<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
AIRLEASE LTD., A CALIFORNIA LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(NAME OF ISSUER)
DEPOSITARY UNITS REPRESENTING LIMITED PARTNERS' INTERESTS
- --------------------------------------------------------------------------------
(TITLE OF CLASS OF SECURITIES)
009366105
- --------------------------------------------------------------------------------
(CUSIP NUMBER)
HENRY LERNER, ESQ.
UNITED STATES AIRLEASE HOLDING, INC.
733 FRONT STREET
P.O. BOX 193985
SAN FRANCISCO, CA 94119
TELEPHONE: 415-627-9582
- --------------------------------------------------------------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS)
AUGUST 5, 1996
- --------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of this class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
PAGE 1 OF 11 PAGES.
<PAGE> 2
SCHEDULE 13D
CUSIP No. 009366105 Page 2 of 11 Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
United States Airlease Holding, Inc.
I.R.S. Identification No.: 94-3009222
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS
AF
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF
0
SHARES
_________________________________________________________________
BENEFICIALLY
8 SHARED VOTING POWER
OWNED BY
1,025,000 Units
EACH _________________________________________________________________
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
1,025,000 Units
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,025,000
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON
CO, HC
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 3
SCHEDULE 13D
CUSIP No. 009366105 Page 3 of 11 Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
USL Capital Corporation
I.R.S. Identification No.: 94-1360891
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS
WC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF
0
SHARES
_________________________________________________________________
BENEFICIALLY
8 SHARED VOTING POWER
OWNED BY
1,025,000 Units
EACH _________________________________________________________________
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
1,025,000 Units
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,025,000 Units
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON
CO, HC
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 4
SCHEDULE 13D
CUSIP No. 009366105 Page 4 of 11 Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ford Motor Company
I.R.S. Identification No.: 38-0549190
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS
AF
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF
0
SHARES
_________________________________________________________________
BENEFICIALLY
8 SHARED VOTING POWER
OWNED BY
1,025,000 Units
EACH _________________________________________________________________
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
1,025,000 Units
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,025,000
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 5
SCHEDULE 13D
CUSIP No. 009366105 Page 5 of 11 Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ford Holdings, Inc.
I.R.S. Identification No.: 38-2890269
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS
AF
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF
0
SHARES
_________________________________________________________________
BENEFICIALLY
8 SHARED VOTING POWER
OWNED BY
1,025,000 Units
EACH _________________________________________________________________
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH _________________________________________________________________
10 SHARED DISPOSITIVE POWER
1,025,000 Units
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,025,000
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.2%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON
CO, HC
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
<PAGE> 6
Page 6 of 11 Pages
SCHEDULE 13D
United States Airlease Holding, Inc., ("Holding"), USL Capital
Corporation (formerly United States Leasing International, Inc.) ("USL
Capital") and Ford Motor Company ("Ford") hereby amend their joint statement on
Schedule 13D (the "Schedule 13D"), as most recently amended and filed with the
Securities and Exchange Commission on or about July 13, 1988, relating to the
Depositary Units Representing Limited Partners' Interests ("Units") of Airlease
Ltd., A California Limited Partnership (the "Partnership").
The Schedule 13D is hereby amended as follows:
ITEM 1. Security and Issuer
Item 1 of the Schedule 13D is hereby amended to read in full as follows:
This Schedule 13D relates to Units of the Partnership, the principal
executive offices of which are located at 733 Front Street, San Francisco,
California 94111.
ITEM 2. Identity and Background
Item 2 of the Schedule 13D is hereby amended to read in full as follows:
This Schedule 13D is filed by Holding, a wholly-owned subsidiary of USL
Capital, on its own behalf, on behalf of its parent USL Capital, a wholly-owned
subsidiary of Ford Holdings, Inc. ("FHI"), on behalf of USL Capital's parent
FHI, an indirect wholly-owned subsidiary of Ford, and on behalf of FHI's
ultimate parent Ford. Holding is a California corporation with its principal
place of business located at 733 Front Street, San Francisco, California 94111.
USL Capital is a Delaware corporation with its principal place of business
located at 733 Front Street, San Francisco, California 94111. FHI, which became
an indirect wholly-owned subsidiary of Ford on September 1, 1989 and to which
Ford transferred its interest in USL Capital on October 1, 1989, is a Delaware
Corporation with its principal place of business located at Dearborn, Michigan.
Ford is a Delaware corporation with its principal place of business located at
Dearborn, Michigan.
In May of 1996, Ford announced that it was pursuing the sale of USL
Capital's businesses, and has since essentially completed (or completed
arrangements for) the sale of USL Capital's six business units, as described
below. Prior to these asset sales, USL Capital, directly and through its
subsidiaries, provided leasing and financing to commercial and governmental
entities, principally in the United States, including office and business
equipment, large-balance transportation equipment, industrial and energy
facilities, and commercial automobile fleets, as well as mortgage financing of
income-producing real estate, full-service
<PAGE> 7
Page 7 of 11 Pages
leasing to industrial shippers and railroads, municipal financing of
essential-use equipment, and investment in publicly traded and privately placed
preferred stocks and senior and subordinated debt of public and private
companies. Since the May announcement, USL Capital has disposed of its rail
services business, which manages a fleet of rail cars, and its fleet services
business, which manages cars, vans and trucks for commercial customers. In
addition, USL has sold its corporate and municipal housing bond and lease
portfolios and has agreed to sell its transportation and industrial financing
division (a portion of which sale is described in Item 6 hereof), its business
equipment financing division and its real estate loan portfolio.
Holding was formed to act as limited partner in the Partnership.
FHI was incorporated by Ford for the principal purpose of acquiring,
owning and managing certain assets of Ford. FHI presently is a holding company
which owns primarily USL Capital and a part of Ford FSG, Inc., a holding
company owning primarily Ford Motor Credit Company and a majority of Ford
Credit Europe, plc and Associates First Capital Corporation.
Ford is a manufacturing company engaged in the production and
distribution of automobiles, trucks and other products, and through
subsidiaries engages in automotive and general commercial financing, and
certain other businesses.
Information concerning the executive officers and directors of USL
Capital, Holding, FHI and Ford and the principal occupations or employment of
each such person are listed in Exhibits 1, 2, 3 and 4, respectively, attached
hereto and incorporated herein by reference.
To the knowledge of Holding, USL Capital, FHI and Ford, none of such
persons has been convicted during the past five years in a criminal proceeding
(excluding traffic violations or similar violations). To the knowledge of
Holding, USL Capital, FHI and Ford, during the last five years, none of such
persons was a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws. Each of such persons,
other than those officers and/or directors of Ford set forth below, is a
citizen of the United States. Michael D. Dingman is a citizen of the
Commonwealth of the Bahamas; Marie-Josee Kravis is a citizen of Canada and
Switzerland; Jacques Nasser is a citizen of Australia; and Richard Parry-Jones
and Henry D.G. Wallace are subjects of Great Britain.
<PAGE> 8
Page 8 of 11 Pages
ITEM 3. Source and Amount of Funds or Other Consideration
Item 3 of the Schedule 13D is hereby amended to read in full as follows:
All of the funds used for Holding's purchase of the Units were provided
by USL Capital. USL Capital derived such funds from its working capital.
ITEM 4. Purpose of Transaction
Item 4 of the Schedule 13D is hereby amended to read in full as follows:
Except as described in Item 6 below, neither Holding, USL Capital, FHI
nor Ford has any plans which relate to or would result in actions or
circumstances enumerated in Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
Item 5 of the Schedule 13D is hereby amended to read in full as follows:
Holding beneficially and directly owns an aggregate of 1,025,000 Units,
which represents approximately 22.2% of the total number of Units presently
issued and outstanding. As the parent company of Holding, USL Capital is a
beneficial indirect owner of the same 1,025,000 Units directly owned by
Holding. As the parent company of USL Capital, FHI is the beneficial indirect
owner of the same 1,025,000 Units directly owned by Holding and indirectly
owned by USL Capital. As the ultimate parent company of FHI, Ford is a
beneficial indirect owner of the same 1,025,000 Units directly owned by Holding
and indirectly owned by USL Capital and FHI. Holding, USL Capital, FHI and Ford
have shared voting and dispositive power over the 1,025,000 Units. Holding
acquired all such Units on October 10, 1986 directly from the Partnership for a
cash payment of $19.03 per Unit. Except as described in Item 6 below, neither
Holding, USL Capital, FHI nor Ford has had any transactions in the Units in the
past 60 days.
The number of Units owned by each of the directors and executive
officers of USL Capital, Holding, FHI and Ford and the nature of such ownership
is set forth in Exhibits 1, 2, 3 and 4 respectively, attached hereto and
incorporated herein by reference. To the knowledge of Holding, USL Capital, FHI
and Ford, from a search of the records of the Partnership, no director or
executive officer of either FHI or Ford owns any Units.
To the knowledge of Holding, USL Capital, FHI and Ford, from a search
of the records of the Partnership, no executive officer or director of any of
them has had any transactions in the Units in the past 60 days.
<PAGE> 9
Page 9 of 11 Pages
ITEM 6. Contracts, Arrangements, Understandings or Relationships
with Respect to Securities of the Issuer
Item 6 of the Schedule 13D is amended to read in full as follows:
Pursuant to Section 8.4 of the Amended and Restated Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), Holding
agreed to hold, except for transfers to related entities, (i) Units
representing 20% of the total Units outstanding immediately after the initial
public offering of the Units for the five-year period ended October 10, 1991
and (ii) at least 25% of such Units while Airlease Management Services, Inc.
("AMSI") or any related entity remains the general partner of the Partnership.
Pursuant to the Underwriting Agreement, dated October 2, 1986, among
AMSI, USL Capital, United States Airlease, Inc., and Dean Witter Reynolds Inc.,
Smith Barney, Harris Upham & Co. Incorporated, and Tucker, Anthony & R.L. Day,
Inc., as Representatives of the several Underwriters, as amended, USL Capital
has agreed that for the 10 year period ending October 10, 1996, AMSI will
remain a related entity of USL Capital (unless to do so would materially and
adversely affect the Partnership).
USL Capital has entered into an Asset Purchase Agreement (the "Purchase
Agreement") dated as of August 5, 1996 among BA Leasing & Capital Corporation
(the "Purchaser"), USL Capital and Ford Motor Credit Company ("Ford Credit"), a
wholly owned subsidiary of Ford, pursuant to which USL Capital agreed to sell to
the Purchaser certain assets of USL Capital and its subsidiaries, including
793,750 Units (17.1622% of the outstanding Units) (the "Purchased Units") and
all of the capital stock of Holding and AMSI (collectively, the "Airlease
Purchased Assets"). The complete terms of the transaction are set forth in the
Purchase Agreement attached to this Schedule 13-D as Exhibit 5 and incorporated
herein by this reference.
The Purchase Agreement provides that consummation of the purchase and
sale of the Airlease Purchased Assets and the assumption of the related
liabilities which are to be assumed by the Purchaser pursuant to the Purchase
Agreement shall take place at two closings. Assuming required conditions to
closing are satisfied, the first closing is scheduled to occur by approximately
September 20, 1996 and the second closing is scheduled to occur on October 31,
1996. At the first closing, the Purchased Units will be sold to the Purchaser,
and at the second closing the capital stock of AMSI and Holding will be sold to
the Purchaser. If, however, the Initial Closing Date, as defined in the
Purchase Agreement, does not occur prior to September 27, 1996, the purchase
and sale of all Airlease Purchased Assets will take place at a single closing
on January 15, 1997, assuming the applicable conditions to closing are
satisfied.
<PAGE> 10
Page 10 of 11 Pages
At the closing at which the capital stock of AMSI and Holding is sold,
USL Capital will deliver or cause to be delivered resignations of all directors
and officers of AMSI and Holding who are employees of USL Capital, AMSI or
Holding.
Pursuant to Section 4.13 of the Partnership Agreement, AMSI agreed to
use its best efforts to maintain a net worth sufficient such that the
Partnership will be taxed as a partnership and not as an association taxable as
a corporation for federal income tax purposes. At June 30, 1996, AMSI had total
equity of approximately $14.1 million, of which $9 million consisted of a
subordinated demand note of United States Airlease, Inc. (which has since been
merged into USL Capital) in favor of AMSI. Pursuant to the Purchase Agreement,
the Purchaser has agreed to arrange for the satisfaction by AMSI of the net
worth requirements of the Partnership Agreement.
ITEM 7. MATERIAL FILED AS EXHIBITS
The response in Schedule 13D to Item 7 is hereby amended as follows:
The following exhibits are filed herewith:
1. Directors and Executive Officers of USL Capital;
2. Directors and Executive Officers of Holding;
3. Directors and Executive Officers of FHI;
4. Directors and Executive Officers of Ford;
5. Asset Purchase Agreement dated as of August 5, 1996, among BA Leasing
and Capital Corporation, USL Capital Corporation and Ford Motor
Credit Company. The exhibits and schedules to the Asset Purchase
Agreement are listed in the Table of Contents thereof. Holding, USL
Capital, FHI and Ford by execution hereof agree to furnish
supplementally to the Securities and Exchange Commission a copy of
any of such exhibits or schedules upon request; and
6. Agreement of Holding, USL Capital, FHI and Ford to file Schedule 13D
jointly.
<PAGE> 11
Page 11 of 11 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
UNITED STATES AIRLEASE HOLDING, INC.
Date: September 5, 1996 /s/ Henry Lerner
------------------------------------
By: Henry Lerner
Title: Senior Vice President
USL CAPITAL CORPORATION
Date: September 5, 1996 /s/ Henry Lerner
------------------------------------
By: Henry Lerner
Title: Senior Vice President
FORD HOLDINGS, INC.
Date: September 5, 1996 /s/ Peter J. Sherry, Jr.
------------------------------------
By: Peter J. Sherry, Jr.
Title: Assistant Secretary
FORD MOTOR COMPANY
Date: September 5, 1996 /s/ Peter J. Sherry, Jr.
------------------------------------
By: Peter J. Sherry, Jr.
Title: Assistant Secretary
<PAGE> 1
DIRECTORS AND EXECUTIVE OFFICERS OF
USL CAPITAL CORPORATION
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
James G. Duff Chairman and 100 Sole voting and
733 Front Street Chief Executive, dispositive power
San Francisco, Ca USL Capital
94111 Corporation
Kenneth Whipple Executive Vice -0-
733 Front Street President, Ford Motor
San Francisco, Ca Company; President, Ford
94111 Financial Services Group
Henry Lerner Senior Vice -0-
733 Front Street President,
San Francisco, Ca General Counsel,
94111 USL Capital
Corporation
John M. Hart Senior Vice -0-
733 Front Street President,
San Francisco, Ca Human Resources,
94111 USL Capital
Corporation
Joseph J. Mahoney Senior Vice -0-
733 Front Street President
San Francisco, Ca and Chief
94111 Financial Officer,
USL Capital
Corporation
Robert A. Keyes, Jr. Vice President, -0-
733 Front Street Corporate
San Francisco, Ca Controller,
94111 USL Capital
Corporation
Ronald F. Dutt Vice President, -0-
733 Front Street Corporate
San Francisco, Ca Analysis,
94111 USL Capital
Corporation
EXHIBIT 1
<PAGE> 2
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
Keith A. Wesselmann Vice President, -0-
733 Front Street Chief Investment
San Francisco, Ca Officer, USL
94111 Capital Corporation
E. E. Wojciechowski Vice President, -0-
733 Front Street Information Systems,
San Francisco, Ca USL Capital
94111 Corporation
David B. Gebler Senior Vice 700 Sole voting and
733 Front Street President, shared dispositive
San Francisco, Ca Transportation power
94111 and Industrial
Financing,
USL Capital
Corporation;
President, Airlease
Management Services,
Inc.
Katherine C. Ashdown Assistant Secretary, -0-
733 Front Street USL Capital
San Francisco, Ca Corporation
94111
Marlies M. Bruning Assistant Secretary, -0-
733 Front Street USL Capital
San Francisco, Ca Corporation
94111
Stanley E. Gutman Assistant Secretary, -0-
733 Front Street USL Capital
San Francisco, Ca Corporation
94111
Lloyd K. Masukawa Assistant Secretary, -0-
733 Front Street USL Capital
San Francisco, Ca Corporation
94111
<PAGE> 1
DIRECTORS & EXECUTIVE OFFICERS OF
UNITED STATES AIRLEASE HOLDING, INC.
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
James G. Duff Chairman and Chief 100 Sole voting and
733 Front Street Executive, USL Capital dispositive power
San Francisco, CA Corporation
94111
John R. Pettipher President, Transportation -0-
733 Front Street and Industrial Financing,
San Francisco, CA USL Capital Corporation
94111
David B. Gebler Senior Vice President, 700 Sole voting and
733 Front Street Transportation and shared dispositive
San Francisco, CA Industrial Financing, power
94111 USL Capital Corporation;
President, Airlease
Management Services, Inc.
Henry Lerner Senior Vice President, -0-
733 Front Street General Counsel,
San Francisco, CA USL Capital Corporation
94111
Stanley E. Gutman Senior Counsel, -0-
733 Front Street USL Capital
San Francisco, CA Corporation
94111
Robert A. Keyes, Jr. Vice President, -0-
733 Front Street Corporate Controller,
San Francisco, CA USL Capital Corporation;
94111 Chief Financial Officer,
Airlease Management
Services, Inc.
Lloyd K. Masukawa Assistant -0-
733 Front Street Secretary,
San Francisco, CA USL Capital Corporation
94111
EXHIBIT 2
<PAGE> 1
DIRECTORS AND EXECUTIVE OFFICERS
OF FORD HOLDINGS, INC.
<TABLE>
<CAPTION>
NATURE OF
NAME AND PRINCIPAL NUMBER OF BENEFICIAL
BUSINESS ADDRESS OCCUPATION UNITS OWNED OWNERSHIP
- ---------------- ---------- ----------- ----------
<S> <C> <C> <C>
Elizabeth S. Acton Assistant Treasurer, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
David M. Brandi Treasurer, Ford -0-
World Headquarters Financial Services
The American Road Group
Dearborn, MI 48121
Malcolm S. Macdonald Treasurer, Ford Motor -0-
World Headquarters Company
The American Road
Dearborn, MI 48121
Kenneth Whipple Executive Vice President, -0-
World Headquarters Ford Motor Company;
The American Road President, Ford Financial
Dearborn, MI 48121 Services Group
Eric A. Law Manager, Financial -0-
World Headquarters Reporting, Ford Motor
The American Road Company
Dearborn, MI 48121
David N. McCammon Vice President, Ford -0-
World Headquarters Motor Company
The American Road
Dearborn, MI 48121
John M. Rintamaki Secretary, Ford Motor -0-
World Headquarters Company
The American Road
Dearborn, MI 48121
Dennis E. Ross Chief Tax Officer, Ford -0-
World Headquarters Motor Company
The American Road
Dearborn, MI 48121
</TABLE>
EXHIBIT 3
<PAGE> 2
<TABLE>
<CAPTION>
NATURE OF
NAME AND PRINCIPAL NUMBER OF BENEFICIAL
BUSINESS ADDRESS OCCUPATION UNITS OWNED OWNERSHIP
- ---------------- ---------- ----------- ----------
<S> <C> <C> <C>
Thomas J. DeZure Assistant Secretary, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Louis J. Ghilardi Counsel, Ford Motor -0-
World Headquarters Company
The American Road
Dearborn, MI 48121
Peter J. Sherry, Jr. Assistant Secretary, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Susan J. Tarpley Director of Corporate -0-
World Headquarters and Domestic Financing,
The American Road Ford Motor Company
Dearborn, MI 48121
</TABLE>
<PAGE> 1
DIRECTORS & EXECUTIVE OFFICERS OF
FORD MOTOR COMPANY
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
Alex Trotman Chairman of the -0-
World Headquarters Board, President &
The American Road Chief Executive Officer,
Dearborn, MI 48121 Ford Motor Company
Michael D. Dingman President & Chief -0-
World Headquarters Executive Officer,
The American Road Shipston Group Limited
Dearborn, MI 48121
Edsel B. Ford II Vice President, -0-
World Headquarters Ford Motor Company;
The American Road President, Ford Motor
Dearborn, MI 48121 Credit Company
William Clay Ford Retired Chairman of -0-
World Headquarters the Finance Committee,
The American Road Ford Motor Company
Dearborn, MI 48121
William Clay Ford, Jr. Chairman of the Finance -0-
World Headquarters Committee, Ford Motor
The American Road Company
Dearborn, MI 48121
Roberto C. Goizueta Chairman of the Board -0-
World Headquarters & Chief Executive Officer,
The American Road The Coca-Cola Company
Dearborn, MI 48121
Irvine O. Hockaday, Jr. President & Chief
World Headquarters Executive Officer,
The American Road Hallmark Cards,
Dearborn, MI 48121 Incorporated
Marie-Josee Kravis Senior Fellow of the -0-
World Headquarters Hudson Institute, Inc.
The American Road
Dearborn, MI 48121
EXHIBIT 4
<PAGE> 2
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
Drew Lewis Chairman of the Board -0-
World Headquarters & Chief Executive
The American Road Officer, Union
Dearborn, MI 48121 Pacific Corporation
Ellen R. Marram President, -0-
World Headquarters The Seagram Beverage
The American Road Group
Dearborn, MI 48121
Carl E. Reichardt Retired Chairman of the -0-
World Headquarters Board & Chief Executive
The American Road Officer, Wells Fargo &
Dearborn, MI 48121 Company
John L. Thornton Partner, Goldman, -0-
World Headquarters Sachs & Co.
The American Road
Dearborn, MI 48121
Clifton R. Wharton, Jr. Retired Chairman of the -0-
World Headquarters Board & Chief Executive
The American Road Officer, TIAA-CREF
Dearborn, MI 48121
John M. Rintamaki Secretary, Ford Motor -0-
World Headquarters Company
The American Road
Dearborn, MI 48121
W. Wayne Booker Executive -0-
World Headquarters Vice President,
The American Road Ford Motor
Dearborn, MI 48121 Company
Edward E. Hagenlocker Executive Vice -0-
World Headquarters President, Ford Motor
The American Road Company; President, Ford
Dearborn, MI 48121 Automotive Operations
Peter J. Pestillo Executive -0-
World Headquarters Vice President,
The American Road Corporate Relations,
Dearborn, MI 48121 Ford Motor Company
<PAGE> 3
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
Kenneth Whipple Executive Vice -0-
World Headquarters President, Ford Motor
The American Road Company; President, Ford
Dearborn, MI 48121 Financial Services Group
John M. Devine Group Vice -0-
World Headquarters President & Chief
The American Road Financial Officer,
Dearborn, MI 48121 Ford Motor Company
Jacques A. Nasser Group Vice President, -0-
World Headquarters Product Development,
The American Road Ford Motor Company
Dearborn, MI 48121
William E. Odom Group Vice -0-
World Headquarters President, Ford Motor
The American Road Company; Chairman &
Dearborn, MI 48121 Chief Executive Officer,
Ford Credit
Robert L. Rewey Group Vice President, -0-
World Headquarters Marketing & Sales,
The American Road Ford Motor Company
Dearborn, MI 48121
Robert H. Transou Group Vice President, -0-
World Headquarters Manufacturing,
The American Road Ford Motor Company
Dearborn, MI 48121
Kenneth R. Dabrowski Vice President, -0-
World Headquarters Vehicle Center 5,
The American Road Ford Motor Company
Dearborn, MI 48121
James D. Donaldson Vice President, -0-
World Headquarters Vehicle Center 2,
The American Raod Ford Motor Company
Dearborn, MI 48121
<PAGE> 4
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
James E. Englehart Vice President, -0-
World Headquarters Vehicle Center 4,
The American Road Ford Motor Company
Dearborn, MI 48121
Ronald E. Goldsberry Vice President/General -0-
World Headquarters Manager, Ford Customer
The American Road Service Division,
Dearborn, MI 48121 Ford Motor Company
Elliott S. Hall Vice President, -0-
World Headquarters Washington Affairs,
The American Road Ford Motor Company
Dearborn, MI 48121
John T. Huston Vice President, -0-
World Headquarters Powertrain Operations,
The American Road Ford Motor Company
Dearborn, MI 48121
Kenneth K. Kohrs Vice President, -0-
World Headquarters Vehicle Center 3,
The American Road Ford Motor Company
Dearborn, MI 48121
Vaughn A. Koshkarian Vice President, Ford -0-
World Headquarters Motor Company; President,
The American Road Ford Motor China, Ltd.
Dearborn, MI 48121
Robert O. Kramer Vice President, -0-
World Headquarters Human Resources,
The American Road Ford Motor Company
Dearborn, MI 48121
Frank E. Macher Vice President/General -0-
World Headquarters Manager, Automotive
The American Road Components Division,
Dearborn, MI 48121 Ford Motor Company
Keith C. Magee Vice President, -0-
World Headquarters European Marketing
The American Road and Sales,
Dearborn, MI 48121 Ford Motor Company
<PAGE> 5
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
John W. Martin, Jr. Vice President, -0-
World Headquarters General Counsel,
The American Road Ford Motor Company
Dearborn, MI 48121
Carlos E. Mazzorin Vice President, -0-
World Headquarters Purchasing,
The American Road Ford Motor Company
Dearborn, MI 48121
David N. McCammon Vice President, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
W. Dale McKeehan Vice President, -0-
World Headquarters Vehicle Operations,
The American Road Ford Motor Company
Dearborn, MI 48121
John P. McTague Vice President, -0-
World Headquarters Technical Affairs,
The American Road Ford Motor Company
Dearborn, MI 48121
James G. O'Connor Vice President, -0-
World Headquarters General Manager
The American Road Lincoln/Mercury Division,
Dearborn, MI 48121 Ford Motor Company
Richard Parry-Jones Vice President, -0-
World Headquarters Vehicle Center 1,
The American Road Ford Motor Company
Dearborn, MI 48121
Helen O. Petrauskas Vice President, -0-
World Headquarters Environmental and
The American Road Safety Engineering,
Dearborn, MI 48121 Ford Motor Company
William F. Powers Vice President, -0-
World Headquarters Research,
The American Road Ford Motor Company
Dearborn, MI 48121
<PAGE> 6
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
Neil W. Ressler Vice President, -0-
World Headquarters Advanced Vehicle
The American Road Technology,
Dearborn, MI 48121 Ford Motor Company
Ross H. Roberts Vice President, -0-
World Headquarters General Manager,
The American Road Ford Division,
Dearborn, MI 48121 Ford Motor Company
David W. Scott Vice President, -0-
World Headquarters Public Affairs,
The American Road Ford Motor Company
Dearborn, MI 48121
Charles W. Szuluk Vice President, -0-
World Headquarters Process Leadership,
The American Road Ford Motor Company
Dearborn, MI 48121
John J. Telnack Vice President, -0-
World Headquarters Design,
The American Road Ford Motor Company
Dearborn, MI 48121
Thomas J. Wagner Vice President, Customer -0-
World Headquarters Communication &
The American Road Satisfaction,
Dearborn, MI 48121 Ford Motor Company
Henry D. G. Wallace Vice President, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Dennis E. Ross Chief Tax Officer, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Peter Look Assistant Tax Officer, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
<PAGE> 7
Nature of
Name and Principal Number of Beneficial
Business Address Occupation Units Owned Ownership
- ---------------- ---------- ----------- ----------
Thomas J. DeZure Assistant Secretary, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Peter J. Sherry, Jr. Assistant Secretary, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Sally W. Staebler Assistant Secretary, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Malcolm S. Macdonald Treasurer, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
Elizabeth S. Acton Assistant Treasurer, -0-
World Headquarters Ford Motor Company
The American Road
Dearborn, MI 48121
<PAGE> 1
EXECUTION
ASSET PURCHASE AGREEMENT
dated as of
August 5, 1996
by and among
BA LEASING & CAPITAL CORPORATION,
USL CAPITAL CORPORATION
and
FORD MOTOR CREDIT COMPANY
EXHIBIT 5
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS............................. 1
1.1 General Provisions............................................. 1
1.2 Specific Provisions............................................ 4
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES....................... 20
2.1 Purchase and Sale of Purchased Assets.......................... 20
2.2 Assumption of Assumed Liabilities.............................. 21
2.3 Purchase Price and Allocation.................................. 21
2.4 Amount Payable in Respect of Each Closing...................... 21
2.5 Procedure for Reconciliation................................... 22
2.6 Final Payment of Purchase Price................................ 25
2.7 Casualty Events................................................ 25
2.8 Certain Airlease Matters....................................... 26
2.9 Transaction Costs Adjustment................................... 26
2.10 Affordable Housing Transactions Adjustment..................... 26
2.11 Certain Matters Relating to the
Subsidiaries................................................... 29
2.12 Transaction Specific Adjustments............................... 29
ARTICLE III
CLOSINGS.............................. 29
3.1 Initial Closing; Subsequent Closings........................... 29
3.2 Items to be Delivered at the Closings By
Sellers........................................................ 30
3.3 Items to be Delivered at the Closing by Buyer.................. 32
3.4 Trailing Closings.............................................. 33
3.5 Removal of Books and Records; No Access to
Sellers' Premises.............................................. 33
3.6 Circumstances Under Which Certain
Transactions May be Excluded................................... 34
3.7 Pricing Files; W&S Report...................................... 36
3.8 Circumstances Under Which Interests in
Certain Transactions May be Sold at Multiple
Closings....................................................... 37
3.9 Alternative Mechanism for Transfer of L-1011
Contracts...................................................... 37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS............... 38
4.1 Organization and Related Matters............................... 38
4.2 Stock; No Undisclosed Liabilities of
Subsidiaries................................................... 39
4.3 Assumed Contracts; Transaction Documents....................... 40
4.4 Title.......................................................... 43
4.5 Interests in Airlease.......................................... 44
4.6 Authorization; No Conflicts.................................... 44
4.7 Operation Since December 31, 1995.............................. 45
4.8 Legal Proceedings.............................................. 46
<PAGE> 3
4.9 Insurance...................................................... 46
4.10 Compliance with Law; Permits................................... 46
4.11 No Brokers or Finders.......................................... 47
4.12 Taxes.......................................................... 47
4.13 Bank Accounts, Powers.......................................... 51
4.14 Support Services; Potential Conflicts of
Interest....................................................... 51
4.15 Absence of Certain Commercial Practices........................ 51
4.16 Restrictions on Doing Business................................. 52
4.17 Disclosure..................................................... 52
4.18 Labor and Employment Matters................................... 52
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER................ 53
5.1 Organization and Related Matters............................... 53
5.2 Authorization; No Conflicts.................................... 53
5.3 Legal Proceedings.............................................. 54
5.4 No Brokers or Finders.......................................... 54
5.5 Disclaimer of Certain Representations and
Warranties..................................................... 54
5.6 Investment Representation...................................... 55
5.7 Citizenship.................................................... 55
ARTICLE VI
INTERIM COVENANTS........................... 55
6.1 Access......................................................... 55
6.2 Conduct of Business............................................ 56
6.3 Approvals and Permits.......................................... 57
6.4 Government Filings............................................. 58
6.5 Bulk Transfer Laws............................................. 59
6.6 Tax Indemnity Agreement........................................ 59
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS.................... 59
7.1 Post-Closing Access............................................ 59
7.2 Insurance; Indemnity Obligations............................... 60
7.3 Employee Matters............................................... 61
7.4 Noncompetition................................................. 64
7.5 Apportionment.................................................. 66
7.6 Use of Excluded Intangible Property............................ 67
7.7 TCUI's Consent to Certain Transfers............................ 67
ARTICLE VIII
GENERAL CONDITIONS OF PURCHASE..................... 67
8.1 No Orders; Legal Proceedings................................... 68
8.2 Governmental Approvals......................................... 68
8.3 Satisfaction of Conditions to Formation of
DFO Partnership................................................ 68
8.4 Tax Indemnity Agreement........................................ 68
ii
<PAGE> 4
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER................... 68
9.1 Representations and Warranties and Covenants
of Sellers..................................................... 69
9.2 No Material Adverse Change..................................... 69
9.3 Aggregate Depreciable Basis.................................... 69
9.4 Third-Party Approvals.......................................... 70
9.5 Certain Matters Relating to TCUI............................... 70
9.6 Transaction Specific Conditions................................ 70
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLERS.................. 70
10.1 Representations and Warranties and Covenants
of Buyer....................................................... 70
10.2 Indemnity Obligations.......................................... 71
10.3 Third-Party Approvals.......................................... 71
ARTICLE XI
TERMINATION OF OBLIGATIONS; SURVIVAL.................. 71
11.1 Termination of Agreement....................................... 71
11.2 Effect of Termination.......................................... 72
11.3 Reliance Upon and Survival of Representations
and Warranties................................................. 72
ARTICLE XII
INDEMNIFICATION............................ 73
12.1 Obligations of Sellers......................................... 73
12.2 Obligations of Buyer........................................... 74
12.3 Procedure...................................................... 74
12.4 Mitigation; Limitations on Indemnification..................... 76
12.5 Remedies Exclusive............................................. 77
12.6 Price Adjustment; After-Tax Basis.............................. 77
ARTICLE XIII
TAX MATTERS.............................. 78
13.1 Allocation of Tax Liabilities;
Indemnification................................................ 78
13.2 Tax Covenants.................................................. 79
13.3 Refunds........................................................ 80
13.4 Returns and Reports............................................ 80
13.5 Disputes....................................................... 81
13.6 Price Adjustment; After-Tax Basis.............................. 81
13.7 Survival....................................................... 82
13.8 Transfer, Use and Property Taxes............................... 82
ARTICLE XIV
PUBLICITY/CONFIDENTIALITY....................... 82
14.1 Publicity and Reports.......................................... 82
14.2 Confidentiality................................................ 83
iii
<PAGE> 5
ARTICLE XV
GENERAL................................ 83
15.1 Amendments; Waivers............................................ 83
15.2 Exhibits and Schedules; Integration............................ 84
15.3 Best Efforts................................................... 84
15.4 Governing Law.................................................. 84
15.5 No Assignment.................................................. 84
15.6 Headings....................................................... 85
15.7 Counterparts................................................... 85
15.8 Parties in Interest............................................ 85
15.9 Performance by Subsidiaries.................................... 85
15.10 Notices........................................................ 85
15.11 Expenses....................................................... 86
15.12 Attorneys' Fees................................................ 86
15.13 Representation By Counsel; Interpretation...................... 87
15.14 Severability................................................... 87
15.15 Dispute Resolution; Agreement to Arbitrate..................... 87
15.16 Further Assurances............................................. 88
iv
<PAGE> 6
EXHIBITS
A September 1 Statement of Aggregate Net Present Value
B September 5 Statement of Aggregate Net Present Value
C September 20 Statement of Aggregate Net Present Value
D January 15 Statement of Aggregate Net Present Value
E Principal Terms of Services Agreement
F Bill of Sale and Assignment
G Release
H Assumption Agreement
I Aircraft Delivery Receipt
SCHEDULES
Disclosure Schedule
1.1 Knowledge
1.2(a) Affordable Housing Financing Contracts
1.2(b) Aircraft
1.2(c)(1) Aircraft Financing Contracts
1.2(c)(2) Certain Aircraft Financing Contracts
1.2(c)(3) Airlease Transaction Contracts
1.2(d) Certain Assumed Contracts
1.2(e) Employees
1.2(f)(1) Facility Financing Contracts
1.2(f)(2) Certain Facility Financing Contracts
1.2(g) LFI Contracts
1.2(h) Railcar Financing Contracts
1.2(i) Transactions
1.2(j) Vessel Financing Contracts
1.2(k) Weighted Average Rate Shift
2.11 Subsidiary Intercompany Receivables
3.2 Certain Officers and Directors of the Subsidiaries
4.1(b) Capitalization, Ownership, Directors and Executive
Officers of Subsidiaries
4.1(c) Transaction Owner Trusts and Transaction
Partnerships
4.3(c) Obligations to Provide Additional Funds
4.3(f) Non-Recourse Debt
4.3(g) Security Deposits; Credit Enhancements
4.3(i) Knowledge (Assumed Contracts; Transaction
Documents)
4.6 Seller Required Consents
4.9 Insurance
4.10 Permits
4.12 Taxpayers; Partnerships
4.13 Bank Accounts
5.2 Buyer Required Consents
6.1 Certain Confidential Information
6.2 Approved Pending Transactions
6.3 Certain Agreements, Guarantees, etc.
7.2 Certain Indemnity Obligations
9.5 Certain Trust Agreements
13.2(a) Certain Subsidiaries
v
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of August 5, 1996 by and
among BA LEASING & CAPITAL CORPORATION, a California corporation ("Buyer"), USL
CAPITAL CORPORATION, a Delaware corporation ("USL Capital"), and FORD MOTOR
CREDIT COMPANY, a Delaware corporation ("Ford Credit").
W I T N E S S E T H
WHEREAS, USL Capital desires to sell certain of the assets of its
transportation and industrial financing division, and Ford Credit desires to
sell certain of the assets of its diversified financing operations business, to
Buyer, and Buyer desires to purchase such assets and assume certain related
liabilities, all on the terms and conditions set forth herein;
WHEREAS, concurrently with the execution and delivery hereof, USL
Capital and SPLC are entering into the Concurrent Asset Purchase Agreement; and
WHEREAS, concurrently with the execution and delivery hereof, SPLC
and Ford Credit are entering into the Commitment Agreement, and it is
contemplated that, promptly following the Initial Closing, SPLC and Holdings
will enter into the DFO Partnership Agreement.
NOW THEREFORE, in consideration of the mutual promises and covenants
contained herein and intending to be legally bound, Buyer and USL Capital and
Ford Credit do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 General Provisions.
(a) For all purposes hereof, except as otherwise
expressly provided:
(i) the terms defined herein have the meanings assigned to them
herein and include the plural as well as the singular;
(ii) all accounting terms used herein have the meanings assigned to
them under generally accepted accounting principles, except to the extent
otherwise provided herein;
(iii) all references herein to designated "Articles," "Sections" and
other subdivisions and to "Exhibits" and "Schedules" are to the designated
Articles, Sections and other subdivisions of the body hereof and to the
Exhibits and Schedules hereto;
<PAGE> 8
(iv) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms;
(v) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(vi) any reference herein to either Seller's "knowledge," or words
of similar effect, refers to the actual knowledge of USL Capital's
Chairman and Chief Executive Officer, Senior Vice President and Chief
Financial Officer and Senior Vice President and General Counsel after
reasonable inquiry of the persons listed on Schedule 1.1, after reasonable
inquiry and investigation as of the date hereof by such listed persons
(such latter inquiry and investigation being subject to the limitations
described in Schedule 1.1);
(vii) any reference herein to either Seller's "actual knowledge," or
words of similar effect, refers to the actual knowledge of USL Capital's
Chairman and Chief Executive Officer, Senior Vice President and Chief
Financial Officer and Senior Vice President and General Counsel after
causing reasonable inquiry to be made by counsel to Sellers of the persons
listed on Schedule 4.3(i);
(viii) any reference herein to the "transfer" of a Transaction shall
mean and refer to the sale, conveyance, assignment, transfer and delivery
of those Purchased Assets pertaining to such Transaction and the
assumption of the Assumed Liabilities pertaining to such Transaction, or
to the purchase and sale of all of the outstanding capital stock of any
Subsidiary that is a participant in such Transaction;
(ix) any reference herein to the "exclusion" of a Transaction from a
Closing shall mean and refer to the failure to transfer such Transaction
at such Closing;
(x) whenever any rights or obligations of Buyer or a Seller
hereunder with respect to any specific Transaction, Purchased Asset,
Assumed Liability or, by virtue of the fact that Excluded Liabilities are
determined hereunder by reference to Assumed Liabilities, any Excluded
Liability, are delineated by reference to or otherwise based upon the
occurrence of any Closing, the term "Closing" refers to the Closing at
which the pertinent Transaction, Purchased Asset or Assumed Liability is
transferred from a Seller to Buyer; and
(xi) whenever any rights or obligations of Buyer or a Seller
hereunder with respect to any specific Transaction, Purchased Asset,
Assumed Liability or, by virtue of the fact
2
<PAGE> 9
that Excluded Liabilities are determined hereunder by reference to Assumed
Liabilities, any Excluded Liability, are delineated by reference to any
Closing Date, the term "Closing Date" refers to the Closing Date on which
the pertinent Transaction, Purchased Asset or Assumed Liability
is transferred from a Seller to Buyer.
(b) For purposes of Sections 3.2(r) and 3.6, references to the
representations and warranties made by a Seller with respect to any Transaction
shall be deemed to mean and refer to any representation and warranty made by a
Seller herein with respect to (i) such Transaction, (ii) the Purchased Assets,
the Assumed Liabilities and the Transaction Documents relating to such
Transaction and (iii) any Transaction Owner Trust or Transaction Partnership
that is a party to such Transaction.
(c) For purposes of Sections 4.3, 4.10(a) and 4.16, no fact, event,
circumstance, condition, term or provision shall be deemed to be disclosed in
any Transaction Document or contained in any provision thereof unless a person
of experience and knowledge in the leasing and financing industry would
reasonably be expected to recognize the existence or application, and the
significance, of such fact, event, circumstance, condition, term or provision
after reading the Transaction Documents. Without limiting the foregoing, no
fact, event, circumstance, condition, term or provision disclosed or contained
in any provision of a Transaction Document not listed on Schedules 1.2(a),
(c)(1), (f)(1), (h) or (j) and not made available to Buyer shall be deemed
disclosed in any Transaction Document that has been so listed and made available
solely because the existence of such unlisted Transaction Document was referred
to in such listed Transaction Document.
(d) For all purposes hereof, any reference to a "Seller" or to
"Sellers" herein, including, but not limited to, (i) any such reference in any
representation and warranty, covenant or agreement made by a Seller or Sellers
herein and (ii) any such reference as may relate to (A) any Purchased Assets or
any Assumed Liabilities, (B) any Transaction or any Purchased Assets, Assumed
Liabilities or Transaction Documents relating to any Transaction or any
Transaction Owner Trust or Transaction Partnership that is a party to such
Transaction, or (C) to the transfer of any Transaction, shall be deemed to mean
and refer to, with respect to any particular fact, circumstance, asset or
Liability, only that Seller to which such fact or circumstance applies or to
that Seller that, as of the date hereof, is the owner of such asset or is
subject to such Liability. Without limiting the foregoing, each reference to
"Seller" as it may apply with respect to or in connection with any Ford Credit
Purchased Asset shall be deemed to refer to Ford Credit, and each reference to
"Seller" as it may apply with respect to or in connection with any USL Capital
Purchased Asset shall be deemed to refer to USL Capital.
3
<PAGE> 10
1.2 Specific Provisions. As used herein the following
definitions shall apply:
"Accounting Firm" is defined in Section 2.5(c).
"Accounting Report" is defined in Section 2.5(c).
"Action" means any action, complaint, investigation, petition, suit
or other proceeding, whether civil or criminal, in law or in equity, or before
any arbitrator or Governmental Entity.
"Adjusted Cash Price" means, at any date, (i) for any Transaction,
the Reserves Adjusted Base Price for such Transaction at such date plus, if
positive, or minus, if negative, the Interest Rate Adjustment Amount for such
Transaction at such date, and (ii) for the Airlease Purchased Assets and for the
Miscellaneous Assets, the Base Price at such date.
"Affiliate" means a Person that directly or indirectly, through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a specified Person.
"Affordable Housing Financing Contracts" means those Contracts
listed on Schedule 1.2(a).
"Affordable Housing Transactions" is defined in Section 2.10.
"After-Tax Basis" means, in the case of any amount being paid to an
Indemnified Party hereunder, an amount which, after deduction of all additional
federal, state and local income taxes imposed on such Indemnified Party that
would not have been imposed but for the receipt or accrual of such amount (or
the receipt or accrual of amounts paid by reason of the "gross-up" provisions of
Section 12.6 or 13.6, as applicable, in connection with the receipt or accrual
of such amount), is equal to the amount otherwise required to be paid to such
Indemnified Party hereunder. When calculating amounts under the preceding
sentence, it shall be assumed that income of the Indemnified Party is subject to
tax, and that deductions of the Indemnified Party produce a benefit, at a
federal income tax rate equal to the highest marginal rate applicable to
corporations for the taxable year of the Indemnified Party during which such
payment accrues, and at an effective state and local tax rate equal to the
highest marginal income tax rate applicable to corporations (or if applicable,
banks and financial corporations) under the laws of the State of California and
the City and County of San Francisco (in each case tax effected) for the taxable
year of the Indemnified Party during which such payment is received or accrued,
as appropriate.
4
<PAGE> 11
"Aggregate Depreciable Basis" means the aggregate basis as
determined under Section 13.2(b) of the Purchased Assets taken into account for
purposes of determining the applicability of the mid-quarter convention under
Section 168(d)(3) of the Code and Treasury Regulations thereunder.
"Aggregate Net Present Value" means, with respect to any Transaction
(other than a Specially Priced Transaction) or any group of such Transactions,
(i) as of the Initial Target Closing Date, the aggregate net present value of
such Transactions as indicated on the September 5 Statement of Aggregate Net
Present Value, (ii) as of the Second Target Closing Date, the aggregate net
present value of such Transactions as indicated on the September 20 Statement of
Aggregate Net Present Value, (iii) as of the Alternative Target Closing Date,
the aggregate net present value of such Transactions as indicated on the January
15 Statement of Aggregate Net Present Value, or (iv) as of any other date, the
aggregate net present value of scheduled net after-tax cash flows and tax
benefits or detriments of such Transactions as of such date calculated in
accordance with the Agreed Assumptions and Methodology.
"Agreed Assumptions and Methodology" means the assumptions and
methodology (i) subsumed in the Pricing Files, and (ii) applied in the
preparation of the September 1 Statement of Aggregate Net Present Value, the
September 5 Statement of Aggregate Net Present Value, the September 20 Statement
of Aggregate Net Present Value and the January 15 Statement of Aggregate Net
Present Value (each as set forth in Exhibits A, B, C and D, respectively) (it
being understood that any calculations with respect to any Transaction (other
than a Transaction the transfer of which would involve the acquisition of a
partnership interest for federal income tax purposes or the acquisition of the
Stock of FM FSC UK Ltd.) to be transferred from Sellers to Buyer during the
Fourth Quarter shall be made on the assumptions that (x) the Initial Closing
occurred prior to October 1, 1996, (y) the condition set forth in Section 9.3
was satisfied with respect to each Closing held during the Fourth Quarter and
(z) Buyer and the other members of its affiliated group placed no other assets
in service on or after October 1, 1996 and placed no other assets in service
during calendar year 1996 other than the Purchased Assets and the "Purchased
Assets" as defined in the Concurrent Asset Purchase Agreement).
"Agreed Present Value Adjustments" is defined in
Section 2.5(a).
"Agreed Rate" means, as of the date of any payment of interest to be
made by reference thereto, the interest rate established on such date by Bank of
America as its "Reference Rate," or, if that rate is no longer established or
published, a comparable interest rate.
5
<PAGE> 12
"Agreement" means this Agreement by and among Buyer and Sellers, as
amended or supplemented, together with all Exhibits and Schedules hereto.
"Aircraft" means the aircraft listed on Schedule 1.2(b).
"Aircraft Financing Contracts" means those Contracts
listed on Schedule 1.2(c)(1).
"Airlease" means Airlease Ltd., a California limited
partnership.
"Airlease Closing" is defined in Section 3.1.
"Airlease Partnership Agreement" means the Amended and Restated
Agreement of Limited Partnership of Airlease Ltd., a California limited
partnership, dated as of October 10, 1986, as amended December 12, 1988.
"Airlease Partnership Units" means the 17.1622% limited partnership
interest in Airlease owned by USAH.
"Airlease Purchase Price" means, for any Closing Date, the purchase
price for the Airlease Purchased Assets transferred from USL Capital to Buyer on
such Closing Date, determined as follows: (i) for the capital stock of AMSI, an
amount equal to 1% of $72,625,972 plus (A) the amount, if any, of accrued but
unpaid management fees payable by Airlease to AMSI pursuant to the Airlease
Partnership Agreement as of such Closing Date and minus (B) (x) management fees
paid by Airlease to AMSI pursuant to the Airlease Partnership Agreement after
September 1, 1996 but prior to such Closing Date and not accrued as of such
Closing Date, and (y) the amount, if any, of distributions made by Airlease to
AMSI after September 1, 1996 but prior to such Closing Date, (ii) for the
capital stock of USAH, an amount equal to 5% of $72,625,972 minus the amount, if
any, of distributions made by Airlease to USAH other than in respect of the
Airlease Partnership Units after September 1, 1996 but prior to such Closing
Date, and (iii) for the Airlease Partnership Units, an amount equal to 17.1622%
of $72,625,972 minus the amount, if any, of distributions made by Airlease in
respect of the Airlease Partnership Units after September 1, 1996 but prior to
such Closing Date.
"Airlease Purchased Assets" means the Airlease Partnership Units and
the capital stock of AMSI and USAH.
"Airlease Reports" is defined in Section 4.5(b).
"Airlease Transaction Contracts" means those Contracts
listed on Schedule 1.2(c)(3).
"Allocation" is defined in Section 13.2.
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<PAGE> 13
"Alternative Target Closing Date" means January 15, 1997.
"AMSI" means Airlease Management Services, Inc., a Delaware
corporation.
"Approval" means any approval, authorization, consent, qualification
or registration, or any waiver of any of the foregoing, required to be obtained
from, or any notice, statement or other communication required to be filed with
or delivered to, any Governmental Entity or any other Person.
"Associates" means Associates First Capital Corporation, a Delaware
corporation.
"Assumed Contracts" means (i) the Aircraft Financing Contracts, the
Facility Financing Contracts, the LFI Contracts, the Railcar Financing
Contracts, the Affordable Housing Financing Contracts and the Vessel Financing
Contracts, to which, in each instance, a Seller or any Selling Subsidiary is a
party, (ii) the Contracts listed on Schedule 1.2(d) and (iii) those Contracts to
which a Seller is a party that pertain to any transaction in which such Seller
has acquired an interest or entered into in accordance with the provisions of
Section 6.2 which transaction is transferred from such Seller to Buyer
hereunder; provided, however, that no such Contract that is a Transaction
Document shall be an Assumed Contract until the Closing Date on which the
Transaction to which it pertains is transferred from a Seller to Buyer.
"Assumed Liabilities" means any and all Liabilities:
(i) of a Seller or any Selling Subsidiary arising under the Assumed
Contracts (except to the extent that any such Liability shall have
accrued, or shall arise from facts or circumstances occurring, on or
before the Closing Date);
(ii) of the Subsidiaries, the Transaction Owner Trusts and the
Transaction Partnerships (except to the extent that any such Liability
shall have accrued, or shall arise from facts or circumstances occurring,
on or before the Closing Date);
(iii) relating to or in connection with the ownership, use,
possession, enjoyment or operation of the Purchased Assets, or any assets
owned by any Subsidiary, any Transaction Owner Trust or any Transaction
Partnership (except to the extent that any such Liability shall have
accrued, or shall arise from facts or circumstances occurring, on or
before the Closing Date);
(iv) to return to any lessee any security deposits transferred by a
Seller or a Selling Subsidiary at any
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<PAGE> 14
Closing or held by any Transaction Owner Trust or Transaction Partnership;
(v) to pay over to any Person any maintenance reserves required to
be paid after any Closing in connection with any Transaction that is
transferred from a Seller or a Selling Subsidiary to Buyer at such
Closing;
(vi) of a Seller or any Selling Subsidiary to indemnify any lessee
or other obligor pursuant to any Transaction Document, Seller Required
Consent, Buyer Required Consent or instrument of transfer or assumption
effecting the transfer of any Transaction from a Seller to Buyer
hereunder, in each case to the extent that any such Liability is in
respect of any obligation of such lessee or obligor to indemnify Buyer in
connection with any Transaction; and
(vii) relating to or in connection with the employment of the
Transferred Employees by Buyer or any of its Affiliates after the Initial
Closing Date.
The parties agree and acknowledge that for all purposes hereof, Liabilities
attributable to continuing events may be in part Assumed Liabilities and in part
Excluded Liabilities.
"Bank of America" means Bank of America National Trust and Savings
Association.
"Base Price" means, at any date, (i) for any Transaction that is not
a Specially Priced Transaction, the Aggregate Net Present Value of such
Transaction at such date, (ii) for any Specially Priced Transaction, the Special
Transaction Price for such Transaction at such date, (iii) for the Airlease
Purchased Assets, the Airlease Purchase Price at such date, and (iv) for the
Miscellaneous Assets, the Miscellaneous Assets Purchase Price at such date.
"Books and Records" means all books, ledgers, files, reports,
financial statements, certificates, plans, operating records, memoranda, notes,
lists and other documents (including any of the foregoing furnished by lessees
and other obligors and those relating to environmental conditions at, or
environmental assessments of, any facilities) of or maintained by a Seller or
any of Sellers' Affiliates relating to the Transactions (other than such as
relate to the negotiation, execution or delivery of this Agreement or solely to
Excluded Liabilities) or, subject to Section 7.3, the Transferred Employees, or
otherwise reasonably required for the operation of the Business, including any
such items stored in computer memories (which shall be delivered in the form of
hard or floppy disk media and, if otherwise already available, paper hard copy),
on microfiche or by any other means, except for (i) Tax Returns filed by any of
Sellers' Affiliates (ii) any information or materials required to be kept
8
<PAGE> 15
confidential by Law, or (iii) any privileged attorney-client communications or
attorney-work product.
"Business" means the transportation and industrial financing
business conducted by (i) USL Capital and the Subsidiaries with respect to the
Transactions and (ii) TCUI.
"Buyer" is defined in the preamble to this Agreement.
"Buyer Required Consents" is defined in Section 5.2.
"Buyer's Statement of Closing Date Aggregate Net Present Value" is
defined in Section 2.4(b).
"Casualty Adjustment Amount" is defined in Section 2.7.
"Casualty Event" is defined in Section 2.7.
"Closing" means the Initial Closing, any Subsequent Closing, any
Airlease Closing or any Trailing Closing, as applicable. If any Purchased Assets
other than the Airlease Purchased Assets are transferred at any Airlease
Closing, such Airlease Closing shall also be deemed a Subsequent Closing.
"Closing Date" means the date of the Initial Closing, any Subsequent
Closing, any Airlease Closing or any Trailing Closing, as applicable.
"Closing Date Aggregate Adjusted Cash Price" is defined in Section
2.5(e).
"Closing Date Payment Amount" is defined in Section
2.4(c).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Activities" means any action (whether legal, equitable
or otherwise) taken by Sellers or any Subsidiary, or any agent, representative
or assign of any of the foregoing, to recover sums due and owing to Sellers or
any Subsidiary pursuant to any Transaction.
"Commitment Agreement" means the Commitment Agreement of even date
herewith by and between SPLC and Ford Credit relating to DFO Partnership.
"Competitive Business" is defined in Section 7.4(a).
"Concurrent Asset Purchase Agreement" means that certain Asset
Purchase Agreement of even date herewith by and between SPLC and USL Capital.
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<PAGE> 16
"Contemplated Transactions" means the purchase by Buyer of the
Purchased Assets and the assumption by Buyer of the Assumed Liabilities on the
terms and conditions set forth herein.
"Continuation Coverage" is defined in Section 7.3(e).
"Contract" means any binding agreement, bond, commitment, contract,
franchise, indemnity, indenture, instrument, lease, license, or other
arrangement, including any modification or amendment of any of the foregoing, in
each instance whether oral or written.
"DFO Partnership" means DFO Partnership, a New York general
partnership to be organized pursuant to the DFO Partnership Agreement.
"DFO Partnership Agreement" means the Agreement of Partnership of
DFO Partnership to be entered into by and between SPLC and Holdings in the form
of Exhibit A to the Commitment Agreement, together with the Subscription
Agreements.
"Disclosure Schedule" means the Disclosure Schedule of even date
herewith delivered by Sellers to Buyer which sets forth certain exceptions to
the representations and warranties made by Sellers in Article IV.
"Employee Benefit Plans" means, for any Person, all Employee Pension
Benefit Plans (as defined in Section 3(2) of ERISA), Employee Welfare Benefit
Plans (as defined in Section 3(1) of ERISA) and any other material employee
benefit arrangements maintained by such Person.
"Employees" means those personnel employed by USL Capital in
connection with the Business as of the date hereof listed on Schedule 1.2(e)
(including any such employees on leave or disability), together with, to the
extent any of such Persons is no longer employed by USL Capital on the Initial
Closing Date, and subject to Buyer's prior written consent (which shall not be
unreasonably withheld), any replacements therefor employed by USL Capital on the
Initial Closing Date.
"Encumbrance" means any claim, charge, easement, encumbrance, lease,
covenant, security interest, lien, option, pledge, rights of others, or other
limitation or restriction (whether on voting, sale, transfer, disposition or
otherwise), whether imposed by agreement, understanding, Law, equity or
otherwise, provided, however, that "Encumbrance" shall not mean any restrictions
on transfer generally arising under any applicable federal or state securities
Laws.
"Engine Casualty" is defined in Section 3.6(e).
"Environmental Laws" means any and all Laws relating to
pollution or protection of the environment (including, with
10
<PAGE> 17
respect to any Transaction to be transferred from a Seller to Buyer hereunder,
principles of common law relating to pollution or protection of the environment
in any jurisdiction in which the real property owned or used by any Subsidiary,
any Transaction Owner Trust or any Transaction Partnership in connection with
such Transaction is located) (i) as in effect as of the Closing Date, or (ii)
that have been enacted as of the Closing Date and are scheduled to take effect
on future dates as specified in such Laws or in any interpretive regulation
relating to such Laws that has been promulgated in final form as of the Closing
Date without any conditions to such effectiveness other than the passage of
time.
"Equity Securities" means any capital stock or other equity
ownership or voting interest, securities convertible into or exchangeable for
capital stock or any such interest, or any other rights, warrants or options to
acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the related regulations and published interpretations.
"ERISA Affiliate" means any Person other than USL Capital or any
Subsidiary who is a member of a group which is under common control with USL
Capital who together with USL Capital is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
"Excluded Assets" means any and all assets of any kind or nature of
Sellers or any of their Affiliates (other than the Subsidiaries, the Transaction
Owner Trusts and the Transaction Partnerships) other than the Purchased Assets.
"Excluded Liabilities" means any and all Liabilities of or
applicable to a Seller or to Sellers' Affiliates or otherwise relating to the
Purchased Assets or any Transaction (other than the Assumed Liabilities and
other than any Liabilities of or applicable to Buyer or any of its Affiliates
that do not arise or for which Buyer has not become liable as a consequence of
the Contemplated Transactions), including, but not limited to, any and all
Liabilities (i) arising under, relating to or in connection with any violation
of any applicable Environmental Law by a Seller or any of Sellers' Affiliates,
by any Person acting on behalf of a Seller or any of Sellers' Affiliates, by any
Person from or through which a Seller or any of Sellers' Affiliates acquired
title to any asset or property, or by any Transaction Owner Trust or Transaction
Partnership, which in each instance occurred on or prior to the Closing Date
and, if such violation is continuing after the Closing Date, only to the extent
that such Liabilities are attributable to the portion of such violation
occurring or in existence on or prior to the Closing Date, or (ii) imposed by
any applicable Environmental Law in respect of any act, omission, event,
condition or circumstance
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<PAGE> 18
occurring or existing in connection with the Purchased Assets or any Transaction
on or prior to the Closing Date and, in the case of any act, omission, event,
condition or circumstance continuing after the Closing Date, only to the extent
that such Liabilities are attributable to the portion of such act, omission,
event, condition or circumstance occurring or in existence on or prior to the
Closing Date. Without limiting the foregoing, the parties agree that any
obligation of a Seller or any Selling Subsidiary under any reverse indemnity
agreement in connection with any Transaction to pay over any amount received
under any tax indemnity agreement or any unexpected tax benefit, to the extent
that the amount received or the benefit giving rise to the payment obligation
was or is received or obtained by such Seller or any Selling Subsidiary, or any
predecessor in interest thereto, shall be an Excluded Liability hereunder.
"FAA" means the Federal Aviation Administration.
"Facility Financing Contracts" means those contracts listed on
Schedule 1.2(f)(1).
"Ford" means Ford Motor Company, a Delaware corporation.
"Ford Credit" is defined in the preamble to this Agreement.
"Ford Credit Purchased Assets" means those Aircraft Financing
Contracts listed on Schedule 1.2(c)(2), those Facility Financing Contracts
listed on Schedule 1.2(f)(2) and the L-1011 Contracts.
"Ford Europe" means Interlocutory Limited, a U.K. company.
"Fourth Quarter" means the period beginning October 1, 1996 and
ending December 31, 1996.
"Governmental Entity" means any government or any agency, bureau,
board, commission, court, department, official, political subdivision, tribunal
or other instrumentality of any government, whether federal, state or local,
domestic or foreign, any arbitrator or arbitral panel, or any non-governmental
regulating body to the extent that the rules, regulations or orders of such body
have the force of law.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the related regulations and published
interpretations.
"Hazardous Substance" means substances that are defined or listed
in, or otherwise classified or regulated pursuant to, any applicable
Environmental Laws as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances,"
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<PAGE> 19
"petroleum products," "pollutants," "contaminants" or in like fashion.
"Holdings" means DFO Holding Company, Inc., a Delaware corporation
to be formed as a wholly owned subsidiary of Ford Credit.
"Indemnifiable Claim" means any Loss for or against which any party
is entitled to indemnity under this Agreement.
"Indemnified Party" means a party entitled to indemnity under this
Agreement.
"Indemnifying Party" means a party obligated to provide indemnity
under this Agreement.
"Initial Closing" is defined in Section 3.1.
"Initial Closing Date" means the date of the Initial Closing.
"Initial Target Closing Date" means September 5, 1996.
"Interest Rate Adjustment Amount" means, for any Transaction at any
time, an amount, which may be positive or negative, equal to the product of (i)
the Weighted Average Rate Shift at such time, (ii) $1,045,000, and (iii) a
fraction the numerator of which is the Reserves Adjusted Base Price (increased,
with respect to any Affordable Housing Transaction, by the amount of capital
contributions with respect thereto that are assumed to be made following the
Closing in the calculation of the Base Price therefor) of such Transaction at
such time and the denominator of which is $1,919,000,000.
"IRS" means the Internal Revenue Service or any successor entity.
"January 15 Statement of Aggregate Net Present Value" means the
Statement of Aggregate Net Present Value as of January 15, 1997 set forth as
Exhibit D.
"July 1996 Projections" means, (x) with respect to any Affordable
Housing Transaction other than the Transaction listed as Item 6 on Schedule
1.2(i), the projections with respect thereto furnished by USL Capital to Buyer
on or about July 20, 1996 and (y) with respect to the Transaction listed as Item
6 on Schedule 1.2(i), such projections as modified if and to the extent
contemplated by the third sentence of Section 4.12(c).
"L-1011 Contracts" means the Assumed Contracts listed as Items 5 and
6 on Schedule 1.2(d).
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<PAGE> 20
"Law" means any constitutional provision, statute, ordinance or
other law, code, rule, regulation, or interpretation of any Governmental Entity
and any Order.
"LFI Contracts" means those Contracts listed on Schedule 1.2(g).
"Liabilities" means any and all liabilities or obligations of any
kind or nature, whether absolute, contingent, accrued, known or unknown, due or
to become due, or recourse or non-recourse.
"Loss" means any action, claim, judgment, cause of action,
assessment, cost, damage, disbursement, expense, liability, loss, deficiency,
obligation, penalty or settlement of any kind or nature, whether foreseeable or
unforeseeable, including, but not limited to, interest or other carrying costs,
penalties, reasonable legal (including allocated costs of internal counsel),
accounting and other fees, expenses and disbursements of personnel and
consultants incurred in any action, proceeding, investigation, collection,
prosecution or defense of claims and amounts paid in settlement, and any
out-of-pocket costs paid to third parties in order to mitigate any of the
foregoing, that may be imposed on or otherwise incurred or suffered by the
specified Person, it being understood that any Loss shall be net of the dollar
amount of any insurance proceeds realized by reason of such Loss by the Person
incurring or suffering such Loss. In determining the amount of any Loss measured
by or in the nature of a decline or reduction in the economic value to Buyer of
any Transaction, such decline or reduction shall be determined by reference or
comparison to the assumptions used in the Pricing Files.
"Miscellaneous Assets" means all of Ford Credit's right, title and
interest in, to and under the L-1011 Contracts and all of USL Capital's right,
title and interest (i) in and to the capital stock of TCUI, and (ii) the
personal computers and calculators owned by USL Capital and used exclusively by
the Transferred Employees.
"Miscellaneous Assets Purchase Price" means, at any date, $1,572,000
plus the amount, if any, by which the cash held (other than for the account of
others) by TCUI as of such date is in excess of $1.4 million or minus the
amount, if any, by which the cash held (other than for the account of others) by
TCUI as of such date is less than $1.4 million.
"Non-Recourse Debt" is defined in Section 4.3(f).
"Order" means any decree, injunction, judgment, award, order,
ruling, assessment or writ.
"Other Agreed Adjustments" is defined in Section 2.5(b).
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<PAGE> 21
"Permit" means any license, permit, franchise, certificate of
authority or occupancy, consent, authorization, right or order, or any waiver or
exemption of or from any of the foregoing, required to be issued by any
Governmental Entity.
"Permitted Encumbrance" means any Encumbrance that:
(i) is a lien of a landlord, carrier, warehouseman, mechanic,
materialman, or any other statutory lien arising in the ordinary course of
business;
(ii) is a lien for Taxes being contested in good faith or not yet
due;
(iii) arises, or is expressly permitted, by the terms of any
applicable Transaction Document; or
(iv) does not materially detract from the value of the encumbered
property or materially detract from or interfere with the use of the
encumbered property in the ordinary course of business;
provided, however, that no Encumbrance with respect to any Purchased Asset or
interest therein shall be a Permitted Encumbrance to the extent it is prohibited
by the terms of any Transaction Document relating thereto.
"Person" means an association, a corporation, a limited liability
company, an individual, a partnership, a trust or any other entity or
organization, including a Governmental Entity.
"Premium Percentage" is defined in Section 2.10(a).
"Pricing Files" is defined in Section 3.7(a).
"Purchase Price" is defined in Section 2.3.
"Purchased Assets" means:
(i) the Stock, together with the charter documents, franchises,
corporate seals, minute books, stock books and other corporate records
relating to the corporate organization and capitalization of the
Subsidiaries;
(ii) all right, title and interest of Sellers and the Selling
Subsidiaries in, to and under the Assumed Contracts and other Transaction
Documents, including, but not limited to, any interest of Sellers or the
Selling Subsidiaries in any Transaction Owner Trust and any Transaction
Partnership;
(iii) the Aircraft, together with all available logbooks and other
records pertaining to the Aircraft, all appliances, instruments and
accessories thereto and any rights as to warranty or indemnity from any
prior sellers,
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<PAGE> 22
suppliers, manufacturers, transporters or installers in effect, if any, to
the extent such rights are assignable;
(iv) the Airlease Purchased Assets;
(v) the personal computers and calculators owned by USL Capital and
used exclusively by the Transferred Employees;
(vi) all sales data, customer lists, information relating to
customers, suppliers' names, mailing lists, and advertising matter, if
any, relating to the Business;
(vii) any security deposits or maintenance reserves held by Seller
or any Selling Subsidiary in connection with any Transaction; and
(viii) the Books and Records.
"Railcar Financing Contracts" means those Contracts listed on
Schedule 1.2(h).
"Reserves Adjustment Amount" means, for any Transaction at any date,
the product of (i) $8,000,000 (i.e., $13,300,000 in reserves, minus related
deferred tax assets of $5,300,000) and (ii) a fraction the numerator of which is
the Base Price for such Transaction at such date (increased, with respect to any
Affordable Housing Transaction, by the amount of capital contributions with
respect thereto that are assumed to be made following the Closing in the
calculation of the Base Price therefor) and the denominator of which is
$1,784,890,198. If, following the later of the last Closing held hereunder and
the last "Closing" under the Concurrent Asset Purchase Agreement, Sellers and
the Selling Subsidiaries shall have sold to Buyer assets having an aggregate
price as shown on the September 1 Statement of Aggregate Net Present Value (as
it shall be amended from time to time to reflect the addition of any new assets
or transactions in which a Seller has acquired an interest in accordance with
the provisions of Section 6.2) in excess of $1,784,890,198, Buyer shall pay to
Seller the amount by which the Closing Date Aggregate Adjusted Cash Price for
each Closing Date was higher than it would have been had the denominator in the
fraction specified in the preceding sentence at such Closing Dates been
$1,784,890,198 plus the additional aggregate price as shown on the September 1
Statement of Aggregate Net Present Value for such additional assets, together
with interest thereon from the pertinent Closing Dates at the Agreed Rate. For
all purposes of this definition, references to the transfer of Purchased Assets
from either Seller to Buyer shall be deemed to also refer to and include
transfers of "Purchased Assets" (as defined in the Concurrent Asset Purchase
Agreement) from USL Capital to SPLC and references to the September 1 Statement
of Aggregate Net Present Value shall be deemed to also refer to and include the
"September 1 Statement of Aggregate Net Present Value" as defined in the
Concurrent Asset Purchase Agreement.
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<PAGE> 23
"Reserves Adjusted Base Price" means, for any Transaction at any
date, the Base Price for such Transaction at such date minus the Reserves
Adjustment Amount for such Transaction at such date.
"Restricted Period" is defined in Section 7.4(a).
"Restrictive Covenants" is defined in Section 7.4(c).
"SEC" means the Securities and Exchange Commission.
"Second Target Closing Date" means September 20, 1996.
"Section 338 Election" is defined in Section 13.2.
"Section 708 Tax Loss" means any loss of Tax benefits, or any Tax
cost incurred by Buyer attributable to a breach of or inaccuracy in Section
4.12(e), it being understood and agreed that any such loss shall be determined
by reference to the extent to which such benefits are less than (or such costs
are greater than) those assumed for the pertinent Transaction in the Pricing
Files for such Transaction, taking into account the impact of such breach or
inaccuracy (positive or negative) in each year.
"Section 754 Tax Loss" means any loss of Tax benefits or any Tax
cost incurred by Buyer attributable to a breach of or inaccuracy in the first
sentence of Section 4.12(h) or a breach of the last sentence of Section 13.2, it
being understood and agreed that any such loss shall be determined by reference
to the extent to which such benefits are less than (or such costs are greater
than) those assumed for the pertinent Transaction in the Pricing Files for such
Transaction, taking into account the impact of such breach or inaccuracy
(positive or negative) in each year.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" means Ford Credit and USL Capital; "Seller" means one or
the other of them as the context and the provisions of Section 1.1(d) require.
"Seller Calculations" is defined in Section 2.5(a).
"Seller Required Consents" is defined in Section 4.6.
"Sellers' Closing Date Notice" is defined in Section 2.4(a).
"Selling Subsidiaries" means each of AMSI, USAH, FSC Four
Partnership, a Delaware general partnership, FSC Five Partnership, a Delaware
general partnership, Riverdale International Sales, Inc., a St. Thomas
corporation, and
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Transportation and Industrial Financing I, Inc., a Delaware corporation.
"Separate Pool Assets" means the Transactions listed as Items 4
(Airbus 1), 10 (Airbus 3), 11 (Alaska 1), 12 (Alaska 2), 33 (United 4A) and 34
(USAir 767) on Schedule 1.2(i).
"September 1 Statement of Aggregate Net Present Value" means the
Statement of Aggregate Net Present Value as of September 1, 1996 set forth as
Exhibit A.
"September 5 Statement of Aggregate Net Present Value" means the
Statement of Aggregate Net Present Value as of the Initial Target Closing Date
set forth as Exhibit B.
"September 20 Statement of Aggregate Net Present Value" means the
Statement of Aggregate Net Present Value as of September 20, 1996 set forth as
Exhibit C.
"Services Agreement" means a Services Agreement to be entered into
by and among Buyer and Sellers having the principal terms set forth in Exhibit E
and otherwise in form and substance reasonably satisfactory to Buyer and
Sellers.
"Severance Costs Payment" is defined in Section 7.3(i).
"Severance Plan" means each of the USL Capital Corporation Severance
Pay Plan and the USL Capital Corporation Senior Management Severance Pay Plan,
each as amended through June 7, 1996.
"Specially Priced Transaction" means each of the Transaction listed
on Schedule 1.2(f)(2), the Transaction listed as Item 5 on Schedule 1.2(i) and
the transaction to which the document listed as Item 4 on Schedule 1.2(d)
pertains.
"Special Transaction Price" means, at any date, for any Specially
Priced Transaction, the book value of such Transaction as would be shown on the
financial statements of USL Capital for such date, determined in accordance with
generally accepted accounting principles applied in a manner consistent with USL
Capital's regular accounting practices taking into account the Revenue Procedure
applicable to the allocation of tax credits from the Affordable Housing
Financing Contracts where a transfer occurs other than at the beginning of a
month.
"SPLC" means Security Pacific Leasing Corporation, a Delaware
corporation.
"Stock" means all of the outstanding capital stock of the
Subsidiaries (other than Airlease).
"Subscription Agreements" means the Subscription Agreements to be
entered into by Ford Credit and Holdings and by
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<PAGE> 25
SPLC in the form of Exhibits B and C, respectively, to the Commitment Agreement.
"Subsequent Closing" is defined in Section 3.1.
"Subsidiaries" means those Persons listed on Schedule 4.1(b).
"Tax" or "Taxes" means any foreign, federal, state, county or local
income, sales and use, excise, franchise, real and personal property, transfer,
gross receipt, capital stock, production, business and occupation, disability,
employment, payroll, severance or withholding tax or charge imposed by any
Governmental Entity, any interest and penalties (civil or criminal) related
thereto or to the nonpayment thereof, and any Loss in connection with the
determination, settlement or litigation of any Tax liability. Without limiting
the generality of the foregoing, "Tax" or "Taxes" shall include any taxes
imposed by reason of any of the Contemplated Transactions, including, but not
limited to, taxes arising from the Section 338 Election.
"Tax Assets" is defined in Section 4.12(b).
"Taxpayers" is defined in Section 4.12(a).
"Tax Package" is defined in Section 13.4(c).
"Tax Partnership" is defined in Section 4.12(a).
"Tax Return" means a report, return or other information required to
be supplied to a Governmental Entity with respect to Taxes including, where
permitted or required, combined or consolidated returns for any group of
entities that includes any subsidiary.
"TCUI" means Trust Company for USL, Inc., an Illinois corporation.
"Termination Date" means February 28, 1997 or such later date as
Buyer and Sellers may mutually agree in writing.
"Trailing Closing" is defined in Section 2.4(a).
"Trailing Closing Date Statement" is defined in Section 2.4(c).
"Transaction" means each of the transportation and industrial
financing transactions listed on Schedule 1.2(i), subject to additions thereto
or deletions therefrom consistent with the provisions of Section 6.2.
"Transaction Documents" means (i) all leases, contracts, subleases,
mortgages, trust agreements, participation
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agreements, tax indemnity agreements, waivers, consents, document supplements
and any other Contracts relating to the Transactions, and any and all exhibits
or schedules thereto, and all amendments thereof and supplements thereto, and
(ii) the Airlease Transaction Contracts, and any and all exhibits or schedules
thereto, and all amendments thereof and supplements thereto.
"Transaction Owner Trust" means any owner trust in respect of which
a Seller or any Subsidiary is a trustor or beneficiary in connection with any
Transaction.
"Transaction Partnership" means any partnership (other than
Airlease) or limited liability company in which a Seller or any Subsidiary is a
partner or member in connection with any Transaction, or in which a Seller or
any Subsidiary holds a direct or indirect interest (including through other
passthrough entities) in connection with any Transaction.
"Transferred Employees" is defined in Section 7.3(a).
"USAH" means United States Airlease Holding, Inc., a California
corporation.
"USL Capital" is defined in the preamble to this Agreement.
"USL Capital Purchased Assets" means all Purchased Assets other than
the Ford Credit Purchased Assets.
"Vessel Financing Contracts" means those Contracts listed on
Schedule 1.2(j).
"W&S" means Warren & Selbert Incorporated.
"W&S Report" is defined in Section 3.7(d).
"Weighted Average Rate Shift" means, at any date, the change in
weighted average interest rates computed in accordance with the procedures set
forth on Schedule 1.2(k).
ARTICLE II
PURCHASE AND SALE OF ASSETS AND
ASSUMPTION OF LIABILITIES
2.1 Purchase and Sale of Purchased Assets. Subject to the terms and
conditions hereof, on the Closing Dates, (a) USL Capital shall sell, convey,
assign, transfer and deliver to Buyer (or, in the case of any USL Capital
Purchased Assets owned by any of the Selling Subsidiaries, shall cause to be
sold, conveyed, assigned, transferred and delivered to Buyer), and Buyer shall
purchase, acquire and accept from USL Capital or the applicable Selling
Subsidiary, the USL Capital Purchased Assets, and (b) Ford Credit shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire
and accept from Ford
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Credit, the Ford Credit Purchased Assets. Sellers shall not sell or transfer,
and Buyer shall not acquire any rights in and to, the Excluded Assets.
2.2 Assumption of Assumed Liabilities. Subject to the terms and
conditions hereof, on the Closing Dates, Buyer shall assume, shall take subject
to and shall become liable for the Assumed Liabilities. Buyer shall not assume,
shall not take subject to and shall not be liable for the Excluded Liabilities.
2.3 Purchase Price and Allocation. The total purchase price (the
"Purchase Price") payable to Sellers by Buyer for the Purchased Assets shall
consist of:
(i) the assumption of the Assumed Liabilities; plus
(ii) the sum of the Closing Date Aggregate Adjusted Cash Price for
each Closing Date; minus
(iii) the Casualty Adjustment Amounts; plus or minus
(iv) any net amount of interest payable by Buyer to Sellers or by
Sellers to Buyer, as the case may be, pursuant to Section 2.6.
2.4 Amount Payable in Respect of Each Closing.
(a) Not later than five business days prior to each Closing Date
that is not the date of a Trailing Closing, Sellers shall prepare and deliver to
Buyer a notice ("Sellers' Closing Date Notice") (i) setting forth a list of
Transactions to be transferred from a Seller or a Selling Subsidiary to Buyer on
such Closing Date, (ii) stating which, if any, of such Transactions Sellers
propose to transfer for Tax, logistical or similar reasons at one or more
Closings (each a "Trailing Closing") to be held shortly after such Closing Date,
(iii) stating whether any of such Transactions are Specially Priced Transactions
and, if so, setting forth Sellers' best estimate of the Special Transaction
Price for each such Specially Priced Transaction as of such Closing Date, (iv)
stating whether the Miscellaneous Assets are to be transferred at such Closing
Date and, if so, setting forth Sellers' best estimate of the Miscellaneous
Assets Purchase Price as of such Closing Date, and (v) stating whether such
Closing is an Airlease Closing, and, if so, setting forth Sellers' best estimate
of the Airlease Purchase Price as of such Closing Date.
(b) After receipt of Sellers' Closing Date Notice, but not later
than three business days prior to each Closing Date that is not the date of a
Trailing Closing, Buyer shall deliver to Sellers a statement of the Aggregate
Net Present Value as of such Closing Date of the Transactions (other than
Specially Priced Transactions) to be transferred from a Seller or a Selling
Subsidiary to Buyer as of such Closing Date (or as of the date of
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any Trailing Closing in respect of such Closing Date) (such statement, as so
prepared, being "Buyer's Statement of Closing Date Aggregate Net Present
Value").
(c) At the Initial Closing and each Subsequent Closing, and at each
Trailing Closing and each Airlease Closing, Buyer shall pay to the pertinent
Seller, by wire transfer of funds immediately available in the City of New York,
(i) the Aggregate Net Present Value of each Transaction transferred at such
Closing that is not a Specially Priced Transaction, as such Aggregate Net
Present Value was set forth on Buyer's Statement of Closing Date Aggregate Net
Present Value for such Closing or, in the case of a Trailing Closing, for the
Initial Closing or the Subsequent Closing to which such Trailing Closing
relates, (ii) the Special Transaction Price for each Specially Priced
Transaction transferred at such Closing, as such Special Transaction Price was
set forth on Sellers' Closing Date Notice for such Closing, (iii) if the
Miscellaneous Assets are transferred at such Closing, the Miscellaneous Assets
Purchase Price as set forth on Sellers' Closing Date Notice for such Closing,
and (iv) if such Closing is an Airlease Closing, the Airlease Purchase Price as
set forth on Sellers' Closing Date Notice for such Closing (the amount payable
at any Closing pursuant to clauses (i), (ii), (iii) and (iv) above being
hereinafter referred to as the "Closing Date Payment Amount"). On or immediately
following the date of each Trailing Closing, Buyer shall deliver to Sellers a
statement (a "Trailing Closing Date Statement") of the Aggregate Net Present
Value as of the date of such Trailing Closing of the Transactions transferred
from a Seller to Buyer at such Trailing Closing.
2.5 Procedure for Reconciliation. Buyer and Sellers shall observe
the following procedures following the Initial Closing, each Subsequent Closing
and each Airlease Closing:
(a) As soon as practicable after the Closing Date, or if there have
been Trailing Closings in respect thereof, after the last of such Trailing
Closings, but in no event later than the later of (i) ten business days after
the pertinent Initial Closing or Subsequent Closing or Airlease Closing, if
applicable, or (ii) five business days after the last of such Trailing Closings,
Sellers shall complete their review of Buyer's Statement of Closing Date
Aggregate Net Present Value and any related Trailing Closing Date Statements,
make the other calculations contemplated by clauses (ii), (iii), (iv), (v) and
(vi) of this Section 2.5(a) (collectively, the "Seller Calculations"), and
advise Buyer in writing of (i) such changes to Buyer's Statement of Closing Date
Aggregate Net Present Value and any related Trailing Closing Date Statements, if
any, believed by Sellers to be required in accordance with the Agreed
Assumptions and Methodology; provided, however, that with respect to any
Transaction transferred on the Initial Target Closing Date, the Second Target
Closing Date or the Alternative Target Closing Date, any changes so proposed by
Sellers shall be limited
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to changes asserted by Sellers to be necessary to conform the amounts presented
in Buyer's Statement of Closing Date Aggregate Net Present Value to the
correlative amounts presented in the September 5 Statement of Aggregate Net
Present Value, the September 20 Statement of Aggregate Net Present Value or the
January 15 Statement of Aggregate Net Present Value, as the case may be, (ii)
Sellers' calculation of the Reserves Adjustment Amount for each Transaction
transferred on such Closing Date and at any Trailing Closings in respect
thereof, (iii) Sellers' calculation of the Interest Rate Adjustment Amount for
each Transaction transferred on such Closing Date and at any such Trailing
Closings, (iv) if the Miscellaneous Assets were transferred on such Closing
Date, Sellers' calculation of the Miscellaneous Assets Purchase Price as of such
Closing Date, (v) if such Closing was an Airlease Closing, Sellers' calculation
of the Airlease Purchase Price as of such Closing Date and (vi) if either of the
Specially Priced Transactions were transferred on such Closing Date, Sellers'
calculation of the pertinent Special Transaction Price as of such Closing Date.
In the event Sellers do not advise Buyer within such period of any changes
referred to in clause (i) above, the Aggregate Net Present Value set forth in
Buyer's Statement of Closing Date Aggregate Net Present Value and any related
Trailing Closing Date Statements shall be final and conclusive. In the event
Sellers advise Buyer within such period of any changes referred to in clause (i)
above, Sellers and Buyer shall endeavor to resolve by written agreement (the
"Agreed Present Value Adjustments") any difference as to the Aggregate Net
Present Value of the Transactions transferred on such Closing Date and at any
Trailing Closings in respect thereof, and, in the event Buyer and Sellers so
resolve any such differences, the Aggregate Net Present Value set forth in
Buyer's Statement of Closing Date Aggregate Net Present Value and in any related
Trailing Closing Date Statements, as adjusted by the Agreed Present Value
Adjustments, shall be final and conclusive.
(b) As soon as practicable after Buyer's receipt of the Seller
Calculations, but in no event later than ten business days thereafter, Buyer
shall review the Seller Calculations and advise Sellers in writing of such
changes thereto, if any, believed by Buyer to be required in accordance with the
terms and provisions of this Agreement. In the event that Buyer does not advise
Sellers within such period of any such changes, the Seller Calculations shall be
final and conclusive. In the event Buyer advises Sellers within such period of
any such changes, Buyer and Sellers shall endeavor to resolve by written
agreement (the "Other Agreed Adjustments") any differences as to any such
calculations and, in the event Sellers and Buyer so resolve any such
differences, the Seller Calculations, as adjusted by the Other Agreed
Adjustments, shall be final and conclusive.
(c) In the event any objections lodged by Sellers in accordance with
Section 2.5(a) above are not resolved by Agreed Present Value Adjustments or any
objections lodged by Buyer in accordance with Section 2.5(b) above are not
resolved by Other
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Agreed Adjustments within ten business days after the receipt by Sellers or
Buyer, as the case may be, of such objections, then Sellers and Buyer shall
jointly select a national accounting firm acceptable to both Sellers and Buyer
(or, if they cannot agree on such selection, they shall select a national
(big-six) accounting firm by lot after eliminating the independent public
accountants of Sellers, Buyer and each of their respective Affiliates) and shall
direct the firm so selected (the "Accounting Firm") to conduct, as promptly as
practicable, but in any event not later than ten business days after such
direction, (i) in the case of a dispute relating to clause (i) of Section
2.5(a), such audit of Buyer's Statement of Closing Date Aggregate Net Present
Value and any related Trailing Closing Date Statements as the Accounting Firm
believes to be necessary to resolve Sellers' objections (it being understood
that under no circumstances shall the Accounting Firm be charged with
reconsidering or conducting an audit of any elements of Buyer's Statement of
Closing Date Aggregate Net Present Value or any related Trailing Closing Date
Statements as to which Sellers have lodged no objection or which do not bear
directly on the matters or conclusions objected to), and (ii) in the case of a
dispute relating to the Seller Calculations, such review of relevant information
as the Accounting Firm believes to be necessary to resolve Buyer's objections
(it being understood that under no circumstances shall the Accounting Firm be
charged with reconsidering or conducting a review of any elements of the Seller
Calculations as to which Buyer has lodged no objection or which do not bear
directly on the matters or conclusions objected to). Sellers and Buyer shall
also direct the Accounting Firm to deliver, promptly following the conclusion of
its audit or review, a written notice (the "Accounting Report") to each of
Sellers and Buyer setting forth (x) what adjustments, if any, to Buyer's
Statement of Closing Date Aggregate Net Present Value or any related Trailing
Closing Date Statements the Accounting Firm believes to be required under the
Agreed Assumptions and Methodology to resolve Sellers' objections, and the
amount of the Aggregate Net Present Value at the pertinent Closing Date (or at
the date of any related Trailing Closing) of each Transaction that is a subject
of the Accounting Report after giving effect to such adjustments, and (y) what
adjustments, if any, to the Seller Calculations the Accounting Firm believes to
be required under the terms and provisions of this Agreement to resolve Buyer's
objections, and the correct amount of each such calculation that is a subject of
the Accounting Report after giving affect to such adjustments. The Accounting
Report shall be final and conclusive.
(d) The parties hereto shall make available to each other and, if
applicable, the Accounting Firm, such books, records and other information
(including the Books and Records and any work papers) as any of them may
reasonably request to audit or review Buyer's Statement of Closing Date
Aggregate Net Present Value and, if applicable, Trailing Closing Date
Statements, and the Seller Calculations and prepare and review the Accounting
Report hereunder; provided, however, that under no
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circumstances shall Sellers be required to make available to Buyer Tax Returns
filed by any of their Affiliates. The fees and expenses of the Accounting Firm,
if any, shall be paid one-half by Sellers and one-half by Buyer.
(e) The term "Closing Date Aggregate Adjusted Cash Price" means,
with respect to any Transactions or assets transferred from a Seller or a
Selling Subsidiary to Buyer on any Closing Date, the Adjusted Cash Price of such
Transactions or assets as of such Closing Date as determined pursuant to this
Section 2.5.
2.6 Final Payment of Purchase Price. Promptly, but in any event not
later than five business days, after the final determination of the Closing Date
Aggregate Adjusted Cash Price for any Closing as set forth herein, (i) in the
event that the Closing Date Aggregate Adjusted Cash Price for such Closing as so
determined exceeds the amount theretofore paid by Buyer to Sellers in respect
thereof, Buyer shall pay to Sellers by wire transfer of funds immediately
available in the City of New York an amount equal to such excess plus interest
thereon from the Closing Date to (but not including) the date of payment thereof
at the Agreed Rate on the basis of a 365-day year, or (ii) in the event that the
Closing Date Aggregate Adjusted Cash Price for such Closing as so determined is
less than the amount theretofore paid by Buyer to Sellers in respect thereof,
Sellers shall pay to Buyer by wire transfer of funds immediately available in
the City of New York an amount equal to such excess plus interest thereon from
the Closing Date to (but not including) the date of payment thereof at the
Agreed Rate on the basis of a 365-day year.
2.7 Casualty Events. In the event that, prior to the Closing at
which any Transaction involving a Railcar Financing Contract or a Vessel
Financing Contract is to be transferred from USL Capital to Buyer, there shall
have occurred any loss, casualty or other event (a "Casualty Event") relating to
any property covered as of the date hereof (without regard to unknown
casualties) by any such Railcar Financing Contract or Vessel Financing Contract
pursuant to which a Seller, any Subsidiary, any Transaction Owner Trust or any
Transaction Partnership has received or is entitled to receive any payment
arising out of such Casualty Event, the Adjusted Cash Price of the applicable
Transaction for such Closing shall be reduced by the Casualty Adjustment Amount.
The "Casualty Adjustment Amount" with respect to any Casualty Event shall be an
amount equal to the product of (a) the quotient resulting from dividing the
original equipment cost of the property subject to the Casualty Event by the
total original equipment cost of all property subject, as of the date hereof
(without regard to unknown casualties), to the applicable Railcar Financing
Contract or Vessel Financing Contract, multiplied by (b) the Adjusted Cash Price
of the applicable Transaction as of such Closing. In the event that as of any
Closing Date a Casualty Event shall have occurred but neither Buyer nor Sellers
is aware of such occurrence on or prior to such
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Closing Date, Sellers shall pay the Casualty Adjustment Amount with respect
thereto (together with interest thereon from such Closing Date at the Agreed
Rate) to Buyer promptly, but in any event not later than 30 days, after Sellers
are first advised by Buyer of the occurrence of such Casualty Event. Any
insurance proceeds or other payments received by Buyer, any Subsidiary, any
Transaction Owner Trust or any Transaction Partnership relating to a Casualty
Event in respect of which there has been a Casualty Adjustment Amount paid
(directly or through a reduction in price) by a Seller to Buyer shall promptly
be paid over to Sellers.
2.8 Certain Airlease Matters. At the first Airlease Closing, USAH
shall sell, convey, assign, transfer and deliver to Buyer the Airlease
Partnership Units, and Buyer shall assume, take subject to and shall become
liable for all Assumed Liabilities relating thereto. At the second Airlease
Closing, USL Capital shall sell, convey, assign, transfer and deliver to Buyer
all of the outstanding capital stock of AMSI and USAH.
2.9 Transaction Costs Adjustment. Buyer and Sellers shall observe
the following procedures with respect to each of the Transactions listed as
Items 28 and 31 on Schedule 1.2(i):
(a) In the event that, prior to the Closing at which such
Transaction is transferred from USL Capital to Buyer, the scheduled rental
payments payable by the lessee in connection therewith shall be adjusted on
account of a change in the transaction costs with respect thereto, Buyer shall
promptly thereafter create an updated ABC, LAS or other computer data and
program file to determine the net present value of such Transaction after giving
effect to such adjustment, and shall deliver the same to W&S in accordance with
the provisions of Section 3.7. Such updated file shall thereafter be the Pricing
File for such Transaction. Notwithstanding any provision herein to the contrary,
in such event the Aggregate Net Present Value of such Transaction on the Closing
Date on which such Transaction is transferred from USL Capital to Buyer shall be
determined in accordance with clause (iv) of the definition of Aggregate Net
Present Value.
(b) In the event that any adjustment described in Section 2.9(a)
shall be made following the Closing at which such Transaction is transferred
from USL Capital to Buyer, Buyer shall promptly thereafter create an updated
Pricing File for such Transaction as of such Closing and Buyer or USL Capital,
as the case may be, shall promptly pay over to the other the difference between
the Adjusted Cash Price as of such Closing based on such updated Pricing File
and the Adjusted Cash Price actually paid in respect of such Transaction at such
Closing, together with interest on such difference at the Agreed Rate.
2.10 Affordable Housing Transactions Adjustment. Notwithstanding
anything else to the contrary in this Agreement, the following provisions shall
apply with respect to each of the
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Transactions listed as Items 1 through 6 on Schedule 1.2(i) (the "Affordable
Housing Transactions"):
(a) Purchase Price Adjustment As Of Closings. Within 90 days after
the close of each fiscal year of USL Capital in which a Closing Date occurs,
Buyer shall give notice to USL Capital of the Closing Adjustment (as hereinafter
defined) with respect to each Affordable Housing Transaction transferred at a
Closing during such fiscal year. The "Closing Adjustment" for any Transaction
shall be determined by first determining the actual benefits received by USL
Capital in respect of such Transaction through the pertinent Closing Date from
(i) low income housing credits, (ii) taxable losses, and (iii) distributions or
other payments (including payments under guarantee arrangements) and then
recalculating the Base Price for such Transaction utilizing such actual benefits
in lieu of the assumed benefits previously utilized in determining such Base
Price. The "Closing Adjustment" shall be the difference between the Base Price
as so recalculated and the Base Price as originally calculated as of the
pertinent Closing Date. For purposes of this determination, benefits shall be
taken into account if they are legally allocable to or claimable by USL Capital,
whether or not such benefits have actually been claimed or utilized by USL
Capital and shall be determined as provided in the pertinent Transaction
Documents consistent with the original determination of the Base Price
regardless of USL Capital's actual tax rates. Buyer shall make available to USL
Capital the Pricing Files for the Affordable Housing Transactions that are not
Specially Priced Transactions and Seller shall make available to Buyer, at or
promptly following the pertinent Closing, its assumptions in determining the
Special Transaction Price for the Affordable Housing Transaction that is a
Specially Priced Transaction, together with, in either case, such other
information as may reasonably be necessary to permit the other party to
calculate or verify such Closing Adjustment. USL Capital shall provide to Buyer
on a timely basis from and after the date hereof all information that it has or
receives regarding or affecting the Affordable Housing Transactions, including
revised projections, and information, certified by the chief financial officer
of USL Capital, regarding tax benefits and tax reporting with respect to the
Affordable Housing Transactions, tax adjustments, additions or refunds with
respect thereto and all other relevant materials or communications (including
the information contemplated by subparagraph (c) below). Within 30 days
following the date on which Buyer sends to USL Capital notice of any Closing
Adjustment, USL Capital shall pay to Buyer (if the adjustment is a decrease in
Base Price) or Buyer shall pay to USL Capital (if the adjustment is an increase
in Base Price) the amount of such Closing Adjustment, together with interest
from the date of the pertinent Closing at the Agreed Rate.
(b) Premium Adjustment As Of Final Funding. On the date that is 60
days after the Final Funding Date (as hereinafter
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defined) for each Affordable Housing Transaction that is not a Specially Priced
Transaction, Buyer shall give notice to USL Capital of the Premium Adjustment
(as hereinafter defined) with respect to such Affordable Housing Transaction
that is not a Specially Priced Transaction. The Premium Adjustment for any
Affordable Housing Transaction shall be determined by calculating the difference
between the actual amount of capital funded by USL Capital and Buyer with
respect to such Affordable Housing Transaction and the amount of capital
projected to be so funded in the July 1996 Projections relating to such
Affordable Housing Transaction and then multiplying such difference by the
Premium Percentage (as hereinafter defined) in respect of such Transaction.
Within 30 days following the date on which Buyer sends to USL Capital notice of
any Premium Adjustment, USL Capital shall pay to Buyer (if the actual capital
funded is less than such projected capital) or Buyer shall pay to USL Capital
(if the actual capital funded exceeds such projected capital) the amount of such
Premium Adjustment, together with interest from the date of pertinent Closing at
the Agreed Rate. "Final Funding Date" means the later of (i) the date on which
Buyer makes its final capital contribution with respect to the pertinent
Affordable Housing Transaction, either directly or by payment on a promissory
note, and (ii) the last day (including extensions) on which Buyer's capital
contribution may be increased or decreased pursuant to any applicable
Transaction Document. "Premium Percentage" means, with respect to any Affordable
Housing Transaction, a fraction, expressed as a percentage, the numerator of
which is the amount by which (x) the sum of (i) the Base Price for such
Transaction as determined as of the pertinent Closing plus (ii) the amount of
capital projected to be funded in respect of such Transaction in the July 1996
Projections relating to such Affordable Housing Transaction and not so funded as
of the pertinent Closing Date, plus (iii) the benefits assumed to have been
received by USL Capital in determining such Base Price exceeds (y) the aggregate
amount of capital projected to be funded by USL Capital and Buyer in respect of
such Transaction in such projections, and the denominator of which is such
aggregate amount of capital so projected to be so funded.
(c) Payments Arising from Audits and Amended Returns. If, subsequent
to a Closing Date pertaining to any Affordable Housing Transaction, USL Capital
receives a payment, tax benefit (including without limitation tax credits and
losses), tax refund or favorable adjustment to its tax liability, or is required
to make a payment, suffer a tax detriment or receives an unfavorable adjustment
to its tax liability, attributable in either case to or arising in either case
from such Affordable Housing Transaction (all of the foregoing being a "Change")
that was not taken into account in determining the Closing Adjustment for such
Affordable Housing Transaction and that would affect Buyer's rights or
obligations under the relevant Transaction Documents, then USL Capital shall pay
to Buyer or Buyer shall pay to USL Capital, as the case may be, an amount equal
to the change in the Closing Adjustment for such Affordable Housing Transaction
that
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would have occurred if such Change had been known as of the time such Closing
Adjustment was made, together with interest from the date of the pertinent
Closing at the Agreed Rate.
2.11 Certain Matters Relating to the Subsidiaries. Prior to the
transfer of the capital stock of any Subsidiary from USL Capital to Buyer
hereunder, (a) any payables or receivables of such Subsidiary to or from USL
Capital or any of USL Capital's Affiliates arising in the ordinary course of
such Subsidiary's business (other than such as may arise by or under the terms
of any Transaction Document to which such Subsidiary and USL Capital or any of
its Affiliates is a party) shall be paid or adjusted such that their net balance
is reduced to zero and any cash or other current assets in excess of current
liabilities (except for such cash or current liabilities held by TCUI) are
distributed to USL Capital as of such transfer, and (b) any receivables of such
Subsidiary from USL Capital or any of USL Capital's Affiliates that are
occasioned by any provision of any Law or any Contract to which such Subsidiary
is a party that may require such Subsidiary to maintain a specified
capitalization, net worth, etc., shall either be assumed by Buyer or cancelled.
Thereafter, Buyer shall arrange for such Subsidiary's satisfaction of any such
requirements. Schedule 2.11 summarizes the receivables, if any, of each
Subsidiary from USL Capital or any of USL Capital's Affiliates referred to in
clause (b) above and the reasons USL Capital believes them to be necessary or
advisable.
2.12 Transaction Specific Adjustments. In connection with the
Transactions identified as Items 36 and 37 on Schedule 1.2(i) (Miami Air/Delta
7), the parties agree that in the event that, prior to the Closing or Closings
at which such Transactions are transferred from Ford Credit to Buyer, Ford
Credit does not procure and deliver to Buyer a letter from Connell Leasing Co.
substantially to the effect that either (a) the Contract listed as Item 10 of
Section 4.3 of the Disclosure Schedule has been terminated, or (b) Aggregate Net
Proceeds (as defined therein) from such Transactions must exceed $60 million (in
1996 dollars) before Buyer will have any obligation thereunder, Ford Credit
shall indemnify and hold Buyer harmless in a manner such that the economic value
of such Transactions to Buyer shall not be reduced from that reflected in the
Pricing Files for such Transactions by virtue of any payment Buyer shall be
required to make to Connell Leasing Co. pursuant to the Contract listed as Item
10 of Section 4.3 of the Disclosure Schedule.
ARTICLE III
CLOSINGS
3.1 Initial Closing; Subsequent Closings. The consummation of the
purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities pursuant to this Agreement shall take place at one or more Closings
at the offices of O'Melveny & Myers, Embarcadero Center West, 275 Battery
Street, San Francisco, California 94111-3305. The first such
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Closing (the "Initial Closing") shall be held (a) on the Initial Target Closing
Date, provided that the conditions specified in Articles VIII, IX and X shall
have been satisfied at such date, (b) in the event that the conditions specified
in Articles VIII, IX and X shall not have been satisfied by the Initial Target
Closing Date, on the Second Target Closing Date, provided that the conditions
specified in Articles VIII, IX and X shall have been satisfied at such date, or
(c) on such other date as Sellers and Buyer may agree; provided, however, that
if the Initial Closing has not been held prior to September 27, 1996, the
Initial Closing shall be held on the Alternative Target Closing Date, provided
that the conditions specified in Articles VIII, IX and X shall have been
satisfied at such date. Subsequent Closings (each a "Subsequent Closing"), if
any, shall be held on such other dates following the Initial Closing Date as
Sellers and Buyer may agree, but not later than five business days after receipt
by Buyer of notice from Sellers to the effect that all necessary Approvals of
third parties with respect to the transfer of Transactions to be transferred at
such Closing have been obtained; provided, however, that unless Buyer shall
otherwise agree, there shall be no more than four Subsequent Closings and no
more than three Subsequent Closings after September 30, 1996, it being
understood and acknowledged that for purposes of determining how many Subsequent
Closings have been held, Subsequent Closings shall not include Trailing
Closings. The consummation of the purchase and sale of the Airlease Purchased
Assets and the assumption of the Assumed Liabilities relating thereto pursuant
to this Agreement shall, subject to the next sentence, take place at two
Closings, the first of which shall be held on the Initial Closing Date and the
second of which shall be held on October 31, 1996 (each an "Airlease Closing"),
provided that the conditions specified in Articles VIII, IX and X shall have
been satisfied at such dates. The foregoing notwithstanding, if the Initial
Closing Date is not prior to September 27, 1996, the purchase and sale of all of
the Airlease Purchased Assets shall take place at a single Airlease Closing to
be held simultaneously with the Initial Closing on the Alternative Target
Closing Date, provided that such conditions shall have been satisfied at such
date. All references herein to items to be delivered or actions to be taken at
any Closing shall be deemed to contemplate, as of any Closing, only such items
or actions as relate to those Transactions with respect to which required
Approvals have been obtained as of the date of such Closing and which have been
specified by Sellers in Sellers' notice delivered pursuant to Section 2.4(a) as
to be transferred from Sellers or any Selling Subsidiary to Buyer at such
Closing.
3.2 Items to be Delivered at the Closings By Sellers. It being
acknowledged and agreed among the parties that only those items specified below
which relate to those Transactions to be transferred at any particular Closing
shall be delivered at such Closing, at the Closings, Sellers shall deliver or
cause to be delivered to Buyer:
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(a) certificates representing the Stock, properly endorsed for
transfer to or accompanied by duly executed stock powers in favor of
Buyer, together with the charter documents, franchises, corporate seals,
minute books, stock books and other corporate records relating to the
corporate organization and capitalization of the Subsidiaries;
(b) resignations, effective as of the Closing, of all directors and
officers of the Subsidiaries;
(c) an executed Bill of Sale and Assignment substantially in the
form of Exhibit F;
(d) with respect to each Aircraft, an executed Aircraft Bill of Sale
on FAA AC Form 8050-2 and all other instruments necessary to cause the FAA
to issue a Certificate of Registration in the name of Buyer for such
aircraft;
(e) with respect to each Transaction, executed transfer documents,
legal opinions and notices necessary to transfer the pertinent Seller's or
Selling Subsidiary's interest in the Transaction Documents relating to
such Transaction or, in the case of any Transaction involving a
Subsidiary, executed notices giving notice of the change in control of
such Subsidiary, in each case in the form required by the terms of the
applicable Transaction Documents;
(f) with respect to the Initial Closing, an executed Services
Agreement;
(g) executed certificates or other instruments of title in respect
of any Purchased Asset the ownership of which is as a matter of Law
evidenced by such certificate or other instrument of title;
(h) instruments of transfer in the form customarily used in
commercial transactions in the places in which the Purchased Assets which
are personal property are located sufficient to transfer to Buyer such
Purchased Assets not otherwise transferred to Buyer by the Bills of Sale
referred to above;
(i) such other instruments of transfer necessary or appropriate to
transfer to and vest in Buyer all of the pertinent Seller's or any Selling
Subsidiary's right, title and interest in, to and under the Purchased
Assets;
(j) originals, to the extent in a Seller's or any Selling
Subsidiary's, as applicable, possession, or copies certified by a Seller
to be true and complete, of all Assumed Contracts;
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(k) with respect to the Initial Closing, opinions of counsel to
Sellers in form and substance reasonably satisfactory to Buyer;
(l) an executed release, dated the date of the Closing,
substantially in the form of Exhibit G, from each director and officer of
each of the Subsidiaries (other than any of the same who is not also an
employee of either Seller or any of their Affiliates);
(m) such executed documents as Buyer may have reasonably requested
in order more effectively to vest in Buyer good title to the Purchased
Assets, including, but not limited to, assignments of any UCC filings
(precautionary or otherwise) that name a Seller or any of Sellers'
Affiliates as a secured party in connection with any Transaction and which
previously has not been assigned to a lender as provided in a Transaction
Document;
(n) certificates of insurance or other evidence reasonably
satisfactory to Buyer that Buyer has been substituted for the pertinent
Seller or added as a loss payee and/or additional insured under each
casualty and liability insurance policy carried by any lessee or other
obligor in connection with any Transaction to be transferred at such
Closing;
(o) all documentation required to exempt Sellers from the
withholding requirements of Section 1445 of the Code;
(p) any other certificates or other documents referred to herein as
then to be delivered by a Seller;
(q) copies of documents evidencing that all Seller Required Consents
with respect to Transactions to be transferred at such Closing have been
obtained and are in full force and effect; and
(r) a certificate of each Seller in form and substance reasonably
satisfactory to Buyer, dated the date of such Closing and signed by USL
Capital's Chairman and Chief Executive Officer, to the effect that, except
as set forth in such certificate, there does not exist any inaccuracy in
or breach of any of the representations and warranties made by a Seller
herein with respect to any Transaction proposed to be transferred from a
Seller or a Selling Subsidiary to Buyer on such date.
3.3 Items to be Delivered at the Closing by Buyer. It being
acknowledged and agreed among the parties that only those items specified below
which relate to those Transactions to be transferred at any particular Closing
shall be delivered at such Closing, at the Closings, Buyer shall deliver or
cause to be delivered to Sellers:
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(a) by wire transfer of funds immediately available in the City of
New York, the Closing Date Payment Amount minus any Casualty Adjustment
Amount, and, with respect to the Initial Closing, the Severance Costs
Payment;
(b) an executed Assumption Agreement substantially in the form of
Exhibit H;
(c) with respect to each Aircraft, an executed Aircraft Delivery
Receipt substantially in the form of Exhibit I;
(d) with respect to each Transaction, executed transfer documents,
legal opinions and notices necessary to assume the pertinent Seller's or
Selling Subsidiary's obligations under the Transaction Documents relating
to such Transaction or, in the case of any Transaction involving a
Subsidiary, executed notices giving notice of the change in control of
such Subsidiary, in each case in the form required by the terms of the
applicable Transaction Documents;
(e) with respect to the Initial Closing, an executed
Services Agreement;
(f) such other instruments of assumption necessary or appropriate to
transfer to and evidence the assumption by Buyer of the Assumed
Liabilities;
(g) such executed documents as Sellers may have reasonably requested
in order more effectively to evidence Buyer's assumption of the Assumed
Liabilities;
(h) with respect to the Initial Closing, opinions of counsel to
Buyer in form and substance reasonably satisfactory to Sellers.
(i) any other certificates or other documents referred to herein as
then to be delivered by Buyer.
3.4 Trailing Closings. Trailing Closings shall be held on dates
selected by Sellers, subject to the approval of Buyer, which approval shall not
be unreasonably withheld. No Trailing Closing may be held more than ten business
days following the Initial Closing or Subsequent Closing to which it relates. At
each Trailing Closing, there shall be delivered from Buyer to a Seller or from a
Seller to Buyer, as the case may be, such of the items set forth in Sections 3.2
and 3.3 as are pertinent to the Transaction which is being transferred at such
Trailing Closing.
3.5 Removal of Books and Records; No Access to Sellers' Premises.
Upon each Closing, Sellers shall make available to Buyer and Buyer shall remove
from USL Capital's premises, all Books and Records relating to the Transactions
transferred at such Closing, and Sellers shall cooperate with
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Buyer and its representatives prior to such Closing to arrange for the same.
Buyer acknowledges and agrees that, except pursuant to the preceding sentence,
as provided in Section 6.1 or to the extent specific arrangements to the
contrary are agreed to by Sellers, none of Buyer's representatives or any of the
Transferred Employees shall be permitted access to Sellers' premises.
3.6 Circumstances Under Which Certain Transactions May be Excluded.
(a) Sellers and Buyer shall each promptly notify the other of any
loss, casualty or other early termination relating to any Transaction and of any
event, condition or circumstance of which it becomes aware subsequent to the
date hereof through the Closing that has caused or would constitute an
inaccuracy in or breach of any representation or warranty contained herein.
(b) In the event that as of any Closing there shall exist any
inaccuracy in or breach of any of the representations and warranties made by a
Seller in Article IV with respect to any Transaction proposed to be transferred
from a Seller or any Selling Subsidiary to Buyer at such Closing other than such
as may result from any matters identified on Schedule 6.2, and such inaccuracy
or breach has had or is reasonably expected to have a material adverse effect on
the value of such Transaction to Buyer, then notwithstanding anything in Section
9.2 or elsewhere herein to the contrary, each of Buyer and the pertinent Seller
or Selling Subsidiary may, at its option by written notice delivered to the
other at or prior to such Closing, elect to exclude such Transaction from the
Closing; provided, however, that a Seller shall have no right to so elect if
Buyer shall have delivered to such Seller after Buyer's receipt of such notice
from such Seller a written notice effecting Buyer's absolute and unconditional
waiver of and release of Sellers from any and all rights of Buyer or any other
Indemnified Party under Article XII in respect of such inaccuracy or breach. If
neither Buyer nor a Seller elects to exclude such Transaction, such Transaction
shall be transferred from the pertinent Seller or Selling Subsidiary to Buyer at
such Closing without prejudice to Buyer's or any other Indemnified Party's
rights under Article XII in respect of such inaccuracy or breach.
(c) In the event that as of any Closing there shall have been,
occurred or arisen subsequent to the date hereof any change in or event
affecting any Transaction proposed to be transferred from a Seller or any
Selling Subsidiary to Buyer at such Closing other than such as may result from
any matters identified on Schedule 6.2 (except for any change or event affecting
generally the leasing or financing industries as a whole) that has caused an
inaccuracy in or breach of any of the representations and warranties made by a
Seller with respect to such Transaction in Article IV, or, with respect to the
representations and warranties set forth in Section 4.3(a) or
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(i), there shall exist any inaccuracy in or breach thereof with respect to any
Transaction proposed to be transferred from a Seller or any Selling Subsidiary
to Buyer at such Closing (regardless of whether there shall have been, occurred
or arisen subsequent to the date hereof any change in or event affecting such
Transaction that has caused such inaccuracy or breach), but in any such event
the provisions of Section 3.6(b) do not apply, the pertinent Seller or Selling
Subsidiary may, at its option by written notice delivered to Buyer at or prior
to such Closing, elect to exclude such Transaction from the Closing; provided,
however, that a Seller or Selling Subsidiary shall have no right to so elect if
Buyer shall have delivered to Sellers after Buyer's receipt of such notice from
a Seller or Selling Subsidiary a written notice effecting Buyer's absolute and
unconditional waiver of and release of Sellers from any and all rights of Buyer
or any other Indemnified Party under Article XII in respect of such inaccuracy
or breach. If Sellers do not elect to exclude such Transaction, such Transaction
shall be transferred from the pertinent Seller or Selling Subsidiary to Buyer at
such Closing without prejudice to Buyer's or any other Indemnified Party's
rights under Article XII in respect of such inaccuracy or breach.
(d) Buyer shall provide management services to Sellers with respect
to any Transaction excluded pursuant to this Section 3.6 on the terms and
conditions set forth in the Services Agreement.
(e) The parties agree and acknowledge that in no event shall any
inaccuracy in or breach of any representation or warranty made by a Seller in
Article IV with respect to any Transaction proposed to be transferred from a
Seller or any Selling Subsidiary to Buyer resulting from or in connection with
any event of loss or casualty to any aircraft engine (an "Engine Casualty") be
deemed to have had, or be reasonably expected to have, a material adverse effect
on the value of such Transaction to Buyer within the meaning of Section 3.6(b).
The pertinent Seller agrees that, following the transfer to Buyer of any
Transaction with respect to which an Engine Casualty has occurred, such Seller
shall promptly pay over to Buyer any insurance proceeds or other payments
received by Seller relating to such Engine Casualty. The parties agree to abide
by the terms of the governing Transaction Documents with respect to any such
Engine Casualty (as regards, e.g., rights of substitution, stipulated loss
value, application of insurance proceeds, etc.). The parties further agree that,
immediately following the first anniversary of the Closing at which the
pertinent Transaction is transferred from a Seller or a Selling Subsidiary to
Buyer, such Seller and Buyer shall together review and agree upon the amount of
any Loss Buyer may have incurred as a result of the Engine Casualty (taking into
account any amounts that Buyer may have received in respect thereof pursuant to
the governing Transaction Documents and the provisions of this Section 3.6(e)),
against which Loss such Seller shall indemnify and hold Buyer harmless in
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a manner such that the economic value of the Transaction to Buyer shall not be
reduced as a result of the Engine Casualty.
3.7 Pricing Files; W&S Report.
(a) Concurrently with the execution and delivery hereof, Buyer is
delivering to W&S true, correct and complete hard copies and computer readable
copies of all of the ABC, LAS or other computer data and program files used by
Buyer to determine the net present value of each Transaction (encompassing all
data, assumptions, calculations and component factors used to determine the
scheduled net after-tax cash flows and tax benefits or detriments comprising the
same, including, but not limited to, such as relate to tax rates, compounding
rates, residuals, scheduled rents, scheduled debt service, discount rates or
yields, and depreciation) (the "Pricing Files"). Buyer shall deliver to W&S
revised Pricing Files for the transactions listed as Items 29 and 30 on Schedule
1.2(i) treating such transactions as grantor trusts for purposes of determining
the applicability of the mid-quarter convention under Section 168(d)(3) of the
Code. W&S shall retain the Pricing Files until such time as Sellers shall have
advised W&S that they may be destroyed.
(b) On the Initial Closing Date, Buyer shall deliver to Sellers
true, correct and complete hard copies and computer readable copies of all of
the Pricing Files used by Buyer to determine the net present value of each
Transaction (other than the Specially Priced Transactions) that is not
transferred from Sellers to Buyer on the Initial Closing Date.
(c) Buyer represents and warrants to Sellers as follows:
(i) the information and procedures contained in the Pricing Files
conform in all respects to the information and procedures applied by Buyer
in the preparation of the September 1 Statement of Aggregate Net Present
Value, the September 5 Statement of Aggregate Net Present Value, the
September 20 Statement of Aggregate Net Present Value and the January 15
Statement of Aggregate Net Present Value; and
(ii) the determination of the Aggregate Net Present Value, as of any
date, of any Transaction or group of Transactions by application of the
information and procedures contained in the Pricing Files will result in a
figure which differs from the Aggregate Net Present Value of such
Transaction or group of Transactions so determined as of any other date
solely to the extent and because of changes attributable to the passage of
time, and to events (including, but not limited to, the occurrence of tax
payment dates or rent payments dates with respect to such Transactions)
occurring, between such dates, and, without limiting the foregoing, for
each such Transaction or group of Transactions, the application of the
information and
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procedures contained in the Pricing Files in determining the Aggregate Net
Present Value of such Transaction or group of Transactions at any date
will not impose or take account of any change in residual values, discount
rates or any other similar variables with respect to such Transaction or
group of Transactions.
(d) Following any Closing held on any date other than the Initial
Target Closing Date, the Second Target Closing Date or the Alternative Target
Closing Date, Buyer and Sellers shall, at a Seller's request, direct W&S to, as
promptly as practicable, but in any event not later than ten business days after
such direction, (i) perform a comparison of (A) the Aggregate Net Present Value
of the Transactions transferred at such Closing as set forth in the applicable
Buyer's Statement of Closing Date Aggregate Net Present Value or any related
Trailing Closing Date Statements with respect to such Closing, with and to (B)
the Aggregate Net Present Value of such Transactions as of the date of such
Closing resulting from the application of the information and procedures
contained in the applicable Pricing Files, and (ii) deliver a written notice
(the "W&S Report") to each of Sellers, Buyer and the Accounting Firm, if any,
setting forth what differences, if any, W&S believes to exist between the
information contained in the applicable Pricing Files and the information
utilized by Buyer in preparing the applicable Buyer's Statement of Closing Date
Aggregate Net Present Value or any related Trailing Closing Date Statements. W&S
shall base such determination on the computer readable ABC Pricing Files.
3.8 Circumstances Under Which Interests in Certain Transactions May
be Sold at Multiple Closings. Notwithstanding any provision hereof to the
contrary, in the event that the sale by a Seller to Buyer at any Closing of such
Seller's entire interest in any Purchased Asset that is a Tax Partnership would
cause a termination thereof within the meaning of Section 708 of the Code, such
Seller may, at its option by written notice delivered to Buyer not later than
five business days prior to such Closing, elect to divide the sale of such
interest in such Purchased Asset into two or more sales such that no such
termination would be caused thereby. In such event, at such Closing the
pertinent Seller shall sell and Buyer shall purchase that portion of such
Seller's interest in such Tax Partnership as is designated by such Seller for a
ratable portion of the Adjusted Cash Price thereof as otherwise contemplated
hereby, and the parties shall negotiate in good faith to amend or supplement
this Agreement such that the balance of such Seller's interests in such Tax
Partnership shall be sold thereafter to Buyer for a purchase price and on other
terms and conditions that give effect to the economic results intended by the
parties hereunder.
3.9 Alternative Mechanism for Transfer of L-1011 Contracts. If,
prior to the Closing at which the Miscellaneous Assets are proposed to be
transferred from Seller to Buyer, Buyer shall notify Seller that it would prefer
to purchase and assume
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the L-1011 Contracts as contemplated by this Section 3.9, the L- 1011 Contracts
shall not be transferred at the Closing Date on which the Miscellaneous Assets
are transferred (although Buyer shall nevertheless pay the full Miscellaneous
Assets Purchase Price at such Closing). In such event, the L-1011 Contracts
shall be transferred and assumed by Buyer, for no additional consideration, in
such manner as Buyer shall reasonably request. Without limiting the foregoing,
if Buyer so requests, Seller shall cause the L-1011 Contracts to be transferred
to and assumed by USAH prior to the second Airlease Closing. Alternatively,
Buyer may designate a different alternative mechanism for transfer of the L-1011
Contracts, it being understood that if any such different alternative mechanism
would result in greater cost or expense to Seller (including, without
limitation, by way of transfer taxes or regulatory requirements), all such
incremental costs shall be borne by Buyer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as otherwise indicated or disclosed in the Disclosure
Schedule, each Seller, as applicable, represents and warrants to Buyer as of the
date hereof and, except to the extent that any representation or warranty is by
its terms specified as being made as of the date hereof or any other date, as of
the pertinent Closing Date, as follows:
4.1 Organization and Related Matters.
(a) Such Seller is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware. Such Seller has
all necessary corporate power and authority to execute, deliver and perform this
Agreement.
(b) Schedule 4.1(b) sets forth the name and jurisdiction of
organization, authorized capital, par value, and number of outstanding shares of
each Subsidiary other than Airlease, and USL Capital's direct or indirect
ownership interest therein. Each of the Subsidiaries is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Subsidiaries other than Airlease has
all necessary corporate power and authority, and Airlease has all necessary
partnership power and authority, to own its respective properties and assets and
to carry on its respective businesses as now conducted and is duly qualified or
licensed to do business as a foreign corporation or foreign partnership, as
applicable, in good standing in all jurisdictions in which the character or the
location of the assets owned or leased by it or the nature of the business
conducted by it requires licensing or qualification, except where the failure to
be so qualified or licensed would not have a material adverse effect on the
business of the applicable Subsidiary or on the interest of any Subsidiary in
any Transaction. None of the Subsidiaries owns or leases property in any
jurisdiction other
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than its jurisdiction of incorporation or organization. Schedule 4.1(b)
correctly lists the current directors and executive officers of each Subsidiary
other than Airlease. No Subsidiary has any employee on its payroll who would
become Buyer's employee solely by virtue of Buyer's purchase of the Stock. True,
correct and complete copies of the respective charter documents of the
Subsidiaries, including all amendments thereto, have been made available to
Buyer. None of the Subsidiaries other than Airlease is a registered or reporting
company under the Exchange Act. The minute books of each of the Subsidiaries
have been made available to Buyer and contain true and complete records of all
meetings and consents in lieu of meeting of the Board of Directors (and any
committee thereof) of each of the Subsidiaries and of their respective
stockholders. The stock books or stock ledgers of each of the Subsidiaries have
been made available to Buyer and are true and complete.
(c) Each Transaction Owner Trust and each Transaction Partnership is
listed on Schedule 4.1(c) and is duly organized and validly existing. Neither
such Seller nor any Subsidiary has taken part in the management of the business
of any Transaction Partnership except as permitted under the terms of the
applicable limited partnership agreement.
4.2 Stock; No Undisclosed Liabilities of Subsidiaries. USL Capital
owns the Stock, beneficially and of record, free and clear of any Encumbrances
other than such as may arise by the terms of any Transaction Document, and the
Stock is not subject to a security interest in favor of any Person. At the
Closing, Buyer will acquire good and marketable title to and complete ownership
of the Stock, free and clear of any Encumbrances other than such as may arise by
the terms of any Transaction Document. There are no outstanding Contracts or
other rights to subscribe for or purchase, or Contracts or other obligations
(including, but not limited to, warrants, calls, preemptive rights, options or
other agreements of any kind) to issue or grant any rights to acquire, any
Equity Securities of any Subsidiary, or to restructure or recapitalize any
Subsidiary. There are no outstanding Contracts of USL Capital or any Subsidiary
to repurchase, redeem or otherwise acquire any Equity Securities of any
Subsidiary. All outstanding Equity Securities of the Subsidiaries are duly
authorized, validly issued and outstanding and are fully paid and nonassessable.
None of the Subsidiaries other than Airlease has any Liabilities other than such
as arise under or pursuant to any Transaction Document to which any of them is a
party. Airlease has no material Liabilities except for such as are reflected or
disclosed in any of the Airlease Reports, arise under or pursuant to any
Transaction Document to which Airlease is a party or that were incurred
subsequent to the date of the latest of the Airlease Reports in the ordinary
course of Airlease's business.
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4.3 Assumed Contracts; Transaction Documents.
(a) Schedules 1.2(a), (c)(1), (f)(1), (h) and (j) collectively set
forth a true and complete list of all of the Transaction Documents and
collectively separately identify, for each Transaction, (i) all of the Assumed
Contracts and (ii) each Transaction Document to which any Subsidiary is a party.
True and complete copies of all of the Assumed Contracts and the Transaction
Documents have been made available to Buyer or its Affiliates. The parties
acknowledge and agree that any exceptions to the preceding sentence identified
in Exhibit 4.3A to the Disclosure Schedule (other than the documents identified
in Item 1 of Schedule 6.1) shall be disregarded for purposes of Section 12.1(a)
to the extent that the failure to make available to Buyer or its Affiliates
prior to the date hereof any Assumed Contracts or Transaction Documents shall
have prevented Buyer from discovering any term or provision of any Transaction
Document identified in such Exhibit the effect of which is or has been to reduce
the economic value of any Transaction to Buyer. No Subsidiary other than
Airlease is a party to any Contract other than its respective charter documents
or a Transaction Document.
(b) The Transaction Documents have been duly and validly authorized,
executed and delivered by the respective parties thereto, are in full force and
effect, and constitute legal, valid and binding obligations of the respective
parties thereto enforceable against such parties in accordance with their
respective terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally. Neither such
Seller nor any Subsidiary, nor, to such Seller's knowledge, any other party, has
taken any action or failed to take any action that would terminate, or permit
the early termination or acceleration of, any obligation of any party under any
of the Transaction Documents. There does not exist any material breach or
default (or, to such Seller's knowledge, any event or condition that, with
notice or lapse of time, or both, would constitute a material breach or default)
by such Seller or any Subsidiary or, to such Seller's knowledge, by any other
party under any of the Transaction Documents, and no written notice of any
existing breach or default (or event or condition that, with notice or lapse of
time, or both, would constitute a breach or default) has been received by such
Seller or any Subsidiary. Such Seller has made available to Buyer true and
complete copies of the most recent draft, letter of intent or term sheet (or if
none of the foregoing exist, a reasonably detailed written summary) with respect
to each transaction listed on Schedule 6.2. Assuming that the Seller Required
Consents and the Buyer Required Consents are sought and obtained, no approval or
consent of any Person is needed in order for the Transaction Documents to
continue in full force and effect following the consummation of the Contemplated
Transactions.
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(c) Except as disclosed in any Transaction Document or contained in
any provision thereof, such Seller has made available to Buyer true and complete
copies of all material writings or computer files in the possession of USL
Capital (including, but not limited to, files containing "stipulated loss value"
and "termination value" tables or their equivalent, cash flow detail and pricing
runs, whether in the form of a hard copy or a diskette) relating to the
financial terms and tax treatment of any Transaction, including any which have
been furnished by lessees and relating to economic terms; provided, however,
that there has not been made available to Buyer any Tax Return of Sellers or any
of their Affiliates. Except as disclosed in any Transaction Document or
contained in any provision thereof, such files, detail and pricing runs (except
for such as were prepared by such Seller for Buyer or in contemplation of the
sale of the Purchased Assets and the Business) were prepared by USL Capital, and
are utilized by such Seller, in the ordinary course of its business. Except as
disclosed in any Transaction Document or contained in any provision thereof, (i)
all changes to "stipulated loss value" and "termination value" required to have
been made under the terms of the Transaction Documents have been made, and (ii)
such changes are accurately reflected in the cash flow detail and pricing runs
made available by such Seller to Buyer. Except as disclosed in any Transaction
Document or contained in any provision thereof, Schedule 4.3(c) sets forth all
obligations that such Seller or any Subsidiary has or may have to provide
additional funds, whether for deferred equity, lessor-paid interest, equipment
upgrades or other similar purposes, in connection with any Transaction. Since
July 1, 1993, none of such Seller and the Subsidiaries has made any indemnity
payment pursuant to any Transaction Document, nor, except as disclosed in any
Transaction Document or contained in any provision thereof, and to such Seller's
knowledge, since such date has any event or condition occurred that has given
rise to, or, with notice or lapse of time, or both, would give rise to, an
obligation of such Seller or any Subsidiary to make any such indemnity payment.
(d) Except as disclosed in any Transaction Document or contained in
any provision thereof, and except for Permitted Encumbrances, (i) no Person
other than such Seller and the Subsidiaries (and the lessee, sublessee or other
obligor to the extent of its rights of use and possession including, but not
limited to, any renewal rights under the applicable Transaction Document) has
any interest in, or any right or claim to the proceeds of, any equipment or any
other assets or properties owned or leased by such Seller, any Subsidiary, any
Transaction Owner Trust and any Transaction Partnership in connection with any
Transaction, including, but not limited to, through any remarketing, residual
sharing, brokerage or other Contract, and (ii) there exist no Contracts
obligating such Seller or any Subsidiary to enter into any such Contract in
connection with any Transaction in the future.
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(e) There are no set-offs, defenses or counterclaims currently
available to any Person with respect to any amounts due or to become due to such
Seller, any Subsidiary, any Transaction Owner Trust or any Transaction
Partnership pursuant to any Transaction Document.
(f) Except as disclosed in any Transaction Document or contained in
any provision thereof, Schedule 4.3(f) identifies each Transaction that involves
indebtedness of such Seller, any Subsidiary, any Transaction Owner Trust or any
Transaction Partnership for borrowed money that does not constitute a general
obligation of such Person ("Non-Recourse Debt") and sets forth as of the dates
there specified the principal amount of Non-Recourse Debt outstanding with
respect to each Transaction. Except as disclosed in any Transaction Document or
contained in any provision thereof, no effective financing statement (other than
in respect of security for the Non-Recourse Debt) showing such Seller, any
Subsidiary, any Transaction Owner Trust or any Transaction Partnership as a
debtor has been filed in any jurisdiction in connection with any Transaction.
(g) Except as disclosed in any Transaction Document or contained in
any provision thereof, Schedule 4.3(g) sets forth (i) all security or other
deposits and maintenance reserves under the control of such Seller, any
Subsidiary, any Transaction Owner Trust or any Transaction Partnership that were
paid to or deposited with such Person and that have not heretofore been refunded
or paid pursuant to the terms of any Transaction Document, (ii) all existing
escrow deposits required to be in the possession of such Seller, any Subsidiary,
any Transaction Owner Trust or any Transaction Partnership pursuant to the terms
of any Transaction Document and (iii) all letters of credit securing, or
guaranties of or surety bonds or keepwell agreements relating to (or assignments
thereof), obligations of lessees or other obligors under any Transaction
Document in favor of such Seller, any Subsidiary, any Transaction Owner Trust or
any Transaction Partnership. Except as disclosed in any Transaction Document or
contained in any provision thereof, (x) none of such Seller, any Subsidiary, any
Transaction Owner Trust or any Transaction Partnership is required to contribute
to any security or maintenance reserve or escrow deposit in connection with any
Transaction, and (y) all security deposits, maintenance reserves and escrow
deposits that any of them was or is required to assign to other parties pursuant
to the Transaction Documents have been so assigned in the required amount and
form. Except as disclosed in any Transaction Document or contained in any
provision thereof, to such Seller's knowledge, except for guaranties by lessees
or other parties pursuant to the Transaction Documents, none of the Assumed
Liabilities or Liabilities of any Subsidiary is guaranteed by any other Person
in connection with any Transaction.
(h) Except as disclosed in any Transaction Document or contained in any
provision thereof, none of such Seller, any
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Subsidiary, any Transaction Owner Trust or any Transaction Partnership has
waived or canceled any right or claim under any Transaction Document. Except as
contemplated by Section 6.1(b), such Seller has made available to Buyer true and
complete copies of all material Books and Records relating to the Transactions.
(i) To the actual knowledge (without investigation or inquiry) of the
persons identified on Schedule 4.3(i), those representations and warranties set
forth in Sections 4.3(c), (d), (f), (g) and (h) which by their terms are
qualified by information disclosed in any Transaction Document or contained in
any provision thereof are true and correct without regard to such qualification.
4.4 Title. Such Seller has good title to the Purchased Assets
(except for those Purchased Assets that are owned by any Selling Subsidiary,
with respect to which such Selling Subsidiary has good title), free and clear of
any Encumbrances except Permitted Encumbrances. Such Seller and, with respect to
the Airlease Purchased Assets and any other Purchased Assets that are owned by
any Selling Subsidiary, the applicable Selling Subsidiary, has all right, power
and authority to sell, convey, assign, transfer and deliver the Purchased Assets
to Buyer in accordance with the terms hereof, and at the Closing, such Seller or
such Selling Subsidiary shall deliver the Purchased Assets to Buyer, free and
clear of any Encumbrances except for Permitted Encumbrances, in each case
assuming that the Seller Required Consents and the Buyer Required Consents are
sought and obtained. The Subsidiaries have good title to all assets and
properties that they respectively purportedly own and such assets and properties
are, and upon the Closing shall be, free and clear of any Encumbrances except
Permitted Encumbrances. The Transaction Owner Trusts and the Transaction
Partnerships have good title to all assets and properties that they respectively
purportedly own and such assets and properties are, and upon the Closing shall
be, free and clear of any Encumbrances except Permitted Encumbrances. Except for
Permitted Encumbrances, each of such Seller, the applicable Selling Subsidiary,
the applicable Subsidiary, the applicable Transaction Owner Trust and the
applicable Transaction Partnership has a perfected first priority security
interest in any equipment or other property that is subject to a secured loan, a
lease intended as security or a conditional sale agreement in connection with
any Transaction. Such Seller's ownership or other interest, if any, in all
equipment (other than the Aircraft) that is subject to a lease, a lease intended
as security or a conditional sale agreement in connection with any Transaction
is held by such Seller through a Transaction Owner Trust or a Transaction
Partnership. None of the Subsidiaries owns or leases any interest in real
property.
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4.5 Interests in Airlease
(a) USL Capital, through AMSI, indirectly owns a 1% general
partnership interest in Airlease and USL Capital, through USAH, indirectly owns
a 22.1622% limited partnership interest in Airlease, in each case free and clear
of any Encumbrances except for any arising by the terms of the Airlease
Partnership Agreement. All such interests have been so held by such entities at
all times since October 10, 1986. AMSI, as the general partner of Airlease, has,
and since the first date it became general partner at all times has had, a
sufficient net worth in conformity with the requirements of Section 4.13 of the
Airlease Partnership Agreement.
(b) Since January 1, 1993, Airlease has filed with the SEC all
material forms, statements, reports and documents required to be filed by it
under the Securities Act, the Securities Exchange Act of 1934 and the respective
rules and regulations thereunder (the "Airlease Reports"), all of which complied
in all material respects with the applicable requirements thereof. True and
complete copies of all of such forms, statements, reports and documents have
been made available to Buyer. As of their respective dates, none of such forms,
statements, reports and documents (including, but not limited to, all financial
statements included therein and exhibits and schedules thereto and any documents
incorporated by reference therein) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) The transfer of the Airlease Purchased Assets to Buyer on the
Airlease Closing Dates as contemplated hereby will not, assuming any applicable
Seller Required Consents and Buyer Required Consents are sought and obtained,
violate or constitute a breach or default (whether upon lapse of time and/or the
occurrence of any act or event or otherwise) under, or cause the termination of
or give any other party the right to terminate or to accelerate any obligation
of AMSI or USAH (or Buyer as the successor holder of the Airlease Purchased
Assets) under, the Airlease Partnership Agreement.
4.6 Authorization; No Conflicts. The execution, delivery and
performance of this Agreement by such Seller has been duly and validly
authorized by the Board of Directors of such Seller and by all other necessary
corporate action on the part of such Seller and its Affiliates. This Agreement
constitutes the legal, valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting creditors' rights
generally. Schedule 4.6 lists all Approvals and Permits required to be obtained,
filed or delivered by such Seller or any
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Subsidiary to consummate the Contemplated Transactions (the "Seller Required
Consents"). The execution, delivery and performance of this Agreement by such
Seller and the consummation of the Contemplated Transactions by such Seller and
its Affiliates will not violate, or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event or otherwise) under, the
charter documents or by-laws of such Seller or any Subsidiary, or, assuming the
Seller Required Consents and the Buyer Required Consents are sought and
obtained, (a) result in the imposition of any material Encumbrance against any
Purchased Asset or any asset or property of any Subsidiary, (b) violate any Law,
(c) violate in any material respect, or constitute a material breach or default
(whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, or cause the termination of or give any other contracting
party the right to terminate or to accelerate any obligation of such Seller or
any Subsidiary under, any Assumed Contract or other Transaction Document, (d)
violate any Order of any Governmental Entity against, or binding upon, such
Seller or any Subsidiary or upon any Purchased Asset or any asset or property of
any Subsidiary, or (e) violate or result in the revocation or suspension of any
Permit held by such Seller or any Subsidiary.
4.7 Operation Since December 31, 1995. Since December 31, 1995 to
the date hereof:
(a) There has not been, occurred or arisen any change in or event
affecting the Business or the Purchased Assets (except for any change or
event affecting generally the leasing or financing industries as a whole)
that has had a material adverse effect on the value thereof, taken as a
whole.
(b) Except for the negotiation, execution, delivery and performance
of the Transaction Documents and this Agreement, and in connection with
the conduct of due diligence investigations by Buyer and other potential
purchasers of the Purchased Assets and the Business, USL Capital and the
Subsidiaries have conducted the Business in the ordinary course of
business.
(c) None of such Seller, any Subsidiary, any Transaction Owner Trust
or any Transaction Partnership has purchased, sold, leased, mortgaged,
pledged, licensed or otherwise acquired or disposed of any properties
(real or personal) or assets used in connection with the Business, or
committed to do so, except as contemplated by or disclosed in any
Transaction Document or in the ordinary course of business.
(d) None of such Seller, any Subsidiary, any Transaction Owner Trust
or any Transaction Partnership has received or, to such Seller's
knowledge, been entitled to receive any payment arising out of a loss of
or casualty to
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any property covered by any Transaction Document or arising out of the
early termination of any Transaction Document.
4.8 Legal Proceedings. There is no Order or Action pending, or, to
the knowledge of such Seller, threatened, against or affecting such Seller, any
Subsidiary, any Transaction Owner Trust or any Transaction Partnership or any of
their respective properties or assets that individually or when aggregated with
one or more other Orders or Actions has had, or, if determined adversely to the
interest of such Seller, any Subsidiary, any Transaction Owner Trust or any
Transaction Partnership might reasonably be expected to have, an adverse effect
on the value to Buyer of any Transaction or such Seller's ability to perform its
obligations under this Agreement. Without limiting the generality of the
foregoing, (i) there are no Actions pending or, to the knowledge of such Seller,
threatened, arising out of or in any way related to any Collection Activities
which assert that any Transaction Document or contractual provision, Collection
Activity or practice of such Seller or any Subsidiary is illegal, unenforceable
or otherwise invalid, and (ii) such Seller has no knowledge of any pending or
current bankruptcy filing by or in respect of any lessee or other obligor that
is a party to any Transaction Document to which such Seller, any Subsidiary, any
Transaction Owner Trust or any Transaction Partnership is a party. There are no
Actions pending or, to the knowledge of such Seller, threatened, that would give
rise to any right of indemnification on the part of any director or officer of
any Subsidiary, or the heirs, executors or administrators of any such director
or officer, against such Subsidiary.
4.9 Insurance. Schedule 4.9 lists all insurance policies owned by
such Seller, and all insurance policies owned, or self-insurance pools
administered, by such Seller's Affiliates, under which the Purchased Assets or
the Assumed Liabilities are insured. All of such insurance policies and such
self-insurance arrangements, to the extent the Purchased Assets or the Assumed
Liabilities are insured thereby or such Seller with respect to the Purchased
Assets or the Assumed Liabilities or any Subsidiary participates therein, are in
full force and effect and none of such Seller, any Subsidiary or any Affiliate
of such Seller is in material default thereunder.
4.10 Compliance with Law; Permits.
(a) Such Seller, with respect to the Purchased Assets owned by it
and the related Transactions, and the Subsidiaries (i) have conducted the
Business in accordance with applicable Environmental Laws, and (ii) have
conducted the Business in all material respects in accordance with all other
applicable Laws. To such Seller's knowledge each Transaction Owner Trust and
Transaction Partnership (x) has complied with all applicable Environmental Laws
in connection with the Transactions, and (y) has complied in all material
respects with all other applicable Laws in connection with the Transactions.
Except as disclosed in
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any Transaction Document or contained in any provision thereof, neither such
Seller nor any Subsidiary, any Transaction Owner Trust or any Transaction
Partnership has received any notice of any violation by any Person of any
applicable Law affecting any of the Transactions. To such Seller's knowledge,
there are no past or present events, conditions, circumstances, activities,
practices, incidents or actions which would prevent compliance with applicable
Environmental Laws, or which have given rise to or which will give rise to any
liability of such Seller, any Subsidiary, any Transaction Owner Trust or any
Transaction Partnership under any Environmental Laws (including, but not limited
to, Environmental Laws relating to the generation, use, treatment, storage,
release or disposal of any Hazardous Substance), in each case in connection with
the Purchased Assets or any Transaction or the ownership by any Subsidiary, any
Transaction Owner Trust or any Transaction Partnership of any of its assets or
properties.
(b) Schedule 4.10 sets forth all Permits of such Seller or any
Subsidiary that are necessary in connection with the conduct of the Business.
All such Permits have been obtained by such Seller or a Subsidiary, as
applicable, and are in full force and effect, no violations are or have been
recorded in respect of any such Permits that have not been cured, and no
proceeding is pending or, to the knowledge of such Seller, threatened, to revoke
or limit any such Permits. No Approvals (other than the Seller Required Consents
and the Buyer Required Consents) are required for any such Permits held by a
Subsidiary to continue in full force and effect following the consummation of
the Contemplated Transactions.
(c) There exist no uncorrected deficiencies that have been
identified by any Governmental Entity pursuant to or in connection with any
regulatory examination of the business or affairs of TCUI.
4.11 No Brokers or Finders. No agent, broker, finder, investment or
commercial banker, or other Person engaged by or acting on behalf of such
Seller, any Subsidiary or any of their respective Affiliates in connection with
the negotiation, execution or performance of this Agreement or otherwise in
connection with the Contemplated Transactions is or will be entitled to any
brokerage or finder's or similar fee or other commission as a result of this
Agreement or the Contemplated Transactions except for J.P. Morgan Securities
Inc., as to which Sellers shall have full responsibility and none of Buyer or
any Subsidiary shall have any liability.
4.12 Taxes.
(a) (i) All Tax Returns that are required to be filed by such Seller
or any Subsidiary by or with respect to such Seller, any Subsidiary or any
partnership set forth on Schedule 4.12 (collectively, the "Taxpayers") on or
before the Closing
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Date have been or will be duly filed, (ii) all Taxes shown as due by such Seller
or any Subsidiary on the Tax Returns referred to in clause (i) have been paid or
will be paid in full on or before the Closing Date, and (iii) no Subsidiary is
currently a party to or has or will have any liability under any tax sharing
agreement or arrangement. The parties acknowledge and agree that any exceptions
to clause (ii) of the preceding sentence identified in Item 1 of Section 4.12 of
the Disclosure Schedule shall be disregarded for purposes of Section 12.1(a) to
the extent that Buyer shall suffer any adverse consequences resulting therefrom.
Schedule 4.12 lists each Purchased Asset which is a partnership interest for
federal income tax purposes and each partnership for federal income tax purposes
in which a Seller or any Subsidiary holds a direct or indirect interest
(including through other passthrough entities) in connection with any
Transaction (each a "Tax Partnership").
(b) For United States federal and applicable state and local income
and franchise Tax purposes, and with respect to those Taxpayers for which such
Seller or any Subsidiary is required to file Tax Returns, the Person listed on
Schedule 4.12 (i) has treated itself as the owner of each asset set forth on
such Schedule (the "Tax Assets") on each of its Tax Returns, (ii) is
depreciating each such Tax Asset, amortizing transaction expenses related to
each such Tax Asset, and deducting interest, each in the manner described on
such Schedule, and (iii) is accruing income in the manner described on such
Schedule. No federal, state or local tax authority has at any time proposed or
asserted that any of the foregoing is not correct. No adjustments with respect
to any Tax have been proposed, asserted or assessed (x) against such Seller or
any Subsidiary with respect to any of the Taxpayers and relating to any
Transaction or any Purchased Asset, or (y) with respect to any Tax Asset. Except
as set forth in Schedule 4.12, none of such Seller and its Affiliates has at any
time claimed, nor has the IRS at any time proposed or asserted in writing, that
any Tax Asset is either property of a type excluded from eligibility for the
modified accelerated cost recovery system of depreciation of Section 168 of the
Code and Treasury Regulations thereunder or property not taken into account for
purposes of determining the applicability of the mid-quarter convention under
Section 168(d)(3) of the Code and Treasury Regulations thereunder.
(c) For United States federal and applicable state and local income
Tax purposes, and with respect to those Taxpayers for which USL Capital or any
Subsidiary is required to file Tax Returns, USL Capital has treated its interest
in all low-income housing units and all residential real property in which USL
Capital, any Subsidiary and any Tax Partnership owns an interest pursuant to the
Affordable Housing Financing Contracts as "qualified low-income buildings," as
defined in Section 42(c)(2) of the Code. Schedule 4.12 lists the amount of low
income tax credits claimed by USL Capital or any Subsidiary with respect to such
Contracts and the minimum return that Buyer would be
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guaranteed with respect to each such Contract by the terms of any guaranty or
credit support agreement with respect thereto. In the event that the final July
1996 projections being prepared by USL Capital with respect to the Affordable
Housing Transaction identified as Item 6 on Schedule 1.2(i) differ from the
information with respect thereto set forth on Schedule 4.12, the Pricing Files
for such Transaction shall be adjusted to take account of any such differences
and appropriate modifications shall be made to the September 1 Statement of
Aggregate Net Present Value, the September 5 Statement of Aggregate Net Present
Value, the September 20 Statement of Aggregate Net Present Value and the January
15 Statement of Aggregate Net Present Value and elsewhere herein. With respect
to each of USL Capital's and any Subsidiary's Tax Partnership interests directly
or indirectly owning an interest in a Code Section 42 project, all credits
received to date by USL Capital or any Subsidiary have been duly claimed and
have not been subject to recapture other than as a result of the Contemplated
Transactions. The July 1996 Projections are based upon information, estimates
and assumptions furnished to USL Capital by representatives of the parties
sponsoring or organizing the Affordable Housing Transactions. USL Capital
received, processed and furnished such projections consistent with its past
practice.
(d) Sellers have delivered to Buyer true and complete copies of any
filed Tax Returns of the Taxpayers that are or were required to be filed by
either Seller or any Subsidiary which refer to any period of time since January
1, 1991 or, in the case of consolidated or combined Tax Returns including
Persons other than the Taxpayers, the appropriate schedules or portions thereof
applicable to the Taxpayers. Sellers also have delivered to Buyer true and
complete copies of all schedules and work papers attached to or relating to the
Tax Returns of Seller, Ford Credit and any of their Affiliates relating to the
Tax Assets which refer to any period of time since January 1, 1991. The parties
acknowledge and agree that any exceptions to the preceding sentence that may be
identified in Section 4.12 of the Disclosure Schedule shall be disregarded for
purposes of Section 12.1(a).
(e) Neither the Section 338 Election nor the consummation of any of
the Contemplated Transactions would, together with prior transfers during the 12
months preceding the pertinent Closing Date, cause a termination within the
meaning of Section 708 of the Code of any Tax Partnership (other than Airlease).
The parties acknowledge and agree that any exceptions to the preceding sentence
that may be identified in Section 4.12 of the Disclosure Schedule shall be
disregarded for purposes of Section 12.1(a). Neither Seller has received any
written notice, and, to Sellers' actual knowledge, neither of them is aware, of
any transfer to be consummated simultaneously with the consummation of any
Contemplated Transaction or thereafter that, whether considered alone or
together with such contemporaneous or prior transfers, would cause a termination
within the meaning of
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Section 708 of the Code of any Tax Partnership (other than Airlease).
(f) Since July 1, 1990, none of the Sellers, any Subsidiary, any
Transaction Owner Trust or any Tax Partnership has claimed or received any Tax
indemnity payment pursuant to any Transaction Document. None of the Sellers, any
Subsidiary, any Transaction Owner Trust or any Tax Partnership is liable to pay
any amount to any Person under any Tax indemnity agreement by virtue of the
receipt of any Tax indemnity payment or any unintended Tax benefit.
(g) For United States federal income tax purposes, all Tax years of
USL Capital and each Subsidiary ending on or before December 31, 1987 are
closed, and, except with respect to certain refund claims not related to the
Purchased Assets, all Tax years of Ford Credit ending on or before December 31,
1987 are closed. Schedule 4.12 lists those issues which relate to the Purchased
Assets with respect to which the IRS has issued a notice of proposed adjustment.
The IRS has examined the Tax years of such Seller and each Subsidiary for Tax
years through the year ended December 31, 1991.
(h) With respect to each Tax Partnership, as of the Closing Date on
which the Transaction to which such Tax Partnership relates is transferred
(directly or indirectly, including though other passthrough entities) from a
Seller to Buyer, and, to such Seller's actual knowledge as of the date hereof,
either (i) such Tax Partnership has an effective election under Section 754 of
the Code, or (ii) a Seller has the power to cause such an election to be made
effective as of such Closing Date. None of Seller, any Subsidiary, any
Transaction Owner Trust, any Tax Partnership or Tax Asset is party, or is
subject, to any tax benefit transfer agreement within the meaning of former
Section 168(f)(8) of the Code with respect to any Purchased Asset. The parties
acknowledge and agree that any exceptions to this Section 4.12 that may be
identified in Section 4.12 of the Disclosure Schedule shall be disregarded for
purposes of Section 12.1(a).
(i) None of Sellers, any Subsidiary, any Transaction Owner Trust or
any Tax Partnership is party to any lease, tax indemnity agreement or refunding
agreement, or any amendment to any of the foregoing, in connection with any
Transaction that was dated on or before June 3, 1996 but was not executed and
delivered by, and binding upon, each party thereto on or before June 3, 1996.
(j) To Sellers' actual knowledge, none of Sellers, any Subsidiary or
any Selling Subsidiary has incurred any foreign withholding, sales, use or
property Tax in connection with any Transaction that has not been reimbursed by
a lessee or other obligor pursuant to a Transaction Document.
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(k) FM FSC UK, Ltd. has made an election under Section 927(f) of the
Code, and such election is valid and in effect.
4.13 Bank Accounts, Powers. Schedule 4.13 lists each bank, trust
company, savings institution, securities or other brokerage firm, mutual fund or
other financial institution with which any Subsidiary has an account, safe
deposit box or vault, the names of all Persons authorized to draw thereon or to
have access thereto, and the purpose of each such account, safe deposit box or
vault. No Person is authorized by proxies, powers of attorney or other
instruments to act on behalf of any Subsidiary in matters concerning its
business or affairs.
4.14 Support Services; Potential Conflicts of Interest.
(a) Except for such Seller and the Subsidiaries, none of (i) such
Seller's Affiliates, (ii) any officer or director of such Seller or any of its
Affiliates, (iii) any relative or spouse (or relative of such spouse) of any
officer or director of such Seller or (iv) any entity controlled by one or more
of the foregoing:
(A) provides management or support services of any type to such
Seller or any Subsidiary in connection with the Business;
(B) owns, directly or indirectly, in whole or in part, any equipment
or other property that such Seller or any Subsidiary owns, leases or uses
in the conduct of the Business; or
(C) has any cause of action or other claim whatsoever against, or
owes any amount to, such Seller or any Subsidiary in connection with the
Business.
(b) None of such Seller or any of its Affiliates (other than
Associates or any Employee Benefit Plan of such Seller or any of such Seller's
Affiliates or the Subsidiaries) owns, directly or indirectly, any interest in
(excepting the Airlease Purchased Assets, the Stock and interests for investment
purposes in less than 5% of the outstanding Equity Securities of publicly held
and traded companies), any Person which is, or is engaged in business as, a
competitor, lessor, lessee (other than Ford Europe), supplier of material goods
and services, distributor, sales agent or customer of such Seller or any
Subsidiary in connection with the Business.
4.15 Absence of Certain Commercial Practices. Neither such Seller
nor any of its Affiliates nor any officer, director or, to such Seller's
knowledge, employee of any of them, nor, to such Seller's knowledge, any
Transaction Owner Trust or any Transaction Partnership, has, directly or
indirectly, given or agreed to give any gift or similar benefit to any customer,
supplier, governmental employee or other Person who was, is or
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may be in a position to assist in connection with any Transaction or any
transaction listed on Schedule 6.2 or the disposition of any asset coming off
lease, or otherwise help or hinder the Business, that would reasonably be
expected to subject such Seller or any Subsidiary to penalty in any private or
governmental litigation or proceeding. Without limiting the generality of the
foregoing, neither such Seller nor any of its Affiliates nor, to such Seller's
knowledge, any Transaction Owner Trust or any Transaction Partnership, has made
any illegal payment to officers or employees of any Governmental Entity, or made
any illegal payment to third parties for the sharing of fees or for the rebating
of charges, or engaged in any other illegal reciprocal practice, or made any
illegal payment or given any other illegal consideration to purchasing agents or
other representatives of third parties in respect of sales made or to be made,
or services provided or to be provided, by any of the Subsidiaries, any
Transaction Owner Trust or any Transaction Partnership or by such Seller as
Buyer's predecessor in interest in any Transaction.
4.16 Restrictions on Doing Business. Except as disclosed in any
Transaction Document or contained in any provision thereof, the Subsidiaries,
the Transaction Owner Trusts and the Transaction Partnerships are not, and upon
consummation of the Contemplated Transactions will not be, party to or bound by
any Contract which would restrict or limit their rights to carry on any activity
in any geographical or product area or otherwise to conduct the Business as
Buyer, the Subsidiaries, the Transaction Owner Trusts and the Transaction
Partnerships may determine, or to solicit business from any employees of any
Person. The Subsidiaries, the Transaction Owner Trusts and the Transaction
Partnerships are not, and upon consummation of the Contemplated Transactions
will not be, subject to any Order in relation to the Business which is not of
general application to Persons carrying on a business similar to the Business,
except for such as would not reasonably be expected to have a material adverse
effect on the business of the applicable Subsidiary, Transaction Owner Trust or
Transaction Partnership or on the interest of any of the foregoing in any
Transaction.
4.17 Disclosure. The representations and warranties made by such
Seller herein, taken as a whole, do not omit to state a material fact necessary
to make such statements, in light of the circumstances under which they were
made, not misleading, excluding, for all such purposes, information generally
known in the leasing or financing industries, information specifically disclosed
or provisions contained in the Transaction Documents and information actually
known to Buyer by virtue of the fact that Buyer or any of its Affiliates is or
was, prior to the date hereof, an investor, lender, participant or otherwise a
party to or in connection with any Transaction.
4.18 Labor and Employment Matters. Seller has made available to
Buyer true and complete copies of the Severance
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Plans. In each case with respect to the Employees and the Business, (a) USL
Capital is not engaged in, and has not engaged in, any unfair labor practice;
(b) there is no labor strike, dispute, slowdown or stoppage actually pending or
threatened against or directly affecting USL Capital; (c) no union is currently
certified, and there is no union representation question and no union or, to USL
Capital's knowledge, other organizational activity that would be subject to the
National Labor Relations Act (29 U.S.C. 151 et seq.) exists or, to USL Capital's
knowledge, is threatened with respect to USL Capital's operations; (d) no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements is pending and no claims therefor exist or are threatened
with respect to USL Capital's operations; (e) no collective bargaining agreement
exists which is binding on USL Capital; (f) within the last six months, USL
Capital has not experienced any material work stoppage; and (g) USL Capital is
not delinquent in any material respect in payments to any of its current or
former officers, directors, employees or agents for any wages, salaries,
commissions, bonuses, benefits or other compensation for any services performed
by them or amounts required to be reimbursed to them which would result in a
liability of or an obligation against Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
5.1 Organization and Related Matters. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation. Buyer has all necessary corporate power and
authority to execute, deliver and perform this Agreement.
5.2 Authorization; No Conflicts. The execution, delivery and
performance of this Agreement by Buyer has been duly and validly authorized by
the Board of Directors of Buyer and by all other necessary corporate action on
the part of Buyer and its Affiliates. This Agreement constitutes the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws and equitable
principles relating to or limiting creditors' rights generally. Schedule 5.2
lists all Approvals and Permits required to be obtained, filed or delivered by
Buyer to consummate the Contemplated Transactions (the "Buyer Required
Consents"). The execution, delivery and performance of this Agreement by Buyer
and the consummation of the Contemplated Transactions by Buyer and its
Affiliates will not violate, or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event or otherwise) under, the
charter documents or by-laws of Buyer, or, assuming the Buyer Required Consents
are sought and obtained, (b) violate any Law,
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(c) violate in any material respect, or constitute a material breach or default
(whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, or cause the termination of or give any other contracting
party the right to terminate or to accelerate any obligation of Buyer under, any
Contract to which Buyer is a party or by which Buyer is bound, to the extent
that any of the same would have a material adverse effect on Buyer's ability to
perform its obligations under this Agreement, or (d) violate any Order of any
Governmental Entity against, or binding upon, Buyer.
5.3 Legal Proceedings. There is no Order or Action pending, or to
the knowledge of Buyer, threatened, against or affecting Buyer or any of its
properties or assets that individually or when aggregated with one or more other
Orders or Actions has had, or, if determined adversely to the interest of Buyer
might reasonably be expected to have, an adverse effect on Buyer's ability to
perform its obligations under this Agreement.
5.4 No Brokers or Finders. No agent, broker, finder, investment or
commercial banker, or other Person engaged by or acting on behalf of Buyer or
its Affiliates in connection with the negotiation, execution or performance of
this Agreement or otherwise in connection with the Contemplated Transactions is
or will be entitled to any brokerage or finder's or similar fee or other
commission as a result of this Agreement or the Contemplated Transactions except
for Lehman Brothers Inc., as to which Buyer shall have full responsibility and
none of Sellers or any Subsidiary shall have any liability.
5.5 Disclaimer of Certain Representations and Warranties. BUYER
ACKNOWLEDGES AND AGREES THAT THE PURCHASE AND SALE OF THE PURCHASED ASSETS AND
THE ASSUMPTION OF THE ASSUMED LIABILITIES HEREUNDER SHALL BE WITHOUT
REPRESENTATION OR WARRANTY BY SELLERS, EXPRESS OR IMPLIED, AND BUYER SHALL
UNCONDITIONALLY ACCEPT THE PURCHASED ASSETS AND THE ASSUMED LIABILITIES "AS IS,
WHERE IS" AND WITH ALL FAULTS, EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE IV.
THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE IV ARE EXCLUSIVE AND IN
LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES OF SELLERS OF ANY KIND
WHATSOEVER, AND SELLERS HAVE NOT MADE AND SHALL NOT BE DEEMED TO HAVE MADE, BY
VIRTUE OF HAVING TRANSFERRED THE PURCHASED ASSETS OR THE ASSUMED LIABILITIES
PURSUANT TO THIS AGREEMENT OR OTHERWISE, AND SELLERS HEREBY DISCLAIM, ANY
REPRESENTATION OR WARRANTY EXCEPT THE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN ARTICLE IV, INCLUDING, BUT NOT LIMITED TO, ANY REPRESENTATION OR
WARRANTY AS TO (A) THE CONDITION, DESIGN, VALUE, OPERATION, EXISTENCE, FREEDOM
FROM ANY LATENT OR OTHER DEFECT (WHETHER OR NOT DISCOVERABLE), MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OF ANY PART OR PORTION OF THE PURCHASED
ASSETS, (B) THE CREDITWORTHINESS OF ANY LESSEE OR ANY OTHER PERSON WHO MAY BE OR
MAY HAVE BEEN OBLIGATED UNDER ANY OF THE ASSUMED CONTRACTS OR THE COLLECTIBILITY
OF ANY AMOUNT NOW OR HEREAFTER PAYABLE UNDER ANY ASSUMED CONTRACT, AND (C)
EXCEPT WITH RESPECT TO ANY MATTER
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SPECIFICALLY COVERED BY SELLERS' REPRESENTATIONS AND WARRANTIES IN ARTICLE IV,
ANY OTHER MATTER AS TO THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER SIMILAR OR
DISSIMILAR TO THE FOREGOING, IT BEING UNDERSTOOD THAT ALL SUCH DISCLAIMED RISKS,
AS AMONG SELLERS AND BUYER, ARE TO BE BORNE SOLELY BY BUYER.
5.6 Investment Representation. Buyer is acquiring any Purchased
Assets which are securities for Buyer's own account, for investment purposes
only and not with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act.
5.7 Citizenship. Buyer is a "citizen of the United States" within
the meaning of the Federal Aviation Act of 1958, as amended, as recodified in
Title 49 of the United States Code and the rules and regulations of the Federal
Aviation Administration thereunder (without making use of a voting trust
agreement, voting powers agreement or other similar arrangement), and (b)
Section 2 of the Shipping Act, 1916, as amended, qualified to engage in the
United States foreign trade and coastwise trade thereunder and entitled to
document a vessel under 46 U.S.C. Section 12102.
ARTICLE VI
INTERIM COVENANTS
6.1 Access.
(a) Sellers shall, and shall cause the Subsidiaries to, authorize
and permit Buyer and its representatives (which term shall be deemed to include
Buyer's independent accountants, investment bankers and counsel), subject to the
rights of lessees, to have reasonable access during normal business hours, upon
reasonable notice and in such manner as will not unreasonably interfere with the
conduct of their respective businesses, to all of the Books and Records and all
other information with respect to the Purchased Assets, the Assumed Liabilities
and the Business as Buyer may from time to time reasonably request, and to make
copies of such Books and Records and other documents as Buyer considers
necessary or appropriate for the purposes of familiarizing itself with the
Transactions and the Transaction Documents, obtaining any necessary Approvals of
or Permits for the Contemplated Transactions and conducting an evaluation of the
Purchased Assets, the Assumed Liabilities and the Business, and Sellers shall
request that the respective officers, employees, consultants, agents,
accountants and attorneys of Sellers, their Affiliates and each Subsidiary
cooperate fully with Buyer and its representatives in connection with such
review and evaluation; provided, however, that under no circumstances shall
Sellers be required to provide to Buyer and its representatives access to, nor
shall any of them have rights to make copies of, (i) Tax Returns filed by any of
their Affiliates (other than any information on any Tax Returns of Sellers and
their Affiliates insofar as such information relates
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to the Transactions), (ii) any information or materials required to be kept
confidential by Law, subject to the provisions of Section 6.1(b), or (iii) any
privileged attorney-client communications or attorney work-product, subject to
the provisions of Section 6.1(b). Sellers shall use reasonable efforts to locate
and deliver to Buyer prior to the Initial Closing Date copies of all documents
identified in Item 1 of Exhibit 4.3A to the Disclosure Schedule.
(b) Schedule 6.1 lists certain materials that have not heretofore
been provided to Buyer, to which Buyer shall not be entitled access under any
provision hereof (including, but not limited to, Section 6.1) and which shall
not constitute part of the Books and Records. Notwithstanding anything herein to
the contrary, the parties acknowledge that as of the date hereof, Buyer has not
reviewed or been permitted access to any materials in Sellers' legal department
files. Promptly following the date hereof, Sellers shall make inquiry of each
in-house lawyer in their employ as to whether any of such legal department files
contain any information or materials that are relevant to any of the
Transactions, the Purchased Assets or the Assumed Liabilities, and shall
promptly deliver any such information or materials that are not required to be
kept confidential by Law and do not constitute privileged attorney-client
communications or attorney work-product to Buyer. Upon completion of such
inquiry, but in any event not later than five business days prior to the Initial
Closing Date, Sellers shall provide to Buyer a description, in reasonable
detail, of the character of any such information or materials that are required
to be kept confidential by Law or that constitute privileged attorney-client
communications or attorney work-product (none of which shall be provided or made
available to Buyer or constitute part of the Books and Records).
6.2 Conduct of Business. Sellers agree that neither of them nor any
Subsidiary shall, without the prior written consent of Buyer:
(a) conduct the Business in any manner except in the ordinary
course, except as contemplated by this Agreement;
(b) terminate or fail to renew or preserve any Permits relating to
the Business;
(c) except in connection with the exercise of any right of first
refusal or right of first offer as disclosed in Schedule 4.6, with respect
to Sellers, sell, transfer, mortgage, encumber or otherwise dispose of any
of the Purchased Assets or the Assumed Liabilities and, with respect to
any Subsidiary, sell, transfer, mortgage, encumber or otherwise dispose of
any of its assets or liabilities;
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(d) except in connection with the exercise of any right of first
refusal or right of first offer as disclosed in Schedule 4.6, take any
action enumerated in Section 4.7(c);
(e) acquire any interest in or enter into any transportation and
industrial financing transaction not listed on Schedule 1.2(i);
(f) amend or modify any provision of any Transaction Document;
(g) waive in any material respect any provision of any Transaction
Document; or
(h) agree to or make any commitment to take any actions prohibited
by this Section 6.2;
provided, however, that notwithstanding any of the foregoing, no such consent of
Buyer shall be required to or in connection with (x) making the amendments,
modifications or waivers with respect to existing Transactions specifically
described on Schedule 6.2, and (y) acquiring an interest in or entering into any
new transaction listed on Schedule 6.2 (except that the final form of any
Contract relating thereto that would be a "Transaction Document" hereunder shall
be subject to Buyer's prior written approval, which approval shall not be
unreasonably withheld), it being understood that the provisions of paragraphs
(a) through (h) of this Section 6.2 shall also apply to Sellers' conduct with
respect to any such new transaction listed on Schedule 6.2.
6.3 Approvals and Permits.
(a) Sellers and Buyer shall endeavor to obtain, and shall promptly
prepare all registrations, filings, applications, requests and notices
preliminary to, all Approvals and Permits identified on Schedules 4.6 and 5.2,
respectively, and shall cooperate with each other in connection therewith.
Subject to the provisions of Schedule 6.3, each of Buyer and Sellers shall bear
the out-of-pocket costs and expenses incurred and fees paid by it in connection
with obtaining such Approvals and Permits. Sellers shall use their best efforts
to obtain Seller Required Consents to the transfer of as many Purchased Assets
as possible on the Initial Closing Date; provided, however, that the parties
acknowledge and agree that Sellers shall not be required to make any payments to
third parties in order to obtain any of the Approvals or Permits identified on
Schedule 4.6 except for payments in respect of the reimbursement of expenses to
the extent that any such reimbursement payments are specifically required to be
made by the terms of the Transaction Documents. Buyer and its Affiliates shall
execute and deliver such agreements, guaranties and letters of representation or
assurance as are reasonably necessary under the terms of the Assumed Contracts
or the Transaction Documents in order to obtain all Approvals required in
connection with Buyer's acquisition of the
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Purchased Assets and assumption of the Assumed Liabilities including, but not
limited to, such as are described on Schedule 6.3. Notwithstanding the foregoing
or any provision of any such agreement or document, the provisions hereof (and
the agreements between Buyer and Sellers set forth herein) shall control and
prevail over the provisions of any such agreement or document as between Buyer
and such Seller, and such Seller shall be responsible for any Liabilities Buyer
may assume or incur as a result thereof if and to the extent that any such
Liabilities are Excluded Liabilities, and Buyer shall be responsible for any
Liabilities a Seller may retain or incur as a result thereof if and to the
extent that any such Liabilities are Assumed Liabilities. Sellers shall also
endeavor to obtain the certificates or other evidence with respect to insurance
required to be received by Buyer pursuant to Section 3.2(n), and Buyer shall
cooperate with Sellers in connection therewith. Buyer further agrees that
following the Initial Closing Date, and upon Seller's request, Buyer shall cause
those Transferred Employees who were responsible while in the employ of USL
Capital for seeking and obtaining Seller Required Consents (so long as such
Transferred Employees remain in the employ of Buyer or any of its Affiliates) to
continue to use their reasonable best efforts to obtain any then outstanding
Seller Required Consents.
(b) Sellers further agree that prior to the Closing, Sellers will,
and USL Capital will cause the Subsidiaries to, use commercially reasonable
efforts to conduct the Business in such a manner so that the representations and
warranties contained in Article IV shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of the Closing Date;
provided, however, that in no event shall Sellers be required to take any action
that may be necessary or advisable in order to make any representation or
warranty true and correct to the extent that it is not so true and correct as of
the date hereof; and provided, further, that any such action by Sellers (or the
failure of Sellers to take any such action) shall not diminish the
indemnification obligations of Sellers under Articles XII and XIII.
(c) Following the Initial Closing, Buyer shall provide management
services to Sellers with respect to each Transaction not transferred to Buyer at
the Initial Closing on the terms and conditions set forth in the Services
Agreement until the Subsequent Closing, if any, at which such Transaction is
transferred to Buyer.
6.4 Government Filings. Buyer and Sellers shall make any and all
filings required under the Hart-Scott-Rodino Act and any other Law requiring
filings with any Governmental Entity with respect to the transactions
contemplated hereby. Sellers and Buyer shall furnish each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
provisions of such Laws. Sellers and Buyer
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will immediately supply to each other copies of all filings (other than draft or
preliminary filings that are not operative) and all formal correspondence and
communications by such party or any of its Affiliates with any Governmental
Entity or members of its staff with respect to the Contemplated Transactions,
except for (a) documents filed pursuant to Item 4(c) of the Hart-Scott Rodino
Notification and Report Form or communications regarding the same and (b)
documents in respect of which such party or any of its Affiliates shall have
requested confidential treatment under the Freedom of Information Act.
6.5 Bulk Transfer Laws. Buyer and Sellers waive compliance with any
applicable bulk transfer Laws.
6.6 Tax Indemnity Agreement. Ford Credit and Buyer and its
Affiliates shall negotiate in good faith to agree to the terms, conditions and
form of the Tax Indemnity Agreement referred to in Section 8.4.
ARTICLE VII
ADDITIONAL CONTINUING COVENANTS
7.1 Post-Closing Access. Buyer shall, and shall cause its Affiliates
and each Subsidiary to, cooperate with representatives of Sellers, and shall
request that the respective officers, employees, consultants, agents,
accountants and attorneys of Buyer, its Affiliates and each Subsidiary cooperate
fully with such representatives, to make available to Sellers and their
Affiliates all financial, Tax and other information and documents, including,
but not limited to, the Books and Records, reasonably required by them in
connection with (a) any audit or other investigation by any taxing authority or
any required reports or submissions (including any consolidated financial or
statutory reporting obligations of Sellers or their Affiliates) to Governmental
Entities with respect to the Purchased Assets or the Assumed Liabilities
relating to any period (or portion thereof) ending on or before the Closing
Date, and (b) matters relating to insurance coverage of the Purchased Assets or
the Assumed Liabilities, third-party litigation, claims, proceedings and
investigations relating to any period (or portion thereof) ending on or before
the Closing Date or relating to any Indemnifiable Claim. Buyer shall, and shall
cause each Subsidiary to, preserve such information until the earlier of (i)
eight years after the Initial Closing Date and (ii) 180 days after Buyer shall
have given Sellers written notice of any impending disposition and the
opportunity (at Sellers' expense) to remove and retain such information. Sellers
agree, upon Buyer's request, to use reasonable efforts to permit Buyer to gain
access to the outside counsel engaged by Sellers in connection with their
acquisition of their interests in the Transactions; provided, however, that in
no event shall Sellers be required to waive any attorney-client privilege or
incur any cost or liability in connection with the same. Any information
obtained pursuant to this Section 7.1 or pursuant to any other
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Section hereof providing for the sharing of information (including, but not
limited to, Section 3.7(b)) shall be subject to Section 14.2.
7.2 Insurance; Indemnity Obligations.
(a) Sellers and their Affiliates shall maintain in effect until
midnight on the night of each Closing Date all casualty and liability insurance
policies listed on Schedule 4.9 (or comparable replacement policies) to the
extent relating to Transactions to be transferred on such Closing Date.
Effective immediately after midnight on the night of each Closing Date, all
insurance coverage and self-insurance maintained by Sellers and their Affiliates
other than any Subsidiary under which the Purchased Assets or the Assumed
Liabilities transferred at such Closing Date are insured or self-insured,
including any and all bonds or other indemnity obligations, shall be, to the
extent related to such Purchased Assets and Assumed Liabilities, cancelled and
terminated (except to the extent that they may not, by their terms, be so
cancelled or terminated). All premium refunds paid to Sellers or their
Affiliates relating to insurance covering the Purchased Assets or the Assumed
Liabilities shall be the property of Sellers or their Affiliates, whether such
refunds are paid on, before or after such Closing Date.
(b) Buyer shall use all reasonable efforts to substitute, as of each
Closing Date, with respect to each guaranty or other indemnity obligation of a
Seller or any of Sellers' Affiliates relating to the Purchased Assets or the
Assumed Liabilities transferred on such Closing Date which is listed on Schedule
7.2 and by its terms may not be terminated or cancelled, Buyer or any of its
Affiliates (or such other Person as may be acceptable to the obligee thereunder)
for such Sellers or Sellers' Affiliates, as the case may be, and to cause such
Seller and Sellers' Affiliates to be forever released from all liability in
respect thereof for events which occur after such Closing Date. To the extent
that Buyer or any of its Affiliates (or such other Person as may be acceptable
to the obligee) is not able to be substituted for a Seller or Seller's
Affiliates, as the case may be, with respect to any such guaranty or other
indemnity obligation, Buyer and such Seller shall cooperate in good faith to
develop an alternative arrangement to ensure that such Seller and Sellers'
Affiliates are released from or indemnified and held harmless against all
liability with respect to such guaranty or other indemnity obligation with
respect to events which occur after such Closing Date. Buyer shall be
responsible for all Losses incurred by a Seller or any of Sellers' Affiliates or
their insurers under any such guaranty or other indemnity obligation in respect
of events which occur after such Closing Date, except to the extent such Losses
constitute Excluded Liabilities.
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7.3 Employee Matters.
(a) Within 15 days after the date hereof, Buyer shall have the
opportunity to interview all Employees listed on Schedule 1.2(e). Buyer shall
arrange all such interviews through Seller's Senior Vice President, Human
Resources. By no later than 20 days following the date hereof, Buyer and/or any
of its Affiliates shall offer employment to any Employee whom it desires, in its
sole discretion, to employ effective the day after the Initial Closing Date,
except that any such Employee who, at the time of the Initial Closing Date is on
leave from the job will be offered employment effective on the date such
Employee is able to return to work so long as such date is within six months
after the Initial Closing Date. Buyer and/or its Affiliates shall use reasonable
best efforts to offer such Employees "Comparable Positions" (as defined in the
Severance Plan covering such Employee (as set forth on Schedule 1.2(e)). No
later than 20 days following the date hereof, Buyer shall also deliver to Seller
a list stating the name of each Employee to whom employment has been offered,
and stating such Employee's proposed job title, duties and responsibilities, if
different from those of such Employee's position with Seller, and proposed
salary, target bonus and/or long-term incentive if any, and other compensation.
Not later than 4 business days prior to the date designated as the Initial
Closing Date in Seller's Closing Date Notice given under Section 2.4(a) above,
Buyer shall deliver to Seller a further list stating the names of all Employees
who have accepted offers of employment with Buyer or its Affiliate as of the day
after the Initial Closing Date, and stating the job title, salary, target bonus
and/or long-term incentive if any and regular compensation, and duties and
responsibilities of the position accepted by each. Nothing in this Agreement
shall obligate Buyer to continue beyond the day after the Initial Closing Date
the employment of any Employee who accepts employment with Buyer under this
Section 7.3(a) (a "Transferred Employee") effective after the Initial Closing
Date.
(b) Subject to the terms thereof and as set forth herein, all
Transferred Employees shall be eligible to participate in the employee benefit
plans and other fringe benefits of Buyer on the same basis as such plans and
benefits are offered to similarly situated employees of Buyer. The Transferred
Employees will be credited for their length of service with USL Capital and
Affiliates of USL Capital under the employee benefit and fringe benefit plans to
the extent provided by Buyer to its employees, including the following: (i)
health benefit plans for active and retired employees, (ii) BankAmerica 401(k)
Investment and BankAmerica Pension Plans (for purposes of eligibility, vesting,
and rate of prospective benefit accrual only), (iii) vacation, and (iv)
severance plans; provided, however, that Buyer shall recognize a Transferred
Employee's length of service with USL Capital and USL Capital's Affiliates only
to the same extent USL Capital recognized such service for purposes of USL
Capital's employee benefit and fringe benefit
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plans similar to those offered by Buyer. Transferred Employees shall receive
credit under Buyer's health care plans for any deductibles paid by such
Transferred Employee and his or her enrolled dependents for the current plan
year under a health care plan maintained by USL Capital.
(c) USL Capital shall offer each Transferred Employee the option to
transfer to Buyer his or her accrued unused vacation leave as of the Initial
Closing Date. Buyer shall assume and discharge USL Capital's obligation for the
payment of all unused vacation leave accrued by each Transferred Employee as of
the Initial Closing Date, but only if such Transferred Employee consents in
writing to such assumption and discharge no later than two business days before
the Initial Closing Date. In the event any Transferred Employee fails by such
date to so consent, USL Capital shall make a cash payment to such Transferred
Employee on account of such unused vacation as required by law. Buyer shall give
credit to each such consenting Transferred Employee as of the day after the
Initial Closing Date for the same number of unused vacation days or fractions
thereof that he or she accrued with USL Capital as of the Initial Closing Date.
USL Capital shall pay to Buyer within ten days after the Initial Closing Date an
amount equal to the accrual on the books of USL Capital as of the Initial
Closing Date for such unused accrued vacation days. The procedures set forth in
this subsection shall be applied to any Transferred Employee on leave at the
Initial Closing Date upon, and as of, the commencement of his or her employment
with Buyer.
(d) Except as provided in Section 7.3(c), USL Capital shall be
responsible for payments for accrued vacation not taken by an Employee on or
prior to the Initial Closing Date and for bonuses and commissions, if any, to
which they are entitled as of the Initial Closing Date, including any
proportional amount of any bonus determined on an annual basis. USL Capital
shall retain the responsibility for payment of all wages and salaries to
Employees through the Initial Closing Date. USL Capital shall also retain the
responsibility for payment of all medical, dental and health claims incurred by
any Employee prior to the first of the month following the Initial Closing Date,
and Buyer shall not assume any liability with respect to such claims. On and
after the first of the month following the Initial Closing Date, all medical,
dental, health and disability claims incurred by the Transferred Employees shall
be determined under Buyer's benefit plans as provided herein, except as to such
claims of any Transferred Employee who was on leave on the Initial Closing Date,
which claims shall be so determined upon the first of the month following the
commencement of his or her employment with Buyer, and except as to claims for
"Continuation Coverage" under USL Capital's group health plan. For purposes of
this Section , a claim shall be deemed to have been incurred on the date on
which medical or other treatment or service was rendered to such Transferred
Employee and not the date of the inception of the
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related illness or injury or the date a claim was submitted with
respect thereto.
(e) USL Capital shall be responsible for providing any Employee
whose "qualifying event" within the meaning of Section 4980B(f) of the Code
occurs prior to the first of the month following the Initial Closing Date (and
such Employee's "qualified beneficiaries" within the meaning of Section 4980B(f)
of the Code) with the continuation of group health coverage required by Section
4980B(f) of the Code ("Continuation Coverage") under the terms of the health
plan maintained by USL Capital. Buyer shall be responsible for providing
Continuation Coverage to any Transferred Employee (and such Transferred
Employee's qualified beneficiaries) whose qualifying event occurs on or after
the first of the month following the Initial Closing Date to the extent required
by applicable Law.
(f) As of the Initial Closing Date, Buyer shall credit Transferred
Employees under Buyer's sickness benefit program with the number of sickness
benefit days accrued under USL Capital's similar program, except in the case of
any Transferred Employee who was on leave on the Initial Closing Date, who shall
be so credited upon the commencement of his or her employment with Buyer.
(g) USL Capital agrees to transfer to Buyer any records relating to
withholding and payment of income and unemployment taxes (federal, state and
local) and FICA taxes (including, without limitation, Forms W-4, Employee's
Withholding Allowance Certificate) with respect to wages paid by USL Capital
during the 1996 calendar year to all Transferred Employees.
(h) Buyer shall pay to any Transferred Employee who becomes eligible
for benefits under a Severance Plan within 366 days after the Initial Closing
Date the severance pay owed to such Transferred Employee under such Severance
Plan, and a net amount equal to the difference between the total premiums
calculated at Buyer's active employee rate and total premiums calculated at
Buyer's Continuation Coverage rate charged for health care coverage during the
"Severance Period" applicable to such Employee, and shall provide outplacement
service to such Transferred Employee, to the extent owed under such Severance
Plan. Buyer or its Affiliate shall determine whether severance benefits under a
Severance Plan are owed to any Transferred Employee. Seller will retain all
other liability for benefits owing under the Severance Plans, including those
owing to any Employee who is not offered employment by, or who does not accept
employment with, Buyer; provided, however, that Buyer shall, within 10 business
days after Seller's demand therefor, reimburse the following costs actually
incurred by Seller under the Severance Plans with respect to any such Employee
terminated by Seller no later than 15 days after the Initial Closing Date: (1)
severance pay; (2) the cost of outplacement services; and (3) for an Employee
who maintains healthcare coverage under a
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plan sponsored by Seller during his or her "Severance Period" as provided in the
Severance Plans, an amount equal to the difference between the total premiums
calculated at the active employee rate for such coverage and the total premiums
calculated at the Continuation Coverage rate, for such period of time; provided,
further, that no such costs shall be reimbursed with respect to any Employee who
is offered a "Comparable Position" or who accepts a position that is not a
"Comparable Position," as defined in the Severance Plan under which such
Employee is covered. Seller shall determine whether severance benefits under a
Severance Plan are owed to any Employee who does not become a Transferred
Employee. Except as expressly authorized by Buyer in writing, Buyer shall have
no obligations under any amendments to either Severance Plan made subsequent to
June 7, 1996.
(i) At the Initial Closing, Buyer shall pay to Seller the sum of
$421,000 (the "Severance Costs Payment") to defray the allocated severance costs
of Seller's Central Services employees who are partially, but not primarily,
allocated to the Business.
(j) This Agreement is not intended, nor shall it be construed, to
create any express or implied third-party beneficiary rights in any person,
including, but not limited to, present or former employees of USL Capital, the
Employees, and any beneficiaries or dependents thereof.
(k) After the Initial Closing Date, upon the reasonable request of a
Seller, Buyer shall make available to such Seller the Transferred Employees for
reasonable assistance and testimony in connection with any litigation involving
the Business, the Purchased Assets or the Excluded Liabilities (except to the
extent that any such litigation is an Action by either Buyer or such Seller (or
any of its respective Affiliates) against the other (or any of its respective
Affiliates). Such reasonable assistance and testimony shall be provided without
charge to such Seller; provided that such Seller shall reimburse Buyer for any
out-of-pocket expenses, including salary expenses, incurred in connection with
the same.
7.4 Noncompetition.
(a) For a period of 30 months commencing on the Initial Closing Date
(the "Restricted Period"), Sellers agree not to, and agree to cause their
Affiliates (other than Associates and any Employee Benefit Plan of Sellers or
any of their Affiliates) not to, at any time, directly or indirectly, anywhere
in the United States:
(i) own, manage, operate or control, or be connected in any manner
(including, but not limited to, as a partner, stockholder, principal,
agent, trustee or consultant) with the ownership, management, operation,
or control of, any Person that engages in the same or a similar type of
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business as the Business or engages in a business competitive with the
Business (a "Competitive Business");
(ii) engage in any activity which is the same as, similar to or in
competition with the Business;
(iii) interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between Buyer or any Subsidiary
and any then-existing customer or prospective customer, supplier, lessee
or employee of Buyer or any Subsidiary, including, without limitation, the
customers and suppliers of the Business prior to the Closing Date; or
(iv) solicit employment, or cause or encourage Associates to solicit
employment, for or of any employee of Buyer or any Subsidiary employed in
connection with their post-Closing conduct of the Business or induce, or
cause or encourage Associates to induce, any such employee to leave the
employ of Buyer or any Subsidiary.
(b) Notwithstanding anything in Section 7.4(a) to the contrary,
nothing herein shall in any way restrict or limit the rights of Sellers or any
of their Affiliates (i) to acquire or hold, solely as an investment not in
excess of 5% of the outstanding Equity Securities of any corporation the
securities of which are listed on a nationally recognized securities exchange or
traded in a nationally recognized over-the-counter market (provided that neither
of Sellers nor any of their Affiliates is a controlling Person of, or a member
of a group which controls, such corporation, it being understood and agreed that
the mere fact of acquiring or holding 5% of the outstanding Equity Securities of
any Person shall not, by itself, be deemed to constitute control of such
Person), (ii) to continue to carry on or enter into any business (other than the
transportation and industrial financing business engaged in by Sellers; it being
understood that Ford Credit shall in no event be precluded from engaging in any
financings that are incidental to sales of vehicles by any of its Affiliates) in
which any of them is engaged as of the date hereof, whether or not any such
business is a Competitive Business (it being understood and agreed that the
ownership of interests in DFO Partnership shall not be considered a Competitive
Business), (iii) to continue the Business only with respect to any assets or
liabilities of Sellers not transferred from Sellers to Buyer in accordance with
this Agreement (including, but not limited to, any assets or liabilities
excluded from any Closing pursuant to Section 3.6), and (iv) to enter into any
intercompany transaction.
(c) If Sellers or any of their Affiliates breaches, or threatens to
commit a breach of, any of the provisions of this Section 7.4 (the "Restrictive
Covenants"), Buyer and the Subsidiaries shall have the right and remedy, in
addition to, and not in lieu of, any other rights and remedies available to
Buyer and the Subsidiaries under law or in equity, to have the
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Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to Buyer and the
Subsidiaries and that money damages would not provide an adequate remedy to
Buyer and the Subsidiaries.
(d) Sellers acknowledge and agree that as to Sellers and their
Affiliates, the Restrictive Covenants are reasonable and valid in geographical
and temporal scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable
as to Sellers or any of their Affiliates, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect as to
Sellers or any of their Affiliates, without regard to the invalid portions.
(e) If any court determines that any of the Restrictive Covenants,
or any part thereof, is unenforceable as to all or any of Sellers and their
Affiliates because of the duration or geographic scope of such provision, such
court shall have the power to reduce the duration or geographic scope of such
provision, as the case may be, as to Sellers or their Affiliates, and, in its
reduced form, such provision shall then be enforceable.
(f) Buyer and each Seller and their Affiliates intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of the Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of Buyer and each Seller and their Affiliates that such determination
not bar or in any way affect Buyer's or any Subsidiary's right to the relief
provided above in the courts of any other jurisdiction within the geographical
scope of the Restrictive Covenants, as to breaches of the Restrictive Covenants
in such other respective jurisdictions, the Restrictive Covenants as they relate
to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.
7.5 Apportionment. All payments due or expenses payable in respect
of any Transaction shall be apportioned either to Sellers (and, prior to the
Closing at which such Transaction is transferred from Sellers or any Selling
Subsidiary to Buyer hereunder, any applicable Subsidiary) or to Buyer (and,
subsequent to the Closing at which such Transaction is transferred from Sellers
or any Selling Subsidiary to Buyer hereunder, any applicable Subsidiary) in a
manner consistent with the Agreed Assumptions and Methodology and the pricing
provisions set forth herein such that such apportionment yields the results
contemplated by such provisions. Without limiting the foregoing, (a) all cash
payments in respect of any Transaction that are due
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from any lessee or other obligor prior to the Closing at which such Transaction
is transferred from a Seller or any Selling Subsidiary to Buyer shall be for the
account of such Seller, and all cash payments in respect of any Transaction that
are due subsequent to the Closing at which such Transaction is transferred from
a Seller or any Selling Subsidiary to Buyer shall be for the account of Buyer,
in each instance regardless of the period in respect of which any such payment
is made, and (b)(i) any distribution by Airlease (other than any such
distribution deducted from the purchase price for any of the Airlease Purchased
Assets in accordance with the definition of "Airlease Purchase Price" herein)
received by Seller or any Subsidiary (A) made with respect to a record date
after September 1, 1996 or (B) made after the date hereof in respect of any loss
of or casualty to any property of Airlease shall be for the account of Buyer,
and if received by Seller, shall be paid over to Buyer, and (ii) all other such
distributions shall be for the account of Seller. If a Seller receives any
amounts in payment of obligations owed or due to Buyer, such Seller shall
promptly disclose the same to Buyer and deliver or pay such amounts over to
Buyer. If Buyer receives any amounts in payment of obligations owed or due to a
Seller, Buyer shall promptly disclose the same to such Seller and deliver or pay
such amounts over to such Seller. Without liability to Sellers, Sellers agree to
promptly deliver to Buyer any written communication received by Sellers after
the Closing Date pursuant to any Transaction Document or otherwise in connection
with any Transaction.
7.6 Use of Excluded Intangible Property. Buyer acknowledges and
agrees that any rights to ownership or use whatsoever with respect to any
intangible property of any kind that is owned by Sellers, Ford or any Affiliate
of Ford, except and to the extent that any Purchased Asset includes intangible
property, shall be Excluded Assets hereunder. For the avoidance of doubt, Buyer
acknowledges and agrees that the names and marks "USL," "USL Capital," "U.S.
Leasing," "U.S. Fleet Leasing," "Ford," "Ford Motor Company," "Ford Motor Credit
Company," the Ford "oval," etc., and any derivatives thereof, shall be Excluded
Assets hereunder.
7.7 TCUI's Consent to Certain Transfers. Upon Seller's request,
Buyer shall cause TCUI to consent to Seller's transfer of its interests in the
transactions to which the Contracts listed as Items 14-20 on Exhibit 4.3B to the
Disclosure Schedule pertain, subject to TCUI's compliance with its obligations
as set forth in any applicable provisions of such Contracts.
ARTICLE VIII
GENERAL CONDITIONS OF PURCHASE
The obligations of the parties to effect any Closing shall be
subject to the following conditions (provided, however,
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that the condition set forth in Section 8.3 shall only apply to the Initial
Closing):
8.1 No Orders; Legal Proceedings. No Law or Order shall have been
enacted, entered, issued, promulgated or enforced by any Governmental Entity,
nor shall any Action have been instituted and remain pending by any Governmental
Entity at what would otherwise be the Closing Date, which prohibits or restricts
or would (if successful) prohibit or restrict the Contemplated Transactions.
8.2 Governmental Approvals. To the extent required by applicable
Law, all Buyer Required Consents and all Seller Required Consents required to be
obtained from any Governmental Entity shall have been received or obtained on or
prior to the pertinent Closing Date, and shall not have imposed, individually or
in the aggregate, any condition or requirement that is or after the Closing Date
would become applicable to Buyer or any of its Affiliates which Buyer
determines, in good faith, would be burdensome in any material respect upon
Buyer and its Affiliates or upon the conduct of the Business after the Closing
Date, and any applicable waiting period under the Hart-Scott-Rodino Act shall
have expired or been terminated.
8.3 Satisfaction of Conditions to Formation of DFO Partnership. All
conditions precedent to the obligations of SPLC and Ford Credit under Section 2
of the Commitment Agreement (other than with respect to the occurrence of the
Initial Closing) and the obligations of SPLC and Holdings under Sections 3.1,
3.2 and 3.3 of the Subscription Agreements (in the case of Sections 3.2 and 3.3
with respect to the assets to be contributed on the "Initial Contribution Date"
as defined in the Subscription Agreements) shall have been duly satisfied or
waived and the Commitment Agreement shall be in full force and effect.
8.4 Tax Indemnity Agreement. With respect to the Closing at which
the Transactions listed as Items 9 and 10 of Schedule 1.2(i) are proposed to be
transferred from Ford Credit to Buyer, Ford Credit and SPLC shall have entered
into a Tax Indemnity Agreement to protect SPLC against certain foreign use and
tax exempt use Tax losses in excess of any amounts of such losses against which
the lessee is obligated to indemnify SPLC, such agreement to be on terms and
conditions and in a form substantially similar to such as have been agreed in
connection with prior transactions between Ford and Buyer's Affiliates.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to effect any Closing shall be subject to
the following conditions, except to the extent waived in writing by Buyer:
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9.1 Representations and Warranties and Covenants of Sellers. The
representations and warranties of Sellers herein contained shall be true at the
Closing Date with the same effect as though made at such time, except for such
inaccuracies as would not reasonably be expected to have a material adverse
effect on the Business and the Purchased Assets, taken as a whole, Sellers shall
have in all material respects performed all obligations and complied with all
covenants, agreements and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing Date, and Sellers shall have
delivered to Buyer a certificate of Sellers in form and substance reasonably
satisfactory to Buyer, dated the Closing Date and signed by the Chairman and
Chief Executive Officer of USL Capital, or any of its Senior Vice Presidents, to
such effect.
9.2 No Material Adverse Change. There shall not have been, occurred
or arisen any change in or event affecting the Business or the Purchased Assets
that has had a material adverse effect on the value thereof, taken as a whole,
subsequent to the date hereof, except for changes or events affecting generally
the leasing or financing industries as a whole.
9.3 Aggregate Depreciable Basis. With respect to any Closing to be
held during the Fourth Quarter, the Aggregate Depreciable Basis of the Purchased
Assets to be transferred from either Seller to Buyer at any such Closing,
together with the Aggregate Depreciable Basis of the Purchased Assets
theretofore transferred from Sellers to Buyer at all prior Closings held during
the Fourth Quarter, shall not exceed 50% of the Aggregate Depreciable Basis of
the Purchased Assets transferred from Sellers to Buyer prior to the Fourth
Quarter (other than any of the same which have been transferred to DFO
Partnership, destroyed or involuntarily transferred); provided, however, that
without limiting the foregoing, during the last calendar week of the Fourth
Quarter, the condition set forth in this Section 9.3 may also be satisfied if
the Aggregate Depreciable Basis of the Purchased Assets to be transferred from
either Seller to Buyer at any such Closing, together with the Aggregate
Depreciable Basis of the Purchased Assets theretofore transferred from Sellers
to Buyer at all prior Closings held during the Fourth Quarter, shall not exceed
55% of the Aggregate Depreciable Basis of the Purchased Assets transferred from
Sellers to Buyer prior to the Fourth Quarter (other than any of the same which
have been transferred to DFO Partnership, destroyed or otherwise transferred
(whether voluntarily or involuntarily)). Buyer shall make any computations
necessary to determine whether the condition set forth in this Section 9.3 is
satisfied in good faith and based upon relevant tax authorities. Such
determination by Buyer shall be final and binding on the parties hereto absent
manifest error. For all purposes of this Section 9.3, references to the transfer
of Purchased Assets from either Seller to Buyer shall be deemed to also refer to
and include
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transfers of "Purchased Assets" (as defined in the Concurrent Asset Purchase
Agreement) from USL Capital to SPLC.
9.4 Third-Party Approvals. With respect to the Initial Closing,
Seller Required Consents and Buyer Required Consents to the transfer of
Purchased Assets the Base Price of which represent not less than 50% of the
total Base Price of all Purchased Assets shall have been duly obtained. With
respect to Subsequent Closings, Seller Required Consents and Buyer Required
Consents with respect to the transfer of the Transactions to be transferred at
such Subsequent Closing shall have been duly obtained. With respect to Airlease
Closings, Seller Required Consents and Buyer Required Consents with respect to
the transfer of the Airlease Purchased Assets to be transferred at such Airlease
Closing shall have been duly obtained.
9.5 Certain Matters Relating to TCUI. With respect to the Closing at
which the capital stock of TCUI is proposed to be transferred from USL Capital
to Buyer, (a) USL Capital shall have effected an amendment to Article Four of
the Articles of Incorporation of TCUI such that such Article shall no longer
refer to USL Capital, USL Capital's predecessor or USL Capital's wholly owned
subsidiaries, (b) USL Capital shall have duly resigned as agent for TCUI as so
appointed under the Trust Agreements and Agency Agreements relating to the
transactions to which the Contracts listed as Items 3-20 on Exhibit 4.3B to the
Disclosure Schedule pertain and under the Trust Agreements listed on Schedule
9.5, and (c) that certain Service Agreement dated as of June 5, 1991 by and
between USL Capital and TCUI shall have been duly terminated.
9.6 Transaction Specific Conditions. With respect to the Closing of
the transfer of the Transaction listed as Item 25 on Schedule 1.2(i) (Grupo
Mexicano), the breach or default under the governing Transaction Documents with
respect to such Transaction identified as Item 4 in Section 4.3 of the
Disclosure Schedule shall have been cured (and none of Sellers or their
Affiliates shall have advanced any funds, or otherwise colluded with the lessee,
to effectuate such cure).
ARTICLE X
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers to effect any Closing shall be subject to
the following conditions, except to the extent waived in writing by Sellers:
10.1 Representations and Warranties and Covenants of Buyer. The
representations and warranties of Buyer herein contained shall be true in all
material respects, taken as a whole, at the Closing Date with the same effect as
though made at such time, Buyer shall have in all material respects performed
all obligations and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied
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with by it at or prior to the Closing Date, and Buyer shall have delivered to
Sellers a certificate of Buyer in form and substance reasonably satisfactory to
Sellers, dated the Closing Date and signed by its Chairman and Chief Executive
Officer, or any of its Senior Vice Presidents, to such effect.
10.2 Indemnity Obligations. Buyer or any of its Affiliates (or such
other Person as may be acceptable to the obligee) shall have been substituted
for Sellers or their Affiliates, as the case may be, with respect to each
guaranty or other indemnity obligation of Sellers or any of their Affiliates
relating to the Purchased Assets or the Assumed Liabilities to be transferred on
such Closing Date listed on Schedule 7.2, and Sellers and their Affiliates shall
have been forever released from all liability in respect thereof for events
which occur after the Closing Date, except with respect to any such guaranty or
other indemnity obligation as to which Buyer and Sellers shall have developed an
alternative arrangement reasonably satisfactory to Sellers to ensure that
Sellers and their Affiliates are released from or indemnified and held harmless
against all liability in respect thereof for events which occur after the
Closing Date.
10.3 Third-Party Approvals. With respect to the Initial Closing,
Seller Required Consents and Buyer Required Consents to the transfer of
Purchased Assets the Base Price of which represent not less than 70% of the
total Base Price of all Purchased Assets shall have been duly obtained. With
respect to Subsequent Closings, Seller Required Consents and Buyer Required
Consents with respect to the transfer of the Transactions to be transferred at
such Subsequent Closing shall have been duly obtained. With respect to Airlease
Closings, Seller Required Consents and Buyer Required Consents with respect to
the transfer of the Airlease Purchased Assets to be transferred at such Airlease
Closing shall have been duly obtained.
ARTICLE XI
TERMINATION OF OBLIGATIONS; SURVIVAL
11.1 Termination of Agreement. Anything herein to the contrary
notwithstanding, this Agreement shall automatically terminate, without any
notice, demand or action by any party, if the Initial Closing does not occur on
or before the close of business on the Termination Date, and, if the Initial
Closing has occurred prior to such date, the obligations of the parties to
consummate the transactions contemplated to occur at all Subsequent Closings
(and any related Trailing Closings) shall automatically so terminate if such
Subsequent Closings (and any related Trailing Closings) have not occurred on or
before the close of business on the Termination Date (or, in the case of any
Trailing Closing, on or before the close of business on the later of (a) the
Termination Date and (b) ten business days after the Subsequent Closing to which
such Trailing Closing relates). This
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Agreement otherwise may be terminated at any time before the Initial Closing as
follows and in no other manner:
(a) Mutual Consent. By mutual consent in writing of Buyer and
Sellers.
(b) Conditions to Buyer's Performance Not Met. By Buyer by written
notice to Sellers if any event occurs or condition exists which would
render impossible the satisfaction of one or more conditions to the
obligations of Buyer to effect the Initial Closing as set forth in
Articles VIII or IX.
(c) Conditions to Sellers' Performance Not Met. By Sellers by
written notice to Buyer if any event occurs or condition exists which
would render impossible the satisfaction of one or more conditions to the
obligations of Sellers to effect the Initial Closing as set forth in
Articles VIII or X.
(d) Material Breach. By Buyer, on the one hand, or Sellers, on the
other hand, if there has been a material misrepresentation or other
material breach by the other in its or their representations, warranties
and covenants set forth herein; provided, however, that the breaching
party shall have ten business days after receipt of notice from the other
party of its intention to terminate this Agreement if such breach
continues, in which to cure such breach.
11.2 Effect of Termination. In the event that this Agreement shall
be terminated pursuant to Section 11.1, all further obligations of the parties
under this Agreement shall terminate; provided that the obligations of the
parties contained in Sections 14.1, 14.2, 15.11 and 15.15 shall survive any such
termination, and that a termination under Section 11.1 shall not relieve any
party of any liability for any breach of, or for any misrepresentation under,
this Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any such breach or
misrepresentation.
11.3 Reliance Upon and Survival of Representations and Warranties.
(a) Notwithstanding any right of Buyer and its representatives fully
to review and investigate the Business, the Purchased Assets and the Assumed
Liabilities, and notwithstanding any knowledge of facts determined or
determinable by Buyer and its representatives pursuant to such investigation or
right of investigation, Buyer shall have the right to rely fully upon the
representations and warranties of Sellers contained in Article IV, subject to
the exceptions specified therein, it being the intention of the parties that
Buyer's review and investigation of the Business, the Purchased Assets and the
Assumed Liabilities
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shall not diminish any of Sellers' representations and warranties set forth in
Article IV.
(b) Notwithstanding the foregoing, the representations and
warranties contained herein shall expire 25 and 1/2 months after the Initial
Closing Date, except that (i) the representations and warranties set forth in
Sections 4.3(d), 4.4 and 4.5(a) shall continue indefinitely, (ii) the
representations and warranties set forth in Section 4.10(a) shall continue until
49 and 1/2 months after the Initial Closing Date, (iii) the representations and
warranties set forth in Section 4.12 shall continue through the expiration of
any applicable statute of limitations as the same may be extended, (iv) the
representations and warranties set forth in Section 4.3(a) shall continue
indefinitely to the extent that any inaccuracy therein or breach thereof shall
have prevented Buyer from discovering any term or provision of any Transaction
Document the effect of which is or has been to reduce the economic value of any
Transaction to Buyer and (v) for purposes of claiming indemnification under
Article XII, any such representation and warranty shall survive the time at
which it would otherwise expire as provided above with respect to any particular
claim if written notice setting forth in reasonable detail the facts giving rise
to the alleged inaccuracy or alleged breach of such representation and warranty
as to such claim shall have been given by any Indemnified Party to the
Indemnifying Party prior to such time.
ARTICLE XII
INDEMNIFICATION
12.1 Obligations of Sellers. Subject to the provisions of Sections
11.3 and 12.4, from and after the Initial Closing, Sellers agree to indemnify
and hold harmless Buyer and its present and former directors, officers,
employees, Affiliates, agents and assigns from and against any and all Losses,
directly or indirectly, as a result of, or based upon, arising from or otherwise
in respect of:
(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Sellers in or
pursuant to this Agreement;
(b) the Excluded Liabilities;
(c) non-compliance with any applicable bulk transfer Laws in
connection with or as a result of the transfer of the Purchased Assets and
the Assumed Liabilities pursuant to this Agreement;
(d) any breach of Law or other liability under ERISA (including
Title IV thereof) or the Code in connection with the operation of, or any
breach or failure to perform the terms of, any employee benefit plan or
arrangement
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maintained, sponsored, contributed to or administered by USL Capital or
its ERISA Affiliates; and
(e) any claim or action by (i) a third-party the basis for which is
an alleged Loss to such third-party resulting from a termination within
the meaning of Section 708 of the Code of any Tax Partnership triggered by
and upon the consummation of the Contemplated Transactions, or (ii) any
holder of an interest in Airlease resulting from an alleged breach of the
Airlease Partnership Agreement or AMSI's fiduciary duty to Airlease caused
by the consummation of the Contemplated Transactions.
12.2 Obligations of Buyer. Subject to the provisions of Sections
11.3 and 12.4, from and after the Initial Closing, Buyer agrees to indemnify and
hold harmless Sellers and their present and former directors, officers,
employees, Affiliates, agents and assigns from and against any and all Losses,
directly or indirectly, as a result of, or based upon, arising from or otherwise
in respect of:
(a) any inaccuracy in or breach or nonperformance of any of the
representations, warranties, covenants or agreements made by Buyer in or
pursuant to this Agreement; and
(b) the Assumed Liabilities.
12.3 Procedure.
(a) Notice. Any Indemnified Party seeking indemnification of any
Loss or potential Loss shall give written notice to the Indemnifying Party from
whom indemnification is sought. Written notice to the Indemnifying Party of the
existence of a third party claim shall be given by the Indemnified Party within
30 days after its receipt of a written assertion of liability from the third
party; provided, however, that any failure by any Indemnified Party to provide
timely notice of the existence of a third party claim to the Indemnifying Party
shall not relieve the Indemnifying Party of its indemnification obligations
hereunder except and to the extent that the Indemnifying Party incurs an
out-of-pocket expense or otherwise has been materially prejudiced as a direct
result of such delay.
(b) Defense. Subject to the provisions of Article XIII, the
Indemnifying Party shall be entitled, at its own expense, by written notice to
the Indemnified Party, to assume the defense of any Indemnifiable Claim. If the
Indemnifying Party assumes the defense of any Indemnifiable Claim, it shall
retain experienced counsel reasonably satisfactory to the Indemnified Party, and
the Indemnified Party shall have the right at all times to fully participate in
such defense at its own expense (unless the Indemnified Party has defenses not
available
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to the Indemnifying Party which conflict with the defenses available to the
Indemnifying Party, in which event the Indemnifying Party shall pay the
reasonable fees and expenses of separate counsel for the Indemnified Party) and
shall cooperate, at the expense of the Indemnifying Party, in such defense and
make available to the Indemnifying Party any books, records or other documents
within its control that may reasonably be required for such defense, including,
but not limited to, the Books and Records. If the Indemnifying Party does not
assume such defense, the Indemnified Party may defend, compromise or settle the
claim on behalf of and for the account and risk of the Indemnifying Party, who
shall remain liable for the costs of such defense, compromise or settlement and
be bound by the result. The Indemnified Party shall retain the defense and
control of matters relating to income and franchise taxes of itself and its
Affiliates with experienced counsel reasonably satisfactory to the Indemnifying
Party and at the expense of the Indemnifying Party, but shall not settle any
such matters without the consent of the Indemnifying Party (which shall not be
unreasonably withheld).
(c) Settlement Limitations. Notwithstanding anything in this Section
12.3 to the contrary, the Indemnifying Party shall not, without the written
consent of the Indemnified Party, settle or compromise any Indemnifiable Claim
or permit a default or consent to entry of any judgment without the written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld) and unless the applicable third party claimant and the Indemnifying
Party provide to the Indemnified Party an unqualified release from all liability
in respect of the claim. Notwithstanding the foregoing, if a settlement offer
solely for money damages is made by the applicable third party claimant, and the
Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying
Party's willingness to accept the settlement offer and pay the amount called for
by such offer and of such claimant's and the Indemnifying Party's willingness to
provide to the Indemnified Party an unqualified release from all liability in
respect of the claim, and the Indemnified Party declines to accept such offer
within 15 days after its receipt of such notice, the Indemnified Party may
continue to contest such claim, free of any participation by the Indemnifying
Party, and the amount of any ultimate liability with respect to such
Indemnifiable Claim that the Indemnifying Party shall have an obligation to pay
hereunder shall be limited to the lesser of (i) the amount of the settlement
offer that the Indemnified Party declined to accept or (ii) the aggregate Losses
of the Indemnified Party with respect to such claim. If the Indemnifying Party
makes any payment on any claim, the Indemnifying Party shall be subrogated, to
the extent of such payment, to all rights and remedies of the Indemnified Party
to any insurance benefits or other claims of the Indemnified Party with respect
to such claim, and the Indemnified Party shall pursue any claims under any
applicable insurance and promptly pay over to the Indemnifying Party any
insurance proceeds (up to the
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amount paid by the Indemnifying Party with respect to such claim) received by
the Indemnified Party in respect of such claim.
12.4 Mitigation; Limitations on Indemnification.
(a) The Indemnified Party shall take reasonable steps to mitigate
Losses and shall provide such evidence and documentation of the nature and
extent of any Loss as may be reasonably requested by the Indemnifying Party. The
obligation of the Indemnifying Party with respect to any Indemnifiable Claim
shall not extend to punitive damages or unforeseen consequential damages.
(b) Sellers shall not be required to indemnify any Indemnified Party
under Section 12.1(a) (other than for breach of Section 2.6, 2.7, 2.9(b), 2.10,
2.11, 2.12, 3.6(e), 4.4, 4.5(a), 7.3, 7.4, 7.5, 14.2 or 15.11 or Article XIII or
so much of (x) the last sentence of Section 4.12(a) as relates to the status of
the Transactions listed as Items 29 and 30 on Schedule 1.2(i) as grantor trusts
or (y) the first sentence of Section 4.12(h) as relates to the Affordable
Housing Transactions) in respect of any Indemnifiable Claim not relating to a
Separate Pool Asset (or an Assumed Liability relating thereto) unless the
aggregate of all amounts for which indemnity would otherwise be payable by
Sellers exceeds $4 million, and, in such event, Sellers shall be responsible
only for the amount in excess of $2 million. Sellers shall not be required to
indemnify any Indemnified Party under Section 12.1(a) (other than for breach of
Section 2.6, 2.7, 2.9(b), 2.10, 2.11, 2.12, 3.6(e), 4.4, 7.5, 14.2 or 15.11 or
Article XIII in respect of any Indemnifiable Claim relating to a Separate Pool
Asset (or an Assumed Liability relating thereto) unless the aggregate of all
amounts for which indemnity would otherwise be payable by Sellers exceeds
$50,000, and, in such event, Sellers shall be responsible only for the amount in
excess of $50,000. Buyer shall not be required to indemnify any Indemnified
Party under Section 12.2(a) (other than for breach of Section 2.6, 2.9(b), 2.10,
2.11, 7.3, 7.5, 14.2 or 15.11 or Article XIII) unless the aggregate of all
amounts for which indemnity would otherwise be payable by Buyer exceeds $4
million, and in such event, Buyer shall be responsible only for the amount in
excess of $2 million. Sellers' indemnity obligations under Section 12.1(a)
(other than for breach of Section 2.6, 2.7, 2.9(b), 2.10, 2.11, 2.12, 3.6(e),
4.4, 4.5(a), 7.4, 7.5, 14.2 or 15.11 or Article XIII) shall be limited, in the
aggregate, to $750 million. Buyer's indemnity obligations under Section 12.2(a)
(other than for breach of Section 2.6, 2.9(b), 2.10, 2.11, 7.5, 14.2 or 15.11 or
Article XIII) shall be limited, in the aggregate, to $750 million.
(c) Sellers shall not be required to indemnify any Indemnified Party
under Section 12.1(a) or (b) for any Loss arising under or relating to any
Environmental Law unless the Loss is (i) the result of a claim or action by a
third-party (including a Governmental Entity), (ii) incurred to comply with a
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requirement of applicable Environmental Law or (iii) incurred to remediate or
clean up any contamination resulting from releases of Hazardous Substances to
levels consistent with applicable clean-up standards of any Governmental Entity.
(d) Sellers shall not be required to indemnify any Indemnified Party
under Section 12.1(a) for any Loss resulting from a termination of a Tax
Partnership under Section 708 of the Code caused by the Contemplated
Transactions unless the Loss is (i) a Section 708 Tax Loss or (ii) the result of
any claim or action by a third-party against the Indemnified Party.
(e) Sellers shall not be required to indemnify any Indemnified Party
under Section 12.1(a) for any Loss resulting from the failure to have in place
at a pertinent Closing a Section 754 election unless the Loss is a Section 754
Tax Loss.
12.5 Remedies Exclusive. The remedies provided for in Articles XII
and XIII shall constitute the sole and exclusive remedy for any claims made
after the Initial Closing for breach of this Agreement or in connection with the
Contemplated Transactions, except for remedies specifically provided for in
Section 7.4, claims arising out of any breach of Section 14.2, and claims which
arise out of conduct that is finally determined pursuant to the procedures set
forth in Section 15.15 to constitute fraudulent misrepresentation; provided,
however, that in no event shall a breach of a representation and warranty be
deemed to constitute bad faith, misconduct or fraud solely by virtue of the fact
that it is shown that any Person or its Affiliates or any of their respective
directors, employees, officers, representatives, advisors or agents knew or
should have known of the existence of information which was inconsistent with
any of the representations and warranties made herein. Each party hereby waives,
to the extent permitted by applicable Law, any provision of Law to the extent
that it would limit or restrict the agreement contained in this Section 12.5.
Notwithstanding anything to the contrary elsewhere herein, no party or its
Affiliates shall seek or be liable for any punitive or unforeseen consequential
damages relating to any breach or alleged breach of this Agreement.
12.6 Price Adjustment; After-Tax Basis. Buyer and Sellers agree that
any payment made under this Article XII or Section 3.6(e) or 2.12 will be
treated by the parties on their Tax Returns as an adjustment to the Purchase
Price, and that any payment made under this Article XII (i) in respect of
federal income Taxes of Buyer (including penalties, but not interest) (other
than any such Taxes treated for Tax purposes as assumed liabilities) shall be
made on an After-Tax Basis, and (ii) in respect of state or local income Taxes
of Buyer (including penalties, but not interest) (other than any such Taxes
treated for Tax purposes as assumed liabilities) shall be made, with respect to
state and local, but not federal Taxes, on an After-Tax Basis.
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ARTICLE XIII
TAX MATTERS
13.1 Allocation of Tax Liabilities; Indemnification.
(a) Subject to the provisions of Section 13.2, Sellers shall be
liable for and shall hold Buyer harmless against any liability for Taxes,
including, but not limited to, liabilities for Taxes arising from the Section
338 Election, of (i) any Subsidiary for any taxable year or other taxable period
that ends on or before the Closing Date and, in the case of any taxable year or
other taxable period that includes the Closing Date, that part of the taxable
year or other taxable period that ends at the close of the Closing Date, and
(ii) any Subsidiary that are attributable to any other corporation and that are
imposed on any Subsidiary as a result of membership of such Subsidiary in a
consolidated, combined or unitary group of any Person through the Closing Date.
(b) Buyer shall be liable for and shall hold Sellers harmless
against any liability for Taxes of any Subsidiary for any taxable year or other
taxable period that begins after the close of the Closing Date and, in the case
of any taxable year or other taxable period that includes the Closing Date, that
part of the taxable year or other taxable period that begins after the close of
the Closing Date.
(c) Whenever it is necessary for purposes of this Section 13.1 to
determine the liability for Taxes of any Subsidiary for a taxable year or period
that begins on or before and ends after the Closing Date, the determination
shall be made by assuming that the Subsidiary had a taxable year which ended at
the close of business on the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis (such as the deduction for
depreciation) shall be apportioned on a time basis.
(d) Buyer shall promptly (and in any event within 15 business days)
notify Sellers in writing upon receipt by Buyer, any of its Affiliates or any
Subsidiary of notice of any pending or threatened audits or assessments relating
to Taxes for which Sellers would be required to indemnify Buyer pursuant to
Section 13.1(a). Sellers shall have the sole right to represent the Subsidiary's
interest in any audit or administrative or court proceeding relating to any Tax
that Sellers are required to indemnify pursuant to Section 13.1(a), and to
employ counsel of their choice at their expense, except with respect to any Tax
for any year ending after the Closing Date which audit or proceeding Buyer shall
have the right to control and to employ counsel of its choice at its expense.
Notwithstanding the foregoing, Sellers shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
which would materially adversely affect the liability for Taxes of Buyer or any
Subsidiary for any period after the Closing Date
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without the prior written consent of Buyer which shall not be unreasonably
withheld, and shall not be necessary to the extent that Sellers have agreed in
form and substance reasonably satisfactory to Buyer to indemnify Buyer against
the effects of any such settlement. If Sellers elect not to assume the defense
of any claim for Taxes which may be the subject of indemnification by Sellers
pursuant to Section 13.1(a), Sellers shall be entitled to participate at their
expense in such defense. None of Buyer or any Subsidiary may agree to settle any
claim for Taxes which may be the subject of indemnification by Sellers under
Section 13.1(a) without the prior written consent of Sellers, which consent
shall not be unreasonably withheld.
(e) Sellers shall not be liable under Section 13.1(a) for any Tax
the payment of which was made without Sellers' prior written consent, which may
not be unreasonably withheld, or any settlements effected without the consent of
Sellers, as required by Section 13.1(d).
13.2 Tax Covenants. USL Capital and its Affiliates shall join with
Buyer in making an election under Section 338(h)(10) of the Code (and comparable
elections pursuant to state and local law) with respect to the purchase and sale
of the stock of each Subsidiary other than Airlease except with respect to those
Subsidiaries identified on Schedule 13.2(a) (such election under Section
338(h)(10) of the Code, coupled with all comparable state and local elections,
being collectively referred to as the "Section 338 Election"). USL Capital
represents and warrants to Buyer that USL Capital and such Subsidiaries are as
of the date hereof, and will be on the Closing Date, members of a "selling
consolidated group," as defined in Treasury Regulations Section
1.338(h)(10)-1(c)(3), and as such will be entitled to join with Buyer in making
an election under Section 338(h)(10) of the Code for federal income tax
purposes, and also will be eligible to make an election under the laws of each
state in which any of them do business or own properties which are the subject
of the Contemplated Transactions comparable to the election under Section
338(h)(10) of the Code. USL Capital and its Affiliates shall (a) cause an IRS
Form 8023-A that has been completed in accordance with Treasury Regulations
Section 1.338(h)(10)-1 and all comparable forms required or appropriate pursuant
to any relevant state law to be executed on the Closing Date on behalf of the
affiliated group of corporations, for federal income tax purposes (and
comparable state groups), of which the Subsidiaries are members on the Closing
Date and (b) take such other action as Buyer shall reasonably request,
including, but not limited to, providing Buyer with any requested information,
and making available and causing appropriate Persons to take any action on
behalf of USL Capital and its Affiliates, required or appropriate for the making
of such Section 338 Election in accordance with Treasury Regulations Section
1.338(h)(10)-1 and Form 8023-A (and in accordance with relevant state and local
law). USL Capital and its Affiliates will appropriately and timely prepare and
file an IRS Form 8594 (and
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any other forms required by Section 338(h)(10)(C) or 1060 of the Code) reporting
the sale and purchase made pursuant to this Agreement (and in accordance with
relevant state and local law). Such form or forms shall be completed and filed
in accordance with the Allocation. The purchase price and the modified adjusted
deemed sales price (as defined in Treasury Regulations Section
1.338(h)(10)-1(f)) shall be reported by Buyer and Sellers for all Tax purposes
in accordance with an allocation (the "Allocation") to be prepared by Buyer in
good faith in a manner consistent with the purchase price paid hereunder for
each Purchased Asset, and none of them nor any of their Affiliates shall take
any position inconsistent with the Allocation in any Tax Return or in any
proceeding before any taxing authority or otherwise. Buyer shall provide the
Allocation to Sellers within a reasonable period of time following the Initial
Closing Date. Sellers shall cause an election under Section 754 of the Code to
be made as of the Closing Date with respect to each Tax Partnership with respect
to which Sellers have the power to cause such an election to be made.
13.3 Refunds. Any refunds (including interest thereon) of Taxes paid
or indemnified by Sellers pursuant to Section 13.1(a) shall be for the account
of Sellers. Any refunds (including interest thereon) of Taxes paid or
indemnified by Buyer pursuant to Section 13.1(b) shall be for the account of
Buyer. Buyer agrees to assign and promptly remit (and to cause each Subsidiary
to assign and promptly remit) to Sellers all refunds (including interest
thereon) of Taxes, net of Taxes (taking into account the payment required
hereby), which Sellers are entitled to hereunder and which are received by Buyer
or any Subsidiary or any other Affiliate of Buyer. Sellers agree to assign and
promptly remit to Buyer all refunds (including interest thereon) of Taxes, net
of Taxes (taking into account the payment required hereby), which Buyer is
entitled to hereunder and which are received by Sellers or any of their
Affiliates. Each of Buyer, on the one hand, and Sellers on the other hand, agree
that, upon the reasonable request and at the sole expense of the other, it or
they shall file, or cause any Subsidiary to file, a claim for refund of any Tax
to which the other is entitled hereunder.
13.4 Returns and Reports.
(a) USL Capital shall file or cause to be filed when due all Tax
Returns with respect to Taxes that are required to be filed by or with respect
to each Subsidiary for taxable years or periods ending on or before the Closing
Date and shall pay any Taxes shown as due on such Tax returns. Unless otherwise
required, Tax Returns with respect to Taxes for taxable years ending on the
Closing Date shall be prepared on a basis consistent with Treasury Regulations
Section 1.1502-76(b)(1); provided, however, that if the Closing Date falls in
the middle of a month, USL Capital and Buyer may agree to allocate the tax items
ratable to such month consistent with Treasury Regulations
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Section 1.1502-76(b)(2)(iii). Buyer shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to each Subsidiary
for taxable years or periods ending after the Closing Date and shall pay any
Taxes shown as due on such Tax Returns. Buyer shall cause each Subsidiary to
consent to join, for all taxable periods of the Subsidiary ending on or before
the Closing Date for which the Subsidiary is eligible to do so, in any
consolidated, combined or unitary Tax Returns relating to Tax which USL Capital
shall request it to join.
(b) With respect to any Tax Return with respect to Taxes that covers
a period beginning before and ending after the Closing Date, a copy of such Tax
Return shall be provided to Sellers within 45 days prior to the due date
(including extensions) for the filing thereof, and Sellers shall have the right
to approve (which approval shall not be unreasonably withheld) such Tax Return
to the extent it relates to the portion of the period ending on the Closing
Date. Sellers shall promptly pay to Buyer the amount of Taxes attributable to
such period (as determined pursuant to Section 13.1(c) above) at the time such
Tax Return is filed.
(c) With respect to any taxable year of any Subsidiary ending after
December 31, 1995 and on or prior to the Closing Date, Buyer shall promptly
cause each Subsidiary to prepare and provide to Sellers a package of tax
information materials (the "Tax Package"), which shall be completed in
accordance with past practice including past practice as to providing the
information, schedules and work papers and as to the method of computation of
separate taxable income or other relevant measure of income of each Subsidiary.
13.5 Disputes. If Buyer and Sellers cannot agree on any calculation
or allocation required to be made under Section 13.1(c), 13.3, or 13.4(b), Buyer
and Sellers shall jointly select a national accounting firm acceptable to both
Buyer and Sellers (or, if they cannot agree on such selection, they shall select
a national (big-six) accounting firm by lot after eliminating the independent
public accountants of Sellers, Buyer and each of their respective Affiliates)
and shall direct the firm so selected to make such calculation as promptly as
practicable, but in any event not later than 30 days after such direction, and
to deliver a written notice to each of Buyer and Sellers setting forth the
results of such calculation. The results of such calculation as made by such
firm shall be final and binding, and the fees and expenses of such firm shall be
paid 50% by Buyer and 50% by Sellers.
13.6 Price Adjustment; After-Tax Basis. Buyer and Sellers agree that
any payment made under this Article XIII will be treated by the parties on their
Tax Returns as an adjustment to the Purchase Price, and that any payment made
under this Article XIII (i) in respect of federal income Taxes of Buyer
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(including penalties, but not interest) (other than any such Taxes treated for
Tax purposes as assumed liabilities) shall be made on an After-Tax Basis, and
(ii) in respect of state or local income Taxes of Buyer (including penalties,
but not interest) (other than any such Taxes treated for Tax purposes as assumed
liabilities) shall be made, with respect to state and local, but not federal
Taxes, on an After-Tax Basis.
13.7 Survival. Notwithstanding anything herein to the contrary, the
provisions of this Article XIII shall survive through the expiration of the
applicable statute of limitations as the same may be extended.
13.8 Transfer, Use and Property Taxes. Sellers shall indemnify and
hold harmless Buyer and the Subsidiaries from all sales or use, transfer,
documentary, registration or other similar Taxes imposed on or in connection
with the purchase, sale or transfer of the Purchased Assets to, and the
assumption of the Assumed Liabilities by, Buyer pursuant to this Agreement
(including, but not limited to, any such Taxes arising from the Section 338
Election) and any such Taxes imposed on the transfers of the Separate Pool
Assets from a Seller to Buyer, thereafter from Buyer to SPLC and thereafter from
SPLC to DFO Partnership. All use Taxes applicable to the Purchased Assets
arising in connection with the use thereof prior to the Closing Date shall be
payable by Sellers (prorated according to the number of days of the relevant Tax
period which are prior to the Closing Date) and all such Taxes arising
thereafter shall be payable by Buyer (prorated according to the number of days
of the relevant Tax period which are after the Closing Date). All property Taxes
applicable to the Purchased Assets arising in connection with their ownership,
use, operation or maintenance prior to the Closing Date shall be payable by
Sellers (prorated according to the number of days of the relevant Tax period
which are prior to the Closing Date), and all such Taxes arising in connection
with their ownership, use, operation or maintenance on and after the Closing
Date shall be payable by Buyer (prorated according to the number of days of the
relevant Tax period which are after the Closing Date).
ARTICLE XIV
PUBLICITY/CONFIDENTIALITY
14.1 Publicity and Reports. Sellers and Buyer shall coordinate all
publicity relating to the Contemplated Transactions, and no party nor any of its
Affiliates shall issue any press release, publicity statement or other public
notice relating to the Contemplated Transactions (including with respect to the
identity of Buyer or Sellers or the amount of the Purchase Price (or any
component thereof)) without first obtaining the consent of the other party,
except that neither party shall be precluded from making such filings with any
Governmental Entity or issuing such releases or statements or giving such
notices as may be required by Law or the rules of any stock exchange.
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14.2 Confidentiality. All information disclosed by any party or its
representatives or Affiliates, whether before or after the date hereof, in
connection with the transactions contemplated by, or the discussions and
negotiations preceding, this Agreement to any other party or its representatives
shall be kept confidential by such other party and its representatives and
Affiliates (and, after the Initial Closing Date, by Sellers and their
representatives in the case of all information relating to the Business provided
by any of them to Buyer or its representatives or Affiliates) and shall not be
used by any such Persons other than as contemplated by this Agreement, except to
the extent that such information (i) was known by the recipient when received,
(ii) is or hereafter becomes obtainable from other sources other than by breach
of Law or any Contract, (iii) is necessary or appropriate to disclose to a
Governmental Entity having jurisdiction over the parties, (iv) may otherwise be
required to be disclosed by Law, (v) must be disclosed in order to comply with a
right of first refusal or right of first offer provided for in any Transaction
Document or Assumed Contract, or (vi) to the extent such duty as to
confidentiality is waived in writing by the other party; provided, that after
each Closing Date, Buyer and its representatives and Affiliates shall not be
required to keep confidential any information provided by Sellers or their
representatives or Affiliates relating to Transactions transferred to Buyer on
such Closing Date, except to the extent that such information is required to be
kept confidential by Law, relates to Tax Returns (or information contained
therein) filed by any of Sellers' Affiliates (except any such information may be
provided to a bona fide prospective purchaser of any Transaction or Purchased
Asset to which it relates provided that (x) Buyer and its Affiliates shall take
reasonable steps to ensure that such prospective purchaser understands and
agrees that neither Seller nor any of its Affiliates shall have any
responsibility to such prospective purchaser for the truth, accuracy or
completeness of any such information and (y) such prospective purchaser shall
have agreed in writing with Buyer to keep all such information confidential on
the same terms as set forth herein) or Buyer agrees in writing with Sellers to
keep such information confidential. If this Agreement is terminated in
accordance with its terms, each party shall return all documents and
reproductions thereof received by it or its representatives and Affiliates from
the other party and, in the case of reproductions, all such reproductions made
by the receiving party that include information not within the exceptions
contained in the first sentence of this Section 14.2, unless the recipients
provide assurances reasonably satisfactory to the requesting party that such
documents have been destroyed.
ARTICLE XV
GENERAL
15.1 Amendments; Waivers. This Agreement and any Schedule or Exhibit
attached hereto may be amended only by agreement in writing of both parties. No
waiver of any provision
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nor consent to any exception to the terms of this Agreement shall be effective
unless in writing and signed by the party to be bound and then only to the
specific purpose, extent and instance so provided.
15.2 Exhibits and Schedules; Integration. Each Exhibit and Schedule
delivered pursuant to the terms of this Agreement shall be in writing and shall
constitute a part of this Agreement, although such Exhibits and Schedules need
not be attached to each copy of this Agreement. This Agreement, together with
such Exhibits and Schedules, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection therewith, except for the
Confidentiality Agreement dated January 2, 1996 by and between J.P. Morgan
Securities Inc., as agent for Ford, and BankAmerica Corporation, provided,
however, that notwithstanding any provision thereof to the contrary, after each
Closing Date, Buyer and its representatives and Affiliates shall not be required
to keep confidential any information provided by Sellers or their
representatives or Affiliates relating to Transactions transferred to Buyer on
such Closing Date, except to the extent that such information is required to be
kept confidential by Law, relates to Tax Returns (or information contained
therein) filed by any of Sellers' Affiliates (except any such information may be
provided to a bona fide prospective purchaser of any Transaction or Purchased
Asset to which it relates provided that (x) Buyer and its Affiliates shall take
reasonable steps to ensure that such prospective purchaser understands and
agrees that neither Seller nor any of its Affiliates shall have any
responsibility to such prospective purchaser for the truth, accuracy or
completeness of any such information and (y) such prospective purchaser shall
have agreed in writing with Buyer to keep such information confidential on the
same terms as set forth herein) or Buyer agrees in writing with Sellers to keep
such information confidential.
15.3 Best Efforts. Each party will use its best efforts to cause all
conditions to its obligations hereunder to be timely satisfied, to the end that
the transactions contemplated by this Agreement shall be effected substantially
in accordance with its terms as soon as reasonably practicable.
15.4 Governing Law. This Agreement, the legal relations among the
parties and any Action, whether contractual or non-contractual, instituted by
either party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement shall be governed by and
construed in accordance with the Laws of the State of California applicable to
contracts made and performed in such State and without regard to conflicts of
law doctrines.
15.5 No Assignment. Neither this Agreement nor any rights or
obligations under it are assignable except that each of
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Buyer or Sellers may assign its or their rights hereunder to any of their
respective Affiliates; provided, however, that no such assignment shall relieve
the assignor of any of its obligations hereunder. Without limiting the
foregoing, the parties acknowledge that the capital stock of FM FSC UK, Ltd.
shall be sold to and purchased by BA FSC Holdings Inc.
15.6 Headings. The descriptive headings of the Articles, Sections
and subsections of this Agreement are for convenience only and do not constitute
a part of this Agreement.
15.7 Counterparts. This Agreement and any amendment hereto or any
other agreement or document delivered pursuant hereto may be executed in one or
more counterparts and by different parties in separate counterparts. All of such
counterparts shall constitute one and the same agreement or other document and
shall become effective unless otherwise provided therein when one or more
counterparts have been signed by each party and delivered to the other party.
15.8 Parties in Interest. This Agreement shall be binding upon and
inure to the benefit of each party and its respective successors and permitted
assigns, and nothing herein (including, but not limited to, the assumption of
the Assumed Liabilities by Buyer), express or implied, is intended to confer
upon any other Person (other than the Indemnified Parties to the extent provided
in Articles XII and XIII) any rights or remedies of any nature whatsoever under
or by reason of this Agreement.
15.9 Performance by Subsidiaries. Each party agrees to
cause its subsidiaries to comply with any obligations hereunder
relating to such subsidiaries and to cause its subsidiaries to take any other
action which may be necessary or reasonably requested by the other party in
order to consummate the transactions contemplated by this Agreement.
15.10 Notices. Any notice or other communication hereunder must be
given in writing and (a) delivered in person, (b) transmitted by telex, telefax
or telecommunications mechanism provided that any notice so given is also mailed
or sent as provided in clause (c) or (c) mailed by certified or registered mail,
postage prepaid, receipt requested or sent by reputable overnight courier as
follows:
If to Buyer, addressed to:
BA Leasing & Capital Corporation
555 California Street
San Francisco, California 94104
Telecopy: 415-765-7373
Attn: Contract Administration, 4th Flr.
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If to Sellers, addressed to:
USL Capital Corporation
733 Front Street
San Francisco, California 94111
Telecopy: 415-986-0584
Attn: General Counsel
and:
Ford Motor Credit Company
The American Road, Room 1187
Dearborn, Michigan 48121
Telecopy: 313-337-9591
Attn: Secretary
with copies to:
Ford Motor Company
The American Road, Room 1187
Dearborn, Michigan 48121
Telecopy: 313-337-9591
Attn: Secretary
and:
O'Melveny & Myers
Citicorp Center
153 East 53rd Street
New York, New York 10022-4611
Telecopy: 212-326-2061
Attn: C. Douglas Kranwinkle, Esq.
Jeffrey J. Rosen, Esq.
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective (i) if given by telecommunication, when
transmitted to the applicable number specified in (or pursuant to) this Section
15.10 and an appropriate answerback is received, (ii) if given by mail or
courier or any other means, when actually delivered.
15.11 Expenses. Sellers and Buyer shall each pay their own expenses
incident to the negotiation, preparation and performance of this Agreement and
the transactions contemplated hereby, including, but not limited to, the fees,
expenses and disbursements of its advisers.
15.12 Attorneys' Fees. In the event of any Action by any party
arising under or out of, in connection with or in respect of this Agreement,
including any participation in bankruptcy proceedings to enforce against a party
a right or
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claim in such proceedings, the prevailing party shall be entitled to reasonable
attorneys' fees (including allocated costs of internal counsel) and out of
pocket costs and expenses incurred in such Action. Attorneys' fees incurred in
enforcing any judgment in respect of this Agreement shall be recoverable as a
separate item. The parties intend that the preceding sentence be severable from
the other provisions of this Agreement, survive any judgment and, to the maximum
extent permitted by law, not be deemed merged into such judgment.
15.13 Representation By Counsel; Interpretation. Sellers and Buyer
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of Law or any legal decision that would
require interpretation of any claimed ambiguities herein against the party that
drafted it has no application and is expressly waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the intent of
Buyer and Sellers.
15.14 Severability. If any provision of this Agreement is determined
to be invalid, illegal or unenforceable by any Governmental Entity, the
remaining provisions of this Agreement shall remain in full force and effect
provided that the essential terms and conditions of this Agreement for both
parties remain valid, binding and enforceable. To the extent permitted by Law,
the parties hereby to the same extent waive any provision of Law that renders
any provision hereof prohibited or unenforceable in any respect.
15.15 Dispute Resolution; Agreement to Arbitrate. Except to the
extent that any specific dispute resolution mechanism has been otherwise
provided for with respect to any specific provision of this Agreement (or such
mechanism has been pursued to its conclusion and either the dispute in question
remains unresolved or the resolution reached by such process has not been
honored), in the event that any dispute arises among the parties with respect to
this Agreement or the Contemplated Transactions, the following procedures shall
apply:
(a) The parties will attempt in good faith to resolve any dispute,
controversy or claim under, arising out of, relating to or in connection
with this Agreement, including, but not limited to, the negotiation,
execution, interpretation, construction, performance, non-performance,
breach, termination, validity, scope, coverage or enforceability of this
Agreement or any alleged fraud in connection therewith, promptly by
negotiations among representatives of the parties. If any such dispute,
controversy or claim should arise, duly authorized representatives of
Buyer and Sellers will meet at least once and will attempt to resolve the
matter. Either representative may request the other to meet again within
14 days thereafter, at a mutually agreed time and place. If
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the matter has not been resolved within 30 days after the first meeting
of the representatives (which period may be extended by mutual agreement),
the parties will attempt in good faith to resolve the controversy or claim
in accordance with the Center for Public Resources Model Procedure for
Mediation of Business Disputes.
(b) If the matter has not been resolved pursuant to the foregoing
procedures within 60 days after the first meeting (which period may be
extended by mutual agreement), the matter shall be settled, at the request
of either party, by arbitration conducted in accordance with the
provisions of the Federal Arbitration Act (9 U.S.C. Sections 1-16)
and in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by one arbitrator
mutually selected by the parties. If the parties are unable to agree on
the selection of an arbitrator, they shall select an arbitrator through
the procedures established by the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes. The arbitration of such
issues, including the determination of any amount of damages suffered by
any party hereto by reason of the acts or omissions of any party, shall be
final and binding upon the parties, except that the arbitrator shall not
be empowered to act as amiable compositeur or authorized to award punitive
damages or unforeseen consequential damages with respect to any such
claim, dispute or controversy. No party shall seek any punitive damages or
unforeseen consequential damages relating to any matters under, arising
out of, in connection with or relating to this Agreement. Equitable
remedies shall be available in any such arbitration. The parties intend
that this agreement to arbitrate be valid, binding, enforceable and
irrevocable. The substantive and procedural Law of the State of California
shall apply to any such arbitration proceedings. The place of any such
arbitration shall be San Francisco, California. Judgment upon the award
rendered by the arbitrators may be entered by any court having
jurisdiction thereof.
(c) Notwithstanding the provisions of this Section 15.15, either
party may seek injunctive or other equitable relief to maintain the status
quo before any court of competent jurisdiction in connection with any
claim, dispute or controversy arising out of this Agreement.
15.16 Further Assurances. Each party shall execute and deliver such
further certificates, agreements and other documents and take such other actions
as any other party may reasonably request to consummate or implement the
transactions contemplated hereby or to evidence such events or matters.
88
<PAGE> 95
IN WITNESS WHEREOF, each of Buyer and each Seller has caused this
Agreement to be executed by its duly authorized representative as of the date
first above written.
BA LEASING & CAPITAL CORPORATION
By: /s/ RICHARD V. HARRIS
-----------------------------
Name: Richard V. Harris
Title: Chairman and President
USL CAPITAL CORPORATION
By: /s/ JAMES G. DUFF
-----------------------------
Name: James G. Duff
Title: Chairman and Chief
Executive Officer
FORD MOTOR CREDIT COMPANY
By: /s/ JOHN P. BURKHARD
-----------------------------
Name: John P. Burkhard
Title: Vice President - Treasurer
<PAGE> 1
AGREEMENT TO FILE JOINTLY
United States Airlease Holding, Inc. ("Holding"), USL Capital
Corporation ("USL"), Ford Holdings, Inc. ("FHI") and Ford Motor Company
("Ford") hereby agree pursuant to Rule 13d-1(f) under the Securities Exchange
Act of 1934, as amended, that the Schedule 13D relating to Units in Airlease
Ltd., a California Limited Partnership, and any amendments thereto are filed by
them jointly and that Holding is authorized to execute such Schedule 13D or any
amendments thereto for and on behalf of each of Holding, USL, FHI and Ford.
Dated: September 3, 1996 UNITED STATES AIRLEASE
HOLDING, INC.
By: /s/ Henry Lerner
----------------------------------
Henry Lerner
Its: Senior Vice President
USL CAPITAL CORPORATION
By: /s/ Henry Lerner
----------------------------------
Henry Lerner
Its: Senior Vice President
FORD HOLDINGS, INC.
By: /s/ Peter J. Sherry, Jr.
----------------------------------
Peter J. Sherry, Jr.
Its: Assistant Secretary
FORD MOTOR COMPANY
By: /s/ Peter J. Sherry, Jr.
----------------------------------
Peter J. Sherry, Jr.
Its: Assistant Secretary
EXHIBIT 6
