and confirm   it matches “Total of Payments.” 

 

Test 3.3(j) — 6: Payment Schedule
   Observe the scheduled due date on the Lease and confirm it follows the   payment due date requirements in the applicable Ford Credit procedure.

Test 3.3(j) — 7: Tax Disclosure
   Observe the Lease and confirm the tax on capitalized cost reduction, if any,   is disclosed as required by Ford Credit procedure.

Test 3.3(j) — 8: Gross Capitalized Cost
   Observe the “Gross capitalized cost” in the “Your payment is determined as   shown below” section of the Lease and confirm that it equals the “Total Gross   Capitalized Cost” in the “Itemization of Gross Capitalized Cost” section.

Test 3.3(j) — 9: Adjusted Capitalized Cost
   Observe the “Your payment is determined as shown below” section of the Lease   and confirm that “Gross capitalized cost” minus “Capitalized cost reduction”   equals “Adjusted capitalized cost.”

Test 3.3(j) — 10: Term
   Observe the “Payments” box on the Lease and confirm it matches the “Lease   payments” in the “Your payment is determined as shown below” section.

Test 3.3(j) — 11: Total Miles Allowed
   Observe the “Excess Wear and Use” section of the Lease and confirm the price   per mile and the mileage lines are completed according to applicable Ford   Credit procedure.

 

Test 3.3(j) — 12: Warranty Disclosure

Observe the “Warranty” disclosure box on the Lease   and confirm it has been completed according to applicable Ford Credit   procedure.

Test 3.3(j) — 13: Official Fees and Taxes   Disclosure
   Observe the “Official Fees and Taxes” disclosure box on the Lease and confirm   it has been competed according to applicable Ford Credit procedure.

Test 3.3(j) — 14: Equal Credit Opportunity Act   - Origination

Observe the Lease account in Ford Credit’s   receivables systems and confirm any comments at origination do not conflict   with the prohibited practices described in the applicable Ford Credit   procedure.
    

 

SB-4

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
 
    	
 
    	
Test 3.3(j) — 15: State Disclosures; Contract   Complete

Observe the Lease and confirm all lines on the Lease   are completed or properly left blank.

 

Test 3.3(j) — 16: State-Specific Underwriting   Requirements  

Observe the state in the address of the Dealer on   the Lease. If the state is listed below, perform the tests for the specific   state.

 

California

 

Observe the Lease and confirm that it indicates it   was negotiated primarily in English or, if it indicates one of the other   languages, confirm a completed translation of the Lease in that language is   in the Lease File.

 

Florida

 

Confirm a signed “Customer-Dealer Registration   Agreement” or a document identifying that the Dealer used the actual   registration amount is in the Lease file.

 

Illinois

 

Illinois-1-Sales Tax Form
   Confirm a completed sales tax form is in the Lease File.
   Illinois-2-Translation
   Confirm there is no translation acknowledgment form in the Lease File or, if   so, confirm the form is completed and signed.

 

Kansas

Observe the Lease and confirm that no credit   insurance was purchased or, if so, confirm the “Credit Insurance Premium   Refund Notice” is in the Lease File and the date of the form is within ten   days of the Lease purchase date.

 

New Jersey

 

Observe the Lease and confirm the date the Lessee   signed the Lease is at least one business day after the date of the Lease or,   if the dates are the same, confirm a waiver signed by the Lessee is in the   Lease File.

 

New York

 

Confirm there is no translation acknowledgment form   in the Lease File or, if so, confirm the form is completed and signed.

 

Ohio

 

Observe the Lease and confirm that no credit   insurance was purchased or, if so, confirm a completed and signed “Notice of   Optional Credit Insurance” is in the Lease File.
    

 

SB-5

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
Section 3.3(k) — Binding Obligation.   The Lease is on a form contract that includes rights and remedies allowing   the holder to enforce the obligation and realize on the Leased Vehicle and   represents the legal, valid and binding payment obligation of the Lessee,   enforceable in all material respects by the holder of the Lease, except as   may be limited by bankruptcy, insolvency, reorganization or other similar   laws relating to the enforcement of creditors’ rights or by general equitable   principles and consumer financial protection laws.
    	
 
    	
Test 3.3(k) — 1: Lease Form  

Observe the form number and revision date on the   Contract and confirm they are on the List of Approved Contract Forms.
    
	
 
    	
 
    	
 
    
	
Section 3.3(l) — Security Interest in   Leased Vehicle. The Collateral Agent has, or the Servicer   has started procedures that will result in the Collateral Agent having, a   perfected, first-priority security interest in the Leased Vehicle, which   security interest was validly created.
    	
 
    	
Test 3.3(l) — 1: Security Interest in Lease   Vehicle

Observe the Title Documents and confirm they show   HTD Leasing LLC, using a name included in the List of Acceptable Name   Variations, as the first lienholder.

 

Observe the vehicle identification number on the   Lease and confirm it matches the vehicle identification number on the Title   Documents.
    
	
 
    	
 
    	
 
    
	
Section 3.3(m) — Good Title to Lease and   Leased Vehicle. The applicable Titling Company has good   title, or the Servicer has started procedures that will result in good title,   to the Lease and Leased Vehicle, free and clear of Liens other than Permitted   Liens.
    	
 
    	
Test 3.3(m) — 1: Garaging Location

Observe the Lease account in Ford Credit’s   receivables systems and confirm the state in the garaging address on the date   of the Lease matches the state on the Title Documents.

 

Observe the Title Documents and confirm they reflect   the Titling Company as stated in the applicable Ford Credit procedure, using   a name included in the List of Acceptable Name Variations, as the Owner.

 

Test 3.3(m) — 2: Valid Assignment

Observe the Lease and confirm the Dealer signature   is present to assign the lease to the applicable Titling Company.
    
	
 
    	
 
    	
 
    
	
Section 3.3(n) — Chattel Paper.   The Lease is either “tangible chattel paper” or “electronic chattel paper”   within the meaning of the applicable UCC and there is only one original   authenticated copy of the Lease.
    	
 
    	
Test 3.3(n) — 1: Lease Signed

Observe the Lease and confirm signatures are present   for the Dealer and Lessee.

 

Test 3.3(n) — 2: Lease Form

Observe the form number and revision date on the   Lease and confirm they are on the List of Approved Contract Forms.

 

Test 3.3(n) — 3: One Original
   Observe the Lease and confirm it is an electronic contract or, if not,   confirm it states “original” above the ply description line.
    

 

SB-6

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
Section 3.3(o) — Servicing.   The Lease was serviced in compliance with law and the Servicing Procedures in   all material respects from the time it was originated to the Cutoff Date.
    	
 
    	
Test 3.3(o) — 1: Credit Bureau Reporting

Observe the Lease account in Ford Credit’s   receivables systems and confirm the number of days, if any, the Lease account   was past due for each month preceding the Cutoff Date matches the information   reported to the credit bureaus for the Lease account.

 

Test 3.3(o) — 2: Lessee Complaints

Observe the Lease account in Ford Credit’s   receivables systems and confirm that “Complaints/Feedback” is not indicated   for the Lease account as of the Cutoff Date or, if so, confirm that the   documentation indicated in Ford Credit’s receivables systems related to the   complaint follows the applicable Ford Credit procedures.

 

Test 3.3(o) — 3: Equal Credit Opportunity Act -   Servicing

Observe the customer service notes, if any, for the   Lease account in Ford Credit’s receivables systems and confirm any comments   do not conflict with the prohibited practices described in the applicable   Ford Credit procedure.

 

Test 3.3(o) — 4: Servicemembers Civil Relief   Act

Observe the Lease account in Ford Credit’s   receivables systems and confirm that Servicemembers Civil Relief Act is not   indicated for the Lease account as of the Cutoff Date or, if so and if   military orders are in the Lease File, confirm the lease factor for the Lease   account indicated in Ford Credit’s receivables systems is less than or equal   to 4.25%.
    
	
 
    	
 
    	
 
    
	
Section 3.3(p) — No Bankruptcy.   As of the Cutoff Date, the Sponsor’s receivables systems do not indicate that   the Lessee on the Lease is a debtor in a bankruptcy proceeding.
    	
 
    	
Test 3.3(p) — 1: No Bankruptcy

Observe the Lease account in Ford Credit’s   receivables systems as of the Cutoff Date and confirm the “Bankrupt” field is   blank.
    
	
 
    	
 
    	
 
    
	
Section 3.3(q) — Leases in Force.   As of the Cutoff Date, neither the Sponsor’s receivables systems nor the   Lease File indicate that the Lease (i) was a Terminating Lease or a   Closed Lease or (ii) was satisfied, subordinated, rescinded, cancelled   or terminated.
    	
 
    	
Test 3.3(q) — 1: Terminating Lease or Closed   Lease
   Observe the Lease account in Ford Credit’s receivables systems and confirm it   was not a Terminating Lease or a Closed Lease.

Test 3.3(q) — 2: Leases in Force
   Observe the Lease account in Ford Credit’s receivables systems and confirm it   was an active account on the Cutoff Date.
    
	
 
    	
 
    	
 
    
	
Section 3.3(r) — No Amendments or   Modifications. No material term of the Lease has been   affirmatively amended or modified (other than the assessment of a security   deposit or a Payment Extension Fee or the payment of any other amount that   would be a Lease Administration Amount, or a default relating to failure by   the related Lessee to pay any such amount), except amendments and   modifications indicated in the Sponsor’s receivables systems or in the Lease   File.
    	
 
    	
Test 3.3(r) — 1: No Amendments

Observe the Lease account in Ford Credit’s   receivables systems and confirm a “Substitution Agreement” and/or “Transfer   of Lease” account message is not indicated or, if so, confirm a substitution   agreement and/or transfer agreement is in the Lease File.
    

 

SB-7

 

	
Representation and Warranty   (Section references are to the
   Exchange Note Purchase Agreement)
    	
 
    	
Tests
    
	
Section 3.3(s) — No Extensions.   As of the Cutoff Date, the Lease was not amended to extend the due date for any   payment, other than Payment Extensions totaling no more than three months, as   recorded in the Sponsor’s receivables systems and in the Lease File.
    	
 
    	
Test 3.3(s) — 1: No Extensions

Observe the Lease account in Ford Credit’s   receivables systems and confirm the Lease was not extended more than three   months as of the Cutoff Date.
    
	
 
    	
 
    	
 
    
	
Section 3.3(t) — No Defenses.   There is no right of rescission, setoff, counterclaim or defense asserted or   threatened against the Lease indicated in the Sponsor’s receivables systems   or in the Lease File.
    	
 
    	
Test 3.3(t) — 1: No Defenses

Observe the Lease account in Ford Credit’s   receivables systems and confirm there are no “Litigation Pending,” “Attorney   Representation” and/or “Second Lien” account messages or, if so, confirm the account   message(s) were not present as of the Cutoff Date.
    
	
 
    	
 
    	
 
    
	
Section 3.3(u) — No Payment Default.   Except for a payment that is not more than 30 days Delinquent as of the   Cutoff Date, no payment default exists on the Lease.
    	
 
    	
Test 3.3(u) — 1: No Payment Default

Observe the Lease account in Ford Credit’s   receivables systems and confirm the Lease was not more than 30 days   Delinquent as of the Cutoff Date.
    
	
 
    	
 
    	
 
    
	
Section 3.3(v) — Maturity of Leases.   The Lease has a Scheduled Lease End Date of not greater than 48 months from   the date of the Lease.
    	
 
    	
Test 3.3(v) — 1: Maturity of Leases

Observe the “Lease Term in Months” on the Lease and   confirm it is not greater than 48.
    

 

SB-8EX-10.1

 Exhibit 10.1 

Execution Version 
  

 
 PURCHASE AGREEMENT 

dated 
 as of May 12, 2017 

between 
 *                               
  *         

as Seller, 
 and 

Contrail Aviation Support, LLC 
 as
Buyer 
  
  

 

			
	*                                
                                     Contrail          Contrail PA	  	i

  

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 TABLE OF CONTENTS 

 

					
	 	  	Page	 
	 1.  Definitions
	  	 	1	 
		
	 2.  Sale
	  	 	1	 
		
	 3.  Purchase Price; Deposit; Purchase Price Adjustment
	  	 	1	 
		
	 4.  Inspection of Aircraft; Value at Closing; Delivery Condition;
Deregistration; Export
	  	 	2	 
		
	 5.  Representations and Warranties of Seller
	  	 	3	 
	 (a)   Organization, Etc.
	  	 	3	 
	 (b)   Organizational Authorization
	  	 	3	 
	 (c)   No Violation
	  	 	3	 
	 (d)   Approvals
	  	 	3	 
	 (e)   Valid and Binding Agreements
	  	 	4	 
	 (f)   Litigation
	  	 	4	 
	 (g)   Encumbrances
	  	 	4	 
	 (h)   Brokers’ Fees
	  	 	4	 
	 (i) Title to Interests
	  	 	4	 
	 (j) Operation
	  	 	4	 
		
	 6.  Disclaimer
	  	 	4	 
		
	 7.  Representations and Warranties of Buyer
	  	 	5	 
	 (a)   Organization, Etc.
	  	 	5	 
	 (b)   Authorization
	  	 	5	 
	 (c)   No Violation
	  	 	5	 
	 (d)   Approvals
	  	 	5	 
	 (e)   Valid and Binding Agreements
	  	 	6	 
	 (f)   Litigation
	  	 	6	 
	 (g)   Broker’s Fees
	  	 	6	 
		
	 8.  Conditions Precedent to the Obligations of Seller
	  	 	6	 
	 (a)   Purchase Price
	  	 	6	 
	 (b)   Due Authorization, Execution and Delivery
	  	 	6	 
	 (c)   Representations and Warranties
	  	 	6	 
	 (d)   Additional Information
	  	 	6	 
	 (e)   Illegality
	  	 	6	 
	 (f)   No Proceedings
	  	 	6	 
	 (g)   Delivery Location
	  	 	7	 
	 (h)   Approvals, Consents and Notices
	  	 	7	 
	 (i) Insurance
	  	 	7	 

  
 i 

					
		
	 9.  Conditions Precedent to the Obligations of Buyer
	  	 	7	 
	 (a)   Due Authorization, Execution and Delivery
	  	 	7	 
	 (b)   Representations and Warranties
	  	 	7	 
	 (c)   Additional Information
	  	 	7	 
	 (d)   Illegality
	  	 	7	 
	 (e)   No Proceedings
	  	 	7	 
	 (f)   Delivery Location
	  	 	7	 
	 (g)   Material Damage
	  	 	7	 
	 (h)   Liens
	  	 	7	 
		
	 10.  International Registry
	  	 	8	 
		
	 11.  Further Assurances
	  	 	8	 
		
	 12.  Taxes, Indemnities and Insurance
	  	 	8	 
	 (a)   Buyer’s Obligations regarding Taxes
	  	 	8	 
	 (b)   Seller’s Indemnity
	  	 	8	 
	 (c)   Buyer’s Indemnity
	  	 	9	 
	 (d)   Withholding
	  	 	9	 
	 (e)   Contest Resolution
	  	 	9	 
	 (f)   Cooperation
	  	 	10	 
	 (g)   Notice of Claims
	  	 	10	 
	 (h)   Insurance
	  	 	10	 
		
	 13.  Know Your Customer
	  	 	11	 
		
	 14.  Miscellaneous
	  	 	11	 
	 (a)   Notices
	  	 	11	 
	 (b)   Confidentiality
	  	 	12	 
	 (c)   Limitation of Liability of Any Party
	  	 	12	 
	 (d)   Headings
	  	 	13	 
	 (e)   References
	  	 	13	 
	 (f)   Governing Law
	  	 	13	 
	 (g)   Arbitration/Jurisdiction
	  	 	13	 
	 (h)   Severability
	  	 	13	 
	 (i) Amendments in Writing
	  	 	13	 
	 (j) Survival
	  	 	13	 
	 (k)   Expenses
	  	 	13	 
	 (1)   Execution in Counterparts
	  	 	14	 
	 (m) Entire Agreement
	  	 	14	 
	 (n)   Exhibits and Schedules
	  	 	14	 
	 (o)   Successors and Assigns
	  	 	14	 
	 (p)   No Third Party Benefit
	  	 	14	 
	 (q)   Assignment
	  	 	14	 

  
 ii 

 SCHEDULES: 
  

			
	Schedule 1	  	Definitions
	Schedule 2	  	Aircraft Description; Purchase Price
	Schedule 3	  	Aircraft Documents
		
	EXHIBITS:	  	
		
	Exhibit A	  	Acknowledgment of Delivery
	Exhibit B	  	Certificate of Technical Acceptance
	Exhibit C	  	Warranty Bill of Sale

  

  
 iii 

 PURCHASE AGREEMENT 

THIS PURCHASE AGREEMENT, dated as of, 2017 (this “Agreement”), is entered into between *             *                 *        , a legal entity organized under the laws of *                               
          (the “Seller”), and Contrail Aviation Support, LLC, a legal entity organized under the laws of
                     in (the “Buyer”). 

