Draft of December 30, 1996
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
NOTE AGREEMENT
Dated as of December 15, 1996
Re: $25,000,000 7.33% Senior Notes
Due December 31, 2006
TABLE OF CONTENTS
(Not a Part of the Agreement)
SECTION HEADING PAGE
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT..............1
Section 1.1. Description of Notes.........................1
Section 1.2. Commitment, Execution Date, Closing Dates....1
Section 1.3. Commitment Fee...............................2
SECTION 2. PREPAYMENT OF NOTES..............................3
Section 2.1. Required Prepayments.........................3
Section 2.2. Optional Prepayments.........................3
Section 2.3. Prepayment in Certain Extraordinary Events...5
Section 2.5. Notice of Prepayments........................7
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 Purchaser.............8
SECTION 4. CLOSING CONDITIONS...............................10
Section 4.1. Closing Certificate..........................10
Section 4.2. Legal Opinions...............................10
Section 4.3. Existence and Authority......................10
Section 4.4. Private Placement Number.....................10
Section 4.5. Insurance Certificate........................10
Section 4.6. Payment of Commitment Fee....................10
Section 4.7. Funding Instructions.........................11
Section 4.8. Satisfactory Proceedings.....................11
Section 4.9. Waiver of Conditions.........................11
SECTION 5. COMPANY COVENANTS................................11
Section 5.1. Existence, Etc...............................11
Section 5.2. Insurance....................................11
Section 5.3. Taxes, Claims for Labor and Materials,
Compliance with Laws.........................12
Section 5.4. Maintenance, Etc.............................12
Section 5.5. Nature of Business...........................12
Section 5.6. Special Provisions for Marine Vessels and
Aircraft.....................................13
Section 5.7. Fixed Charge Coverage........................14
Section 5.8. Sale and Leaseback...........................14
Section 5.9. Limitations on Indebtedness..................14
Section 5.10. Limitation on Liens..........................15
Section 5.11. Distributions, Certain Payments..............17
Section 5.12. Limitation on Long-Term Leases and Joint
Ownership of Equipment.......................17
Section 5.13. Mergers, Consolidations and Sales of Assets..17
Section 5.14. Guaranties...................................18
Section 5.15. Repurchase of Notes..........................19
Section 5.16. Transactions with Affiliates and
Affiliated Entities..........................19
Section 5.17. Investments..................................19
Section 5.18. Termination of Pension Plans.................20
Section 5.19. Reports and Rights of Inspection.............20
Section 5.20. Certain Appraisals...........................24
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR..........25
Section 6.1. Events of Default............................25
Section 6.2. Notice to Holders............................27
Section 6.3. Acceleration of Maturities...................27
Section 6.4. Rescission of Acceleration...................27
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.................28
Section 7.1. Consent Required.............................28
Section 7.2. Solicitation of Holders......................28
Section 7.3. Effect of Amendment or Waiver................29
SECTION 8. INTERPRETATION OF AGREEMENT......................29
Section 8.1. Definitions..................................29
Section 8.2. Accounting Principles........................39
Section 8.3. Directly or Indirectly.......................40
SECTION 9. MISCELLANEOUS....................................40
Section 9.1. Registered Notes.............................40
Section 9.2. Exchange of Notes............................40
Section 9.3. Loss, Theft, Etc. of Notes...................40
Section 9.4. Expenses, Stamp Tax Indemnity................41
Section 9.5. Powers and Rights Not Waived.................41
Section 9.6. Notices......................................42
Section 9.7. Successors and Assigns.......................42
Section 9.8. Survival of Covenants and Representations....42
Section 9.9. Severability.................................42
Section 9.10. Governing Law................................42
Section 9.11. Submission to Jurisdiction...................42
Section 9.12. Captions.....................................42
Section 9.13. Limitation of Liability......................43
Signature...................................................................44
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I -- Name and Address of Purchaser
Schedule II -- Existing Liens
Schedule III -- Names of Appraisers
Exhibit A -- Form of 7.33% Senior Note due December 31, 2006 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
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-1301
NOTE AGREEMENT
Re: $25,000,000 7.33% Senior Notes
Due December 31, 2006
Dated as of
December 15, 1996
Keyport Life Insurance Company
c/o ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇ Incorporated
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Ladies and Gentlemen:
The undersigned, PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C., a
Delaware limited liability company (the "Company"), agrees with you as follows:
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. The Company will authorize the
issue and sale of $25,000,000 aggregate principal amount of its 7.33% Senior
Notes (the "Notes") to be dated the date of issue, to bear interest from such
date at the rate of 7.33% per annum, payable semiannually in arrears on the last
day of each June and December in each year (commencing June 30, 1997) 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 rate
of 9.33% per annum after maturity or the due date thereof, as applicable,
whether by acceleration or otherwise, until paid, to be expressed to mature on
December 31, 2006, 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 of twelve 30-day months. 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. You are
hereinafter sometimes referred to as the "Purchaser".
Section 1.2. Commitment, Execution Date, Closing Dates. Subject to
the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth, the Company and you agree to execute and
deliver this Agreement on the Execution Date hereafter mentioned. The Company
further agrees to issue and sell to you, and you further 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 allocated as requested by the Company to the Closing Dates hereinafter
mentioned.
Execution and delivery of the Agreement will be made at the offices of
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on December
30, 1996, or such later date as shall be mutually agreed upon by the Company and
the Purchaser (the "Execution Date").
Delivery of the Notes will be made at the offices of ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, against payment
therefor in Federal or other funds current and immediately available at the
principal office of First Union National Bank, Charlotte, North Carolina, ABA
Routing No. ▇▇▇▇▇▇▇▇▇, in the amount of the purchase price for credit to the
Company's account identified by the Company in the funding instructions
delivered pursuant to ss.4.7 at 10:00 A.M., Chicago time, on up to two separate
dates (not later than March 31, 1997) as shall be mutually agreed upon by the
Company and the Purchaser; provided, that the Company shall provide you with
written notice in the manner provided in ss.9.6 of its desire to consummate each
such closing and the principal amount of Notes it desires to sell at each such
Closing (in the aggregate, equaling $25,000,000) not less than three Business
Days prior to the date of each closing (each, a "Closing Date" and,
collectively, the "Closing Dates"). The Notes delivered to you on each 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.
Section 1.3. Commitment Fee. In consideration of your agreement to
enter into this Agreement on the Execution Date and to delay your actual
purchase of the Notes until the respective Closing Dates as set forth in ss.1.2
hereof, the Company agrees to pay to you on each Closing Date a commitment fee
(the "Commitment Fee") in an amount equal to 0.125% per month of the aggregate
principal amount of the Notes to be purchased by you, computed monthly based on
actual days elapsed, and payable for each month or portion thereof elapsing from
and after the Execution Date to and including the final Closing Date. On the
first Closing Date, the Commitment Fee shall be payable with respect to the
aggregate principal amount of the Notes to be purchased by you on both Closing
Dates, accruing from the Execution Date to and including the first Closing Date.
