Document:

Liquidating Trust Agreement

________________________________________________________________________________

LIQUIDATING TRUST AGREEMENT

Dated as of December 31, 2004

by and among

AFG Investment Trust D,

a trust formed under the laws of the State of Delaware ("Investment Trust D")

as Grantor

by

AFG ASIT Corporation, 

not in its individual capacity 

but solely as the Managing Trustee of Grantor

and

Wilmington Trust Company,

not in its individual capacity but solely as the Liquidating Trustee

_________________________________________________________________________________

	
 

	 	 	 
	

	

TABLE OF CONTENTS

 

ARTICLE I: NAME AND DEFINITIONS                                        2

 

1.1    Name2

 

1.2    Certain Terms Defined                                               2

 

ARTICLE II: NATURE OF TRANSFER                                                   4

 

2.1    Purpose of Liquidating Trust                                                   4

 

2.2    Prohibited Activities                                                   5

 

2.3    No Reversion to Investment Trust D                                             5

 

2.4    Payment of Liabilities                                                 5

 

2.5    Bill of Sale, Assignment, Acceptance and Assumption Agreement; 

Instruments of Further Assurance                                                   5

 

2.6    Incidents of Ownership                                                    6

 

2.7    Notice to Unlocated Holders of Investment Trust D Units                               6

 

ARTICLE III: BENEFICIARIES                                                  6

 

3.1    Beneficial Interests                                                   6

 

3.2    Rights of Beneficiaries                                                    7

 

3.3    No Transfer of Interests of Beneficiaries                                     7

 

3.4    Trustee as Beneficiary                                                    8

 

ARTICLE IV: DURATION AND TERMINATION OF LIQUIDATING TRUST                   8

 

4.1    Duration                                                            8

 

4.2    Other Obligations of the Liquidating Trustee upon Termination                       8

 

ARTICLE V: ADMINISTRATION OF LIQUIDATING TRUST ASSETS                       8

 

5.1    Sale of Liquidating Trust Assets                                            8

 

5.2    Transactions with Related Persons                                                    9

 

5.3    Payment of Claims, Expenses and Liabilities                                      9

 

5.4    Interim Distributions                                                 9

 

5.5    Final Distribution                                                      9

 

5.6    Reports to Beneficiaries and Others                                                 10

 

5.7    Federal Income Tax Information                                                10

5.8    Employment of Manager                                                11

 

ARTICLE VI: POWERS OF AND LIMITATIONS ON THE LIQUIDATING TRUSTEE            11

 

6.1    Limitations on Liquidating Trustee                                         11

 

6.2    Specific Powers of the Liquidating Trustee                                        12

 

ARTICLE VII: CONCERNING THE LIQUIDATING TRUSTEE, BENEFICIARIES, EMPLOYEES AND AGENTS 15

 

7.1    Generally                                                           15

 

7.2    Reliance by Liquidating Trustee                                             15

 

7.3    Limitation on Liability to Third Persons                                               16

 

7.4    Recitals                                                              17

 

7.5    Indemnification                                                   17

 

7.6    Rights of Liquidating Trustee, Employees, Independent Contractors

and Agents to Own Liquidating Trust Units or Other Property and 

to Engage in Other Business                                                     18

 

7.7    Contribution Back                                                      18

 

ARTICLE VIII: PROTECTION OF PERSONS DEALING WITH THE LIQUIDATING TRUSTEE      19

 

8.1    Action by Liquidating Trustee                                                 19

 

8.2    Reliance on Statements by the Liquidating Trustee                                    19

 

ARTICLE IX: COMPENSATION OF LIQUIDATING TRUSTEE                                     19

 

9.1    Amount of Compensation                                                       19

 

9.2    Dates of Payment                                                            19

 

9.3    Expenses                                                             19

 

ARTICLE X: THE LIQUIDATING TRUSTEE AND SUCCESSOR LIQUIDATING TRUSTEE           19

 

10.1    Number and Qualification of Liquidating Trustees                                19

 

10.2    Resignation and Removal                                                       20

 

10.3    Appointment of Successor                                                      20

 

10.4    Acceptance of Appointment by Successor Liquidating Trustee                          21

 

10.5    Bonds                                                                        21

 

ARTICLE XI: CONCERNING THE BENEFICIARIES                                   21

 

11.1    Evidence of Action by Beneficiaries                                              21

 

11.2    Limitation on Suits by Beneficiaries                                               22

 

11.3    Requirement of Undertaking                                                   22

 

ARTICLE XII: MEETING OF BENEFICIARIES                                               22

 

12.1    Purpose of Meetings                                                         22

 

12.2    Meeting Called by Liquidating Trustee                                            22

 

12.3    Meeting Called on Request of Beneficiaries                                    22

 

12.4    Persons Entitled to Vote at Meeting of Beneficiaries                                   23

 

12.5    Quorum                                                                23

 

12.6    Adjournment of Meeting                                                                                  23

 

12.7    Conduct of Meetings                                                    23

 

12.8    Record of Meeting                                                       23

 

ARTICLE XIII: AMENDMENTS                                                            23

 

13.1    Consent of Beneficiaries                                                     23

 

13.2    Notice and Effect of Amendment                                              24

 

13.3    Liquidating Trustee’s Declining to Execute Documents                                 24

 

ARTICLE XIV: MISCELLANEOUS PROVISIONS                                             24

 

14.1    Filing Documents                                                    24

 

14.2    Intention of Parties to Establish Liquidating Trust                                    24

 

14.3    Beneficiaries Have No Rights or Privileges as Holders of 

Investment Trust D Units                                                               24

 

14.4    Laws as to Construction                                                       25

 

14.5    Severability                                                              25

 

14.6    Notices                                                              25

 

14.7    Counterparts                                                                        26

	
 

 

	 	 	 
	

	

LIQUIDATING TRUST AGREEMENT

This LIQUIDATING TRUST AGREEMENT (this "Agreement"), dated as of December 31, 2004 (the "Effective Date"), by and among AFG ASIT Corporation, not in its individual capacity but solely as Managing Trustee (the "Managing Trustee") of AFG Investment Trust D, a trust formed under the laws of the State of Delaware ("Investment Trust D"), pursuant to a certain Third Amended and Restated Declaration of Trust dated as of October 1, 2003, as the same has been amended thereafter from time to time (the "Trust Agreement") and WILMINGTON TRUST COMPANY, a Delaware banking corporation as Liquidating Trustee (the "Liquidating Trustee").

WHEREAS, pursuant to Section 1.6 thereof, the Trust Agreement shall continue in full force and effect until December 31, 2006, except that Investment Trust D shall be dissolved, its affairs wound up and its assets liquidated prior to such date upon the sale or other disposition of all or substantially all of the Assets of Investment Trust D, unless the Managing Trustee elects to continue Investment Trust D’s business for the purpose of the receipt and collection of any consideration to be received in exchange for Assets (which activities shall be deemed to be a part of such sale or other disposition and the winding up of the affairs of Investment Trust D); and

 

WHEREAS, the Trust Agreement provides that the Managing Trustee shall use its best efforts to sell all of the Assets of Investment Trust D not later than the end of the tenth year following Investment Trust D’s Final Closing, provided that market conditions existing at the time permit sale of the Assets on terms deemed reasonable by the Managing Trustee; and 

 

WHEREAS, pursuant to the Trust Agreement, the Managing Trustee shall have full power and authority on behalf on Investment Trust D to sell, exchange or otherwise dispose of the Assets on terms the Managing Trustee deems to be in the best interests of Investment Trust D; and

 

WHEREAS, the Managing Trustee has determined that it is necessary and advisable and in the best interest of Investment Trust D to (i) sell or otherwise dispose of all or substantially all of its Assets, (ii) dissolve Investment Trust D, and (iii) wind up the business of Investment Trust D in accordance with the Trust Agreement, pursuant to the Plan of Complete Dissolution and Liquidation (the “Plan”), entered into as of December 31, 2004 by AFG ASIT Corporation, not in its individual capacity but solely as Managing Trustee and Wilmington Trust Company, not in its individual capacity but solely as Delaware Trustee of Investment Trust D and in conformity with the laws of the State of Delaware; and

 

WHEREAS, all cash including the Cash Reserves and all right, title and interest in and to all other assets of Investment Trust D that could not be sold for cash prior to its dissolution (the "Retained Assets") shall be placed in a separate liquidating trust, identified individually as “AFG Investment Trust D Liquidating Trust,” for the benefit of the Beneficiaries (as hereinafter defined), with Wilmington Trust Company an independent, nationally-recognized financial institution as its trustee; and

WHEREAS, the Managing Trustee, on behalf of Investment Trust D, wishes to engage Wilmington Trust Company as the trustee of the AFG Investment Trust D Liquidating Trust (referred to hereafter as the “Liquidating Trust”), and Wilmington Trust Company wishes to accept such engagement, each on the terms set forth in and in accordance with this Agreement; and

WHEREAS, capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Trust Agreement.

NOW, THEREFORE, for good and valuable consideration, Investment Trust D hereby agrees to grant, release, assign, convey and deliver unto the Liquidating Trustee for the benefit of the Beneficiaries (as hereinafter defined), all of the right, title and interest of Investment Trust D in and to the Retained Assets for the uses and purposes stated herein on the Effective Date, subject to the terms and provisions set out below, and the Liquidating Trustee hereby agrees to accept such Retained Assets and such Liquidating Trust, subject to the following terms and provisions:

ARTICLE I

NAME AND DEFINITIONS

1.1    Name. This Liquidating Trust shall be known as the “AFG Investment Trust D Liquidating Trust”.

1.2    Certain Terms Defined. For all purposes of this instrument, unless the context otherwise requires:

(a)    "Affiliated Person" shall mean a Person (i) who in his individual capacity is a director, trustee, officer, partner or employee of the Manager or of a Person who controls, is controlled by or is under common control with the Manager or (ii) who controls, is controlled by or is under common control with the Manager.

(b)    "Agreement" shall mean this instrument as originally executed or as it may from time to time be amended pursuant to the terms hereof.

(c)    "Beneficial Interest" shall mean each Beneficiary's proportionate share of the Liquidating Trust Assets in the Liquidating Trust determined by the ratio of the number of Investment Trust D Units held by the Initial Beneficiary on the close of business on the Record Date in Investment Trust D over the total number of Investment Trust D Units existing on such Record Date in Investment Trust D and thereafter each Beneficiary's proportional beneficial interest in Investment Trust D’s Liquidating Trust represented by Liquidating Trust Units.

(d)    "Beneficiaries" shall mean the holders from time to time on or after the Record Date, including the Initial Beneficiaries and the Subsequent Beneficiaries.

(e)    "Initial Beneficiaries" shall mean the initial holders of Liquidating Trust Units.

(f)    "Investment Trust D" shall mean the trust formed under the laws of the State of Delaware, under a certain Third Amended and Restated Declaration of Trust dated as of October 1, 2003, as the same has been amended thereafter from time to time, maintained by the Managing Trustee, identified as “AFG Investment Trust D;” also referred to herein as the “Trust.”

(g)    "Investment Trust D Units" shall mean the units in Investment Trust D held by each of the Beneficiaries as of the Record Date.

(h)    "Liquidating Trust" shall mean the liquidating trust created by this Agreement maintained by the Liquidating Trustee holding Liquidating Trust Assets, identified as the “AFG Investment Trust D Liquidating Trust”;

(i)    "Liquidating Trust Assets" shall mean all the property held from time to time by the Liquidating Trustee under this Agreement, which initially shall consist of the Retained Assets granted, assigned and conveyed to the Liquidating Trustee by Investment Trust D, the Cash Reserves, and, in addition, shall thereafter include all proceeds and other receipts of, from, or attributable to any assets, causes of actions or claims held by the Liquidating Trust.

(j)    "Liquidating Trust Units" shall mean those equal, undivided portions into which the Beneficial Interests in the Liquidating Trust Assets are divided, as evidenced on the books and records of the Liquidating Trust.

(k)    "Liquidating Trustee" shall mean the original Liquidating Trustee under this Agreement and its successor(s), if any.

(l)    "Manager" shall mean such Person or Persons who have been employed by, or who have contracted with, the Liquidating Trustee to assist in the management of the Liquidating Trust.

(m)    "Person" shall mean an individual, a corporation, a partnership, an association, a joint stock company, a limited liability company, a trust, a joint venture, any unincorporated organization, or a government or political subdivision thereof.

(n)    "Record Date" shall mean the date selected by the Grantors for determination of the holders of Investment Trust D Units entitled to become Beneficiaries.

(o)  Subsequent Beneficiaries" shall mean Beneficiaries as reflected on the books and records of the Liquidating Trust from time to time after the Effective Date, other than the Initial Beneficiaries.

ARTICLE II

NATURE OF TRANSFER

2.1    Purpose of Liquidating Trust.

(a)    It is expected that Investment Trust D shall liquidate and dissolve prior to fully winding up its affairs, including, but not limited to, the sale of its remaining assets, the collection of any receivables and the payment of any unsatisfied debts, claims, liabilities, commitments, suits and other obligations, whether contingent or fixed or otherwise (the "Liabilities"), except for such Liabilities for which Investment Trust D has previously reserved by the retention of the Cash Reserves as described in the recitals hereto. The Liquidating Trust hereby is organized for the sole purpose of winding up the affairs of Investment Trust D as promptly as reasonably possible and with no objective to continue or engage in the conduct of a trade or business.

(b)    Investment Trust D’s Cash Reserves and Retained Assets to be granted, assigned and conveyed to the Liquidating Trustee as of the Effective Date will be held in the Liquidating Trust, and the Liquidating Trustee will: (i) further liquidate the Liquidating Trust Assets as it deems to be necessary to carry out the purpose of the Liquidating Trust and facilitate distribution of the Liquidating Trust Assets; (ii) protect, conserve and manage the Liquidating Trust Assets in accordance with the terms and conditions hereof; (iii) take such actions as may be necessary to carry out the intent of the proposals approved by the written consent of the unit holders of Investment Trust D solicited pursuant to a Solicitation Statement dated as of February 17, 2004 (the “Solicitation Statement”); and (iv) distribute the Liquidating Trust Assets in accordance with the terms and conditions hereof.

(c)    It is intended that the granting, assignment and conveyance of the Cash Reserves and the Retained Assets by Investment Trust D to the Liquidating Trustee pursuant hereto shall be treated for federal and state income tax purposes as if Investment Trust D made such distributions directly to the holders of Investment Trust D Units. It is further intended that for federal, state and local income tax purposes the Liquidating Trust shall be treated as a liquidating trust under Treasury Regulation Section 301.7701-4(d) and any analogous provision of state or local law, and the Beneficiaries shall be treated as the owners of their respective share of the Liquidating Trust pursuant to Sections 671 through 679 of the Code and any analogous provision of state or local law and shall be taxed on their respective share of the Liquidating Trust's taxable income (including both ordinary income and capital gains) pursuant to Section 671 of the Code and any analogous provision of state or local law. The Liquidating Trustee shall file all tax returns required to be filed with any governmental agency consistent with this position, including, but not limited to, any returns required of grantor trusts pursuant to Section 1.671-4(a) of the Income Tax Regulations. Investment Trust D agrees that the Transfer Agent acting on its behalf may prepare and file applicable K-1’s respecting the Beneficiaries’ Investment Trust D income. To the extent that the Liquidating Trustee becomes liable for the payment of taxes, including withholding taxes, in respect of income derived from the investment of funds held hereunder or any payment made hereunder (collectively, the "Taxes"), the Liquidating Trustee may pay such Taxes. The Liquidating Trustee may withhold from any payment of the Liquidating Trust Assets such amount as the Liquidating Trustee estimates to be sufficient to provide for the payment of such Taxes not yet paid, and may use the sum withheld for that purpose. The Liquidating Trustee shall be indemnified and held harmless against any liability for Taxes and for any penalties or interest in respect of Taxes on such investment income or payments in the manner provided herein.

2.2    Prohibited Activities. The Liquidating Trust shall not continue or engage in the conduct of any trade or business, and the Liquidating Trustee is expressly prohibited from, and shall have no power or authority to, continue or engage in the conduct of any trade or business on behalf of the Liquidating Trust or the Beneficiaries, and all of the terms and conditions hereof shall be construed accordingly.

2.3    No Reversion to Investment Trust D. In no event shall any part of the Liquidating Trust Assets revert to or be distributed to Investment Trust D.

2.4    Payment of Liabilities. To the extent that there are available Liquidating Trust Assets in the Liquidating Trust, the Liquidating Trust hereby agrees to assume all Liabilities of Investment Trust D on the Effective Date. Should any Liability be asserted against the Liquidating Trust by the transferee of the Liquidating Trust Assets or as a result of the assumption made in this paragraph, the Liquidating Trustee may use such part of Liquidating Trust Assets as may be necessary in contesting any such Liability or in payment thereof. In no event shall the Liquidating Trustee, Beneficiaries or employees or agents of the Liquidating Trust be personally liable, nor shall resort be had to the private property of such Persons or to any other Liquidating Trust Assets, in the event the Liquidating Trust Assets are not sufficient to satisfy the Liabilities asserted against or payable out of such available Liquidating Trust Assets in the Liquidating Trust.

2.5    Bill of Sale, Assignment, Acceptance and Assumption Agreement; Instruments of Further Assurance. On the Effective Date, Investment Trust D and the Liquidating Trust shall execute a Bill of Sale, Assignment, Acceptance and Assumption Agreement conveying the Retained Assets, Cash Reserves and Liabilities to the Liquidating Trust, a form of which is attached as Exhibit A hereto. After the dissolution of Investment Trust D, such Persons as shall have the right and power to so act, will, upon reasonable request of the Liquidating Trustee, execute, acknowledge, and deliver such further instruments and do such further acts as may be necessary or proper to carry out effectively the purposes of this Agreement, to confirm or effectuate the transfer to the Liquidating Trustee of any property intended to be covered hereby, and to vest in the Liquidating Trustee, their successors and assigns, the estate, powers, instruments or funds in trust hereunder.

2.6    Incidents of Ownership. The holders of Investment Trust D Units as of the Record Date shall be the Initial Beneficiaries of the Liquidating Trust as holders of Liquidating Trust Units in Investment Trust D’s Liquidating Trust, and the Liquidating Trustee shall retain only such incidents of legal ownership as are necessary to undertake the actions and transactions authorized herein.

2.7    Notice to Unlocated Holders of Investment Trust D Units. If the Liquidating Trust holds Liquidating Trust Assets for unlocated holders of any Investment Trust D Units, due notice shall be given to such holders of Investment Trust D Units in accordance with Delaware law.

ARTICLE III

BENEFICIARIES

3.1    Beneficial Interests.

(a)    The Beneficial Interest of each Initial Beneficiary hereof shall be determined by Investment Trust D in accordance with a certified copy of Investment Trust D’s list of Investment Trust D Unit holders as of the Record Date (the “List”). The Managing Trustee of Investment Trust D will deliver the certified copy of the List to the Liquidating Trustee within a reasonable time after the Record Date specifying the Beneficial Interests of each Initial Beneficiary in Investment Trust D. For ease of administration, the List shall express the Beneficial Interest of each Initial Beneficiary in terms of units and it is intended that each unit shall represent one Liquidating Trust Unit in Investment Trust D’s Liquidating Trust.

(b)    In the case of Investment Trust D Unit holders, customary institutional book-entry or other records or any other evidence of ownership satisfactory to the Liquidating Trustee will be deemed to evidence the Beneficial Interest in the Liquidating Trust of each such Investment Trust D Unit holder, expressed in Liquidating Trust Units.

(c)    If any conflicting claims or demands are made or asserted with respect to the ownership of any Liquidating Trust Units, or if there should be any disagreement between the transferees, assignees, heirs, representatives or legatees succeeding to all or part of the interest of any Beneficiary resulting in adverse claims or demands being made in connection with such Liquidating Trust Units, then, in any of such events, the Liquidating Trustee shall be entitled, at its sole election, to refuse to comply with any such conflicting claims or demands. In so refusing, the Liquidating Trustee may elect to make no payment or distribution with respect to such Liquidating Trust Units, or to make such payment to a court of competent jurisdiction or an escrow agent, and in so doing the Liquidating Trustee shall not be or become liable to any of such parties for their failure or refusal to comply with any of such conflicting claims or demands, nor shall the Liquidating Trustee be liable for interest on any funds which it may so withhold. The Liquidating Trustee shall be entitled to refrain and refuse to act until either (i) the rights of the adverse claimants have been adjudicated by a final judgment of a court of competent jurisdiction, (ii) all differences have been adjusted by valid written agreement between all of such parties, and the Liquidating Trustee shall have been furnished with an executed counterpart of such agreement, or (iii) there is furnished to the Liquidating Trustee a surety bond or other security satisfactory to the Liquidating Trustee, as it shall deem appropriate, to fully indemnify it as between all conflicting claims or demands.

3.2    Rights of Beneficiaries. Each Beneficiary shall be entitled to participate in the rights and benefits due to a Beneficiary hereunder according to his Beneficial Interest. Each Beneficiary shall take and hold the same subject to all the terms and provisions of this Agreement. The interest of the Beneficiary hereby is declared and shall be in all respects personal property and upon the death of an individual Beneficiary, his Beneficial Interest shall pass as personal property to his legal representative and such death shall in no way terminate or affect the validity of this Agreement, provided that the Liquidating Trustee shall not be required to evidence a book entry transfer of a deceased Beneficiary’s Beneficial Interest to his legal representative until the Liquidating Trustee shall have received Letters Testamentary or Letters of Administration and written notice of the death of the deceased Beneficiary. A Beneficiary shall have no title to, right to, possession of, management of, or control of, Investment Trust D’s Liquidating Trust Assets except as herein expressly provided. No widower, widow, heir, or devisee of any person who may be a Beneficiary shall have any right of dower, homestead, or inheritance, or of partition, or of any other right, statutory or otherwise, in any property forming a part of Liquidating Trust Assets but the whole title to Investment Trust D’s Liquidating Trust Assets shall be vested in the Liquidating Trustee and the sole interest of the applicable Beneficiaries shall be the rights and benefits given to such Persons under this Agreement. 

3.3    No Transfer of Interests of Beneficiaries. The Beneficial Interest of a Beneficiary may not be transferred by any Beneficiary in person or by a duly authorized agent or attorney, or by the properly appointed legal representatives of the Beneficiary, nor may a Beneficiary have authority or power to sell, assign, transfer, encumber, or in any other manner dispose of his Beneficial Interest; provided, however, that the Beneficial Interest shall be assignable or transferable by will, intestate succession, or operation of law.

Except as may be otherwise required by law, the Beneficial Interests of the Beneficiaries hereunder shall not be subject to attachment, execution, sequestration or any order of a court, nor shall such interests be subject to the contracts, debts, obligations, engagements or liabilities of any Beneficiary, but the interest of a Beneficiary shall be paid by the Liquidating Trustee to the Beneficiary free and clear of all assignments, attachments, anticipations, levies, executions, decrees and sequestrations and shall become the property of the Beneficiary only when actually received by such Beneficiary.

3.4    Trustee as Beneficiary. The Liquidating Trustee, either individually or in a representative or fiduciary capacity, may be a Beneficiary to the same extent as if it were not a Liquidating Trustee hereunder and shall have all the rights of a Beneficiary, including, without limitation, the right to vote and to receive distributions, to the same extent as if it was not the Liquidating Trustee hereunder.

ARTICLE IV

DURATION AND TERMINATION OF LIQUIDATING TRUST

4.1    Duration. The existence of this Liquidating Trust shall terminate upon the earliest of (i) a termination required by the applicable laws of the State of Delaware, (ii) the termination due to the distribution of all Liquidating Trust Assets as provided in Section 5.5, or (iii) December 31, 2006; provided, however, that the Liquidating Trustee, in its discretion, may extend the existence of this Liquidating Trust to such later date as it may designate, if it determines that an extension is reasonably necessary to pay or make provision for then known liabilities, actual or contingent.

4.2    Other Obligations of the Liquidating Trustee upon Termination. Upon distribution of all the Liquidating Trust Assets, the Liquidating Trustee shall provide for the retention of all necessary books, records, lists of holders of Liquidating Trust Units in the Liquidating Trust, certificates and files that shall have been delivered to or created by the Liquidating Trustee for a period of ten (10) years thereafter, at the Liquidating Trustee’s discretion, all of such records and documents may be destroyed. Except as otherwise specifically provided herein, upon the distribution of all Liquidating Trust Assets in the Liquidating Trust, the Liquidating Trustee shall have no further duties or obligations hereunder.

ARTICLE V

ADMINISTRATION OF LIQUIDATING TRUST ASSETS

5.1    Sale of Liquidating Trust Assets. The Liquidating Trustee is hereby authorized and directed, at such times as it may deem appropriate, to transfer, assign, or otherwise dispose of all or any part of the Liquidating Trust Assets in the Liquidating Trust as it deems appropriate at public auction or at private sale for cash, securities or other property, or upon credit (either secured or unsecured as the Liquidating Trustee shall determine).

5.2    Transactions with Related Persons. Notwithstanding any other provisions of this Agreement, except as expressly provided herein and in the proposals approved by written consent of the unit holders of Investment Trust D pursuant to the Solicitation Statement, the Liquidating Trustee shall not knowingly, directly or indirectly, sell or otherwise transfer all or any part of any Liquidating Trust Assets to, or contract with, (i) itself or any other Liquidating Trustee or an employee or agent (acting in its or their individual capacities) of this Liquidating Trust, or (ii) any Person of which any Liquidating Trustee, employee or agent of this Liquidating Trust is an affiliate by reason of being a trustee, director, officer, partner or direct or indirect beneficial owner of 5% or more of the outstanding capital stock, shares or other equity interest of such Persons.

5.3    Payment of Claims, Expenses and Liabilities. Provided the Liquidating Trustee has been advised in writing respecting such claims, expenses, charges, liabilities and obligations, the Liquidating Trustee shall pay from the Liquidating Trust Assets in the Liquidating Trust all claims, expenses, charges, liabilities, and obligations of the Liquidating Trust Assets in the Liquidating Trust and all Liabilities relating to the Liquidating Trust Assets held in the Liquidating Trust and obligations which the Liquidating Trustee specifically assumes and agrees to pay pursuant to this Agreement and such transferee liabilities which the Liquidating Trustee may be obligated to pay as transferees of the Liquidating Trust Assets in the Liquidating Trust, including among the foregoing, and without limiting the generality of the foregoing, interest, penalties, taxes, assessments, and public charges of every kind and nature and the costs, charges, and expenses connected with or growing out of the execution or administration of this Liquidating Trust and such other payments and disbursements as are provided in this Agreement or which may be determined to be a proper charge against the Liquidating Trust Assets in the Liquidating Trust by the Liquidating Trustee.

5.4    Interim Distributions. At such times as may be determined by it in its sole discretion, the Liquidating Trustee shall distribute, or cause to be distributed, to the Beneficiaries, in proportion to the number of Liquidating Trust Units held by each Beneficiary relating to the Liquidating Trust, such cash or other property comprising a portion of the Liquidating Trust Assets in the Liquidating Trust as the Liquidating Trustee may in its sole discretion determine may be distributed without detriment to the conservation and protection of the Liquidating Trust Assets in the Liquidating Trust.

5.5    Final Distribution. If the Liquidating Trustee determines that the Liabilities and all other claims, expenses, charges, liabilities and obligations of the Liquidating Trust have been paid or discharged, or if the existence of the Liquidating Trust shall terminate pursuant to Section 4.1, the Liquidating Trustees shall, as expeditiously as is consistent with the conservation and protection of the Liquidating Trust Assets, distribute the Liquidating Trust Assets in the Liquidating Trust to the Beneficiaries in proportion to the number of Liquidating Trust Units held by each Beneficiary in the Liquidating Trust based on the list submitted to the Liquidating Trustee by the Managing Trustee of Investment Trust D pursuant to Section 3.1 above, as such list may be amended. The Liquidating Trustee shall hold in the Liquidating Trust and thereafter make disposition of all liquidating distributions and other payments due any Beneficiaries who have not been located, in accordance with Delaware law, subject to applicable state laws regarding escheat and abandoned property. It is understood that the Liquidating Trustee and the Beneficiary's bank in any funds transfer may rely solely upon any account numbers or similar identifying number provided by the parties hereto to identify (i) the Beneficiary, (ii) the Beneficiary's bank, or (iii) and intermediary bank. The Liquidating Trustee may apply any of the Liquidating Trust Assets for any payment order it executes using any such identifying number, even where its use may result in a person other than the Beneficiary being paid, or the transfer of funds to a bank other than the Beneficiary's bank, or an intermediary bank designated.

5.6    Reports to Beneficiaries and Others. As soon as practicable after the end of each taxable year of the Liquidating Trust and after termination of the Liquidating Trust, the Liquidating Trustee shall submit a written report and account to the Beneficiaries showing (i) the assets and liabilities of the Liquidating Trust at the end of such taxable year or upon termination and the receipts and disbursements of the Liquidating Trustee for such taxable year or period, (ii) any changes in the Liquidating Trust Assets in the Liquidating Trust which they have not previously reported, and (iii) any action taken by the Liquidating Trustee in the performance of its duties under this Agreement which it has not previously reported and which, in its opinion, materially affects the Liquidating Trust Assets. The Liquidating Trustee may submit similar reports for such interim periods during the taxable year as it deems advisable or as may be required by the Securities and Exchange Commission. The taxable year of the Liquidating Trust shall end on December 31 of each year unless the Liquidating Trustee deems it advisable to establish some other date as the date on which the taxable year of the Liquidating Trust shall end.

5.7    Federal Income Tax Information. As soon as practicable after the close of each taxable year, the Liquidating Trustee shall direct Gemisys, the transfer agent of the Investment Trust, or any replacement or successor thereof (the “Transfer Agent”), to mail to each Person who was a Beneficiary at the close of the year, a statement showing on a Liquidating Trust Unit basis in the Liquidating Trust the dates and amounts of all distributions made by the Liquidating Trustee, if any, income earned on assets held by the Liquidating Trust, if any, such other information as is reasonably available to the Liquidating Trustee which the Liquidating Trustee determines may be helpful in determining the amount of gross income and expenses attributable to the Liquidating Trust that such Beneficiary should include in such Person's federal income tax return for the preceding year and any other information as may be required to be furnished under the tax laws. In addition, after receipt of a written request in good faith, or in its discretion without such request or if required by applicable law, the Transfer Agent (or if it cannot, the Liquidating Trustee) shall furnish to any Person who has been a Beneficiary at any time during the preceding year a statement containing such further information as is reasonably available to the Transfer Agent or Liquidating Trustee, respectively, which shall be helpful in determining the amount of taxable income which such Person should include in such Person's federal income tax return.

5.8    Employment of Manager.

(a)    The Liquidating Trustee shall be responsible for the general policies of the Liquidating Trust and for the general supervision of the activities of the Liquidating Trust conducted by all agents, employees, advisors or managers of the Liquidating Trust. However, the Liquidating Trustee is not and shall not be required personally to conduct the activities of the Liquidating Trust, and consistent with its ultimate responsibility as stated above, the Liquidating Trustee shall have the power to appoint, employ or contract with any Person or Persons (including any corporation, partnership, or trust in which one or more of them may be directors, officers, shareholders, partners or trustees) as the Liquidating Trustee may deem necessary or proper for the transaction of the activities of the Liquidating Trust, including, but not limited to, Equis Financial Group and its affiliates. The Liquidating Trustee may therefore employ or contract with such Person or Persons (herein referred to as the "Manager") and may grant or delegate such authority to the Manager as the Liquidating Trustee may in its sole discretion deem necessary or desirable to carry out the purpose of the Liquidating Trust without regard to whether such authority is normally granted or delegated by trustees.

The Liquidating Trustee shall have the power to determine the terms and compensation of the Manager or any other Person whom they may employ or with whom they may contract. The Liquidating Trustee may exercise broad discretion in allowing the Manager to administer and regulate the operations of the Liquidating Trust, to act as agent for the Liquidating Trust, to execute documents on behalf of the Liquidating Trustee, and to make executive decisions which conform to general policies and general principles previously established by the Liquidating Trustee.

(b)    The Manager or other Persons shall not be required to administer the Liquidating Trust as its sole and exclusive function and may have other business interests and may engage in other activities similar or in addition to those relating to the Liquidating Trust, including the rendering of advice or services of any kind to investors or any other Persons and the management of other investments.

ARTICLE VI

POWERS OF AND LIMITATIONS ON THE LIQUIDATING TRUSTEE

6.1    Limitations on Liquidating Trustee. Except as contemplated by this Agreement, the Liquidating Trustee shall not at any time, on behalf of the Liquidating Trust or Beneficiaries, enter into or engage in any trade or business, and no part of any Liquidating Trust Assets shall be used or disposed of by the Liquidating Trustee in furtherance of any trade or business. Except as the Liquidating Trustee reasonably believes is consistent with and in furtherance of its obligations under this Agreement, the Liquidating Trustee shall be restricted to the holding, collection and sale of the Liquidating Trust Assets and the payment and distribution thereof for the purposes set forth in this Agreement and to the conservation and protection of the Liquidating Trust Assets and the administration thereof in accordance with the provisions of this Agreement. In no event shall the Liquidating Trustee receive any property, make any distribution, satisfy or discharge any claims, expenses, charges, Liabilities and obligations or otherwise take any action which is inconsistent with a complete liquidation of Investment Trust D within the meaning of the Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated thereunder, and rulings, decisions and determinations of the Internal Revenue Service and courts of competent jurisdiction, or take any action which would jeopardize the status of the Liquidating Trust as a "liquidating trust" for federal income tax purposes within the meaning of Treasury Regulation Section 301.7701-4(d). This limitation shall apply regardless of whether the conduct of any such trade or business is deemed by the Liquidating Trustee to be necessary or proper for the conservation and protection of the Liquidating Trust Assets. The Liquidating Trustee shall not invest any of the cash held as Liquidating Trust Assets, except that the Liquidating Trustee may invest in (i) direct obligations of the United States of America or obligations of any agency or instrumentality thereof which mature not later than one year from the date of acquisition thereof; (ii) money market deposit accounts, checking accounts, savings accounts, or certificates of deposit, commercial paper rated not less than A1P1, or other time deposit accounts which mature not later than one year from the date of acquisition thereof which are issued by a commercial bank, brokerage firm or savings institution organized under the laws of the United States of America or any state thereof including, the Wilmington Fund, an AAA rated money market fund managed by Rodney Square, and an affiliate of the Liquidating Trustee,; or (iii) other temporary investments not inconsistent with the Liquidating Trust's status as a liquidating trust for tax purposes (collectively, “Permitted Investments”). It is hereby acknowledged that the Liquidating Trustee shall not be required to maximize the investment return on the Liquidating Trust Assets during the term of this Liquidating Trust Agreement. The Liquidating Trustee shall be and hereby is relieved of all liability with respect to the purchasing, holding or selling of Permitted Investments in accordance with the terms hereof. The Liquidating Trustee is not responsible for any losses to the Liquidating Trust which may occur, including, without limitation, by reason of bank failure or the amount of the Liquidating Trust exceeding the Federal Deposit Insurance Corporation limits.

6.2    Specific Powers of the Liquidating Trustee. Subject to the provisions of Section 6.1, the Liquidating Trustee shall have the following specific powers in addition to any powers conferred upon them by any other Section or provision of this Agreement or any statutory laws of the State of Delaware; provided, however, that the enumeration of the following powers shall not be considered in any way to limit or control the power of the Liquidating Trustee to act as specifically authorized by any other Section or provision of this Agreement and to act in such a manner as the Liquidating Trustee may deem necessary or appropriate to conserve and protect any Liquidating Trust Assets or to confer on the Beneficiaries the benefits intended to be conferred upon them by this Agreement:

(a)    To determine the nature and amount of the consideration to be received with respect to the sale or other disposition of, or the grant of interests in, any Liquidating Trust Assets.

(b)    To collect, liquidate or otherwise convert into cash, or such other property as they deem appropriate, all property, assets and rights in any Liquidating Trust Assets, and to pay, discharge and satisfy all other claims, expenses, charges, Liabilities, and obligations existing with respect to any Liquidating Trust Assets, the Liquidating Trust or the Liquidating Trustee.

(c)    To elect, appoint, engage, retain or employ any Persons as agents, representatives, employees, or independent contractors (including without limitation real estate advisors, investment advisors, accountants, transfer agents, custodians, attorneys-at-law, managers, appraisers, brokers, or otherwise) in one or more capacities, and to pay compensation from the Liquidating Trust Assets for services in as many capacities as such Person may be so elected, appointed, engaged, retained or employed, to prescribe the titles, powers and duties, terms of service and other terms and conditions of the election, appointment, engagement, retention or employment of such Persons and, except as prohibited by law, to delegate any of the powers and duties of the Liquidating Trustee to any one or more Liquidating Trustees, agents, representatives, employers, independent contractors or other Persons.

(d)    To retain and set aside such funds out of the Liquidating Trust as the Liquidating Trustee shall deem necessary or expedient to pay, or provide for the payment of (i) unpaid claims, expenses, charges, Liabilities, and obligations of the Liquidating Trust or Investment Trust D, except to the extent that liabilities for which Investment Trust D has previously reserved Cash Reserves are satisfied with funds from said Cash Reserves; (ii) contingencies; and (iii) the expenses of administering the Liquidating Trust Assets.

(e)    To do and perform any and all acts necessary or appropriate for the conservation and protection of the Liquidating Trust Assets, including acts or things necessary or appropriate to maintain Liquidating Trust Assets held by the Liquidating Trustee pending sale or other disposition thereof or distribution thereof to the Beneficiaries.

(f)    To hold legal title to property of the Liquidating Trust in the name of the Liquidating Trust, or in the name of the Liquidating Trustee, or of any other Person, without disclosure of the interest of the Liquidating Trust therein.

(g)    To cause any investments of any part of the Liquidating Trust Assets to be registered and held in the name of any one or more of their names or in the names of a nominee or nominees without increase or decrease of liability with respect thereto.

(h)    To institute or defend actions or declaratory judgments or other actions and to take such other action, in the name of the Liquidating Trust or Investment Trust D or as otherwise required, as the Liquidating Trustee may deem necessary or desirable to enforce any instruments, contracts, agreements, causes of action, claims or rights relating to or forming a part of the Liquidating Trust Assets.

(i)    To determine conclusively from time to time the value of and to revalue the securities and other property of the Liquidating Trust, in accordance with independent appraisals or other information as they deem necessary or appropriate.

(j)    To cancel, terminate, or amend any instruments, contracts, agreements, obligations or causes of action relating to or forming a part of any Liquidating Trust Assets, and to execute new instruments, contracts, agreements, obligations or causes of action notwithstanding that the terms of any such instruments, contracts, agreements, obligations or causes of action may extend beyond the terms of this Liquidating Trust, provided that no such new instrument, contract, agreement, obligation or cause of action shall permit the Liquidating Trustee to engage in any activity prohibited by Section 6.1.

(k)    To vote by proxy or otherwise on behalf of the Beneficiaries and with full power of substitution all shares of stock and all securities held by the Liquidating Trustee hereunder and to exercise every power, election, discretion, option and subscription right and give every notice, make every demand, and to do every act or thing in respect to any shares of stock or any securities held by the Liquidating Trustee which the Liquidating Trustee might or could do if they were the absolute owners thereof.

(l)    To undertake or join in any merger, plan of reorganization, consolidation, liquidation, dissolution, readjustment or other transaction of any corporation, any of whose shares of stock or other securities, obligations, or properties may at any time constitute a part of any Liquidating Trust Assets, and to accept the substituted shares of stock, bonds, securities, obligations and properties and to hold the same in trust in accordance with the provisions hereof.

(m)    In connection with the sale or other disposition or distribution of any securities held by the Liquidating Trustee, to comply with the applicable federal and state securities laws, and to enter into agreements relating to sale or other disposition or distribution thereof.

(n)    To authorize transactions between corporations or other entities whose securities, or other interests therein (either in the nature of debt or equity) are held by the Liquidating Trustee as part of any Liquidating Trust Assets.

(o)    To terminate and dissolve any entities owned by the Liquidating Trust.

(p)    To have a judicial settlement of their account of the Liquidating Trust at any time to the extent they determine necessary or advisable.

(q)    To perform any act authorized, permitted, or required under any instrument, contract, agreement, right, obligation or cause of action relating to or forming a part of any Liquidating Trust Assets whether in the nature of an approval, consent, demand or notice thereunder or otherwise, unless such act would require the consent of the Beneficiaries in accordance with the express provisions of this Agreement.

ARTICLE VII

CONCERNING THE LIQUIDATING TRUSTEE,

BENEFICIARIES, EMPLOYEES AND AGENTS

7.1    Generally. The Liquidating Trustee accepts and undertakes to discharge the Liquidating Trust created by this Agreement, upon the terms and conditions thereof on behalf of the Beneficiaries. The Liquidating Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. No provision of this Agreement shall be construed to relieve the Liquidating Trustee from liability for its own willful misconduct, knowingly and intentionally committed in bad faith, except that:

(a)    No successor Liquidating Trustee shall be in any way responsible for the acts or omissions of the Liquidating Trustee in office prior to the date on which he or it becomes a Liquidating Trustee.

(b)    The Liquidating Trustee shall not be liable for the performance of such duties and obligations as are specifically set forth in this Agreement except for its bad faith or willful misconduct, and no implied covenants or obligations shall be read into this Agreement against the Liquidating Trustee.

(c)    The Liquidating Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Liquidating Trustee and conforming to the requirements of this Agreement.

(d)    The Liquidating Trustee shall not be liable for any act which the Liquidating Trustee may do or omit to do hereunder, or for any mistake of fact or law, or for any error of judgment, or for the misconduct of any employee, agent, representative or attorney appointed by it, or for anything that it may do or refrain from doing in connection with this Liquidating Trust Agreement while acting in good faith; unless caused by or arising from gross negligence, willful misconduct, fraud or any other breach of fiduciary duty of the Liquidating Trustee or any of its employees, agents, representatives or attorneys.

 

(e)    The duties and obligations of the Liquidating Trustee shall be limited to and determined solely by the express provisions of this Liquidating Trust Agreement and no implied duties or obligations shall be read into this Liquidating Trust Agreement against the Liquidating Trustee. The Liquidating Trustee is not bound by and is under no duty to inquire into the terms or validity of any other agreements or documents, including, but not limited to any agreements which may be related to, referred to in or deposited with the Liquidating Trustee in connection with this Liquidating Trust Agreement.

7.2    Reliance by Liquidating Trustee. Except as otherwise provided in Section 7.1:

(a)    The Liquidating Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

(b)    The Liquidating Trustee may consult with legal counsel, auditors or other experts to be selected by it, including firms with which the Liquidating Trustee may be an affiliate, and the advice or opinion of such counsel, accountants, auditors or other experts shall be full and complete protection to the Liquidating Trustee, the employees and the agents of the Liquidating Trustee in respect of any action taken or omitted or suffered by them in good faith and in reliance on, or in accordance with, such advice or opinion. 

(c)    Persons dealing with the Liquidating Trustee shall look only to the Liquidating Trust Assets in the Liquidating Trust to satisfy any liability relating to the Liquidating Trust Assets in the Liquidating Trust incurred by the Liquidating Trustee to such Person in carrying out the terms of this Liquidating Trust, and the Liquidating Trustee shall have no obligation to satisfy any such liability. If for any purposes hereunder such liability is properly allocated to two or more Investment Trusts or Liquidating Trusts, then such liability shall be satisfied from the Liquidating Trust Assets of the relevant Liquidating Trust as directed by the General Partners of the predecessor Investment Trusts in a manner consistent with the allocation practices prior to the Investment Trusts’ liquidations.

(d)    As far as practicable and except as expressly permitted above, the Liquidating Trustee shall cause any written instrument creating an obligation of the Liquidating Trust to include a reference to this Agreement and to provide that neither the Beneficiaries, the Liquidating Trustee nor their agents shall be liable thereunder and that the other parties to such instrument shall look solely to the Liquidating Trust Assets held in the Liquidating Trust for the payment of any claim thereunder or the performance thereof; provided, however, that the omission of such provision from any such instrument shall not render the Beneficiaries, the Liquidating Trustee, or their agents liable nor shall the Liquidating Trustee be liable to anyone for such omission.

7.3    Limitation on Liability to Third Persons. No Beneficiary shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with the Liquidating Trust Assets or the affairs of this Liquidating Trust; and neither the Liquidating Trustee nor any employee or agent of this Liquidating Trust shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with any Liquidating Trust Assets or the affairs of this Liquidating Trust, except for such Person’s own willful misconduct, knowingly and intentionally committed in bad faith; and all such other Persons shall look solely to any Liquidating Trust Assets held in such Person’s Liquidating Trust for satisfaction of claims of any nature arising in connection with the affairs of this Liquidating Trust. The Liquidating Trustee shall, at all times, maintain insurance for the protection of all Liquidating Trust Assets, its Beneficiaries, the Liquidating Trustee and its employees and agents in such amount as the Liquidating Trustee shall deem adequate to cover all foreseeable liability to the extent available at reasonable rates.

7.4    Recitals. Any written instrument creating an obligation of this Liquidating Trust shall be conclusively taken to have been executed or done by the Liquidating Trustee, or the employee or agent of this Liquidating Trust only in its capacity as Liquidating Trustee under this Agreement or in his capacity as employee or agent of the Liquidating Trust.

7.5    Indemnification. Each of the Liquidating Trustee and each of its employees and agents including, but not limited to, Persons appointed, employed or contracted by the Liquidating Trustee pursuant to Section 5.8, Employment of Manager, or Section 6.2, Specific Powers of the Liquidating Trustee (each an "Indemnified Person" and collectively, the "Indemnified Persons") shall be indemnified out of all Liquidating Trust Assets against all liabilities and expenses, including amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and all costs and expenses, including, but not limited to, reasonable counsel fees and disbursements paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding by the Indemnified Persons in connection with the defense or disposition of any action, suit or other proceeding by the Liquidating Trust or any other Person, whether civil or criminal, in which the Indemnified Person may be involved or with which the Indemnified Person may be threatened while in office or thereafter, by reason of its or his being or having been such a Liquidating Trustee, employee or agent; provided, however, that the Indemnified Person shall not be entitled to such indemnification in respect of any matter as to which the Indemnified Person shall have been adjudicated to have acted in bad faith or with willful misfeasance or in reckless disregard of the Indemnified Person's duties. The Liquidating Trustee may make advance payments in connection with indemnification under this Section, provided that the Indemnified Person shall have given a written undertaking to repay any amount advanced to the Indemnified Person and to reimburse the Liquidating Trust in the event it is subsequently determined in a final adjudication by a court of law that the Indemnified Person is not entitled to such indemnification. The Liquidating Trustee may purchase such insurance as it believes, in the exercise of its discretion, adequately insures that each Indemnified Person shall be indemnified against any such loss, liability or damage pursuant to this Section. The rights accruing to any Indemnified Person by reason of the foregoing shall not be deemed to exclude any other right to which he may legally be entitled nor shall anything else contained herein restrict the right of the Liquidating Trustee to indemnify or reimburse such Indemnified Person in any proper case even though not specifically provided for herein, nor shall anything contained herein restrict the right of any such Indemnified Person to contribution under applicable law. As security for the timely and full payment and satisfaction of all of the present and future obligations of the parties to the Liquidating Trustee under this Agreement, including without limitation the indemnity obligations hereunder, whether joint or several, the Liquidating Trust (and by accepting distributions hereunder, each Beneficiary) hereby grants to the Liquidating Trustee a continuing security interest in and to any and all of the Liquidating Trust Assets, whether now existing or hereafter acquired or created, together with the products and proceeds thereof, all payments and other distributions with respect thereto, and any and all investments, renewals, substitutions, modifications and extensions of any and all of the foregoing. The Liquidating Trustee shall have all of the rights and remedies of a secured party under the Uniform Commercial Code. In addition, in the event the Liquidating Trustee has not received any payment, indemnity, reimbursement or other amount due it under this Agreement, then, notwithstanding any other term or provision of this Agreement, the Liquidating Trustee may in its discretion set off and apply any of the Liquidating Trust Assets as is required to pay and satisfy those obligations. Promptly after the receipt by the Liquidating Trustee of notice of any demand or claim or the commencement of any action, suit or proceeding, the Liquidating Trustee shall, if a claim in respect thereof is to be made against any of the other parties hereto, notify such other parties thereof in writing; but the failure by the Liquidating Trustee to give such notice shall not relieve any party from any liability which such party may have to the Liquidating Trustee hereunder. Notwithstanding any obligation to make payments and deliveries hereunder, the Liquidating Trustee may retain and hold for such time as it reasonably deems necessary such amount of the Liquidating Trust Assets as it shall from time to time in its sole discretion reasonably deem sufficient to indemnify itself for any such loss or expense and for any amounts due it hereunder. Except as required by law or as expressly provided herein, the Liquidating Trustee shall be under no duty to institute any suit, or to take any remedial procedures under this Liquidating Trust Agreement, or to enter any appearance or in any way defend any suit in which it may be made a defendant hereunder until it shall be indemnified as provided above, except as expressly set forth herein.

7.6    Rights of Liquidating Trustee, Employees, Independent Contractors and Agents to Own Liquidating Trust Units or Other Property and to Engage in Other Business. Any Liquidating Trustee, employee, independent contractor or agent may own, hold and dispose of Liquidating Trust Units for its or his individual account, and may exercise all rights thereof and thereunder to the same extent and in the same manner as if he were not a Liquidating Trustee, employee, independent contractor or agent. Any Liquidating Trustee, employee, independent contractor or agent may, in his personal capacity or in a capacity of trustee, officer, director, shareholder, partner, member, advisor, employee of any Person or otherwise, have business interests and holdings similar to or in addition to those relating to the Liquidating Trust. Subject to the provisions of Article V hereof, any Liquidating Trustee, employee, independent contractor or agent of the Liquidating Trust may be a trustee, officer, director, shareholder, partner, member, advisor, employee or independent contractor of, or otherwise have a direct or indirect interest in, any Person who may be engaged to render advice or services to the Liquidating Trust, and may receive compensation from such Person as well as compensation as Trustee, employee, independent contractor or agent or otherwise hereunder so long as such interest is disclosed to the Liquidating Trustee. None of these activities in and of themselves shall be deemed to conflict with his duties as Trustee, employee, independent contractor or agent.

7.7    Contribution Back. In the event any amount of Liquidating Trust Assets released to a party under this Liquidating Trust Agreement is invalidated, declared to be fraudulent or preferential or must otherwise be restored or returned by the Liquidating Trustee in connection with the insolvency, bankruptcy or reorganization of such party, whether by order of or settlement before any court or other authority or otherwise, such party shall contribute back to the Liquidating Trustee an amount such that such party will be affected by that invalidation, declaration, restoration or return ratably in proportion to the distributions it received under this Agreement, together with any related assignment, release or other instrument or document the Liquidating Trustee may request to restore the status quo ante.

 

ARTICLE VIII

PROTECTION OF PERSONS DEALING WITH THE LIQUIDATING TRUSTEE

8.1    Action by Liquidating Trustee. All action required or permitted to be taken by the Liquidating Trustee, in its capacity as Trustee, shall be taken by a written vote, resolution, or other writing signed by the Liquidating Trustee, or if there is more than one Liquidating Trustee then serving, signed by a majority of them.

8.2    Reliance on Statements by the Liquidating Trustee. Any Person dealing with the Liquidating Trustee shall be fully protected in relying upon the Liquidating Trustee’s certificate or instrument signed by the Liquidating Trustee that it has authority to take any action under this Liquidating Trust.

ARTICLE IX

COMPENSATION OF LIQUIDATING TRUSTEE

9.1    Amount of Compensation. The compensation of Wilmington Trust Company in its capacity as the initial Liquidating Trustee shall be in accordance with the terms specified on Schedule A hereto or upon such other terms and conditions as may be agreed upon by the Liquidating Trustee and the Beneficiaries holding Liquidating Trust Units representing at least a majority of the aggregate Beneficial Interests in all of the Liquidating Trust accounts. Schedule A shall apply only to the initial Liquidating Trustee and, in the event a successor to the initial Liquidating Trustee shall serve, such schedule shall be deleted from this Agreement and neither such deletion nor the substitution of a counterpart schedule applicable to the successor Liquidating Trustee shall constitute an amendment of this Agreement

9.2    Dates of Payment. The compensation payable to the Liquidating Trustee pursuant to the provisions of Section 9.1 shall be in accordance with Schedule A or, if Schedule A is no longer in force, at such other times as the Liquidating Trustee may determine.

9.3    Expenses. The Liquidating Trustee shall be reimbursed from the Liquidating Trust Assets for all expenses reasonably incurred by it in the performance of its duties in accordance with this Agreement including the reasonable compensation and out-of-pocket expenses of attorneys, accountants, appraisers, consultants, the Manager and other persons retained by the Liquidating Trustee or the Manager in negotiating or pursuant to the terms of this Agreement.

ARTICLE X

THE LIQUIDATING TRUSTEE AND SUCCESSOR LIQUIDATING TRUSTEE

10.1    Number and Qualification of Liquidating Trustees. Subject to the provisions of Section 10.3 relating to the period pending the appointment of a successor Liquidating Trustee, there shall be one Liquidating Trustee of this Liquidating Trust, which shall be a citizen and resident of or a corporation which is incorporated under the laws of a state of the United States and, if a corporation, it shall be authorized to act as a corporate fiduciary under the laws of the State of Delaware. The number of Liquidating Trustees may be increased or decreased from time to time by the Liquidating Trustee. There shall at all times be a Liquidating Trustee hereunder which shall be a bank or trust company organized and doing business under the laws of the United States, or of any State of the United States, which at the time of its appointment shall have total capital and surplus of at least $50,000,000 and shall be authorized under such laws to exercise corporate trust powers and be subject to supervision or examination by federal or state authority

If any corporate Liquidating Trustee shall ever change its name, or shall reorganize or reincorporate, or shall merge with or into or consolidate with any other bank or trust company, such corporate Liquidating Trustee shall be deemed to be a continuing entity and shall continue to act as a Liquidating Trustee hereunder with the same liabilities, duties, powers, titles, discretions and privileges as are herein specified for a Liquidating Trustee.

10.2    Resignation and Removal. Any Liquidating Trustee may resign and be discharged from the Liquidating Trust hereby created by giving written notice thereof to any remaining Liquidating Trustee or Liquidating Trustees or by giving written notice to the Beneficiaries holding Liquidating Trust Units representing an aggregate of at least a majority of the total Beneficial Interests in all of the Liquidating Trust accounts and the Grantor. Such resignation shall become effective on the day specified in such notice or upon the appointment of such Liquidating Trustee's successor and such successor's acceptance of such appointment, whichever is earlier. Any Liquidating Trustee may be removed at any time, with or without cause, by Beneficiaries having an aggregate Beneficial Interest of at least a majority of the total Beneficial Interests in the Liquidating Trust. All obligations of the Liquidating Trustee hereunder shall cease and terminate on the effective date of its resignation and its sole responsibility thereafter shall be to hold the Liquidating Trust Assets for a period of thirty (30) calendar days following the effective date of resignation, at which time, if a successor Liquidating Trustee shall have been appointed and have accepted such appointment in a writing to the Beneficiaries, then upon written notice thereof given by a representative of the Beneficiaries to the resigning Liquidating Trustee, the resigning Liquidating Trustee shall deliver the Liquidating Trust Assets to the successor Liquidating Trustee. If a successor Liquidating Trustee shall not have been appointed within a thirty (30) day period from the predecessor Liquidating Trustee’s resignation, for any reason whatsoever, the resigning Liquidating Trustee shall deliver the Liquidating Trust Assets to a court of competent jurisdiction in the county in which the Liquidating Trust Assets are there being held and give written notice of the same to the parties hereto.

 

The resigning Liquidating Trustee shall be entitled to payment of any unpaid fees (which shall be pro-rated as of the effective date of the resignation) and expenses and to reimbursement by the Beneficiaries for any expenses incurred in connection with the transfer of the Liquidating Trust Assets pursuant to and in accordance with the provisions of this section.

10.3    Appointment of Successor. Should at any time a Liquidating Trustee resign or be removed, die, become mentally incompetent or incapable of action (as determined by the Beneficiaries holding Liquidating Trust Units representing an aggregate of at least a majority of the total Beneficial Interests in the Liquidating Trust), or be adjudged a bankrupt or insolvent, unless any remaining Liquidating Trustees shall decrease the number of Liquidating Trustees of the Liquidating Trust pursuant to Section 10.1 hereof, a vacancy shall be deemed to exist and a successor shall be appointed by any remaining Liquidating Trustees. If such a vacancy is not filled by any remaining Liquidating Trustees within ninety (90) days, the remaining Liquidating Trustees must notify the Beneficiaries of their inability to fill such vacancy, and the Beneficiaries may, pursuant to Article XII hereof, call a meeting to appoint a successor Liquidating Trustee by Beneficiaries holding Liquidating Trust Units representing an aggregate of at least a majority of the total Beneficial Interests in the Liquidating Trust. Pending the appointment of a successor Liquidating Trustee, the remaining Liquidating Trustee or Liquidating Trustees then serving may take any action in the manner set forth in Section 8.1.

10.4    Acceptance of Appointment by Successor Liquidating Trustee. Any successor Liquidating Trustee appointed hereunder shall execute an instrument accepting such appointment hereunder and shall deliver one counterpart thereof to each of the other Liquidating Trustees and, in case of a resignation, to the retiring Liquidating Trustee. Thereupon such successor Liquidating Trustee shall, without any further act, become vested with all the estates, properties, rights, powers, trusts and duties of his or its predecessor in the Liquidating Trust hereunder with like effect as if originally named therein; but the retiring Liquidating Trustee shall nevertheless, when requested in writing by the successor Liquidating Trustee or by the remaining Liquidating Trustees, execute and deliver an instrument or instruments conveying and transferring to such successor Liquidating Trustee upon the trust herein expressed, all the estates, properties, rights, powers and trusts of such retiring Liquidating Trustee, and shall duly assign, transfer and deliver to such successor Liquidating Trustee all property and money held by him hereunder.

10.5    Bonds. No bond shall be required of the original Liquidating Trustee hereunder, and no bond shall be required of any successor Liquidating Trustee hereunder. If a bond is required by law, no surety or security with respect to such bond shall be required unless required by law.

ARTICLE XI

CONCERNING THE BENEFICIARIES

11.1    Evidence of Action by Beneficiaries. Whenever in this Agreement it is provided that the Beneficiaries may take any action (including the making of any demand or request, the giving of any notice, consent, or waiver, the removal of a Liquidating Trustee, the appointment of a successor Liquidating Trustee, or the taking of any other action), the fact that at the time of taking any such action such Beneficiaries have joined therein may be evidenced (i) by any instrument or any number of instruments of similar tenor executed by Beneficiaries in person or by agent or attorney appointed in writing, or (ii) by the record of the Beneficiaries voting in favor thereof at any meeting of Beneficiaries duly called and held in accordance with the provisions of Article XII.

11.2    Limitation on Suits by Beneficiaries. No Beneficiary shall have any right by virtue of any provision of this Agreement to institute any action or proceeding at law or in equity against any party other than the Liquidating Trustees upon or under or with respect to any Liquidating Trust Assets or the agreements relating to or forming part of any Liquidating Trust Assets, and the Beneficiaries do hereby waive any such right.

11.3    Requirement of Undertaking. The Liquidating Trustee may request any court to require, and any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Liquidating Trustee for any action taken or omitted by it as Liquidating Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this Section shall not apply to any suit by the Liquidating Trustee.

ARTICLE XII

MEETING OF BENEFICIARIES

12.1    Purpose of Meetings. A meeting of the Beneficiaries may be called at any time and from time to time pursuant to the provisions of this Article for the purposes of taking any action which the terms of this Agreement permit a Beneficiary having a specified aggregate Beneficial Interest to take either acting alone or with the Liquidating Trustees.

12.2    Meeting Called by Liquidating Trustee. The Liquidating Trustee may at any time call a meeting of the Beneficiaries of the Liquidating Trust to be held at such time and at such place within the State of Delaware (or elsewhere if so determined by a majority of the Liquidating Trustees) as the Liquidating Trustee shall determine. Written notice of every meeting of the Beneficiaries shall be given by the Liquidating Trustee (except as provided in Section 12.3), which written notice will set forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, and shall be mailed not more than sixty (60) nor less than ten (10) days before such meeting is to be held to all of the Beneficiaries of record not more than sixty (60) days before the date of such meeting. The notice shall be directed to the Beneficiaries at their respective addresses as they appear in the records of the Liquidating Trust.

12.3    Meeting Called on Request of Beneficiaries. Within thirty (30) days after written request to the Liquidating Trustee by Beneficiaries holding Liquidating Trust Units representing at least a majority of the aggregate Beneficial Interests in the Liquidating Trust to call a meeting of all of the Beneficiaries of the Liquidating Trust, which written request shall specify in reasonable detail the action proposed to be taken, the Liquidating Trustee shall proceed under the provisions of Section 12.2 to call a meeting of the Beneficiaries, and if the Liquidating Trustee fails to call such meeting within such thirty (30) day period then such meeting may be called by Beneficiaries holding Liquidating Trust Units representing at least a majority of the aggregate Beneficial Interests in the Liquidating Trust.

12.4    Persons Entitled to Vote at Meeting of Beneficiaries. Each Beneficiary shall be entitled to vote at a meeting of the Beneficiaries of the Liquidating Trust either in person or by his proxy duly authorized in writing. The vote of each Beneficiary shall be weighted based on the number of Liquidating Trust Units in the Liquidating Trust held by each Beneficiary determined pursuant to the list described in Section 3.1, as such list is amended hereby. The signature of the Beneficiary on such written authorization need not be witnessed or notarized.

12.5    Quorum. At any meeting of Beneficiaries of Liquidating Trust account, the presence of Beneficiaries holding Liquidating Trust Units representing at least a majority of the aggregate Beneficial Interests in the Liquidating Trust sufficient to take action on any matter for the transaction of which such meeting was called shall be necessary to constitute a quorum; but if less than a quorum be present, Beneficiaries having aggregate Beneficial Interests of more than 50% of the total Beneficial Interests in the Liquidating Trust of all Beneficiaries represented at the meeting may adjourn such meeting with the same effect and for all intents and purposes as though a quorum had been present.

12.6    Adjournment of Meeting. Subject to Section 12.5 hereof, any meeting of Beneficiaries of the Liquidating Trust may be adjourned from time to time and a meeting may be held at such adjourned time and place without further notice.

12.7    Conduct of Meetings. The Liquidating Trustee shall appoint the Chairman and the Secretary of the meeting. The vote upon any resolution submitted to any meeting of Beneficiaries shall be by written ballot. An Inspector of Votes, appointed by the Chairman of the meeting, shall count all votes cast at the meeting for or against any resolution and shall make and file with the Secretary of the meeting their verified written report.

12.8    Record of Meeting. A record of the proceedings of each meeting of Beneficiaries of the Liquidating Trust shall be prepared by the Secretary of the meeting. The record shall be signed and verified by the Secretary of the meeting and shall be delivered to the Liquidating Trustee to be preserved by it. Any record so signed and verified shall be conclusive evidence of all the matters therein stated.

ARTICLE XIII

AMENDMENTS

13.1    Consent of Beneficiaries. At the direction or with the consent of Beneficiaries holding Liquidating Trust Units representing at least a majority of the aggregate Beneficial Interests in the Liquidating Trust, or such greater percentage as shall be specified in this Agreement for the taking of an action by the Beneficiaries under the affected provision of this Agreement, the Liquidating Trustee shall promptly make and execute a declaration amending this Agreement for the purpose of adding any material provisions to or changing in any material manner or eliminating any of the material provisions of this Agreement or amendments thereto as they apply to the Liquidating Trust; provided, however, that no such amendment shall permit the Liquidating Trustee to engage in any activity prohibited by Section 6.1 hereof or affect the Beneficiaries' rights to receive their pro rata shares of the Liquidating Trust Assets in the Liquidating Trust at the time of distribution; provided further, however, that no consent of the Beneficiaries shall be required with respect to any amendment made solely for the purpose of facilitating the transferability by Beneficiaries of Liquidating Trust Units or to comply with applicable laws, including tax laws, so long as such amendment has been approved by the Liquidating Trustee.

13.2    Notice and Effect of Amendment. Promptly after the execution by the Liquidating Trustee of any such declaration of amendment, the Liquidating Trustee shall give notice of the substance of such amendment to the Beneficiaries of the Liquidating Trust or, in lieu thereof, the Liquidating Trustee may send a copy of the amendment to each Beneficiary. Upon the execution of any such declaration of amendment by the Liquidating Trustee, this Agreement shall be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties, and immunities of the Liquidating Trustee and the Beneficiaries under this Agreement with respect to the Liquidating Trust shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendments, and all the terms and conditions of any such amendment shall be thereby deemed to be part of the terms and conditions of this Agreement for any and all purposes.

13.3    Liquidating Trustee’s Declining to Execute Documents. If, in the reasonable opinion of the Liquidating Trustee, any document required to be executed pursuant to the terms of Section 13.2 hereof adversely affects any right, obligation, immunity or indemnity in favor of the Liquidating Trustee under this Agreement, the Liquidating Trustee may in its discretion decline to execute such document.

ARTICLE XIV

MISCELLANEOUS PROVISIONS

14.1    Filing Documents. This Agreement shall be filed or recorded in such office or offices as the Liquidating Trustee may determine to be necessary or desirable. A copy of this Agreement and all amendments thereof shall be maintained in the office of the Liquidating Trustee and shall be available at all times during regular business hours for inspection by any Beneficiary or his duly authorized representative. The Liquidating Trustee shall file or record any amendment of this Agreement in the same places where the original Agreement is filed or recorded. The Liquidating Trustee shall file or record any instrument which relates to any change in the office of the Liquidating Trustee in the same places where the original Agreement is filed or recorded.

14.2    Intention of Parties to Establish Liquidating Trust. This Agreement is not intended to create and shall not be interpreted as creating a corporation, association, partnership, or joint venture of any kind for purposes of federal income taxation or for any other purpose.

14.3    Beneficiaries Have No Rights or Privileges as Holders of Investment Trust D Units. Except as expressly provided in this Agreement or under applicable law, the Beneficiaries shall have no rights or privileges attributable to their former status as holders of Investment Trust D Units.

14.4    Laws as to Construction. The Liquidating Trustee, and the Beneficiaries (by their acceptance of any distributions made to them pursuant to this Agreement), consent and agree that this Liquidating Trust Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without reference to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the state of New York and the United States District Court for any District within such state for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Liquidating Trust Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Liquidating Trust Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Each of the parties hereto agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. All parties waive the right to a jury trial of all such disputes, claims and demands.

 

14.5    Severability. In the event any provision of this Agreement or the application thereof to any Person or circumstances shall be finally determined by a court of proper jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

14.6    Notices. Any notice or other communication by the Liquidating Trustee to any Beneficiary shall be deemed to have been sufficiently given, for all purposes, if deposited, postage prepaid, in a post office or letter box addressed to such Person at his address as shown in the records of the Liquidating Trust.

All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by cable, telegram, telecopier or telex to the Liquidating Trustee at the following address or at such other addresses as shall be specified by the Liquidating Trustee:

If to the Liquidating Trustee:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890

Attention: Corporate Trust Administration

Facsimile: (302) 636-4149

with a copy to:

Putney, Twombly, Hall & Hirson LLP

521 Fifth Avenue

New York, New York 10175 

Attention: William M. Pollak, Esq.

Facsimile: (212) 682-9380

14.7    Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument.

[Remainder of page intentionally left blank. Signature page follows.]

	
 

	 	 	 
	

	

IN WITNESS WHEREOF, the Managing Trustee of Investment Trust D has caused this Agreement to be executed an authorized officer, and the Liquidating Trustee hereunder has executed this Agreement, as Liquidating Trustee and not as an individual, this 31st day of December 2004.

 

AFG INVESTMENT TRUST D

 

By: AFG ASIT Corporation, Trustee

 

 

By:______________________________

Rick Brock, Vice President

LIQUIDATING TRUSTEE:

WILMINGTON TRUST COMPANY

 

By:___________________________________

Name:

Title:

	
 

	 	 	 
	

	

SCHEDULE A

WILMINGTON TRUST COMPANY

SCHEDULE OF FEES

to act as

TRUSTEE, REGISTRAR, TRANSFER AGENT AND DISTRIBUTION AGENT

LIQUIDATING TRUST

EXHIBIT A

	 
 

 

	 	 	 
	

	 

FORM OF BILL OF SALE, ASSIGNMENT, ACCEPTANCE

AND ASSUMPTION AGREEMENT

This BILL OF SALE, ASSIGNMENT, ACCEPTANCE AND ASSUMPTION AGREEMENT, made, executed and entered into as of December 31, 2004, by and among AFG ASIT Corporation, not in its individual capacity, but solely as Managing Trustee (the “Managing Trustee”) of AFG Investment Trust D, a Delaware business trust (the “Assignor”) and Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity, but solely as trustee (the “Trustee”) of the AFG Investment Trust D Liquidating Trust (the “Liquidating Trust”).

 

RECITALS

 

WHEREAS, the Trustee and the Assignor are parties to a Liquidating Trust Agreement dated as of the date hereof (the “Agreement”), pursuant to which the Assignor has created a Liquidating Trust and engaged the Trustee as trustee to administer the Liquidating Trust in furtherance of a Plan of Complete Liquidation and Dissolution, entered into by the Assignor, the Managing Trustee and certain other parties including the Trustee in its capacity as the Delaware Trustee of the Assignor on December 31, 2004 (the “Plan”); and 

WHEREAS, the Agreement contemplates that the Assignor will place, as of the date hereof and in furtherance with the Plan, all of its undistributed assets, including but not limited to, cash, equipment and securities, along with certain cash reserves subject to disbursement for the Assignor’s and the Liquidating Trust’s contingent liabilities, into the Liquidating Trust established to receive said assets and reserves; and

WHEREAS, the Trustee and the Assignor now desire to carry out the intent and purpose of the Agreement by the execution and delivery to the Trustee by the Assignor of this instrument evidencing the conveyance, assignment, transfer, sale and delivery to the Trustee of the Transferred Assets (as hereinafter defined) the acceptance by the Trustee of same and the assumption by the Trustee of the Assumed Obligations (as hereinafter defined); 

NOW, THEREFORE, in consideration of the foregoing premises and for $10 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged:

ASSIGNMENT

The Assignor does hereby convey, assign, transfer, sell and deliver unto the Trustee and its successors and assigns, forever, for the benefit of the Liquidating Trust, all of Assignor's right, title and interest in, to and under all of the assets of the Assignor as set forth and more fully described by category of asset and more fully enumerated by Assignor on Exhibit A, hereto, including, without limitation any accounts receivable, limited partnership interests, beneficial interests, rights in litigation, security interests, contract rights or agreements, rights to payment or distributions or similar rights that Assignor may possess in same (together, the “Transferred Assets”).

ACCEPTANCE AND ASSUMPTION

The Trustee, not individually but solely in its capacity as Trustee, accepts the foregoing conveyance, assignment, transfer and delivery of the Transferred Assets and agrees to assume all liabilities and obligations relating to the Transferred Assets to the extent specifically set forth in the Agreement (the “Assumed Obligations”).

TO HAVE AND TO HOLD the Transferred Assets and the Assumed Obligations unto the Trustee, its successors and assigns, FOREVER, for the benefit of the Liquidating Trust.

The Assignor hereby constitutes and appoints the Trustee and its successors and assigns as its true and lawful attorney-in-fact in connection with the transactions contemplated by this instrument, with full power of substitution, in the name and stead of the Assignor but on behalf of and for the benefit of the Trustee and its successors and assigns, to demand and receive any and all of the assets, properties, rights and business hereby conveyed, assigned, and transferred or intended so to be, and to give receipt and releases for and in respect of the same and any part thereof, and from time to time to institute and prosecute, in the name of the Assignor or otherwise, for the benefit of the Liquidating Trust or its successors and assigns, proceedings at law, in equity, or otherwise, which the Trustee or its successors or assigns reasonably deem proper in order to collect or reduce to possession or endorse any portion of the Transferred Assets and to do all acts and things in relation to the assets which the Trustee or its successors or assigns reasonably deem desirable.

This instrument shall be binding upon and shall inure to the benefit of the respective successors and assigns of the Assignor and the Trustee.

This instrument shall be construed and enforced in accordance with the laws of the State of Delaware, without regard to conflict of law.

[The remainder of this page is left intentionally blank.]

	 
 

 

	 	 	 
	

	 

IN WITNESS WHEREOF, the undersigned have executed this Bill of Sale, Assignment, Acceptance and Assumption Agreement under seal on the date first above written.

ASSIGNOR:

AFG INVESTMENT TRUST D

a Delaware business trust

 

By:    AFG ASIT CORPORATION, not in its individual

capacity, but solely as its Managing Trustee

 

By:    ____________________________

Name:

Title:

By:    WILMINGTON TRUST COMPANY, not in its individual

capacity, but solely as its Delaware Trustee

 

By:    ____________________________

Name:

Title:

TRUSTEE:

WILMINGTON TRUST COMPANY, not in its individual

capacity but solely as Trustee of the

AFG Investment Trust D Liquidating Trust

 

By:    ____________________________

Name:

Title:

	
 

	 	 	 
	

	

EXHIBIT A

Transferred Assets

Described by Category of Asset

	I.  	Cash and Cash Equivalents

$____________ as of 12/__/04

	II.  	Accounts Receivable

All of the receivables listed on the schedule attached hereto dated 12/__/04

	III.  	Interest in EFG Kirkwood LLC

	 		__% of the membership interests in EFG Kirkwood LLC, a Delaware limited liability company, held by Assignor

	IV.  	Beneficial Interests in Trusts

All of the beneficial interests held by Assignor in the common law trusts on the schedule attached hereto dated 12/__/04, such beneficial interest being all the beneficial interest in such trusts except as noted.

	V.  	Equipment

All of the equipment listed on the schedule attached hereto dated 12/__/04

The amounts or schedules referenced in I, II and VIII above will be updated and replaced by schedules dated 12/__/04 once all transactions occurring on or prior to such date are scheduled by the Assignor.Equity Purchase Agreement

Execution Copy

EQUITY PURCHASE AGREEMENT

 

among

 

KETTLE VALLEY USA LLC

and

EQUIS II CORPORATION

as the Buyers

EFG/KETTLE DEVELOPMENT LLC,

the Company

AFG INVESTMENT TRUST C and AFG INVESTMENT TRUST D,

as the Sellers

December 31, 2004

	
 

	 	 	 
	

	

	 	
TABLE OF CONTENTS
	 
	 	 	
Page

	
ARTICLE 1
	
DEFINITIONS AND RULES OF CONSTRUCTION
	
1

	
1.1.
	
Definitions
	
1

	
1.2.
	
Certain Interpretive Matters
	
6

	
1.3
	
Acknowledgment Regarding Negotiation and Preparation of Agreement
	
7

	
ARTICLE 2
	
PURCHASE AND SALE OF THE INTERESTS
	
8

	
2.1.
	
Purchase and Sale of the Interests
	
8

	
2.2.
	
Purchase Price; Payment; Delivery of Deposit into Escrow
	
8

	
2.3.
	
Other Obligations
	
8

	
ARTICLE 3
	
THE CLOSING
	
9

	
3.1.
	
Closing and Closing Date
	
9

	
3.2.
	
Documents and Items to Be Delivered to the Buyers by the Sellers
	
9

	
3.3.
	
Documents and Items to Be Delivered to the Sellers by the Buyers.
	
10

	
ARTICLE 4
	
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	
11

	
4.1.
	
Organization of the Company
	
11

	
4.2.
	
Capitalization
	
11

	
4.3.
	
Authority of the Company
	
11

	
4.4.
	
Organization and Authority of the Sellers
	
12

	
4.5.
	
Enforceability
	
12

	
4.6.
	
Issuance of the Interests; Sellers
	
12

	
4.7.
	
No Violation or Conflict; Consents
	
12

	
4.8.
	
Litigation
	
13

	
4.10.
	
Liens
	
13

	
ARTICLE 5
	
REPRESENTATIONS AND WARRANTIES OF KVUSA
	
13

	
5.1.
	
Organization.
	
13

	
5.2.
	
Authority of KVUSA
	
13

	
5.3.
	
Enforceability
	
13

	
5.4.
	
No Violation or Conflict; Consents
	
14

	
5.5.
	
Brokers.
	
14

	
5.6.
	
Investment Intent
	
14

	
5.7.
	
Litigation
	
14

	
ARTICLE 6
	
REPRESENTATIONS AND WARRANTIES OF EQUIS II
	
15

	
6.1.
	
Organization.
	
15

	
6.2.
	
Authority of Equis II
	
15

	
6.3.
	
Enforceability
	
15

	
6.4.
	
No Violation or Conflict; Consents
	
15

	
6.5.
	
Brokers.
	
16

	
6.6.
	
Investment Intent
	
16

	
6.7.
	
Litigation
	
16

	
ARTICLE 7
	
COVENANTS OF THE PARTIES
	
16

	
7.1.
	
Conduct of Business of the Company
	
16

	
7.2.
	
Notification of Certain Matters.
	
16

	
ARTICLE 8
	
CONDITIONS TO CLOSING
	
17

	
8.1.
	
Conditions to Obligations of the Sellers
	
17

	
8.2.
	
Conditions to Obligations of the Buyers
	
17

	
ARTICLE 9
	
TERMINATION
	
18

	
9.1.
	
Termination.
	
18

	
9.2.
	
Effect of Termination
	
19

	
ARTICLE 10 
	
INDEMNIFICATION
	
20

	
10.1.
	
Survival
	
20

	
10.2.
	
Terms of Indemnification
	
20

	
10.3.
	
Procedures with Respect to Third-Party Claims
	
21

	
10.4.
	
Indemnification Cap and Threshold.
	
22

	
10.5.
	
Additional Indemnification Provisions
	
22

	
10.6.
	
Exclusive Remedy
	
23

	
ARTICLE 11
	
GENERAL PROVISIONS
	
23

	
11.1.
	
Parties in Interest; Successors and Assigns; No Third Party Rights.
	
23

	
11.2.
	
Assignment
	
23

	
11.3.
	
Notices.
	
23

	
11.4.
	
Entire Agreement.
	
24

	
11.5.
	
Counterparts and Facsimile Signature
	
24

	
11.6.
	
Severability
	
24

	
11.7.
	
Amendment
	
24

	
11.8.
	
Waiver
	
24

	
11.9.
	
Further Assurances
	
24

	
11.10.
	
Legal Counsel
	
25

	
11.11.
	
Expenses.
	
25

	
11.12.
	
Governing Law
	
25

	
    

	 	 	 
	

	

EQUITY PURCHASE AGREEMENT

 

THIS EQUITY PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of December 31, 2004, by and among Kettle Valley USA LLC, a Florida limited liability company (“KVUSA”) and Equis II Corporation, a Delaware corporation (“Equis II” and, together with KVUSA, each a “Buyer” and together the “Buyers”), EFG/Kettle Development LLC, a Delaware limited liability company (the “Company”) and AFG Investment Trust C and AFG Investment Trust D, each a Delaware statutory trust (“Trust C” and “Trust D,” respectively, together with an Assignee (as hereinafter defined) of each of Trust C or Trust D, as the case may be, each a “Seller” and together, the “Sellers”).

 

RECITALS

 

WHEREAS, the Sellers are the owners of all of the outstanding units of interest of the Company (the “Interests”); and

 

WHEREAS, the Buyers desires to purchase the Interests from the Sellers, and the Sellers desire to sell the Interests to the Buyers, all upon the terms and conditions set forth in this Agreement; and

 

WHEREAS, the Sellers contemplate that on or prior to December 31, 2004, each of the Sellers will contribute all of such Seller’s assets, including each Seller’s Interests and their rights and obligations under this Agreement, subject to such Seller’s liabilities, to a liquidating trust (the “Liquidating Trust”) in which Wilmington Trust Company is the Liquidating Trustee (with respect to each Seller, an “Assignee”);

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants, agreements, representations and warranties contained in this Agreement, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

ARTICLE 1

 

DEFINITIONS AND RULES OF CONSTRUCTION

 

1.1.    Definitions. As used in this Agreement, the following terms have the meanings set forth below:

 

“Affiliate(s)” means with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with the first Person on or after the date of this Agreement. For the purposes of this definition, “control,” when used with respect to any Person, means the possession, directly or indirectly, of the power to (i) vote 25% or more of the voting securities of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing. 

 

“Agreement” has the meaning set forth in the introduction to this Agreement.

 

“Assignee” has the meaning set forth in the Recitals to this Agreement.

 

“Assignment Instructions” means those certain Assignment Instructions in the form of Exhibit E hereto.

 

“Breach” means (a) any inaccuracy in, or breach or violation of, or default under, or failure to perform or comply with, any representation, warranty, covenant, obligation or other provision of this Agreement or any of the other Transaction Documents; or (b) any claim (by any Person) or other occurrence or circumstance that is or was inconsistent with any such representation, warranty, covenant, obligation or other provision.

 

“Buyer” or “Buyers” has the meaning set forth in the introduction to this Agreement.

 

“Buyer Party” means (a) prior to the Closing, each of the Buyers, their Affiliates and their respective stockholders, directors, officers, employees, agents, advisors and other representatives, including legal counsel, accountants and financial advisors; and (b) from and after Closing, each of the Buyers and their Affiliates, the Company and its Affiliates and their respective stockholders, directors, officers, employees, agents, advisors and other representatives, including legal counsel, accountants and financial advisors.

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Date” has the meaning set forth in Section 3.1.

 

“Code” means the Internal Revenue Code of 1986, as amended, and rules and regulations promulgated pursuant thereto.

 

“Company” has the meaning set forth in the introduction to this Agreement.

 

“Company Securities” has the meaning set forth in Section 4.2.

 

“Consent” means any consent, approval, license, ratification, waiver, novation, award or other authorization, including any Permit.

 

“Contract” means any agreement, contract, instrument, obligation, commitment, covenant, understanding, promise, promissory note, bond, indenture, insurance policy, deed, lease, license, franchise, invoice, quotation, purchase order, sales order or other obligation, undertaking or arrangement (whether written or oral and whether express or implied) that is legally binding.

 

“Damages” means any and all losses, charges, claims, damages, liabilities, obligations, judgments, settlements, taxes, fines, penalties, awards, demands, offsets, costs, deficiencies and expenses including reasonable attorney and expert fees, whether absolute, accrued, conditional or otherwise and whether or not resulting from third-party claims and including all amounts paid in investigation, defense or settlement of the foregoing.

 

“Equis II Pledge Agreement” means that certain Pledge Agreement in the form of Exhibit D hereto.

 

“Escrow Agent” means Wilmington Trust Company.

 

“Escrow Agreement” means that certain Escrow Agreement dated as of December 31, 2004, by and among the Buyers, the Sellers, the Company and the Escrow Agent in the form attached as Exhibit A hereto.

 

“GAAP” means United States generally accepted accounting principles, consistently applied.

 

“Governmental Authority” means: (a) any nation, state, county, city, town, municipality, village, district, territory or other jurisdiction of any nature; (b) any federal, state, municipal or local governmental or quasi-governmental entity or authority of any nature; (c) any court or tribunal exercising or entitled to exercise judicial authority or power of any nature; (d) any multinational organization or body; and (e) any department or subdivision of any of the foregoing, including any commission, branch, board, bureau, agency, official or other instrumentality exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

 

“Guaranty” means that certain Guaranty by the Buyers in favor of the Sellers, substantially in the form of Exhibit G hereto.

 

“Indebtedness” means with respect to the Company, at any date, without duplication: (a) all obligations of the Company for borrowed money, whether current, short-term or long-term, secured or unsecured, including all principal, interest, premiums, fees, expenses, overdrafts and pre-payment and other penalties with respect thereto; (b) all obligations of the Company evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations of the Company to pay the deferred purchase price of property or services, except trade payables incurred in the Ordinary Course of Business; (d) all obligations of the Company to reimburse any bank or other Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument; (e) all capital lease obligations; (f) any Liability of the Company with respect to interest rate swaps, collars, caps and similar hedging obligations; and (g) all Indebtedness of any other Person of the type referred to in clauses (a) through (f) above directly or indirectly guaranteed by the Company or secured by any assets of the Company. For purposes of this definition, “capital lease obligations” means the obligations of the Company that are required to be classified and accounted for as capital lease obligations under GAAP, and the amount of such obligations at any date shall be the capitalized amount of such obligations at such date determined in accordance with GAAP together with all obligations to make termination payments under such capital lease obligations.

 

“Indemnification Cap” has the meaning set forth in Section 10.4(a).

 

“Indemnification Threshold” has the meaning set forth in Section 10.4(b).

 

“Indemnified Party” has the meaning set forth in Section 10.3.

 

“Indemnifying Party” has the meaning set forth in Section 10.3.

 

“Interests” has the meaning set forth in the Recitals to this Agreement.

 

“Knowledge” means (a) with respect to the Company or the Sellers, the actual knowledge of James A. Coyne and Gary D. Engle and such knowledge that any of such named individuals should have acquired in the normal course of his or her duties on behalf of the Company or the Sellers and (b) with respect to the Buyers, the actual knowledge of any director or officer of the Buyers.

 

“KVDLP” means Kettle Valley Development Limited Partnership, a [Delaware] limited partnership.

 

“KVUSA Pledge Agreement” means that certain Pledge Agreement in the form of Exhibit F hereto.

 

“Law” means (a) any constitution, statute, code, ordinance, regulation, treaty, rule, common law, policy, interpretation or guidance document enacted, published or promulgated by any Governmental Authority; and (b) with respect to a particular Person, the terms of any Order binding upon such Person or its assets or properties.

 

“Liability” means any liability, Indebtedness or other obligation, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated.

 

“Lien” means any charge, claim, mortgage, lease, sublease, occupancy agreement or similar Contract, tenancy, right-of-way, easement, collateral assignment, restrictive covenant, encroachment, burden, condition, Order, community property interest, equitable interest, security interest, lien (statutory or otherwise), pledge, hypothecation, option, right of first refusal or other restriction, limitation, exception or encumbrance of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

 

“Material Adverse Effect” means a material adverse effect on the business, operations, condition (financial or otherwise), results of operations, rights, assets (including intangible assets) or liabilities of the Company or a material adverse effect on the ability of the Company or the Sellers to consummate and perform in a timely manner the transaction contemplated by this Agreement.

 

“Material Adverse Event” means any one or more events, changes, circumstances, conditions, violations or developments (whether or not arising in the Ordinary Course of Business), which has had or have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

“Notes” has the meaning set forth in Section 2.2(c).

 

“Order” means any order, injunction (whether temporary, preliminary or permanent), ruling, decree (including any consent decree), writ, subpoena, verdict, charge, assessment, Consent or other decision entered, issued, made or rendered by any court or other Governmental Authority or by any arbitrator.

 

“Ordinary Course of Business” means, with respect to a particular Person, an action taken by, or the conduct of, such Person that is: 

 

(a)    consistent with the past practices of such Person in timing, frequency, amount and otherwise and taken in the ordinary course of the normal day-to-day operations of such Person; 

 

(b)    not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and

 

(c)    similar in nature and magnitude to actions customarily taken by, or the conduct of, such Person, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business as such Person.

 

“Organizational Documents” means, with respect to a particular Person, (a) if such Person is a corporation, its certificate or articles of incorporation, organization or formation and its by-laws; (b) if such Person is a general partnership, its partnership agreement and any statement of partnership; (c) if such Person is a limited partnership, its certificate of limited partnership and its limited partnership agreement; (d) if such Person is a limited liability company, its certificate or articles of formation or organization and limited liability company or operating agreement; (e) any other charter or similar document adopted or filed in connection with the creation, formation or organization of such Person; and (f) any amendment to any of the foregoing. 

 

“Permit” means any permit, license, Consent, exemption, variance, registration, security clearance or other authorization issued or granted by any Governmental Authority.

 

“Permitted Liens” means any: (a) Liens for current Taxes not yet due (other than Taxes arising out of the transactions contemplated by this Agreement); (b) Liens of carriers, laborers, materialmen, mechanics, repairmen or warehousemen, and other similar Liens imposed by Law and arising in the Ordinary Course of Business for Liabilities not yet due; and (c)  Liens of record or other minor defects of title that do not and could not interfere with the use of such real property or materially diminish the value thereof.

 

“Person” means any individual, firm, company, general partnership, limited partnership, limited liability partnership, joint venture, association, corporation, limited liability company, trust, business trust, estate, Governmental Authority or other entity.

 

“Proceeding” means any action, claim, complaint, charge, arbitration, audit, hearing, investigation, inquiry, suit, litigation or other proceeding (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.

 

“Purchase Price” has the meaning set forth in Section 2.2(a).

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated pursuant thereto.

 

“Seller Party” means (a) prior to Closing, the Sellers and the Company, and (b) from and after Closing, the Sellers.

 

“Seller” or “Sellers” has the meaning set forth in the introduction to this Agreement.

 

“Seller’s Counsel” means Nixon Peabody LLP.

 

“Tax” or “Taxes” means, however denominated, all federal, state, local, territorial, foreign and other taxes, levies, fees, deficiencies, imposts, assessments, impositions or other government charges of whatever nature, including all net income, gross income, estimated income, gross receipts, business, occupation, franchise, real property, payroll, personal property, sales, transfer, stamp, use, employment, social security, unemployment, worker’s compensation, commercial rent, withholding, occupancy, premium, gross receipts, profits, windfall profits, deemed profits, recapture, license, lease, severance, capital, production, corporation, ad valorem, excise, custom, duty, escheat, built in gain pursuant to Code Section 1374 or similar tax, including any interest, fines, penalties and additions (to the extent applicable) thereon or thereto, whether disputed or not, and any obligations with respect to such amounts arising as a result of being a member of an affiliated, consolidated, combined or unitary group for any period or under any Contract with any other Person, and including any Liability for taxes of a predecessor.

 

“Transaction Documents” means this Agreement and all other agreements, certificates, instruments and other documents being delivered pursuant to this Agreement or pursuant to such other agreements, certificates, instruments and other documents.

 

“Yukon” means 18177 Yukon Inc., a Delaware corporation.

 

1.2.    Certain Interpretive Matters.

 

(a)    General Rules of Construction. In this Agreement, unless the context otherwise requires:

 

(i)    words of the masculine or neuter gender shall include the masculine and/or feminine gender, and words in the singular number or in the plural number shall each include the singular number or the plural number;

 

(ii)    reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and reference to a Person in a particular capacity excludes such Person in any other capacity;

 

(iii)    reference to any agreement (including this Agreement) or other Contract or any document means such agreement, Contract or document as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof;

 

(iv)    any accounting term used and not otherwise defined in this Agreement or any other Transaction Document has the meaning assigned to such term in accordance with GAAP;

 

(v)    “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding or succeeding such term;

 

(vi)    relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including;”

 

(vii)    “hereto”, “herein”, “hereof”, “hereinafter” and similar expressions refer to this Agreement in its entirety, and not to any particular Article, Section, paragraph or other part of this Agreement;

 

(viii)    reference to any “Article” or “Section” means the corresponding Article(s) or Section(s) of this Agreement;

 

(ix)    the descriptive headings of Articles, Sections, paragraphs and other parts of this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement or any of the terms or provisions hereof;

 

(x)    references to dollars or “$” in this Agreement shall mean United States Dollars;

 

(xi)    reference to any Law or Order, means (A) such Law or Order as amended, modified, codified, supplemented or reenacted, in whole or in part, and in effect from time to time; and (B) any comparable successor Laws or Orders; and

 

(xii)    any Contract, instrument, insurance policy, certificate or other document defined or referred to in this Agreement or in any other Transaction Document means such Contract, instrument, insurance policy, certificate or other document as from time to time amended, modified or supplemented, including (in the case of Contracts or instruments) by waiver or Consent and all attachments thereto and instruments and other documents incorporated therein. 

 

1.3    Acknowledgment Regarding Negotiation and Preparation of Agreement. The parties hereto further acknowledge and agree that: (i) this Agreement is the result of negotiations between the parties hereto and shall not be deemed or construed as having been drafted by any one party, (ii) each of the parties hereto and its counsel have reviewed and negotiated the terms and provisions of this Agreement (including any exhibits and schedules attached hereto) and have contributed to its preparation, (iii) the rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement, and (iv) the terms and provisions of this Agreement shall be construed fairly as to all parties hereto and not in favor of or against any party, regardless of which party was generally responsible for the preparation of this Agreement. The parties hereto recognize that Wilmington Trust Company will be acting as Escrow Agent with respect to the transactions contemplated hereby, and, after January 1, 2005, will also be acting as the Liquidating Trustee of each of the Sellers. Each of the parties hereto recognizes that acting in both capacities creates a potential conflict of interest with respect to Wilmington Trust Company, and each party hereto hereby waives any and all such conflicts of interest.

 

ARTICLE 2

 

PURCHASE AND SALE OF THE INTERESTS

 

2.1.    Purchase and Sale of the Interests. Upon and subject to the terms and provisions of this Agreement, at the Closing, KVUSA will purchase and accept delivery of seventy-two percent (72%) of the Interests pro rata from each Seller, and Equis II will purchase and accept delivery of twenty-eight percent (28%) of the Interests pro rata from each Seller, and the Sellers shall sell, assign, transfer and deliver all of the Interests to the Buyers free and clear of all Liens.

 

2.2.    Purchase Price; Payment; Deposit and Delivery into Escrow.

 

(a)    Purchase Price. The total purchase price for the Interests will be Five Million Dollars ($5,000,000) (the “Purchase Price”).

 

(b)    Payment. The Purchase Price shall be paid at the Closing in accordance with the Escrow Agreement.

 

(c)    Delivery of Deposit into Escrow. On the date hereof, KVUSA shall deposit with the Escrow Agent in immediately available funds by wire transfer One Hundred Thousand Dollars ($100,000) as a deposit (the “Deposit”), which shall be offset against the Purchase Price at Closing; however; the Deposit shall not be considered part of the Purchase Price as the Deposit shall be non-refundable except as expressly set forth in Section 9.2(b).

 

2.3.    Other Obligations. Buyers and Sellers agree that on the Closing Date the Sellers shall have made certain open account advances to Kettle Valley Development Limited Partnership (“KVDLP”). All such amounts due on the Closing Date from KVDLP, as set forth on Schedule A of the Guaranty, shall be paid to Sellers, as their interests may appear in the accounting and other records of KVDLP, if and when KVDLP makes distributions or other payments on account of such advances. At Closing, Buyers shall deliver the Guaranty to Sellers whereby Buyers shall guaranty the payment of the open account advances outstanding on the Closing Date, on or prior to the date which is eighteen (18) months after the Closing Date, pursuant to the terms of the Guaranty.

 

ARTICLE 3

 

THE CLOSING

 

3.1.    Closing and Closing Date. Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned in accordance with the terms and provisions of Article 9, the purchase and sale of the Interests (the “Closing”) shall take place at 10:00 a.m. (Boston time) on a date to be designated by the Buyers and the Sellers upon the satisfaction or waiver of all of the conditions to the respective obligations of the parties set forth in Article 8 (such date and time on and at which the Closing actually occurs being referred to herein as the “Closing Date”), in accordance with the terms of the Escrow Agreement. The Closing shall take place at the offices of the Sellers’ counsel, Nixon Peabody LLP, 100 Summer Street, Boston, MA 02110. 

 

3.2.    Documents and Items to Be Delivered to the Buyers by the Sellers. At the Closing, the Sellers will deliver to the Buyers:

 

(i)    Signature pages to the Equis II Pledge Agreement, the KVUSA Pledge Agreement, the Guaranty and the Assignment Instructions, fully executed by the Sellers and the Company, as applicable, and dated as of the Closing Date;

 

(ii)    A certificate in form and substance reasonably acceptable to the Buyers, dated the Closing Date, executed by the manager(s) of the Company, certifying: (i) that attached thereto is a true, correct and complete copy of the Organizational Documents of the Company, including all amendments thereto, as in effect on the Closing Date; (ii) that attached thereto is a true and complete copy of the resolutions duly adopted by the manager(s) of the Company authorizing the execution and delivery of this Agreement and each of the other Transaction Documents to which the Company is a party, and that such resolutions have not been modified, rescinded or amended and are in full force and effect as of the Closing Date; and (iii) as to the incumbency of the Company’s manager(s) and officers and their signatures;

 

(iii)    A certificate in form and substance reasonably acceptable to the Buyers, dated the Closing Date, executed by AFG ASIT Corporation, the Managing Trustee of each Seller, certifying that attached thereto is a true, correct and complete copy of the Organizational Documents of each Seller, including all amendments thereto, as in effect on the Closing Date;

 

(iv)    A certificate, in form and substance reasonably acceptable to the Buyers, dated the Closing Date, executed by the manager(s) of the Company, certifying that (i) the representations and warranties of the Company set forth in this Agreement were true, correct and complete at and as of the date hereof and the Closing Date (provided that representations and warranties which are confined to a specific date shall speak only as of such date); and (ii) that the Company has performed in accordance with the terms thereof each of its agreements and obligations set forth in this Agreement and each of the other Transaction Documents to which the Company is a party to be performed prior to the Closing;

 

(v)    A certificate, in form and substance reasonably acceptable to the Buyers, dated the Closing Date, executed by the Managing Trustee of each of the Sellers, certifying that (i) the representations and warranties of the Sellers set forth in this Agreement were true, accurate and complete at and as of the date hereof and the Closing Date (provided that representations and warranties which are confined to a specific date shall speak only as of such date); and (ii) each of the Sellers performed its respective or joint agreements and obligations set forth in this Agreement and each of the other Transaction Documents to which the Sellers are a party to be performed prior to the Closing;

 

(vi)    Resignations of such manager(s) and officers of the Company as the Buyers may request at least five (5) days prior to Closing;

 

(vii)    Certificates of good standing for the Company and each of the Sellers from the Secretary of State of the State of Delaware dated not earlier than ten (10) days prior to the Closing Date; and

 

(viii)    Such other certificates and documents as the Buyers or the Buyers’ Counsel may reasonably request.

3.3.    Documents and Items to Be Delivered to the Sellers by the Buyers. At the Closing, each of the Buyers (except as noted) will deliver to the Sellers:

 

(i)    KVUSA shall deliver, in immediately available funds by wire transfer, a total of Nine Hundred Thousand Dollars ($900,000), payable Four Hundred Fifty Thousand Dollars ($450,000) each to Trust C and Trust D;

 

(ii)    two executed promissory notes, dated on the Closing Date, each having a initial principal amount of $1,300,000, in favor of Trust C and Trust D, respectively, in the form attached hereto as Exhibit B and Exhibit C, respectively (together, the “Notes”);

 

(iii)    KVUSA shall deliver, in immediately available funds by wire transfer, a total of One Million Four Hundred Thousand Dollars ($1,400,000), payable Seven Hundred Thousand Dollars ($700,000) each to Trust C and Trust D;

 

(iv)    Signature pages, as applicable, to the Equis II Pledge Agreement, the KVUSA Pledge Agreement and the Guaranty; 

 

(v)    A certificate, in form and substance reasonably acceptable to the Sellers, executed by an authorized officer of each of the Buyers, dated the Closing Date, and certifying (i) that attached thereto are true and complete copies of the Organizational Documents of the Buyers, including all amendments thereto, as in effect on the Closing Date; (ii) that attached thereto are the Organizational Documents of each of the Buyers, as amended and in effect on the Closing Date; (iii) that attached thereto are the votes duly adopted by the Board of Directors or Manager(s) of each of the Buyers, as applicable, authorizing the execution, delivery and performance of this Agreement and each of the other Transaction Documents to which it is a party, and that such votes have not been modified, rescinded or amended and are in full force and effect as of the Closing Date; and (iv) as to the incumbency of each of the Buyers’ officers and their signatures;

 

(vi)    A certificate, in form and substance reasonably acceptable to the Sellers, executed by an authorized officer of each of the Buyers, dated the Closing Date, and certifying as to the accuracy of the Buyers’ representations and warranties at and as of the Closing and the performance by each of the Buyers of its agreements and obligations set forth in this Agreement and each of the other Transaction Documents to which it is a party to be performed prior to the Closing; and

 

(vii)    Such other certificates and documents as the Sellers or the Sellers’ Counsel may reasonably request. 

 

ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF THE SELLERS 

 

The Sellers, jointly and severally, hereby represent and warrant to the Buyers as follows:

 

4.1.    Organization of the Company. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware with all power and authority to own or lease all of its properties and assets and to conduct its business as presently conducted.

 

4.2.    Capitalization. Other than the Interests, there are no outstanding (a) membership or other ownership interests of the Company; (b) securities of the Company convertible into or exchangeable for membership or other ownership interests of the Company; or (c) subscriptions, options, warrants, rights or other Contracts to acquire from the Company, and no obligation of the Company to issue, any (i) membership or other ownership interests of the Company, or (ii) securities convertible into or exchangeable for membership or other ownership interests of the Company, and no obligation of the Company to grant, extend or enter into any subscription, warrant, option, right, convertible or exchangeable security or other similar Contract. The ownership interests in the Company of the types described in clauses (a), (b) and (c) of this Section 4.2, whether or not authorized, issued or outstanding, are hereinafter sometimes referred to, collectively, as “Company Securities.” No Company Securities were issued in violation of the Securities Act or other applicable Law. There are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities. There are no voting trusts, agreements or other Contracts relating to the ownership, voting or transfer of membership interests of the Company to which the Company or a Seller is a party. No Person other than the Sellers owns of record or beneficially any Company Securities. The Company has not received any notice of any Lien or any other claim or Proceeding against any Company Securities.

 

4.3.    Authority of the Company. The Company has all requisite power and authority to execute and deliver this Agreement and each of the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company of this Agreement and each of the other Transaction Documents to which it is a party, the performance by the Company of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the manager(s) of the Company.

 

4.4.    Organization and Authority of the Sellers. Each of the Sellers is a statutory trust duly formed, validly existing and in good standing under the laws of the State of Delaware with all power and authority to own or lease all of its properties and assets and to conduct its business as currently conducted. Each of the Sellers has all requisite power and authority to execute and deliver this Agreement and each of the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Sellers of this Agreement and each of the other Transaction Documents to which it is a party, the performance of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Managing Trustee of each of the Sellers.

 

4.5.    Enforceability. This Agreement has been and each of the other Transaction Documents to which the Company is a party has been (or will be at Closing) duly and validly executed and delivered by the Company and (assuming such agreements constitute a legal, valid and binding obligation of the Buyers) constitute (or will constitute upon Closing following execution thereof) the legal, valid and binding agreements of the Company, enforceable against the Company in accordance with their terms. This Agreement and each of the other Transaction Documents to which either of the Sellers is a party has been (or will be at Closing) duly and validly executed and delivered by such Seller and (assuming such agreements constitute a legal, valid and binding obligation of the Buyers) constitute (or will constitute upon Closing following execution thereof) the legal, valid and binding agreements of such Seller, enforceable against such Seller in accordance with their terms.

 

4.6.    Issuance of the Interests; Sellers’ Title to the Interests. The Interests are duly authorized, validly issued, fully paid and non-assessable. Each of the Sellers has good title to and is the lawful, legal, record and beneficial owner of the Interests, free and clear of all Liens and the Buyers, at the Closing and upon payment of the Purchase Price, will receive good title to the Interests, free and clear of all Liens. 

 

4.7.    No Violation or Conflict; Consents. Neither the execution and delivery by the Sellers of this Agreement or any of the other Transaction Documents to which either of the Sellers is a party, nor the performance by either of the Sellers of their respective obligations hereunder and thereunder, nor the consummation of the transactions contemplated hereby and thereby will, directly or indirectly (with or without notice or lapse of time, or both):

 

(i)    violate, contravene, conflict with or Breach any term or provision of the Organizational Documents of the Company or of either of the Sellers;

 

(ii)    violate, contravene or conflict with any of the terms, conditions or requirements of, or require any notice to or filing with any Governmental Authority or other Person under, any Permit, Law or Order applicable to either of the Sellers, or any of their respective assets or properties;

 

(iii)    give any Governmental Authority the right to revoke, withdraw, suspend, cancel, modify, or terminate any Permit held by the Company; or

 

(iv)    require any Permit or other Consent of, or filing with or notification to, any Governmental Authority or other Person.

 

4.8.    Litigation. There is no Proceeding, pending or, to the Knowledge of either Seller, threatened, against or relating to Sellers or the Company that would affect the consummation of the transactions contemplated by this Agreement.

 

4.9.    Liens. Except for Permitted Liens, the Interests are not subject to and the Company has not granted, created or suffered to exist with respect to any of its assets or properties, any Lien.

 

4.10    Brokers. No investment banker, broker, agent, finder, advisor, firm or other Person acting on behalf of the Sellers is, or will be, entitled to any commission or broker’s or finder’s fees from any of the parties hereto, or from any Person controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated herein.

 

4.11    Disclaimer. Other than the express representations and warranties of the Sellers set forth above in this Section 4, the Interests are being sold “AS-IS, WHERE-IS” and THE BUYERS ACKNOWLEDGE AND AGREE THAT NEITHER THE SELLERS, NOR ANY SELLER PARTY HAS MADE OR WILL BE DEEMED TO HAVE MADE ANY CLAIM, CONDITION, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE INTERESTS OR OTHERWISE.

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES OF KVUSA

 

KVUSA represents and warrants to the Sellers as follows:

 

5.1.    Organization. KVUSA is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Florida with all power and authority to own or lease all of its properties and assets and to conduct its business as presently conducted. 

 

5.2.    Authority of KVUSA. KVUSA has all requisite power and authority to execute and deliver this Agreement and each of the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by KVUSA of this Agreement and each of the other Transaction Documents to which it is a party, the performance by KVUSA of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the manager(s) of KVUSA and no other proceedings on the part of KVUSA are necessary to authorize this Agreement and each of the Transaction Documents to which KVUSA is a party, the performance of such obligations or the consummation of such transactions. 

 

5.3.    Enforceability. This Agreement and each of the other Transaction Documents to which KVUSA is a party have been duly and validly executed and delivered by KVUSA and (assuming such agreements constitute the legal, valid and binding obligations of the Sellers) constitute the legal, valid and binding agreement of KVUSA, enforceable against KVUSA in accordance with their terms.

 

5.4.    No Violation or Conflict; Consents. Neither the execution and delivery by KVUSA of this Agreement or any of the other Transaction Documents to which it is a party, nor the performance by KVUSA of its obligations hereunder and thereunder, nor the consummation of the transactions contemplated hereby and thereby will, directly or indirectly (with or without notice or lapse of time or both):

 

(i)    violate, contravene, conflict with or Breach any term or provision of the Organizational Documents of KVUSA or any resolution or vote adopted by the manager(s) or members of KVUSA;

 

(ii)    violate, contravene or conflict with any of the terms, conditions or requirements of, or require any notice to or filing with any Governmental Authority or other Person under, any Permit, Law or Order applicable to KVUSA or any of its assets or properties;

 

(iii)    give any Governmental Authority the right to revoke, withdraw, suspend, cancel, modify, or terminate any Permit held by KVUSA; or

 

(iv)    require any Permit or other Consent of, or filing with or notification to, any Governmental Authority or other Person.

 

5.5.    Brokers. No investment banker, broker, agent, finder, advisor, firm or other Person acting on behalf of KVUSA or its stockholders is, or will be, entitled to any commission or broker’s or finder’s fees from any of the parties hereto, or from any Person controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated herein.

 

5.6.    Investment Intent. KVUSA is acquiring the Interests for its own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act. KVUSA confirms that the Sellers and the Company have made available to KVUSA and its representatives and agents the opportunity to ask questions of the officers and management employees of the Company and to acquire such additional information about the business and financial condition of the Company as KVUSA has requested.

 

5.7.    Litigation. There is no suit, action, proceeding, claim or investigation pending, or, to KVUSA’s Knowledge, threatened, against KVUSA that would affect the consummation of the transactions contemplated by this Agreement.

 

ARTICLE 6

 

REPRESENTATIONS AND WARRANTIES OF EQUIS II

 

Equis II represents and warrants to the Sellers as follows:

 

6.1.    Organization. Equis II is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with all corporate power and authority to own or lease all of its properties and assets and to conduct its business as presently conducted.

 

6.2.    Authority of Equis II. Equis II has all requisite corporate power and authority to execute and deliver this Agreement and each of the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Equis II of this Agreement and each of the other Transaction Documents to which it is a party, the performance by Equis II of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by the Board of Directors of Equis II and no other corporate proceedings on the part of Equis II are necessary to authorize this Agreement and each of the Transaction Documents to which Equis II is a party, the performance of such obligations or the consummation of such transactions.

 

6.3.    Enforceability. This Agreement and each of the other Transaction Documents to which Equis II is a party have been duly and validly executed and delivered by Equis II and (assuming such agreements constitute the legal, valid and binding obligations of the Sellers) constitute the legal, valid and binding agreement of Equis II, enforceable against Equis II in accordance with their terms.

 

6.4.    No Violation or Conflict; Consents. Neither the execution and delivery by Equis II of this Agreement or any of the other Transaction Documents to which it is a party, nor the performance by Equis II of its obligations hereunder and thereunder, nor the consummation of the transactions contemplated hereby and thereby will, directly or indirectly (with or without notice or lapse of time or both):

 

(i)    violate, contravene, conflict with or Breach any term or provision of the Organizational Documents of Equis II or any resolution or vote adopted by the Board of Directors or stockholders of Equis II;

 

(ii)    violate, contravene or conflict with any of the terms, conditions or requirements of, or require any notice to or filing with any Governmental Authority or other Person under, any Permit, Law or Order applicable to Equis II or any of its assets or properties;

 

(iii)    give any Governmental Authority the right to revoke, withdraw, suspend, cancel, modify, or terminate any Permit held by Equis II; or

 

(iv)    require any Permit or other Consent of, or filing with or notification to, any Governmental Authority or other Person.

 

6.5.    Brokers. No investment banker, broker, agent, finder, advisor, firm or other Person acting on behalf of Equis II or its stockholders is, or will be, entitled to any commission or broker’s or finder’s fees from any of the parties hereto, or from any Person controlling, controlled by or under common control with any of the parties hereto, in connection with any of the transactions contemplated herein.

 

6.6.    Investment Intent. Equis II is acquiring the Interests for its own account and not with a view to its distribution within the meaning of Section 2(11) of the Securities Act. Equis II confirms that the Sellers and the Company have made available to Equis II and its representatives and agents the opportunity to ask questions of the officers and management employees of the Company and to acquire such additional information about the business and financial condition of the Company as Equis II has requested.

 

6.7.    Litigation. There is no suit, action, proceeding, claim or investigation pending, or, to Equis II’s Knowledge, threatened, against Equis II that would affect the consummation of the transactions contemplated by this Agreement.

 

ARTICLE 7

 

COVENANTS OF THE PARTIES

 

7.1.    Conduct of Business of the Company. During the period from the date of this Agreement to the Closing Date, the Company shall, and the Sellers shall cause the Company to: (i) conduct its operations in the Ordinary Course of Business; (ii) use reasonable best efforts to preserve intact its business organization, keep available the services of its current managers, officers, employees, consultants and agents; (iii) use reasonable best efforts to preserve the goodwill of the Company; (iv) cooperate with all reasonable due diligence requests of the Buyers; (v) provide the Buyers with reasonable access to all books, records, partners and employees of the Company, including but not limited to plans, surveys, reports and other documents or records that pertain to the Company and its assets, including any appraisals or other valuations; and (vi) promptly advise the Buyers in writing of any Material Adverse Event.

 

7.2.    Notification of Certain Matters. The Sellers shall give prompt notice to the Buyers, and the Buyers shall give prompt notice to the Sellers, of the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which is likely (a) to cause any representation or warranty of such party contained in this Agreement to be untrue, inaccurate or incomplete in any material respect at or prior to the Closing, or (b) to result in any material failure of such party to comply with or satisfy any condition, obligation, covenant or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.2 shall not limit or otherwise affect any representations and warranties or any conditions, obligations, covenants or agreements under this Agreement, or the rights or remedies, pursuant to Article X, available to the Buyer receiving such notice relating to such occurrence or non-occurrence.

 

ARTICLE 8

CONDITIONS TO CLOSING

 

8.1.    Conditions to Obligations of the Sellers. The obligations of the Sellers to close the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver by the Sellers at or prior to the Closing of the following conditions:

 

(i)    The Buyers shall have performed or complied with their obligations, covenants and agreements contained in this Agreement (considered individually and collectively) required to be performed or complied with at or prior to the Closing;

 

(ii)    The representations and warranties of the Buyers contained in this Agreement (considered individually and collectively) shall be true, correct and complete on and as of the date hereof and on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date (provided that representations and warranties which are confined to a specific date shall speak only as of such date);

 

(iii)    The Sellers shall have received from the Buyers the deliveries referred to in Section 3.3;

 

(iv)    Each of the Sellers shall have received an opinion regarding the fairness, from a financial point of view, of the consideration to be received by each Seller and/or the interest holders of such Seller, in form and substance satisfactory to such Seller in each Seller’s sole discretion; and

 

(v)    No Law or Order shall have been enacted, entered, promulgated, issued or enforced by any Governmental Authority of competent jurisdiction which prohibits, restrains, enjoins or restricts the consummation of the transactions contemplated hereby; provided, however, that the parties shall use reasonable best efforts to cause any such Law or Order to be vacated or lifted.

 

8.2.    Conditions to Obligations of the Buyers. The obligations of the Buyers to close the transaction contemplated hereby shall be subject to the satisfaction or waiver by the Buyers at or prior to the Closing of the following conditions:

 

(i)    The Sellers shall have performed or complied with their obligations, covenants and agreements, including restrictive covenants, contained in this Agreement (considered either individually and/or collectively, as applicable) required to be performed or complied with at or prior to the Closing;

 

(ii)    The representations and warranties of the Sellers contained in this Agreement (considered individually and collectively) shall be true, correct and complete, when made and on and as of the Closing Date with the same force and effect as if made on and as of the Closing Date;

 

(iii)    The Buyers shall have received the deliveries referred to in Section 3.2;

 

(iv)    Buyers shall have entered into an agreement with 18177 Yukon Inc. (“Yukon”), to be effective at Closing, whereby Yukon agrees to subordinate all of its rights to distributions from KVDLP until such time as (a) the Notes are paid in full or accelerated, and (b) the Buyers have received a 12% return on the Purchase Price, as more fully described therein;

 

(v)    No Law or Order shall have been enacted, entered, promulgated, issued or enforced by any Governmental Authority of competent jurisdiction, and no Proceeding shall have been commenced or threatened, which prohibits, restrains, enjoins or restricts the consummation of the transactions contemplated hereby; provided, however, that the parties shall use reasonable best efforts to cause any such Law or Order to be vacated or lifted;

 

(vi)    KVUSA shall have received an appraisal of the Company, in form and substance satisfactory to KVUSA in its sole discretion;

 

(vii)    KVUSA shall have completed and shall be satisfied with, in its sole reasonable discretion, its due diligence investigation with respect to the business and financial condition of the Company;

 

(viii)  No Material Adverse Event shall exist or shall have occurred since the date of this Agreement; and

 

(ix)  Each of the Sellers shall have obtained “tail” insurance, in form and substance reasonably acceptable to KVUSA.

 

ARTICLE 9

 

TERMINATION

 

9.1.    Termination. This Agreement may be terminated and the transaction contemplated hereby may be abandoned at any time prior to the Closing, as follows:

 

(a)    by mutual written consent of the Buyers and the Sellers;

 

(b)    by either of the Buyers or either of the Sellers if the Closing shall not have occurred on or before February 15, 2005 (provided that the right to terminate this Agreement under this Section 9.1(b) shall not be available to any party hereto whose failure to perform or comply with any covenant, condition or obligation under this Agreement has been the cause of, or resulted in, the failure of the transactions to be consummated on or before such date);

 

(c)    by either of the Buyers or either of the Sellers if any Governmental Authority of competent jurisdiction shall have issued a final Order restraining, enjoining or prohibiting the transactions contemplated by this Agreement and such Order is or shall have become final and non-appealable;

 

(d)    by either of the Sellers if prior to the Closing Date there shall have been a material Breach of any of the representations, warranties, covenants or agreements of the Buyers contained in this Agreement which cannot be or has not been cured within twenty (20) days after notice thereof to the Buyers;

 

(e)    by KVUSA if (i) prior to the Closing Date, or on February 15, 2005, there shall have been a material Breach of any of the representations, warranties, covenants or agreements on the part of the Company or the Sellers contained in this Agreement which cannot be or has not been cured within the earlier of (x) twenty (20) days after notice thereof to the Sellers or (y) February 15, 2004, or (ii) a Material Adverse Event shall have occurred and is continuing on the earlier of (x) the Closing Date or (y) February 15, 2004;

 

(f)    by KVUSA if the condition set forth in 8.2(vii) has not been satisfied or waived prior to February 15, 2005;

 

(g)    by either Seller in the event that such Seller’s Managing Trustee or Liquidating Trustee, as applicable, believes that it would violate its fiduciary duty to the respective Trust or Liquidating Trust and/or their respective beneficiaries close the transactions contemplated hereby; or

 

(h)    by either Seller in the event that such Seller makes a determination that the cost of obtaining the “tail” insurance described in Section 8.2(ix) is unreasonable.

 

9.2.    Effect of Termination.

 

(a)    If this Agreement is terminated in accordance with Section 9.1, this Agreement shall hereafter become null and void and of no further force or effect, except that the terms and provisions of this Section 9.2 and the following other Sections shall survive such termination and shall remain in full force and effect:

 

Section 11.3 (Notices),

 

Section 11.4 (Entire Agreement),

 

Section 11.11 (Expenses), and

 

Section 11.12 (Governing Law).

 

(b)    (i) In connection with the negotiation and execution of this Agreement, the Sellers agree that KVUSA has devoted significant time and effort and has incurred significant expense in analyzing the transactions contemplated herein. In the event that either of the Buyers terminates this Agreement pursuant to any applicable subsection of Section 9.1 (subject to the proviso in Section 9.1(b)) or if either of the Sellers terminates this Agreement pursuant to Sections 9.1(c), 9.1(g) or 9.1(h), KVUSA shall be entitled to the return of the Deposit; otherwise, the Deposit shall be distributed pro-rata to the Sellers upon termination of this Agreement. Upon any termination, the parties hereto covenant and agree to immediately provide the Escrow Agent with written instructions regarding the return or distribution of the Deposit. For the avoidance of doubt, each party hereto covenants and agrees to provide such instructions with respect to such termination in accordance herewith, even if such party disputes the basis of such termination. If a dispute exists, such dispute shall be noted in the instructions delivered to the Escrow Agent, and the parties hereto agree that in the event of such a dispute, the instructions delivered to the Escrow Agent shall include an instruction that the Escrow Agent treat the Deposit in accordance with Section F of the Escrow Agreement.

 

(ii) In addition to the foregoing, in the event this Agreement is terminated by either of the Sellers pursuant to Section 9.1(g) and instructions have been given to the Escrow Agent to return the Deposit to KVUSA, each of the Sellers shall, within three (3) business days of receipt of a copy of such instructions, pay $50,000 in immediately available funds to KVUSA as liquidated damages and not as a penalty (each such payment, together, the “Break-Up Fee”). If the Deposit is returned to KVUSA as provided in (i) above, or, with respect to a termination pursuant to Section 9.1(g), the Deposit is returned and the Break-Up Fee is paid, then such payments under this Section 9.2(b) shall be the sole and exclusive remedy for the Buyers upon the termination of this Agreement.

 

(c)    Except as expressly set forth in Section 9.2(b) above, any termination of this Agreement shall not relieve any party hereto from any Liability for any Breach of its representations, warranties, covenants or agreements contained herein. The exercise of a right of termination under this Agreement by any party hereto shall not be an election of remedies.

 

ARTICLE 10

 

INDEMNIFICATION

 

10.1.    Survival.

 

(a)    Representations and Warranties. All of the representations and warranties of the parties contained in this Agreement shall survive the Closing and shall continue in full force and effect for a period of six (6) months following the Closing Date.

 

(b)    Covenants and Agreements. All of the covenants and agreements of the parties shall survive the Closing and continue in full force and effect forever, or otherwise in accordance with their respective terms.

 

(c)    Timely Claims. No party shall have any liability (for indemnification or otherwise) based upon any claim for indemnification arising out of the Breach of any representation or warranty contained in this Agreement or in any of the other Transaction Documents, to be fulfilled or complied with at or before the Closing unless such party is given notice asserting a claim with respect thereto prior to the termination of the applicable time period set forth under Section 10.1(a). Any representation or warranty as to which a claim for indemnification (including a contingent claim) shall have been asserted during the survival period shall continue in effect with respect to such claim until such claim shall have been finally resolved or settled.

 

10.2.    Terms of Indemnification. Subject to the terms and provisions of this Agreement,

 

(a)    (i) the Sellers, jointly and severally, shall indemnify the Buyer Parties against, and shall protect, defend and hold harmless the Buyer Parties from, all Damages arising out of, relating to, or resulting from any Breach of any of the Sellers’ or the Company’s respective representations, warranties, covenants or agreements contained in this Agreement, including the schedules hereto or in any of the other Transaction Documents. 

 

(ii) The Sellers, severally but not jointly, shall indemnify the Buyer Parties against, and shall protect, defend and hold harmless the Buyer Parties from all Damages arising out of, relating to, or resulting from any Proceeding, commenced at any time (and without regard to any survival period for any representation or warranty contained in this Agreement), that is brought (x) by any beneficial interest holder of either of the Sellers, or (y) on a derivative basis by any beneficial interest holder of either Seller on behalf of such Seller, and, in the case of each of (x) and (y) above, which relates to or arises out of any event, fact or circumstance existing prior to the Closing and relates to the transactions contemplated by this Agreement, including without limitation the liabilities, damages, costs and expenses incurred by the Company and the Buyers (including attorney’s fees) in connection with the defense, settlement or other resolution thereof.

 

(b)    the Buyers, severally but not jointly, shall indemnify the Seller Parties against, and shall protect, defend and hold harmless the Seller Parties from, all Damages arising out of, relating to, or resulting from any Breach of either of the Buyers’ representations, warranties, covenants or agreements contained in this Agreement or in any of the other Transaction Documents.

 

10.3.    Procedures with Respect to Third-Party Claims. Promptly after the occurrence of any claim, assertion, event, action or proceeding against the Company or any party hereto which could give rise to a claim for indemnification under this Article 9, the party seeking indemnification (the “Indemnified Party”) shall give notice to the party from whom indemnification is sought (the “Indemnifying Party”) if it wishes to assert a claim for indemnification under this Article 10. The failure of the Indemnified Party to timely deliver such notice shall not reduce the liability of the Indemnifying Party except to the extent the Indemnifying Party demonstrates that the defense of the subject claim has been prejudiced by such failure. The Indemnifying Party shall then be entitled to participate in such action or proceeding and, to the extent that it shall wish, to assume the defense thereof with counsel satisfactory to such Indemnified Party (but prior to assuming such defense the Indemnifying Party shall have acknowledged in writing its indemnification obligation hereunder). After notice from the Indemnifying Party to the Indemnified Party of its election to assume the defense of a claim, the Indemnifying Party shall not be liable to such Indemnified Party under Section 10.2 for any fees of other counsel or any other expenses, in each case subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable costs of investigation. If an Indemnifying Party assumes the defense of such an action (a) no compromise or settlement thereof may be effected by the Indemnifying Party without the Indemnified Party’s consent (which shall not be unreasonably withheld) unless (i) there is no finding or admission of any violation of law or any violation of the rights of any person and no effect on any other claims that may be made against the Indemnified Party and (ii) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party, and (b) the Indemnifying Party shall have no liability with respect to any compromise or settlement thereof effected by the Indemnified Party without its consent (which shall not be unreasonably withheld). If notice is given to an Indemnifying Party of the commencement of any action and it does not, within thirty (30) days after the Indemnified Party’s notice is given, give notice to the Indemnified Party of its election to assume the defense thereof (and in connection therewith, acknowledges in writing its indemnification obligation hereunder), the Indemnifying Party shall be bound by any determination made in such action or any compromise or settlement thereof effected by the Indemnified Party. Notwithstanding the foregoing, if an Indemnified Party determines in good faith that there is a reasonable probability that any action may materially and adversely affect it or its Affiliates other than as a result of monetary damages, such Indemnified Party may, by notice to the Indemnifying Party, assume the exclusive right to defend, compromise or settle such action, but the Indemnifying Party shall have no liability with respect to judgment entered in any action so defended, or a compromise or settlement thereof entered into, without its consent (which shall not be unreasonably withheld).

 

10.4.    Indemnification Cap and Threshold.

 

(a)    Indemnification Cap. The maximum aggregate liability of each party for claims for indemnification made pursuant to in Section 10.2 shall be Five Hundred Thousand and 00/100 Dollars ($500,000) (the “Indemnification Cap”).

 

(b)    Indemnification Threshold. No Buyer Party shall be entitled to make any claim for indemnification pursuant to Section 10.2(a) unless and until the aggregate amount of Damages with respect to all such claims that may be made by all Buyer Parties pursuant to this Article 10 as a result of a Breach of any of the Sellers’ representations, warranties, obligations, covenants or agreements set forth in this Agreement exceeds an aggregate of One Hundred Thousand and 00/100 Dollars ($100,000) (the “Indemnification Threshold”), after which the Sellers shall be liable for the full amount of such Damages, subject to the Indemnification Cap. No Seller shall be entitled to make any claim for indemnification pursuant to Section 10.2(b) unless and until the aggregate amount of Damages with respect to all such claims that may be made by the Sellers pursuant to this Article 10 exceeds the Indemnification Threshold, after which the Buyers shall be liable for the full amount of such Damages, subject to the Indemnification Cap.

 

(c)    Applicability of Indemnification Cap and Threshold. Notwithstanding anything in this Article 10 to the contrary, neither the Indemnification Cap nor the Indemnification Threshold shall apply to or against, and the parties shall be liable under this Article 10 for, the entirety of any Damages resulting from, arising out of, in the nature of, or caused by (i) any fraudulent, willful or intentional Breach by any party of any of its representations, warranties or covenants set forth herein (ii) the indemnification of the Buyer Parties contained in Section 10.2(a)(ii), or (iii) any failure by the Buyers to perform their obligations under the Guaranty.

 

10.5.    Additional Indemnification Provisions.

 

(a)    Other Recoveries; Insurance. Notwithstanding anything herein to the contrary, no party shall be entitled to indemnification or reimbursement under any provision of this Agreement for any amount to the extent such party or its Affiliates has been indemnified or reimbursed for such amount under any other provision of this Agreement, the exhibits attached hereto, or any document executed in connection with this Agreement or otherwise. Furthermore, in the event any Damages related to a claim by either Buyer is covered by insurance, such Buyer agrees to use commercially reasonable efforts to seek recovery under such insurance and such Buyer shall not be entitled to recovery from the Sellers (and shall refund amounts received up to the amount of indemnification actually received) with respect to such Damages to the extent, and only to the extent, such Buyer recovers the insurance payment specified in the policy.

 

(b)    Mitigation. The parties shall take all commercially reasonable steps (to the extent then available or possible) to mitigate all Damages upon and after becoming aware of any event which could reasonably be expected to give rise to such Damages.

 

10.6.    Exclusive Remedy. Except with respect to claims arising out of, in the nature of, or caused by any fraudulent, willful or intentional Breach by any party of any of its representations, warranties or covenants set forth herein, and notwithstanding anything to the contrary contained herein, the indemnification provided in this Article 10 shall be the sole and exclusive remedy after the Closing Date available to the parties for Breach of any of the terms, conditions, representations, warranties or covenants contained herein or any right, claim or action arising from the transactions contemplated by this Agreement. Nothing contained herein, however, shall preclude a party from seeking injunctive relief or specific performance, under circumstances where such relief might be appropriate, provided that the moving party shall not be entitled to ancillary relief in the nature of Damages or fee awards unless specifically so provided for herein.

 

ARTICLE 11

 

GENERAL PROVISIONS

 

11.1.    Parties in Interest; Successors and Assigns; No Third Party Rights. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, and, nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, title, privilege, benefit, interest, remedy or claim of any nature whatsoever under or by reason of this Agreement, or any term or provision hereof.

 

11.2.    Assignment. This Agreement and the rights, title, privileges, benefits, interests, remedies and obligations hereunder may not be assigned by any party hereto, by operation of law or otherwise; provided, however, that either Buyer may (a) assign any or all of its rights, title, privileges, benefits, interests and remedies hereunder to any one or more of its Affiliates; (b) designate any one or more of its Affiliates to perform its obligations hereunder (in any or all of which cases such Buyer nonetheless shall remain responsible for the performance of all of its obligations hereunder); and (c) assign any or all of its rights, title, privileges, benefits, interests and remedies hereunder to and for the benefit of any lender to such Buyers for the purpose of providing collateral security.

 

11.3.    Notices. All notices, requests, claims, instructions and other communications required or permitted under this Agreement shall be in writing and shall be (a) delivered personally, (b) sent by national overnight courier, with all costs and expenses therefore prepaid (c) sent by certified mail, postage prepaid, return receipt requested, or (d) by facsimile transmission, with a confirmation sent by one of the foregoing methods to the address of such party as such party has notified the other parties in writing prior to the date hereof, together with copies to such other persons as such parties may request.

 

11.4.    Entire Agreement. This Agreement, together with each of the other Transaction Documents, constitute the entire agreement among the parties with respect to the subject matter hereof and thereof, and supersede all prior or contemporaneous agreements and understandings, whether written or oral, among the parties hereto, or any of them, with respect to the subject matter hereof and thereof.

