PLM Equipment Growth Fund VI 10QSB

0000812914-04-000287.txt : 20041115 0000812914-04-000287.hdr.sgml : 20041115 20041112183242 ACCESSION NUMBER: 0000812914-04-000287 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041115 DATE AS OF CHANGE: 20041112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM EQUIPMENT GROWTH FUND VI CENTRAL INDEX KEY: 0000874395 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943135515 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-21806 FILM NUMBER: 041141093 BUSINESS ADDRESS: STREET 1: 200 NYALA FARMS CITY: WESTPORT STATE: CT ZIP: 06880 BUSINESS PHONE: 2033410555 MAIL ADDRESS: STREET 1: 200 NYALA FARMS CITY: WESTPORT STATE: CT ZIP: 06880 10QSB 1 gfviqsbq32004.htm PLM EQUIPMENT GROWTH FUND VI 10QSB PLM Equipment Growth Fund VI 10QSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

FORM 10-QSB

[X]

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2004

[ ]

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 0-21806

_______________________

PLM EQUIPMENT GROWTH FUND VI

(Exact name of registrant as specified in its charter)

California		94-3135515
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

200 Nyala Farms Road
Westport, CT		06880
(Address of principal		(Zip code)
executive offices)

Registrant's telephone number, including area code: (203) 341-0555

_______________________

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 ____

Transitional Small Business Disclosure Format: Yes No X

Aggregate market value of voting stock: N/A

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

CONDENSED BALANCE SHEETS

(in thousands of dollars, except unit amounts)

(unaudited)

	September 30,	December 31,
	2004	2003
Assets

Equipment held for operating leases, at cost	$43,923	65,675
Less accumulated depreciation	(34,746)	(48,220)
Net equipment	9,177	17,455

Cash and cash equivalents	13,789	13,294
Restricted cash	--	410
Accounts receivable, less allowance for doubtful accounts
of $444 in 2004 and $444 in 2003	1,269	1,060
Equity investments in affiliated entities	14,673	9,241
Deferred charges, net of accumulated amortization of
$314 in 2004 and $508 in 2003	225	302
Prepaid expenses and other assets	116	241

Total assets	$39,249	$42,003

Liabilities and partners

Liabilities:
Accounts payable and accrued expenses	$372	$495.00
Due to affiliates	1,357	1,552
Notes payable	11,000	14,000
Total liabilities	12,729	16,047

Commitments and contingencies

Partners
Limited partners (7,730,965 limited partnership units)	26,520	25,956
General Partner	--	--
Total partners	26,520	25,956

Total liabilities and partners	$39,249.00	$42,003.00

See accompanying notes to unaudited condensed financial statements.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

CONDENSED STATEMENTS OF OPERATIONS

(in thousands of dollars, except weighted-average limited partnership unit amounts)

(unaudited)

		For the		Three Months		For the		Nine Months
		Ended		September 30,		Ended		September 30

		2004		2003		2004		2003
Revenues

Lease revenue	$	1,327	$	2,262	$	5,621	$	6,384
Interest and other income		30		12		61		53
Gain on disposition of equipment		210		37		713		108
Loss on disposition of equipment		--		(4		--		(26
Total revenues		1,567		2,307		6,395		6,519

Expenses

Depreciation and amortization		478		1,231		2,496		3,620
Repairs and maintenance		117		330		925		847
Insurance expense		49		67		183		192
Management fees to affiliate		53		90		239		274
Interest expense		153		158		475		472
General and administrative expenses
to affiliates		115		95		385		165
Other general and administrative expenses		246		263		875		904
Impairment loss on equipment		--		201		--		278
Provision for (recovery of) bad debts		15		(14)		6		19
Total expenses		1,226		2,421		5,584		6,771

Equity in net loss of equity investments		(275)		(26)		(247)		(495)

Net income (loss)	$	66	$	(140)	$	564	$	(747)

Partners' share of net income (loss)

Limited partners	$	66	$	(140)	$	564	$	(747)
General Partner		--		--		--		--

Total	$	66	$	(140)	$	564	$	(747)

Limited partners' net income (loss) per
weighted-average limited partnership unit	$	0.01	$	(0.02)	$	0.07	$	(0.10)

See accompanying notes to unaudited condensed financial statements.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

CONDENSED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

For the Period from December 31, 2003 to September 30, 2004

(in thousands of dollars)

(unaudited)

		Limited	General
		Partners	Partner		Total


Partners' capital as of December 31, 2003	$	25,956	$ --	$	25,956

Net income		564			564

Partners' capital as of September 30, 2004	$	26,520	$ --	$	26,520

See accompanying notes to unaudited condensed financial statements.

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)
	For the Nine Months Ended September 30,
				2004				2003
Operating activities

Net income (loss)		$	564			$	(747		)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization			2,496				3,620
Amortization of debt issuance costs			83				94
Provision for bad debts			6				19
Impairment loss on equipment			--				278
Net gain on disposition of equipment			(713		)		(82		)
Equity in net loss from equity investments			247				495
Distribution from equity investments			756				1,741
Changes in operating assets and liabilities:
Accounts receivable			(215		)		(72		)
Prepaid expenses and other assets			125				111
Accounts payable and accrued expenses			(123		)		(224		)
Due to affiliates			(195		)		322
Lessee deposits			--				3
Net cash provided by operating activities			3,031				5,558

Investing activities

Payments for purchase of equipment and capitalized repairs			(5,969		)		(4,100		)
Investment in equity investments			(19,499		)		--
Non-operating distributions from equity investments			24,513				--
Payments of acquisition fees to affiliate			(269		)		(184		)
Payments of lease negotiation fees to affiliate			(60		)		(41		)
Proceeds from disposition of equipment			1,338				247
Net cash provided by (used in) investing activities			54				(4,078		)

Financing activities

Payments of notes payable			(3,000		)		(3,000		)
Decrease in restricted cash			410				--
Net cash used in financing activities			(2,590		)		(3,000		)

Net increase (decrease) in cash and cash equivalents			495				(1,520		)
Cash and cash equivalents at beginning of period			13,294				8,286
Cash and cash equivalents at end of period		$	13,789			$	6,766

Supplemental information

Interest paid		$	401			$	529
Non-cash transfer of equipment at net book value from
the Partnership to an equity investment		$	11,449			$	--

See accompanying notes to unaudited condensed financial statements.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

1. Basis of Presentation

The unaudited financial statements presented herein are prepared in conformity with generally accepted accounting principles in the United States of America and the instructions for preparing Form 10-QSB under Rule 310 of Regulation S-B of the Securities and Exchange Commission. Rule 310 provides that disclosures that would substantially duplicate those contained in the most recent annual report may be omitted from interim financial statements. The accompanying unaudited condensed financial statements have been prepared on that basis and, therefore, should be read in conjunction with the financial statements and notes presented in the 2003 Annual Report (Form 10-KSB) of PLM Equipment Growth Fund VI (the Partnership) on file with the United States Securities and Exchange Commission. Except as disclosed herein, there h ave been no material changes to the information presented in the notes to the 2003 Annual Report in Form 10-KSB.

In the opinion of the management of PLM Financial Services, Inc. (FSI or the General Partner) all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the Partnership’s unaudited condensed balance sheets at September 30, 2004 and December 31, 2003, condensed statements of operations for the three and nine months ended September 30, 2004 and 2003, condensed statements of changes in partners’ capital for the period from December 31, 2003 to September 30, 2004, and the condensed statements of cash flows for the nine months ended September 30, 2004 and 2003 have been made and are reflected.

2. Schedule of Partnership Phases

The Partnership is currently in its investment phase during which the Partnership uses cash generated from operations and proceeds from asset dispositions to purchase additional equipment.

The Partnership may commit its cash flow, surplus cash and equipment disposition proceeds to purchase additional equipment, consistent with the objectives of the Partnership, until December 31, 2004. The Partnership will terminate on December 31, 2011, unless terminated earlier upon sale of all equipment and by certain other events.

3. Reclassifications

Certain amounts previously reported have been reclassified to conform to the 2004 presentation. These reclassifications did not have any effect on total assets, total liabilities, partners’ capital, or net income (loss).

4. Transactions with General Partner and Affiliates

The balance due to affiliates as of September 30, 2004 and December 31, 2003, included $0.1 million due to FSI or its affiliates for management fees and $1.3 million and $1.4 million, respectively, due to equity investments in affiliated entities.

During the nine months ended September 30, 2004, the Partnership purchased $6.0 million in railcars from FSI or its affiliates. The Partnership's cost for the railcars was the lower of FSI's or its affiliates cost or the fair market value at the time of purchase. The Partnership, and three affiliated entities, also formed two investment entities which each purchased two commercial aircraft. The Partnership's net investment in these entities was $2.6 million. In addition, the Partnership transferred 774 owned railcars with a net book value of $11.4 million into another newly formed entity This investment is owned with two affiliated partnerships that also transferred owned railcars into this entity (see Note 6 to the financial statements).

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

4. Transactions with General Partner and Affiliates (continued)

During the nine months ended September 30, 2004 and 2003, FSI or its affiliates were paid or accrued acquisition, lease negotiation, debt placement, and management fees and reimbursed FSI or its affiliates for data processing and administrative expenses. The components of these fees and expenses paid or accrued to FSI or its affiliates were as follows (in thousands of dollars):

		Owned Equipment					Equity Investments
			2004		2003			2004		2003
Acquisition fees	$		269	$	184	$		900	$	--
Lease negotiation fees			60		41			200		--
Debt placement fees			--		--			178		--
Management fees			239		274			179		151
Data processing and administrative
expenses			385		165			59		11

5. Equipment

Owned equipment held for operating leases is stated at cost. The components of owned equipment were as follows (in thousands of dollars):

		September 30,		December 31,
		2004		2003

Marine containers	$	22,557	$	23,381
Aircraft and rotables		15,555		15,987
Trailers		5,150		5,212
Railcars		661		21,095
		43,923		65,675
Less accumulated depreciation		(34,746)		(48,220)
Net equipment	$	9,177	$	17,455

Equipment held for operating leases is stated at cost less depreciation and any reductions to the carrying value.

As of September 30, 2004, all owned equipment in the Partnership’s portfolio was on lease except for the aircraft rotables and eight railcars with a net book value of $0.3 million. As of December 31, 2003, all owned equipment in the Partnership's portfolio was on lease except for a portfolio of aircraft rotables and 218 railcars with an aggregate net book value of $1.3 million.

During the nine months ended September 30, 2004 and 2003, the Partnership purchased railcars for $6.2 million and $4.3 million including acquisition fees of $0.3 million and $0.2 million, respectively.

During the nine months ended September 30, 2004, the Partnership disposed of aircraft rotables, marine containers, railcars and trailers, with an aggregate net book value of $0.6 million for proceeds of $1.3 million. During the nine months ended September 30, 2003, the Partnership disposed of marine containers and railcars, with an aggregate net book value of $0.2 million for proceeds of $0.2 million.

On July 1, 2004, the Partnership transferred 774 owned railcars with an original cost of $22.8 million and a net book value of $11.4 million from its owned equipment portfolio into PLM Railcar Partners, LLC, an equity investment owned with two affiliated entities (see Note 6 to the financial statements).

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

5. Equipment (continued)

During the nine months ended September 30, 2003, the Partnership marketed the aircraft components for re-lease or sale and this indicated to the General Partner that an impairment may exist. The General Partner determined the fair value of the aircraft components based on the valuation given by its independent third party aircraft equipment manager that considered, among other factors, expected income to be earned from the asset, condition of the aircraft components, estimated sales proceeds and holding costs excluding interest. Additionally, during 2003, the Partnership recorded an impairment of $0.1 million to 19 owned railcars with cracks in the seal weld. This indicated that an impairment to these railcars may exist. The General Partner determined that these railcars should be scrapped. The fair value of the rail cars with this defect was determined by using industry expertise.

No reductions were required to the carrying value of the owned equipment during the nine months ended September 30, 2004.

6. Equity Investments in Affiliated Entities

The Partnership owns equipment and other assets jointly with affiliated programs.

Ownership interest is based on the Partnership’s contribution towards the cost of the assets in the equity investments. The Partnership’s investment in equity investments includes acquisition fees, lease negotiation fees, and debt placement fees paid by the Partnership to the General Partner or its affiliates. The Partnership’s equity interest in the net income (loss) of equity investments is reflected net of management fees paid or payable and the amortization of acquisition fees, lease negotiation fees, and debt placement fees.

The tables below set forth 100% of the lease revenues and other income, gain on disposition of equipment, depreciation and amortization expense, interest expense, direct and indirect expenses, impairment loss on equipment, and net income (loss) of the entities in which the Partnership has an interest, and the Partnership‘s proportional share of income (loss) in each entity for the three and nine months ended September 30, 2004 and 2003 (in thousands of dollars):

		Aero	Boeing	PLM
For the three months ended	Lion	California	737-300	Worldwide
September 30, 2004	Partnership1	Trust2	Trust3	Leasing4

Lease revenues and other income	$	2,212	$	27	$	391
Less: Depreciation and amortization expense		279		--		383
Direct expenses		1,231		6		5
Indirect expenses		123		15		26
Net income (loss)	$	579	$	6	$	(23	)

Partnership’s share of net income (loss)	$	311	$	2	$	(11	)	$	(10	)

1	The Partnership owns a 53% interest in the Lion Partnership that owns a product tanker.

2 The Partnership owns a 40% interest in the Aero California Trust that owns two stage III commercial aircraft on a direct finance lease.

3	The Partnership owns a 62% interest in the Boeing 737-300 Trust that owns a stage III commercial aircraft.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

6. Equity Investments in Affiliated Entities (continued)


For the three months ended	PLM Rail	PLM CAL I	PLM CAL II
September 30, 2004 (continued)	Partners LLC5	LLC6	LLC7	Total

Lease revenues and other income	$	1,985		$	380		$	371
Gain on disposition of equipment		62			--			--
Less: Depreciation and amortization expense		1,132			865			864
Interest expense		382			202			202
Direct expenses		465			--			--
Indirect expenses		268			21			21
Net loss	$	(200	)	$	(708	)	$	(716	)

Partnership’s share of net loss	$	(88	)	$	(238	)	$	(241	)	$	(275	)

		Aero	Boeing
For the three months ended	Lion	California	737-300
September 30, 2003	Partnership1	Trust2	Trust3	Total

Lease revenues and other income	$	1,744		$	86	$	465
Less: Depreciation and amortization expense		307			--		515
Direct expenses		1,383			4		4
Indirect expenses		60			26		19
Net (loss) income	$	(6	)	$	56	$	(73	)

Partnership’s share of net income (loss)	$	7		$	22	$	(55	)	$	(26	)

		Aero	Boeing	PLM
For the nine months ended	Lion	California	737-300	Worldwide
September 30, 2004	Partnership1	Trust2	Trust3	Leasing4

Lease revenues and other income	$	4,934	$	114	$	1,171
Less: Depreciation and amortization expense		836		--		1,151
Direct expenses		3,251		21		17
Indirect expenses		278		67		73
Net income (loss)	$	569	$	26	$	(70	)

Partnership’s share of net income (loss)	$	306	$	11	$	(35	)	$	38


For the nine months ended	PLM Rail	PLM CAL I	PLM CAL II
September 30, 2004 (continued)	Partners LLC5	LLC6	LLC7	Total

Lease revenues and other income	$	1,985		$	380		$	371
Gain on disposition of equipment		62			--			--
Less: Depreciation and amortization expense		1,132			865			864
Interest expense		382			202			202
Direct expenses		465			--			--
Indirect expenses		268			21			21
Net loss	$	(200	)	$	(708	)	$	(716	)

Partnership’s share of net loss	$	(88	)	$	(238	)	$	(241	)	$	(247	)

1	The Partnership owns a 53% interest in the Lion Partnership that owns a product tanker.

2 The Partnership owns a 40% interest in the Aero California Trust that owns two stage III commercial aircraft on a direct finance lease.

3	The Partnership owns a 62% interest in the Boeing 737-300 Trust that owns a stage III commercial aircraft.

4	The Partnership owns a 25% interest in PLM Worldwide Leasing Corp.

5	The Partnership owns a 43% interest in PLM Rail Partners, LLC that owns various types of railcars.

6	The Partnership owns a 34% interest in the PLM CAL I LLC that owns two Boeing 737-500 stage III commercial aircraft.

7	The Partnership owns a 34% interest in the PLM CAL II LLC that owns two Boeing 737-500 stage III commercial aircraft.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

6. Equity Investments in Affiliated Entities (continued)

		Aero	Boeing
For the nine months ended	Lion	California	737-300
September 30, 2003	Partnership1	Trust2	Trust3	Total

Lease revenues and other income	$	5,700	$	284	$	1,395
Less: Depreciation and amortization expense		920		63		1,549
Direct expenses		3,740		14		11
Indirect expenses		288		21		83
Impairment loss on equipment		--		--		1,321
Net income (loss)	$	752	$	186	$	(1,569	)

Partnership’s share of net income (loss)	$	393	$	74	$	(962	)	$	(495	)

As of September 30, 2004, all jointly-owned equipment in the Partnership’s equity investment portfolio was on lease except for 83 railcars with a net book value of $0.4 million. As of December 31, 2003, all jointly-owned equipment in the Partnership’s equity investment portfolio was on lease.

On July 1, 2004, the Partnership transferred 774 owned railcars with a net book value of $11.4 million into a newly formed equity investment PLM Rail Partners, LLC (PLM Rail Partners) which is jointly owned with two affiliated partnerships. The Partnership owns a 43.3% interest in PLM Rail Partners. PLM Rail Partners borrowed $25.3 million. The loan is non-recourse to the Partnership and is collateralized by the railcars and future lease payments. During July 2004, PLM Rail Partners distributed $9.9 million to the Partnership from the proceeds of this loan. The Partnership intends to purchase additional equipment with these proceeds.

During the nine months ended September 30, 2004, the Partnership, with three affiliated entities, formed two new entities, PLM CAL I LLC (CAL I) and PLM CAL II LLC (CAL II). The Partnership contributed a total of $19.4 million to these entities and owns a 33.7% interest in CAL I and CAL II. CAL I and CAL II each own two Boeing 737-500 stage III commercial aircraft. CAL I and CAL II each assumed two loans totaling $25.7 million that bear an interest rate of 7.46% and 7.42%. The loans are non-recourse to the Partnership. The loans are collateralized by the aircraft and future lease payments. CAL I and CAL II distributed a total of $14.6 million as a non-operating cash distribution to the Partnership during the third quarter of 2004.

The Partnership's proportional share of acquisition, lease negotiation and debt placement fees paid by CAL I and CAL II to an affiliate of the General Partner totaled $1.3 million.

PLM Rail Partners, CAL I and CAL II are accounted for using the equity method.

During the nine months ended September 30, 2003 the General Partner recorded an impairment of $1.3 million to a Boeing 737-300 commercial aircraft. Declining fair values of aircraft similar to the one owned by the equity investment, indicated to the General Partner that an impairment to this aircraft may exist.

1	The Partnership owns a 53% interest in the Lion Partnership that owns a product tanker.

2 The Partnership owns a 40% interest in the Aero California Trust that owns two stage III commercial aircraft on a direct finance lease.

3	The Partnership owns a 62% interest in the Boeing 737-300 Trust that owns a stage III commercial aircraft.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

6. Equity Investments in Affiliated Entities (continued)

The General Partner determined the fair value of the aircraft based on the valuation given by its independent third party aircraft equipment manager that considered, among other factors, expected income to be earned from the asset, condition of the aircraft, estimated sales proceeds and holding costs excluding interest. No reductions were required to the carrying value of jointly-owned equipment during the nine months ended September 30, 2004.

7. Operating Segments

The Partnership operates in five primary operating segments: marine vessel leasing, aircraft leasing, railcar leasing, trailer leasing and marine container leasing. Each equipment leasing segment primarily engages in short-term to mid-term operating leases to a variety of customers.

The following tables present a summary of the operating segments (in thousands of dollars):

		Marine								Marine
For the three months ended		Vessel		Aircraft		Railcar		Trailer		Container
September 30, 2004		Leasing		Leasing		Leasing		Leasing		Leasing		Other1		Total

Revenues
Lease revenue	$	--	$	307	$	(10)	$	208	$	822	$	--	$	1,327
Interest income and other income		--		--		14		2		--		14		30
Gain on disposition of equipment		--		--		135		--		75		--		210
Total revenues		--		307		139		210		897		14		1,567

Expenses
Depreciation and amortization		--		--		12		72		393		1		478
Operations support		--		--		(44)		163		14		33		166
Management fees to affiliate		--		4		10		8		31		--		53
Interest expense		--		--		--		--		--		153		153
General and administrative expenses		--		14		205		--		--		142		361
Provision for (recovery of) bad debts		--		--		16		(1)		--		--		15
Total expenses		--		18		199		242		438		329		1,226
Equity in net income (loss) of equity
investments		311		(498)		(88)		--		--		--		(275)
Net income (loss)	$	311	$	(209)	$	(148)	$	(32)	$	459	$	(315)	$	66
Total assets as of September 30, 2004	$	3450	$	10,003	$	2,179	$	542	$	9,042	$	14,033	$	39,249
Investments in equity investments	$	--	$	19,358	$	141	$	--	$	--	$	--	$	19,499
Non-cash transfer of assets into an
equity investment	$	--	$	--	$	11,449	$	--	$	--	$	--	$	11,449

Includes certain assets not identifiable to a specific segment such as cash, certain deferred charges and prepaid expenses. Also includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and certain amortization, general and administrative and operations support expenses.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

7. Operating Segments (continued)

Marine

For the three months ended

Vessel

Aircraft

Railcar

Trailer

Container

September 30, 2003

Leasing

Other¹

Total

Revenues
Lease revenue	$	--	$	518		$	855		$	174		$	715	$	--		$	2,262
Interest income and other income		--		--			--			--			--		12			12
(Loss) gain on disposition of equipment		--		--			(4	)		--			37		--			33
Total revenues		--		518			851			174			752		12			2,307

Expenses
Depreciation and amortization		--		--			666			72			490		3			1,231
Operations support		--		--			294			68			16		19			397
Management fees to affiliate		--		12			45			6			27		--			90
Interest expense		--		--			--			--			--		158			158
General and administrative expenses		--		11			111			46			--		190			358
Impairment loss on equipment				140			61			--			--		--			201
Recovery of bad debts		--		--			(14	)		--			--		--			(14	)
Total expenses		--		163			1,163			192			533		370			2,421
Equity in net income (loss) of equity
investments		7		(33	)		--			--			--		--			(26	)
Net income (loss)	$	7	$	322		$	(312	)	$	(18	)	$	219	$	(358	)	$	(140	)

Marine

For the nine months ended

Vessel

Aircraft

Railcar

Trailer

Container

September 30, 2004

Leasing

Other¹

Total

Revenues
Lease revenue	$	--	$	939		$	1,841		$	635		$	2,206	$	--		$	5,621
Interest income and other		--		--			14			2			--		45			61
Gain on disposition of equipment		--		--			509			3			201		--			713
Total revenues		--		939			2,364			640			2,407		45			6,395

Expenses
Depreciation and amortization		--		--			1,032			217			1,241		6			2,496
Operations support		--		--			520			449			44		95			1,108
Management fees to affiliate		--		15			117			24			83		--			239
Interest expense		--		--			--			--			--		475			475
General and administrative expenses		2		41			559			29			--		629			1,260
Provision for (recovery of) bad debts		--		--			7			(1	)		--		--			6
Total expenses		2		56			2,235			718			1,368		1,205			5,584
Equity in net income (loss) of equity
investments		306		(465	)		(88	)		--			--		--			(247	)
Net income (loss)	$	306	$	418		$	41		$	(78	)	$	1,039	$	(1,160	)	$	564
Equipment purchases and
capitalized repairs	$	--	$	--		$	5,969		$	--		$	--	$	--		$	5,969
Acquisition fees to affiliate	$	--	$	--		$	269		$	--		$	--	$	--		$	269
Investments in equity investments	$	--	$	19,358		$	141		$	--		$	--	$	--		$	19,499
Non-cash transfer of assets into an
equity investment	$	--	$	--		$	11,449		$	--		$	--	$	--		$	11,449

1 Includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and certain amortization, general and administrative and operations support expenses.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

7. Operating Segments (continued)

Marine

For the nine months ended

Vessel

Aircraft

Railcar

Trailer

Container

September 30, 2003

Leasing

Other¹

Total

Revenues
Lease revenue	$	--	$	1,174		$	2,522		$	473		$	2,215	$	--		$	6,384
Interest income and other income		--		5			--			--			--		48			53
(Loss) gain on disposition of equipment		--		--			(26	)		--			108		--			82
Total revenues		--		1,179			2,496			473			2,323		48			6,519

Expenses
Depreciation and amortization		--		36			1,821			218			1,538		7			3,620
Operations support		--		(1	)		686			259			39		56			1,039
Management fees to affiliate		--		39			134			18			83		--			274
Interest expense		--		--			--			--			--		472			472
General and administrative expenses		--		101			237			117			--		614			1,069
Impairment loss on equipment		--		217			61			--			--		--			278
Provision for bad debts		--		--			19			--			--		--			19
Total expenses		--		392			2,958			612			1,660		1,149			6,771
Equity in net income (loss) of equity
investments		393		(888	)		--			--			--		--			(495	)
Net income (loss)	$	393	$	(101	)	$	(462	)	$	(139	)	$	663	$	(1,101	)	$	(747	)
Equipment purchases and
capitalized repairs	$	--	$	--		$	4,100		$	--		$	--	$	--		$	4,100
Acquisition fees to affiliate	$	--	$	--		$	184		$	--		$	--	$	--		$	184

8. Net Income (Loss) Per Weighted-Average Limited Partnership Unit

Net income (loss) per weighted-average limited partnership unit was computed by dividing net income or loss attributable to limited partners by the weighted-average number of limited partnership units deemed outstanding during the period. The weighted-average number of limited partnership units deemed outstanding during the three and nine months ended September 30, 2004 and 2003 was 7,730,965.

9. Accounts Receivable

Accounts receivable represent balances due from current or former lessees for unpaid balances incurred from leasing Partnership owned equipment. The components of accounts receivable were as follows (in thousands of dollars):

		September 30,		December 31,
		2004		2003

Trade accounts receivable	$	1,713	$	1,504
Allowance for doubtful accounts		(444)		(444)
	$	1,269	$	1,060

10. Debt

The Partnership is a participant in a warehouse credit facility. In the third quarter of 2004, this facility was amended to increase the amount available to be borrowed under the facility from $7.5 million to $10.0 million and to remove PLM Equipment Growth Fund V as an eligible borrower. The warehouse credit facility is scheduled to expire on December 31, 2004 with all advances due no later than December 31, 2004. As of September 30, 2004 and December 31, 2003, the Partnership had no borrowings outstanding under this facility. (see Note 13 to the financial statements)

1 Includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and certain amortization, general and administrative and operations support expenses.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

10. Debt (continued)

The Partnership made the regularly scheduled principal payments totaling $3.0 million to the lender of the notes payable during the nine months ended September 30, 2004.

11. Commitments and Contingencies

PLM Transportation Equipment Corp. (TEC), an affiliate of the General Partner, arranged for the lease or purchase of up to 1,050 railcars with a delivery date between 2002 and 2004. The commitment requires a minimum of 30% of the railcars delivered under the arrangement be purchased and the remaining 70% of the railcars may be leased or purchased. As of September 30, 2004, TEC or an affiliated program have purchased 531 railcars, at a cost of $38.5 million, and have leased 494 railcars, exceeding the minimum purchase requirement under this commitment. The remaining 25 railcars to be purchased or leased under this commitment with a cost of $1.8 million, will be delivered in 2004 and may be purchased or leased by TEC, the Partnership, an affiliated program, or an unaffiliated third party. While FSI has not determined w hich managed program will buy these railcars, it is possible that they will be purchased by the Partnership.

In the fourth quarter of 2003 and the second quarter of 2004, FSI exercised options under the above agreement to purchase or lease a total of 460 additional railcars which will be delivered in the fourth quarter of 2004 and in 2005. The commitment requires that a minimum of 30% of the total railcars to be delivered under the original agreement and the option be purchased and the remaining railcars may be leased or purchased. If purchased, the total cost for the 453 railcars is $32.3 million. TEC, the Partnership, an affiliated programs, or unaffiliated third party may purchase or lease these railcars. While FSI has not determined which managed program will buy these railcars, it is possible that they will be purchased by the Partnership.

As of September 30, 2004, TEC is not required to purchase any of the remaining railcars under the commitment to meet its overall requirement that 30% of the total commitment be purchased.

During the third quarter of 2004, the General Partner committed to purchase 125 general service (GS) tank railcars to be delivered in the third quarter of 2005. The total cost of the 125 GS tank railcars is expected to be $8.9 million subject to adjustments for the price of steel. TEC, the Partnership, or an affiliated program may purchase these railcars. While FSI has not determined which managed program will buy these railcars, it is possible that they will be purchased by the Partnership.

At September 30, 2004, railcars with an original equipment cost of $13.0 million were owned by FSI and its affiliate, some of which were purchased from the above transactions. While FSI has neither determined if a Program Affiliate will purchase these railcars nor the timing of any purchases, it is possible the Partnership may purchase some of these railcars.

Litigation

On December 31, 2003 and during 2004, in the Court of Common Pleas for Williamsburg County, South Carolina, actions have been filed by Harold H. Collins, Dianne Collins his wife, and Rickey Thomas, Sr. against South Carolina Central Railroad Company, Inc., CSX Transportation, Inc., TradeMark Nitrogen, Inc. and PLM Investment Management, Inc. The actions involve a chemical spill from a railcar owned by the Partnership. All three law suits claim permanent injuries and alleges negligence on the part of all four defendants in their duty to exercise reasonable care in the inspection, maintenance and repair of the railcar. The complaints do not allege a specific amount of damages. The General Partner expects that these actions will be amended at some point and that the Partnership will also be named as a defendant.

The attorney for these plaintiffs states that he also represents a number of additional potential plaintiffs. Published reports indicate that several nearby residents were evacuated. While no additional actions have been served as of this time, the potential exists for additional claims to be filed.

PLM EQUIPMENT GROWTH FUND VI

(A Limited Partnership)

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

Litigation (continued)

The General Partner believes that the actions will not have a material effect on the financial condition of the Partnership, are completely without merit and will vigorously defend against the actions.

The Partnership is involved as plaintiff or defendant in various legal actions incidental to its business. Management does not believe that any of these actions will be material to the financial condition or results of operations of the Partnership.

12. Recent Accounting Pronouncements

In January 2003, Financial Accounting Standards Board issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). FIN 46 requires the Partnership to evaluate all existing arrangements to identify situations where the Partnership has a “variable interest,” commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a “variable interest entity,” commonly a thinly capitalized entity, and further determine when such variable interest requires the Partnership to consolidate the variable interest entities’ financial statements with its own. For existing entities, the Partnership is required to perform this assessment by December 31, 2004 and consolidate any variable interest entities for which the Partnership will absorb a m ajority of the entities’ expected losses or receive a majority of the expected residual gains. The General Partner is still in the process of evaluating its impact and has not completed its analysis or concluded on the impact that FIN 46 will have on the Partnership.

For newly formed entities, FIN 46 is effective. FIN 46 did not impact the accounting for new entities formed in 2004.

13. Subsequent Event

On October 20, 2004, the $10.0 million warehouse credit facility was amended and Rail Investors II was added as a co-borrower to the facility. Rail Investors II is controlled by Gary Engle, the President of MILPI Holdings, the parent company of the General Partner. Rail Investors II borrowings may not exceed $5.0 million under this facility.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(I) RESULTS OF OPERATIONS

Comparison of PLM Equipment Growth Fund VI’s (the Partnership’s) Operating Results for the Three Months Ended September 30, 2004 and 2003

(A) Owned Equipment Operations

Lease revenues less direct expenses (defined as repairs and maintenance and asset-specific insurance expenses) on owned equipment decreased during the three months ended September 30, 2004, compared to the same period of 2003. Gains or losses from the disposition of equipment, interest and other income, and certain expenses such as management fees to affiliate, depreciation and amortization, impairment loss on equipment and general and administrative expenses relating to the operating segments (see Note 7 to the unaudited condensed financial statements), are not included in the owned equipment operation discussion because these expenses are indirect in nature and not a result of operations, but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expenses by segment ( in thousands of dollars):

		For the Three Months
		Ended September 30,
		2004			2003
Marine containers	$		808	$		699
Aircraft and rotables			307			518
Trailers			45			106
Railcars			34			561

Marine containers: Marine container lease revenues and direct expenses were $0.8 million and $14,000, respectively, for the three months ended September 30, 2004, compared to $0.7 million and $16,000, respectively, during the same period of 2003. The increase in lease revenues of $0.1 million during the three months ended September 30, 2004 was due to higher utilization of the Partnership's marine containers.

Aircraft and rotables: Aircraft and rotables lease revenues were $0.3 million for the three months ended September 30, 2004, compared to $0.5 million during the same period of 2003. The decrease in aircraft and rotables lease revenues of $0.2 million was due to the one time receipt of a termination fee from a former lessee of the aircraft components during the third quarter of 2003. A similar event did not occur during the same period of 2004. The Partnership's wholly owned aircraft is on lease through July 2008 and as such, lease revenues are expected to remain at their current level through the end of the lease.

Trailers: Trailer lease revenues and direct expenses were $0.2 million and $0.2 million, respectively, for the three months ended September 30, 2004, compared to $0.2 million and $0.1 million, respectively, during the same period of 2003. The increase in trailer direct expenses is due to an increase in repairs and maintenance expense compared to the same period of 2003.

Railcars: Railcar lease revenues and direct expenses were $(10,000) and $(44,000), respectively, for the three months ended September 30, 2004, compared to $0.9 million and $0.3 million, respectively, during the same period of 2003. The primary reason contribution from railcars decreased $0.5 million during the third quarter 2004 compared to the same period 2003 was the Partnership transferred most of its owned railcar portfolio into an equity investment on July 1, 2004.

(B) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $1.1 million for the three months ended September 30, 2004 decreased from $2.0 million for the same period in 2003. Significant variances are explained as follows:

(i) A $0.8 million decrease in depreciation and amortization expenses from 2003 levels reflects the decrease of $0.7 caused by the transfer of most of the Partnership's owned railcar portfolio into an equity investment during the third quarter of 2004 and a $0.1 million decrease caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned;

(ii) A $0.2 million decrease in the impairment loss on equipment resulted from the Partnership reducing the carrying value of the owned aircraft rotables $0.1 million and owned railcars $0.1 million to their estimated fair value during the three months ended September 30, 2003. No impairment of equipment was required during the same period of 2004; and

(iii) A decrease of $37,000 in management fees to affiliates was primarily the result of lower lease revenues caused by the transfer of owned railcars to an equity investment during the three months ended September 30, 2004.

The gain on the disposition of owned equipment for the three months ended September 30, 2004 totaled $0.2 million, and resulted from the disposition of aircraft rotables, marine containers, railcars and a trailer, with an aggregate net book value of $0.1 million for proceeds of $0.4 million. The net gain on the disposition of owned equipment for the third quarter of 2003 totaled $33,000, and resulted from the sale of marine containers and railcars, with an aggregate net book value of $40,000 for proceeds of $0.1 million.

(D) Equity in Net (Loss) Income of Equity Investments

Equity in net (loss) income of equity investments generally represents the Partnership's share of the net income or loss generated from the operation of jointly owned entities accounted for under the equity method of accounting. The following table presents equity in net income (loss) by equipment type (in thousands of dollars):

			For the Three Months
			Ended September 30,
		2004			2003
Marine vessel	$	311		$	7
Railcars		(88)			--
Aircraft		(498)			(33)
Equity in net loss of equity investments	$	(275)		$	(26)

The following equity investment discussion by equipment type is based on the Partnership's proportional share of revenues, depreciation expense, direct expenses, interest expense, and administrative expenses in the equity investments:

Marine vessel: As of September 30, 2004 and 2003, the Partnership owned an interest in an entity that owned a marine vessel. During the three months ended September 30, 2004, lease revenues of $1.2 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $0.9 million. During the same period of 2003, lease revenues of $0.9 million were offset by depreciation expense, direct expenses, and administrative expenses of $0.9 million.

Marine vessel lease revenues increased $0.2 million during the three months ended September 30, 2004 compared to the same period 2003 due to the marine vessel earning a higher lease rate compared to the same period 2003.

Direct expenses decreased $0.1 million during the three months ended September 30, 2004 compared to 2003 due to lower operation expenses.

Railcars: As of September 30, 2004, the Partnership owned an interest in an entity that owned railcars. These railcars were transferred into this entity on July 1, 2004 from the Partnership's owned equipment portfolio. During the three months ended September 30, 2004, lease revenues of $0.9 million were offset by depreciation expense, direct expenses, interest expense and administrative expenses of $1.0 million. The Partnership had no equity investments that owned railcars during the three months ended September 30, 2003.

Aircraft: As of September 30, 2004, the Partnership owned an interest in entities owning two commercial aircraft on a direct finance lease, an interest in an entity owning a Boeing 737-300 commercial aircraft, an interest in two entities each owning two Boeing 737-500 commercial aircraft, and an interest in an entity owning other aircraft related assets. As of September 30, 2003, the Partnership owned an interest in entities owning two commercial aircraft on a direct finance lease, an interest in an entity owning a Boeing 737-300 commercial aircraft, and an interest in an entity owning other aircraft related assets.

During the three months ended September 30, 2004, equipment owning entities generated revenues of $0.5 million which were offset by depreciation expense, direct expenses, interest expense and administrative expenses of $1.0 million. During the same period of 2003, entities owning equipment generated revenues of $0.3 million which were offset by depreciation expense, direct expenses and administrative expenses of $0.4 million. During the three months ended September 30, 2004, contribution from an entity owning other aircraft related assets decreased $10,000 compared to 2003.

Aircraft revenues increased $0.3 million due to the Partnership's investment into two entities each owning two Boeing 737-500 commercial aircraft during the three months ended September 30, 2004. This increase was offset by a decrease of $46,000 due to a lower lease rate being earned on the remaining Boeing 737-300 commercial aircraft compared to the same period 2003 and decreased $24,000 due to a lower outstanding principal balance on the finance lease compared to 2003.

Depreciation expense, direct expenses, interest expense and administrative expenses increased $0.6 million during the three months ended September 30, 2004 compared to the same period 2003. Depreciation expense increased $0.6 million caused by the Partnership's investment into two entities each owning two Boeing 737-500 commercial aircraft during the three months ended September 30, 2004. This increase was partially offset by a decrease of $0.1 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned. An additional increase in direct expenses of $0.1 million was caused by interest expense from the non-recourse debt in the two entities that each purchased two aircraft in the third quarter of 2004. Equity investments during the same period of 2003 did not have any debt or interest expense from debt.

(E) Net Income (Loss)

As a result of the foregoing, the Partnership's net income for the three months ended September 30, 2004 was $0.1 million, compared to a net loss of $0.1 million during the same period of 2003. The Partnership's ability to acquire, operate, and liquidate assets, secure leases and re-lease those assets whose leases expire is subject to many factors. Therefore, the Partnership's performance in the third quarter of 2004 is not necessarily indicative of future periods.

Comparison of the Partnership’s Operating Results for the Nine Months Ended September 30, 2004 and 2003

(A) Owned Equipment Operations

Lease revenues less direct expenses on owned equipment decreased during the nine months ended September 30, 2004, compared to the same period of 2003. The following table presents lease revenues less direct expenses by segment (in thousands of dollars):

		For the Nine Months
		Ended September 30,
		2004			2003
Marine containers	$		2,162	$		2,176
Railcars			1,321			1,836
Aircraft and rotables			939			1,175
Trailers			186			214

Marine containers: Marine container lease revenues and direct expenses were $2.2 million and $44,000, respectively, for the nine months ended September 30, 2004, compared to $2.2 million and $39,000, respectively, during the same period of 2003.

Railcars: Railcar lease revenues and direct expenses were $1.8 million and $0.5 million, respectively, for the nine months ended September 30, 2004, compared to $2.5 million and $0.7 million, respectively, during the same period of 2003. Railcar lease revenues decreased $0.9 million due to the transfer of most of the Partnership's owned railcar portfolio into an equity investment during the third quarter of 2004 and decreased $0.2 million due to the sale of railcars that were on lease during the nine months ended September 30, 2003. These decreases were partially off-set by an increase in lease revenues of $0.4 million due the purchase and lease of railcars during 2004 and 2003. Direct expenses decreased $0.2 million during the nine months ended September 30, 2004 due to the transfer of most of the Partnership's owne d railcars into an equity investment during the third quarter of 2004.

Aircraft and rotables: Aircraft and rotables lease revenues were $0.9 million for the nine months ended September 30, 2004, compared to $1.2 million during the same period of 2003. The decrease in aircraft and rotables lease revenues was primarily due to the one time receipt of a termination fee from a former lessee of the aircraft components during 2003. A similar event did not occur in the nine months ended September 30, 2004. The Partnership's wholly owned aircraft is on lease through July 2008 and as such, lease revenues are expected to remain at their current level through the end of the current lease.

Trailers: Trailer lease revenues and direct expenses were $0.6 million and $0.4 million, respectively, for the nine months ended September 30, 2004, compared to $0.5 million and $0.3 million, respectively, during the same period of 2003. Trailer lease revenues increased $0.2 million due to earning a higher lease rate compared to the same period of 2003. Trailer direct expenses increased $0.2 million due to an increase in repairs and maintenance.

(B) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $4.6 million for the nine months ended September 30, 2004 decreased from $5.8 million for the same period in 2003. Significant variances are explained as follows:

(i) A $1.1 million decrease in depreciation and amortization expenses from 2003 levels reflects the decrease of $0.7 million caused by the transfer of most of the Partnership's owned railcar portfolio into an equity investment, a decrease of $0.4 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned and a $0.2 decrease caused by the sale of railcars during 2004 and 2003. These decreases were partially offset by an increase of $0.2 million caused by the purchase of railcars during 2004 and 2003;

(ii) A $0.3 million decrease in the impairment loss on equipment resulted from the Partnership reducing the carrying value of the owned aircraft rotables $0.2 million and owned railcars $0.1 million to their estimated fair value during the nine months ended September 30, 2003. No impairment of equipment was required during the same period of 2004; and

(iii) A $0.2 million increase in general and administrative expenses during the nine months ended September 30, 2004 was primarily due to additional professional costs associated with equipment acquisitions.

The gain on the disposition of owned equipment for the nine months ended September 30, 2004 totaled $0.7 million, and resulted from the disposition of aircraft rotables, marine containers, railcars and trailers, with an aggregate net book value of $0.6 million for proceeds of $1.3 million. The net gain on the disposition of owned equipment for the nine months ended September 30, 2003 totaled $0.1 million, and resulted from the disposition of marine containers and railcars, with an aggregate net book value of $0.2 million for proceeds of $0.2 million.

(D) Equity in Net Income (Loss) of Equity Investments

Equity in net income (loss) of equity investments generally represents the Partnership's share of the net income or loss generated from the operation of jointly owned entities accounted for under the equity method of accounting. The following table presents equity in net income (loss) by equipment type (in thousands of dollars):

			For the Nine Months
			Ended September 30,
		2004			2003
Marine vessel	$	306		$	393
Railcars		(88)			--
Aircraft		(465)			(888)
Equity in net loss of equity investments	$	(247)		$	(495)

The following equity investment discussion by equipment type is based on the Partnership's proportional share of revenues, depreciation expense, direct expenses, interest expense, administrative expenses, and impairment loss on equipment in the equity investments:

Marine vessel: As of September 30, 2004 and 2003, the Partnership owned an interest in an entity that owned a marine vessel. During the nine months ended September 30, 2004, lease revenues of $2.6 million were partially offset by depreciation expense, direct expenses, and administrative expenses of $2.3 million. During the same period of 2003, lease revenues of $3.0 million were offset by depreciation expense, direct expenses, and administrative expenses of $2.6 million.

Marine vessel lease revenues decreased $0.4 million during the nine months ended September 30, 2004 compared to the same period 2003. Lease revenues decreased approximately $0.3 million during the nine months ended September 30, 2004 due to the marine vessel being off-hire while in dry-dock approximately 30 days in 2004 (no similar event occurred in 2003) and decreased $0.1 million due to earning a lower lease rate during the early months of 2004 compared to 2003.

Direct expenses decreased $0.2 million due to lower operation expenses and decreased $0.1 million in the nine months ended September 30, 2004 due to lower repairs and maintenance when compared to 2003.

During the nine months ended September 30, 2004, entities owning equipment generated revenues of $1.0 million which were offset by depreciation expense, direct expenses, interest expense and administrative expenses of $1.5 million. During the same period of 2003, entities owning equipment generated revenues of $1.0 million which were offset by depreciation expense, direct expenses and administrative expenses of $1.0 million and the impairment loss on equipment of $0.8 million. During the nine months ended September 30, 2004, contribution from an entity owning other aircraft related assets increased $38,000 compared to 2003.

Aircraft revenues increased $0.3 million due to the Partnership's investment into two entities in 2004 that each own two Boeing 737-500 commercial aircraft. This increase was partially offset by a decrease in lease revenues of $0.1 million in 2004 due to a lower lease rate being earned on the remaining Boeing 737-300 commercial aircraft and a decrease of $0.1 million due to a lower outstanding principal balance on the finance lease in 2004 compared to 2003.

Depreciation expense, direct expenses and administrative expenses increased $0.5 million during the nine months ended September 30, 2004 compared to the same period 2003. An increase in Depreciation expense of $0.6 million was caused by the Partnership's investment into two entities each owning two Boeing 737-500 commercial aircraft during the third quarter of 2004. This increase was partially offset by a decrease of $0.1 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned. An additional increase in direct expenses of $0.1 million was caused by interest expense from the non-recourse debt that is included as part of the Partnership's investment in two entities each owning two Boeing 737-500 commercial aircraft. Equity investme nts during the same period of 2003 did not have any debt or interest expense from debt.

During the nine months ended September 30, 2003, an impairment loss of $0.8 million resulted from the reduction of the carrying value of a Boeing 737-300 commercial aircraft to its estimated fair value. No impairment was required during the period of 2004.

(E) Net Income (Loss)

As a result of the foregoing, the Partnership's net income for the nine months ended September 30, 2004 was $0.6 million, compared to a net loss of $0.7 million during the same period of 2003. The Partnership's ability to acquire, operate, and liquidate assets, secure leases and re-lease those assets whose leases expire is subject to many factors. Therefore, the Partnership's performance in the nine months ended September 30, 2004 is not necessarily indicative of future periods.

(II) CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires PLM Financial Services, Inc. (FSI or the General Partner) to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, the General Partner reviews these estimates including those related to asset lives and depreciation methods, impairment of long-lived assets, allowance for doubtful accounts, reserves related to legally mandated equipment repairs and contingencies and litigation. These estimates are based on the General Partner's historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The General Partner believes, however, that the estimates, including those for the above-listed items, are reasonable and that actual results will not vary significantly from the estimated amounts.

The General Partner believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Partnership's financial statements:

Revenue recognition: Lease revenues are earned by the Partnership monthly and no significant amounts are calculated on factors other than the passage of time. The Partnership’s leases are accounted for as operating leases and are non-cancelable. Rents received prior to their due dates are deferred.

The Partnership has an equity investment that owns aircraft jointly with other affiliated partnerships. These aircraft are leased on a direct finance lease. The equity investment’s revenues from the direct finance lease are based on a monthly amortization schedule.

Asset lives and depreciation methods: The Partnership’s primary business involves the purchase and subsequent lease of long-lived transportation and related equipment. The General Partner has chosen asset lives that it believes correspond to the economic life of the related asset. Depreciation is computed using the double-declining balance method, taking a full month's depreciation in the month of acquisition based upon estimated useful lives of 15 years for railcars and 12 years for all other equipment. The depreciation method changes to straight line when annual depreciation expense using the straight-line method exceeds that calculated by the double-declining balance method. The General Partner has chosen a depreciation method that it believes matches the benefit to the Partnership from the asset with the ass ociated costs. These judgments have been made based on the General Partner’s expertise in each equipment segment that the Partnership operates. If the asset life and depreciation method chosen does not reduce the book value of the asset to at least the potential future cash flows from the asset to the Partnership, the Partnership would be required to record an impairment loss. Likewise, if the net book value of the asset was less than the economic value, the Partnership may record a gain on sale upon final disposition of the asset.

Impairment of long-lived assets: Whenever circumstances indicate that an impairment may exist, the General Partner reviews the carrying value of its equipment and equity investments in affiliated entities to determine if the carrying value of the assets may not be recoverable, in consideration of the current economic conditions. This requires the General Partner to make estimates related to future cash flows from each asset as well as the determination if the deterioration is temporary or permanent. If these estimates or the related assumptions change in the future, the Partnership may be required to record additional impairment charges.

Allowance for doubtful accounts: The Partnership maintains allowances for doubtful accounts for estimated losses resulting from the inability of the lessees to make the lease payments. These estimates are primarily based on the amount of time that has lapsed since the related payments were due as well as specific knowledge related to the ability of the lessees to make the required payments. If the financial condition of the Partnership’s lessees were to deteriorate, additional allowances could be required that would reduce income. Conversely, if the financial condition of the lessees were to improve or if legal remedies to collect past due amounts were successful, the allowance for doubtful accounts may need to be reduced and income would be increased.

Reserves for repairs: The Partnership accrues for legally required repairs to equipment such as scheduled major maintenance for marine vessels and engine overhauls to aircraft engines over the period prior to the required repairs. The amount that is reserved for is based on the General Partner’s expertise in each equipment segment, the past history of such costs for that specific piece of equipment and discussions with independent, third party equipment brokers. If the amount reserved for is not adequate to cover the cost of such repairs or if the repairs must be performed earlier than the General Partner estimated, the Partnership would incur additional repair and maintenance or equipment operating expenses.

Contingencies and litigation: The Partnership is subject to legal proceedings involving ordinary and routine claims related to its business. The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements. Estimates for losses from litigation are disclosed if considered possible and accrued if considered probable after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Partnership may be required to record additional litigation expense.

(III) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY

For the nine months ended September 30, 2004, the Partnership generated cash from operations of $3.0 million to meet its operating obligations, purchase additional equipment, pay debt and interest, and maintain working capital reserves.

During the nine months ended September 30, 2004, the Partnership purchased railcars for $6.0 million and paid FSI or its affiliates $0.3 million for acquisition fees and $0.1 million for lease negotiation fees. During the nine months ended September 30, 2004, the Partnership disposed of owned equipment and received aggregate proceeds of $1.3 million. The Partnership also transferred most of its owned railcar portfolio with a net book value of $11.4 million into an equity investment.

Restricted cash decreased $0.4 million during the nine months ended September 30, 2004 resulting from the withdrawal of the lender from the Partnership's debt facilities that required these deposits. No such deposits were required from the new lender.

Accounts receivable increased $0.1 million during the nine months ended September 30, 2004 due to the timing of cash receipts and increased $0.1 million due to an annual billing in the third quarter of 2004 for mileage equalization to railcar lessees.

Equity investments in affiliated entities increased $5.4 million during the nine months ended September 30, 2004. The increase of $6.4 million caused by the Partnership's net investment into three newly formed equity investments by the transfer of owned railcars with a net book value of $11.4 million and cash investment of $19.4 million being partially off-set by decreases caused by non-operating cash distributions of $24.5 million, operating cash distributions of $0.8 million from the equity investments to the Partnership and by the loss of $0.2 million recorded by the Partnership for its interests in the equity investments.

Prepaid expenses and other assets decreased $0.1 million during the nine months ended September 30, 2004 due primarily to the refund of a deposit.

Accounts payable decreased $0.1 million during the nine months ended September 30, 2004 due to the timing of payments to vendors.

Due to affiliates decreased $0.2 million during the nine months ended September 30, 2004 due to the payment of $0.4 million in engine reserves due to an equity investment to repair the engines on an aircraft. This decrease was partially offset by an increase of $0.2 million in additional engine reserves deposits during 2004.

The Partnership made its scheduled principal payments totaling $3.0 million on the notes payable during the nine months ended September 30, 2004. The Partnership is scheduled to make a quarterly debt payment of $1.0 million plus interest to the lenders of the notes payable on December 31, 2004. The cash for this payment will come from operations and equipment dispositions. The Partnership may also prepay a portion of the note payable obligation during the first quarter of 2005.

On July 1, 2004, the Partnership transferred 774 owned railcars with a net book value of $11.4 million into a newly formed equity investment PLM Rail Partners, LLC (PLM Rail Partners) which is jointly owned with two affiliated partnerships. The Partnership owns a 43.3% interest in PLM Rail Partners. PLM Rail Partners borrowed $25.3 million. The loan is non-recourse to the Partnership and is collateralized by the railcars and future lease payments. During July 2004, proceeds of $9.9 million from this loan were distributed to the Partnership. The Partnership intends to purchase additional equipment with these proceeds.

The loan amount of $25.3 million consists of two tranches of borrowings, tranche A with an interest rate of 5.65% and tranche B with an interest rate of 7.25%. Tranche A, for $15.7 million, will be repaid with quarterly principal payments of $0.7 million totaling $1.3 million in 2004, $2.6 million in 2005, 2006, 2007, 2008, 2009 and $1.3 million in 2010. Tranche B, for $9.6 million, will be repaid with quarterly payments totaling $0.9 million in 2010, $1.4 million in 2011, a quarterly payment of $0.2 million in March of 2012 and a balloon payment of $7.0 million in June 2012. PLM Rail Partners made the regularly scheduled principal payment of $0.7 million to the lender during the third quarter of 2004.

At the end of each quarter, cash remaining in PLM Rail Partners after payment of all operating expenses, required debt payment, all fees and expenses, will be distributed at the rate of 25% as a prepayment of tranche A loan and 75% to the owners based on their proportional share of ownership.

The Partnership's proportional share of acquisition fees, lease negotiation fees and debt placements fees paid by CAL I and CAL II to an affiliate of the General Partner totaled $1.3 million.

The Partnership is a participant in a $10.0 million warehouse credit facility. The warehouse credit facility is shared by the Partnership, PLM Equipment Growth & Income Fund VII, MILPI Holdings LLC (MILPI), and Railcar Investors II all of which are related parties and is controlled by Gary Engle, the President of MILPI. The facility provides for financing up to 100% of the cost of the equipment and expires on December 31, 2004. Borrowings by the Partnership are collateralized by equipment purchased with the proceeds of the loan. Outstanding borrowings by one borrower reduce the amount available to each of the other borrowers under the facility. Individual borrowings may be outstanding for no more than 270 days, with all advances due no later than December 31, 2004. Interest accrues either at the prime rate or LIB OR plus 2.0% at the borrower’s option and is set at the time of an advance of funds. Borrowings by the Partnership are guaranteed by FSI, PLM International, Inc. and MILPI, the parent companies of the General Partner. The Partnership is not liable for the advances made to the other borrowers.

As of November 12, 2004, there were no outstanding borrowings on this facility by the Partnership. Other borrowers had loans outstanding totaling $9.6 million.

As of September 30, 2004, TEC is not required to purchase any of the remaining railcars under the commitment to meet its overall requirement that 30% of the total commitment be purchased.

At September 30, 2004, railcars with an original equipment cost of $13.0 million were owned by FSI and it's affiliates, some of which were purchased from the above transactions. While FSI has neither determined if a Program Affiliate will purchase these railcars nor the timing of any purchases, it is possible the Partnership may purchase some of these railcars.

Commitments and contingencies as of September 30, 2004 are as follows (in thousands of dollars):

				Less than		1-3
Partnership Obligations:		Total		1 Year		Years

Notes payable	$	11,000	$	4,000	$	7,000

Affiliate Obligations:

Commitment to purchase railcars	$	38,688	$	25,584	$	13,104

1 While FSI has neither determined if a Program Affiliate will purchase these railcars nor the timing of any purchases, it is possible the Partnership may purchase some of the railcars.

(IV) RECENT ACCOUNTING PRONOUNCEMENTS

For newly formed entities, FIN 46 is effective. FIN 46 did not impact the accounting for new entities formed in 2004.

(V) OUTLOOK FOR THE FUTURE

The ability of the Partnership 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 unpredictability of these factors makes it difficult for the General Partner to clearly define trends or influences that may impact the performance of the Partnership's equipment. The General Partner continually monitors both the equipment markets and the performance of the Partnership's equipment in these markets. The General Partner may decide to reduce the Partnership's exposure to equipment markets in which it determines it cannot operate equipment to achieve acceptable rates of return. Alternatively, the General Partner may make a determinati on to enter equipment markets in which it perceives opportunities to profit from supply/demand instabilities or other market imperfections.

Several factors may affect the Partnership's operating performance during the remainder of 2004 and beyond, including changes in the markets for the Partnership's equipment and changes in the regulatory environment in which that equipment operates.

The Partnership's operation of a diversified equipment portfolio in a broad base of markets is intended to reduce its exposure to volatility in individual equipment sectors.

Other factors affecting the Partnership’s operations during the remainder of 2004 and beyond include:

(1) Economic recovery in the railcar segment continues to be strong. Overall railcar loadings continue to be forecast to grow approximately 6% for the remainder of 2004. Railcar manufacturers now have full production schedules until the summer of 2005 for tank railcars and until 2006 for box railcars.

The Partnership's railcar fleet is largely used by a broadly defined chemical sector. Chemical and petroleum railcar loadings are projected to grow at a substantially higher rate this year than the 3% per year long run average. The continuation of high steel prices have resulted in increases in the price of a new tank railcars and lease rates have now increased in response this price increase. While this improves returns for railcar lessors in the short run, reduced railcar availability and higher lease costs along with railroad operating inefficiencies may cause the chemical industry growth to slow and perhaps cause chemical producers to shift to other forms of transportation. Also, there are a number of potential new railroad operating requirements and regulations which, if adopted, could increase the cost of railc ar ownership. At present, the Partnership's tank railcar fleet is highly utilized and appears to be in a position to remain so for the foreseeable future;

(2) The Partnership has an investment in a double-hull product tanker constructed in 1985 that operates in international markets carrying a variety of clean commodity-type cargoes. Demand for commodity-based shipping is closely tied to worldwide economic growth patterns, which can affect demand by causing changes in specific grade volume on trade routes. The General Partner operates the Partnership’s product tanker in the spot charter markets, carrying mostly gasoline, jet fuel, gas oils and similar petroleum distillates or simple chemicals or vegetable oils, an approach that provides the flexibility to adapt to changes in market conditions. The marine ve ssel owned by an entity in which the Partnership has an interest is 19 years old which may limit its future marketability. Marine vessels 20 years of age typically earn a lower lease rate than newer marine vessels and may have increased off-hire time.

The charter market for tankers is expected to remain strong for the remainder of 2004;

(3) Market demand for new and used aircraft has been severely impacted by the poor financial condition of the airline industry. The General Partner believes that there is a significant oversupply of commercial aircraft available that has caused a decrease in aircraft fair market values. The General Partner believes prices on selected aircraft have reached levels which make them attractive investment opportunities.

The Partnership’s owned aircraft rotables are off-lease. The General Partner is currently marketing this equipment for sale. Due to the poor market for these rotables, it may take a considerable period of time to dispose of them.

During 2004, the General Partner renegotiated the lease for the partially owned Boeing 737-300. The lease was extended from April 2005 to July 2008 and the monthly lease rate was lowered by 6%.

(4) The management fee rate paid by the Partnership is reduced by 25% for the period starting January 1, 2003 and ending September 30, 2005;

(5) The Partnership is expected to have increased general and administrative costs as the General Partner liquidates other investment programs that currently share certain general and administrative expenses; and

(6) General and administrative expenses are expected to increase over the next 15 months due to additional expenses required to meet compliance standards of the Sarbanes - Oxley Act.

The Partnership may commit to purchase additional equipment with its cash flow, surplus cash, and equipment sale proceeds generated prior to December 31, 2004, consistent with the objectives of the Partnership. The General Partner believes that these acquisitions may cause the Partnership to generate additional earnings and cash flow for the Partnership. The Partnership will terminate on December 31, 2011, unless terminated earlier upon sale of all equipment and by certain other events.

The Partnership intends to use cash flow from operations to satisfy its operating requirements, pay loan principal and interest on debt, and purchase additional equipment.

The General Partner believes prices on certain transportation equipment, primarily railcar equipment, selected aircraft equipment and certain types of non-transportation related equipment, have reached attractive levels and is currently in the market to make investments in 2004. The General Partner believes that equipment purchased in today's economic environment may appreciate. Accordingly, the General Partner believes that most of the cash currently held by the Partnership will be used to purchase additional equipment.

The General Partner does not anticipate declaring any cash distributions to the partners until at least the end of the investment phase of the Partnership. Cash distributions when paid to the partners generally consist of both a return of and a return on capital. Cash distributions do not represent and are not indicative of yield on investment. Actual yield on investment cannot be determined with any certainty until conclusion of the Partnership and will be dependent upon the collection of all future contracted rent, the generation of renewal and/or re-lease rents and the residual value realized for each asset at its disposal.

(VI) FORWARD-LOOKING INFORMATION

Except for the historical information contained herein, this Form 10-QSB contains forward-looking statements that involve risks and uncertainties, such as statements of the Partnership’s plans, objectives, expectations, and intentions. The cautionary statements made in this Form 10-QSB should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-QSB. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made herein. These factors include, but are not limited to, the collection of the Partnership’s contracted rents, the realization of residual proceeds, and future economic conditions.

ITEM 3. CONTROLS AND PROCEDURES

Limitations on the Effectiveness of Controls

The General Partner’s management, including it’s President and Chief Financial Officer (CFO), does not expect that our internal controls or disclosure control will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud, if any, within the Partnership have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, collusion of two or more people, or by management override of the control. The design of any system of controls also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Notwithstanding the forgoing limitations, we believe that our internal controls and disclosure control provide reasonable assurances that the objectives of our control system are met.

Quarterly Evaluation of the Partnership’s Disclosure Controls and Internal Controls

(1) Within the 90-day period prior to the filing of this report, the General Partner carried out an evaluation, under the supervision and with the participation of the General Partner’s management, including it’s President and CFO, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the President and CFO concluded that the Partnership’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Partnership’ s required to be included in the Partnership’s exchange act filings.

(2) There have been no significant changes in the Partnership’s internal controls or in other factors which could significantly affect internal controls subsequent to the date the General Partner carried out its evaluations.

PART II -- OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1

First Amendment to Amended and Restated Warehouse Credit Agreement dated September 3, 2004.

10.2

Second Amendment to Amended and Restated Warehouse Credit Agreement dated October 20, 2004.

10.3 PLM CAL I LLC operating agreement dated June 4, 2004.

10.4 PLM CAL II LLC operating agreement dated June 4, 2004.

10.5 PLM CAL I LLC equipment purchase agreement dated August 26, 2004.

10.6 PLM CAL II LLC equipment purchase agreement dated August 26, 2004.

31.1

Certificate of President of the General Partner pursuant to Section 302 of Sarbanes - Oxley Act.

31.2

Certificate of Chief Financial Officer of the General Partner pursuant to Section 302 of Sarbanes - Oxley Act.

32.1

Certificate of President of the General Partner pursuant to Section 906 of Sarbanes - Oxley Act.

32.2

Certificate of Chief Financial Officer of the General Partner pursuant to Section 906 of Sarbanes - Oxley Act.

(b) Reports on Form 8-K

Report 8-K dated September 27, 2004, announcing that Ernst & Young LLP would not act as the Partnership’s independent auditor after the review and the filing of the Partnership's third quarter report on Form 10-QSB.

Report 8-KA dated October 13, 2004, announcing that Ernst & Young LLP had declined to stand for re-election as the Partnership’s independent auditor after that review and the filing of the Partnership's third quarter report on Form 10-QSB.

(This space intentionally left blank)

--

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PLM EQUIPMENT GROWTH FUND VI

By: PLM Financial Services, Inc.

General Partner

Date: November 12, 2004 By: /s/ Richard B Brock

Richard K Brock

Chief Financial Officer

Exhibit 31.1

CONTROL CERTIFICATION

I, James A. Coyne, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of PLM Equipment Growth Fund VI.

2. Based on my knowledge, this quarterly 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 quarterly report.

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation.

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; 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 over financial reporting.

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether 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: November 12, 2004 By: /s/ James A. Coyne

James A. Coyne

President

Exhibit 31.2

CONTROL CERTIFICATION

I, Richard K Brock, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of PLM Equipment Growth Fund VI.

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: November 12, 2004 By: /s/ Richard K. Brock

Richard K Brock

Chief Financial Officer

(Principal Financial Officer)

Exhibit 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the

Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of PLM Equipment Growth Fund VI (the “Partnership”), on Form 10-QSB for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the President of the General Partner and of the Partnership, hereby certifies pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) the Report of the Partnership filed today fully complies with the requirements of Section 13(a) and 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

/s/ James A. Coyne

James A. Coyne

President of PLM Financial Services, Inc.

November 12, 2004

Exhibit 32.2

Certification Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to Section 906 of the

Sarbanes - Oxley Act of 2002

In connection with the Quarterly Report of PLM Equipment Growth Fund VI (the “Partnership”), on Form 10-QSB for the period ended September 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, the Chief Financial Officer of the General Partner and of the Partnership, hereby certifies pursuant to 18 U.S.C. §1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1) the Report of the Partnership filed today fully complies with the requirements of Section 13(a) and 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

/s/ Richard K Brock

Richard K Brock

Chief Financial Officer of PLM Financial Services, Inc.

(Principal Financial Officer)

November 12, 2004

EX-10.1 2 gfvexhibit101.htm EX-10.1 GF V Exhibit 10.1

FIRST AMENDMENT TO

AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT

This First Amendment to Amended and Restated Warehousing Credit Agreement (the “Amendment”) is made and entered into as of September 3, 2004 (“Effective Date”), by and among PLM Equipment Growth Fund V, a California limited partnership (“EGF V”), PLM Equipment Growth Fund VI, a California limited partnership (“EGF VI”), PLM Equipment Growth & Income Fund VII, a California limited partnership (“EGF VII”), Transportation Equipment-PLM, LLC, a Delaware limited liability company (“TEP”) (EGV V, EGF VI, EGF VII, and TEP, each individually being a “Borrower” and, collectively, the “Borrowers”), Acquisub, LLC , a Delaware limited liability company (“Acquisub”), PLM Financial Services, Inc., a Delaware corporation and the sole general partner, in the case of EGF V, EGF VI and EGF VII, and the sole manager, in the case of Acquisub (“FSI”), the banks, financial institutions and institutional lenders from time to time party to the Credit Agreement (defined below) and defined as Lenders therein (“Lenders”), and Comerica Bank (“Comerica Bank”), not in its individual capacity, but solely as agent (in such capacity, the “Agent”).

Recitals

A. Borrowers requested and the Lenders agreed to extend and make loans available to Borrowers upon the terms and conditions contained in that certain Amended and Restated Warehousing Credit Agreement dated as of March 17, 2004, by and among the Borrowers, FSI, Agent, and the Lenders (the “Credit Agreement”). Initially capitalized terms not defined herein shall have the meanings assigned to such terms in th e Credit Agreement.

B. Borrowers and FSI have requested that the Lenders amend the Credit Agreement (i) to increase the Commitment of Comerica Bank, (ii) to eliminate EGF V as a “Borrower” thereunder, (iii) to add Acquisub as a “Borrower” thereunder, and (iv) to modify the cash balances financial covenant, and the Lenders are willing to do so on the terms and conditions set forth herein and in reliance on the representations and warranties set forth herein.

Agreement

Now, Therefore, in consideration of the foregoing recitals and the mutual covenants herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, and to induce Agent and the Lenders to enter into this Amendment, Borrowers, FSI, Acquisub, Lenders and Agent hereby agree as follows:

Section 1. Elimination of EGF V as a Borrower. As of the Effective Date, EGF V is hereby eliminated as a “Borrower” under the Credit Agreement and the other Loan Documents, and the Lenders’ Commitment to make Advances to EGF V is hereby terminated. Promptly after the Effective Date, each Lender shall return to EGF V the original Note issued by EGF V to such Lender, and Agent shall file a termination statement with the California Secretary of State terminatin g the UCC-1 financing statement filed by Agent against EGF V.

Section 2. Addition of Acquisub as Borrower. As of the Effective Date, Acquisub is hereby added as a “Borrower” under the Credit Agreement and the other Loan Documents. Acquisub agrees that it will be bound by (and will comply with) all of the conditions, representations and warranties, covenants, and obligations of a “Borrower” under the Credit Agreement and the other Loan Documents, as amended hereby, as though it were a party thereunder and a signato ry thereto. For notice purposes, the address of Acquisub is c/o MILPI Holdings, LLC, 200 Nyala Farms, Westport, CT 06880, attn: James A. Coyne, President and Secretary.

Section 3. Amendments to Section 1.1 of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended as follows:

3.1 New Definition of Acquisub. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Acquisub” means Acquisub, LLC, a Delaware limited liability company.

3.2 Definition of Change of Control. The definition of “Change of Control” set forth in Section 1.1 of the Credit Agreement is amended by inserting “Acquisub,” immediately afte r “TEP,” in each place where “TEP,” appears in that definition.

3.3 Definition of Compliance Certificate. The definition of “Compliance Certificate” set forth in Section 1.1 of the Credit Agreement is amended (i) by inserting “ or Acquisub” immediately after “TEP” in the first line thereof, and (ii) by deleting “Exhibit A-1 and Exhibit A-2” in the sixth line thereof and substituting “Exhibit A” therefor.

3.4 Definition of Equipment Growth Funds. The definition of “Equipment Growth Funds” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inse rted in lieu thereof:

“Equipment Growth Funds” means any and all of EGF VI and EGF VII.

3.5 Definition of Equipment Purchase Agreement. The definition of “Equipment Purchase Agreement” set forth in Section 1.1 of the Credit Agreement is amended by inserting “ or Acquis ub” immediately after “TEP in the second line thereof.

3.6 New Definition of First Amendment. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“First Amendment” means that certain First Amendment to Amended and Restated Warehousing Credit Agreement dated as of September 3, 2004 among EGF V, EGF VI, EGF VII, TEP, Acquisub, FSI, Lenders, and Agent.

3.7 Definition of Funded Debt Ratio. The definition of “Funded Debt Ratio” set forth in Section 1.1 of the Credit Agreement is amended by inserting “or Acquisub” immediately af ter “TEP in the second line thereof.

3.8 Definition of Limited Partnership Agreement. The definition of “Limited Partnership Agreement” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the fol lowing is inserted in lieu thereof:

“Limited Partnership Agreement” means (a) for EGF VI, the Amended and Restated Limited Partnership Agreement dated as of December 20, 1991, as amended by a First Amendment to the Amended and Restated Limited Partnership Agreement dated as of November 21, 1996 and a Second Amendment to the Amended and Restated Limited Partnership Agreement dated as of August 24, 2001, and (b) fo r EGF VII, the Third Amended and Restated Limited Partnership Agreement of EGF VII dated as of May 10, 1993, as amended by the First Amendment to the Third Amended and Restated Limited Partnership Agreement dated May 28, 1993, the Second Amendment to Third Amended and Restated Limited Partnership Agreement dated as of January 21, 1994, the Third Amendment to Third Amended and Restated Limited Partnership Agreement dated as of March 25, 1999, and the Fourth Amendment to the Third Amended and Restated Limited Partnership Agreement dated as of August 24, 2001.

3.9 Definition of Loan Parties. The definition of “Loan Parties” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof :

“Loan Parties” means EGF VI, EGF VII, TEP, Acquisub, any Marine Subsidiary, any Owner Trustee, FSI, TEC, IMI, PLMI and MILPI and a “Loan Party” means any one of the Loan Parties.

3.10 Definition of Operating Agreement. The definition of “Operating Agreement” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Operating Agreement” means (i) for TEP, the Operating Agreement of TEP adopted and approved as of October 10, 2002, and (ii) for Acquisub, the Operating Agreement of Acquisub, entered into as of April 9, 2001.

3.11 Definition of Responsible Officer. The definition of “Responsible Officer” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Responsible Officer” means for (i) FSI, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of FSI having authority to request Advances or perform other duties required hereunder, (ii) EGF VI or EGF VII, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of FSI as the sole general partner of EGF VI or EGF VII, as the case may be, in each case having authority to request Advances or perform other duties required hereunder, (iii) Acquisub, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of FSI as the sole manager of Acquisub having authority to request Advances or perform other duties required hereunder, (iv) TEP, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of the managing trustee of the members of MILPI, as the sole member and manager of TEP, having authority to request Advances or perform other duties required hereunder, (v) MILPI, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of the managing trustee of the members of MILPI, and (vi) any other Loan Party, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Contr oller thereof.

3.12 Definition of Security Agreements. The definition of “Security Agreements” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Security Agreements” means (i) the Security Agreement between TEP and Agent dated as of March 17, 2004, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of TEP, subject to no other Liens other than Permitted Liens, substantially in the form of Exhibit L (the “Security Agreement (TEP)”), (ii) the Amended and Restated Security Agreement between PLMI and Agent dated as of March 17, 2004, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of PLMI, subject to no other Liens other than Permitted Liens, substantially in the form of Exhibit M (the “Security Agreement (PLMI)”), (iii) the Amended and Restated Security Agreement between MILPI and Agent dated as of March 17, 2004, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the a ssets of MILPI, subject to no other Liens other than Permitted Liens, substantially in the form of Exhibit N (the “Security Agreement (MILPI)”), (iv) the Security Agreement between EGF VI and Agent dated as of March 17, 2004, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of EGF VI, subject to no other Liens other than Permitted Liens, substantially in the form of Exhibit O (the “Security Agreement (EGF VI)”), and (v) the Security Agreement between Acquisub and Agent dated as of September 3, 2004, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of Acquisub, subject to no other Liens other than Permitted Liens, substantially in the form of Exhibit P (the “Security Agreement (Acquisub)”), in each case including all amendments, modifications and supplements thereto and all appendices, exhibits and schedules to any of the foregoing, and shall refer to each Security Agreement as the same may be in effect from time to time.

3.13 Definition of Subordination Agreements. The definition of “Subordination Agreements” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Subordination Agreements” means collectively (i) the Amended and Restated Subordination Agreement dated as of March 17, 2004 among MILPI, PLMI, FSI, TEC, and IMI (the “Subordinated Lenders”), EGF VI, and Agent, substantially in the form of Exhibit I-1 (the “Subordination Agreement (EGF VI)”), (ii) the Amended and Restated Subordination Agreement dated as of March 17, 2004 among the Subordinated Lenders, EGF VII, and Agent, substantially in the form of Exhibit I-2 (the “Subordination Agreement (EGF VII)”), (iii) the Subordination Agreement dated as of March 17, 2004 among the Subordinated Lenders, TEP, and Agent, substantially in the form of Exhibit I-3 < FONT style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman, serif">(the “Subordination Agreement (TEP)”), and (iv) the Subordination Agreement dated as of September 3, 2004 among the Subordinated Lenders, Acquisub, and Agent, substantially in the form of Exhibit I-4 (the “Subordination Agreement (Acquisub)”), including all further amendments, modifications and supplements thereto and all appendices, exhibits and schedules to any of the foregoing, and shall refer to the Subordination Agreements as the same may be in effect from time to time.

Section 4. Other Amendments to the Credit Agreement.

4.1 The following new Section 3.3A is hereby added to Section 3 of the Credit Agreement immediately after Section 3.3 thereof:

“3.3A Conditions to Each Advance to Acquisub. Unless waived in writing by Requisite Lenders, the obligation of any Lender to make any Advance to Acquisub (or any Marine Subsidiary or Owner Trustee of Acquisub) (including the initial Advance) is subject to the satisfaction of the following further condition precedent:

3.3A.1 Security Documents. At least five (5) Business Days before each Loan hereunder with respect to the financing or refinancing of Equipment by Acquisub (or any Marine Subsidiary or Owner Trustee of Acquisub), (i) there shall have been executed, filed and/or recorded in all applicable jurisdictions such instruments or documents as the Agent deems necessary or advisable to perfect its security interest in such Equipment and all related Collateral, including without limitation, additional security agreements, ship mortgages and chattel mortgages, and (ii) Agent shall have received such Lien and judgment searches, opinions, releases, termination statements, and other documents and instruments as Agent shall reasonably request to confirm that upon the consummation of such financing or refinancing Agent shall have a first priority perfected security interest in such Equipment and all related Collateral subject to no other Liens other than Permitted Liens.”

4.2 Section 3.6.2 of the Credit Agreement is amended by adding the following language to the end thereof::

“, or FSI shall resign or be removed as sole manager of Acquisub”

4.3 Section 3.6.3 of the Credit Agreement is amended by inserting “Acquisub,” immediately after “TEP,” in the first line thereof.

4.4 Section 5.1.1 of the Credit Agreement is amended by inserting “or Acquisub” immediately after “TEP” in each place where “TEP” appears in that section.

4.5 Section 5.1.2 of the Credit Agreement is amended by inserting

“or Acquisub” immediately after “TEP” in each place where “TEP” appears in that section.

4.6 Section 5.1.4 of the Credit Agreement is amended by inserting

“ or Acquisub” immediately after “TEP” in the third line thereof.

4.7 Section 5.1.7 of the Credit Agreement is amended by inserting

“or Acquisub” immediately after “TEP” in each place where “TEP” appears in that section.

4.8 Section 5.11 of the Credit Agreement is amended by inserting

“ or Acquisub” immediately after “TEP” in each place where “TEP” appears in that section.

4.9 Section 6.10 of the Credit Agreement is amended by deleting the last sentence thereof and substituting the following sentence therefor:

“Without limiting the foregoing, neither TEP nor Acquisub shall engage in any business other than the purchase of transportation equipment and the operation, leasing, remarketing and resale of such equipment.”

4.10 Section 6.13 of the Credit Agreement is amended and restated in its entirety to read as follows:

4.11 Section 6.15.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“6.15.1 Neither TEP nor Acquisub shall incur any obligation to contribute to a Pension Plan required by a collective bargaining agreement or as a consequence of the acquisition of an ERISA Affiliate, unless (i) TEP or Acquisub shall notify Agent in writing that it intends to incur such obligation and (ii) after Agent’s receipt of such notice, Requisite Lenders consent to the establishment or maintenance of, or TEP’s or Acquisub’s incurring an obligation to contribute to, the Pension Plan, which consent may not unreasonably be withheld but may be subject to such reasonable conditions as Requisite Lenders may require.”

4.12 Section 6.18 of the Credit Agreement is amended by inserting “or Acquisub” immediately after “TEP” in the third line thereof.

4.13 Section 7.4 of the Credit Agreement is amended by deleting “$3,750,000” and substituting therefor “$10,000,000”.

4.14 Section 8.1.2 of the Credit Agreement is amended by inserting

“or Acquisub,” immediately after “TEP” in each place where “TEP” appears in that section.

4.15 Section 8.1.6 of the Credit Agreement is amended by inserting “Acquisub,” immediately after “TEP,” in the second line thereof.

4.16 Section 8.1.7 of the Credit Agreement is amended by inserting “Acquisub,” immediately after “TEP,” in each place where “TEP” appears in that section.

4.17 Section 8.1.8 of the Credit Agreement is amended by inserting “Acquisub,” immediately after “TEP,” in the third line thereof.

4.18 Section 8.1.9 of the Credit Agreement is amended (i) by inserting “Acquisub” immediately after “TEP,” in the third line thereof, (ii) by inserting “, Acquisub,” immediately after “TEP” in the first place where “TEP” appears in the tenth line thereof, and (iii) by inserting “or Acquisub” immediately after “TEP” in the second place where “TEP” appears in the tenth line thereof.

4.19 Section 8.1.10 of the Credit Agreement is amended by inserting “Acquisub,” immediately after “TEP,” in each place where “TEP” appears in that section.

4.20 Section 8.1.11 of the Credit Agreement is amended by deleting “or” before “(c)” and inserting the following language at the end thereof immediately after the semicolon: “or (d) FSI shall cease to be the sole manager of Acquisub, whether due to the voluntary or involuntary withdrawal, substitution, removal or transfer of FSI from or of all or any portion of FSI’s membership interest or capital contribution in Acquisub.”

4.21 Section 8.1.13 of the Credit Agreement is amended by inserting “Acquisub,” immediately after “TEP” in the first line thereof.

4.22 Section 8.1.15 of the Credit Agreement is amended (i) by inserting “Acquisub’s,” immediately after “TEP’s,” in the third line thereof, (ii) by inserting “, Acquisub,” immediately after “TEP” in the first place where “TEP” appears in the fourteenth line thereof, (iii) by inserting “ or Acquisub” immediately after “TEP” in the second place where “TEP” appears in the fourteenth line thereof, and (iv) by inserting “Acquisub,” immediately aft er “TEP” where “TEP” appears in the twenty-first line thereof.

4.23 The following new Section 11.20 is hereby added to the Credit Agreement immediately after Section 11.19 thereof:

“11.20 Judicial Reference. If and only if the jury trial waiver set forth in Section 11.19 of this Agreement is invalidated for any reason by a court of law, statute or otherwise, the reference provisions set forth below shall be substituted in place of the jury trial waiver. So long as the jury trial waiver remains valid, the reference provisions set forth in this Section shall be inapplicable.

(a) Each controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Agreement or any other Loan Document, other than (i) all matters in connection with nonjudicial foreclosure of security interests in real or personal property; or (ii) the appointment of a receiver or the exercise of other provisional remedies (any of which may be initiated pursuant to applicable law) that are not settled in writing within fifteen (15) days after the date on which a party subject to the Loan Documents gives written notice to all other parties that a Claim exists (the “Claim Date”) shall be resolved by a reference proceeding in California in accordance with the provisions of Section 638 et seq. of the California Code of Civil Procedure, or their successor sections (“CCP”), which shall constitute the exclusive remedy for the resolution of any Claim concerning the Loan Documents, including whether such Claim is subject to the reference proceeding. Except as set forth in this section, the parties waive the right to initiate legal proceedings against each other concerning each such Claim. Venue for these proceedings shall be in the Superior Court in the County where the real property, if any, is located or in a County where venue is otherwise appropriate under state law (the “Court”). By mutual agreement, the parties shall select a retired Judge of the Court to serve as referee, and if they cannot so agree within fifteen (15) days after the Claim Date, the Presiding Judge of the Court (or his or her representative) shall prompt ly select the referee. A request for appointment of a referee may be heard on an ex parte or expedited basis. The referee shall be appointed to sit as a temporary judge, with all the powers for a temporary judge, as authorized by law, and upon selection should take and subscribe to the oath of office as provided for in Rule 244 of the California Rules of Court (or any subsequently enacted Rule). Each party shall have one peremptory challenge pursuant to CCP §170.6. Upon being selected, the referee shall (a) be requested to set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection and (b) if practicable, try any and all issues of law or fact and report a statement of decision upon them within ninety (90) days of the date of selection. The referee will have power to expand or limit the amount of discovery a party may employ. Any decision rendered by the referee will be final, binding and conclusive, and judgment shall be entered pursuant to CCP §644 in any court in the State of California having jurisdiction. The parties shall complete all discovery no later than fifteen (15) days before the first trial date established by the referee. The referee may extend such period in the event of a party’s refusal to provide requested discovery for any reason whatsoever, including, without limitation, legal objections raised to such discovery or unavailability of a witness due to absence or illness. No party shall be entitled to “priority” in conducting discovery. Either party may take depositions upon seven (7) days written notice, and shall respond to requests for production or inspection of documents within ten (10) days after service. All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding upon the parties. Pending appointment of the referee as provided herein, the Superior Court is empowered to issue temporary and/or provisional remedies, as applicab le.

(b) Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of all hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding. Except for trial, all proceedings and hearings conducted before the referee shall be conducted without a court reporter unless a party requests a court reporter. The party making such a request shall have the obligation to arrange for and pay for the court reporter. Subject to the referee’s power to award costs to the prevailing party, the parties shall equally bear the costs of the court reporter at the trial and the referee’s expenses.

(c) The referee shall determine all issues in accordance with existing California case and statutory law. California rules of evidence applicable to proceedings at law will apply to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief, to provide all temporary and/or provisional remedies and to enter equitable orders that shall be binding upon the parties. At the close of the reference proceeding, the referee shall issue a single judgment at disposing of all the claims of the parties that are the subject of the reference. The parties reserve the right (i) to contest or appeal from the final judgment or any appealable order or appealable judgment entered by the referee and (ii) to obtain findings of fact, conclusions of laws, a written statement of decision, and (iii) to move for a new trial or a different judgment, which new trial, if granted, shall be a reference proceeding under this provision.

(d) If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by the reference procedure herein described will be resolved and determined by arbitration conducted by a retired judge of the Court, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery as set forth in this Section shall apply to any such arbitration proceeding.”

Section 5. Amendments to Schedules and Exhibits.

5.1 Schedule A of the Credit Agreement is deleted in its entirety and Schedule A hereto is incorporated into the Credit Agreement as Schedule A thereto.

5.2 Exhibit B to the Credit Agreement (Form of Borrowing Base Certificate) is deleted in its entirety and Exhibit A hereto is incorporated into the Credit Agreement as Exhibit B thereto.

5.3 Exhibit D to the Credit Agreement (Form of Compliance Certificate) is deleted in its entirety and Exhibit B hereto is incorporated into the Credit Agreement as Exhibit D thereto.

5.4 Exhibit G to the Credit Agreement (Form of Assignment and Acceptance) is deleted in its entirety and Exhibit C hereto is incorporated into the Credit Agreement as < EM>Exhibit G thereto.

Section 6. Conditions Precedent. The legal effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:

6.1 Executed Amendment. Agent shall have received this Amendment duly executed and delivered by FSI, each Borrower, and Acquisub, and consented to and acknowledged by the Guarantors, and the same shall have become effective.

6.2 Partnership and Company Documents. Agent shall have received, in form and substance satisfactory to Lenders and their respective counsel, the following:

(a) A certified copy of the records of all actions taken by Acquisub, including resolutions authorizing or relating to the execution, delivery and performance of this Amendment and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby;

(b) A certificate of a Responsible Officer of Acquisub, stating that (A) the formation documents of Acquisub attached to such certificate are true and accurate, remain in full force and effect and have not been amended since the date thereof and (B) Acquisub is in good standing under the laws of the state of its formation and each other jurisdiction where its ownership of Property and assets or conduct of business requires such qualification;

(c) Certificates of incumbency and signature with respect to the authorized representatives of Acquisub executing this Agreement and the other Loan Documents and requesting Loans; and

(d) Such other documents relating to Acquisub as Lenders may reasonably request.

6.3 Notes. Agent shall have received Notes, in form and substance satisfactory to Lenders, and duly executed and delivered by Acquisub.

6.4 Subordination Agreements. Agent shall have received the Subordination Agreement (Acquisub) in form and substance satisfactory to Lenders, duly executed and delivered by each Subordinated Lender and Acquisub.

6.5 Second Amended and Restated MILPI Letter. Agent shall have received a Second Amended and Restated MILPI Letter dated as of September 3, 2004 in substantially the form attached hereto as Exhibit D, in form and substance satisfactory to Lenders, duly executed and delivered by MILPI.

6.6 Security Documents (Acquisub). Agent shall have received the Security Agreement (Acquisub) in form and substance satisfactory to Lenders, duly executed and delivered by Acquisub; there shall have been filed in all applicable jurisdictions Uniform Commercial Code financing statements naming Acquisub as “debtor” and the Agent as “secured party 48; (which financing statements shall be in form and substance acceptable to Agent) to perfect the security interest of Agent in the Collateral described in the Security Agreement (Acquisub) entered into by Acquisub, and there shall have been delivered to Agent or executed, filed and/or recorded in all applicable jurisdictions such other instruments or documents as Agent deems necessary or advisable to perfect its security interest in such Collateral; and Agent shall have received such Lien and judgment searches, opinions, releases, termination statements, and other documents and instruments as Agent shall reasonably request to confirm that Agent shall have a first priority perfected security interest in such Collateral subject to no other Liens other than Permitted Liens.

6.7 Material Adverse Effect. No event that has resulted or could result in a Material Adverse Effect shall have occurred since the date of the most recent financial statements delivered to Agent pursuant to Section 5.1 of the Credit Agreement, as determined by Agent in its sole discretion.

6.8 Bringdown Certificate. A separate certificate, dated as of the Effective Date, of a Responsible Officer of FSI, in its capacity as the sole manager of Acquisub, to the effect that (i) the representations and warranties of Acquisub contained in Section 8 of this Amendment, are true, accurate and complete in all material respects as of the Effective Date as though made on such date and (ii) no Event of Default or Potential Event of Default under the Credit Agreement has occurred.

6.9 Other Documents. Agent shall have received such other documents, information and items as reasonably requested by Agent.

6.10 Payment of Fees. Agent shall have received reimbursement from Borrowers and Acquisub of its costs and expenses incurred (incl uding, without limitation, its attorneys’ fees and expenses) in connection with this Amendment and the transactions contemplated hereby.

Section 7. Limited Amendment. Each of the amendments set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be an amendment of any other term or condition of the Credit Agreement or the other Loan Documents, to prejudice any right or remedy which Agent or any Lender may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or (b) to be a consent to any future amendment.

Section 8. Representations And Warranties. Each of Borrower and FSI represents and warrants that its respective representations and warranties made in the Loan Documents continue to be true and complete in all material respects as of the date hereof after giving effect to this Amendment (except to the extent such specifically relate to another date). Acquisub severally, as to itself, but not jointly as to the Borrowers and FSI, hereby represents and warrants to Agent and each Lender that each representation and warranty of a “Borrower” made in the Loan Documents, including without limitation, each representation and warranty set forth in Section 4.1 of the Credit Agreement (which is hereby incorporated herein by this reference as though each such representation and warranty had been fully set forth herein), is true and complete in all material respects as of the date hereof after giving effect to this Amendment (except that Section 4.1.1 of the Credit Agreement is amended to insert the words “and Acquisub” after “TEP” in the second line thereof and except to the extent such representations and warranties specifically relate to another date), and agrees that each said representation and warranty shall be deemed to continue until the full, complete and indefeasible payment and performance of the Obligations and shall apply anew to each borrowing under the Credit Agreement. Each of Borrower, Acquisub, and FSI further represents and warrants that the execution, delivery and performance of this Amendment are duly authorized, do not require the consent or approval of any governmental body or regulatory authority and are not in contravention of or in conflict with any material law or regulation or any term or provision of any other material agreement entered into by such Borrower, Acquisub or FSI, as applicable.

Section 9. Ratification and Reaffirmation of Liens. Each of TEP and EGF VI hereby ratifies and reaffirms the validity and enforceability of all of the liens and security interests heretofore granted pursuant to its respective Security Agreements, as collateral security for the Secured Obligations (as defined therein), and acknowledges that all of such liens and security interests, and all Collateral (as defined therein) heretofore pledged as security for the Secured Obligations (as defined therein), continues to be and remain s Collateral (as defined therein) for the Secured Obligations (as defined therein) from and after the date hereof. Agent hereby acknowledges and agrees that, as of the Effective Date, the Security Agreement (EGF V) is terminated, subject to Section 17 thereof.

Section 10. Governing Law. Except as otherwise expressly provided in any of the Loan Documents, in all respects, including all matters of construction, validity and performance, this Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of California applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America.

Section 11. Effective Date of Amendment; Full Force And Effect; Entire Agreement. This Amendment shall be deemed effective as of the Effective Date. Except to the extent expressly provided in this Amendment, the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect. This Amendment, the Credit Agreement, and the other Loan Documents constitute and contain the entire agreement of the parties hereto and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof or the extension of credit by the Lenders to the Borrowers, Acquisub, and/or their affiliates.

Section 12. Counterparts. This Amendment may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.

Borrowers: PLM Equipment Growth Fund V

By PLM Financial Services, Inc.,

Its General Partner

Its________________________________________

PLM Equipment Growth Fund VI

By PLM Financial Services, Inc.,

Its General Partner

Its________________________________________

PLM Equipment Growth & Income Fund VII

By PLM Financial Services, Inc.,

Its General Partner

Its________________________________________

Transportation Equipment-PLM, LLC

By: MILPI Holdings, LLC,

a Delaware limited liability company

By: Its Managing Members,

AFG Investment Trust C

By: Its Managing Trustee,

AFG ASIT Corporation, a Massachusetts corporation

By:___________________________

Richard K Brock

Its: Chief Financial Officer

PLM MILPI Holdings LLC,

A Delaware limited liability company

By:_________________________

James A. Coyne, Manager

Acquisub

Acquisub, LLC

By PLM Financial Services, Inc.,

Its Manager

Its________________________________________

FSI: PLM Financial Services, Inc.

Its________________________________________

Lenders Comerica Bank

Its________________________________________

First Bank dba First Bank & Trust

Its________________________________________

Agent: &nb sp;Comerica Bank

Its________________________________________

The undersigned Guarantors under the Amended and Restated Guaranty dated as of March 17, 2004 (the “Guaranty”) hereby consent to the terms of the foregoing amendment and acknowledge that the Guaranty remains fully effective in accordance with its terms with respect to the obligations of the Borrowers and Acquisub under the Credit Agreement, as amended pursuant to this Amendment. Without limiting the foregoing, each of the undersigned agrees that all references to a “Borrower” or “Borrowers” in the Guaranty shall include Acquisub.

In addition, each of PLMI and MILPI hereby ratifies and reaffirms the validity and enforceability of all of the liens and security interests heretofore granted pursuant to its respective Security Agreements, as collateral security for the Secured Obligations (as defined therein), and acknowledges that all of such liens and security interests, and all Collateral (as defined therein) heretofore pledged as security for the Secured Obligations (as defined therein), continues to be and remains Collateral (as defined therein) for the Secured Obligations (as defined therein) from and after the date hereof.

Executed as of September 3, 2004.

PLM International, Inc.

By:__________________________

Its:__________________________

PLM Financial Services, Inc.

By:_________________________

Its:_________________________

PLM Transportation Equipment Corporation

By:__________________________

Its:__________________________

(Additional signature page to follow)

MILPI Holdings, LLC

By: Its Managing Members,

AFG Investment Trust C

By: Its Managing Trustee,

AFG ASIT Corporation, a Massachusetts corporation

By:___________________________

Richard K Brock

Its: Chief Financial Officer

PLM MILPI Holdings LLC,

a Delaware limited liability company

By:_________________________

James A. Coyne, Manager

Schedule A

&n bsp;(COMMITMENTS)

Pro Rata

Lender Commitment Share

Comerica Bank $7,500,000 75%

First Bank dba First Bank & Trust $2,500,000 25%

EX-10.2 3 gfviex102.htm GF VI EXHIBIT 10.2 GF VI Exhibit 10.2

SECOND AMENDMENT TO

AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT

This Second Amendment to Amended and Restated Warehousing Credit Agreement (the “Amendment”) is made and entered into as of October 20, 2004 (“Effective Date”), by and among PLM Equipment Growth Fund VI, a California limited partnership (“EGF VI”), PLM Equipment Growth & Income Fund VII, a California limited partnership (“EGF VII”), Transportation Equipment-PLM, LLC, a Delaware limited liability company (“TEP”), Acquisub, LLC, a Delaware limited liability company (“Acquisub”) (EGF VI, EGF VII, TEP, and Acquisub, each individually being a “Borrower” and, collectively, the “Borrowers”), Rail Investors II, LLC, a Delaware limite d liability company (“Rail”), PLM Financial Services, Inc., a Delaware corporation and the sole general partner, in the case of EGF VI and EGF VII, and the sole manager, in the case of Acquisub (“FSI”), the banks, financial institutions and institutional lenders from time to time party to the Credit Agreement (defined below) and defined as Lenders therein (“Lenders”), and Comerica Bank (“Comerica Bank”), not in its individual capacity, but solely as agent (in such capacity, the “Agent”).

Recitals

A. Borrowers requested and the Lenders agreed to extend and make loans available to Borrowers upon the terms and conditions contained in that certain Amended and Restated Warehousing Credit Agreement dated as of March 17, 2004, as amended by that certain First Amendment to Amended and Restated Warehousing Credit Agreement dated as of September 3, 2004, by and among the Borrowers, FSI, Agent, and the Lenders (the “Cre dit Agreement”). Initially capitalized terms not defined herein shall have the meanings assigned to such terms in the Credit Agreement.

B. Borrowers and FSI have requested that the Lenders amend the Credit Agreement (i) to add Rail as a “Borrower” thereunder and (ii) to create a $5,000,000 sub-facility under the Facility for borrowings by Rail, and the Lenders are willing to do so on the terms and conditions set forth herein and in reliance on the representations and warranties set forth herein.

Agreement

Section 1. Addition of Rail as Borrower. As of the Effective Date, Rail is hereby added as a “Borrower” under the Credit Agreement and the other Loan Documents. Rail agrees that it will be bound by (and will comply with) all of the conditions, representations and warranties, covenants, and obligations of a “Borrower” under the Credit Agreement and the other Loan Documents, as amended hereby, as though it were a party thereunder and a signatory thereto. For notice purposes, the address of Rail is 200 Nyala Farms Road, Westport, CT 06880, attn: James A. Coyne, President and Secretary.

Section 2. Amendments to Section 1.1 of the Credit Agreement. Section 1.1 of the Credit Agreement is hereby amended as follows:

2.1 Definition of Applicable Margin. The definition of “Applicable Margin” set forth in Section 1.1 of the Credit Agreement is amended and restated in its entirety to read as follows:

“Applicable Margin” means:

(a) with respect to Base Rate Loans made to Borrowers other than Rail, zero percent (0.00%), and with respect to Base Rate Loans made to Rail, one quarter percent (0.25%); and

(b) with respect to LIBOR Loans made to Borrowers other than Rail, two percent (2.0%) and with respect to LIBOR Loans made to Rail, two and one quarter percent (2.25%).

2.2 Definition of Change of Control. The definition of “Change of Control” set forth in Section 1.1 of the Credit Agreement is amended by inserting “Rail, JAC, GDE,” immediatel y after “Acquisub,” in each place where “Acquisub,” appears in that definition.

2.3 Definition of Compliance Certificate. The definition of “Compliance Certificate” set forth in Section 1.1 of the Credit Agreement is amended (i) by inserting “or Rail” imme diately after “Acquisub” in the first line thereof, and (ii) by adding the following language to the end thereof:

“, and with respect to JAC and GDE, a certificate signed by a Responsible Officer of JAC and GDE, substantially in the form of Exhibit A to the JAC/GDE Letter, with such changes as Agent may from time to time reasonably request for the purpose of having such certificate disclose the matters certified therein and the method of computation thereof”

2.4 Definition of Equipment Purchase Agreement. The definition of “Equipment Purchase Agreement” set forth in Section 1.1 of the Credit Agreement is amended by inserting “ or Rail&# 148; immediately after “Acquisub” in the second line thereof.

2.5 Definition of Funded Debt Ratio. The definition of “Funded Debt Ratio” set forth in Section 1.1 of the Credit Agreement is amended by inserting “or Rail” immediately after “Acquisub” in the second line thereof.

2.6 New Definition of GDE. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“GDE” means GDE Investment Corp., a Delaware corporation.

2.7 Definition of Guaranty. The definition of “Guaranty” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof< /DIV>

“Guaranty” means that certain Second Amended and Restated Guaranty dated as of October 20, 2004 executed jointly and severally by MILPI, PLMI, FSI, and TEC in favor of Lenders and Agent, substantially in the form of Exhibit H to the Second Amendment, including all further amend ments, modifications and supplements thereto and all appendices, exhibits and schedules to any of the foregoing, and shall refer to the Guaranty as the same may be in effect from time to time.

2.8 New Definition of JAC. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“JAC” means JAC Investment Corp., a Delaware corporation.

2.9 New Definition of JAC/GDE Letter. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“JAC/GDE Letter” means the JAC/GDE Letter dated as of October 20, 2004 between JAC, GDE, and Agent, including all amendments, modifications and supplements thereto, and shall refer to the JAC/GDE Letter as the same may be in effect from time to time, substantially in the form of Exhibit C to the Second Amendment.

2.10 Definition of Loan Document. The definition of “Loan Document” set forth in Section 1.1 of the Credit Agreement is amended by inserting Rail Guaranty, JAC/GDE Letter,” immediat ely after “Guaranty” in the third line thereof.

2.11 Definition of Loan Parties. The definition of “Loan Parties” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereo f:

“Loan Parties” means EGF VI, EGF VII, TEP, Acquisub, Rail, any Marine Subsidiary, any Owner Trustee, FSI, TEC, IMI, PLMI, MILPI, JAC, and GDE and a “Loan Party” means any one of the Loan Parties.

2.12 Definition of Operating Agreement. The definition of “Operating Agreement” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Operating Agreement” means (i) for TEP, the Operating Agreement of TEP adopted and approved as of October 10, 2002, (ii) for Acquisub, the Operating Agreement of Acquisub, entered into as of April 9, 2001, and (iii) for Rail, the Operating Agreement of Rail, entered into as of September 13, 2004.

2.13 New Definition of Rail. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Rail” means Rail Investors II, LLC, a Delaware limited liability company.

2.14 New Definition of Rail Commitment. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Rail Commitment” means with respect to each Lender the amounts set forth on Schedule A-1 and “Rail Commitments” means all such amounts collectively, as each may be amended from time to time upon the execution and delivery of an instrument of assignment pursuant to Section 11.10, which amendments shall be evidenced on a supplement to Schedule A-1.

2.15 New Definition of Rail Guarantor. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Rail Guarantor” means JAC and GDE.

2.16 New Definition of Rail Guaranty. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Rail Guaranty” means that certain Guaranty dated as of October 20, 2004 executed jointly and severally by JAC and GDE, in favor of Lenders and Agent with respect to the Rail Sub-facility, substantially in the form of Exhibit D to the Second Amendment, including all further ame ndments, modifications and supplements thereto and all appendices, exhibits and schedules to any of the foregoing, and shall refer to the Rail Guaranty as the same may be in effect from time to time.

2.17 New Definition of Rail Sub-facility. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Rail Sub-facility” means the total Rail Commitments described in Schedule A-1, as such Schedule A-1 may be amended from time to time as set forth on an amendment to Schedule A-1, for the Rail credit facility described in Section 2.1.1 to be provided by Lenders to Rail, according to each Lender’s Pro Rata Share.

2.18 Definition of Responsible Officer. The definition of “Responsible Officer” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Responsible Officer” means for (i) FSI, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of FSI having authority to request Advances or perform other duties required hereunder, (ii) EGF VI or EGF VII, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of FSI as the sole general partner of EGF VI or EGF VII, as the case may be, in each case having authority to request Advances or perform other duties required hereunder, (iii) Acquisub, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of FSI as the sole manager of Acquisub having authority to request Advances or perform other duties required hereunder, (iv) TEP, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of the managing trustee of the members of MILPI, as the sole member and manager of TEP, having authority to request Advances or perform other duties required hereunder, (v) MILPI, any of the President, Chief Executive Officer, Executive Vice President, Chief Financial Officer, Secretary or Corporate Controller of the managing trustee of the members of MILPI, (vi) Rail, Gary D. Engle or James A. Coyne, as managers of Rail, and (vii) any other Loan Party, any of the President, Chief Executive Officer, Executive Vic e President, Chief Financial Officer, Secretary or Corporate Controller thereof.

2.19 New Definition of Second Amendment. The following definition is added to the list of definitions set forth in Section 1.1 of the Credit Agreement, inserted in its respective alphabetical sequence:

“Second Amendment” means that certain Second Amendment to Amended and Restated Warehousing Credit Agreement dated as of October 20, 2004 among EGF VI, EGF VII, TEP, Acquisub, Rail, FSI, Lenders, and Agent.

2.20 Definition of Security Agreements. The definition of “Security Agreements” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Security Agreements” means (i) the Security Agreement between TEP and Agent dated as of March 17, 2004, substantially in the form of Exhibit L (the “Security Agreement (TEP)”), as amended by that First Amendment to Security Agreement dated as of October 20, 2004, substantially in the form of Exhibit LL to the Second Amendment, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of TEP, subject to no other Liens other than Permitted Liens, (ii) the Amended and Restated Security Agreement between PLMI and Agent dated as of March 17, 2004, substantially in the form of Exhibit M (the “Security Agreement (PLMI)”), as amended by that First Amendment to Amended and Restated Security Agreement date d as of October 20, 2004, substantially in the form of Exhibit MM to the Second Amendment, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of PLMI, subject to no other Liens other than Permitted Liens, (iii) the Amended and Restated Security Agreement between MILPI and Agent dated as of March 17, 2004, substantially in the form of Exhibit N (the “Security Agreement (MILPI)”), as amended by that First Amendment to Amended and Restated Security Agreement dated as of October 20, 2004, substantially in the form of Exhibit NN to the Second Amendment, on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of MILPI, subject to no other Liens other than Permitted Liens, (iv) the Security Agreement between EGF VI and Agent dated as of March 17, 2004, substantially in the form of Exhibit O (the “Security Agreement (EGF VI)”), on behalf and for the benefit of the Lenders, providi ng for the grant of a first priority perfected security interest in substantially all of the assets of EGF VI, subject to no other Liens other than Permitted Liens, (v) the Security Agreement between Acquisub and Agent dated as of September 3, 2004, substantially in the form of Exhibit P (the “Security Agreement (Acquisub)”), as amended by that First Amendment to Security Agreement dated as of October 20, 2004, substantially in the form of Exhibit PP to the Second Amendment, on behalf and for the benefit of the Lenders, providing for th e grant of a first priority perfected security interest in substantially all of the assets of Acquisub, subject to no other Liens other than Permitted Liens, and (vi) the Security Agreement between Rail and Agent dated as of October 20, 2004, substantially in the form of Exhibit Q to the Second Amendment (the “Security Agreement (Rail)”), on behalf and for the benefit of the Lenders, providing for the grant of a first priority perfected security interest in substantially all of the assets of Rail, subject to no other Liens other than Permitted Liens, in each case including all amendments, modifications and supplements thereto and all appendices, exhibits and schedules to any of the foregoing, and shall refer to each Security Agreement as the same may be in effect from tim e to time.

2.21 Definition of Subordination Agreements. The definition of “Subordination Agreements” set forth in Section 1.1 of the Credit Agreement is deleted in its entirety and the following is inserted in lieu thereof:

“Subordination Agreements” means collectively (i) the Second Amended and Restated Subordination Agreement dated as of October 20, 2004 among MILPI, PLMI, FSI, TEC, IMI, JAC, and GDE (the “Subordinated Lenders”), EGF VI, and Agent, substantially in the form of Exhibit I-1 to the Second Amendment (the “Subordination Agreement (EGF VI)”), (ii) the Second Amended and Restated Subordination Agreement dated as of October 20, 2004 among the Subordinated Lenders, EGF VII, and Agent, substantially in the form of Exhibit I-2 to the Second Amendment (the “Subordination Agreement (EGF VII)”), (iii) the Amended and Restated Subordination Agreement dated as of October 20, 2004 among the Subordinated Lenders, TEP, and Agent, substantially in the form of Exhibit I-3 to the Second Amendment (the “Subordination Agreement (TEP)”), (iv) the Amended and Restated Subordination Agreement dated as of October 20, 2004 among the Subordinated Lenders, Acquisub, and Agent, substantially in the form of Exhibit I-4 to the Second Amendment (the “Subordination Agreement (Acquisub)”), and (v) the Sub ordination Agreement dated as of October 20, 2004 among the Subordinated Lenders, Rail, and Agent, substantially in the form of Exhibit I-5 to the Second Amendment (the “Subordination Agreement (Rail)”), and including all further amendments, modifications and supplements thereto and all appendices, exhibits and schedules to any of the foregoing, and shall refer to the Subordination Agreements as the same may be in effect from time to time.

Section 3. Other Amendments to the Credit Agreement.

3.1 The first paragraph of Section 2.1.1 and Section 2.1.1(a) of the Credit Agreement are amended and restated in their entirety to read as follows:

“2.1.1 Revolving Facility. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Borrowers set forth herein, Lenders hereby agree to make advances of immedia tely available funds to Borrowers (other than Rail) (“Non-Rail Advances”), on a revolving basis, from the Closing Date until the Business Day immediately preceding the Commitment Termination Date, in the aggregate principal amount outstanding at any time not to exceed the lesser of (a) the total Commitments for the Facility or (b) for any one Borrower, its respective Borrowing Base (such lesser amount being the “< /FONT>Maximum Availability”), as more fully set forth in this Section 2.1.1, provided that, in no event shall the aggregate principal amount outstanding of the Non-Rail Advances and the Rail Advances (as defined below) exceed the total Commitments for the Facility. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of Rail set forth herein, Lenders hereby agree to make advances of immediately available funds to Rail (“Rail Advances”), on a revolving basis, from the Closing Date until the Business Day immediately preceding the Commitment Termination Date, in the aggregate principal amount outstanding at any time not to exceed the lesser of (a) the total Rail Commitments or (b) its Borrowing Base (such lesser amount being the “Rail Maximum Availability”), as more fully set forth in this Section 2.1.1, provided that, in no event shall the aggregate principal amount outstanding of the Non-Rail Advances and the Rail Advances exceed the total Commitments for the Facility. The obligation of Borrowers to repay the Non-Rail Advances or the Rail Advances (collectively, “Advances”) made to any Borrower shall be several but not joint.

(a) Facility Commitments.

(i) On the Funding Date requested by any Borrower (the “Requesting Borrower”), after such Borrower shall have satisfied all applicable conditions precedent set forth in Section 3, each Lender shall advance immediately available funds to Agent evidencing such Lender’s Pro Rata Share of the requested Advance to such Borrower (“ ;Loan”). Agent shall immediately advance such immediately available funds to such Borrower at the Designated Deposit Account (or such other deposit account at Comerica Bank or such other financial institution as to which such Borrower and Agent shall agree at least three (3) Business Days prior to the requested Funding Date) on the Funding Date with respect to such Loan. The Requesting Borrower shall pay interest accrued on the Loan at the rates and in the manner set forth in Section 2.1.1(b). Subject to the terms and conditions of this Agreement, the unpaid principal amount of each Loan and all unpaid interest accrued thereon, together with all other fees, expenses, costs and other sums chargeable to the Requesting Borrower incurred in connection therewith shall be due and payable no later than the Maturity Date of such Loan. Each Loan advanced hereunder by each Lender shall be evidenced by the Requesting Borrower’s revolving promissory note in favor of such Lender substantially in the form of Exhibit A (each a “Note”).

(ii) The obligation of Lenders to make any Loan to a Borrower (other than Rail) from time to time hereunder shall be limited to the then applicable Maximum Availability, and the obligation of Lenders to make any Loan to Rail from time to time hereunder shall be limited to the then applicable Rail Maximum Availability. For the purpose of determining the amount of the Borrowing Base available at any one time, the amount available shall be the total amount of the Borrowing Base as set forth in the Borrowing Base Certificate delivered to Agent pursuant to Section 3.2.1 with respect to such requested Loan and reviewed and approved by Agent. Nothing contained in this Agreement shall under any circumstance be deemed to require any Lender to make any Advance under the Facility which, in the aggregate principal amount, taking into account such Lender’s portion of the aggregate principal amounts outstanding under this Agreement and the making of such Advance, exceeds the lesser of (A) such Lender’s Commitment for the Facility and (B) such Lender’s Pro Rata Share of the Requesting Borrower’s Borrowing Base. Nothing contained in this Agreement shall under any circumstance be deemed to require any Lender to make any Rail Advance under the Rail Sub-facility which, in the aggregate principal amount, taking into account such Lender’s portion of the aggregate principal amounts outstanding under this Agreement and the making of such Rail Advance, exceeds the lesser of (A) such Lender’s Rail Commitment for the R ail Sub-facility and (B) such Lender’s Pro Rata Share of Rail’s Borrowing Base.

(iii) If at any time and for any reason the aggregate principal amount of the Loan(s) then outstanding to any Borrower (other than Rail) shall exceed the Maximum Availability for such Borrower (the amount of such excess, if any, being an “Overadvance”), such Borrower shall immediately repay the full amount of such Overadvance, togethe r with all interest accrued thereon. If at any time and for any reason the aggregate principal amount of the Loan(s) then outstanding to Rail shall exceed the Rail Maximum Availability (the amount of such excess, if any, being a “Rail Overadvance”), Rail shall immediately repay the full amount of such Rail Overadvance, together with all interest accrued thereon.

(iv) Amounts borrowed by Borrowers under this Facility may be repaid and, prior to the Commitment Termination Date and subject to the applicable terms and conditions precedent to borrowings hereunder, reborrowed; provided, however, that no Loan shall have a Maturity Date which is later than the Commitment Termination Date and no LIBOR Loan shall have a n Interest Period ending after the Maturity Date or the Commitment Termination Date.

(v) Each request for a Loan hereunder shall constitute a reaffirmation by the Requesting Borrower and the Responsible Officer requesting the same that the representations and warranties contained in this Agreement are true, correct and complete in all material respects to the same extent as though made on and as of the date of the request, except to the extent such representations and warranties specifically relate to an earlier date, in which event they shall be true, correct and complete in all material respects as of such earlier date.”

3.2 The following new Section 2.1.1(d) is hereby added to the Credit Agreement immediately following Section 2.1.1(c) thereof:

“(c) Rail Sub-facility Fee. On the Effective Date (as defined in the Second Amendment), Rail shall pay to Agent for the account of each Lender a fee equal to 0.25% of the aggregate Rail Commitments, pro rata based on the number of days elapsed between the Effective Date and December 31, 2004.”

3.3 Section 2.1.3 of the Credit Agreement is amended and restated in its entirety to read as follows:

“2.1.3 Utilization of the Loans. The Loans (other than the Loans made to Rail) made under the Facility may be used solely for the purpose of financing or refinancing specific items of Eligible Inventory; provided, however, in no event shall the proceeds of any Loan be used to finance or refinance more than one hundred percent (100.0%) of the Equipment Cost of any item of Eligible Inventory. The Loans made to Rail under the Rail Sub-facility may be used solely for the purpose of financing or refinancing new Railcars that otherwise come within the definition of “Eligible Inventory”; provided, however, in no event shall the proceeds of any Loan to Rail be used to finance or refinance more than one hundred percent (100.0%) of the Equipment Cost of any Railcar.”

3.4 Section 3.2.1 of the Credit Agreement is hereby amended by adding the following sentence to the end thereof:

“In addition, at least five (5) Business Days before each Loan hereunder with respect to any financing or refinancing of Equipment by Rail, Agent shall have received a Compliance Certificate, with appropriate insertions, executed by a Responsible Officer of JAC and GDE.”

3.5 The following new Section 3.3B is hereby added to Section 3 of the Credit Agreement immediately after Section 3.3A thereof:

“3.3A Conditions to Each Advance to Rail. Unless waived in writing by Requisite Lenders, the obligation of any Lender to make any Advance to Rail (or any Marine Subsidiary or Owner Trustee of Rail) (including the initial Advance) is subject to the satisfaction of the following further condition precedent:

3.3A.1 Security Documents. At least five (5) Business Days before each Loan hereunder with respect to the financing or refinancing of Equipment by Rail (or any Marine Subsidiary or Owner Trustee of Rail), (i) there shall have been executed, filed and/or recorded in all applicable jurisdictions such in struments or documents as the Agent deems necessary or advisable to perfect its security interest in such Equipment and all related Collateral, including without limitation, additional security agreements, ship mortgages and chattel mortgages, and (ii) Agent shall have received such Lien and judgment searches, opinions, releases, termination statements, and other documents and instruments as Agent shall reasonably request to confirm that upon the consummation of such financing or refinancing Agent shall have a first priority perfected security interest in such Equipment and all related Collateral subject to no other Liens other than Permitted Liens.”

3.6 Section 3.6.2 of the Credit Agreement is amended by adding the following language to the end thereof:

“, or Gary D. Engle or James A. Coyne shall resign or be removed as the sole managers of Rail”

3.7 Section 3.6.3 of the Credit Agreement is amended by inserting “Rail,” immediately after “Acquisub,” in the first line thereof.

3.8 Section 5.1.1 of the Credit Agreement is amended by inserting “or Rail” immediately after “Acquisub” in each place where “Acquisub” appears in that section.

3.9 Section 5.1.2 of the Credit Agreement is amended by inserting

“or Rail” immediately after “Acquisub” in each place where “Acquisub” appears in that section.

3.10 Section 5.1.4 of the Credit Agreement is amended by inserting

“ or Rail” immediately after “Acquisub” in the third line thereof.

3.11 Section 5.1.7 of the Credit Agreement is amended by inserting

“or Rail” immediately after “Acquisub” in each place where “Acquisub” appears in that section.

3.12 Section 5.11 of the Credit Agreement is amended by inserting

“ or Rail” immediately after “Acquisub” in each place where “Acquisub” appears in that section.

3.13 Section 6.10 of the Credit Agreement is amended by deleting the last sentence thereof and substituting the following sentence therefor:

“Without limiting the foregoing, neither TEP nor Acquisub nor Rail shall engage in any business other than the purchase of transportation equipment and the operation, leasing, remarketing and resale of such equipment.”

3.14 Section 6.13 of the Credit Agreement is amended and restated in its entirety to read as follows:

“6.13 No Distributions. No Borrower shall make, pay or set apart any funds for the payment or distribution to its shareholders, partners or members if such distribution would cause or result in an Event of Default or Potential Event of Default. In addition, TEP shall not declare or make any distribution of assets, properties, cash, rights, obligations or securities on account of any of its membership interests, or purchase, redeem or otherwise acquire for value any of its membership interests or any warrants, rights or options to acquire such membership interests, now or hereafter outstanding; except that TEP may, (a) following the resale of any item of Eligible Inventory to PLMI or MILPI, any Equipment Growth Fund or any third party and after having repaid in full the Loan advanced by Lenders to finance or refinance such Eligible Inventory, distribute the remaining proceeds of such resale to MILPI and (b) no more frequently than monthly and in no event prior to such time as TEP shall have made payment in full of all interest on the Loans funded here under accrued through the last day of the previous calendar month, TEP may distribute its net profits (revenues less interest and operating expenses) to MILPI. In addition, Acquisub shall not declare or make any distribution of assets, properties, cash, rights, obligations or securities on account of any of its membership interests, or purchase, redeem or otherwise acquire for value any of its membership interests or any warrants, rights or options to acquire such membership interests, now or hereafter outstanding; except that Acquisub may, (a) following the resale of any item of Eligible Inventory to PLMI or MILPI, any Equipment Growth Fund or any third party and after having repaid in full the Loan advanced by Lenders to finance or refinance such Eligible Inventory, distribute the remaining proceeds of such resale to FSI and (b) no more frequently than monthly and in no event prior to such time as Acquisub shall have made payment in full of all interest on the Loans funded hereunder accrued through the last day of the previous calendar month, Acquisub may distribute its net profits (revenues less interest and operating expenses) to FSI. In addition, Rail shall not declare or make any distribution of assets, properties, cash, rights, obligations or securities on account of any of its membership interests, or purchase, redeem or otherwise acquire for value any of its membership interests or any warrants, rights or options to acquire such membership interests, now or hereafter outstanding; except that Rail may, (a) following the resale of any item of Eligible Inventory to PLMI or MILPI, any Equipment Growth Fund or any third party and after having repaid in full the Loan advanced by Lenders to finance or refinance such Eligible Inventory, distribute the remaining proceeds of such resale to its members and (b) no more frequently than monthly and in no event prior to such time as Rail shall have made payment in full of all interest on the Loans funded hereunder accrued through the last day of the previous calendar month, Rail may distribute its net profits (revenues less interest and operating expenses) to its members.”

3.15 Section 6.15.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“6.15.1 Neither TEP nor Acquisub nor Rail shall incur any obligation to contribute to a Pension Plan required by a collective bargaining agreement or as a consequence of the acquisition of an ERISA Affiliate, unless (i) TEP or Acquisub or Rail shall notify Agent in writing that it intends to incur such obligation and (ii) after Agent’s receipt of such notice, Requisite Lenders consent to the establishment or maintenance of, or TEP’s or Acquisub’s or Rail’s incurring an obligation to contribute to, the Pension Plan, which consent may not unreasonably be withheld but may be subject t o such reasonable conditions as Requisite Lenders may require.”

3.16 Section 6.18 of the Credit Agreement is amended by inserting “or Rail” immediately after “Acquisub” in the third line thereof.

3.17 Section 8.1.2 of the Credit Agreement is amended by inserting

“or Rail,” immediately after “Acquisub” in each place where “TEP” appears in that section.

3.18 Section 8.1.6 of the Credit Agreement is amended by inserting “Rail,” immediately after “Acquisub,” in the second line thereof.

3.19 Section 8.1.7 of the Credit Agreement is amended by inserting “Rail,” immediately after “Acquisub,” in each place where “Acquisub” appears in that section.

3.20 Section 8.1.8 of the Credit Agreement is amended by inserting “Rail,” immediately after “Acquisub,” in the third line thereof.

3.21 Section 8.1.9 of the Credit Agreement is amended (i) by inserting “Rail” immediately after “Acquisub,” in the third line thereof, (ii) by inserting “, Rail,” immediately after “Acquisub” in the first place where “Acquisub” appears in the tenth line thereof, and (iii) by inserting “or Rail” immediately after “Acquisub” in the second place where “Acquisub” appears in the tenth line thereof.

3.22 Section 8.1.10 of the Credit Agreement is amended by inserting “Rail,” immediately after “Acquisub,” in each place where “Acquisub” appears in that section.

3.23 Section 8.1.11 of the Credit Agreement is amended by deleting “or” before “(c)” and inserting the following language at the end thereof immediately after the semicolon: “or (d) Gary D. Engle or James A. Coyne shall cease to be the sole managers of Rail, or Gary D. Engle or James A. Coyne shall cease to be a manager of Rail.”

3.24 Section 8.1.13 of the Credit Agreement is amended by inserting “Rail,” immediately after “Acquisub” in the first line thereof.

3.25 Section 8.1.15 of the Credit Agreement is amended (i) by inserting “Rail’s,” immediately after “Acquisub’s,” in the third line thereof, (ii) by inserting “, Rail,” immediately after “Acquisub” in the first place where “Acquisub” appears in the fourteenth line thereof, (iii) by inserting “ or Rail” immediately after “Acquisub” in the second place where “Rail” appears in the fourteenth line thereof, and (iv) by inserting “Rail,” immediatel y after “Acquisub” where “Acquisub” appears in the twenty-first line thereof.

3.26 Section 8.4.1 of the Credit Agreement is amended (i) by inserting “or any Rail Guarantor” immediately after “Guarantor” in each place where “Guarantor” appears in that section and (ii) by inserting “Rail Guarantors,” immediately after “Guarantors,” in the last sentence thereof.

3.27 Section 11.10.2 of the Credit Agreement is amended (i) by inserting “and Rail Commitments” immediately after “Commitments” in each place where “Commitments” appears in that section, (ii) by inserting “and Schedule A-1” immediately after “Schedule A” in the penultimate sentence thereof, and (iii) by adding the following new sentence to the end thereof: “No Lender shall sell all or any portion of its Pro Rata Share of the Commitments unless at the same time it sells all or the same portion of its Pro Rata Share of the Rail Commitments.”

Section 4. Amendments to Schedules and Exhibits.

4.1 Schedule A-1 attached hereto is hereby incorporated into the Credit Agreement as Schedule A-1 thereto.

4.2 Exhibit B to the Credit Agreement (Form of Borrowing Base Certificate) is deleted in its entirety and Exhibit A hereto is incorporated into the Credit Agreement as Exhibit B thereto.

4.3 Exhibit G to the Credit Agreement (Form of Assignment and Acceptance) is deleted in its entirety and Exhibit B hereto is incorporated into the Credit Agreement as Exhibi t G thereto.

Section 5. Conditions Precedent. The legal effectiveness of this Amendment is subject to the satisfaction of all of the following conditions precedent:

5.1 Executed Amendment. Agent shall have received this Amendment duly executed and delivered by FSI, each Borrower, and Rail, and consented to and acknowledged by the Guarantors, and the same shall have become effective.

5.2 Rail Documents. Agent shall have received, in form and substance satisfactory to Lenders and their respective counsel, the following:

(a) A certified copy of the records of all actions taken by Rail, including resolutions authorizing or relating to the execution, delivery and performance of this Amendment and the other Loan Documents and the consummation of the transactions contemplated hereby and thereby;

(b) A certificate of a Responsible Officer of Rail, stating that (A) the formation documents of Rail attached to such certificate are true and accurate, remain in full force and effect and have not been amended since the date thereof and (B) Rail is in good standing under the laws of the state of its formation and each other jurisdiction where its ownership of Property and assets or conduct of business requires such qualification;

(c) Certificates of incumbency and signature with respect to the authorized representatives of Rail executing this Agreement and the other Loan Documents and requesting Loans; and

(d) Such other documents relating to Rail as Lenders may reasonably request.

5.3 Notes. Agent shall have received Notes, in form and substance satisfactory to Lenders, and duly executed and delivered by Rail.

5.4 Rail Guaranty. Agent shall have received the Rail Guaranty, in form and substance satisfactory to Lenders, duly executed and delivered by each Rail Guarantor.

5.5 Guaranty. Agent shall have received the Guaranty, in form and substance satisfactory to Lenders, duly executed and delivered by each Guarantor.

5.6 Subordination Agreements. Agent shall have received the Subordination Agreements described in the revised definition thereof (as set forth above), in form and substance satisfactory to Lenders, duly executed and delivered by each Subordinated Lender, each Borrower, and Rail (as applicable).

5.7 JAC/GDE Letter. Agent shall have received the JAC/GDE Letter in form and substance satisfactory to Lenders, duly executed and delivered by JAC and GDE.

5.8 Security Documents (Rail). Agent shall have received the Security Agreement (Rail) in form and substance satisfactory to Lenders, duly executed and delivered by Rail; there shall have been filed in all applicable jurisdictions Uniform Commercial Code financing statements naming Rail as “debtor” and the Agent as “secured party” (which finan cing statements shall be in form and substance acceptable to Agent) to perfect the security interest of Agent in the Collateral described in the Security Agreement (Rail) entered into by Rail, and there shall have been delivered to Agent or executed, filed and/or recorded in all applicable jurisdictions such other instruments or documents as Agent deems necessary or advisable to perfect its security interest in such Collateral; and Agent shall have received such Lien and judgment searches, opinions, releases, termination statements, and other documents and instruments as Agent shall reasonably request to confirm that Agent shall have a first priority perfected security interest in such Collateral subject to no other Liens other than Permitted Liens.

5.9 Amendments to Security Agreements. Agent shall have received each of the amendments to the Security Agreements described in the revised definition of “Security Agreements” set forth above in form and substance satisfactory to lenders, duly executed and delivered by each grantor named therein.

5.10 Material Adverse Effect. No event that has resulted or could result in a Material Adverse Effect shall have occurred since the date of the most recent financial statements delivered to Agent pursuant to Section 5.1 of the Credit Agreement, as determined by Agent in its sole discretion.

5.11 Bringdown Certificate. A separate certificate, dated as of the Effective Date, of a Responsible Officer of Rail to the effect that (i) the representations and warranties of Rail contained in Section 7 of this Amendment, are true, accurate and complete in all material respects as of the Effective Date as though made on such date and (ii) no Event of Default or Potential Event of Default under the Credit Agreement has occurred.

5.12 Other Documents. Agent shall have received such other documents, information and items as reasonably requested by Agent.

5.13 Payment of Fees. Agent shall have received reimbursement from Borrowers and Rail of its costs and expenses incurred (includin g, without limitation, its attorneys’ fees and expenses) in connection with this Amendment and the transactions contemplated hereby.

Section 6. Limited Amendment. Each of the amendments set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be an amendment of any other term or condition of the Credit Agreement or the other Loan Documents, to prejudice any right or remedy which Agent or any Lender may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or (b) to be a consent to any future amendment.

Section 7. Representations And Warranties. Each of Borrower and FSI represents and warrants that its respective representations and warranties made in the Loan Documents continue to be true and complete in all material respects as of the date hereof after giving effect to this Amendment (except to the extent such specifically relate to another date). Rail severally, as to itself, but not jointly as to the Borrowers and FSI, hereby represents and warrants to Agent and each Lender that each representation and warranty of a 7;Borrower” made in the Loan Documents, including without limitation, each representation and warranty set forth in Section 4.1 of the Credit Agreement (which is hereby incorporated herein by this reference as though each such representation and warranty had been fully set forth herein), is true and complete in all material respects as of the date hereof after giving effect to this Amendment (except that Section 4.1.1 of the Credit Agreement is amended to insert the words “and Rail” after “Acquisub” in the second line thereof and except to the extent such representations and warranties specifically relate to another date), and agrees that each said representation and warranty shall be deemed to continue until the full, complete and indefeasible payment and performance of the Obligations and shall apply anew to each borrowing under the Credit Agreement. Each of Borrower, Rail, and FSI further represents and warrants that the execution, delivery and performance of this Amendment are du ly authorized, do not require the consent or approval of any governmental body or regulatory authority and are not in contravention of or in conflict with any material law or regulation or any term or provision of any other material agreement entered into by such Borrower, Rail or FSI, as applicable.

Section 8. Ratification and Reaffirmation of Liens. Each of TEP, Acquisub and EGF VI hereby ratifies and reaffirms the validity and enforceability of all of the liens and security interests heretofore granted pursuant to its respective Security Agreements, as collateral security for the Secured Obligations (as defined therein), and acknowledges that all of such liens and security interests, and all Collateral (as defined therein) heretofore pledged as security for the Secured Obligations (as defined therein), continues to be and remains Collateral (as defined therein) for the Secured Obligations (as defined therein) from and after the date hereof.

Section 9. Governing Law. Except as otherwise expressly provided in any of the Loan Documents, in all respects, including all matters of construction, validity and performance, this Amendment shall be governed by, and construed and enforced in accordance with, the laws of the State of California applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America.

Section 10. Effective Date of Amendment; Full Force And Effect; Entire Agreement. This Amendment shall be deemed effective as of the Effective Date. Except to the extent expressly provided in this Amendment, the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect. This Amendment, the Credit Agreement, and the other Loan Documents constitute and contain the entire agreement of the parties hereto and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof or the extension of credit by the Lenders to the Borrowers, Rail, and/or their affiliates.

Section 11. Counterparts. This Amendment may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

Witness the due execution hereof by the respective duly authorized officers of the undersigned as of the date first written above.

Borrowers: PLM Equipment Growth Fund VI

By PLM Financial Services, Inc.,

Its General Partner

Its________________________________________

PLM Equipment Growth & Income Fund VII

By PLM Financial Services, Inc.,

Its General Partner

Its________________________________________

Transportation Equipment-PLM, LLC

By: MILPI Holdings, LLC,

a Delaware limited liability company

By: Its Managing Members,

AFG Investment Trust C

By: Its Managing Trustee,

AFG ASIT Corporation, a

Massachusetts corporation

By:___________________________

Richard K Brock

Its: Chief Financial Officer

PLM MILPI Holdings LLC,

A Delaware limited liability company

By:_________________________

James A. Coyne, Manager

Acquisub, LLC

By PLM Financial Services, Inc.,

Its Manager

Its________________________________________

Rail: Rail Investors II, LLC

By________________________________

Gary D. Engle, Manager

By________________________________

James A. Coyne, Manager

FSI: PLM Financial Services, Inc.

Its________________________________________

Lenders: Comerica Bank

Its________________________________________

First Bank dba First Bank & Trust

Its________________________________________

Agent: Comerica Bank

Its________________________________________

The undersigned Guarantors under the Second Amended and Restated Guaranty dated as of October 20, 2004 (the “Guaranty”) hereby consent to the terms of the foregoing amendment and acknowledge that the Guaranty remains fully effective in accordance with its terms with respect to the obligations of the Borrowers (other than Rail) under the Credit Agreement, as amended pursuant to this Amendment.

[signature page to follow]

Executed as of October 20, 2004.

PLM International, Inc.

By:__________________________

Its:__________________________

PLM Financial Services, Inc.

By:_________________________

Its:_________________________

PLM Transportation Equipment Corporation

By:__________________________

Its:__________________________

MILPI Holdings, LLC

By: Its Managing Members,

AFG Investment Trust C

By: Its Managing Trustee,

AFG ASIT Corporation, a Massachusetts corporation

By:___________________________

Richard K Brock

Its: Chief Financial Officer

PLM MILPI Holdings LLC,

a Delaware limited liability company

By:_________________________

James A. Coyne, Manager

Schedule A-1

(RAIL COMMITMENTS)

& nbsp;

Lender	Rail Commitment	Pro Rata Share
Comerica Bank	$3,750.00	75%
Fist Bank dba First Bank & Trust	$1,250.00	25%

EX-10.3 4 plmexh103.htm PLM EXHIBIT 10.3 PLM Exhibit 10.3

OPERATING AGREEMENT

PLM CAL I LLC

This Operating Agreement ("Agreement") is made as of June 4, 2004 among the parties signing below as Members (each individually referred to as a "Member" and collectively referred to as the "Members").

SECTION 1

DEFINITIONS

When used in the Agreement the following terms shall have the meanings set forth in this Section.

1.1 Act. The Delaware Limited Liability Company Act, Delaware Statutes, §§ 18-101 to 18-1109, as amended from time to time.

1.2 Additional Capital Contribution Date. As defined in Section 4.2

1.3 Additional Capital Contributions. As defined in Section 4.2.

1.4 Adjusted Capital Account. As defined in Section 4.4(b).

1.5 Adjusted Capital Account Deficit. As defined in Section 4.4(c).

1.6 Adjusted Invested Capital. The Invested Capital of a Member, less all Distributions.

1.7 Affiliate. An affiliate of a erson is:

a) any person directly or indirectly controlling, controlled by, or under common control with the person;

b) a person owning or controlling 10% or more of the outstanding voting securities or beneficial interests of the person:

c) any officer, director, partner, general trustee, or person acting in a substantially similar capacity for the person; and

d) any person who is an officer, director, general partner, trustee, or holder of 10% or more of the voting securities or beneficial interests of any of the foregoing.

1.8 Allocations. The allocations of the LLC

1.9 Assignee. A person who has acquired a beneficial interest in the LLC from a Member in compliance with the terms of the Agreement and who acquires the rights described in Section 9.2.

1.10 Bankruptcy. Institution of any proceedings under federal or state laws for relief of debtors, including the filing of a voluntary or involuntary petition under the federal bankruptcy law; an adjudication as insolvent or bankrupt; an assignment of property for the benefit of creditors; the appointment of a receiver, trustee, or conservator of any substantial portion of assets; or the seizure by a sheriff, receiver, trustee, or conservator of any substantial portion of assets. The failure to obtain the dismissal of any of the foregoing proceedings, or the failure to obtain the removal of a conservator, receiver, or trustee, within 60 days after either event shall also be considered Bankruptcy.

1.11 Capital Account. As defined in Section 4.4(a).

1.12 Cash Call. As defined in Section 4.2.

1.13 Certificate of Interest. The certificate described in Section 2.6.

1.14 Code. The Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent revenue laws.

1.15 Contributing Member. As defined in Section 4.2.

1.16 Deficit Contribution Amount. As defined in Section 4.2.

1.17 Distributions. Cash or property distributed to Members arising from their interests in the LLC, other than payments to Members for services or as repayment of loan.

1.18 Event of Dissolution. As defined in Section 3.2.

1.19 Invested Capital. The money contributed to the LLC by any Member as capital, including contributions pursuant to Section 4.1 when the LLC was first formed and any subsequent contributions.

1.20 Limited Liability Company or LLC. PLM CAL I LLC

1.21 Managing Member. Equis II Corporation, a Delaware corporation, and any permitted successors thereto.

1.22 Member. Any person who is a Member in the LLC.

1.23 Membership Interests. The interests of the Member(s) in the LLC as indicated on Exhibit A as it may be modified from time to time as permitted by this Agreement and the Act, as more particularly described in Section 2.6 below.

1.24 Minimum Gain. The

1.25 Net Income and Net Loss. For each taxable year or other period, the amount equal to the LLC

a) Any income that is exempt from federal income tax shall be added to the LLC

b) Any expenditure of the LLC described in Internal Revenue Code Section 705(a)(2)(B) (or treated by Treasury Regulations as if described in that section) shall be treated as a deduction of the LLC;

c) Gain or loss from any disposition of LLC property shall be computed with reference to the LLC

d) Such other adjustments that the Managing Member determines is necessary to comply with Treasury Regulation Section 1.704-1(b).

1.26 Net Proceeds from Operations. Gross revenues generated by the LLC and miscellaneous sources other than Net Proceeds from Sales or Refinancings, less cash expenditures, debt service, operating expenses and amounts set aside for reserves.

1.27 Net Proceeds from Sales or Refinancings. Net proceeds from (i) a sale or refinancing of the LLC assets after deducting expenses relating to the transaction and retaining a Reserve, (ii) condemnation awards, or (iii) insurance settlements not used to rebuild or replace the affected property.

1.28 Percentage Interest. The total percentage Membership Interest of a Member in the LLC as indicated on Exhibit A, as it may be modified from time to time as permitted by this Agreement and the Act.

1.29 Place of Business. As defined in Section 2.5.

1.30 Reserves. A sum of money retained by the LLC for contingencies, as described in Section 4.5.

1.31 Successor. A successor to or holder of a Member

1.32 Tax Matters Members. Equis II Corporation, a Delaware corporation, and any permitted successors thereto.

1.33 Value Date. As defined in Section 14.2.

SECTION 2

ORGANIZATION

2.1 Form. The LLC shall hold, operate, purchase, sell and manage the company property and enter into contracts and do business as a limited liability company.

2.2 Articles. The Certificate of Formation will or have been signed by a Member, or its legal representative, and filed in the Office of the Secretary of State of Delaware.

2.3 Purpose. Except as otherwise stated herein, the purpose and activity of the LLC shall be to engage in any lawful act or activity for which a limited liability company may be organized under the Act. In particular, the LLC shall manage, and act as agent for a number of Aircraft directly and/or indirectly controlled by various customers but shall not be involved in any capacity with any investment activity arising therefrom except in a referring capacity t o Affiliates of the Members.

2.4 Name. The name of the LLC shall be

2.5 Place of Business. The principal place of business for the Limited Liability Company shall be 200 Nyala Farms, Westport, CT, 06880, at such other place as the Managing Member may determine from time to time.

2.6 Certificate of Interest. Upon request, the LLC shall issue to each Member a Certificate of Interest evidencing the Member

2.7 Ownership/Acquisition of Certificates of Interest. Each Member who now owns or holds or who in the future may own or hold a Certificate of Interest or who otherwise owns or holds a Percentage Interest in the LLC warrants and covenants that he/she: (i) owns such Percentage Interest free and clear of any and all pledges, proxies, voting trusts or other adverse claims whatsoever; (ii) acquired or is acquiring such Percentage Interest for his/her own account and not with a view to, or for resale in connection with, any distribution within the meaning of the Securities Act of 1933, as amended, and/or any equivalent or similar Act passed by any relevant state legislature, including but not limited to the Delaware legislature; (iii) prior to acquiring the Percentage Interest, had received all information regarding the LLC and its businesses which he/she requested in order to enable him/her to evaluate the merits and risks of an investment in the Percentage Interest; (iv) by reason of his/her substantial experience in business and financial matters or that of his/her financial or other advisor(s) was fully capable of evaluating the merits and risks of an investment in the Percentage Interest; and (v) was able to bear the full economic risk of investment in the Percentage Interest, understood that there were substantial restrictions on transferability of the Percentage Interest, and could afford the complete loss of its investment in the Percentage Interest.

SECTION 3

TERM

3.1 Commencement. The LLC terms shall begin on the date the Certificate of Formation is filed with the Secretary of State.

3.2 Dissolution.

a) The LLC, and the agency relationship between the Members shall dissolve on the occurrence of an Event of Dissolution.

b) Each of the following shall be an

i) Election by a unanimous vote of the Members to dissolve;

ii) sale of all or substantially all of the assets of the LLC as determined by the Members in their sole and absolute discretion; or

iii) entry of a judicial decree of dissolution.

c) Following a dissolution, the LLC assets shall be liquidated and the proceeds distributed as provided in Section 5.4.

3.3 Continuation. On the occurrence of an Event of Dissolution, a Member by unanimous vote may elect to continue the business of the LLC in a new limited liability company.

SECTION 4

CAPITAL

4.1 Capital Contributions. Each Member has made the initial capital contributions on Exhibit A in return for the Membership Interest.

4.2 Additional Capital.

c) Loans. In the event the Managing Member determines that Company requires funds in addition to the amounts provided in Section 4.1 and 4.2, and the Company has determined that a loan or loans are necessary or desirable, the Company may borrow funds from Persons upon such terms and conditions as are approved by the Managing Member.

4.3 Additional Member. Additional Members may be admitted to the LLC at any time as proposed by any Member and approved by a unanimous vote of the Members. Additional Members shall be admitted effective as of the first day of the first calendar month following the month in which the additional Member has contributed Invested Capital. All of the Members

4.4 Capital Accounts.

b) Adjusted Capital Account.

i) increasing the Capital Account by any amounts which the Member is obligated to restore or is deemed to be obligated to restore pursuant to Treasury Regulation Section 1.704-1(b)(4)(iv) (f) or Treasury Regulation Section 1.704-1(b)(4)(iv)(h)(5); and

ii) decreasing the Capital Account by the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

c) Adjusted Capital Account Deficit.

d) Valuation of Limited Liability Company Assets. The book values of all LLC assets shall be adjusted to equal their respective fair market values (taking Internal Revenue Code Section 7701(g) into account), as reasonably determined by the Managing Member, upon the occurrence of any of the following events:

i) a contribution of money or property (other than a de minimis amount) to the LLC by a new or existing Member as consideration for an interest in the LLC;

ii) a distribution of money or property (other than a de minimis amount) by the LLC to a Member as consideration for an interest in the LLC; and

iii) the liquidation of the LLC within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g).

Any such adjustments shall be reflected by corresponding adjustments to the Capital Accounts which reflect the manner in which the unrealized income, gain, loss or deduction inherent in such property (that has not been reflected in the Capital Accounts previously) would be allocated among the Members if there were a taxable disposition of such assets for such fair market values.

4.5 Reserves. Reserves in an amount determined by the Managing Member may be retained out of Invested Capital, Net Proceeds From Sales or Refinancings or Net Proceeds From Operations. Any Reserves remaining on dissolution of the LLC shall be held until the final liquidation and then distributed to the Members in accordance with the provisions of Section 5.5.

SECTION 5

DISTRIBUTIONS AND ALLOCATIONS

5.1 Distributions. Except as otherwise provided in Section 5.4, Net Proceeds from Operations, Net Proceeds from Sales and Refinancings and Net Income shall be distributed as follows: subject to the provisions of Section 6.2 below, and after all ordinary and reasonable expenses of the LLC have been paid, including but not limited to debt service, fees for services rendered to the LLC, commissions, etc., any cash or other assets of the LLC remaining will be distributed by the LLC between and amongst all Members pro-rata in accordance with their Percentage Interests.

5.2 Net Losses. Except as otherwise provided in Section 5.3, Net Losses for any year shall be allocated between and amongst all Members pro-rata. Notwithstanding the foregoing, the Members expressly agree that no Member shall be allocated Net Losses in excess of that Member

5.3 Special Allocations. Notwithstanding Sections 5.1 and 5.2, LLC income, gain, losses and deductions shall be allocated in accordance with the following provisions:

a) If LLC property is reflected in the Capital Accounts and on the books of the LLC at a book value that differs from the adjusted tax basis of such property, then depreciation, depletion, amortization, and gain or loss, as computed for tax purposes, with respect to such property, shall be determined so as to take account of the variation between the adjusted tax basis and the book value of such property in the same manner as under Section 704(c) of the Internal Revenue Code.

c) If there is a net decrease in LLC Minimum Gain for any LLC taxable year and if there exists an Adjusted Capital Account Deficit in a Member

d) Any item of LLC loss, deduction, or Section 705(a)(2)(B) expenditure that is attributable to nonrecourse debt with respect to which a Member bears the economic risk of loss (a

e) Any special allocations of items of Income or gain pursuant to Sections 5.4(b) and (c) shall be taken into account in computing subsequent allocations pursuant to Sections 5.2 and 5.3, so that the net amount of any items so allocated to each Member shall, to the extent possible, be equal to the net amount that would have been allocated to each Member pursuant to this Section 5 if the qualified income offset or minimum gain charge back had not occurred.

5.4 Dissolution. On dissolution of the LLC without continuation, the business of the LLC shall be wound up by the Managing Member, the assets liquidated, and the proceeds applied to:

a) payment of LLC debts, including expenses of the liquidation, except that on liquidation the debts owed to secured creditors shall be assumed or otherwise transferred; and

b) creation in a trust account of a reasonable reserve, as determined by the Managing Member, for payment of contingent liabilities and expenses.

The remaining proceeds shall be distributed to the Members in accordance with Section 5.1 of this Agreement, as determined after taking into account all Capital Account adjustments for the LLC taxable year during which such liquidation occurs. Such Distributions shall be made by the end of the taxable year in which the liquidation occurs, or, if later, within 90 days after the date of such liquidation. After passage of a reasonable time and payment of any contingencies arising in that time, the balance of the reserve shall be distributed to the Members in the same manner.

5.5 Apportionment Among Members. Except as otherwise provided herein, the Net Income, Net Loss, and Distributions allocated to the Members shall be apportioned among them in the same ratio as each Capital Account bears to the total of the Capital Accounts of all Members.

5.6 Return of Distributions. Any Distribution made to the Members shall be deemed to comply with all applicable law, provided the Distribution is made from available LLC assets.

5.7 Allocation on Transfer of Limited Liability Company Percentage Interests. On the transfer of a Percentage Interest of a particular class of Membership Interest in the LLC, the distributive share of all items of income, gain, loss, deduction, or credit associated with that interest for the taxable year in which the transfer occurs shall be allocated between the transferor and the transferee as determined by the Member using any permissible method under Internal Revenue Code Section 706 and Treasury Regulations thereunder.

5.8 Allocation Regulation. It is the intent of the LLC that the Agreement complies with the terms and requirements of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), including its provisions as to the safe harbor test and the qualified income offset. Treasury Regulation Section 1.704-1(b)(2)(ii)(d) is incorporated by reference in this Agreement. If the LLC determines that the Allocation provisions of the Agreement are unlikely to be respected for federal income tax purposes, the Members shall have the authority to amend the allocation provisions of this Agreement to the minimum extent necessary to effect the allocations and distributi ons plan of the Agreement.

SECTION 6

MANAGING MEMBER COMPENSATION

The Managing Member shall receive compensation only as specified in the Agreement, as set forth on Exhibit B. The Members hereby expressly agree that compensation to the Managing Member shall be paid prior to any profit distribution to the Members. The compensation to the Managing Member as contemplated by this Section 6 shall be in addition to, and not in lieu of, any other Distributions that the LLC may make to its Members.

SECTION 7

LIMITED LIABILITY COMPANY EXPENSES

7.1 Reimbursable Expenses.

a) The LLC shall reimburse the Managing Member, Members or its Affiliates for the actual cost of goods and materials used for or by the LLC.

b) The LLC shall pay all expenses of the LLC for services engaged by the LLC. Such services shall be upon terms and conditions that the Managing Member deems to be fair and reasonable, provided that no amounts payable to Affiliates or Members for such services shall exceed an amount which is competitive in price and terms with compensation charged by a non-Affiliate or non-Member rendering comparable services. Such services may include, without limitation:

i) any expenses incurred in borrowing money and the costs of repaying loans;

ii) all taxes and assessments on property and all other taxes applicable to the LLC;

iii) all costs of professional services rendered to the LLC for LLC related business, including, without limitation, administrative services, asset management services, management agents, personnel, insurance brokers, real estate brokers, loan brokers, consultants, accountants, attorneys, auditors, and other professional advisors;

iv) expenses and taxes incurred in distributing, transferring, and recording documents that evidence ownership of an interest in the LLC or LLC related business;

v) expenses incurred in repairing, certifying, leasing, refinancing, removal, improvements to and operating the LLC property;

vi) commissions arising from the sale or disposition of the LLC property; and

vii) the costs to employ the services to assist the Managing Member in its managerial duties.

7.2 Members Indemnification. Each Member will indemnify each other Member for any amounts such other Member pays on any guarantee of the LLC

SECTION 8

BOOKS AND RECORDS

8.1 Records. The Managing Member shall keep at its offices located at the Place of Business, the following LLC documents:

a) a current list of the full name and last known business or residence address of each Member, together with the contribution and share in profits and losses of each Member;

b) a copy of the Certificate of Formation of LLC and all Certificates of Amendment, and executed copies of any powers of attorney pursuant to which any Certificate has been executed;

c) copies of the LLC

d) copies of this Agreement and all Amendments to the Agreement;

e) financial statements of the LLC for the six most recent tax years; and

f) the LLC

8.2 Delivery to Member and Inspection.

a) Upon written request of a Member, the Managing Member shall promptly deliver to the requesting Member, at the expense of the LLC, a copy of the information required to be maintained by Sections 8.1(a), 8.1(b), or 8.1(d).

b) Each Member has the right, upon reasonable request in writing, to:

i) Inspect and copy during normal business hours any of the LLC records required to be maintained by Section 8.1; and

ii) Obtain from the Managing Member, promptly after they are available a copy of the LLC

c) Notwithstanding anything to the contrary in Section 8 of the Agreement, Members shall not be entitled to inspect or receive copies of the following:

i) internal memoranda of the Members or Managing Member relating to matters other than LLC matters;

ii) correspondence and memoranda of advice from attorneys for the Managing Member;

iii) trade secrets and customer lists of the Managing Member or Members, tor information, financial statements of investors or Members, supplier lists, and similar and related materials, documents and correspondence.

8.3 Tax Returns.

a) The LLC

b) The Managing Member shall send to each Member, within 120 days after the end of each tax year, the information necessary for each Member to complete its federal and state income tax or information returns.

8.4 Tax Matters Member. The Managing Member shall be the Tax Matters Member for purposes of Section 6231(a)(7) of the Code, and shall have all the authority granted by the Code to the Tax Matters Member, including the authority, without the consent of any other Member, to do any of the following:

a) enter into a settlement agreement with the Internal Revenue Service, which purports to bind the Members;

b) file a petition as contemplated in Sections 6226(a) or 6228 of the Code;

c) intervene in any action as contemplated in Section 6226(b)5 of the Code;

d) file any request contemplated in Section 6227(b) of the Code; and enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code.

SECTION 9

ASSIGNMENT

9.1 Member Assignment Prohibited. Members shall not assign, transfer or sell any Percentage Interest or any Interest in LLC assets unless unanimous approval is given by the Members, and the procedures of this section, Section 13, and Section 14 are followed. A person purchasing or obtaining a Member interest at a foreclosure sale (or at its substituted sale) or by other operation of law without the consent of all of the Members, shall be an Assignee. Any assignment made in violation of this Agreement shall be void.

9.2 Assignee Rights. An Assignee shall not be entitled to any Member rights except the right to receive Distributions and Allocations of Net Income and Net Loss. The Assignee shall have a Capital Account and shall have Adjusted Invested Capital in the same amount as when its Percentage Interest was held by the assigning Member. The Assignee may become a Member pursuant to the procedures set forth in Section 9.3 below.

9.3 Substitute Member. An Assignee may become a Member upon the completion of all of the following:

a) The execution, acknowledgment, and delivery to the LLC of a written assignment in a form approved by the Members specifying the interest (including class) being assigned and setting forth the intention of the assigning Member that the Assignee succeed to the LLC interest as a Member.

b) The execution, acknowledgment, and delivery to the LLC of any other documents required by the Members from the assigning Member and the Assignee, including the Assignee

c) Obtaining the unanimous written consent of the Members.

The Members may elect to treat an Assignee who has not become a substituted Member as a substituted Member in the place of his Assignor should the Members deem, in their sole and absolute discretion, that such treatment is in the best interest of the LLC.

9.4 Involuntary Transfer.

a) Subject to the terms and conditions of Section 15 below, persons may become an Assignee by:

i) transfer caused by the death or legal incapacity of a Member;

ii) foreclosure (or transfer in lieu of foreclosure) against a Member

iii) court order;

iv) transfer from the transferee

v) transfer from a trustee, guardian, conservator, or other fiduciary on termination of the trust, guardian, conservator, or other fiduciary on termination of the trust, guardianship, conservatorship, or other fiduciary relationship.

On the occurrence of any of these events, the transferee shall become an Assignee on the first day of the calendar month following the later to occur of the date of transfer or notice to the Members of the date of transfer.

9.5 Conditions of Member Transfer. No assignment, transfer or sale of any Membership Interest that would otherwise be permitted hereunder shall be effective or recognized in any manner unless the person who acquires such interest accepts and assumes the terms and conditions of this Agreement in writing in form and substance acceptable to the Managing Member in its sole and absolute discretion. Any person who acquires in any manner whatsoever any Membership Interest (or any part thereof) in the LLC, whether or not such person has accepted and assumed in writing the terms and provisions of this Agreement or been admitted into the LLC as a Member, shall be deemed, by acceptance of the acquisition thereof, to have agreed to be subject to and bound by all of the obligations of this Agreement with respect to such Membership Interest and shall be subject to the provisions of this Agreement with respect to any subsequent assignment, transfer or sale of any Membership Interest.

9.6 Tax Election. The Managing Member may, at its sole discretion, make an election under Section 754 of the Internal Revenue Code to adjust the basis of the LLC

SECTION 10

MANAGEMENT

10.1 Control in Managing Member. Except as otherwise expressly stated in the Agreement, the Managing Member shall have exclusive control over the day to day business of the LLC, including without limitation the power to make ordinary and regular business decisions on a day-to-day basis regarding the operation of the venture.

a) manage the LLC operations and property;

b) acquire, hold, refinance, alienate or dispose of property, any interest in property, or any assets of the LLC;

c) employ or hire services for the LLC at the expense of the LLC as contemplated in Section 7 of this Agreement;

d) pay all organization expenses incurred in creating the LLC, and all operation expenses incurred in operating the LLC;

e) determine the amount and timing of Distributions;

f) open and maintain LLC bank accounts;

g) assume the overall duties imposed on the Managing Member by the Act;

h) borrow money on behalf of the LLC, encumber LLC assets, or place title to the LLC in the name of a nominee to obtain financing;

i) prepay in whole or in part, refinance, increase, modify, or extend any obligation;

10.3 Limitation on Managing Member. Without the unanimous consent of the Members, the Managing Member shall not have authority to:

a) perform any act in contravention of the Agreement;

b) perform any act that would make it impossible to carry on the ordinary business of the LLC;

c) amend the Agreement;

d) perform any act which, pursuant to the Agreement, requires approval by a vote of the Members, without first receiving the required approval; or

e) cause the LLC to enter into partnerships as a general or limited partner and exercise the authority and perform the duties required of the LLC as a partner in any partnership.

10.5 below. The Managing Member shall devote to the LLC the amount of time reasonably necessary to manage the LLC business and perform the Managing MemberIndemnification of Managing Member.

b) Recoveries based on the indemnification provisions of Section 10.4(a) shall be paid only out of LLC assets. No Member shall be personally liable for any recovery based on the indemnification provisions of Section 10.4(a).

10.6 Investment Opportunities. Neither the Managing Member, Members, nor any of its Affiliates shall be obligated to present any particular investment opportunity to the LLC, even if the opportunity is of a character which, if presented to the LLC, could be taken by the LLC. The Managing Member, Members, and their Affiliates shall have the right to take for their own account, or to recommend to others, any investment opportunity.

10.7 Miscellaneous Management Matters.

a) In executing the powers granted and performing the duties imposed by the Agreement, the Managing Member may rely on any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other document they believe to be genuine and to have been signed or presented by the proper party.

b) Members and Affiliates may participate in any permitted agreement and this participation shall not constitute a breach of any duty that the participant owes under the Agreement or by operation of law to the LLC, the Members, or the Assignees.

SECTION 11

VOTING RIGHTS AND MEETINGS OF MEMBERS

11.1 Management and Control. Except as otherwise provided in this Agreement, Members shall take no part in the control, conduct, or operation of the LLC and shall have no right or authority to act for or bind the LLC, including during the winding up period following dissolution of the LLC.

11.2 Voting Rights. Members shall have voting rights in proportion to their Percentage Interest.

11.3 Limitations. No Member shall have the right or power to:

a) withdraw or reduce its Invested Capital except on the dissolution of the LLC or as otherwise provided by law;

b) bring an action for partition against the LLC.

c) cause the termination and dissolution of the LLC, except as set forth in the Agreement; or

d) receive property other than cash in return for its Invested Capital.

Except as provided in Section 5 above, no Member shall have priority over any other Member to receive a return of invested Capital, Allocations of Net Income and Net Loss, or Distributions. Other than on dissolution of the LLC as provided by the Agreement, the Members have not agreed on when the contribution of each Member may be returned.

11.4 Limited Liability Company Meetings.

a) LLC meetings shall be held at any place stated in a meeting notice.

b) LLC meetings shall be held when called by any of the Members.

c) LLC meeting notices and procedures shall conform to the Act.

11.5 Voting Procedures. A Member shall be entitled to vote at a LLC meeting in person, by written proxy, or by a signed writing that is delivered to the Managing Member before the meeting and directs the manner in which the vote is to be cast. A Member shall be entitled to vote without a meeting by a signed writing that is delivered to the Managing Member in which the vote is to be cast. Only votes of Members of record on the notice date shall be counted at a LLC meeting or on the counting of a noticed vote. The laws of the State of Delaware applicable to the use of Limited Liability Company or corporate proxies shall govern the use of proxies by the Members.

11.6 Action Without a Meeting. Any action that may be taken at a LLC meeting may be taken without a LLC meeting if Members owning Percentage Interest of Membership Interest sufficient to authorize the action at a LLC meeting consent in a signed writing to the action and all Members are given notice of the action as provided in Section 11.4.

SECTION 12

REMOVAL OR WITHDRAWAL OF THE MANAGING MEMBER

12.2 Withdrawal. Any Member may withdraw only upon the unanimous approval of all Members, and then on 90 days

SECTION 13

RIGHT OF FIRST REFUSAL

13.1 Offer. Subject to Sections 9.2 and 15, any Member who wants to assign, transfer, sell, pledge or hypothecate its LLC interest (

13.2 Concurrence or Acceptance. The Offerees, shall respond by giving notice within 10 days of receiving the Proposal (

13.3 Rights of Buyer. A purchaser of the Selling Member

13.4 Purchase By Member. Any Member in the LLC or any Affiliate of a Member (the

SECTION 14

DEATH OR INCAPACITY OF A MEMBER

14.1 Withdrawing Member. A Member who is a natural person who becomes incapacitated, as defined in Section 15.1(b), or has died, shall be referred to as the Withdrawing Member.

a) Death of a Member. A Member

b) Incapacity of a Member. A Member shall be deemed incapacitated as of the date it undergoes bankruptcy, is judicially declared incompetent or insane, or has appointed a legal guardian or conservator. The trustee in bankruptcy, legal guardian, or conservator shall be referred to as the Successor. On the incapacity of a Member, its Successor shall become a Member except that its interest shall be subject to the options described in Section 15.1(c).

c) Successor. The LLC shall have the option to purchase the Successor

14.2 Valuation of Successor. If an option described in Section 14.1(c) is exercised, the LLC shall determine the value of the Withdrawing Member

14.3 Payment Upon Withdrawal. If the LLC purchases the Successor

SECTION 15

MISCELLANEOUS

15.1 Arbitration. Any controversy or claim arising out of or relating to this Agreement or a breach thereof shall, upon the request of any party involved, be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered may be entered in the highest court of any forum, state or Federal, having jurisdiction.

15.2 Survival of Representations and Obligations. Each and every warranty, representation, covenant and agreement set forth herein shall be true as of the date of execution hereof and as of the closing date of the subject transaction, shall survive the closing contemplated herein and the delivery of the assets and transfer of the title thereon, and shall be binding upon and inure to the benefit of the parties hereto and their representatives, heirs, successors and assigns.

15.3 Governing Law/Venue. It is the intent of the parties hereto that all questions with respect to the construction of this Agreement and the rights and liabilities of the parties hereto, shall be determined solely in accordance with the provisions of the laws of the State of Delaware.

15.4 Paragraph Headings. The subject headings of the paragraphs of this Agreement are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions.

15.5 Capitalized Terms. Except as otherwise expressly provided herein, all capitalized terms herein which are defined in this Agreement shall have the meaning ascribed to them in the Agreement.

15.6 Severability. In the event that any of the terms of this Agreement are held to be partially or wholly invalid or unenforceable for any reason whatsoever, such holding shall not affect, alter, modify or impair in any manner whatsoever, any of the other terms, or the remaining portion of any term, held to be partially invalid or unenforceable.

15.7 Amendments. The parties hereto may at any time amend this Agreement in any particular, by written consent of all of the Members.

15.8 Gender. Whenever required by the context, the singular number shall include the plural number, the plural number shall include the singular number, the masculine gender shall include the neuter and feminine genders and vice versa.

15.9 Notices. All notices and other communications under this Agreement shall be in writing and shall be considered given when delivered personally or mailed by registered mail (return receipt requested) or by well known international courier (i.e., Federal Express or D.H.L.) to the parties at the addresses set forth in the signature block (or at such other address as a party may specify by notice pursuant to this provision). 1

5.10 Merger of Prior Agreement and Understandings. This Agreement and the other documents incorporated herein by reference contain the entire understanding between the parties relating to the transaction contemplated hereby and all prior contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect.

15.11 Covenant to Sign Documents. Each Member shall execute, with acknowledgment or affidavit if required, all documents reasonably necessary or expedient to create the LLC and achieve its purpose.

15.13 No Waiver of Remedies. The failure of a Member to insist on the strict performance of any covenant or duty required by the Agreement, or to pursue any remedy under the Agreement, shall not constitute a waiver of the breach or the remedy.

15.14 Other States. If the business of the LLC is carried on or conducted in states other than Delaware, each Member shall execute documents as may be required or requested so that the Members may legally qualify the LLC in such other states. The Managing Member shall have the authority to designate a LLC office or principal place of business in any other state.

15.15 Remedies Cumulative. The remedies of the Members under the Agreement are cumulative and shall not exclude any other remedies to which the Member may be lawfully entitled.

[Signature page follows.]

IN WITNESS WHEREOF, the following Members have signed this Operating Agreement effective as of the date first set forth above.

Equis II Corporation, a Delaware corporation

______________________________________

By: __________________________________

Title:____________________________

PLM Equipment Growth Fund V, a

California limited partnership

_____________________________________

By:___________________________________

Title: __________________________________

PLM Equipment Growth Fund VI, a

California limited partnership

_____________________________________

By:___________________________________

Title: __________________________________

PLM Equipment Growth Fund VII, a

California limited partnership

_______________________________________

By:____________________________________

Title:___________________________________

EXHIBIT A

MEMBERS' NAMES, ADDRESSES,

INITIAL CAPITAL CONTRIBUTIONS AND

PERCENTAGE INTERESTS

Name and Address	Initial Capital Contribution	Percentage Interest
Equis II Corporation1050 Waltham StreetLexington, MA 02421	$500,000 in cash	0.990%
PLM Equipment Growth Fund V200 Nyala FarmsWestport, CT 06880	$20,000,000 in cash	39.604%
PLM Equipment Growth Fund VI200 Nyala FarmsWestport, CT 06880	$17,000,000 in cash	33.6634%
PLM Equipment Growth Fund VII200 Nyala FarmsWestport, CT 06880	$13,000,000 in cash	25.7426%

EXHIBIT B

MANAGING MEMBER COMPENSATION

(1) Acquisition Fee. As compensation for supervising asset acquisition and arranging deliveries of assets, Managing Member shall receive a fee equal to 4.5% of the original purchase price of the assets.

(2) Lease Negotiation Fee. As compensation for negotiating arrangements for the initial use of the assets, Managing Member shall receive a fee equal to 1% of the original purchase price of the assets.

(3) Debt Placement Fee. As compensation for arranging new indebtedness to finance the acquisition of assets by the LLC, Managing Member shall receive a fee equal to 1% of such indebtedness; provided, however, that such fee shall be reduced to the extent the LLC incurs such fees to unaffiliated third parties with respect to such indebtedness

(4) Asset Management Fee. As compensation for managing the assets, the Managing Member shall receive from the LLC, on a monthly basis, as soon as reasonably practical following the close of each calendar month, Asset Management Fees equal to the lessor of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) 2% of the gross lease revenues attributable to assets which are subject to full payout net leases.

EX-10.4 5 gfvex103.htm GF VI EXHIBIT 10.4 GF V Exhibit 10.3

OPERATING AGREEMENT

PLM CAL II LLC

This Operating Agreement (“Agreement”) is made as of June 4, 2004 among the parties signing below as Members (each individually referred to as a “Member” and collectively referred to as the “Members”).

SECTION 1

DEFINITIONS

When used in the Agreement the following terms shall have the meanings set forth in this Section.

1.1 Act. The Delaware Limited Liability Company Act, Delaware Statutes, §§ 18-101 to 18-1109, as amended from time to time.

1.2 Additional Capital Contribution Date. As defined in Section 4.2

1.3 Additional Capital Contributions. As defined in Section 4.2.

1.4 Adjusted Capital Account. As defined in Section 4.4(b).

1.5 Adjusted Capital Account Deficit. As defined in Section 4.4(c).

1.6 Adjusted Invested Capital. The Invested Capital of a Member, less all Distributions.

1.7 Affiliate. An affiliate of a person is:

a) any person directly or indirectly controlling, controlled by, or under common control with the person;

b) a person owning or controlling 10% or more of the outstanding voting securities or beneficial interests of the person:

c) any officer, director, partner, general trustee, or person acting in a substantially similar capacity for the person; and

d) any person who is an officer, director, general partner, trustee, or holder of 10% or more of the voting securities or beneficial interests of any of the foregoing.

1.8 Allocations. The allocations of the LLC’s Net Income, Net Loss, and other items of income loss, gain, or credits.

1.9 Assignee. A person who has acquired a beneficial interest in the LLC from a Member in compliance with the terms of the Agreement and who acquires the rights described in Section 9.2.

1.10 Bankruptcy. Institution of any proceedings under federal or state laws for relief of debtors, including the filing of a voluntary or involuntary petition under the federal bankruptcy law; an adjudication as insolvent or bankrupt; an assignment of property for the benefit of creditors; the appointment of a receiver, trustee, or conservator of any substantial portion of assets; or the seizure by a sheriff, receiver, trustee, or conservator of any substantial portion of assets. The failure to obtain the dismissal of any of the foregoing proceedings, or t he failure to obtain the removal of a conservator, receiver, or trustee, within 60 days after either event shall also be considered Bankruptcy.

1.11 Capital Account. As defined in Section 4.4(a).

1.12 Cash Call. As defined in Section 4.2.

1.13 Certificate of Interest. The certificate described in Section 2.6.

1.14 Code. The Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent revenue laws.

1.15 Contributing Member. As defined in Section 4.2.

1.16 Deficit Contribution Amount. As defined in Section 4.2.

1.17 Distributions. Cash or property distributed to Members arising from their interests in the LLC, other than payments to Members for services or as repayment of loan.

1.18 Event of Dissolution. As defined in Section 3.2.

1.19 Invested Capital. The money contributed to the LLC by any Member as capital, including contributions pursuant to Section 4.1 when the LLC was first formed and any subsequent contributions.

1.20 Limited Liability Company or LLC. PLM CAL II LLC

1.21 Managing Member. Equis II Corporation, a Delaware corporation, and any permitted successors thereto.

1.22 Member. Any person who is a Member in the LLC.

1.24 Minimum Gain. The “minimum gain” as defined in Treasury Regulation Section 1.704-1(b).

1.25 Net Income and Net Loss. For each taxable year or other period, the amount equal to the LLC’s taxable income or loss for such year or period, determined in accordance with Internal Revenue Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Internal Revenue Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

a) Any income that is exempt from federal income tax shall be added to the LLC’s gross income;

b) Any expenditure of the LLC described in Internal Revenue Code Section 705(a)(2)(B) (or treated by Treasury Regulations as if described in that section) shall be treated as a deduction of the LLC;

c) Gain or loss from any disposition of LLC property shall be computed with reference to the LLC’s internal adjusted tax basis of the property;

d) Such other adjustments that the Managing Member determines is necessary to comply with Treasury Regulation Section 1.704-1(b).

1.29 Place of Business. As defined in Section 2.5.

1.30 Reserves. A sum of money retained by the LLC for contingencies, as described in Section 4.5.

1.31 Successor. A successor to or holder of a Member’s interest following the death, incapacity, or bankruptcy of a Member as described in Section 14.1.

1.32 Tax Matters Members. Equis II Corporation, a Delaware corporation, and any permitted successors thereto.

1.33 Value Date. As defined in Section 14.2.

SECTION 2

ORGANIZATION

2.1 Form. The LLC shall hold, operate, purchase, sell and manage the company property and enter into contracts and do business as a limited liability company.

2.2 Articles. The Certificate of Formation will or have been signed by a Member, or its legal representative, and filed in the Office of the Secretary of State of Delaware.

2.4 Name. The name of the LLC shall be “PLM CAL II LLC,” or such other name as the Members may choose from time to time.

2.6 Certificate of Interest. Upon request, the LLC shall issue to each Member a Certificate of Interest evidencing the Member’s Percentage Interest of the LLC. The Certificate of Interest shall serve as prima facie evidence of the Member’s Percentage Interest. Subject to any restrictions on assignment in the Agreement, the Certificate of Interest may provide that its transfer is evidence of the transfer of the Percentage Interest of the Member of Membership Interest in the LLC, and that the holder of the Certificate of Interest shall be treated b y the LLC as an assignee or as a Member, according to the terms of the Agreement. A Percentage Interest shall be treated as a security as such term is defined in the Uniform Commercial Code as enacted in Delaware.

2.7 Ownership/Acquisition of Certificates of Interest. Each Member who now owns or holds or who in the future may own or hold a Certificate of Interest or who otherwise owns or holds a Percentage Interest in the LLC warrants and covenants that he/she: (i) owns such Percentage Interest free and clear of any and all pledges, proxies, voting trusts or other adverse claims whatsoever; (ii) acquired or is acquiring such Percentage Interest for his/her own account and not with a view to, or for resale in connection with, any distribution within the meaning of th e Securities Act of 1933, as amended, and/or any equivalent or similar Act passed by any relevant state legislature, including but not limited to the Delaware legislature; (iii) prior to acquiring the Percentage Interest, had received all information regarding the LLC and its businesses which he/she requested in order to enable him/her to evaluate the merits and risks of an investment in the Percentage Interest; (iv) by reason of his/her substantial experience in business and financial matters or that of his/her financial or other advisor(s) was fully capable of evaluating the merits and risks of an investment in the Percentage Interest; and (v) was able to bear the full economic risk of investment in the Percentage Interest, understood that there were substantial restrictions on transferability of the Percentage Interest, and could afford the complete loss of its investment in the Percentage Interest.

SECTION 3

TERM

3.1 Commencement. The LLC terms shall begin on the date the Certificate of Formation is filed with the Secretary of State.

3.2 Dissolution.

a) The LLC, and the agency relationship between the Members shall dissolve on the occurrence of an Event of Dissolution.

b) Each of the following shall be an “Event of Dissolution:”

i) Election by a unanimous vote of the Members to dissolve;

ii) sale of all or substantially all of the assets of the LLC as determined by the Members in their sole and absolute discretion; or

iii) entry of a judicial decree of dissolution

c) Following a dissolution, the LLC assets shall be liquidated and the proceeds distributed as provided in Section 5.4.

3.3 Continuation. On the occurrence of an Event of Dissolution, a Member by unanimous vote may elect to continue the business of the LLC in a new limited liability company.

SECTION 4

CAPITAL

4.1 Capital Contributions. Each Member has made the initial capital contributions on Exhibit A in return for the Membership Interest.

4.2 Additional Capital.

a) Additional Capital Contributions. To the extent that the Managing Member determines that Company requires funds in addition to the amounts provided in Section 4.1, the Members shall make such additional capital contributions (“Additional Capital Contributions”) as the Managing Member shall determine are necessary or desirable upon written notice (the “ Cash Call”) to each Member setting forth in reasonable detail (i) the amount and purpose of the Additional Capital Contributions required of the Members, (ii) the date on which the funds are required (the “Additional Capital Contribution Date”), and (iii) the amount to be contributed by each Member, which amount shall be in proportion to each Member’s Percentage Interest on the date of the Cash Call. On or prior to the Additional Capital Contribution Date, each Member shall contribute to the Company as an Additional Capital Contribution the funds requested in the Cash Call.

b) Consequences of Failure to Provide Additional Capital Contributions. In the event that Additional Capital Contributions are required to be made, if on or prior to the Additional Capital Contribution Date, one or more Members has made its share of the Additional Capital Contribution (each a “Contributing Member”) and one or more Members has failed to make its share of the Additional Capital Contribution (each a “Non-Contributing Member”), the Manager shall determine and give written notice to each Contributing Member of the amount of Additional Capital Contributions remaining to be made (the “Deficit Contribution Amount”), whereupon any Contributing Member shall have the option during the following five day period to elect to advance to the Company as an Additional Capital Contribution its pro rata share of the Deficit Contribution Amount. If there is more than one Contributing Member who elects to make such an additional advance, such Contributing Members shall make the additional advances pro rata in proportion to their respective Percentage Interests.

4.4 Capital Accounts.

a) Capital Account. Each Member shall have a Capital Account which shall be maintained in accordance with Treasury Regulation Section 1.704-1(b). The Capital Account for each Member shall include that Member’s Invested Capital in the Membership Interest plus the Member’s allocation of Net Income and minus the Member’s allocations of Net Loss and share of Distributions.

b) Adjusted Capital Account. “Adjusted Capital Account” shall mean the balance in a Member’s Capital Account as of the end of the taxable year after giving effect to the following adjustments:

ii) decreasing the Capital Account by the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6).

c) Adjusted Capital Account Deficit. “Adjusted Capital Account Deficit” shall mean the deficit balance, if any, in a Member’s Adjusted Capital Account as of the end of the taxable year. This definition of Adjusted Capital Account Deficit is intended to comply with, and it shall be interpreted so as to be, consistent with, the provisions of the Treasury Regulation,

Section 1.704-1(b)(2)(ii)(d).

i) a contribution of money or property (other than a de minimis amount) to the LLC by a new or existing Member as consideration for an interest in the LLC;

ii) a distribution of money or property (other than a de minimis amount) by the LLC to a Member as consideration for an interest in the LLC; and

iii) the liquidation of the LLC within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g).

SECTION 5

DISTRIBUTIONS AND ALLOCATIONS

5.3 Special Allocations. Notwithstanding Sections 5.1 and 5.2, LLC income, gain, losses and deductions shall be allocated in accordance with the following provisions:

b) To the extent a Member unexpectedly receives an adjustment allocation or distribution of any item described in Treasury Regulations Section 1.704-1(b) (2)(ii)(4), (5) or (6), and such adjustment, allocation or distribution creates an Adjusted Capital Account Deficit in such Member’s Capital Account, item of income and gain shall be allocated to such in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. This Section 5.4(b) is intended to comply with the “qualified income offset” provisions of Treasury Regulations Section 1.704-1(b) (2)(ii)(d) and these provisions shall be interpreted, and allocations hereunder shall be made, in conformity with such regulations.

c) If there is a net decrease in LLC Minimum Gain for any LLC taxable year and if there exists an Adjusted Capital Account Deficit in a Member’s Capital Account, items of income and gain shall be allocated to such Member in accordance with Treasury Regulation Section 1.704-1T(b)(4)(iv)(e). This Section 5.4(c) is intended to comply with the “minimum gain charge back” requirements of Treasury Regulations Section 1.704-1T(b)(4)(iv) and shall be interpreted consistently therewith.

d) Any item of LLC loss, deduction, or Section 705(a)(2)(B) expenditure that is attributable to nonrecourse debt with respect to which a Member bears the economic risk of loss (a “partner nonrecourse debt”) must be allocated to such Member in accordance with Treasury Regulations Section 1.704-1T(b)(4)(iv)(h). If there is a net decrease during a LLC taxable year in the partnership Minimum Gain attributable to a Member nonrecourse debt, then any Member with a share of such LLC Minimum Gain at the beginning of such taxable year shall be allocated items of LLC income and gain for such year (and, i f necessary, for subsequent years) in proportion to, and to the extent of, an amount equal to the greater of (i) the portion of such Member’s share of the net decrease of such LLC Minimum Gain that is allocable to the disposition of the Property that is subject to such nonrecourse debt, or (ii) the Adjusted Capital Account Deficit in such Member’s Capital Account as determined pursuant to Treasury Regulations Section 1.704-1(T)(b)(4)(iv)(h)(4).

5.4 Dissolution. On dissolution of the LLC without continuation, the business of the LLC shall be wound up by the Managing Member, the assets liquidated, and the proceeds applied to:

a) payment of LLC debts, including expenses of the liquidation, except that on liquidation the debts owed to secured creditors shall be assumed or otherwise transferred; and

b) creation in a trust account of a reasonable reserve, as determined by the Managing Member, for payment of contingent liabilities and expenses.

5.6 Return of Distributions. Any Distribution made to the Members shall be deemed to comply with all applicable law, provided the Distribution is made from available LLC assets.

SECTION 6

MANAGING MEMBER COMPENSATION

SECTION 7

LIMITED LIABILITY COMPANY EXPENSES

7.1 Reimbursable Expenses.

a) The LLC shall reimburse the Managing Member, Members or its Affiliates for the actual cost of goods and materials used for or by the LLC.

i)	any expenses incurred in borrowing money and the costs of repaying loans;

ii) all taxes and assessments on property and all other taxes applicable to the LLC;

iv) expenses and taxes incurred in distributing, transferring, and recording documents that evidence ownership of an interest in the LLC or LLC related business;

v) expenses incurred in repairing, certifying, leasing, refinancing, removal, improvements to and operating the LLC property;

vi) commissions arising from the sale or disposition of the LLC property; and

vii) the costs to employ the services to assist the Managing Member in its managerial duties.

7.2 Members Indemnification. Each Member will indemnify each other Member for any amounts such other Member pays on any guarantee of the LLC’s debts in excess of such indemnified Member’s pro rata share of such debt.

SECTION 8

BOOKS AND RECORDS

8.1 Records. The Managing Member shall keep at its offices located at the Place of Business, the following LLC documents:

a) a current list of the full name and last known business or residence address of each Member, together with the contribution and share in profits and losses of each Member;

b) a copy of the Certificate of Formation of LLC and all Certificates of Amendment, and executed copies of any powers of attorney pursuant to which any Certificate has been executed;

c) copies of the LLC’s federal, state, and local income tax or information returns and reports, if any, for the six most recent tax years;

d) copies of this Agreement and all Amendments to the Agreement;

e) financial statements of the LLC for the six most recent tax years, and

f) the LLC’s books and records as they relate to the internal affairs of the LLC for the current and most recent three fiscal years.

8.2 Delivery to Member and Inspection.

b) Each Member has the right, upon reasonable request in writing to:

i) Inspect and copy during normal business hours any of the LLC records required to be maintained by Section 8.1; and

ii) Obtain from the Managing Member, promptly after they are available a copy of the LLC’s federal, state and local income tax or information returns for each year.

c) Notwithstanding anything to the contrary in Section 8 of the Agreement, Members shall not be entitled to inspect or receive copies of the following:

i) internal memoranda of the Members or Managing Member relating to matters other than LLC matters;

ii) correspondence and memoranda of advice from attorneys for the Managing Member;

iii) trade secrets and customer lists of the Managing Member or Members, investor information, financial statements of investors or Members, supplier lists, and similar and related materials, documents and correspondence.

8.3 Tax Returns.

a) The LLC’s tax or fiscal year shall terminate on December 31 of each calendar year. The LLC’s accountants shall be instructed to prepare and file all required income tax returns for the LLC. The Managing Member shall make any tax election necessary for completion of the LLC tax return.

a) enter into a settlement agreement with the Internal Revenue Service, which purports to bind the Members;

b) file a petition as contemplated in Sections 6226(a) or 6228 of the Code;

c) intervene in any action as contemplated in Section 6226(b)5 of the Code;

d) file any request contemplated in Section 6227(b) of the Code; and enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code.

SECTION 9

ASSIGNMENT

9.3 Substitute Member. An Assignee may become a Member upon the completion of all of the following:

b) The execution, acknowledgment, and delivery to the LLC of any other documents required by the Members from the assigning Member and the Assignee, including the Assignee’s acceptance of the Agreement (including Section 2.7 hereof).

c) Obtaining the unanimous writeen consent of the Members.

9.4 Involuntary Transfer.

a) Subject to the terms and conditions of Section 15 below, persons may become an Assignee by:

i) transfer caused by the death or legal incapacity of a Member.

ii) foreclosure (or transfer in lieu of foreclosure) against a Member’s interest that was pledged or assigned as security for an obligation;

iii) court order;

iv) transfer from the transferee’s spouse pursuant to a dissolution decree or a property settlement agreement; or

9.5 Conditions of Member Transfer. No assignment, transfer or sale of any Membership Interest that would otherwise be permitted hereunder shall be effective or recognized in any manner unless the person who acquires such interest accepts and assumes the terms and conditions of this Agreement in writing in form and substance acceptable to the Managing Member in its sole and absolute discretion. Any person who acquires in any manner whatsoever any Membership Interest (or any part thereof) in the LLC, whether or not such person has accepted and assumed in wri ting the terms and provisions of this Agreement or been admitted into the LLC as a Member, shall be deemed, by acceptance of the acquisition thereof, to have agreed to be subject to and bound by all of the obligations of this Agreement with respect to such Membership Interest and shall be subject to the provisions of this Agreement with respect to any subsequent assignment, transfer or sale of any Membership Interest.

9.6 Tax Election. The Managing Member may, at its sole discretion, make an election under Section 754 of the Internal Revenue Code to adjust the basis of the LLC’s assets to reflect the purchase price paid by an Assignee.

SECTION 10

MANAGEMENT

10.2 Authority of Managing Member. The Managing Member shall have all rights, power and authority generally conferred by law or necessary, advisable, or consistent with accomplishing the purpose of the LLC. Without limiting the Managing Member’s powers, and subject to the applicable voting rights of the Members, the Managing Member shall have the right and authority to:

a) manage the LLC operations and property.

b) acquire, hold, refinance, alienate or dispose of property, any interest in property, or any assets of the LLC;

c) employ or hire services for the LLC at the expense of the LLC as contemplated in Section 7 of this Agreement;

d) pay all organization expenses incurred in creating the LLC, and all operation expenses incurred in operating the LLC;

e) determine the amount and timing of Distributions;

f) open and maintain LLC bank accounts;

g) assume the overall duties imposed on the Managing Member by the Act;

h) borrow money on behalf of the LLC, encumber LLC assets, or place title to the LLC in the name of a nominee to obtain financing;

i) prepay in whole or in part, refinance, increase, modify, or extend any obligation;

10.3 Limitation on Managing Member’s Authority. Without the unanimous consent of the Members, the Managing Member shall not have authority to:

a) perform any act in contravention of the Agreement;

b) perform any act that would make it impossible to carry on the ordinary business of the LLC;

c) amend the Agreement;

d) perform any act which, pursuant to the Agreement, requires approval by a vote of the Members, without first receiving the required approval; or

e) cause the LLC to enter into partnerships as a general or limited partner and exercise the authority and perform the duties required of the LLC as a partner in any partnership.

10.4 Devotion of Time. The Managing Member is not obligated to devote its full time and attention to the affairs of the LLC, and may become involved in other businesses, occupations and partnerships, whether or not related to the business and affairs of the LLC, including but not limited to that certain capital investment venture as more particularly described in Section 10.5 below. The Managing Member shall devote to the LLC the amount of time reasonably necessary to manage the LLC business and perform the Managing Member’s duties.

10.5 Indemnification of Managing Member.

a) The LLC, its receiver, or its trustee shall indemnify the Managing Member, any partners of the Managing Member, any officers, directors, shareholders, employees, agents, attorneys, subsidiaries, or assignees of the Managing Member or its partners and any Affiliates of the Managing Member or its partners against all liabilities and expenses (including penalties, fines, attorneys’ fees, and amounts paid in compromise of a claim or to satisfy a judgment) reasonably incurred by any of them in defending or disposing of any threatened or actual civil, criminal, or administrative suit or proceeding ari sing out of or in any way relating to the LLC, the business of the LLC, or to acting or having acted as a Managing Member or an Affiliate of the Managing Member, including any payments made to satisfy guarantees of the debts of the LLC, except as limited in Section 7.2 of this Agreement. Notwithstanding anything to the contrary in Section 10.4(a), no person shall be indemnified as to any matter caused by that person’s gross negligence, fraud, or criminal act or as to any matter in which the person is adjudicated to have acted in bad faith or with willful misconduct.

10.7 Miscellaneous Management Matters.

10.8 Agreements with Managing Member, Members or Affiliate. The Managing Member, Members and any of its Affiliates may deal directly or indirectly with the LLC in carrying out LLC business. The Managing Member may act as an independent contractor or as an agent for other persons, and may receive profits, compensation and commissions. Any such agreements the Managing Member intends to have with the LLC shall be made on an arm’s length basis and disclosed in advance of such agreement to all of the Members. In particular, and without limiting in any way the Managing Member’s right to participate in any other related or unrelated business venture, the Members, jointly and severally: (i) acknowledge that the Managing Member may be associated with an investment company, (ii) irrevocably consent to the referral by the LLC and/or the Managing Member to the Investment Company of investment opportunities which may arise or be related in any way to the management or administration of the LLC, (iii) expressly and irrevocably waive the right to claim an interest in any profits derived by the Managing Member and/or the Investment Company from any such investment activity, whether or not such profit was derived from a referral of the Managing Member and/or the LLC, and (iv) expressly and irrevocably waive any conflict and/or breach of fiduciary duty on the part of the Managing Member with respect to the foregoing. Notwithstanding the foregoing, the LLC shall be reimbursed by the Investment Company for all out of pocket expenses incurred in relation to any investme nt activity arising from or related to the LLC business, including but not limited legal fees, aircraft inspections, and travel, upon the written disclosure by the LLC to the Investment Company of all such out of pocket expenses.

SECTION 11

VOTING RIGHTS AND MEETINGS OF MEMBERS

11.2 Voting Rights. Members shall have voting rights in proportion to their Percentage Interest.

11.3 Limitations. No Member shall have the right or power to:

a) withdraw or reduce its Invested Capital except on the dissolution of the LLC or as otherwise provided by law;

b) bring an action for partition against, the LLC.

c) cause the termination and dissolution of the LLC, except as set forth in the Agreement; or

d) receive property other than cash in return for its Invested Capital

11.4 Limited Liability Company Meetings.

a) LLC meetings shall be held at any place stated in a meeting notice.

b) LLC meetings shall be held when called by any of the Members.

c) LLC meeting notices and procedures shall conform to the Act.

SECTION 12

REMOVAL OR WITHDRAWAL OF THE MANAGING MEMBER

12.1 Removal. Any Member may be removed at any time, with cause, by the unanimous vote of the Members at a meeting called expressly for that purpose, or by the unanimous written consent of the Members. Any removal shall not affect the Members’ rights as a Member or constitute a withdrawal of a Member. For purposes of this section, “cause” shall mean fraud, gross negligence, willful misconduct, breach of fiduciary duty not otherwise waived herein or elsewhere in writing, embezzlement or a breach of the Managing Member’s obligations under this Agreement. Notice of removal shall be served on the Member and shall set forth the date on which the removal becomes effective.

12.2 Withdrawal. Any Member may withdraw only upon the unanimous approval of all Members, and then on 90 days’ written notice to all of the Members, and shall cease to be a Managing Member and Member on the effective date of its withdrawal.

SECTION 13

RIGHT OF FIRST REFUSAL

13.1 Offer. Subject to Sections 9.2 and 15, any Member who wants to assign, transfer, sell, pledge or hypothecate its LLC interest (“Selling Member”) other than to another Member or an Affiliate of a Member shall first offer to sell its interest to the LLC and to the other Members (“Offerees”). The Selling Member shall make the offer to sell by giving notice to the Offerees (“Proposal”). The Proposal shall state the exact terms and price of the proposed sale.

13.2 Concurrence or Acceptance. The Offerees, shall respond by giving notice within 10 days of receiving the Proposal (“Offer Period”). The Offeree’s response shall either accept the offer on the same terms and for the same price as in the Proposal or reject the offer. If more than one Offeree elects to purchase, the purchasers shall take the Selling Member’s interest pro rata according to their respective Percentage Interests in the class of Membership Interest being sold by the Selling Member. If the Offerees do not respond within the Offer Period, the Selling Member may sell its interest to any other party on the same terms and for the same price as in the Proposal for a period of 90 days after the end of the Offer Period. If the Selling Member does not complete the sale of its interest within that 90-day period, the provisions of Section 14 shall apply to any later sale or Proposal.

13.3 Rights of Buyer. A purchaser of the Selling Member’s interest, if not already a Member, shall be an Assignee and shall not become a substitute Member unless it satisfies the requirements of Section 9.3 above.

13.4 Purchase By Member. Any Member in the LLC or any Affiliate of a Member (the “Purchasing Member”) may, at any time, purchase any or all of the Membership Interests in the LLC of another Member, subject to the requirements of Sections 9 and 14.

SECTION 14

DEATH OR INCAPACITY OF A MEMBER

14.1 Withdrawing Member’s Status. A Member who is a natural person who becomes incapacitated, as defined in Section 15.1(b), or has died, shall be referred to as the Withdrawing Member.

a) Death of a Member. A Member’s death shall not cause the LLC to dissolve. The estate of the deceased Member and the person entitled to succeed to the LLC interest of a deceased Member under the decedent’s will or the laws of interstate succession shall be referred to as the “Successor”. On the death of a Member, the Successor shall become a Member, with all the rights and obligations of the deceased Member except that its interest shall be subject to the options described in Section 15 .1(c).

c) Successor’s Interest. The LLC shall have the option to purchase the Successor’s interest. The LLC’s decision to exercise its option to purchase shall be within the sole discretion of the Managing Member. This option shall be available for 90 calendar days after the date of death or incapacity and shall be exercised by giving notice to the LLC and the Successor within that time period.

14.2 Valuation of Successor’s Interest. If an option described in Section 14.1(c) is exercised, the LLC shall determine the value of the Withdrawing Member’s interest. The value shall be calculated as of the last day of the calendar month in which the Withdrawing Member dies or becomes incapacitated (“Value Date”). The value shall be the amount that the Withdrawing Member would receive upon a liquidation and sale of all of the LLC assets, taking into consideration the costs of the sale and assuming the assets would be sold at their fair market value. If the Successor does not approve the value determined by the LLC, or if the determination of value is not made within 90 calendar days of the Value Date, the value shall be determined by arbitration according to the rules of the American Arbitration Association.

14.3 Payment Upon Withdrawal. If the LLC purchases the Successor’s interest, the LLC shall pay the Successor the stated amount in one, single cash payment.

SECTION 15

MISCELLANEOUS

15.5 Capitalized Terms. Except as otherwise expressly provided herein, all capitalized terms herein which are defined in this Agreement shall have the meaning ascribed to them in the Agreement.

15.7 Amendments. The parties hereto may at any time amend this Agreement in any particular, by written consent of all of the Members.

15.10 Merger of Prior Agreement and Understandings. This Agreement and the other documents incorporated herein by reference contain the entire understanding between the parties relating to the transaction contemplated hereby and all prior contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect.

15.11 Covenant to Sign Documents. Each Member shall execute, with acknowledgment or affidavit if required, all documents reasonably necessary or expedient to create the LLC and achieve its purpose.

15.12 Multiple Ownership of Limited Liability Company Issues. A Membership Interest may be held jointly by husband and wife as community property, or by husband and wife or by unrelated persons as joint tenants or tenants in common, as shown on the signature page of the Agreement or in the LLC’s books and records. A Membership Interest owned by more than one person shall be deemed to be held by the owners as one Member. The LLC and the Members shall be entitled to consider any notice, vote, check, or similar document signed by any one of the owners to bind all the owners.

15.15 Remedies Cumulative. The remedies of the Members under the Agreement are cumulative and shall not exclude any other remedies to which the Member may be lawfully entitled.

15.16 Confidentiality. The Members hereby jointly and severally resolve that the commercial terms of this Agreement, and all negotiations between the Members, shall remain strictly confidential. The Members will hold same as “confidential information” in confidence, using whatever security measures, devices and procedures are necessary and required to secure the information confidential. In the event that disclosure is required to any other third party or any other person who is not a party to this Agreement, they shall be made to execute a confi dentiality and non-compete agreement in advance binding them to the terms of this Agreement. This covenant shall be construed as an agreement independent of any other provision of this Agreement and shall survive the termination of this Agreement. In the event of a breach or threatened breach of the obligations under this Section 15.16, the Members acknowledge that the Company will not have an adequate remedy at law and shall be entitled to such equitable and injunctive relief as may be available to restrain the defaulting party from the violation of the provisions of this Section 15.16. This remedy shall not be exclusive.

[Signature page follows.]

IN WITNESS WHEREOF, the following Members have signed this Operating Agreement effective as of the date first set forth above.

Equis II Corporation, a Delaware

corporation

________________________________

By:______________________________

Title:____________________________

PLM Equipment Growth Fund V, a

California limited partnership

________________________________

By:______________________________

Title:____________________________

PLM Equipment Growth Fund VI, a

California limited partnership

________________________________

By:______________________________

Title:____________________________

PLM Equipment Growth Fund VII, a

California limited partnership

________________________________

By:______________________________

Title:____________________________

EXHIBIT A

MEMBERS’ NAMES, ADDRESSES,

INITIAL CAPITAL CONTRIBUTIONS AND

PERCENTAGE INTERESTS

Name and Address	Initial Capital Contribution	Percentage Interest
Equis II Corporation 1050 Waltham Street Lexington, MA 02421	$49.50 in cash	0.990%
PLM Equipment Growth Fund V 200 Nyala Farms Westport, CT 06880	$1,980.20 in cash	39.604%
PLM Equipment Growth Fund VI 200 Nyala Farms Westport, CT 06880	$1,683.17 in cash	33.6634%
PLM Equipment Growth Fund VII 200 Nyala Farms Westport, CT 06880	$1,287.13 in cash	25.7426%

EXHIBIT B

MANAGING MEMBER COMPENSATION

EX-10.5 6 gfvex104.htm GF VI EXHIBIT 10.5 GF V Exhibit 10.4

EXECUTION COPY

PURCHASE AGREEMENT (645/646)

dated as of August 26, 2004

between

BALLSTON AERO TRUST SERVICES, L.C.,

as Seller,

and

PLM CAL I LLC,

as Purchaser

Vedder, Price, Kaufman & Kammholz, P.C.

Chicago, Illinois

	TABLE OF CONTENTS

		1
ARTICLE I	DEFINITIONS	1
Section 1.1.	Defined Terms	1

ARTICLE II	SALE AND PURCHASE, OTHER AGREEMENTS	4
Section 2.1.	Sale and Purchase	4
Section 2.2.	Acquisition Price; Payment	4
Section 2.3.	Taxes	5

ARTICLE III	CLOSING; CONDITIONS TO CLOSING	6
Section 3.1.	Closing	6
Section 3.2.	Seller	6
Section 3.3.	Purchaser	7

ARTICLE VI	REPRESENTATIONS, WARRANTIES AND COVENANTS	9
Section 4.1.	Representations, Warranties and Covenants of Seller	9
Section 4.2.	Representations, Warranties and Covenants of Purchaser	11

ARTICLE V	RESERVED RIGHTS	13
Section 5.1.	Reserved Rights	13
Section 5.2.	Allocation of Amounts	13
Section 5.3.	Indemnification	13
Section 5.4.	Mutual Cooperation	14

ARTICLE VI	MISCELLANEOUS	14
Section 6.1.	Transaction Costs	14
Section 6.2.	Brokers, Finders, Etc	14
Section 6.3.	Announcements	14
Section 6.4.	Counterparts	15
Section 6.5.	Amendments, Etc.; Entire Agreement	15
Section 6.6.	Successors and Assigns	15
Section 6.7.	Governing Law; Submission to Jurisdiction	15
Section 6.8.	WAIVER OF JURY TRIAL	16
Section 6.9.	Notices, Etc	16
Section 6.10.	Severability of Provisions	17
Section 6.11.	Headings, Etc	17
Section 6.12.	Further Assurances; Confidentiality	17
Section 6.13.	Survival	18
Section 6.14.	Counterparts	18

SCHEDULES AND EXHIBITS

SCHEDULE 1	Addresses and Accounts
SCHEDULE 2	Trust Agreements and Owner Trustees
SCHEDULE 3	Description of Aircraft
SCHEDULE 4	Indebtedness
SCHEDULE 5	Leases
SCHEDULE 6	Participation Agreements
SCHEDULE 7	Trust Indentures

EXHIBIT A	Form of Assignment and Assumption Agreement (____)

PURCHASE AGREEMENT (645/646)

THIS PURCHASE AGREEMENT (645/646), dated as of August 26, 2004 (this “Agreement”) is by and between PLM CAL I LLC, a Delaware limited liability company (“Purchaser”) and BALLSTON AERO TRUST SERVICES, L.C., a Virginia limited liability company, as trustee under that certain TCC Master Aircraft Trust Agreement dated as of September 23, 1996, as amended and supplemented (“Seller”). Defined terms used herein shall have the meanings assigned to such terms (whether by reference to another document or otherwise) in Section 1.

W I T N E S S E T H:

WHEREAS, Seller owns the beneficial interests of the trust estates created pursuant to the trust agreements listed on Schedule 2 hereto;

WHEREAS, upon the terms and subject to the conditions set forth herein, Seller desires to sell, assign, transfer, convey and set over to Purchaser, and Purchaser desires to purchase, accept and assume from Seller, Seller’s right, title and interest in and to such beneficial interests;

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, subject to the terms and conditions set forth herein, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. Defined Terms.

(a) The following terms shall have the following meanings for all purposes of this Agreement:

“Acquisition Price” shall have the meaning set forth in Section 2.2(a).

“Aircraft” shall mean Aircraft (28906) or Aircraft (28907), or either or both of them, as indicated by the context.

“Aircraft (28906)” shall mean the aircraft described on Schedule 3 hereto bearing manufacturer’s serial number 28906.

“Aircraft (28907)” shall mean the aircraft described on Schedule 3 bearing manufacturer’s serial number 28907.

“Applicable Law” shall mean all applicable laws of any Governmental Authority, including, without limitation, federal, state and foreign securities laws, tax laws, tariff and trade laws, ordinances, judgments, decrees, injunctions, writs and orders or like actions of any Governmental Authority and rules, regulations, orders, interpretations, licenses, and permits of any federal, regional, state, county, municipal or other Governmental Authority.

“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement with respect to an Equity Interest Transfer, substantially in the form of Exhibit A hereto.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by law to close in New York, New York, Houston, Texas, Wilmington, Delaware or Sale Lake City, Utah.

“Closing Date” shall mean the date on which an Equity Interest Transfer is consummated, which date shall be a Business Day specified by Seller and reasonably acceptable to Purchaser (and which date shall be on or before August 27, 2004 unless Seller and Purchaser agree to a later date).

“Equity Interest” shall mean all of the beneficial interest in a Trust Estate and all of Owner Participant’s right, title and interest in, to and under the related Transaction Documents (including, without limitation, the related Trust Agreement, but excluding Reserved Rights) arising from and after the applicable Closing Date, and “Equity Interests” shall mean both of them, collective ly.

“Equity Interest Transfer” shall mean a transfer, sale and assignment from Seller to Purchaser of an Equity Interest as contemplated by, and subject to the terms and conditions of, this Agreement and the relevant Assignment and Assumption Agreement and “Equity Interest Transfers” shall mean both of them, collectively.

“Event of Loss” shall mean an “Event of Loss” under any Transaction Document.

“Governmental Authority” shall mean any nation or government (including any state or other political subdivision of either thereof) and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Guarantor” shall mean PLM CAL I LLC, a Delaware limited liability company.

“Guaranties” shall mean those two guaranty agreements, in each case executed and delivered by Guarantor and in each case in form and substance reasonably satisfactory to Lessee, providing for the guaranty of PLM II’s obligations under the Transfer Documents (28908/28909) and “Guaranty” shall mean either of them.

“Indebtedness” shall mean the amounts set forth on Schedule 4 hereto.

“Leases” or “Lease” shall mean the documents listed on Schedule 5 hereto, or either of them, as indicated by the context.

“Lessee” shall mean Continental Airlines, Inc.

“Lien” shall mean any mortgage, pledge, security interest, charge, lien or other encumbrance.

“Owner Participant” shall have the meaning assigned to such term in the relevant Participation Agreement.

“Owner Trustee” shall mean the owner trustee named on Schedule 2 hereto.

“Participation Agreements” or “Participation Agreement” shall mean the documents listed on Schedule 6 hereto, or either of them, as indicated by the context.

“Person” shall mean any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or any Governmental Authority or any political subdivision thereof.

“PLM II” means PLM CAL II LLC, a Delaware limited liability company.

“Reserved Rights” shall mean any and all rights and interests of Seller in respect of the following: (i) Seller’s right to tax and other indemnification under any Transaction Document as a result of or arising out of events occurring or circumstances existing prior to the relevant Closing Date (or claim asserted against Seller with respect to a matter subsequent to such Closing Date, if Seller would otherwise be entitled to indemnification for such claim under a Transaction Document), (ii) each and every obligation of Lessee to provide liability insurance on behalf of or in favor of Sell er as an additional insured under any Transaction Document, (iii) any interest payable by Lessee on any amount referred to in clauses (i) and (ii) above and (iv) the right to enforce payment of the amounts referred to in clauses (i) through (iii) above.

“Transaction Documents” shall mean, collectively, the documentation identified as such on Exhibits I to each of the Assignment and Assumption Agreements.

“Transfer Documents” shall mean, collectively, this Agreement and the Assignment and Assumption Agreements.

“Transfer Documents (28908/28909)” shall mean that certain Purchase Agreement (647/648), certain Assignment and Assumption Agreement (N16647), and that certain Assignment and Assumption Agreement (N16648) each between Seller and PLM II as to those Boeing 737-524 aircraft bearing manufacturer’s serial numbers 28908 and 28909.

“Trust Agreements” or “Trust Agreement” shall mean the documents listed on Schedule 2 hereto, or either of them, as indicated by the context.

“Trust Estates” shall have the meanings set forth in the Trust Agreements and “Trust Estate” shall mean either of them.

“Trust Indentures” or “Trust Indenture” shall mean the documents listed on Schedule 7 hereto, or either of them, as indicated by the context.

(b) Capitalized terms used herein to the extent not defined above shall have the meaning specified in the Participation Agreement (as such terms are defined, by reference to another document or otherwise).

(c) Unless otherwise indicated, all references in this Agreement to sections, paragraphs, clauses, schedules, appendices and exhibits are to sections, paragraphs, clauses, schedules, appendices and exhibits in and to this Agreement.

ARTICLE II

SALE AND PURCHASE; OTHER AGREEMENTS

Section 2.1. Sale and Purchase.

(a) Sale of Equity Interests. Subject to the terms and conditions set forth herein and in the related Assignment and Assumption Agreement (including, without limitation, satisfaction of the conditions precedent set forth herein and in the related Assignment and Assumption Agreement), on each Closing Date, Seller hereby agrees to sell, convey, assign, transfer and set over unto Purchaser, as of the relevant Closing Date, the relevant Equity Interest in the related Trust Estate (other than with respect to Reserved Rights).

(b) Purchase of Equity Interests. Subject to the terms and conditions set forth herein and in the related Assignment and Assumption Agreement (including, without limitation, satisfaction of the conditions precedent set forth herein and in the related Assignment and Assumption Agreement), on each Closing Date, Purchaser hereby agrees to purchase and accept from Seller, as of the relevant Closing Date, the Equity Interest in the related Trust Estate (other than with respect to Reserved Rights).

(c) Closing. The closing and effectiveness (a “Closing”) of an Equity Interest Transfer contemplated hereby shall take place (i) upon the execution and delivery of the related Assignment and Assumption Agreement, (ii) upon satisfaction (or waiver) of the conditions precedent set forth herein and in the applicable Assignment and Assumption Agreement, and (iii) on a Closing Date. If either or both of the Equity Interest Transfers contemplated hereby shall not have been consummated by August 27, 2004 (or such later date as may be agreed by the parties) (any such unconsummated transfer, the “Remaining Equity Interest Transfer”), the parties’ obligations herein (other than under Section 6.12(b)) shall terminate with respect to any Remaining Equity Interest Transfer.

Section 2.2. Acquisition Price; Payment.

(a) Acquisition Price for Equity Interests. The purchase price payable by Purchaser to Seller for an Equity Interest on the related Closing Date ( the “Acquisition Price”) shall be equal to (i) for Aircraft (28906), $1,596,250 plus assumption of the Indebtedness related to Aircraft (28906) and (ii) for Aircraft (28907) $1,596,250 plus the assumption of Indebtedness related to Aircraft ( 28907). The Acquisition Price for each Equity Interest shall be payable by Purchaser in lawful dollar currency of the United States of America in the manner contemplated by, and to Seller’s account specified in, paragraph (b) of this Section 2.2.

(b) Payment Instructions. Payment of the relevant Acquisition Price (subject to the application of any Deposit as set forth in paragraph (d) below) on the applicable Closing Date shall be made to the account of Seller at JP Morgan Chase, ABA Number: 021 000 021, Account Number: 116 003 855, Credit to the Account of CIT Group, Reference: Continental Sale/Equis, by wire transfer of immediately available funds, without deduction or withholding of any kind, or in such other manner or to such other account as Seller may direct.

(c) Event of Loss. In the event of an Event of Loss with respect to an Aircraft prior to the applicable Closing Date, the obligations of Purchaser and Seller hereunder (except under Section 6.12(b)) shall terminate with respect to such Aircraft only.

(d) Deposit. Seller acknowledges receipt from Purchaser of a deposit in the aggregate amount of $171,000 (the “Deposit”). On a Closing Date, one-quarter of the Deposit (which, for the avoidance of doubt, is $42,750) shall be applied to the Acquisition Price for each Equity Interest to be transferred on such Closing Date. In the event that any Equity Interest Transfer is not consummated due to (i) the failure of the conditions precedent to Purchaser’s obligations set forth herein to be satisfied (unless such conditions precedent are not satisfied due to Purchaser’s failure to act in good faith), (ii) Seller’s non-performance or breach of this Agreement, or (iii) Seller’s failure to act in good faith with respect to the transactions contemplated hereby, Seller shall refund to Purchaser that portion of the Deposit relating to such unconsummated Equity Interest Transfer (i.e., one-half of the Deposit per any such unconsummated Equity Interest Transfer).

Section 2.3. Taxes. Purchaser shall be responsible for payment of and shall pay (at no after-tax cost to Seller, Owner Trustee or the Trust Estates (collectively, the “Tax Indemnitees” and, individually, a “Tax Indemnitee”) any and all license, recording and documentation fees, and sales, use, excise, transfer, value added, gross receipts, property or any other similar taxes, fees or charges imposed on or with respect to the Aircraft, or the ownership, leasing, use or operation thereof or the rentals derived therefrom (hereinafter, individually, a “Covered Tax”, and collectively, “Covered Taxes”) imposed by the United States federal or any state or local government or taxing authority upon or in respect of the sale, assignment or transfer of the Equity Interests as contempl ated hereby (provided, however, that Purchaser shall not be responsible for any (a) taxes based on, measured by, or with respect to net or gross income or capital of such Tax Indemnitee or (b) taxes related to the Aircraft and arising prior to the relevant Closing Date). Purchaser shall indemnify each Tax Indemnitee against the imposition of any Covered Tax immediately upon receipt of such Indemnitee’s demand therefor, which demand shall be accompanied by documentation evidencing the imposition of such Covered Tax. Subject to the scheduled locations of the equipment constituting the Trust Estate on the applicable Closing Date, Seller agrees to cooperate with Purchaser concerning the time of closing of the transaction contemplated hereby on the subject Closing Date so as to minimize the imposition of any Taxes that otherwise might be imposed upon or in respect of the Equity Interest Transfer as contemplated hereby.

If Purchaser disputes the payment of any Covered Taxes payable by Purchaser or Seller for which Purchaser is responsible under this Agreement, Purchaser shall have the right, at Purchaser’s expense, to contest the payment of such Covered Taxes, provided that (i) Seller in its sole discretion considers that such contest shall not materially prejudice it or result in any risk of criminal penalty or danger of sale, forfeiture or loss of an Aircraft or Equity Interest, (ii) Purchaser has provided Seller with an opinion, reasonably satisfactory to Seller, that it is more likely than not that the contest will be successful, and (iii) Purchaser has made adequate provision to the satisfaction of Seller in respect of the expenses concerned.

ARTICLE III

CLOSING; CONDITIONS TO CLOSING

Section 3.1. Closing. The closing in respect of an Equity Interest Transfer shall take place at the offices of Vedder, Price, Kaufman & Kammholz, P.C. 222 North LaSalle Street, Chicago, Illinois commencing at such time as Seller and Buyer may mutually agree on the applicable Closing Date.

Section 3.2. Seller’s Conditions to Closing. The obligation of Seller to sell, convey, assign, transfer and set over an Equity Interest to Purchaser on a Closing Date is subject to the satisfaction (to the reasonable satisfaction of Seller) or the waiver by Seller of the following conditions precedent:

(a) No Default. (i) Purchaser shall not be in default of any of its obligations hereunder or under any of the other Transfer Documents to which Purchaser is a party (collectively, the “Purchaser Documents”), (ii) PLM II shall not be in default of any of its obligations under any of the Transfer Documents (28908/28909) and (iii) Guarantor shall not be in default of any of its obliga tions under either Guaranty.

(b) Representations and Warranties. The representations and warranties of (i) Purchaser contained herein and in all of the other Purchaser Documents, (ii) PLM II contained in the Transfer Documents (28908/28909) and (iii) the Guarantor contained in the Guaranties shall be true and correct as of the subject Closing Date with the same force and effect as though made on and as of such Closing Date, except to the extent that any such representation or warranty relates solely to an earlier date in which case such representation or warranty shall have been true and correct on and as of such e arlier date.

(c) Consents and Approvals. All approvals and consents which are required under the Transaction Documents in connection with the transaction contemplated by this Agreement and the applicable Assignment and Assumption Agreement, shall have been duly obtained, given, accomplished or waived.

(d) Litigation. No action, proceeding or investigation shall have been instituted or threatened by any Person before any Governmental Authority, nor shall any order, writ, judgment or decree have been issued or proposed to be issued by any Governmental Authority as of the subject Closing Date, which in any case questions the validity or legality of this Agreement, the transactions contemplated hereby or by the Transaction Documents relating to the Equity Interest to be transferred on such Closing Date or the ability of either party hereto to consummate any of such transactions.

(e) Assignment and Assumption Agreement. Seller shall have received each of this Agreement and the Assignment and Assumption Agreement relating to the Equity Interest to be transferred on such Closing Date, in each case duly authorized, executed and delivered by Purchaser. The subject Assignment and Assumption Agreement shall have been duly filed with the FAA (or shall be filed concurrently with or immediately after the closing of the applicable Equity Interest Transfer).

(f) Acquisition Price. Seller shall have received the Acquisition Price relating to the Equity Interest to be transferred on such Closing Date in the manner contemplated by, and to the account specified in, Section 2.2.

(g) Change in Law. Since July 31, 2004, no change shall have occurred in Applicable Law or interpretations thereof by any Governmental Authority, any of which would make it illegal or unduly burdensome for Seller to fully perform its obligations under this Agreement, the Assignment and Assumption Agreement relating to the Equity Interest to be transferred on such Closing Date or any Transaction Document.

(h) Insurance. Seller shall have received evidence satisfactory to it that it has been named as an additional insured under the liability insurance policies maintained pursuant to the Lease relating to the Equity Interest to be transferred on such Closing Date.

(i) Due Authorization; Closing Certificate. Seller shall have received (i) a certified copy of board resolutions of the Purchaser with respect to the due authorization of the transaction contemplated by this Agreement and the Assignment and Assumption Agreements; (ii) copies certified by a member of Purchaser, of (x) the certificate of formation of Purchaser, (y) the operating agreement of Purchaser and (z) a good standing certificate for Purchaser in the state of Delaware and (iii) a certificate of the secretary or an assistant secretary of Purchaser, dated the applicabl e Closing Date, certifying as to the incumbency of the officer of Purchaser executing this Agreement and the Assignment and Assumption Agreements.

(j) Certification of Financials. Seller shall have received a copy of the financial statements of Purchaser (in form and substance reasonably satisfactory to Seller) certified by a member or manager of Purchaser evidencing that Purchaser complies with the requirements contained in the Transaction Documents applicable to a transferee of the Equity Interests.

(k) FAA Counsel Opinion. The Seller shall have received an opinion addressed to it from McAfee & Taft, special FAA counsel, with respect to (x) such Assignment and Assumption Agreement being in due form for recordation with the FAA, and (y) the absence of any Liens of record with respect to the Aircraft except the Liens created pursuant to or permitted by the Transaction Documents.

Section 3.3. Purchaser’s Conditions to Closing. The obligation of Purchaser to acquire an Equity Interest and to pay the related Acquisition Price on the relevant Closing Date is subject to the satisfaction of (to the reasonable satisfaction of Purchaser), or the waiver by Purchaser of the following conditions precedent:

(a) No Default. Seller shall not be in default of any of its obligations hereunder or under any of the other Transfer Documents or under the Transfer Documents (28908/28909). No Default or Event of Default as defined in the Participation Agreements or the equivalent shall have occurred and be continuing under any of the Transaction Documents, and each of the Transaction Documents are in full force and effect.

(b) Representations and Warranties. The representations and warranties of Seller contained herein and in all of the other Seller Documents shall be true and correct as of such Closing Date with the same force and effect as though made on and as of such Closing Date, except to the extent that any such representation or warranty relates solely to an earlier date in which case such representation or warranty shall have been true and correct on and as of such earlier date.

(c) Consents and Approvals. All approvals and consents required under the Transaction Documents in connection with the transaction contemplated by this Agreement and the Assignment and Assumption Agreement relating to the Equity Interest to be transferred on such Closing Date shall have been duly obtained, given or accomplished. Without limiting the foregoing, Purchaser shall deliver to Lessee, within three (3) Business Days after Lessee’s request therefor, copies of Purchaser’s financial statements.

(d) Litigation. No action, proceeding or investigation shall have been instituted or threatened by any Person before any Governmental Authority, nor shall any order, writ, judgment or decree have been issued or proposed to be issued by any Governmental Authority as of the subject Closing Date, which in any case questions the validity or legality of this Agreement, the transactions contemplated hereby or by the Transaction Documents relating to the Equity Interest to be transferred on such Closing Date, or the ability of either party hereto to consummate any of such transactions.

(e) Assignment and Assumption Agreement. Purchaser shall have received each of this Agreement and the Assignment and Assumption Agreement relating to the Equity Interest to be transferred on such Closing Date, in each case duly executed and delivered by Seller. The subject Assignment and Assumption Agreement shall have been duly filed with the FAA (or shall be filed concurrently with or immediately after the closing of the applicable Equity Interest Transfer).

(f) Change in Law. Since July 31, 2004, no change shall have occurred in Applicable Law or interpretations thereof by any Governmental Authority, any of which would make it illegal or unduly burdensome for Purchaser to fully perform its obligations under this Agreement or the Assignment and Assumption Agreement relating to the Equity Interest to be transferred on such Closing Date.

(g) Insurance. Purchaser shall have received (i) a certificate from Lessee’s independent insurance broker evidencing the insurance required to be maintained pursuant to the relevant Lease, and listing Purchaser as an additional insured; and (ii) a report from such broker evidencing compliance with the terms of the relevant Lease and as to such other matters as Purchaser may reasonably request.

(h) Due Authorization; Closing Certificate. Purchaser shall have received (i) a copy of the Articles of Organization and Operating Agreement of Seller, (ii) a good standing certificate for Seller in the State of Virginia and (iii) a limited Power of Attorney by the Managing Member of Seller.

(i) No Material Adverse Change. On the applicable Closing Date, since March 1, 2004, (i) there shall have been no material adverse change in the financial condition or results of operations of Lessee; and (ii) there shall have been no material adverse change in the condition of the Aircraft.

(j) FAA Counsel Opinion. The Purchaser shall have received an opinion addressed to it from McAfee & Taft, special FAA counsel, with respect to (x) such Assignment and Assumption Agreement being in due form for recordation with the FAA, and (y) the absence of any Liens of record with respect to the Aircraft except the Liens created pursuant to or permitted by the Transaction Documents.

(k) Trust Agreement. The Trust Agreement shall be in full force and effect.

(l) Aircraft Inspection. Purchaser shall have completed an inspection of the Aircraft and the Aircraft records satisfactory to the Purchaser.

(m) No Termination. Lessee shall not have exercised its rights to an early termination pursuant to Section 9 of the Lease.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 4.1. Representations, Warranties and Covenants of Seller. Seller hereby represents and warrants to Purchaser, as of the date hereof and as of each Closing Date as follows:

(a) Organization, Corporate Authority, Etc. Seller is a limited liability company duly formed, validly existing and in good standing under the laws of the state of Virginia. Seller has all requisite power and authority to enter into and perform its obligations under the Transfer Documents.

(b) Authorization, Etc. This Agreement and each Assignment and Assumption Agreements (when entered into by Seller) have been (or will have been) duly authorized, executed and delivered by Seller and the Assignment and Assumption Agreements constitute (or will constitute) the legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as enforcement of the terms hereof and thereof may be limited by applicable bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws affecting enforcement of creditors’ rights gen erally, and by general principles of equity.

(c) No Violation. None of the execution, delivery or performance by Seller of the Transfer Documents, or the consummation by Seller of the transactions contemplated hereby and thereby, will contravene any Applicable Law binding on Seller or any of its property, or any provision of the certificate of formation or operating agreement of Seller, or will result in a breach of, or constitute a default under, or contravene any provision of, any mortgage, deed of trust, indenture or other agreement or instrument to which Seller is a party or by which Seller or all or any of its property or assets is bound.

(d) Seller’s Liens. Seller is the sole legal and beneficial owner of the Equity Interest. There are no Liens on the Equity Interest, and on the relevant Closing Date, Seller will transfer to Purchaser good and marketable title to the Equity Interest, other than the Reserved Rights, free and clear of any and all Liens other than Liens permitted by the terms of the Transaction Documents.

(e) No Consents or Approvals. None of the execution, delivery or performance by Seller of the Transfer Documents, or the consummation by Seller of the transactions contemplated hereby and thereby, requires the consent or approval of, the giving of notice to, the registration, recording or filing of any documents with, or the taking of any other action in respect of, any Governmental Authority, except such as have been obtained or effected on or prior to the applicable Closing Date.

(f) No Litigation. There are no pending or, to the best of Seller’s knowledge, threatened investigations, suits or proceedings against Seller or affecting Seller or its properties, that, if determined adversely, would adversely affect the consummation of the transaction contemplated by, or the performance by Seller of its obligations under, the Transfer Documents.

(g) No Violation of Law. Seller is not in breach of any Applicable Law that would have an adverse effect on Seller or on the transaction contemplated by, or on Seller’s ability to perform its obligations under, the Transfer Documents.

(h) Disclaimer. EXCEPT AS PROVIDED IN ONE OR MORE OF THE TRANSFER DOCUMENTS, SELLER HAS NOT, AND SHALL NOT BE DEEMED TO HAVE MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE AIRCRAFT, THE TRUST ESTATES, THE EQUITY INTERESTS OR THE TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, COMPLIANCE WITH DESCRIPTION, FITNESS FOR ANY PARTICULAR PURPOSE, AIRWORTHINESS, QUALITY, WORKMANSHIP, VALUE, CONDITION, DESIGN, MANUFACTURE, PERFORMANCE OR OP ERATION, OR ANY WARRANTIES OR REPRESENTATIONS ARISING OUT OF CUSTOMARY TRADE USAGE AND PRIOR COURSE OF DEALING, WHETHER OR NOT ANY DEFECT IS APPARENT OR LATENT ON THE CLOSING DATE.

(i) Damage to Aircraft. Seller has no knowledge or notice that any loss or damage relating to the Aircraft, or an event that, with lapse of time or the making of a determination or both, might cause any loss or damage, has occurred, except for immaterial losses or damage that does not interfere with the operational status of the Aircraft.

(j) No Prepayment. Seller has not received any prepayment of Rent under the Lease.

(k) No Lessee Assignment. Seller has not consented to any assignment by the Lessee of its rights under the Lease or to any sublease or transfer of possession of the Aircraft subject thereto, and to Seller’s knowledge, no such assignment, sublease or transfer or possession has occurred.

(l) No Lessee Termination. Seller has not received notice that Lessee has exercised its rights to an early termination under Section 9 of the Lease.

(m) Tax Indemnity Agreement. Seller agrees to cause CIT Communications Finance Corporation (“CIT”) (as successor to AT&T Credit Corporation (“AT&T”) to assign, pursuant to an assignment in form and substance reasonably satisfactory to each of Seller and Purchaser, CIT’s rights under each of (i) that certain Tax Indemnity Agreement 645 dated as of Septe mber 30, 1997, between AT&T and Lessee and (ii) that certain Tax Indemnity Agreement 646 dated as of November 21, 1997 between AT&T and Lessee (each of the documents referred to in clauses (i) and (ii), a “Tax Indemnity Agreement”) arising from and after the applicable Closing Date, but excluding in each case any and all rights and interests of CIT in respect of the following: (i) CIT’s right to tax and other indemnification under the applicable Tax Indemnity Agreement as a result of or arising out of events occurring or circumstances existing prior to the relevant Closing Date (or claim asserted against CIT with respect to a matter subsequent to such Closing Date, if CIT would otherwise be entitled to indemnification for such claim under the applicable Tax Indemnity Agreement, (ii) any interest payable by Lessee on any amount referred to in clause (i) above and (iii) the right to enforce payment of the amounts referred to in clauses (i) and (ii) above.

Section 4.2. Representations, Warranties and Covenants of Purchaser. Purchaser hereby represents, warrants and covenants to Seller, as of the date hereof and as of each Closing Date, as follows:

(a) Organization, Authority, Etc. Purchaser is a limited liability company duly incorporated, validly existing and in good standing under the laws of the state of Delaware. Purchaser has the limited liability company power and authority to conduct the business in which it is currently engaged and to own or hold under lease its properties and to enter into, and perform its obligations under the Transfer Documents and the Transaction Documents, and has a tangible Net Worth (exclusive of goodwill) greater than $50,000,000.

(b) Authorization, Etc. Purchaser has taken, or caused to be taken, all necessary action to authorize the execution and delivery by Purchaser of the Transfer Documents, and the performance of Purchaser’s obligations thereunder. This Agreement and each of the other Transfer Documents (when entered into by Purchaser) has been (or will have been), duly authorized, executed and delivered by Purchaser and constitute (or will constitute) the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their respective terms, except as enforcement of the terms here of and thereof may be limited by applicable bankruptcy, insolvency, reorganization, liquidation, moratorium or similar laws affecting enforcement of creditors’ rights generally, and by general principles of equity.

(c) No Violation. None of the execution, delivery or performance by Purchaser of this Agreement, or the Assignment and Assumption Agreements, or the consummation by Purchaser of the transaction contemplated hereby and thereby, will contravene any Applicable Law binding on Purchaser or any of its property, or any provision of the certificate of formation or operating agreement of Purchaser, or will result in a breach of, or constitute a default under, or contravene any provision of, any mortgage, deed of trust, indenture or other agreement or instrument to which Purchaser is a party or by which Purchas er or all or any of its property or assets is bound.

(d) No Consents or Approvals. None of the execution, delivery or performance by Purchaser of this Agreement, or the other Transfer Documents, or the consummation by Purchaser of the transactions contemplated hereby and thereby, requires the consent or approval of, the giving of notice to, the registration, recording or filing of any documents with, or the taking of any other action in respect of, any Governmental Authority, except such as have been obtained or effected on or prior to the applicable Closing Date.

(e) No Litigation. There are no pending or, to the best of Purchaser’s knowledge, threatened investigations, suits or proceedings against Purchaser or affecting Purchaser or its properties, that, if determined adversely, would adversely affect the consummation of the transaction contemplated by, or the performance by Purchaser of its obligations under, this Agreement, the other Transfer Documents or the Transaction Documents.

(f) No Violation of Law. Purchaser is not in breach of any Applicable Law that would have an adverse effect on Purchaser or on the transaction contemplated by, or on Purchaser’s ability to perform its obligations under, this Agreement, the other Transfer Documents or the Transaction Documents.

(g) Covenant Regarding Insurance. Purchaser hereby agrees to use its best efforts to cause Lessee to name Seller as an additional insured under the liability insurance policies maintained pursuant to each Lease for a period of one (1) year from and after the applicable Closing Date.

(h) Citizenship. Purchaser is a Citizen of the United States.

(i) No Liens. No Lessor Liens attributable to Purchaser will attach in respect of all or any part of the Trust Estate as a result of the Transactions contemplated by the Transfer Documents or the Transaction Documents.

(j) Investment by Purchaser. Purchaser’s beneficial interest in the Trust Estate is being acquired by it for its own account, for investment and not with a view to any resale or distribution thereof, except that, subject to the restrictions on transfer set forth in Section 10 of the Participation Agreement, the disposition by Purchaser of its beneficial interest in the Trust Estate shall at all times be within its control.

(k) ERISA. No part of the funds to be used by Purchaser to acquire the Equity Interests directly or indirectly constitutes assets of a Plan.

(l) Securities Laws. Neither Purchaser nor any Person authorized to act on its behalf has directly or indirectly offered any beneficial interest in or security relating to the ownership of either Aircraft or any interest in a Trust Estate, or any of the Equipment Notes or any other interest in or under any Trust Indenture for sale to, or solicited any offer to acquire any of the same from, any Person in violation of applicable securities Laws.

(m) Sales Tax Matters. Purchaser agrees to cooperate with and assist Seller in obtaining any certificate or exemption as Seller may reasonably request and as may be necessary in order to minimize the imposition of any sales, use or other transfer taxes arising as a result of the transactions contemplated herein.

ARTICLE V

RESERVED RIGHTS

Section 5.1. Reserved Rights. Purchaser will be entitled to all benefits and rights of Owner Participant (subject to Seller’s retention of the Reserved Rights), pursuant to any and all Transaction Documents in respect of the period from and after the Closing Date. Seller hereby reserves, and nothing contained herein shall be construed as a sale, conveyance, assignment or transfer of Reserved Rights.

Section 5.2. Allocation of Amounts. If Purchaser or Owner Trustee shall receive any amount relating to any Transaction Document or any of the transactions contemplated thereby to which Seller is entitled under Section 5.1, Purchaser shall promptly remit or shall cause the Owner Trustee to remit such amount to Seller (together with, to the extent not paid over within ten Business Days, interest at the then- applicable average rate for federal funds from and including the date of receipt by Purchaser or Owner Trustee, as the case may be, to but excluding, the date of payment to Seller) a nd, until so delivered, any such amount received shall be received and held in trust by Purchaser or Owner Trustee, as the case may be, for the benefit of Seller. If Seller shall receive any amount relating to any Transaction Document or any of the transactions contemplated thereby to which Purchaser or Owner Trustee is entitled under Section 5.1, Seller shall promptly remit such amount to Purchaser or Owner Trustee, as the case may be (together with, to the extent not paid over within ten Business Days, interest at the then-applicable average rate for federal funds from and including the date of receipt by Seller to, but excluding, the date of payment to Purchaser or Owner Trustee, as the case may be), and until so delivered any such amount received by Seller shall be received and held in trust by Seller for the benefit of Purchaser or Owner Trustee, as the case may be.

Section 5.3. Indemnification. (a) Purchaser shall have no liability or obligation as a result of, and Seller shall indemnify and hold Purchaser harmless on an after-tax basis against, and shall be liable for and shall pay any loss, cost or other expense arising out of (i) any failure by Seller to comply with the terms of the Transaction Documents to which it is a party prior to each Closing Date, (ii)& nbsp;any liabilities or obligations of Seller under the Transaction Documents required to be satisfied or performed prior to each Closing Date or (iii) a breach by Seller of any of its representations or warranties contained in any of the Transfer Documents.

(b) Seller shall have no liability or obligation as a result of, and Purchaser shall indemnify and hold Seller harmless on an after-tax basis against, and shall be liable for and shall pay any loss, cost or other expense arising out of (i) any failure by Purchaser to comply with the terms of the Transaction Documents on or after each Closing Date, (ii) any liabilities or obligations of Purchaser required to be satisfied or performed under the Transaction Documents on or after each Closing Date or (iii) a breach by Purchaser of any of its representations or warranties contained in any of the Transfer Documents.

Section 5.4. Mutual Cooperation. Seller and Purchaser shall provide each other with such assistance as may reasonably be requested by either of them in writing in connection with the preparation of any tax return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to liability for Taxes, and each will retain and, upon the request of the other, provide the other with any records or information which may be relevant to such return, audit or examination or proceedings. Such assistance shall include making employees available on a mutu ally convenient basis to provide additional information and explanation of any material provided hereunder. The party requesting assistance hereunder shall reimburse the other for reasonable out-of-pocket expenses incurred by the other in providing such assistance.

ARTICLE VI

MISCELLANEOUS

Section 6.1. Transaction Costs. Regardless of whether the transactions contemplated hereby are consummated, (A) Purchaser agrees to pay all costs, expenses and fees (collectively, “Costs”) incurred by it (including, without limitation, fees and disbursements of counsel and/or special counsel to Purchaser) in connection with the transaction contemplated hereby, and (B) Seller agrees to pay all Costs incurred by it in connection with the transaction contemplated hereby (including, without limitation, fees and disbursements of counsel and/or special counsel to Seller and any and all Costs incurred by each of Lessee and Owner Trustee in connection with the transactions contemplated hereby). Each of Seller and Purchaser agrees to pay one-half of the fees and expenses of special FAA counsel for services rendered in connection with the transaction contemplated hereby.

Section 6.2. Brokers, Finders, Etc. Each party to this Agreement represents to the other that it has dealt with no broker or finder, in connection with the transaction contemplated hereby, no broker or Person acting on such a party’s behalf is entitled to any brokerage fee, financial advisory fee, commission or finder’s fee in connection with such transaction. Each of Seller and Purchaser agrees to indemnify and hold harmless the other for, from and against any and all loss, liability, damage, cost, claim or expense (including, without limitation, attorneys’ fees) incurred by reason of any commission, brokerage fee, financial advisory fee or finder’s fee alleged to be payable because of any act, omission or statement of the indemnifying party.

Section 6.3. Announcements. Purchaser and Seller shall consult with each other regarding press releases or other public announcements related to the Transfer Documents and the transactions contemplated hereby.

Section 6.4. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts shall together constitute but one and the same instrument.

Section 6.5. Amendments, Etc.; Entire Agreement. Except as otherwise specifically provided herein, this Agreement and the other Transfer Documents contain the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings between the parties, whether written or oral. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument which purports to terminate, amend, supplement, waive or modify this Agreement, or any of the terms hereo f, signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification is sought. The schedules and exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein by reference as if set forth in full in the main body of this Agreement.

Section 6.6. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and permitted assigns. Neither party may assign its rights hereunder without the prior written consent of the other party prior to the Closing Date (and any such attempted assignment without such consent shall be void).

Section 6.7. Governing Law; Submission to Jurisdiction. (a) THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE IN SUCH STATE, WITHOUT GIVING EFFECT TO PRINCIPLES RELATING TO CONFLICTS OF LAW.

(b) Each of Seller and Purchaser irrevocably agrees that any legal suit, action or proceeding arising out of or relating solely to this Agreement, or the Assignment and Assumption Agreements (or any document referred to herein or therein) or the transactions contemplated hereby or thereby or the subject matter hereof or thereof, shall be instituted in the state or federal courts in the borough of Manhattan, City of New York, State of New York, and it hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may have now or hereafter to the laying of the venue or the jurisdiction or the convenience of the forum of any such legal suit, action or proceeding and irrevoc ably submits generally and unconditionally to the jurisdiction of any such court but only in any such suit, action or proceeding. Each of Seller and Purchaser further irrevocably agrees to the service of process of any of the aforementioned courts but only in any suit, action or proceeding of the nature referred to above by the mailing of the copies thereof by certified mail, postage prepaid, return receipt requested, to it at its address specified in section 6.9 hereof (as the same may be changed from time to time pursuant to section 6.9 hereof), such service to be effective upon the date of receipt indicated on the postal receipt returned from it.

(c) Subject to any right of appeal, final judgment against Seller or Purchaser in any suit shall be conclusive, and may be enforced in other jurisdictions by suit on the judgment, a certified or true copy of which shall be conclusive evidence of the fact and of the amount of any indebtedness or liability of Seller or Purchaser, as the case may be, therein described.

Section 6.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR THE ASSIGNMENT AND ASSUMPTION AGREEMENTS OR RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, OR THE ASSIGNMENT AND ASSUMPTION AGREEMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTH ER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 6.9. Notices, Etc. All notices, offers, acceptances, approvals, waivers, requests, demands and other communications hereunder or under any instrument, certificate or other instrument delivered in connection with the transactions described herein shall be in writing, shall be addressed as provided below and shall be considered as properly given (a) if delivered in person, (b) if sent by reputable overnight delivery service, (c) in the event overnight delivery services are not readily available, if mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested, or (d) if sent by telecopier and confirmed in writing by any other manner described above. Notice so mailed shall be effective upon the earlier of actual receipt or the expiration of five (5) days after its deposit. Notice given in any other manner shall be effective upon receipt by the addressee; provided, however, that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. For the purposes of notice, the address of the parties shall be as set forth below; provided, that either party shall have the right to change its address for notice hereunder to any other location by the giving of prior notice to the other party in the manner set forth hereinabove. The initial addresses of the parties hereto are as follows:

If to Purchaser:

PLM CAL I LLC

c/o Equis Financial Group

200 Nyala Farm Rd.

Westport, CT 06880

Attention: James A. Coyne

Telephone: (203) 341-0515

Telecopier: (203) 341-9988

with a copy to:

Kevin Johnson, Esq.

Fafinski, Mark & Johnson

775 Prairie Center Drive, Suite 400

Eden Prairie, MN 55344

Telephone: (952) 995-9500

Telecopier: (952) 995-9577

If to Seller:

Ballston Aero Trust Services, L.C.

c/o C.I.T. Leasing Corporation

1211 Avenue of the Americas, 21^st Floor

New York, NY 10036

Attention: General Counsel

Telephone: (212) 536-1375

Telecopier: (212) 536-1388

with a copy to:

Vedder, Price, Kaufman & Kammholz, P.C.

222 North LaSalle Street

Suite 2600

Chicago, IL 60601

Attention: Lynne A. Gochanour, Esq.

Telephone: (312) 609-7500

Telecopier: (312) 609-5005

Section 6.10. Severability of Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 6.11. Headings, Etc. The headings and the table of contents used herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 6.12. Further Assurances; Confidentiality. (a) Seller and Purchaser shall do and perform such further acts and execute and deliver such further instruments as may be required by Applicable Law or reasonably requested by either party to carry out and effectuate the purposes of this Agreement and the Assignment and Assumption Agreements.

(b) Purchaser and Seller agree that any and all information of any kind obtained pursuant to this Agreement that shall not then be or have become generally available shall be kept and maintained in strictest confidence, and shall not be disclosed or disseminated to any other Person, except (A) as otherwise required by any Transaction Document, (B) to any regulatory agency, (C) in response to any subpoena or other legal process, (D) to any prospective successor or assign which has agreed with such party that, upon disclosure of such information, such prospective successor or assign shall be bound by the provisions of this Section 6.12(b), (E) as part of any filing to b e made with any Governmental Authority and (F) to attorneys, accountants and financial, insurance and other independent advisors of any such party.

Section 6.13. Survival. The representations, warranties, covenants and indemnities of the parties contained in this Agreement shall survive execution and delivery hereof.

Section 6.14. Counterparts. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

* * *

IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement (645/646) to be duly executed and delivered as of the date first above written.

	BALLSTON AERO TRUST SERVICES, L.C., as trustee under that certain TCC Master Aircraft Trust Agreement dated as of September 23, 1996, Seller By: Its: Attorney in Fact
	PLM CAL I LLC, by Equis II Corporation, its Managing Member, Purchaser By: Its:

SCHEDULE 1

ADDRESSES AND ACCOUNTS

Addresses	Accounts
Seller	Bank: JP Morgan Chase
	ABA Number: 021 000 021
Ballston Aero Trust Services, L.C.	Credit to: CIT Group
c/o C.I.T. Leasing Corporation	Acct Number: 116-003855
1211 Avenue of the Americas, 21st Floor	Reference: Continental Sale/Equis
New York, NY 10036
Attention: General Counsel
Telephone: (212) 536-1375
Telecopier: (212) 536-1388

Purchaser	Bank: Comerica Bank

PLM CAL II, LLC.	ABA Number: 121 137 522
c/o Equis Financial Group	Credit to: PLM International Inc.
200 Nyala Farm Road	Acct Number: 1891533166
Westport, CT 06880
Attention: James A. Coyne
Telephone: (203) 341-0515
Telecopier: (203) 341-9988

SCHEDULE 2

TRUST AGREEMENTS AND OWNER TRUSTEES

1.	Trust Agreement 645, dated as of September 30, 1997, between Ballston Aero Trust Services, L.C., as Owner Participant, and Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee.

2.	Trust Agreement 646, dated as of November 21, 1997, between Ballston Aero Trust Services, L.C., as Owner Participant, and Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee.

&n bsp; SCHEDULE 3

DESCRIPTION OF AIRCRAFT

1.	Airframe:	Boeing 737-524 MSN# 28906, Reg. # N14645
	Engines:	2 CFM 56-3-B1, MSN’s # 858653 and 858654
2.	Airframe:	Boeing 737-524 MSN# 28907, Reg. # N16646
	Engines:	2 CFM 56-3-B1, MSN’s # 858732 and 858696

SCHEDULE 4

INDEBTEDNESS

Aircraft Serial Number	Aircraft Registration Mark	Indebtedness (as of 6/30/04)

28906	N14645	$ 12,871,870.64
28907	N16646	$ 12,871,870.64

SCHEDULE 5

LEASES

1.	Lease Agreement 645, dated as of September 30, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

2.	Lease Agreement 646, dated as of November 21, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

3.	Lease Supplement No. 1, dated September 30, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

4.	Lease Supplement No. 1, dated December 1, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

SCHEDULE 6

PARTICIPATION AGREEMENTS

Participation Agreement 645, dated as of September 30, 1997, among Continental Airlines, Inc., as Lessee, Ballston Aero Trust Services, L.C., as Owner Participant, Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee, Subordination Agent and Pass Through Trustee.

Participation Agreement 646, dated as of November 21, 1997, among Continental Airlines, Inc., as Lessee, Ballston Aero Trust Services, L.C., as Owner Participant, Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee, Subordination Agent and Pass Through Trustee.

SCHEDULE 7

TRUST INDENTURES

1. Trust Indenture and Mortgage 645, dated as of September 30, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee.

2. Trust Indenture and Mortgage 646, dated as of November 21, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee.

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

EX-10.6 7 gfvex105.htm GF VI EXHIBIT 10.6 GF VI Exhibit 10.6

PURCHASE AGREEMENT (647/648)

dated as of August 26, 2004

between

BALLSTON AERO TRUST SERVICES, L.C.,

as Seller,

and

PLM CAL II LLC,

as Purchaser

Vedder, Price, Kaufman & Kammholz, P.C.

Chicago, Illinois

TABLE OF CONTENTS

Article I	DEFINITIONS	1
Section 1.1.	Defined Terms	1
Article II	SALE AND PURCHASE; OTHER AGREEMENTS	4
Section 2.1.	Sale and Purchase	4
Section 2.2.	Acquisition Price; Payment	4
Section 2.3.	Taxes	5
Article III	CLOSING; CONDITIONS TO CLOSING	6
Section 3.1.	Closing	6
Section 3.2.	Seller	6
Section 3.3.	Purchaser	7
Article IV	REPRESENTATIONS, WARRANTIES AND COVENANTS	9
Section 4.1.	Representations, Warranties and Covenants of Seller	9
Section 4.2.	Representations, Warranties and Covenants of Purchaser	11
Article V	RESERVED RIGHTS	13
Section 5.1.	Reserved Rights	13
Section 5.2.	Allocation of Amounts	13
Section 5.3.	Indemnification	13
Section 5.4.	Mutual Cooperation	14
Article VI	MISCELLANEOUS	14
Section 6.1.	Transaction Costs	14
Section 6.2.	Brokers, Finders, Etc	14
Section 6.3.	Announcements	14
Section 6.4.	Counterparts	15
Section 6.5.	Amendments, Etc.; Entire Agreement	15
Section 6.6.	Successors and Assigns	15
Section 6.7.	Governing Law; Submission to Jurisdiction	15
Section 6.8.	WAIVER OF JURY TRIAL	16
Section 6.9.	Notices, Etc	16
Section 6.10.	Severability of Provisions	17
Section 6.11.	Headings, Etc	17
Section 6.12.	Further Assurances; Confidentiality	17
Section 6.13.	Survival	18
Section 6.14.	Counterparts	18

SCHEDULES AND EXHIBITS

SCHEDULE 1	Addresses and Accounts
SCHEDULE 2	Trust Agreements and Owner Trustees
SCHEDULE 3	Description of Aircraft
SCHEDULE 4	Indebtedness
SCHEDULE 5	Leases
SCHEDULE 6	Participation Agreements
SCHEDULE 7	Trust Indentures

EXHIBIT A	Form of Assignment and Assumption Agreement (____)

PURCHASE AGREEMENT (647/648)

THIS PURCHASE AGREEMENT (647/648), dated as of August 26, 2004 (this “Agreement”) is by and between PLM CAL II LLC, a Delaware limited liability company (“Purchaser”) and BALLSTON AERO TRUST SERVICES, L.C., a Virginia limited liability company, as trustee under that certain TCC Master Aircraft Trust Agreement dated as of September 23, 1996, as amended and supplemented (“Seller”). Defined terms used herein shall have the meanings assigned to such terms (whether by reference to another document or otherwise) in Section 1.

W I T N E S S E T H:

WHEREAS, Seller owns the beneficial interests of the trust estates created pursuant to the trust agreements listed on Schedule 2 hereto;

ARTICLE I

DEFINITIONS

Section 1.1. Defined Terms.

(a) The following terms shall have the following meanings for all purposes of this Agreement:

“Acquisition Price” shall have the meaning set forth in Section 2.2(a).

“Aircraft” shall mean Aircraft (28908) or Aircraft (28909), or either or both of them, as indicated by the context.

“Aircraft (28908)” shall mean the aircraft described on Schedule 3 hereto bearing manufacturer’s serial number 28908.

“Aircraft (28909)” shall mean the aircraft described on Schedule 3 bearing manufacturer’s serial number 28909.

“Assignment and Assumption Agreement” shall mean an assignment and assumption agreement with respect to an Equity Interest Transfer, substantially in the form of Exhibit A hereto.

“Event of Loss” shall mean an “Event of Loss” under any Transaction Document.

“Guarantor” shall mean PLM CAL I LLC, a Delaware limited liability company.

“Indebtedness” shall mean the amounts set forth on Schedule 4 hereto.

“Leases” or “Lease” shall mean the documents listed on Schedule 5 hereto, or either of them, as indicated by the context.

“Lessee” shall mean Continental Airlines, Inc.

“Lien” shall mean any mortgage, pledge, security interest, charge, lien or other encumbrance.

“Owner Participant” shall have the meaning assigned to such term in the relevant Participation Agreement.

“Owner Trustee” shall mean the owner trustee named on Schedule 2 hereto.

“Participation Agreements” or “Participation Agreement” shall mean the documents listed on Schedule 6 hereto, or either of them, as indicated by the context.

“PLM I” means PLM CAL I LLC, a Delaware limited liability company.

“Transaction Documents” shall mean, collectively, the documentation identified as such on Exhibits I to each of the Assignment and Assumption Agreements.

“Transfer Documents” shall mean, collectively, this Agreement and the Assignment and Assumption Agreements.

“Transfer Documents (28906/28907)” shall mean that certain Purchase Agreement (645/646), certain Assignment and Assumption Agreement (N14645), and that certain Assignment and Assumption Agreement (N16646) each between Seller and PLM I as to those Boeing 737-524 aircraft bearing manufacturer’s serial numbers 28906 and 28907.

“Trust Agreements” or “Trust Agreement” shall mean the documents listed on Schedule 2 hereto, or either of them, as indicated by the context.

“Trust Estates” shall have the meanings set forth in the Trust Agreements and “Trust Estate” shall mean either of them.

“Trust Indentures” or “Trust Indenture” shall mean the documents listed on Schedule 7 hereto, or either of them, as indicated by the context.

ARTICLE II

SALE AND PURCHASE; OTHER AGREEMENTS

Section 2.1. Sale and Purchase.

Section 2.2. Acquisition Price; Payment.

(a) Acquisition Price for Equity Interests. The purchase price payable by Purchaser to Seller for an Equity Interest on the related Closing Date ( the “Acquisition Price”) shall be equal to (i) for Aircraft (28908), $1,596,250 plus assumption of the Indebtedness related to Aircraft (28908) and (ii) for Aircraft (28909) $1,596,250 plus the assumption of Indebtedness related to Aircraft ( 28909). The Acquisition Price for each Equity Interest shall be payable by Purchaser in lawful dollar currency of the United States of America in the manner contemplated by, and to Seller’s account specified in, paragraph (b) of this Section 2.2.

Section 2.3. Taxes. Purchaser shall be responsible for payment of and shall pay (at no after-tax cost to Seller, Owner Trustee or the Trust Estates (collectively, the “Tax Indemnitees” and, individually, a “Tax Indemnitee”) any and all license, recording and documentation fees, and sales, use, excise, transfer, value added, gross receipts, property or any other similar taxes, fees or charges imposed on or with respect to the Aircraft, or the ownership, leasing, use or operation thereof or the rentals derived therefrom (hereinafter, individually, a “Covered Tax”, and collectively, “Covered Taxes”) imposed by the United States federal or any state or local government or taxing authority upon or in respect of the sale, assignment or transfer of the Equity Interests as co ntemplated hereby (provided, however, that Purchaser shall not be responsible for any (a) taxes based on, measured by, or with respect to net or gross income or capital of such Tax Indemnitee or (b) taxes related to the Aircraft and arising prior to the relevant Closing Date). Purchaser shall indemnify each Tax Indemnitee against the imposition of any Covered Tax immediately upon receipt of such Indemnitee’s demand therefor, which demand shall be accompanied by documentation evidencing the imposition of such Covered Tax. Subject to the scheduled locations of the equipment constituting the Trust Estate on the applicable Closing Date, Seller agrees to cooperate with Purchaser concerning the time of closing of the transaction contemplated hereby on the subject Closing Date so as to minimize the imposition of any Taxes that otherwise might be imposed upon or in respect of the Equity Interest Transfer as contemplated hereby.

ARTICLE III

CLOSING; CONDITIONS TO CLOSING

(a) No Default. (i) Purchaser shall not be in default of any of its obligations hereunder or under any of the other Transfer Documents to which Purchaser is a party (collectively, the “Purchaser Documents”), (ii) PLM I shall not be in default of any of its obligations under any of the Transfer Documents (28906/28907) and (iii) Guarantor shall not be in default of any of its obligat ions under either Guaranty.

(b) Representations and Warranties. The representations and warranties of (i) Purchaser contained herein and in all of the other Purchaser Documents, (ii) PLM I contained in the Transfer Documents (28906/28907) and (iii) the Guarantor contained in the Guaranties shall be true and correct as of the subject Closing Date with the same force and effect as though made on and as of such Closing Date, except to the extent that any such representation or warranty relates solely to an earlier date in which case such representation or warranty shall have been true and correct on and as of such ea rlier date.

(j) Certification of Financials. Seller shall have received a copy of the financial statements of Guarantor (in form and substance reasonably satisfactory to Seller) certified by a member or manager of Guarantor evidencing that Purchaser complies with the requirements contained in the Transaction Documents applicable to a transferee of the Equity Interests.

(a) No Default. Seller shall not be in default of any of its obligations hereunder or under any of the other Transfer Documents or under the Transfer Documents (28906/28907). No Default or Event of Default as defined in the Participation Agreements or the equivalent shall have occurred and be continuing under any of the Transaction Documents, and each of the Transaction Documents are in full force and effect.

(d) Litigation. No action, proceeding or investigation shall have been instituted or threatened by any Person before any Governmental Authority, nor shall any order, writ, judgment or decree have been issued or proposed to be issued by any Governmental Authority as of the subject Closing Date, which in any case questions the validity or legality of this Agreement, the transactions contemplated hereby or by the Transaction Documents relating to the Equity Interest to be transferred on such Closing Date, or the ability of either party hereto to consummate any of such transactions.

(k) Trust Agreement. The Trust Agreement shall be in full force and effect.

(l) Aircraft Inspection. Purchaser shall have completed an inspection of the Aircraft and the Aircraft records satisfactory to the Purchaser.

(m) No Termination. Lessee shall not have exercised its rights to an early termination pursuant to Section 9 of the Lease.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 4.1. Representations, Warranties and Covenants of Seller. Seller hereby represents and warrants to Purchaser, as of the date hereof and as of each Closing Date as follows:

(j) No Prepayment. Seller has not received any prepayment of Rent under the Lease.

(l) No Lessee Termination. Seller has not received notice that Lessee has exercised its rights to an early termination under Section 9 of the Lease.

(m) Tax Indemnity Agreement. Seller agrees to cause CIT Communications Finance Corporation (“CIT”) (as successor to AT&T Credit Corporation (“AT&T”) to assign, pursuant to an assignment in form and substance reasonably satisfactory to each of Seller and Purchaser, CIT’s rights under each of (i) that certain Tax Indemnity Agreement 647 dated as of Novem ber 24, 1997, between AT&T and Lessee and (ii) that certain Tax Indemnity Agreement 648 dated as of November 26, 1997 between AT&T and Lessee (each of the documents referred to in clauses (i) and (ii), a “Tax Indemnity Agreement”) arising from and after the applicable Closing Date, but excluding in each case any and all rights and interests of CIT in respect of the following: (i) CIT’s right to tax and other indemnification under the applicable Tax Indemnity Agreement as a result of or arising out of events occurring or circumstances existing prior to the relevant Closing Date (or claim asserted against CIT with respect to a matter subsequent to such Closing Date, if CIT would otherwise be entitled to indemnification for such claim under the applicable Tax Indemnity Agreement, (ii) any interest payable by Lessee on any amount referred to in clause (i) above and (iii) the right to enforce payment of the amounts referred to in clauses (i) and (ii) above.

Section 4.2. Representations, Warranties and Covenants of Purchaser. Purchaser hereby represents, warrants and covenants to Seller, as of the date hereof and as of each Closing Date, as follows:

(h) Citizenship. Purchaser is a Citizen of the United States.

(k) ERISA. No part of the funds to be used by Purchaser to acquire the Equity Interests directly or indirectly constitutes assets of a Plan.

ARTICLE V

RESERVED RIGHTS

Section 5.2. Allocation of Amounts. If Purchaser or Owner Trustee shall receive any amount relating to any Transaction Document or any of the transactions contemplated thereby to which Seller is entitled under Section 5.1, Purchaser shall promptly remit or shall cause the Owner Trustee to remit such amount to Seller (together with, to the extent not paid over within ten Business Days, interest at the then- applicable average rate for federal funds from and including the date of receipt by Purchaser or Owner Trustee, as the case may be, to but excluding, the date of payment to Sel ler) and, until so delivered, any such amount received shall be received and held in trust by Purchaser or Owner Trustee, as the case may be, for the benefit of Seller. If Seller shall receive any amount relating to any Transaction Document or any of the transactions contemplated thereby to which Purchaser or Owner Trustee is entitled under Section 5.1, Seller shall promptly remit such amount to Purchaser or Owner Trustee, as the case may be (together with, to the extent not paid over within ten Business Days, interest at the then-applicable average rate for federal funds from and including the date of receipt by Seller to, but excluding, the date of payment to Purchaser or Owner Trustee, as the case may be), and until so delivered any such amount received by Seller shall be received and held in trust by Seller for the benefit of Purchaser or Owner Trustee, as the case may be.

Section 5.3. Indemnification. (a) Purchaser shall have no liability or obligation as a result of, and Seller shall indemnify and hold Purchaser harmless on an after-tax basis against, and shall be liable for and shall pay any loss, cost or other expense arising out of (i) any failure by Seller to comply with the terms of the Transaction Documents to which it is a party prior to each Closing Date, (ii) any liabilities or obligations of Seller under the Transaction Documents required to be satisfied or performed prior to each Closing Date or (iii) a breach by Seller of any of its representations or warranties contained in any of the Transfer Documents.

Section 5.4. Mutual Cooperation. Seller and Purchaser shall provide each other with such assistance as may reasonably be requested by either of them in writing in connection with the preparation of any tax return, any audit or other examination by any taxing authority, or any judicial or administrative proceedings relating to liability for Taxes, and each will retain and, upon the request of the other, provide the other with any records or information which may be relevant to such return, audit or examination or proceedings. Such assistance shall include making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The party requesting assistance hereunder shall reimburse the other for reasonable out-of-pocket expenses incurred by the other in providing such assistance.

ARTICLE VI

MISCELLANE OUS

Section 6.1. Transaction Costs. Regardless of whether the transactions contemplated hereby are consummated, (A) Purchaser agrees to pay all costs, expenses and fees (collectively, “Costs”) incurred by it (including, without limitation, fees and disbursements of counsel and/or special counsel to Purchaser) in connection with the transaction contemplated hereby, and (B) S eller agrees to pay all Costs incurred by it in connection with the transaction contemplated hereby (including, without limitation, fees and disbursements of counsel and/or special counsel to Seller and any and all Costs incurred by each of Lessee and Owner Trustee in connection with the transactions contemplated hereby). Each of Seller and Purchaser agrees to pay one-half of the fees and expenses of special FAA counsel for services rendered in connection with the transaction contemplated hereby.

Section 6.2. Brokers, Finders, Etc. Each party to this Agreement represents to the other that it has dealt with no broker or finder, in connection with the transaction contemplated hereby, no broker or Person acting on such a party’s behalf is entitled to any brokerage fee, financial advisory fee, commission or finder’s fee in connection with such transaction. Each of Seller and Purchaser agrees to indemnify and hold harmless the other for, from and against any and all loss, liability, damage, cost, claim or expense (including, without limitation, attorneys’ fees) incur red by reason of any commission, brokerage fee, financial advisory fee or finder’s fee alleged to be payable because of any act, omission or statement of the indemnifying party.

Section 6.5. Amendments, Etc.; Entire Agreement. Except as otherwise specifically provided herein, this Agreement and the other Transfer Documents contain the entire agreement of the parties with respect to the subject matter hereof and thereof, and supersede all prior agreements and understandings between the parties, whether written or oral. Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument which purports to terminate, amend, supplement, waive or modify this Agreement, or any of the terms hereof, signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification is sought. The schedules and exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein by reference as if set forth in full in the main body of this Agreement.

Section 6.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR THE ASSIGNMENT AND ASSUMPTION AGREEMENTS OR RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, OR THE ASSIGNMENT AND ASSUMPTION AGREEMENTS. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND A LL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

Section 6.9. Notices, Etc. All notices, offers, acceptances, approvals, waivers, requests, demands and other communications hereunder or under any instrument, certificate or other instrument delivered in connection with the transactions described herein shall be in writing, shall be addressed as provided below and shall be considered as properly given (a) if delivered in person, (b) if sent by reputable overnight delivery service, (c) in the event overnight delivery services are not readily available, if mailed by first class United States mail, postage prepaid, registe red or certified with return receipt requested, or (d) if sent by telecopier and confirmed in writing by any other manner described above. Notice so mailed shall be effective upon the earlier of actual receipt or the expiration of five (5) days after its deposit. Notice given in any other manner shall be effective upon receipt by the addressee; provided, however, that if any notice is tendered to an addressee and the delivery thereof is refused by such addressee, such notice shall be effective upon such tender. For the purposes of notice, the address of the parties shall be as set forth below; provided, that either party shall have the right to change its address for notice hereunder to any other location by the giving of prior notice to the other party in the manner set forth hereinabove. The initial addresses of the parties hereto are as follows:

If to Purchaser:

PLM CAL II LLC

c/o Equis Financial Group

200 Nyala Farm Rd.

Westport, CT 06880

Attention: James A. Coyne

Telephone: (203) 341-0515

Telecopier: (203) 341-9988

with a copy to:

Kevin Johnson, Esq.

Fafinski, Mark & Johnson

775 Prairie Center Drive, Suite 400

Eden Prairie, MN 55344

Telephone: (952) 995-9500

Telecopier: (952) 995-9577

If to Seller:

Ballston Aero Trust Services, L.C.

c/o C.I.T. Leasing Corporation

1211 Avenue of the Americas, 21^st Floor

New York, NY 10036

Attention: General Counsel

Telephone: (212) 536-1375

Telecopier: (212) 536-1388

with a copy to:

Vedder, Price, Kaufman & Kammholz, P.C.

222 North LaSalle Street

Suite 2600

Chicago, IL 60601

Attention: Lynne A. Gochanour, Esq.

Telephone: (312) 609-7500

Telecopier: (312) 609-5005

Section 6.11. Headings, Etc. The headings and the table of contents used herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.

Section 6.13. Survival. The representations, warranties, covenants and indemnities of the parties contained in this Agreement shall survive execution and delivery hereof.

* * *

IN WITNESS WHEREOF, the parties hereto have caused this Purchase Agreement (647/648) to be duly executed and delivered as of the date first above written.

	BALLSTON AERO TRUST SERVICES, L.C., as trustee under that certain TCC Master Aircraft Trust Agreement dated as of September 23, 1996, Seller
	By:
	Its: Attorney in Fact

	PLM CAL II LLC, by Equis II Corporation, its Managing Member, Purchaser
	By:
	Its:

SCHEDULE 1

ADDRESSES AND ACCOUNTS

Addresses	Accounts
Seller Ballston Aero Trust Services, L.C. c/o C.I.T. Leasing Corporation 1211 Avenue of the Americas, 21st Floor New York, NY 10036 Attention: General Counsel Telephone: (212) 536-1375 Telecopier: (212) 536-1388	Bank: JP Morgan Chase ABA Number: 021 000 021 Credit to: CIT Group Acct Number: 116-003855 Reference: Continental Sale/Equis
Purchaser PLM CAL II, LLC. c/o Equis Financial Group 200 Nyala Farm Road Westport, CT 06880 Attention: James A. Coyne Telephone: (203) 341-0515 Telecopier: (203) 341-9988	Bank: Comerica Bank ABA Number: 121 137 522 Credit to: PLM International Inc. Acct Number: 1891533166

SCHEDULE 2

TRUST AGREEMENTS AND OWNER TRUSTEES

1.	Trust Agreement 645, dated as of September 30, 1997, between Ballston Aero Trust Services, L.C., as Owner Participant, and Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee.

2.	Trust Agreement 646, dated as of November 21, 1997, between Ballston Aero Trust Services, L.C., as Owner Participant, and Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee.

SCHEDULE 3

DESCRIPTION OF AIRCRAFT

1.	Airframe:	Boeing 737-524 MSN# 28908, Reg. # N16647
	Engines:	2 CFM 56-3-B1, MSN’s # 858653 and 858654
2.	Airframe:	Boeing 737-524 MSN# 28909, Reg. # N16648
	Engines:	2 CFM 56-3-B1, MSN’s # 858732 and 858696

SCHEDULE 4

INDEBTEDNESS

Aircraft Serial Number	Aircraft Registration Mark	Indebtedness (as of 6/30/04)

28908	N16647	$ 12,857,981.35
28909	N16648	$ 12,857,981.35

SCHEDULE 5

LEASES

1.	Lease Agreement 647, dated as of November 24, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

2.	Lease Agreement 648, dated as of November 26, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

3.	Lease Supplement No. 1, dated November 24, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

4.	Lease Supplement No. 1, dated December 5, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Lessor and Continental Airlines, Inc., as Lessee.

SCHEDULE 6

PARTICIPATION AGREEMENTS

Participation Agreement 647, dated as of November 24, 1997, among Continental Airlines, Inc., as Lessee, Ballston Aero Trust Services, L.C., as Owner Participant, Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee, Subordination Agent and Pass Through Trustee.

Participation Agreement 648, dated as of November 26, 1997, among Continental Airlines, Inc., as Lessee, Ballston Aero Trust Services, L.C., as Owner Participant, Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee, Subordination Agent and Pass Through Trustee.

SCHEDULE 7

TRUST INDENTURES

1. Trust Indenture and Mortgage 647, dated as of November 24, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee.

2. Trust Indenture and Mortgage 648, dated as of November 26, 1997, between Wells Fargo Bank Northwest, N.A. as successor to First Security Bank, N.A., as Owner Trustee and Wilmington Trust Company, as Mortgagee.

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

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