UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): May 28, 1997
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Commission File No. 33-2794
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POLARIS AIRCRAFT INCOME FUND II,
A California Limited Partnership
State of Organization: California
IRS Employer Identification No. 94-2985086
201 Mission Street, 27th Floor, San Francisco, California 94105
Telephone - (415) 284-7400
This document consists of 70 pages.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a) Financial Statements. None
b) Pro Forma Information. None
c) Exhibits.
2.1 Purchase, Assignment and Assumption Agreement - attached *
2.2 Escrow Agreement **
2.3 Pledge and Security Agreement **
2.4 Keep Well Agreement **
2.5 Promissory Note **
2.6 Guaranty (Keep Well) **
2.7 Guaranty (SPV Indebtedness) **
*Exhibit 2.1 which was filed on June 12, 1997 with the original Current Report
on Form 8-K dated May 28, 1997 was incomplete in that all of the schedules were
inadvertently omitted. The complete document, including all schedules, is now
attached.
**Exhibits 2.2 through 2.7 were previously filed on June 12, 1997 with the
original Current Report on Form 8-K dated May 28, 1997 and are hereby
incorporated by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POLARIS AIRCRAFT INCOME FUND II
(Registrant)
By: Polaris Investment
Management Corporation,
General Partner
August 12, 1997 By: /S/Marc A. Meiches
- --------------------------------- ------------------
Marc A. Meiches
Chief Financial Officer
(principal financial officer and
principal accounting officer of
Polaris Investment Management
Corporation, General Partner of
the Registrant)
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PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT
dated as of
April 1, 1997
between
POLARIS AIRCRAFT INCOME FUND II
as Assignor
and
TRITON AVIATION SERVICES II LLC
as Assignee
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions.......................................... 1
SECTION 2. Sale and Assignment.................................. 11
SECTION 3. Purchase and Assumption.............................. 12
SECTION 4. Purchase Price....................................... 12
(a) Payment of Purchase Price............................ 12
(b) Transfer of Income and Lessee Deposits............... 13
(c) First Effective Date; Mop-Up Date.................... 13
(d) Settlement of Income and Lessee Deposits............. 14
SECTION 5. Representations and Warranties of Assignor;
Limitation of Warranty; Covenant with Respect to
Pre-Closing Actions.................................. 16
5.1 Representations and Warranties of Assignor........... 16
(a) Partnership Organization, Etc........................ 16
(b) Due Authorization; Non-Contravention................. 16
(c) Due Execution and Delivery; Enforceability........... 17
(d) Event of Default..................................... 17
(e) Total Loss........................................... 17
(f) Taxes................................................ 18
(g) Litigation........................................... 18
(h) Encumbrances......................................... 18
(i) Brokers' Fees........................................ 19
(j) Operative Agreements; Receivable Agreements.......... 19
(k) Title to Transferred Interests....................... 19
(l) Unfunded Commitments................................. 20
(m) The outstanding principal amount of each Receivable
as of April 1, 1997 is set forth on Schedule 8 hereto 20
5.2 Supplements to Schedules; Post-Signing Information... 20
5.3 Limitation of Warranty............................... 20
5.4 Actions with Respect to Transferred Interests........ 21
SECTION 6. Representations and Warranties of Assignee;
Access Covenant...................................... 21
6.1 Representations and Warranties of Assignee........... 21
(a) LLC Organization, Etc................................ 21
(b) Due Authorization; Non-Contravention................. 22
(c) Due Execution and Delivery; Enforceability........... 22
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(d) Litigation........................................... 22
(e) Compliance with Operative Agreements and Receivable
Agreements........................................... 23
(f) Non-Airline.......................................... 23
(g) Brokers' Fees........................................ 23
(h) Acquisition For Own Account.......................... 23
6.2 Access Covenant...................................... 23
SECTION 7. Conditions Precedent to the Obligations of Assignor.. 24
(a) Purchase Price....................................... 24
(b) Affidavit of Limited Control by a Non-U.S. Citizen... 24
(c) Escrow Agreement..................................... 24
(d) TASL "Keep Well" Agreement........................... 25
(e) TIL Keep Well Guaranty and Loan Guaranty............. 25
(f) Assignee Security Agreement.......................... 25
(g) Approvals and Consents............................... 25
(h) Due Authorization, Execution and Delivery............ 25
(i) Representations and Warranties....................... 26
(j) Organizational and Authorization Matters............. 26
(k) Illegality; No Proceedings........................... 27
(l) No Total Loss........................................ 27
(m) Opinions............................................. 27
(n) Location of Aircraft................................. 28
(o) TIL Balance Sheets................................... 28
(p) Other Instruments and Documents; Additional
Information.......................................... 28
(q) Outside Date......................................... 28
(r) No Pending Superior Proposal......................... 28
(s) Satisfaction of Conditions........................... 28
(t) Opinions............................................. 29
(u) Outside Date......................................... 29
(v) Superior Proposal.................................... 29
SECTION 8. Conditions Precedent to the Obligations of Assignee.. 29
(a) Leases and Trust Agreements.......................... 29
(b) Due Authorization, Execution and Delivery............ 29
(c) Representations and Warranties....................... 29
(d) Schedules ........................................... 30
(e) Partnership Authorization Matters.................... 30
(f) Illegality; No Proceedings........................... 31
(g) Approvals and Consents............................... 31
(h) No Total Loss........................................ 31
(i) Opinions............................................. 31
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(j) Location of Aircraft................................. 32
(k) Other Instruments and Documents; Additional
Information.......................................... 32
(l) Outside Date......................................... 32
(m) Receivable Agreements................................ 32
(o) Opinion.............................................. 33
SECTION 9. Payments............................................. 33
SECTION 10. Certain Notices...................................... 33
SECTION 11. Superior Proposal.................................... 34
SECTION 12. Further Assurances................................... 35
SECTION 13. Taxes and Indemnities................................ 35
(a) Transfer Taxes....................................... 35
(b) Notice of IRS Reports................................ 36
(c) Assignor's Indemnity................................. 36
(d) Assignee's Indemnity................................. 37
(e) Survival of Representations and Warranties........... 38
SECTION 14. Indemnification Procedure............................ 38
SECTION 15. Termination.......................................... 40
SECTION 16. Miscellaneous........................................ 41
(a) Notices.............................................. 41
(b) Headings............................................. 42
(c) References........................................... 42
(d) GOVERNING LAW........................................ 42
(e) Severability......................................... 42
(f) Amendments in Writing................................ 42
(g) Expenses............................................. 43
(h) Execution in Counterparts............................ 43
(i) Entire Agreement..................................... 43
(j) Exhibits............................................. 43
(k) Assignment and Successors............................ 43
(l) Confidentiality...................................... 44
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EXHIBITS
Exhibit A -- Form of Promissory Note
Exhibit B -- Form of TASL Keep Well
Exhibit C-1 -- Form of TIL Keep Well Guaranty
Exhibit C-2 -- Form of TIL Loan Guaranty
Exhibit D -- Form of Pledge and Security Agreement
Exhibit E -- Form of SPV Provisions
SCHEDULES
Schedule 1 -- Aircraft
Schedule 2 -- Leases
Schedule 3 -- Foreign Aircraft Engines
Schedule 4 -- Other Operative Agreements
Schedule 4(a) -- Purchase Price
Schedule 5 -- Owner Trustees
Schedule 5(b) -- Consents
Schedule 5(d) -- Assignor Claims
Schedule 5(g) -- Pending Litigation
Schedule 5(h) -- Liens
Schedule 5(j) -- Missing Documents
Schedule 6 -- Trust Agreements
Schedule 7 -- Unfunded Commitments
Schedule 8 -- Receivables and Receivable Agreements
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This PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT (as the same
may be amended, modified or supplemented from time to time, this "Agreement"),
dated as of April 1, 1997, is by and between POLARIS AIRCRAFT INCOME FUND II, a
California limited partnership ("Assignor"), and TRITON AVIATION SERVICES II
LLC, a California limited liability company ("Assignee").
W I T N E S E T H:
WHEREAS, Assignor desires to sell and assign to Assignee and
Assignee desires to purchase and assume from Assignor all of Assignor's right,
title and interest in and to the Transferred Interests;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements of the parties contained herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Assignor and Assignee agree as follows:
SECTION 1. Definitions
In addition to the terms defined elsewhere herein, when used in
this Agreement, the following terms have the meanings indicated below:
"Act" means Part A of subtitle VII of title 49, United States
Code.
"actual knowledge" of any Person, means the conscious awareness
of facts or other information by any director, officer, employee or agent of
such Person, in either such case, who is (i) actively involved in negotiating
the transactions contemplated by this Agreement or (ii) responsible, in the
ordinary course, for administering, on behalf of Assignor, the transactions
contemplated by the Operative Agreements or the Receivable Agreements.
"Affiliate" means, with respect to any Person, (i) each Person
that, direct ly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, 20% or more of the Stock having ordinary
voting power in the election of direc tors or manager of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person and (iii) each of such Person's officers,
directors, members, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
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"After-Tax Basis" means on a basis such that any payment received
or deemed to have been received by any Person shall be supplemented by a further
amount paid to that Person, so that the recipient is held harmless on an
after-Tax basis from all Taxes (calculated with respect to the highest
applicable tax rate and taking into account any related credits or deductions
allowed to the recipient of such payment in respect of the indemnified matters)
resulting from the receipt (actual or constructive) of such payments and where
the indemnitee is treated as a partnership for federal income tax purposes, the
"highest applicable tax rate" means the highest applicable federal tax rate in
effect for individuals at the time the indemnity payment is made plus 6%.
"Agreement" shall have the meaning assigned to it in the preamble
hereof.
"Aircraft" means the aircraft more fully described on Parts A and
B of Schedule 1 attached hereto and, with respect to each Foreign Aircraft,
shall include (i) any and all Parts installed on or attached to any such Foreign
Aircraft as of the Effective Time relating to such Foreign Aircraft (subject to
any pooling, replacement or exchange rights arising under the Operative
Agreements relating to such Foreign Aircraft), (ii) all Aircraft Documents
relating to such Foreign Aircraft, (iii) the Engines and (iv) to the extent
assignable by Assignor, all warranties of manufacturers or other vendors of such
Foreign Aircraft, Engines or Parts relating thereto that are in effect on the
Effective Date relating to such Foreign Aircraft.
"Aircraft Documents" mean, with respect to any Aircraft, all
records, logs, technical data and manuals relating to the maintenance or
operation of such Aircraft which are owned by Assignor.
"Aircraft Transferred Interests" means, collectively, all of
Assignor's present and future right, title and interest in, to and under the
Trust Estate, the Trust Agreements and all other Operative Agreements, all
Lessee Deposits, all Foreign Aircraft and all Income relating to or associated
with any of the foregoing, but excluding, in each case, the Reserved Rights
relating to or associated with any of the foregoing. The term Transferred
Interest followed immediately by a manufacturer's serial number of an Aircraft
(e.g., "Transferred Interest 19711") shall mean, in each case, collectively, all
of Assignor's present and future right, title and interest in, to and under the
Trust Estate, the Trust Agreement and other Operative Agreements, Lessee
Deposits and Income relating to or associated with the Aircraft bearing such
manufacturer's serial number.
"Allocable Portion Percentage" means, with respect to any
Aircraft, the amount obtained by dividing the Appraised Value of such Aircraft
(determined immediately before such Aircraft suffered a Total Loss or such
Aircraft is otherwise
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deleted from this Agreement) by the sum of the Appraised Values of all the
Aircraft (determined at the same time).
"Ancillary Agreements" mean, collectively, the Promissory Note,
the Keep Well, the Keep Well Guaranty, the Loan Guaranty, the Security
Agreement, the Assignment and Assumption Agreements and all other agreements,
instruments, docu ments and certificates, including, without limitation,
consents, assignments, contracts, financing statements and all other written
matters whether now or hereafter executed by or on behalf of Assignor or
Assignee or any of their respective Affiliates and delivered in connection with
this Agreement or the transactions contemplated hereby.
"Appraised Value" means, with respect to any Aircraft, the most
recent semi-annual generic current fair market value of aircraft of the same
type, age, gross weight and configuration, including, without limitation, engine
type and hushkit status, published by Avitas Aircraft Appraisal Inc. without
adjustment for the maintenance "half-time" condition of such Aircraft.
"Assignee" shall have the meaning assigned to it in the preamble
hereof.
"Assignee Acceptance Notice" shall have the meaning assigned to
it in Section 11(c) hereof.
"Assignee Indemnitees" shall have the meaning assigned to it in
Section 13(c) hereof.
"Assignment and Assumption Agreement" shall mean (A) for each
Aircraft Transferred Interest, either (i) an Assignment and Assumption Agreement
(FAA), executed and delivered by Assignor and Assignee at the applicable
Effective Time, in form and substance satisfactory to Assignee and Assignor or
(ii) a Novation Agreement, executed and delivered by Assignor and Assignee at
the applicable Effective Time, in form and substance satisfactory to Assignee
and Assignor and (B) for each Receivable Transferred Interest, a Bill of Sale
and Assignment, executed and delivered by Assignor and Assignee at the
applicable Effective time, in form and substance satisfactory to Assignee and
Assignor.
"Assignor" shall have the meaning assigned to it in the preamble
hereof.
"Assignor Indemnitees" shall have the meaning assigned to it in
Section 13(d) hereof.
