-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PwLAyhJdKpw3yrvUREzqZdgn1WkHzJsbROm6TAfIIcotC67Av48jd0vgpfaMu7OH Rcp6j+MrvuntYHnKRVlZhw== 0000847557-03-000024.txt : 20030328 0000847557-03-000024.hdr.sgml : 20030328 20030328145616 ACCESSION NUMBER: 0000847557-03-000024 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM EQUIPMENT GROWTH FUND III CENTRAL INDEX KEY: 0000824210 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 680146197 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10813 FILM NUMBER: 03624695 BUSINESS ADDRESS: STREET 1: STEUART ST TOWER STE 900 STREET 2: C/O ONE MARKET PLAZA CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4159741399 MAIL ADDRESS: STREET 1: ONE MARKET STEUART STREET TWR STREET 2: STE 900 CITY: SAN FRANCISCO STATE: CA ZIP: 94105 10-K 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002. [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-10813 _______________________ PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (INITIAL) (Exact name of registrant as specified in its charter) CALIFORNIA 68-0146197 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 235 3RD STREET SOUTH, SUITE 200 ST. PETERSBURG, FL 33701 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (727) 803-1800 _______________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of voting stock: N/A Indicate the number of beneficial interests outstanding of each of the issuer's classes of beneficial interests, as of the latest practicable date: Class Outstanding at March 28, 2003 ----- --------------------------------- Beneficial interests: 9,871,210 An index of exhibits filed with this Form 10-K is located at page 11. Total number of pages in this report: 63. PART I ITEM 1. BUSINESS -------- (A) Background On December 31, 2002 (inception), PLM Equipment Growth Fund III Liquidating Trust (the Trust) was established. On that date all of the assets and liabilities of PLM Equipment Growth Fund III, a California limited partnership (the Partnership) were transferred to the Trust. PLM Financial Services, Inc. (FSI) is the Trustee of the Trust. FSI is a wholly owned subsidiary of PLM International, Inc. (PLM International). FSI has a 5% interest in the earnings and distributions of the Trust. The Partnership was formed on October 15, 1987 and engaged primarily in the business of owning, leasing, or otherwise investing in predominately used transportation and related equipment. FSI was the General Partner of the Partnership. The Trust's primary objectives are: (1) to selectively sell equipment when the Trustee believes that, due to market conditions, market prices for equipment exceed inherent equipment values or that expected future benefits from continued ownership of a particular asset will have an adverse effect on the Trust. As the Trust is in the liquidation phase, proceeds from these sales, together with excess net operating cash flows from operations, will be paid as distributions to the beneficial interest holders; and (2) to preserve and protect the value of the portfolio through quality management. As of December 31, 2002, there were 9,871,210 beneficial interests outstanding. On December 31, 2002, the Trustee began the dissolution and liquidation of the assets in the Trust in an orderly fashion. Table 1, below, lists the equipment and the net realizable amounts of the equipment in the Trust's portfolio, as of December 31, 2002 (in thousands of dollars): TABLE 1 -------
Realizable Units Type Amounts - ----------------------------------------------------------- Equipment held for operating leases: 433. . Pressurized tank railcars $ 3,988 700. . Non-pressurized tank railcars 3,816 176. . Intermodal trailers 388 119. . Marine containers 14 Total owned equipment held for operating leases $ 8,206
Railcars are leased under operating leases with terms of six months to six years. Lease payments for intermodal trailers are based on a per-diem lease in the free running interchange with the railroads. The Trust's marine containers are leased to operators of utilization-type leasing pools that include equipment owned by unaffiliated parties. In such instances, lease payments received by the Trust consist of a specified percentage of payments generated by leasing the pooled equipment to sublessees, after deducting certain direct operating expenses of the pooled equipment. (B) Management of Trust Equipment - ---------------------------------------- The Trust has entered into an equipment management agreement with PLM Investment Management, Inc. (IMI), a wholly owned subsidiary of FSI, for the management of the Trust's equipment. The Trust's management agreement with IMI is to co-terminate with the dissolution of the Trust, unless the beneficial interest holders vote to terminate the agreement prior to that date or at the discretion of the Trustee. IMI has agreed to perform all services necessary to manage the equipment on behalf of the Trust and to perform or contract for the performance of all obligations of the lessors under the Trust's leases. In consideration for its services and pursuant to the Trust agreement, IMI is entitled to a monthly management fee (see Notes 1 and 2 to the financial statements). (C) Competition - ------------------- (1) Operating Leases versus Full Payout Leases - ------------------------------------------------------- The equipment owned by the Trust is leased out on an operating lease basis wherein the rents received during the initial noncancelable term of the lease are insufficient to recover the Trust's purchase price of the equipment. The short to mid-term nature of operating leases generally commands a higher rental rate than longer-term, full payout leases and offers lessees relative flexibility in their equipment commitment. In addition, the rental obligation under an operating lease need not be capitalized on the lessee's balance sheet. The Trust encounters considerable competition from lessors that utilize full payout leases on new equipment, i.e. leases that have terms equal to the expected economic life of the equipment. While some lessees prefer the flexibility offered by a shorter-term operating lease, other lessees prefer the rate advantages possible with a full payout lease. Competitors may write full payout leases at considerably lower rates and for longer terms than the Trust offers, or larger competitors with a lower cost of capital may offer operating leases at lower rates, which may put the Trust at a competitive disadvantage. (2) Manufacturers and Equipment Lessors - ---------------------------------------------- The Trust competes with equipment manufacturers who offer operating leases and full payout leases. Manufacturers may provide ancillary services that the Trust cannot offer, such as specialized maintenance service (including possible substitution of equipment), training, warranty services, and trade-in privileges. The Trust also competes with many equipment lessors, including ACF Industries, Inc. (Shippers Car Line Division), GATX General Electric Railcar Services Corporation, and other investment programs that lease the same types of equipment. (D) Demand - -------------- The Trust operates in three operating segments: railcar leasing, trailer leasing, and marine container leasing. Each equipment-leasing segment engages in short-term to mid-term operating leases to a variety of customers. The Trust's equipment is used to transport materials and commodities, rather than people. The following section describes the international and national markets in which the Trust's capital equipment operates: (1) Railcars - ---------------- (a) General Purpose (Nonpressurized) Tank Railcars - ---------------------------------------------------------- General purpose tank railcars are used to transport bulk liquid commodities and chemicals not requiring pressurization, such as certain petroleum products, liquefied asphalt, lubricating oils, molten sulfur, vegetable oils, and corn syrup. The overall health of the market for these types of commodities is closely tied to both the United States (US) and global economies, as reflected in movements in the Gross Domestic Product, personal consumption expenditures, retail sales, and currency exchange rates. The manufacturing, automobile, and housing sectors are the largest consumers of chemicals. Within North America, 2002 carloadings of the commodity group that includes chemicals and petroleum products reversed previous declines and rose 4% after a fall of 5% during 2001. Utilization of the Trust's nonpressurized tank railcars has been increasing reflecting this market condition and presently stands at about 83%. (b) Pressurized Tank Railcars - ----------------------------------- Pressurized tank railcars are used to transport liquefied petroleum gas (LPG) and anhydrous ammonia (fertilizer). The North American markets for LPG include industrial applications, residential use, electrical generation, commercial applications, and transportation. LPG consumption is expected to grow over the next few years as most new electricity generation capacity is expected to be gas fired. Within any given year, consumption is particularly influenced by the severity of winter temperatures. Within the fertilizer industry, demand is a function of several factors, including the level of grain prices, status of government farm subsidy programs, amount of farming acreage and mix of crops planted, weather patterns, farming practices, and the value of the US dollar. Population growth and dietary trends also play an indirect role. On an industry-wide basis, North American carloadings of the commodity group that includes petroleum and chemicals decreased over 2% in 2002 after a 5% decline in 2001. Even with this further decrease in industry-wide demand, the utilization of pressurized tank railcars in the Trust is presently in the 88% range. The desirability of the railcars in the Trust is affected by the advancing age of this fleet. (2) Intermodal Trailers - ---------------------------- Intermodal trailers are used to transport a variety of dry goods by rail on flatcars, usually for distances of over 400 miles. Over the past seven years, intermodal trailers have continued to be rapidly displaced by domestic containers as the preferred method of transport for such goods. This displacement occurs because railroads offer approximately 20% lower wholesale freight rates on domestic containers compared to intermodal trailers. During 2002, demand for intermodal trailers was more depressed than historic norms. Unusually low demand occurred over the first half of the year due to a rapidly slowing economy and low rail freight rates for 53-foot domestic containers. Due to the decline in demand, shipments for the year within the intermodal pool trailer market declined approximately 10% compared to the prior year. Average utilization of the entire US intermodal trailer pool fleet declined from 77% in 1999 to 75% in 2000 to 63% in 2001 and further declined to a record low of 50% in 2002. The Trustee continued its aggressive marketing program in a bid to attract new customers for the Trust's intermodal trailers during 2002. The largest trailer customer, Consolidated Freightways, abruptly shut down their operations and declared bankruptcy during 2002. This situation was largely offset by extensive efforts with other carriers to increase market share. Even with these efforts, average utilization of the Trust's intermodal trailers for the year 2002 dropped 12% from 2001 to approximately 61%, still 11% above the national average. The trend towards using domestic containers instead of intermodal trailers is expected to accelerate in the future. Due to the anticipated continued weakness of the overall economy, intermodal trailer shipments are forecast to decline by 10% to 15% in 2003, compared to 2002. As such, the nationwide supply of intermodal trailers is expected to have approximately 27,000 units in surplus for 2003. The maintenance costs have increased approximately 12% from 2001 due to improper repair methods performed by the railroads' vendors and billed to owners. (3) Marine Containers - -------------------------- Marine containers are used to transport a variety of types of cargo. They typically travel on marine vessels but may also travel on railroads loaded on certain types of railcars and highways loaded on a trailer. The Trust's fleet of dry, refrigerated and other specialized containers is in excess of 13 years of age, and is generally no longer suitable for use in international commerce, either due to its specific physical condition, or the lessees' preferences for newer equipment. As individual containers are returned from their specific lessees, they are being marketed for sale on an "as is, where is" basis. The market for such sales is highly dependent upon the specific location and type of container. The Trust has continued to experience reduced residual values on the sale of refrigerated containers primarily due to technological obsolescence associated with this equipment's refrigeration machinery. - ------ (E) Government Regulations - ------------------------------- The use, maintenance, and ownership of equipment are regulated by federal, state, local, or foreign government authorities. Such regulations may impose restrictions and financial burdens on the Trust's ownership and operation of equipment. Changes in government regulations, industry standards, or deregulation may also affect the ownership, operation, and resale of the equipment. Substantial portions of the Trust's equipment portfolio are either registered or operated internationally. Such equipment may be subject to adverse political, government, or legal actions, including the risk of expropriation or loss arising from hostilities. Certain of the Trust's equipment is subject to extensive safety and operating regulations, which may require its removal from service or extensive modification of such equipment to meet these regulations, at considerable cost to the Trust. Such regulations include but are not limited to: (1) The Montreal Protocol on Substances that Deplete the Ozone Layer and the U.S. Clean Air Act Amendments of 1990, which call for the control and eventual replacement of substances that have been found to cause or contribute significantly to harmful effects to the stratospheric ozone layer and which are used extensively as refrigerants in refrigerated marine cargo containers. (2) The U.S. Department of Transportation's Hazardous Materials Regulations regulates the classification and packaging requirements of hazardous materials that apply particularly to Trust's tank railcars. The Federal Railroad Administration has mandated that effective July 1, 2000 all tank railcars must be re-qualified every ten years from the last test date stenciled on each railcar to insure tank shell integrity. Tank shell thickness, weld seams, and weld attachments must be inspected and repaired if necessary to re-qualify the tank railcar for service. The average cost of this inspection is $3,600 for jacketed tank railcars and $1,800 for non-jacketed tank railcars. This does not include any necessary repairs. This inspection is to be performed at the next scheduled tank test and every ten years thereafter. The Trust currently owns 432 jacketed tank railcars and 74 non-jacketed tank railcars that will need re-qualification. As of December 31, 2002, 17 jacketed tank railcars and 14 non-jacketed tank railcars of the fleet will need to be re-qualified during 2003 or 2004. As of December 31, 2002, the Trust was in compliance with the above government regulations. Typically, costs related to extensive equipment modifications to meet government regulations are passed on to the lessee of that equipment. ITEM 2. PROPERTIES - ----------------------- The Trust neither owns nor leases any properties other than the equipment it has purchased. As of December 31, 2002, the Trust owned a portfolio of transportation and related equipment as described in Item 1, Table 1. The Trust maintains its principal office at 235 3rd Street South, Suite 200, St. Petersburg, FL 33701. ITEM 3. LEGAL PROCEEDINGS ------------------ During 2000 and 2001, the Partnership, together with affiliates, initiated litigation in various official forums in the United States and India against two defaulting Indian airline lessees to repossess its property and to recover damages for failure to pay rent and failure to maintain such property in accordance with relevant lease contracts. In response to the Partnership's collection efforts, the airline lessees filed counter-claims against the Partnership, one of which was in excess of the Partnership's claims against the airline. FSI believes that the airline's counterclaims are completely without merit and will vigorously defend against such counterclaims. During 2001, an arbitration hearing was held between one India lessee and the Partnership and the arbitration panel issued an award to the Partnership. The Partnership initiated proceedings in India to collect on the arbitration award and has recently been approached again by the lessee to discuss a negotiated settlement of the Partnership's collection action. The arbitration award was not accrued for in the December 31, 2002 financial statements because the likelihood of collection of the award is remote. FSI will continue to try to collect the full amount of the settlement. During 2001, the FSI decided to minimize its collection efforts from the other India lessee in order to save the Partnership from incurring additional expenses associated with trying to collect from a lessee that has no apparent ability to pay. All matters of litigation of which the Partnership was involved have been assumed by the Trust. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ----------------------------------------------------------- No matters were submitted to a vote of the Trust's beneficial interest holders from December 31, 2002 (inception) through December 31, 2002. PART II ITEM 5. MARKET FOR THE TRUST'S EQUITY AND RELATED DEPOSITARY UNIT MATTERS ------------------------------------------------------------------- Pursuant to the terms of the Trust agreement, the Trustee is entitled to a 5% interest in the profits, losses and distributions of the Trust. The Trustee is the sole holder of such interest. Special allocations of income are made to the Trustee equal to the deficit balance, if any, in the capital account of the Trustee. The Trustee's annual allocation of net income will generally be equal to the Trustee's cash distributions paid during the current year. The remaining interests in the profits, losses and distributions of the Trust are owned, as of December 31, 2002, by the 7,995 beneficial interest holders in the Trust There is no market for the sale of the beneficial interests of the Trust. The Trustee will not allow for transfer of such ownership except by will, interstate succession or operation of law. ITEM 6. SELECTED FINANCIAL DATA ------------------------- The Trust was formed on December 31, 2002 and as such has no historical data or results of operations other than the following (in thousands of dollars): TABLE 2 -------
As of December 31, 2002: Total assets. . . . . . . $10,223 Total liabilities . . . . 7,539 ------- Net assets in liquidation $ 2,684 =======
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ------------------------------------------------------------------- RESULTS OF OPERATIONS ------------------- (A) Introduction Management's discussion and analysis of financial condition and results of operations relates to the financial statements of PLM Equipment Growth Fund III, Liquidating Trust (the Trust). The following discussion and analysis of operations focuses on the performance of the Trust's equipment in the various segments in which it operates and its effect on the Trust's overall financial condition. (B) Results of Operations -- Factors Affecting Performance (1) Re-leasing Activity and Repricing Exposure to Current Economic Conditions The exposure of the Trust's equipment portfolio to repricing risk occurs whenever the leases for the equipment expire or are otherwise terminated and the equipment must be remarketed. Major factors influencing the current market rate for Trust's equipment include supply and demand for similar or comparable types of transport capacity, desirability of the equipment in the leasing market, market conditions for the particular industry segment in which the equipment is to be leased, overall economic conditions, and various regulations concerning the use of the equipment. Equipment that is idle or out of service between the expiration of one lease and the assumption of a subsequent lease can result in a reduction of contribution to the Trust. (2) Equipment Liquidations Liquidation of Trust equipment represents a reduction in the size of the equipment portfolio and may result in a reduction of contribution to the Trust. (3) Equipment Valuation In accordance with the liquidation basis of accounting, the carrying values of the assets are presented at net realizable amounts. (C) Financial Condition -- Capital Resources and Liquidity The Trust's assets and liabilities were transferred to it from PLM Equipment Growth Fund III. As of December 31, 2002, the Trust had no outstanding indebtedness. The Trust relies on operating cash flow and asset disposition proceeds to meet its operating obligations and make distributions to the beneficial interest holders. The Trustee has not planned any expenditures, nor is it aware of any contingencies that would cause it to require any additional capital to that mentioned above. The beneficial interest holders are prohibited from making capital contributions to the Trust. The Trust is in its active liquidation phase. As a result, the size of the Trust's remaining equipment portfolio and, in turn, the amount of net cash flows from operations will continue to become progressively smaller as assets are sold. Significant asset sales may result in distributions to the beneficial interest holders. In accordance with the liquidation basis of accounting, the carrying values of the assets are presented at net realizable amounts and all liabilities are presented at estimated settlement amounts, including estimated costs associated with completing the liquidation. Preparation of the financial statements on a liquidation basis requires significant assumptions by the Trustee, including the estimate of liquidation costs and the resolution of any contingent liabilities. There may be differences between the assumptions and the actual results because events and circumstances frequently do not occur as expected. (D) Results of Operations The Trust was formed on December 31, 2002; therefore, there are no results of operations. (E) Forward-Looking Information Except for historical information contained herein, the discussion in this Form 10-K contains forward-looking statements that involve risks and uncertainties, such as statements of the Trust's plans, objectives, expectations, and intentions. The cautionary statements made in this Form 10-K should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-K. The Trust's actual results could differ materially from those discussed here. (F) Outlook for the Future Since the Trust is in its active liquidation phase, the Trustee will be seeking to sell or re-lease assets as the existing leases expire until all the assets are sold. Sale decisions will cause the operating performance of the Trust to decline over the remainder of its life. Throughout the remaining life of the Trust, the Trust may make distributions to the beneficial interest holders as asset sales are completed. Liquidation of the Trust's equipment will cause a reduction in the size of the equipment portfolio and may result in a reduction of contribution to the Trust. Other factors that may affect the Trust's contribution in the year 2003 include: 1. The Trust's fleet of marine containers is in excess of thirteen years of age and is no longer suitable for use in international commerce either due to its specific physical condition, or lessees' preferences for newer equipment. Demand for the Trust's marine containers will continue to be weak due to their age. These containers will be sold on an "as is, where is" basis as leases expire. 2. Railcar freight loadings in the United States and Canada decreased 1% and 3%, respectively, through most of 2002. There has been, however, a recent increase for some of the commodities that drive demand for those types of railcars owned by the Trust. It will be some time, however, before this translates into new leasing demand by shippers since most shippers have idle railcars in their fleets. The Trustee has entered into an agreement to sell all of the Trust's remaining railcars which is expected to close in the first half of 2003 for an amount that approximates the carrying amount on the Trust's statement of net assets in liquidation (see Note 9 to the financial statements); and 3. As the Trust's trailers are smaller than many shippers prefer, the Trustee expects declines in utilization over the next few years. The Trustee expects to sell all of the trailers during 2003. The assets of the Trust are reported at their net realizable values that include future lease payments as well as residual sales proceeds less any costs to sell. The Trust does not have signed commitments or binding contracts to sell certain of its transportation equipment at the reported net realizable value. The estimate of the fair value for the Trust's transportation equipment is based on the opinion of the Trust's equipment managers using data, reasoning and analysis of prevailing market conditions of similar equipment, data from recent purchases, independent third party valuations and discounted cash flows. At December 31, 2003, the estimated gain on the Trust's transportation equipment if sold at the reported net realizable value would be $6.3 million. Such estimated gain has been deferred at December 31, 2002. The ability of the Trust to realize acceptable lease rates on its equipment in the different equipment markets is contingent on many factors, such as specific market conditions and economic activity, technological obsolescence, and government or other regulations. The Trustee continually monitors both the equipment markets and the performance of the Trust's equipment in these markets to determine the most advantageous time to dispose its equipment. Several other factors may affect the Trust's operating performance in 2003 and beyond, including changes in the markets for the Trust's equipment and changes in the regulatory environment in which that equipment operates. The other factors that may affect the Trust's contribution in 2003 and beyond include: (1) Repricing Risk Until sold, certain of the Trust's marine containers, railcars and trailers will be remarketed in 2003 as existing leases expire, exposing the Trust to repricing risk/opportunity. (2) Impact of Government Regulations on Future Operations The Trustee operates the Trust's equipment in accordance with current applicable regulations (see Item 1, Section E, Government Regulations). However, the continuing implementation of new or modified regulations by some of the authorities mentioned previously, or others, may adversely affect the Trust's ability to continue to own or operate equipment in its portfolio. Additionally, regulatory systems vary from country to country, which may increase the burden to the Trust of meeting regulatory compliance for the same equipment operated between countries. Ongoing changes in the regulatory environment, both in the United States and internationally, cannot be predicted with any accuracy and preclude the Trustee from determining the impact of such changes on Trust operations, or sale of equipment. The U.S. Department of Transportation's Hazardous Materials Regulations regulates the classification and packaging requirements of hazardous materials that apply particularly to Trust's tank railcars. The Federal Railroad Administration has mandated that effective July 1, 2000 all tank railcars must be re-qualified every ten years from the last test date stenciled on each railcar to insure tank shell integrity. Tank shell thickness, weld seams, and weld attachments must be inspected and repaired if necessary to re-qualify the tank railcar for service. The average cost of this inspection is $3,600 for jacketed tank railcars and $1,800 for non-jacketed tank railcars, not including any necessary repairs. This inspection is to be performed at the next scheduled tank test and every ten years thereafter. The Trust currently owns 432 jacketed tank railcars and 74 non-jacketed tank railcars that will need re-qualification. As of December 31, 2002, 17 jacketed tank railcars and 14 non-jacketed tank railcars of the fleet will need to be re-qualified during 2003 or 2004. (3) Distributions During the active liquidation phase, the Trust will use operating cash flow and proceeds from the sale of equipment to meet its operating obligations, and to the extent available, make distributions to the beneficial unitholders. (4) Liquidation Liquidation of the Trust's equipment represents a reduction in the size of the equipment portfolio and may result in a reduction of contribution to the Trust. Since the Trust is in its active liquidation phase, the size of the Trust's remaining equipment portfolio and, in turn, the amount of net cash flows from operations will continue to become progressively smaller as assets are sold. Significant asset sales may result in distributions to beneficial unitholders. The Trust is scheduled to be dissolved by December 31, 2004, although this date may be extended. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------------- The Trust's primary market risk exposure is currency devaluation risk. Most of the leases require payment in United States (US) currency. If these lessees' currency devalues against the US dollar, the lessees could potentially encounter difficulty in making the US dollar denominated lease payments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - -------- ----------------------------------------------- The financial statements for the Trust are listed in the Index to Financial Statements included in Item 15(a) of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND ------------------------------------------------------------------- FINANCIAL DISCLOSURE ----------------- (A) Disagreements with Accountants on Accounting and Financial Disclosures None. (B) Changes in Accountants None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PLM FINANCIAL SERVICES, INC. ------------------------------------------------------------------ As of the date of this annual report, the directors and executive officers of PLM Financial Services, Inc. (and key executive officers of its subsidiaries) are as follows:
Name Age Position - ------------------------------------------------------------------------------- Gary D. Engle . 53 Director, PLM Financial Services, Inc., PLM Investment Management, Inc., and PLM Transportation Equipment Corp. James A. Coyne 42 Director, Secretary and President, PLM Financial Services, Inc. and PLM Investment Management, Inc., Director and Secretary, PLM Transportation Equipment Corp. Richard K Brock 40 Director and Chief Financial Officer, PLM Financial Services, Inc., PLM Investment Management, Inc. and PLM Transportation Equipment Corp.
Gary D. Engle was appointed a Director of PLM Financial Services, Inc. in January 2002. He was appointed a director of PLM International, Inc. in February 2001. He is a director and President of MILPI Holdings, LLC (MILPI). Since November 1997, Mr. Engle has been Chairman and Chief Executive Officer of Semele Group Inc. ("Semele"), a publicly traded company. Mr. Engle is President and Chief Executive Officer of Equis Financial Group ("EFG"), which he joined in 1990 as Executive Vice President. Mr. Engle purchased a controlling interest in EFG in December 1994. He is also President of AFG Realty, Inc. James A. Coyne was appointed President of PLM Financial Services, Inc. in August 2002. He was appointed a Director and Secretary of PLM Financial Services, Inc. in April 2001. He was appointed a director of PLM International, Inc in February 2001. He is a director, Vice President and Secretary of MILPI. Mr. Coyne has been a director, President and Chief Operating Officer of Semele since 1997. Mr. Coyne is Executive Vice President of Equis Corporation, the general partner of EFG. Mr. Coyne joined EFG in 1989, remained until 1993, and rejoined in November 1994. Richard K Brock was appointed a Director and Chief Financial Officer of PLM Financial Services, Inc. in August 2002. From June 2001 through August 2002, Mr. Brock was a consultant to various leasing companies including PLM Financial Services, Inc. From October 2000 through June 2001, Mr. Brock was a Director of PLM Financial Services, Inc. Mr. Brock was appointed Vice President and Chief Financial Officer of PLM International, Inc. and PLM Financial Services, Inc. in January 2000, having served as Acting Chief Financial Officer since June 1999 and as Vice President and Corporate Controller of PLM International, Inc. and PLM Financial Services, Inc. since June 1997. Prior to June 1997, Mr. Brock served as an accounting manager at PLM Financial Services, Inc. beginning in September 1991 and as Director of Planning and General Accounting beginning in February 1994. The directors of PLM Financial Services, Inc. are elected for a one-year term or until their successors are elected and qualified. No family relationships exist between any director or executive officer of PLM Financial Services, Inc., PLM Transportation Equipment Corp., or PLM Investment Management, Inc. ITEM 11. EXECUTIVE COMPENSATION ----------------------- The Trust has no directors, officers, or employees. The Trust had no pension, profit sharing, retirement, or similar benefit plan in effect as of December 31, 2002. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ------------------------------------------------------------------ (A) Security Ownership of Certain Beneficial Owners The Trustee is generally entitled to a 5% interest in the profits and losses (subject to certain allocations of income) and distributions of the Trust. As of December 31, 2002, no beneficiary interest holder was known by the Trustee to beneficially own more than 5% of the beneficial interest of the Trust. (B) Security Ownership of Management Neither the Trustee and its affiliates nor any executive officer or director of the Trustee and its affiliates own any beneficial interest of the Trust as of December 31, 2002. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -------------------------------------------------- Transactions with Management and Others: None. ITEM 14. CONTROLS AND PROCEDURES ------------------------- Based on their evaluation as of a date within 90 days of the filing of this Form 10-K, the Trustee's principal Executive Officer and Chief Financial Officer have concluded that the Trust's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Trust files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Trust's internal controls or in other factors that could significantly affect those controls subsequent to the date of their evaluation. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8K ------------------------------------------------------------------ (A) 1. Financial Statements The financial statements listed in the accompanying Index to Financial Statements are filed as part of this Annual Report on Form 10-K. 2. Financial Statements required under Regulation S-X Rule 3-09 a. None. (B) Reports on Form 8-K Form 8-K dated December 16, 2002, announcing, effective December 31, 2002, that the assets and liabilities of PLM Equipment Growth Fund III were transferred to PLM Equipment Growth Fund III, Liquidating Trust. (C) Financial Statement Schedule None. (D) Exhibits 4. Plan of Dissolution and Liquidation dated December 31, 2002 between PLM Equipment Growth Fund III and PLM Financial Services, Inc. 4.1 Liquidating Trust Agreement dated December 31, 2002 by and between PLM Equipment Growth Fund III as grantor and PLM Financial Services, Inc. as the Trustee for PLM Equipment Growth Fund III, Liquidating Trust. 4.2 Bill of Sale Assignment and Assumption Agreement entered into as of December 31, 2002 by and among PLM Equipment Growth Fund III and PLM Financial Services, Inc. as the Trustee for PLM Equipment Growth Fund III, Liquidating Trust. 10.1 Management Agreement between the Trust and PLM Investment Management, Inc. Incorporated by reference to the Partnership's Registration Statement on Form S-1 (Reg. No. 33-18104), which became effective with the Securities and Exchange Commission on March 25, 1988. CONTROL CERTIFICATION I, James A. Coyne, certify that: 1. I have reviewed this annual report on Form 10-K of PLM Equipment Growth Fund III, Liquidating Trust. 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the statement of net assets in liquidation at December 31, 2002; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this annual report is prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and board of Managers: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 28, 2003 By: /s/ James A. Coyne --------------------- James A. Coyne President (Principal Executive Officer) CONTROL CERTIFICATION - ---------------------- I, Richard K Brock, certify that: 1. I have reviewed this annual report on Form 10-K of PLM Equipment Growth Fund III, Liquidating Trust. 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the statement of net assets in liquidation at December 31, 2002; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this annual report is prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and board of Managers: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: March 28, 2003 By: /s/ Richard K Brock ---------------------- Richard K Brock Chief Financial Officer (Principal Financial Officer) SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Trust has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The Trust has no directors or officers. The Trustee has signed on behalf of the Trust by duly authorized officers. Date: March 28, 2003 PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST By: PLM Financial Services, Inc. Trustee By: /s/ James A. Coyne --------------------- James A. Coyne President By: /s/ Richard K Brock ---------------------- Richard K Brock Chief Financial Officer CERTIFICATION The undersigned hereby certifies, in their capacity as an officer of the Trustee of PLM Equipment Growth Fund III, Liquidating Trust (the Trust), that the Annual Report of the Trust on Form 10-K for the year ended December 31, 2002, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Trust at the end of such period and the results of operations of the Trust for such period. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following directors of the Trust's Trustee on the dates indicated. Name Capacity Date - ---- -------- ---- /s/ Gary D. Engle - -------------------- Gary D. Engle Director, FSI March 28, 2003 /s/ James A. Coyne - --------------------- James A. Coyne Director, FSI March 28, 2003 /s/ Richard K Brock - ---------------------- Richard K Brock Director, FSI March 28, 2003 PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) INDEX TO FINANCIAL STATEMENTS (Item 15(a)) Page ---- Independent auditors' report 16 Statement of net assets in liquidation at December 31, 2002 17 Statement of changes in net assets in liquidation for the period from inception (December 31, 2002) through December 31, 2002 18 Notes to financial statements 19-22 INDEPENDENT AUDITORS' REPORT The Beneficiaries PLM Equipment Growth Fund III, Liquidating Trust: We have audited the accompanying statement of net assets in liquidation of PLM Equipment Growth Fund III, Liquidating Trust (the "Trust") as of December 31, 2002 and the related statement of changes in net assets in liquidation for the period from December 31, 2002 (inception) to December 31, 2002. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1 to the financial statements, the Trust was established to liquidate the assets and pay all liabilities of the Trust. The Trust is scheduled to be dissolved by December 31, 2004, although this date may be extended. The Trust accounts for its net assets under the liquidation basis of accounting. In our opinion, such financial statements present fairly, in all material respects, the net assets in liquidation of the Trust as of December 31, 2002, and the changes in its net assets in liquidation for the period from December 31, 2002 (inception) to December 31, 2002 in conformity with accounting principles generally accepted in the United States of America applied on the basis described in the preceding paragraph. /s/ Deloitte & Touche LLP Certified Public Accountants Tampa, Florida March 7, 2003 PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) STATEMENT OF NET ASSETS IN LIQUIDATION DECEMBER 31, 2002 (in thousands of dollars)
ASSETS Transportation equipment. . . . . . . . . . . . . . . $ 8,206 Cash and cash equivalents . . . . . . . . . . . . . . 1,611 Accounts receivable . . . . . . . . . . . . . . . . . 406 ------- Total assets. . . . . . . . . . . . . . . . . . $10,223 ======= LIABILITIES AND NET ASSETS IN LIQUIDATION Liabilities Accounts payable and accrued expenses . . . . . . . . $ 1,060 Deferred gain on the sale of transportation equipment 6,330 Due to affiliates . . . . . . . . . . . . . . . . . . 49 ------- Total liabilities . . . . . . . . . . . . . . . . . 7,439 ------- Net assets in liquidation . . . . . . . . . . . . . . $ 2,784 =======
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION (LIQUIDATION BASIS) FOR THE PERIOD FROM INCEPTION (DECEMBER 31, 2002) THROUGH DECEMBER 31, 2002 (in thousands of dollars)
Limited Partners Trustee Total ---------------------------- Net assets at December 31, 2002 . . . . . . . . . $ -- $ -- $ -- Transfer of net assets in liquidation . . . . . . 2,784 -- 2,784 --------- -------- ------ Net assets in liquidation as of December 31, 2002 $ 2,784 $ -- $2,784 ========= ======== ======
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation ----------------------- Organization - ------------ On December 31, 2002 (inception), PLM Equipment Growth Fund III, Liquidating Trust (the Trust) was established. On that date all of the assets and liabilities of PLM Equipment Growth Fund III were transferred to the Trust. PLM Financial Services, Inc. (FSI) is the Trustee of the Trust. FSI has a 5% interest in the earnings and distributions of the Trust. The Trust's primary purpose is to liquidate the assets and pay all liabilities of the Trust. The Trust has a scheduled termination date of December 31, 2004, although that date may be extended. The Trust is currently marketing all of the Trust's equipment for sale. Estimates - --------- The accompanying financial statements have been prepared on the liquidation basis of accounting. The carrying values of the assets are presented at net realizable amounts and all liabilities are presented at estimated settlement amounts, including estimated costs associated with completing the liquidation, in accordance with accounting principles generally accepted in the Unites States of America. This requires the Trustee to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Liquidation Accounting - ----------------------- The assets of the Trust are reported at their net realizable values that include future lease payments as well as residual sales proceeds less any costs to sell. The Trust does not have signed commitments or binding contracts to sell certain of its transportation equipment at the reported net realizable value. The estimate of the fair value for the Trust's transportation equipment is based on the opinion of the Trust's equipment managers using data, reasoning and analysis of prevailing market conditions of similar equipment, data from recent purchases, independent third party valuations and discounted cash flows. At December 31, 2003, the estimated gain on the Trust's transportation equipment if sold at the reported net realizable value would be $6.3 million. Such estimated gain has been deferred at December 31, 2002. The amounts reported for liabilities include all estimated expenses to conclude the operations of the Trust. The net adjustment required to convert from the going concern (historical cost) basis of accounting to the liquidation basis of accounting was an increase in net assets of $5.5 million. This amount is reflected in the transfer of net assets in liquidation in the Statement of Changes in Net Assets in Liquidation. Significant changes in the carrying value of assets and liabilities are summarized as follows (in thousands of dollars):
Adjustment of assets from historical costs $6,066 Adjustment to accrued expenses . . . . . . 612 ------ Total adjustment to liquidation basis. . . $5,454 ======
------ PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation (continued) ----------------------- Operations - ---------- PLM Equipment Growth Fund III, a California limited partnership (the Partnership), was formed on October 15, 1987. The Partnership engaged primarily in the business of owning, leasing, or otherwise investing in predominately used transportation and related equipment. PLM Financial Services, Inc. (FSI) was the General Partner of the Partnership. FSI is a wholly owned subsidiary of PLM International, Inc. (PLM International). In December 2002, FSI filed a Registration Statement on Form 15-12G with the Securities and Exchange Commission with respect to a certificate of cancellation of PLM Equipment Growth Fund III and the formation of PLM Equipment Growth Fund III, Liquidating Trust (the Trust). The Trust became effective on December 31, 2002. FSI, as Trustee, owns a 5% interest in the Trust. The Trust was organized to liquidate and dissolve all of the remaining assets and liabilities of the Trust. The equipment of the Trust is managed, under a continuing management agreement by PLM Investment Management, Inc. (IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly management fee from the Trust for managing the equipment (see Note 2). FSI, in conjunction with its subsidiaries, sells equipment to investor programs and third parties, manages pools of equipment under agreements with the investor programs, and is a general partner of other investment programs. Transportation Equipment - ------------------------- Equipment held for operating leases is stated at net realizable value less any costs to sell. Repairs and Maintenance - ------------------------- Repair and maintenance costs for railcars and trailers are usually the obligation of the Trust. Maintenance costs for the marine containers are the obligation of the lessee. Estimated future repairs and maintenance costs have reduced the net fair value of transportation equipment on the statement of net assets in liquidation. Net Income and Distributions Per Beneficial Unit - ------------------------------------------------------ Cash distributions are allocated 95% to the beneficial holders and 5% to the Trustee. Special allocations of income are made to (from) the Trustee equal to the deficiency (equity) balance, if any, in the capital account of the Trustee. Cash distributions are recorded when declared. Cash and Cash Equivalents - ---------------------------- The Trust considers highly liquid investments that are readily convertible into known amounts of cash with original maturities of three months or less as cash equivalents. 2. Transactions with General Partner and Affiliates ----------------------------------------------------- Under the equipment management agreement, IMI receives a monthly management fee equal to the greater of (a) the fees that would be charged by an independent third party for similar services for similar equipment or (b) the sum of (i) 5% of the gross lease revenues attributable to equipment that is subject to operating leases, (ii) 2% of the gross lease revenues attributable to equipment that is subject to full payout net leases, and (iii) 7% of the gross lease revenues attributable to equipment for which IMI provides both management and additional services relating to the continued and active operation of program equipment, such as on-going marketing and re-leasing of equipment, hiring or arranging for the hiring of crew or operating personnel for equipment, and similar services. PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) NOTES TO FINANCIAL STATEMENTS 3. Transportation Equipment ------------------------- The components of transportation equipment as of December 31, 2002 are as follows (in thousands of dollars):
Railcars. . . . . $7,804 Trailers. . . . . 388 Marine containers 14 ------ Net equipment . $8,206 ======
Lease payments for railcars are based on fixed rates. Lease payments for trailers are based on a per-diem lease in the free running interchange with the railroads. The Trust's marine containers are leased to operators of utilization-type leasing pools that include equipment owned by unaffiliated parties. In such instances, lease payments received by the Trust consist of a specified percentage of revenues generated by leasing the equipment to sublessees, after deducting certain direct operating expenses of the pooled equipment. As of December 31, 2002, all transportation equipment in the Trust portfolio was on lease except for 171 railcars, with an aggregate net fair value of $1.2 million. Future minimum rents under noncancelable operating leases as of December 31, 2002 during each of the next five years are $4.2 million in 2003, $2.5 million in 2004, $1.7 million in 2005, $0.7 million in 2006, $0.3 million in 2007 and $0.6 million thereafter. While the leases for certain transportation equipment extend beyond the Trust's expected dissolution date, the Trustee believes it will be able to sell that transportation equipment subject to those leases. The Trustee has entered into a non-binding agreement to sell all of the Trust's railcars for an amount that approximates the carrying value in the accompanying statement of net assets in liquidation (see Note 9). 4. Geographic Information ----------------------- The Trust owns certain equipment that is leased and operated internationally. A limited number of the Trust's transactions are denominated in a foreign currency. The Trust leases its railcars and trailers to lessees domiciled in two geographic regions: the United States and Canada. Marine containers are leased to multiple lessees in different regions that operate worldwide. The net realizable value of these assets as of December 31, 2002 is as follows (in thousands of dollars):
Region Owned Equipment - ------------------------------------------ Canada . . . . . . . . . $ 4,952 United States. . . . . . 3,240 Rest of the world. . . . 14 ---------------- Net realizable value $ 8,206 ================
5. Concentrations of Credit Risk -------------------------------- As of December 31, 2002, the Trustee believes the Trust had no significant concentrations of credit risk that could have a material adverse effect on the Trust. 6. Income Taxes ------------- The Trust is not subject to income taxes, as any income or loss is included in the tax returns of the individual beneficial interest holders. Accordingly, no provision for income taxes has been made in the PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) NOTES TO FINANCIAL STATEMENTS 6. Income Taxes (continued) ------------- financial statements of the Trust. As of December 31, 2002, the federal income tax basis was higher than the financial statement carrying amount of assets and liabilities by $22.7 million, primarily due to differences in the carrying value of the owned equipment and certain accruals using the liquidation method of accounting, and the tax treatment of underwriting commissions and syndication costs. 7. Contingencies ------------- During 2000 and 2001, the Partnership, together with affiliates, initiated litigation in various official forums in the United States and India against two defaulting Indian airline lessees to repossess its property and to recover damages for failure to pay rent and failure to maintain such property in accordance with relevant lease contracts. In response to the Partnership's collection efforts, the airline lessees filed counter-claims against the Partnership, one of which was in excess of the Partnership's claims against the airline. FSI believes that the airline's counterclaims are completely without merit and will vigorously defend against such counterclaims. During 2001, an arbitration hearing was held between one India lessee and the Partnership and the arbitration panel issued an award to the Partnership. The Partnership initiated proceedings in India to collect on the arbitration award and has recently been approached again by the lessee to discuss a negotiated settlement of the Partnership's collection action. The arbitration award was not accrued for in the December 31, 2002 financial statements because the likelihood of collection of the award is remote. FSI will continue to try to collect the full amount of the settlement. During 2001, FSI decided to minimize its collection efforts from the other India lessee in order to save the Partnership from incurring additional expenses associated with trying to collect from a lessee that has no apparent ability to pay. All matters of litigation of which the Partnership was involved have been assumed by the Trust. The Trust is involved as plaintiff or defendant in various other legal actions incidental to its business. The Trustee does not believe that any of these actions will be material to the financial condition or results of operations of the Trust. 8. Liquidation of Trust ---------------------- The Trustee is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sales proceeds are received, the Trustee intends to periodically declare distributions to distribute the sale proceeds to the beneficial interest holders. During the liquidation phase of the Trust, the equipment will continue to be leased under operating leases until sold. The amounts reflected for assets and liabilities of the Trust have been adjusted to reflect liquidation values. The transportation equipment portfolio is reported at the net realizable value less any disposal costs. Any excess proceeds over expected Trust obligations will be distributed to the beneficial interest holders throughout the liquidation period. The Trust is scheduled to be dissolved by December 31, 2004, although that date may be extended. Upon final liquidation, the Trust will be dissolved. 9. Subsequent Event ----------------- In March 2003, the Trustee entered into a non-binding agreement to sell all of the Trust's railcars for $6.7 million plus 50% of all the residual proceeds after the buyer has received a 12% return on its investment. The buyer has the option to purchase the right to the Trust's residual sales proceeds for $1.5 million prior to December 31, 2003. Estimated transaction costs are approximately $0.4 million. This transaction is expected to close in the first half of 2003. PLM EQUIPMENT GROWTH FUND III, LIQUIDATING TRUST (A TRUST) INDEX OF EXHIBITS
Exhibit Page - ------- ---- 4. Plan of Dissolution and Liquidation dated December 31, 2002 between PLM Equipment Growth Fund III and PLM Financial Services, Inc. 25-27 4.1 Liquidating Trust Agreement dated December 31, 2002 by and between PLM Equipment Growth Fund III as grantor and PLM Financial Services, Inc. as the Trustee for PLM Equipment Growth Fund III, Liquidating Trust 28-60 4.2 Bill of Sale Assignment and Assumption Agreement entered into as of December 31, 2002 by and among PLM Equipment Growth Fund III and PLM Financial Services, Inc. as the Trustee for PLM Equipment Growth Fund III, Liquidating Trust. 61-63 10.1 Management Agreement between Trust and PLM Investment Management, Inc. **
* Incorporated by reference. See page 11 of this report. EX-1 3 doc2.txt PLAN OF DISSOLUTION AND LIQUIDATION This Plan of Dissolution and Liquidation (this "Plan"), is entered into as of December 31, 2002, by and among PLM Equipment Growth Fund III, a California limited partnership (the "Partnership"), and PLM Financial Services, Inc., a Delaware corporation (the "General Partner"). R E C I T A L S - - - - - - - - WHEREAS, the Partnership and the General Partner among others, are parties to that certain Second Amended and Restated Agreement of Limited Partnership, dated as of March 10, 1988, as amended (the "Partnership Agreement"); and WHEREAS, the Partnership Agreement provides that the Partnership be dissolved upon the expiration of the term of the Partnership and such expiration has occurred; and WHEREAS, the Partnership filed a Certificate of Dissolution with the California Secretary of State on December 22, 2000; and WHEREAS, the General Partner has determined that it is in the best interest of the Partnership to complete the dissolution and liquidation of the Partnership pursuant to the adoption of this Plan; and WHEREAS, in furtherance hereof, the General Partner shall (i) apply and distribute all cash and proceeds in accordance with the provisions set forth in the Partnership Agreement; (ii) except for an allocation of reasonable estimates of cash amounts to be used for contingent or existing liabilities (the "Cash Reserve"), liquidate the Partnership's assets; (iii) place all undistributed cash, including the Cash Reserve and any assets that could not be sold for cash prior to dissolution in a liquidating trust (the "Liquidating Trust") for the benefit of the limited partnership and general partner unitholders of the Partnership (the "Unitholders") with the General Partner as its trustee (the "Trustee"); and (iv) cause the Liquidating Trust, pursuant to the terms of a Liquidating Trust Agreement by and between the Partnership and the General Partner, of even date herewith substantially in the form attached as Exhibit A --------- hereto (the "Liquidating Trust Agreement"), to distribute all of the net cash proceeds from the sale of assets of the Liquidating Trust and cash, less reserves for any contingent liabilities, to the beneficiaries of the Liquidating Trust when the Trustee deems it to be in the best interest of the withholders to do so; and WHEREAS, pursuant to the terms of the Liquidating Trust Agreement the Unitholders in the Partnership shall be deemed to be pro rata holders of the beneficial interests in the Liquidating Trust; and WHEREAS, in furtherance of the dissolution and liquidation of the Partnership as described herein, the General Partner has adopted and approved this Plan; NOW THEREFORE, the General Partner authorizes the following on behalf of the Partnership: 1. The Partnership shall enter into, execute and deliver the Liquidating Trust Agreement with the Trustee. 2. The Partnership shall, after having set aside the Cash Reserve and reserving additional cash to be transferred to the Liquidating Trust for estimated fees, expenses and contingent liabilities of the Liquidating Trust together with any remaining unsold assets of the Partnership (the "Retained Assets"), in accordance with the Partnership Agreement, distribute all available cash to the Partnership's Unitholders. 3. The Partnership shall enter into, execute and deliver to the Trustee a Bill of Sale, Assignment, Acceptance and Assumption Agreement, a form of which is attached hereto as Exhibit B (the "Bill of Sale"), which, together with ------- - related transfer instruments, shall transfer and assign to the Trustee, on behalf of the Liquidating Trust, all right, title, interest in and to, and obligations related to, all assets, including, but not limited to the Cash Reserves, the Retained Assets, and any other assets held by the Partnership that have not been, as of the date of such Bill of Sale, distributed. Such assets shall be reserved, liquidated or distributed by the Trustee in accordance with the terms of the Liquidating Trust Agreement. 4. After dissolution and liquidation, in accordance with the Partnership Agreement and pursuant to the California Revised Limited Partnership Act as adopted by and in effect in the State of California, the General Partner shall cause the Partnership to file with the Secretary of State of the State of California, a Certificate of Cancellation, which cancels the Partnership's Certificate of Limited Partnership. 5. The General Partner shall take any and all other actions deemed required, necessary or desirable to complete the liquidation and dissolution of the Partnership, including but not limited to, the execution and delivery of any and all agreements, certificates, instruments or other documents. [The remainder of this page is left intentionally blank.] IN WITNESS WHEREOF, the parties hereto have executed this Plan as of the date first set forth above. PLM EQUIPMENT GROWTH FUND III By: PLM Financial Services, Inc., its General Partner By: ____________________________ Name: Richard K Brock Title: Chief Financial Officer PLM FINANCIAL SERVICES, INC. By: ______________________________ Name: Richard K Brock Title: Chief Financial Officer EX-2 4 doc3.txt LIQUIDATING TRUST AGREEMENT Dated as of December 31, 2002 by and between PLM EQUIPMENT GROWTH FUND III individually as Grantor and PLM FINANCIAL SERVICES, INC. as the Trustee TABLE OF CONTENTS ARTICLE I: NAME AND DEFINITIONS 1 1.1 Name 1 1.2 Certain Terms Defined 2 ARTICLE II: NATURE OF TRANSFER 3 2.1 Purpose of Trust 3 2.2 Prohibited Activities 4 2.3 No Reversion to the Partnership 4 2.4 Payment of Liabilities 4 2.5 Bill of Sale, Assignment, Acceptance and Assumption Agreement; Instruments of Further Assurance 4 2.6 Incidents of Ownership 4 2.7 Notice to Unlocated Holders of Partnership Units 5 ARTICLE III: BENEFICIARIES 5 3.1 Beneficial Interests 5 3.2 Rights of Beneficiaries 5 3.3 No Transfer of Interests of Beneficiaries 6 3.4 Trustee as Beneficiary 6 ARTICLE IV: DURATION AND TERMINATION OF TRUST 6 4.1 Duration 6 4.2 Other Obligations of the Trustee upon Termination 7 ARTICLE V: ADMINISTRATION OF TRUST ASSETS 7 5.1 Sale of Trust Assets 7 5.2 Transactions with Related Persons 7 5.3 Payment of Claims, Expenses and Liabilities 7 5.4 Interim Distributions 7 5.5 Final Distribution 8 5.6 Reports to Beneficiaries and Others 8 5.7 Federal Income Tax Information 8 5.8 Employment of Manager 9 ARTICLE VI: POWERS OF AND LIMITATIONS ON THE TRUSTEE 9 6.1 Limitations on Trustee 9 6.2 Specific Powers of the Trustee 10 ARTICLE VII: CONCERNING THE TRUSTEE, EMPLOYEES AND AGENTS 12 7.1 Generally 12 7.2 Reliance by Trustee 13 7.3 Limitation on Liability to Third Persons 14 7.4 Recitals 14 7.5 Indemnification 14 7.6 Rights of Trustees, Employees, Independent Contractors and Agents to Own Trust Units or Other Property and to Engage in Other Business 15 7.7 Contribution Back 15 ARTICLE VIII: PROTECTION OF PERSONS DEALING WITH THE TRUSTEE 16 8.1 Action by Trustee 16 8.2 Reliance on Statements by the Trustee 16 ARTICLE IX: COMPENSATION OF TRUSTEE 16 9.1 Amount of Compensation 16 9.2 Dates of Payment 16 9.3 Expenses 16 ARTICLE X: THE TRUSTEE AND SUCCESSOR TRUSTEE 16 10.1 Number and Qualification of Trustees 16 10.2 Resignation and Removal 17 10.3 Appointment of Successor 17 10.4 Acceptance of Appointment by Successor Trustee 18 10.5 Bonds 18 ARTICLE XI: CONCERNING THE BENEFICIARIES 18 11.1 Evidence of Action by Beneficiaries 18 11.2 Limitation on Suits by Beneficiaries 18 11.3 Requirement of Undertaking 18 ARTICLE XII: MEETING OF BENEFICIARIES 19 12.1 Purpose of Meetings 19 12.2 Meeting Called by Trustee 19 12.3 Meeting Called on Request of Beneficiaries 19 12.4 Persons Entitled to Vote at Meeting of Beneficiaries 19 12.5 Quorum 19 12.6 Adjournment of Meeting 19 12.7 Conduct of Meetings 20 12.8 Record of Meeting 20 ARTICLE XIII: AMENDMENTS 20 13.1 Consent of Beneficiaries 20 13.2 Notice and Effect of Amendment 20 13.3 Trustee's Declining to Execute Documents 20 ARTICLE XIV: MISCELLANEOUS PROVISIONS 21 14.1 Filing Documents 21 14.2 Intention of Parties to Establish Trust 21 14.3 Beneficiaries Have No Rights or Privileges as Holders of Partnership Units 21 14.4 Laws as to Construction 21 14.5 Severability 21 14.6 Notices 22 14.7 Counterparts. 22 SCHEDULE A: Schedule of Fees EXHIBIT A: Form of Bill of Sale, Assignment, Acceptance and Assumption Agreement LIQUIDATING TRUST AGREEMENT This LIQUIDATING TRUST AGREEMENT (this "Agreement"), dated as of December 31, 2002 (the "Effective Date"), by and between PLM Equipment Growth Fund III, a California limited partnership, as Grantor (the "Partnership"), and PLM Financial Services, Inc., a Delaware corporation, as Trustee (the "Trustee"). WHEREAS, the Partnership was organized for the objectives and purposes of owning and leasing, and otherwise dealing with equipment and other personal property; and WHEREAS, the term of the Partnership expired on December 31, 2000 pursuant to the terms of its Second Amended and Restated Agreement of Limited Partnership dated as of March 10, 1988, as amended (the "Partnership Agreement"); and WHEREAS, as of the date hereof, substantially all of the assets of the Partnership have been sold or otherwise disposed of; and WHEREAS, PLM Financial Services, Inc., a Delaware corporation (the "General Partner"), believes it to be in the best interest of the Partnership to complete the liquidation of the Partnership by transferring all remaining assets of the Partnership (the "Retained Assets") to a liquidating trust (the "Trust") with PLM Financial Services, Inc., serving as its initial trustee (the "Trustee"), including a cash reserve set aside for the contingent and existing obligations of the Partnership and the Liquidating Trust (the "Cash Reserve"); and WHEREAS, the Trustee shall administer the Liquidating Trust pursuant to the terms of this Agreement and, upon satisfaction of all liabilities and obligations of the Partnership and the Liquidating Trust, the Trustee shall distribute the residue of the proceeds of the liquidation of the assets of the Partnership in accordance with the terms hereof; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Partnership hereby agrees to grant, release, assign, convey and deliver unto the Trustee for the benefit of the Beneficiaries (as hereinafter defined), all of the right, title and interest of the Partnership 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 Trustee hereby agrees to accept such Retained Assets and such Trust, subject to the following terms and provisions: ARTICLE I NAME AND DEFINITIONS 1.1 Name. This Trust shall be known as the PLM Equipment ---- Growth Fund III 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 Trust Assets in the Trust determined by the ratio of the number of Partnership Units held by the Initial Beneficiary on the close of business on the Record Date in the Partnership over the total number of Partnership Units existing on such Record Date in the Partnership and thereafter each Beneficiary's proportional beneficial interest in the Trust represented by Trust Units. (d) "BENEFICIARIES" shall mean the holders of Trust Units from time to time on or after the Record Date, including the Initial Beneficiaries and the Subsequent Beneficiaries. (e) "GRANTOR" shall mean the Partnership. (f) "INITIAL BENEFICIARIES" shall mean the initial holders of Trust Units. (g) "LIQUIDATING TRUST" shall mean the liquidating trust maintained by the Trustee holding the Trust Assets of the Partnership, identified as the "PLM Equipment Growth Fund III Liquidating Trust"; also referred to herein as the "Trust." (h) "MANAGER" shall mean such Person or Persons who have been employed by, or who have contracted with, the Trustee to assist in the management of the Trust, and for the avoidance of doubt, the Manager may be the General Partner or any affiliate of the General Partner. (i) "PARTNERSHIP UNITS" shall mean the limited and general partnership units in the Partnership held by each of the Beneficiaries as of the Record Date. (j) "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. (k) "RECORD DATE" shall mean the date selected by the Grantor for determination of the holders of Partnership Units entitled to become Beneficiaries. (l) "SUBSEQUENT BENEFICIARIES" shall mean Beneficiaries as reflected on the books and records of the Trust from time to time after the Effective Date, other than the Initial Beneficiaries. (m) "TRUST" shall mean the Trust created by this Agreement. (n) "TRUST ASSETS" shall mean all the property held from time to time by the Trustee under this Agreement, which initially shall consist of the Retained Assets of the Partnership granted, assigned and conveyed to the Trustee by the Partnership, 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 Trust. (o) "TRUST UNITS" shall mean those equal, undivided portions into which the Beneficial Interests in the Trust Assets are divided, as evidenced on the books and records of the Trust. (p) "TRUSTEE" shall mean the original Trustee under this Agreement and its successor(s), if any. ARTICLE II NATURE OF TRANSFER 2.1 Purpose of Trust. ------------------ (a) It is expected that the Partnership shall dissolve and liquidate 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 the Partnership has previously reserved by the retention of the Cash Reserves as described in the recitals hereto. The Trust hereby is organized for the sole purpose of winding up the affairs of the Partnership as promptly as reasonably possible and with no objective to continue or engage in the conduct of a trade or business. (b) The Cash Reserves and Retained Assets to be granted, assigned and conveyed to the Trustee as of the Effective Date will be held in the Trust, and the Trustee will: (i) further liquidate the Trust Assets as it deems necessary to carry out the purpose of the Trust and facilitate distribution of the Trust Assets; (ii) protect, conserve and manage the Trust Assets in accordance with the terms and conditions hereof; and (iii) distribute the 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 the Partnership to the Trustee pursuant hereto shall be treated for federal and state income tax purposes as if the Partnership made such distributions directly to the holders of Partnership Units. It is further intended that for federal, state and local income tax purposes the 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 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 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 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. The Partnership agrees that a transfer agent acting on its behalf may prepare and file applicable K-1's respecting the Beneficiaries' Partnership income. To the extent that the 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 Trustee may pay such Taxes. The Trustee may withhold from any payment of the Trust Assets such amount as the 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 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 Trust ---------------------- shall not continue or engage in the conduct of any trade or business, and the 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 Trust or the Beneficiaries, and all of the terms and conditions hereof shall be construed accordingly. 2.3 No Reversion to the Partnership. ----------------------------------- Partnership. In no event shall any part of the Trust Assets revert to or be distributed to the Partnership. 2.4 Payment of Liabilities. To the ------------------------ extent that there are available Trust Assets in the Trust, the Trust hereby agrees to assume all Liabilities of the Partnership on the Effective Date. Should any Liability be asserted against the Trust as the transferee of the Trust Assets or as a result of the assumption made in this paragraph, the Trustee may use such part of the Trust Assets as may be necessary in contesting any such Liability or in payment thereof. In no event shall the Trustee, Beneficiaries or employees or agents of the Trust be personally liable, nor shall resort be had to the private property of such Persons or to any other Trust Assets, in the event the Trust Assets are not sufficient to satisfy the Liabilities asserted against or payable out of the Partnership's available Trust Assets in the Trust. 2.5 Bill of Sale, Assignment, Acceptance and Assumption Agreement; ------------------------------------------------------------------- Instruments of Further Assurance ---------------------------- On the Effective Date, the Partnership and the Trust shall execute a Bill of Sale, Assignment, Acceptance and Assumption Agreement conveying the Retained Assets, Cash Reserves and Liabilities to the Trust, a form of which is attached as Exhibit A hereto. ------- - After the dissolution of the Partnership, such Persons as shall have the right and power to so act, will, upon reasonable request of the 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 Trustee of any property intended to be covered hereby, and to vest in the Trustee, its successors and assigns, the estate, powers, instruments or funds in trust hereunder. 2.6 Incidents of Ownership. The holders ----------------------- of Partnership Units as of the Record Date shall be the Initial Beneficiaries of the Trust as holders of Trust Units in the Trust, and the 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 Partnership Units -------------------------------------------------- If the Trust holds Trust Assets for unlocated holders of any Partnership Units, due notice shall be given to such holders of Partnership 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 the Partnership in accordance with a certified copy of the Partnership's list of Partnership Unit holders as of the Record Date (the "List"). The Partnership will deliver the certified copy of the List to the Trustee within a reasonable time after the Record Date specifying the Beneficial Interests of each Initial Beneficiary in the Partnership. 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 Trust Unit in the Trust. (b) In the case of the Partnership Unit holders, customary institutional book-entry or other records or any other evidence of ownership satisfactory to the Trustee will be deemed to evidence the Beneficial Interest in the Trust of each such Beneficiary. (c) If any conflicting claims or demands are made or asserted with respect to the ownership of any 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 Trust Units, then, in any of such events, the Trustee shall be entitled, at its sole election, to refuse to comply with any such conflicting claims or demands. In so refusing, the Trustee may elect to make no payment or distribution with respect to such Trust Units, or to make such payment to a court of competent jurisdiction or an escrow agent, and in so doing the 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 Trustee be liable for interest on any funds which it may so withhold. The 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 Trustee shall have been furnished with an executed counterpart of such agreement, or (iii) there is furnished to the Trustee a surety bond or other security satisfactory to the 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 Trustee shall not be required to evidence a book entry transfer of a deceased Beneficiary's Beneficial Interest to his legal representative until the 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, the 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 Trust Assets but the whole title to the Trust Assets shall be vested in the 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 and, further provided, that the executor or administrator of the estate of a Beneficiary may mortgage, pledge, grant a security interest in, hypothecate or otherwise encumber, the Beneficial Interest held by the estate of such Beneficiary if necessary in order to borrow money to pay estate, succession or inheritance taxes or the expenses of administering the estate of the Beneficiary, upon written notice to and upon written consent of the Trustee. 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 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 Trustee, ---------------------- either individually or in a representative or fiduciary capacity, may be a Beneficiary to the same extent as if it were not a 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 Trustee hereunder. ARTICLE IV DURATION AND TERMINATION OF TRUST 4.1 Duration. The existence of this 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 Trust Assets as provided in Section 5.5, or (iii) December 31, 2004; provided, however, that the Trustee, in its discretion, may extend the existence of this 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 Trustee upon Termination ------------------------------------------------------ Upon distribution of all the Trust Assets, the Trustee shall provide for the retention of all necessary books, records, lists of holders of Trust Units in the Trust, certificates and files that shall have been delivered to or created by the Trustee for a period of ten (10) years thereafter, at the Trustee's discretion, all of such records and documents may be destroyed. Except as otherwise specifically provided herein, upon the distribution of all Trust Assets in the Trust, the Trustee shall have no further duties or obligations hereunder. ARTICLE V ADMINISTRATION OF TRUST ASSETS 5.1 Sale of Trust Assets. The 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 Trust Assets in the 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 Trustee shall determine). 5.2 Transactions with Related Persons ---------------------------------- Notwithstanding any other provisions of this Agreement, the Trustee shall not knowingly, directly or indirectly, sell or otherwise transfer all or any part of any Trust Assets to, or contract with, (i) itself or any other Trustee or an employee or agent (acting in its or their individual capacities) of this Trust, or (ii) any Person of which any Trustee, employee or agent of this 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 Trustee has been advised in writing respecting such claims, expenses, charges, liabilities and obligations, the Trustee shall pay from the Trust Assets in the Trust all claims, expenses, charges, liabilities, and obligations of the Trust Assets and all Liabilities relating to the Trust Assets and obligations which the Trustee specifically assumes and agrees to pay pursuant to this Agreement and such transferee liabilities which the Trustee may be obligated to pay as transferees of the Trust Assets in the 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 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 Trust Assets in the Trust by the Trustee. 5.4 Interim Distributions. At such times ---------------------- as may be determined by it in its sole discretion, the Trustee shall distribute, or cause to be distributed, to the Beneficiaries, in proportion to the number of Trust Units held by each Beneficiary relating to the Trust, such cash or other property comprising a portion of the Trust Assets as the Trustee may in its sole discretion determine may be distributed without detriment to the conservation and protection of the Trust Assets in the Trust. 5.5 Final Distribution. If the Trustee ------------------- determines that the Liabilities and all other claims, expenses, charges, liabilities and obligations of the Trust have been paid or discharged, or if the existence of the Trust shall terminate pursuant to Section 4.1, the Trustee shall, as expeditiously as is consistent with the conservation and protection of the Trust Assets, distribute the Trust Assets to the Beneficiaries in proportion to the number of Trust Units held by each Beneficiary in the Trust based on the list submitted to the Trustee by the Partnership pursuant to Section 3.1 above, as such list may be amended. The Trustee shall hold in the 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 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) an intermediary bank. The Trustee may apply any of the 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 Trust and after termination of the Trust, the Trustee shall submit a written report and account to the Beneficiaries showing (i) the assets and liabilities of the Trust at the end of such taxable year or upon termination and the receipts and disbursements of the Trustee for such taxable year or period, (ii) any changes in the Trust Assets which they have not previously reported, and (iii) any action taken by the Trustee in the performance of its duties under this Agreement which it has not previously reported and which, in its opinion, materially affects the Trust Assets. The 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 Trust shall end on December 31 of each year unless the Trustee deems it advisable to establish some other date as the date on which the taxable year of the Trust shall end. 5.7 Federal Income Tax Information --------------------------------- As soon as practicable after the close of each taxable year, the Trustee shall direct its transfer agent to mail to each Person who was a Beneficiary at the close of the year, a statement showing on a Trust Unit basis in the Trust the dates and amounts of all distributions made by the Trustee, if any, income earned on assets held by the Trust, if any, such other information as is reasonably available to the Trustee which the Trustee determines may be helpful in determining the amount of gross income and expenses attributable to the 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, such transfer agent (or if it cannot, the 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 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 Trustee shall be responsible for the general policies of the Trust and for the general supervision of the activities of the Trust conducted by all agents, employees, advisors or managers of the Trust. However, the Trustee is not and shall not be required personally to conduct the activities of the Trust, and consistent with its ultimate responsibility as stated above, the 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 Trustee may deem necessary or proper for the transaction of the activities of the Trust, including, but not limited to, PLM International, Inc. and its affiliates. The 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 Trustee may in its sole discretion deem necessary or desirable to carry out the purpose of the Trust without regard to whether such authority is normally granted or delegated by trustees. The 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 Trustee may exercise broad discretion in allowing the Manager to administer and regulate the operations of the Trust, to act as agent for the Trust, to execute documents on behalf of the Trustee, and to make executive decisions which conform to general policies and general principles previously established by the Trustee. (b) The Manager or other Persons shall not be required to administer the 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 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 TRUSTEE 6.1 Limitations on Trustee. Except as ------------------------ contemplated by this Agreement, the Trustee shall not at any time, on behalf of the Trust or the Beneficiaries, enter into or engage in any trade or business, and no part of any Trust Assets shall be used or disposed of by the Trustee in furtherance of any trade or business. Except as the Trustee reasonably believes is consistent with and in furtherance of its obligations under this Agreement, the Trustee shall be restricted to the holding, collection and sale of the Trust Assets and the payment and distribution thereof for the purposes set forth in this Agreement and to the conservation and protection of the Trust Assets and the administration thereof in accordance with the provisions of this Agreement. In no event shall the 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 the Partnership 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 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 Trustee to be necessary or proper for the conservation and protection of the Trust Assets. The Trustee shall not invest any of the cash held as Trust Assets, except that the 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; or (iii) other temporary investments not inconsistent with the Trust's status as a liquidating trust for tax purposes (collectively, "Permitted Investments"). It is hereby acknowledged that the Trustee shall not be required to maximize the investment return on the Trust Assets during the term of this Agreement. The 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 Trustee is not responsible for any losses to the Trust which may occur, including, without limitation, by reason of bank failure or the amount of the Trust exceeding the Federal Deposit Insurance Corporation limits. 6.2 Specific Powers of the Trustee ---------------------------------- Subject to the provisions of Section 6.1, the 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 Trustee to act as specifically authorized by any other Section or provision of this Agreement and to act in such a manner as the Trustee may deem necessary or appropriate to conserve and protect any 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 Trust Assets. (b) To collect, liquidate or otherwise convert into cash, or such other property as the Trustee deems deem appropriate, all property, assets and rights in any Trust Assets, and to pay, discharge and satisfy all other claims, expenses, charges, liabilities, and obligations existing with respect to any Trust Assets, the Trust or the 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 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 Trustee to any one or more Trustees, agents, representatives, employers, independent contractors or other Persons. (d) To retain and set aside such funds out of the Trust as the Trustee shall deem necessary or expedient to pay, or provide for the payment of (i) unpaid claims, expenses, charges, liabilities, and obligations of the Trust or the Partnership, except to the extent that liabilities for which the Partnership has previously reserved Cash Reserves are satisfied with funds from said Cash Reserves; (ii) contingencies; and (iii) the expenses of administering the Trust Assets. (e) To do and perform any and all acts necessary or appropriate for the conservation and protection of the Trust Assets, including acts or things necessary or appropriate to maintain Trust Assets held by the Trustee pending sale or other disposition thereof or distribution thereof to the Beneficiaries. (f) To hold legal title to property of the Trust in the name of the Trust, or in the name of the Trustee, or of any other Person, without disclosure of the interest of the Trust therein. (g) To cause any investments of any part of the Trust Assets to be registered and held in the name of any one or more of its 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 Trust or the Partnership or as otherwise required, as the 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 Trust Assets. (i) To determine conclusively from time to time the value of and to revalue the securities and other property of the Trust, in accordance with independent appraisals or other information as it deems 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 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 Trust, provided that no such new instrument, contract, agreement, obligation or cause of action shall permit the 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 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 Trustee which the Trustee might or could do if the Trustee was the absolute owner 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 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 Trustee, to comply with the applicable federal and state securities laws, and to enter into agreements relating to the 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 Trustee as part of any Trust Assets. (o) To terminate and dissolve any entities owned by the Trust. (p) To have a judicial settlement of its account of the Trust at any time to the extent it determines 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 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 TRUSTEE, BENEFICIARIES, EMPLOYEES AND AGENTS 7.1 Generally. The Trustee accepts and undertakes to --------- discharge the Trust created by this Agreement, upon the terms and conditions thereof on behalf of the Beneficiaries. The 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 Trustee from liability for its own willful misconduct, knowingly and intentionally committed in bad faith, except that: (a) No successor Trustee shall be in any way responsible for the acts or omissions of the Trustee in office prior to the date on which he or it becomes a Trustee. (b) The 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 Trustee. (c) The 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 Trustee and conforming to the requirements of this Agreement. (d) The Trustee shall not be liable for any act which the 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 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 Trustee or any of its employees, agents, representatives or attorneys. (e) The duties and obligations of the Trustee shall be limited to and determined solely by the express provisions of this Agreement, and no implied duties or obligations shall be read into this Agreement against the Trustee. 7.2 Reliance by Trustee. Except as --------------------- otherwise provided in Section 7.1: (a) The 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 Trustee may consult with legal counsel, auditors or other experts to be selected by it, including firms with which the 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 Trustee, the employees and the agents of the 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 Trustee shall look only to the Trust Assets to satisfy any liability relating to the Trust Assets incurred by the Trustee to such Person in carrying out the terms of this Trust, and the Trustee shall have no obligation to satisfy any such liability. (d) As far as practicable and except as expressly permitted above, the Trustee shall cause any written instrument creating an obligation of the Trust to include a reference to this Agreement and to provide that neither the Beneficiaries, the Trustee nor their agents shall be liable thereunder and that the other parties to such instrument shall look solely to the Trust Assets 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 Trustee, or their agents liable, nor shall the 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 Trust Assets or the affairs of this Trust; and neither the Trustee nor any employee or agent of this Trust shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with any Trust Assets or the affairs of this 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 Trust Assets for satisfaction of claims of any nature arising in connection with the affairs of this Trust. The Trustee shall, at all times, maintain insurance for the protection of all Trust Assets, its Beneficiaries, the Trustee and its employees and agents in such amount as the 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 Trust shall be conclusively taken to have been executed or done by the Trustee, or the employee or agent of this Trust only in its capacity as Trustee under this Agreement or in his capacity as employee or agent of the Trust. 7.5 Indemnification. The Trustee and each of --------------- its employees and agents (each an "Indemnified Person" and collectively, the "Indemnified Persons") shall be indemnified out of all 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 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 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 rights accruing to any Indemnified Person under these provisions shall not exclude any other right to which the Indemnified Person may be lawfully entitled. The 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 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 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 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 Trustee under this Agreement, including without limitation the indemnity obligations hereunder, whether joint or several, the Trust (and by accepting distributions hereunder, each Beneficiary) hereby grants to the Trustee a continuing security interest in and to any and all of the 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 Trustee shall have all of the rights and remedies of a secured party under the Uniform Commercial Code. In addition, in the event the 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 Trustee may in its discretion set off and apply any of the Trust Assets as is required to pay and satisfy those obligations. Promptly after the receipt by the Trustee of notice of any demand or claim or the commencement of any action, suit or proceeding, the 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 Trustee to give such notice shall not relieve any party from any liability which such party may have to the Trustee hereunder. Notwithstanding any obligation to make payments and deliveries hereunder, the Trustee may retain and hold for such time as it reasonably deems necessary such amount of the 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 Trustee shall be under no duty to institute any suit, or to take any remedial procedures under this 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 Trustees, Employees, Independent Contractors and Agents ------------------------------------------------------------------- to Own Trust Units or Other Property and to Engage in Other Business. ---------------------------------------------------------------------------- Any Trustee, employee, independent contractor or agent may own, hold and dispose of 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 it were not a Trustee, employee, independent contractor or agent. Any 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 Trust. Subject to the provisions of Article V hereof, any Trustee, employee, independent contractor or agent of the 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 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 Trustee. None of these activities in and of themselves shall be deemed to conflict with its duties as Trustee, employee, independent contractor or agent. 7.7 Contribution Back. In the event any ------------------ amount of Trust Assets released to a party under this Agreement is invalidated, declared to be fraudulent or preferential or must otherwise be restored or returned by the 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 Trust 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 Trustee may request to restore the status quo ante. ARTICLE VIII PROTECTION OF PERSONS DEALING WITH THE TRUSTEE 8.1 Action by Trustee. All action required or ----------------- permitted to be taken by the Trustee, in its capacity as Trustee, shall be taken by a written vote, resolution, or other writing signed by the Trustee then serving. 8.2 Reliance on Statements by the Trustee. ------------------------------------- Any Person dealing with the Trustee shall be fully protected in relying upon the Trustee's certificate or instrument signed by the Trustee that it has authority to take any action under this Trust. ARTICLE IX COMPENSATION OF TRUSTEE 9.1 Amount of Compensation. The ------------------------ compensation of the 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 Trustee and the Beneficiaries holding Trust Units representing at least a majority of the aggregate Beneficial Interests. Schedule A shall apply only to -------- - the initial Trustee and, in the event a successor to the initial 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 Trustee shall constitute an amendment of this Agreement. 9.2 Dates of Payment. The compensation payable ---------------- to the 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 Trustee may determine. 9.3 Expenses. The Trustee shall be reimbursed from the -------- 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 and other persons retained by the Trustee or the Manager pursuant to the terms of this Agreement. ARTICLE X THE TRUSTEE AND SUCCESSOR TRUSTEE 10.1 Number and Qualification of Trustees. ---------------------------------------- Subject to the provisions of Section 10.3 relating to the period pending the appointment of a successor Trustee, there shall be one Trustee of this Trust, which shall be a citizen and resident of or a corporation or other entity which is incorporated or formed 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 Trustees may be increased or decreased from time to time by the Trustee. If any corporate Trustee shall ever change its name, or shall reorganize or reincorporate, or shall merge with or into or consolidate with any other corporation or entity, bank or trust company, such corporate Trustee shall be deemed to be a continuing entity and shall continue to act as a Trustee hereunder with the same liabilities, duties, powers, titles, discretions and privileges as are herein specified for a Trustee. 10.2 Resignation and Removal. Any ------------------------- Trustee may resign and be discharged from the Trust hereby created by giving written notice thereof to any remaining Trustee or Trustees or by giving written notice to the Beneficiaries holding Beneficial Interests representing an aggregate of at least a majority of the total Beneficial Interests. Such resignation shall become effective on the day specified in such notice or upon the appointment of such Trustee's successor and such successor's acceptance of such appointment, whichever is earlier. Any 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 Trust. All obligations of the Trustee hereunder shall cease and terminate on the effective date of its resignation and its sole responsibility thereafter shall be to hold the Trust Assets for a period of thirty (30) calendar days following the effective date of resignation, at which time, if a successor 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 Trustee, the resigning Trustee shall deliver the Trust Assets to the successor Trustee. If a successor Trustee shall not have been appointed within a thirty (30) day period from the predecessor Trustee's resignation, for any reason whatsoever, the resigning Trustee shall deliver the Trust Assets to a court of competent jurisdiction in the county in which the Trust Assets are there being held and give written notice of the same to the parties hereto. The resigning 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 out of the Trust Assets for any expenses incurred in connection with the transfer of the Trust Assets pursuant to and in accordance with the provisions of this section. 10.3 Appointment of Successor. Should ------------------------ at any time a Trustee resign or be removed, die, become mentally incompetent or incapable of action (as determined by the Beneficiaries holding Trust Units representing an aggregate of at least a majority of the total Beneficial Interests in the Trust), or be adjudged bankrupt or insolvent, unless any remaining Trustees shall decrease the number of Trustees of the Trust pursuant to Section 10.1 hereof, a vacancy shall be deemed to exist and a successor shall be appointed by any remaining Trustees. If such a vacancy is not filled by any remaining Trustees within ninety (90) days, the remaining 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 Trustee by Beneficiaries holding Trust Units representing an aggregate of at least a majority of the total Beneficial Interests in the Trust. Pending the appointment of a successor Trustee, the remaining Trustee or Trustees then serving may take any action in the manner set forth in Section 8.1. 10.4 Acceptance of Appointment by Successor Trustee. ----------------------------------------------- Any successor Trustee appointed hereunder shall execute an instrument accepting such appointment hereunder and shall deliver one counterpart thereof to each of the other Trustees and, in case of a resignation, to the resigning Trustee. Thereupon such successor 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 Trust hereunder with like effect as if originally named therein; but the resigning Trustee shall nevertheless, when requested in writing by the successor Trustee or by the remaining Trustees, execute and deliver an instrument or instruments conveying and transferring to such successor Trustee upon the trust herein expressed, all the estates, properties, rights, powers and trusts of such resigning Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by it hereunder. 10.5 Bonds. No bond shall be required of the original ----- Trustee hereunder, and no bond shall be required of any successor 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 Trustee, the appointment of a successor 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 Trustees upon or under or with respect to any Trust Assets or the agreements relating to or forming part of any Trust Assets, and the Beneficiaries do hereby waive any such right. 11.3 Requirement of Undertaking. ---------------------------- The 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 Trustee for any action taken or omitted by it as 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 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 Trustee. 12.2 Meeting Called by Trustee. The -------------------------- Trustee may at any time call a meeting of the Beneficiaries of the 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 Trustees) as the Trustee shall determine. Written notice of every meeting of the Beneficiaries shall be given by the 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 Trust. 12.3 Meeting Called on Request of Beneficiaries. ------------------------------------------- Within thirty (30) days after written request to the Trustee by Beneficiaries holding Trust Units representing at least a majority of the aggregate Beneficial Interests to call a meeting of all of the Beneficiaries, which written request shall specify in reasonable detail the action proposed to be taken, the Trustee shall proceed under the provisions of Section 12.2 to call a meeting of the Beneficiaries, and if the Trustee fails to call such meeting within such thirty (30) day period then such meeting may be called by Beneficiaries holding Trust Units representing at least a majority of the aggregate Beneficial Interests. 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 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 Trust Units in the 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, the ------ presence of Beneficiaries holding Trust Units representing at least a majority of the aggregate Beneficial Interests 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 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 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 Trustee --------------------- shall appoint the Chairman and the Secretary of the meeting. The vote upon any proposal 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 proposal and shall make and file with the Secretary of the meeting its verified written report. 12.8 Record of Meeting. A record of the ------------------- proceedings of each meeting of Beneficiaries of the 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 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 Trust Units representing at least a majority of the aggregate Beneficial Interests, 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 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 Trust; provided, however, that no such amendment shall permit the 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 Trust Assets 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 Trust Units or to comply with applicable laws, including tax laws, so long as such amendment has been approved by the Trustee. 13.2 Notice and Effect of Amendment. ---------------------------------- Promptly after the execution by the Trustee of any such declaration of amendment, the Trustee shall give notice of the substance of such amendment to the Beneficiaries or, in lieu thereof, the Trustee may send a copy of the amendment to each Beneficiary. Upon the execution of any such declaration of amendment by the 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 Trustee and the Beneficiaries under this Agreement with respect to the 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 Trustee's Declining to Execute Documents. ---------------------------------------- If, in the reasonable opinion of the 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 Trustee under this Agreement, the 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 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 Trustee and shall be available at all times during regular business hours for inspection by any Beneficiary or his duly authorized representative. The Trustee shall file or record any amendment of this Agreement in the same places where the original Agreement is filed or recorded. The Trustee shall file or record any instrument which relates to any change in the office of the Trustee in the same places where the original Agreement is filed or recorded. 14.2 Intention of Parties to Establish 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 ---------------------------------------------------------------- Partnership 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 Partnership Units. 14.4 Laws as to Construction. The -------------------------- Trustee, and the Beneficiaries (by their acceptance of any distributions made to them pursuant to this Agreement), consent and agree that this 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 California 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 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 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 ------- 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 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, facsimile transmission or telex to the Trustee at the following address or at such other addresses as shall be specified by the Trustee: If to the Trustee: PLM Financial Services, Inc. 253 3rd Street South, Suite 200 St. Petersburg, FL 33716 Fax: (727) 803-8200 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. [The remainder of this page is left intentionally blank.] IN WITNESS WHEREOF, the General Partner of the Grantor has caused this Agreement to be executed by an authorized officer, and the Trustee hereunder has executed this Agreement, as Trustee and not as an individual, as of the date first set forth herein. GRANTOR: PLM EQUIPMENT GROWTH FUND III By: PLM Financial Services, Inc., its General Partner By: Richard K Brock Its: Chief Financial Officer TRUSTEE: PLM FINANCIAL SERVICES, INC. By: Richard K Brock Its: Chief Financial Officer SCHEDULE A ---------- SCHEDULE OF FEES to act as TRUSTEE, REGISTRAR, TRANSFER AGENT AND DISTRIBUTION AGENT OF THE LIQUIDATING TRUST The Trustee shall receive no compensation for its services hereunder, other than an amount equivalent to the compensation and other payments that the Trustee would have received as General Partner of the Partnership for the same or similar services undertaken by the Trustee hereunder if the General Partner had undertaken such services on behalf of the Partnership. 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, 2002, by and among PLM Equipment Growth Fund III, a California limited partnership (the "Assignor"), and PLM Financial Services, Inc. a Delaware corporation, not in its individual capacity or in its capacity as the general partner of the Assignor, but solely as trustee (the "Trustee") of the PLM Equipment Growth Fund III 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 the Liquidating Trust and engaged the Trustee as trustee to administer the Liquidating Trust pursuant to the terms of a Plan of Liquidation and Dissolution of even date herewith (the "Plan"); and WHEREAS, the Agreement contemplates that the Assignor will place, as of the date hereof and in accordance with the Plan, all of its unliquidated and/or undistributed assets, including but not limited to, cash, equipment and securities, along with certain cash reserves subject to disbursement for the Assignor's contingent liabilities 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) and the acceptance 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 the Assignor may possess in same (together, the "Transferred ----------- Assets"). ACCEPTANCE AND ASSUMPTION --------------------------- The 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 attorneys-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 Trustee 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 PLM EQUIPMENT GROWTH FUND III By: PLM Financial Services, Inc., its general partner By: Richard K Brock Its: Chief Financial Officer TRUSTEE PLM FINANCIAL SERVICES, INC., not in its individual capacity but solely as trustee of the Liquidating Trust By: Richard K Brock Its: Chief Financial Officer EXHIBIT A TRANSFERRED ASSETS ------------------ EQUIPMENT: - --------- - - See attached schedules of equipment and other assets, which are prepared as of the dates set forth thereon, and which will be updated and replaced with final schedules after accounting for transactions, if any, occurring on or prior to December 31, 2002. LITIGATION: - ---------- - - All of Assignors rights with respect to claims and counterclaims against Sahara Airlines Ltd. and any other rights which Assignor may have with respect to any litigation matters or claims relating to the assets of the Assignor transferred hereby. EX-3 5 doc4.txt 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, 2002, by and among PLM Equipment Growth Fund III, a California limited partnership (the "Assignor"), and PLM Financial Services, Inc. a Delaware corporation, not in its individual capacity or in its capacity as the general partner of the Assignor, but solely as trustee (the "Trustee") of the PLM Equipment Growth Fund III 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 the Liquidating Trust and engaged the Trustee as trustee to administer the Liquidating Trust pursuant to the terms of a Plan of Liquidation and Dissolution of even date herewith (the "Plan"); and WHEREAS, the Agreement contemplates that the Assignor will place, as of the date hereof and in accordance with the Plan, all of its unliquidated and/or undistributed assets, including but not limited to, cash, equipment and securities, along with certain cash reserves subject to disbursement for the Assignor's contingent liabilities 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) and the acceptance 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 the Assignor may possess in same (together, the "Transferred ----------- Assets"). ACCEPTANCE AND ASSUMPTION --------------------------- The 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 attorneys-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 Trustee 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 PLM EQUIPMENT GROWTH FUND III By: PLM Financial Services, Inc., its general partner By: Rick Brock Its: Chief Financial Officer TRUSTEE PLM FINANCIAL SERVICES, INC., not in its individual capacity but solely as trustee of the Liquidating Trust By: Rick Brock Its: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----