ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of May 28, 1997, (the "Agreement")
by and among POLARIS AIRCRAFT INCOME FUND V, a California limited partnership
("Polaris"), TRITON AVIATION SERVICES V LLC, a California limited liability
company ("Triton") and Bankers Trust Company, a New York banking corporation (as
escrow agent hereunder, the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the parties hereto, other than the Escrow Agent, have
entered into a Purchase, Assignment and Assumption Agreement dated as of April
1, 1997 (the "Purchase Agreement") pursuant to which Polaris has agreed to sell
to Triton and Triton has agreed to purchase from Polaris, certain assets, as
provided therein (the "Assets"); and
WHEREAS, pursuant to Section 4 of the Purchase Agreement,
Polaris and Triton have agreed that Triton shall deposit or cause to be
deposited the purchase price for the Assets, to be held in escrow and
distributed in accordance with the terms of this Escrow Agreement and the
Purchase Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent
and hold the Escrowed Property (as hereinafter defined) in accordance with the
terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged by each of the parties
hereto, the parties hereto, intending to be legally bound, do hereby agree as
follows:
1. Appointment of Escrow Agent. Polaris and Triton hereby
appoint Bankers Trust Company as escrow agent in accordance with the terms and
conditions set forth herein, and the Escrow Agent hereby accepts such
appointment.
2. Deposit into the Escrow Fund. Triton, simultaneously with
the execution and delivery of this Agreement, has deposited or caused to be
deposited with the Escrow Agent the sum of $5,204,540 (of which $1,000
represents one-half of the Escrow Fees (as defined in paragraph 8 hereof)) in
immediately available funds (together with any interest earned thereon, the
"Escrowed Property"), the receipt of which will be acknowledged by the Escrow
Agent, and which Escrowed Property shall be held by the Escrow Agent upon the
terms and conditions hereinafter set forth.
3. Deposit of Escrowed Property.
(a) During the term of this Agreement, the Escrow Agent is
hereby directed to deposit the Escrowed Property and any interest or income
earned thereon in the BT Institutional Cash Management Fund.
(b) The Escrow Agent shall not have any liability for any loss
sustained as a result of any investment made as provided above, any liquidation
of any such investment prior to its maturity, or the failure of an authorized
person of the Company to give the Escrow Agent any written instruction to invest
or reinvest the Escrowed Funds or any earnings thereon.
4. Distribution of Escrowed Property.
(a) The Escrow Agent shall hold the Escrowed Property in its
possession until instructed hereunder to deliver the Escrowed Property or any
specified portion thereof as provided in paragraph 4(b) below.
(b) At such time as Polaris delivers a written notice
substantially in the form of Exhibit A hereto (the "Release Notice") to the
Escrow Agent, signed by an authorized representative of Polaris, stating that
the requirements under the Purchase Agreement for release of the Escrowed
Property have been met, the Escrow Agent shall promptly disburse to Polaris to
the account specified by Polaris in the Release Notice, the amount set forth in
the Release Notice (which amount shall be the Cash Amount, as defined in the
Purchase Agreement), less one-half of the Escrow Fees payable to the Escrow
Agent hereunder, and shall disburse the balance of the Escrowed Property to
Triton to an account specified by Triton to the Escrow Agent.
(c) The Escrow Agent is acting as a stakeholder only with
respect to the Escrowed Property. If any dispute arises as to whether the Escrow
Agent is obligated to deliver the Escrowed Property or as to whom the Escrowed
Property is to be delivered or the amount thereof, the Escrow Agent shall not be
required to make any delivery, but in such event the Escrow Agent may hold the
Escrowed Property until receipt by the Escrow Agent of instructions in writing,
signed by all parties which have, or claim to have, an interest in the Escrowed
Property, directing the disposition of the Escrowed Property, or in the absence
of such authorization, the Escrow Agent may hold the Escrowed Property until
receipt of a certified copy of a final judgment of a court of competent
jurisdiction providing for the disposition of the Escrowed Property. The Escrow
Agent may require, as a condition to the disposition of the Escrowed Property
pursuant to written instructions, indemnification and/or opinions of counsel, in
form and substance satisfactory to the Escrow Agent, from each party providing
such instructions. If such written instructions, indemnification and opinions
2
are not received, or proceedings for such determination are not commenced,
within 30 days after receipt by the Escrow Agent of notice of any such dispute
and diligently continued, or if the Escrow Agent is uncertain as to which party
or parties are entitled to the Escrowed Property, the Escrow Agent may either
(i) hold the Escrowed Property until receipt of such written instructions and
indemnification or a certified copy of a final judgment of a court of competent
jurisdiction providing for the disposition of the Escrowed Property, or (ii)
deposit the Escrowed Property in the registry of a court of competent
jurisdiction; provided, however, that notwithstanding the foregoing, the Escrow
Agent may, but shall not be required to, institute legal proceedings of any
kind.
5. Resignation of Escrow Agent. The Escrow Agent may resign
and be discharged from its duties hereunder at any time by giving written notice
of such resignation to Polaris and Triton specifying a date when such
resignation shall take effect and upon delivery of the Escrowed Property to the
successor escrow agent designated by all parties hereto (other than the Escrow
Agent) in writing. Upon such notice, a successor escrow agent shall be appointed
with the mutual consent of Polaris and Triton. Such successor escrow agent shall
become the escrow agent hereunder upon the resignation date specified in such
notice. If Polaris and Triton are unable to agree upon a successor escrow agent
within thirty (30) days after such notice, the Escrow Agent shall be entitled to
apply to a court of competent jurisdiction for the appointment of a successor.
The Escrow Agent shall continue to serve until its successor accepts the escrow
and receives the Escrowed Property. Polaris and Triton shall have the right at
any time upon their mutual consent to substitute a new Escrow Agent by giving
notice thereof to the Escrow Agent then acting. Upon its resignation (or
replacement) and delivery of the Escrowed Property as set forth in this
Paragraph 5, the Escrow Agent shall be discharged of and from any and all
further obligations arising in connection with the escrow contemplated by this
Agreement.
6. Indemnification of Escrow Agent.
(a) The Escrow Agent shall exercise ordinary care in
fulfilling its duties and obligations hereunder. The Escrow Agent shall have no
duties or responsibilities whatsoever with respect to the Escrowed Property
except as are specifically set forth herein. The Escrow Agent shall neither be
responsible for or under, nor chargeable with knowledge of the terms and
conditions of any other agreement, instrument or document in connection
herewith. Except as otherwise provided in subsection (b) hereof, the Escrow
Agent may conclusively rely upon, and shall be fully protected from all
liability, loss, cost, damage or expense in acting or omitting to act pursuant
to any written notice, instrument, request, consent, certificate, document,
letter, telegram, opinion, order, resolution or other writing hereunder without
being required to determine the authenticity of such document, the correctness
of any fact stated therein, the propriety of the service thereof or the
capacity, identity or authority of any party purporting to sign or deliver such
3
document. The Escrow Agent shall have no responsibility for the contents of any
such writing contemplated herein and may conclusively rely without any liability
upon the contents thereof.
(b) The Escrow Agent shall not be liable for any action taken
or omitted by it in good faith and reasonably believed by it to be authorized
hereby or with the rights or powers conferred upon it hereunder, nor for action
taken or omitted by it in good faith, and in accordance with advice of counsel
(which counsel may be of the Escrow Agent's own choosing), and shall not be
liable for any mistake of fact or error of judgment or for any acts or omissions
of any kind except for its own willful misconduct or negligence.
(c) Polaris and Triton agree severally and not jointly to
indemnify the Escrow Agent and its employees, directors, officers and agents and
hold each harmless against any and all liabilities incurred by it hereunder as a
consequence of such party's action, and both Polaris and Triton agree severally
and not jointly to indemnify the Escrow Agent and hold it harmless against any
and all liabilities incurred by it and them hereunder that are not a consequence
of any party's action, except in either case for liabilities incurred by the
Escrow Agent resulting from its own willful misconduct or negligence. In
connection therewith, Polaris and Triton shall each be liable for 50% of any
such liabilities.
7. Compensation of Escrow Agent. The Escrow Agent shall be
entitled to payment for customary fees and expenses for all services rendered by
it here under in accordance with Schedule B attached hereto (as such schedule
may be amended from time to time by Polaris, Triton and the Escrow Agent)
("Escrow Fees"). The Escrow Agent shall also be entitled to reimbursement on
demand for all reasonable loss, liability, damage or expenses paid or incurred
by it in the administration of its duties hereunder, including, but not limited
to, all reasonable counsel, advisors' and agents' fees and disbursements and all
taxes or other governmental charges.
8. Further Assurances. From time to time on and after the date
hereof, the other parties hereto shall deliver or cause to be delivered to the
Escrow Agent such further documents and instruments and shall do and cause to be
done such further acts as the Escrow Agent shall reasonably request (it being
understood that the Escrow Agent shall have no obligation to make any such
request) to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is
protected in acting hereunder.
9. Termination of Agreement. This Agreement shall terminate on
the final disposition of the Escrowed Property provided that the rights of the
Escrow Agent and the obligations of the other parties hereto under Sections 6
and 7 shall survive the termination hereof and the resignation or removal of the
Escrow Agent.
4
10. Consents to Service of Process. Each of the parties hereto
hereby irrevocably consents to the jurisdiction of the courts of the State of
New York and of any Federal Court located in the Borough of Manhattan in such
State in connection with any action, suit or other proceeding arising out of or
relating to this Agreement or any action taken or omitted hereunder, and waives
any claim of forum non conveniens and any objections as to laying of venue. Each
party further waives personal service of any summons, complaint or other process
and agrees that the service thereof may be made by certified or registered mail
directed to such person at such person's address for purposes of notices
hereunder.
11. Waiver. THE PARTIES TO THIS AGREEMENT HEREBY
UNCONDITIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
AGREEMENT, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS AMONG THEM RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED AMONG THEM. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF
DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, AND RELATED DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENT, AND RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
12. Miscellaneous.
(a) This Agreement embodies the entire agreement and
understanding among these parties relating to the subject matter hereof except,
as to Polaris and Triton, the Purchase Agreement.
(b) All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, on the
next Business Day after delivery to a recognized overnight courier or when sent
by facsimile to the parties (which facsimile copy shall be followed, in the case
of notices or other communications sent to the Escrow Agent, by a hard copy) at
the following addresses (or to such other address as a party may have specified
by notice given to the other parties pursuant to this provision);
5
If to Polaris, to:
c/o Polaris Investment Management Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
c/o Polaris Investment Management Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Portfolio Management
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Triton, to:
Triton Aviation Services V LLC
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Escrow Agent, to:
Bankers Trust Company
Corporate Trust and Agency Group
Four ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Market Services
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇/6392
(c) The headings of the Paragraphs of this Agreement have been
inserted for convenience and shall not modify, define, limit or expand the
express provisions of this Agreement.
(d) This Agreement and the rights and obligations hereunder of
parties hereto may not be assigned except with the prior written consent of the
other parties hereto. This Agreement shall be binding upon and inure to the
6
benefit of each party's respective successors and permitted assigns. Except as
expressly provided herein, no other person shall acquire or have any rights
under or by virtue of this Agreement. This Agreement is intended to be for the
sole benefit of the parties hereto, and (subject to the provisions of this
Paragraph 12(d)) their respective successors and assigns, and none of the
provisions of this Agreement are intended to be, nor shall they be construed to
be, for the benefit of any third person.
(e) This Agreement may not be amended, supplemented or
otherwise modified without the prior written consent of the parties hereto.
(f) The Escrow Agent makes no representation as to the
validity, value, genuineness or the collectability of any security or other
document or instrument held by or delivered to it.
(g) The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
(h) Any payments of income from the Escrowed Property shall be
subject to withholding regulations then in force with respect to United States
taxes. Each of Polaris and Triton will provide the Escrow Agent with its
Employer Identification Number for use by the Escrow Agent if necessary. It is
understood that the Escrow Agent shall be responsible for income reporting only
with respect to income earned on the Escrowed Property and will not be
responsible for any other reporting.