On the second Closing Date, the Commitment Fee shall be payable with respect to
the remaining aggregate principal amount of the Notes to be purchased by you on
the second Closing Date, accruing from the first Closing Date to and including
the second Closing Date. Two Business Days prior to each Closing Date, the
Company shall telecopy to the Purchaser at the telecopy number set forth in
Schedule I the computation of the Commitment Fee to be paid on such Closing Date
in reasonable detail for approval by the Purchaser.
SECTION 2. PREPAYMENT OF NOTES.
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
December 31, 2000 $3,000,000
December 31, 2001 $3,000,000
December 31, 2002 $3,000,000
December 31, 2003 $3,000,000
December 31, 2004 $3,000,000
December 31, 2005 $5,000,000
The entire unpaid principal amount of the Notes shall become due and
payable on December 31, 2006. 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 if made
pursuant to ss.2.2 or ss.2.3 or otherwise 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 was reduced by such prepayment.
Section 2.2. Optional Prepayments. (a) In addition to the payments
required by ss.2.1, upon compliance with ss.2.4, the Company shall have the
privilege at any time and from time to time, 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 a premium equal to the Make-Whole Amount, determined two Business Days
prior to the date of such prepayment.
"Make-Whole Amount" shall mean, in connection with any
prepayment, the excess, if any, of (a) the aggregate present value as
of the date of such prepayment of each dollar of principal being
prepaid (taking into account the application of such prepayment
required by ss.2.1) and the amount of interest (exclusive of interest
accrued to the date of prepayment) that would have been payable in
respect of such dollar if such prepayment had not been made, determined
by discounting such amounts at the Reinvestment Rate from the
respective dates on which they would have been payable, over (b) 100%
of the principal amount of the outstanding Notes being prepaid. If the
Reinvestment Rate is equal to or higher than 7.33%, the Make-Whole
Amount shall be zero.
"Reinvestment Rate" shall mean the sum of (a) the Applicable
Spread plus the yield reported on page "USD" of the Bloomberg Financial
Markets Services Screen (or, if not available, any other nationally
recognized trading screen reporting on-line intraday trading in
actively traded marketable United States Treasury fixed interest rate
Securities selected by the Company and acceptable to the Majority
Holders) at 9:00 a.m. (Chicago, Illinois time) for actively traded
marketable United States Treasury fixed interest rate Securities having
a maturity (rounded to the nearest month) corresponding to the
remaining Weighted Average Life to Maturity of the principal of the
Notes being prepaid or paid, or (b) in the event that no such
nationally recognized trading screen reporting on-line intraday trading
in United States Treasury fixed interest rate Securities is available,
Reinvestment Rate shall mean the Applicable Spread plus the arithmetic
mean of the yields for the two columns under the heading "Week Ending"
published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to such Weighted Average Life to Maturity of the
principal of the Notes then being prepaid or paid. If no maturity
exactly corresponds to such Weighted Average Life to Maturity, yields
for the two published maturities most closely corresponding to such
Weighted Average Life to Maturity of the principal of the Notes then
being prepaid or paid shall be calculated pursuant to the immediately
preceding sentence and the Reinvestment Rate for the Notes shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month. For the
purposes of calculating the Reinvestment Rate of the Notes pursuant to
clause (b) above, the most recent Statistical Release published prior
to the date of determination of the Make-Whole Amount shall be used.
"Applicable Spread" shall mean (a) 1.00% in the case of any
computation of the Make-Whole Amount for purposes of ss.2.4, and (b)
0.50% in the case of any other computation of the Make-Whole Amount for
purposes of this Agreement.
"Statistical Release" shall mean the then most recently
published statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve System and
which establishes yields on actively traded U.S. Government Securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the Majority
Holders.
"Weighted Average Life to Maturity" of the principal amount of
the Notes being prepaid or paid shall mean, as of the time of any
determination thereof, the number of years obtained by dividing the
then Remaining Dollar-Years of such principal by the aggregate amount
of such principal. The term "Remaining Dollar-Years" of such principal
shall mean the amount obtained by (a) multiplying (x) the remainder of
(i) the amount of principal that would have become due on each
scheduled payment date if such prepayment or payment had not been made,
less (ii) the amount of principal on the Notes scheduled to become due
on such date after giving effect to such prepayment or payment and the
application thereof in accordance with the provisions of ss.2.1, by (y)
the number of years (calculated to the nearest one-twelfth of a year)
which will elapse between the date of determination and such scheduled
payment date, and (b) totaling the products obtained in (a).
(b) In addition to the privilege of optionally prepaying the Notes as
set forth in ss.2.2(a), upon compliance with ss.2.5, the Company shall have the
privilege at any time and from time to time on or after January 1, 2005, 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, but without premium; provided that such optional
prepayment is made solely from the proceeds of the sale or other disposition by
the Company or a Restricted Subsidiary of all or any portion of the Equipment
(other than the Encumbered Equipment) and not from the refinancing or refunding
of Debt of the Company or a Restricted Subsidiary or with funds from any other
source.
Section 2.3. Prepayment in Certain Extraordinary Events. (a) In the
event that (i) 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, (ii) the Company shall be dissolved or
its existence otherwise terminated, or (iii) Class A Members holding more than
50% of the Class A Units in the Company shall vote to dissolve the Company (each
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. Such
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 ss.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 prior to the consummation of such
Change Event, in the event that such Declaration Notice is served at least 10
days 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 at
least 10 days 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 ss.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 give notice of its intention to resign
or withdraw or transfer its interest as Manager or Fund Manager, as the case may
be or shall receive notice that it is to be removed as Manager 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
three days after the giving or receipt of such notice, as the case may be, 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 Manager 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
50% 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,
together with a Make-Whole Amount (computed in the manner described in
ss.2.2(a)).
Section 2.4. Special Prepayment Relating to Covenant Compliance.
(a) In the event that a Default or Event of Default shall occur under ss.5.9(b)
solely as a result of a decline in the Equipment Value of Aggregate Equipment
(herein a "Covenant Compliance Event") or the Company shall have knowledge of
any impending Covenant Compliance Event, the Company will give written notice
(the "Covenant Compliance Notice") of such fact in the manner provided in ss.9.6
hereof to the holders of the Notes. The Covenant Compliance Notice shall be
delivered promptly upon receipt of such knowledge by the Company and in any
event no later than two Business Days following the occurrence of any Covenant
Compliance Event. The Covenant Compliance Notice shall (1) describe the facts
and circumstances of such Covenant Compliance Event in reasonable detail, (2)
make reference to this ss.2.4 and the obligation of the Company to prepay the
Notes to the extent and on the terms and conditions provided for in this ss.2.4,
(3) set forth in reasonable detail the computations which reflect the minimum
aggregate principal amount of Notes necessary (the "Permitted Prepayment
Amount") to be prepaid in order to result in the Company again being in
compliance with the terms of ss.5.9(b), (4) offer in writing to prepay on a pro
rata basis the outstanding Notes to the extent of the Permitted Prepayment
Amount, together with accrued interest to the date of prepayment and a premium
equal to the applicable Make-Whole Amount, and (5) specify a date for such
prepayment (the "Compliance Event Prepayment Date"), which Compliance Event
Prepayment Date shall be not more than 45 days nor less than 15 days following
the date of such Covenant Compliance Notice. Each holder of the then outstanding
Notes shall have the right to accept such offer and require prepayment of such
holder's pro rata share of the Notes to be prepaid by written notice to the
Company given not later than 10 days after receipt of the Covenant Compliance
Notice. The Company shall on the Compliance Event Prepayment Date prepay the
Notes held by holders which have so accepted such offer of prepayment to the
extent and only to the extent of the Permitted Prepayment Amount. The Company
shall not be permitted to prepay Notes under this ss.2.4(a) in excess of the
Permitted Prepayment Amount. The prepayment price of the Notes payable upon the
occurrence of any Covenant Compliance Event 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, together with a premium equal
to the applicable Make-Whole Amount determined as of two Business Days prior to
the date of such prepayment pursuant to this ss.2.4(a).
