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EXHIBIT 3.05
JETFLEET AIRCRAFT II, L.P.
LIMITED PARTNERSHIP AGREEMENT
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TABLE OF CONTENTS
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ARTICLE I. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Name, Place of Business and Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III. PARTNERS AND CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1 General Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Initial Limited Partner; Unitholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Capital Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Application of Capital Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 JetFleet II Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Liability of Partners and Unitholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV. DISTRIBUTIONS, PROFITS AND LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Allocation of Profits and Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Special Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Curative Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Allocation Among Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Acknowledgment of Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V. RIGHTS, POWERS AND DUTIES OF THE GENERAL
PARTNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Management and Control of JetFleet II. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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5.2 Authority of the Managing General Partner. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Authority of Partners to Deal with JetFleet II. . . . . . . . . . . . . . . . . . . . . . 22
5.4 Restrictions on the Authority of a General Partner . . . . . . . . . . . . . . . . . . . . 23
5.5 Duties and Obligations of the General Partners. . . . . . . . . . . . . . . . . . . . . . 24
5.6 Compensation of the General Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Other Businesses of Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Indemnification of the General Partners and their Affiliates. . . . . . . . . . . . . . . 28
ARTICLE VI. GENERAL PARTNER WITHDRAWAL, REMOVAL, AUTOMATIC CESSATION AND SUBSTITUTION;
TRANSFER OF A GENERAL PARTNER'S INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.1 Withdrawal of the General Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Removal of the General Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Substitute and Additional General Partners; Assignment of Economic Interest. . . . . . . . 29
6.4 Automatic Cessation of General Partners . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Purchase of a Terminated General Partner's Interest. . . . . . . . . . . . . . . . . . . . 30
6.6 Amounts Accrued and Owing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.7 Notes and Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.8 Liability of a Terminated General Partner. . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII. TRANSFERABILITY OF LIMITED PARTNERSHIP
INTERESTS OR UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1 Restrictions on Transfers of Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Incapacity of Unitholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.3 Change in Record Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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7.4 Substituted Unitholder. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII. DISSOLUTION, LIQUIDATION AND TERMINATION OF
JETFLEET II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Events Causing Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX. BOOKS AND RECORDS; ACCOUNTING, TAX RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.1 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2 Accounting Basis for Tax and Reporting Purposes. . . . . . . . . . . . . . . . . . . . . . 38
9.3 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Elections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.6 Designation of Tax Matters Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.7 Expenses of Tax Matters Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE X. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Proposal and Adoption of Amendments Generally. . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Amendments on Admission or Withdrawal of Partners and Unitholders. . . . . . . . . . . . . 42
ARTICLE XI. CONSENTS, VOTING AND MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.1 Method of Giving Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2 Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.3 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.4 Submissions to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.5 Record Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE XII. POWERS OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.1 Notification to JetFleet II or the General Partners. . . . . . . . . . . . . . . . . . . . 45
13.2 Binding Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.3 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.5 Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.7 Section Titles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.8 Legal Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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JETFLEET AIRCRAFT II, L.P.
LIMITED PARTNERSHIP AGREEMENT
This Limited Partnership Agreement is made and executed as of June 21,
1991, by and among CMA Capital Group, a California corporation (the "Managing
General Partner"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as General Partners
(collectively, the "General Partners"), and each person who is admitted to the
Partnership as a limited partner (a "Limited Partner"). Each Limited Partner
who has entered into and executed a Subscription Agreement, as a condition to
the offer and sale of the Units under the Subscription Agreement, will be
deemed to have entered into and properly executed this Agreement, which shall
then become fully binding on each such Limited Partner. In consideration of the
mutual promises made herein, the parties, intending to be legally bound, hereby
agree as follows:
ARTICLE I.
DEFINED TERMS
The definitions used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article I. The singular
shall include the plural, and any reference to gender shall include the other
genders (whether masculine, feminine or neuter), as the context requires.
"Acquisition Expenses": Expenses including, but not limited to, legal
fees and expenses, travel and communication expenses, costs of appraisals,
accounting fees and expenses and miscellaneous expenses relating to selection
and acquisition of Aircraft, whether or not acquired. Acquisition Expenses
include both Chargeable Acquisition Expenses and General Partner Acquisition
Expenses.
"Acquisition Fee": The total of all fees and commissions paid by any
party in connection with the initial purchase of Aircraft acquired by JetFleet
II. Included in the computation of such fees or commissions are any commission,
selection fee, financing fee, non-recurring management fee, or any fee of a
similar nature, however designated. Other examples of Acquisition Fees include
brokers' fees and commissions, trustee fees, commitment fees and prepayment
fees. The principal Acquisition Fee to be paid by JetFleet II is a fee, equal
to 1.5% of the Adjusted Purchase Price of Aircraft purchased by JetFleet II
(excluding any amount of the Adjusted Purchase Price borrowed by JetFleet II),
for services rendered in identifying the availability of such Aircraft for
purchase. The Managing General Partner will be retained to perform such
services and will receive that Acquisition Fee. Other Acquisition Fees which it
is anticipated that JetFleet II will incur are loan fees and trustee fees. In
certain circumstances, JetFleet II may become obligated to pay fees or
commissions to third-party brokers (other than the Managing General Partner or
any substitute) for services rendered in connection with the acquisition of
Aircraft. Such fees and commissions, if any, will be included in the Purchase
Price of the Aircraft acquired by JetFleet II; accordingly, the amount of such
fees together with the other amounts included in the Purchase Price will not
exceed the fair market value of the Aircraft as determined by the Appraiser.
"Additional Closing": Any Closing after the Initial Closing.
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"Adjusted Capital Account Deficit": With respect to any General
Partner or Unitholder, the deficit balance, if any, in such General Partner's
or Unitholder's Capital Account as of the end of the relevant Fiscal Year,
after giving effect to the following adjustments:
a) Crediting to such Capital Account the amount of such General
Partner's or Unitholder's share of JetFleet II Minimum Gain (which
share shall be determined in accordance with Section
1.704lT(b)(4)(iv)(f) of the Regulations); and
b) Debiting to such Capital Account the amount of such
Unitholder's share of items described in Sections
1.704-l(b)(2)(ii)(d)(4), (5), and (6) of the Regulations.
This definition is intended to comply with the provisions of Section
1.704-1 (b) (2) (ii) (d) of the Regulations, and shall be interpreted
consistently therewith.
"Adjusted Capital Contributions": The Unitholders' Capital
Contributions reduced to not less than zero by cash distributions from any
source (including liquidating distributions) to the Unitholders which exceed a
cumulative, noncompounded 8% annual return on such Unitholders' Adjusted
Capital Contributions (excluding any distributions previously reducing such
Adjusted Capital Contributions), with such calculation to be based on the
Adjusted Capital Contributions outstanding on the last day of the preceding
calendar quarter.
"Adjusted Purchase Price": The Purchase Price of Aircraft, plus all
Chargeable Acquisition Expenses but not including (a) any loan fees or similar
charges or (b) the Acquisition Fee equal to 1.5% of the Adjusted Purchase Price
(excluding any amount of the Adjusted Purchase Price borrowed by JetFleet II)
and payable to the Managing General Partner or its substitute, if any. In no
Event will the Adjusted Purchase Price exceed the fair market value of the
Aircraft at the time of purchase as determined by an appraisal by the
Appraiser.
"Affiliate": When used with reference to a specified Person, (a) any
Person directly or indirectly controlling, controlled by or under common
control with such Person, (b) any Person owning or controlling 10% or more of
the outstanding voting securities of such Person, (c) any officer, director or
general partner of such Person and (d) if such other Person is an officer,
director or general partner, any company for which such Person acts in such
capacity.
"Agreement": This Limited Partnership Agreement, as originally
executed and as amended or restated, as the context requires.
"Aircraft": An aircraft, or aircraft engine separate from an aircraft,
identified or selected for purchase or purchased or otherwise held by or on
behalf of JetFleet II, or an interest in such aircraft or separate engine
identified or selected for acquisition or acquired or otherwise held by or on
behalf of JetFleet II, together with all appliances, pans, instruments,
appurtenances, accessories, furnishings or other equipment included therein
(including any and all engines originally installed thereon) or included in the
aircraft engine if acquired separately from an aircraft, and all substitutions,
renewals or replacements of, and all additions, improvements and accessions to,
such aircraft or separate aircraft engine.
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"Appraiser": Such other nationally recognized independent appraiser
selected by the Managing General Partner in its discretion.
"Aviation Act": The Federal Aviation Act of 1958, as amended.
"Business Day": Any day that is not a Saturday, a Sunday, or a day on
which banking institutions in the City of San Francisco, California are
authorized or required to close by law, executive order or regulation.
"California Act": The California Revised Limited Partnership Act or
the corresponding provisions of any succeeding law.
"Capital Account": A separate capital account established for each
Partner by JetFleet II maintained in accordance with the following provisions:
a)To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of
Profits and any items in the nature of income or gain which are
specially allocated pursuant to Article IV hereof, and the amount of
any JetFleet II liabilities assumed by such Partner or which are
secured by any JetFleet II property distributed to such Partner.
b)To each Partner's Capital Account there shall be debited the amount
of cash and the fair market value of any JetFleet II property
distributed to such Partner pursuant to any provision of the
Agreement, such Partner's distributive share of Losses and any items
in the nature of expenses or losses that are specially allocated
pursuant to Article IV hereof, and the amount of any liabilities of
such Partner assumed by JetFleet II or which are secured by any
property contributed by such Partner to JetFleet II.
The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Section 1.704-1 (b) of the Regulations and shall be interpreted and applied in a
manner consistent with such Regulations.
"Capital Contribution": The gross amount of investment in JetFleet II
by a Partner or by all such Partners, as the case may be. Since Capital
Contributions to JetFleet II are to be made in cash, JetFleet II's Capital
Contributions will be the total amount of cash contributed to JetFleet II by
any Partner or by the predecessor holder of the Interest of such Partner, as
the context requires, without reduction for any Sales Commissions or other
expense. As used with respect to a Unitholder, the term "Capital Contribution"
refers to the Capital Contribution made in respect of the purchase price paid
by or on behalf of the Unitholder or the Unitholder's predecessor upon the
issuance and sale by JetFleet II of the Unitholder's Units pursuant to the
applicable Subscription Agreement.
"Cash Available for Distribution": Cash Flow plus cash funds available
for distribution from reserves less amounts set aside for restoration or
creation of reserves.
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"Cash Flow": JetFleet 1I cash funds provided from operations, without
deduction for depreciation, but after deducting cash funds used to pay all
other expenses, debt payments, capital improvements and replacements (other
than cash funds withdrawn from Working Capital Reserves or Gross Offering
Proceeds). Cash Flow does not include Net Disposition Proceeds.
"Cash Reserves": Those reserves established by the Managing General
Partner for JetFleet II from Gross Offering Proceeds and thereafter, from
JetFleet 1I revenues, including Cash Flow and Net Disposition Proceeds.
"Chargeable Acquisition Expenses": Acquisition Expenses that are
incurred in connection with the selection and acquisition of Aircraft and that
are to be paid by JetFleet II. Chargeable Acquisition Expenses include, without
limitation, legal and accounting expenses incurred in connection with the
acquisition of Aircraft, appraisal costs, title insurance costs, any
reimbursement that might be payable by JetFleet 1I to the Managing General
Partner for any out-of-pocket costs which are incurred by the Managing General
Partner in rendering acquisition services for JetFleet II and any other direct
out-of-pocket costs incurred in connection with the selection and purchase of
Aircraft.
"Closing": The sale of Units by JetFleet II pursuant to the Offering,
at which time the subscription proceeds with respect to the Units are released
from escrow and delivered to JetFleet II, and the subscribers who deposited
those funds become Unitholders. It is anticipated that, on the Closing Date or
shortly thereafter, JetFleet II will purchase one or more Aircraft with a
portion of the subscription proceeds.
"Closing Date": The date on which a Closing takes place.
"Code": The Internal Revenue Code of 1986, as amended, or the
corresponding provisions of any succeeding law.
"Commission": The Securities and Exchange Commission.
"Competitive Equipment Sales Commission": That brokerage fee paid for
services rendered in connection with the purchase or sale of equipment, which
is reasonable, customary and competitive in light of the size, type and
location of the equipment.
"Consent": The approval of a Person, given as provided in Section
11.1, to do the act or thing for which the approval is solicited, or the act of
granting such approval, as the context may require. Reference to the Consent of
a specified percentage in Interest of the Unitholders means the Consent of
Unitholders who own Units representing at least such specified percentage of
the Units owned by all Unitholders.
"Constructive Ownership Rules": The constructive ownership rules of
Section 318 of the Code which require an individual to be treated as owning the
corporate stock owned directly or indirectly by the individual the individual's
spouse, children, grandchildren and parents and the individual's proportionate
share of stock held by S corporations of which the individual is a shareholder,
partnerships of which the individual is a partner, trusts of which is a
beneficiary of
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more than 5% of the value thereof and C corporations of which the individual is
a 50% or more shareholder by value. A Person is also treated as owning any
stock with respect to which the Person holds options to purchase. In general,
corporations, partnerships and trusts arc treated as owning stock held by their
shareholders, partners and beneficiaries respectively.
"Due Diligence Costs": Reimbursement payable to the Sales Agent
pursuant to Section 5.6(b) for the accountable, bona fide due diligence costs
actually incurred by the Sales Agent (or, if the reimbursement is reallowed by
the Sales Agent to a member of the Selling Group, actually incurred by such
Selling Group member) in connection with the Offering.
"Equipment Management": Personnel and services necessary to the
leasing activities of JetFleet II including, but not limited to, leasing and
re-leasing of JetFleet II Aircraft, arranging for any necessary: maintenance
and repair of the Aircraft, collecting revenues, paying operating expenses,
determining that the Aircraft is used in accordance with all contractual
arrangements and providing clerical and bookkeeping services necessary to the
operation of JetFleet II Aircraft. Under Triple Net Leases, the lessees will
assume the responsibility for Aircraft maintenance and repair and for paying
operating expenses.
"Equipment Management Fee": The fee payable to the Managing General
Partner pursuant to Section 5.6(d).
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent": The Bank of San Francisco, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
"FAA": The Federal Aviation Administration.
"Final Closing Date": The date on which the last Closing takes place.
"Fiscal Period": The fiscal year of JetFleet II, which shall initially
be the calendar year or any interim accounting period established by the
Corporate General Partner within a fiscal year.
"Front-End Fees": Fees and; expenses paid by any party for any
services rendered during JetFleet II's organizational or acquisition phase
including Organizational and Offering Expenses, Leasing Fees, Acquisition Fees,
Acquisition Expenses and any similar fees, however designated by JetFleet II
(including the Non-Accountable Organizational and Expense Allowance). Front-End
Fees shall not include any Acquisition Fees or Acquisition Expenses paid by a
manufacturer of Aircraft to any of its employees unless such Persons are
Affiliates of any of the Sponsors.
"Full Payout Lease": A lease under which the noncancellable rental
payments due during the initial term of the lease are sufficient to recover the
Purchase Price of the Aircraft.
"GAAP": Generally accepted accounting principles, consistently
applied.
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"Gain from Sale" and "Loss from Sale": For any Fiscal Year or other
period, an amount equal to JetFleet II's gain or loss for such year or period
from the sale, exchange, refinancing or other disposition of the Aircraft.
Gross Income specially allocated to the General Partners pursuant to Sections
4.3(c) and (g) shall be excluded from the calculation of Gain and Loss from
Sale.
"General Partners": CMA Capital Group, a California corporation, ▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or any other Person that becomes an
additional or successor General Partner as provided under this Agreement.
"Gross Income": The gross income of the Partnership within the meaning
of Section 61 (a) of the Code.
"Gross Offering Proceeds": The Capital Contributions of all
Unitholders upon the purchase of Units pursuant to the Offering.
"Guidelines": The Equipment Program Guidelines of the North American
Securities Administrators Association, Inc.
"Initial Closing": The first Closing.
"Initial Leases": The initial leases to which the Aircraft identified
or selected for purchase or purchased by JetFleet II out of Gross Offering
Proceeds are subject.
"Initial Limited Partner": ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or his successor in
interest.
"Investment Banking Fee": The fee payable to the Sales Agent pursuant
to Section 5.6(b).
"Investment in Aircraft": The amount of Capital Contributions actually
paid or allocated to the purchase or renovation of Aircraft acquired by
JetFleet II, including the purchase of Aircraft, Working Capital Reserves
allocable thereto (except that Working Capital Reserves in excess of 3% of
Capital Contributions will not be included), and other cash payments such as
interest and taxes but excluding Front-End Fees.
"IRAs": Individual retirement accounts qualifying under Section 408 of
the Code.
"IRS": The United States Internal Revenue Service or its successor.
"JetFleet II": JetFleet Aircraft II, L.P., a California limited
partnership, as such partnership may from time to time be constituted.
"JetFleet II Minimum Gain": The sum for all JetFleet II assets of the
amounts of income or gain that would be recognized if each asset were disposed
of for the amount of non-recourse liabilities secured by such assets, which
shall be determined in accordance with the principles set forth in Section
1.704-1 (b) (4) (iv) (c) of the Regulations.
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"Leasing Fees": The total of all fees and commissions paid by any
party in connection with the Initial Lease of the Aircraft acquired by JetFleet
II.
"Limited Partner": Initially, the Initial Limited Partner. Upon the
Initial Closing, the term "Limited Partner" shall refer to a Unitholder.
"Losses": See "Profits" and "Losses."
"Majority Vote": The affirmative vote of holders of more than 50% of
the outstanding Units.
"Managing General Partner": CMA Capital Group, a California
corporation or its successor.
"NASDAQ": The National Association of Securities Dealers Automated
Quotations System, as constituted from time to time.
"National Securities Exchange": A stock or securities exchange
registered with the Commission under the provisions of the Securities Exchange
Act of 1934, as amended.
"Net Disposition Proceeds": The proceeds realized by JetFleet II from
sale, refinancing or other disposition of the Aircraft, including insurance
proceeds or lessee indemnity payments arising from the loss or destruction of
the Aircraft, less all JetFleet II liabilities.
"Non-Accountable Organizational and Offering Expense Allowance": An
amount payable to the Managing General Partner pursuant to Section 5.6(c).
"Notification": A writing, containing the information required by this
Agreement to be communicated to any Person, sent by mail, postage prepaid, to
such Person at the address of such Person as shown by the records of JetFleet
II on the date of the giving of Notification or personally delivered to such
Person; provided, however, that any communication containing such information
sent to such Person and actually received by such Person shall constitute
Notification for all purposes under this Agreement. Notification shall be
deemed to have been given either five days after deposited in the United States
mail, postage prepaid, or as of delivery, if personally delivered.
"Offering": The offering of Units pursuant to the Prospectus For the
Offering.
"Operating Lease": A lease which will return to the lessor less than
the Purchase Price of the Aircraft from rentals payable during the initial term
of the lease.
"Organizational and Offering Expenses": Expenses incurred in
connection with preparing JetFleet II for registration and subsequently
offering and distributing Units to the public, including sales commissions paid
to broker-dealers in connection with the distribution of Units and all
advertising expenses except advertising expenses related to the leasing of
JetFleet II's Aircraft. Such expenses include those expenses incurred in
connection with the formation of JetFleet II and other amounts paid to
broker-dealers in connection with the distribution of Units (including, without
limitation, Sales Commissions, Investment Banking Fee and Due Diligence Costs).
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"Partner": Any General Partner or Limited Partner.
"Person": Any natural person, partnership, corporation, association or
other legal entity, including a trust.
"Profits from Operations" and "Losses from Operations": For any Fiscal
Year or other period, an amount equal to JetFleet II's taxable income or loss
from operations for such year or period, determined in accordance with Section
703(a) of the Code, including all items of income, gain, loss or deduction
required to be stated separately pursuant to Section 703(a)(1) of the Code,
with the following adjustments: (a) any income of JetFleet II that is exempt
from federal income tax and not otherwise taken into account in computing
Profits from Operations and Losses from Operations pursuant to this definition
shall be added to such taxable income or shall reduce such taxable loss; (b)
any expenditures of JetFleet II described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations
Section 1.704-l(b)(2)(iv)(i) and not otherwise taken into account in computing
Profits from Operations or Losses from Operations pursuant to this definition
shall be subtracted from such taxable income or loss; and (c) any Gain from
Sale or Loss from Sale shall not be included in such taxable income or loss.
Gross Income specially allocated to the General Partners pursuant to Sections
4.3(c) and (g) shall be excluded from the calculation of Profits from
Operations and Losses from Operations.
"Program": A limited or general partnership, joint venture,
unincorporated association or similar organization other than a corporation
formed and operated for the primary purpose of investing in and the generation
of or gain from an interest in equipment.
"Prospectus": This term shall have the meaning given by Section 2(10)
of the Securities Act of 1933, including a preliminary Prospectus. "Prospectus
For the Offering" refers to the Prospectus contained in the Registration
Statement, as that Prospectus may be amended or supplemented.
"Purchase Price": The purchase price paid upon the purchase or sale of
Aircraft, including the amount of Acquisition Fees and all liens and mortgages
on the Aircraft, but excluding points and prepaid interest.
"Qualified Plans": Qualified pension, profit-sharing and stock bonus
plans ▇▇▇▇▇ plans, 401 (k) plans and other corporate retirement plans
qualifying under Section 401 (a) of the Code.
"Registered Owner": As applied to a Unit, the Person in whose name a
Unit is registered on the books of JetFleet II.
"Registration Statement": The registration statement for the initial
offering of Units by JetFleet II, to be filed with the Commission under the
Securities Act of 1933, as it may be amended.
"Regulations": The income tax regulations promulgated under the Code,
as such regulations may be amended from time to time.
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"Resale Fee": The fee payable to the Managing General Partner pursuant
o Section 5.6(f').
"Sales Agency Agreement": The sales agency agreement entered into by
and among the Sales Agent, JetFleet II and the Managing General Partner with
respect to the Offering.
"Sales Agent": CKS Securities, Incorporated, a member of the National
Association of Securities Dealers, Inc.
"Sales Commissions": The commissions payable to the Sales Agent
pursuant to Section 5.6(b).
"Selling Group": The group of brokers authorized by the Sales Agent to
sell Units. Each such broker must be a member of the National Association of
Securities Dealers, Inc.
"Sponsor": Any person directly or indirectly instrumental in
organizing, wholly or in part, JetFleet II or any person who will manage or
participate in the management of a program, and any Affiliate of any such
person. The term "Sponsor" does not include a Person whose only relation with
JetFleet II is that of an independent equipment manager and whose only
compensation is as such. Sponsor does not include wholly independent third
parties, such as attorneys, accountants and underwriters, whose only
compensation is for professional services rendered in connection with the
offering of JetFleet II interests.
"Substantially All of the Assets" shall mean Aircraft, the Purchase
Price for which represents 66-2/3% or more of JetFleet II's Aircraft based on
the then fair market value of the Aircraft.
"Subscription Agreement": The Subscription Agreement to be executed
and delivered by each subscriber for Units pursuant to the Offering. The form
of the Subscription Agreement is included as an exhibit to the Prospectus For
the Offering.
"Syndication Expenses": All expenditure classified as syndication
expenses pursuant to Section 1.709-2(b) of the Regulations. Syndication
Expenses shall be taken into account under JetFleet It's methods of accounting
as if they were deductible expenses.
"Terminated General Partner": Any General Partner who ceases to be a
General Partner pursuant to Article VI.
"Triple Net Lease": A lease in which the lessee assumes responsibility
for, and bears the cost of, insurance, taxes, maintenance, repair and operation
of the leased asset and where the non-cancellable rental payments under the
lease are absolutely net to the lessor. In certain cases the lessee might not
be required to pay excess hull insurance or certain of the costs of complying
with airworthiness directives issued by the Aircraft manufacturer, the FAA or
any other government agency having jurisdiction and with other regulatory
requirements.
"Unit": The limited partnership Unit or other indicia of ownership in
JetFleet II. Such Unit represents the interest of a Unitholder attributable to
a Capital Contribution of $50 (except in the case of certain volume discounts
described in the Prospectus), constituting the rights and
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obligations of a subscriber for a Unit pursuant to the Offering upon the
acceptance of the subscriber's subscription and Capital Contribution pursuant
to the subscriber's Subscription Agreement.
"Unitholder": The holder of a Unit. Any Person recognized as a holder
of a Unit shall be a Person who is admitted to JetFleet II as a Limited Partner
and who is a Registered Owner of one or more Units.
"Unitholder Payout": Distributions to the Unitholders, from Cash
Available for Distribution as well as Net Disposition Proceeds, equal to the
Unitholders' Capital Contributions, plus a cumulative, noncompounded 8% annual
return on the Unitholders' Adjusted Capital Contributions (computed from the
respective Closing Dates with respect to the Unitholders' respective
subscriptions).
ARTICLE II.
ORGANIZATION
2.1 Formation. The General Partners and the Initial Limited
Partner hereby form this limited partnership in accordance with and pursuant to
the provisions of the California Act and this Agreement. The General Partners
are the Sponsors of JetFleet II and the Offering. The rights and liabilities of
the Partners are as provided in the California Act and in this Agreement.
2.2 Name. Place of Business and Office.
(a) The name of the Partnership is JetFleet Aircraft II,
L.P.
(b) The principal offices of JetFleet II shall be at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Managing
General Partner may at any time change the location of such offices and may
establish such additional offices as it shall deem advisable. Notification of
any change in location shall be given to the Unitholders as soon as practicable
after such change. The parties hereto shall immediately execute all such
certificates and other documents conforming hereto and do all such filing,
recording, publishing and other acts as in the judgment of the Managing General
Partner may be appropriate to comply with all requirements for the formation of
a limited partnership under the California Act. The business of JetFleet II may
be carried on in states in addition to California and, accordingly, the parties
hereto shall execute all such certificates and other documents conforming
hereto and to do all such filing, recording, publishing and other acts as in
the judgment of the Managing General Partner may be necessary or appropriate
for the formation or qualification and operation of JetFleet II as a limited
partnership in such additional states.
2.3 Purpose. The purpose and character of the business of JetFleet
II is:
(a) to acquire new or used Aircraft for lease pursuant to
Triple Net Leases (which may be Full Payout Leases or Operating Leases) with
the primary objective of generating cash from operations and distributing as
much of the cash as is not required for operating expenses and Cash Reserves;
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(b) to preserve and protect the value of JetFleet II's
assets;
(c) to maximize returns through distributions of cash
received upon the ultimate sale of Aircraft;
(d) to engage in any and all business activities
permitted under the California Act; and
(e) to perform any acts necessary or incidental to the
accomplishment of the foregoing purposes.
2.4 Term. JetFleet II is formed upon the execution and delivery
of this Agreement and upon the filing of JetFleet II's Certificate of Limited
Partnership in accordance with the provisions of the California Act, and
JetFleet II shall continue in full force and effect until December 31, 2010, or
until dissolution prior thereto pursuant to the provisions hereof.
ARTICLE III.
PARTNERS AND CAPITAL
3.1 General Partners.
(a) The Managing General Partner of JetFleet II is CMA
Capital Group, a California corporation with its principal office at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The individual
General Partners are the founding principals of the Managing General Partner,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (whose principal office is located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 94104) and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (whose
principal office is located at ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇).
(b) The General Partners, or any of them, shall make a
Capital Contribution in cash in the aggregate amount of $750.
(c) Any General Partners or Affiliates of any General
Partners also may be Unitholders to the extent they separately purchase any
Units, and the Consent or approval of any Unitholder to such transfer to the
General Partners need not be obtained. If any General Partners or Affiliates of
any General Partners purchase any Units, they shall have all the rights and
liabilities of Unitholders (in addition to, in the case of any General
Partners, such General Partners' rights and liabilities as General Partners),
as provided in the California Act and this Agreement, except as provided
otherwise in Sections 6.1, 6.2 and 11.2.
3.2 Initial Limited Partner; Unitholders.
(a) The Initial Limited Partner shall make a Capital
Contribution of $250 and shall receive five Units. Upon the Initial Closing,
the five Units issued to the Initial Limited Partner in respect of such Capital
Contribution shall be redeemed and cancelled by JetFleet II, and such Capital
Contribution shall be returned to the Initial Limited Partner, whereupon his
status as the Initial Limited Partner shall terminate.
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(b) Upon the Initial Closing, JetFleet II shall issue and
sell those Units which have been fully paid for pursuant to Subscription
Agreements duly accepted by the Managing General Partner, provided that the
issuance and sale are in accordance with the terms of the Offering. Upon each
Additional Closing, JetFleet II shall issue and sell any additional Units which
have been fully paid for pursuant to Subscription Agreements duly accepted by
the Managing General Partner, provided that the issuance and sale are in
accordance with the terms of the Offering. At each such Closing, the $50
purchase price paid for each Unit then being issued and sold shall be
contributed to JetFleet II. Purchasers of Units shall be admitted as
Unitholders not later than 15 days after the release from escrow of the
purchaser's funds to JetFleet II.
(c) JetFleet II shall cause the Managing General Partner
to register on its books the name of each Registered Owner of Units as the
Unitholder thereof.
(d) Pursuant to the applicable Subscription Agreement,
each purchaser of Units issued at any Closing (and each transferee of the
rights of any such purchaser) shall be bound by the terms and conditions of
this Agreement as if such Person had executed this Agreement as a party hereto.
3.3 Capital Contributions. Capital Contributions shall be made
only in cash or cash equivalents. No Unitholder shall be required to make any
Capital Contribution to JetFleet II other than the Capital Contributions made
as provided in the Subscription Agreement(s) pursuant to which the Unitholder's
Units are issued.
3.4 Application of Capital Contributions.
(a) Upon JetFleet II's receipt of the Capital
Contributions, the Managing General Partner shall deposit such funds in
JetFleet II's bank account and shall then apply such Capital Contributions in
the manner and for the purposes provided in Articles IV and V.
(b) JetFleet II shall apply at least 82% of the Gross
Offering Proceeds for Investment in Aircraft.
(c) Any Capital Contributions of the Unitholders not
committed for Investment in Equipment within two years after the date of
commencement of the Offering (except for necessary working capital) shall be
distributed pro rata to the Unitholders as a return of capital.
3.5 JetFleet II Capital.
(a) No Partner or Unitholder shall be entitled to any
interest on any Capital Contribution.
(b) Except as provided in Section 3.4 or 4.5, or upon
dissolution of JetFleet II pursuant to Article VIII, no General Partner or
Unitholder shall have the right to withdraw, or to
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receive any return of any portion of, such Partner's or Unitholder's Capital
Contribution. No specific time has been agreed upon for the repayment of
Capital Contributions.
(c) No Unitholder shall have the right to receive any
distribution from JetFleet II in property other than cash. Except as expressly
provided in this Agreement, no Unitholder shall have priority over any other
Partner or Unitholder with respect to a return of such Person's Capital
Contribution or with respect to distributions of Cash Available for
Distribution or Net Disposition Proceeds.
3.6 Liability of Partners and Unitholders.
(a) No Unitholder shall have any personal liability as a
Unitholder, whether to JetFleet II, to any Partners, to any Unitholders or to
any creditors of JetFleet II, for the debts, liabilities, contracts or any
other obligations of JetFleet II or for any losses of JetFleet II. Except for
payment of the purchase price for Units purchased pursuant to Subscription
Agreement, no Unitholder shall be required to make any Capital Contribution to
JetFleet II or to repay to JetFleet II, any Partner, any Unitholder or any
creditor of JetFleet II all or any fraction of any negative amount of such
Unitholder's Capital Account.
(b) Notwithstanding Section 3.6(a), in accordance with
the California Act, a Unitholder may, under certain circumstances, be required
to return to JetFleet II or to creditors of JetFleet II, amounts previously
distributed to such Unitholder in violation of the California Act. It is the
intent of the parties hereto that no Unitholder shall be obligated to pay any
such amount to or for the account of JetFleet II or any creditor of JetFleet
II. However, if any court of competent jurisdiction holds that, notwithstanding
the provisions of this Agreement, the Unitholders are obligated to repay any
such amount, such obligation shall be the responsibility of the Unitholders who
received such distributions in proportion to the distributions received which
are to be returned. In lieu of requiring return of such distributions from
Unitholders, the Managing General Partner may withhold future distributions to
the Unitholders until the amount so withheld equals the amount of the
distributions which are required to be repaid or returned, regardless of
whether the Unitholders entitled to receive such distributions were the same
Persons as those who actually received the required to be returned.
(c) JetFleet II shall indemnify the Unitholders, to the
extent of JetFleet II's assets but without recourse to the assets of the
General Partners, against any claim of liability asserted against them solely
because they are Unitholders.
(d) None of the General Partners, their respective
Affiliates, officers, directors, employees or agents shall be liable to
JetFleet II or any Unitholder for any loss suffered by JetFleet II or any
Unitholder which arises out of any action or inaction of the General Partners,
or their Affiliates, officers, directors, employees, partners or trustees, if
such General Partner or other Person (i) determined in good faith that such
course of conduct or inaction was in the best interests of JetFleet II, (ii)
was acting on behalf of or performing services for JetFleet II and acting
within the scope of the General Partner's authority, and (iii) such course of
conduct or inaction did not constitute negligence or misconduct.
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(e) Except as otherwise provided in Section 8.2(e), none
of the General Partners or any of their Affiliates shall have any personal
liability to any Unitholder for the repayment of any amounts outstanding in the
Capital Account of any Unitholder. The General Partners shall not be liable to
any Unitholder by reason of any change in the federal income tax laws as they
apply to JetFleet II and the Unitholders, whether such change occurs through
legislative, judicial or administrative action, so long as the General Partners
have acted in good faith and in a manner reasonably believed to be in the best
interests of the Unitholders.
(f) None of the General Partners or their Affiliates
shall have any personal liability to repay to JetFleet II all or any portion of
any negative amount of any Partner's or Unitholder's Capital Account, except as
otherwise provided in Section 8.25(e).
ARTICLE IV.
DISTRIBUTIONS, PROFITS AND LOSSES
4.1 Distributions.
(a) Distributions, if any, whether out of Cash Available
for Distribution or Net Disposition Proceeds, will be made from time to time at
the discretion of the Managing General Partner. The Managing General Partner
shall establish the amount of Cash Reserves from time to time at such levels as
the Managing General Partner deems necessary and appropriate to serve the best
interests of JetFleet II, which levels shall be taken into account by the
Managing General Partner from time to time in determining the amount, if any,
of JetFleet II distributions. Such Cash Reserves shall be at least 1% of Gross
Offering Proceeds. Except in the event of liquidation of JetFleet II under
Section 8.2, (i) all distributions from Cash Available for Distribution will be
made 95% to the Unitholders and 5% to the General Partners; and (ii) all
distributions from Net Disposition Proceeds will be made 99% to the Unitholders
and 1% to the General Partners until such time as the Unitholders have received
distributions equal to the Unitholder Payout; thereafter, cash distributions
from Net Disposition Proceeds will be made 95% to the Unitholders and 5% to the
General Partners.
(b) To the extent deemed feasible by the Managing General
Partner, any distributions that are made out of Cash Available for Distribution
will be made on a monthly or quarterly basis, as designated by the individual
Unitholders in their Subscription Agreements or otherwise in writing to the
Managing General Partner. The Managing General Partner will cause distributions
to be made, to the extent feasible, within 30 days after the end of the month,
or within 45 days after the end of the fiscal quarter, as the case may be, to
Unitholders of record on the last day of such month or quarter, as the case may
be.
(c) Distributions (other than those referred to in
Section 8.2) to the Unitholders shall be apportioned among the Unitholders in
the ratio in which the number of Units held by each of them bears to the total
number of Units held by all Unitholders as of the last day of the month with
respect to which such distributions are made; provided, however, that, with
respect to distributions made for any month during the Offering period of the
Units (including the month in which the Offering terminates), such
distributions shall be apportioned among the Unitholders in the ratio in which
(i) the number of Units held by each ▇▇▇▇▇▇▇▇▇▇
▇▇
▇▇
multiplied by the number of days during such month that such Unitholder was the
owner of such Units bears to (ii) the sum of the number of Units outstanding on
each day during such month.
(d) Distributions to the General Partners as a group
shall be divided among the General Partners in such manner as they shall agree
upon.
(e) Distributions in kind shall not be permitted except
as provided in 8.2(a).
4.2 Allocation of Profits and Losses.
(a) Profits and Losses from Operations. Except as
otherwise provided, in Sections 4.2(c), 4.3, 4.4 and 8.2(d), Profits and Losses
from Operations for any Fiscal Period shall be allocated 95% to the Unitholders
and 5% to the General Partners.
(b) Gains and Losses from Sales. Except as provided in
Sections 4.2(c), 4.3, 4.4 and 8.2(d), Gain or Loss from Sale for any Fiscal
Period shall be allocated 99% to the Unitholders and 1% to the General Partners
until the Unitholders have received distributions equal to the Unitholder
Payout; thereafter, Gain or Loss from Sale shall be allocated 95% to the
Unitholders and 5% to the General Partners.
(c) Unitholder Excess Losses. Notwithstanding any
provision of this Article IV to the contrary, Losses from Operations and Losses
from Sales allocated to the Unitholders pursuant to this Article IV shall not
exceed the maximum amount of losses that can be so allocated without causing a
Unitholder who is not a General Partner to have an Adjusted Capital Account
Deficit at the end of any Fiscal Year. In the event some but not all of the
Unitholders who are not General Partners would have Adjusted Capital Account
Deficits as a consequence of an allocation of Losses from Operations or Losses
from Sales pursuant to this Article IV, the limitation set forth in this
Section 4.2(c) shall be applied on a Unitholder by Unitholder basis so as to
allocate the maximum permissible Loss under Section 1.704-1 (b) (2) (ii) (d) of
the Regulations to each Unitholder who is not a General Partner. All losses in
excess of the limitation set forth in this Section 4.2(c) shall be allocated to
the General Partners.
4.3 Special Allocations. The following special allocations shall
be made in the following order
(a) Minimum Gain Chargeback. If, in any fiscal year,
there is a net decrease in Minimum Gain, the Partners shall be allocated items
of Partnership income and gain for such year (and, if necessary, for subsequent
years) in proportion to, and to the extent of, an amount equal to the greater
of:
(i) The portion of such Partner's share of the
net decrease in Minimum Gain during such year determined under Temporary
Treasury Regulation Section 1.704-lT(b) (4) (iv) (f) that is allocable under
Temporary Treasury Regulation Section 1.704-lT(b) (4) (iv) (e) to the
disposition of Partnership property subject to one or more Nonrecourse
Liabilities of the Partnership; or
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(ii) The deficit balance in such Partner's Capital
Account at the end of such year (determined before any allocation of
Partnership income, gain, loss, deduction, or Section 705(a)(2)(B) expenditure
for such year and excluding from such deficit Capital Account balance any
amount that such Partner is obligated to restore under Temporary Regulation
Section 1.704-lT(b)(2)(ii)(c), as well as any addition thereto pursuant to the
penultimate sentences of paragraphs (f) and (h) (5) of Temporary Treasury
Regulation Section 1.704-lT(b)(4)(iv) after taking into account thereunder any
changes during such year in Minimum Gain and in Minimum Gain attributable to
any "Partner Nonrecourse Debt" as defined in Temporary Treasury Regulation
Section 1.704-lT(b)(4)(iv)(k)(4).
For purposes of this Section 4.3(a) the Partner's Capital Accounts
shall be reduced by the items described in Treasury Regulation Section
1.704-l(b)(2)(ii)(d)(4), (5), and (6). This Section 4.3(a) is intended to
constitute a "minimum gain chargeback" within the meaning of Temporary Treasury
Regulation Section 1.704-lT(b)(4)(iv)(e).
(b) Qualified Income Offset. In the event any Unitholder
who is not a General Partner unexpectedly receives in any fiscal year any
adjustments, allocations or distributions described in Section 1.704-1
(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of JetFleet II income
and gain for such year (and, if necessary, subsequent years) shall be specially
allocated in an amount and manner sufficient to eliminate, to the extent
required by such Regulations, the Adjusted Capital Account Deficits created by
such adjustments, allocations or distributions as quickly as possible, provided
that an allocation pursuant of this Section 4.3(b) shall be made only if and to
the extent that such Unitholder would have Adjusted Capital Account Deficits
after all other allocations provided for in this Article 4 have been
tentatively made as if this Section 4.3(b) were not in the Agreement. This
Section 4.3(b) is intended to comply with the qualified income offset
requirements in Section 1.704-l(b)(2)(ii)(d)(3) of the Regulations and shall be
interpreted consistently therewith.
(c) Gross Income Allocation to General Partners. If,
after first giving effect to the distribution provisions of Section 4.1, and
the allocations provisions of Section 4.2, the General Partners would have an
Adjusted Capital Account Deficit, Gross Income shall be specially allocated to
the General Partners in such an amount as, when taken together with
distributions in accordance with Section 4.1 and allocations pursuant to
Section 4.2, such Adjusted Capital Account Deficit would be eliminated;
provided, however, that any allocation pursuant to this Section 4.3(c) shall be
subject to the restrictions set forth in Section 4.2(c).
(d) Syndication Expenses. Except as provided in Section
4.3(e) hereof, Syndication Expenses for any Fiscal Period shall be specially
allocated to the Unitholders in proportion to their Units, provided that if
Unitholders are admitted to JetFleet II on different dates, all Syndication
Expenses shall be divided among the Unitholders so that, to the extent
possible, the cumulative Syndication Expenses allocated with respect to each
Unit at any time is the same amount. In the event that the General Partners
determine that such allocation of Syndication Expenses is not likely to be
achieved through future allocations of Syndication Expenses, the General
Partners may allocate a portion of Profits or Losses so as to achieve the same
effect on the Capital Accounts of the Unitholders.
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(e) Sales Commissions and Investment Banking Fee. Items
of Loss arising out of JetFleet II's payment of Sales Commissions and
Investment Banking Fee with respect to each Unit shall be specially allocated
to the Unitholder who acquires such Unit.
(f) Adjustment to Basis. To the extent an adjustment to
the adjusted tax basis of any JetFleet II asset is required, pursuant to
Section 1.704-1(b)(2)(iv)(m) of the Regulations, to be taken into account in
determining Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are required to be
adjusted pursuant to such Section of the Regulations.
(g) Recharacterized Fees. If the Equipment Management Fee
or Resale Fee is treated as a distributive share of JetFleet II income by the
Service, a special allocation of JetFleet II Gross Income shall be made
annually to the General Partners in an amount equal to the General Partners'
share of any such recharacterized fee for that Fiscal Period.
(h) General Partners' One Percent Interest. In no event
shall the interest of all the General Partners, taken together, in each
material item of partnership income, gain, loss, deduction or credit for any
fiscal year be less than 1% of each such item.
4.4 Curative Allocations. The allocations set forth in Sections
4.3 (a), (b) and (d) hereof (the "Regulatory Allocations") are intended to
comply with the requirements of Section 1.704-l(b) of the Regulations.
Notwithstanding any other provision of this Article 4 (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into account
in allocating other profits, losses and items of income, gain, loss and
deduction among the Partners so that, to the extent possible, the net amount of
such allocations of other profits, losses and other items and the Regulatory
Allocations to each Partner shall be equal to the net amount that would have
been allocated to each such Partner if the Regulator Allocations had not
occurred.
4.5 Allocation Among Partners.
(a) Allocation Among Unitholders. Except as provided in
Section 4.5(b) hereof, any allocations to the Unitholders pursuant to this
Article 4 for a Fiscal Period shall be allocated among the Unitholders, to the
extent possible, in order to equalize the Capital Account balances per Unit of
each Unitholder, and then in the proportion that the number of Units held by
each Unitholder bears to the total number of Units held by all of the
Unitholders.
(b) Effect of Different Admission Dates and Transfers of
Units. With respect to any Fiscal Period during which the Initial Closing or
any Additional Closing occurs, income and loss (and all items thereof)
allocated to the Unitholders shall be apportioned among the Unitholders in the
ratio in which (i) the number of Units held by each Unitholder multiplied by
the number of days during such Fiscal Period that such Unitholder was the owner
of such Units bears to (ii) the sum of number of Units outstanding on each day
during such Fiscal Period. With respect to any transfer of Units, any income
and loss (and items thereof) attributable to a Unit transferred during a
particular Fiscal Period shall be allocated between the transferor and the
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transferee in proportion to the number of days that each such holder was the
Registered Owner of such Unit during such Fiscal Period, without regard to the
results of JetFleet II operations during the period in which each such holder
was the owner thereof and without regard to the date, amount or recipient of
any distributions which may have been made with respect to such Units.
(c) Allocation Among General Partners. All items of
income and loss that are allocated to the General Partners as a group shall be
allocated among the General Partners in such manner as they shall agree upon;
provided that any such allocations shall be in compliance with the code and the
Regulations.
4.6 Acknowledgment of Tax Consequences. The Partners are aware of
the income tax consequences of the allocations made by this Article 4 and
hereby agree to be bound by the provisions of the Partnership Agreement in
reporting their share of JetFleet II income, gain, deduction and loss for
income tax purposes.
ARTICLE V.
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNERS
5.1 Management and Control of JetFleet II.
(a) Subject to the Consent of the Unitholders when
required by this Agreement, the General Partners, within the authority granted
to them by this Agreement, shall have the full and exclusive right to manage
and control the business and affairs of JetFleet II and to make all decisions
regarding the business of JetFleet II. Except as limited herein, the General
Partners shall have all of the rights and powers of general partners of a
limited partnership under the California Act and any other applicable laws.
(b) Except as expressly provided herein, the authority of
the General Partners to manage the business of JetFleet II shall be exercised
only by the Managing General Partner and, except as expressly provided herein,
no General Partner other than the Managing General Partner shall have any
control over JetFleet II's business.
(c) No General Partner other than the Managing General
Partner (except one who may also be an officer or employee of the Managing
General Partner, and then only in his capacity as such officer or employee of
the Managing General Partner within the scope of its authority hereunder) shall
participate in or have any control over JetFleet II's business or have any
authority or right to act for or on behalf of JetFleet II.
(d) In order to expedite the handling of JetFleet II's
business, any document executed by the Managing General Partner while acting in
the name and on behalf of JetFleet II shall be deemed to be the action of
JetFleet II as to any third parties.
(e) The Unitholders shall not participate in the
management of, or have any control over, JetFleet II's business. The
Unitholders shall not have the power to represent, act for, sign for or bind
the General Partners or JetFleet II.
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(f) Subject to Section 5.4(d), the Managing General
Partner shall have the authority to borrow money in the name of JetFleet II
from any bank or other lending institution located in the United States and, in
connection with any such borrowing, to pledge, encumber or hypothecate the
assets of JetFleet II.
5.2 Authority of the Managing General Partner.
(a) In addition to any other rights and powers which the
Managing General Partner may possess under this Agreement and the California
Act, the Managing General Partner shall have all specific rights and powers
required or appropriate to its management of JetFleet II business which, by way
of illustration but not by way of limitation, may include to cause JetFleet II
to do the following,:
(i) to acquire, hold, manage, repair,
reconfigure, maintain, lease, sell and dispose of Aircraft and interests
therein at such purchase prices, lease or rental rates, costs or sale prices
and upon such other terms as the Managing General Partner deems, in its
discretion, to be in the best interest of JetFleet II; it is provided, however,
that JetFleet II shall not (A) pay an Adjusted Purchase Price for any Aircraft
which is in excess of the fair market value of the Aircraft at the time of
purchase as determined by an appraisal by an Appraiser or (B) pay an
Acquisition Fee to the Managing General Partner or any substitute which is in
excess of 1.5% of the Adjusted Purchase Price (excluding any amount of the
Adjusted Purchase Price borrowed by JetFleet II); it is further provided that
the Managing General Partner shall cause JetFleet II to purchase Aircraft out
of Gross Offerings Proceeds which meet the criteria referred to in the
Prospectus For the Offering under the captions "Business of JetFleet--
Acquisition Policies--Certain Criteria."
(ii) to execute, deliver and perform (A)
agreements relating to and consistent with the terms of the Offering,
including, without limitation, the Sales Agency Agreement, an escrow agreement,
an agreement among Selling Group members and other agreements and instruments;
and (B) any aircraft acquisition, management, operation or remarketing
agreements and all other agreements, contracts, documents, certifications,
leases (including Full Payout Leases and Operating Leases), bills of sale and
other instruments, and all amendments to any of the foregoing, which may be
deemed by the Managing General Partner to be necessary or convenient in
connection with the business of JetFleet II;
(iii) to protect and preserve the title and
interest of JetFleet II with respect to the assets of JetFleet II, to collect
all amounts due JetFleet II, to enforce all rights of JetFleet II and, in that
connection, to retain counsel and institute such suits or proceedings, in the
name and on behalf of JetFleet II, or, if the Managing General Partner shall so
determine, in the name of the General Partners and the Unitholders;
(iv) to the extent that funds of JetFleet II are
available, to pay all debts and obligations of JetFleet 11 and to make all
distributions periodically to the Unitholders out of JetFleet II accounts and
in accordance with the provisions of this Agreement;
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(v) within the limitations provided for in this
Agreement, to advance funds or to borrow funds on behalf of JetFleet II for
maintaining JetFleet II operations or for other JetFleet II purposes and to
guarantee the repayment of such borrowed funds;
(vi) to purchase, at the expense of JetFleet 11,
liability and other insurance to protect JetFleet II's assets and business;
(vii) on behalf of JetFleet II, to engage such firm
of independent certified public accountants, such attorneys, such Appraisers
and such consultants and others as may be selected by the Managing General
Partner in its discretion;
(viii) to open and maintain JetFleet II accounts on
behalf of JetFleet II with any bank in the United States having assets in
excess of $50,000,000 and to designate and change signatories on such accounts;
(ix) until the fifth anniversary date of the Final
Closing Date, to reinvest Net Disposition Proceeds in additional Aircraft,
provided that no reinvestment will take place unless sufficient cash will be
distributed to the Unitholders to pay any state income tax (at a rate
reasonably assumed by the Managing General Partner) and federal income tax
(assuming the Unitholders are subject to marginal rates applicable to the
highest levels created by such disposition; after such fifth anniversary date,
such Net Disposition Proceeds shall be distributed to the General Partners and
Unitholders in accordance with Section 4.1; except for the placement of funds
provided in Section 5.2(a) (x), Cash Available for Distribution will not be
reinvested;
(x) to place such funds as are temporarily not
required for investment in Aircraft, including the Cash Reserves, in bank
accounts as provided in subsection (viii) above, in short-term highly liquid
investments where there is appropriate safety of principal, such as United
States treasury bonds or bills, investment grade commercial paper and
certificates of deposit of banks which have a net worth of $50,000,000 or more;
(xi) to lease, sell (except as provided otherwise
in (xv) below), refinance and/or otherwise manage and operate the Aircraft;
(xii) to invest with non-Affiliates of the General
Partners in general partnerships or ventures which own and operate specific
equipment provided that (A) JetFleet II acquires a controlling interest in such
general partnership or venture; (B) the agreement between the co-investors does
not authorize JetFleet II to do anything as a co-investor with respect to the
Aircraft which JetFleet II or the General Partners would not be permitted to do
under this Agreement; and (C) the investment does not result in the payment of
duplicative fees. For the purposes of this Section, a controlling interest
shall exist if the provisions in the venture or co-ownership agreement give
JetFleet II the right to make or veto decisions for the sale, refinancing or
remarketing of the equipment. JetFleet II shall be permitted to invest in joint
venture arrangements with a Program which is an Affiliate of any General
Partner if such action is in the best interests of both Programs and if the
following conditions are met: (A) the Affiliated Program has investment
objectives substantially identical to those of JetFleet II; (B) there are no
duplicative fees; (C) the controlling persons of each co-investor have a
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compensation structure that is substantially identical; (D) the investments of
JetFleet II and the Affiliated Program are on substantially the same terms and
conditions; (E) the investment is entered into in order to obtain
diversification for JetFleet II and such Affiliated Program or for the purpose
of relieving the General Partners or their Affiliates from the commitment
referred to in Section 5.2(a) (xvii); and (F) JetFleet II has a right of first
refusal should an Affiliated co-venturer decide to sell equipment held in the
venture;
(xiii) to duly place record title to Aircraft in the
name or names of a nominee or nominees or a trustee or trustees for any
purposes convenient or beneficial to JetFleet II, such as to meet ownership
registration requirements under the Aviation Act;
(xiv) if the tax laws change and the Managing
General Partner determines that such action will not cause JetFleet II to be
treated as a "publicly traded partnership" or result in any other adverse tax
consequences for Unitholders, to cause the Units (or any instruments
representing Units) to be listed for trading on a National Securities Exchange
or to be authorized for quotation in NASDAQ or in any similar national
automated quotations system, and, in connection with such listing or quotation,
to take such other steps as the Managing General Partner determines advisable
or necessary to effect such listing or quotation;
(xv) to sell all or Substantially All of the
Assets, with the approval of the Unitholders as provided in Section
5.4(a)(viii);
(xvi) to approve the transfer of, and transfer on
its books and on the register of JetFleet II, any Units of a Unitholder of
JetFleet II as provided in Article VII; and
(xvii) to purchase Aircraft in any of the General
Partners' or their Affiliates' own names (and assume loans in connection
therewith) and hold title thereto on a temporary or interim basis (generally
not in excess of six months) for the purpose of facilitating the acquisition of
such Aircraft or the borrowing of money or obtaining of financing for JetFleet
II, or any other purpose related to the business of JetFleet II, provided (A)
it is in the best interest of JetFleet II; (B) such Aircraft is purchased by
JetFleet II for a price no greater than the cost of the Aircraft to the General
Partners or their Affiliates, except compensation in accordance with this
Agreement; (C) there is no difference in interest terms of the loans secured by
the Aircraft at the time acquired by the General Partners or their Affiliates
and the time acquired by JetFleet II; (D) no other benefit arises out of such
transaction to the General Partners or their Affiliates apart from compensation
otherwise permitted by this Agreement; and (E) all profits and losses of the
General Partners and their Affiliates during the interim period relating to the
purchase or holding of Aircraft by the General Partners or their Affiliates
will accrue to JetFleet II. In accordance with Section 5.3(b)(iii) below, an
Affiliated Program will not temporarily hold the Aircraft.
(b) Any Person dealing with JetFleet II or the Managing
General Partner may rely upon a certificate signed by the Managing General
Partner, "hereunto duly authorized, as to:
(i) the identity of the General Partners or any
▇▇▇▇▇▇▇▇▇▇,
▇▇
▇▇
(▇▇) the existence or nonexistence of any fact or
facts which constitute conditions precedent to acts by the General Partners or
which are in any other manner germane to the affairs of JetFleet II;
(iii) the Persons who are authorized to execute and
deliver any instrument or document on behalf of JetFleet II;
(iv) any act or failure to act by JetFleet II; or
(v) any other matter whatsoever involving
JetFleet II, any Partner or any Unitholder.
5.3 Authority of Partners to Deal with JetFleet II.
(a) All services or goods for which any of the General
Partners or their Affiliates are to receive compensation from JetFleet II shall
be embodied in a written contract which precisely describes the services to be
rendered and compensation to be paid; the contract may only be modified by
Majority Vote; the contract shall contain a clause allowing termination without
penalty on 60 days' notice. In addition to other specific provisions set forth
elsewhere in this Agreement, the General Partners and their Affiliates may
provide other services to JetFleet II only if the following criteria are met:
(i) the compensation, price or fee charged for providing such services must be
comparable and competitive with the compensation, price or fee of any other
Person who is rendering comparable services or selling or leasing comparable
goods and materials which could reasonably be made available to JetFleet II;
(ii) the fees and other terms of the contract for such services shall be fully
disclosed in the Prospectus at the time the Registration Statement becomes
effective with the Commission; (iii) the General Partner or its Affiliates must
be independently engaged in the business of providing such services to Persons
other than Affiliates of the General Partners; and (iv) at least 75% of the
General Partner's or Affiliate's gross revenue from providing such services
must be derived from other than the General Partner or their Affiliates.
(b) The following transactions expressly are prohibited:
(i) JetFleet II shall not sell or lease Aircraft
to, the General Partners or an Affiliate of a General Partner. Except as
provided in Section 5.2(a) (xvii), JetFleet II shall not purchase or lease
Aircraft from the General Partners or an Affiliate of a General Partner;
(ii) JetFleet II shall not make any loans to a
General Partner or its Affiliates;
(iii) JetFleet II shall not acquire equipment from
a Program in which the General Partners or their Affiliates have an interest;
(iv) JetFleet II shall not acquire equipment in
exchange for Units;
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(v) JetFleet II shall not give a General Partner
or any Affiliate of a General Partner an exclusive right to sell or exclusive
employment to sell equipment for JetFleet II;
(vi) JetFleet II shall not purchase limited
partnership interests in other partnerships; and
(vii) JetFleet II shall not permit a Unitholder to
contract away the fiduciary duty owed to the Unitholder by the General Partners
and their Affiliates under the California law.
5.4 Restrictions on the Authority of a General Partner.
(a) The General Partners and their Affiliates shall not,
without the Consent of a Majority Vote:
(i) do any act in contravention of this
Agreement;
(ii) do any act which would make it impossible to
carry on the ordinary business of JetFleet II;
(iii) operate JetFleet It as an investment company
subject to the requirements of the Investment Company Act of 1940, as amended;
(iv) make any changes in the investment objectives
of JetFleet II described in the Prospectus For the Offering;
(v) cause JetFleet II to issue equity securities
senior to the Units;
(vi) acquire Aircraft with Cash Flow or, after the
fifth anniversary of the Final Closing Date, with Net Disposition Proceeds;
(vii) admit an additional or successor General
Partner other than in accordance with Section 6.3;
(viii) sell Substantially All of the Assets in a
single sale, or in multiple sales in the same 12-month period; or
(ix) incur indebtedness on behalf of JetFleet II
for the acquisition of Aircraft, unless such indebtedness is nonrecourse to the
Unitholders and unless (A) the amount of any such indebtedness does not exceed
35% of the aggregate Adjusted Purchase Price of all the Aircraft then acquired
or owned by JetFleet II and (B) the terms of the indebtedness are such that the
maturity date of the indebtedness occurs after the expiration of the existing
lease on the Aircraft acquired and the interest and other carrying charges on
the indebtedness must be payable entirely out of a proportionate share of the
gross rentals from such lease; the indebtedness of JetFleet II in the aggregate
for all Aircraft may not exceed 35% of Gross Offering Proceeds without the
consent of a Majority Vote. JetFleet II may refinance Aircraft for the purpose
of
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distributing the net refinancing proceeds to the Unitholders and the General
Partners only if (A) the refinancing loan is nonrecourse to JetFleet II and the
Unitholders and (B) the Aircraft refinanced is subject to a Full Payout Lease
and the noncancellable rental payments under that lease are sufficient to repay
the refinancing loan entirely.
(b) No rebates or give-ups may be received by a General
Partner or its Affiliates; nor may a General Partner or Affiliate participate
in reciprocal business arrangements which would circumvent the Guidelines; nor
may a General Partner or any Affiliate participate in any reciprocal business
arrangement which would circumvent the restrictions of this Agreement or the
Guidelines against dealing with Affiliates;
(c) The General Partner and their Affiliates shall not
directly or indirectly pay or award any commissions or other compensation to
any Person engaged by a potential investor for investment advice as an
inducement to such advisor to advise the purchaser of interests in JetFleet II;
provided, however, that Sales Commissions, the Investment Banking Fee and Due
Diligence Costs may be paid for the sale of Units; or
(d) The General Partners and their Affiliates shall not
(i) provide financing, or receive interest or other financing charges or fees
on such financing, from JetFleet II in excess of the amounts which would be
charged by an unrelated lending institution on comparable loans for the same
purpose, or (ii) provide financing with a term in excess of 12 months.
5.5 Duties and Obligations of the General Partners.
(a) The General Partners shall devote to JetFleet II such
time as the General Partners shall deem to be necessary for the proper
performance of their duties hereunder.
(b) The Managing General Partner shall have a fiduciary
responsibility to demand payment pursuant to any promissory note contributed to
its capital by its parent (if any) in order to satisfy any liabilities of such
Managing General Partner to JetFleet II or its creditors.
(c) The Managing General Partner shall prepare and file,
or cause to be prepared and filed, on or before the due date (or any extension
thereof) all federal, state, local and foreign tax returns required to be filed
by JetFleet II and shall provide, or cause to be provided, all accounting and
record-keeping (including, without limitation, the maintenance of Capital
Accounts on behalf of each of the Partners) necessary for the preparation and
filing of such returns. The Managing General Partner shall, to the extent that
JetFleet II funds are available, cause JetFleet 1I to pay any taxes payable by
JetFleet II.
(d) Within the restrictions of this Agreement, the
Managing General Partner shall determine when and upon what terms JetFleet 1I
shall incur indebtedness.
(e) Within the restrictions of this Agreement, the
Managing General Partner shall manage JetFleet II's Aircraft and the
acquisition, leasing, sale or other disposition thereof.
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(f) The Managing General Partner shall manage the cash of
JetFleet II, determine (within the restrictions of this Agreement) the amount
of Cash Reserves and determine the amount of distributions to be made to
Partners and Unitholders.
(g) The Managing General Partner shall submit on behalf
of JetFleet II to the Commission and any appropriate state securities
authorities such information as the Commission or such authorities require, as
the case may be, including, but not limited to, reports and statements required
to be distributed to Unitholders.
(h) The Managing General Partner shall prepare and file
all certificates (or amendments thereto) and other similar documents which are
required by law to be filed and recorded under the California Act or under any
other laws of the State of California or of any other state in which JetFleet
II is then qualified to do business, or in which it owns property or transacts
business.
(i) The Managing General Partner shall have fiduciary
responsibility for the safekeeping and use of all funds and assets of JetFleet
II, whether or not in JetFleet II's immediate possession or control, and shall
not employ or permit another to employ such funds or assets in any manner
except for the exclusive benefit of JetFleet II. The Managing General Partner
shall open and maintain all JetFleet II bank accounts. JetFleet II's funds
shall not be commingled with the funds of any other Person except to the extent
necessary for investments meeting the criteria of Section 5.2(a) (xii). Nothing
contained in this Section shall prohibit the Managing General Partner from
establishing a master fiduciary account pursuant to which separate subtrust
accounts are established for the benefit of affiliated limited partnerships,
provided that Program funds are protected from claims of other partnerships and
for creditors. The Managing General Partner shall manage and operate JetFleet
II in a prudent and businesslike manner and for the best interests of JetFleet
II and the Unitholders. Nothing in this Agreement will relieve the General
Partner or any of its Affiliates from their general fiduciary obligations to
JetFleet II.
(j) If any General Partner or any of its Affiliates
(other than private or public investor programs) intends to acquire or lease
Aircraft for their own account, such opportunity must first be presented to
JetFleet II if JetFleet II is in a position to purchase such Aircraft, to the
extent such opportunity is consistent with the investment objectives and
policies of JetFleet II.
(k) If two or more Programs (including JetFleet II)
sponsored by a General Partner or any of its Affiliates are in a position to
acquire the same aircraft, the Managing General Partner shall determine which
Program, including JetFleet II, will purchase the aircraft based upon (i) the
amount of cash available in each Program, and the length of time such cash has
been available for investment, (ii) the liabilities of each Program and (iii)
the suitability of the acquisition in the light of each Program's objectives.
If two or more such Programs, including JetFleet II, are both in a position to
enter into a lease for different aircraft with the same lessee or to sell
aircraft to the same purchaser, the Managing General Partner generally will
afford priority to the aircraft which has been available for lease or sale for
the longest period of time.
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(l) The Managing General Partner shall duly file for
registration all Aircraft of JetFleet 1I with the FAA as required by the
Aviation Act (to the extent applicable) in accordance with all rules and
regulations promulgated thereunder.
5.6 Compensation of the General Partners.
(a) Except as expressly provided or permitted in this
Agreement, the General Partners and their Affiliates shall not receive any
compensation or reimbursement from JetFleet II.
(b) The Sales Agent shall receive, on the Initial Closing
and on each Additional Closing, Sales Commissions in an amount equal to 8% of
the Gross Offering Proceeds received by JetFleet II upon such Closing, the
Investment Banking Fee in an amount equal to 2% of such Gross Offering Proceeds
(subject in both cases to certain volume discounts, as described in the
Prospectus) and Due Diligence Costs in an amount not to exceed 0.5% of such
Gross Offering Proceeds. The Sales Agent will be permitted to reallow such fees
and costs as provided in the Prospectus For the' Offering' and the Sales Agent
Agreement
(c) The Managing General Partner shall receive, on the
Initial Closing and on each Additional Closing, a Non-Accountable
Organizational and Offering Expense Allowance in an amount equal to 3% of Gross
Offering Proceeds received by JetFleet II upon such Closing, out of which the
Managing General Partner will pay all Organizational and Offering Expenses
other than Sales Commissions, the Investment Banking Fee and Due Diligence
Costs. If the Organizational and Offering Expenses are less than this
allowance, then the Managing General Partner will retain the difference. If
such Expenses are greater than the allowance, then the Managing General Partner
shall be required to pay the excess.
(d) The Managing General Partner shall receive an
Equipment Management Fee, payable quarterly in arrears, in an amount equal to
3% of the gross rental payments from Operating Leases and 2% of the gross
rental payments from Full Payout Leases. This Equipment Management Fee will be
reduced (but not below zero) to the extent that any fees are payable to third
panics who, with the consent of the Managing General Partner, provide Equipment
Management services.
(e) The Managing General Partner shall receive an
Acquisition Fee equal to 1.5% of the Adjusted Purchase Price of Aircraft
purchased by JetFleet II (excluding any amount of the Adjusted Purchase Price
borrowed by JetFleet II), for services provided by the Managing General Partner
in identifying the availability of such Aircraft for purchase.
(f) The Managing General Partner shall receive a Resale
Fee with respect to each Aircraft sold by JetFleet II in an amount equal to
one-half of the Competitive Equipment Sales Commission, not to exceed 3% of the
contract sales price of the Aircraft. The Resale Fee will be subordinated to
the Preferred Payout.
(g) Calculation of the Preferred Payout for determining
payment of the Resale Fee will be made on an annual basis at the end of each
year. To the extent the Managing General
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Partner has received fees in excess of those fees permitted in such year as a
result of the application of the Preferred Payout test, such excess will be
refunded to JetFleet II. If, at any time, the Preferred Payout test either
precludes payment of such fees that would otherwise be due or requires a refund
to JetFleet II of such fees, the payment of such fees will be deferred and
accrued, without interest, until that requirement has been satisfied, at which
time such fees shall be paid from the first available proceeds. Failure to
achieve the Preferred Payout in any year will not affect any fees paid in prior
years.
(h) The aggregate amount of all Front-End Fees paid by
JetFleet II shall not, over the life of JetFleet II, exceed 18% of the Gross
Offering Proceeds.
(i) The Managing General Partner shall be responsible for
the payment of all General Partner Acquisition Expenses and shall not be
entitled to reimbursement for payment of such expenses. Subject to the
foregoing limitation, all expenses of JetFleet II, including all of JetFleet
II's general and administrative expenses which are payable to third panics for
legal, auditing and accounting expenses, for the renewal of Aircraft leases or
the re-lease or sale of Aircraft, for preparing and distributing reports and
for other general and administrative expenses, shall be billed directly to and
paid by JetFleet II. Each General Partner or Affiliate of a General Partner
shall be reimbursed by JetFleet II for the actual cost of goods and materials
used for or by JetFleet II and obtained from entities unaffiliated with such
General Partner or Affiliate, including all expenses for administrative
services performed by the General Partner or Affiliate which are necessary for
the prudent operation of JetFleet II. Reimbursement for any item referred to
this Section 5.6(i) shall be at the lower of the General Partner's or
Affiliate's actual cost or the amount which JetFleet II would have had to pay
to third panics for comparable services in the same geographic location. No
reimbursement under this Section 5.6(i) shall be permitted for services for
which the General Partner or Affiliate receives a separate fee pursuant to this
Agreement. Expenses incurred by any General Partner or any Affiliate for rent,
depreciation or utilities, for the cost of capital equipment not purchased by
JetFleet II as provided in this Agreement or for administrative items (except
as provided herein) shall not be charged to JetFleet II. Salaries, fringe
benefits, general travel expenses and other administrative items of any
"Controlling Person" shall not be charged to JetFleet II. For the purposes of
this Section 5.6(i), "Controlling Person" shall refer to Persons, whatever
their titles, who perform functions for the General Partners similar to those
of: (i) any director, (ii) executive management such as the (A) president, (B)
vice president or senior vice president, (C) corporate secretary, (D)
treasurer, (iii) senior management such as the vice president of an operating
division who reports directly to executive management; or (iv) any Person
holding 5% or more equity interest in the Managing General Partner or a Person
having the power to direct or cause the direction of the Managing General
Partner, whether through the ownership of voting securities, by contract or
otherwise.
(j) If JetFleet II borrows funds or the General Partners
advance funds, JetFleet II shall repay such borrowed funds or advances and any
interest thereon in accordance with the terms thereof from the cash receipts of
JetFleet II.
(k) JetFleet II shall not pay to the General Partners or
their Affiliates, directly or indirectly, except as permitted otherwise in this
Section 5.6, a commission or fee in connection with the reinvestment or
distribution of Cash Available for Distribution or out of the proceeds of the
resale, exchange or refinancing of Aircraft.
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5.7 Other Businesses of Partners. Subject to Sections 5.5(j) and
5.5(k), the General Partners and their Affiliates may engage in or possess any
interest in other business ventures of any kind, nature or description,
independently or with others, including, but not limited to, the acquisition,
financing, ownership, leasing, operation, management and syndication of
equipment, including aircraft, for their own account or for the account of
others. Neither JetFleet II nor any Unitholders, by virtue of their status as
Unitholders, shall have any rights or obligations in or to such independent
ventures or the revenues, profits or losses derived therefrom. Subject to the
provisions of this Agreement defining the rights and duties of the General
Partners, nothing in this Section 5.7 shall be deemed to diminish the General
Partners' overriding fiduciary obligation to JetFleet II and the Unitholders.
5.8 Indemnification of the General Partners and their Affiliates.
(a) JetFleet II shall indemnify and hold harmless the
General Partners and their Affiliates from any liability or loss suffered by
JetFleet II, the General Partners and their Affiliates (including reasonable
attorney's fees and other costs of defense, which may be paid as incurred)
which arises out of any action or inaction of any such Persons if (i) the
General Partners have determined in good faith that such course of conduct was
in the best interest of JetFleet II, (ii) such Person was acting on behalf of
or performing services for JetFleet II, (iii) such liability or loss was not
the result of negligence or misconduct by such Person and (iv) any amounts
payable pursuant to the foregoing are recoverable only out the assets of
JetFleet II and not out of the assets of any Limited Partner.
(b) Notwithstanding the above, the General Partners,
their Affiliates and any person acting as a broker dealer shall not be
indemnified for any liability by judgment, and costs associated therewith,
including attorneys' fees, arising from or out of a violation of federal or
state securities laws. Indemnification will be allowed for settlements and
related expenses of lawsuits alleging securities law violations, and for
expenses incurred in successfully defending such lawsuits, provided that a
court either (i) approves the settlement and finds that indemnification of the
settlement and related costs should be made, or (ii) approves indemnification
of litigation costs if a successful defense is made. In any claim for
indemnification for federal or state securities law violations, the party
seeking indemnification shall place before the court the position of the
Commission and any other applicable regulatory authority with respect to the
issue of indemnification for securities law violations, before seeking court
approval for indemnification.
(c) JetFleet II shall not incur the cost of that portion
of liability insurance which insures any General Partners or their Affiliates
for any liability as to which any such Person is prohibited from being
indemnified.
(d) The General Partners and their Affiliates may receive
advances from JetFleet II for payment of their costs and attorneys' fees as
incurred only if each of the following three conditions arc satisfied: (i) the
legal action is related to the performance of duties or
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services by such Person on behalf of JetFleet II; (ii) the legal action is
initiated by a third party who is not a General Partner or Unitholder, and
(iii) such person undertakes to repay the advanced funds with interest to
JetFleet II in cases in which it is not entitled to indemnification.
(e) For purposes of this Section 5.8 only, the term
"Affiliate" shall mean any person performing services on behalf of a General
Partner and acting within the scope of the General Partners' authority as set
forth in this Agreement, who or which: (1) directly or indirectly controls, or
is controlled by, or is under common control with a General Partner, (2) owns
or controls 10% or more of the outstanding voting securities of a General
Partner, (3) is an officer, director, employee, partner or trustee of a General
Partner, or (4) is a company in which a General Partner acts as an officer,
director, partner or trustee.
ARTICLE VI.
GENERAL PARTNER WITHDRAWAL, REMOVAL, AUTOMATIC CESSATION
AND SUBSTITUTION; TRANSFER OF A GENERAL PARTNER'S INTEREST
6.1 Withdrawal of the General Partners. A General Partner may
withdraw as a General Partner of JetFleet II at any time, provided that such
withdrawal is approved by a Majority Vote of the Unitholders. Units
beneficially owned by the affected General Partner or its Affiliates shall not
be voted on any such question and shall not be counted as outstanding in
calculating whether a Majority Vote has been obtained.
6.2 Removal of the General Partners. Any or all of the General
Partners may be removed as a General Partner for any reason by Majority Vote.
Units beneficially owned by the affected General Partner or its Affiliates
shall not be voted on any such question and shall not be counted as outstanding
in calculating whether a Majority Vote has been obtained.
6.3 Substitute and Additional General Partners; Assignment of
Economic Interest. Notwithstanding anything to the contrary in this Agreement,
a corporate General Partner may substitute in its stead as General Partner any
entity which has, by merger, consolidation or otherwise, acquired substantially
all of the assets or stock of the General Partner and continued its business.
In the event that the Managing General Partner is removed and no successor
Managing General Partner is appointed by the Unitholders, the remaining General
Partner(s) may appoint a successor Managing General Partner. In the event of
the withdrawal of the Managing General Partner or the cessation of the Managing
General Partner as a General Partner pursuant to Section 6.4, a remaining
General Partner may elect to become the successor Managing General Partner. In
addition, the existing General Partner(s) may, in its or their sole discretion,
admit one or more successor or additional General Partners to JetFleet II
provided that such successor or additional General Partner shall not be a
Managing General Partner. A General Partner may, without the permission of the
Unitholders, assign all or any portion of its economic interest in JetFleet II.
To the extent indicated in such assignment or to the extent necessary to
effectuate such assignment (but not otherwise), the assignee shall (i) be
permitted to receive directly from JetFleet II any distributions or other
consideration which would otherwise be received by the General Partner and (ii)
be treated as an assignee of a General Partner with respect to the interest
assigned. Any such assignment shall not affect the obligations or liabilities
of such General Partner hereunder.
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6.4 Automatic Cessation of General Partners. A General Partner
shall automatically cease being a General Partner upon the occurrence of any of
the following:
(a) An order for relief against the General Partner is
entered under Chapter 7 of the federal bankruptcy law;
(b) The General Partner (i) makes a general assignment
for the benefit of creditors, (ii) files a voluntary petition under the federal
bankruptcy law, (iii) files a petition or answer seeking for that General
Partner any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation, (iv) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the General
Partner in any proceeding of the nature described in (ii) or (iii) above or (v)
seeks, consents to or acquiesces in the appointment of a trustee, receiver or
liquidator of the General Partner or of all or any substantial pan of the
General Partner's assets;
(c) In the case of a General Partner who is an
individual, either the death of that General Partner or the entry by a court of
competent jurisdiction of an order adjudicating the General Partner incompetent
to manage the General Partner's person or estate; or
(d) In the case of a General Partner that is a
corporation or JetFleet II, the dissolution of such General Partner.
The occurrence of any of the following events, among others, will not by itself
cause a dissolution of JetFleet II and, notwithstanding the occurrence of any
of the following events, the affected General Partner will continue to be a
General Partner of JetFleet II:
a)The commencement of any proceeding against a General Partner seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any state, law or regulation;
b)The appointment, without the General Partner's consent or
acquiescence, of a trustee, receiver or liquidator of the General
Partner or of all or any substantial pan of the General Partner's
assets; or
c)In the case of a General Partner which is an entity, the
consolidation, merger or reorganization of the General Partner with
any other entity, whether or not the General Partner is the surviving
entity, or any change of control of the General Partner.
6.5 Purchase of a Terminated General Partner's Interest. Subject
to Section 6.7(a), upon a General Partner ceasing to be a General Partner
pursuant to this Article VI, such General Partner's interest as a general
partner in JetFleet II's income, losses, distributions and capital shall be
repurchased by JetFleet II (if JetFleet II continues) for an amount equal to
the fair market value of the Terminated General Partner's interest at the time
of removal, as determined by
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agreement among the Terminated General Partner and the remaining or
successor General Partner(s). In the event of any dispute as to such fair
market value determination, the fair market value will be determined by binding
arbitration in San Francisco, California in accordance with the then current
rules of the American Arbitration Association, with the expenses of the
arbitration borne equally by JetFleet II and the Terminated General Partner.
6.6 Amounts Accrued and Owing. Upon a General Partner ceasing to
be a General Partner pursuant to this Article VI, JetFleet II shall pay to the
Terminated General Partner all amounts then accrued and owing to the Terminated
General Partner.
6.7 Notes and Interest.
(a) If the Terminated General Partner's termination is
voluntary, JetFleet II shall deliver to the Terminated General Partner JetFleet
II's noninterest bearing promissory note, with principal payable, if at all,
from amounts which the Terminated General Partner otherwise would have received
as distributions under this Agreement.
(b) If the Terminated General Partner's termination is
involuntary, JetFleet II shall deliver to the Terminated General Partner
JetFleet II's promissory note, bearing interest at the "prime rate" as defined
in Section 6.7(c) below, payable in not less than five years with equal annual
installments.
(c) As to amounts required to be paid pursuant to Section
6.6, amounts unpaid when due shall accrue interest at a rate equal to 2% above
the "prime rate" (or any comparable rate) as announced from time to time by the
Bank of San Francisco (but not in excess of the maximum rate permitted under
applicable law), and such amounts and interest shall be paid out of fees that
would have been paid to the Terminated General Partner had it not been
terminated.
6.8 Liability of a Terminated General Partner. Any Terminated
General Partner shall remain liable for its portion of any obligations and
liabilities incurred by it as General Partner prior to the time such
withdrawal, removal or incapacity shall have become effective. The Terminated
General Partner shall be free of any obligation or liability incurred on
account of the activities of JetFleet II occurring from and after the time such
withdrawal or removal shall have become effective, and shall be indemnified and
held harmless by JetFleet II from and against any such obligations and
liabilities.
ARTICLE VII.
TRANSFERABILITY OF LIMITED PARTNERSHIP INTERESTS OR UNITS
7.1 Restrictions on Transfers of Units.
(a) A Unitholder may not assign or transfer all or pan of
the Unitholder's legal and equitable interest in the Unitholder's Units without
the consent of the Managing General Partner, which consent may be withheld in
the Managing General Partner's sole discretion. Further, the Managing General
Partner may condition its consent on representations, warranties, opinions of
counsel (who may be counsel to JetFleet II) and other assurances as to:
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(i) such assignments or transfers not resulting,
when added to the total of all other assignments or transfers within the
preceding 12 months, in JetFleet II being considered to have terminated within
the meaning of Section 708 of the Code;
(ii) the assignee or transferee not being a minor
or an incompetent;
(iii) the transfer or assignment not violating
federal or state securities laws (including any investor suitability
standards);
(iv) the transferor or the assignee or transferee
not holding less than 50 Units (40 Units in the case of IRAs and Qualified
Plans);
(v) such assignment or transfer not constituting
a transfer "on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code, not causing JetFleet II to lose
its status as a partnership for federal income tax purposes or not causing
JetFleet II to be a publicly traded partnership within the meaning of Section
7704 of the Code or otherwise adversely affecting the tax status of JetFleet
II;
(vi) such assignment or transfer not causing
JetFleet II assets to be deemed plan assets under ERISA;
(vii) the transferor filing with JetFleet II a duly
executed and acknowledged counterpart of the instrument effecting such
assignment or transfer, which instrument evidences the written acceptance by
the assignee or transferee of all of the terms and provisions of this
Agreement, contains a representation that such assignment or transfer was made
in accordance with all applicable laws and regulations (including any investor
suitability requirements) and in all other respects being satisfactory in form
and substance to the Managing General Partner;
(viii) such transfer or assignment not causing
JetFleet II to be in violation of applicable FAA regulations or law; and
(ix) such other matters as the Managing General
Partner shall reasonably request in its sole discretion.
(b) In no event shall any Units be assigned or
transferred to a minor or an incompetent except in trust, pursuant to the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, or by will
or intestate succession.
(c) Except for transfers or assignments (in trust or
otherwise), whether on death or inter vivos, to or for the benefit of (i) the
transferor's spouse, parents, children, other descendants, spouses of children,
heirs or legatees or (ii) a charitable, religious, scientific, literary, or
educational organization, and except as consented to by the Managing General
Partner in its sole discretion, no sale, exchange, transfer, or assignment of a
Unit may be made to any Person unless such Person (i) meets the suitability
requirements to become a Unitholder in
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accordance with the terms of the offering of the Units contained in the
Prospectus For the Offering or (ii) is a Partner or Unitholder.
(d) No purported sale, exchange, assignment or transfer
of any fractional Unit will be permitted or recognized for any purpose without
the consent of the Managing General Partner, in its sole discretion.
(e) Each Unitholder agrees, upon request of the Managing
General Partner, to execute such certificates or other documents and perform
such acts as the Managing General Partner deems appropriate after an assignment
or transfer of a Unit by that Unitholder to preserve the limited liability of
the Unitholders under the laws of any jurisdiction in which JetFleet II is
doing business. For purpose of this Section 7.1(e), any transfer of a Unit,
whether voluntary or by operation of law, shall be considered an assignment.
(f) In no event shall any Units be assigned or
transferred to a person who makes a market in securities unless such person
shall certify to the Managing General Partner that it has acquired such Units
solely for investment purposes and not for purpose of resale.
(g) No purported sale, exchange, transfer or assignment
of any Units will be permitted or recognized for any purpose unless (i) the
transferor shall have represented that such transfer (A) was effected through a
broker-dealer or matching agent whose procedures with respect to the transfer
of Units, have been approved by the Managing General Partner as not being
incident to a public trading market and not through any other broker-dealer or
matching agent or (B) otherwise was not effected through a broker-dealer or
matching agent which makes a market in Units or that provides a readily
available, regular and ongoing opportunity to Unitholders to sell or exchange
their Units through a public means of obtaining or providing information of
offers to buy, sell or exchange Units and (ii) the Managing General Partner
determines that such sale, assignment, or transfer would not, by itself or
together with any offer sales, exchanges, transfers or assignments, likely
result in, as determined by the Managing General Partner in its sole
discretion, JetFleet II's being classified as a publicly traded partnership.
(h) No purported sale, exchange, assignment or transfer
of any Units will be permitted or recognized for any purpose if such sale,
exchange, transfer or assignment would, by itself or together with any other
sales, exchanges, transfers or assignments, likely result in JetFleet II's
failing to satisfy the safe harbors contained in Internal Revenue Service
Advance Notice 88-75 (the "Notice"). Without limiting the foregoing, no
purported sale, exchange, transfer or assignment of any Units will be
recognized if such sale, exchange, transfer or assignment, together with all
other such dispositions (including repurchases by JetFleet II of its own Units)
during the same taxable year of JetFleet II would result in both (i) the
transfer of more than 5% of the total interests in JetFleet II capital or
profits (excluding transfers described in clauses (i) through (vi) of the next
succeeding sentence); and (ii) (A) the transfer of more than 2% of the total
interests in JetFleet II capital or profits (excluding transfers described in
clauses (i) through (vi) of the next succeeding sentence and sales through a
matching service that meets the requirements of the Notice, Part II, Section D)
or (B) the transfer of more than 10% of the
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total interests in JetFleet II capital or profits (excluding transfers
described in clauses (i) through (vi) of the next succeeding sentence). For
purposes of the 5% and the 2% limitations described in the preceding sentence,
the following transfers will be disregarded: (i) transfers in which the basis
of the Units in the hands of the transferee is determined, in whole or in part,
by reference to its basis in the hands of the transferor or is determined under
Code Section 732; (ii) transfers at death; (iii) transfers between members of a
family (as defined in Code Section 267(c) (4); (iv) the issuance of Units by or
on behalf of JetFleet II in exchange for cash, property, or services; (v)
distributions from a retirement plan qualified under Code Section 401(a); and
(vi) block transfers. The term "block transfer" means the transfer by a Partner
in one or more transactions during any 30 calendar day period of JetFleet 1I
Interests representing in the aggregate more than 5% of the total interest in
JetFleet II capital or profits.
(i) Any attempted assignment or transfer which does not
comply with subparagraphs (a) through (h) of this Section 7.1 shall be null and
void, unless otherwise determined by the Managing General Partner in its sole
discretion.
(j) The effective date of any assignment or transfer of
Units shall be no later than the last day of the calendar month following the
calendar month in which the requirements set forth in subparagraphs (a) through
(h) of this Section 7.1 have been satisfied. Until such effective date, the
Managing General Partner shall be entitled to treat the assignee or transferor
as the absolute owner of the Units, and shall incur no liability for
allocations, distributions, reports or notices made or given in good faith to
such assignee or transferor.
(k) A Unitholder may not contract away the common law
fiduciary duty owed to the Unitholders by the General Partners.
(l) JetFleet II is entitled to be reimbursed for the
reasonable expenses (expected to be $150 per transfer) and legal fees it incurs
in connection with any assignment or transfer.
7.2 Incapacity of Unitholders. If a Unitholder dies (or, in the
case of an entity, dissolves or terminates), the Unitholder's executor,
administrator or trustee or, if the Unitholder is adjudicated incompetent or
insane, the Unitholder's guardian or conservator, or, if the Unitholder becomes
bankrupt, the trustee or receiver of the Unitholder's estate shall have all the
rights and obligations of a Unitholder for the purpose of settling or managing
the Unitholder's estate and such power as the Unitholder possessed to assign
the Unitholder's Units. The death, dissolution, termination, incompetency,
insolvency or bankruptcy of a Unitholder shall not dissolve JetFleet II.
7.3 Change in Record Ownership. Subject to the terms and
conditions of this Agreement, title to a Unit shall be transferable by delivery
of an instrument of transfer, in a form satisfactory to the Managing General
Partner, properly executed by the Registered Owner, in accordance with the laws
governing transfers of investment securities; provided, however, that, until a
Unit has been transferred on the register of the Managing General Partner,
JetFleet II, notwithstanding any notice to the contrary, shall treat the
Registered Owner thereof as the absolute owner thereof for all purposes
(including, without limitation, the economic benefits and other rights of
Unitholders). Changes in the record ownership of Units will be recognized only
as provided in Section 7.1(j).
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7.4 Substituted Unitholder.
(a) No Person shall have the right to become a
substituted Unitholder unless each of the following conditions is satisfied:
(i) in the case of an assignment or transfer of
Units of a Unitholder, (A) the instrument of assignment or transfer sets forth
the intention of the assignor or transferor that the assignee or transferee
succeed to the assignor's or transferor's Unit as a Unitholder in place of the
assignee or transferee Unitholder, (B) the assignee or transferee shall have
fulfilled the requirements of this Article VII and shall have become a party
to, and adopted all the terms and conditions of, this Agreement by the
execution and delivery of all documents as required by the Managing General
Partner, (C) if such Person is a corporation, the Managing General Partner, may
require evidence satisfactory to the Managing General Partner of such Person's
authority to become a Partner or Unitholder under the terms and conditions of
this Agreement; and (D) JetFleet II shall have received all reasonable expenses
and legal fees incurred by JetFleet II in connection with such assignment,
transfer and substitution (expected to be $150 per transaction; and
(ii) the Managing General Partner shall have
consented to such Person's admission as a substituted Unitholder.
(b) This Agreement shall be amended as necessary to
recognize the admission of any substituted Unitholder no later than the last
day of the month following the month in which the requirements for transfer
have been satisfied.
(c) Any Unitholder who shall assign or transfer all of
the Unitholder's Units shall cease to be a Unitholder upon a substituted
Unitholder being admitted in the assigning or transferring Unitholder's stead
as a Unitholder with respect to the Units assigned or transferred.
(d) An assignee or transferee of Units who does not
become a substituted Unitholder and desires to make a further assignment or
transfer of the Units, shall be subject to all the provisions of this Article
VII to the same extent and in the same manner as any Unitholder desiring to
make an assignment or transfer of his Units.
(e) Notwithstanding anything to the contrary in this
Agreement, the Managing General Partner may at any time, without obtaining the
consent of any Unitholders, take such action with respect to the manner in
which Units are being or may be transferred or such other steps as the Managing
General Partner may deem necessary or appropriate in order to preserve the
status of JetFleet II as a partnership rather than an association taxable as a
corporation for federal income tax purposes or to insure that Unitholders will
be treated as limited partners of JetFleet II for federal income tax purposes.
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(f) For all purposes hereunder and under the California
Act, each Limited Partner hereby Consents to the admission of any Person as a
Substituted Limited Partner if the provisions of this Article VII are
satisfied.
ARTICLE VIII.
DISSOLUTION, LIQUIDATION AND TERMINATION OF JETFLEET II
8.1 Events Causing Dissolution. JetFleet II shall dissolve and its
affairs shall be wound up upon the earliest to occur of any of the following
events:
(a) the expiration of its term;
(b) the withdrawal, removal or automatic cessation
pursuant to Section 6.4 of a General Partner unless (i) there remains at least
one General Partner and, within 60 days after the date of such event, the
remaining General Partner(s) elect to continue the business of JetFleet II or
(ii) if there is no remaining General Partner, the Unitholders, within 90 days
after the date of such event, elect to continue the business of JetFleet II, in
a reconstituted form if necessary, and elect a successor Managing General
Partner effective as of the date of such event. In the event of the removal or
withdrawal of a General Partner where there is no remaining General Partner,
then a Majority Vote of the Unitholders may elect to continue JetFleet II and
elect a new Managing General Partner. If, however, the dissolution is caused by
a General Partner ceasing to be a General Partner for any reason other than
removal or withdrawal, and if there is no remaining General Partner, then the
right of the Unitholders to continue the business of JetFleet II and to elect
one or more General Partners may only be exercised by the unanimous vote of the
Unitholders;
(c) the election to dissolve JetFleet II by the Majority
Vote of the Unitholders;
(d) the entry of a decree of judicial dissolution by a
court of competent jurisdiction; and
(e) upon the disposition of JetFleet II's last interest
in Aircraft, including any debt obligation taken as consideration in the
disposition of Aircraft.
8.2 Liquidation.
(a) Upon dissolution and liquidation of JetFleet II, its
liabilities shall be paid in the order provided herein. The Managing General
Partner shall cause JetFleet II property to be sold in such manner as the
Managing General Partner, in its sole discretion, shall determine in an effort
to obtain the best prices for such property. The Managing General Partner shall
cause the cancellation of JetFleet II's Certificate of Limited Partnership upon
completion of the dissolution and liquidation of JetFleet II. Pending such
sales and cancellation, the Managing General Partner shall have the right to
continue to operate the business of JetFleet II and otherwise deal with
JetFleet II property. In the event that a General Partner withdraws, is removed
or otherwise ceases to be a General Partner and there is no remaining or
successor General Partner, a Person shall be elected by Majority Vote of the
Unitholders as a liquidating trustee to perform the
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functions of a general partner in liquidating the assets of JetFleet II and
winding up its affairs. Distributions in kind shall not be permitted except to
a liquidating trust which is established for the purpose of the liquidation of
the assets of JetFleet II and the distribution of cash in accordance with this
Agreement.
(b) The proceeds from the liquidation of JetFleet II's
property shall be paid out in the following order:
(i) First, JetFleet II shall pay or make
reasonable provision to pay all claims and obligations, including all
contingent, conditional or unmatured claims and obligations, known to JetFleet
II but for which the identity of the claimant is unknown, in accordance with
the California Act, excluding claims of the General Partners but including
claims of the Unitholders who are creditors, to the extent permitted by the
California Act;
(ii) Second, to the General Partners for any loans
or advances made by them to JetFleet II;
(iii) Third, to the extent permitted by the
limitations set forth in Section 5.6, to the Managing General Partner for any
fees due hereunder, and
(iv) The balance if any, to the General Partners
and Unitholders having positive balances in their Capital Accounts (after
giving effect to all contributions, distributions and allocations for all
periods, including the period during which such distribution occurs) in the
proportion that the positive balance in each General Partner's and Unitholder's
Capital Account bears to the sum of all Capital Accounts having positive
balances; provided, however, that any remaining amount of fees due to the
Managing General Partner hereunder shall first be paid to the Managing General
Partner in accordance with, at the time prescribed by, and subject to the
limitations of Section 5.6.
(c) Distributions in liquidation shall be made by the end
of the taxable year in which the liquidation occurs or, if later, within 90
days after the liquidating event and shall otherwise comply with Regulations
Section 1.704-l(b).
(d) Profits and Losses from Operations, Gross Income and
Gain from Sale and Loss from Sale for the fiscal year in which the liquidation
of JetFleet II occurs shall be allocated among the Unitholders and the General
Partners in such a manner as to first eliminate any deficit balances in the
Capital Accounts of the Unitholders or the General Partners, and thereafter, to
bring the Capital Accounts balances of the Unitholders and the General Partners
into such proportion that the distribution of liquidation proceeds in
accordance with Section 8.2(b)(iv) will produce, as nearly as possible, the
same result as a distribution of such proceeds in accordance with Section
4.1(a).
(e) If upon liquidation of JetFleet II (or the
liquidation of a General Partner's interest in JetFleet II within the meaning
of Section 1.704-l(b)(2)(ii)(g) of the Regulations), a General Partner has a
deficit balance in its Capital Account (after taking into account all Capital
Account adjustments for JetFleet It's taxable year in which the liquidation
occurs), such General
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Partner shall contribute in cash to JetFleet II by the end of such taxable year
(or, if later, within 90 days after the date of such liquidation) an amount
equal to such deficit Capital Account balance. Each of the General Partners
shall be jointly and severally liable with respect to the obligations of the
General Partners under this Section 8.2(e); provided, however that each General
Partner's aggregate liability to contribute cash to JetFleet II pursuant to
this Section 8.2(e) shall be limited to the greater of the deficit balance in
its own Capital Account or 1.01% of the Capital Contributions made by the
Unitholders.
(f) If any Unitholder has a deficit balance in the
Unitholder's Capital Account (after taking into account all Capital Account
adjustments for JetFleet II's taxable year in which the liquidation occurs),
such Unitholder shall have no obligation to make any contribution to the
capital of JetFleet II with respect to such deficit, and such deficit shall not
be considered a debt owed to JetFleet II or to any other person for any purpose
whatsoever.
(g) The provisions of Section 8.2(e) shall be enforceable
directly, indirectly, derivatively or otherwise, only by the Unitholders, or
the General Partners, as applicable, and no third party may enforce any rights
provided hereby.
ARTICLE IX.
BOOKS AND RECORDS; ACCOUNTING, TAX RECORDS
9.1 Books and Records. The books and records of JetFleet II,
including JetFleet II's Certificate of Limited Partnership and amendments
thereto, copies of this Agreement, copies of JetFleet II's federal, state and
local tax or information returns, JetFleet II's financial records, the books
and records relating to JetFleet II's internal affairs and the appraisals of
JetFleet II's Aircraft shall be maintained by the Managing General Partner at a
principal office of JetFleet II. The books and records shall include
information relating to the sale by the General Partners, or by their
Affiliates, of goods or services to JetFleet II, and an alphabetical list of
the names and addresses and Units of all Unitholders. The books and records
shall be available for examination by any Unitholder or the Unitholder's duly
authorized representative at any reasonable time and upon payment of reasonable
costs. Any Unitholder or the Unitholder's duly authorized representative, upon
paying the reasonable costs of duplication and mailing, shall be entitled to a
copy of property appraisals and the list of names, addresses and Units of the
Unitholders. JetFleet II may maintain such other books and records and may
provide such other statements as the Managing General Partner in its discretion
deems advisable. JetFleet II shall maintain its financial statements for at
least six years and its other books and records relating to its internal
affairs for at least three years.
9.2 Accounting Basis for Tax and Reporting Purposes. The books and
records of JetFleet II for financial reporting purposes and for the purpose of
reports to the Partners will be kept on an accrual basis in a manner consistent
with generally accepted accounting principles. The Managing General Partner
will cause the income tax returns of JetFleet II to be prepared on the accrual
basis of accounting by the application of memorandum entries to the accrual
basis books of account.
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9.3 Bank Accounts. The Managing General Partner shall maintain
JetFleet II bank accounts, and withdrawals shall be made only in the regular
course of JetFleet II business on such signature or signatures as the Managing
General Partner may determine. All deposits and other funds not needed in the
operation of the business may be deposited in interest-bearing accounts or
invested in securities as described in Section 5.2(a)(x).
9.4 Reports.
(a) Within 60 days after the end of each fiscal quarter
in which JetFleet II is in existence, the Managing General Partner shall cause
JetFleet II to prepare and distribute to the Unitholders the following
information:
(i) A detailed statement of any fees paid to the
General Partners or their Affiliates and the services rendered therefor;
(ii) Until the proceeds of the Offering are fully
invested or returned as provided in Section 3.4(c), a report of all Aircraft
purchased during the quarter, the amount of cash expended by JetFleet II to
acquire such Aircraft (itemizing the commissions, fees, expenses and payees)
and a statement of the amount of proceeds which remain unexpended or
uncommitted; and
(iii) While JetFleet II is registered under Section
12(g) of the Securities Exchange Act of 1934, the same financial information
contained in JetFleet II's report for the quarter on Form 10-Q filed with the
Commission. While JetFleet II is not so registered, within 60 days after the
end of the first six months of each Fiscal Year, JetFleet II will distribute to
the Unitholders a report, prepared on the same accounting basis to be utilized
as JetFleet II's annual reports, containing a condensed, unaudited balance
sheet, a condensed, unaudited statement of income for the six-month period, an
unaudited cash flow statement for the six-month period and other pertinent
information.
(b) Within 120 days after the end of each Fiscal Year,
the Managing General Partner shall cause JetFleet II to send to the
Unitholders, a report containing the following information:
(i) A balance sheet as of the end of such Fiscal
Year and statements of income and Partner's equity and a Cash Flow statement in
respect of such Fiscal Year, all of which (except the Cash Flow statement)
shall be prepared in accordance with generally accepted accounting principles.
(ii) An annual report consolidating the activities
of JetFleet II during such Fiscal Year, including (A) a detailed statement of
any transactions with the General Partners or their Affiliates and of fees,
commissions, compensation, reimbursement and other benefits paid or accrued to
the General Partners their Affiliates for such Fiscal Year, showing the amount
paid or accrued to each recipient and the services performed, and (B) a
breakdown of distributions made by JetFleet II for such Fiscal Year separately
identifying the source of such distributions, including: (1) Cash Flow during
the period, (2) Cash Flow from operations during
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a prior period which had been held as Cash Reserves, (3) Net Disposition
Proceeds and (4) Cash Reserves from the Gross Offering Proceeds;
(iii) A status report with respect to each Aircraft
owned by JetFleet II setting forth the condition of the Aircraft and indicating
whether the Aircraft is leased, operated or held for lease, repair or sale, the
remaining term of any existing lease, the projected use of the Aircraft for the
next year (whether the lease is expected to continue or to be renewed, or
whether the Aircraft is expected to be re-leased or sold) and any other
information relevant to the value or utilization of the Aircraft as deemed
appropriate by the Managing General Partner. The status report shall describe
the method used or basis for any valuation.
(c) The financial statements described in Section
9.4(b)(i), other than the Cash Flow statement, shall be audited by a firm of
independent certified public accountants and shall be prepared in accordance
with generally accepted accounting principles and accompanied by the opinion of
such independent certified public accountants.
(d) Within the scope of the annual audit of the General
Partners' or their Affiliates' financial statements, the independent certified
public accountants shall issue a special report on the allocation of the cost
of services, goods or materials provided by the General Partner or Affiliate to
JetFleet II. The special report shall, at a minimum, provide (i) a review of
the time records of individual employees, the cost of whose services were
reimbursed, and (ii) a review of the specific nature of the work performed by
each such employee. The special report shall be in accordance with generally
accepted auditing standards. The cost of such special report will be itemized
by such accountants and may be reimbursed to the General Partners or their
Affiliates by JetFleet II only to the extent that such reimbursement, when
added to the cost of the services rendered, does not exceed the allowable rate
for such services as determined in Section 5.6 of this Agreement.
(e) Not later than March 15 next following the end of
each Fiscal Year, the Managing General Partner will send to each Person who was
a Unitholder at any time during that Fiscal Year such tax information as shall
be necessary for the preparation of federal and state income tax returns.
(f) The Managing General Partner shall make any of the
foregoing reports available to the Commission and any state securities
administrators upon request.
9.5 Elections. The Managing General Partner may cause JetFleet II
to make all elections required or permitted to be made by JetFleet II under the
Code or deemed appropriate by the Managing General Partner and not otherwise
expressly provided for in this Agreement or the Prospectus For the Offering.
9.6 Designation of Tax Matters Partner. The Managing General
Partner shall be the Tax Matters Partner of JetFleet II, as provided in Section
6231 of the Code and the Regulations promulgated thereunder. Each Partner and
Unitholder approves of such designation of the Tax Matters Partner and agrees
to execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such approval.
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9.7 Expenses of Tax Matters Partner. JetFleet II shall indemnify
and reimburse the Tax Matters Partner for expenses, including legal and
accounting fees, claims, liabilities, losses and damages incurred in connection
with any administrative or judicial proceeding with respect to the tax
liability of JetFleet II, the Partners and the Unitholders. The payment of such
expenses shall be made before any distributions are made from Cash Available
for Distribution. Neither of the General Partners, nor any of their respective
Affiliates, nor any other Person shall have any obligation to provide funds for
such purposes. The taking of any action and the incurring of any expense by the
Tax Matters Partner in connection with any such proceeding, except to the
extent required by law, is a matter in the sole discretion of the Tax Matters
Partner, and the limitations of liability and indemnification of the General
Partner set forth Section 5.8 shall be fully applicable to the Tax Makers
Partner in its capacity as such.
ARTICLE X.
AMENDMENTS
10.1 Proposal and Adoption of Amendments Generally.
(a) Amendments to this Agreement which do not, in the
opinion of the Managing General Partner, have a material adverse effect upon
the Unitholders or which are necessary or desirable, in the reasonable
determination of the Managing General Partner, to satisfy any requirements,
conditions or guidelines contained in any regulation, ruling, order, directive
or opinion of any federal or state agency or judicial authority or contained in
any federal or state statute or to preserve the status of JetFleet II as a
partnership for federal income tax purposes or to ensure that Unitholders will
be treated as limited partners for federal income tax purposes, may be made by
the Managing General Partner through the use of the Power of Attorney granted
in Section 12.1, without the approval of any Unitholder. Amendments which
shall be deemed to be of an inconsequential nature not adversely affecting the
rights of the Unitholders in any material respect include, without limitation,
the following:
(i) Amendments made to this Agreement to prevent
the Reregistration or decertification of the Aircraft by the FAA or by third
parties, or to reduce the risk of Reregistration or decenification of Aircraft;
(ii) Changing the name or the location of a
principal office of JetFleet II;
(iii) Changing the name, address or Capital Account
of a Partner or Unitholder to reflect changes through transfer, assignment or
withdrawal from JetFleet II, change of address or reduction in capital (to the
extent permitted by the California Act);
(iv) To the extent this Agreement is inconsistent
with the California Act, the Code or other applicable law, making any change
necessary to conform this Agreement to law;
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(v) To the extent any provisions of this
Agreement are ambiguous or inconsistent with other provisions in this Agreement
or in the Prospectus For the Offering, making any change necessary to clarify
this Agreement in order to conform it to the intentions of the Partners as
reflected in this Agreement and the Prospectus For the Offering.
(vi) Making any changes necessary or convenient to
the orderly administration of JetFleet II's affairs which do not adversely
effect the rights of the Unitholders in any material respect;
(vii) Making any changes necessary to prevent
JetFleet II or any General Partner or Unitholder (or any principal thereof)
from being subject to the provisions of the Investment Company Act of 1940, as
amended, or "plan asset" regulations adopted under ERISA; and
(viii) Making any change relating to the allocation
of income, gain, losses, deductions and credits as may be required under the
Code and the Regulations.
(b) Any other amendment to this Agreement may be proposed
by the General Partners or by holders of 10% of the Interests of the
Unitholders. The Persons proposing such amendment shall submit (i) the text of
such amendment and (ii) a statement of the purpose of such amendment. Within
ten days after receipt of any proposal under this Section 10.1(b), the Managing
General Partner shall give written Notification of such proposed amendment to
all Partners and Unitholders either in person or by mail, together with the
statement of purpose and the views if any, of the Managing Partner with respect
to such proposed amendment. In order to be adopted, any such amendment will
require the approval of a Majority Vote.
(c) The Managing General Partner shall, within a
reasonable time after the adoption of any amendment to this Agreement, make any
filings or publications required or desirable to reflect such amendment.
(d) Notwithstanding the provisions of this Section 10.1,
this Agreement shall in no event be amended to change the limited liability of
the Unitholders without the vote or consent of all of the Unitholders.
10.2 Amendments on Admission or Withdrawal of Partners and
Unitholders.
(a) If this Agreement shall be amended to reflect the
admission for substitution of a Unitholder or Limited Partner, the amendment to
this Agreement shall be signed by the General Partners and the Person to be
substituted or added or such Person's attorney-in-fact. Such amendments shall
occur as often as appropriate, in the opinion of the Managing General Partner.
(b) Except as provided in Section 6.3, no successor or
additional General Partner will be admitted to JetFleet II without an amendment
hereof approved by a Majority Vote.
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ARTICLE XI.
CONSENTS, VOTING AND MEETINGS
11.1 Method of Giving Consent. Any Consent required by this
Agreement may be given as follows:
(a) by a written Consent given by the approving Partner
or Unitholder at or prior to the doing of the act for which the Consent is
solicited.
(b) by the affirmative vote of the approving Partner or
Unitholder to the doing of the act for which the approval is solicited at any
meeting called and held pursuant to Section 11.3 to consider the doing of such
act.
Such Consent may be given to the Managing General Partner or to any
third party by proxy and, in either case, may be voted in favor of or against
any proposal, provided the party acting on behalf of the Partner who granted
the Consent or proxy acts in accordance with the terms of such Consent or
proxy.
11.2 Voting Rights. A Unitholder shall be entitled to cast one vote
for each Unit which the Unitholder owns: (a) at a meeting, in person or by
written proxy, or (b) without a meeting, by a signed writing directing the
manner in which the Unitholder desires that the Unitholder's vote be cast,
which writing must be received by the Managing General Partner prior to the
date upon which the votes of Unitholders are to be counted. The Unitholders
may, by Majority Vote, without the necessity for concurrence by any General
Partners, (w) amend this Agreement, (x) dissolve JetFleet II, (y) remove a
General Partner and elect a new General Partner and (z) approve or disapprove
the sale of all or Substantially All of the Assets of JetFleet II. Units
beneficially owned by the General Partners above or on any other matter which
involves a conflict of interest on the part of the General Partners, and such
Units shall not be counted as outstanding in calculating whether a Majority
Vote on these matters has been obtained.
11.3 Meetings. Meetings of the Partners may be called for any
matters for which Unitholders may vote as set forth in this Agreement by any
General Partner or by Unitholders holding 10% or more of the Outstanding Units.
A list of names and addresses of all Unitholders shall be maintained as part of
the books and records of JetFleet II and shall be made available by mail on
request to any Unitholder or a designated representative thereof at their cost.
Upon a written request, either in person or by registered mail, stating the
purpose(s) of the meeting, the Managing General Partner shall provide all
Unitholders, within ten days after each request, Notification of a meeting. The
meeting shall be held not less than 15 nor more than 60 days after Notification
thereof shall have been distributed to the Unitholders. Any such Notification
shall state briefly the purpose, time and place of the meeting. Such meeting
shall be held at the time and place specified in the request for the meeting
or, if none, at a time and place in the City and County of San Francisco as
designated by the Managing General Partner. Annual meetings of JetFleet II are
not contemplated. A majority of the Units entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of JetFleet II.
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11.4 Submissions to Unitholders. The Managing General Partner shall
give all the Unitholders Notification of any proposal or other matter required
to be submitted for the consideration and approval of the Unitholders, or shall
cause such Notification to be given by JetFleet II. Such Notification shall
include any information required by the relevant provision of this Agreement,
by the California Act or pursuant to applicable federal and state securities
laws.
11.5 Record Dates. The Managing General Partner may set in advance
a date for determining the Unitholders entitled to Notification and entitled to
vote at any meeting. All record dates shall not be more than 60 nor less than
10 days prior to the date of the meeting.
ARTICLE XII.
POWERS OF ATTORNEY
(a) Each Unitholder irrevocably constitutes and appoints
the Managing General Partner as such Unitholder's true and lawful
attorney-in-fact, with full power and authority in the Unitholder's name, place
and stead, to execute, acknowledge, deliver, swear to, file and/or record at
the appropriate public offices, such documents, instruments and conveyances as
may be necessary or appropriate to carry out the provisions or purposes of this
Agreement, including, without limitation:
(i) all certificates and other instruments
(including counterparts of this Agreement), and any amendment to any of the
foregoing which the Managing General Partner deems appropriate to qualify or
continue JetFleet II as a limited partnership (or a partnership in which the
Unitholders will have limited liability comparable to that provided by the
California Act) or which is otherwise adopted in accordance with this
agreement, and to execute, acknowledge, deliver, swear to, file and record at
the appropriate public offices all such other agreements, documents,
instruments or conveyances as the Managing General Partner may deem necessary
or appropriate to carry out the provisions or purposes of this Agreement or the
business of JetFleet II;
(ii) all instruments which the Managing General
Partner deems appropriate to reflect a change or modification of JetFleet II in
accordance with the terms of this Agreement;
(iii) all conveyances and other instruments which
the Managing General Partner deems appropriate to reflect the dissolution and
termination of JetFleet II (including a certificate of cancellation); and
(iv) all consents, instruments and documents which
may be necessary or desirable in order to effectuate and comply with the
provisions of Article VI.
(b) This appointment of the Managing General Partner as
attorney-in-fact is irrevocable and shall be deemed to be a power coupled with
an interest in recognition of the fact that each of the Unitholders under this
Agreement will be relying upon the power of the Managing General Partner to act
as contemplated by this Agreement in any filing and other action by it on
behalf of JetFleet II, and shall survive and not be affected by the subsequent
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death, incapacity, insanity, dissolution or termination of any Person hereby
giving such power and the transfer or assignment of all or any pan of the
Interest of such Person; provided, however, that in the event a Unitholder
transfers all of the Unitholder's units, the foregoing power of attorney of a
transferor Unitholder shall survive such transfer only until such time as the
transferee shall have been recognized by JetFleet II as a Unitholder and all
required documents and instruments shall have been duly executed, filed and
recorded to effect such substitution.
(c) this appointment of the Managing General Partner as
attorney-in-fact may be exercised by the Managing General Partner by signing
separately as attorney-in-fact for each Unitholder or by a single signature of
the Managing General Partner as attorney-in-fact for all the Unitholders.
ARTICLE XIII.
MISCELLANEOUS
13.1 Notification to JetFleet II or the General Partners. Any
Notification to JetFleet II or the General Partners shall be delivered to them
at the principal offices of JetFleet II as set forth in this Agreement or as
revised in any subsequent Notification to all the Partners and Unitholders.
13.2 Binding Provisions. The covenants, agreements and provisions
contained herein shall be binding upon and inure to the benefit of the heirs,
executors, administrators, successors and assigns of the respective parties
hereto.
13.3 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of California without giving
effect to the principles thereof relating to the conflict of laws.
13.4 Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart or such counterparts have been signed at different times.
13.5 Severability of Provisions. If for any reason any provision
hereof is determined to be invalid, such invalidity shall not impair the
operation of or affect those portions of this Agreement which are valid.
13.6 Entire Agreement. This Agreement constitutes the entire
agreement among the parties. This Agreement supersedes any prior agreement or
understanding among the parties and may not be modified or amended in any
manner other than as set forth herein.
13.7 Section Titles. Section titles are for descriptive purposes
only and shall not control or alter the meaning of this Agreement as set forth
in the text.
13.8 Legal Fee. Subject to the provisions of Section 5.8, in the
event of any litigation or other legal dispute between any of the General
Partners hereto to enforce any provision of this
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Agreement or any right of any party hereto, the unsuccessful party to such
litigation or legal dispute shall pay the successful party all costs, including
reasonable attorneys' fees, incurred therein by the successful party, all of
which may be included in and as part of the judgment or other resolution of
such litigation or legal dispute.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.
GENERAL PARTNERS:
CMA CAPITAL GROUP
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
INITIAL LIMITED PARTNER:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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AMENDMENT TO JETFLEET AIRCRAFT II, L.P.
LIMITED PARTNERSHIP AGREEMENT
Pursuant to Section 10.1(a) of the Limited Partnership Agreement of
JetFleet Aircraft II, L.P., a California limited partnership ("JetFleet II"),
dated as of June 21, 1991 (the "Agreement"), the Partnership hereby amends the
Agreement as of March 15, 1993 as follows:
1. Except as indicated otherwise in this amendment, capitalized
terms used in this amendment have the same meanings that such terms have in the
Agreement.
2. The second sentence of Section 3.6(e) (stating that the
General Partners shall not be liable to any Unitholder, in certain
circumstances by reason of changes in the federal income tax laws) is hereby
deleted.
3. Section 9.1 of the Agreement is hereby amended by adding the
following at the end of such section:
Notwithstanding the foregoing, any Unitholder and any designated
representative thereof shall be permitted access to all records of
JetFleet II at all reasonable times, and may inspect and copy any of
them. An alphabetical list of the names, addresses and business
telephone numbers of the Unitholders along with the number of Units
held by each of them (the "Unitholder List") shall be maintained as
part of the books and records of JetFleet II and shall be available
for inspection by any Unitholder or any designated agent thereof at
the home office of JetFleet II upon the request of the Unitholder.
The Unitholder List shall be updated at least quarterly to reflect
changes in the information contained therein. A copy of the
Unitholder List shall be mailed to any Unitholder requesting the
Unitholder List within ten days of the request. A copy of the
Unitholder List shall be printed in alphabetical order, on white
paper, and in readily readable type size (in no event smaller than
10-point type). A reasonable charge for any copy work may be charged
by JetFleet II. The purposes for which a Unitholder may request a
copy of the Unitholder List include, without limitation, matters
relating to Unitholders' voting rights under this Agreement, and the
exercise of Unitholders' rights under federal proxy laws. If any
Sponsor of JetFleet II neglects or refuses to exhibit, produce or mail
a copy of the Unitholder List as requested, the Sponsor may be liable
to any Unitholder requesting the list for the costs, including
attorneys' fees incurred by that Unitholder for compelling production
of the Unitholder List, and for actual damages suffered by any
Unitholder by reason of such refusal or neglect. It shall be a
defense that the actual purpose and reason for the requests for
inspection or for a copy of the Unitholder List is to secure such list
of Unitholders or other information for the purpose of selling such
list or copies thereof, or of using the same for a commercial purpose
other than in the interest of the applicant as a Unitholder relative
to the affairs of JetFleet II. The Sponsor may require the Unitholder
requesting the Unitholder List to represent that the list is not
requested for a commercial purpose unrelated to the Unitholder's
interest in JetFleet II. The remedies provided hereunder to
Unitholder requesting copies of the Unitholder List are in addition
to, and shall not in any way limit, other remedies available to
Unitholders under federal law, or the laws of any state.
4. The following Section 13.9 is added to the Agreement:
13.9 Rollup. (a) For the purposes of this Section 13.9, the term
"Roll-Up" shall refer to a transaction involving the acquisition,
merger, conversion or consolidation either directly or indirectly of
JetFleet II and the issuance of securities of a Roll-Up Entity. Such
term does not include:
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(i) a transaction involving securities of JetFleet II if those
securities have been for at least 12 months listed on a national
securities exchange or traded through the National Association of
Securities Dealers Automated Quotation National Market System; or
(ii) a transaction involving the conversion to corporate, trust or
association form of only JetFleet II if, as a consequence of the
transaction, there will be no significant change in any of the
following:
(A) the Unitholder's voting rights;
(B) the term of existence of JetFleet II;
(C) Sponsor compensation; or
(D) JetFleet II's investment objectives.
For purposes of this Section 13.9, the term "Roll-Up Entity" refers to
the partnership, corporation, trust or other entity that would be
created or would survive after the successful completion of a proposed
Roll-Up transaction.
(b) In connection with a proposed Roll-Up, an appraisal of all
JetFleet II assets shall be obtained from a competent, independent
expert (such expert shall be a person with no current material or
prior business or personal relationship with any Sponsor, who is
engaged to a substantial event in the business of rendering opinions
regarding the value of assets of the type held by JetFleet II and who
is qualified to perform such work). If the appraisal will be included
in a Prospectus used to offer the securities of a Roll-Up Entity, the
appraisal shall be filed with the Commission and the states as an
exhibit to the registration statement for the offering. Accordingly,
an issuer using the appraisal shall be subject to liability for
violation of Section 11 of the Securities Act of 1933, as amended, and
comparable provisions under state laws for any material
misrepresentations or material omissions in the appraisal. JetFleet
II's assets shall be appraised on a consistent basis. The appraisal
shall be based on an evaluation of all relevant information, and shall
indicate the value of JetFleet II's assets as of a date immediately
prior to the announcement of the proposed transaction. The appraisal
shall assume an orderly liquidation of the assets over a 12 month
period. The terms of the engagement of the independent expert shall
clearly state that the engagement is for the benefit of JetFleet II
and its Unitholders. A summary of the independent appraisal,
including all material assumptions underlying the appraisal, shall be
included in a report to the Unitholders in connection with a proposed
Roll- Up.
(c) In connection with a proposed Roll-Up, the Person sponsoring
the Roll-Up shall offer to the Unitholders who vote "no" on the
proposal the choice of:
(i) accepting the securities of the Roll-Up Entity
offered in the proposed Roll-Up; or
(ii) one of the following:
(A) remaining as Unitholders in JetFleet II, and
preserving their interests therein on the
same terms and conditions as existed
previously; or
(B) receiving cash in an amount equal to the
Unitholder's pro-rata share of the appraised
value of the net assets of JetFleet II.
(d) JetFleet II shall not participate in any proposed Roll-Up
which would result in Unitholders having democracy rights in the
Roll-Up Entity which are less than those provided for under Sections
VI.A and VI.B of the Guidelines. If the Roll-Up Entity is a
corporation, the voting rights of Unitholders shall correspond to the
voting rights provided for in these Guidelines to the greatest extent
possible.
(e) JetFleet II shall not participate in any proposed Roll-Up
which includes provisions which would operate to materially impede or
frustrate the accumulation of shares by any
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purchaser of the securities of the Roll-Up Entity (except to the
minimum extent necessary to preserve the tax status of the Roll-Up
Entity). JetFleet II shall not participate in any proposed Roll-Up
which would limit the ability of a Unitholder to exercise the voting
rights of its securities of the Roll-Up Entity on the basis of the
number of Units held by that Unitholder.
(f) JetFleet II shall not participate in any proposed Roll-Up in
which Unitholders' rights of access to the records of the Roll-Up
Entity will be less than those provided for under Section VI.D of the
Guidelines.
(g) JetFleet II shall not participate in any proposed Roll-Up in
which any of the costs of the transaction would be borne by JetFleet
II if the Roll-Up is not approved by the Unitholders.
IN WITNESS WHEREOF, the undersigned have executed this amendment as of
March 15, 1993
GENERAL PARTNERS
CMA Capital Group
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CMA Capital Group, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
LIMITED PARTNERS
Each Limited Partner of JetFleet II
By: CMA Capital Group, as Attorney-in-Fact
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
55
IN WITNESS WHEREOF, the undersigned have executed this amendment as of
March 15, 1993.
GENERAL PARTNERS:
CMA Capital Group
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
CMA Capital Group, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
LIMITED PARTNERS:
Each Limited Partner of JetFleet II
By: CMA Capital Group, as Attorney-in-Fact
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
4