"Assumed Liabilities" mean (a) with respect to each Aircraft
Transferred Interest, (i) all of the obligations and liabilities of Assignor
relating to the applicable Trust
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Estate and under the applicable Trust Agreement and all other Operative
Agreements relating to such Trust Estate or such Aircraft Transferred Interest
to the extent arising from acts, omissions, events or circumstances occurring or
accruing on or after the appli cable Effective Time for such Aircraft
Transferred Interest, (ii) all Deposit Liabilities relating to such Aircraft
Transferred Interest, (iii) all Unfunded Commitments relating to such Aircraft
Transferred Interest and (b) with respect to each Receivable Transferred
Interest, all of the obligations and liabilities of Assignor relating to such
Receivable Transferred Interest and under the applicable Receivable Agreements
to the extent arising from acts, omissions, events or circumstances occurring or
accruing on or after the Receivable Effective Date.
"Business Day" means any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in the States of
California or New York.
"CAA" means the United Kingdom Civil Aviation Authority.
"Cash Account" shall have the meaning assigned to it in Section
4(a) hereof.
"Citizen of the United States" means Citizen of the United States
as defined in Section 40102(a)(15) of the Act and in the FAA Regulations.
"Claim Notice" shall have the meaning assigned to it in Section
14(a) hereof.
"Damages" means, in respect of any obligation to indemnify any
Person pursuant to the terms of this Agreement, any and all losses, claims,
damages, liabilities, obligations, actions, suits, judgments, settlements,
awards, reasonable and documented out-of-pocket costs, expenses and attorneys'
fees but shall exclude any consequential, expectancy or speculative Damages or
any Damages based on a claim of lost profits or opportunities.
"Daylight Effective Time" means any Effective Time that occurs on
a Business Day during the hours of 9:30 a.m. and 5:00 p.m. EDT, New York City
time.
"Deposit Liabilities" mean, with respect to any Lessee Deposit
transferred to Assignee pursuant to this Agreement, all liabilities, obligations
and duties owed by Assignor or any Owner Trustee to a Lessee or any assignee of
or successor to such Lessee relating to, based on or arising out of such Lessee
Deposit, whether known or unknown, contingent or absolute, or arising before, on
or after the Effective Time applicable to such Lessee Deposit.
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"Effective Time" means, subject to the final sentence of this
definition, (i) with respect to the Aircraft Transferred Interests, each date
and time on which any Aircraft Transferred Interest is delivered by Assignor to
Assignee and accepted by Assignee in accordance with the terms of this Agreement
as specified in the Assignment and Assumption Agreement with respect to such
Aircraft Transferred Interest and (ii) with respect to the Receivable
Transferred Interests, 5:00 p.m. EDT on the Receivable Effective Date. Each
Transferred Interest may be delivered by Assignor to Assignee and accepted by
Assignee in accordance with the terms hereof and the terms of the applicable
Assignment and Assumption Agreement independently of any other Transferred
Interest and at different Effective Times. Notwithstanding the foregoing, the
Effective Time for each Transferred Interest assigned to Assignee shall be
deemed, with respect to the allocation of Income as between Assignor and
Assignee (but not for any other purpose), to be April 1, 1997.
"Engine" means each of the engines identified as to manufacturer,
type and manufacturer serial number on Schedule 3 hereto together, in each case,
with any and all Parts incorporated or installed in or attached thereto as of
the Effective Time relating to such Engine (subject to any pooling, replacement
or exchange rights arising under the Operative Agreements relating to such
Engine).
"Escrow Agent" means the escrow agent (and any financial
institution that succeeds such escrow agent) pursuant to the terms of the Escrow
Agreement.
"Escrow Agreement" means an Escrow Agreement among Assignor,
Assignee and the Escrow Agent, in form and substance satisfactory to each of
them.
"FAA" means the Federal Aviation Administration of the United
States or any Government Entity succeeding to the functions of the Federal
Aviation Administration.
" Foreign Aircraft " means, collectively, the Aircraft described
on Part B of Schedule 1.
"Government Entity" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
the Receivable Agreements or relating to the observance or performance of the
obligations of any of the parties to the Operative Agreements or the Receivable
Agreements.
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"Income" means, with respect to a Transferred Interest, all
income, scheduled rental, principal or interest payments, payments in respect of
fees due to Assignor or the Owner Trustee and proceeds of such Transferred
Interest earned on or after April 1, 1997, but shall not be deemed to include
any Lessee Deposit or Reserved Rights relating to or associated with such
Transferred Interest.
"Indemnified Party" shall have the meaning assigned to it in
Section 14(a)hereof.
"Indemnitor" shall have the meaning assigned to it in Section
14(a) hereof.
"IRS" means the Internal Revenue Service or any Government Entity
succeeding to the functions of the Internal Revenue Service.
"Keep Well" shall have the meaning assigned to it in Section 7(d)
hereof.
"Keep Well Guaranty" shall have the meaning assigned to it in
Section 7(e) hereof.
"Leases" mean, collectively, the Leases listed on Schedule 2
attached hereto, as the same may have been amended, supplemented or modified
from time to time.
"Lessee Deposit" means any security deposit, maintenance reserve
or other funds held by Assignor or any Owner Trustee as security for the
performance by a Lessee of any of its obligations under a Lease or any of the
Operative Agreements relating to such Lease (including any interest or earnings
on any such funds which, pursuant to such Lease or such Operative Agreements
relating to such Lease, are for the account or the benefit of the Lessee).
"Lessees" mean, collectively, the Persons listed on Schedule 1
attached hereto.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease or security interest affecting the title to or any interest
in property.
"Loan Guaranty" shall have the meaning assigned to it in Section
7(e) hereof.
"Loss of Title" means, with respect to any Aircraft, the
condemnation, confiscation, appropriation or seizure of, or requisition of title
to such Aircraft by any Government Entity; provided, however, that requisition
of the use of an Aircraft shall not
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constitute a Loss of Title unless there has also been a requisition of title to
such Aircraft by a Governmental Entity.
"Mop-Up Date" means the seventh (7th) Business Day after the
Start Date; provided, however, that if, on the seventh (7th) Business Day after
the Start Date, Assignee gives notice to Assignor that an Aircraft which is
subject of an Aircraft Transferred Interest not yet transferred to Assignee (i)
is located in a jurisdiction that is unacceptable to Assignee and (ii) cannot be
relocated to an acceptable jurisdiction because either (x) such Aircraft is
physically unable to be so relocated or (y) the Lessee of such Aircraft has
refused to cooperate in relocating it, then in such case "Mop-Up Date" shall
mean the earlier of (A) the thirtieth (30th) day following the seventh (7th)
Business Day after the Start Date or (B) June 30, 1997.
"Offering Party" means any Person making a bona fide inquiry,
offer or proposal to acquire, directly or indirectly, (a) all or substantially
all of the assets subject to the Trust Agreements and the Receivables or (b) all
or substantially all of the Transferred Interests or (c) a combination thereof.
"Operative Agreements" means, collectively, each of the Leases,
the Trust Agreements, the tax indemnity agreements and the other agreements
listed on Schedule 4 attached hereto, as the same may have been amended,
supplemented or modified from time to time.
"Outside Date" shall have the meaning assigned to it in Section
7(q) hereof.
"Owner Trustee" means each Owner Trustee listed on Schedule 5
attached hereto, not in its individual capacity but solely as owner trustee
under the applicable Trust Agreement.
"Parts" mean, with respect to any Aircraft or any Engine, all
appliances, components, parts, instruments, appurtenances, accessories,
furnishings, spare parts, seats and other equipment of whatever nature (other
than complete engines), incorporated or installed in or attached to any such
Aircraft or Engine as of the Effective Time relating to any such Aircraft or
Engine (subject to any pooling, replacement or exchange rights arising under the
Operative Agreements relating to such Aircraft or Engine).
"Person" means any Government Entity, individual, sole
proprietorship, partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution, public
benefit corporation or other entity.
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"PIMC" means Polaris Investment Management Corporation, a
California corporation.
"Promissory Note" shall have the meaning assigned to it in
Section 4(a) hereof.
"Purchase Price" shall have the meaning assigned to it in Section
4(a) hereof.
"Purchase Price Interest" means an amount equal to interest on
the "Cash Amount" set forth on Schedule 4(a) hereto (as such Cash Amount may be
reduced pursuant to Section 4(c) or Section 4(d)(ii)), calculated for the period
from and including April 1, 1997 through but not including the date Assignor
receives the Cash Amount pursuant to Section 4(a), at a rate equal to 5.3% per
annum.
"Receivable Agreements" mean, collectively, all of the
agreements, documents and instruments governing or evidencing any of the
Receivables including, without limitation, the agreements, documents and
instruments listed on Schedule 8 attached hereto, as the same may have been
amended, supplemented or modified from time to time.
"Receivable Effective Date" means, with respect to the
Receivables, the date on which Assignor transfers the Receivables to Assignee
pursuant to the terms of this Agreement.
"Receivable Transferred Interests" means, collectively, all of
Assignor's present and future right, title and interest in, to and under the
Receivables and all the Receivable Agreements and all of the Income relating to
the Receivables, but excluding, in each case, the Reserved Rights relating to or
associated with any of the foregoing.
"Receivables" mean, collectively, the receivable obligations set
forth on Schedule 8 attached hereto.
"Reserved Rights" mean, with respect to each Transferred
Interest, any of the right, title or interest of Assignor in, to or in respect
of each and every indemnity or other payment or obligation (whether in the form
of rent, principal, interest or otherwise), arising in connection with any
claim, cause of action or payment obligation payable to, on behalf or in favor
of Assignor, under or pursuant to any Trust Agreement or any other Operative
Agreements or Receivable Agreement relating to such Transferred Interest
(including, without limitation, any rights or causes of action Assignor may have
against any Owner Trustee pursuant to the terms of any Trust Agreement) to the
extent that such indemnities, payments or obligations vested or relate to an
act, omission, event or
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circumstance occurring or accruing prior to the Effective Time for such
Transferred Interest other than Income, Lessee Deposits or other rights
specifically transferred to Assignee pursuant to this Agreement.
"Security Agreement" shall have the meaning assigned to it in
Section 7(f) hereof.
"SP Notice" shall have the meaning assigned to it in Section
11(b) hereof.
"Special CAA Counsel" shall have the meaning assigned to it in
Section 7(m) hereof.
"Special FAA Counsel" shall have the meaning assigned to it in
Section 7(m) hereof.
"Start Date" means the earlier of (i) a date mutually acceptable
to Assignor and Assignee or (ii) the sixth (6th) Business Day after which, in
the good faith judgement of Assignor, the conditions precedent set forth in
Section 7(g), (k) or (r) are first satisfied with respect to an Aircraft
Transferred Interest.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including,
without limitation, common stock, preferred stock, membership interest or any
other "equity security" (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended).
"Superior Proposal" means any bona fide inquiry, offer or
proposal which, in the case of an offer or proposal, is made by a Person that,
in the good faith judgment of Assignor, is financially capable of consummating
such offer or proposal to acquire, directly or indirectly, (a) all or
substantially all of the Receivables and the assets subject to the Trust
Agreements or (b) all or substantially all of the Transferred Interests or (c)
any combination thereof, the terms of which, in the good faith judgment of
Assignor, provide aggregate present value consideration to Assignor that is
materially better or more advantageous than the aggregate present value
consideration provided by the transactions contemplated hereby; provided that in
making such judgment Assignor shall have no duty or obligation to seek the
advice of any outside advisors or appraisers.
"TASL" means Triton Aviation Services Limited, a Bermuda
corporation.
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"Taxes" mean all license, recording, documentary, registration
and other similar fees and all taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever imposed by any Taxing
Authority, together with any penalties, additions to tax, fines or interest
thereon or additions thereto.
"Taxing Authority" means any federal, state or local Government
Entity or other taxing authority in the United States, any foreign government or
any political sub division or taxing authority thereof, any international taxing
authority or any territory or possession of the United States or any taxing
authority thereof.
"Third Party Action" shall have the meaning assigned to it in
Section 14(a) hereof.
"Threshold Amount" shall have the meaning assigned to it in
Section 13(c) hereof.
"TIL" means Triton Investments Limited, a Bermuda corporation.
"Total Loss" means, with respect to any Aircraft, any of the
following events: (a) total loss of such Aircraft or the destruction, damage
beyond economic repair or rendition of such Aircraft permanently unfit for
normal use for any reason whatsoever; (b) any damage to such Aircraft which
results in an insurance settlement with respect to such Aircraft on the basis of
a total loss or on the basis of a compromised or constructive total loss; and
(c) Loss of Title.
"Transfer Taxes" shall have the meaning assigned to it in Section
13(a) hereof.
"Transferred Interests" mean, collectively, all of the Aircraft
Transferred Interests and all of the Receivable Transferred Interests.
"Trust Agreements" mean, collectively, each Trust Agreement
listed on Schedule 6 attached hereto, as the same may have been amended,
supplemented or modi fied from time to time.
"Trust Estate" means, collectively, each Trust Estate as defined
in each of the Trust Agreements.
"Trusts" mean, collectively, each Trust as defined in each of the
Trust Agreements.
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"Unfunded Commitment" means, with respect to any Aircraft
Transferred Interest, any unfunded obligations of Assignor or the Owner Trustee
to make loans, advances or extensions of credit or to defer or extend the time
for payment of rent obligations for the purpose of funding or otherwise
financing modifications to the Aircraft to which such Aircraft Transferred
Interest relates or the acquisition of equipment.
"without special inquiry" means with respect to Assignor, no
inquiry other than that conducted in the ordinary course of administering the
transactions contemplated by the Operative Agreements or by the Receivable
Agreements and that conducted in the ordinary course of negotiating the
transactions contemplated by this Agreement, by any director, officer, employee
or agent of Assignor who is actively involved in negotiating the transactions
contemplated by this Agreement.
As used herein, each of "Assignor," "Assignee," "Lessee," "Owner
Trustee" or any other Person includes, without prejudice to the provisions of
any Operative Agreements or any Receivable Agreements, any successor in interest
to it and any permitted transferee, permitted purchaser or permitted assignee of
it.
SECTION 2. Sale and Assignment
Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of Assignee set forth herein, at
each applicable Effective Time, Assignor does hereby sell, assign and transfer
to Assignee all of Assignor's present and future right, title and interest in,
to and under each Transferred Interest including, without limitation, all of the
Assumed Liabilities relating to such Transferred Interest; provided that such
sale, assignment and transfer shall be effective only upon the satisfaction or
waiver, at or prior to the applicable Effective Time for each such Transferred
Interest, of the conditions set forth in Section 7, such satisfaction or waiver
to be evidenced by, Assignor's acceptance from Assignee of an Assignment and
Assumption Agreement for such Aircraft Transferred Interest.
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SECTION 3. Purchase and Assumption
Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of Assignor set forth herein, at
each applicable Effective Time, Assignee does hereby (i) purchase and accept
each Transferred Interest, (ii) assume all of the Assumed Liabilities relating
to any such Transferred Interest, (iii), if applicable, confirm that it shall be
deemed a party to any Trust Agreement as of the Effective Time relating, and
with respect, to the Transferred Interest referenced in such Trust Agreement,
and agrees to be bound by all the terms of each thereof and hereby undertakes
and assumes all of the Assumed Liabilities and (iv), if applicable, confirm that
it shall be deemed a party to all Receivable Agreements as of the Effective Time
relating, and with respect, to such Transferred Interest, and agrees to be bound
by all the terms of each thereof and hereby undertakes and assumes all of the
Assumed Liabilities contained in such Receivable Agreements; provided, however,
that Assignor shall remain liable for the obligations of Assignor relating to
Reserved Rights; provided, further, that such purchase, acceptance and
assumption shall be effective only upon the satisfaction or waiver, at or prior
to the applicable Effective Time for such Transferred Interest, of the
conditions set forth in Section 8, such satisfaction or waiver to be evidenced
by Assignee's delivery to Assignor of an Assignment and Assumption Agreement for
such Transferred Interest. The assumption contemplated hereby, at the applicable
Effective Time, as between Assignor and Assignee, shall be deemed to release
Assignor from all Assumed Liabilities relating to such Transferred Interest.
SECTION 4. Purchase Price
(a) Payment of Purchase Price
The purchase price for the Transferred Interests is as set forth
on Schedule 4(a) attached hereto plus the Purchase Price Interest (the "Purchase
Price"). The Purchase Price Interest shall be due and payable on the Business
Day after the earlier to occur of (i) the last Effective Time to occur hereunder
and (ii) the seventh Business Day after the Start Date and shall be paid by
Assignee to Assignor by wire transfer of immediately available funds in
accordance with the instructions of Assignor. At or prior to the first Effective
Time to occur pursuant to the terms hereof, Assignee shall (i) deliver a note to
Assignor in substantially the form attached hereto as Exhibit A (the "Promissory
Note"), in an amount equal to the amount set forth on Schedule 4(a) as the "Note
Amount" and (ii) wire transfer immediately available funds in an amount equal to
the amount set forth on Schedule 4(a) as the "Cash Amount" to the Escrow Agent
for deposit into the account established pursuant to the Escrow Agreement (the
"Cash Account").
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(b) Transfer of Income and Lessee Deposits
For the Receivable Effective Date, each Daylight Effective Time
and on the Mop-Up Date, contemporaneously with the Receivable Effective Date,
such Daylight Effective Time or on the Mop-Up Date, and for each Effective Time
that does not constitute a Daylight Effective Time or is not deemed to occur on
the Mop-Up Date, promptly at the beginning of the next Business Day after such
Effective Time, Assignor shall wire transfer immediately available funds to
Assignee, at an account designated in writing by Assignee, in an amount equal to
the Income and Lessee Deposits estimated by Assignor pursuant to Section 4(d)(i)
hereof to constitute part of the Transferred Interest transferred (or deemed to
be transferred) as of the Receivable Effective Date, such Effective Time or as
of the Mop-Up Date.
(c) First Effective Date; Mop-Up Date
Each of Assignor and Assignee covenants and agrees that(i) if
each of the conditions precedent in Section 7(a)-(r) (as to Assignor) or Section
8(a)-(l) (as to Assignee) are satisfied or waived by the appropriate party, the
first Effective Time with respect to any Aircraft Transferred Interest will
occur on the Start Date and (ii) the Effective Time for each and every Aircraft
Transferred Interest will occur not later than the close of business in New York
on the Mop-Up Date. Each of Assignor and Assignee covenants and agrees that the
Receivable Effective Date will occur no later than the sixth Business Day after
each of the conditions precedent in Subsection 7(s) through (v) (as to Assignor)
or Subsection 8(m) through (o) (as to Assignee) are satisfied or waived by the
appropriate party. Each of Assignor and Assignee further agrees that at any time
after the earlier of (i) the seventh Business Day after the Start Date and (ii)
the last Effective Time to occur pursuant to the terms hereof, (A) Assignor is
hereby authorized to withdraw from the Cash Account, an amount equal to the Cash
Amount less any reduction of the Cash Amount pursuant to the last sentence of
this Section 4(c) or pursuant to Section 4(d)(ii) less one-half of the fees owed
to the Escrow Agent and (B) Assignee is hereby authorized to withdraw from the
Cash Account all other funds in excess of the amount set forth in clause (A);
provided, however, if Assignee withdraws the Cash Amount pursuant to the
foregoing clause (i) and there is a subsequent reduction in the Cash Amount
pursuant to the last sentence of this Section 4(c), then Assignor shall promptly
return to Assignee an amount equal to such subsequent reduction plus interest at
the rate of 5.3% per annum from the withdrawal date through the date of
repayment to Assignee. On the Mop-Up Date, so long as (i) the conditions
precedent set forth in Section 7 hereof (other than with respect to the location
of the Aircraft) shall have been satisfied or waived by Assignor, Assignor shall
be obligated to deliver, with respect to each Aircraft Transferred Interest that
has not been assigned previously to Assignee (including any Aircraft Transferred
Interest which has not been transferred previously because the Aircraft relating
to such Aircraft Transferred Interest has been the subject of a Loss of Title
but as to which such Loss of Title has been cured or otherwise corrected on or
prior to the Mop-Up Date), Assignment and Assumption Agreements, the evidence of
authorization described in Section 8(e)(iv), any consents referred to in Section
5.1(b), the opinions described in Section 8(i) and any other instruments or
documents as Assignee or its counsel shall reasonably request and (ii) the
conditions precedent set forth in Section 8 hereof (other than with respect to
the location of the Aircraft) shall have been satisfied or waived by Assignee,
Assignee shall be obligated to deliver, with respect to each Aircraft
Transferred Interest that has not been assigned previously to Assignee
(including any Aircraft Transferred Interest which has not been transferred
previously because the Aircraft relating to such Aircraft Transferred Interest
has been the subject of a Loss of Title but as
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to which such Loss of Title has been cured or otherwise corrected on or prior to
the Mop-Up Date), Assignment and Assumption Agreements, the evidence of
authorization described in Section 7(j)(v), any consents referred to in Section
6.1(b), the opinions described in Section 7(m) and any other instruments or
documents as Assignor or its counsel shall reasonably request. If on the Mop-Up
Date any of the conditions precedent set forth in Section 7 or Section 8 hereof
(other than with respect to the location of the Aircraft) are not satisfied or
waived by the applicable party with respect to any Aircraft Transferred
Interest, any Aircraft which is subject of such Aircraft Transferred Interest
will no longer be the subject of this Agreement and this Agreement will be
deemed to be reformed to delete all references to such Aircraft and the such
Aircraft Transferred Interest and the Purchase Price will be reduced in an
amount equal to the Allocable Portion Percentage for such Aircraft and each of
the Note Amount and the Cash Amount as set forth on Schedule 4(a) hereof will be
adjusted on a pro rata basis.
(d) Settlement of Income and Lessee Deposits
(i) Prior to assignment of a Transferred Interest to Assignee
here under, Assignor shall estimate the Income and any Lessee Deposits that have
been received by Assignor or the Owner Trustee relating to such Transferred
Interest as of the applicable Effective Time for such Transferred Interest.
Because the actual amount of the Income and any Lessee Deposits relating to a
Transferred Interest and received by Assignor or such Owner Trustee will not be
readily determinable until after the applicable Effective Time, a final
calculation cannot be made on that date. Therefore, within fifteen (15) Business
Days after the end of the month in which such Effective Time occurs, Assignor
shall provide Assignee with such final calculation (in reasonable detail) of the
Income and any Lessee Deposits that have been received by Assignor or the Owner
Trustee relating to such Transferred Interest. To the extent the calculation
indicates that the amounts transferred by Assignor pursuant to Section 4(b)
hereof with respect to such Transferred Interest were in excess of the actual
Income and any Lessee Deposits received by Assignor or the Owner Trustee
relating to such Transferred Interest, Assignee shall promptly pay the amount of
such excess to Assignor (plus interest on such amount at the rate of 5.3% per
annum from the applicable date of payment to Assignee to the date of repayment
to Assignor). To the extent the calculation indicates that the amounts
transferred by Assignor pursuant to Section 4(b) hereof with respect to such
Transferred Interest were less than the actual Income and any Lessee Deposits
received by Assignor or the Owner Trustee relating to such Transferred Interest,
Assignor shall promptly pay the amount of such deficiency to Assignee (plus
interest on such amount at the rate of 5.3% per annum from the Business Day
following the applicable Effective Time to the date of payment to Assignee). An
adjustment to the Purchase Price for Income under this Section 4(d)(i) shall be
treated by the parties as a purchase price adjustment for all income tax
purposes.
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(ii) If at any time prior to the last Effective Time to occur
pursuant to the terms hereof, any Aircraft which is subject of an Aircraft
Transferred Interest not yet transferred by Assignor to Assignee suffers a Total
Loss, such Aircraft will no longer be the subject of this Agreement and this
Agreement will be deemed to be reformed to delete all references to such
Aircraft and the related Aircraft Transferred Interests; provided, however, that
with respect to any such Aircraft, if such Total Loss is due to a Loss of Title
and if Assignor cures or otherwise corrects such Loss of Title by regaining or
recovering the use thereof or title thereto on or prior to the Mop-Up Date, such
Aircraft will be deemed to be reinstated and once more subject to this Agreement
and this Agreement will be deemed to be reformed to include all previously
deleted references to such Aircraft and the related Aircraft Transferred
Interests. Contemporaneously with the removal of any Aircraft from the terms of
this Agreement, the Purchase Price will be reduced in an amount equal to the
Allocable Portion Percentage for such Aircraft and each of the Note Amount and
the Cash Amount as set forth on Schedule 4(a) hereof will be adjusted on a pro
rata basis. Contemporaneously with the reinstatement of an Aircraft into this
Agreement, the Purchase Price will be increased in an amount equal to the
Allocable Portion Percentage for such Aircraft and each of the Note Amount and
the Cash Amount as set forth on Schedule 4(a) hereof will be adjusted on a pro
rata basis. If at any time prior to the last Effective Time to occur pursuant to
the terms hereof, any Aircraft which is subject of an Aircraft Transferred
Interest not yet transferred by Assignor to Assignee suffers any property damage
or loss not constituting a Total Loss and such property damage or loss is not
cured or corrected prior to the time when such Aircraft Transferred Interest is
transferred (or deemed to be transferred) by Assignor to Assignee, Assignor
shall pay to Assignee any insurance proceeds received by Assignor with respect
to such property damage or loss promptly after receipt by Assignor of such
insurance proceeds; provided, however, that Assignor shall not enter into any
settlement of any insurance claim without the prior written consent of Assignee,
which consent may not be unreasonably withheld.
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SECTION 5. Representations and Warranties of Assignor; Limitation of
Warranty; Covenant with Respect to Pre-Closing Actions
5.1 Representations and Warranties of Assignor. As of the date
hereof and as of each Effective Time with respect to the Transferred Interest
being transferred at such Effective Time, Assignor makes the following
representations and warranties to Assignee:
(a) Partnership Organization, Etc.
Assignor (i) is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of California, (ii) is
a Citizen of the United States and (iii) has the requisite partnership power and
authority to carry on its business as presently conducted, to own or hold under
lease its properties, and to enter into and perform its obligations under this
Agreement and each of the Ancillary Agreements to which it is a party.
(b) Due Authorization; Non-Contravention
The execution and delivery by Assignor of this Agreement and
each of the Ancillary Agreements to which it is a party, and the performance by
Assignor of its obligations hereunder and thereunder, (i) have been duly
authorized by all necessary partnership action on the part of Assignor, (ii) do
not require any partnership approval, or approval or consent of any trustee or
holder of any indebtedness or obligations of Assignor not already obtained,
(iii) do not contravene any law, governmental rule, regulation, judgment or
order applicable to or binding on Assignor, or the limited partnership agreement
of Assignor or contravene the provisions of, or constitute a default under or
result in the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements or the Receivable Agreements, as
applicable) upon the Trust Estate or any other Transferred Interest under any
indenture, mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to which Assignor is a
party or by which Assignor is bound and (iv) except as set forth on Schedule
5(b) attached hereto, do not require the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action in respect
of, any federal, state or foreign governmental authority or agency or any other
Person, except those already obtained.
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(c) Due Execution and Delivery; Enforceability
This Agreement and each of the Ancillary Agreements to which
it is a party have been duly executed and delivered and are enforceable against
Assignor in accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and, with respect to
the enforceability of this Agreement or any such Ancillary Agreement, by general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(d) Event of Default
Except as set forth on Schedule 5(d), no claims have been
made by or at the direction of Assignor that remain unresolved under any of the
Operative Agree ments or any of the Receivable Agreements, and to the actual
knowledge of Assignor, without special inquiry, no basis for such claims exists
(excluding in all cases claims for reimbursement of fees, costs and expenses
which are either immaterial or incurred in the ordinary course). Except as set
forth on Schedule 5(d), to the actual knowledge of Assignor, without special
inquiry, (i) no disputes exist among any of the parties to the Operative
Agreements or any of the Receivable Agreements concerning the rights or
obligations of such parties thereunder, (ii) there exists no default or event of
default under any Leases, any Trust Agreement, any other Operative Agreement or
any of the Receivable Agreements attributable to any act or omission of
Assignor, (iii) Assignor is not in default under any of the Operative Agreements
or any of the Receivable Agreements, (iv) no default under any Operative
Agreement or any Receivable Agreement has occurred and is continuing as a result
of any action taken by the Owner Trustee in accordance with any express
instruction by Assignor, (v) there has been no assertion by any Lessee of any
default on the part of Assignor or the Owner Trustee under any Operative
Agreement and (vi) there has been no assertion by any obligor under any
Receivable of any default on the part of Assignor or the Owner Trustee under any
of the Receivable Agreements.
(e) Total Loss
To the actual knowledge of Assignor, without special inquiry,
none of the Aircraft are the subject of any Total Loss.
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(f) Taxes
(i) All tax returns and reports required to be filed by or on
behalf of each Owner Trustee (solely in its capacity as Owner Trustee and not in
its individual capacity), and all federal income tax returns required to be
filed by or on behalf of Assignor on or before the Effective Time have been
timely filed with the appropriate taxing authorities in all jurisdictions in
which such tax returns were required to be filed and all taxes shown due on such
tax returns have been paid in full; and
(ii) No claims have been made by or on behalf of Assignor or
any other Person in respect of any obligation under the Operative Agreements or
the Receivable Agreements to indemnify any Owner Trustee or Assignor for or with
respect to Taxes, and Assignor has no present intention of making any such claim
(other than possible claims for state, local and foreign Taxes or foreign tax
credits arising from the use or operation of the Aircraft by the applicable
Lessee or any sublessee prior to the applicable Effective Time).
(g) Litigation
Except as set forth on Schedule 5(g) hereof, there are no
legal or governmental actions, suits or proceedings pending or, to the actual
knowledge of Assignor, threatened against Assignor before any court,
administrative agency or tribunal which, if determined adversely to Assignor,
would materially adversely affect the ability of Assignor to perform its
obligations under this Agreement or any of the Ancillary Agreements to which it
is a party.
(h) Encumbrances
Except as set forth on Schedule 5(h) hereof, Assignor is the
sole legal and beneficial owner of (i) each of the Transferred Interests (other
than the Foreign Aircraft), free and clear of all Liens and, except as set forth
on Schedule 5(b), transfer restrictions and (ii) each of the Foreign Aircraft,
free and clear of all Liens and, except as set forth on Schedule 5(b), transfer
restrictions other than (A) Liens that are permitted by the terms of the leases
relating to such Foreign Aircraft and (B) the rights of the Lessee with respect
to such Foreign Aircraft. Except as set forth on Schedule 5(h) hereof, each
Owner Trustee is the sole legal owner of (x) each Trust Estate for which such
Owner Trustee is owner trustee pursuant to the applicable Trust Agreement, free
and clear of all Liens and, except as set forth on Schedule 5(b), transfer
restrictions other than Liens permitted by and transfer restrictions contained
in the Operative Agreements relating to such Trust Estate and (y) each
Receivable pursuant to the Receivable Agreements relating to such Receivable,
free and clear of all Liens and transfer restrictions other than Liens permitted
by and transfer restrictions contained in the Receivable Agreements relating to
such Receivable. Except as otherwise provided in the Operative Agreements or the
Receivable Agreements, Assignor has not previously sold, assigned, encumbered,
transferred or conveyed, and other than as provided in this Agreement, has no
obligation to sell, assign, encumber, transfer or convey, any of its right,
title or interest in, to or under the Transferred Interests to any Person.
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(i) Brokers' Fees
Assignor is not liable for the fees of any broker or Person
acting on Assignor's behalf in connection with the transactions contemplated
hereby or by any of the Ancillary Agreements to which it is a party.
(j) Operative Agreements; Receivable Agreements
Except as set forth on Schedule 5(j), Assignor has provided
Assignee with true and complete originals of each of the Leases, the Trust
Agreements and the promissory notes representing the Receivables and with true
and complete copies of each of the other Operative Agreements, the Receivable
Agreements and all amendments and supplements thereto. The Leases, Trust
Agreements, the promissory notes representing the Receivables, the Receivable
Agreements, the other Operative Agreements and the amendments and supplements
thereto set forth on Schedules 2, 4, 6 and 8 hereto (as applicable) represent,
collectively, all of the agreements, instruments and documents among (i)
Assignor and the parties to the Operative Agreements with respect to the
Aircraft Transferred Interests and no other agreements, instruments or
documents, among Assignor and the parties to the Operative Agreements, with
respect to the Aircraft Transferred Interests exist and (ii) Assignor and the
parties to the Receivable Agreements with respect to the Receivable Transferred
Interests and no other agreements, instruments or documents, among Assignor and
the parties to the Receivable Agreements, with respect to the Receivable
Transferred Interests exist.
(k) Title to Transferred Interests
Upon execution and delivery to Assignee of each of the
Assignment and Assumption Agreements and the consummation of the transactions
contemplated hereunder and thereunder, Assignee will acquire legal title to the
Transferred Interests, free and clear of all Liens and transfer restrictions
other than as set forth on Schedule 5(h).
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(l) Unfunded Commitments
Except as set forth on Schedule 7 hereof, there are no
Unfunded Commitments in respect of any Transferred Interest.
(m) The outstanding principal amount of each Receivable as of
April 1, 1997 is set forth on Schedule 8 hereto.
5.2 Supplements to Schedules; Post-Signing Information. Assignor
may supplement or amend Schedules 5(d), 5(g) and 5(h) to this Agreement with
respect to any matter, condition or occurrence hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedules or would otherwise have been
inconsistent with its representations herein.
5.3 Limitation of Warranty. Assignor's representations and
warranties are limited as set forth below:
(a) THE AIRCRAFT, EACH ENGINE AND EACH PART THAT
CONSTITUTE A PORTION OF ANY TRANSFERRED
INTEREST IS BEING TRANSFERRED AND DELIVERED TO
ASSIGNEE "AS IS" AND "WHERE IS," AND EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 5.1 HEREOF, WITH
OUT ANY REPRESENTATION, GUARANTEE OR
WARRANTY OF ASSIGNOR, EXPRESS OR IMPLIED, OF
ANY KIND, ARISING BY LAW OR OTHERWISE; AND
(b) WITHOUT LIMITING THE GENERALITY OF THE FOREGO
ING, ASSIGNOR SPECIFICALLY DISCLAIMS, AND
EXCLUDES HEREFROM (i) ANY EXPRESS OR IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, (ii) ANY IMPLIED WARRANTY OF
FREEDOM FROM ANY RIGHTFUL CLAIM BY WAY OF
INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK,
DESIGN OR OTHER PROPRIETARY RIGHT, (iii) ANY
IMPLIED WARRANTY ARISING FROM COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF
TRADE, AND (iv) EXCEPT AS EXPRESSLY SET FORTH IN
SECTION 13(c) HEREOF, ANY OBLIGATION OR LIABILITY
OF ASSIGNOR ARISING IN TORT, WHETHER OR NOT
ARISING FROM THE NEGLIGENCE OF ASSIGNOR,
ACTUAL OR IMPLIED, OR IN STRICT LIABILITY,
INCLUDING ANY OBLIGATION OR LIABILITY FOR LOSS
OF USE, REVENUE OR PROFIT WITH RESPECT TO THE
AIRCRAFT OR ENGINE OR PART OR FOR ANY LIABILITY
OF ASSIGNOR TO ANY THIRD PARTY OR ANY OTHER
DIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES WHATSOEVER.
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5.4 Actions with Respect to Transferred Interests. From the date
this Agreement is executed and delivered by Assignor to Assignee to the earlier
to occur of (i) the termination of this Agreement pursuant to Section 15 hereof
or (ii) the Effective Time with respect to a Transferred Interest, except as
otherwise expressly required or permitted by this Agreement, Assignor shall not
and shall not direct the Owner Trustee to, without the prior written consent of
Assignee:
(a) enter into or materially modify any agreement, contract or
commitment which, if entered into, created or established prior to the date of
this Agreement, would be required to be listed (or, in the case of modifications
and amendments, pertains to an agreement, contract, commitment or arrangement
which is presently listed) on Schedule 2, 4, 6, 7 or 8 of this Agreement or
waive any default or event of default under any Operative Agreement or
Receivable Agreement; or
(b) mortgage, pledge or otherwise encumber any of the Transferred
Interests, any Aircraft which is part of a Trust Estate, or any Receivable; or
(c) sell, lease, transfer or otherwise dispose of any of the
Transferred Interests, any Aircraft which is a part of a Trust Estate or any
Receivable; or
(d) enter into an agreement or arrangement to do any of the
above.
SECTION 6. Representations and Warranties of Assignee; Access Covenant
6.1 Representations and Warranties of Assignee. As of the date
hereof and as of each Effective Time with respect to the Transferred Interest
being transferred at such Effective Time, Assignee makes the following
representations and warranties to Assignor:
(a) LLC Organization, Etc.
Assignee (i) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of California,
and (ii) has the requisite power and authority to carry on its business as
presently conducted and as proposed to be conducted after the date of this
Agreement, to own or hold under lease its properties, and to enter into and
perform its obligations under this Agreement, each of the Ancillary Agreements
to which it is a party, each of the Trust Agreements and each of the other
Operative Agreements.
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(b) Due Authorization; Non-Contravention
The execution and delivery by Assignee of this Agreement and
each of the Ancillary Agreements to which it is a party, and the performance by
Assignee of its obligations hereunder, thereunder, under the Trust Agreements
and the other Operative Agreements and under the Receivable Agreements (i) have
been duly authorized by all necessary action on the part of Assignee, (ii) do
not require any member approval or any approval or consent of any trustee or
holder of any indebtedness or obligations of Assignee except those already
obtained, (iii) do not contravene any provision of the Act or any other law,
governmental rule, regulation, judgment or order applicable to or binding on
Assignee, or the organizational documents of Assignee or contravene the
provisions of, or constitute a default under, or result in the creation of any
Lien (other than as provided for or otherwise permitted in the Operative
Agreements or the Receivable Agreements) upon the Trust Estate or any Receivable
under any indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or instrument to which
Assignee is a party or by which Assignee is bound and (iv) except as set forth
on Schedule 6(b) attached hereto, do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any other action in
respect of, any federal, state or foreign governmental authority or agency or
any other Person, except those already obtained.
(c) Due Execution and Delivery; Enforceability
This Agreement and each of the Ancillary Agreements to which
it is a party have been duly executed and delivered and are enforceable against
Assignee in accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and, with respect to
the enforceability of this Agreement or any such Ancillary Agreement, by general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(d) Litigation
There are no legal or governmental actions, suits or
proceedings pending or, to the actual knowledge of Assignee, threatened against
Assignee before any court, administrative agency or tribunal which, if
determined adversely to Assignee, would materially adversely affect the ability
of Assignee to perform its obligations under this Agreement, any of the
Ancillary Agreements, the Trust Agreements, the other Operative Agreements or
any of the Receivable Agreements.
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(e) Compliance with Operative Agreements and Receivable
Agreements
Prior to the Effective Time for a Transferred Interest,
Assignee will have complied with and satisfied all of the conditions,
requirements and other obligations imposed on Assignee pursuant to each of the
Leases, Trust Agreements, other Operative Agreements or any of the Receivable
Agreements which have not been waived by the party entitled to require
compliance with such conditions, requirements or other obligations in order to
effect a permitted binding transfer of such Transferred Interests to Assignee.
(f) Non-Airline
Assignee is not a commercial air carrier or Affiliate thereof
that is in direct competition with any Lessee.
(g) Brokers' Fees
Assignee is not liable for the fees of any broker or Person
acting as a broker on Assignee's behalf in connection with the transactions
contemplated hereby.
(h) Acquisition For Own Account
The Transferred Interests are being acquired by Assignee for
its own account, for investment and not with a view to any resale or
distribution thereof. Assignee acknowledges that it has received, or has had
access to, all information which it considers necessary or advisable to enable
it to make a decision concerning the transfer of the Transferred Interests
including, without limitation, access to the Leases, the Trust Agreements, the
other Operative Agreements and the Receivable Agreements and an opportunity to
inspect the Aircraft.
6.2 Access Covenant. Assignee agrees that it shall use its best
efforts to retain the Operative Agreements and the Receivable Agreements with
respect to each of the Transferred Interests transferred to it hereunder in
perpetuity; provided, however, that Assignee shall have the right to (a)
transfer any Operative Agreements or Receivable Agreements relating to a
Transferred Interest or Aircraft to the purchaser of such Transferred Interest
or Aircraft, as the case may be, subject to such purchaser's agreement to retain
such Operative Agreements or Receivable Agreements and to permit Assignor and
its agents and representatives access to such Operative Agreements or Receivable
Agreements for the remaining term of the Promissory Note and (b) dispose of or
destroy any such Operative Agreements or Receivable Agreements at any time which
is after payment in full and discharge of the Promissory Note. Assignee will
allow or will cause Assignor and its agents and representatives to be allowed
access, during regular business hours at the offices of Assignee, to all of the
Operative Agreements or Receivable Agreements and to any Persons having
possession of or information relating to the Operative Agreements or Receivable
Agreements.
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SECTION 7. Conditions Precedent to the Obligations of Assignor
The obligation of Assignor to sell and assign any Aircraft Transferred Interest
to Assignee is subject to the satisfaction of the following conditions with
respect to such Aircraft Transferred Interest:
(a) Purchase Price
Assignee shall have paid the Purchase Price in the manner
specified in Section 4.
(b) Affidavit of Limited Control by a Non-U.S. Citizen
Not later than the first Effective Time, an affidavit shall
have been duly authorized, executed, notarized and delivered by Owner Trustee to
FAA Counsel in form suitable for filing with the FAA pursuant to the Act
certifying that (i) contemporaneously with the Effective Time with respect to
each Aircraft Transferred Interest, the Trust Agreement with respect thereto
shall have been amended to include limitations on the voting rights of Assignee
thereunder and (ii) Owner Trustee is a Citizen of the United States pursuant to
the Act.
(c) Escrow Agreement
Assignor shall have received a copy of the Escrow Agreement,
dated as of a date not later than the first Effective Time to occur under this
Agreement which shall have been executed and delivered by Assignee, Assignor and
the Escrow Agent.
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(d) TASL "Keep Well" Agreement
Assignor shall have received a copy of the Keep Well
Agreement, dated as of a date not later than the first Effective Time to occur
under this Agreement which shall have been executed and delivered by Assignee
and TASL, in substantially the form attached hereto as Exhibit B (the "Keep
Well").
(e) TIL Keep Well Guaranty and Loan Guaranty
Assignor shall have received an original counterpart of the
Keep Well Guaranty and the Loan Guaranty, each dated as of a date not later than
the first Effective Time to occur under this Agreement, each of which shall have
been executed and delivered by TIL, in substantially the form attached hereto as
Exhibit C-1 (the "Keep Well Guaranty") or C-2 (the "Loan Guaranty"), as
applicable.
(f) Assignee Security Agreement
Assignor shall have received an original counterpart of the
Pledge and Security Agreement, dated as of a date not later than the first
Effective Time, which shall have been executed and delivered by Assignee, TASL
and each member of Assignee in substantially the form attached hereto as Exhibit
D (the "Security Agreement") together with evidence that all other actions
necessary or, in the opinion of Assignor, desirable to perfect and protect the
security interests and liens created by the Security Agreement have been taken
including, without limitation, the filing of financing statements against
Assignee, TASL and each member of Assignee.
(g) Approvals and Consents
All approvals, consents and other items listed on Schedule
5(b) shall have been obtained, satisfactory to Assignor in all respects, as
determined by Assignor in its sole discretion and any authorizations which may
be required for the valid consummation by Assignor and Assignee of the
transactions contemplated by this Agreement under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have been obtained
(including, but not limited to, the expiration of any applicable waiting period
thereunder).
(h) Due Authorization, Execution and Delivery
This Agreement, the Assignment and Assumption Agreement and
any other Ancillary Agreements with respect to such Transferred Interest shall
have been duly authorized, executed and delivered by Assignee.
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(i) Representations and Warranties
The representations and warranties of Assignee contained
herein shall be true and correct in all material respects as of the applicable
Effective Time with the same force and effect as though such representations and
warranties had been made on and as of such Effective Time.
(j) Organizational and Authorization Matters
Assignor shall have received:
(i) Resolutions of the boards of directors of each of TASL,
TIL, each member of Assignee that is not a natural person and of the manager of
Assignee, certified by the respective Secretary or Assistant Secretary thereof,
as of the date of this Agreement, to be duly adopted and in full force and
effect on such date, authorizing (a) the consummation of each of the
transactions contemplated by this Agreement and each of the Ancillary Agreements
and (b) specific officers or representatives of TASL, TIL and Assignee to
execute and deliver this Agreement and the Ancillary Agreements to which any of
them is a party.
(ii) Governmental certificates, dated the most recent
practicable date prior to the date of this Agreement with telegram updates where
available, showing that each of Assignee, TASL, TIL and each member of Assignee
that is not a natural person is organized and in good standing in the
jurisdiction of its organization and that each of Assignee, TASL, TIL and each
member of Assignee that is not a natural person is qualified as a foreign
corporation, partnership or limited liability company, as applicable, and in
good standing in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification.
(iii) A copy of (a) the certificate of formation and all
amendments thereto of Assignee and the articles of incorporation and all
amendments thereto of each of TASL, TIL and each member of Assignee that is not
a natural person, each certified as of a recent date by the Secretary of State
of the jurisdiction of its organization, (b) the bylaws of each of TASL, TIL and
each member of Assignee that is not a natural person, certified by the Secretary
or Assistant Secretary thereof as true and correct as of the date of this
Agreement and (c) the operating agreement of Assignee (which shall include
provisions that are substantially in the form attached hereto as Exhibit E) and
the articles of incorporation and all amendments thereto of each of TASL, TIL
and each member of Assignee that is not a natural person, certified by its
manager as true and correct on the date of this Agreement (with tax allocation
and cash distribution provisions deleted).
(iv) Certificates of the Secretary or an Assistant Secretary
of each of TASL, TIL and each member of Assignee that is not a natural person
and of the manager of Assignee, as to the incumbency and signatures of the
representatives thereof executing this Agreement or any of the Ancillary
Agreements to which any of them is a party, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(v) As of each Effective Time, a certificate of the
Secretary, an Assistant Secretary or an Attesting Secretary of each of TASL,
TIL, each member of Assignee that is not a natural person and the manager of
Assignee certifying that the certificates delivered in accordance with clauses
(i), (ii), (iii) and (iv) above are true and correct as of such Effective Time.
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(k) Illegality; No Proceedings
At the applicable Effective Time, the performance of the
transac tions contemplated hereby, upon the terms and conditions set forth
herein, shall not, in the reasonable judgment of Assignor, violate, and shall
not subject Assignor to any penalty or liability under, any law, rule or
regulation binding upon Assignor. At the applicable Effective Time, no legal or
governmental action, suit or proceeding shall have been instituted or threatened
before any court, administrative agency or tribunal, nor shall any order,
judgment or decree have been issued or proposed to be issued by any court,
administrative agency or tribunal to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby.
(l) No Total Loss
At the applicable Effective Time, there shall not exist a
Total Loss with respect to the Aircraft related to such Aircraft Transferred
Interest.
(m) Opinions
Assignor shall have received opinion reasonably satisfactory
to Assignor, dated as of the first Effective Time from Manwell & Milton, counsel
to Assignee, each member of Assignee, TASL and TIL, with respect to such matters
and to such effect as Assignor shall reasonably request. Assignor shall also
have received, with respect to each Aircraft Transferred Interest, at the
applicable Effective Time for such Aircraft Transferred Interest, an opinion
from (i) Manwell & Milton, counsel to Assignee and (ii) Crowe & Dunleavy,
special FAA counsel ("Special FAA Counsel") or Theodore Goddard ("Special CAA
Counsel"), in each case with respect to such matters relating to such Aircraft
Transferred Interest and to such effect as Assignor shall reasonably request.
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(n) Location of Aircraft
Subject to Section 4(c) hereof, the location of the Aircraft
relating to each Aircraft Transferred Interest shall be acceptable to Assignor
at the applicable Effective Time for such Aircraft Transferred Interest.
(o) TIL Balance Sheets
Assignor shall have received an audited balance sheet of TIL
as of December 31, 1996 reflecting a consolidated net worth, net of minority
interests, of at least $150,000,000.
(p) Other Instruments and Documents; Additional Information
Assignor shall have received such other instruments and
documents as Assignor or its counsel shall reasonably request. Assignor shall
have received such other documents and evidence with respect to Assignee as
Assignor may reasonably request in order to establish the authority of Assignee
to consummate the transactions contemplated by this Agreement, the consummation
of the transactions contemplated by this Agreement, the taking of all
appropriate action in connection therewith and compliance with the conditions
set forth in this Agreement.
(q) Outside Date
Except as otherwise agreed by the parties hereto, all of the
fore going conditions shall have been satisfied or waived on or before 5:00 p.m.
E.D.T. on June 30, 1997 (the "Outside Date").
(r) No Pending Superior Proposal
Assignor shall not have received and have accepted or be
considering any Superior Proposal with respect to such Transferred Interest in
accordance with Section 11 hereof.
The obligation of Assignor to assign its interest in the Receivable Transferred
Interests to Assignee is subject to satisfaction of the following conditions
with respect to the Receivable Transferred Interests, in each case, on or prior
to the Receivable Effective Date:
(s) Satisfaction of Conditions
The conditions contained in Sections 7(a), 7(c), 7(d) 7(e),
7(f) 7(g), 7(i), 7(j) (including the certificate described in clause (v) dated
as of the Receivable Effective Date, 7(k), 7(o) and 7(p) shall have been
satisfied or waived by Assignor as they relate to the Receivable Transferred
Interests.
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(t) Opinions
Assignor shall have received an opinion reasonably
satisfactory to Assignor, dated as of the Receivable Effective Date, from
Manwell & Milton with respect to such matters and to such effect as Assignor
shall reasonably request.
(u) Outside Date
The Outside Date shall not have occurred.
(v) Superior Proposal
Assignor shall not have received and have accepted or be
considering any Superior Proposal with respect to the Receivables in accordance
with Section 11 hereof.
SECTION 8. Conditions Precedent to the Obligations of Assignee
The obligation of Assignee to purchase any Aircraft Transferred Interest from
Assignor and assume the obligations related thereto at the applicable Effective
Time is subject to the satisfaction of the following conditions:
(a) Leases and Trust Agreements
The Lease and Trust Agreement and, as applicable, each other
Operative Agreement with respect to such Aircraft Transferred Interest shall be
in full force and effect.
(b) Due Authorization, Execution and Delivery
This Agreement, the Assignment and Assumption Agreement and
any of the other Ancillary Agreements with respect to such Aircraft Transferred
Interest to which Assignor is a party shall have been duly authorized, executed
and delivered by Assignor.
(c) Representations and Warranties
The representations and warranties of Assignor contained
herein shall be true and correct in all material respects as of the Effective
Time with the same force and effect as though such representations and
warranties had been made on and as of such Effective Time.
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(d) Schedules
Schedule 5(d) shall not have been supplemented or amended by
Assignor to include a default or event of default caused by the filing by the
Lessee of the Aircraft that is the subject of such Transferred Interest for
protection from its creditors.
(e) Partnership Authorization Matters
Assignee shall have received:
(i) Resolutions of the board of directors of PIMC, general
partner of Assignor, certified by the Secretary or Assistant Secretary thereof,
as of the date of this Agreement, to be duly adopted and in full force and
effect on such date, authorizing (i) the consummation of each of the
transactions contemplated by this Agreement and each of the Ancillary Agreements
to which Assignor is a party and (ii) specific officers or representatives to
execute and deliver this Agreement and the Ancillary Agreements to which
Assignor is a party.
(ii) A copy of the certificate of limited partnership and all
amendments thereto of Assignor, certified as of a recent date by the Secretary
of State of the jurisdiction of its organization and a copy of the agreement of
limited partnership, as amended, certified by an officer of the general partner.
(iii) Certificates of the Secretary or an Assistant Secretary
of PIMC, certified by the Secretary or Assistant Secretary thereof, as to the
incumbency and signatures of the representatives thereof executing this
Agreement or any of the Ancillary Agreements to which Assignor is a party,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(iv) As of each Effective Time, for such Transferred
Interest, a certificate of the Secretary or an Assistant Secretary of PIMC
certifying that the certificates delivered in accordance with clauses (i), (ii)
and (iii) above are true and correct with respect to the Transferred Interest
being conveyed as of the applicable Effective Time.
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(f) Illegality; No Proceedings
At the applicable Effective Time, the performance of the
transac tions contemplated hereby, upon the terms and conditions set forth
herein, shall not, in the reasonable judgment of Assignee, violate, and shall
not subject Assignee to any penalty or liability under, any law, rule or
regulation binding upon Assignee. At the applicable Effective Time, no legal or
governmental action, suit or proceeding shall have been instituted or threatened
before any court, administrative agency or tribunal, nor shall any order,
judgment or decree have been issued or proposed to be issued by any court,
administrative agency or tribunal to set aside, restrain, enjoin or prevent the
consummation of this Agreement or the transactions contemplated hereby.
(g) Approvals and Consents
All approvals and consents and other items listed on Schedule
5(b) shall have been obtained.
(h) No Total Loss
At the applicable Effective Time, there shall not exist a
Total Loss with respect to the Aircraft related to such Aircraft Transferred
Interest.
(i) Opinions
Assignee shall have received opinions reasonably satisfactory
to Assignee, dated as of the first Effective Time from (i) Haight, Gardner, Poor
& Havens, California counsel to Assignor with respect to Assignor's due
organization and good standing, the due execution and delivery of this Agreement
and the Ancillary Agreements to which it is a party, no violation of Assignor's
organizational documents, the enforceability of this Agreement and the Ancillary
Agreements to which it is a party and that there are no consents required under
California law and (ii) Weil, Gotshal & Manges LLP, counsel to Assignor, that
the execution and delivery of this Agreement and the consummation of the
transactions contemplated thereby and compliance by the Company with the
provisions thereof will not conflict with or violate any federal law or
regulation (other than federal securities laws, the Hart-Scott Rodino Act or any
federal laws or regulations relating to the Federal Aviation Administration or
civil or commercial aviation). Assignee shall also have received, with respect
to each Aircraft Transferred Interest, at the applicable Effective Time for such
Aircraft Transferred Interest, an opinion from (i) Haight, Gardner, Poor &
Havens, California counsel to Assignor and (ii) Special FAA Counsel or Special
CAA Counsel, as applicable, in each case with respect to such matters relating
to such Aircraft Transferred Interest and to such effect as Assignee shall
reasonably request.
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(j) Location of Aircraft
Subject to Section 4(c) hereof, the location of the Aircraft
relating to each Aircraft Transferred Interest shall be acceptable to Assignee
at the applicable Effective Time for such Aircraft Transferred Interest.
(k) Other Instruments and Documents; Additional Information
Assignee shall have received such other instruments and
documents as Assignee or its counsel shall reasonably request. Assignee shall
have received such other documents and evidence with respect to Assignor as
Assignee may reasonably request in order to establish the authority of Assignor
to consummate the transactions contemplated by this Agreement, the consummation
of the transactions contemplated by this Agreement, the taking of all
appropriate partnership action in connection therewith and compliance with the
conditions set forth in this Agreement.
(l) Outside Date
Except as otherwise agreed by the parties hereto, all of the
forego ing conditions shall have been satisfied or waived on or before 5:00 p.m.
E.D.T. on the Outside Date.
The obligation of Assignee to purchase the Receivable Transferred Interests from
Assignor and assume the obligations is subject to the satisfaction, in each
case, of the following conditions with respect to the Receivable Transferred
Interests, on or prior to the Receivable Effective Date:
(m) Receivable Agreements
Each of the Receivable Agreements shall be in full force and
effect.
(n) Satisfaction of Conditions
The conditions contained in Sections 8(b), 8(c), 8(e)
(including the certificate described in clause (iv) dated as of the Receivable
Effective Date, 8(f) and 8(g) shall have been satisfied or waived by Assignee as
they relate to the Receivable Transferred Interests.
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(o) Opinion
Assignee shall have receive an opinion reasonably
satisfactory to Assignee, dated as of the Receivable Effective Date, from
Haight, Gardner, Poor & Havens with respect to such matters and to such effect
as Assignee shall reasonably request.
(p) Outside Date
The Outside Date shall not have occurred.
SECTION 9. Payments
To the extent not transferred in accordance with Section 4,
Assignor hereby covenants and agrees to pay over to Assignee, no later than five
(5) Business Days after receipt by Assignor from and after the applicable
Effective Time, any Income or Lessee Deposits paid to or for the benefit of
Assignor that constitute a Transferred Interest earlier transferred to Assignee
hereunder (including any amounts payable as interest in respect thereof), and
until so paid over, any Income or Lessee Deposits received by Assignor in
respect of any such Transferred Interest shall be received and held by Assignor
in trust for Assignee. Assignee hereby covenants and agrees to pay over to
Assignor, no later than five (5) Business Days after receipt by Assignee from
and after the applicable Effective Time, any amounts paid to or for the benefit
of Assignee that constitute Reserved Rights which relate to a Transferred
Interest earlier transferred (including any amounts payable as interest in
respect thereof), and until so paid over any such amounts received by Assignee
shall be received and held by Assignee in trust for Assignor.
SECTION 10. Certain Notices
Assignor hereby covenants and agrees promptly to forward to
Assignee any notice Assignor receives from any party to any of the Operative
Agreements or any of the Receivable Agreements (other than Assignee) relating to
any of the Transferred Interests. Assignee hereby covenants and agrees promptly
to forward to Assignor any notice Assignee receives from any party to any of the
Operative Agreements or any of the Receivable Agreements (other than Assignor)
pursuant to and in accordance with this Agreement, the Assignment and Assumption
Agreement, the Trust Agreements, any other Operative Agreement or any of the
Receivable Agreements related to the Reserved Rights. Assignor hereby covenants
and agrees to notify Assignee of any Reserved Right, describing the
circumstances of such Reserved Right in reasonable detail, promptly after
Assignor has actual knowledge of facts or circumstances giving rise to a
Reserved Right and that such facts and circumstances constitute a Reserved
Right.
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SECTION 11. Superior Proposal
(a) Each party agrees and acknowledges that from and after the
date hereof until the close of business on April 28, 1997, if Assignor receives
a Superior Proposal, Assignor may (i) furnish any information requested by the
Offering Party with respect to such Superior Proposal (other than the contents
of this Agreement or any Ancillary Agreement), (ii) participate in negotiations
with such Offering Party regarding such Superior Proposal or (iii) enter into
one or more letters of intent, term sheets or agreements with respect to any
Superior Proposals; provided, however, that if Assignor proposes to take any of
the actions specified in clause (iii) hereof, Assignor shall give Assignee prior
written notice setting forth Assignor's proposed actions.
(b) Not later than the close of business on May 12, 1997,
Assignor shall require each Offering Party with whom it is still engaged in
discussions to submit a final binding offer, subject only to acceptance by
Assignor. Not later than the close of business on May 16, 1997, Assignor shall
(i) determine whether any such offer constitutes a Superior Proposal, (ii) if
there is more than one Superior Proposal, select which Superior Proposal
Assignor intends to accept and (iii) provide written notice to Assignee setting
forth all the material terms and conditions of such selected Superior Proposal
("SP Notice").
(c) After receipt of the SP Notice, Assignee shall have five (5)
days to notify Assignor of its agreement to modify this Agreement and any
Ancillary Agreement as necessary to acquire the Transferred Interests at the
same price and under the same terms and conditions as set forth in the SP Notice
("Assignee Acceptance Notice"); provided further, however, if under the terms
set forth in the SP Notice Assignor is proposing to accept property (other than
cash or promissory notes), Assignee shall have the right to substitute cash in
an amount equal to the value of such other property.
(d) If Assignor does not give an SP Notice to Assignee on or
before May 16, 1997, or if Assignee gives an Assignee Acceptance Notice to
Assignor in accordance with subsection (c) hereof, neither Assignor nor Assignee
shall thereafter have any right to terminate this Agreement pursuant to Section
15(c).
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SECTION 12. Further Assurances
Each party agrees, upon the reasonable request of the other party
at any time and from time to time, promptly to execute and deliver all such
further documents and promptly to take and forbear from all such action as may
be reason ably necessary or appropriate in order to more effectively confirm or
carry out the provisions of this Agreement or any of the Ancillary Agreements,
including, without limitation, the filing of any Assignment and Assumption
Agreement with the FAA pursuant to the Act or the CAA. The parties agree that
the transactions are fully effective as of the applicable Effective Time and
that they will treat the transactions as such for all purposes and acknowledge
that any filings with the FAA or the CAA are merely ministerial in nature.
SECTION 13. Taxes and Indemnities
(a) Transfer Taxes
Assignee hereby covenants and agrees to pay (and indemnify
and hold Assignor harmless on an After-Tax Basis for) any and all registration,
docu ment or filing fees and any and all sales taxes, use taxes and similar
transfer taxes (including, without limitation, any charges, such as gross
receipts taxes (but excluding any taxes in the nature of any income tax) in lieu
thereof) (collectively, "Transfer Taxes"), that may be imposed in connection
with the sale, assignment and transfer of any Transferred Interests including,
without limitation, any penalties, fines or interest thereon and those Transfer
Taxes relating to the transfer of rights and other interests in and to, and the
act of assuming duties, liabilities and obligations in, to and under this
Agreement, the Assignment and Assumption Agreements, the Transferred Interests,
the Aircraft, the Operative Agreements or any of the Receivable Agreements
together with all reasonable and documented out-of-pocket costs, expenses and
attorney's fees incurred in connection therewith. Assignor hereby agrees to
perform such acts, including, without limitation, attending the closing of the
transactions contemplated hereby at a site or sites selected by Assignee, and
executing such documents as may be reasonably necessary to minimize Transfer
Taxes. The parties further agree to furnish each other with such documents and
certificates as they may reasonably request in connection with any claims for
exemption from the payment of Transfer Taxes.
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(b) Notice of IRS Reports
(i) Assignor shall promptly notify Assignee of receipt from
the IRS of any written proposed or final revenue agent's report, 30-day letter
or notice of deficiency in which an adjustment is proposed to the federal income
taxes of Assignor for which any of the Lessees would be required to indemnify
Assignor under any Operative Agreement or any of the Receivable Agreements and,
thereafter, shall upon request keep Assignee apprised at least monthly of the
progress of any protest or proceeding in respect of such adjustment.
(ii) Assignee shall promptly notify Assignor of receipt from
the IRS of any written proposed or final revenue agent's report, 30-day letter
or notice of deficiency in which an adjustment is proposed to the federal income
taxes of Assignee for which any of the Lessees would be required to indemnify
Assignee under any Operative Agreement and, thereafter, shall upon request keep
Assignor apprised at least monthly of the progress of any protest or proceeding
in respect of such adjustment.
(c) Assignor's Indemnity
Assignor hereby covenants and agrees upon demand of Assignee
to pay and assume liability for, and indemnify, protect, defend, save and keep
harmless Assignee and each of its Affiliates and in each such case their
respective directors, officers, employees and agents (the "Assignee
Indemnitees"), on an After-Tax Basis, from and against any and all Damages which
may at any time or from time to time be imposed upon, incurred by or asserted
against any of the Assignee Indemnitees in any way relating directly or
indirectly to, or arising out of, (i) any inaccuracy or breach of any
representation or warranty made by Assignor under this Agreement or any
Ancillary Agreement to which it is a party, (ii) the ownership, leasing, use or
operation of any Transferred Interest prior to the Effective Time applicable to
such Transferred Interest including, without limitation, any obligations
relating to the Trust Estate, any of the Operative Agreements or any of the
Receivable Agreements relating to such Transferred Interest which arise from
acts, omissions, events or circumstances occurring or accruing prior to the
Effective Time with respect to such Transferred Interest, but not including any
Assumed Liabilities, (iii) the failure of Assignor to perform or observe any of
its obligations under this Agreement or any Ancillary Agreement to which it is a
party, (iv) any litigation, claim or action brought by a limited partner of
Assignor against any Assignee Indemnitee to the extent such litigation, claim or
action directly arises out of and relates to the transactions contemplated by
this Agreement other than to the extent any litigation, claim or action relates
directly or indirectly to, or arises out of, the breach by such Assignee
Indemnitee of the terms of this Agreement or any Ancillary Agreement or (v) any
Liens set forth on Schedule 5(h) hereto; provided that (a) Assignor shall not be
liable for any Damages to the extent that Assignee has a recovery available to
it under any insurance policy which was in effect on or prior to the applicable
Effective Time; (b) Assignor shall not be liable for any Damages attributable to
the gross negligence or willful misconduct of Assignee or its Affiliates; and
(c) Assignor shall not be liable for any Damages in excess of the Purchase
Price. Notwithstanding the foregoing, Assignor shall be liable pursuant to this
Section 13(c) only to the extent that the aggregate cumulative Damages incurred
by the Assignee Indemnitees which are required to be indemnified by Assignor
exceed $50,000 (the "Threshold Amount") in which event, Assignor shall then also
be liable for the initial $50,000 of aggregate cumulative Damages incurred by
the Assignee Indemnitees; provided, that, with respect to any Lien set forth on
Schedule 5(h) hereto, (x) the Threshold Amount limitation shall not apply and
Assignor shall be liable for all Damages arising from such Liens and (y) amounts
expended by Assignor to discharge and release such Liens shall not constitute
Damages to be applied toward the Threshold Amount and only those expenses, if
any, actually incurred by Assignee in connection with such discharge or release
shall be so applied.
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(d) Assignee's Indemnity
Assignee hereby covenants and agrees upon demand of Assignor
to pay and assume liability for, and indemnify, protect, defend, save and keep
harmless, Assignor and each of its Affiliates and in each such case their
respective directors, officers, employees and agents (the "Assignor
Indemnitees"), on an After-Tax Basis, from and against any and all Damages which
at any time or from time to time may be imposed upon, incurred by or asserted
against the Assignor Indemnitees in any way relating directly or indirectly to,
or arising out of, (i) any inaccuracy or breach of any representation or
warranty made by Assignee or any of its Affiliates under this Agreement or any
Ancillary Agreement to which it or any of its Affiliates is a party, (ii) the
ownership, leasing, use or operation of any Transferred Interest on or after the
Effective Time applicable to such Transferred Interest including, without
limitation, any obligations relating to the Trust Estate, any of the Operative
Agreements or any of the Receivable Agreements relating to such Transferred
Interest which arise from acts, omissions, events or circumstances occurring or
accruing on or after the Effective Time with respect to such Transferred
Interest, (iii) the failure of Assignee or any of its Affiliates to perform or
observe any of their respective obligations under this Agreement or any
Ancillary Agreement to which it or any of its Affiliates is a party, (iv) any
Assumed Liabilities or (v) any modification, amendment or other change to any of
the Operative Agreements or any of the Receivable Agreements entered into by
Assignee, or to which Assignee consents or forbears, in any such case without
the prior written consent of Assignor (such consent not to be unreasonably
withheld) that affects any of the Reserved Rights; provided, however, that with
respect to any Transferred Interest which includes a Lease, such indemnification
obligation shall only relate to modifications, amendments or other changes made
or agreed to during the period beginning on the Effective Date applicable to
such Transferred Interest and ending on the date that is twenty-four (24) months
after the termination of the Lease included in such Transferred Interest (which
period shall be deemed to include any renewals, extensions or continuations of
such Lease). Notwithstanding the foregoing, (a) Assignee shall not be liable for
any Damages to the extent that Assignor has a recovery available to it under any
insurance policy which was in effect on or prior to the Effective Time; (b)
Assignee shall not be liable for any Damages attributable to the gross
negligence or willful misconduct of Assignor; (c) Assignee shall not be liable
for any Damages in excess of the Purchase Price and (d) Assignee shall be liable
pursuant to this Section 13(d) only to the extent that the aggregate Damages
incurred by the Assignor Indemnitees which are required to be indemnified by
Assignee exceed $50,000 in which event, Assignee shall then also be liable for
the initial $50,000 of aggregate cumulative Damages incurred by the Assignor
Indemnitees.
37
<PAGE>
(e) Survival of Representations and Warranties
All representations and warranties of the parties hereto
contained in this Agreement (including all Schedules hereto) or in any document,
statement, certificate or other instrument referred to herein or delivered at
the applicable Effective Time in connection with the transactions contemplated
hereby, that (i) relate to any Transferred Interest which includes a Lease,
shall survive until the later of (A) twenty-four (24) months after the Effective
Time applicable to such Transferred Interest or (B) twelve (12) months after the
expiry of the Lease included in such Transferred Interest (which period shall
not be deemed to include any renewals, extensions or continuations of such
Lease), (ii) relate to any Transferred Interest which does not include a Lease,
shall survive until twenty-four (24) months after the Effective Time applicable
to such Transferred Interest and (iii) do not relate to a Transferred Interest,
shall survive until twenty-four (24) months after the first Effective Time to
occur under this Agreement.
SECTION 14. Indemnification Procedure
(a) Any Assignee Indemnitee or Assignor Indemnitee (the
"Indemnified Party") seeking indemnification hereunder shall give to the party
obligated under this Agreement to provide indemnification to such Indemnified
Party (the "Indemnitor") a notice ("Claim Notice") describing in reasonable
detail the facts giving rise to its claim for indemnification hereunder, and
shall include in such Claim Notice (if then known) the amount or method of
computation of the amount of the claim, and a reference to the provision of this
Agreement or any other agreement, document or instrument executed and delivered
hereunder or in connection herewith upon which such claim is based; provided
that a Claim Notice in respect of any action at law or suit in equity against an
Indemnified Party by a third party, as to which indemnification will be sought
(a "Third Party Action"), shall be given promptly after the action or suit is
commenced; provided, further, that failure of the Indemnified Party to give the
Indemnitor prompt notice in respect of any such Third Party Action as provided
herein shall not relieve the Indemnitor of its obligations hereunder, except to
the extent such Indemnitor shall have been materially prejudiced by such
failure.
(b) The Indemnitor shall be entitled (but not obligated) to
assume the defense or settlement of such Third Party Action, or to conduct any
negotiations or proceedings to settle or otherwise eliminate any Third Party
Claim and shall pay the reasonable fees and disbursements of such counsel
related to such Third Party Action. If the Indemnitor assumes any such defense
or settlement or any such negotiations, it shall pursue such defense, settlement
or negotiations in good faith. If the Indemnitor fails to elect in writing
within 30 Business Days of the notification referred to above to assume such
defense, the Indemnified Party may engage counsel to defend, settle or otherwise
38
<PAGE>
dispose of such action or proceeding, which counsel shall be reasonably
satisfactory to the Indemnitor. In any such Third Party Action, any Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnitor and the Indemnified Party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnitor and the Indemnified Party and
representation of both the Indemnitor and the Indemnified Party by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the Indemnitor shall not, in connection with
any Third Party Action or related Third Party Action in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to local counsel) for all Persons to be indemnified pursuant to Section 13;
provided that the Indemnitor will be so liable if (x) the Indemnified Party has
reasonably concluded that there may be legal defenses available to it in such
Third Party Action that are different from or in addition to those available to
the Indemnitor or (y) a conflict or potential conflict exists between the
Indemnified Party and the Indemnitor in such Third Party Action (in which case
the Indemnitor will not have the right to direct the defense of such Third Party
Action with respect to which such conflict exists on behalf of the Indemnified
Party), but only to the extent such fees and expenses are incurred in connection
with such conflicting issues. Any such separate firm shall be designated in
writing by the Indemnified Party. The Indemnitor shall not be liable for any
settlement of any proceeding of such Third Party Action effected without its
written consent, but if the Indemnitor consents to any such settlement, the
Indemnitor agrees to indemnify the Indemnified Party from and against any loss
or liability for which indemnity is available hereunder and which is specified
in such settlement or judgment. No Indemnitor shall, without the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed), effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability or claims that are the subject matter of such
proceeding and such settlement only involves the payment of money.
(c) Assignor shall be entitled in all cases (but not obligated)
to assume the settlement and to conduct negotiations or proceedings to obtain
the discharge and release of or otherwise eliminate any Lien set forth on
Schedule 5(h) hereto. If Assignor assumes any such settlement or any such
negotiations, it shall pursue such settlement or negotiations in good faith.
Assignor shall not be liable for any settlement or discharge of any such Lien
effected without its written consent, but if Assignor consents to any such
settlement or discharge, Assignor agrees to indemnify Assignee from and against
any loss or liability for which indemnity is available hereunder and which is
specified in such settlement or discharge.
39
<PAGE>
SECTION 15. Termination
This Agreement may be terminated at any time prior to the first
Effective Time to occur pursuant to the terms hereof:
(a) by mutual written consent of Assignee and Assignor;
(b) by either party by written notice to the other party if the
transactions contemplated hereby have not been consummated on or before the
Outside Date; provided, however, that the right to terminate this Agreement
under this Section 15(b) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause of or has
resulted in the failure of the transactions contemplated hereby being
consummated on or before the Outside Date; or
(c) by (i) Assignor if (a) Assignor accepts or recommends one or
more Superior Proposals to its partners or resolves to do either of the
foregoing and (b) Assignee no longer has the right pursuant to Section 11(c) to
deliver an Assignee Acceptance Notice to Assignor or (ii) by Assignee if (x)
Assignor has given an SP Notice and (y) at least fourteen (14) days have passed
since the date on which Assignee's right pursuant to Section 11(c) to deliver an
Assignee Acceptance Notice terminated.
40
<PAGE>
SECTION 16. Miscellaneous
(a) Notices
All notices, demands, declarations and other communications
required by this Agreement shall be in writing and shall be effective (i) if
given by facsimile, when transmitted, (ii) if given by registered or certified
mail, three (3) Business Days after being deposited with the U.S. Postal
Service, (iii) if given by courier, when received, or (iv) if personally
delivered, when so delivered, addressed:
If to Assignor, to:
c/o Polaris Investment Management Corporation
201 Mission Street, 27th Floor
San Francisco, CA 94105
Attention: President
Facsimile Number:
With a copy to:
c/o Polaris Investment Management Corporation
201 High Ridge Road, 1st Floor
Stamford, CT 06927-4900
Attention: Portfolio Management
Facsimile Number: (203) 357-4585
Or to such other address as assignor shall from time to time designate in
writing to assignee; and
If to Assignee, to:
Triton Aviation Services II LLC
55 Green Street, Suite 500
San Francisco, CA 94111
Attn: President
Facsimile Number: (415) 398-9184
or to such other address as Assignee may from time to time designate in writing
to Assignor.
41
<PAGE>
(b) Headings
Headings used herein are for convenience only and shall not
in any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
(c) References
Any reference to a specific Section or Section number shall
be interpreted as a reference to that Section of this Agreement unless otherwise
expressly provided.
(d) GOVERNING LAW
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCE ABILITY THEREOF, SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
EXCLUDING ANY CONFLICT OF LAWS RULES THEREOF.
(e) Severability
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (i) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction.
(f) Amendments in Writing
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement, nor any consent to any departure by Assignor
or Assignee from any provision hereof, shall in any event be effective unless
the same shall be in writing and signed by Assignor and Assignee, and each such
amendment, modification, waiver, termination or discharge shall be effective
only in the specific instance and for the specific purpose for which given. No
provision of this Agreement shall be varied, contradicted or explained by any
oral agreement, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by Assignor and Assignee.
42
<PAGE>
(g) Expenses
Each of Assignor and Assignee shall be responsible for all
fees and expenses incurred by it, including for legal counsel and other
advisors, in connection with this Agreement, any Ancillary Agreement or
otherwise relating to the transactions contemplated hereby; provided, however,
all costs and expenses incurred in connection with Special FAA Counsel or with
Special CAA Counsel and all fees and expenses payable to the Escrow Agent
pursuant to the Escrow Agreement shall be shared equally by Assignor and
Assignee; provided, further, if either Assignor or Assignee terminates this
Agreement in accordance with Section 15(c) hereof, Assignor shall pay or cause
to be paid to Assignee within two (2) Business Days of such termination a fee in
immediately available funds in an amount equal to one and one-half percent
(1.5%) of the Purchase Price.
(h) Execution in Counterparts
This Agreement and any amendments, waivers or consents hereto
may be executed by Assignor and Assignee in separate counterparts (or upon
separate signature pages bound together into one or more counterparts), each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
(i) Entire Agreement
This Agreement and the Ancillary Agreements constitute the
entire agreement of Assignor and Assignee with respect to the subject matter
hereof or thereof, and all prior understandings or agreements, whether written
or oral, between Assignor and Assignee with respect to such subject matter are
hereby superseded in their entirety.
(j) Exhibits
The exhibits attached hereto are incorporated by reference
herein and shall have the same force and effect with respect to the provisions
set forth therein as though fully set forth in this Agreement.
(k) Assignment and Successors
This Agreement may not be assigned except by operation of
law. This Agreement shall be binding upon, shall inure to the benefit of and
shall be enforceable by Assignor and Assignee and their respective successors.
43
<PAGE>
(l) Confidentiality
This Agreement and the Ancillary Agreements are confidential
documents between the parties thereto and shall not be disclosed by either party
to third parties without the prior written consent of the other party other than
(i) to such party's directors, officers, employees, advisors, auditors, agents
or representatives who are advised of the confidential nature of this Agreement
and the Ancillary Agreements (and for whose compliance with the terms hereof,
such party shall be liable), (ii) to the extent disclosure as required by any
applicable law, regulation or judicial order or (iii) in connection with the
disclosure requirements of the Securities and Exchange Commission. The
obligations and protections contained in this Section 16(l) are in addition to
and not a replacement of any obligations and protections provided pursuant to
any confidentiality agreement executed by and currently in effect between the
parties hereto or any of their respective Affiliates.
44
<PAGE>
SCHEDULE 1
AIRCRAFT AND LESSEES
Serial No. Aircraft Type Lessee
---------- ------------- ------
PART A (DOMESTIC)
21426 727-200 ADV Continental
21427 727-200 ADV Continental Micronesia
21947 727-200 ADV Continental Micronesia
47082 DC-9-31 TWA
47096 DC-9-31 TWA
47617 DC-9-41 TWA
47734 DC-9-32 TWA
PART B (FOREIGN AIRCRAFT)
None
<PAGE>
SCHEDULE 2
LEASES
21426 Aircraft Lease Agreement [A], dated as of February 5, 1993, between
First Security Bank of Utah, National Association, as Lessor, and
Continental Airlines, Inc., as Lessee, as supplemented by Lease
Supplement No. 1 dated April 27, 1993.
21427 Aircraft Lease Agreement [B], dated as of February 5, 1993, between
First Security Bank of Utah, National Association, as Lessor, and
Continental Micronesia, Inc., as Lessee, as supplemented by Lease
Supplement No. 1 dated May 14, 1993.
21947 Aircraft Lease Agreement [C], dated as of February 5, 1993, between
First Security Bank of Utah, National Association, as Lessor, and
Continental Micronesia, Inc., as Lessee, as supplemented by Lease
Supplement No. 1 dated June 9, 1993.
47082 Aircraft Lease Agreement [B-1] dated as of January 20, 1987, between
First Security Bank of Utah, National Association, as Lessor, and
Trans World Airlines, Inc., as Lessee, as supplemented by that certain
Lease Supplement No. 2 [B-2], among others, dated January 29, 1987,
and as amended by Amendment No. 1 dated as of March 28, 1991,
Amendment No. 2 dated as of November 8, 1991, Amendment No. 3 dated as
of December 27, 1991, Amendment No. 4 dated as of November 27, 1996
and Amendment No. 5 dated as of February 7, 1997, filed with the FAA
on February 7, 1997, but not recorded as of May 12, 1997. *
47096 Aircraft Lease Agreement [B-1] dated as of January 20, 1987, between
First Security Bank of Utah, National Association, as Lessor, and
Trans World Airlines, Inc., as Lessee, as supplemented by that certain
Lease Supplement No. 1 [B-1], dated January 29, 1987, as amended by
Amendment No. 1 dated as of March 28, 1991, Amendment No. 2 dated as
of November 8, 1991, Amendment No. 3 dated as of December 27, 1991,
Amendment No. 4 dated as of November 27, 1996, and Amendment No. 5
dated as of February 7, 1997, filed with the FAA on February 7, 1997,
but not recorded as of May 12, 1997. *
47617 Aircraft Lease Agreement [B-2] dated as of January 20, 1987, between
First Security Bank of Utah, National Association, as Lessor, and
Trans World Airlines, Inc., as Lessee, as supplemented by that certain
Lease Supplement No. 6 ["B-17"], dated January 29, 1987, as amended by
Amendment No. 1 dated as of March 28, 1991, Amendment No. 2 dated as
of November 8, 1991, Amendment No. 3 dated as of December 27, 1991,
Amendment No. 4 dated as of November 27, 1996, and Amendment No. 5
<PAGE>
SCHEDULE 2: LEASES
dated as of February 7, 1997, filed with the FAA on February 7, 1997,
but not recorded as of May 12, 1997. *
47734 Aircraft Lease Agreement [B-2] dated as of January 20, 1987, between
First Security Bank of Utah, National Association, as Lessor, and
Trans World Airlines, Inc., as Lessee, as supplemented by that certain
Lease Supplement No. 5 [B-16], dated January 29, 1987, as amended by
Amendment No. 1 dated as of March 28, 1991, Amendment No. 2 dated as
of November 8, 1991, Amendment No. 3 dated as of December 27, 1991,
Amendment No. 4 dated as of November 27, 1996, and Amendment No. 5
dated as of February 7, 1997, filed with the FAA on February 7, 1997,
but not recorded as of May 12, 1997. *
- -----------------------------
* Each of these Lease Agreements relate to multiple aircraft, including
certain aircraft not being sold to Assignee. Prior to the Effective
Time in respect of each aircraft being sold to Assignee, the lease
agreements relating to such aircraft will be amended and restated into
newly created leases relating to these Aircraft containing
substantially the same terms and conditions as the Lease Agreements
listed above. Only the newly created, amended and restated lease
agreements will constitute a part of the Transferred Interests conveyed
to Assignee.