(b) Compliance with the provisions of ss.2.4(a) shall not be deemed
to constitute a waiver of, or consent to, any Default or Event of Default under
the provisions of ss.5.9(b) unless and until the Company does in fact prepay the
Notes as provided in ss.2.4(a).
Section 2.5. Notice of Prepayments. The Company will give notice of
any prepayment of the Notes (other than the prepayments required by ss.2.1,
ss.2.3 or ss.2.4) to each holder thereof not less than 30 days nor more than 60
days before the date fixed for such optional prepayment specifying (a) such
date, (b) the section of this Agreement under which the prepayment is to be
made, (c) the principal amount of the holder's Notes to be prepaid on such date,
and (d) the estimated premium, if any, and accrued interest applicable to the
prepayment. Such notice of prepayment shall also certify all facts which are
conditions precedent to any such prepayment. Notice of prepayment having been so
given, the aggregate principal amount of the Notes specified in such notice,
together with the premium, if any, and accrued interest thereon shall become due
and payable on the prepayment date. The Company will also give written notice to
each holder of the Notes, by telecopy or other same day written communication,
setting forth the computation and amount of any premium payable in connection
with such prepayment two Business Days prior to the date of such prepayment.
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.
Section 2.7. Direct Payment. Notwithstanding anything to the
contrary in this Agreement or the Notes, in the case of any Note owned by you or
your nominee or owned by any subsequent 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 you, to your nominee or to such subsequent holder at your
address or your nominee's address set forth in Schedule I or at such other
address as you, your nominee or such subsequent holder may from time to time
designate in writing to the Company or, if a bank account is designated for you
or your nominee on Schedule I hereto or in any written notice to the Company
from you, your nominee 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 you, your nominee or such
holder in any bank in the United States as you, your nominee 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 as provided herein. 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.
SECTION 3. REPRESENTATIONS.
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.
Section 3.2. Representations of the Purchaser. (a) You represent,
and in entering into this Agreement the Company understands, that (i) you are an
"accredited investor" within the meaning of Regulation D promulgated by the
Securities and Exchange Commission and (ii) 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.
(b) You further represent that at least one of the following
statements concerning each source of funds to be used by you to purchase the
Notes is accurate as of each of the Closing Dates:
(i) the source of funds to be used by you to pay the purchase
price of the Notes is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption 95-60
("PTE") (issued July 12, 1995) and the purchase of the Notes by you is
eligible for and satisfies the requirements of PTE 95-60;
(ii) all or a part of such funds constitute assets of one or
more separate accounts, trusts or a commingled pension trust maintained
by you, and you have disclosed to the Company names of such employee
benefit plans whose assets in such separate account or accounts or
pension trusts exceed 10% of the total assets or are expected to exceed
10% of the total assets of such account or accounts or trusts as of the
date of such purchase (for the purpose of this clause (ii), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(iii) all or part of such funds constitute assets of a bank
collective investment fund maintained by you, and you have disclosed to
the Company names of such employee benefit plans whose assets in such
collective investment fund exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such fund as of the date
of such purchase (for the purpose of this clause (iii), all employee
benefit plans maintained by the same employer or employee organization
are deemed to be a single plan);
(iv) all or part of such funds constitute assets of one or
more employee benefit plans, each of which has been identified to the
Company in writing;
(v) you are acquiring the Notes for the account of one or more
pension funds, trust funds or agency accounts, each of which is a
"governmental plan" as defined in Section 3(32) of ERISA;
(vi) the source of funds is an "investment fund" managed by a
"qualified professional asset manager" or "QPAM" (as defined in Part V
of PTE 84-14, issued March 13, 1984), provided that no other party to
the transactions described in this Agreement and no "affiliate" of such
other party (as defined in Section V(c) of PTE 84-14) has at this time,
and during the immediately preceding one year has exercised the
authority to appoint or terminate said QPAM as manager of the assets of
any plan identified in writing pursuant to this clause (vi) or to
negotiate the terms of said QPAM's management agreement on behalf of
any such identified plans; or
(vii) if you are other than an insurance company, all or a
portion of such funds consists of funds which do not constitute "plan
assets".
The Company shall deliver a certificate on each of the Closing Dates
which certificate shall either state that (A) it is neither a "party in
interest" (as defined in Title I, Section 3(14) of ERISA) nor a "disqualified
person" (as defined in Section 4975(e)(2) of the Internal Revenue Code of 1986,
as amended), with respect to any plan identified pursuant to paragraphs (ii),
(iii) or (iv) above, or (B) with respect to any plan identified pursuant to
paragraph (vi) above, neither it nor any "affiliate" (as defined in Section V(c)
of PTE 84-14) is described in the proviso to said paragraph (vi). As used in
this ss.3.2(b), the terms "separate account" and "employee benefit plan" shall
have the respective meanings assigned to them in ERISA and the term "plan
assets" shall have the meaning assigned to it in Department of Labor Regulation
29 C.F.R. ss.2510.3-101.
SECTION 4. CLOSING CONDITIONS.
Your obligation to execute and deliver this Agreement on the Execution
Date and to purchase the Notes on each of the Closing Dates 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 the execution and delivery
of the Agreement or the issuance and delivery of the Notes, as the case may be,
and to the following further conditions precedent:
Section 4.1. Closing Certificate. Concurrently with the execution
and delivery of this Agreement on the Execution Date and the delivery of Notes
to you on each of the Closing Dates, you shall have received a certificate dated
the Execution Date or such Closing Date, as the case may be, signed by an
authorized officer of the Manager substantially in the form attached hereto as
Exhibit B, the truth and accuracy of which shall be a condition to your
obligation to execute and deliver this Agreement or to purchase the Notes
proposed to be sold to you, as the case may be.
Section 4.2. Legal Opinions. Concurrently with the delivery of
Notes to you on each of the Closing Dates, you shall have received from ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇, who are acting as your special counsel in this transaction, and from
▇▇▇▇▇▇▇ ▇▇▇▇▇, General Counsel of the Company, their respective opinions dated
such Closing Date, in form and substance satisfactory to you, and covering the
matters set forth in Exhibits C and D, respectively, hereto.
Section 4.3. Existence and Authority. On or prior to the Execution
Date, you shall have received, in form and substance reasonably satisfactory to
you and your special counsel, such documents and evidence with respect to the
Company and the Manager as you may reasonably request in order to establish to
the existence and good standing of the Company and the Manager and the
authorization of the transactions contemplated by this Agreement.
Section 4.4. Private Placement Number. A Private Placement Number
relating to the Notes shall have been duly ordered from Standard & Poor's, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. ("Standard & Poor's").
Section 4.5. Insurance Certificate. On or prior to the Execution
Date, 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.
Section 4.6. Payment of Commitment Fee. On each of the Closing
Dates, the Company shall have paid to the Purchaser the Commitment Fee referred
to in ss.1.3 by bank wire transfer of Federal or other immediately available
funds to the account specified for such Purchaser in Schedule I.
Section 4.7. Funding Instructions. At least three Business Days
prior to each of the Closing Dates, you shall have received written instructions
executed by an authorized officer of the Manager 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.
Section 4.8. Satisfactory Proceedings. On each of the Execution
Date and the Closing Dates, 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.
Section 4.9. Waiver of Conditions. If on the Execution Date the
Company fails to execute and deliver this Agreement or on either of the Closing
Dates the Company fails to tender to you the Notes to be issued to you on such
date, or if on the Execution Date or either of the Closing Dates 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.
SECTION 5. COMPANY COVENANTS.
From and after the Execution Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Existence, Etc. (a) 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.
(b) The Company will take, or will cause to be taken, all such
actions as shall be necessary to preserve its tax treatment as a partnership.
(c) The Company will cause the Manager to retain at all times its
status as a Class B Member.
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
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 Manager
and its Affiliates.
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 Delaware Limited
Liability Company Act, 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, taken as a whole, or would result in any Lien or charge
upon any Property of the Company or any Subsidiary not permitted by ss.5.10.
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.
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 all as
more fully described in Section 1.05 of the Operating Agreement as in effect on
the date hereof.
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 ▇▇▇▇▇ 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 at least 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.
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 3.00 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).
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.
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:
(i) the Notes;
(ii) unsecured Debt of the Company in an aggregate principal
amount not to exceed $2,000,000, incurred in the ordinary course of
business, having an original maturity less than one year and not
renewable at the option of the Company for a term of one year or
greater beyond the date of original issuance, issued and outstanding in
compliance with clause (b) hereof, provided that in each case at the
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof, no Default or Event of Default
would exist, provided, further, that such Debt shall be subordinated to
the Notes upon terms reasonably acceptable to the Requisite Holders;
(iii) Debt of a Restricted Subsidiary to the Company or to a
Wholly-Owned Restricted Subsidiary, provided that at the time of
issuance thereof and after giving effect thereto and to the application
of the proceeds thereof, no Default or Event of Default would exist;
and
(iv) Short Term Warehouse Debt in an aggregate principal
amount not to exceed the lesser of (1) $10,000,000 or (2) 50% of the
aggregate principal amount of the Notes outstanding at the time of
issuance thereof; provided that at the time of such issuance and after
giving effect thereto and to the application of the proceeds thereof,
no Default or Event of Default would exist under this Agreement and no
default or event of default would exist under the Warehousing Credit
Agreement (without giving effect to any consent, waiver or amendment
waiving or in effect waiving any default or event of default which
would otherwise arise from such issuance under the Warehousing Credit
Agreement).
(b) The Company will not at any time permit Consolidated Debt to
exceed the lesser of (i) $25,000,000 or (ii) 33-1/3% of the sum of Consolidated
Assets.
(c) The Company will not at any time permit any individual borrowing
by the Company under or pursuant to the Warehousing Credit Agreement to remain
outstanding for more than 180 days from the initial issuance thereof or to
permit any extension, renewal or refunding of any such individual borrowing.
(d) Any corporation, limited liability company or partnership which
becomes a Restricted Subsidiary after the date hereof shall for all purposes of
this ss.5.9 be deemed to have created, assumed or incurred at the time it
becomes a Restricted Subsidiary all Debt of such entity existing immediately
after it becomes a Restricted Subsidiary. Accordingly, the Company shall cause
each such corporation, limited liability company or partnership to retire all of
such Debt (except Debt permitted by ss.5.9(a)(iii)) prior to such corporation,
limited liability company or partnership becoming a Restricted Subsidiary.
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 ▇▇▇▇▇ 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 securing Indebtedness of a Restricted Subsidiary to
the Company or to a Wholly-owned Restricted Subsidiary;
(f) 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; provided that the
consideration payable pursuant to any such option shall in no event be
less than the fair market value of the Equipment subject thereto;
(g) Liens securing the Short Term Warehouse Debt; provided
that such Short Term Warehouse Debt has been incurred within the
limitations of ss.5.9(a)(iv); and
(h) Liens existing on the Execution Date and described on
Schedule II hereto.
Section 5.11. Distributions, Certain Payments. The Company will not
directly or indirectly, or through any Subsidiary, make any payment to the
Manager or any Affiliate or Affiliated Entity on account of Management Fees in
excess of the amount provided for in the Operating Agreement or the Equipment
Management Agreement as each such agreement is in effect on the Execution Date,
or make or declare any Distribution, if in each such case, either prior to or
after giving effect thereto, a Default or an Event of Default shall have
occurred and be continuing.
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 the aggregate amount of all capital
accounts of the Members of the Company determined in accordance with generally
accepted accounting principles.
(b) The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise permit or suffer to exist on or with respect
to any Equipment any right of first refusal or any purchase option other than
purchase options in favor of the lessees of such Equipment for consideration
payable which is not less than the Current Fair Market Value of the related
Equipment at the time such option is exercised.
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 substantial 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, any Wholly-owned Restricted Subsidiary or any
other Person so long as in any merger or consolidation involving the
Company, the Company shall be the surviving or continuing entity and in
the case of any merger or consolidation with any other Person, such
Person shall, after giving effect to such merger or consolidation, be a
Wholly-owned Restricted Subsidiary;
(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; and
(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.
(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:
(1) for the purpose of qualifying directors or the equivalent
thereof; or
(2) 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; or
(3) to Affiliated Entities in connection with the formation
of a Restricted Subsidiary which is organized as an investment entity
by the Company and such Affiliated Entities and the activities of which
are limited solely to the ownership of Equipment.
(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 Manager 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 Manager to be adequate and satisfactory;
and
(4) the Restricted Subsidiary being disposed of shall not
have any continuing investment in the Company or any other Subsidiary
not being simultaneously disposed of.
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 Aircraft or Vessels 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 Aircraft or Vessels.
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.
Section 5.16. Transactions with Affiliates and Affiliated Entities.
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 or
Affiliated Entity (including, without limitation, the purchase from, sale to or
exchange of Property with, or the rendering of any service by or for, any
Affiliate or Affiliated Entity), 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 or Affiliated Entity;
provided, however, that nothing contained in this ss.5.16 shall prohibit any
transaction or arrangement otherwise permitted under Section 2.02(r) of the
Operating Agreement as in effect on the Execution Date.
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, ▇▇▇▇▇'▇ 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 and which are backed by the full faith
and credit of the United States;
(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 and which are backed by
the full faith and credit of the federal government of Canada;
(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
the time of acquisition thereof by the Company or a Restricted
Subsidiary, 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 or "A2" or better by ▇▇▇▇▇'▇ Investors Service, Inc.;
(f) investments by the Company and its Restricted Subsidiaries
in Property and Equipment (including investments in Unconsolidated
Special Purpose Entities) to be used in the ordinary course of
business; and
(g) short-term receivables arising from the sale of goods and
services in the ordinary course of business of the Company and its
Restricted Subsidiaries.
