TRANSFER AGREEMENT AND ▇▇▇▇ OF SALE
between
AeroCentury IV, Inc.
as Assignor
and
▇▇▇▇▇ Fargo Bank Northwest, National Association
as Assignee
relating to
one (1) ▇▇▇▇▇▇▇▇▇ model Metro III SA227-AC aircraft bearing MSN 647, with the
engines and propellers attached thereto, leased to Merlin Airways, Inc.
and
one (1) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A Engine bearing manufacturer's serial number
P674452B, leased to Interglobal, Inc. and subleased to Aero California S.A. de
C.V.
TRANSFER AGREEMENT AND ▇▇▇▇ OF SALE
TRANSFER AGREEMENT AND ▇▇▇▇ OF SALE dated as of June 10, 2001 between
AEROCENTURY IV, INC. ("Assignor"), ▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION (f/k/a First Security Bank, National Association) ("Assignee") as
indenture trustee (in such capacity, "Trustee") under an Indenture of Trust
dated as of May 26, 1997 (the "Indenture"), as amended, between Trustee and
Assignor.
RECITALS
A. Assignor and Trustee are party to the Indenture which sets forth, inter
alia, terms and conditions relating to the issuance of AeroCentury IV,
Inc. 10% Secured Promissory Notes (the "Notes") by Assignor, and the
creation and granting of a security interest, for the benefit of
Trustee, in the items of equipment identified on Exhibit A hereto
(together with the engines, all parts, accessories, logs, manuals and
records related thereto, the "Items of Equipment") and the Relevant
Agreements (as defined below);
B. Assignor has previously entered into certain lease agreements and a
sublease assignment identified on Exhibit B hereto covering the
Equipment (together with all amendments and supplements thereto, and
all related documents, certificates and instruments to the date hereof,
the "Relevant Agreements") and has received, in connection therewith,
various cash security deposits, maintenance reserves and rent payments,
which amounts are held in the accounts described on Exhibit C hereto
(such amounts, collectively, the "Cash Collateral"); and
C. Assignor has defaulted on its obligations to the holders of the Notes to
make payments of interest on the Notes, which constitutes an "Event of
Default" under Section 5.01(a) of the Indenture. As a result of such
default, Assignee, as Trustee under the Indenture for the benefit of the
holders of the Notes, desires to exercise the remedy available to it
pursuant to Section 5.04(d) of the Indenture for the benefit of such
holders. Assignee desires to obtain legal title from Assignor to the Items
of Equipment and therefore direct, pursuant to the terms and conditions set
forth below, Assignor to sell, transfer and assign to Assignee all of its
right, title and interest in, to and under, the Equipment, the Relevant
Agreements and the Cash Collateral (the Cash Collateral, collectively with
the Equipment and the Relevant Agreements, the "Assigned Property") in lieu
of foreclosure.
------------------
AGREEMENT
NOW THEREFORE, for good and valuable consideration, receipt of which is hereby
acknowledged, Assignor and Assignee agree as follows:
1. Assignment; Transfer in Lieu of Foreclosure. Assignor hereby sells,
assigns, transfers, and sets over unto Assignee, in lieu of foreclosure as
set forth in the recitals to this Agreement, all of Assignor's right, title
and interest in and to the Assigned Property, including without limitation
all of its right, title and interest in and to the Equipment and all
payments and other amounts due and to become due under the Relevant
Agreements, in each case, from and after the date hereof.
2. Acceptance and Assumption. The Assignee hereby accepts the assignment of
all of Assignor's right, title and interest in and to the Assigned Property
pursuant to the terms of this Agreement.
3. Assignor Representations and Acknowledgement.
3.1 Assignor represents and warrants to the Assignee that at the time of
the execution of this Agreement:
(a) Organization, Standing and Power. Assignor is a corporation duly
organized and validly existing in good standing under the laws of
the State of California and has all requisite power and authority
to execute, deliver and perform its obligations under this
Agreement.
(b) Title. Assignor has legal title to the Assigned Property, free
and clear of all liens (other than the lien of the Indenture),
encumbrances, equities, security interests, restrictions on
transfer, and any other claims whatsoever arising by or through
Assignor.
(c) Relevant Agreements. There are no other documents that affect in
any material respect the rights, interests, duties, obligations
or liabilities of the Assignor in respect of the Assigned
Property other than the Relevant Agreements and the Indenture.