2
<PAGE>
SCHEDULE 3
FOREIGN AIRCRAFT ENGINES
None
<PAGE>
SCHEDULE 4
OTHER OPERATIVE AGREEMENTS
21426 Letter Agreement No. 1 dated as of February 5, 1993, between First
Security Bank of Utah, National Association, as Lessor, and
Continental Airlines, Inc., as Lessee
Participation Agreement, dated as of February 5, 1993, among
Continental Airlines, Inc., as Lessee, First Security Bank of Utah,
National Association, as Owner Trustee, and Polaris Aircraft Income
Fund II, as Owner Participant.
21427 Letter Agreement No. 1 dated as of February 5, 1993, between First
Security Bank of Utah, National Association, as Lessor, and
Continental Airlines, Inc., as Lessee
Participation Agreement, dated as of February 5, 1993, among
Continental Airlines, Inc., as Lessee, First Security Bank of Utah,
National Association, as Owner Trustee, and Polaris Aircraft Income
Fund II, as Owner Participant.
21947 Letter Agreement No. 1 dated as of February 5, 1993, between First
Security Bank of Utah, National Association, as Lessor, and
Continental Airlines, as Lessee
Participation Agreement, dated as of February 5, 1993, among
Continental Airlines, Inc., as Lessee, First Security Bank of Utah,
National Association, as Owner Trustee, and Polaris Aircraft Income
Fund II, as Owner Participant.
47082 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Income Fund II,
as Buyer.
Tax Indemnification Agreement, dated as of November 14, 1986, among
Polaris Aircraft Income Fund II, as Beneficiary, Ozark Air Lines,
Inc., as Seller, and Trans World Airlines, Inc., as Lessee.
Unconditional And Irrevocable Lease Guaranty, dated as of November 14,
1986, issued by Trans World Airlines, Inc. in favor of First Security
Bank, National Association, as Lessor.
Side Amendment Letter to Amendment No. 1 to Aircraft Lease Agreement,
dated as of January 20, 1987.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
<PAGE>
SCHEDULE 4:OTHER OPERATIVE AGREEMENTS
47096 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Income Fund II,
as Buyer.
Tax Indemnification Agreement, dated as of November 14, 1986, among
Polaris Aircraft Income Fund II, as Beneficiary, Ozark Air Lines,
Inc., as Seller, and Trans World Airlines, Inc., as Lessee.
Unconditional And Irrevocable Lease Guaranty, dated as of November 14,
1996, issued by Trans World Airlines, Inc. in favor of First Security
Bank, National Association, as Lessor.
Side Amendment Letter to Amendment No. 1 to Aircraft Lease Agreement,
dated as of January 20, 1987.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
47617 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Income Fund II,
as Buyer.
Tax Indemnification Agreement, dated as of November 14, 1986, among
Polaris Aircraft Income Fund II, as Beneficiary, Ozark Air Lines,
Inc., as Seller, and Trans World Airlines, Inc., as Lessee.
Unconditional And Irrevocable Lease Guaranty, dated as of November 14,
1996, issued by Trans World Airlines, Inc. in favor of First Security
Bank, National Association, as Lessor.
Side Amendment Letter to Amendment No. 1 to Aircraft Lease Agreement,
dated as of January 20, 1987.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
47734 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Income Fund II,
as Buyer.
Tax Indemnification Agreement, dated as of November 14, 1986, among
Polaris Aircraft Income Fund II, as Beneficiary, Ozark Air Lines,
Inc., as Seller, and Trans World Airlines, Inc., as Lessee.
2
<PAGE>
SCHEDULE 4:OTHER OPERATIVE AGREEMENTS
Unconditional And Irrevocable Lease Guaranty, dated as of November 14,
1996, issued by Trans World Airlines, Inc. in favor of First Security
Bank, National Association, as Lessor.
Side Amendment Letter to Amendment No. 1 to Aircraft Lease Agreement,
dated as of January 20, 1987.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
3
<PAGE>
SCHEDULE 4(a)
PURCHASE PRICE
Purchase Note Cash
Transferred Interests Price Amount Amount
--------------------- ----- ------ ------
----|
Transferred Interest 21426 |
Transferred Interest 21427 |
Transferred Interest 21947 |
Transferred Interest 47082 |--- $ 13,988,000 $ 12,412,112 $ 1,575,888
Transferred Interest 47096 | ------------ ------------- -----------
Transferred Interest 47617 |
Transferred Interest 47734 |
----|
<PAGE>
SCHEDULE 5
OWNER TRUSTEES
Serial No. Owner Trustee
---------- -------------------------------------------
21426 First Security Bank, National Association *
21427 First Security Bank, National Association *
21947 First Security Bank, National Association *
47082 First Security Bank, National Association *
47096 First Security Bank, National Association *
47617 First Security Bank, National Association *
47734 First Security Bank, National Association *
- -----------------------------
* Formerly known as First Security Bank of Utah, National Association
<PAGE>
SCHEDULE 5(b)
CONSENTS
Lessee Owner Trustee
Serial No. Lessee Consent Required Release Needed
---------- ------ ---------------- --------------
21426 Continental Yes Yes
21427 Continental Yes Yes
Micronesia
21947 Continental Yes Yes
Micronesia
47082 TWA Yes; must subdivide Trust Yes
and Lease Agreements
47096 TWA Yes; must subdivide Trust Yes
and Lease Agreements
47617 TWA Yes; must subdivide Trust Yes
and Lease Agreements
47734 TWA Yes; must subdivide Trust Yes
and Lease Agreements
<PAGE>
SCHEDULE 5(d)
ASSIGNOR CLAIMS
None
<PAGE>
SCHEDULE 5(g)
PENDING LITIGATION
Equity Resources, Inc. v. Polaris Investment Management Corporation, et al. On
or about April 18, 1997, an action entitled Equity Resources, Inc. v. Polaris
Investment Management Corporation, et al. was filed in the Superior Court for
the County of Middlesex, Commonwealth of Massachusetts. The complaint names each
of Polaris Investment Management Corporation, Polaris Aircraft Income Fund II,
Polaris Aircraft Income Fund III, Polaris Aircraft Income Fund IV, Polaris
Aircraft Income Fund V, and Polaris Aircraft Income Fund VI, as defendants. The
complaint alleges that Polaris Investment Management Corporation, as general
partner of each of the partnerships, committed a breach of its fiduciary duties,
violated applicable partnership law statutory requirements, and breached
provisions of the partnership agreements of each of the foregoing partnerships
by failing to solicit a vote of the limited partners in each of such
partnerships in connection with the proposed sale of the Transferred Interests
to Assignee and in failing to disclose material facts relating to such
transaction. Plaintiffs filed a motion seeking to enjoin the sale of the
Transferred Interests to Assignee, which motion was denied by the Court on May
6, 1997. Plaintiffs have filed an appeal from the order denying their request
for an injunction.
<PAGE>
SCHEDULE 5(h)
LIENS
None
<PAGE>
SCHEDULE 5(j)
MISSING DOCUMENTS
47082, 47096, 47617, 47734
Tax Indemnification Agreement, dated as of November 14, 1986, among
Polaris Aircraft Income Fund II, as Beneficiary, Ozark Air Lines,
Inc., as Seller, and Trans World Airlines, Inc., as Lessee.
Unconditional And Irrevocable Lease Guaranty, dated as of November 14,
1986, issued by Trans World Airlines, Inc. in favor of First Security
Bank, National Association, as Lessor.
WestJet Promissory Note
Amended and Restated Trust Agreement dated as of March 23, 1988.
<PAGE>
SCHEDULE 6
TRUST AGREEMENTS
21426 Trust Agreement A, dated as of June 29, 1987, between Polaris Aircraft
Income Fund II, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee ("Alaska Airlines, Inc. (1987)
Trust A")
21427 Trust Agreement B, dated as of June 29, 1987, between Polaris Aircraft
Income Fund II, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee ("Alaska Airlines, Inc. (1987)
Trust B")
21947 Trust Agreement C, dated as of June 29, 1987, between Polaris Aircraft
Income Fund II, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee ("Alaska Airlines, Inc. (1987)
Trust C")
47082 Trust Agreement, dated as of November 14, 1986, between Polaris
Aircraft Income Fund II, as Beneficiary, and First Security Bank of
Utah, National Association, as Owner Trustee ("Ozark Air Lines, Inc.
(1986) Trust B") *
47096 Trust Agreement, dated as of November 14, 1986, between Polaris
Aircraft Income Fund II, as Beneficiary, and First Security Bank of
Utah, National Association, as Owner Trustee ("Ozark Air Lines, Inc.
(1986) Trust B") *
47617 Trust Agreement, dated as of December 1, 1986, between Polaris
Aircraft Income Fund II, as Beneficiary, and First Security Bank of
Utah, National Association, as Owner Trustee ("Ozark Air Lines, Inc.
(1986) Trust B-2") *
47734 Trust Agreement, dated as of December 1, 1986, between Polaris
Aircraft Income Fund II, as Beneficiary, and First Security Bank of
Utah, National Association, as Owner Trustee ("Ozark Air Lines, Inc.
(1986) Trust B-2") *
- -----------------------
* Each of these Trust Agreements relates to multiple aircraft, including
certain aircraft not being sold to Assignee. Prior to the Effective Time in
respect of each aircraft being sold to Assignee, such aircraft will have
been transferred into a newly created single-aircraft trust, governed by a
trust agreement under which Assignor is the beneficiary upon substantially
the same terms and conditions as the Trust Agreement listed above. Only the
newly created trust agreements will constitute a part of the Transferred
Interest conveyed to Assignee.
<PAGE>
SCHEDULE 7
UNFUNDED COMMITMENTS
Serial No. Comments
- --------- ----------------------------------------------------------------------
21426 Obligation to provide modification financing pursuant to Letter
Agreement No. 1, dated February 5, 1993.
21427 Obligation to provide modification financing pursuant to Letter
Agreement No. 1, dated February 5, 1993.
21947 Obligation to provide modification financing pursuant to Letter
Agreement No. 1, dated February 5, 1993.
47082 Obligation to provide modification financing pursuant to Amendment No.
3 Side Letter, dated December 27, 1991.
47096 Obligation to provide modification financing pursuant to Amendment No.
3 Side Letter, dated December 27, 1991.
47617 Obligation to provide modification financing pursuant to Amendment No.
3 Side Letter, dated December 27, 1991.
47734 Obligation to provide modification financing pursuant to Amendment No.
3 Side Letter, dated December 27, 1991.
<PAGE>
SCHEDULE 8
RECEIVABLES AND RECEIVABLE DOCUMENTS
Principal Balance
as of 4/1/97: Receivable Agreements
- ------------- ---------------------
$114,385.00 Purchase Money Promissory Note, dated February 9, 1995, by
American International Airlines, Inc. ("Borrower") payable to
First Security Bank of Utah, National Association ("Lender"), as
owner trustee under that certain Trust Agreement dated as of June
27, 1986, for the benefit of Polaris Aircraft Income Fund II, in
the original principal sum of One Million Nine Hundred Eighty
Thousand United States Dollars (U.S. $1,980,000). Executed
pursuant to that certain Aircraft Purchase Agreement, dated
January 27, 1995, and secured by that certain Aircraft Security
Agreement and Chattel Mortgage, dated _____________, pertaining
to one hushkitted Boeing 727-200 bearing MSN 19455 and FAA No.
N4735.
$390,211.80 Promissory Note, dated March 4, 1996, by WestJet Airlines Ltd.
("Maker") payable to First Security Bank of Utah, National
Association ("Payee"), as owner trustee under that certain
Amended and Restated Trust Agreement dated as of March 23, 1988,
for the benefit of Polaris Aircraft Income Fund II, in the
original principal sum of Eight Hundred and Forty-three Thousand
Two Hundred Dollars ($843,200). Executed pursuant to that certain
Aircraft Sale Agreement, dated as of March 4, 1996, between Maker
and Payee, as owner trustee, and secured by that certain Aircraft
Security Agreement of the same date, pertaining to one Boeing
737-200 Combi Aircraft, bearing MSN 19743, and including one
Pratt & Whitney JT8D-9A Engine, Serial No. 665497.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this PURCHASE,
ASSIGNMENT AND ASSUMPTION AGREEMENT to be duly executed as of the day and year
first written above.
POLARIS AIRCRAFT INCOME FUND II
By: Polaris Investment Management Corporation,
General Partner
By: /S/ ERIC DULL
----------------------------------------
Name: ERIC DULL
----------------------------------------
Title: PRESIDENT
----------------------------------------
TRITON AVIATION SERVICES II LLC
By: Triton Aviation Services Limited,
Manager
By: /S/ JOHN E. FLYNN
---------------------------------------
Name: JOHN E. FLYNN
---------------------------------------
Title: PRESIDENT
---------------------------------------