For purposes of this ss.5.17, at any time when a corporation, a limited
liability company or a partnership becomes a Restricted Subsidiary, all
investments of such corporation, limited liability company or partnership at
such time shall be deemed to have been made by such corporation, such limited
liability company or such partnership, as a Restricted Subsidiary, at such time.
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.
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):
(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 operations and
changes in members' 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 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 and the percentage of all Equipment that is
being leased from the Company as at the end of such quarterly
period,
all in reasonable detail and certified as complete and correct, by an
authorized financial officer of the Company or the Manager;
(b) Annual Statements. As soon as available and in any event
within 90 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, and
(2) consolidated statements of operations and
changes in members' equity and cash flows of the Company and
its Restricted Subsidiaries for 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 members generally and of each
regular or periodic report, and any registration statement or
prospectus filed by the Company or any Subsidiary or the Manager 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 or the Manager is a party,
issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries or the
Manager;
(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 Manager 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 Members. Promptly upon their becoming
available copies of all financial statements and reports other than tax
reports sent by the Company to its Members generally, including without
limitation, copies of the annual comparison report prepared by the
Manager pursuant to Section 2.06(e) of the Operating Agreement; and
(j) Annual Insurance Certificates. Within 90 days after the
end of each fiscal year of the Company, a certificate signed by
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Insurance Services Inc. or any other independent
insurance broker satisfactory to the Majority 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 outlining any material inadequacies in the accounting
controls of the Company, the Manager or the Fund Manager submitted by
independent accountants in connection with any audit of the Company,
any Restricted Subsidiary, the Manager or the Fund Manager.
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 thereof. 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, willful 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.
Section 5.20. Certain Appraisals. (a) The Requisite Holders shall
have the right, exercisable not more than two times from and after the first
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 Value").
In addition to such required appraisals at the Company's expense, the Requisite
Holders shall have the further right from time to time to cause the Appraised
Value to be determined (the "Additional Appraisals"); provided, that upon any
determination of the Appraised Value pursuant to any Additional Appraisal, (1)
if the Appraised Value demonstrates that the Company is in compliance with
ss.5.9(b), the holders of the Notes shall bear the expense of such Additional
Appraisal, or (2) if the Appraised Value demonstrates that the Company is not in
compliance with ss.5.9(b), the Company shall bear the expense of such Additional
Appraisal.
In any such event, the Company shall promptly notify all of the holders
of the Notes of the request to have the Appraised Value determined and the
Appraised 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 shall be limited to an
appraisal of only such Equipment designated by the Company as is necessary to
demonstrate compliance with ss.5.6, ss.5.9 or ss.5.12.
"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 value by the Appraisal Procedure, the Company shall designate which
nationally recognized appraiser(s) listed on Schedule III hereto shall conduct
the Appraisal Procedure. The Requisite Holders shall have the right to cause any
appraiser listed on Schedule III to be removed from such Schedule III if such
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 III, the Company and such requesting
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
Value.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
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 ss.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 ss.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 through ss.5.16
(excluding ss.5.9(b)), inclusive, hereof, or in the Letter Agreement
dated the Execution Date between the Company and the Purchaser; or
(g) Default shall occur in the observance or performance of
the provisions of ss.5.9(b) which is not remedied within the earlier of
(1) 45 days of the occurrence thereof or (2) 10 days after any officer
of the Manager shall have received actual knowledge of such Default; or
(h) 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 Manager shall have received actual
knowledge of such Default; or
(i) 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
(j) 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
(k) 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
(l) Final judgment or judgments for the payment of money
aggregating in excess of $1,000,000 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
(m) 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
(n) Any of the Events of Dissolution described in clauses (a)
through (d) and clause (f) of Section 10.01 of the Operating Agreement
as in effect on the Execution Date shall occur or the Company shall be
terminated.
Notwithstanding the foregoing, if any one or more of the events
described in (j), (k), (l) or (m) 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.
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.
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 (l), inclusive, of said ss.6.1 has happened and is
continuing, the holder or holders of 40% 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 (m) or (n) 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, to the
extent permitted by law, an amount, payable as liquidated damages and not as a
penalty, equal to the amount which would be payable if the Company then had
elected to prepay the Notes at a premium pursuant to ss.2.2. No course of
dealing on the part of the holder or holders of any Note nor any delay or
failure on the part of any holder of the Notes 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.
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 (l), inclusive, of ss.6.1, the Majority 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.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
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 Majority 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.
Section 7.2. Solicitation of Holders. 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.
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.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
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:
"Affiliate" shall mean any Person (other than an Affiliated Partnership
or 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 10% or
more of any class of the Equity Capital of the Company, (c) 10% or more of the
Voting Equity Capital of which is beneficially owned or held by the Company or a
Subsidiary, or (d) Officers and members of the Board of Directors of the
Manager. 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 Entity" shall mean all partnerships of which the Manager is
a controlling general partner or with respect to which the general partner is
controlled by the Company or any other Affiliated Entity and all limited
liability companies of which the Manager is a controlling manager or with
respect to which the manager is controlled by the Company or any other
Affiliated Entity and, in any such case, 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 December 15,
1996 between the Company and the Purchaser, 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 Operating 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.
"Appraised Value" shall have the meaning ascribed thereto in ss.5.20.
"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.
"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 and those investments described in clause (e) of ss.5.17
which mature within 90 days from the date of acquisition thereof.
"Change Event" shall have the meaning ascribed thereto in ss.2.3(a).
"Change Notice" shall have the meaning ascribed thereto in ss.2.3(a).
"Class A Member" shall mean any Person or Persons who, at the time of
any determination thereof, is a Class A Member of the Company under and pursuant
to the terms of the Operating Agreement.
"Class B Member" shall mean any Person or Persons who, at the time of
any determination thereof, is a Class B Member of the Company under and pursuant
to the terms of the Operating Agreement.
"Closing Date" and "Closing Dates" shall have the meanings ascribed
thereto in ss.1.2.
"Commitment Fee" shall have the meaning ascribed thereto in ss.1.3.
"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 (other than such provisions made with
respect to Encumbered Equipment), (d) any loss arising as the result of
revaluation of Equipment (net of revaluation gains) during such period (other
than any such loss relating to Encumbered Equipment), (e) cash payments received
from Unconsolidated Special Purpose Entities (other than Unconsolidated Special
Purpose Entities which constitute Encumbered Equipment) during such period, and
(f) Consolidated Fixed Charges during such period.
"Consolidated Debt" shall mean all Debt of the Company and its
Restricted Subsidiaries (other than Short Term Warehouse Debt), determined on a
consolidated basis eliminating intercompany items.
"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 (other than Interest Charges relating to Short Term
Warehouse Debt).