Assignor has provided Assignee with true and correct copies of
all amendments, supplements, and modifications to each Relevant
Agreement and the Indenture.
(d) No Amounts Due. There are no amounts owed by Assignor to any
lessee or sublessee under the Relevant Agreements and no such
amount shall be owed by Assignee to any lessee or sublessee as a
result of the consummation of the transactions contemplated
hereby; provided, however, that Assignor makes no representations
as to the existence of any reimbursement obligation owed to
Merlin Airways ("MA") out of non-refundable reserve payments for
maintenance performed by MA of which Assignor has not been
informed or notified. Assignor has received no information
concerning, or notice of, the existence of any such maintenance
or reimbursement obligation as of the date hereof.
3.2 ASSIGNOR SHALL NOT BE DEEMED TO HAVE MADE ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE AIRWORTHINESS, CONDITION, VALUE,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE EQUIPMENT, AS
TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS
TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT,
AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS
TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE EQUIPMENT, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER (EXCEPT FOR SUCH TITLE
REPRESENTATION SET FORTH IN SECTION 3.1(b)), EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT.
3.3 Assignor acknowledges that the "Event of Default" under Section 5.01(a)
of the Indenture has occurred and is continuing, as referred to in Section
C of the Recitals hereto.
4. Relevant Agreements and Other Documents; Account Information. Assignor
shall promptly deliver to Assignee after the execution of this Agreement
executed originals of each of the Relevant Agreements and all other
documents, instruments or agreements which relate in any material respect
to the Relevant Agreements. All Cash Collateral shall be remitted to
Assignee's account at: ▇▇▇▇▇ Fargo Bank Minnesota, National Association,
ABA # ▇▇▇▇▇▇▇▇▇, Beneficiary Name: Corporate Trust, Beneficiary Account No.
▇▇▇▇▇▇▇▇▇▇, For further credit to: Account # ▇▇▇▇▇▇▇▇, Attn: ▇▇▇ ▇▇▇▇▇ Re:
AeroCentury.
5. Indemnification.
5.1 Assignor shall indemnify and hold harmless Assignee and its
successors and assigns from and against any and all claims, including,
but not limited to reasonable attorneys fees and costs with respect to
such claims, resulting from any misrepresentation, breach of warranty
or non-fulfillment of any covenant on the part of Assignor under this
Agreement or Assignor's failure to perform any of its obligations
under the Indenture or the Relevant Agreements prior to the date
hereof. This indemnification shall survive the consummation of the
transactions contemplated by this Agreement and its termination.
6. Further Assurances; Notices; Payments.
6.1 Assignor will promptly and duly execute and deliver such further
documents, bills of sale, and assurances and take such further action
as may from time to time be necessary to carry out the intent and
purpose of this Agreement, including, without limitation, if requested
by Assignee, documents necessary for the deregistration and/or
reregistration of the Aircraft and/or filing of assignments of the
Relevant Agreements with the appropriate governmental authorities. If
requested by Assignee, Assignor shall use its reasonable best efforts
to cause a lessee under a Relevant Agreement to amend and reissue in
the name of the Assignee any documentation originally issued in the
name of Assignor under the terms of such Relevant Agreement, and
Assignor shall use its reasonable best efforts to cause all payments
of amounts due under a Relevant Agreement (from a lessee or sublessee
thereunder) to be made to Assignee directly. All reasonable costs and
expenses incurred by Assignor, or payable to a lessee or lessee's
counsel, in connection with the negotiation and execution of such
documentation shall be paid by Assignee from the Cash Collateral, upon
presentation of an original invoice for such reasonable costs and
expenses.
6.2 Assignor shall obtain from each lessee and sublessee of the Items
of Equipment a written acknowledgement in the form of Annex 1 or 2
hereto, as applicable.
6.3 Assignor shall notify Assignee of, and shall hold in trust for the
benefit of Assignee, any payments received by Assignor from a lessee
or sublessee in respect of the Relevant Agreements. Upon receipt, and
without request or demand therefor, any such payment shall be promptly
remitted by Assignor to the account of Assignee specified in Section 4
hereof.
6.4 All notices required to be given to Assignor in its capacity as
"Lessor" under and as defined in any of the Relevant Agreements or
hereunder shall be promptly transmitted by Assignor from and after the
date hereof to ▇▇▇▇▇ Fargo Bank Northwest, National Association, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ S., MAC ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇, Fax: (612)
667-9825 Attention: ▇▇▇▇ ▇▇▇▇▇▇.
7. Reservation of Rights. Assignee does not waive, and hereby expressly
reserves, all rights and remedies available to it pursuant to the Indenture and
under any applicable law. The transfer in lieu of foreclosure effected hereby
shall be without prejudice to any such right or remedy so provided, which rights
and remedies may be exercised at any time hereafter in Assignee's sole
discretion.
8. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
9. Entire Agreement. This Agreement supersedes all previous arrangements and
agreements, whether written or oral, and comprises the entire agreement between
the parties hereto, in respect of the subject matter hereof.
10. Severability. If any provision hereof shall be held invalid or unenforceable
by any court or as a result of future administrative or legislative
action, such holding or action shall be strictly construed and shall not affect
the validity or effect of any other provision hereof.
11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
Signature Page Follows
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
AEROCENTURY IV, INC.
By:
-----------------------
Name:
Its:
▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION
By:
-----------------------
Name:
Its:
EXHIBIT A
EQUIPMENT INFORMATION
A. One (1) ▇▇▇▇▇▇▇▇▇ model Metro III SA227-AC aircraft with two (2) ▇▇▇▇▇▇▇
model TPE-331-11U-612G engines and two (2) ▇▇▇▇▇▇▇▇ model 4AFR34C652-EF
propellers, all bearing the following marks:
Aircraft Engines (Manufacturer's Propellers
Serial No.) (Manufacturer's Serial
No.) Lessee Name
------------------------------------------ -------------------------- ------------------------- ----------------------
------------------------ ----------------- -------------------------- ------------------------- ----------------------
Manufacturer's Serial Registration No.
No.
------------------------ ----------------- -------------------------- ------------------------- ----------------------
------------------------ ----------------- -------------------------- ------------------------- ----------------------
AC647 N184SW P44483C and P44440C 890671 and 881802 Merlin Airways, Inc.
------------------------ ----------------- -------------------------- ------------------------- ----------------------
B. One (1) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ JT8D-9A Engine bearing manufacturer's serial number
P674452B, leased to Interglobal, Inc. and subleased to Aero California S.A. de
C.V.
EXHIBIT B
DESCRIPTIONS OF RELEVANT AGREEMENTS
1. Lease Agreement dated as of June 16, 2000 between AeroCentury IV, Inc. as
lessor and Merlin Airways, Inc. as lessee, as amended, modified or supplemented
from time to time covering the ▇▇▇▇▇▇▇▇▇ Metro III aircraft more completely
described on Exhibit A above.
2. Engine Lease Agreement dated November 5, 1997 between AeroCentury IV, Inc. as
Lessor and Interglobal, Inc., as lessee, as amended, modified or supplemented
from time to time covering the engine more completely described on Exhibit A
above.
3. Purchase Agreement dated as of November 5, 1997 between Interglobal, Inc. and
AeroCentury IV, Inc. and the ▇▇▇▇ of Sale dated as of November 5, 1997 issued by
Interglobal, Inc. in connection therewith.
4. Sublease Assignment dated as of November 5, 1997 among Aero California S.A de
C.V., as Lessee, AeroCentury IV, Inc. and Interglobal, Inc. assigning the rights
of Interglobal, Inc. under the Engine Lease Agreement dated November 5, 1997
between Aero California S.A. de C.V. and Interglobal, Inc.
5. Guaranty dated June 14, 2000 given by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ in favor of
AeroCentury IV, Inc.
6. Any other agreement, supplement, guaranty, instrument, certificate, or other
document entered into in connection with items 1 through 5 above.
EXHIBIT C
CASH COLLATERAL
First Bank and Trust Checking
Account No. 1461040802
Balance: (6/10/02): $329,871.79
EXHIBIT D-1
[FORM OF ▇▇▇▇ OF SALE [METRO III]]
WARRANTY ▇▇▇▇ OF SALE [METRO III]
KNOW ALL PERSONS BY THESE PRESENTS:
That AEROCENTURY IV, INC. ("Seller"), does this 10th day of June, 2002
hereby sell, grant, convey, transfer, bargain, deliver and set over to ▇▇▇▇▇
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION ("Buyer"), and unto its successors
and permitted assigns forever, all of Seller's right, title and interest in and
to one ▇▇▇▇▇▇▇▇▇ Metro III SA227-AC aircraft bearing FAA registration ▇▇▇▇
N184SW and manufacturer's Serial No. AC647, together with two ▇▇▇▇▇▇▇ Model
TPE-331-11U612G engines bearing manufacturer's Serial No. P44483C and P44440C
and two ▇▇▇▇▇▇▇▇ model 4AFR34C652-EF propellers bearing manufacturer's Serial
No. 890671 and 881802, respectively, together with all avionics, appliances,
parts, instruments, appurtenances, accessories, furnishings or other equipment
or property incorporated in, installed on or attached to such aircraft or
engines (the "Aircraft").
Seller does hereby represent and warrant that Seller does hereby sell,
grant, convey, transfer, bargain, deliver and set over to Buyer, and its
successors and permitted assigns, good and marketable title to its undivided
interest in the Aircraft, free and clear of all Liens, and Seller does hereby
covenant and agree to warrant and defend such title forever against all claims
and demands whatsoever.
THIS ▇▇▇▇ OF SALE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Transfer Agreement and ▇▇▇▇ of Sale dated
as of June 10, 2002 between Buyer and Seller.
IN WITNESS WHEREOF, SELLER has caused this instrument to be executed in
its name this 10th day of June, 2002.
AEROCENTURY IV, INC.
By:
-----------------------
Name:
Title:
EXHIBIT D-2
[FORM OF ▇▇▇▇ OF SALE [ENGINE]]
WARRANTY ▇▇▇▇ OF SALE [ENGINE]
KNOW ALL PERSONS BY THESE PRESENTS:
That AEROCENTURY IV, INC. ("Seller"), does this 10th day of June, 2002
hereby sell, grant, convey, transfer, bargain, deliver and set over to ▇▇▇▇▇
FARGO BANK NORTHWEST, NATIONAL ASSOCIATION ("Buyer"), and unto its successors
and permitted assigns forever, all of Seller's right, title and interest in and
to one ▇▇▇▇▇ & Whitney Model JT8D-9A engines bearing manufacturer's Serial No.
P674452B, appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment or property incorporated in, installed on or
attached to such engine (the "Engine").
Seller does hereby represent and warrant that Seller does hereby sell,
grant, convey, transfer, bargain, deliver and set over to Buyer, and its
successors and permitted assigns, good and marketable title to its undivided
interest in the Engine, free and clear of all Liens, and Seller does hereby
covenant and agree to warrant and defend such title forever against all claims
and demands whatsoever.
THIS ▇▇▇▇ OF SALE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Transfer Agreement and ▇▇▇▇ of Sale dated
as of June 10, 2002 between Buyer and Seller.
IN WITNESS WHEREOF, SELLER has caused this instrument to be executed in
its name this 10th day of June, 2002.
AEROCENTURY IV, INC.
By:
-----------------------------------
Name:
Title:
ANNEX 1
[FORM OF LETTER TO LESSEE - METRO III]
Merlin Airways, Inc. ("Merlin")
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Re: Aircraft Lease Agreement between AeroCentury IV, Inc. ("Lessor") and Merlin
dated June 16, 2000 (the "Lease") covering one (1) ▇▇▇▇▇▇▇▇▇
SA227-AC Aircraft bearing MSN AC-647 and US Registration No. N184SW (the
"Aircraft").
To Whom It May Concern:
Reference is made to (i) the Lease, (ii) the Indenture of Trust dated as of May
26, 1997 (the "Indenture") between ▇▇▇▇▇ Fargo Bank Northwest, National
Association (fka First Security Bank, National Association), as indenture
trustee thereunder ("Trustee"), and Lessor, and (iii) the Transfer Agreement and
▇▇▇▇ of Sale dated as of June 10, 2002 (the "Transfer Agreement"), a copy of
which is attached hereto.
Merlin acknowledges the notice and instructions herein contained as adequate
notice of the transactions contemplated by the Transfer Agreement. Pursuant to
the Transfer Agreement, Lessor has transferred all of its right, title and
interest in and to, inter alia, the Lease and the Aircraft to ▇▇▇▇▇ Fargo Bank
Northwest, National Association ("WFB"). On and after the date hereof, all
payments due to Lessor under the Lease and any other agreement, supplement,
guaranty, instrument, certificate, or other document entered into in connection
therewith (the "Lease Documents") shall be made to WFB, at is account at ▇▇▇▇▇
Fargo Bank Minnesota, N.A., ABA # ▇▇▇▇▇▇▇▇▇, Beneficiary Name: Corporate Trust,
Beneficiary Account No. ▇▇▇▇▇▇▇▇▇▇, For further credit to: Account # ▇▇▇▇▇▇▇▇,
Attn: ▇▇▇ ▇▇▇▇▇ Re: AeroCentury. Merlin will cause Trustee to be added as an
additional insured under the liability insurance and sole loss payees under the
hull insurance until the expiration of the Lease. Merlin acknowledges and agrees
that Lessor is not in default of any of its obligations under the Lease
Documents and all payment obligations owed by the Lessor to Lessee under the
Lease Documents have been satisfied as of the date hereof.
AEROCENTURY IV, INC.
By:
-----------------------
Name:
Title:
Acknowledged and Agreed:
MERLIN AIRWAYS, INC.
By:
-----------------------
Name:
Title:
ANNEX 2
[FORM OF LETTER TO LESSEE AND SUBLESSEE - ENGINE]
Interglobal, Inc. ("Interglobal")
-----------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Aero California S.A de C.V. ("AeroCal")
-------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ #1995
▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Fax: ▇▇▇-▇▇-▇▇▇▇▇▇▇▇▇▇▇
Re: Engine Lease Agreement between AeroCentury IV, Inc. ("Lessor") and
Interglobal dated November 5, 1997 (the "Lease") covering One (1) ▇▇▇▇▇ &
▇▇▇▇▇▇▇ JT8D-9A Engine bearing manufacturer's serial number P674452B (the
"Engine"), subleased to AeroCal pursuant to the Engine Lease Agreement between
Interglobal and AeroCal dated November 5, 1997 (the "Sublease").
To Whom It May Concern:
Reference is made to (i) the Lease, (ii) the Sublease, (iii) the Indenture of
Trust dated as of May 26, 1997 (the "Indenture") between ▇▇▇▇▇ Fargo Bank
Northwest, National Association (fka First Security Bank, National Association),
as indenture trustee thereunder ("Trustee"), and Lessor, and (iv) the Transfer
Agreement and ▇▇▇▇ of Sale dated as of June 10, 2002 (the "Transfer Agreement").
Each of Interglobal and AeroCal acknowledges the notice and instructions herein
contained as adequate notice of the transactions contemplated by the Transfer
Agreement. Pursuant to the Transfer Agreement, Lessor has transferred all of its
right, title and interest in and to, inter alia, the Lease, the Sublease
Assignment dated as of November 5, 1997 among Lessor, Interglobal and Aero Cal,
and the Engine to ▇▇▇▇▇ Fargo Bank Northwest, National Association ("WFB"). On
and after the date hereof, all payments due to Lessor under the Lease, Sublease,
and Sublease Assignment and any other agreement, supplement, guaranty,
instrument, certificate, or other document entered into in connection therewith
(the "Lease Documents") shall be made to WFB at its account at ▇▇▇▇▇ Fargo Bank
Minnesota, N.A., ABA # ▇▇▇▇▇▇▇▇▇, Beneficiary Name: Corporate Trust, Beneficiary
Account No. ▇▇▇▇▇▇▇▇▇▇, For further credit to: Account # ▇▇▇▇▇▇▇▇, Attn: ▇▇▇
▇▇▇▇▇ Re: AeroCentury. Each of Interglobal and AeroCal, will cause Trustee to be
added as an additional insured under the liability insurance and sole loss
payees under the hull insurance until the expiration of the Lease and the
Sublease. Each of Interglobal and AeroCal acknowledge and agree that Lessor is
not in default of any of its oblitagions under the Lease Documents and all
payment obligations owed by Lessor to either of AeroCal or Interglobal under the
Lease Documents have been satisfied as of the date hereof.
AEROCENTURY IV, INC.
By:
-----------------------
Name:
Title:
Acknowledged and Agreed:
INTERGLOBAL, INC.
By:
-----------------------
Name:
Title:
AERO CALIFORNIA, S.A. de C.V.
By:
-----------------------
Name:
Title: