Draft of March 31, 1994
Marked to Show Changes
From Draft Dated March 30, 1994
PLM Equipment Growth Fund II
Note Agreement
Dated as of March 1, 1994
Re: $35,000,000 Adjustable Rate Senior Notes Due March 31, 2000
Table of Contents(Not a Part of the Agreement)SectionHeadingPage
Section 1.
Description of Notes and Commitment. 1
Section 1.1.
Description of Notes. 1
Section 1.2.
Commitment, Closing Date 2
Section 1.3.
Other Agreements 3
Section 2.
Prepayment of Notes 3
Section 2.1.
Required Prepayments 3
Section 2.2.
Optional Prepayments 4
Section 2.3.
Prepayment in Certain Extraordinary Events 4
Section 2.4.
Prepayment of the Notes Following the Post-Closing
Appraisal 6
Section 2.5.
Notice of Prepayments. 6
Section 2.6.
Allocation of Prepayments. 7
Section 2.7.
Direct Payment. 7
Section 3.
Representations 8
Section 3.1.
Representations of the Company 8
Section 3.2.
Representations of the Purchasers. 8
Section 4.
Closing Conditions. 8
Section 4.1.
Closing Certificate. 8
Section 4.2.
Legal Opinions 9
Section 4.3.
Private Placement Number 9
Section 4.4.
Related Transactions 9
Section 4.5.
Insurance Certificate 9
Section 4.6.
Rating 9
Section 4.7.
Funding Instructions 9
Section 4.8.
Satisfactory Proceedings. 9
Section 4.9.
Waiver of Conditions. 10
Section 5.
Company Covenants 10
Section 5.1.
Existence, Etc 10
Section 5.2.
Insurance 10
Section 5.3.
Taxes, Claims for Labor and Materials, Compliance with
Laws 10
Section 5.4.
Maintenance, Etc 11
Section 5.5.
Nature of Business 11
Section 5.6.
Special Provisions for Marine Vessels and Aircraft 11
Section 5.7.
Fixed Charge Coverage 13
Section 5.8.
Sale and Leaseback 13
Section 5.9.
Limitations on Indebtedness 13
Section 5.10.
Limitation on Liens 13
Section 5.11.
Distributions, Certain Payments. 14
Section 5.12.
Limitation on Long-Term Leases and Joint Ownership of
Equipment. 15
Section 5.13.
Mergers, Consolidations and Sales of Assets 15
Section 5.14.
Guaranties. 17
Section 5.15.
Repurchase of Notes. 17
Section 5.16.
Transactions with Affiliates 17
Section 5.17.
Investments 18
Section 5.18.
Termination of Pension Plans 19
Section 5.19.
Reports and Rights of Inspection 19
Section 5.20.
Certain Appraisals 23
Section 6.
Events of Default and Remedies Therefor 24
Section 6.1.
Events of Default 24
Section 6.2.
Notice to Holders 26
Section 6.3.
Acceleration of Maturities. 26
Section 6.4.
Rescission of Acceleration 26
Section 7.
Amendments, Waivers and Consents 27
Section 7.1.
Consent Required. 27
Section 7.2.
Solicitation of Noteholders. 27
Section 7.3.
Effect of Amendment or Waiver 28
Section 8.
Interpretation of Agreement 28
Section 8.1.
Definitions. 28
Section 8.2.
Accounting Principles. 40
Section 8.3.
Directly or Indirectly. 41
Section 9.
Miscellaneous 41
Section 9.1.
Registered Notes. 41
Section 9.2.
Exchange of Notes 41
Section 9.3.
Loss, Theft, Etc. of Notes. 41
Section 9.4.
Expenses, Stamp Tax Indemnity. 42
Section 9.5.
Powers and Rights Not Waived 42
Section 9.6.
Notices 42
Section 9.7.
Successors and Assigns 43
Section 9.8.
Survival of Covenants and Representations. 43
Section 9.9.
Severability. 43
Section 9.10.
Governing Law 43
Section 9.11.
Submission to Jurisdiction. 43
Section 9.12.
Captions. 43
Section 9.13.
Limitation of Liability. 43
Attachments to Note Agreement:
Schedule I -- Names and Addresses of Purchasers
Schedule II -- Names of Appraisers
Schedule III -- Names of Underwriters, Protection and Indemnity Clubs and
Insurers relating to Extensions and Renewals of Insurance Policies
Exhibit A -- Form of Adjustable Rate Senior Note due March 31, 2000 Exhibit B --
Closing Certificate of the Company Exhibit C -- Description of Special Counsel's
Closing Opinion Exhibit D -- Description of Closing Opinion of Counsel to the
Company
PLM Equipment Growth Fund II
One Market
Steuart Street Tower
Suite 900
San Francisco, CA 94105-1301
Note Agreement
Re: $35,000,000 Adjustable Rate Senior Notes
Due March 31, 2000_________________
Dated as of March 1, 1994
To the Purchaser named in
Schedule I which is a signatory
to this Agreement
Ladies and Gentlemen:
The undersigned, PLM Equipment Growth Fund II, a California limited
partnership (the "Company"), agrees with you as follows:
.c1.Section 1. Description of Notes and Commitment.
.c2.Section 1.1. Description of Notes. ; (a) The Company will authorize
the issue and sale of $35,000,000 aggregate principal amount of its Adjustable
Rate Senior Notes (the "Notes") to be dated the date of issue, to bear interest
from such date at the Adjustable Rate, payable quarterly in arrears on the last
day of each March, June, September, and December in each year (commencing June
30, 1994) and at maturity and to bear interest on overdue principal (including
any overdue required or optional prepayment of principal) and premium, if any,
and (to the extent legally enforceable) on any overdue installment of interest
at the Overdue Rate after maturity, whether by acceleration or otherwise, until
paid, to be expressed to mature on March 31, 2000, and to be substantially in
the form attached hereto as Exhibit A. Interest on the Notes shall be computed
on the basis of a 360-day year and actual days elapsed. The Notes are not
subject to prepayment or redemption at the option of the Company prior to their
expressed maturity dates except on the terms and conditions and in the amounts
and with the premium, if any, set forth in Section 2 of this Agreement. The term
"Notes" as used herein shall include each Note delivered pursuant to this
Agreement and the separate agreements with the other purchasers named in
Schedule I. You and the other purchasers named in Schedule I are hereinafter
sometimes referred to as the "Purchasers".
(b) (1) The Indexing Agent shall, as soon as practicable after 11:00
a.m., London, England time two (2) Business Days prior to the commencement of
each Interest Period, determine the Adjustable Rate applicable to the
outstanding principal amount of the Notes and inform the Company and each of the
holders of the Notes of the Adjustable Rate so determined. Such Adjustable Rate
shall be applicable to the outstanding principal amount of the Notes during such
Interest Period. Neither the Indexing Agent nor any holder of the Notes shall be
under any duty or obligation to notify the Company that the Interest Period then
applicable to the outstanding principal amount of the Notes is about to expire.
(2) Notwithstanding any other provisions of this Agreement or
any Note, if at any time after the date hereof any change in any applicable law,
rule, regulation or treaty or in the interpretation thereof makes it, in the
judgment of the Requisite Holders, unlawful for the holders of the Notes to
continue to maintain the loan evidenced by the Notes based upon a LIBO Rate or
to give effect to the obligations of the holders as contemplated thereby and
hereby, the
Requisite Holders shall promptly give notice thereof to the Company (and the
Company shall then and thereupon promptly notify each other holder of the Notes
in the manner provided in ss.9.6). The obligations of the holders of the Notes
to maintain the loan evidenced by the Notes based upon a LIBO Rate shall
thereupon terminate, effective on and as of the expiration date of the then
current Interest Period, and the Company and the Requisite Holders shall
negotiate in good faith in order to arrive at a mutually satisfactory method of
computing the interest rate applicable to the Notes. If no substitute rate is
agreed upon between the Company and the Requisite Holders, the Company shall, on
the expiration date of such Interest Period, prepay the outstanding principal
amount of the Notes, together with all interest accrued thereon and all other
amounts then due and payable to such holder under this Agreement.
(3) If on or prior to the Business Day next preceding any
Interest Period (i) the Indexing Agent shall have determined that U.S. Dollar
deposits for a period equal to such Interest Period and in an amount comparable
to the outstanding principal amount of the Notes are not being offered by prime
banks in the London interbank market, or (ii) the Requisite Holders advise the
Indexing Agent that the method of computing the rate applicable to the Notes
does not accurately reflect the cost to the holders of the Notes of funding the
outstanding balance of the Notes, the Indexing Agent shall on such Business Day
next preceding such Interest Period give notice of such determination to the
Company and each holder of the Notes, and the Company and the Requisite Holders
shall negotiate in good faith in order to arrive at a mutually satisfactory
method of computing the interest rate applicable to the Notes. If no substitute
rate is agreed upon between the Company and the Requisite Holders, the Company
shall on the expiration date of the Interest Period then expiring prepay the
outstanding principal amount of the Notes, together with all interest accrued
thereon and all other amounts then due and payable to the holders of the Notes
under this Agreement.
.c2.Section 1.2. Commitment, Closing Date;. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes of the Company in the aggregate
principal amount set forth opposite your name in Schedule I, at a price of 100%
of the principal amount thereof on the Closing Date hereinafter mentioned.
Delivery of the Notes will be made at the offices of Chapman and
Cutler, 111 West Monroe Street, Chicago, Illinois 60603, against payment
therefor in Federal or other funds current and immediately available at the
principal office of First Union National Bank of North Carolina, Charlotte,
North Carolina, ABA Routing No. 053000219, in the amount of the purchase price
for credit to the Company's account (PLM Receipts Trust #2000000371782) at 10:00
A.M., Chicago time, on March 31, 1994 or such later date (not later than April
15, 1994) as shall be mutually agreed upon by the Company and the Purchasers
(the "Closing Date"). The Notes delivered to you on the Closing Date will be
delivered to you in the form of a single registered Note for the full amount of
your purchase (unless different denominations are specified by you), registered
in your name or in the name of such nominee as you may specify and in
substantially the form attached hereto as Exhibit A, all as you may specify at
any time prior to the date fixed for delivery.
.c2.Section 1.3. Other Agreements;. Simultaneously with the execution
and delivery of this Agreement, the Company is entering into similar agreements
with the other Purchasers under which such other Purchasers agree to purchase
from the Company the principal amount of Notes set opposite such Purchasers'
name in Schedule I, and your obligation and the obligations of the Company
hereunder are subject to the execution and delivery of the similar
agreements by the other Purchasers. The obligations of each Purchaser shall be
several and not joint and no Purchaser shall be liable or responsible for the
acts of any other Purchaser.
.c1.Section 2. Prepayment of Notes;.
.c2.Section 2.1. Required Prepayments;. The Company agrees that on each
of the dates set forth in the table below, it will prepay and apply and there
shall become due and payable on the principal indebtedness evidenced by the
Notes the lesser of (a) the amount set opposite such date in the table below and
(b) the then outstanding aggregate principal amount of the Notes:
Required Prepayment Dates
Principal Prepayment
March 31, 1996
$4,000,000
March 31, 1997
$4,000,000
March 31, 1998
$9,000,000
March 31, 1999
$9,000,000
The entire unpaid principal amount of the Notes shall become due and
payable on March 31, 2000. No premium shall be payable in connection with any
required prepayment made pursuant to this ss.2.1. For the purposes of this
ss.2.1, any prepayment of less than all of the outstanding Notes (i) if made
pursuant to ss.2.2 shall be deemed to be applied to the scheduled principal
payments in chronological order, or (ii) if made pursuant to ss.2.3 or ss.2.4
shall be deemed to be applied pro rata to the payment of all remaining principal
payments required by this ss.2.1, so that each such remaining payment of
principal shall thereupon be reduced in the same proportion that the principal
amount of Notes outstanding immediately preceding the payment pursuant to ss.2.3
or ss.2.4, as the case may be, was reduced by such prepayment.
.c2.Section 2.2. Optional Prepayments;. (a) In addition to the payments
required by ss.2.1, upon compliance with ss.2.5, but subject always to the
limitations expressed in clause (b) of this ss.2.2, the Company shall have the
privilege on each Interest Rate Adjustment Date, of prepaying the outstanding
Notes, either in whole or in part (but if in part, then in units in excess of
$100,000) by payment of the principal amount of the Notes, or portion thereof to
be prepaid, and accrued interest thereon to the date of such prepayment,
together with the premium equal to the Make-Whole Amount, if applicable.
(b) Anything contained in this Agreement, including without
limitation this ss.2.2, to the contrary notwithstanding, upon the occurrence of
any Change Event or Withdrawal Event, the Company may only prepay the Notes
pursuant to and within the limitations of ss.2.3(a) or ss.2.3(b), as the case
may be, and not pursuant to this ss.2.2.
.c2.Section 2.3. Prepayment in Certain Extraordinary Events;.
(a) In the event that any Material Agreement shall be canceled or
terminated for any reason whatsoever or shall be modified or amended in a manner
materially adverse to the rights of the Company thereunder (herein a "Change
Event") and the Company has knowledge of a Change Event or an impending
Change Event, the Company will give written notice (herein called a "Change
Notice") of such fact to all holders of the Notes then outstanding. Said Change
Notice shall be delivered at least 60 days and no more than 90 days prior to the
occurrence of such Change Event; provided, however that if the Company shall not
then have knowledge of such fact, such Change Notice shall be delivered within
two Business Days after receipt of such knowledge by the Company. In addition to
notifying the holders of the Notes of a Change Event or a proposed Change Event,
the Change Notice shall state that the occurrence of such Change Event entitles
said holders to declare the Notes held by them to become due and payable
pursuant to this ss.2.3(a) and the date by which said holders must respond to
such Change Notice pursuant to clause (ii) of the next succeeding paragraph if
they desire to waive such right. The Company shall not be required to prepay any
Notes pursuant to this ss.2.3(a) unless and until such Change Event shall be
consummated.
Upon the receipt of such Change Notice or, if no Change Notice is
given, upon the occurrence of a Change Event, any holder of Notes shall have the
privilege, upon written notice (the "Declaration Notice") to the Company, of
either (i) declaring all Notes held by such holder serving such Declaration
Notice due and payable or (ii) waiving the right of such holder to declare the
Notes held by it to be due and payable. In the event that a Change Notice is
given and a holder of the Notes fails to waive such right in accordance with
this Sec. 2.3(a), the Notes held by such holder shall irrevocably be deemed to
be and the same shall on the Payment Date (as hereinafter defined) become due
and payable as a result of such Change Event. All Notes declared due and payable
shall become due and payable and paid on such date (the "Payment Date") as the
Company shall specify in a written notice delivered to the holder or holders
which have declared their Notes due and payable (which notice shall be delivered
by the Company to such holder or holders not later than 10 days prior to the
Payment Date) and the Payment Date shall be not later than 10 days after the
consummation of such Change Event, in the event that such Declaration Notice is
served on or prior to the date of the consummation of such Change Event or 10
days after the date such Declaration Notice is served, if such Declaration
Notice is not served on or prior to the date of such Change Event. The Company
covenants and agrees to prepay in full on the Payment Date all Notes held by
such holder serving such Declaration Notice to the Company declaring such Notes
due and payable.
In the event that any holder of the Notes shall have declared all of
the Notes held by it to become due and payable pursuant to Sec. 2.3(a), then the
Company shall promptly, but in any event within five days after the receipt of
the Declaration Notice, deliver written notice of such declaration (the
"Notification of Declaration") to each other holder of the Notes and,
notwithstanding anything to the contrary contained in this Agreement, each such
other holder which has previously waived its right to declare the Notes held by
it to be due and payable pursuant to ss.2.3(a)(ii) shall then have the right to
declare all of the Notes held by it to become due and payable pursuant to
ss.2.3(a)(i) until the later to occur of (x) 60 days after receipt by such
holders of the Change Notice or (y) 20 days after receipt by such holders of a
Notification of Declaration, with respect to a Declaration Notice made by
holders of Notes.
