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. 33-21977
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POLARIS AIRCRAFT INCOME FUND V,
A California Limited Partnership
State of Organization: California
IRS Employer Identification No. 94-3068259
201 Mission Street, 27th Floor, San Francisco, California 94105
Telephone - (415) 284-7400
This document consists of 72 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 V
(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 V
as Assignor
and
TRITON AVIATION SERVICES V LLC
as Assignee
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TABLE OF CONTENTS
Page
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SECTION 1. Definitions.......................................... 1
SECTION 2. Sale and Assignment.................................. 11
SECTION 3. Purchase and Assumption.............................. 12
SECTION 4. Purchase Price....................................... 12
(a) Payment of Purchase Price............................ 12
(b) Transfer of Income and Lessee Deposits............... 13
(c) First Effective Date; Mop-Up Date.................... 13
(d) Settlement of Income and Lessee Deposits............. 14
SECTION 5. Representations and Warranties of Assignor;
Limitation of Warranty; Covenant with Respect
to Pre-Closing Actions............................... 16
5.1 Representations and Warranties of Assignor........... 16
(a) Partnership Organization, Etc........................ 16
(b) Due Authorization; Non-Contravention................. 16
(c) Due Execution and Delivery; Enforceability........... 17
(d) Event of Default..................................... 17
(e) Total Loss........................................... 17
(f) Taxes................................................ 18
(g) Litigation........................................... 18
(h) Encumbrances......................................... 18
(i) Brokers' Fees........................................ 19
(j) Operative Agreements; Receivable Agreements.......... 19
(k) Title to Transferred Interests....................... 19
(l) Unfunded Commitments..................................... 20
(m) The outstanding principal amount of each Receivable...... 20
5.2 Supplements to Schedules; Post-Signing Information. 20
5.3 Limitation of Warranty............................... 20
5.4 Actions with Respect to Transferred Interests........ 21
SECTION 6. Representations and Warranties of Assignee;
Access Covenant...................................... 21
6.1 Representations and Warranties of Assignee........... 21
(a) LLC Organization, Etc................................ 21
(b) Due Authorization; Non-Contravention................. 22
(c) Due Execution and Delivery; Enforceability........... 22
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(d) Litigation........................................... 22
(e) Compliance with Operative Agreements and Receivable
Agreements........................................... 23
(f) Non-Airline.......................................... 23
(g) Brokers' Fees........................................ 23
(h) Acquisition For Own Account.......................... 23
6.2 Access Covenant...................................... 23
SECTION 7. Conditions Precedent to the Obligations of Assignor.. 24
(a) Purchase Price....................................... 24
(b) Affidavit of Limited Control by a Non-U.S. Citizen... 24
(c) Escrow Agreement..................................... 24
(d) TASL "Keep Well" Agreement........................... 25
(e) TIL Keep Well Guaranty and Loan Guaranty............. 25
(f) Assignee Security Agreement.......................... 25
(g) Approvals and Consents............................... 25
(h) Due Authorization, Execution and Delivery............ 25
(i) Representations and Warranties....................... 26
(j) Organizational and Authorization Matters............. 26
(k) Illegality; No Proceedings........................... 27
(l) No Total Loss........................................ 27
(m) Opinions............................................. 27
(n) Location of Aircraft................................. 28
(o) TIL Balance Sheets................................... 28
(p) Other Instruments and Documents; Additional
Information.......................................... 28
(q) Outside Date......................................... 28
(r) No Pending Superior Proposal......................... 28
(s) Satisfaction of Conditions........................... 28
(t) Opinions............................................. 29
(u) Outside Date......................................... 29
(v) Superior Proposal.................................... 29
SECTION 8. Conditions Precedent to the Obligations of Assignee.. 29
(a) Leases and Trust Agreements.......................... 29
(b) Due Authorization, Execution and Delivery............ 29
(c) Representations and Warranties....................... 29
(d) Schedules ........................................... 30
(e) Partnership Authorization Matters.................... 30
(f) Illegality; No Proceedings........................... 31
(g) Approvals and Consents............................... 31
(h) No Total Loss........................................ 31
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(i) Opinions............................................. 31
(j) Location of Aircraft................................. 32
(k) Other Instruments and Documents; Additional
Information.......................................... 32
(l) Outside Date......................................... 32
(m) Receivable Agreements................................ 32
(o) Opinion.............................................. 33
SECTION 9. Payments............................................. 33
SECTION 10. Certain Notices...................................... 33
SECTION 11. Superior Proposal.................................... 34
SECTION 12. Further Assurances................................... 35
SECTION 13. Taxes and Indemnities................................ 35
(a) Transfer Taxes....................................... 35
(b) Notice of IRS Reports................................ 36
(c) Assignor's Indemnity................................. 36
(d) Assignee's Indemnity................................. 37
(e) Survival of Representations and Warranties........... 38
SECTION 14. Indemnification Procedure............................ 38
SECTION 15. Termination.......................................... 40
SECTION 16. Miscellaneous........................................ 41
(a) Notices.............................................. 41
(b) Headings............................................. 42
(c) References........................................... 42
(d) GOVERNING LAW........................................ 42
(e) Severability......................................... 42
(f) Amendments in Writing................................ 42
(g) Expenses............................................. 43
(h) Execution in Counterparts............................ 43
(i) Entire Agreement..................................... 43
(j) Exhibits............................................. 43
(k) Assignment and Successors............................ 43
(l) Confidentiality...................................... 44
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EXHIBITS
Exhibit A -- Form of Promissory Note
Exhibit B -- Form of TASL Keep Well
Exhibit C-1 -- Form of TIL Keep Well Guaranty
Exhibit C-2 -- Form of TIL Loan Guaranty
Exhibit D -- Form of Pledge and Security Agreement
Exhibit E -- Form of SPV Provisions
SCHEDULES
Schedule 1 -- Aircraft
Schedule 2 -- Leases
Schedule 3 -- Foreign Aircraft Engines
Schedule 4 -- Other Operative Agreements
Schedule 4(a) -- Purchase Price
Schedule 5 -- Owner Trustees
Schedule 5(b) -- Consents
Schedule 5(d) -- Assignor Claims
Schedule 5(g) -- Pending Litigation
Schedule 5(h) -- Liens
Schedule 5(j) -- Missing Documents
Schedule 6 -- Trust Agreements
Schedule 7 -- Unfunded Commitments
Schedule 8 -- Receivables and Receivable Agreements
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This PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT (as the
same may be amended, modified or supplemented from time to time, this
"Agreement"), dated as of April 1, 1997, is by and between POLARIS AIRCRAFT
INCOME FUND V, a California limited partnership ("Assignor"), and TRITON
AVIATION SERVICES V LLC, a California limited liability company ("Assignee").
W I T N E S E T H:
WHEREAS, Assignor desires to sell and assign to Assignee and
Assignee desires to purchase and assume from Assignor all of Assignor's right,
title and interest in and to the Transferred Interests;
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants and agreements of the parties contained herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Assignor and Assignee agree as follows:
SECTION 1. Definitions
In addition to the terms defined elsewhere herein, when used
in this Agreement, the following terms have the meanings indicated below:
"Act" means Part A of subtitle VII of title 49, United
States Code.
"actual knowledge" of any Person, means the conscious
awareness of facts or other information by any director, officer, employee or
agent of such Person, in either such case, who is (i) actively involved in
negotiating the transactions contemplated by this Agreement or (ii) responsible,
in the ordinary course, for administering, on behalf of Assignor, the
transactions contemplated by the Operative Agreements or the Receivable
Agreements.
"Affiliate" means, with respect to any Person, (i) each
Person that, direct ly or indirectly, owns or controls, whether beneficially or
as a trustee, guardian or other fiduciary, 20% or more of the Stock having
ordinary voting power in the election of direc tors or manager of such Person,
(ii) each Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person and (iii) each of such Person's
officers, directors, members, joint venturers and partners. For the purpose of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
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"After-Tax Basis" means on a basis such that any payment
received or deemed to have been received by any Person shall be supplemented by
a further amount paid to that Person, so that the recipient is held harmless on
an after-Tax basis from all Taxes (calculated with respect to the highest
applicable tax rate and taking into account any related credits or deductions
allowed to the recipient of such payment in respect of the indemnified matters)
resulting from the receipt (actual or constructive) of such payments and where
the indemnitee is treated as a partnership for federal income tax purposes, the
"highest applicable tax rate" means the highest applicable federal tax rate in
effect for individuals at the time the indemnity payment is made plus 6%.
"Agreement" shall have the meaning assigned to it in the
preamble hereof.
"Aircraft" means the aircraft more fully described on Parts
A and B of Schedule 1 attached hereto and, with respect to each Foreign
Aircraft, shall include (i) any and all Parts installed on or attached to any
such Foreign Aircraft as of the Effective Time relating to such Foreign Aircraft
(subject to any pooling, replacement or exchange rights arising under the
Operative Agreements relating to such Foreign Aircraft), (ii) all Aircraft
Documents relating to such Foreign Aircraft, (iii) the Engines and (iv) to the
extent assignable by Assignor, all warranties of manufacturers or other vendors
of such Foreign Aircraft, Engines or Parts relating thereto that are in effect
on the Effective Date relating to such Foreign Aircraft.
"Aircraft Documents" mean, with respect to any Aircraft, all
records, logs, technical data and manuals relating to the maintenance or
operation of such Aircraft which are owned by Assignor.
"Aircraft Transferred Interests" means, collectively, all of
Assignor's present and future right, title and interest in, to and under the
Trust Estate, the Trust Agreements and all other Operative Agreements, all
Lessee Deposits, all Foreign Aircraft and all Income relating to or associated
with any of the foregoing, but excluding, in each case, the Reserved Rights
relating to or associated with any of the foregoing. The term Transferred
Interest followed immediately by a manufacturer's serial number of an Aircraft
(e.g., "Transferred Interest 19711") shall mean, in each case, collectively, all
of Assignor's present and future right, title and interest in, to and under the
Trust Estate, the Trust Agreement and other Operative Agreements, Lessee
Deposits and Income relating to or associated with the Aircraft bearing such
manufacturer's serial number.
"Allocable Portion Percentage" means, with respect to any
Aircraft, the amount obtained by dividing the Appraised Value of such Aircraft
(determined immediately before such Aircraft suffered a Total Loss or such
Aircraft is otherwise deleted from this Agreement) by the sum of the Appraised
Values of all the Aircraft (determined at the same time).
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"Ancillary Agreements" mean, collectively, the Promissory
Note, the Keep Well, the Keep Well Guaranty, the Loan Guaranty, the Security
Agreement, the Assignment and Assumption Agreements and all other agreements,
instruments, docu ments and certificates, including, without limitation,
consents, assignments, contracts, financing statements and all other written
matters whether now or hereafter executed by or on behalf of Assignor or
Assignee or any of their respective Affiliates and delivered in connection with
this Agreement or the transactions contemplated hereby.
"Appraised Value" means, with respect to any Aircraft, the
most recent semi-annual generic current fair market value of aircraft of the
same type, age, gross weight and configuration, including, without limitation,
engine type and hushkit status, published by Avitas Aircraft Appraisal Inc.
without adjustment for the maintenance "half-time" condition of such Aircraft.
"Assignee" shall have the meaning assigned to it in the
preamble hereof.
"Assignee Acceptance Notice" shall have the meaning assigned
to it in Section 11(c) hereof.
"Assignee Indemnitees" shall have the meaning assigned to it
in Section 13(c) hereof.
"Assignment and Assumption Agreement" shall mean (A) for
each Aircraft Transferred Interest, either (i) an Assignment and Assumption
Agreement (FAA), executed and delivered by Assignor and Assignee at the
applicable Effective Time, in form and substance satisfactory to Assignee and
Assignor or (ii) a Novation Agreement, executed and delivered by Assignor and
Assignee at the applicable Effective Time, in form and substance satisfactory to
Assignee and Assignor and (B) for each Receivable Transferred Interest, a Bill
of Sale and Assignment, executed and delivered by Assignor and Assignee at the
applicable Effective time, in form and substance satisfactory to Assignee and
Assignor.
"Assignor" shall have the meaning assigned to it in the
preamble hereof.
"Assignor Indemnitees" shall have the meaning assigned to it
in Section 13(d) hereof.
"Assumed Liabilities" mean (a) with respect to each Aircraft
Transferred Interest, (i) all of the obligations and liabilities of Assignor
relating to the applicable Trust Estate and under the applicable Trust Agreement
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and all other Operative Agreements relating to such Trust Estate or such
Aircraft Transferred Interest to the extent arising from acts, omissions, events
or circumstances occurring or accruing on or after the applicable Effective Time
for such Aircraft Transferred Interest, (ii) all Deposit Liabilities relating to
such Aircraft Transferred Interest, (iii) all Unfunded Commitments relating to
such Aircraft Transferred Interest and (b) with respect to each Receivable
Transferred Interest, all of the obligations and liabilities of Assignor
relating to such Receivable Transferred Interest and under the applicable
Receivable Agreements to the extent arising from acts, omissions, events or
circumstances occurring or accruing on or after the Receivable Effective Date.
"Business Day" means any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
States of California or New York.
"CAA" means the United Kingdom Civil Aviation Authority.
"Cash Account" shall have the meaning assigned to it in
Section 4(a) hereof.
"Citizen of the United States" means Citizen of the United
States as defined in Section 40102(a)(15) of the Act and in the FAA Regulations.
"Claim Notice" shall have the meaning assigned to it in
Section 14(a) hereof.
"Damages" means, in respect of any obligation to indemnify
any Person pursuant to the terms of this Agreement, any and all losses, claims,
damages, liabilities, obligations, actions, suits, judgments, settlements,
awards, reasonable and documented out-of-pocket costs, expenses and attorneys'
fees but shall exclude any consequential, expectancy or speculative Damages or
any Damages based on a claim of lost profits or opportunities.
"Daylight Effective Time" means any Effective Time that
occurs on a Business Day during the hours of 9:30 a.m. and 5:00 p.m. EDT, New
York City time.
"Deposit Liabilities" mean, with respect to any Lessee
Deposit transferred to Assignee pursuant to this Agreement, all liabilities,
obligations and duties owed by Assignor or any Owner Trustee to a Lessee or any
assignee of or successor to such Lessee relating to, based on or arising out of
such Lessee Deposit, whether known or unknown, contingent or absolute, or
arising before, on or after the Effective Time applicable to such Lessee
Deposit.
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"Effective Time" means, subject to the final sentence of
this definition, (i) with respect to the Aircraft Transferred Interests, each
date and time on which any Aircraft Transferred Interest is delivered by
Assignor to Assignee and accepted by Assignee in accordance with the terms of
this Agreement as specified in the Assignment and Assumption Agreement with
respect to such Aircraft Transferred Interest and (ii) with respect to the
Receivable Transferred Interests, 5:00 p.m. EDT on the Receivable Effective
Date. Each Transferred Interest may be delivered by Assignor to Assignee and
accepted by Assignee in accordance with the terms hereof and the terms of the
applicable Assignment and Assumption Agreement independently of any other
Transferred Interest and at different Effective Times. Notwithstanding the
foregoing, the Effective Time for each Transferred Interest assigned to Assignee
shall be deemed, with respect to the allocation of Income as between Assignor
and Assignee (but not for any other purpose), to be April 1, 1997.
"Engine" means each of the engines identified as to
manufacturer, type and manufacturer serial number on Schedule 3 hereto together,
in each case, with any and all Parts incorporated or installed in or attached
thereto as of the Effective Time relating to such Engine (subject to any
pooling, replacement or exchange rights arising under the Operative Agreements
relating to such Engine).
"Escrow Agent" means the escrow agent (and any financial
institution that succeeds such escrow agent) pursuant to the terms of the Escrow
Agreement.
"Escrow Agreement" means an Escrow Agreement among Assignor,
Assignee and the Escrow Agent, in form and substance satisfactory to each of
them.
"FAA" means the Federal Aviation Administration of the
United States or any Government Entity succeeding to the functions of the
Federal Aviation Administration.
"Foreign Aircraft" means, collectively, the Aircraft
described on Part B of Schedule 1.
"Government Entity" means (a) any federal, state, provincial
or similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
the Receivable Agreements or relating to the observance or performance of the
obligations of any of the parties to the Operative Agreements or the Receivable
Agreements.
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"Income" means, with respect to a Transferred Interest, all
income, scheduled rental, principal or interest payments, payments in respect of
fees due to Assignor or the Owner Trustee and proceeds of such Transferred
Interest earned on or after April 1, 1997, but shall not be deemed to include
any Lessee Deposit or Reserved Rights relating to or associated with such
Transferred Interest.
"Indemnified Party" shall have the meaning assigned to it in
Section 14(a) hereof.
"Indemnitor" shall have the meaning assigned to it in
Section 14(a) hereof.
"IRS" means the Internal Revenue Service or any Government
Entity succeeding to the functions of the Internal Revenue Service.
"Keep Well" shall have the meaning assigned to it in Section
7(d) hereof.
"Keep Well Guaranty" shall have the meaning assigned to it
in Section 7(e) hereof.
"Leases" mean, collectively, the Leases listed on Schedule 2
attached hereto, as the same may have been amended, supplemented or modified
from time to time.
"Lessee Deposit" means any security deposit, maintenance
reserve or other funds held by Assignor or any Owner Trustee as security for the
performance by a Lessee of any of its obligations under a Lease or any of the
Operative Agreements relating to such Lease (including any interest or earnings
on any such funds which, pursuant to such Lease or such Operative Agreements
relating to such Lease, are for the account or the benefit of the Lessee).
"Lessees" mean, collectively, the Persons listed on Schedule
1 attached hereto.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease or security interest affecting the title to or any interest
in property.
"Loan Guaranty" shall have the meaning assigned to it in
Section 7(e) hereof.
"Loss of Title" means, with respect to any Aircraft, the
condemnation, confiscation, appropriation or seizure of, or requisition of title
to such Aircraft by any Government Entity; provided, however, that requisition
of the use of an Aircraft shall not constitute a Loss of Title unless there has
also been a requisition of title to such Aircraft by a Governmental Entity.
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"Mop-Up Date" means the seventh (7th) Business Day after the
Start Date; provided, however, that if, on the seventh (7th) Business Day after
the Start Date, Assignee gives notice to Assignor that an Aircraft which is
subject of an Aircraft Transferred Interest not yet transferred to Assignee (i)
is located in a jurisdiction that is unacceptable to Assignee and (ii) cannot be
relocated to an acceptable jurisdiction because either (x) such Aircraft is
physically unable to be so relocated or (y) the Lessee of such Aircraft has
refused to cooperate in relocating it, then in such case "Mop-Up Date" shall
mean the earlier of (A) the thirtieth (30th) day following the seventh (7th)
Business Day after the Start Date or (B) June 30, 1997.
"Offering Party" means any Person making a bona fide
inquiry, offer or proposal to acquire, directly or indirectly, (a) all or
substantially all of the assets subject to the Trust Agreements and the
Receivables or (b) all or substantially all of the Transferred Interests or (c)
a combination thereof.
"Operative Agreements" means, collectively, each of the
Leases, the Trust Agreements, the tax indemnity agreements and the other
agreements listed on Schedule 4 attached hereto, as the same may have been
amended, supplemented or modified from time to time.
"Outside Date" shall have the meaning assigned to it in
Section 7(q) hereof.
"Owner Trustee" means each Owner Trustee listed on Schedule
5 attached hereto, not in its individual capacity but solely as owner trustee
under the applicable Trust Agreement.
"Parts" mean, with respect to any Aircraft or any Engine,
all 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.
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"PIMC" means Polaris Investment Management Corporation, a
California corporation.
"Promissory Note" shall have the meaning assigned to it in
Section 4(a) hereof.
"Purchase Price" shall have the meaning assigned to it in
Section 4(a) hereof.
"Purchase Price Interest" means an amount equal to interest
on the "Cash Amount" set forth on Schedule 4(a) hereto (as such Cash Amount may
be reduced pursuant to Section 4(c) or Section 4(d)(ii)), calculated for the
period from and including April 1, 1997 through but not including the date
Assignor receives the Cash Amount pursuant to Section 4(a), at a rate equal to
5.3% per annum.
"Receivable Agreements" mean, collectively, all of the
agreements, documents and instruments governing or evidencing any of the
Receivables including, without limitation, the agreements, documents and
instruments listed on Schedule 8 attached hereto, as the same may have been
amended, supplemented or modified from time to time.
"Receivable Effective Date" means, with respect to the
Receivables, the date on which Assignor transfers the Receivables to Assignee
pursuant to the terms of this Agreement.
"Receivable Transferred Interests" means, collectively, all
of Assignor's present and future right, title and interest in, to and under the
Receivables and all the Receivable Agreements and all of the Income relating to
the Receivables, but excluding, in each case, the Reserved Rights relating to or
associated with any of the foregoing.
"Receivables" mean, collectively, the receivable obligations
set forth on Schedule 8 attached hereto.
"Reserved Rights" mean, with respect to each Transferred
Interest, any of the right, title or interest of Assignor in, to or in respect
of each and every indemnity or other payment or obligation (whether in the form
of rent, principal, interest or otherwise), arising in connection with any
claim, cause of action or payment obligation payable to, on behalf or in favor
of Assignor, under or pursuant to any Trust Agreement or any other Operative
Agreements or Receivable Agreement relating to such Transferred Interest
(including, without limitation, any rights or causes of action Assignor may have
against any Owner Trustee pursuant to the terms of any Trust Agreement) to the
extent that such indemnities, payments or obligations vested or relate to an
act, omission, event or circumstance occurring or accruing prior to the
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Effective Time for such Transferred Interest other than Income, Lessee Deposits
or other rights specifically transferred to Assignee pursuant to this Agreement.
"Security Agreement" shall have the meaning assigned to it
in Section 7(f) hereof.
"SP Notice" shall have the meaning assigned to it in Section
11(b) hereof.
"Special CAA Counsel" shall have the meaning assigned to it
in Section 7(m) hereof.
"Special FAA Counsel" shall have the meaning assigned to it
in Section 7(m) hereof.
"Start Date" means the earlier of (i) a date mutually
acceptable to Assignor and Assignee or (ii) the sixth (6th) Business Day after
which, in the good faith judgement of Assignor, the conditions precedent set
forth in Section 7(g), (k) or (r) are first satisfied with respect to an
Aircraft Transferred Interest.
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests, participations or other
equivalents (regardless of how designated) of or in a corporation, partnership,
limited liability company or equivalent entity whether voting or nonvoting,
including, without limitation, common stock, preferred stock, membership
interest or any other "equity security" (as such term is defined in Rule 3a11-1
of the General Rules and 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 Receivables and the assets subject to the Trust
Agreements or (b) all or substantially all of the Transferred Interests or (c)
any combination thereof, the terms of which, in the good faith judgment of
Assignor, provide aggregate present value consideration to Assignor that is
materially better or more advantageous than the aggregate present value
consideration provided by the transactions contemplated hereby; provided that in
making such judgment Assignor shall have no duty or obligation to seek the
advice of any outside advisors or appraisers.
"TASL" means Triton Aviation Services Limited, a Bermuda
corporation.
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"Taxes" mean all license, recording, documentary,
registration and other similar fees and all taxes, levies, imposts, duties,
charges, assessments or 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.
"Third Party Action" shall have the meaning assigned to it
in Section 14(a) hereof.
"Threshold Amount" shall have the meaning assigned to it in
Section 13(c) hereof.
"TIL" means Triton Investments Limited, a Bermuda
corporation.
"Total Loss" means, with respect to any Aircraft, any of the
following events: (a) total loss of such Aircraft or the destruction, damage
beyond economic repair or rendition of such Aircraft permanently unfit for
normal use for any reason whatsoever; (b) any damage to such Aircraft which
results in an insurance settlement with respect to such Aircraft on the basis of
a total loss or on the basis of a compromised or constructive total loss; and
(c) Loss of Title.
"Transfer Taxes" shall have the meaning assigned to it in
Section 13(a) hereof.
"Transferred Interests" mean, collectively, all of the
Aircraft Transferred Interests and all of the Receivable Transferred Interests.
"Trust Agreements" mean, collectively, each Trust Agreement
listed on Schedule 6 attached hereto, as the same may have been amended,
supplemented or modified from time to time.
"Trust Estate" means, collectively, each Trust Estate as
defined in each of the Trust Agreements.
"Trusts" mean, collectively, each Trust as defined in each
of the Trust Agreements.
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"Unfunded Commitment" means, with respect to any Aircraft
Transferred Interest, any unfunded obligations of Assignor or the Owner Trustee
to make loans, advances or extensions of credit or to defer or extend the time
for payment of rent obligations for the purpose of funding or otherwise
financing modifications to the Aircraft to which such Aircraft Transferred
Interest relates or the acquisition of equipment.
"without special inquiry" means with respect to Assignor, no
inquiry other than that conducted in the ordinary course of administering the
transactions contemplated by the Operative Agreements or by the Receivable
Agreements and that conducted in the ordinary course of negotiating the
transactions contemplated by this Agreement, by any director, officer, employee
or agent of Assignor who is actively involved in negotiating the transactions
contemplated by this Agreement.
As used herein, each of "Assignor," "Assignee," "Lessee,"
"Owner Trustee" or any other Person includes, without prejudice to the
provisions of any Operative Agreements or any Receivable Agreements, any
successor in interest to it and any permitted transferee, permitted purchaser or
permitted assignee of it.
SECTION 2. Sale and Assignment
Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of Assignee set forth herein, at
each applicable Effective Time, Assignor does hereby sell, assign and transfer
to Assignee all of Assignor's present and future right, title and interest in,
to and under each 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 an Assignment and Assumption Agreement for such Aircraft Transferred
Interest.
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SECTION 3. Purchase and Assumption
Subject to the terms and conditions of this Agreement and in
reliance on the representations and warranties of Assignor set forth herein, at
each applicable Effective Time, Assignee does hereby (i) purchase and accept
each Transferred Interest, (ii) assume all of the Assumed Liabilities relating
to any such Transferred Interest, (iii), if applicable, confirm that it shall be
deemed a party to any Trust Agreement as of the Effective Time relating, and
with respect, to the Transferred Interest referenced in such Trust Agreement,
and agrees to be bound by all the terms of each thereof and hereby undertakes
and assumes all of the Assumed Liabilities and (iv), if applicable, confirm that
it shall be deemed a party to all Receivable Agreements as of the Effective Time
relating, and with respect, to such Transferred Interest, and agrees to be bound
by all the terms of each thereof and hereby undertakes and assumes all of the
Assumed Liabilities contained in such Receivable Agreements; provided, however,
that Assignor shall remain liable for the obligations of Assignor relating to
Reserved Rights; provided, further, that such purchase, acceptance and
assumption shall be effective only upon the satisfaction or waiver, at or prior
to the applicable Effective Time for such Transferred Interest, of the
conditions set forth in Section 8, such satisfaction or waiver to be evidenced
by Assignee's delivery to Assignor of an Assignment and Assumption Agreement for
such Transferred Interest. The assumption contemplated hereby, at the applicable
Effective Time, as between Assignor and Assignee, shall be deemed to release
Assignor from all Assumed Liabilities relating to such Transferred Interest.
SECTION 4. Purchase Price
(a) Payment of Purchase Price
The purchase price for the Transferred Interests is
as set forth on Schedule 4(a) attached hereto plus the Purchase Price Interest
(the "Purchase Price"). The Purchase Price Interest shall be due and payable on
the Business Day after the earlier to occur of (i) the last Effective Time to
occur hereunder and (ii) the seventh Business Day after the Start Date and shall
be paid by Assignee to Assignor by wire transfer of immediately available funds
in accordance with the instructions of Assignor. At or prior to the first
Effective Time to occur pursuant to the terms hereof, Assignee shall (i) deliver
a note to Assignor in substantially the form attached hereto as Exhibit A (the
"Promissory Note"), in an amount equal to the amount set forth on Schedule 4(a)
as the "Note Amount" and (ii) wire transfer immediately available funds in an
amount equal to the amount set forth on Schedule 4(a) as the "Cash Amount" to
the Escrow Agent for deposit into the account established pursuant to the Escrow
Agreement (the "Cash Account").
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(b) Transfer of Income and Lessee Deposits
For the Receivable Effective Date, each Daylight
Effective Time and on the Mop-Up Date, contemporaneously with the Receivable
Effective Date, such Daylight Effective Time or on the Mop-Up Date, and for each
Effective Time that does not constitute a Daylight Effective Time or is not
deemed to occur on the Mop-Up Date, promptly at the beginning of the next
Business Day after such Effective Time, Assignor shall wire transfer immediately
available funds to Assignee, at an account designated in writing by Assignee, in
an amount equal to the Income and Lessee Deposits estimated by Assignor pursuant
to Section 4(d)(i) hereof to constitute part of the Transferred Interest
transferred (or deemed to be transferred) as of the Receivable Effective Date,
such Effective Time or as of the Mop-Up Date.
(c) First Effective Date; Mop-Up Date
Each of Assignor and Assignee covenants and agrees
that (i) if each of the conditions precedent in Section 7(a)-(r) (as to
Assignor) or Section 8(a)-(l) (as to Assignee) are satisfied or waived by the
appropriate party, the first Effective Time with respect to any Aircraft
Transferred Interest will occur on the Start Date and (ii) the Effective Time
for each and every Aircraft Transferred Interest will occur not later than the
close of business in New York on the Mop-Up Date. Each of Assignor and Assignee
covenants and agrees that the Receivable Effective Date will occur no later than
the sixth Business Day after each of the conditions precedent in Subsection 7(s)
through (v) (as to Assignor) or Subsection 8(m) through (o) (as to Assignee) are
satisfied or waived by the appropriate party. Each of Assignor and Assignee
further agrees that at any time after the earlier of (i) the seventh Business
Day after the Start Date and (ii) the last Effective Time to occur pursuant to
the terms hereof, (A) Assignor is hereby authorized to withdraw from the Cash
Account, an amount equal to the Cash Amount less any reduction of the Cash
Amount pursuant to the last sentence of this Section 4(c) or pursuant to Section
4(d)(ii) less one-half of the fees owed to the Escrow Agent and (B) Assignee is
hereby authorized to withdraw from the Cash Account all other funds in excess of
the amount set forth in clause (A); provided, however, if Assignee withdraws the
Cash Amount pursuant to the foregoing clause (i) and there is a subsequent
reduction in the Cash Amount pursuant to the last sentence of this Section 4(c),
then Assignor shall promptly return to Assignee an amount equal to such
subsequent reduction plus interest at the rate of 5.3% per annum from the
withdrawal date through the date of repayment to Assignee. On the Mop-Up Date,
so long as (i) the conditions precedent set forth in Section 7 hereof (other
than with respect to the location of the Aircraft) shall have been satisfied or
waived by Assignor, Assignor shall be obligated to deliver, with respect to each
Aircraft Transferred Interest that has not been assigned previously to Assignee
(including any Aircraft Transferred Interest which has not been transferred
previously because the Aircraft relating to such Aircraft Transferred Interest
has been the subject of a Loss of Title but as to which such Loss of Title has
been cured or otherwise corrected on or prior to the Mop-Up Date), Assignment
and Assumption Agreements, the evidence of authorization described in Section
8(e)(iv), any consents referred to in Section 5.1(b), the opinions described in
Section 8(i) and any other instruments or documents as Assignee or its counsel
shall reasonably request and (ii) the conditions precedent set forth in Section
8 hereof (other than with respect to the location of the Aircraft) shall have
been satisfied or waived by Assignee, Assignee shall be obligated to deliver,
with respect to each Aircraft Transferred Interest that has not been assigned
previously to Assignee (including any Aircraft Transferred Interest which has
not been transferred previously because the Aircraft relating to such Aircraft
Transferred Interest has been the subject of a Loss of Title but as to which
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such Loss of Title has been cured or otherwise corrected on or prior to the
Mop-Up Date), Assignment and Assumption Agreements, the evidence of
authorization described in Section 7(j)(v), any consents referred to in Section
6.1(b), the opinions described in Section 7(m) and any other instruments or
documents as Assignor or its counsel shall reasonably request. If on the Mop-Up
Date any of the conditions precedent set forth in Section 7 or Section 8 hereof
(other than with respect to the location of the Aircraft) are not satisfied or
waived by the applicable party with respect to any Aircraft Transferred
Interest, any Aircraft which is subject of such Aircraft Transferred Interest
will no longer be the subject of this Agreement and this Agreement will be
deemed to be reformed to delete all references to such Aircraft and the such
Aircraft Transferred Interest and the Purchase Price will be reduced in an
amount equal to the Allocable Portion Percentage for such Aircraft and each of
the Note Amount and the Cash Amount as set forth on Schedule 4(a) hereof will be
adjusted on a pro rata basis.
(d) Settlement of Income and Lessee Deposits
(i) Prior to assignment of a Transferred Interest to
Assignee hereunder, Assignor shall estimate the Income and any Lessee Deposits
that have been received by Assignor or the Owner Trustee relating to such
Transferred Interest as of the applicable Effective Time for such Transferred
Interest. Because the actual amount of the Income and any Lessee Deposits
relating to a Transferred Interest and received by Assignor or such Owner
Trustee will not be readily determinable until after the applicable Effective
Time, a final calculation cannot be made on that date. Therefore, within fifteen
(15) Business Days after the end of the month in which such Effective Time
occurs, Assignor shall provide Assignee with such final calculation (in
reasonable detail) of the Income and any Lessee Deposits that have been received
by Assignor or the Owner Trustee relating to such Transferred Interest. To the
extent the calculation indicates that the amounts transferred by Assignor
pursuant to Section 4(b) hereof with respect to such Transferred Interest were
in excess of the actual Income and any Lessee Deposits received by Assignor or
the Owner Trustee relating to such Transferred Interest, Assignee shall promptly
pay the amount of such excess to Assignor (plus interest on such amount at the
rate of 5.3% per annum from the applicable date of payment to Assignee to the
date of repayment to Assignor). To the extent the calculation indicates that the
amounts transferred by Assignor pursuant to Section 4(b) hereof with respect to
such Transferred Interest were less than the actual Income and any Lessee
Deposits received by Assignor or the Owner Trustee relating to such Transferred
Interest, Assignor shall promptly pay the amount of such deficiency to Assignee
(plus interest on such amount at the rate of 5.3% per annum from the Business
Day following the applicable Effective Time to the date of payment to Assignee).
An adjustment to the Purchase Price for Income under this Section 4(d)(i) shall
be treated by the parties as a purchase price adjustment for all income tax
purposes.
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(ii) If at any time prior to the last Effective Time
to occur pursuant to the terms hereof, any Aircraft which is subject of an
Aircraft Transferred Interest not yet transferred by Assignor to Assignee
suffers a Total Loss, such Aircraft will no longer be the subject of this
Agreement and this Agreement will be deemed to be reformed to delete all
references to such Aircraft and the related Aircraft Transferred Interests;
provided, however, that with respect to any such Aircraft, if such Total Loss is
due to a Loss of Title and if Assignor cures or otherwise corrects such Loss of
Title by regaining or recovering the use thereof or title thereto on or prior to
the Mop-Up Date, such Aircraft will be deemed to be reinstated and once more
subject to this Agreement and this Agreement will be deemed to be reformed to
include all previously deleted references to such Aircraft and the related
Aircraft Transferred Interests. Contemporaneously with the removal of any
Aircraft from the terms of this Agreement, the Purchase Price will be reduced in
an amount equal to the Allocable Portion Percentage for such Aircraft and each
of the Note Amount and the Cash Amount as set forth on Schedule 4(a) hereof will
be adjusted on a pro rata basis. Contemporaneously with the reinstatement of an
Aircraft into this Agreement, the Purchase Price will be increased in an amount
equal to the Allocable Portion Percentage for such Aircraft and each of the Note
Amount and the Cash Amount as set forth on Schedule 4(a) hereof will be adjusted
on a pro rata basis. If at any time prior to the last Effective Time to occur
pursuant to the terms hereof, any Aircraft which is subject of an Aircraft
Transferred Interest not yet transferred by Assignor to Assignee suffers any
property damage or loss not constituting a Total Loss and such property damage
or loss is not cured or corrected prior to the time when such Aircraft
Transferred Interest is transferred (or deemed to be transferred) by Assignor to
Assignee, Assignor shall pay to Assignee any insurance proceeds received by
Assignor with respect to such property damage or loss promptly after receipt by
Assignor of such insurance proceeds; provided, however, that Assignor shall not
enter into any settlement of any insurance claim without the prior written
consent of Assignee, which consent may not be unreasonably withheld.
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SECTION 5. Representations and Warranties of Assignor; Limitation of
Warranty; Covenant with Respect to Pre-Closing Actions
5.1 Representations and Warranties of Assignor. As of the
date hereof and as of each Effective Time with respect to the Transferred
Interest being transferred at such Effective Time, Assignor makes the following
representations and warranties to Assignee:
(a) Partnership Organization, Etc.
Assignor (i) is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of California,
(ii) is a Citizen of the United States and (iii) has the requisite partnership
power and authority to carry on its business as presently conducted, to own or
hold under lease its properties, and to enter into and perform its obligations
under this Agreement and each of the Ancillary Agreements to which it is a
party.
(b) Due Authorization; Non-Contravention
The execution and delivery by Assignor of this
Agreement and each of the Ancillary Agreements to which it is a party, and the
performance by Assignor of its obligations hereunder and thereunder, (i) have
been duly authorized by all necessary partnership action on the part of
Assignor, (ii) do not require any 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 or the
Receivable Agreements, as applicable) upon the Trust Estate or any other
Transferred Interest under any indenture, mortgage, bank credit agreement, note
or bond purchase agree ment, long-term lease, license or other agreement or
instrument to which Assignor is a party or by which Assignor is bound and (iv)
except as set forth on Schedule 5(b) attached hereto, do not require the consent
or approval of, the giving of notice to, the registration with, or the taking of
any other action in respect of, any federal, state or foreign governmental
authority or agency or any other Person, except those already obtained.