"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;
(j) any reversal of any contingency reserve (other than
maintenance reserves and engine reserves paid by lessees of Equipment
into restricted accounts which, upon the occurrence of a default under,
or expiration of, the related lease, such reserves are paid to the
Company), except to the extent that provision for such contingency
reserve shall have been made from income arising during such period;
and
(k) earnings generated by or attributable to Encumbered
Equipment.
"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
ss.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 ss.5.13(a).
"Distributions" shall mean and include (a) any payment or distribution
of income or profits of the Company (other than payments of Management Fees),
(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 Members which under generally accepted accounting principles would be
required to be deducted from the capital account for such Member 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 any
Unit or other interest as a Member of the Company.
"Encumbered Equipment" shall mean all items of Equipment the
acquisition of which are financed with borrowings under the Warehousing Credit
Agreement, whether or not secured by any Lien.
"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. ss.ss.6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. ss.ss.1251 et
seq., Clean Air Act of 1966, as amended, 42 U.S.C. ss.ss.7401 et seq., Toxic
Substances Control Act of 1976, 15 U.S.C. ss.ss.2601 et seq., Hazardous
Materials Transportation Act, 49 U.S.C. App. ss.ss.1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. ss.ss.651 et seq., Oil
Pollution Act of 1990, 33 U.S.C. ss.ss.2701 et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. ss.ss.11001 et seq., National
Environmental Policy Act of 1969, 42 U.S.C. ss.ss.4321 et seq., Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. ss.ss.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 Operating 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 as of January 24, 1995, entered into on behalf of the Company by
the Manager with its Affiliate, PLM Investment Management, Inc., pursuant to
Section 2.02(k) of the Operating 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 Manager or, if an appraisal shall have
been made within one year of the date of determination pursuant to ss.5.20, the
Appraised 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 Manager or, if an appraisal shall have been made within one year of the
date of determination pursuant to ss.5.20, the Appraised Value) of all of the
Equipment owned and leased or available for lease (as lessor) by the Company and
its Restricted Subsidiaries, including the Company's proportionate share of
Equipment owned jointly through the Company's investments in Unconsolidated
Special Purpose Entities, 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 ss.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 ss.5.9(b), there shall be excluded therefrom the
Equipment Value of (a) any item of Equipment which at the time of the
computation of Equipment Value of Aggregate Equipment has not been subject to a
lease with a Person which is not an Affiliate or an Affiliated Entity for more
than 120 days and (b) Encumbered Equipment.
"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 limited liability company,
partnership or other entity shall mean any membership interest, 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 ss.3.2.
"Event of Default" shall have the meaning ascribed thereto in ss.6.1.
"Execution Date" shall have the meaning ascribed thereto in ss.1.2.
"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 PLM Investment Management, Inc.
"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, or (iii) 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 (c) 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.
"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.
"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 Entity, or any subsidiary of the Manager in any Equipment
owned jointly by the Company, such Affiliated Entity and any subsidiary of the
Manager through a trust, a limited liability company 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.
"Majority Holders" shall mean as of any date of determination thereof
the holders of not less than 50.1% in aggregate principal amount of outstanding
Notes.
"Management Fees" shall mean (a) the Equipment Management Fee, the
Re-Lease Fee, the Equipment Liquidation Fee (as such terms are defined in the
Operating Agreement) and any premiums, commissions or fees for providing
insurance and risk management services, all as provided in the Operating
Agreement as in effect on the Execution Date, and (b) all fees payable to the
Fund Manager pursuant to the Equipment Management Agreement as in effect on the
Execution Date.
"Manager" shall mean PLM Financial Services, Inc., a Delaware
corporation, or any Person or Persons who, at the time of reference thereto, has
become the Manager of the Company pursuant to the Operating Agreement and if
there is more than one such Manager, the terms "Manager" shall mean the Manager
of the Company vested under the provisions of the Operating Agreement with the
responsibility and authority for the management and direction of the business
and operations of the Company.
"Material Agreement" shall mean the Equipment Management Agreement and
the Operating Agreement.
"Member" shall mean any member, of any class or kind, of the Company.
"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 membership
interests or 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 Operating 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 ss.1.1(a).
"Notification of Declaration" shall have the meaning ascribed thereto
in ss.2.3(a).
"Officer" shall mean any officer as provided in the by-laws of the
Manager.
"Operating Agreement" shall mean the Fifth Amended and Restated
Operating Agreement of Professional Lease Management Income Fund I, L.L.C. dated
as of January 24, 1995, by and among PLM Financial Services, Inc., as the
manager and the initial Class B Member, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as the initial
Class A Member, and the other Class A Members named therein, as amended by the
First Amendment dated as of March 18, 1996, and as the same may be further
amended, modified, supplemented or restated from time to time.
"Payment Date" shall have the meaning ascribed thereto in ss.2.3(a).
"Person" shall mean an individual, limited liability company,
partnership, corporation, trust, joint venture or unincorporated organization,
and a government or agency or political subdivision thereof.
"Prohibited Transferee" shall mean Bank of America National Trust &
Savings Association and its direct subsidiaries.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"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 Execution Date and whose names are set forth on Annex A to Exhibit B
and (b) any Subsidiary designated as such by the Manager in a written notice to
the holders of the Notes. 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 Entity
in any computation pursuant to ss.5.7 to the extent of, but only to the extent
of, the Equity Capital of such Affiliated Entity owned by the Company, provided
that any such computation pursuant to said ss.5.7 shall so include such profits
and losses to the extent of the Equity Capital of such Affiliated Entity so
owned by the Company for so long as 100% of the Equity Capital of such
Affiliated Entity is owned by the Company and other Affiliated Entities.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Short Term Warehouse Debt" shall mean and include all Indebtedness of
the Company due within one year from the date of the issuance thereof under the
Warehousing Credit Agreement.
"Standard & Poor's" shall have the meaning ascribed thereto in ss.4.4.
The term "subsidiary" shall mean, as to any particular parent entity,
any corporation, limited liability company, 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.
"Unconsolidated Special Purpose Entity" shall mean any entity which is
organized solely for the purpose of owning and operating or leasing long-lived,
low obsolescence transportation or oil drilling equipment in a manner consistent
with the purpose of the Company articulated in the Operating Agreement with an
aggregate purchase price of $5,000,000 or more in which the Company and one or
more Affiliates are co-investors and which investment may not, under generally
accepted accounting principles, be consolidated in the preparation of the
financial statements of the Company.
"Units" shall have the same meaning as in the Operating Agreement.
"Unrestricted Subsidiary" shall mean any Subsidiary which is not a
Restricted Subsidiary.
"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
Operating 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, membership interests 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).
"Warehousing Credit Agreement" shall mean that certain Second Amended
and Restated Warehousing Credit Agreement dated as of May 31, 1996 (including
any extension, renewal or replacement thereof), as amended by Amendment No. 1
dated as of November 5, 1996, among the Company and certain Affiliates, First
Union National Bank of North Carolina, as Agent, and the Lenders named therein,
established to finance, on a short term basis, the Company's and certain other
Affiliates' purchases of transportation assets, as the same may be further
amended or restated or replaced on substantially similar terms.
"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 Prepayment Election Period" shall have the meaning
ascribed thereto in ss.2.3(b).
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.
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.
SECTION 9. MISCELLANEOUS.
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 to any person
other than a Prohibited Transferee 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.