 

11.5.    Counterparts and Facsimile Signatures. This Agreement may be executed in any number of counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, and all of which, taken together, shall be deemed to constitute one and the same instrument. This Agreement may be executed by facsimile signature.

 

11.6.    Severability. If any term or other provision of this Agreement is deemed to be invalid, illegal or incapable of being enforced under any Law, Order or public policy, all other terms, conditions and provisions of this Agreement shall nevertheless remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

 

11.7.    Amendment. This Agreement may not be amended or modified except by a written instrument, specifically referring to this Agreement and signed by each of the parties hereto.

 

11.8.    Waiver. Neither the failure nor any delay of any party to this Agreement to assert or exercise any right, power, privilege or remedy under this Agreement, any of the other Transaction Documents or otherwise, or to enforce any term or provision hereof or thereof, shall constitute a waiver of such right, power, privilege or remedy, and no single or partial exercise of any such right, power, privilege or remedy shall preclude any other or further exercise of such right, power, privilege or remedy or the exercise of any other right, power, privilege or remedy. The rights, powers, privileges and remedies of the parties to this Agreement are cumulative and not alternative. Any waiver of any right, power, privilege or remedy hereunder or under any of the Transaction Documents shall be valid and binding only if set forth in a written instrument specifically referring to this Agreement and signed by the party or parties giving such waiver, and shall be effective only in the specific instance and for the specific purpose for which it is given. At any time prior to the Closing Date, the Buyers with respect to the Sellers and the Sellers with respect to the Buyers may, subject to and in accordance with the provisions of this Section 11.8, (a) waive any inaccuracies in the representations and warranties contained in this Agreement or in any of the other Transaction Documents; and (b) waive compliance with any of the conditions, covenants or agreements contained in this Agreement or in any of the other Transaction Documents.

 

11.9.    Further Assurances. Each party hereto shall do and perform or cause to be done and performed all further acts and things and shall execute and deliver all further agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

11.10.    Legal Counsel. Each party to this Agreement acknowledges and represents that it has been represented by its own separate legal counsel in connection with the negotiations and preparation of this Agreement and each of the other Transaction Documents to which it is a party, and in connection with the transactions contemplated hereby and thereby, with the opportunity to seek advice as to its legal rights from such counsel. Each party hereto further represents that it is being independently advised as to the tax consequences of such transactions.

 

11.11.    Expenses. The Sellers shall bear all reasonable and customary fees, costs and expenses incurred in connection with this Agreement (including the preparation, negotiation and performance hereof) and the transactions contemplated hereby (including fees and disbursements of attorneys, accountants, agents, representatives and financial and other advisors).

 

11.12.    Governing Law. This Agreement shall be governed by, and construed in accordance with, the Laws of The Commonwealth of Massachusetts without regard to any conflict of Laws principles that would cause the application of the Laws of any other jurisdiction.

 

 

[The remainder of this page is intentionally left blank. Signature page follows.]

	
 

	 	 	 
	

	

IN WITNESS WHEREOF, the parties hereto have duly caused this Equity Purchase Agreement to be executed, as an instrument under seal, as of the date first above written.

 

The Buyers:    KETTLE VALLEY USA LLC

 

Signature: ___/s/ Lauren L. Holmes______________

 

Printed Name: ___Lauren L. Holmes_____________

 

Title:  _____Vice President ____________________

EQUIS II CORPORATION

 

Signature: ___/s/ James A. Coyne________________

 

Printed Name: _____________________________

 

Title:  ___________________________________

The Sellers:    AFG INVESTMENT TRUST C

and

AFG INVESTMENT TRUST D

 

By: AFG ASIT CORPORATION, as Managing Trustee

Signature: ____/s/ James A. Coyne__________

 

Printed Name: _________________________

 

Title: ________________________________

The Company:    EFG/KETTLE DEVELOPMENT LLC 

 

By: __ James A. Coyne______________, as Manager

Signature: _____/s/ James A. Coyne____________

 

Printed Name: ____James A. Coyne___________

 

Title: ________________________________

	
Signature Page to Equity Purchase Agreement

	 	 	 
	

	

EXHIBIT A

ESCROW AGREEMENT

This Agreement is entered into as of the 31st day of December, 2004 by and among Kettle Valley USA LLC, a Florida limited liability company (“KVUSA”), Equis II Corporation, a Delaware corporation (“Equis II” and, together with KVUSA, each a “Buyer” and together the “Buyers”), AFG Investment Trust C, a Delaware statutory trust (“Trust C”), AFG Investment Trust D, a Delaware statutory trust (“Trust D” and, together with Trust C, each a “Seller” and, together, the “Sellers”), EFG/Kettle Development LLC, a Delaware limited liability company (the “Company”) and Wilmington Trust Company, as escrow agent (the "Escrow Agent").

This Agreement is being entered into in connection with the execution of an Equity Purchase Agreement (the “Purchase Agreement”) among the Buyers, the Sellers and the Company relating to the sale of all of the equity interests in the Company (the “Interests”). All terms used but not defined herein shall have the meanings set forth in the Purchase Agreement.

In consideration of the payments herein provided for and the mutual agreements of the parties herein contained, the parties hereto agree as follows:

(A)    The Escrow Agent has established in its own name a special account, Number 068986-000.1 (the "Escrow Account"). All deposits by the parties in the Escrow Account shall be made by wire transfer of immediately available funds to the Escrow Agent as follows: ABA# 031100092, Account No. 068986-000.1, Name: KVUSA Escrow, Ref:  Attn:  Steve Cimalore, VP. All funds deposited therein shall be held without interest;

(B)    Upon execution of this Agreement, KVUSA shall forward to the Escrow Account the sum of One Hundred Thousand Dollars ($100,000) (the “Deposit”);

(C)    Thereupon, upon written instructions by all parties hereto, the Escrow Agent is authorized and directed to take such action as the parties may direct pursuant to the terms of the Purchase Agreement;

(D)    Any instructions, directions or notices required to be delivered hereunder to the Escrow Agent (i) shall be in writing, (ii) may be delivered by hand delivery, reputable overnight courier, facsimile or telecopy, and (iii) may be executed in one or more counterparts, each of which shall constitute an original and all of which, taken together, shall constitute one and the same instrument. All notices to the Escrow Agent shall be addressed as follows:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890

Attention: Corporate Trust Administration

Fax: (302) 636-4149

(E)    The Escrow Agent shall act as stakeholder and shall not be responsible for genuineness, validity, sufficiency or collectibility of funds deposited hereunder or any description of property or other thing therein, and shall not be required to determine the existence of any fact or decide any questions of law. It shall not be liable in any respect on the account of the identity, authority or rights of the persons executing or delivering or purporting to execute or deliver any such funds, its duties hereunder being limited to the safekeeping of such funds received by it as Escrow Agent, and for the delivery of the same in accordance with this Agreement. The parties hereto recognize that Wilmington Trust Company is acting as Escrow Agent hereunder, and, after January 1, 2005, will also be acting as the Liquidating Trustee of each of the Sellers. Each of the parties hereto recognizes that acting in both capacities creates a potential conflict of interest with respect to Wilmington Trust Company, and each party hereto hereby waives any and all such conflicts of interest.

(F)    In accepting any funds delivered hereunder it is agreed and understood between the parties hereto that the Escrow Agent will not be called upon to construe any contract or instrument deposited herewith, and shall be required to act in respect of the deposits herein made only upon the joint consent in writing, of the parties hereto, and in the failure of such agreement or consent, it reserves the right to hold any money in its possession concerning this escrow, until a mutual agreement in writing has been reached between all of said parties and delivered to it or until delivery is legally authorized and ordered by final judgment or decree of the courts of the State of Delaware or other court of competent jurisdiction; and in case the Escrow Agent obeys or complies with any judgment, order or decree of a court of competent jurisdiction, it shall not be liable to any of the parties hereto nor to any other person, firm or corporation by reason of such compliance, notwithstanding that any such judgment, order or decree is subsequently reversed, modified, annulled, set aside or vacated.

(G)    The Escrow Agent, as part of the consideration for the acceptance of this escrow, will not be liable for any acts or omissions done in good faith, nor for any claims, demands or losses, nor for any damages made or suffered by any party to this escrow, except such as may arise through or be caused by its bad faith or gross negligence.

(H)    The Escrow Agent's fee in the amount of $2,500 and expenses shall be paid by the Sellers at the Closing. In addition, the Escrow Agent shall be entitled to reasonable compensation, including attorney's fees and expenses for unusual circumstances or, in the event it is necessary to seek an order by a court, it may employ attorneys for the reasonable protection of the escrow property and of itself and shall have a lien on all money, documents or property held in escrow to cover the same.

(I)    In the event the escrow instructions set forth in paragraph (C) above have not been accomplished on or before 5:00 P.M., E.S.T., February 15, 2005, the Escrow Agent shall have the right to consider this Agreement of no further force and effect, and shall have the right to return the Deposit to KVUSA and the delivery of the Deposit in accordance herewith shall relieve the said Escrow Agent from any further liability with reference thereto; this provision, however, may at any time be waived by the Escrow Agent. An extension of the term of this escrow may be entered into at any time by the mutual consent of the parties hereto, upon the condition, however, that the same be reduced to writing and delivered to and accepted by the said Escrow Agent.

(J)    It is further understood and agreed between the parties that this Agreement is the only contract between the Escrow Agent and the parties hereto and that it supersedes any other contract with reference to this escrow deposit, insofar as said Escrow Agent is concerned, and that the said Escrow Agent may rely absolutely hereon to the exclusion of any and all other agreements between the parties hereto.

(K)    This Agreement may be executed in multiple counterparts, each of which shall constitute an original, all of which, taken together, shall constitute one and the same instrument.

(L)    This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.

[The remainder of this page is left intentionally blank. Signature page follows.]

	 
    --

	 	 	 
	

	 

This Escrow Agreement has been executed by the parties hereto as of the date set forth above.

The Buyers:    KETTLE VALLEY USA LLC

 

Signature: _________________________________

 

Printed Name: _____________________________

 

Title:     ___________________________________

EQUIS II CORPORATION

 

Signature: _________________________________

 

Printed Name: _____________________________

 

Title:     ___________________________________

The Sellers:    AFG INVESTMENT TRUST C

and

AFG INVESTMENT TRUST D

 

By: AFG ASIT CORPORATION, as Managing Trustee

Signature: ____________________________

 

Printed Name: _________________________

 

Title:     _______________________________

The Company:    EFG/KETTLE DEVELOPMENT LLC 

 

By: _____________________, as Manager

Signature: ____________________________

 

Printed Name: _________________________

 

Title:     _______________________________

	 
    --

	 	 	 
	

	 

The foregoing escrow is accepted as of the above date.

The Escrow Agent:    WILMINGTON TRUST COMPANY

Signature: ________________________

 

Printed Name: _____________________

 

Title: ____________________________

	
 

	 	 	 

	
 

	 	 	 
	

	

EXHIBIT B

PROMISSORY NOTE

$1,300,000.00    [_________ __], 2004

FOR VALUE RECEIVED, Kettle Valley USA LLC, a Florida limited liability company having its principal place of business at ___________________________ ("Maker"), promises to pay to the order of AFG Investment Trust C, a Delaware statutory trust having its principal place of business at c/o Equis Financial Group, 200 Nyala Farms Road, Westport, CT 06880 ("Payee"), the principal sum of

ONE MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS

($1,300,000.00), with interest at the rate of seven percent (7%) per annum, compounded quarterly, computed from the date hereof. Unless extended pursuant to the terms hereof, principal and interest shall be paid in one installment on [__________ __], 2005 (the “Maturity Date”). If such payment date shall not be a business day, such payment shall be due on the next business day following such date. All payments shall be made to Payee at the address shown below or at such other place as Payee may from time to time designate in writing. Terms used but not defined herein shall have the meanings set forth in that certain Equity Purchase Agreement of even date herewith by and among the Maker and Equis II Corporation, as buyers, Payee and AFG Investment Trust D, as sellers, and EFG/Kettle Valley Development LLC (the “Company”).

This Note may be prepaid in whole or, from time to time, in part at any time without premium or penalty. This Note shall be prepaid in an amount equal to any distributions or other amounts received by the Maker from the Company, in each case within five (5) business days of receipt of such distributions or amounts. All payments hereunder shall be payable in lawful money of the United States and all payments shall be applied first to any costs and expenses of the Payee due hereunder, then to interest due hereunder, and any balance shall be applied in reduction of principal.

Absent any Event of Default (as hereinafter defined), the Maker may, with written notice to the Payee, extend the term of this Note for a single extension term of up to eleven (11) months (the “Extension Term”). If Maker so extends this Note, this Note shall bear interest at the rate of eleven percent (11%) per annum, compounded quarterly, computed from the Maturity Date to the end of the Extension Term.

All amounts payable under this Note shall immediately become due and payable in full at the option of Payee without notice or demand if any one or more of the following events (an "Event of Default") shall occur:

a.    Maker shall fail to make any payment hereunder when and as the same shall become due.

b.    Maker shall admit in writing its inability to pay its debts as they mature or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a trustee or receiver for all or a substantial part of its property.

c.    A trustee or receiver shall be appointed for Maker or for all or a substantial part of its property and such trustee or receiver shall not be discharged within sixty (60) days after such appointment.

d.    Bankruptcy, reorganization, arrangement or insolvency proceedings or other proceedings for relief under any bankruptcy or similar law or laws for the relief of debtors shall be instituted by or against Maker and, if instituted against Maker, shall be consented to or shall not be dismissed within sixty (60) days after being instituted.

In the event that any payment due hereunder shall not be paid when due, the Maker shall pay a late fee equal to two percent (2%) of such payment. Notwithstanding any provision of this Note, in no event, whether by reason of acceleration of maturity of this Note or otherwise, shall the interest under this Note exceed the highest lawful rate of interest applicable to this Note (the “Maximum Rate”). If under any circumstances interest would otherwise be payable on this Note in excess of interest computed at the Maximum Rate, an amount equal to any excessive interest shall be applied to reduction of the principal amount of this Note and not to the payment of interest. If such excessive interest exceeds the unpaid principal balance of this Note, then Payee shall refund such excess to Maker.

All of the obligations of the Maker hereunder shall be secured by a pledge of all of Maker’s equity interest in the Company, as more fully set forth in that certain Pledge Agreement of even date herewith, by and between Maker, Payee, AFG Investment Trust D and the Company.

Maker hereby waives presentment, demand, notice, protest, dishonor and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of the obligations of Maker under this Note, and the exercise of and enforcement of any rights hereunder by Payee, and assents without notice to any extension or postponement of the time of payment, to the addition or release of any party or person in any way liable hereunder, and to the compromise or settlement of the liability of any such party or person hereunder, which may from time to time be agreed to by Payee.

All notices required or permitted hereunder shall be in writing and shall be delivered in hand or by facsimile, commercial overnight courier or certified or first-class mail, postage prepaid, as follows:

If to Maker:    Kettle Valley USA LLC

________________________

________________________

________________________

If to Payee:    AFG Investment Trust C

c/o Equis Financial Group

200 Nyala Farms Road

Westport, CT 06880

or such other address or addresses as Maker or Payee may designate from time to time by notice given in accordance with the foregoing.

All of the provisions of this Note shall be binding upon and inure to the benefit of Maker and its respective successors, assigns and legal representatives. This Note shall be binding upon and inure to the benefit of the Payee, but shall not be transferable by the Payee. This Note shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to conflict or choice of law principles. 

Maker shall pay all costs and expenses, including legal expenses and reasonable attorney’s fees incurred by Payee in connection with the enforcement of Maker’s obligations under this Note. No delay or omission on the part of Payee in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder, and no single or partial exercise of any right hereunder shall preclude other or future exercise thereof. 

IN WITNESS WHEREOF, Maker has executed and delivered this Note, under seal, as of the date first written above.

KETTLE VALLEY USA LLC

By: ____________________, its manager

By: ___________________________

Name: _________________________

Title: __________________________

	
 

	 	 	 
	

	

EXHIBIT C

PROMISSORY NOTE

$1,300,000.00    [_________ __], 2004

FOR VALUE RECEIVED, Kettle Valley USA LLC, a Florida limited liability company having its principal place of business at ___________________________ ("Maker"), promises to pay to the order of AFG Investment Trust D, a Delaware statutory trust having its principal place of business at c/o Equis Financial Group, 200 Nyala Farms Road, Westport, CT 06880 ("Payee"), the principal sum of

ONE MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS

($1,300,000.00), with interest at the rate of seven percent (7%) per annum, compounded quarterly, computed from the date hereof. Unless extended pursuant to the terms hereof, principal and interest shall be paid in one installment on [__________ __], 2005 (the “Maturity Date”). If such payment date shall not be a business day, such payment shall be due on the next business day following such date. All payments shall be made to Payee at the address shown below or at such other place as Payee may from time to time designate in writing. Terms used but not defined herein shall have the meanings set forth in that certain Equity Purchase Agreement of even date herewith by and among the Maker and Equis II Corporation, as buyers, Payee and AFG Investment Trust C, as sellers, and EFG/Kettle Valley Development LLC (the “Company”).

This Note may be prepaid in whole or, from time to time, in part at any time without premium or penalty. This Note shall be prepaid in an amount equal to any distributions or other amounts received by the Maker from the Company, in each case within five (5) business days of receipt of such distributions or amounts. All payments hereunder shall be payable in lawful money of the United States and all payments shall be applied first to any costs and expenses of the Payee due hereunder, then to interest due hereunder, and any balance shall be applied in reduction of principal.

Absent any Event of Default (as hereinafter defined), the Maker may, with written notice to the Payee, extend the term of this Note for a single extension term of up to eleven (11) months (the “Extension Term”). If Maker so extends this Note, this Note shall bear interest at the rate of eleven percent (11%) per annum, compounded quarterly, computed from the Maturity Date to the end of the Extension Term.

All amounts payable under this Note shall immediately become due and payable in full at the option of Payee without notice or demand if any one or more of the following events (an "Event of Default") shall occur:

a.    Maker shall fail to make any payment hereunder when and as the same shall become due.

b.    Maker shall admit in writing its inability to pay its debts as they mature or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a trustee or receiver for all or a substantial part of its property.

c.    A trustee or receiver shall be appointed for Maker or for all or a substantial part of its property and such trustee or receiver shall not be discharged within sixty (60) days after such appointment.

d.    Bankruptcy, reorganization, arrangement or insolvency proceedings or other proceedings for relief under any bankruptcy or similar law or laws for the relief of debtors shall be instituted by or against Maker and, if instituted against Maker, shall be consented to or shall not be dismissed within sixty (60) days after being instituted.

In the event that any payment due hereunder shall not be paid when due, the Maker shall pay a late fee equal to two percent (2%) of such payment. Notwithstanding any provision of this Note, in no event, whether by reason of acceleration of maturity of this Note or otherwise, shall the interest under this Note exceed the highest lawful rate of interest applicable to this Note (the “Maximum Rate”). If under any circumstances interest would otherwise be payable on this Note in excess of interest computed at the Maximum Rate, an amount equal to any excessive interest shall be applied to reduction of the principal amount of this Note and not to the payment of interest. If such excessive interest exceeds the unpaid principal balance of this Note, then Payee shall refund such excess to Maker.

All of the obligations of the Maker hereunder shall be secured by a pledge of all of Maker’s equity interest in the Company, as more fully set forth in that certain Pledge Agreement of even date herewith, by and between Maker, Payee, AFG Investment Trust C and the Company.

Maker hereby waives presentment, demand, notice, protest, dishonor and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of the obligations of Maker under this Note, and the exercise of and enforcement of any rights hereunder by Payee, and assents without notice to any extension or postponement of the time of payment, to the addition or release of any party or person in any way liable hereunder, and to the compromise or settlement of the liability of any such party or person hereunder, which may from time to time be agreed to by Payee.

All notices required or permitted hereunder shall be in writing and shall be delivered in hand or by facsimile, commercial overnight courier or certified or first-class mail, postage prepaid, as follows:

If to Maker:    Kettle Valley USA LLC

________________________

________________________

________________________

If to Payee:    AFG Investment Trust D

c/o Equis Financial Group

200 Nyala Farms Road

Westport, CT 06880

or such other address or addresses as Maker or Payee may designate from time to time by notice given in accordance with the foregoing.

All of the provisions of this Note shall be binding upon and inure to the benefit of Maker and its respective successors, assigns and legal representatives. This Note shall be binding upon and inure to the benefit of the Payee, but shall not be transferable by the Payee. This Note shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to conflict or choice of law principles. 

Maker shall pay all costs and expenses, including legal expenses and reasonable attorney’s fees incurred by Payee in connection with the enforcement of Maker’s obligations under this Note. No delay or omission on the part of Payee in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder, and no single or partial exercise of any right hereunder shall preclude other or future exercise thereof. 

IN WITNESS WHEREOF, Maker has executed and delivered this Note, under seal, as of the date first written above.

KETTLE VALLEY USA LLC

By: ____________________, its manager

By: ___________________________

Name: _________________________

Title: __________________________

	
 

	 	 	 
	

	

EXHIBIT D

EQUIS II PLEDGE AGREEMENT

FOR VALUE RECEIVED, the undersigned, Equis II Corporation, a Delaware corporation (the “Pledgor”), hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto AFG Investment Trust C and AFG Investment Trust D, each a Delaware statutory trust (each a “Pledgee” and together, the “Pledgees”), and grants to the Pledgees a security interest in _____ units of limited liability company interests in EFG/Kettle Development LLC, a Delaware limited liability company (the “Company”), which represents all of the Company units held by the Pledgor (the “Units”). The Units are uncertificated. The Pledgor hereby grants such a security interest therein, and directs the Company to reflect such a security interest in and lien on the Units on the books and records of the Company. The Company hereby acknowledges such direction and covenants to comply. The Pledgees shall hold the Units as collateral security for the payment and performance of all of Pledgor’s obligations under the Guaranty, as defined in that certain Equity Purchase Agreement dated as of December [__], 2004 (the “Purchase Agreement”), by and among the Pledgor and Kettle Valley USA LLC, as buyers, the Pledgees, as sellers, and the Company (the “Pledgor Obligations”), and shall not encumber or dispose of the Units except in accordance with the terms and provisions of this Agreement.

1.    Distributions; Voting and other Rights. During the term of this Agreement and so long as the Pledgor is not in default in the performance of the Pledgor Obligations, the Pledgor shall be treated for all purposes as the owner of the Units and, accordingly, may exercise all rights of ownership with respect thereto, including, but not limited to, the right to vote and the right to receive distributions. Further, if the Pledgor is issued any additional units of membership interest on account of the Units, all such units shall be subject to the terms of this Agreement and shall be included within the definition of Units for purposes hereof. Upon demand of payment or performance by either Pledgee of the Pledgor Obligations and the failure of payment or performance thereunder (as determined by the Pledgee in its sole and exclusive discretion): (i) the Units then subject to this Agreement shall, at such Pledgee’s written option, become vested in the Pledgees with or without record transfer and the Pledgees shall have exclusive authority to exercise voting and all other rights relative to the Units; (ii) the Pledgees shall be entitled to receive and retain any and all future cash or other distributions and other monies or consideration relative to the Units from whatever source derived; and (iii) the Company shall take notice of the foregoing and make record transfer of the Units from Pledgor to Pledgees, pro rata.

2.    Representations and Warranties of the Pledgor.

2.1.    The Pledgor has the necessary power, corporate or otherwise, to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by the Pledgor have been duly and validly authorized and approved by the Pledgor’s Board of Directors, and no other proceedings on the part of the Pledgor, its Board of Directors or interest holders are necessary to authorize or approve this Agreement or to consummate the transactions contemplated hereby. 

 

2.2.    This Agreement has been duly executed and delivered by the Pledgor and constitutes the valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, subject to any limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors.

 

2.3.    The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not (1) violate or conflict with the organizational documents or operating agreement of the Pledgor; (2) violate any statute, ordinance, rule, regulation, order, judgment or decree applicable to the Pledgor or any of the Units or (3) result in a violation or breach, or constitute a default or an event that, with notice or lapse of time would become a default, under any note, bond, mortgage, indenture, material contract, agreement, arrangement, lease, license, permit, judgment, decree, franchise or other instrument or obligation, to which the Pledgor is a party or by which the Pledgor or any of its respective properties or assets may be bound or affected.

 

2.4.    There is not now pending against or affecting the Pledgor or its assets, nor, to the knowledge of the Pledgor, is there threatened, any action, suit or proceeding at law or in equity or by or before any court or administrative agency which, if adversely determined, would materially impair or affect the Pledgor’s financial condition, operation or assets.

 

2.5.    The Pledgor is the legal, record and beneficial owner of, and has good and marketable title to, the Units. Other than claims arising from the rights in favor of the Pledgees created hereby, there are no other claims whatsoever to the interests of the Pledgor in the Units, and the Pledgor has the right to sell, assign, transfer and set over the Units and to grant and confer upon the Pledgees the rights, title, interest, powers and authorities herein granted and conferred.

 

2.6.    Except as granted to the Pledgees pursuant to this Agreement, the Units are subject to no lien and, other than in favor of the Pledgees, the Pledgor has entered into no financing statement, security agreement, pledge agreement, mortgage or any other instrument evidencing a lien against all or any part of the Units, nor is any such instrument on file in any public office; and this Agreement creates a valid, enforceable first lien on the Units.

 

2.7.    The Pledgor will warrant and defend its title to the Units and Pledgees’ lien thereon and security interest therein created by this Agreement against all claims and all persons and will maintain and preserve such lien and security interest.

 

3.    Other Action. Pledgor shall, upon the request of either Pledgee from time to time, make, execute and deliver any and all instruments and documents and take all such other and further action as such Pledgee may reasonably require in order to perfect or otherwise vest in the Pledgees more securely any of the rights or interests granted to the Pledgees hereunder and otherwise to carry out the purpose of this Agreement.

4.    No Waiver. No failure on the part of either Pledgee to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy exclude any other or further exercise thereof or of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law or in equity.

5.    Termination. All obligations of the Pledgor under this Agreement shall terminate when all of the Pledgor Obligations to the Pledgees have been paid, performed or terminated.

6.    Binding Agreement; Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors and permitted assigns; provided, however, that the Pledgor shall not, without the Pledgees’ written consent, assign its rights in, or its obligations under, this Agreement or any other interest herein, or any interest in the Units, or any part thereof, or otherwise pledge, encumber or grant any option in respect of the Units or any part thereof, or any other property held by the Pledgees as collateral security under this Agreement. Absent any default in the performance of the Pledgor Obligations, Pledgor will not assign its rights hereunder without the prior written consent of the Pledgees, which consent shall not be unreasonably withheld or delayed.

7.    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to conflict or choice of law principles.

8.    Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered, first class postage prepaid, overnight courier or by prepaid telegraph or telegram at the respective addresses set forth beneath the signature of each respective party, or at such other address as either party may designate by notice to the other party.

9.    Counterparts. This Agreement may be executed in one or more counterparts, each of which, when executed, shall be deemed an original and all of which, taken together, shall be deemed one instrument.

[The remainder of this page is left intentionally blank. Signature page follows.]

	 
 

	 	 	 
	

	 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused their authorized representatives to execute this Agreement under seal as of the [__] day of December, 2004.

PLEDGOR:

EQUIS II CORPORATION

By: _________________________

Name: _______________________

Title: ________________________

Address: c/o Equis Financial Group

200 Nyala Farms Road

Westport, CT 06880

PLEDGEES:

AFG INVESTMENT TRUST C

AFG INVESTMENT TRUST D

By: AFG ASIT CORPORATION, not in its 

individual capacity, but solely as Managing Trustee

By: _________________________

Name: _______________________

Title: ________________________

Address: c/o Equis Financial Group

200 Nyala Farms Road

Westport, CT 06880

	 
 

	 	 	 
	

	 

The undersigned hereby acknowledges this Agreement and agrees to and accepts the covenants contained herein:

THE COMPANY:

EFG/KETTLE DEVELOPMENT LLC

By: ______________________, its manager

By: _________________________

Name: _______________________

Title: ________________________

Address: ________________________

________________________

	
 

	 	 	 

	
 

	 	 	 
	

	

EXHIBIT E

KETTLE VALLEY USA LLC PLEDGE AGREEMENT

FOR VALUE RECEIVED, the undersigned, Kettle Valley USA LLC, a Florida limited liability company (the “Pledgor”), hereby pledges, hypothecates, assigns, transfers, sets over and delivers unto AFG Investment Trust C and AFG Investment Trust D, each a Delaware statutory trust (each a “Pledgee” and together, the “Pledgees”), and grants to the Pledgees a security interest in _____ units of limited liability company interests in EFG/Kettle Development LLC, a Delaware limited liability company (the “Company”), which represents all of the Company units held by the Pledgor (the “Units”). The Units are uncertificated. The Pledgor hereby grants such a security interest therein, and directs the Company to reflect such a security interest in and lien on the Units on the books and records of the Company. The Company hereby acknowledges such direction and covenants to comply. The Pledgees shall hold the Units as collateral security for the payment and performance of all of Pledgor’s obligations under (i) the Notes and (ii) the Guaranty, each as defined in that certain Equity Purchase Agreement dated as of December [__], 2004 (the “Purchase Agreement”), by and among the Pledgor and Equis II Corporation, as buyers, the Pledgees, as sellers, and the Company (the “Pledgor Obligations”), and shall not encumber or dispose of the Units except in accordance with the terms and provisions of this Agreement.

1.    Distributions; Voting and other Rights. During the term of this Agreement and so long as the Pledgor is not in default in the performance of the Pledgor Obligations, the Pledgor shall be treated for all purposes as the owner of the Units and, accordingly, may exercise all rights of ownership with respect thereto, including, but not limited to, the right to vote and the right to receive distributions, provided that if any distributions shall be paid to the Pledgor on account of the Units, such distributions must be applied to prepay the Notes, pro rata, within five (5) business days of the Pledgor’s receipt of such distributions. Further, if the Pledgor is issued any additional units of membership interest on account of the Units, all such units shall be subject to the terms of this Agreement and shall be included within the definition of Units for purposes hereof. Upon demand of payment or performance by either Pledgee of the Pledgor Obligations and the failure of payment or performance thereunder (as determined by the Pledgee in its sole and exclusive discretion): (i) the Units then subject to this Agreement shall, at such Pledgee’s written option, become vested in the Pledgees with or without record transfer and the Pledgees shall have exclusive authority to exercise voting and all other rights relative to the Units; (ii) the Pledgees shall be entitled to receive and retain any and all future cash or other distributions and other monies or consideration relative to the Units from whatever source derived; and (iii) the Company shall take notice of the foregoing and make record transfer of the Units from Pledgor to Pledgees, pro rata.

2.    Representations and Warranties of the Pledgor.

2.1.    The Pledgor has the necessary power, corporate or otherwise, to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by the Pledgor have been duly and validly authorized and approved by the Pledgor’s [Manager/Board of Directors], and no other proceedings on the part of the Pledgor, its [Manager/Board of Directors] or interest holders are necessary to authorize or approve this Agreement or to consummate the transactions contemplated hereby. 

 

2.2.    This Agreement has been duly executed and delivered by the Pledgor and constitutes the valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms, subject to any limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors.

 

2.3.    The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not (1) violate or conflict with the organizational documents or operating agreement of the Pledgor; (2) violate any statute, ordinance, rule, regulation, order, judgment or decree applicable to the Pledgor or any of the Units or (3) result in a violation or breach, or constitute a default or an event that, with notice or lapse of time would become a default, under any note, bond, mortgage, indenture, material contract, agreement, arrangement, lease, license, permit, judgment, decree, franchise or other instrument or obligation, to which the Pledgor is a party or by which the Pledgor or any of its respective properties or assets may be bound or affected.

 

2.4.    There is not now pending against or affecting the Pledgor or its assets, nor, to the knowledge of the Pledgor, is there threatened, any action, suit or proceeding at law or in equity or by or before any court or administrative agency which, if adversely determined, would materially impair or affect the Pledgor’s financial condition, operation or assets.

 

2.5.    The Pledgor is the legal, record and beneficial owner of, and has good and marketable title to, the Units. Other than claims arising from the rights in favor of the Pledgees created hereby, there are no other claims whatsoever to the interests of the Pledgor in the Units, and the Pledgor has the right to sell, assign, transfer and set over the Units and to grant and confer upon the Pledgees the rights, title, interest, powers and authorities herein granted and conferred.

 

2.6.    Except as granted to the Pledgees pursuant to this Agreement, the Units are subject to no lien and, other than in favor of the Pledgees, the Pledgor has entered into no financing statement, security agreement, pledge agreement, mortgage or any other instrument evidencing a lien against all or any part of the Units, nor is any such instrument on file in any public office; and this Agreement creates a valid, enforceable first lien on the Units.

 

2.7.    The Pledgor will warrant and defend its title to the Units and Pledgees’ lien thereon and security interest therein created by this Agreement against all claims and all persons and will maintain and preserve such lien and security interest.

 

3.    Other Action. Pledgor shall, upon the request of either Pledgee from time to time, make, execute and deliver any and all instruments and documents and take all such other and further action as such Pledgee may reasonably require in order to perfect or otherwise vest in the Pledgees more securely any of the rights or interests granted to the Pledgees hereunder and otherwise to carry out the purpose of this Agreement.

4.    No Waiver. No failure on the part of either Pledgee to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy exclude any other or further exercise thereof or of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law or in equity.

5.    Termination. All obligations of the Pledgor under this Agreement shall terminate when all of the Pledgor Obligations to the Pledgees have been paid, performed or terminated.

6.    Binding Agreement; Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors and permitted assigns; provided, however, that the Pledgor shall not, without the Pledgees’ written consent, assign its rights in, or its obligations under, this Agreement or any other interest herein, or any interest in the Units, or any part thereof, or otherwise pledge, encumber or grant any option in respect of the Units or any part thereof, or any other property held by the Pledgees as collateral security under this Agreement. Absent any default in the performance of the Pledgor Obligations, Pledgor will not assign its rights hereunder without the prior written consent of the Pledgees, which consent shall not be unreasonably withheld or delayed.

7.    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to conflict or choice of law principles.

8.    Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if delivered by hand or mailed, certified or registered, first class postage prepaid, overnight courier or by prepaid telegraph or telegram at the respective addresses set forth beneath the signature of each respective party, or at such other address as either party may designate by notice to the other party.

9.    Counterparts. This Agreement may be executed in one or more counterparts, each of which, when executed, shall be deemed an original and all of which, taken together, shall be deemed one instrument.

[The remainder of this page is left intentionally blank. Signature page follows.]

	 
 

	 	 	 
	

	 

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have caused their authorized representatives to execute this Agreement under seal as of the [__] day of December, 2004.

PLEDGOR:

KETTLE VALLEY USA LLC

By: ______________________, its manager

By: _________________________

Name: _______________________

Title: ________________________

Address: ________________________

________________________

PLEDGEES:

AFG INVESTMENT TRUST C

AFG INVESTMENT TRUST D

By: AFG ASIT CORPORATION, not in its 

individual capacity, but solely as Managing Trustee

By: _________________________

Name: _______________________

Title: ________________________

Address: c/o Equis Financial Group

200 Nyala Farms Road

Westport, CT 06880

	 
 

	 	 	 
	

	 

The undersigned hereby acknowledges this Agreement and agrees to and accepts the covenants contained herein:

THE COMPANY:

EFG/KETTLE DEVELOPMENT LLC

By: ______________________, its manager

By: _________________________

Name: _______________________

Title: ________________________

Address: ________________________

________________________

	
 

	 	 	 

	
 

	 	 	 
	

	

EXHIBIT F

_________________, 2005

EFG/Kettle Development LLC

__________________________

__________________________

__________________________

Attn: James A. Coyne, Manager

	 	Re:	Assignment of membership interests (the “Interests”)

in EFG/Kettle Development LLC (the “LLC”)

To Whom It May Concern:

The undersigned, being the holders of all of the Interests in the LLC, hereby consent to and approve the transfer and assignment of the Interests on the date hereof as contemplated in that certain Equity Purchase Agreement of even date herewith. The undersigned hereby instruct the Manager of the LLC to reflect such transfer and assignment on the books and records of the LLC.

AFG INVESTMENT TRUST C

AFG INVESTMENT TRUST D

By:    AFG ASIT CORPORATION, not in its individual capacity, but solely as Managing Trustee

By: ___________________________

Its: ___________________________

	
 

	 	 	 

	
 

	 	 	 
	

	

EXHIBIT G

GUARANTY

This GUARANTY (the “Guaranty”), dated as of December 31, 2004, is made by Kettle Valley USA LLC, a Florida limited liability company (“KVUSA”) and Equis II Corporation, a Delaware corporation (“Equis II”, and together with KVUSA, each a “Guarantor” and together the “Guarantors”, severally but not jointly, in favor of AFG Investment Trust C, a Delaware statutory trust (“Trust C”) and AFG Investment Trust D, a Delaware statutory trust (“Trust D” and together with Trust C, each a “Seller” and together the “Sellers”).

On the date hereof, the Guarantors are purchasing all of the equity interests (the “Interests”) in EFG/Kettle Development LLC (the “Company”), a subsidiary of which is Kettle Valley Development Limited Partnership (the “LP”), from the Sellers pursuant to the terms of that certain Equity Purchase Agreement, dated December [__], 2004, by and among the Guarantors, as buyers, the Sellers and the Company (the “Purchase Agreement”). As of the date hereof, the LP owes certain open account advances to the Sellers, as more fully described on Schedule A hereto, and no other open account advances are owed to the Sellers. As a condition precedent to the Sellers willingness to sell the Interests, and for value received, the Guarantors hereby irrevocably guaranty to the Sellers the repayment by the LP of any such advances that remain outstanding on the date that is eighteen (18) months after the Closing Date, as such term is defined in the Purchase Agreement, up to the maximum percentage of such then outstanding amounts as set forth opposite such Guarantors name on Schedule A hereto (in such percentages with respect to each Guarantor, the “Guaranteed Obligations”).

This Guaranty is a guaranty of payment and performance and not of collection only. Obligations hereunder shall be payable solely in U.S. Dollars.

The Guarantors, severally but not jointly, guaranty that the Guaranteed Obligations will be paid and performed strictly in accordance with the terms hereof and of the applicable instrument. The obligations of the Guarantors hereunder are absolute, present and continuing obligations which are not conditional upon the exercise of any remedies against the LP or the making of a demand against the LP or the filing of a suit to obtain or assert a claim for personal judgment against the LP for the Guaranteed Obligations or the making of an effort at collecting the Guaranteed Obligations from the LP, or any attempt to foreclose or realize upon any security for obligations of the LP or the taking of any other action with respect to the LP, it being expressly acknowledged and agreed that the Guarantors shall be directly obligated hereunder for all amounts payable in respect of the Guaranteed Obligations by the LP arising under the applicable instrument and for breaches of or failures to perform or observe, or any other noncompliance with, any covenant, condition or agreement or other obligation to be performed by the LP in respect of the Guaranteed Obligations arising under the applicable instrument. The liability of the Guarantors under this Guaranty shall not be subject to any counterclaim, setoff, deduction, release, recoupment or defense and shall remain in full force and effect and shall be irrevocable, absolute and unconditional irrespective of (i) any lack of validity, genuineness or enforceability of any provisions of the applicable instrument or any other agreement or instrument relating thereto; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment, or waiver of or any consent to departure from the applicable instrument; (iii) any bankruptcy or insolvency of, or any merger or consolidation of, or any sale of ownership interests in, the LP; (iv) any failure by the Sellers to pursue remedies against the LP; (v) the pursuit by the Sellers of whatsoever remedies there may be against the LP, any other guarantee or any security for any or all of the Guaranteed Obligations; and (vi) any other occurrence or circumstances whatsoever, whether similar or dissimilar to the foregoing, and any other circumstances (other than actual payment or performance) that might otherwise constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or that might otherwise limit recourse against the Guarantors; provided that any claim hereunder against the Guarantors shall be subject to, and the Guarantors shall have available to it in defense of any such claim, any and all of the LP’s rights and defenses, whether arising under the applicable instrument or otherwise, in respect of any such claim.

This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time payment, in whole or in part, of any of the sums due in respect of the Guaranteed Obligations to the Sellers is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, reorganization, arrangement, adjustment, composition, dissolution, liquidation or the like, of the LP, or upon or as a result of, the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the LP or any substantial part of its property, or otherwise, all as though such payment had not been made notwithstanding any termination of this Guaranty or the Purchase Agreement.

The Guarantors hereby waives (i) notice of any of the foregoing matters, (ii) promptness, diligence, demand, protest, proof or notice of nonpayment and notice of acceptance, and (iii) any other notice with respect to any of the Guaranteed Obligations and this Guaranty.

The Guarantors will pay, in the percentages set forth opposite each Guarantor’s name on Schedule A hereto, all costs and expenses (including reasonable attorneys’ fees, expenses and disbursements) reasonably incurred by or on behalf of the Sellers in enforcing the obligations of the Guarantors hereunder.

To the extent of any payment hereunder by the Guarantors to the Sellers, the Guarantors shall succeed to all corresponding claims that the Sellers may have and otherwise shall be subrogated to the rights of the Sellers against the LP and any other applicable person or security; and in connection with the foregoing, the Sellers shall, at the Guarantors’ sole cost and expense, cooperate with the Guarantors as either Guarantor may reasonably request in seeking recovery under such claims.

This instrument will inure to the benefit of the Sellers and their respective successors and permitted assigns under the applicable instrument.

None of the terms and provisions of this Guaranty may be waived, altered, modified or amended except by an instrument in writing executed by the Sellers and Guarantors, and with respect to the amount of the Guaranteed Obligations set forth on Schedule A, the LP.

The execution, delivery and performance by the Guarantors of this Guaranty have been duly and validly authorized by the parties hereto by all necessary corporate, partnership or limited liability action. This Guaranty has been duly and validly executed and delivered by the parties hereto and constitutes the legal, valid and binding obligation of Guarantors and the LP, enforceable against the Guarantors and the LP in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.

This Guaranty is made under and, accordingly, shall be governed in all respects by, the internal laws (and not the laws pertaining to conflicts or choice of law) of The Commonwealth of Massachusetts applicable to agreements made and to be performed wholly within The Commonwealth of Massachusetts.

IN WITNESS WHEREOF, the Guarantors have executed and delivered this Guaranty as of the date first set forth above.

GUARANTORS:

 

KETTLE VALLEY USA LLC

 

Signature: _________________________________

 

Printed Name: _____________________________

 

Title:     ___________________________________

Date: ____________, 2004

 

EQUIS II CORPORATION

 

Signature: _________________________________

 

Printed Name: _____________________________

 

Title:     ___________________________________

Date: ____________, 2004

The undersigned confirms its obligation to pay the open account advances set forth on Schedule A hereto, on or prior to the date that is eighteen (18) months after the Closing Date (as defined in the Purchase Agreement).

KETTLE VALLEY DEVELOPMENT LIMITED PARTNERSHIP

By: 18177 Yukon, Inc., its general partner

By: __________________________

Name: ________________________

Title: _________________________

Date: ______________________________

	 
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Schedule A

Description of Guaranteed Obligations

As of 12/31/04, open account advances totaling $_______ in favor of Trust C and $_________ in favor of Trust D, for a total of $____________.

Kettle Valley USA LLC shall guaranty 72% of such amount with respect to each of Trust C and Trust D, and Equis II Corporation shall guaranty 28% of such amount with respect to each of Trust C and Trust D.

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