29/06/2018 Key Legal Aspects of the Sales Process Mark Bisset, Partner, Clyde & Co, London David M. Hernandez, Shareholder, Vedder Price, Washington DC 3 rd & 4 th July | Wotton House Overview • Essential elements of the LOI • Long form versus short form • Negotiating the deposit and escrow • The aircraft sale and purchase agreement • Getting deals to completion 3 rd & 4 th July | Wotton House 1
29/06/2018 Essential Elements of the LOI • Purpose? To establishes the initial deal terms • Parties (Back-to-back transaction?) • Price • Deposit • Pre-Buy Inspection & Delivery Condition • Expenses • Warranties • Tax • Jurisdiction 3 rd & 4 th July | Wotton House Long form versus short form LOI • Depends on the aircraft • Level of details varies significantly • Relevant to aircraft costs • Escrow agent procedures • Delivery condition • Delivery process • Inspection scope • Long form LOI could be used a sale/purchase agreement • Level of detail consistent with parties’ wishes • Subject to contract 3 rd & 4 th July | Wotton House 2
29/06/2018 Negotiating the deposit and escrow • Primary concern is risk, and how adequately mitigate risks • How motivated or desperate are the parties? • What is appropriated deposit for the aircraft and risk? • Refundable or Non-refundable? • Liquidated Damages or Penalty? • What is escrow and should you use it? • Which jurisdiction? • The Escrow Agreement, intended purpose vs. reality 3 rd & 4 th July | Wotton House Aircraft Sale and Purchase Agreement • Agreement to sell relevant to aircraft and market • Avoid broker’s offer to use prior agreement • Template is LOI, but “Subject to Contact” • Comprehensive • Timing • Deposit refundability • Spare parts and equipment included • Delivery condition and delivery process • Maintenance condition, MSP/ADs/SBs, pending maintenance • Representation and warranties • Risk mitigation/damage prior to closing 3 rd & 4 th July | Wotton House 3
29/06/2018 Aircraft Sale and Purchase Agreement (Cont.) • Technical acceptance • Financing and other contingencies • Export control considerations, who is the buyer, end user • Default and remedies • Termination rights, excusable delays • Indemnification and insurance • Delivery & post-closing obligations • Broker commissions • Governing law and venue 3 rd & 4 th July | Wotton House Getting deals to completion • Discrepancy or damage risk on delivery flight, payment of costs • Is the aircraft in the delivery condition • All buyer and seller conditions to closing completed • Who is in charge of the pre-closing process • Verify everything, look at actual documents • Warranty or MSP transfers • Preposition closing documents, government approvals • Funds management • Insurance • Closing checklist 3 rd & 4 th July | Wotton House 4
29/06/2018 Getting deals to completion (cont.) • Completion Documents • Bill of Sale • Acceptance Certificate/Delivery Receipt • Mortgage/Lien Release • Title Documents/Limited Liability Company Statement for US SPEs • VAT Documents • Aviation Authority • Certificate of Registration • C of A/Export C of A • Mortgage & Lien Releases • De-registration Certificate 3 rd & 4 th July | Wotton House Questions & contact information David M. Hernandez Mark Bisset Shareholder | Vedder Price P.C. Partner | Clyde & Co LLP D +1 202 312 3340 D +44 20 7876 4854 M +1 202 403 1678 M +44 7810 557 841 dhernandez@vedderprice.com Mark.Bisset@clydeco.com Vedder Price P.C. Clyde & Co LLP 1401 I Street NW, Suite 1100 The St Botolph Building Washington, D.C. 20005 138 Houndsditch London EC3A 7AR | UK www.vedderprice.com www.clydeco.com 3 rd & 4 th July | Wotton House 5
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