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(c) Due Execution and Delivery; Enforceability
This Agreement and each of the Ancillary Agreements
to which it is a party have been duly executed and delivered and are enforceable
against Assignor in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors generally and, with
respect to the enforceability of this Agreement or any such Ancillary Agreement,
by general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
(d) Event of Default
Except as set forth on Schedule 5(d), no claims have
been made by or at the direction of Assignor that remain unresolved under any of
the Operative Agreements or any of the Receivable Agreements, and to the actual
knowledge of Assignor, without special inquiry, no basis for such claims exists
(excluding in all cases claims for reimbursement of fees, costs and expenses
which are either immaterial or incurred in the ordinary course). Except as set
forth on Schedule 5(d), to the actual knowledge of Assignor, without special
inquiry, (i) no disputes exist among any of the parties to the Operative
Agreements or any of the Receivable Agreements concerning the rights or
obligations of such parties thereunder, (ii) there exists no default or event of
default under any Leases, any Trust Agreement, any other Operative Agreement or
any of the Receivable Agreements attributable to any act or omission of
Assignor, (iii) Assignor is not in default under any of the Operative Agreements
or any of the Receivable Agreements, (iv) no default under any Operative
Agreement or any Receivable Agreement has occurred and is continuing as a result
of any action taken by the Owner Trustee in accordance with any express
instruction by Assignor, (v) there has been no assertion by any Lessee of any
default on the part of Assignor or the Owner Trustee under any Operative
Agreement and (vi) there has been no assertion by any obligor under any
Receivable of any default on the part of Assignor or the Owner Trustee under any
of the Receivable Agreements.
(e) Total Loss
To the actual knowledge of Assignor, without special
inquiry, none of the Aircraft are the subject of any Total Loss.
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(f) Taxes
(i) All tax returns and reports required to be filed
by or on behalf of each Owner Trustee (solely in its capacity as Owner Trustee
and not in its individual capacity), and all federal income tax returns required
to be filed by or on behalf of Assignor on or before the Effective Time have
been timely filed with the appropriate taxing authorities in all jurisdictions
in which such tax returns were required to be filed and all taxes shown due on
such tax returns have been paid in full; and
(ii) No claims have been made by or on behalf of
Assignor or any other Person in respect of any obligation under the Operative
Agreements or the Receivable Agreements to indemnify any Owner Trustee or
Assignor for or with respect to Taxes, and Assignor has no present intention of
making any such claim (other than possible claims for state, local and foreign
Taxes or foreign tax credits arising from the use or operation of the Aircraft
by the applicable Lessee or any sublessee prior to the applicable Effective
Time).
(g) Litigation
Except as set forth on Schedule 5(g) hereof, there
are no legal or governmental actions, suits or proceedings pending or, to the
actual knowledge of Assignor, threatened against Assignor before any court,
administrative agency or tribunal which, if determined adversely to Assignor,
would materially adversely affect the ability of Assignor to perform its
obligations under this Agreement or any of the Ancillary Agreements to which it
is a party.
(h) Encumbrances
Except as set forth on Schedule 5(h) hereof, Assignor
is the sole legal and beneficial owner of (i) each of the Transferred Interests
(other than the Foreign Aircraft), free and clear of all Liens and, except as
set forth on Schedule 5(b), transfer restrictions and (ii) each of the Foreign
Aircraft, free and clear of all Liens and, except as set forth on Schedule 5(b),
transfer restrictions other than (A) Liens that are permitted by the terms of
the leases relating to such Foreign Aircraft and (B) the rights of the Lessee
with respect to such Foreign Aircraft. Except as set forth on Schedule 5(h)
hereof, each Owner Trustee is the sole legal owner of (x) each Trust Estate for
which such Owner Trustee is owner trustee pursuant to the applicable Trust
Agreement, free and clear of all Liens and, except as set forth on Schedule
5(b), transfer restrictions other than Liens permitted by and transfer
restrictions contained in the Operative Agreements relating to such Trust Estate
and (y) each Receivable pursuant to the Receivable Agreements relating to such
Receivable, free and clear of all Liens and transfer restrictions other than
Liens permitted by and transfer restrictions contained in the Receivable
Agreements relating to such Receivable. Except as otherwise provided in the
Operative Agreements or the Receivable Agreements, Assignor has not previously
sold, assigned, encumbered, transferred or conveyed, and other than as provided
in this Agreement, has no obligation to sell, assign, encumber, transfer or
convey, any of its right, title or interest in, to or under the Transferred
Interests to any Person.
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(i) Brokers' Fees
Assignor is not liable for the fees of any broker or
Person acting on Assignor's behalf in connection with the transactions
contemplated hereby or by any of the Ancillary Agreements to which it is a
party.
(j) Operative Agreements; Receivable Agreements
Except as set forth on Schedule 5(j), Assignor has
provided Assignee with true and complete originals of each of the Leases, the
Trust Agree ments and the promissory notes representing the Receivables and with
true and complete copies of each of the other Operative Agreements, the
Receivable Agreements and all amendments and supplements thereto. The Leases,
Trust Agreements, the promissory notes representing the Receivables, the
Receivable Agreements, the other Operative Agreements and the amendments and
supplements thereto set forth on Schedules 2, 4, 6 and 8 hereto (as applicable)
represent, collectively, all of the agreements, instruments and documents among
(i) Assignor and the parties to the Operative Agreements with respect to the
Aircraft Transferred Interests and no other agreements, instruments or
documents, among Assignor and the parties to the Operative Agreements, with
respect to the Aircraft Transferred Interests exist and (ii) Assignor and the
parties to the Receivable Agreements with respect to the Receivable Transferred
Interests and no other agreements, instruments or documents, among Assignor and
the parties to the Receivable Agreements, with respect to the Receivable
Transferred Interests exist.
(k) Title to Transferred Interests
Upon execution and delivery to Assignee of each of
the 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).
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(l) Unfunded Commitments
Except as set forth on Schedule 7 hereof, there are
no Unfunded Commitments in respect of any Transferred Interest.
(m) The outstanding principal amount of each Receivable as
of April 1, 1997 is set forth on Schedule 8 hereto.
5.2 Supplements to Schedules; Post-Signing Information.
Assignor may supplement or amend Schedules 5(d), 5(g) and 5(h) to this Agreement
with respect to any matter, condition or occurrence hereafter arising which, if
existing or occurring at the date of this Agreement, would have been required to
be set forth or described in such Schedules or would otherwise have been
inconsistent with its representations herein.
5.3 Limitation of Warranty. Assignor's representations and
warranties are limited as set forth below:
(a) THE AIRCRAFT, EACH ENGINE AND EACH PART THAT
CONSTITUTE A PORTION OF ANY TRANSFERRED
INTEREST IS BEING TRANSFERRED AND DELIVERED
TO ASSIGNEE "AS IS" AND "WHERE IS," AND EXCEPT
AS EXPRESSLY SET FORTH IN SECTION 5.1 HEREOF,
WITHOUT ANY REPRESENTATION, GUARANTEE OR
WARRANTY OF ASSIGNOR, EXPRESS OR IMPLIED, OF
ANY KIND, ARISING BY LAW OR OTHERWISE; AND
(b) WITHOUT LIMITING THE GENERALITY OF THE 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.
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5.4 Actions with Respect to Transferred Interests. From the
date this Agreement is executed and delivered by Assignor to Assignee to the
earlier to occur of (i) the termination of this Agreement pursuant to Section 15
hereof or (ii) the Effective Time with respect to a Transferred Interest, except
as otherwise expressly required or permitted by this Agreement, Assignor shall
not and shall not direct the Owner Trustee to, without the prior written consent
of Assignee:
(a) enter into or materially modify any agreement, contract
or commitment which, if entered into, created or established prior to the date
of this Agreement, would be required to be listed (or, in the case of
modifications and amendments, pertains to an agreement, contract, commitment or
arrangement which is presently listed) on Schedule 2, 4, 6, 7 or 8 of this
Agreement or waive any default or event of default under any Operative Agreement
or Receivable Agreement; or
(b) mortgage, pledge or otherwise encumber any of the
Transferred Interests, any Aircraft which is part of a Trust Estate, or any
Receivable; or
(c) sell, lease, transfer or otherwise dispose of any of the
Transferred Interests, any Aircraft which is a part of a Trust Estate or any
Receivable; or
(d) enter into an agreement or arrangement to do any of the
above.
SECTION 6. Representations and Warranties of Assignee; Access Covenant
6.1 Representations and Warranties of Assignee. As of the
date hereof and as of each Effective Time with respect to the Transferred
Interest being transferred at such Effective Time, Assignee makes the following
representations and warranties to Assignor:
(a) LLC Organization, Etc.
Assignee (i) is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
California, and (ii) has the requisite power and authority to carry on its
business as presently conducted and as proposed to be conducted after the date
of this Agreement, to own or hold under lease its properties, and to enter into
and perform its obligations under this Agreement, each of the Ancillary
Agreements to which it is a party, each of the Trust Agreements and each of the
other Operative Agreements.
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(b) Due Authorization; Non-Contravention
The execution and delivery by Assignee of this
Agreement and each of the Ancillary Agreements to which it is a party, and the
performance by Assignee of its obligations hereunder, thereunder, under the
Trust Agreements and the other Operative Agreements and under the Receivable
Agreements (i) have been duly authorized by all necessary action on the part of
Assignee, (ii) do not require any member approval or any approval or consent of
any trustee or holder of any indebtedness or obligations of Assignee except
those already obtained, (iii) do not contravene any provision of the Act or any
other law, governmental rule, regulation, judgment or order applicable to or
binding on Assignee, or the organizational documents of Assignee or contravene
the provisions of, or constitute a default under, or result in the creation of
any Lien (other than as provided for or otherwise permitted in the Operative
Agreements or the Receivable Agreements) upon the Trust Estate or any Receivable
under any indenture, mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or instrument to which
Assignee is a party or by which Assignee is bound and (iv) except as set forth
on Schedule 6(b) attached hereto, do not require the consent or approval of, the
giving of notice to, the registration with, or the taking of any other action in
respect of, any federal, state or foreign governmental authority or agency or
any other Person, except those already obtained.
(c) Due Execution and Delivery; Enforceability
This Agreement and each of the Ancillary Agreements
to which it is a party have been duly executed and delivered and are enforceable
against Assignee in accordance with their terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors generally and, with
respect to the enforceability of this Agreement or any such Ancillary Agreement,
by general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
(d) Litigation
There are no legal or governmental actions, suits or
proceedings pending or, to the actual knowledge of Assignee, threatened against
Assignee before any court, administrative agency or tribunal which, if
determined adversely to Assignee, would materially adversely affect the ability
of Assignee to perform its obligations under this Agreement, any of the
Ancillary Agreements, the Trust Agreements, the other Operative Agreements or
any of the Receivable Agreements.
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(e) Compliance with Operative Agreements and Receivable
Agreements
Prior to the Effective Time for a Transferred
Interest, Assignee will have complied with and satisfied all of the conditions,
requirements and other obligations imposed on Assignee pursuant to each of the
Leases, Trust Agreements, other Operative Agreements or any of the Receivable
Agreements which have not been waived by the party entitled to require
compliance with such conditions, requirements or other obligations in order to
effect a permitted binding transfer of such Transferred Interests to Assignee.
(f) Non-Airline
Assignee is not a commercial air carrier or Affiliate
thereof that is in direct competition with any Lessee.
(g) Brokers' Fees
Assignee is not liable for the fees of any broker or
Person acting as a broker on Assignee's behalf in connection with the
transactions contemplated hereby.
(h) Acquisition For Own Account
The Transferred Interests are being acquired by
Assignee for its own account, for investment and not with a view to any resale
or distribution thereof. Assignee acknowledges that it has received, or has had
access to, all information which it considers necessary or advisable to enable
it to make a decision concerning the transfer of the Transferred Interests
including, without limitation, access to the Leases, the Trust Agreements, the
other Operative Agreements and the Receivable Agreements and an opportunity to
inspect the Aircraft.
6.2 Access Covenant. Assignee agrees that it shall use its
best efforts to retain the Operative Agreements and the Receivable Agreements
with respect to each of the Transferred Interests transferred to it hereunder in
perpetuity; provided, however, that Assignee shall have the right to (a)
transfer any Operative Agreements or Receivable Agreements relating to a
Transferred Interest or Aircraft to the purchaser of such Transferred Interest
or Aircraft, as the case may be, subject to such purchaser's agreement to retain
such Operative Agreements or Receivable Agreements and to permit Assignor and
its agents and representatives access to such Operative Agreements or Receivable
Agreements for the remaining term of the Promissory Note and (b) dispose of or
destroy any such Operative Agreements or Receivable Agreements at any time which
is after payment in full and discharge of the Promissory Note. Assignee will
allow or will cause Assignor and its agents and representatives to be allowed
access, during regular business hours at the offices of Assignee, to all of the
Operative Agreements or Receivable Agreements and to any Persons having
possession of or information relating to the Operative Agreements or Receivable
Agreements.
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SECTION 7. Conditions Precedent to the Obligations of Assignor
The obligation of Assignor to sell and assign any Aircraft Transferred Interest
to Assignee is subject to the satisfaction of the following conditions with
respect to such Aircraft Transferred Interest:
(a) Purchase Price
Assignee shall have paid the Purchase Price in the
manner specified in Section 4.
(b) Affidavit of Limited Control by a Non-U.S. Citizen
Not later than the first Effective Time, an affidavit
shall have been duly authorized, executed, notarized and delivered by Owner
Trustee to FAA Counsel in form suitable for filing with the FAA pursuant to the
Act certifying that (i) contemporaneously with the Effective Time with respect
to each Aircraft Transferred Interest, the Trust Agreement with respect thereto
shall have been amended to include limitations on the voting rights of Assignee
thereunder and (ii) Owner Trustee is a Citizen of the United States pursuant to
the Act.
(c) Escrow Agreement
Assignor shall have received a copy of the Escrow
Agreement, dated as of a date not later than the first Effective Time to occur
under this Agree ment which shall have been executed and delivered by Assignee,
Assignor and the Escrow Agent.
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(d) TASL "Keep Well" Agreement
Assignor shall have received a copy of the Keep Well
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
authorizations which may be required for the valid consummation by Assignor and
Assignee of the transactions contemplated by this Agreement under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have
been obtained (including, but not limited to, the expiration of any applicable
waiting period thereunder).
(h) Due Authorization, Execution and Delivery
This Agreement, the Assignment and Assumption
Agreement and any other Ancillary Agreements with respect to such Transferred
Interest shall have been duly authorized, executed and delivered by Assignee.
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(i) Representations and Warranties
The representations and warranties of Assignee
contained herein shall be true and correct in all material respects as of the
applicable Effective Time with the same force and effect as though such
representations and warranties had been made on and as of such Effective Time.
(j) Organizational and Authorization Matters
Assignor shall have received:
(i) Resolutions of the boards of directors of each of
TASL, TIL, each member of Assignee that is not a natural person and of the
manager of Assignee, certified by the respective Secretary or Assistant
Secretary thereof, as of the date of this Agreement, to be duly adopted and in
full force and effect on such date, authorizing (a) the consummation of each of
the transactions contemplated by this Agreement and each of the Ancillary
Agreements and (b) specific officers or representatives of TASL, TIL and
Assignee to execute and deliver this Agreement and the Ancillary Agreements to
which any of them is a party.
(ii) Governmental certificates, dated the most recent
practicable date prior to the date of this Agreement with telegram updates where
available, showing that each of Assignee, TASL, TIL and each member of Assignee
that is not a natural person is organized and in good standing in the
jurisdiction of its organization and that each of Assignee, TASL, TIL and each
member of Assignee that is not a natural person is qualified as a foreign
corporation, partnership or limited liability company, as applicable, and in
good standing in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification.
(iii) A copy of (a) the certificate of formation and
all amend ments thereto of Assignee and the articles of incorporation and all
amendments thereto of each of TASL, TIL and each member of Assignee that is not
a natural person, each certified as of a recent date by the Secretary of State
of the jurisdiction of its organization, (b) the bylaws of each of TASL, TIL and
each member of Assignee that is not a natural person, certified by the Secretary
or Assistant Secretary thereof as true and correct as of the date of this
Agreement and (c) the operating agreement of Assignee (which shall include
provisions that are substantially in the form attached hereto as Exhibit E) and
the articles of incorporation and all amendments thereto of each of TASL, TIL
and each member of Assignee that is not a natural person, certified by its
manager as true and correct on the date of this Agreement (with tax allocation
and cash distribution provisions deleted).
(iv) Certificates of the Secretary or an Assistant
Secretary of each of TASL, TIL and each member of Assignee that is not a natural
person and of the manager of Assignee, as to the incumbency and signatures of
the representatives thereof executing this Agreement or any of the Ancillary
Agreements to which any of them is a party, together with evidence of the
incumbency of such Secretary or Assistant Secretary.
(v) As of each Effective Time, a certificate of the
Secretary, an Assistant Secretary or an Attesting Secretary of each of TASL,
TIL, each member of Assignee that is not a natural person and the manager of
Assignee certifying that the certificates delivered in accordance with clauses
(i), (ii), (iii) and (iv) above are true and correct as of such Effective Time.
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(k) Illegality; No Proceedings
At the applicable Effective Time, the performance of
the 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 Aircraft
Transferred Interest.
(m) Opinions
Assignor shall have received opinion reasonably
satisfactory to Assignor, dated as of the first Effective Time from Manwell &
Milton, counsel to Assignee, each member of Assignee, TASL and TIL, with respect
to such matters and to such effect as Assignor shall reasonably request.
Assignor shall also have received, with respect to each Aircraft Transferred
Interest, at the applicable Effective Time for such Aircraft Transferred
Interest, an opinion from (i) Manwell & Milton, counsel to Assignee and (ii)
Crowe & Dunleavy, special FAA counsel ("Special FAA Counsel") or Theodore
Goddard ("Special CAA Counsel"), in each case with respect to such matters
relating to such Aircraft Transferred Interest and to such effect as Assignor
shall reasonably request.
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(n) Location of Aircraft
Subject to Section 4(c) hereof, the location of the
Aircraft relating to each Aircraft Transferred Interest shall be acceptable to
Assignor at the applicable Effective Time for such Aircraft Transferred
Interest.
(o) TIL Balance Sheets
Assignor shall have received an audited balance sheet
of TIL as of December 31, 1996 reflecting a consolidated net worth, net of
minority interests, of at least $150,000,000.
(p) Other Instruments and Documents; Additional
Information
Assignor shall have received such other instruments
and 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").
(r) No Pending Superior Proposal
Assignor shall not have received and have accepted or
be considering any Superior Proposal with respect to such Transferred Interest
in accordance with Section 11 hereof.
The obligation of Assignor to assign its interest in the Receivable Transferred
Interests to Assignee is subject to satisfaction of the following conditions
with respect to the Receivable Transferred Interests, in each case, on or prior
to the Receivable Effective Date:
(s) Satisfaction of Conditions
The conditions contained in Sections 7(a), 7(c), 7(d)
7(e), 7(f) 7(g), 7(i), 7(j) (including the certificate described in clause (v)
dated as of the Receivable Effective Date, 7(k), 7(o) and 7(p) shall have been
satisfied or waived by Assignor as they relate to the Receivable Transferred
Interests.
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(t) Opinions
Assignor shall have received an opinion reasonably
satisfactory to Assignor, dated as of the Receivable Effective Date, from
Manwell & Milton with respect to such matters and to such effect as Assignor
shall reasonably request.
(u) Outside Date
The Outside Date shall not have occurred.
(v) Superior Proposal
Assignor shall not have received and have accepted or
be considering any Superior Proposal with respect to the Receivables in
accordance with Section 11 hereof.
SECTION 8. Conditions Precedent to the Obligations of Assignee
The obligation of Assignee to purchase any Aircraft Transferred Interest from
Assignor and assume the obligations related thereto at the applicable Effective
Time is subject to the satisfaction of the following conditions:
(a) Leases and Trust Agreements
The Lease and Trust Agreement and, as applicable,
each other Operative Agreement with respect to such Aircraft Transferred
Interest shall be in full force and effect.
(b) Due Authorization, Execution and Delivery
This Agreement, the Assignment and Assumption
Agreement and any of the other Ancillary Agreements with respect to such
Aircraft Transferred Interest to which Assignor is a party shall have been duly
authorized, executed and delivered by Assignor.
(c) Representations and Warranties
The representations and warranties of Assignor
contained herein shall be true and correct in all material respects as of the
Effective Time with the same force and effect as though such representations and
warranties had been made on and as of such Effective Time.
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(d) Schedules
Schedule 5(d) shall not have been supplemented or
amended by Assignor to include a default or event of default caused by the
filing by the Lessee of the Aircraft that is the subject of such Transferred
Interest for protection from its creditors.
(e) Partnership Authorization Matters
Assignee shall have received:
(i) Resolutions of the board of directors of PIMC,
general partner of Assignor, certified by the Secretary or Assistant Secretary
thereof, as of the date of this Agreement, to be duly adopted and in full force
and effect on such date, authorizing (i) the consummation of each of the
transactions contemplated by this Agreement and each of the Ancillary Agreements
to which Assignor is a party and (ii) specific officers or representatives to
execute and deliver this Agreement and the Ancillary Agreements to which
Assignor is a party.
(ii) A copy of the certificate of limited partnership
and all amendments thereto of Assignor, certified as of a recent date by the
Secretary of State of the jurisdiction of its organization and a copy of the
agreement of limited partnership, as amended, certified by an officer of the
general partner.
(iii) Certificates of the Secretary or an Assistant
Secretary of PIMC, certified by the Secretary or Assistant Secretary thereof, as
to the incumbency and signatures of the representatives thereof executing this
Agreement or any of the Ancillary Agreements to which Assignor is a party,
together with evidence of the incumbency of such Secretary or Assistant
Secretary.
(iv) As of each Effective Time, for such Transferred
Interest, a certificate of the Secretary or an Assistant Secretary of PIMC
certifying that the certificates delivered in accordance with clauses (i), (ii)
and (iii) above are true and correct with respect to the Transferred Interest
being conveyed as of the applicable Effective Time.
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(f) Illegality; No Proceedings
At the applicable Effective Time, the performance of
the 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.
(g) Approvals and Consents
All approvals and consents and other items listed on
Schedule 5(b) shall have been obtained.
(h) No Total Loss
At the applicable Effective Time, there shall not
exist a Total Loss with respect to the Aircraft related to such Aircraft
Transferred Interest.
(i) Opinions
Assignee shall have received opinions reasonably
satisfactory to Assignee, dated as of the first Effective Time from (i) Haight,
Gardner, Poor & Havens, California counsel to Assignor with respect to due
organization and good standing and (ii) Weil, Gotshal & Manges LLP, counsel to
Assignor, that the execution and delivery of this Agreement and the consummation
of the transactions contemplated thereby and compliance by the Company with the
provisions thereof will not conflict with or violate any federal law or
regulation (other than federal securities laws, the Hart-Scott Rodino Act or any
federal laws or regulations relating to the Federal Aviation Administration or
civil or commercial aviation). Assignee shall also have received, with respect
to each Aircraft Transferred Interest, at the applicable Effective Time for such
Aircraft Transferred Interest, an opinion from (i) Haight, Gardner, Poor &
Havens, California counsel to Assignor and (ii) Special FAA Counsel or Special
CAA Counsel, as applicable, in each case with respect to such matters relating
to such Aircraft Transferred Interest and to such effect as Assignee shall
reasonably request.
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(j) Location of Aircraft
Subject to Section 4(c) hereof, the location of the
Aircraft relating to each Aircraft Transferred Interest shall be acceptable to
Assignee at the applicable Effective Time for such Aircraft Transferred
Interest.
(k) Other Instruments and Documents; Additional
Information
Assignee shall have received such other instruments
and docu ments 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 transac tions 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.
The obligation of Assignee to purchase the Receivable Transferred Interests from
Assignor and assume the obligations is subject to the satisfaction, in each
case, of the following conditions with respect to the Receivable Transferred
Interests, on or prior to the Receivable Effective Date:
(m) Receivable Agreements
Each of the Receivable Agreements shall be in full
force and effect.
(n) Satisfaction of Conditions
The conditions contained in Sections 8(b), 8(c), 8(e)
(including the certificate described in clause (iv) dated as of the Receivable
Effective Date, 8(f) and 8(g) shall have been satisfied or waived by Assignee as
they relate to the Receivable Transferred Interests.
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(o) Opinion
Assignee shall have receive an opinion reasonably
satisfactory to Assignee, dated as of the Receivable Effective Date, from
Haight, Gardner, Poor & Havens with respect to such matters and to such effect
as Assignee shall reasonably request.
(p) Outside Date
The Outside Date shall not have occurred.
SECTION 9. Payments
To the extent not transferred in accordance with Section 4,
Assignor hereby covenants and agrees to pay over to Assignee, no later than five
(5) Business Days after receipt by Assignor from and after the applicable
Effective Time, any Income or Lessee Deposits paid to or for the benefit of
Assignor that constitute a Transferred Interest earlier transferred to Assignee
hereunder (including any amounts payable as interest in respect thereof), and
until so paid over, any Income or Lessee Deposits received by Assignor in
respect of any such Transferred Interest shall be received and held by Assignor
in trust for Assignee. Assignee hereby covenants and agrees to pay over to
Assignor, no later than five (5) Business Days after receipt by Assignee from
and after the applicable Effective Time, any amounts paid to or for the benefit
of Assignee that constitute Reserved Rights which relate to a Transferred
Interest earlier transferred (including any amounts payable as interest in
respect thereof), and until so paid over any such amounts received by Assignee
shall be received and held by Assignee in trust for Assignor.
SECTION 10. Certain Notices
Assignor hereby covenants and agrees promptly to forward to
Assignee any notice Assignor receives from any party to any of the Operative
Agreements or any of the Receivable Agreements (other than Assignee) relating to
any of the Transferred Interests. Assignee hereby covenants and agrees promptly
to forward to Assignor any notice Assignee receives from any party to any of the
Operative Agreements or any of the Receivable Agreements (other than Assignor)
pursuant to and in accordance with this Agreement, the Assignment and Assumption
Agreement, the Trust Agreements, any other Operative Agreement or any of the
Receivable Agreements related to the Reserved Rights. Assignor hereby covenants
and agrees to notify Assignee of any Reserved Right, describing the
circumstances of such Reserved Right in reasonable detail, promptly after
Assignor has actual knowledge of facts or circumstances giving rise to a
Reserved Right and that such facts and circumstances constitute a Reserved
Right.
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SECTION 11. Superior Proposal
(a) Each party agrees and acknowledges that from and after
the date hereof until the close of business on April 28, 1997, if Assignor
receives a Superior Proposal, Assignor may (i) furnish any information requested
by the Offering Party with respect to such Superior Proposal (other than the
contents of this Agreement or any Ancillary Agreement), (ii) participate in
negotiations with such Offering Party regarding such Superior Proposal or (iii)
enter into one or more letters of intent, term sheets or agreements with respect
to any Superior Proposals; provided, however, that if Assignor proposes to take
any of the actions specified in clause (iii) hereof, Assignor shall give
Assignee prior written notice setting forth Assignor's proposed actions.
(b) Not later than the close of business on May 12, 1997,
Assignor shall require each Offering Party with whom it is still engaged in
discussions to submit a final binding offer, subject only to acceptance by
Assignor. Not later than the close of business on May 16, 1997, Assignor shall
(i) determine whether any such offer constitutes a Superior Proposal, (ii) if
there is more than one Superior Proposal, select which Superior Proposal
Assignor intends to accept and (iii) provide written notice to Assignee setting
forth all the material terms and conditions of such selected Superior Proposal
("SP Notice").
(c) After receipt of the SP Notice, Assignee shall have five
(5) days to notify Assignor of its agreement to modify this Agreement and any
Ancillary Agreement as necessary to acquire the Transferred Interests at the
same price and under the same terms and conditions as set forth in the SP Notice
("Assignee Acceptance Notice"); provided further, however, if under the terms
set forth in the SP Notice Assignor is proposing to accept property (other than
cash or promissory notes), Assignee shall have the right to substitute cash in
an amount equal to the value of such other property.
(d) If Assignor does not give an SP Notice to Assignee on or
before May 16, 1997, or if Assignee gives an Assignee Acceptance Notice to
Assignor in accordance with subsection (c) hereof, neither Assignor nor Assignee
shall thereafter have any right to terminate this Agreement pursuant to Section
15(c).
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SECTION 12. Further Assurances
Each party agrees, upon the reasonable request of the other
party at any time and from time to time, promptly to execute and deliver all
such further documents and promptly to take and forbear from all such action as
may be reason ably necessary or appropriate in order to more effectively confirm
or carry out the provisions of this Agreement or any of the Ancillary
Agreements, including, without limitation, the filing of any Assignment and
Assumption Agreement with the FAA pursuant to the Act or the CAA. The parties
agree that the transactions are fully effective as of the applicable Effective
Time and that they will treat the transactions as such for all purposes and
acknowledge that any filings with the FAA or the CAA are merely ministerial in
nature.
SECTION 13. Taxes and Indemnities
(a) Transfer Taxes
Assignee hereby covenants and agrees to pay (and indemnify
and hold Assignor harmless on an After-Tax Basis for) any and all registration,
docu ment or filing fees and any and all sales taxes, use taxes and similar
transfer taxes (including, without limitation, any charges, such as gross
receipts taxes (but excluding any taxes in the nature of any income tax) in lieu
thereof) (collectively, "Transfer Taxes"), that may be imposed in connection
with the sale, assignment and transfer of any Transferred Interests including,
without limitation, any penalties, fines or interest thereon and those Transfer
Taxes relating to the transfer of rights and other interests in and to, and the
act of assuming duties, liabilities and obligations in, to and under this
Agreement, the Assignment and Assumption Agreements, the Transferred Interests,
the Aircraft, the Operative Agreements or any of the Receivable Agreements
together with all reasonable and documented out-of-pocket costs, expenses and
attorney's fees incurred in connection therewith. Assignor hereby agrees to
perform such acts, including, without limitation, attending the closing of the
transactions contemplated hereby at a site or sites selected by Assignee, and
executing such documents as may be reasonably necessary to minimize Transfer
Taxes. The parties further agree to furnish each other with such documents and
certificates as they may reasonably request in connection with any claims for
exemption from the payment of Transfer Taxes.
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(b) Notice of IRS Reports
(i) Assignor shall promptly notify Assignee of
receipt from the IRS of any written proposed or final revenue agent's report,
30-day letter or notice of deficiency in which an adjustment is proposed to the
federal income taxes of Assignor for which any of the Lessees would be required
to indemnify Assignor under any Operative Agreement or any of the Receivable
Agreements and, thereafter, shall upon request keep Assignee apprised at least
monthly of the progress of any protest or proceeding in respect of such
adjustment.
(ii) Assignee shall promptly notify Assignor of
receipt from the IRS of any written proposed or final revenue agent's report,
30-day letter or notice of deficiency in which an adjustment is proposed to the
federal income taxes of Assignee for which any of the Lessees would be required
to indemnify Assignee under any Operative Agreement and, thereafter, shall upon
request keep Assignor apprised at least monthly of the progress of any protest
or proceeding in respect of such adjustment.
(c) Assignor's Indemnity
Assignor hereby covenants and agrees upon demand of
Assignee to pay and assume liability for, and indemnify, protect, defend, save
and keep harmless Assignee and each of its Affiliates and in each such case
their respective directors, officers, employees and agents (the "Assignee
Indemnitees"), on an After-Tax Basis, from and against any and all Damages which
may at any time or from time to time be imposed upon, incurred by or asserted
against any of the Assignee Indemnitees in any way relating directly or
indirectly to, or arising out of, (i) any inaccuracy or breach of any
representation or warranty made by Assignor under this Agreement or any
Ancillary Agreement to which it is a party, (ii) the ownership, leasing, use or
operation of any Transferred Interest prior to the Effective Time applicable to
such Transferred Interest including, without limitation, any obligations
relating to the Trust Estate, any of the Operative Agreements or any of the
Receivable Agreements relating to such Transferred Interest which arise from
acts, omissions, events or circumstances occurring or accruing prior to the
Effective Time with respect to such Transferred Interest, but not including any
Assumed Liabilities, (iii) the failure of Assignor to perform or observe any of
its obligations under this Agreement or any Ancillary Agreement to which it is a
party, (iv) any litigation, claim or action brought by a limited partner of
Assignor against any Assignee Indemnitee to the extent such litigation, claim or
action directly arises out of and relates to the transactions contemplated by
this Agreement other than to the extent any litigation, claim or action relates
directly or indirectly to, or arises out of, the breach by such Assignee
Indemnitee of the terms of this Agreement or any Ancillary Agreement, or (v) any
Liens set forth on Schedule 5(h) hereto; provided that (a) Assignor shall not be
liable for any Damages to the extent that Assignee has a recovery available to
it under any insurance policy which was in effect on or prior to the applicable
Effective Time; (b) Assignor shall not be liable for any Damages attributable to
the gross negligence or willful misconduct of Assignee or its Affiliates; and
(c) Assignor shall not be liable for any Damages in excess of the Purchase
Price. Notwithstanding the foregoing, Assignor shall be liable pursuant to this
Section 13(c) only to the extent that the aggregate cumulative Damages incurred
by the Assignee Indemnitees which are required to be indemnified by Assignor
exceed $50,000 (the "Threshold Amount") in which event, Assignor shall then also
be liable for the initial $50,000 of aggregate cumulative Damages incurred by
the Assignee Indemnitees; provided, that, with respect to any Lien set forth on
Schedule 5(h) hereto, (x) the Threshold Amount limitation shall not apply and
Assignor shall be liable for all Damages arising from such Liens and (y) amounts
expended by Assignor to discharge and release such Liens shall not constitute
Damages to be applied toward the Threshold Amount and only those expenses, if
any, actually incurred by Assignee in connection with such discharge or release
shall be so applied.
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(d) Assignee's Indemnity
Assignee hereby covenants and agrees upon demand of
Assignor to pay and assume liability for, and indemnify, protect, defend, save
and keep harmless, Assignor and each of its Affiliates and in each such case
their respective directors, officers, employees and agents (the "Assignor
Indemnitees"), on an After-Tax Basis, from and against any and all Damages which
at any time or from time to time may be imposed upon, incurred by or asserted
against the Assignor Indemnitees in any way relating directly or indirectly to,
or arising out of, (i) any inaccuracy or breach of any representation or
warranty made by Assignee or any of its Affiliates under this Agreement or any
Ancillary Agreement to which it or any of its Affiliates is a party, (ii) the
ownership, leasing, use or operation of any Transferred Interest on or after the
Effective Time applicable to such Transferred Interest including, without
limitation, any obligations relating to the Trust Estate, any of the Operative
Agreements or any of the Receivable Agreements relating to such Transferred
Interest which arise from acts, omissions, events or circumstances occurring or
accruing on or after the Effective Time with respect to such Transferred
Interest, (iii) the failure of Assignee or any of its Affiliates to perform or
observe any of their respective obligations under this Agreement or any
Ancillary Agreement to which it or any of its Affiliates is a party, (iv) any
Assumed Liabilities or (v) any modification, amendment or other change to any of
the Operative Agreements or any of the Receivable Agreements entered into by
Assignee, or to which Assignee consents or forbears, in any such case without
the prior written consent of Assignor (such consent not to be unreasonably
withheld) that affects any of the Reserved Rights; provided, however, that with
respect to any Transferred Interest which includes a Lease, such indemnification
obligation shall only relate to modifications, amendments or other changes made
or agreed to during the period beginning on the Effective Date applicable to
such Transferred Interest and ending on the date that is twenty-four (24) months
after the termination of the Lease included in such Transferred Interest (which
period shall be deemed to include any renewals, extensions or continuations of
such Lease). Notwithstanding the foregoing, (a) Assignee shall not be liable for
any Damages to the extent that Assignor has a recovery available to it under any
insurance policy which was in effect on or prior to the Effective Time; (b)
Assignee shall not be liable for any Damages attributable to the gross
negligence or willful misconduct of Assignor; (c) Assignee shall not be liable
for any Damages in excess of the Purchase Price and (d) Assignee shall be liable
pursuant to this Section 13(d) only to the extent that the aggregate Damages
incurred by the Assignor Indemnitees which are required to be indemnified by
Assignee exceed $50,000 in which event, Assignee shall then also be liable for
the initial $50,000 of aggregate cumulative Damages incurred by the Assignor
Indemnitees.
37
<PAGE>
(e) Survival of Representations and Warranties
All representations and warranties of the parties
hereto contained in this Agreement (including all Schedules hereto) or in any
document, statement, certificate or other instrument referred to herein or
delivered at the applicable Effective Time in connection with the transactions
contemplated hereby, that (i) relate to any Transferred Interest which includes
a Lease, shall survive until the later of (A) twenty-four (24) months after the
Effective Time applicable to such Transferred Interest or (B) twelve (12) months
after the expiry of the Lease included in such Transferred Interest (which
period shall not be deemed to include any renewals, extensions or continuations
of such Lease), (ii) relate to any Transferred Interest which does not include a
Lease, shall survive until twenty-four (24) months after the Effective Time
applicable to such Transferred Interest and (iii) do not relate to a Transferred
Interest, shall survive until twenty-four (24) months after the first Effective
Time to occur under this Agreement.
SECTION 14. Indemnification Procedure
(a) Any Assignee Indemnitee or Assignor Indemnitee (the "Indemnified Party")
seeking indemnification hereunder shall give to the party obligated under this
Agreement to provide indemnification to such Indemnified Party (the
"Indemnitor") a notice ("Claim Notice") describing in reasonable detail the
facts giving rise to its claim for indemnification hereunder, and shall include
in such Claim Notice (if then known) the amount or method of computation of the
amount of the claim, and a reference to the provision of this Agreement or any
other agreement, document or instrument executed and delivered hereunder or in
connection herewith upon which such claim is based; provided that a Claim Notice
in respect of any action at law or suit in equity against an Indemnified Party
by a third party, as to which indemnification will be sought (a "Third Party
Action"), shall be given promptly after the action or suit is commenced;
provided, further, that failure of the Indemnified Party to give the Indemnitor
prompt notice in respect of any such Third Party Action as provided herein shall
not relieve the Indemnitor of its obligations hereunder, except to the extent
such Indemnitor shall have been materially prejudiced by such failure.
(b) The Indemnitor shall be entitled (but not obligated) to
assume the defense or settlement of such Third Party Action, or to conduct any
negotiations or proceedings to settle or otherwise eliminate any Third Party
Claim and shall pay the reasonable fees and disbursements of such counsel
related to such Third Party Action. If the Indemnitor assumes any such defense
or settlement or any such negotiations, it shall pursue such defense, settlement
or negotiations in good faith. If the Indemnitor fails to elect in writing
within 30 Business Days of the notification referred to above to assume such
defense, the Indemnified Party may engage counsel to defend, settle or otherwise
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
38
<PAGE>
the Indemnitor or (y) a conflict or potential conflict exists between the
Indemnified Party and the Indemnitor in such Third Party Action (in which case
the Indemnitor will not have the right to direct the defense of such Third Party
Action with respect to which such conflict exists on behalf of the Indemnified
Party), but only to the extent such fees and expenses are incurred in connection
with such conflicting issues. Any such separate firm shall be designated in
writing by the Indemnified Party. The Indemnitor shall not be liable for any
settlement of any proceeding of such Third Party Action effected without its
written consent, but if the Indemnitor consents to any such settlement, the
Indemnitor agrees to indemnify the Indemnified Party from and against any loss
or liability for which indemnity is available hereunder and which is specified
in such settlement or judgment. No Indemnitor shall, without the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed), effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability or claims that are the subject matter of such
proceeding and such settlement only involves the payment of money.
(c) Assignor shall be entitled in all cases (but not
obligated) to assume the settlement and to conduct negotiations or proceedings
to obtain the discharge and release of or otherwise eliminate any Lien set forth
on Schedule 5(h) hereto. If Assignor assumes any such settlement or any such
negotiations, it shall pursue such settlement or negotiations in good faith.
Assignor shall not be liable for any settlement or discharge of any such Lien
effected without its written consent, but if Assignor consents to any such
settlement or discharge, Assignor agrees to indemnify Assignee from and against
any loss or liability for which indemnity is available hereunder and which is
specified in such settlement or discharge.
39
<PAGE>
SECTION 15. Termination
This Agreement may be terminated at any time prior to the
first Effective Time to occur pursuant to the terms hereof:
(a) by mutual written consent of Assignee and Assignor;
(b) by either party by written notice to the other party if
the transactions contemplated hereby have not been consummated on or before the
Outside Date; provided, however, that the right to terminate this Agreement
under this Section 15(b) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement has been the cause of or has
resulted in the failure of the transactions contemplated hereby being
consummated on or before the Outside Date; or
(c) by (i) Assignor if (a) Assignor accepts or recommends
one or more Superior Proposals to its partners or resolves to do either of the
foregoing and (b) Assignee no longer has the right pursuant to Section 11(c) to
deliver an Assignee Acceptance Notice to Assignor or (ii) by Assignee if (x)
Assignor has given an SP Notice and (y) at least fourteen (14) days have passed
since the date on which Assignee's right pursuant to Section 11(c) to deliver an
Assignee Acceptance Notice terminated.
40
<PAGE>
SECTION 16. Miscellaneous
(a) Notices
All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
effective (i) if given by facsimile, when transmitted, (ii) if given by
registered or certified mail, three (3) Business Days after being deposited with
the U.S. Postal Service, (iii) if given by courier, when received, or (iv) if
personally delivered, when so delivered, addressed:
If to Assignor, to:
c/o Polaris Investment Management Corporation
201 Mission Street, 27th Floor
San Francisco, CA 94105
Attention: President
Facsimile Number:
With a copy to:
c/o Polaris Investment Management Corporation
201 High Ridge Road, 1st Floor
Stamford, CT 06927-4900
Attention: Portfolio Management
Facsimile Number: (203) 357-4585
or to such other address as Assignor shall from time to time designate in
writing to Assignee; and
If to Assignee, to:
Triton Aviation Services V LLC
55 Green Street, Suite 500
San Francisco, CA 94111
Attn: President
Facsimile Number: (415) 398-9184
or to such other address as Assignee may from time to time designate in writing
to Assignor.
41
<PAGE>
(b) Headings
Headings used herein are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, this Agreement.
(c) References
Any reference to a specific Section or Section number
shall be interpreted as a reference to that Section of this Agreement unless
otherwise expressly provided.
(d) GOVERNING LAW
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE
INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCE ABILITY THEREOF, SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
EXCLUDING ANY CONFLICT OF LAWS RULES THEREOF.
(e) Severability
If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by law, (i) all other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be construed in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) such invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of such provision in any other
jurisdiction.
(f) Amendments in Writing
No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor any consent to any departure
by Assignor or Assignee from any provision hereof, shall in any event be
effective unless the same shall be in writing and signed by Assignor and
Assignee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by Assignor and Assignee.
42
<PAGE>
(g) Expenses
Each of Assignor and Assignee shall be responsible
for all fees and expenses incurred by it, including for legal counsel and other
advisors, in connection with this Agreement, any Ancillary Agreement or
otherwise relating to the transactions contemplated hereby; provided, however,
all costs and expenses incurred in connection with Special FAA Counsel or with
Special CAA Counsel and all fees and expenses payable to the Escrow Agent
pursuant to the Escrow Agreement shall be shared equally by Assignor and
Assignee; provided, further, if either Assignor or Assignee terminates this
Agreement in accordance with Section 15(c) hereof, Assignor shall pay or cause
to be paid to Assignee within two (2) Business Days of such termination a fee in
immediately available funds in an amount equal to one and one-half percent
(1.5%) of the Purchase Price.
(h) Execution in Counterparts
This Agreement and any amendments, waivers or
consents hereto may be executed by Assignor and Assignee in separate
counterparts (or upon separate signature pages bound together into one or more
counterparts), each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
(i) Entire Agreement
This Agreement and the Ancillary Agreements
constitute the entire agreement of Assignor and Assignee with respect to the
subject matter hereof or thereof, and all prior understandings or agreements,
whether written or oral, between Assignor and Assignee with respect to such
subject matter are hereby superseded in their entirety.
(j) Exhibits
The exhibits attached hereto are incorporated by
reference herein and shall have the same force and effect with respect to the
provisions set forth therein as though fully set forth in this Agreement.
(k) Assignment and Successors
This Agreement may not be assigned except by
operation of law. This Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by Assignor and Assignee and their
respective successors.
43
<PAGE>
(l) Confidentiality
This Agreement and the Ancillary Agreements are
confidential documents between the parties thereto and shall not be disclosed by
either party to third parties without the prior written consent of the other
party other than (i) to such party's directors, officers, employees, advisors,
auditors, agents or representatives who are advised of the confidential nature
of this Agreement and the Ancillary Agreements (and for whose compliance with
the terms hereof, such party shall be liable), (ii) to the extent disclosure as
required by any applicable law, regulation or judicial order or (iii) in
connection with the disclosure requirements of the Securities and Exchange
Commission. The obligations and protections contained in this Section 16(l) are
in addition to and not a replacement of any obligations and protections provided
pursuant to any confidentiality agreement executed by and currently in effect
between the parties hereto or any of their respective Affiliates.
44
<PAGE>
SCHEDULE 1
AIRCRAFT AND LESSEES
Serial No. Aircraft Type Lessee
---------- ------------- ------
PART A (DOMESTIC AIRCRAFT)
21345 727-2A1 ADV Sun Country
21601 727-2A1 ADV Sun Country
19733 747-124 Polar Air Cargo
20925 737-2H4 ADV N/A
21117 737-2H4 ADV N/A
21447 737-2H4 ADV Southwest
21448 737-2H4 ADV Southwest
21533 737-2H4 ADV Southwest
21534 737-2H4 ADV Southwest
21999 727-200 ADV ATA
23014 727-200 ADV ATA
22162 727-200 ADV ATA
PART B (FOREIGN AIRCRAFT)
None
<PAGE>
SCHEDULE 2
LEASES
21345 Aircraft Lease Agreement [A], dated as of September 1, 1993, between
First Security Bank of Utah, National Association, as Lessor, and Sun
Country Airlines, Inc., as Lessee, as supplemented by Lease Supplement
No. 1 dated October 26, 1993, as extended by Extension Notice dated
March 21, 1997.
21601 Aircraft Lease Agreement [B], dated as of September 1, 1993, between
First Security Bank of Utah, National Association, as Lessor, and Sun
Country Airlines, Inc., as Lessee, as supplemented by Lease Supplement
No. 1 dated October 1, 1993, as extended by Extension Notice dated
March 21, 1997.
19733 Amended and Restated Lease Agreement, dated as of February 28, 1997,
between First Security Bank, National Association, as Lessor, and
Polar Air Cargo, Inc, as Lessee.
20925 None
21117 None
21447 Aircraft Lease Agreement A, dated as of July 21, 1989, between First
Security Bank of Utah, National Association, as Lessor, and Southwest
Airlines Co., as Lessee, as supplemented by Lease Supplement No. 1
dated as of September 28, 1989, and as amended by Amendment No. 1
dated as of May 18, 1994.
21448 Aircraft Lease Agreement B, dated as of July 21, 1989, between First
Security Bank of Utah, National Association, as Lessor, and Southwest
Airlines Co., as Lessee, as supplemented by Lease Supplement No. 1
dated September 29, 1989, and as amended by Amendment No. 1 dated as
of May 18, 1994.
21533 Aircraft Lease Agreement C, dated as of July 21, 1989, between First
Security Bank of Utah, National Association, as Lessor, and Southwest
Airlines Co., as Lessee, as supplemented by Lease Supplement No. 1
dated September 28, 1989, and as amended by Amendment No. 1 dated as
of May 18, 1994.
21534 Aircraft Lease Agreement D, dated as of July 21, 1989, between First
Security Bank of Utah, National Association, as Lessor, and Southwest
Airlines Co., as Lessee, as supplemented by Lease Supplement No. 1
dated September 29, 1989, and as amended by Amendment No. 1 dated as
of May 18, 1994.
<PAGE>
SCHEDULE 2: LEASES
21999 Aircraft Lease Agreement, dated as of December 15, 1992, between First
Security Bank of Utah, National Association, as Lessor, and American
Trans Air, Inc., as Lessee, as supplemented by Lease Supplement No. 1
dated December 30, 1992, as amended by Amendment No. 1 dated as of
February 24, 1993, and Amendment No. 2 dated as of January 31, 1994.
23014 Aircraft Lease Agreement, dated as of December 15, 1992, between First
Security Bank of Utah, National Association, as Lessor, and American
Trans Air, Inc., as Lessee, as supplemented by Lease Supplement No. 1
dated December 30, 1992, as amended by Amendment No. 1 dated as of
February 24, 1993, and Amendment No. 2 dated as of January 31, 1994.
22162 Aircraft Lease Agreement, dated as of December 15, 1992, between First
Security Bank of Utah, National Association, as Lessor, and American
Trans Air, Inc., as Lessee, as supplemented by Lease Supplement No. 1
dated December 30, 1992 as amended by Amendment No. 1 dated as of
February 24, 1993, and Amendment No. 2 dated as of January 31, 1994.
2
<PAGE>
SCHEDULE 3
FOREIGN AIRCRAFT ENGINES
None
<PAGE>
SCHEDULE 4
OTHER OPERATIVE AGREEMENTS
21345 Tax Indemnification Agreement, dated as of March 15, 1989, among
Alaska Airlines, Inc., Polaris Holding Company and First Security Bank
of Utah, National Association.
Assignment Agreement, dated as of May 12, 1989, between Polaris
Holding Company and Polaris Aircraft Income Fund V.
Letter Agreement No. 1 to Aircraft Lease Agreement [A], dated
September 1, 1993, between First Security Bank of Utah, National
Association and Sun Country.
21601 Tax Indemnification Agreement, dated as of April 15, 1989, among
Alaska Airlines, Inc., Polaris Holding Company and First Security Bank
of Utah, National Association.
Assignment Agreement, dated as of July 13, 1989, between Polaris
Holding Company and Polaris Aircraft Income Fund V.
Letter Agreement No. 1 to Aircraft Lease Agreement [B], dated
September 1, 1993, between First Security Bank of Utah, National
Association and Sun Country.
19733 Letter Agreement No. 1 to Amended and Restated Aircraft Lease
Agreement, dated as of February 28, 1997, between First Security Bank
of Utah, National Association and Polar Air Cargo, Inc.
20925 Assignment Agreement, dated as of November 22, 1988, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
21117 Assignment Agreement, dated as of December 15, 1988, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
21447 Aircraft Purchase Agreement, dated as of July 21, 1989, between
Southwest Airlines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
Tax Indemnification Agreement A, dated as of July 21, 1989, among
Polaris Aircraft Leasing Corporation, as Beneficiary, Southwest
Airlines, Inc., as Lessee, and First Security Bank of Utah, National
Association, as Owner Trustee.
<PAGE>
SCHEDULE 4: OTHER OPERATIVE AGREEMENTS
Assignment Agreement, dated as of October 30, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Amendment Letter No. 1 to Amendment No. 1, dated May 18, 1994, from
First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
Amendment Letter No. 2 to Amendment No. 1, dated November 15, 1994,
from First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
21448 Aircraft Purchase Agreement, dated as of July 21, 1989, between
Southwest Airlines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
Tax Indemnification Agreement B, dated as of July 21, 1989, among
Polaris Aircraft Leasing Corporation, as Beneficiary, Southwest
Airlines, Inc., as Lessee, and First Security Bank of Utah, National
Association, as Owner Trustee.
Assignment Agreement, dated as of November 17, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Amendment Letter No. 1 to Amendment No. 1, dated May 18, 1994, from
First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
Amendment Letter No. 2 to Amendment No. 1, dated November 15, 1994,
from First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
21533 Aircraft Purchase Agreement, dated as of July 21, 1989, between
Southwest Airlines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
Tax Indemnification Agreement C, dated as of July 21, 1989, among
Polaris Aircraft Leasing Corporation, as Beneficiary, Southwest
Airlines, Inc., as Lessee, and First Security Bank of Utah, National
Association, as Owner Trustee.
Assignment Agreement, dated as of December 5, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Amendment Letter No. 1 to Amendment No. 1, dated May 18, 1994, from
First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
2
<PAGE>
SCHEDULE 4: OTHER OPERATIVE AGREEMENTS
Amendment Letter No. 2 to Amendment No. 1, dated November 15, 1994,
from First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
21534 Aircraft Purchase Agreement, dated as of July 21, 1989, between
Southwest Airlines, Inc., as Seller, and Polaris Aircraft Leasing
Corporation, as Buyer.
Tax Indemnification Agreement D, dated as of July 21, 1989, among
Polaris Aircraft Leasing Corporation, as Beneficiary, Southwest
Airlines, Inc., as Lessee, and First Security Bank of Utah, National
Association, as Owner Trustee.
Assignment Agreement, dated as of December 21, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Amendment Letter No. 1 to Amendment No. 1, dated May 18, 1994, from
First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
Amendment Letter No. 2 to Amendment No. 1, dated November 15, 1994,
from First Security Bank of Utah, National Association to Southwest
Airlines, Inc.
21999 Assignment Agreement dated as of June 15, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Letter Agreement No. 1 to Aircraft Lease Agreement, dated as of
December 15, 1992, between First Security Bank of Utah, National
Association, as Owner Trustee and American Trans Air, Inc., as Lessee.
23014 Assignment Agreement dated as of January 30, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Letter Agreement No. 1 to Aircraft Lease Agreement, dated as of
December 15, 1992, between First Security Bank of Utah, National
Association, as Owner Trustee and American Trans Air, Inc., as Lessee.
22162 Assignment Agreement dated as of February 21, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V.
Letter Agreement No. 1 to Aircraft Lease Agreement, dated as of
December 15, 1992, between First Security Bank of Utah, National
Association, as Owner Trustee and American Trans Air, Inc., as Lessee.
3
<PAGE>
SCHEDULE 4(a)
PURCHASE PRICE
Purchase Note Cash
Transferred Interests Price Amount Amount
----|
Transferred Interest 21345 |
Transferred Interest 21601 |
Transferred Interest 19733 |
Transferred Interest 20925 |
Transferred Interest 21117 |
Transferred Interest 21447 |
Transferred Interest 21448 |--- $ 46,188,000 $ 40,984,460 $ 5,203,540
Transferred Interest 21533 | ------------ ------------ -----------
Transferred Interest 21534 |
Transferred Interest 21999 |
Transferred Interest 23014 |
Transferred Interest 22162 |
----|
<PAGE>
SCHEDULE 5
OWNER TRUSTEES
Serial No. Owner Trustee
----------- -------------------------------------------
21345 First Security Bank, National Association *
21601 First Security Bank, National Association *
19733 First Security Bank, National Association *
20925 First Security Bank, National Association *
21117 First Security Bank, National Association *
21447 First Security Bank, National Association *
21448 First Security Bank, National Association *
21533 First Security Bank, National Association *
21534 First Security Bank, National Association *
21999 First Security Bank, National Association *
23014 First Security Bank, National Association *
22162 First Security Bank, National Association *
- ------------------------------
* Formerly known as First Security Bank of Utah, National Association
<PAGE>
SCHEDULE 5(b)
CONSENTS
Serial Lessee Owner Trustee
No. Lessee Consent Required Release Needed
--- ------ ---------------- --------------
21345 Sun Country No No
21601 Sun Country No No
19733 Polar Air Yes Yes; Trust established for
Cargo Beneficiary A(PAIF V) and
Beneficiary B(PHC); must subdivide
Trust and also obtain consent of
Beneficiary B
20925 N/A No Yes; Trust established for
Beneficiary A (PAIF V) and
Beneficiary B (PHC); must
subdivide Trust and also obtain
consent of Beneficiary B
21117 N/A N/A Yes
21447 Southwest No Yes
21448 Southwest No Yes
21533 Southwest No Yes
21534 Southwest No Yes
21999 ATA No Yes
23014 ATA No Yes
22162 ATA No Yes
<PAGE>
SCHEDULE 5(d)
ASSIGNOR CLAIMS
21345 Sun Country has experienced a change of control and is currently not
in compliance under operative agreements.
21601 Sun Country has experienced a change of control and is currently not
in compliance under operative agreements.
19733 Polar Air Cargo is chronically late in making payments but no default
has been declared due to the late payments.
<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
None
<PAGE>
SCHEDULE 6
TRUST AGREEMENTS
21345 Trust Agreement, dated as of March 15, 1989, between Polaris Holding
Company, as Beneficiary, and First Security Bank of Utah, National
Association, as Owner Trustee ("Alaska Airlines, Inc. (1989) Trust
A"), as assigned by Assignment Agreement, dated as of May 12, 1989,
between Polaris Holding Company and Polaris Aircraft Income Fund V.
21601 Trust Agreement, dated as of April 15, 1989, between Polaris Holding
Company, as Beneficiary, and First Security Bank of Utah, National
Association, as Owner Trustee ("Alaska Airlines, Inc. (1989) Trust
B"), as assigned by Assignment Agreement, dated as of July 13, 1989,
between Polaris Holding Company and Polaris Aircraft Income Fund V.
19733 Amended and Restated Trust Agreement, dated as of November 17, 1989,
among Polaris Aircraft Income Fund V, as Beneficiary A, Polaris
Holding Company, as Beneficiary B, and First Security Bank of Utah,
National Association, as Owner Trustee ("Polaris Aircraft Income Fund
V Trust"). *
20925 Amended and Restated Trust Agreement, dated as of November 17, 1989,
among Polaris Aircraft Income Fund V, as Beneficiary A, Polaris
Holding Company, as Beneficiary B, and First Security Bank of Utah,
National Association, as Owner Trustee ("Polaris Aircraft Income Fund
V Trust"). *
21117 Trust Agreement, dated as of November 22, 1988, between Polaris
Aircraft Leasing Corporation, as Beneficiary, and First Security Bank
of Utah, National Association, as Owner Trustee, as supplemented by
Supplement No. 1, dated November 22, 1988 ("Polaris Aircraft Leasing
Corporation (1988) Trust") as assigned by an Assignment Agreement
dated as of December 15, 1988 between Polaris Aircraft Leasing
Corporation and Polaris Aircraft Income Fund V, as amended by
Amendment No. 1 to Trust Agreement dated as of December 15, 1988 among
Polaris Aircraft Leasing Corporation, Polaris Aircraft Income Fund V
and First Security Bank of Utah.
- --------------------------------
* This Trust Agreement 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 6: TRUST AGREEMENTS
21447 Trust Agreement A, dated as of July 21, 1989, between Polaris Aircraft
Leasing Corporation, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee, as supplemented by Supplement
No. 1, dated September 28, 1989, and as amended by Amendment No. 1 to
Trust Agreement A, dated as of October 30, 1989 ("Southwest Airlines
Co. (1989) Trust A").
21448 Trust Agreement B, dated as of July 21, 1989 between Polaris Aircraft
Leasing Corporation, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee, as supplemented by Supplement
No. 1, dated September 29, 1989, and as amended by Amendment No. 1 to
Trust Agreement B, dated as of November 17, 1989 ("Southwest Airlines
Co. (1989) Trust B").
21533 Trust Agreement C, dated as of July 21, 1989, between Polaris Aircraft
Leasing Corporation, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee, as supplemented by Supplement
No. 1, dated September 28, 1989, and as amended by Amendment No. 1 to
Trust Agreement C, dated as of December 5, 1989 ("Southwest Airlines
Co. (1989) Trust C").
21534 Trust Agreement D, dated as of July 21, 1989, between Polaris Aircraft
Leasing Corporation, as Beneficiary, and First Security Bank of Utah,
National Association, as Owner Trustee, as supplemented by Supplement
No. 1, dated September 29, 1989, and as amended by Amendment No. 1 to
Trust Agreement D, dated as of December 21, 1989 ("Southwest Airlines
Co. (1989) Trust D").
21999 Trust Agreement, dated as of November 17, 1988, between Polaris
Aircraft Leasing Corporation, as Beneficiary, and First Security Bank
of Utah, National Association, Owner Trustee, as assigned by
Assignment Agreement dated as of June 15, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V, as
amended by Amendment No. 1 to Trust Agreement USAir, Inc. (1988-4)
Trust, dated of December 15, 1992 ("USAir, Inc. (1988-4) Trust").
23014 Trust Agreement, dated as of November 15, 1988, between Polaris
Aircraft Leasing Corporation, as Beneficiary, and First Security Bank
of Utah, National Association, Owner Trustee, as assigned by
Assignment Agreement dated as of January 30, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V, as
amended by Amendment No. 1 to Trust Agreement USAir, Inc. (1988-2)
Trust dated as of December 15, 1992 ("USAir, Inc. (1988- 2) Trust").
22162 Trust Agreement, dated as of November 16, 1988, between Polaris
Aircraft Leasing Corporation, as Beneficiary, and First Security Bank
2
<PAGE>
SCHEDULE 6: TRUST AGREEMENTS
of Utah, National Association, Owner Trustee, as assigned by
Assignment Agreement dated as of February 21, 1989, between Polaris
Aircraft Leasing Corporation and Polaris Aircraft Income Fund V, as
amended by Amendment No. 1 to Trust Agreement U.S. Air, Inc. (1988-3)
Trust dated of December 15, 1992 ("USAir, Inc. (1988- 3) Trust".)
3
<PAGE>
SCHEDULE 7
UNFUNDED COMMITMENTS
Serial No. Comments
----------- -----------------------------------------------------------
19733 Obligation to finance costs incurred in connection with
complying with Airworthiness Directives and as otherwise
described in Letter Agreement No. 1, dated August 10, 1994.
21999 Obligation to provide hushkit financing on six (6) months'
written notice and 80% spare engine financing with 10 days
written notice, pursuant to Letter Agreement No. 1, dated
December 15, 1992.
23014 Obligation to provide hushkit financing on six (6) months'
written notice, pursuant to Letter Agreement No. 1, dated
December 15, 1992.
22162 Obligation to provide hushkit financing on six (6) months'
written notice, pursuant to Letter Agreement No. 1, dated
December 15, 1992.
<PAGE>
SCHEDULE 8
RECEIVABLES
Principal balance
as of 4/1/97: Receivable Agreements
- ------------- ---------------------
$11,437,740.66 Purchase Money Promissory Note, dated June 27, 1996, by
American International Airlines, Inc. ("Borrower") payable
to First Security Bank of Utah, National Association
("Lender"), as owner trustee under that certain Amended and
Restated Trust Agreement dated as of November 17, 1989, for
the benefit of Polaris Aircraft Income Fund V (Beneficiary
A), in the original principal sum of Thirteen Million United
States Dollars (U.S. $13,000,000). Executed pursuant to that
certain Aircraft Purchase Agreement, dated as of June 17,
1996, and secured by that certain Aircraft Security
Agreement and Chattel Mortgage, dated as of _____________,
pertaining to one Boeing 747-132 Freighter Aircraft bearing
MSN 20247, and including three Pratt & Whitney JT9D-7A
engines bearing serial nos. 662405, 663032 and 685653.
<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 V
By: Polaris Investment Management Corporation,
General Partner
By: /S/ ERIC DULL
--------------------------------
Name: ERIC DULL
--------------------------------
Title: PRESIDENT
--------------------------------
TRITON AVIATION SERVICES V LLC
By: Triton Aviation Services Limited,
Manager
By: /S/ JOHN E. FLYNN
--------------------------------
Name: JOHN E. FLYNN
--------------------------------
Title: PRESIDENT
--------------------------------