WHEREAS, subject to the terms and conditions hereof, Seller desires to sell, transfer, and convey to Buyer, and Buyer desires to purchase from
Seller, one (1) used Boeing 737-800 Aircraft and related Aircraft Documents (as defined herein). 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements of the parties contained herein and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Seller and Buyer agree as follows: 
 1.
Definitions 
 Capitalized terms used in this Agreement shall have the meanings set forth in Schedule 1 to this Agreement. 

2. Sale 
 Subject to the terms and conditions of
this Agreement, Seller agrees to sell and transfer to Buyer, and Buyer agrees to purchase from Seller, all of Seller’s right, title and interest in, to and under the Aircraft and Aircraft Documents, free and clear of all liens. The Closing of
the purchase and sale of the Aircraft shall take place upon satisfaction or waiver of all of the conditions set forth in Section 8 and Section 9 on the Anticipated Closing Date but not later than
the respective Final Closing Date, or at such other time as Buyer and Seller may agree in writing. 
 3. Purchase Price; Deposit; Purchase Price
Adjustment 
  

	(a)	 The purchase price for the Aircraft shall be in the amount and allocated (as applicable) as set forth on
Schedule 2 hereto (collectively and individually, the “Purchase Price”). 

  

	(b)	 Buyer has previously paid to Seller a security deposit in the amount and allocation (as applicable) as set
forth on Schedule 2 hereto (the “Deposit”) which shall be non-refundable to Buyer unless any of the following events occur: 

  

	 	(i)	 Seller fails to deliver the Aircraft to Buyer on or before the Final Closing Date; 

 

	 	(ii)	 the Aircraft suffers an Event of Loss or Material Damage between the time of Technical Acceptance and Delivery.
“Material damage” shall mean any damage 1) exceeding $100,000 in the total amount; 2) affecting the current non-incident statement; or 3) preventing Buyer from ferrying the Aircraft to the U.S.A.
(Buyer shall negotiate in good faith with Seller to resolve concerns over any material damage to the Aircraft before requesting termination of the Purchase Agreement and return of the Deposit.); 

  
 Purchase Agreement 

Page 1 
  

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

	 	(iii)	 Buyer’s or Seller’s material breach of this Agreement; 

 

	 	(iv)	 Buyer does not issue the Certificate of Technical Acceptance to Seller; or 

 

	 	(v)	 Seller’s inability to satisfy the Conditions Precedent listed in Section 9 of this Agreement, save
where such failure is as a result of Buyer’s breach of the Purchase Agreement. 

  

	(c)	 Prior to Closing, Seller shall provide an original undated signed bill of sale in the form shown on Exhibit C,
and Buyer shall provide an original undated signed delivery receipt for the Aircraft in the form shown on Exhibit A, to an escrow agent designated by Buyer, and reasonably acceptable to Seller, to be held by such escrow agent until Seller gives
notice that the full Purchase Price has been received by Seller. Said bill of sale shall be delivered (and shall only be delivered) to Buyer by the escrow agent upon receiving Seller’s email confirmation of receipt of the full Purchase Price in
cleared funds in Seller’s bank account, which confirmation Seller shall provide immediately upon receiving the Purchase Price. 

  

	(d)	 At Closing, Buyer shall deliver to Seller an amount equal to the Purchase Price (less the Deposit), in
immediately available funds, by wire transfer to the following account: 

  

					
	*	  		  	
		  		  	
		  		  	
		  		  	
		  		  	

 4. Inspection of Aircraft; Value at Closing; Delivery Condition; Deregistration; Export 

 

	(a)	 Buyer shall have the opportunity to perform inspections of the Aircraft and Aircraft Documents prior to Closing
at *         *             *                    
*             (“Inspection”). Buyer shall be entitled to perform a general inspection of the Aircraft, including (i) a
physical “walk around” inspection of the Aircraft interiors and exteriors; (ii) review of the engine borescopes and engine performance checks and (iii) an inspection of all Aircraft Documents relating to such Aircraft. Upon
Buyer’s confirmation that the Aircraft and Aircraft Documents are in a condition required by this Agreement and as otherwise acceptable to Buyer, Buyer shall execute and deliver to Seller the Certificate of Technical Acceptance.

  

	(b)	 Seller shall provide to Buyer at the time of delivery all Aircraft records, including but not limited to, the
following current documentation: (i) updated disk sheets, and (ii) non-incident statement(s) and non-PMA/DER statement(s), all in the form presented to Buyer
in connection with the Inspection. 

  
 Purchase Agreement 

Page 2 
  

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

	(c)	 At Closing, the Aircraft (including the Aircraft Documents) shall be delivered to Buyer in “as-is” “where-is” basis. Seller makes no warranties, guarantees or representations of any kind, either express or implied, statutory or otherwise, as to
the condition of the Aircraft. 

  

	(d)	 The export and re importation of the Aircraft under this Agreement are subject to the export laws of the State
of Registration. Buyer shall be responsible for the post-closing exportation process required for the Aircraft, including any and all costs associated therewith. 

5. Representations and Warranties of Seller 
 On
the date hereof and on the Closing Date Seller makes the following representations and warranties. 
  

	(a)	 Organization, Etc. Seller is duly organized, validly existing and in good standing under the laws of *                            
*     *             with all requisite organizational power and authority to
own, participate in or hold under lease its properties and enter into and perform its obligations under this Agreement and the Transfer Documents to which Seller is or will be a party (collectively, the “Seller Agreements”);

  

	(b)	 Organizational Authorization. Seller has taken, or caused to be taken, all necessary organizational
action (including, without limitation, the obtaining of any consent or approval of any of its board of directors or committee thereof or any officers required by its charter documents or other organizational agreements) to authorize the execution
and delivery of this Agreement and each of the Seller Agreements and the performance of its obligations hereunder and thereunder; 

  

	(c)	 No Violation. The execution and delivery by Seller of this Agreement and the Seller Agreements, the
performance by Seller of its obligations hereunder and thereunder and the consummation by Seller on the date hereof and on the Closing Date of the transactions contemplated hereby and thereby, do not and will not (i) violate or contravene any
provision of the charter documents or other organizational agreements 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 upon, 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 its properties is or may
be bound or affected; 

  

	(d)	 Approvals. The execution and delivery by Seller of this Agreement and the Seller Agreements, the
performance by Seller of its obligations hereunder and thereunder and the consummation by Seller on the Closing Date of the transactions contemplated hereby or thereby 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 any Government Entity; 

  
 Purchase Agreement 

Page 3 
  

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

	(e)	 Valid and Binding Agreements. This Agreement has, and the Seller Agreements have been or as of the
Closing Date will have been, duly authorized, executed and delivered by Seller and, assuming the due authorization, execution and delivery by the other party or parties thereto, this Agreement and, as of the Closing Date, the Seller Agreements
constitute the legal, valid and binding obligations of Seller and are 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)	 Litigation. There are no pending or, or to the knowledge of Seller, threatened actions or proceedings
against Seller before any court, administrative agency or tribunal which, if determined adversely to Seller, would prohibit or materially adversely affect the ability of Seller to perform its obligations under this Agreement or the Seller
Agreements; 

  

	(g)	 Encumbranccs. Seller has not previously sold, assigned, encumbered, transferred or conveyed and, except
as contemplated hereby, has no obligation to sell, assign, encumber, transfer or convey, any of its right, title or interest in, to or under the Aircraft; 

  

	(h)	 Brokers’ Fees. Buyer shall not be liable for the fees of any broker or other Person acting on
Seller’s behalf in connection with the transactions contemplated hereby; 

  

	(i)	 Title to Interests. Seller is the sole owner of the Aircraft and has good title thereto, free and clear
of any and all Liens. At Closing, such title shall be transferred to Buyer free and clear of all Liens. 

 6. Disclaimer

 Other than the express representations and warranties of Seller set forth in Section 5 and in any other Transfer Document,
the Aircraft is being sold and assigned hereunder, “AS IS, WHERE IS” and BUYER ACKNOWLEDGES AND AGREES THAT NEITHER THE SELLER NOR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, EMPLOYEES OR REPRESENTATIVES HAS MADE OR WILL BE DEEMED
TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO, AND BUYER HEREBY WAIVES, RELEASES AND RENOUNCES ANY AND ALL WARRANTIES, OBLIGATIONS AND LIABILITIES, EXPRESS OR IMPLIED
(WHETHER STATUTORY OR OTHERWISE) WITH RESPECT TO, (a) THE CAPACITY, AGE, VALUE, QUALITY, DURABILITY, DESCRIPTION (EXCEPT AS TO SERIAL NUMBERS), CONDITION (WHETHER OF THE AIRCRAFT, ANY PART THEREOF OR ITS AIRCRAFT DOCUMENTS), DESIGN,
WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRCRAFT OR USE THE AIRCRAFT IN ANY OR ALL
JURISDICTIONS) OR SUITABILITY OF THE AIRCRAFT, OR ANY PART THEREOF, (b) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, (c) THE ABSENCE OF ANY INFRINGEMENT
OF ANY PATENT, TRADEMARK, COPYRIGHT OR OTHER INTELLECTUAL PROPERTY RIGHTS, (d) ANY IMPLIED WARRANTY ARISING 

  
 Purchase Agreement 

Page 4 

 FROM THE COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE OR (e) ANY OTHER REPRESENTATIONS OR
WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF OR ITS AIRCRAFT DOCUMENTS, ALL OF WHICH ARE HEREBY EXPRESSLY EXCLUDED, IT BEING UNDERSTOOD THAT NOTHING HEREIN WILL BE DEEMED TO LIMIT THE BUYER FROM AVAILING
ITSELF OF ANY WARRANTIES, COVENANTS, AND REPRESENTATIONS OF ANY MANUFACTURER. 
 7. Representations and Warranties of Buyer 

On the date hereof and on the Closing Date, Buyer makes the following representations and warranties as to itself, to Seller: 

 

	(a)	 Organization, Etc. Buyer is a limited liability company duly organized, validly existing and in good
standing under the laws of North Carolina, U.S.A., and has the power and authority to own, participate in or hold under lease its properties and to enter into and perform its obligations under this Agreement and the Transfer Documents to which Buyer
is a party (collectively, the “Buyer Agreements”);. 

  

	(b)	 Authorization. Buyer has taken, or caused to be taken, all necessary action (including, without
limitation, the obtaining of any consent or approval of its members required by its certificate of formation or limited liability company agreement) to authorize the execution and delivery of this Agreement and each of the Buyer Agreements, as the
case may be, and the performance of its obligations hereunder and thereunder; 

  

	(c)	 No Violation. The execution and delivery by Buyer of this Agreement and the Buyer Agreements, the
performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer on the Closing Date of the transactions contemplated hereby and thereby, do not and will not (i) violate or contravene any provision of the
certificate of formation, limited liability company agreement, other charter documents or other organizational agreements 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 upon, 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
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 and the Buyer Agreements, the
performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer on the Closing Date of the transactions contemplated hereby and thereby 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 and (ii) any Government Entity;

  
 Purchase Agreement 

Page 5 

	(e)	 Valid and Binding Agreements. This Agreement has been and the Buyer Agreements have been or as of the
Closing Date will have 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 and, as of the Closing Date, the Buyer Agreements
constitute the legal, valid and binding obligations of Buyer and are 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)	 Litigation. There are no pending or, to the knowledge of Buyer, threatened actions or proceedings
against Buyer before any court, administrative agency or tribunal which, if determined adversely to Buyer would materially adversely affect the ability of Buyer to perform its obligations under this Agreement or the Buyer Agreements; and

  

	(g)	 Broker’s Fees. Seller shall not be liable for the fees of any broker or other person acting on
Buyer’s behalf in connection with the transactions contemplated hereby. 

 8. Conditions Precedent to the Obligations of
Seller 
 The obligation of Seller to sell, transfer, assign and convey the Aircraft to Buyer on each Closing Date is subject to the satisfaction or
waiver of the following conditions: 
  

	(a)	 Purchase Price. Seller shall have received the Purchase Price via wire transfer to Seller’s account
as specified in Section 3; 

  

	(b)	 Due Authorization, Execution and Delivery. This Agreement and each other Transfer Document shall have
been duly authorized, executed and delivered by each party thereto other than Seller; 

  

	(c)	 Representations and Warranties. The representations and warranties of Buyer contained herein and in any
other Buyer Agreements shall be true and correct as of Closing in all material respects; 

  

	(d)	 Additional Information. Seller shall have received such other documents and evidence with respect to
Buyer as Seller may reasonably request in order to establish the authority of Buyer to consummate the transactions contemplated by this Agreement and the other Transfer Documents on such date, the taking by Buyer of all appropriate action in
connection therewith and compliance by Buyer with the conditions set forth in this Agreement on such date; 

  

	(e)	 Illegality. The performance on such date of the transactions contemplated hereby, upon the terms and
conditions set forth herein, shall not, in the reasonable judgment of Seller, violate, and shall not subject Seller to any penalty or liability under, any law, rule or regulation binding upon Seller; 

 

	(f)	 No Proceedings. No legal or governmental action, suit or proceeding shall have been instituted or
threatened before any court, administrative agency or tribunal, nor shall any order, judgment or decree have been issued or proposed to be issued by any court, administrative agency or tribunal to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby; 

  
 Purchase Agreement 

Page 6 

	(g)	 Delivery Location. The Aircraft shall be located at the agreed Delivery Location; 

 

	(h)	 Approvals, Consents and Notices. All approvals and consents of, or notices to, any Governmental Entity,
any trustee or holder of any indebtedness or obligation of the Seller or any other person, which are required in connection with the transaction contemplated by this Agreement shall have been duly obtained, given or accomplished; and

  

	(i)	 Insurance. Seller shall have received the insurance certificate specified in Section 12(h).

 9. Conditions Precedent to the Obligations of Buyer 

The obligation of Buyer to purchase the Aircraft from Seller on each Closing Date is subject to the satisfaction or waiver of the following conditions: 

 

	(a)	 Due Authorization. Execution and Delivery. This Agreement and each other Transfer Document shall have
been duly authorized, executed and delivered by each party thereto other than Buyer; 

  

	(b)	 Representations and Warranties. The representations and warranties of Seller contained in the Transfer
Documents shall be true and correct as of the Closing Date in all material respects; 

  

	(c)	 Additional Information. Buyer shall have received such other documents and evidence with respect to
Seller as Buyer may reasonably request in order to establish the authority of Seller to consummate the transactions contemplated by this Agreement and other Transfer Documents on such date, the taking by Seller of all appropriate corporate action in
connection therewith and compliance by Seller with the conditions set forth in the Transfer Documents on such date; 

  

	(d)	 Illegality. The performance of the transactions contemplated hereby, upon the terms and conditions set
forth herein, shall not, in the reasonable judgment of Buyer, violate, and shall not subject any Buyer to any penalty or liability under, any law, rule or regulation binding upon such Buyer; 

 

	(e)	 No Proceedings. No legal or governmental action, suit or proceeding shall have been instituted or
threatened before any court, administrative agency or tribunal, nor shall any order, judgment or decree have been issued or proposed to be issued by any court, administrative agency or tribunal to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby; 

  

	(f)	 Delivery Location. The Aircraft shall be located at the agreed Delivery Location; 

 

	(g)	 Material Damage. No Material Damage (as defined in Section 3) or an Event of Loss with respect to
the Aircraft shall have occurred; 