(b) In the event that PLM Financial Services, Inc., a Delaware
corporation, or PLM Investment Management, Inc., a California corporation, or
any successor to either such entity shall resign or withdraw or be removed or
transfer its interest as General Partner or Fund Manager, as the case may be
(such event being herein referred to as a "Withdrawal Event"), then, in such
event, the Company will promptly, but in any event within 10 days, give written
notice thereof (a "Withdrawal Notice") to the holders of all outstanding Notes,
which notice shall
make specific reference to this Section and to the rights of the holders
hereunder. If, within 90 days after the Withdrawal Notice, the Company procures
a successor entity qualified and experienced in performing functions such as
those performed by the General Partner or Fund Manager, as the case may be, the
Company shall promptly, but in any event within five days, send notice thereof
to the holders of all outstanding Notes. Should the holders of 33-1/3% or more
in aggregate principal amount of the Notes then outstanding object to such
successor entity within 10 days of the receipt of such notice, or should the
Company not be able to procure such successor within such 90-day period, each
holder of outstanding Notes shall have the right by written notice to the
Company given not earlier than five days nor later than 45 days after the
expiration of such period (the "Withdrawal Event Prepayment Election Period"),
to either (i) demand that the Company prepay all of the Notes then held by such
holder or (ii) notify the Company that such holder has waived its right to have
the Notes held by it prepaid. In the event that a Withdrawal Notice is given and
a holder of the Notes fails to provide such written notice within the Withdrawal
Event Prepayment Election Period, the Notes held by such holder shall
irrevocably be deemed to be and the same shall on a date five days following the
expiration of the Withdrawal Event Prepayment Election Period become due and
payable. With respect to any prepayment, the prepayment date shall be specified
in writing to each holder by the Company and shall be the same date as the date
established for the prepayment of Notes held by all holders exercising their
rights under this ss.2.3(b) by reason of the occurrence of the Withdrawal Event.
The Company will also promptly notify the holders of the Notes of the
receipt of any demand by any Note holder for the prepayment of its Note pursuant
to this ss.2.3(b).
(c) All prepayments on the Notes pursuant to this ss.2.3 shall be
made by the payment of the aggregate principal amount remaining unpaid on the
Notes to be prepaid and accrued interest thereon to the date of such prepayment,
and if such prepayment is to be made on any date other than an Interest Rate
Adjustment Date, then together with a premium equal to the Make-Whole Amount,
determined as of two Business Days prior to the date of such prepayment pursuant
to this Sec. 2.3.
.c2.Section 2.4. Prepayment of the Notes Following the Post-Closing
Appraisal;. In the event that for any reason whatsoever, the Equipment Value of
the Aircraft, Containers and Vessels owned by the Company on and as of the date
(the "Post-Closing Appraisal Delivery Date") of the last of the appraisals
delivered by the Company to the holders of the Notes pursuant to Sec. 5.20(a)
(the "Post-Closing Appraisal"), does not constitute at least $34,002,680, then
in such event the Company will, within 10 days of the date of such appraisals so
delivered to the holders of the Notes, give written notice (the "Post-Closing
Appraisal Notice") of such fact by prepaid overnight air courier to the holders
of the Notes. Such notice shall (a) be accompanied by a true, correct and
complete copy of each of such Post-Closing Appraisals, (b) make reference to
this Sec. 2.4 and the right of the holders of the Notes to require prepayment on
the terms and conditions provided for in this Sec. 2.4, (c) offer in writing to
prepay, on a date (the "Post-Closing Appraisal Prepayment Date") which shall be
not more than 20 Business Days nor less than 10 Business Days following the
Post-Closing Appraisal Delivery Date, the outstanding Notes, together with
accrued interest thereon to the date of prepayment and, if such prepayment is to
be made on any date other than an Interest Rate Adjustment Date, with a premium
equal to the then applicable Make-Whole Amount, determined as of two Business
Days prior to the date of such prepayment pursuant to this Sec. 2.4. Each holder
of the then outstanding Notes shall have the right to accept such offer and
require prepayment of the Notes held by such holder by
written notice to the Company given not later than 7 Business Days after the
date of the Post-Closing Appraisal Notice from the Company. In the event that a
Post-Closing Appraisal Notice is given and a holder of the Notes fails to
provide such written notice within such 7 Business Day time period following the
Post-Closing Appraisal Notice, the Notes held by such holder shall irrevocably
be deemed to be and the same shall on the Post-Closing Appraisal Prepayment Date
become due and payable as herein provided. The Company shall on the Post-Closing
Appraisal Prepayment Date prepay all (but not less than all) of the Notes held
by each holder which has so accepted such offer of prepayment or has failed to
provide written notice as herein contemplated. The prepayment price of the Notes
required by this ss.2.4 shall be an amount equal to 100% of the outstanding
principal amount of the Notes so to be prepaid and accrued interest thereon to
the date of such prepayment, and if such prepayment is to be made on any date
other than an Interest Rate Adjustment Date, then together with a premium equal
to the then applicable Make-Whole Amount, determined as of two Business Days
prior to the date of such prepayment pursuant to this ss.2.4.
.c2.Section 2.5. Notice of Prepayments.; The Company will give notice
of any prepayment of the Notes pursuant to ss.2.2 to each holder thereof not
less than 30 days nor more than 60 days before the Interest Rate Adjustment Date
fixed for such optional prepayment specifying (a) such date, (b) the section of
this Agreement under which the prepayment is to be made, and (c) the principal
amount of the holder's Notes to be prepaid on such date. Such notice of
prepayment shall also certify all facts which are conditions precedent to any
such prepayment and, in the case of any prepayment pursuant to ss.2.2, shall
contain (i) the certification of the Company that it is not prepaying the Notes
with the proceeds of any Indebtedness or Equity Capital of the Company or any of
its Restricted Subsidiaries or Affiliates and (ii) the covenant of the Company
to the effect that neither the Company nor any of its Restricted Subsidiaries
will incur any Indebtedness from and after the date of prepayment of the Notes
pursuant to said ss.2.2. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice and accrued
interest thereon shall become due and payable on such Interest Rate Adjustment
Date.
.c2.Section 2.6. Allocation of Prepayments.; Except for prepayment of
less than all of the Notes at the time outstanding pursuant to ss.2.3 or ss.2.4,
all partial prepayments shall be applied on all outstanding Notes ratably in
accordance with the unpaid principal amounts thereof but only in units of
$1,000, and to the extent that such ratable application shall not result in an
even multiple of $1,000, adjustment may be made by the Company to the end that
successive applications shall result in substantially ratable payments. Partial
prepayments made pursuant to ss.2.2 shall be credited in each case in
chronological order against the required prepayments provided for by ss.2.1.
.c2.Section 2.7. Direct Payment.; Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by a
Purchaser or its nominee or owned by any other institutional holder who has
given written notice to the Company requesting that the provisions of this
Section shall apply, the Company will promptly and punctually pay when due the
principal thereof and premium, if any, and interest thereon, without any
presentment thereof directly to such Purchaser or such subsequent holder at the
address of such Purchaser set forth in Schedule I or at such other address as
such Purchaser or such subsequent holder may from time to time designate in
writing to the Company or, if a bank account is designated for such Purchaser on
Schedule I hereto or in any written notice to the Company from such Purchaser or
any such subsequent holder, the Company will make such payments in immediately
available funds to such bank account no later than 12:00 Noon Chicago, Illinois
time on the date due, marked for attention as indicated, or in such other manner
or to such other account of such Purchaser or such holder in any bank in the
United States as the Purchaser or any such subsequent holder may from time to
time direct in writing. If for any reason whatsoever the Company does not make
any such payment by such 12:00 Noon Chicago, Illinois time on the date due, such
payment shall be deemed to have been made on the next following Business Day and
such payment shall bear interest at the Overdue Rate. The holder of any Notes to
which this Section applies agrees that in the event it shall sell or transfer
any such Notes it will, prior to the delivery of such Notes (unless it has
already done so), make a notation thereon of all principal, if any, prepaid on
such Notes and will also note thereon the date to which interest has been paid
on such Notes. With respect to Notes to which this Section applies, the Company
shall be entitled to presume conclusively that the original or such subsequent
institutional holder as shall have requested the provisions hereof to apply to
its Notes remains the holder of such Notes until (a) the Company shall have
received notice of the transfer of such Notes, and of the name and address of
the transferee, or (b) such Notes shall have been presented to the Company as
evidence of the transfer. .c1.Section 3. Representations;.
.c2.Section 3.1. Representations of the Company;. The Company
represents and warrants that all representations set forth in the form of
certificate attached hereto as Exhibit B are true and correct as of the date
hereof and are incorporated herein by reference with the same force and effect
as though herein set forth in full.
.c2.Section 3.2. Representations of the Purchasers.; You represent, and
in entering into this Agreement the Company understands, that (a) you are an
"accredited investor" within the meaning of Regulation D promulgated by the
Securities and Exchange Commission and (b) you are acquiring the Notes for the
purpose of investment and not with a view to the distribution thereof, and that
you have no present intention of selling, negotiating or otherwise disposing of
the Notes; provided that the disposition of your Property shall at all times be
and remain within your control. You further represent that either: (i) no part
of the funds to be used by you to purchase the Notes constitutes assets
allocated to any separate account maintained by you; or (ii) no part of the
funds to be used by you to purchase the Notes constitutes assets allocated to
any separate account maintained by you such that the application of such funds
constitutes a prohibited transaction under Section 406 of the Employee
Retirement Income Security Act of 1974 ("ERISA"); or (iii) all or a part of such
funds constitute assets of one or more separate accounts maintained by you, and
you have disclosed to the Company the names of such employee benefit plans whose
assets in such separate account or accounts exceed 10% of the total assets as of
the date of such purchase and the Company has advised you in writing (and in
making the representations set forth in this clause (iii) you are relying on
such advice) that the Company is not a party-in-interest nor are the Notes
employer securities with respect to the particular employee benefit plan
disclosed to the Company by you as aforesaid (for the purpose of this clause
(iii), all employee benefit plans maintained by the same employer or employee
organizations are deemed to be a single plan). As used in this Section, the
terms "separate account", "party-in-interest", "employer securities" and
"employee benefit plan" shall have the respective meanings assigned to them in
ERISA. .c1.Section 4. Closing Conditions.
Your obligation to purchase the Notes on the Closing Date shall be
subject to the performance by the Company of its agreements hereunder which by
the terms hereof are to be
performed at or prior to the time of delivery of the Notes and to the following
further conditions precedent:
.c2.Section 4.1. Closing Certificate.; Concurrently with the delivery
of Notes to you on the Closing Date, you shall have received a certificate dated
the Closing Date, signed by an authorized officer of the General Partner
substantially in the form attached hereto as Exhibit B, the truth and accuracy
of which shall be a condition to your obligation to purchase the Notes proposed
to be sold to you.
.c2.Section 4.2. Legal Opinions;. Concurrently with the delivery of
Notes to you on the Closing Date, you shall have received from Chapman and
Cutler, who are acting as your special counsel in this transaction, and from
Stephen Peary, General Counsel of the Company, their respective opinions dated
the Closing Date, in form and substance satisfactory to you, and covering the
matters set forth in Exhibits C and D, respectively, hereto.
.c2.Section 4.3. Private Placement Number;. A Private Placement
Number relating to the Notes shall have been duly ordered from Standard & Poor's
Corporation.
.c2.Section 4.4. Related Transactions;. Prior to or concurrently with
the issuance and sale of Notes to you, the Company shall have consummated the
sale of the entire principal amount of the Notes scheduled to be sold on the
Closing Date pursuant to this Agreement and the other agreements referred to in
ss.1.3.
.c2.Section 4.5. Insurance Certificate;. Prior to or concurrently with
the issuance and sale of the Notes to you, the Company will furnish to you and
to your special counsel a report signed by an independent insurance broker
satisfactory to you with respect to the insurance maintained under this
Agreement (including, without limitation, as to each policy, its number, the
amount, the insurer, the named assureds, the type of risk, the loss payees and
the expiration date) and stating the opinion of said broker that such insurance
is in such amounts, against such risks, and with such insurers as to adequately
protect the Company.
.c2.Section 4.6. Rating;. The Notes shall have received a preliminary
rating of "2" or better from the National Association of Insurance
Commissioners.
.c2.Section 4.7. Funding Instructions;. At least three Business Days
prior to the Closing Date, you shall have received written instructions executed
by an authorized officer of the General Partner directing the manner of payment
of funds and setting forth (1) the name of the transferee bank, (2) such
transferee bank's ABA number, (3) the account name and number into which the
purchase price for the Notes is to be deposited, and (4) the name and telephone
number of the account representative responsible for verifying the receipt of
the funds.
.c2.Section 4.8. Satisfactory Proceedings.; All proceedings taken in
connection with the transactions contemplated by this Agreement, and all
documents necessary to the consummation thereof, shall be satisfactory in form
and substance to you and your special counsel, and you shall have received a
copy (executed or certified as may be appropriate) of all legal documents or
proceedings taken in connection with the consummation of said transactions.
.c2.Section 4.9. Waiver of Conditions.; If on the Closing Date the
Company fails to tender to you the Notes to be issued to you on such date or if
the conditions specified in this ss.4 have not been fulfilled, you may thereupon
elect to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in this ss.4 have not been
fulfilled, you may waive compliance by the Company with any such condition to
such extent as you may in your sole discretion determine. Nothing in this ss.4.9
shall operate to relieve the Company of any of its obligations hereunder or to
waive any of your rights against the Company.
.c1.Section 5. Company Covenants;.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
.c2.Section 5.1. Existence, Etc;. The Company will preserve and keep in
force and effect, and will cause each Restricted Subsidiary to preserve and keep
in force and effect, its existence and all licenses and permits necessary to the
proper conduct of its business, provided that the foregoing shall not prevent
any transaction permitted by ss.5.13.
.c2.Section 5.2. Insurance;. The Company will maintain, or cause to be
maintained, and will cause each Restricted Subsidiary to maintain, or cause to
be maintained, insurance coverage on the Equipment by financially sound and
reputable hull and other underwriters or protection and indemnity clubs, or
Lloyds of London or a foreign insurer certified by a reputable insurance broker
as a financially sound insurance carrier or domestic insurers accorded a rating
by A.M. Best Company, Inc. of A+ or better at the time of issuance of any policy
(other than renewals or extensions of policies maintained with underwriters,
protection and indemnity clubs or insurers identified on Schedule III hereto,
provided that at the time of any such renewal or extension, such underwriter,
protection or indemnity club or insurer is rated A or better by A.M. Best
Company, Inc. in the case of any such underwriter, club or insurer other than
Pacific Insurance Company and in the case of Pacific Insurance Company, it shall
be rated A- or better by A.M. Best Company, Inc. at the time of any such renewal
or extension) in such forms and amounts and against such risks as are customary
for businesses of established reputation engaged in the same or a similar
business and owning and operating similar Properties. Without limiting the
foregoing, the Company will maintain, or cause to be maintained, insurance
coverage against third-party bodily injury and property damage liability in
connection with equipment ownership and operation and will also maintain or
cause to be maintained, insurance coverage with a limit of liability of not less
than $500,000 per occurrence, to insure the Company and its Subsidiaries against
loss caused by the fraud or dishonesty of any of its employees and the employees
of the General Partner and its Affiliates.
.c2.Section 5.3. Taxes, Claims for Labor and Materials, Compliance with
Laws;. (a) The Company will promptly pay and discharge, and will cause each
Restricted Subsidiary promptly to pay and discharge, all lawful taxes,
assessments and governmental charges or levies imposed upon the Company or such
Restricted Subsidiary, respectively, or upon or in respect of all or any part of
the Property or business of the Company or such Restricted Subsidiary, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a Lien or
charge upon any Property of the Company or such Restricted Subsidiary; provided
the Company or such Restricted Subsidiary shall not be required to pay any such
tax, assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by appropriate
actions or proceedings which will prevent the forfeiture or sale of any Property
of the Company or such Restricted Subsidiary or any material interference with
the use thereof by the Company or such Restricted Subsidiary, and (ii) the
Company or such Restricted Subsidiary shall set aside on its books, reserves
deemed by it to be adequate with respect thereto.
(b) The Company will promptly comply and will cause each Subsidiary
to comply with all laws, ordinances or governmental rules and regulations to
which it is subject, including, without limitation, the Occupational Safety and
Health Act of 1970, ERISA and any Environmental Law, the violation of which
would materially and adversely affect the properties, business, prospects,
profits or condition of the Company and its Subsidiaries or would result in
any Lien or charge upon any Property of the Company or any Subsidiary not
permitted by ss.5.10.
.c2.Section 5.4. Maintenance, Etc;. The Company will maintain, preserve
and keep, or cause to be maintained, preserved and kept, all Properties which
are used or useful in the conduct of the business of the Company and its
Restricted Subsidiaries (whether owned in fee or a leasehold interest) in good
repair and working order and from time to time will make all necessary repairs,
replacements, renewals and additions so that at all times the efficiency thereof
shall be maintained.
.c2.Section 5.5. Nature of Business;. The Company and its Restricted
Subsidiaries taken as a whole will not engage in any business other than the
business of owning and leasing a diversified equipment portfolio consisting
primarily of used transportation and transportation-related equipment with a
secondary emphasis on new equipment all as more fully described in Section 1.05
of the Partnership Agreement as in effect on the date hereof.
.c2.Section 5.6. Special Provisions for Marine Vessels and Aircraft;.
Without limiting the foregoing provisions of ss.5.2 and ss.5.4, the Company
shall cause any Vessels or Aircraft owned by it or in which it has an ownership
interest to be maintained and insured as provided in this ss.5.6.
(a) Maintenance of Marine Vessels. The Company will at all times
cause any Vessel to be maintained and preserved in good condition, working order
and repair as will entitle her to retain the highest classification and rating
for vessels of the same age and type in the American Bureau of Shipping, Det
Norske Veritas, Bureau Veritas, Lloyds Register, Nippon Kaiji Kyokai,
Germanischer Lloyd or classification societies of similar stature.
(b) Insurance on Marine Vessels. The Company will at all times cause
the following insurance to be carried and maintained with respect to any Vessel:
(i) Marine insurance in an amount at least equal to the Equipment
Value of such Vessel covering the hull and all equipment and appurtenances of
the Vessel, against all usual marine risks;
(ii) Insurance covering the customary protection and indemnity risks
in an amount equal to the higher of (1) an amount customary with operations
conducted by any such Vessel and (2) the Equipment Value of such Vessel;
(iii) Insurance against liability arising out of pollution, spillage or
leakage in connection with operations conducted by any Vessel in an amount not
less than the usual and customary coverage amounts carried in the international
shipping industry for comparable marine vessels handling or transporting similar
cargo; provided that in no event shall such insurance be maintained in an amount
less than that required by the laws of any jurisdiction in which any such Vessel
is operated for so long as such Vessel is operated under the laws of such
jurisdiction; and
(iv) War risk insurance, if available at commercially reasonable
rates.
(c) Certificate of Financial Responsibility. When required for access
to U.S. ports, the Company shall obtain a Certificate of Financial
Responsibility issued by the United States pursuant to the Federal Water
Pollution Control Act to the extent that the same may be required by law or
regulation.
(d) Maintenance and Servicing of Aircraft. The Company will at all
times cause:
(i) any Aircraft to be serviced, repaired, maintained, tested and
overhauled so as to keep such Aircraft in such operating condition as may be
necessary to enable the airworthiness certification of the Aircraft to be
maintained in good standing at all times
under the Federal Aviation Act or the governmental authority having jurisdiction
over such Aircraft;
(ii) all records, logs and other materials required to be maintained
by the Federal Aviation Administration, or the governmental authority having
jurisdiction over any Aircraft, to be maintained in respect of each Aircraft
(including any item of Equipment included therein); and
(iii) any Aircraft to comply with all airworthiness directives issued
by any governmental authority having jurisdiction over any Aircraft.
(e) Public Liability and Property Damage Liability Insurance for
Aircraft. The Company will at all times cause third party aircraft liability
insurance, passenger legal liability insurance, if applicable, and property
damage liability insurance to be carried with respect to any Aircraft.
(f) Insurance Against Loss or Damage to the Aircraft. The Company
shall at all times cause the following to be maintained with respect to any
Aircraft: (i) all-risk ground and flight aircraft hull insurance covering the
airframe and engines of any such Aircraft; (ii) fire, transit and extended
coverage with respect to any engines or parts while removed from such Aircraft;
and (iii) war risk insurance, including, hijacking (air piracy), governmental
confiscation and expropriation insurance.
.c2.Section 5.7. Fixed Charge Coverage;. The Company will keep and
maintain as of the end of each fiscal quarter the ratio of Consolidated Cash
Flow Available for Fixed Charges for the Four-Quarter Period then ended to
Consolidated Fixed Charges for such Four-Quarter Period at not less than 3.25 to
1.00 (it being understood that any such failure to comply with this covenant at
the end of any fiscal quarter shall be deemed to continue until such time as the
Company shall be in full compliance with this covenant at the end of a
subsequent fiscal quarter).
.c2.Section 5.8. Sale and Leaseback;. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any arrangement whereby the
Company or any Restricted Subsidiary shall sell or transfer any Property owned
by the Company or any Restricted Subsidiary to any Person other than the Company
or a Restricted Subsidiary and thereupon the Company or any Restricted
Subsidiary shall lease or intend to lease, as lessee, the same Property, except
that the Company shall be permitted to enter into such arrangements to the
extent that the related lease would be permitted under ss.5.12.
.c2.Section 5.9. Limitations on Indebtedness;. (a) The Company will
not, and will not permit any Restricted Subsidiary to, create, assume or incur
or in any manner be or become liable in respect of any Debt (including, without
limitation, any extension, renewal or replacement thereof), except in the case
of the Company, the Notes.
(b) The Company will not at any time permit Debt of the Company to
exceed the lesser of (i) $35,000,000 or (ii) 45% of Consolidated Assets.
.c2.Section 5.10. Limitation on Liens;. The Company will not, and will
not permit any Restricted Subsidiary to, create or incur, or suffer to be
incurred or to exist, any mortgage, pledge, security interest, encumbrance, Lien
or charge of any kind on its or their Property or assets, whether now owned or
hereafter acquired, or assigned, or upon any income or profits therefrom, or
transfer any Property for the purpose of subjecting the same to the payment of
obligations in priority to the payment of its or their general creditors, or
acquire or agree to acquire, or permit any Restricted Subsidiary to acquire, any
Property or assets upon conditional sales agreements or other title retention
devices, except:
(a) Liens for Property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and materialmen,
provided that payment thereof is not at the time required by ss.5.3;
(b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Restricted Subsidiary shall at any time in
good faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review shall
have been secured; provided, however, that (i) the Company or such Restricted
Subsidiary shall have made adequate reserves for said judgment or award in their
financial statements and (ii) such Liens shall not cause interference with the
use of any Equipment;
(c) Liens incidental to the conduct of business or the ownership of
Properties and assets (including warehousemen's and attorneys' Liens and
statutory landlords' Liens) and deposits, pledges or Liens to secure the
performance of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money, provided in each case, the obligation secured is not overdue
or, if overdue, (i) is being contested in good faith by appropriate actions or
proceedings, (ii) adequate reserves therefor have been set up on the financial
statements of the Company or a Restricted Subsidiary, and (iii) such Liens shall
not cause interference with the use of any Equipment;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real Properties,
which are necessary for the conduct of the activities of the Company and its
Restricted Subsidiaries or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in any
event materially impair their use in the operation of the business of the
Company and its Restricted Subsidiaries;
(e) Liens in favor of lessees consisting of, or granted to secure
purchase options contained in or related to leases of Equipment owned by the
Company or a Restricted Subsidiary (including any extension or renewal of such
Lien); provided that consideration payable pursuant to any such option shall in
no event be less than the Current Fair Market Value of the Equipment subject
thereto; and
(f) Liens arising in connection with the purchase of Vessels by the
Company or any Restricted Subsidiary for a purchase price 100% of which will be
paid to the seller of such Vessel not more than 90 days following the date of
execution by the Company or such Restricted Subsidiary of a memorandum of
agreement relating to the sale of such Vessel.
.c2.Section 5.11. Distributions, Certain Payments.; The Company will not
directly or indirectly, or through any Subsidiary, make any payment to the
General Partner or any Affiliate on account of management fees pursuant to the
Partnership Agreement or equipment management fees pursuant to the Equipment
Management Agreement in each case in excess of the amount provided for in the
Partnership Agreement or the Equipment Management Agreement as each such
agreement is in effect on the Closing Date, or make or declare any Partnership
Distribution, if in each such case, after giving effect thereto, a Default or an
Event of Default shall have occurred and be continuing.
The Company will not, directly or indirectly, or through any
Subsidiary, pay any Subordinated Incentive Fee (as defined in the Partnership
Agreement as in effect on the Closing Date) unless and until, among other
things, all liabilities of the Company, including any and all liability on the
Notes, shall have been fully paid, all as provided in the Partnership Agreement
as in effect on the Closing Date.
.c2.Section 5.12. Limitation on Long-Term Leases and Joint Ownership of
Equipment.; (a) The Company will not, and will not permit any Restricted
Subsidiary to, become obligated, as lessee, under any Long-Term Lease if at the
time of entering into any such Long-Term Lease and after giving effect thereto,
the aggregate Rentals payable by the Company and all of its Restricted
Subsidiaries on a consolidated basis in any one fiscal year thereafter under all
Long-Term Leases would exceed 10% of Partnership Capital.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, acquire any Equipment subject to a purchase option in favor of
any Person other than the lessee of such Equipment or to a right of first
refusal by any Person (including, without limitation, by any Affiliate, any
lessee of such Equipment or any joint venturer with the Company) or subject any
Equipment to a purchase option in favor of any Person other than the lessee of
such Equipment or a right of first refusal if, as a result thereof and after
giving effect thereto, the aggregate Equipment Value of all items of Equipment
subject to such options or rights of first refusal shall exceed 30% of Equipment
Value of Aggregate Equipment.
.c2.Section 5.13. Mergers, Consolidations and Sales of Assets;. (a)
The Company will not, and will not permit any Restricted Subsidiary to: (i)
consolidate with or be a party to a merger with any other Person or (ii)
license, transfer, sell or otherwise dispose of (herein a "Disposition") all or
any part of the assets of the Company and its Restricted Subsidiaries, provided,
however, that:
(1) any Restricted Subsidiary may merge or consolidate with or into
the Company or any Wholly-owned Restricted Subsidiary so long as in any merger
or consolidation involving the Company, the Company shall be the surviving or
continuing entity;
(2) any Restricted Subsidiary may sell or otherwise dispose of all or
any part of its assets to the Company or any Wholly-owned Restricted Subsidiary;
(3) the Company or any Restricted Subsidiary may sell or otherwise
dispose of any of its assets in the ordinary course of business for fair value
and, in each such case, if:
(A) (x) the proceeds of such Disposition are deposited with a
financial institution and held in an account which is segregated from all other
accounts and funds of the Company and invested in cash or Cash Equivalents and
(y) within 270 days of such Disposition, either such proceeds are reinvested in
the Company's transportation equipment leasing business by either purchasing
Equipment (including costs necessary to place Equipment in service) or procuring
services and other goods necessary for the operation of the business of the
Company or a Restricted Subsidiary or the Company or a Restricted Subsidiary
shall have entered into a binding commitment to purchase Equipment with the
proceeds of such Disposition, provided, however, that if in any case such
proceeds are not applied to purchase Equipment within 12 months after the date
of any such Disposition, such proceeds shall be applied in the manner described
in clause (B) below, or
(B) the proceeds of such Disposition are applied to the payment of a
Partnership Distribution, provided, however, that if a Default or Event of
Default then exists, or would exist after giving effect to such Partnership
Distribution, such proceeds shall first be applied to: (x) the prepayment of
principal on the Notes in an amount such that after giving effect to such
prepayment and to the proposed Partnership Distribution, no Default or Event of
Default would then exist, plus (y) the payment of interest accrued on the Notes
so prepaid to such date of prepayment, plus (z) the payment of a Make-Whole
Amount on the principal amount of the Notes so prepaid; or
(C) the proceeds of such Disposition are applied in any combination
of the purposes set forth in clauses (A) and (B) above.
In the event that the proceeds of any Disposition which is subject to
the foregoing ss.5.13(a)(3) are to be applied in whole or in part pursuant to
clause (B) or clause (C) above, then and in such event the Company will, not
more than ten Business Days following the date of such Disposition, give written
notice to the holders of the Notes of such Disposition and indicate in such
notice the amount of proceeds available to be applied as set forth in clause (B)
or (C) above and the date on which any prepayment of the Notes in connection
with any such Disposition shall occur, which prepayment date shall be not more
than twenty nor less than ten Business Days following such notice.
(b) The Company will not permit any Restricted Subsidiary to issue or
sell any Equity Capital of such Restricted Subsidiary to any Person other than
the Company or a Wholly-owned Restricted Subsidiary, except for the purpose of
qualifying directors or the equivalent thereof, or except in satisfaction of the
validly pre-existing preemptive rights of minority shareholders or the
equivalent thereof in connection with the simultaneous issuance of Equity
Capital to the Company and/or a Restricted Subsidiary whereby the Company and/or
such Restricted Subsidiary maintain their same proportionate interest in such
Restricted Subsidiary.
(c) The Company will not sell, transfer or otherwise dispose of any
Equity Capital in any Restricted Subsidiary (except to qualify directors or the
equivalent thereof) or any Indebtedness of any Restricted Subsidiary, and will
not permit any Restricted Subsidiary to sell, transfer or otherwise dispose of
(except to the Company or a Wholly-owned Restricted Subsidiary) any Equity
Capital or any Indebtedness of any other Restricted Subsidiary, unless:
(1) simultaneously with such sale, transfer, or disposition, all
shares of Equity Capital and all Indebtedness of such Restricted Subsidiary at
the time owned by the Company and by every other Subsidiary shall be sold,
transferred or disposed of as an entirety;
(2) the General Partner shall have determined, as evidenced by a
resolution of the Board of Directors thereof, that the retention of such Equity
Capital and Indebtedness is no longer in the best interests of the Company;
(3) such Equity Capital and Indebtedness is sold, transferred or
otherwise disposed of to a Person, for a cash consideration and on terms
reasonably deemed by the General Partner to be adequate and satisfactory;
(4) the proceeds from such disposition shall be utilized in
accordance with the requirements of clauses (3)(A), (B) and/or (C) of
ss.5.13(a)(3); and
(5) the Restricted Subsidiary being disposed of shall not have any
continuing investment in the Company or any other Subsidiary not being
simultaneously disposed of.
.c2.Section 5.14. Guaranties.; The Company will not, and will not permit
any Restricted Subsidiary, to become or be liable in respect of any Guaranty
except Guaranties by the Company of the obligations of any Restricted Subsidiary
as a lessor of Equipment so long as the obligation of the Company as Guarantor
is not in excess of that which the Company would have were it the lessor of such
Equipment.
.c2.Section 5.15. Repurchase of Notes.; Neither the Company nor any
Restricted Subsidiary or Affiliate, directly or indirectly, may repurchase or
make any offer to repurchase any Notes unless the offer has been made to
repurchase Notes, pro rata, from all holders of the Notes at the same time and
upon the same terms. In case the Company repurchases any Notes, such Notes shall
thereafter be cancelled and no Notes shall be issued in substitution therefor.
.c2.Section 5.16. Transactions with Affiliates;. The Company will not,
and will not permit any Restricted Subsidiary to, enter into or be a party to
any transaction or arrangement with any Affiliate (including, without
limitation, the purchase from, sale to or exchange of Property with, or the
rendering of any service by or for, any Affiliate), except in the ordinary
course of, and pursuant to the reasonable requirements of the Company's or such
Restricted Subsidiary's, business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person other than an Affiliate;
provided, however, that nothing contained in this ss.5.16 shall prohibit any
transaction or arrangement otherwise permitted under Section 2.02(q) of the
Partnership Agreement as in effect on the Closing Date.
.c2.Section 5.17. Investments;. The Company will not, and will not
permit any Restricted Subsidiary to, make any investments in or loans, advances
or extensions of credit to, any Person, except:
(a) investments, loans and advances by the Company and its Restricted
Subsidiaries in and to Restricted Subsidiaries, including any investment in a
Person which, after giving effect to such investment, will become a Restricted
Subsidiary;
(b) investments in commercial paper maturing in 270 days or less from
the date of issuance which, at the time of acquisition by the Company or any
Restricted Subsidiary, is accorded the highest rating by Standard & Poor's
Corporation, Moody's Investors Service, Inc. or other nationally recognized
credit rating agency of similar standing;
(c) investments in direct obligations of the United States of
America, or any agency thereof, maturing in twelve months or less from the date
of acquisition thereof, which are in each such case backed by the full faith and
credit of the United States of America and which, at all times, are rated "AA-"
or better by Standard & Poor's Corporation or "Aa3" or better by Moody's
Investors Service, Inc.;
(d) investments in direct obligations of the federal government of
Canada, or any agency thereof, maturing in twelve months or less from the date
of acquisition thereof, which are in each such case backed by the full faith and
credit of the federal government of Canada and which, at all times, are rated
"AA-" or better by Standard & Poor's Corporation or "Aa3" or better by Moody's
Investors Service, Inc.;
(e) investments in demand deposits and/or certificates of deposit
maturing within one year from the date of acquisition thereof issued by a bank
or trust company organized under the laws of the United States or any state
thereof, having capital, surplus and undivided profits aggregating at least
$100,000,000 and substantially all of whose assets are located in the United
States; provided that at all times, the senior unsecured
long-term deposits of such bank or trust company or the senior unsecured
long-term debt of the holding company of such bank or trust company (in the
event no such rating exists for such bank or trust company) is rated "A" or
better by Standard & Poor's Corporation or "A2" or better by Moody's Investors
Service, Inc.;
(f) loans or advances in the usual and ordinary course of business to
officers, directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the Company or
any Restricted Subsidiary;
(g) receivables arising from the sale of Equipment in the ordinary
course or liquidation of business of the Company and its Restricted
Subsidiaries;
(h) the investment of the Company in Dorado Offshore Limited
Partnership, a California Limited Partnership ("Dorado"); provided that Dorado
remains an Affiliated Partnership; and
(i) investments by the Company and its Restricted Subsidiaries in
Property and Equipment to be used in the ordinary course of business.
In valuing any investments, loans and advances for the purpose of
applying the limitations set forth in this Sec. 5.17, such investments, loans
and advances shall be taken at the original cost thereof, without allowance for
any subsequent write-offs or appreciation or depreciation therein, but less any
amount repaid or recovered on account of capital or principal.
For purposes of this Sec. 5.17, at any time when a corporation or a
partnership becomes a Restricted Subsidiary, all investments of such corporation
or partnership at such time shall be deemed to have been made by such
corporation or such partnership, as a Restricted Subsidiary, at such time.
.c2.Section 5.18. Termination of Pension Plans;. The Company will not
and will not permit any Subsidiary to permit any employee benefit plan
maintained by it to be terminated in a manner which could result in the
imposition of a lien on any Property of the Company or any Subsidiary pursuant
to Section 4068 of ERISA.
.c2.Section 5.19. Reports and Rights of Inspection;. The Company will
keep, and will cause each Subsidiary to keep, proper books of record and account
in which full and correct entries will be made of all dealings or transactions
of or in relation to the business and affairs of the Company or such Subsidiary,
in accordance with generally accepted principles of accounting consistently
maintained (except for changes disclosed in the financial statements furnished
to you pursuant to this ss.5.19 and concurred with by the independent public
accountants referred to in ss.5.19(b) hereof), and will furnish to you so long
as you are the holder of any Note and to each other institutional holder of the
then outstanding Notes (in duplicate if so specified below or otherwise
requested) and, in the case of the financial statements required to be delivered
pursuant to ss.5.19(b) below, within the same time limitation imposed therein,
to the Securities Valuation Office, National Association of Insurance
Commissioners 195 Broadway, Suite 1903, New York, NY 10007:
(a) Quarterly Statements. As soon as available and in any event
within 60 days after the end of each quarterly fiscal period (except the last)
of each fiscal year, duplicate copies of:
(1) a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of the close of such quarter setting forth in comparative form
the consolidated figures for the end of the preceding fiscal year,
(2) consolidated statements of income and partnership equity of the
Company and its Restricted Subsidiaries for such quarterly period and for the
portion of the fiscal year ending with such quarter, setting forth in
comparative form the consolidated figures for the corresponding period of the
preceding fiscal year,
(3) consolidated statements of cash flows of the Company and its
Restricted Subsidiaries for such quarterly period and for the portion of the
fiscal year ending with such quarter, setting forth in comparative form the
consolidated figures for the corresponding period of the preceding fiscal year,
and
(4) a list of all Equipment, all sales of Equipment, all purchases of
additional Equipment and of any Equipment which has become the subject of a
total loss, in any such case during such quarterly period, all in reasonable
detail and certified as complete and correct, by an authorized financial officer
of the Company or the General Partner;
(b) Annual Statements. As soon as available and in any event within
105 days after the close of each fiscal year of the Company, duplicate copies
of:
(1) a consolidated balance sheet of the Company and its Restricted
Subsidiaries as of the close of such fiscal year,
(2) consolidated statements of income and partnership equity and cash
flows of the Company and its Restricted Subsidiaries for such fiscal year, and
(3) a list of all Equipment, all sales of Equipment, all purchases of
additional Equipment and of any Equipment which has become the subject of a
total loss, in any such case during the last quarterly fiscal period of such
fiscal year, in each case setting forth in comparative form the consolidated
figures for the preceding fiscal year, all in reasonable detail and accompanied
by a report thereon of a firm of independent public accountants of recognized
national standing selected by the Company to the effect that the consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles and present fairly, in all material respects, the
financial condition of the Company and its Restricted Subsidiaries and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards and
accordingly includes such tests of the accounting records and such other
auditing procedures as were considered necessary to provide a reasonable basis
for the opinion expressed in the report;
(c) Audit Reports. Promptly upon receipt thereof, one copy of each
interim or special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary;
(d) SEC and Other Reports. Promptly upon their becoming available,
one copy of each financial statement, report, notice or proxy statement sent by
the Company to limited partners generally and of each regular or periodic
report, and any registration statement or prospectus filed by the Company or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency, and copies of any orders in any proceedings
to which the Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the Company or
any of its Subsidiaries;
(e) Requested Information. With reasonable promptness, all such
information which at the time you or any successor qualified institutional buyer
(as defined in Rule
144A of the General Rules and Regulations of the Securities and Exchange
Commission) may need to comply with said Rule 144A upon a sale of Notes pursuant
to said Rule as well as such other data and information as you or any such
institutional holder may reasonably request;
(f) Officer's Certificates. Within the periods provided in paragraphs
(a) and (b) above, a certificate of an authorized financial officer of the
Company or the General Partner stating that such officer has reviewed the
provisions of this Agreement and setting forth: (i) the information and any
computations (in sufficient detail) required in order to establish whether the
Company was in compliance with the requirements of ss.5.7 through ss.5.18,
inclusive, at the end of the period covered by the financial statements then
being furnished, (ii) whether there existed as of the date of such financial
statements and whether, to the best of such officer's knowledge, there exists on
the date of the certificate or existed at any time during the period covered by
such financial statements any Default or Event of Default and, if any such
condition or event exists on the date of the certificate, specifying the nature
and period of existence thereof and the action the Company is taking and
proposes to take with respect thereto, and (iii) the Equipment Value of
Aggregate Equipment as of the end of such period;
(g) Accountants Certificates. Within the period provided in paragraph
(b) above, a report of the accountants who render an opinion with respect to
such financial statements, stating that they have reviewed ss.ss.5.7, 5.8, 5.9,
5.11, 5.12 and ss.5.17 of this Agreement and stating further whether, in making
their audit, such accountants have become aware of any Default or Event of
Default under any of the terms or provisions of this Agreement insofar as any of
such terms or provisions pertain to or involve accounting matters or
determinations, and if any such condition or event then exists, specifying the
nature and period of existence thereof;
(h) Unrestricted Subsidiaries. Within the respective periods provided
in paragraph (b) above, financial statements of the character and for the dates
and periods as in said paragraph (b) provided covering each Unrestricted
Subsidiary (or groups of Unrestricted Subsidiaries on a consolidated basis);
(i) Reports to Partners. Promptly upon their becoming available
copies of all financial statements and reports other than tax reports sent by
the Company to its Partners generally; and
(j) Annual Insurance Certificates. Within 90 days after the end of
each fiscal year of the Company, a certificate signed by Sedgwick James of
California, Inc. or any other independent insurance broker satisfactory to the
Requisite Holders containing a statement of the insurance maintained by the
Company pursuant to ss.5.6 (including as to each policy, its number, the amount,
the insurer, the named assureds, the type of risk, the loss payees and the
expiration date) and a statement that such insurance is in such amounts, against
such risks and with such insurers as to adequately protect the Company; and
(k) Accounting Controls. Promptly upon becoming available, and in any
event within three Business Days after receipt, copies of any report relating to
material inadequacies in the accounting controls of the Company (including
reports advising of the absence of any such inadequacies) submitted by
independent accountants in connection with any audit of the Company or any
Restricted Subsidiary.
Without limiting the foregoing, the Company will permit you, so long
as you are the
holder of any Note, and each institutional holder of 10% or more of the
aggregate principal amount of the then outstanding Notes (or such Persons as
either you or such holder may designate), to visit and inspect, under the
Company's guidance, any of the properties of the Company or any Subsidiary, to
examine all their books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss with you the finances and affairs of the Company and its Subsidiaries)
all at such reasonable times and as often as may be reasonably requested;
provided, however, that any inspections of Equipment shall only be permitted to
be conducted at such times and in such manner as shall not interfere with the
normal and customary use of such Equipment by the Lessee. The Company shall not
be required to pay or reimburse you or any such holder for expenses which you or
any such holder may incur in connection with any such visitation or inspection
unless a Default or Event of Default shall have occurred and be continuing, in
which case, any such visitation or inspection shall be at the sole expense of
the Company.
You agree that all non-public information furnished to you pursuant to
this Agreement shall be treated as confidential information by you and that you
will use reasonable efforts to refrain from disclosing such information to any
other Person (excluding any of your officers, employees, agents, auditors and
counsel), provided that (a) you shall not be liable to the Company or any other
Person in damages for any failure to comply with the foregoing covenant except
in any case involving gross negligence, wilful misconduct or fraudulent
misconduct on your part, (b) you may disclose any or all of such information if
in your judgment such disclosure is necessary or advisable in connection with
the preservation or protection of your interests as a holder of any Notes or in
connection with selling, or otherwise realizing upon your interest in, the
Notes, and (c) you may disclose any such information to, or in response to the
order or request of, any governmental agency, regulatory or supervisory
authority (including for this purpose the National Association of Insurance
Commissioners) or court or any nationally recognized rating agency in connection
with its rating of the holder of the Notes. The restrictions contained herein
shall not apply to information which (i) is or becomes generally available to
the public other than as a result of a disclosure by you or your
representatives, (ii) becomes available to you on a non-confidential basis from
a source other than the Company or one of its agents or (iii) was known to you
on a non-confidential basis prior to its disclosure to you by the Company or one
of its agents.
The foregoing provisions of this ss.5.19 notwithstanding, the Company
shall not be required to furnish any of the above information which is not
otherwise generally available to the public to any holder of the Notes which is
engaged in the transportation equipment leasing or service business.
.c2.Section 5.20. Certain Appraisals;. (a) On or prior to the sixtieth
day next following the Closing Date, the Company will, at its sole expense,
deliver to the holders of the Notes appraisals of the Equipment Value of the
Aircraft, Containers and Vessels owned by the Company on and as of the Closing
Date, which appraisal of such Equipment shall have been conducted by Aircraft
Information Services, Inc. in the case of the Aircraft, International Equipment
Marketing, Inc. in the case of the Containers and American Marine Advisors in
the case of the Vessels. Each such appraisal shall be accompanied by a
certificate of an authorized officer of the Company to the effect that, to the
best of the knowledge of such authorized officer, such appraisal does not
contain any untrue statement of a material fact or omit a material
fact necessary to make the statements and conclusions contained therein not
misleading and that there is no fact peculiar to such appraisal which, to the
best knowledge of such authorized officer, has not been disclosed in such
appraisal which would materially affect adversely the statements and conclusions
therein contained.
(b) (i) Without limiting the foregoing clause (a), the Requisite
Holders shall, in addition to receipt of the appraisal required by said clause
(a), have the additional right, exerciseable not more than two times from and
after the sixty-first day next following the Closing Date, to require that at
the expense of the Company an appraisal be made of the Current Fair Market Value
of the Equipment (the "Appraised Current Fair Market Value"). In such event, the
Company shall promptly notify all of the holders of the Notes of the request to
have the Appraised Current Fair Market Value determined and the Appraised
Current Fair Market Value shall thereupon be determined in accordance with the
Appraisal Procedure set forth below. The Company shall make available to any
appraiser who so requests all information regarding the Equipment reasonably
requested by any appraiser. Any appraisal made pursuant to this ss.5.20(b) shall
be limited to an appraisal of only such Equipment designated by the Company as
is necessary to demonstrate compliance with Sec. 5.6, Sec. 5.9 or Sec. 5.12.
(ii) "Appraisal Procedure" shall mean the following procedure for
determining the Current Fair Market Value of any Equipment: If the Requisite
Holders shall have given written notice to the Company requesting determination
of such Current Fair Market Value by the Appraisal Procedure, the Company shall
designate which appraiser(s) listed on Schedule II hereto shall conduct the
Appraisal Procedure. The Requisite Holders shall have the right to cause any
appraiser listed on Schedule II to be removed from such Schedule II if such
Requisite Holders shall indicate their objection to any such appraiser to the
Company and state a reasonable basis therefor. If the Company shall seek to
designate any appraiser other than one listed on Schedule II, the Company and
such requesting Requisite Holders shall consult for the purpose of appointing a
qualified independent appraiser skilled in the valuation of Property such as the
Equipment by mutual agreement. If no such appraiser is so appointed within 15
days after such notice is given, the Company and such holders shall each appoint
a qualified independent appraiser within 20 days after such notice is given. If
one party appoints an appraiser pursuant to the preceding sentence, the
appraisal shall be made by such appraiser if the other party fails to appoint a
second appraiser within the applicable time limit. If both parties appoint
appraisers, the two appraisers so appointed shall within 30 days after such
notice is given, appoint a third independent appraiser. If no such third
appraiser is appointed within 30 days after such notice is given, either party
may apply to the American Arbitration Association to make such appointment, and
both parties shall be bound by any such appointment. If the parties shall have
appointed a single appraiser, his determination of Current Fair Market Value
shall be final. If three appraisers shall be appointed, the Current Fair Market
Value determined by the three appraisers shall be averaged, the determination
which differs most from such average shall be excluded, the remaining two
determinations shall be averaged and such average shall be final and shall
constitute the Appraised Current Fair Market Value. .c1.Section 6. Events of
Default and Remedies Therefor;.
.c2.Section 6.1. Events of Default;. Any one or more of the following
shall constitute an "Event of Default" as the term is used herein:
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more than
five days; or
(b) Default shall occur in the making of any required prepayment on
any of
the Notes as provided in Sec. 2.1; or
(c) Default shall occur in the making of any other payment of the
principal of any Note or the premium thereon at the expressed or any accelerated
maturity date or at any date fixed for prepayment; or
(d) Default shall be made in the payment of the principal of or
interest or premium, if any, on any Indebtedness of the Company or any
Restricted Subsidiary for borrowed money aggregating in excess of $1,000,000, as
and when the same shall become due and payable by the lapse of time, by
declaration, by call for redemption or otherwise, and such default shall
continue beyond the grace period, if any, allowed with respect thereto; provided
however, this Sec. 6.1(d) shall not apply to alleged defaults under contracts or
leases (other than relating to Indebtedness for borrowed money) that are being
contested in good faith; or
(e) Default or the happening of any event shall occur under any
indenture, agreement, or other instrument under which any Indebtedness of the
Company or any Restricted Subsidiary for borrowed money aggregating in excess of
$1,000,000 may be issued and such default or event shall continue for a period
of time sufficient to permit the acceleration of the maturity of any
Indebtedness of the Company or any Restricted Subsidiary outstanding thereunder;
provided however, this ss.6.1(e) shall not apply to alleged defaults under
contracts or leases (other than relating to Indebtedness for borrowed money)
that are being contested in good faith; or
(f) Default shall occur in the observance or performance of any
covenant or agreement contained in ss.5.7, ss.5.8, ss.5.9 and ss.5.11 through
ss.5.16, inclusive hereof; or
(g) Default shall occur in the observance or performance of any other
provision of this Agreement which is not remedied within 30 days after any
officer of the General Partner shall have received actual knowledge of such
Default; or
(h) Any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the Company in
connection with the consummation of the issuance and delivery of the Notes or
furnished by the Company pursuant hereto, is untrue in any material respect as
of the date of the issuance or making thereof; or
(i) The Company or any Restricted Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Company or any Restricted
Subsidiary applies for or consents to the appointment of a custodian, trustee or
receiver for the Company or such Restricted Subsidiary or for the major part of
the Property of either; or
(j) A custodian, trustee or receiver is appointed for the Company or
any Restricted Subsidiary or for the major part of the Property of either and is
not discharged within 30 days after such appointment; or
(k) Final judgment or judgments for the payment of money aggregating
in excess of $500,000 is or are outstanding against the Company or any
Restricted Subsidiary or against any Property or assets of either and any one of
such judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or
otherwise for a period of 30 days from the date of its entry; or
(l) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or similar law
or laws for the relief of debtors, are instituted by or against the Company or
any Restricted Subsidiary and,
if instituted against the Company or any Restricted Subsidiary, are
consented to or are not dismissed within 60 days after such institution; or
(m) Any of the Events of Dissolution described in clauses (a) through
(d) of Section 10.01 of the Partnership Agreement as in effect on the Closing
Date shall occur or the Partnership shall be terminated.
Notwithstanding the foregoing, if any one or more of the events
described in (i), (j), (k) or (l) above shall have occurred and be continuing
involving one or more Restricted Subsidiaries, it shall not be deemed to
constitute an Event of Default unless the Restricted Subsidiary or Subsidiaries
so involved own, in the aggregate, 5% or more of the Tangible Assets at the time
owned by the Company and its Restricted Subsidiaries.
.c2.Section 6.2. Notice to Holders;. When any Event of Default
described in the foregoing ss.6.1 has occurred, or if the holder of any Note or
of any other evidence of Indebtedness of the Company gives any notice or takes
any other action with respect to a claimed default, the Company agrees to give
notice within three Business Days of such event to all holders of the Notes then
outstanding, such notice to be in writing and sent by registered or certified
mail or by telegram.
.c2.Section 6.3. Acceleration of Maturities.; When any Event of Default
described in paragraph (a), (b) or (c) of ss.6.1 has happened and is continuing,
any holder of any Note may, and when any Event of Default described in
paragraphs (d) through (k), inclusive, of said ss.6.1 has happened and is
continuing, the holder or holders of 25% or more of the principal amount of
Notes at the time outstanding may, by notice in writing sent by registered or
certified mail to the Company, declare the entire principal and all interest
accrued on all Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraph (l) or (m) of ss.6.1 has occurred, then all outstanding
Notes shall immediately become due and payable without presentment, demand or
notice of any kind. Upon the Notes becoming due and payable as a result of any
Event of Default as aforesaid, the Company will forthwith pay to the holders of
the Notes the entire principal and interest accrued on the Notes and if such
payment is not made on an Interest Rate Adjustment Date, to the extent permitted
by law, an amount, payable as liquidated damages and not as a penalty, equal to
the Make-Whole Amount, if any, determined as of the date on which the Notes
shall become so due and payable. No course of dealing on the part of any
Noteholder nor any delay or failure on the part of any Noteholder to exercise
any right shall operate as a waiver of such right or otherwise prejudice such
holder's rights, powers and remedies. The Company further agrees, to the extent
permitted by law, to pay to the holder or holders of the Notes all costs and
expenses incurred by them in the collection of any Notes upon any default
hereunder or thereon, including reasonable compensation to such holder's or
holders' attorneys for all services rendered in connection therewith.
.c2.Section 6.4. Rescission of Acceleration; The provisions of ss.6.3
are subject to the condition that if the principal of and accrued interest on
all or any outstanding Notes have been declared immediately due and payable by
reason of the occurrence of any Event of Default described in paragraphs (a)
through (k), inclusive, of ss.6.1, the Requisite Holders may, by written
instrument filed with the Company, waive such default and rescind and annul such
declaration and the consequences thereof, provided that at the time such
declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due
pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal, interest
or premium on the Notes which has become due and payable solely by reason of
such declaration under ss.6.3) shall have been duly paid; and
(c) each and every Default and Event of Default shall have been made
good, cured or waived pursuant to ss.7.1; and provided further, that no such
rescission and annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereto.
.c1.Section 7. Amendments, Waivers and Consents;.
.c2.Section 7.1. Consent Required. ; Any term, covenant, agreement or
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the Requisite Holders; provided that without the
written consent of the holders of all of the Notes then outstanding, no such
waiver, modification, alteration or amendment shall be effective (a) which will
change the time of payment (including any prepayment required by ss.2.1) of the
principal of or the interest on any Note or reduce the principal amount thereof
or change the rate of interest thereon, or (b) which will change any of the
provisions with respect to optional prepayments, (c) which will change any of
the provisions of ss.6, or (d) which will change the percentage of holders of
the Notes required to consent to any such amendment, alteration or modification
or any of the provisions of this ss.7.
.c2.Section 7.2. Solicitation of Noteholders.; The Company will not
solicit, request or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Agreement or the Notes unless each
holder of the Notes (irrespective of the amount of Notes then owned by it) shall
be informed thereof by the Company and shall be afforded the opportunity of
considering the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected pursuant
to the provisions of this ss.7.2 shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which the same shall
have been executed and delivered by the holder or holders of the requisite
percentage of outstanding Notes. The Company will not, directly or indirectly,
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, to any holder of the Notes in
consideration for or as an inducement to any waiver or amendment of any of the
terms and provisions of this Agreement unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all of the Notes then
outstanding.
.c2.Section 7.3. Effect of Amendment or Waiver;. Any such amendment or
waiver shall apply equally to all of the holders of the Notes and shall be
binding upon them, upon each future holder of any Note and upon the Company,
whether or not such Note shall have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
.c1.Section 8. Interpretation of Agreement; Definitions;.
.c2.Section 8.1. Definitions.; Unless the context otherwise requires,
the terms hereinafter set forth when used herein shall have the following
meanings and the following definitions shall be equally applicable to both the
singular and plural forms of any of the terms herein defined:
"Adjustable Rate" shall mean a rate per annum equal to the sum of (i)
1.55%, plus (ii) the LIBO Rate for the applicable Interest Period.
"Affiliate" shall mean any Person (other than a Wholly-owned Restricted
Subsidiary) (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Company, (b)
which beneficially owns or holds 5% or more of any class of the Equity Capital
of the Company, (c) 5% or more of the Voting Equity Capital of which is
beneficially owned or held by the Company or a Subsidiary, or (iv) Officers and
members of the Board of Directors of the General Partner. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Equity Capital, by contract or otherwise.
"Affiliated Partnerships" shall mean all partnerships of which the
General Partner is a controlling general partner and which are engaged in the
business of owning and leasing a diversified equipment portfolio consisting
primarily of used transportation and transportation related equipment with a
secondary emphasis on new equipment.
"Agreement" shall mean this Note Agreement dated as of March 1, 1994
between the Company and the Purchasers, as the same may from time to time be
supplemented or amended.
"Aircraft" shall mean any corporate, commuter, or commercial aircraft
or helicopters, purchased, owned and leased or held for lease to others or
otherwise used by or on behalf of the Company or any Restricted Subsidiary as
described in the Partnership Agreement, together with all modifications (as
applicable) and replacement or spare parts used in connection therewith,
including, without limitation, engines, rotables or propellers, and any engines,
rotables and propellers used on a stand-alone basis, title to which vests in the
Company or any Restricted Subsidiary or in a trust or other entity of which the
Company or any Restricted Subsidiary is the sole or a participating beneficiary
or owner.
"Appraisal Procedure" shall have the meaning ascribed thereto in
ss.5.20(b)(ii).
"Appraised Current Fair Market Value" shall have the meaning ascribed
thereto in ss.5.20(b)(i).
"Asset Class" shall mean any of the following categories of Equipment
owned by the Company or any of the Restricted Subsidiaries: (a) the Aircraft;
(b) the Containers; (c) the Vessels; (d) the Mobile Offshore Drilling Units; (e)
the Railroad Rolling Stock; and (f) the Tractor Trailers.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which banks in San Francisco, California or Chicago, Illinois, are
required by law to close or are customarily closed and if the applicable
"Business Day" relates to the determination of the LIBO Rate, a day on which
banks are dealing in U.S. Dollar deposits in the Interbank Market in London,
England.
"Capitalized Lease" shall mean any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet of the
lessee in accordance with generally accepted accounting principles.
"Capitalized Rentals" shall mean as of the date of any determination
the amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or any Restricted Subsidiary is a
lessee would be reflected as a liability on a consolidated balance sheet of the
Company and its Restricted Subsidiaries.
"Cash Equivalents" shall mean those investments described in clauses
(b) and (c) of ss.5.17.
"Change Event" shall have the meaning ascribed thereto in Sec. 2.3(a).
"Change Notice" shall have the meaning ascribed thereto in Sec. 2.3(a).
"Closing Date" shall have the meaning ascribed thereto in Sec. 1.2.
"Company" shall have the meaning ascribed thereto in the Preamble.
"Consolidated Assets" as of any date of determination shall mean the
sum of (a) cash, (b) Cash Equivalents and (c) Equipment Value of Aggregate
Equipment.
"Consolidated Cash Flow Available for Fixed Charges" for any period
shall mean the sum of (a) Consolidated Net Income during such period plus (to
the extent deducted in determining Consolidated Net Income), (b) all provisions
for any Federal, state or other income taxes made by the Company and its
Restricted Subsidiaries during such period, (c) all provisions for depreciation
and amortization made during such period and (d) Consolidated Fixed Charges
during such period.
"Consolidated Fixed Charges" for any period shall mean on a
consolidated basis the sum of (a) all Rentals (other than Rentals on Capitalized
Leases) payable during such period by the Company and its Restricted
Subsidiaries, and (b) all Interest Charges on all Indebtedness (including the
imputed interest applicable to Capitalized Rentals) of the Company and its
Restricted Subsidiaries.
"Consolidated Net Income" for any period shall mean the gross revenues
of the Company and its Restricted Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied and after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) the proceeds of any life insurance policy;
(b) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(c) net earnings and losses of any corporation (other than a
Restricted Subsidiary), substantially all the assets of which have been acquired
in any manner, realized by such other corporation prior to the date of such
acquisition;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary) with which the Company or a Restricted Subsidiary shall
have consolidated or which shall have merged into or with the Company or a
Restricted Subsidiary prior to the date of such consolidation or merger;
(e) net earnings of any business entity (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an ownership
interest unless such net earnings shall have actually been received by the
Company or such Subsidiary in the form of cash distributions;
(f) any portion of the net earnings of any Restricted Subsidiary
which for any reason is unavailable for payment of dividends to the Company or
any other Restricted Subsidiary;
(g) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(h) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(i) any gain arising from the acquisition of any Securities of the
Company or any Restricted Subsidiary; and
(j) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during such
period.
"Container" shall mean any (i) dry van container, (ii)
temperature-controlled unit (refrigerated and insulated containers), (iii) tank
container, and (iv) "special" container - flat, folding flat or platform
container, bulk container and open-top container, purchased, owned and leased or
held for lease to others or otherwise used by or on behalf of the Company or any
Restricted Subsidiary as described in the Partnership Agreement, together with
all appliances, parts, instruments, appurtenances, accessories, furnishings or
other equipment included therein and all substitutions, renewals or replacements
of, and all additions, improvements and accessions to, any and all thereof,
title to which vests in the Company or any Restricted Subsidiary or in a trust
or other entity of which the Company or any Restricted Subsidiary is the sole or
a participating beneficiary or owner.
"Current Fair Market Value" with respect to any item of Equipment shall
mean the fair market value thereof as determined by an equally willing and
informed buyer and seller, neither under a short time constraint or compulsion
to buy or sell, for a single unit cash transaction with no hidden value or
liability, as adjusted by prevailing market conditions (whether at, above or
below fair market value), including without limitation: the status of the
economy in which such item of Equipment is used, the status of supply and demand
for items of equipment which are the same as such item of Equipment, the value
of recent transactions involving similar items of equipment and the opinions of
informed buyers and sellers with no immediate constraint or compulsion to buy or
sell.
"Debt" of any Person shall mean and be limited to Indebtedness of such
Person for and in respect of money borrowed, as well as Indebtedness of such
Person of the types described in clauses (a) through (e) of the definition of
Indebtedness set forth below.
"Declaration Notice" shall have the meaning ascribed thereto in Sec.
2.3(a).
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default as defined in ss.6.1.
"Disposition" shall have the meaning ascribed thereto in Sec. 5.13(a).
"Environmental Law" shall mean any current or future treaty,
convention, statute, law, regulation, ordinance, permit, governmental approval,
injunction, judgment, order, consent decree or other legal requirement
pertaining to (a) the protection of health, safety and the indoor or outdoor
environment, (b) the conservation, management or use of natural resources and
wildlife, (c) the protection or use of surface water and groundwater, (d) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release, abatement, removal,
remediation or handling of, or exposure to, any hazardous material (including
asbestos and crude oil or any fraction thereof) or (e) pollution (including any
release to air, land, surface water and groundwater), and includes, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986, 42 U.S.C. ss.ss.9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Sec. 6901 et seq., Federal Water Pollution Control
Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Sec. 1251 et seq.,
Clean Air Act of 1966, as amended, 42 U.S.C. Sec. 7401 et seq., Toxic Substances
Control Act of 1976, 15 U.S.C. Sec. 2601 et seq., Hazardous Materials
Transportation Act, 49 U.S.C. App. Sec. 1801 et seq., Occupational Safety and
Health Act of 1970, as amended, 29 U.S.C. Sec. 651 et seq., Oil Pollution Act of
1990, 33 U.S.C. Sec. 2701 et seq., Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sec. 11001 et seq., National
Environmental Policy Act of 1969, 42 U.S.C. Sec. 4321 et seq., Safe
Drinking Water Act of 1974, as amended, 42 U.S.C. Sec. 300(f) et seq., any
similar, implementing or successor law, and any amendment, rule, regulation,
order or directive issued thereunder.
"Equipment" shall mean each item of and all of the transportation
equipment and other personal Property purchased, owned, and leased or held for
lease to others or otherwise used by or on behalf of the Company or any
Restricted Subsidiary as described in the Partnership Agreement, together with
all appliances, parts, instruments, appurtenances, accessories, furnishings or
other equipment included therein (including any and all engines originally
installed thereon), and all substitutions, renewals or replacements of, and all
additions, improvements and accessions to, any and all thereof, title to which
vests in the Company or any Restricted Subsidiary or in a trust or other entity
of which the Company or any Restricted Subsidiary is the sole or a participating
beneficiary or owner.
"Equipment Management Agreement" shall mean the Equipment Management
Agreement dated June 5, 1987 entered into on behalf of the Company by the
General Partner with its Affiliate, PLM Investment Management, Inc., pursuant to
Section 2.05(f) of the Partnership Agreement.
"Equipment Value" when used with reference to an item of Equipment
shall mean, as of any date of determination thereof, the Current Fair Market
Value (determined in good faith by the General Partner or, if an appraisal shall
have been made within one year of the date of determination pursuant to Sec.
5.20, the Appraised Current Fair Market Value) of such item of Equipment owned
and leased or available for lease (as lessor) by the Company and its Restricted
Subsidiaries.
"Equipment Value of Aggregate Equipment" shall mean, as of any date of
determination thereof, the Current Fair Market Value (determined in good faith
by the General Partner or, if an appraisal shall have been made within one year
of the date of determination pursuant to ss.5.20, the Appraised Current Fair
Market Value) of all of the Equipment owned and leased or available for lease
(as lessor) by the Company and its Restricted Subsidiaries and, with respect to
any Equipment owned jointly, the pro rata share thereof, it being understood and
agreed that nothing contained in this definition of "Equipment Value of
Aggregate Equipment" shall be deemed or construed to relieve the Company of its
obligation pursuant to Sec. 5.6 to maintain the full amount of insurance
required pursuant thereto in respect of Vessels, Mobile Offshore Drilling Units
and Aircraft notwithstanding that the Company and its Subsidiaries may own less
than 100% of any such item of Equipment. For the purposes of all computations of
Equipment Value of Aggregate Equipment pertaining to Sec. 5.9(b), there shall be
excluded therefrom that portion of the Equipment Value of any Asset Class which
exceeds the amount equal to the sum of (a) 30% of Consolidated Assets plus (b)
the product of (i) 30% of Consolidated Assets multiplied by (ii) a fraction, the
numerator of which is the aggregate principal amount of the Notes which at the
time of any determination pursuant hereto has been prepaid or paid by the
Company (whether as a required or voluntary prepayment or payment or otherwise)
and the denominator of which is $35,000,000.
"Equity Capital" shall mean in the case of a corporation, shares of
stock of any class, including as stock any warrants, rights or options to
purchase or otherwise acquire stock or other Securities exchangeable for or
convertible into stock, and in the case of any partnership or other entity shall
mean any partnership interest or like interest constituting equity, and in the
case of each of the foregoing, any part or portion thereof.
"ERISA" is defined in Sec. 3.2.
"Event of Default" shall have the meaning ascribed thereto in ss.6.1.
"Four-Quarter Period" shall mean a period of four, full, consecutive
quarter-annual fiscal periods, taken together as one accounting period.
"Fund Manager" shall mean PLM Investment Management, Inc., a California
corporation, or any Person or Persons who, at the time of reference thereto,
shall have been appointed as successor to the Fund Manager.
"General Partner" shall mean PLM Financial Services, Inc., a Delaware
corporation, or any Person or Persons who, at the time of reference thereto, has
become the General Partner of the Company pursuant to the Partnership Agreement
and if there is more than one such General Partner, the General Partner of the
Company vested under the provisions of the Partnership Agreement with the
responsibility and authority for the management and direction of its business
and operations shall be the General Partner.
"Guaranties" by any Person shall mean all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any Property or assets constituting security therefor, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or obligation, (ii)
to maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (c) to lease Property or to purchase Securities or other Property
or services primarily for the purpose of assuring the owner of such Indebtedness
or obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation, or (d) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purposes of all computations made under this Agreement, a
Guaranty in respect of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness for borrowed
money which has been guaranteed, and a Guaranty in respect of any other
obligation or liability or any dividend shall be deemed to be Indebtedness equal
to the maximum aggregate amount of such obligation, liability or dividend.
"Indebtedness" of any Person shall mean and include all obligations of
such Person which in accordance with generally accepted accounting principles
shall be classified upon a balance sheet of such Person as liabilities of such
Person, and in any event shall include, without duplication, all (a) obligations
of such Person for borrowed money or which has been incurred in connection with
the acquisition of Property or assets, (b) obligations secured by any Lien or
other charge upon Property or assets owned by such Person, even though such
Person has not assumed or become liable for the payment of such obligations,
excluding, however, any Lien which is being contested in good faith and the
continued existence thereof shall not cause any material interference with the
use of the Property, (c) obligations created or arising under any conditional
sale or other title retention agreement with respect to Property acquired by
such Person, notwithstanding the fact that the rights and remedies of the
seller, lender or lessor under such agreement in the event of default are
limited to repossession or sale of Property, excluding, however, any arrangement
for the acquisition of Property by such Person where the risk of loss of such
Property has not passed to such Person, (d) Capitalized Rentals under any
Capitalized Lease and (e) Guarantees. For the purpose of computing the
"Indebtedness" of any Person,
there shall be excluded any particular Indebtedness to the extent that, upon or
prior to the maturity thereof, there shall have been deposited with the proper
depositary in trust the necessary funds (or evidences of such Indebtedness, if
permitted by the instrument creating such Indebtedness) for the payment,
redemption or satisfaction of such Indebtedness; and thereafter such funds and
evidences of Indebtedness so deposited shall not be included in any computation
of the assets including cash or Cash Equivalents of such Person.
"Indexing Agent" shall mean First Union National Bank of North
Carolina, or any other Person or Persons who, at the time of reference thereto,
shall have been appointed as successor to the Indexing Agent by the Requisite
Holders.
"Interest Charges" for any period shall mean all interest and all
amortization of debt discount and expense on any particular Debt for which such
calculations are being made and shall include the imputed interest portion of
Capitalized Rentals. Computations of Interest Charges on a pro forma basis for
Debt having a variable interest rate shall be calculated at the rate in effect
on the date of any determination.
"Interest Periods" with respect to the Notes shall mean in the case of
the first Interest Period, the period commencing on the Closing Date to and
including June 30, 1994 and thereafter shall mean each three-month period
commencing on June 30, 1994 and each September 30, December 31, March 31, and
June 30 thereafter through and including the March 31, June 30, September 30, or
December 31 date on which the Notes are paid in full; provided that:
(a) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall be
extended to the next succeeding Business Day, provided, however, that, if such
extension would cause the last day of such Interest Period to occur in the
following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day;
(b) a month means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month;
provided, however, that if there is no numerically corresponding day in the
month in which such an Interest Period is to end or if such an Interest Period
begins on the last Business Day of a calendar month, then such Interest Period
shall end on the last Business Day of the calendar month in which such Interest
Period is to end;
(c) the interest rate to be applicable for each Interest Period shall
apply from and including the first day of such Interest Period to but excluding
the last day thereof; and
(d) if any such Interest Period would otherwise end after March 31,
2000, such Interest Period shall end on March 31, 2000.
"Interest Rate Adjustment Date" shall mean the last day of each
Interest Period.
"LIBO Rate" means, with respect to each Interest Period which occurs
while any principal amount of the Notes remains outstanding; the rate of
interest (expressed as an annual rate) determined by the Indexing Agent equal to
the arithmetic average (expressed as a percentage rounded upward, if necessary,
to the nearest whole multiple of 1/16th of 1%) of the offered rates for deposits
in U.S. Dollars for a period equal to such Interest Period that appear on the
display designated as page "LIBO" on the Reuter System, or on such other display
on the Reuter System as shall then replace or succeed page "LIBO" and display
the London Interbank offered rates for deposits in Dollars quoted by selected
banks (page "LIBO" or such other display being herein referred to as the "Reuter
LIBO Screen"), for delivery on the first day
of such Interest Period, such rate to be established from quotes on the Reuter
LIBO Screen at (or as near to as practicable to) 11:00 A.M. (London time) two
(2) Business Days prior to the first day of such Interest Period (which shall be
a Business Day); provided, that, if fewer than two such offered rates appear on
the Reuter LIBO Screen, the LIBO Rate in respect of that Interest Period will be
the composite offered rate of interest per annum shown on Page 3750 of the Dow
Jones Company Telerate screen or any successor page as the composite offered
rate for London interbank deposits and with a period equal to the Interest
Period of such loan as shown under the heading "USD" as of 11:00 A.M. (London
time) two (2) Business Days prior to the first day of such Interest Period. As
used herein, "Reuter System" shall mean the Reuter Money Service Monitor System.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting Property but shall not include the interests
of any Affiliated Partnership, or any subsidiary of the General Partner in any
Equipment owned jointly by the Company, such Affiliated Partnership and any
subsidiary of the General Partner through a trust or a partnership. For the
purposes of this Agreement, the Company or a Restricted Subsidiary shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, Capitalized Lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes and such retention or vesting shall constitute a Lien.
"Long-Term Lease" shall mean any lease of real or personal Property
(other than a Capitalized Lease) having an original term, including any period
for which the lease may be renewed or extended at the option of the lessor, of
more than three years.
"Make-Whole Amount" with respect to the Notes shall mean the following:
in the event any holder of a Note shall incur any loss, cost or expense
(including, without limitation, any loss of profit, and any loss, cost or
expense incurred by reason of the liquidation or re-employment of deposits or
other funds acquired by such holder to fund or maintain the loan evidenced by
the Notes or the relending or reinvesting of such deposits or amounts paid or
prepaid to such holder) as a result of:
(a) any payment or prepayment of the Notes, other than any required
prepayment pursuant to Sec. 2.1, or
(b) any acceleration of the maturity of the Notes as a result of the
occurrence of any Event of Default hereunder, then, upon the demand of such
holder, the Company shall pay to such holder such amount as will reimburse such
holder for such loss, cost or expense, which amount shall include, without
limitation, an amount equal to the interest which would have accrued on the
loans evidenced by the Notes through the end of the then current Interest Period
if such prepayment had not occurred, discounted to the date of payment at a rate
per annum at which the holders of the Notes are able to reinvest such amount. If
any holder of a Note makes such a claim for compensation, it shall provide to
the Company a certificate setting forth the amount of such loss, cost or expense
in reasonable detail (including an explanation of the basis for and the
computation of such loss, cost or expense) and the amounts shown on such
certificate shall be conclusive and binding on the Company absent manifest
error.
"Material Agreement" shall mean the Equipment Management Agreement
and the Partnership Agreement.
"Minority Interests" shall mean any Equity Capital of a Restricted
Subsidiary (other than directors' qualifying shares of stock as required by law)
that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing (a) Minority
Interests constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater, (b) Minority
Interests constituting common stock at the book value of capital and surplus
applicable thereto adjusted, if necessary, to reflect any changes from the book
value of such common stock required by the foregoing method of valuing Minority
Interests in preferred stock and (c) Minority Interests constituting limited or
general partnership interests at the book value thereof determined in accordance
with generally accepted accounting principles in the United States.
"Mobile Offshore Drilling Unit" shall mean any jack-up rig,
semi-submersible rig or platform drilling rig, purchased, owned and leased or
held for lease to others or otherwise used by or on behalf of the Company or any
Restricted Subsidiary as described in the Partnership Agreement, together with
all appliances, parts, instruments, appurtenances, accessories, furnishings or
other equipment included therein and all substitutions, renewals or replacements
of, and all additions, improvements and accessions to, any and all thereof,
title to which vests in the Company or any Restricted Subsidiary or in a trust
or other entity of which the Company or any Restricted Subsidiary is the sole or
a participating beneficiary or owner.
"Notes" shall have the meaning ascribed thereto in Sec. 1.1(a).
"Notification of Declaration" shall have the meaning ascribed thereto
in Sec. 2.3(a).
"Officer" shall mean any officer as provided in the by-laws of the
General Partner.
"Overdue Rate" shall mean the Adjustable Rate plus 2% for each
Interest Period for so long as any payment or prepayment remains due and owing
after the due date thereof, whether or not any Event of Default has been
declared hereunder.
"Partner" shall mean any limited or general partner, of any class or
kind, of the Company or, if indicated by the context in which such terms are
used, any Subsidiary which is a Partnership.
"Partnership Agreement" shall mean the Second Amended and Restated
Limited Partnership Agreement dated as of June 16, 1987 by and among PLM
Financial Services, Inc., a Delaware corporation, as the General Partner, and
the limited partners named therein.
"Partnership Capital" at the time of any determination thereof shall
mean the aggregate amount of all capital accounts of the Partners of the Company
determined in accordance with generally accepted accounting principles.
"Partnership Distribution" shall mean and include (a) any payment or
distribution of income or profits of the Company, (b) any other payment or other
distribution of Property (including, without limitation, cash distributions)
made by or on behalf of the Company to any of its Partners (general or limited)
which under generally accepted accounting principles would be required to be
deducted from the capital account for such Partner on the books of the Company,
and (c) any payment or other distribution to any Person to purchase, redeem or
retire any warrant, option or other right to acquire an interest as a partner,
general or limited, in the Company.
"Payment Date" shall have the meaning ascribed thereto in ss.2.3(a).
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
"Post-Closing Appraisal" shall have the meaning ascribed thereto in
Sec. 2.4.
"Post-Closing Appraisal Delivery Date" shall have the meaning
ascribed thereto in Sec. 2.4.
"Post-Closing Appraisal Notice" shall have the meaning ascribed
thereto in Sec. 2.4.
"Post-Closing Appraisal Prepayment Date" shall have the meaning
ascribed thereto in ss.2.4.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Purchasers" shall have the meaning ascribed thereto in Sec. 1.1(a).
"Railroad Rolling Stock" shall mean any open top gondola car, open
top hopper car, covered hopper car, pressure tank car, non-pressure tank car,
intermodal car, box car, flatcar, locomotive, or maintenance-of-way equipment,
purchased, owned and leased or held for lease to others or otherwise used by or
on behalf of the Company or any Restricted Subsidiary as described in the
Partnership Agreement, together with all appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment included therein and
all substitutions, renewals or replacements of, and all additions, improvements
and accessions to, any and all thereof, title to which vests in the Company or
any Restricted Subsidiary or in a trust or other entity of which the Company or
any Restricted Subsidiary is the sole or a participating beneficiary or owner.
"Rentals" shall mean and include all fixed rents (including as such all payments
which the lessee is obligated to make to the lessor on termination of the lease
or surrender of the Property) payable by the Company or a Restricted Subsidiary,
as lessee or sublessee under a lease of real or personal Property, but shall be
exclusive of any amounts required to be paid by the Company or a Restricted
Subsidiary (whether or not designated as rents or additional rents) on account
of maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues. "Requisite Holders" shall mean as of any date of
determination thereof the holders of not less than 66-2/3% in aggregate
principal amount of outstanding Notes. "Restricted Subsidiary" shall mean (a)
those Subsidiaries designated as such on the Closing Date and whose names are
set forth on Annex A to Exhibit B, (b) any Subsidiary designated as such by the
General Partner in a written notice to the holders of the Notes, and (c) unless
designated an Unrestricted Subsidiary by the General Partner in a written notice
to the holders of the Notes, any Subsidiary (i) which is organized under the
laws of the United States or any State thereof; (ii) which conducts
substantially all of its business and has substantially all of its assets within
the United States; and (iii) of which more than 50% (by number of votes) of the
Voting Equity Capital, is owned by the Company and/or one or more Restricted
Subsidiaries. Any Subsidiary which has been designated as a Restricted
Subsidiary may not thereafter be designated as an Unrestricted Subsidiary. The
Company shall, notwithstanding the foregoing definition of "Restricted
Subsidiary", include any profits or losses of any Affiliated Partnership in any
computation pursuant to Sec. 5.7 to the extent of, but only to the extent of,
the Equity Capital of such Affiliated Partnership owned by the Company, provided
that any such computation pursuant to said Sec. 5.7 shall so include such
profits and losses to the extent of the Equity Capital of such Affiliated
Partnership so owned by the Company for so long as 100% of the Equity Capital of
such Affiliated Partnership is owned by the Company and other Affiliated
Partnerships.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
The term "subsidiary" shall mean, as to any particular parent entity,
any corporation, partnership or other entity of which more than 50% of the
Voting Equity Capital, and more than 50% of the Equity Capital shall be owned by
such parent entity and/or one or more entities which are themselves subsidiaries
of such parent entity. The term "Subsidiary" shall mean a subsidiary of the
Company.
"Tangible Assets" shall mean, as of the date of any determination
thereof, the total amount of all assets of the Company and its Restricted
Subsidiaries determined in accordance with generally accepted accounting
principles (less depreciation, depletion and other properly deductible valuation
reserves), after deducting goodwill, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets other than prepaid insurance and
prepaid taxes, the excess of cost of shares acquired over book value of related
assets and such other assets as are properly classified as "intangible assets"
in accordance with generally accepted accounting principles.
"Tractor Trailer" shall mean any piggyback trailer or over-the-road
trailer purchased, owned and leased or held for lease to others or otherwise
used by or on behalf of the Company or any Restricted Subsidiary as described in
the Partnership Agreement, together with all appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment included therein and
all substitutions, renewals or replacements of, and all additions, improvements
and accessions to, any and all thereof, title to which vests in the Company or
any Restricted Subsidiary or in a trust or other entity of which the Company or
any Restricted Subsidiary is the sole or a participating beneficiary or owner.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"U.S. Dollars" shall mean the lawful currency of the United States of
America.
"Vessel" shall mean any marine dry or liquid bulk carrier or tanker
purchased, owned and leased or held for lease to others or otherwise used by or
on behalf of the Company or any Restricted Subsidiary as described in the
Partnership Agreement, together with all appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment included therein
(including any and all engines installed thereon), and all substitutions,
renewals or replacements of, and all additions, improvements and accessions to,
any and all thereof, title to which vests in the Company or any Restricted
Subsidiary or in a trust or other entity of which the Company or any Restricted
Subsidiary is the sole or a participating beneficiary or owner.
"Voting Equity Capital" shall mean Securities or partnership interests
of any class or classes, the owners or holders of which are entitled to elect a
majority of the corporate directors (or Persons performing similar functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
Subsidiary of which all of the issued and outstanding Equity Capital (except
shares of stock required as directors' qualifying shares) and all Indebtedness
for borrowed money shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.
"Withdrawal Event" shall have the meaning ascribed thereto in Sec.
2.3(b).
"Withdrawal Event Prepayment Election Period" shall have the meaning
ascribed thereto in ss.2.3(b).
"Withdrawal Notice" shall have the meaning ascribed thereto in Sec.
2.3(b).
.c2.Section 8.2. Accounting Principles.; Where the character or
amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with generally
accepted accounting principles in the United States, to the extent applicable,
except where such principles are inconsistent with the requirements of this
Agreement.
.c2.Section 8.3. Directly or Indirectly.; Where any provision in this
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
.c1.Section 9. Miscellaneous;.
.c2.Section 9.1. Registered Notes.; The Company shall cause to be kept
at its principal office a register for the registration and transfer of the
Notes, and the Company will register or transfer or cause to be registered or
transferred, as hereinafter provided and under such reasonable regulations as it
may prescribe, any Note issued pursuant to this Agreement.
At any time and from time to time the holder of any Note which has been
duly registered as hereinabove provided may transfer such Note upon surrender
thereof at the principal office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the holder of such Note or its
attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement.
Payment of or on account of the principal, premium, if any, and interest on any
Note shall be made to or upon the written order of such holder.
.c2.Section 9.2. Exchange of Notes;. At any time and from time to time,
upon not less than ten days' notice to that effect given by the holder of any
Note initially delivered or of any Note substituted therefor pursuant to ss.9.1,
this ss.9.2 or ss.9.3, and, upon surrender of such Note at its office, the
Company will deliver in exchange therefor, without expense to the holder, except
as set forth below, a Note for the same aggregate principal amount as the then
unpaid principal amount of the Note so surrendered or Notes for the same
aggregate principal amount as the then unpaid principal amount of the Note so
surrendered in minimum denominations of $1,000,000 (or such lesser amount as
shall constitute 100% of the Notes of such holder) or any amount in excess
thereof as such holder shall specify, dated as of the date to which interest has
been paid on the Note so surrendered or, if such surrender is prior to the
payment of any interest thereon, then dated as of the date of issue, payable to
such Person or Persons, or registered assigns, as may be designated by such
holder, and otherwise of the same form and tenor as the Notes so surrendered for
exchange. The Company may require the payment of a sum sufficient to cover any
stamp tax or governmental charge imposed upon such exchange or transfer.
.c2.Section 9.3. Loss, Theft, Etc. of Notes.; Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity to the Company in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation upon surrender
and cancellation of the Note, the Company will make and deliver without expense
to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Note. If the Purchaser or any subsequent institutional
holder is the owner of any such lost, stolen or destroyed Note, then the
affidavit of an authorized officer of such owner, setting forth the fact of
loss, theft or destruction and of its ownership of the Note at the time of such
loss, theft or destruction shall be accepted as satisfactory evidence thereof
and no further
indemnity shall be required as a condition to the execution and delivery of a
new Note other than the written agreement of such owner to indemnify the
Company.
.c2.Section 9.4. Expenses, Stamp Tax Indemnity.; Whether or not the
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement and the transactions contemplated
hereby, including but not limited to the reasonable charges and disbursements of
Chapman and Cutler, your special counsel, the initial and ongoing reasonable
charges and disbursements of the Indexing Agent, duplicating and printing costs
and charges for shipping the Notes, adequately insured to you at your home
office or at such other place as you may designate, and all such expenses
relating to any amendment, waivers or consents pursuant to the provisions
hereof, including, without limitation, any amendments, waivers or consents
resulting from any work-out, restructuring or similar proceedings relating to
the performance by the Company of its obligations under this Agreement and the
Notes. The Company agrees that it will pay the charges and disbursements of
Chapman and Cutler not later than five Business Days from the date of
presentation of an invoice therefor subsequent to the Closing Date. Without
limiting the foregoing, the Company also agrees to pay, within five Business
Days of receipt thereof, supplemental statements of Chapman and Cutler for
disbursements unposted or not incurred as of the Closing Date. The Company
further agrees that it will pay and save you harmless against any and all
liability with respect to stamp and other taxes, if any (other than taxes
measured by income), which may be payable or which may be determined to be
payable in connection with the execution and delivery of this Agreement or the
Notes, whether or not any Notes are then outstanding. The Company agrees to
protect and indemnify you against any liability for any and all brokerage fees
and commissions payable or claimed to be payable to any Person in connection
with the transactions contemplated by this Agreement.
.c2.Section 9.5. Powers and Rights Not Waived; Remedies Cumulative;. No
delay or failure on the part of the holder of any Note in the exercise of any
power or right shall operate as a waiver thereof; nor shall any single or
partial exercise of the same preclude any other or further exercise thereof, or
the exercise of any other power or right, and the rights and remedies of the
holder of any Note are cumulative to and are not exclusive of any rights or
remedies any such holder would otherwise have, and no waiver or consent, given
or extended pursuant to ss.7 hereof, shall extend to or affect any obligation or
right not expressly waived or consented to.
.c2.Section 9.6. Notices;. All communications provided for hereunder
shall be in writing and, if to you, delivered or mailed by registered or
certified mail, by overnight air courier, or by facsimile transmission (in which
case, such communication shall be concurrently sent by registered or certified
mail or overnight air courier) in each case prepaid and addressed to you at your
address appearing on Schedule I to this Agreement or such other address as you
or the subsequent holder of any Note initially issued to you may designate to
the Company in writing, and if to the Company, delivered or mailed by registered
or certified mail, by overnight air courier, or by facsimile transmission (in
which case, such communication shall be concurrently sent by registered or
certified mail or overnight air courier) in each case prepaid and addressed to
the Company at One Market, Steuart Street Tower, Suite 900, San Francisco, CA
94105-1301, Attention: Vice President - Chief Financial Officer, or to such
other address as the Company may in writing designate to you or to a subsequent
holder of the Note initially issued to you.
.c2.Section 9.7. Successors and Assigns;. This Agreement shall be
binding upon the
Company and its successors and assigns and shall inure to your benefit and to
the benefit of your successors and assigns, including each successive holder or
holders of any Notes.
.c2.Section 9.8. Survival of Covenants and Representations.; All
covenants, representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with the
Closing Date, shall survive the closing and the delivery of this Agreement and
the Notes.
.c2.Section 9.9. Severability.; Should any part of this Agreement for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Agreement had been executed with the invalid portion thereof
eliminated.
.c2.Section 9.10. Governing Law;. This Agreement and the Notes issued
and sold hereunder shall be governed by and construed in accordance with
Illinois law.
.c2.Section 9.11. Submission to Jurisdiction.; Any legal action or
proceeding with respect to this Agreement or the Notes or any document related
thereto shall be brought in the courts of the State of Illinois or of the United
States of America for the Northern District of Illinois and in no other courts,
and, by execution and delivery of this Agreement, the Company hereby accepts for
itself and in respect of its property generally and unconditionally, the
jurisdiction of the aforesaid courts. The Company hereby irrevocably and
unconditionally waives any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non conveniens
which it may now or hereafter have to the bringing of any action or proceeding
in such respective jurisdiction.
.c2.Section 9.12. Captions.; The descriptive headings of the various
Sections or parts of this Agreement are for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.
.c2.Section 9.13. Limitation of Liability.; Except in the event of fraud
on the part of the General Partner or any of its Affiliates in connection with
the transactions contemplated by this Agreement, no holder of any Note shall
have any right at any time to seek recovery of the Indebtedness evidenced by the
Notes from the assets of the General Partner.
Principal Amount
Name and Address
of Notes to be
of Purchasers
Purchased
Allstate Life Insurance Company
$15,000,000
Private Placements Department
3100 Sanders Road, STE J2A
Northbrook, Illinois 60062-7154
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds (identifying each payment with name of Issuer, the
Private Placement Number preceded by "DPP" and the payment as principal,
interest or premium) in the exact format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = PLM Equipment Growth Fund II
OBI = DPP - 693414 A* 5
Payment Due Date (MM/DD/YY)
--
P ______ (enter "P" and the
amount of
principal being remitted, for
example, P5000000.00) -
I ______ (enter "I" and the amount
of
interest being remitted, for
example,
I225000.00)
Notices
All notices of scheduled payments and written confirmation of each such payment,
to be addressed:
Allstate Insurance Company
Investment Operations - Private
Placements
2880 Sanders Road, STE G4A
Northbrook, IL 60062-7127
Telephone: (708) 402-8709
Telecopy: (708) 402-7331
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 36-2554642
Principal Amount
Name and Address
of Notes to be
of Purchasers
Purchased
Keyport Life Insurance Company
$15,000,000
c/o Stein Roe & Farnham Incorporated
1 South Wacker Drive
Chicago, Illinois 60606
Attn: Private Placements
Telecopier No.: (312) 368-8100
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "PLM
Equipment Growth Fund II, Adjustable Rate Senior Notes, due 2000, PPN 693414 A*
5, principal or interest") to:
Bank of Boston/Cust
ABA# 011000390
For further credit to
A/C 50757004 - Keyport
Clearance #009-8527
Attn: Carol McDermott
Mail Stop 45-02-03
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: BOB & CO.
Taxpayer I.D. Number: 05-0302931
Principal Amount
Name and Address
of Notes to be
of Purchasers
Purchased
Alexander Hamilton Life Insurance
$5,000,000
Company of America
33045 Hamilton Boulevard
Farmington Hills, Michigan 48334
Attention: Treasury and Asset Management
Payments
All payments on or in respect of the Notes to be by bank wire transfer
of Federal or other immediately available funds (identifying each
payment as "PLM Equipment Growth Fund II, Adjustable Rate Senior Notes,
due 2000, PPN 693414 A* 5, principal or interest") to:
Comerica Bank (ABA # 0720-0009-6)
411 W. Lafayette
Detroit, Michigan 48226
Account Number: 82043
Bnfac: 21585-98546, Master Trust
Notices
All notices and communications, including notices with respect to
payments and written confirmation of each such payment, to be addressed
as first provided above.
Name of Nominee in which Notes are to be issued: Calhoun & Co.
Taxpayer I.D. Number: 38-2190143
Names of Appraisers
List of Approved Appraisal Firms:
General
1. American Appraisal Associates
2. Marshal & Stevens
3. Valuation Research
4. Manufacturers Appraisal
5. Strategis Asset Valuation & Management
(Alexander & Alexander - Appraisal Division)
6. Valuation Engineering Associates
Containers
1. International Equipment Marketing, Inc.
Tractor Trailers
1. Taylor & Martin, Inc.
Vessels
1. American Marine Advisers - Connecticut
2. Fearnleys - Oslo, Norway
3. Clarkson - London, England
4. Jacques Pierot & Sons - New York, NY
5. Victoria Ship Brokers - Hong Kong
6. R.S. Platou (USA) Co. - Houston, Texas
7. R.S. Platou A/S - Oslo, Norway
List of Approved Appraisal Firms continued:
Aircraft
1. Aircraft Information Services, Inc.
as successor to
Airclaims Information Services, Inc.
23232 Peralta Drive
Suite 115
Laguna Hills, California 92653
(714) 830-0101
2. Avitas Aviation
835 Alexander Bell Drive
Reston, Virginia 22091
(703) 476-2300
3. USAir Leasing and Services
2345 Crystal Drive
Arlington, VA 22227
(703) 418-7500
Railroad Rolling Stock
1. Railmark Ltd.
Robert E. Krause, President
8058 12th Avenue So.
St. Petersburg, FL 33707
2. Jerry Gregg
9911 Nieman Road
Overland Park, KS 66214
Madeira Beach, Florida 33708
(913) 541-9133
Mobile Offshore Drilling Units
1. R.S. Platou (USA) Co. - Houston, Texas
Names of Underwriters, Protection and Indemnity Clubsand Insurers
Relating to Extensions and Renewalsof Insurance Policies
(Domestic insurers with a Best's rating less than A+)
Insurer
Coverage
Best's Rating
Associated International Insurance Company
DIC Earthquake & Flood
A
Fireman's Fund Insurance Company
Worker's Compensation
A
Pacific Insurance Company
Excess Liability $10 million excess $11 million
A-
Reliance Insurance Company
Directors & Officers and General Partner Liability
A-
PLM Equipment Growth Fund II
Adjustable Rate Senior NoteDue March 31, 2000
No. R- ___________, 1994
$ PPN 693414 A* 5
PLM Equipment Growth Fund II, a California limited partnership (the
"Company"), for value received, hereby promises to pay to
or registered assigns,
on the last day of March, 2000
the principal amount of
Dollars ($________)
and to pay interest (computed on the basis of a 360-day year and actual days
elapsed) on the principal amount from time to time remaining unpaid hereon at
the Adjustable Rate from the date hereof until maturity, payable quarterly on
the last day of each March, June, September, and December in each year
commencing June 30, 1994, and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the Overdue Rate after maturity, whether by
acceleration or otherwise, until paid.
For purposes of this Note, the terms hereinafter set forth when used
herein shall have the following meanings:
"Adjustable Rate" shall mean a rate per annum equal to the sum of (i)
1.55%, plus (ii) the LIBO Rate for the applicable Interest Period.
"Indexing Agent" shall mean First Union National Bank of North
Carolina, or any other Person or Persons who, at the time of reference thereto,
shall have been appointed as successor to the Indexing Agent by the Requisite
Holders.
"Interest Periods" with respect this Note shall mean in the case of the
first Interest Period, the period commencing on the Closing Date to and
including June 30, 1994 and thereafter shall mean each three-month period
commencing on June 30, 1994 and each September 30, December 31, March 31, and
June 30 thereafter through and including the March 31, June 30, September 30, or
December 31 date on which this Note is paid in full; provided that:
(a) whenever the last day of any Interest Period would otherwise be a
day that is not a Business Day, the last day of such Interest Period shall be
extended to the next succeeding Business Day, provided, however, that, if such
extension would cause the last day of such Interest Period to occur in the
following calendar month, the last day of such Interest Period shall be the
immediately preceding Business Day;
(b) a month means a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next calendar month;
provided, however, that if there is no numerically corresponding day in the
month in which such an Interest Period is to end or if such an Interest Period
begins on the last Business Day of a calendar month, then such Interest Period
shall end on the last Business Day of the calendar month in which such Interest
Period is to end;
(c) the interest rate to be applicable for each Interest Period shall
apply from and including the first day of such Interest Period to but excluding
the last day thereof;
and
(d) if any such Interest Period would otherwise end after March 31,
2000, such Interest Period shall end on March 31, 2000.
"Interest Rate Adjustment Date" shall mean the last day of each
Interest Period.
"LIBO Rate" means, with respect to each Interest Period which occurs
while any principal amount of this Note remains outstanding; the rate of
interest (expressed as an annual rate) determined by the Indexing Agent equal to
the arithmetic average (expressed as a percentage rounded upward, if necessary,
to the nearest whole multiple of 1/16th of 1%) of the offered rates for deposits
in U.S. Dollars for a period equal to such Interest Period that appear on the
display designated as page "LIBO" on the Reuter System, or on such other display
on the Reuter System as shall then replace or succeed page "LIBO" and display
the London Interbank offered rates for deposits in Dollars quoted by selected
banks (page "LIBO" or such other display being herein referred to as the "Reuter
LIBO Screen"), for delivery on the first day of such Interest Period, such rate
to be established from quotes on the Reuter LIBO Screen at (or as near to as
practicable to) 11:00 A.M. (London time) two (2) Business Days prior to the
first day of such Interest Period (which shall be a Business Day); provided,
that, if fewer than two such offered rates appear on the Reuter LIBO Screen, the
LIBO Rate in respect of that Interest Period will be the composite offered rate
of interest per annum shown on Page 3750 of the Dow Jones Company Telerate
screen or any successor page as the composite offered rate for London interbank
deposits and with a period equal to the Interest Period of such loan as shown
under the heading "USD" as of 11:00 A.M. (London time) two (2) Business Days
prior to the first day of such Interest Period. As used herein, "Reuter System"
shall mean the Reuter Money Service Monitor System. Both the principal hereof
and interest hereon are payable at the principal office of the Company in San
Francisco, California in coin or currency of the United States of America which
at the time of payment shall be legal tender for the payment of public and
private debts. If any amount of principal, premium, if any, or interest on or in
respect of this Note becomes due and payable on any day which is not a Business
Day, such amount shall be payable on the immediately succeeding Business Day,
provided that interest shall be due and payable through and including such
succeeding Business Day. "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which banks in San Francisco, California or
Chicago, Illinois, are required by law to close or are customarily closed and if
the applicable "Business Day" relates to the determination of the LIBO Rate, a
day on which banks are dealing in U.S. Dollar deposits in the Interbank Market
in London, England. This Note is one of the Adjustable Rate Senior Notes of the
Company in the aggregate principal amount of $35,000,000 issued or to be issued
under and pursuant to the terms and provisions of separate and several Note
Agreements, each dated as of March 1, 1994 (the "Note Agreements", words and
phrases not otherwise defined in this Note having the meanings ascribed thereto
in said Note Agreements) entered into by the Company with the original
purchasers therein referred to and this Note and the holder hereof are entitled
equally and ratably with the holders of all other Notes outstanding under the
Note Agreements to all the benefits and security provided for thereby or
referred to therein, to which Note Agreements reference is hereby made for the
statement thereof. This Note and the other Notes outstanding under the Note
Agreements may be declared due prior to their expressed maturity dates and
certain prepayments are required to be made thereon, all in the events, on the
terms and in the manner and amounts as provided in the Note
Agreements.
Except in the event of fraud on the part of the General Partner or any
of its Affiliates in connection with the transaction contemplated by the Note
Agreements, no holder of this Note shall have any right at any time to seek
recovery of the Indebtedness evidenced by this Note from the assets of the
General Partner.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in Section
2 of the Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note and said Agreements are governed by and construed in accordance with
the laws of the State of Illinois.
PLM Equipment Growth Fund II
By: PLM Financial Services, Inc.,
Its General Partner
By
Its
This Note has not been registered under the Securities Act of 1933, as
amended. This Note may not be sold or transferred in the absence of such
registration or any exemption therefrom under said Act.
Under the terms of the Note Agreements, the Company is not required to
deliver certain financial information to noteholders engaged in the
transportation equipment leasing or servicing business.
PLM Equipment Growth Fund II
Closing Certificate
To the Parties listed on theSchedule attached hereto Ladies and Gentlemen:
This certificate is delivered to you in compliance with the
requirements of the separate and several Note Agreements, each dated as of March
1, 1994 (the "Agreements"), entered into by the undersigned, PLM Equipment
Growth Fund II, a California limited partnership (the "Company"), with each of
you, and as an inducement to and as part of the consideration for your purchase
on this date aggregating $35,000,000 principal amount of the Adjustable Rate
Senior Notes due March 31, 2000 (the "Notes") of the Company pursuant to the
Agreements. The terms which are capitalized herein shall have the same meanings
as in the Agreements.
The Company represents and warrants to each of you as follows:
1. Subsidiaries. Annex A attached hereto states the name of each of
the Company's Restricted Subsidiaries, its jurisdiction of organization and the
percentage of its Voting Equity Capital or other Equity Capital owned by the
Company and/or its Subsidiaries. The Company and each Restricted Subsidiary has
good and marketable title to all of the Voting Equity Capital or other Equity
Capital it purports to own of each Restricted Subsidiary, free and clear in each
case of any Lien. All such Voting Equity Capital and other Equity Capital has
been duly issued and are fully paid and non-assessable. The Company has no
Subsidiary which is not a Restricted Subsidiary.
2. Organization and Authority. (a) The Company is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of California. The Company's sole general partner is PLM Financial
Services, Inc. The General Partner and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
(b) The Company, the General Partner and each Subsidiary
(i) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business as now conducted and as presently proposed to be conducted; and
(ii) is duly licensed or qualified and is in good standing in each
jurisdiction wherein the nature of the business transacted by it or the nature
of the Property owned or leased by it makes such licensing or qualification
necessary, except where the failure to be duly licensed or qualified or to be in
good standing would not have a materially adverse effect on the business or
financial condition of the Company.
3. Business and Property. You have heretofore been furnished with a
copy of the Private Placement Offering Memorandum dated January, 1994 (the
"Memorandum") prepared by the Company with assistance from First Union National
Bank of North Carolina which generally sets forth the business conducted and
proposed to be conducted by the Company and its Subsidiaries and the principal
properties of the Company and its Subsidiaries. As disclosed in the Prospectus
of the Company dated June 9, 1987, it is and has been since the inception of the
Company the intention of the Company to incur Indebtedness in order to finance
in part the purchase of Equipment to be held for lease by the Company. The issue
and sale of the Notes constitutes an incurrence of Indebtedness which is
consistent with the business of the Company as
described in the Partnership Agreement and such Prospectus.
Under the terms of the Partnership Agreement, the Company is not
permitted to pay, directly or indirectly, or through any Subsidiary, any
Subordinated Incentive Fee (as defined in the Partnership Agreement) unless and
until, among other things, all liabilities of the Company, including any and all
liability on the Notes, shall have been fully paid.
4. Financial Statements. (a) The consolidated balance sheet of the
Company and its Subsidiaries as of December 31, 1992, and the statement of
operations and changes in partners' capital and the statement of cash flows for
the fiscal year ended on said date accompanied by a report thereon containing an
opinion unqualified as to scope limitations imposed by the Company and otherwise
without qualification except as therein noted, by KPMG Peat Marwick, have been
prepared in accordance with generally accepted accounting principles
consistently applied except as therein noted, are correct and complete and
present fairly the financial position of the Company and its Subsidiaries as of
such date and the results of their operations and changes in partners' capital
and cash flows for such period. The unaudited consolidated balance sheets of the
Company and its Subsidiaries as of September 30, 1993, and the unaudited
statement of operations and changes in partners' capital and the statement of
cash flows for the nine-month period ended on said date prepared by the Company
have been prepared in accordance with generally accepted accounting principles
consistently applied, are correct and complete and present fairly the financial
position of the Company and its Subsidiaries as of said date and the results of
their operations and changes in partners' capital and cash flows for such
period.
(b) Since December 31, 1992, there has been no change in the
condition, financial or otherwise, of the Company and its Subsidiaries as shown
on the consolidated balance sheet as of such date except changes in the ordinary
course of business, none of which individually or in the aggregate has been
materially adverse.
5. Indebtedness. Annex B attached hereto correctly describes all
Debt, including without limitation Debt secured by Liens within the limitations
of ss.5.10, Capitalized Leases and Long-Term Leases of the Company and its
Restricted Subsidiaries outstanding on the Closing Date.
6. Full Disclosure. The financial statements referred to in
paragraph 4 do not, nor does the Memorandum or any other written statement
furnished by the Company to you in connection with the negotiation of the sale
of the Notes (including the Memorandum), contain any untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein or herein not misleading. There is no fact peculiar to the Company or
its Subsidiaries which the Company has not disclosed to you in writing which
materially affects adversely nor, so far as the Company can now foresee, will
materially affect adversely the properties, business, prospects, profits or
condition (financial or otherwise) of the Company and its Subsidiaries.
7. Pending Litigation. There are no proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary in any court or before any governmental authority or arbitration
board or tribunal which involve the possibility of materially and adversely
affecting the properties, business, prospects, profits or condition (financial
or otherwise) of the Company and its Subsidiaries. Neither the Company nor any
Subsidiary is in default with respect to any
order of any court or governmental authority or arbitration board or tribunal.
8. Title to Properties. The Company and each Subsidiary has good and
marketable title in fee simple (or its equivalent under applicable law) to all
the real Property and has good title to all the other Property it purports to
own, including that reflected in the most recent balance sheet referred to in
paragraph 4, except as sold or otherwise disposed of in the ordinary course of
business and except for material liens disclosed in notes to the financial
statements referred to in paragraph 4 hereof or otherwise permitted by the
Agreements.
9. Patents and Trademarks. The Company and each Subsidiary owns or
possesses all the patents, trademarks, trade names, service marks, copyrights,
licenses and rights with respect to the foregoing necessary for the present and
planned future conduct of its business, without any known conflict with the
rights of others.
10. Sale is Legal and Authorized. The sale of the Notes and the
execution and delivery of, and performance by the Company and the General
Partner of their respective obligations under, the Agreements and the Notes have
been duly authorized by all requisite partnership and corporate action, as the
case may be, and will not violate any provision of law, any order, judgment or
decree of any court or other agency of corporate or other government, the
Partnership Agreement, the corporate charter or by-laws of the General Partner,
or any indenture, agreement or other instrument to which the Company or the
General Partner is a party, or by which the Company or the General Partner is
bound, or be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or result in the creation or
imposition of any Lien of any nature whatsoever upon any of the Property or
assets of the Company or the General Partner pursuant to, any such indenture,
agreement or instrument except as permitted by the Agreements.
11. No Defaults. No Default or Event of Default as defined in the
Agreements has occurred and is continuing. The Company is not in default in the
payment of principal or interest on any Indebtedness for borrowed money and is
not in default under any instrument or instruments or agreements under and
subject to which any Indebtedness for borrowed money has been issued and no
event has occurred and is continuing under the provisions of any such instrument
or agreement which with the lapse of time or the giving of notice, or both,
would constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or withholding of
objection on the part of any regulatory body, state, Federal or local, is
necessary in connection with the execution and delivery by the Company of the
Agreements or the Notes or compliance by the Company with any of the provisions
of the Agreements or the Notes.
13. Taxes. All tax returns required to be filed by the Company or any
Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Company or any
Subsidiary or upon any of their respective properties, income or franchises,
which are shown to be due and payable in such returns have been paid, except any
such returns for the failure to file would not have a material adverse effect on
the business or financial condition of the Company and its Restricted
Subsidiaries, taken as a whole. The Company does not know of any proposed
additional tax assessment against it for which adequate provision has not been
made in its accounts, and no material controversy in respect of additional
Federal or state income taxes is pending or to the knowledge to the Company
threatened. The provisions
for taxes on the books of the Company and each Subsidiary are adequate for all
open years, and for its current fiscal period.
14. Use of Proceeds. The net proceeds from the sale of the Notes will
be used to pay in full Debt outstanding under the Loan Agreement, as amended and
supplemented, dated as of June 29, 1989 among Bergen Bank A/S, as Agent, the
banks listed on Schedule 1 thereto, the Company and PLM Financial Services, Inc.
None of the transactions contemplated in the Agreements (including, without
limitation thereof, the use of proceeds from the issuance of the Notes) will
violate or result in a violation of Section 7 of the Securities Exchange Act of
1934, as amended, or any regulation issued pursuant thereto, including, without
limitation, Regulations G, T and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary
owns or intends to carry or purchase any "margin stock" within the meaning of
said Regulation G. None of the proceeds from the sale of the Notes will be used
to purchase, or refinance any borrowing, the proceeds of which were used to
purchase any "security" within the meaning of the Securities Exchange Act of
1934, as amended.
15. Private Offering. Neither the Company, directly or indirectly,
nor any agent on its behalf has offered or will offer the Notes or any similar
Security or has solicited or will solicit an offer to acquire the Notes or any
similar Security from or has otherwise approached or negotiated or will approach
or negotiate in respect of the Notes or any similar Security with any Person
other than you and not more than 35 other institutional investors, each of whom
was offered a portion of the Notes at private sale for investment. Neither the
Company, directly or indirectly, nor any agent on its behalf has offered or will
offer the Notes or any similar Security or has solicited or will solicit an
offer to acquire the Notes or any similar Security from any Person so as to
bring the issuance and sale of the Notes within the provisions of Section 5 of
the Securities Act of 1933, as amended.
16. Employee Retirement Income Security Act of 1974. The consummation
of the transactions provided for in the agreement and compliance by the Company
with the provisions thereof and the Notes issued thereunder will not involve any
prohibited transaction within the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA") or Section 4975 of the Internal Revenue Code of
1986, as amended. The Company does not maintain any "employee pension benefit
plans", as defined in ERISA.
17. Compliance with Law. Neither the Company nor any Restricted
Subsidiary (a) is in violation of any law, ordinance, franchise, governmental
rule or regulation to which it is subject; or (b) has failed to obtain any
license, permit, franchise or other governmental authorization necessary to the
ownership of its Property or to the conduct of its business, which violation or
failure to obtain could materially adversely affect the business, prospects,
profits, properties or condition (financial or otherwise) of the Company and its
Restricted Subsidiaries, taken as a whole, or the ability of the Company to
perform its obligations contained in the Agreements or the Notes.
18. Compliance with Environmental Laws. The Company is not in
violation of any applicable Environmental Law which violation could have a
material adverse effect on the business, prospects, profits, properties or
condition (financial or otherwise) of the Company and its Restricted
Subsidiaries, taken as a whole. The Company does not know of any liability or
class of liability of the Company or any Restricted Subsidiary
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et
seq.).
19. Fungible Securities. When issued, the Notes will constitute
"securities" within the meaning of the Securities Exchange Act of 1934 (the
"Exchange Act") and will not be of the same class as securities listed on a
national security exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. automated inter-dealer quotation system, and will not be
convertible or exchangeable into any such securities.
20. Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment holding company" or "affiliated company" or a
company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Dated:
PLM Equipment Growth Fund II
By PLM Financial Services, Inc.,
Its General Partner
By
Its
Subsidiaries of the Company
Restricted Subsidiaries:
(a)
Name of Vessel/Mobile Offshore Drilling Unit Subsidiaries
Jurisdiction of Incorporation
Percentage of Voting Equity Capital Owned by Company and Each Other Restricted
Subsidiary
Carrier Gretchen W.Gretchen W, Inc.
California
100%
Beverlee Vessel L.P.Beverlee Vessel, Inc. (General Partner)
California
100%
Embarcadero Vessel Limited PartnershipEmbarcadero Vessel Inc. (General Partner)
California
50%
Fairweather Offshore Limited PartnershipFairweather Offshore Inc.
(General Partner)
California
55%
Description of Debt and Leases
1. Unsecured Debt as of the Closing Date:
None
2. Debt Secured by Liens within the Limitations of ss.5.10, other than
Capitalized Leases, as of the Closing Date:
None
3. Capitalized Leases as of the Closing Date:
None
4. Long-Term Leases as of the Closing Date:
None
Description of Special Counsel's Closing Opinion
The closing opinion of Chapman and Cutler, special counsel to the
Purchasers, called for by ss.4.2 of the Note Agreement, shall be dated the
Closing Date and addressed to the Purchasers, and shall be satisfactory in form
and substance to the Purchasers and shall be to the effect that:
(1) The Company is a limited partnership, duly organized and validly
existing under the laws of the State of California, has the power and the
authority to execute and deliver the Note Agreements and to issue the Notes.
(2) The Note Agreements have been duly authorized by all necessary
partnership action on the part of the Company, have been duly executed and
delivered by an authorized officer of the General Partner and constitute the
legal, valid and binding contracts of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar
laws affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
(3) The Notes have been duly authorized by all necessary partnership
action on the part of the Company, have been duly executed and delivered by an
authorized officer of the General Partner and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
(4) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements does not, under existing law,
require the registration of the Notes under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.
The opinion of Chapman and Cutler shall also state that the opinion of
Stephen Peary, Esq. is satisfactory in scope and form to Chapman and Cutler and
that, in their opinion, the Purchasers are justified in relying thereon and
shall cover such other matters relating to the sale of the Notes as the
Purchasers may reasonably request.
In rendering the opinion set forth in paragraph 1 above, Chapman and
Cutler may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Amended and Restated Limited Partnership Agreement certified
by an authorized officer of the General Partner and the Certificate of Limited
Partnership and all amendments thereto certified by the Secretary of State of
the State of California. The opinion of Chapman and Cutler is limited to the
laws of the State of Illinois and the Federal laws of the United States.
With respect to matters of fact upon which such opinion is based,
Chapman and Cutler may rely on appropriate certificates of public officials and
officers of the Company and upon representations of the Company and the
Purchasers delivered in connection with the issuance and sale of the Notes.
Description of Closing Opinion of General Counsel to the Company
The closing opinion of Stephen Peary, Esq., general counsel of the
General Partner, which is called for by ss.4.2 of the Note Agreement, shall be
dated the Closing Date, shall be addressed to the Purchasers and shall be
satisfactory in form and substance to the Purchasers to the effect that:
(1) The Company is a limited partnership, duly organized and validly
existing under the laws of the State of California, has all requisite power and
authority and is duly authorized to enter into and perform the Note Agreements
and to issue the Notes and incur the Indebtedness to be evidenced thereby and
has full power and authority to conduct the activities in which it is now
engaged and is duly licensed or qualified and is in good standing as a foreign
limited partnership in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business transacted by it
makes such licensing or qualification necessary, except where the failure to be
duly licensed or qualified or to be in good standing would not have a materially
adverse effect on the business or financial condition of the Company.
(2) Each Restricted Subsidiary that is a corporation or a partnership
is a corporation or partnership, as the case may be, duly organized, legally
existing and in good standing under the laws of its jurisdiction of organization
and is duly licensed or qualified and is in good standing in each jurisdiction
in which the character of the properties owned or leased by it or the nature of
the business transacted by it makes such licensing or qualification necessary,
except where the failure to be duly licensed or qualified or to be in good
standing would not have a materially adverse effect on the business or financial
condition of the Company; and all of the issued and outstanding shares of
capital stock of each such Restricted Subsidiary that is a corporation have been
duly issued, are fully paid and non-assessable and are owned by the Company, by
one or more Restricted Subsidiaries, or by the Company and one or more
Restricted Subsidiaries.
(3) The Note Agreements have been duly authorized by all necessary
partnership action on the part of the Company, have been duly executed and
delivered by an authorized officer of the General Partner and constitute the
legal, valid, binding and enforceable contracts of the Company enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting creditors' rights generally and general
principles of equity (regardless of whether the application of such principles
is considered in a proceeding in equity or at law).
(4) The Notes have been duly authorized by all necessary partnership
action on the part of the Company, have been duly executed and delivered by an
authorized officer of the General Partner and constitute the legal, valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
(5) The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Agreements do not (i) conflict with
or contravene any law, rule or regulation applicable to the Company or (ii)
conflict with or result in any breach of any of the provisions of or constitute
a default under or result in the creation or imposition of any lien or
encumbrance upon any of the property of the
Company pursuant to the provisions of the Partnership Agreement or any agreement
or other instrument known to such counsel to which the Company is a party or by
which the Company may be bound except as permitted by the Note Agreements.
(6) The courts of the State of California will give effect to those
provisions of the Note Agreements and the Notes which stipulate that such
documents shall be governed, and construed in accordance with, the laws of the
State of Illinois.
(7) The execution and delivery of the Note Agreements and the issue
and sale of the Notes does not conflict with or violate any of the provisions of
the Partnership Agreement.
(8) The payment by the Company of all amounts required to be paid
with respect to the Notes in accordance with the terms and conditions of the
Note Agreements will not violate the provisions of any applicable state or
federal law limiting or regulating the payment of interest on obligations.
(9) Neither the Company nor any of its Subsidiaries is an "investment
holding company" or "affiliated company" or a company "controlled by" an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(10) The transaction contemplated by the Note Agreements (including,
without limitation, the use of the proceeds of the Notes) will not violate
Section 7 of the Securities and Exchange Act of 1934 or the provisions of
Regulation G, Regulation T or Regulation U promulgated by the Board of Governors
of the Federal Reserve System.
(11) The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreements is an exempt transaction under
the Securities Act of 1933, as amended, and does not under existing law, as at
the date of closing, require the registration of the Notes under the Securities
Act of 1933, as amended, or the qualification of an indenture in respect thereof
under the Trust Indenture Act of 1939.
(12) To the knowledge of such counsel, there are no actions, suits or
proceedings pending or threatened against or affecting the Company, the General
Partner or any Subsidiary, at law or in equity or before or by any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which are likely to result,
either individually or collectively, in any material adverse change in the
business, Properties, operations or condition, financial or otherwise, of the
Company or of the Company and its Restricted Subsidiaries taken as a whole,
impair the ability of the Company and its Restricted Subsidiaries to carry on
their business substantially as now conducted, impair the ability of the Company
to perform its obligations under the Note Agreements or under the Notes.
(13) No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body, Federal,
State or local, is necessary in connection with the execution and delivery of
the Note Agreements or the Notes.
The opinion of Stephen Peary, Esq. shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company.