PLEDGE AND SECURITY AGREEMENT
THIS SECURITY AGREEMENT, made as of the 30th day of June 1998, is by and
between GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation with an
address at 44 Old Ridgebury Road, Danbury, CT 06811 (the "Secured Party"), and
American Finance Group, Inc., a corporation organized and existing under the
laws of the State of Delaware with its chief executive offices located at 24
School Street, Boston, MA 02108 (the "Debtor").
In consideration of the promises herein contained and of certain other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
I. CREATION OF SECURITY INTEREST.
As security for the payment of any and all obligations and liabilities
of any nature whatsoever, whether primary, secondary, direct, contingent, sole,
joint or several, due or to become due, now existing or hereafter contracted or
acquired, of Debtor to Secured Party, including without limitation the payment
of all sums due or to become due and the performance of all obligations pursuant
to certain Promissory Notes (each, a "Note", together the "Notes") made by
Debtor to the order of Secured Party, identified on any collateral schedule
which, from time to time, may be annexed hereto and incorporated herein by
reference ("Collateral Schedule"), and modifications thereof (any and all of
which are sometimes referred to hereafter as the "Indebtedness"), Debtor hereby
gives, grants and assigns to Secured Party, its successors and assigns, a
security interest in and against the Lease Agreement between Debtor and Oxford
Health Plans, Inc., dated February 10, 1998 and Equipment Schedule Nos. 10
attached hereto (the Lease Agreement and all such equipment schedules shall be
hereinafter collectively and individually referred to as the "Lease"), all of
the equipment leased thereunder (the "Equipment") and any and all additional
property pledged to Debtor pursuant to any such Lease now and hereafter listed
on any such Collateral Schedule and in and against any and all additions,
attachments, accessories and accessions thereto, any and all substitutions,
replacements or exchanges therefore, and any and all insurance and/or other
proceeds of the Lease, Equipment and other property in and against which a
security interest is granted hereunder, all of which Lease, Equipment and other
property and proceeds are hereinafter individually and collectively referred to
as the ("Collateral").
2. RIGHTS OF SECURED PARTY.
(a) If requested by Debtor, Secured Party may, but shall in no event be
obligated to, accept and/or designate substitutions and exchanges of the
Lease, Equipment or other property already pledged hereunder for leases,
equipment or other property not already pledged hereunder, and additions to
the Lease, Equipment and other property, constituting all or any part of
the Collateral. Such substitutions, exchanges and additions shall be
accomplished at any time and from time to time, by the substitution of a
revised Collateral Schedule for the Collateral Schedule now or hereafter
annexed. Any lease, equipment or other property which may be substituted,
exchanged or added as aforesaid shall constitute a portion of the
Collateral and shall be subject to the security interest granted herein.
Any substitution, exchange or addition of a lease or leases under this
Security Agreement shall be conditioned on the receipt by Secured Party of
Debtor's representations and warranties, in writing, as to each such
substituted, exchanged or added lease (each, a "Replacement Lease")
substantially in the form of Section 3(k) hereof. Replacement Leases to be
pledged pursuant to the terms of Section 50) hereof shall be have a value,
as determined by Secured Party in its sole discretion, at least equal to
the value of the Lease or Leases to be replaced pursuant to said Section
50).
(b) Additions to, reductions or exchanges of, or substitutions for, the
Collateral, payments on account of any obligation or liability secured
hereby, or increases in the obligations and liabilities secured hereby, or
the creation of additional obligations and liabilities secured hereby, may
from time to time be made or occur without affecting the provisions of this
Security Agreement or the provisions of any obligation or liability which
this Security Agreement secures.
(c) The surrender of a Note or other document evidencing an obligation or
liability secured hereby upon payment or otherwise, shall not affect the
rights of Secured Party to retain the Collateral for such other obligations
and liabilities as may then exist or as it may be reasonably contemplated
will exist in the future.