  

	(h)	 Liens. The Aircraft shall be free and clear of all Liens; 

  
 Purchase Agreement 

Page 7 

 10. International Registry 

At or promptly after Closing, upon request by Buyer, Seller shall provide any consents required to register a contract of sale for the sale of the Aircraft on
the International Registry. 
 11. Further Assurances 

Each party agrees, upon the reasonable request of the other party, at any time and from time to time, promptly to execute and deliver all such further
documents, and promptly to take and forebear from all such action, as may be reasonably necessary or appropriate in order more effectively to confirm or carry out the provisions of this Agreement. Without limiting the foregoing, Seller shall, at the
sole cost and expense of Buyer, do or cause to be done all acts and things as may be required to perfect and preserve the title and interest of Buyer in the Aircraft as Buyer may reasonably request, including, without limitation, that Seller shall,
upon request by Buyer and at Buyer’s cost and expense, cause all instruments which shall be executed pursuant to the terms hereof to be kept, filed and recorded in the appropriate office or offices pursuant to applicable laws to perfect,
protect and preserve the rights and interests of Buyer hereunder and in the Aircraft. 
 12. Taxes, Indemnities and Insurance 

 

	(a)	 Buyer’s Obligations regarding Taxes. Buyer hereby agrees promptly to pay and indemnify each Seller
Indemnitee from and against any and all Taxes payable in connection with the sale, transfer and delivery by Seller to Buyer of the Aircraft or in connection with any other transaction to occur on or after the Closing expressly contemplated hereby.
The foregoing shall expressly exclude any liability for Taxes on or based on or measured by the gross or net income of Seller or capital gains of Seller or Taxes imposed by a taxing authority in a jurisdiction that would not have been imposed but
for the business activity (other than the transactions contemplated hereby) or tax residence of Seller in such jurisdiction. The parties agree to cooperate in takingactions to minimize or eliminate Taxes in connection with this transaction.

  

	(b)	 Seller’s Indemnity. Seller hereby covenants and agrees that it will pay and assume liability for,
and indemnify, protect, defend, save and keep harmless each Buyer Indemnitee from and against, any and all liabilities, Taxes, obligations, losses, damages, settlements, claims, actions, suits, penalties, costs and expenses (including, without
limitation, reasonable fees and expenses of counsel) of whatsoever kind and nature which may at any time or from time to time be imposed upon, incurred by or asserted against any Buyer Indemnitee in any way relating to, resulting from or arising out
of (i) any inaccuracy or breach of any representation or warranty made by Seller under this Agreement or any Seller Agreements, (ii) any failure by Seller to have observed or performed any of its obligations under or in connection with
this Agreement or any Seller Agreements, or (iii) any claims made after Closing, solely to the extent any such claim is attributable to (A) the gross negligence or willful misconduct of Seller and occurring prior to Closing, or
(B) the existence of any Liens on the Aircraft attributable to the period occurring prior to Closing. 

  
 Purchase Agreement 

Page 8 

	(c)	 Buyer’s Indemnity. Buyer hereby covenants and agrees upon demand of Seller to pay and assume
liability for, and indemnify, protect, defend, save and keep harmless each Seller Indemnitee from and against, any and all liabilities, Taxes, fees, obligations, losses, damages, settlements, claims, actions, suits, penalties, costs and expenses
(including, without limitation, reasonable fees and expenses of counsel) of whatsoever kind and nature which may at any time or from time to time be imposed upon, incurred by or asserted against any Seller Indemnitee in any way relating to,
resulting from or arising out of (i) any inaccuracy or breach of any representation or warranty made by Buyer under this Agreement or any Buyer Agreements, (ii) any failure by Buyer to have observed or performed any of its obligations
under or in connection with this Agreement or any Buyer Agreements in respect of or to the extent attributable to the period from and after Closing, or (iii) any claims made after Closing, solely to the extent such claim is not attributable
(A) to the period occurring prior to Closing or (B) to Seller’s failure to perform its obligations under this Agreement or the Seller Agreements. 

 

	(d)	 Withholding. If any Tax is required by law to be deducted or withheld from or with respect to any amount
paid or payable by Buyer or the Seller pursuant to this Agreement (the “Paying Party”) to the other party hereto (the “Receiving Party”), then the Paying Party shall pay such additional amount as shall be necessary
to enable the Receiving Party to receive, after all such withholding (including any withholding from or with respect to such additional amount), the amount that the Receiving Party would have received if such deduction or withholding had not been
made. 

  

	(e)	 Contest Resolution. If a claim is made by any tax authority against a party hereto (the “taxed
party”) with respect to any Tax of which another party (the “indemnifying party”) is obligated to indemnify under this Section 12, the taxed party shall promptly notify the indemnifying party of such claim; provided,
however, that the failure to give such notice will not prejudice or otherwise affect any of the rights of the taxed party hereunder unless such failure materially and adversely affects the indemnifying party in exercising its contest rights
hereunder or to the extent such failure results in any increase in, or fine or penalty with respect to, any amounts claimed to be payable by the indemnifying party to the taxed party pursuant to this Section 12. If reasonably requested by the
indemnifying party in writing, the taxed party shall (at the expense and direction of the indemnifying party) contest in the name of the taxed party or indemnifying party (as applicable), the validity, applicability or amount of such Taxes so
indemnified by (i) if permitted by applicable law without adverse consequences to the taxed party, resisting payment thereof, (ii) paying under protest, if protest is necessary or proper, and (iii) if payment be made, using reasonable
commercial efforts to obtain a refund thereof in appropriate administrative and judicial proceedings. If the taxed party becomes eligible for a refund of any Taxes paid by the indemnifying party, it shall notify the indemnifying party and, if
reasonably requested by the indemnifying party and permissible under applicable law, the taxed party shall consider in good faith any request by the indemnifying party to assign such right to the indemnifying party. Should the taxed party obtain a
refund of all or any part of the Taxes paid by the indemnifying party, the taxed party shall pay the indemnifying party the amount of such refund, plus, any interest thereon (net of any taxes imposed on such interest) obtained by the taxed party
from the taxing authority if fairly attributable to such Taxes. 

  
 Purchase Agreement 

Page 9 

	(f)	 Cooperation. Seller and Buyer shall reasonably cooperate so as to minimize any potential tax risk to
Buyer or Seller as a result of the transactions contemplated hereby. Seller and Buyer shall provide one another with such assistance as may reasonably be required in connection with the preparation of any tax return, any audit or other examination
by any taxing authority, or any judicial or administrative proceedings relating to liability for Taxes arising from the transactions contemplated by this Agreement, and shall provide one another upon written request with any records or information
that are relevant to such Tax return, audit or examination or proceedings. The party requesting assistance, records or information under the preceding sentence shall reimburse the other for reasonable out-of-pocket expenses incurred by the other in providing such assistance, records or information. 

  

	(g)	 Notice of Claims. Seller and Buyer agree to provide written notification to the other party promptly
after becoming aware of any liability, obligation or claim, whether pending or threatened, that is the subject of indemnification pursuant to this Section 12; unless the failure to provide such notification would not materially and adversely
affect the indemnifying party in exercising its contest rights hereunder or result in any increase in, or fine or penalty with respect to, any amounts claimed to be payable by the indemnifying party to the other party pursuant to this
Section 12, provided, that the failure by either party to so notify the other party will not in any manner affect either party’s other obligations under this Section 12. 

 

	(h)	 Insurance. For the earlier of a period of two years after the purchase of the Aircraft or the
dismantling of the Aircraft, or the airframe or engine, Buyer shall, or shall cause any subsequent buyer or operator to, at its own cost and expense, maintain and keep in full force and effect an insurance policy(ies) for the Aircraft and Engines
providing $10,000,000 of aviation products liability coverage, except in the event that any Engine is returned to service, in which event $500,000,000 of aviation general liability coverage shall be provided with respect to such Engine. Aviation
General Liability insurance covering Buyer’s or any operator’s aviation activities shall include Premises Liability, Contractual Liability, Products Liability, War Risks Liability, and including Extended Coverage Endorsement (Aviation
Liabilities) AVN52 or equivalent covering War and Allied Perils excluded by War, Hijacking and Other Perils Exclusion Clause AVN48B or any modification or substitution thereof for the time in force. Such policies shall be carried with insurers
reasonably acceptable to Seller. Such insurance shall include the Seller and any other Seller Indemnitees as Additional Insureds. Such policies shall include a Waiver of Subrogation Clause, Breach of Warranty Clause, and Severability of Interest
Clause in favor of the Additional Insureds. Buyer shall furnish an insurance certificate evidencing the same at Closing, and, upon Seller’s request, at the expiration of an existing certificate. 

  
 Purchase Agreement 

Page 10 

 13. Know Your Customer 

Seller and Buyer shall (i) ensure that no Person who owns a controlling interest in or otherwise controls Buyer or Seller is or shall be listed on the
Specially Designated Nationals and Blocked Person List or other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of the Treasury or included in any Executive Orders, (ii) not violate any
of the foreign asset control regulations of OFAC or any enabling statute or Executive Order relating thereto, (iii) comply with all applicable Bank Secrecy Act laws and regulations, as amended or (iv) comply with any other applicable national
sanctions program. As required by federal law or other applicable law, Seller or Buyer may need to obtain, verify and record certain customer identification information and documentation in connection herewith, and each party hereto shall provide
such information as is reasonably requested prior to Closing. 
 14. Miscellaneous 

 

	(a)	 Notices. 

All notices, demands, declarations and other communications required by this Agreement shall be in writing and shall be effective (i) if
given by facsimile, when transmitted, (ii) if given by registered or certified mail, three Business Days after being deposited with the U.S. Postal Service or other commercially recognized carrier and (iii) if given by a nationally
recognized overnight courier, when received, or, if personally delivered, when so delivered, addressed: 
 If to Seller, to: 

 

					
	*	  		  	
		  		  	
		  		  	
		  		  	
		  		  	

 or to such other address as Seller shall from time to time designate in writing to Buyer; and 

If to Buyer, to: 
 CONTRAIL
AVIATION SUPPORT, LLC 
 435 Investment Court 

Verona, Wisconsin 53593 
 Attn:
Joseph Kuhn, CEO 
 Fax: (608) 848-8100 

Email: Joe@contrail.com 

  
 Purchase Agreement 

Page 11 
  

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 or to such other address as Buyer may from time to time designate in writing to Seller. 

 

	(b)	 Confidentiality. 

 

	 	(i)	 Each party hereto shall keep strictly confidential any and all Confidential Information furnished to it or to
its Affiliates, or their respective officers, employees, agents, directors or advisers (collectively, “Representatives”) in the course of negotiations relating to this Agreement or any transaction contemplated by this Agreement, and
the business and financial reviews and investigation conducted by any party hereto in connection with this Agreement, and each such party has instructed its Representatives having access to such Confidential Information of such obligation of
confidentiality. The obligations of confidentiality set forth herein shall not apply to information to the limited extent (v) it is contained in a Transfer Document that is publicly filed as contemplated hereby; (w) it is required to be
disclosed by any Governmental Entity or required to be disclosed by applicable law or administrative proceeding, (x) for which a party has received a subpoena or similar demand (provided that such party shall to the extent permitted by
applicable law first, as promptly as practicable upon receipt of such subpoena or demand, furnish a copy thereof to the other party), (y) that such information is generally available to the public or in the possession of the receiving party before
its disclosure by the disclosing party to the receiving party or (z) that it is given to the receiving party by another Person other than in breach of obligations of confidentiality owed by such Person to the disclosing party. Notwithstanding
the foregoing, each party acknowledges and agrees that any party may disclose Confidential Information to (A) regulators, (B) such party’s counsel, Affiliates, beneficiaries, hedging arrangement providers, insurance brokers and providers,
reinsurers and auditors provided that such recipients maintain the confidentiality of the Confidential Information and (C) prospective transferees and lenders who agree to keep such Confidential Information confidential. 

 

	 	(ii)	 Notwithstanding anything herein to the contrary, any party to this Agreement (and any Representative) may
disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it
relating to such tax treatment and tax structure; provided, however, that such disclosure may not be made to the extent required to be kept confidential to comply with any applicable federal or state securities laws. 

 

	(c)	 Limitation of Liability of Any Party. THE PARTIES ACKNOWLEDGE AND AGREE THAT, NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT, NO PARTY SHALL BE LIABLE TO ANOTHER PARTY TO THIS AGREEMENT OR ASSERT A CLAIM FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES, REGARDLESS OF THE NATURE OR THEORY OF ANY UNDERLYING CAUSE OF ACTION THAT
MIGHT OTHERWISE APPLY. 

  
 Purchase Agreement 

Page 12 

	(d)	 Headings. Headings used herein are for convenience only and shall not in any way affect the construction
of, or be taken into consideration in interpreting, this Agreement. 

  

	(e)	 References. Any reference to a specific Section or Section number shall be interpreted as a reference to
that Section of this Agreement unless otherwise expressly provided. 

  

	(f)	 Governing Law; Jurisdiction; Attorney Fees. This Agreement and any other Transfer Documents shall in all
respects be governed by, and construed in accordance with, the laws of the State of New York, U.S.A., including all matters of construction, validity and performance, without giving effect to principles of conflicts of law. The federal courts
located in the State of New York shall serve as the exclusive forum for any such dispute and the parties irrevocably consent to the jurisdiction of such courts. In the event of a dispute between the parties, the prevailing party shall be entitled to
reasonable attorney fees and costs. 

  

	(g)	 Severability. If any provision hereof should be held invalid, illegal or unenforceable in any respect in
any jurisdiction, then, to the fullest extent permitted by law, (i) all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be construed in order to carry out the intentions of the parties hereto as
nearly as may be possible, and (ii) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction. 

 

	(h)	 Amendments in Writing. No amendment, modification, waiver, termination or discharge of any provision of
this Agreement, or any consent to any departure by Seller or Buyer from any provision hereof, shall in any event be effective unless the same shall be in writing and signed by Seller and Buyer, and each such amendment, modification, waiver,
termination or discharge shall be effective only in the specific instance and for the specific purpose for which given. 

  

	(i)	 Survival. Notwithstanding anything contained herein to the contrary, all agreements, indemnities,
representations and warranties contained in this Agreement shall survive the Closing Date and the consummation of the transactions contemplated hereby for such date. 

 

	(j)	 Expenses. Each of Seller and Buyer shall be responsible for its own costs and expenses incurred in
connection with the negotiation, preparation, execution and delivery of this Agreement and the Transfer Documents, and shall not have any right of reimbursement or indemnity for such costs and expenses as against the Buyer or Seller, respectively.
Notwithstanding anything to the contrary, Buyer shall be responsible for any cost associated with the registration of the transfer of title in the State of Registration including any special aviation counsel fees. [Subject to review by *                    counsel.] 

 

	(k)	 Execution in Counterparts; Signatures. This Agreement, the other Transfer Documents and any amendments,
waivers or consents hereto or thereto may be executed by Seller and Buyer in separate counterparts (or upon separate signature pages bound together into one or more counterparts), each of which, when so executed and delivered, shall be an original,
but all such counterparts shall together constitute one and the same instrument. Promptly upon Closing, each Party shall provide executed originals of this Agreement and the Transaction Documents, as applicable, to the other Party. Nevertheless,
facsimile and PDF copy signatures shall also be treated as original signatures for all purposes. 

  
 Purchase Agreement 

Page 13 
  

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

	(l)	 Entire Agreement. This Agreement and the other Transfer Documents constitute the entire agreement of
Seller and Buyer with respect to the subject matter hereof or thereof, and all prior or contemporaneous understandings or agreements, whether written or oral, between Seller and Buyer with respect to such subject matter are hereby superseded in
their entirety. In the event of a conflict between this Agreement and any other Transfer Document, the terms and conditions of this Agreement shall govern. 

  

	(m)	 Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated by reference herein
and shall have the same force and effect with respect to the provisions set forth therein as though fully set forth in this Agreement. 

  

	(n)	 Successors and Assigns. This Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by Seller and Buyer, and their respective successors and assigns. 

  

	(o)	 No Third Party Benefit. Seller and Buyer agree that except as provided in Section 12 with respect
to Seller Indemnitees and Buyer Indemnitees, the provisions of this Agreement, including, without limitation, Section 2, are for the sole benefit of Seller and Buyer and their respective successors and assigns, and are not for the benefit,
directly or indirectly, of any other Person. 

  

	(p)	 Assignment. Neither party shall assign or delegate this Agreement, or any of its rights or obligations
hereunder, without the prior written consent of the other party. 

  
 Purchase Agreement 

Page 14 

 IN WITNESS WHEREOF, the undersigned have caused this PURCHASE AGREEMENT to be duly
executed as of the day and year first written above. 
  

					
	*	 		 	                             as
Seller
		 		 	
		 	By:	 	  

		 	Name:	 	
		 	Title:	 	
		 		 	
		
		 	CONTRAIL AVIATION SUPPORT, LLC, as Buyer
			
		 	By:	 	 /s/ Joseph G. Kuhn

		 	Name:	 	Joseph G. Kuhn
		 	Title:	 	CEO

  
 Purchase Agreement 

Page 15 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 SCHEDULE 1 

DEFINITIONS 
  

	(a)	 Unless the context otherwise indicates, any reference in this Agreement to: 

 

	 	(i)	 a “part” means any engine, module, component, instrument, furnishing, control, appliance, accessory,
reverser, nacelle, equipment or other item or equipment of any kind whether similar to any of the foregoing or not; 

  

	 	(ii)	 a “regulation” includes any present or future directive, regulation, request or requirement (in each
case whether or not having the force of law) but, if not having the force of law, the compliance with which is in accordance with the general practice of the persons to whom it is addressed; 

 

	 	(iii)	 any “agreement”, “license” or other document includes any agreement, license or other
instrument as varied, novated, amended or replaced from time to time (but without prejudice to any restrictions on such variation, novation, amendment or replacement); 

 

	 	(iv)	 the expressions “hereof”, “herein” and similar expressions shall be construed as references
to this Agreement as a whole and shall not be limited to the particular clause in which the relevant expressions appear and the expressions “thereof”, “therein” and similar expressions shall be construed in like fashion;

  

	 	(v)	 references to any statute or other legislative provision shall be read to include any statutory or legislative
modification or re-enactment thereof or any substitution therefor; 

  

	 	(vi)	 references to a party shall be read to include its successors and permitted assigns; 

 

	 	(vii)	 a Clause or Schedule shall be construed as a reference to a clause hereof or a schedule hereto;

  

	 	(viii)	 a word importing the singular number shall be construed so as to include the plural and vice versa;

  

	 	(ix)	 the expression “in writing” includes by facsimile or e-mail;
and 

  

	 	(x)	 the index, clause and sub-clause headings in this Agreement (including
their use in cross references) are for ease of reference only and shall not affect the interpretation of this Agreement. 

  

	(b)	 In this Agreement, the following terms have the following meanings: 

“Acknowledgment of Delivery” means the Acknowledgment of Delivery substantially in the form attached hereto as Exhibit A. 

  
 Schedule 1 

Page 1 

 “Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person or which owns, directly or indirectly, more than fifty percent of the outstanding equity interests of such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise. 

“Aircraft” means the Airframe, equipped with the Engines and other items of equipment installed in or attached thereto, and all Aircraft
Documents related thereto. 
 “Aircraft Documents” means full
back-to-birth traceability of life limited parts which shall include commercial trace as required to show the part change of ownership from new to current and a non-incident / accident / military / government letter and the manuals and records described in Schedule 3 attached hereto including all inspection, modification and overhaul records required to be maintained
under applicable rules and regulations, all records of any third party which has made any modifications to or refurbishments of the Aircraft, and any other technical documents that pertain to the Aircraft including, without limitation, the dirty
finger prints for all the shop visits from last performance restoration. 
 “Airframe” means that certain Boeing 737-800 airframe more specifically described on Schedule 2. 
 “Anticipated Closing Date” means the date
for anticipated Closing for the Aircraft as designated on Schedule 2. 
 “Bill of Sale” means the Warranty Bill of Sale for
the Aircraft. 
 “Business Day” means any day, other than a Saturday or Sunday, on which banks in New York City and *Taiwan, Republic of China are open for business. 

“Certificate of Technical Acceptance” means the Certificate of Technical Acceptance in the form attached hereto as Exhibit B. 

“Closing” means the closing of the sale and purchase of the Aircraft pursuant to this Agreement on the Closing Date. 

“Closing Date” means the date of the Closing. 

“Confidential Information” means any and all information, whether written, in electronic form, or oral concerning or relating in any way to
the Aircraft, which is provided by a party hereto or such party’s Affiliates or representatives to the other party hereto or such party’s Affiliates or representatives, and includes, without limitation, all agreements, analyses,
compilations, forecasts, studies, capabilities, specifications, program plans, marketing plans, e-commerce strategies, inspection reports, certificates of insurance or other documents which contain or
otherwise reflect such information, or any portion thereof or notes or other documents which contain or reflect such information, whether or not marked or specifically identified as “confidential” or “proprietary.” 

  
 Schedule 1 

Page 2 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 “Delivery Location”
*                              
              
*            , or such other location as mutually agreed to by the
parties. 
 “Deposit” has the meaning set forth in Section 3 hereof. 

“Engines” means those CFM56-7B26 aircraft engines including all parts, components, appliances, accessories, instruments, furnishings,
alterations thereto whether or not attached to the Airframe on the Closing Date as more specifically described on Schedule 2. 
 “Event of
Loss” means any of the following events with respect to the Aircraft, including, but not limited to, the Aircraft, the Airframe or any Engine or engine installed on the Airframe: (a) loss of such property or its use due to theft,
hijacking or disappearance for a period in excess of sixty (60) consecutive days, or in any event extending beyond the Anticipated Closing Date, or destruction, damage beyond economic repair or rendition of such property permanently unfit for
normal use for any reason whatsoever, (b) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss or on the basis of a compromised or constructive total loss, (c) the
condemnation, confiscation, appropriation or seizure of, or requisition of title to, such property by a governmental entity or purported governmental entity, (d) the condemnation, confiscation, appropriation or seizure of the use of such
property by or on behalf of the authority of any governmental entity or purported governmental entity, that in any such case shall have resulted in the loss of possession thereof for a period in excess of sixty (60) consecutive days or in any
event extending beyond the Anticipated Closing Date or (e) any divestiture of title of such property except as otherwise permitted by the other party. 

“Final Closing Date” means the date which is 21 days after the Anticipated Closing Date the Aircraft as designated on Schedule 2. 

“Government Entity” means any (i) nation, state, county, city, town, village, district, or other jurisdiction of any nature;
(ii) federal, state, local, municipal, foreign, or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal);
(iv) multinational organization or body; or (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, regulatory, or taxing authority or power of any nature. 

“Inspection” has the meaning set forth in Section 4 hereof. 

“International Registry” means the International Registry of Mobile Assets established pursuant to the Convention on International Interests
in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment, concluded in Cape Town on November 16, 2001. 
 “Lien”
means any pledge, lien, charge, encumbrance, exercise of rights, security interest or claim of any kind or nature. 
 “OFAC” has the
meaning set forth in Section 13 hereof. 

  
 Schedule 1 

Page 3 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 “Person” means an individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture, Government Entity or other entity of whatever nature. 
 “Purchase
Price” has the meaning set forth in Section 3 hereof. 
 “Buyer Agreements” has the meaning ascribed in
Section 7(a) hereof. 
 “Buyer Indemnitee” means Buyer and any Buyer’s Affiliates, members, managers,
officers, directors, employees, successors and assigns. 
 “Seller Agreements” has the meaning ascribed to such term in
Section 5(a) hereof. 
 “Seller Indemnitee” means each of the Seller, *    
*             *         and any Affiliates of either, and the members, managers, officers, directors, employees,
successors and assigns of any of such entities. 
 “State of Registration” means *             (previous registration) and USA (after sale) 

“Taxes” means and includes all present and future income, gains, sales, stamp, documentary, use, value-added, goods and services and other
taxes, duties, imposts, levies, deductions, charges and withholdings imposed by any Government Entity and also includes all fines, penalties and interest thereon, and the terms “Tax” and “Taxation” shall be construed accordingly.

 “Transfer Documents” means this Agreement, the Bill of Sale, the Acknowledgments of Delivery, the Certificates of Technical Acceptance
and any other agreements, documents, certificates and instruments executed and delivered in connection herewith. 
 “Warranty Bill of
Sale” means the warranty bill of sale for the Aircraft, in the form of Exhibit C hereto for the Aircraft. 

  
 Schedule 1 

Page 4 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 SCHEDULE 2 

AIRCRAFT DESCRIPTION; PURCHASE PRICE 
  

															
	 MSN
	 	*Chinese
Registration
Mark	 	Engine
Make
and
Model	 	ESNs	 	Purchase
Price	 	Deposit	 	Anticipated
Closing Date	 	Final
Closing
Date
	*            	 	*                	 	CFM56-7B26	 	*              
	 	*                    	 	*                    	 	May 10, 2017	 	May 31, 2017
		 		 		 	  
	 		 		 		 	
		 		 		 	*            	 		 		 		 	

  
 Schedule 2 

Page 1 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 SCHEDULE 3 

AIRCRAFT DOCUMENTS 

AIRCRAFT RECORDS 
 All
aircraft technical documents and records relating to the Aircraft in Seller’s possession as 
 inspected and accepted by Buyer,
including non-incident statements from previous operators and 
 Seller, and including but not
limited to the following: 
  

	1.	 Copies of original Certificates delivered by the Manufacturer, such as: 

 

	2.	 Copies of original Documents delivered by the Manufacturer, such as: 

 

	3.	 Letters signed and stamped by Quality Assurance: 

 

	 	a.	 Current aircraft hours and cycles 

 

	 	b.	 Current engines hours and cycles, including LLP Disk Sheets 

 

	 	c.	 Accident and Incident report 

 

	 	d.	 Summary of Maintenance Program 

 

	 	e.	 AD compliance 

4. Aircraft log books 
 5. Last weighing report 

6. Cabin Configuration drawing (LOPA) 
 ENGINES
RECORDS 
  

	1.	 Life-limited Parts status and traceability 

 

	2.	 AD compliance report 

 

	3.	 Engine Modification / service bulletin /inspection report and applicable forms 

 

	4.	 Last heavy maintenance records for each module 

 

	5.	 Engine log books 

  

	6.	 Engine removal history 

 

	7.	 Last 3 months’ trend monitoring reports 

APU RECORDS 
  

	1.	 APU status (FH, FC, limits) 

 

	2.	 Life-limited Part status and traceability 

 

	3.	 AD compliance report 

 

	4.	 Modification status 

  

	5.	 Last heavy maintenance documents 

 

	6.	 APU log books 

  

	7.	 Last test cell report 

COMPONENT RECORDS 
  

	1.	 Aircraft component inventory 

 

	2.	 Hard time component inventory 

 

	4.	 Landing Gear status with last Overhaul and life-limited Part status 

 

	5.	 AD compliance report 

 

	6.	 Modification status 

  
 Schedule 3 

Page 1 

 EXHIBIT A 

ACKNOWLEDGMENT OF DELIVERY 

, 2017 
 By this Acknowledgment of Delivery, *                             *         (the “Seller”), and
Contrail Aviation Support, LLC (the “Buyer”), acknowledge that pursuant to that certain Purchase Agreement dated as of             , 2017, among Seller and
Buyer, (the “Agreement”), Seller does hereby deliver to Buyer and Buyer does hereby accept the following in all respects under the Agreement: 

One Boeing model 737-800 aircraft bearing manufacturer’s serial number *             and equipped with two CFM56-7B26 aircraft engines bearing
manufacturer’s serial numbers *             and *            , including all parts, components, appliances, accessories,
instruments, furnishings, alterations and other items of equipment installed in or attached thereto, and all Aircraft Documents related thereto (collectively the “Aircraft”). 

Buyer has accepted delivery of the Aircraft at                  hours G.M.T.
at *                             *             *        1. Accordingly, as of the date hereof, Seller has delivered the Aircraft to Buyer and that
the Closing Date as defined and set forth in the Agreement has occurred. Buyer hereby declares that the Aircraft is acceptable and does conform to the Agreement in all respects. 

This Acknowledgment of Delivery may be signed in one or more counterparts with the same effect as if the signatures to each counterpart were upon a single
instrument. All counterparts shall, taken together, be considered an original of this Acknowledgment of Delivery. All capitalized terms used herein not otherwise defined shall have the same meaning as that given in the Agreement. 

[Signature page follows.] 

  
 Exhibit A 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 IN WITNESS WHEREOF, the undersigned have duly executed this Acknowledgment of Delivery as of
the date first written above. 
  

					
	*	 	                        
(Seller)

 
					
			
	  	 	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

		
		 	Contrail Aviation Support, LLC (Buyer)
			
		 	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

  
 Exhibit A 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 EXHIBIT B 

CERTIFICATE OF TECHNICAL ACCEPTANCE  

relating to that Boeing 737-800 Aircraft, 

manufacturer’s serial number
*             (the “Aircraft”) 

, 2017 
 This Certificate of Technical
Acceptance (this “Certificate”) is delivered on the date set out below by Contrail Aviation Support, LLC (“Buyer”), to
*            
*                
*           (“Seller”), pursuant to that certain Purchase Agreement dated
            , 2017 between Buyer and Seller (the “Agreement”). The capitalized terms used in this Certificate shall have the meaning given to such terms in the Agreement.

  

	(a)	 Buyer has inspected the Aircraft in accordance with the provisions of Section 4 of the Agreement at
[insert inspection location] and the Aircraft and found the Aircraft to be satisfactory; and 

  

	(b)	 Buyer has received and inspected all of the Aircraft Documents and found them to be complete and satisfactory.

 IN WITNESS WHEREOF, Buyer has, by its duly authorized representative, executed this Certificate on the date
first written above, accepted the Aircraft and confirmed its compliance with the Agreement in all respects. 
  

			
	Contrail Aviation Support, LLC (Buyer)
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  
 Exhibit B 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission. 

 EXHIBIT C 

WARRANTY BILL OF SALE 

relating to that Boeing 737-800 Aircraft, 

manufacturer’s serial number
*             

, 2017 
 KNOW ALL MEN BY THESE PRESENTS: 

THAT for and in consideration of good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, *        
*                            
 (“Seller”) dues, on the date hereof, grant, convey, transfer, bargain, sell, deliver and set over to Contrail Aviation Support, LLC (“Buyer”), all of Seller’s right, title and interest in and
to the one Boeing 737-800 aircraft bearing manufacturer’s serial number
*            , equipped with two CFM56-7B26 aircraft engines bearing
manufacturer’s serial numbers *             and *            , including all parts, components, appliances, accessories,
instruments, furnishings, alterations and other items of equipment installed in or attached thereto, and all Aircraft Documents related thereto (collectively the “Aircraft”). Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in that certain Purchase Agreement dated as of                     , 2017, among Seller and Buyer (the
“Agreement”). 
 TO HAVE AND TO HOLD said Aircraft unto Buyer, its successors and assigns, for its and their own use
forever. 
 THAT Seller hereby warrants to Buyer, its successors and assigns, that it is the holder of title to the Aircraft and has the
right to sell the same as aforesaid and that this Warranty Bill of Sale conveys to Buyer on the date hereof, good title to the Aircraft, free and clear of all Liens, encumbrances and rights of others, and that Seller will warrant and defend such
title forever against all claims and demands whatsoever. 
 This Bill of Sale shall be governed by the laws of New York, U.S.A, without
giving effect to its conflicts-of-laws principles. 
 IN
WITNESS WHEREOF, Seller has caused this Warranty Bill of Sale to be executed by its duly authorized officers as of the date first written above. 
  

					
	*	 	                              
   (Seller)

 
					
			
		 	By:	 	  

		 	Name:	 	  

		 	Title:	 	  

  
 Exhibit C 

	*	 The confidential portion has been omitted pursuant to a request for confidential treatment filed by Air T, Inc.
with the Securities Exchange Commission and filed separately with the Commission.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00287-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00287-of-00352.parquet"}]]