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.
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.
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
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, your special counsel, 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, any cost or expense incurred in
obtaining the Private Placement Number referred to in ss.4.4 hereof, 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 ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ not later than fifteen Business Days from
the date of presentation of an invoice therefor subsequent to each of the
Closing Dates. Without limiting the foregoing, the Company also agrees to pay,
within fifteen Business Days of receipt thereof, supplemental statements of
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ for disbursements unposted or not incurred as of each of the
Closing Dates. 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.
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.
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 c/o PLM Financial Services, Inc. at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇, Telecopier No.
(▇▇▇) ▇▇▇-▇▇▇▇, 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.
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.
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
Execution Date or either of the Closing Dates, shall survive the closing and the
delivery of this Agreement and the Notes.
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.
Section 9.10. Governing Law. This Agreement and the Notes issued and
sold hereunder shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
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 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.
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.
Section 9.13. Limitation of Liability. Except in the event of fraud
on the part of the Manager 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 Manager.
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
PROFESSIONAL LEASE MANAGEMENT
INCOME FUND I,
L.L.C.
By: PLM Financial Services, Inc.,
Its Manager
By /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
Its Manager
Accepted as of December __, 1996
KEYPORT LIFE INSURANCE COMPANY
By: ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇
Incorporated,
as agent
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Its Senior Vice President
SCHEDULE I
(to Note Agreement)
PRINCIPAL AMOUNT
NAME AND ADDRESSES OF NOTES TO BE
OF PURCHASER PURCHASED
KEYPORT LIFE INSURANCE COMPANY $25,000,000
c/o ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇ Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Private Placements
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
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
"Professional Lease Management Income Fund I, L.L.C., 7.33% Senior Notes, due
2006, PPN 74316@ AA 0, principal or interest") to:
Bank of Boston/Cust (ABA #011-000-390)
For further credit to: A/C 50757004 - Keyport
Clearance Number 009-8527
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, 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: Hare & Co.
Taxpayer I.D. Number: ▇▇-▇▇▇▇▇▇▇
SCHEDULE II
(to Note Agreement)
EXISTING LIENS
on the Execution Date
NONE
SCHEDULE III
(to Note Agreement)
NAMES OF APPRAISERS
List of Approved Appraisal Firms:
GENERAL
1. American Appraisal Associates
2. Marshal & ▇▇▇▇▇▇▇
3. Valuation Research
4. Manufacturers Appraisal
5. Strategis Asset Valuation & Management
(Alexander & ▇▇▇▇▇▇▇▇▇ - Appraisal Division)
6. Valuation Engineering Associates
CONTAINERS
1. Independent Equipment Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
Suite 309
Clearwater, Florida 34619
(▇▇▇) ▇▇▇-▇▇▇▇
2. International Equipment Marketing, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
3. Unicon
TRAILERS
1. Arrow Truck Sales, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
2. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc.
MARINE VESSELS
1. ▇.▇. ▇▇▇▇▇▇▇ - Fort ▇▇▇, New Jersey
2. American Marine Advisers
3. Bassoe - Oslo, Norway
4. Fearnleys - Oslo, Norway
5. Clarkson - London, England
6. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Sons - New York, NY
7. Victoria Ships Brokers - Hong Kong
8. ▇.▇. ▇▇▇▇▇▇ (USA) Co. - Houston, Texas
9. ▇.▇. ▇▇▇▇▇▇ A/S - Oslo, Norway
AIRCRAFT
1. AV Solutions
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
2. Avitas Aviation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
3. Aircraft Information Service, Inc.
as successor to
Airclaims Information Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
ROLLING STOCK
1. ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Railmark, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
2. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇ & Associates, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
MOBILE OFFSHORE DRILLING UNITS
1. Bassoe Offshore Consultants
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
2. ▇.▇. ▇▇▇▇▇▇ (USA) Inc.
▇▇▇▇ ▇▇▇▇▇ - President
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
3. ▇▇▇▇▇▇▇▇▇ Offshore Consultants A.S.
▇▇▇▇▇ ▇▇▇▇▇
Dronningen 1, Postboks A
Bygdoy, 0211 Oslo Norway
47 22 55 44 55
4. Normarine Offshore Consultants, Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Weslayan Tower, Suite ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
(to Note Agreement)
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
7.33% Senior Note
Due December 31, 2006
No. R- ___________, 199__
$ PPN 74316@ AA 0
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C., a Delaware limited
liability company (the "Company"), for value received, hereby promises to pay to
or registered assigns,
on the thirty-first day of December, 2006
the principal amount of
DOLLARS ($________)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at the
rate of 7.33% per annum from the date hereof until maturity, payable
semi-annually on the last day of each June and December in each year commencing
June 30, 1997, 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 rate of 9.33% per annum after maturity or the
due date thereof, as applicable, whether by acceleration or otherwise, until
paid.
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.
This Note is one of the 7.33% Senior Notes of the Company in the
aggregate principal amount of $25,000,000 issued or to be issued under and
pursuant to the terms and provisions of the Note Agreement dated as of December
15, 1996 (the "Note Agreement", words and phrases not otherwise defined in this
Note having the meanings ascribed thereto in said Note Agreement) entered into
by the Company with the original purchaser 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 Agreement to all the benefits and security
provided for thereby or referred to therein, to which Note Agreement reference
is hereby made for the statement thereof.
This Note and the other Notes outstanding under the Note Agreement 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 Agreement.
Except in the event of fraud on the part of the Manager or any of its
Affiliates in connection with the transaction contemplated by the Note
Agreement, 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
Manager.
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 Agreement.
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 Note Agreement are governed by and construed in
accordance with the internal laws of the State of Illinois.
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I,
L.L.C.
By: PLM FINANCIAL SERVICES, INC.,
Its Manager
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 AGREEMENT, THE COMPANY IS NOT REQUIRED TO
DELIVER CERTAIN FINANCIAL INFORMATION TO HOLDERS ENGAGED IN THE TRANSPORTATION
EQUIPMENT LEASING OR SERVICING BUSINESS.
UNDER THE TERMS OF THE NOTE AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED
TO CERTAIN PROHIBITED TRANSFEREES.
EXHIBIT B
(to Note Agreement)
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
CLOSING CERTIFICATE
Keyport Life Insurance Company
c/o ▇▇▇▇▇ ▇▇▇ & ▇▇▇▇▇▇▇ Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This certificate is delivered to you in compliance with the
requirements of the Note Agreement dated as of December 15, 1996 (the
"Agreement"), entered into by the undersigned, Professional Lease Management
Income Fund I, L.L.C., a Delaware limited liability company (the "Company"),
with you, and as an inducement to and as part of the consideration for your
purchase on this date of $25,000,000 aggregate principal amount of the 7.33%
Senior Notes due December 31, 2006 (the "Notes") of the Company pursuant to the
Agreement. The terms which are capitalized herein shall have the same meanings
as in the Agreement.
The Company represents and warrants to 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
liability company duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company's Manager is PLM
Financial Services, Inc. The Manager 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 Manager 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 October
1996 (the "Memorandum") prepared by First Union Capital Markets Corp.
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 January 24, 1995, as supplemented by
the Prospectus Supplement dated November 6, 1995, 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 Operating
Agreement and such Prospectus.
4. Financial Statements. (a) The consolidated balance sheet
of the Company and its Subsidiaries as of December 31, 1995, and the
statement of operations and changes in members' 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 LLP, 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 members' capital and cash flows for such
period. The unaudited consolidated balance sheets of the Company and
its Subsidiaries as of September 30, 1996, and the unaudited statement
of operations and changes in members' 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 members' capital and cash flows for such period.
(b) Since December 31, 1995, 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. (a) 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 Execution Date (the "Scheduled Matters"). Annex C-1 and Annex C-2,
to be attached hereto on each of the Closing Dates, correctly describes
the Scheduled Matters outstanding on such respective Closing Dates.
(b) On the date hereof, the aggregate principal
amount of the Notes does not exceed 20% of the aggregate cost of all
Equipment owned by the Company by more than _____%. Within [90] days of
the date hereof, the aggregate principal amount of the Notes shall not
exceed 20% of the aggregate cost of all Equipment then owned by the
Company.
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 Agreement.
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
Manager of their respective obligations under, the Agreement and the
Notes have been duly authorized by all requisite action 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 Certificate
of Formation of the Company, the Operating Agreement (including,
without limitation, Section 2.02(c) thereof), or the corporate charter
or by-laws of the Manager, or any indenture, agreement or other
instrument to which the Company or the Manager is a party, or by which
the Company or the Manager 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 Manager pursuant to, any such indenture, agreement or instrument
except as permitted by the Agreement.
11. No Defaults. No Default or Event of Default as defined in
the Agreement 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. (a) 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 Agreement or the Notes or compliance by
the Company with any of the provisions of the Agreement or the Notes.
(b) The Registration Statement filed with the SEC relating to
the sale of the Class A Units became effective January 23 1995, and no
stop-orders were issued in connection therewith.
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 finance the purchase of additional
transportation-related equipment, the refinancing of existing
indebtedness of the Company and other corporate purposes. None of the
transactions contemplated in the Agreement (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 20 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 (i) is in violation of any law, ordinance,
franchise, governmental rule or regulation to which it is subject
(including, without limitation, the filing requirements of Sections 13
and 15(d) of the Securities Exchange Act of 1934, as amended); or (ii)
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 Agreement 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:
PROFESSIONAL LEASE MANAGEMENT
INCOME FUND I,
L.L.C.
By PLM FINANCIAL SERVICES, INC.,
Its Manager
By
Its
ANNEX A
(to Closing Certificate)
SUBSIDIARIES OF THE COMPANY
RESTRICTED SUBSIDIARIES:
SUBSIDIARY % OWNED BY COMPANY
Spear Vessel Inc. 50%
United Marine Vessel Inc. 100%
ANNEX B
(to Closing Certificate)
DESCRIPTION OF DEBT AND LEASES
ON THE EXECUTION DATE
1. Unsecured Debt as of the Execution Date:
None
2. Debt Secured by Liens within the Limitations of ss.5.10, other than
Capitalized Leases, as of thE Execution Date:
None
3. Capitalized Leases as of the Execution Date:
None
4. Long-Term Leases as of the Execution Date:
None
ANNEX C-1
(to Closing Certificate)
[TO BE COMPLETED ON FIRST CLOSING DATE]
DESCRIPTION OF DEBT AND LEASES
ON THE FIRST CLOSING DATE
1. Unsecured Debt as of the First Closing Date:
2. Debt Secured by Liens within the Limitations of ss.5.10, other than
Capitalized Leases, as of the FirsT Closing Date:
3. Capitalized Leases as of the First Closing Date:
4. Long-Term Leases as of the First Closing Date:
ANNEX C-2
(to Closing Certificate)
[TO BE COMPLETED ON SECOND CLOSING DATE]
DESCRIPTION OF DEBT AND LEASES
ON THE SECOND CLOSING DATE
1. Unsecured Debt as of the Second Closing Date:
2. Debt Secured by Liens within the Limitations of ss.5.10, other than
Capitalized Leases, as of the SeconD Closing Date:
3. Capitalized Leases as of the Second Closing Date:
4. Long-Term Leases as of the Second Closing Date:
EXHIBIT C
(to Note Agreement)
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, special counsel to the
Purchaser, called for by ss.4.2 of thE Note Agreement, shall be dated the first
Closing Date or second Closing Date, as the case may be, and addressed to the
Purchaser, and shall be satisfactory in form and substance to the Purchaser and
shall be to the effect that:
(1) The Company is a limited liability company, duly
organized and validly existing under the laws of the State of Delaware,
has the power and the authority to execute and deliver the Note
Agreement and to issue the Notes.
(2) The Note Agreement has been duly authorized by all
necessary action on the part of the Company, has been duly executed and
delivered by an authorized officer of the Manager and constitutes a
legal, valid and binding contract of the Company enforceable in
accordance with its 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
action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Manager and constitute 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 Agreement 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 ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall also state that the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq. is satisfactory in scope and form to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and
that, in their opinion, the Purchaser is justified in relying thereon and shall
cover such other matters relating to the sale of the Notes as the Purchaser may
reasonably request.
In rendering the opinion set forth in paragraph 1 above, ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ may rely, as to matters referred to in paragraph 1, solely upon an
examination of the Fifth Amended and Restated Operating Agreement certified by
an authorized officer of the Manager. The opinion of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ 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,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ may rely on appropriate certificates of public officials and
officers of the Company and upon representatives of the Company and the
Purchaser delivered in connection with the issuance of the Notes.
EXHIBIT D
(to Note Agreement)
DESCRIPTION OF CLOSING OPINION OF GENERAL COUNSEL TO THE COMPANY
The closing opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq., general counsel of the
Manager, which is called for by ss.4.2 of the Note Agreement, shall be dated the
first Closing Date or the second Closing Date, as the case may be, shall be
addressed to the Purchaser and shall be satisfactory in form and substance to
the Purchaser to the effect that:
(1) The Company is a limited liability company, duly
organized and validly existing under the laws of the State of Delaware,
has all requisite power and authority and is duly authorized to enter
into and perform the Note Agreement 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
liability company 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, a
limited liability company or a partnership is a corporation, limited
liability company 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 or an Affiliated Partnership.
(3) The Note Agreement has been duly authorized by all
necessary action on the part of the Company, has been duly executed and
delivered by an authorized officer of the Manager and constitutes a
legal, valid, binding and enforceable contract of the Company
enforceable in accordance with its 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
action on the part of the Company, have been duly executed and
delivered by an authorized officer of the Manager and constitute 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 Agreement 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 Operating
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 Agreement.
(6) The courts of the State of Delaware will give effect to
those provisions of the Note Agreement 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 Agreement and the
issue and sale of the Notes does not conflict with or violate any of
the provisions of the Operating 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 Agreement 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 Agreement
(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 Agreement 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, as amended.
(12) To the knowledge of such counsel, there are no actions,
suits or proceedings pending or threatened against or affecting the
Company, the Manager 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 Agreement 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 Agreement or the Notes.
The opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq. shall cover such other matters
relating to the sale of the Notes as the Purchaser 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.