(d) Any third person at any time and from time to time holding all or any
portion of the Collateral shall be deemed to, and shall, hold the
Collateral as the agent of, and as pledge holder for, Secured Party. At any
time and from time to time, Secured Party may give notice to any third
person holding all or any portion of the Collateral that such third person
is holding the Collateral as the agent of, and as pledge holder for, the
Secured Party.
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR.
Debtor hereby represents and warrants as of the date hereof and as of
the date of execution of each Collateral Schedule hereto that:
(a) Debtor is duly organized, existing and in good standing under the
laws of the State set forth in the first paragraph of this Security Agreement,
has its chief executive offices at the location set forth in such paragraph,
and, to the best of Debtor's knowledge, is duly qualified and licensed in every
jurisdiction wherever necessary to carry on its present business and operations;
(b) Debtor has adequate power and capacity to enter into, and to perform
its obligations, under this Security Agreement, each Note and any other
documents evidencing, or given in connection with, any of the Indebtedness (all
of the foregoing being hereinafter collectively referred to as the "Loan
Documents");
(c) The Loan Documents have been duly authorized, executed and delivered
by Debtor and constitute legal, valid and binding agreements enforceable in
accordance with their terms, except to the extent that the enforcement of
remedies may be limited under applicable bankruptcy and insolvency laws;
(d) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into, or
performance by, Debtor of any of the Loan Documents, except such as may have
already been obtained;
(e) The entry into, and performance by, Debtor of the Loan Documents
will not (i) violate any of the organizational documents of Debtor or any
judgment, order, law or regulation applicable to Debtor, or (ii) result in any
breach of, constitute a default under, or result in the creation of any lien,
claim or encumbrance (except for the lien created by Secured Party under this
Security Agreement) pursuant to, any indenture mortgage, deed of trust, bank
loan, credit agreement, or other agreement or instrument to which Debtor is a
party;
(f) There are no suits, or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Debtor which could, in the aggregate, have a material adverse effect on Debtor,
its business or operations, or its ability to perform its obligations under the
Loan Documents;
(g) All financial statements of Debtor and any of its affiliates
delivered to Secured Party have been prepared in accordance with generally
accepted accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change;
(h) The Equipment pledged hereunder is and will remain in good condition
in accordance with theLease.
(i) Debtor is the sole and lawful owner of the Lease and Equipment, has
good and marketable title to the Lease and Equipment, free and clear of any
security interests, liens, and other encumbrances and rights, except as provided
for in this Security Agreement, and has the sole right and lawful authority to
grant to Secured Party the security interest described in this Security
Agreement; and
(j) The Collateral is and will remain free and clear of all liens,
claims and encumbrances of every kind, nature and description except for the
lien of this Security Agreement.
(k) With respect to each Lease pledged hereunder: (i) the Lease is
genuine and represents a valid obligation of the lessee and any other party
(including, but not limited to, any Guarantors) named in any of the Lease
documentation (each, a "Lease Party"); (ii) each Lease Party is bona fide and in
good standing; (iii) the Lease documentation delivered by Debtor to Secured
Party correctly reflects the entire agreement between Debtor and each Lease
Party with respect to the Lease; (iv) Debtor has delivered to Secured Party all
originals of the Lease documentation, except for those in the possession or
control of a Lease Party; (v) all names, addresses, amounts, dates, signatures
and other statements and facts contained in the Lease documentation are genuine,
true and correct; (vi) all Lease documentation has been duly authorized,
executed and delivered by each Lease Party thereto and represents the legal,
valid and binding obligation of such Lease Party, enforceable under all
applicable laws against such Lease Party in accordance with its terms, except to
the extent that enforcement of remedies may be limited by applicable bankruptcy,
insolvency or similar laws; (vii) the Lease is not in default and is and will be
free from any liens, setoffs, counterclaims and any and all other defenses;
(viii) there are no claims pending or threatened by any Lease Party against
Debtor in connection with the Lease or otherwise; (ix) the Lease documentation
evidences a valid reservation of title to, or first lien on, the Equipment and
all other property that is the subject of the Lease that is effective against
all persons; (x) Debtor has properly and timely filed or recorded any Lease
documentation or other instruments as may be required under all applicable
filing and recording statutes, and has obtained all necessary subordinations,
releases and/or waivers, to ensure that Debtor's lien or other interest in the
Equipment and all other property that is the subject of the Lease is and will be
superior to that of all other persons; (xi) Debtor has the right to assign the
Lease to Secured Party and the assignment conveys to Secured Party good and
valid title, at law and in equity, to the Lease, free and clear of any and all
liens, claims and encumbrances of any kind or nature whatsoever and (xii) as of
the date a Lease is assigned to Secured Party hereunder, (1) except April 1998
payment, no payment due under the Lease was more than ten (IO) days past due,
(2) no nonpayment default was in existence thereunder, (3) Debtor has no
knowledge that any Lease Party is asserting or has any basis to assert any
defense, setoff, or counterclaim to its obligations under any Lease Document,
(4) Debtor has not granted any extensions or waivers under the Lease during the
period since the commencement date of the Lease, (5) the Lease complies with all
applicable usury laws, retail installment sales acts, truth-in-lending and
truth-in-leasing laws and regulations and all other applicable laws and
regulations and (6) no consent of any Lease Party is required for Lessor to
assign or grant a security interest in, as applicable, the Lease or the
Equipment.
4. CERTAIN COVENANTS OF DEBTOR.
Debtor hereby covenants as follows:
(a) Debtor shall cooperate and do all acts deemed necessary or
advisable by Secured Party to continue in Secured Party a perfected first
security interest in the Collateral, including without limitation the removal of
any liens, claims or encumbrances upon any of the Collateral, the subordination
and waiver of any landlord or lessor rights to Secured Party's first security
interest in the collateral and subordination of any rights of any mortgagee of
any real property where Collateral is located to Secured Party's first security
interest therein. Debtor agrees to make a good faith effort to obtain and
furnish to Secured Party landlord, lessor, and/or mortgagee waivers upon request
of and in form satisfactory to Secured Party.
(c) Debtor shall, upon request of Secured Party, furnish to
Secured Party such further information, execute and deliver to Secured Party
such documents, including without limitation Uniform Commercial Code financing
statements, and do such other acts and things, as Secured Party may at any time
reasonably request relating to the perfection or protection of the security
interest created by this Security Agreement or for the purpose of carrying out
the intent of this Security Agreement.
(d) All Leases and other Lease Documentation delivered to Secured Party
hereunder and constituting any or all of the Collateral shall be originals
thereof identified by the stamp or mark "Original" and all other counterparts,
if any, shall be marked "Duplicate" or "Copy".
(e) Debtor shall promptly notify Secured Party in writing in the event
of any change in the name of Debtor or any relocation of its chief executive
offices. In addition, Debtor shall promptly notify Secured Party in writing in
the event of any relocation of any of the Collateral; provided, however, in no
event shall any of the Collateral be removed from the continental United States.
5. EVENTS OF DEFAULT.
Debtor shall be in default under this Security Agreement and under each
obligation and liability identified on any Collateral Schedule hereto upon the
occurrence of any of the following "Event(s) of Default":
(a) Debtor fails to pay any installment or other amount due or coming
due under any of the Loan Documents within ten days after its due date;
(b) Any attempt by Debtor, without the prior written consent of Secured
Party, to sell, rent, lease, mortgage, grant a security interest in (other than
the security interest granted in favor of Secured Party pursuant to this
Security Agreement), or otherwise encumber or transfer any of the Collateral;
(c) Debtor fails to procure, or maintain in effect at all times, any of
the insurance on the Collateral in accordance with Section 7(b) of the this
Security Agreement;
(d) Debtor breaches any of its other obligations under any of the Loan
Documents and fails to cure the same within thirty days after written notice
thereof;
(e) Any warranty, representation or statement made by Debtor in any of
the Loan Documents or otherwise in connection with any of the Indebtedness shall
be false or misleading in any material respect;
(f) Any dissolution, termination of existence, insolvency, or business
failure of Debtor, or if Debtor is a natural person, any death or incompetency
of Debtor;
(g) Any of the Collateral being subjected to, or being threatened with,
attachment, execution, levy, seizure or confiscation in any legal proceeding, or
the entry of any judgment against, or the assessment and/or filing of any tax
lien against, or the issuance of any writ of garnishment or attachment against
any property of Debtor;
(h) The appointment of a receiver for all or of any part of the
property of Debtor, the assignment for the benefit of creditors by or the
commencement of any proceeding under any bankruptcy or insolvency law by Debtor
or against Debtor or any guarantor of Debtor's obligation hereunder or in
connection with the Indebtedness (and such involuntary proceeding is not
dismissed within thirty days of the filing thereof); or
(j) Debtor fails to provide Secured Party with a Replacement, Lease or
Leases, as the case may be, in compliance with Section 2(a) hereof within thirty
(30) days of the occurrence of any of the following events (i) any Lease pledged
hereunder is declared in default or is otherwise terminated or (ii) any Lease
pledged hereunder is, in the judgment of Secured Party, likely to be declared in
default.
6. REMEDIES ON DEFAULT.
Upon the occurrence of an Event of Default under this Security
Agreement, the Secured Party, at its option, may declare any or all of the
Indebtedness, including without limitation the Notes, to be immediately due and
payable, without demand or notice to Debtor or any guarantor of any obligations
of Debtor. The obligations and liabilities accelerated thereby shall bear
interest at the lower of thirteen percent (13%) per annum or the maximum rate
allowed by applicable law. Upon such declaration of default, Secured Party shall
have all of the rights and remedies of a Secured Party under the Uniform
Commercial Code, or under any other applicable law, including without limitation
the right to (i) notify any account debtor of Debtor or any obligor on any
instrument which constitutes part of the Collateral to make payment to the
Secured Party, (ii) with or without legal process, enter any premises where the
Collateral may be and take possession and/or remove said Collateral from said
premises, (iii) sell the Collateral at public or private sale, in whole or in
part, and have the right to bid and purchase at said sale, and/or (iv) lease or
otherwise dispose of all or part of the Collateral, applying proceeds therefrom
to the obligations
then in default. If requested by Secured Party, Debtor shall promptly assemble
the Collateral and make it available to Secured Party at a place to be
designated by Secured Party which is reasonably convenient to both parties.
Secured Party may also render any or all of the Collateral unusable at the
Debtor's premises and may dispose of such Collateral on such premises without
liability for rent or costs. Proceeds from any sale or lease or other
disposition shall be applied: first, to all costs of repossession, storage, and
disposition including without limitation reasonable attorneys', appraisers', and
auctioneers' fees; second, to discharge the obligations then in default; third,
to discharge any other indebtedness of Debtor to Secured Party, whether as
obligor, endorser, guarantor, surety or indemnitor; fourth, to expenses incurred
in paying or settling liens and claims against the Collateral; and lastly, to
Debtor, if there exists any surplus. Any notice which Secured Party is required
to give to Debtor under the Uniform Commercial Code of the time and place of any
public sale or the time after which any private sale or other intended
disposition of the Collateral is to be made shall be deemed to constitute
reasonable notice if such notice is mailed by registered or certified mail to
the last known address of Debtor at least five (5) days prior to such action.
In the event of the breach of any representations or warranties of
Debtor hereunder in connection with any Lease, or in the event Debtor fails to
observe or perform any covenants or agreements to be observed and performed by
Debtor hereunder in connection with any Lease, and the continuance thereof for
fifteen (I 5) calendar days following written notice thereof from Secured Party
to Debtor, Secured Party may demand that Debtor prepay the Note secured by
applicable Lease and Equipment, and Debtor agrees to make such prepayment upon
such demand and that Debtor will be liable for such payment upon demand. Secured
Party agrees to reassign such Lease and related Equipment to Debtor AS-IS,
WHERE-IS, without recourse and to release Secured Party's security interest in
the related Equipment upon receipt of such payment by Debtor.
7. COLLATERAL.
(a) Debtor shall not, without the prior written consent of Secured Party
sell, rent, lease, mortgage, grant a security interest in (other than the
security interest granted to Secured Party hereunder) or otherwise encumber or
transfer any of the Collateral. Debtor shall pay promptly when due all taxes,
license fees, assessments and public and private charges levied or assessed on
any of the Collateral, on the use thereof, or on this Security Agreement or any
of the other Loan Documents. At its option, Secured Party may discharge taxes,
liens, security interests or other encumbrances at any time levied or placed on
the Collateral and may pay for the maintenance, insurance and preservation of
the Collateral or to effect compliance with the terms of this Security Agreement
or any of the other Loan Documents, and Debtor agrees to reimburse Secured
Party, on demand, therefor.
(b) Until the declaration of any default hereunder, Debtor shall remain
in possession of the Collateral subject to any lessee's rights under the Lease
or any Replacement Lease. The Collateral shall at all times be held at Debtor's
risk, and Debtor shall keep it insured against loss or damage by fire and
extended coverage perils, theft, burglary and for any or all Collateral which
are vehicles, for risk of loss by collision, and where requested by Secured
Party, against other risks as required thereby, for the full replacement value
thereof, with companies, in amounts and under policies acceptable to Secured
Party, with losses payable to Secured Party and Debtor as their interests may
appear. Debtor shall, if Secured Party so requires, deliver to Secured Party
policies or certificates of insurance evidencing such coverage. Each policy
shall provide for coverage to Secured Party regardless of the breach by Debtor
of any warranty or representation made therein and shall provide for thirty (30)
days written notice to Secured Party of the cancellation or material
modification thereof.
(c) Debtor will, at all times, keep accurate and complete records of
the Collateral to the extent permitted by the Lease, and Secured Party or its
agents, successors and assigns will have the right to examine, inspect, and make
extracts from all of Debtor's books and records relating to the Collateral at
any time.
8. MISCELLANEOUS.
(a) Secured Party's rights and remedies hereunder or otherwise arising
are cumulative and may be exercised singularly or concurrently.
Neither the failure nor any delay on the part of the Secured Party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
(b) Secured Party shall not be deemed to have waived any of its rights
hereunder, or under any other agreement, instrument or paper signed by Debtor
unless such waiver be in waiting and signed by Secured Party. No delay or
omission on the part of Secured Party in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any future
occasion. Secured Party may correct patent errors herein. All notices to be
given in connection with this Security Agreement shall be in writing and shall
be sufficiently given if sent by first-class mail, postage prepaid, or delivered
in hand, to the appropriate party at its address set forth hereinabove (unless
and until a different address may be specified in a written notice to the other
party).
(c) Time is of the essence hereof. This Security Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns. If any
provision of this Security Agreement is in conflict with any statute, rule of
law applicable hereto, then such provision shall be deemed null and void to the
extent that it may conflict therewith, but without invalidating any other
provision(s) hereof. This Security Agreement shall not be changed or terminated
orally, but only by a writing signed by both parties hereto. This Security
Agreement, any Note and/or any of the other Loan Documents may be assigned by
Secured Party without notice to Debtor, and Debtor hereby waives any defense,
counterclaim or cross-complaint by Debtor against any assignee, agreeing that
Secured Party shall be solely responsible therefor.
(d) Debtor hereby grants to Secured Party the power to sign Debtor's
name and generally to act on behalf of Debtor to execute and file applications
for title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain such certificate showing the lien hereof with respect to the Collateral
and promptly deliver same to Secured Party. Debtor shall do everything necessary
or expedient to preserve or perfect the lien and perfected security interest of
Secured Party granted hereunder. Debtor waives, to the greatest extent permitted
by law, the benefit of all homestead and other property exemption laws. In the
event this Security Agreement, any Note or any other Loan Documents are placed
in the hands of an attorney for collection of money due or to become due or to
obtain performance of any provision hereof, Debtor agrees to pay all reasonable
attorneys' fees incurred by Secured Party, and further agrees that payment of
such fees is secured hereunder.
(e) Upon request, if so available, Debtor agrees to furnish its annual
financial statements in form Satisfactory to Secured Party. Any and all
financial statements submitted and to be submitted to Secured Party have and
will have been prepared on a basis of generally accepted accounting principles,
and are and will be complete and correct and fairly present Debtor's financial
condition as at the date thereof. Secured Party may at any reasonable time
examine the books and records of Debtor and make copies thereof.
(f) This Security Agreement shall be governed by and construed under
the substantive laws of the State of New York, without regard to choice of law
principles thereof, and any provision of this Security Agreement or of the
obligations and liabilities secured by this Security Agreement which may prove
to be unenforceable shall not affect the validity of any other provision of the
Security Agreement.
(g) This Security Agreement shall continue in full force and effect for
so long as there shall remain in existence obligations or liabilities from
Debtor to Secured Party and for so long after the payment of all outstanding
obligations and liabilities as it is reasonably contemplated that there may be
future obligations and liabilities between Debtor and Secured Party, which
future obligations and liabilities shall be secured by the security interest
granted in this Security Agreement.
(h) Secured Party hereby acknowledges that the Leases pledged hereunder
grant certain rights of quiet enjoyment to the lessees under such Leases.
Secured Party hereby agrees that, so long as no Event of Default has occurred
under the Lease, it will not disturb any such lessee's quiet, peaceful and
uninterrupted possession of the Collateral that is the subject of any such
Lease.
(i) THE PARTIES TO THIS SECURITY AGREEMENT HEREBY UNCONDITIONALLY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS SECURITY AGREEMENT, ANY OF
THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER
OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS
BEING ESTABLISHED BETWEEN THEM. The scope of this waiver is intended to be all
encompassing of any and all disputes that may be filed in any court (including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims). 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, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
SECURITY AGREEMENT ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Security Agreement in one or more
counterparts, each of which shall be deemed to be an original, as of the day and
year first aforesaid.
SECURED PARTY: DEBTOR:
GENERAL ELECTRIC CAPITAL CORPORATION AMERICAN FINANCE GROUP, INC.
By: /s/ James Trinacria By: /s/ Donald R. Dugan
------------------------ --------------------------
James Trinacria Donald R. Dugan
Title: Senior Risk Analyst Title: President
COLLATERAL SCHEDULE NO. I
THIS COLLATERAL SCHEDULE NO. 1 is annexed to and made a part of that
certain Pledge and Security Agreement dated as of June 30, 1998 (the "Security
Agreement") between General Electric Capital Corporation as secured party
("Secured Party") and American Finance Group, Inc., as debtor ("Debtor") and
describes the collateral in which Debtor has granted Secured Party a security
interest in connection with the Indebtedness (as defined in the Security
Agreement) including without limitation that certain Promissory Note dated June
30, 1998 in the original principal amount of $1,118,010.14.
The inventory of Debtor consisting of the equipment listed on Equipment
Schedule nos. 10 (all attachments, replacements and substitutions thereof) to
the Lease Agreement dated February 19,1998 by and between Debtor, as Lessor, and
Oxford Health Plans, Inc., as Lessee ("Lessee"), copies of which are attached
hereto and made a part hereof. In addition, Debtor hereby assigns and grants to
Secured Party a security interest in the above described Lease Agreement and
Equipment Schedule Nos. 10 thereto.
SECURED PARTY: DEBTOR:
GENERAL ELECTRIC CAPITAL CORPORATION AMERICAN FINANCE GROUP, INC.
By: /s/ James Trinacria By: /s/ Donald R. Dugan
-------------------------- -------------------------
James Trinacria Donald R. Dugan
Title: Senior Risk Analyst Title: President
Date: 6/30/98 Date: 26 June 1998
PROMISSORY NOTE
June 30, 1998
(Date)
24 SCHOOL STREET, BOSTON, MA 02108
(Address of Maker)
FOR VALUE RECEIVED, AMERICAN FINANCE GROUP, INC., ("Maker") promises, jointly
and severally if more than one, to pay to the order of General Electric Capital
Corporation or any subsequent holderhereof (each, a "Payee") at its office
located at 44 0ld Ridgebury Road, Danbury, CT 06811orat such other place as
Payee or the holder hereof may designate, the principal sum of one million one
hundred eighteen thousand ten and 14/100 dollars ($1,118,010.14), with interest
thereon, from the date hereof through and including the dates of payment, at a
fixed interest rate of nine and 26/100 percent (9.26%) per annum, to be paid in
lawful money of the United States, in thirty two (32) consecutive monthly
installments of principal and interest of thirty nine thousand five hundred
seventy two and 81/100 ($39,572.81) each ("Periodic Installment") and a final
installment which shall be in the amount of the total outstanding principal and
interest. The first Periodic Installment shall be due and payable on August 1,
1998 and the following Periodic Installments and the final installment shall be
due and payable on the same day of each succeeding month (each, a "Payment
Date"). Such installments have been calculated on the basis of a 360 day year of
twelve 30-day months. Each payment may, at the option of the Payee, be
calculated and applied on an assumption that such payment would be made on its
due date.
The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time.
Maker hereby expressly authorizes the Payee to insert the date value is actually
given in the blank space on the face hereof and on all related documents
pertaining hereto.
This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "Security
Agreement")
Maker shall be liable to repay this Note in the event of any breach of any
representation or warranty given by Maker to Payee under any Security Agreement,
however to the extent that any payments to be made by Maker under this Note or
any Security Agreement not related to a breach of any representation or warranty
given by Maker to Payee under any Security Agreement, Payee shall look solely to
the income and proceeds available under the Collateral (as that term is defined
in the Security Agreement) for the performance of Maker's duties and obligations
hereunder or under any Security Agreement and except as specifically provided
for in the paragraph, Maker shall not be otherwise personally liable to Payee
hereunder.
Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date. If (i) Maker fails to make payment of any amount due hereunder
within ten (10) days after the same becomes due and payable; or (ii) Maker is in
default under, or fails to perform under any term or condition contained in any
Security Agreement, then the entire principal sum remaining unpaid, together
with all accrued interest thereon and any other sum payable under this Note or
any Security Agreement, at the election of Payee, shall immediately become due
and payable, with interest thereon at the lesser of thirteen percent (I 3%) per
annum or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).
Maker may prepay in full, but not in part, its entire indebtedness hereunder
upon payment of an additional sum as a premium equal to the following
percentages of the original principal balance for the indicated period:
Prior to the first annual anniversary date of this Note: three percent (3%)
Prior to the second annual anniversary date of this Note: two percent (2%)
Prior to the third annual anniversary date of this Note: one percent (I%) and
zero percent (O%) thereafter, plus all other sums due hereunder or under any
Security Agreement.
It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, Maker agrees that, on the effective date
of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.
Maker and all sureties, endorsers, guarantors or any others (each such person,
other than Maker, an "Obligor") who may at any time become liable for the
payment hereof jointly and severally consent hereby to any and all extensions of
time, renewals, waivers or modifications of, and all substitutions or releases
of, security or of any party primarily or secondarily liable on this Note or any
Security Agreement or any term and provision of either, which may be made,
granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. Maker and each Obligor hereby waives presentment,
demand for payment, notice of nonpayment, protest, notice of protest, notice of
dishonor, and all other notices in connection herewith, as well as filing of
suit (if permitted by law) and diligence in collecting this Note or enforcing
any of the security hereof, and agrees to pay (if permitted by law) all expenses
incurred in collection, including Payee's actual attorneys' fees. Maker and each
Obligor agrees that fees not in excess of twenty percent (20%) of the amount
then due shall be deemed reasonable.
THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) 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,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
This Note and any Security Agreement constitute the entire agreement of Maker
and Payee with respect to the subject matter hereof and supercedes all prior
understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.
Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.
AMERICAN FINANCE GROUP, INC.
BY: /s/ Donald R. Dugan (L.S.)
-------------------------------
/s/ Jason M. Howard (Signature)
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(Witness)
Jason M. Howard Donald R. Dugan, President
(Print name) Print name (and title, if applicable)
Account Manager, AFG 94-3226128
(Address) (Federal tax identification number)