(i) This Agreement shall be governed by and construed in
accordance with laws of the State of New York without reference to the
principles of conflict of laws.
(j) This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
(k) Time is of the essence in each and every term and
provision of this Agreement.
(l) In the event that the interpretation of any provision of
this Agreement conflicts in any way with any other provision of any other
document related to the transactions contemplated herein, then the provisions of
this Agreement shall be controlling between these parties and will take
precedence.
7
(m) For purposes of this Agreement, "Business Day" shall mean
any day that is not a Saturday or a day on which banks are required or permitted
by law or executive order to be closed in The City of New York.
8
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
POLARIS AIRCRAFT INCOME
FUND V
By: Polaris Investment Management
Corporation, General Partner
By:/S/▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: ATTORNEY IN FACT
TRITON AVIATION SERVICES V LLC
By: Triton Aviation Services Limited,
Manager
By:/S/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: ATTORNEY IN FACT
BANKERS TRUST COMPANY
By:/S/▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: ASSISTANT TREASURER
Schedule A
Schedule of Fees
Prepared For
Escrow Agreement
A. Acceptance Fee: $2,000 one time fee.
(Includes acceptance of appointment, review of
documentation, establishment of account and records.
This fee is intended to cover costs and set up of a
standard escrow agreement. Any escrow that
substantially alters the agreement may incur
additional costs which would be billed as an
acceptance fee.)
B. Annual Administrative Fee: None.
(Payable annually in advance. Includes normal
administrative duties as stipulated in the
agreement.)
C. Investment Transactions: None.
(Covers all costs associated with investing in
eligible investments at the direction of the client,
including ticket charges, custody and tax reporting.)
D. Wire Transfer Fee: None.
(Pertains to outgoing wires only.)
The fees set forth in this schedule are subject to review of
documentation. The fees are also subject to change should circumstances
warrant. As provided in the Escrow Agreement, reimbursement for all
out-of-pocket expenses, disbursements and fees of counsel (including
their disbursements and expenses) incurred in the performance of the
Escrow Agent's duties will be added to billed fees. Once appointed, if
the deal should fail to close for reasons beyond our control, we
reserve the right to charge a fee not to exceed the amount of our
acceptance fee, and we will require reimbursement in full for our legal
fees and any out-of-pocket expenses related to the deal.
Fees for any services not specifically covered in this or other
applicable schedules will be based on an appraisal of services
rendered.
Exhibit A
Release Notice
Pursuant to Paragraph 4(b) of the Escrow Agreement dated May
__, 1997 (the "Escrow Agreement") among Polaris Aircraft Income Fund V
("Polaris"), Triton Aviation Services V LLC ("Triton") and Bankers Trust
Company, as escrow agent (the "Escrow Agent"), the undersigned hereby certifies
that the requirements under the Purchase Agreement for release of the Escrowed
Property have been met and directs the Escrow Agent to promptly disburse the
Escrowed Property (as defined in the Escrow Agreement) as follows:
(i) $__________ to Polaris to [account information]; and
(ii) the balance of the Escrowed Property to an account
specified by Triton.
IN WITNESS WHEREOF, the undersigned has executed this Release
Notice this __ day of ________, 19__.
POLARIS AIRCRAFT INCOME FUND V
By: Polaris Investment Management
Corporation, general partner
By:
Name:
Title:
Exhibit B
Receipt of Funds by Escrow Agent
BANKERS TRUST COMPANY, a New York banking corporation, as
escrow agent (the "Escrow Agent") under that certain Escrow Agreement dated May
__, 1997 (the "Escrow Agreement") among Polaris Aircraft Income Fund V
("Polaris"), Triton Aviation Services V LLC ("Triton"), and the Escrow Agent,
hereby acknowledges receipt from Triton, by wire transfer of immediately
available funds to the account specified by the Escrow Agent, of the aggregate
amount of [$__________], to be held in escrow pursuant to the terms of the
Escrow Agreement.
Dated: __________, 1997
BANKERS TRUST COMPANY,
as Escrow Agent
By:
Name:
Title: