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. 33-10122
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POLARIS AIRCRAFT INCOME FUND III,
A California Limited Partnership
State of Organization: California
IRS Employer Identification No. 94-3023671
201 Mission Street, 27th Floor, San Francisco, California 94105
Telephone - (415) 284-7400
This document consists of 64 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 III
(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 III
as Assignor
and
TRITON AVIATION SERVICES III LLC
as Assignee
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions.......................................... 1
SECTION 2. Sale and Assignment.................................. 10
SECTION 3. Purchase and Assumption.............................. 11
SECTION 4. Purchase Price....................................... 11
(a) Payment of Purchase Price............................ 11
(b) Transfer of Aircraft Income and Lessee Deposits...... 12
(c) First Effective Date; Mop-Up Date.................... 12
(d) Settlement of Aircraft Income and Lessee Deposits.... 13
SECTION 5. Representations and Warranties of Assignor;
Limitation of Warranty; Covenant with Respect to
Pre-Closing Actions.................................. 15
5.1 Representations and Warranties of Assignor........... 15
(a) Partnership Organization, Etc........................ 15
(b) Due Authorization; Non-Contravention................. 15
(c) Due Execution and Delivery; Enforceability........... 15
(d) Event of Default..................................... 16
(e) Total Loss........................................... 16
(f) Taxes................................................ 16
(g) Litigation........................................... 17
(h) Encumbrances......................................... 17
(i) Brokers' Fees........................................ 17
(j) Operative Agreements................................. 18
(k) Title to Transferred Interests....................... 18
5.2 Supplements to Schedules; Post-Signing Information. ...... 18
5.3 Limitation of Warranty............................... 18
5.4 Actions with Respect to Transferred Interests........ 19
SECTION 6. Representations and Warranties of Assignee;
Access Covenant...................................... 20
6.1 Representations and Warranties of Assignee........... 20
(a) LLC Organization, Etc................................ 20
(b) Due Authorization; Non-Contravention................. 20
(c) Due Execution and Delivery; Enforceability........... 21
(d) Litigation........................................... 21
(e) Compliance with Operative Agreements................. 21
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(f) Non-Airline.......................................... 21
(g) Brokers' Fees........................................ 21
(h) Acquisition For Own Account.......................... 22
6.2 Access Covenant...................................... 22
SECTION 7. Conditions Precedent to the Obligations of Assignor.. 22
(a) Purchase Price....................................... 22
(b) Affidavit of Limited Control by a Non-U.S. Citizen... 22
(c) Escrow Agreement..................................... 23
(d) TASL "Keep Well" Agreement........................... 23
(e) TIL Keep Well Guaranty and Loan Guaranty............. 23
(f) Assignee Security Agreement.......................... 23
(g) Approvals and Consents............................... 23
(h) Due Authorization, Execution and Delivery............ 24
(i) Representations and Warranties....................... 24
(j) Organizational and Authorization Matters............. 24
(k) Illegality; No Proceedings........................... 25
(l) No Total Loss........................................ 25
(m) Opinions............................................. 26
(n) Location of Aircraft................................. 26
(o) TIL Balance Sheets................................... 26
(p) Other Instruments and Documents; Additional
Information.......................................... 26
(q) Outside Date......................................... 26
(r) No Pending Superior Proposal......................... 27
SECTION 8. Conditions Precedent to the Obligations of Assignee.. 27
(a) Leases and Trust Agreements.......................... 27
(b) Due Authorization, Execution and Delivery............ 27
(c) Representations and Warranties....................... 27
(d) Schedules ........................................... 27
(e) Partnership Authorization Matters.................... 28
(f) Illegality; No Proceedings........................... 28
(g) Approvals and Consents............................... 29
(h) No Total Loss........................................ 29
(i) Opinions............................................. 29
(j) Location of Aircraft................................. 29
(k) Other Instruments and Documents; Additional
Information.......................................... 30
(l) Outside Date......................................... 30
SECTION 9. Payments............................................. 30
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SECTION 10. Certain Notices...................................... 30
SECTION 11. Superior Proposal.................................... 31
SECTION 12. Further Assurances................................... 32
SECTION 13. Taxes and Indemnities................................ 32
(a) Transfer Taxes....................................... 32
(b) Notice of IRS Reports................................ 33
(c) Assignor's Indemnity................................. 33
(d) Assignee's Indemnity................................. 34
(e) Survival of Representations and Warranties........... 35
SECTION 14. Indemnification Procedure............................ 35
SECTION 15. Termination.......................................... 37
SECTION 16. Miscellaneous........................................ 38
(a) Notices.............................................. 38
(b) Headings............................................. 39
(c) References........................................... 39
(d) GOVERNING LAW........................................ 39
(e) Severability......................................... 39
(f) Amendments in Writing................................ 39
(g) Expenses............................................. 40
(h) Execution in Counterparts............................ 40
(i) Entire Agreement..................................... 40
(j) Exhibits............................................. 40
(k) Assignment and Successors............................ 40
(l) Confidentiality...................................... 41
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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
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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 III, a California limited partnership ("Assignor"), and TRITON
AVIATION SERVICES III LLC, a California limited liability company ("Assignee").
W I T N E S 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.
"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 managers 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 Income" means, with respect to a Transferred
Interest, all income, scheduled rental 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 associated with such Transferred Interest.
"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 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,
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instruments, documents 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 (i) each
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 and (ii) each Novation Agreement, 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, with respect to each Transferred
Interest, (i) all of the obligations and liabilities of Assignor relating to the
applicable Trust Estate and under the applicable Trust Agreement and all other
Operative Agreements relating to such Trust Estate or such Transferred Interest
to the extent arising from acts, omissions, events or circumstances occurring or
accruing on or after the applicable Effective Time for such Transferred
Interest, (ii) all Deposit Liabilities relating to such Transferred Interest and
(iii) all Unfunded Commitments relating to such Transferred Interest.
"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.
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"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.
"Effective Time" means, subject to the final sentence of
this definition, each date and time on which any 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 Transferred Interest. 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 Aircraft 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,
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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
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"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.
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"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 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 a 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 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.
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"Outside Date" shall have the meaning assigned to it in
Section 7(g) 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 appli ances, 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
proprietor ship, partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution, public
benefit corporation or other entity.
"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.
"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 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 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 circumstance
occurring or accruing prior to the Effective Time for such Transferred Interest
other than Aircraft Income, Lessee Deposits or other rights specifically
transferred to Assignee pursuant to this Agreement.
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"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(o) hereof.
"Special FAA Counsel" shall have the meaning assigned to it
in Section 7(o) 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 a
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 Regula tions 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 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 with holdings 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 subdivision or taxing authority thereof, any
international taxing authority or any territory or possession of the United
States or any taxing authority thereof.
"Threshold Amount" shall have the meaning assigned to it in
Section 13(c) hereof.
"TIL" means Triton Investments Limited, a Bermuda
corporation.
"Third Party Action" shall have the meaning assigned to it
in Section 14(a) hereof.
"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
Assignor's present and future right, title and interest in, to and under the
Trust Estate, the Trust Agree ments and all other Operative Agreements, all
Lessee Deposits, all Aircraft Income and all Foreign Aircraft, but excluding, in
each case, the Reserved Rights. 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 Aircraft
Income relating to the Aircraft bearing such manufacturer's serial number.
"Trust Agreements" mean, collectively, each Trust Agreement
listed on Schedule 6 attached hereto, as the same may have been amended,
supplemented or modified from time to time.
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"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.
"Unfunded Commitment" means, with respect to any 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 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 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, 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 Trans ferred 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
the Assignment and Assumption Agreement for each such 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 each such Transferred Interest and (iii) confirm that it shall be deemed a
party to each 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 relating to such Trans ferred Interest;
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 the 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 Aircraft Income and Lessee Deposits
For each Daylight Effective Time and on the Mop-Up
Date, contemporaneously with 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 Aircraft 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 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 (as to Assignor) or
Section 8 (as to Assignee) are satisfied or waived by the appropriate party, the
first Effective Time will occur on the Start Date and (ii) the Effective Time
for each and every Transferred Interest will occur not later than the close of
business in New York on the Mop-Up Date. 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
Transferred Interest that has not been assigned previously to Assignee
(including any Transferred Interest which has not been transferred previously
because the Aircraft relating to such 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
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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 Transferred Interest that has not been assigned previously to
Assignee (including any Transferred Interest which has not been transferred
previously because the Aircraft relating to such 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
7(j)(v), any consents referred to in Section 6.1(b), the opinions described in
Section 7(n) 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 Transferred Interest, any Aircraft which is subject of such
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 such 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 Aircraft Income and Lessee Deposits
(i) Prior to assignment of a Transferred Interest to
Assignee hereunder, Assignor shall estimate the Aircraft 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 Aircraft 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 Aircraft 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 Aircraft 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
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(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 Aircraft 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
Aircraft Income under this Section 4(d)(i) shall be treated by the parties as a
purchase price adjustment for all income tax purposes.
(ii) If at any time prior to the last Effective Time
to occur pursuant to the terms hereof, any Aircraft which is subject of a
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 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 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 a 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 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 part nership 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 provi sions 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) 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.
(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
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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 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 concerning the rights or
obligations of such parties thereunder, (ii) there exists no default or event of
default under any Leases, any Trust Agreement or any other Operative Agreement
attributable to any act or omission of Assignor, (iii) Assignor is not in
default under any of the Operative Agreements, (iv) no default under any
Operative 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 and (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.
(e) Total Loss
To the actual knowledge of Assignor, without special
inquiry, none of the Aircraft are the subject of any Total Loss.
(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 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
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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 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. Except as otherwise provided in the Operative 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.
(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.
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(j) Operative Agreements
Except as set forth on Schedule 5(j), Assignor has
provided Assignee with true and complete originals of each of the Leases and the
Trust Agreements and with true and complete copies of each of the other
Operative Agreements and all amendments and supplements thereto as set forth on
Schedules 2, 4 and 6 hereto, which represent, collectively, all of the
agreements, instruments and documents among Assignor and the parties to the
Operative Agreements with respect to the Transferred Interests and no other
agreements, instruments or documents, among Assignor and the parties to the
Operative Agreements, with respect to the Transferred Interests exist.
(k) Title to Transferred Interests
Upon execution and delivery to Assignee of each of
the Assign ment and Assumption Agreements and the consummation of the
transactions contem plated 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).
(l) Unfunded Commitments
Except as set forth on Schedule 7 hereof, there are
no Unfunded Commitments in respect of any Aircraft.
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,
WITHOUT ANY REPRESENTATION, GUARANTEE OR
WARRANTY OF ASSIGNOR, EXPRESS OR IMPLIED, OF
ANY KIND, ARISING BY LAW OR OTHERWISE; AND
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(b) WITHOUT LIMITING THE GENERALITY OF THE FORE
GOING, 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, TRADE
MARK, 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.
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, 7 or 8 of this
Agreement or waive any default or event of default under any Operative
Agreement; or
(b) mortgage, pledge or otherwise encumber any of the
Transferred Interests or any Aircraft which is part of a Trust Estate; or
(c) sell, lease, transfer or otherwise dispose of any of the
Transferred Interests or any Aircraft which is a part of a Trust Estate; or
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(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.
(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 and under the
Trust Agreements and the other Operative 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) upon the Trust
Estate 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.
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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 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 Agree ments or the other Operative Agreements.
(e) Compliance with Operative 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 and other Operative 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 the 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.
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(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 and
the other Operative 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 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 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 and to permit Assignor
and its agents and representatives access to such Operative Agreements for the
remaining term of the Promissory Note and (b) dispose of or destroy any such
Operative 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 and to any Persons
having possession of or information relating to the Operative Agreements.
SECTION 7. Conditions Precedent to the Obligations of Assignor
The obligation of Assignor to sell and assign any
Transferred Interest to Assignee is subject to the satisfaction of the following
conditions with respect to such 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
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to each 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 Agree ment which shall have been executed and delivered by Assignee,
Assignor and the Escrow Agent.
(d) TASL "Keep Well" Agreement
Assignor shall have received a copy of the Keep Well
Agree ment, 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
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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.
(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.
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(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.
(k) Illegality; No Proceedings
At the applicable Effective Time, the performance of
the trans actions 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 Transferred
Interest.
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(m) Opinions
Assignor shall have received an 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 Transferred Interest, at
the applicable Effective Time for such Transferred Interest, an opinion from (i)
Manwell & Milton, counsel to Assignee and (ii) Crowe & Dunlevy, special FAA
counsel ("Special FAA Counsel") or Theodore Goddard ("Special CAA Counsel") or
in each case with respect to such matters relating to such Transferred Interest
and to such effect as Assignor shall reasonably request.
(n) Location of Aircraft
Subject to Section 4(c) hereof, the location of the
Aircraft relating to each Transferred Interest shall be acceptable to Assignor
at the applicable Effective Time for such 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 docu ments 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 transac tions contemplated by this Agreement, the taking of
all appropriate action in connec tion 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").
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(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.
SECTION 8. Conditions Precedent to the Obligations of Assignee
The obligation of Assignee to purchase any 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 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
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.
(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.
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(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, 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 such Transferred Interest being conveyed as of the
applicable Effective Time.
(f) Illegality; No Proceedings
At the applicable Effective Time, the performance of
the trans actions 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.
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(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 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 Transferred Interest, at the applicable Effective Time for such
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 Transferred Interest and to such effect as Assignee shall reasonably
request.
(j) Location of Aircraft
Subject to Section 4(c) hereof, the location of the
Aircraft relating to each Transferred Interest shall be acceptable to Assignee
at the applicable Effective Time for such Transferred Interest.
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(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 fore going conditions shall have been satisfied or waived on or before
5:00 p.m. E.D.T. on the Outside Date.
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 Aircraft Income or Lessee Deposits paid to or for the
benefit of Assignor that consti tute a Transferred Interest earlier transferred
to Assignee hereunder (including any amounts payable as interest in respect
thereof), and until so paid over, any Aircraft 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 (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 (other than
Assignor) pursuant to and in accordance with this Agreement, the Assignment and
Assumption Agreement, the Trust Agreements or any other Operative Agreement
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 and the Operative 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 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 or any of the Operative 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 or any of the Operative
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
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.
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(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
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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.
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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.
37
<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 III 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.
38
<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 LIMITA
TION, 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.
39
<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
40
<PAGE>
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.
(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.
41
<PAGE>
SCHEDULE 1
AIRCRAFT AND LESSEES
Serial No. Aircraft Type Lessee
---------- ------------- ------
PART A (DOMESTIC AIRCRAFT)
21247 727-200 ADV Continental
21248 727-200 ADV Continental
21249 727-200 ADV Continental
21363 727-200 ADV Continental
21366 727-200 ADV Continental
47248 DC-9-31 TWA
47029 DC-9-32 TWA
47344 DC-9-31 TWA
PART B (FOREIGN AIRCRAFT)
None
<PAGE>
SCHEDULE 2
LEASES
21247, 21248, 21249, 21363, 21366
Aircraft Lease Agreement, dated as of September 25, 1987, between
First Security Bank of Utah, National Association, as Lessor, and
Continental Airlines, Inc., as Lessee, as supplemented by Lease
Supplement Nos. 10, 11, 12, 19 and 20 dated as of September 28, 1987,
and as amended by Amendment No. 1 dated October 31, 1996.
47248 Aircraft Lease Agreement [A-13], dated as of January 20, 1987, between
Polaris Aircraft Leasing Corporation, as Lessor, and Trans World
Airlines, Inc., as Lessee, as supplemented by Lease Supplement No. 1
[A-13] dated January 29, 1987, as assigned by Lease Assignment and
Assumption Agreement dated as of March 26, 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,
and Amendment No. 4 dated as of February 7, 1997.
47029 Aircraft Lease Agreement [A-22], dated as of January 20, 1987, between
Polaris Aircraft Leasing Corporation, as Lessor, and Trans World
Airlines, Inc., as Lessee, as supplemented by Lease Supplement No. 1
[A-22] dated January 29, 1987, as assigned by Lease Assignment and
Assumption Agreement dated as of March 26, 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,
and Amendment No. 4 dated as of February 7, 1997.
47344 Aircraft Lease Agreement [A-15], dated as of January 20, 1987, between
Polaris Aircraft Leasing Corporation, as Lessor, and Trans World
Airlines, Inc., as Lessee, as supplemented by Lease Supplement No. 1
[A-15], dated January 29, 1987, as assigned by Lease Assignment and
Assumption Agreement dated as of February 27, 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 December 27, 1991, and
Amendment No. 4, dated as of February 7, 1997.
<PAGE>
SCHEDULE 3
FOREIGN AIRCRAFT ENGINES
None
<PAGE>
SCHEDULE 4
OTHER OPERATIVE AGREEMENTS
21247, 21248, 21249, 21363, 21366
Aircraft Purchase Agreement, dated as of September 25, 1987, between
Continental Airlines, Inc., as Seller, and Polaris Aircraft Income
Fund III, as Buyer
Tax Indemnification Agreement dated as of September 25, 1987, among
First Security Bank of Utah, National Association, as Lessor, Polaris
Aircraft Income Fund III, as Beneficiary, and Continental Airlines,
Inc., as Lessee.
Stipulation and Order Between Continental Airlines, Inc., New York
Airlines, Inc., Polaris Aircraft Income Fund III, Polaris Aircraft
Income Fund IV, Polaris Holding Company and First Security Bank of
Utah, N.A., as Owner Trustee Concerning Five DC-9-82 Aircraft, Six
727-22 Aircraft, Seven DC-9-14 Aircraft, and Five DC-9-32 Aircraft and
Certain Engines and Related Equipment, dated as of August 8, 1991,
approved by Bankruptcy Court (District of Delaware, Case Nos. 90-932
through 90-984) on August 23, 1991.
47248 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
Tax Indemnification Agreement [A-13] dated as of November 14, 1986,
among Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans
World Airlines. *
Assignment of Aircraft Purchase and Sale Lease Rights Agreement, dated
as of March 26, 1987 between Polaris Aircraft Leasing Corporation, as
Assignor, and First Security Bank of Utah, National Association, as
Owner Trustee and Assignee.
Lease Assignment and Assumption Agreement [A-13], dated as of March
26th, 1987, between Polaris Aircraft Leasing Corporation, and First
Security Bank of Utah, National Association.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
47029 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
<PAGE>
SCHEDULE 4:OTHER OPERATIVE AGREEMENTS
Tax Indemnification Agreement [A-22], dated as of November 14, 1986,
among Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans
World Airlines. *
Assignment of Aircraft Purchase and Sale Lease Rights Agreement, dated
as of March 26, 1987 between Polaris Aircraft Leasing Corporation, as
Assignor, and First Security Bank of Utah, National Association, as
Owner Trustee and Assignee.
Lease Assignment and Assumption Agreement [A-22], dated as of March
26th, 1987, between Polaris Aircraft Leasing Corporation and First
Security Bank of Utah, National Association.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
47344 Aircraft Purchase Agreement, dated as of November 14, 1986, between
Ozark Air Lines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
Tax Indemnification Agreement [A-15], dated as of November 14, 1986,
among Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans
World Airlines. *
Assignment of Aircraft Purchase and Sale Lease Rights Agreement, dated
as of March 26, 1987 between Polaris Aircraft Leasing Corporation, as
Assignor, and First Security Bank of Utah, National Association, as
Owner Trustee and Assignee.
Lease Assignment and Assumption Agreement [A-15], dated as of February
26, 1987, between Polaris Aircraft Leasing Corporation and First
Security Bank of Utah, National Association.
Amendment No. 3 Side Letter, dated as of December 27, 1991.
- --------------------------
* According to the index of the closing documents, that certain Tax
Indemnification Agreement [A-1], dated as of November 14, 1986, among
Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans World
Airlines, is exemplary of Tax Indemnification Agreements [A-2] through
[A-23].
2
<PAGE>
SCHEDULE 4(a)
PURCHASE PRICE
Purchase Note Cash
Transferred Interests Price Amount Amount
--------------------- ----- ------ ------
----|
Transferred Interest 21247 |
Transferred Interest 21248 |
Transferred Interest 21249 |
Transferred Interest 21363 |
Transferred Interest 21366 |--- $ 10,947,000 $ 9,713,711 $ 1,233,289
Transferred Interest 47248 | ------------- ------------ ------------
Transferred Interest 47029 |
Transferred Interest 47344 |
----|
<PAGE>
SCHEDULE 5
OWNER TRUSTEES
Serial No. Owner Trustee
---------- -------------
21247 First Security Bank, National Association *
21248 First Security Bank, National Association *
21249 First Security Bank, National Association *
21363 First Security Bank, National Association *
21366 First Security Bank, National Association *
47248 First Security Bank, National Association *
47029 First Security Bank, National Association *
47344 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
---------- ------ ---------------- --------------
21247 Continental No Yes
21248 Continental No Yes
21249 Continental No Yes
21363 Continental No Yes
21366 Continental No Yes
47248 TWA Yes, must transfer to newly Yes
created trust
47029 TWA Yes, must transfer to newly Yes
created trust
47344 TWA Yes, must transfer to newly Yes
created trust
<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
47248 Tax Indemnification Agreement [A-13] dated as of November 14, 1986,
among Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans
World Airlines. *
47029 Tax Indemnification Agreement [A-22], dated as of November 14, 1986,
among Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans
World Airlines. *
47344 Tax Indemnification Agreement [A-15], dated as of November 14, 1986,
among Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans
World Airlines. *
- -----------------------------------
* The index to the original closing documents states that Tax
Indemnification Agreement [A-1], dated as of November 14, 1986, among
Polaris Aircraft Leasing Corporation, Ozark Air Lines, and Trans World
Airlines, is exemplary of Tax Indemnification Agreement [A-2] through
[A-23].
<PAGE>
SCHEDULE 6
TRUST AGREEMENTS
21247, 21248, 21249, 21363, 21366
Trust Agreement, dated as of September 25, 1987, between Polaris
Aircraft Income Fund III, as Beneficiary, and First Security Bank of
Utah, National Association, as Owner Trustee ("Continental Airlines,
Inc. (1987) Trust") *
47248 Trust Agreement, dated as of March 26, 1987, between Polaris Aircraft
Income Fund III, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee ("Trans World Airlines, Inc.
(1987) Trust C-3") **
47029 Trust Agreement, dated as of March 26, 1987, between Polaris Aircraft
Income Fund III, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee ("Trans World Airlines, Inc.
(1987) Trust C-3") **
47344 Trust Agreement, dated as of February 26, 1987, between Polaris
Aircraft Income Fund III, as Beneficiary, and First Security Bank of
Utah, National Association, as Owner Trustee ("Trans World Airlines,
Inc. (1987) Trust C-2") **
- --------------------------------
* Each of these Trust Agreements relates to multiple aircraft, all of
which are being sold to Assignee. Prior to the Effective Time in
respect of each such aircraft, the 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.
** 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. Source/Type
- ---------- --------------------------------------------------------------------
21247 Obligation to provide modification financing pursuant to a
bankruptcy stipulaton, dated August 8, 1991.
21248 Obligation to provide modification financing pursuant to a
bankruptcy stipulaton, dated August 8, 1991.
21249 Obligation to provide modification financing pursuant to a
bankruptcy stipulaton, dated August 8, 1991.
21363 Obligation to provide modification financing pursuant to a
bankruptcy stipulaton, dated August 8, 1991.
21366 Obligation to provide modification financing pursuant to bankruptcy
stipulaton, dated August 8, 1991.
47248 Obligation to provide modification financing pursuant to Amendment
No. 3 Side Letter, dated December 27, 1991.
47344 Obligation to provide modification financing pursuant to Amendment
No. 3 Side Letter, dated December 27, 1991.
47029 Obligation to provide modification financing pursuant to Amendment
No. 3 Side Letter, dated December 27, 1991.
<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 III
By: Polaris Investment Management Corporation,
General Partner
By: /S/ ERIC DULL
------------------------------------------
Name: ERIC DULL
------------------------------------------
Title: PRESIDENT
------------------------------------------
TRITON AVIATION SERVICES III LLC
By: Triton Aviation Services Limited, Manager
By: /S/ JOHN E. FLYNN
------------------------------------------
Name: JOHN E. FLYNN
------------------------------------------
Title: PRESIDENT
------------------------------------------
