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EXHIBIT 10.1(a)(i)
NOTE
$80,400,000
NEW YORK, NEW YORK
July 25, 1994
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the
order of ITEL RAIL HOLDINGS CORPORATION, a Delaware corporation ("Payee") at
its place of payment listed in Section 13 below, on or before December 1, 1998,
the sum of EIGHTY MILLION AND FOUR HUNDRED THOUSAND DOLLARS ($80,400,000.00)
plus interest thereon on the unpaid principal amount hereof from time to time
outstanding from July 1, 1994 until maturity (provided, that for purposes of
calculating the interest due hereunder the full amount of $80,400,000 shall be
deemed outstanding for the period of time, if any, from July 1, 1994 until the
date hereof, even if no amount has then been advanced hereunder), at the
Interest Rate (as defined below) from time to time in effect in accordance with
the terms hereof. This Note is a purchase money note and is executed and
delivered pursuant to that certain Purchase Agreement dated as of June 23, 1994
by and among Maker, Payee and Itel Corporation, a Delaware corporation (the
"Purchase Agreement") as a portion of the purchase price payable by Maker as
the purchaser under the Purchase Agreement. Certain capitalized terms used and
not defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement. In consideration of the extension of credit evidenced by
this Note and of the transaction contemplated by the Purchase Agreement, Maker
hereby agrees as follows:
1. Interest Rate. Subject to the provisions of Section 2 below, the
principal amount outstanding (or deemed outstanding) from time to time under
this Note shall bear interest at a rate (the "Interest Rate") calculated as
follows:
(a) From July 1, 1994 to and including July 1, 1995 the Interest Rate
shall be a rate per annum equal to the rate from time to time announced by
Continental Bank, N.A. or its successor (the "Bank") as its "prime rate" (the
"Prime Rate").
(b) From and after July 2, 1995, the Interest Rate at any time shall
be a rate equal to the greater of (i) a rate per annum equal to the Prime Rate
in effect at such time, plus one and one-half percent (1-1/2%) and (ii) the
rate per annum in effect at such time (whether as a result of default or
otherwise) with respect to the Bank Loan (as defined below).
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(c) As used in this Note, the "Bank Loan" shall mean the loan, in the
original principal amount of $11,900,000, made by the Bank to Maker on the date
hereof, or any refinancing or replacement thereof which satisfies all of the
following conditions: (i) such loan is made by a reputable bank, insurance
company or other institutional lender, (ii) the principal amount of such loan
does not exceed an amount equal to the sum of $11,900,000, plus any accrued and
unpaid interest on the Bank Loan that has been added to principal in accordance
with the terms thereof, less any payments of principal made with respect to the
Bank Loan, and (iii) the maximum rate of interest payable on such loan prior to
default does not exceed the Prime Rate plus 2%.
2. Default Rate. Notwithstanding Section 1 above, after the
occurrence and during the continuance of an Event of Default hereunder, the
principal amount outstanding from time to time under this Note shall bear
interest at a rate (the "Default Rate equal to the greater of (i) two percent
(2%) per annum in excess of the Interest Rate that would otherwise be
applicable pursuant to Section 1(a) or Section 1(b)(i) hereof, and (ii) the
rate applicable under Section 1(b)(ii) hereof.
3. Certain Calculations; Limitation. The Interest Rate and the
Default Rate hereunder shall change when and as the Prime Rate changes, and
shall be computed, for the exact number of days elapsed, on the basis of a year
of 360 days. Notwithstanding any other provision of this Note, in no event
shall the Interest Rate or Default Rate hereunder exceed the maximum rate of
interest permitted under applicable law.
4. Payments of Interest; Maturity. Interest hereon shall be payable
semiannually for the first year on December 31, 1994 and June 30, 1995 and
monthly thereafter on the first day of each month (an "Interest Payment Date");
provided, that any unpaid interest may at Maker's election be added to
principal on such Interest Payment Date and shall thereafter bear interest at
the rates set forth above. All unpaid principal and accrued interest shall be
payable in full on December 1, 1998.
5. Security. This Note is secured by (i) a SCAP Pledge and
Security Agreement II of even date herewith (the "Pledge Agreement"), made by
Maker for the benefit of the Bank, as agent for Payee and the Bank and creating
a first security interest in certain shares of the common stock of Signal
Capital Holdings Corporation and (ii) an SCHC Guaranty II of even date herewith
(the "Guaranty") made by Signal Capital Holdings Corporation for the benefit of
Payee, and the Guaranty is secured by an SCHC Pledge and Security Interest II
of even date herewith (the "Security Agreement"). The Pledge Agreement, the
Guaranty and
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the Security Agreement are collectively referred to herein as the "Collateral
Documents".
6. Prepayment. Maker shall have the right from time to time upon
10 days prior written notice to Payee to prepay this Note prior to the
expressed maturity hereof (together with all accrued and unpaid interest hereon
and all other amounts due hereunder), in whole but not in part, without premium
or penalty.
7. Representations and Warranties. Maker hereby represents and
warrants to Payee that:
(a) Maker is a limited liability company duly organized,
validly existing and in good standing under the law of the state of
Delaware.
(b) This Note and each of the Collateral Documents to which
Maker is a party has been duly authorized, executed and delivered by
Maker and constitutes the valid and legally binding obligation of
Maker, enforceable in accordance with its terms. Each of the
Collateral Documents to which Signal Capital Holdings Corporation is a
party has been duly authorized, executed and delivered by Signal
Capital Holdings Corporation and constitutes the valid and legally
binding obligation of Signal Capital Holdings Corporation, enforceable
in accordance with its terms
(c) The execution and delivery of this Note and the
Collateral Documents, and performance by Maker and Signal Capital
Holdings Corporation of their respective obligations hereunder and
thereunder, will not violate any provision of law.
(d) There are no outstanding judgments, actions or
proceedings pending before any court or governmental authority, bureau
or agency, with respect to or threatened against or affecting Maker.
(e) Maker has no assets other than cash and cash
equivalents, the Acquired Trust Interests, and the 110 Shares of
Signal Capital Holdings Corporation (the "Shares") and has no
liabilities, contingent or otherwise, other than the liabilities
assumed pursuant to the Purchase Agreement, this Note, the Bank Loan,
the guaranty by Maker of the Redemption Note of $89,100,000 issued by
Signal Capital Holdings Corporation to Payee, the guaranty by Maker of
the loan, in the original principal amount of $24,400,000, made by the
Bank to Signal Capital Holdings Corporation (together with the Bank
Loan, the "Acquisition Loan"), and accrued expenses to be paid from
the Bank Loan.
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(f) Maker is not in default under, or in violation of any
term of, any agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment (including, without limitation, the
documents and agreements executed or delivered in connection with the
Bank Loan) to which it is a party or by which it is bound, or by which
any of the properties or assets owned by or used in the conduct of its
business is affected.
(g) Maker is not a party to or bound by, nor are any of the
properties or assets owned by it or used in the conduct of its
business affected by, any agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment, or subject to any charter or
other corporate restriction, which materially and adversely affects
its business assets or condition, financial or otherwise.
(h) All balance sheets, profit and loss statements and other
financial information of Maker heretofore furnished to Payee are true,
correct and complete and present fairly the financial condition of
Maker as at the dates thereof and for the periods covered thereby,
which financial condition has not materially adversely changed since
the date of the most recently dated balance sheet of Maker heretofore
furnished to Payee.
8. Financial Statements. Maker shall deliver to Payee:
(a) Annually, as soon as available, but in any event within
60 days after the last day of each of its fiscal years, consolidated
and consolidating balance sheets of Maker and its Subsidiaries, as at
such last day of the fiscal year, and consolidated and consolidating
statements of income and retained earnings and changes in financial
position, for such fiscal year, each prepared in accordance with
generally accepted accounting principles consistently applied, in
reasonable detail, such consolidated statements to be certified
without qualification by a firm of independent certified public
accountants satisfactory to Payee.
(b) As soon as available, but in any event within 30 days
after the end of each of Maker's first three fiscal quarterly periods,
the consolidated and consolidating balance sheets of Maker and its
Subsidiaries as of the last day of such quarter, and consolidated and
consolidating statements of income and retained earnings and changes
in financial position, for such quarter, all in reasonable detail,
each such statement to be certified by the chief financial, or
accounting, officer of Maker as having been prepared in accordance
with generally accepted accounting
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principles consistently applied (subject to year-end audit
adjustments).
(c) Promptly after a written request therefor, such other
financial data or information as Payee may reasonably request from
time to time.
(d) At the same time as it delivers the financial statements
required under the provisions of Sections 8(a) and 8(b), a certificate
signed by a manager of Maker, to the effect that no Event of Default
hereunder or under any other agreement to which Maker or any
Subsidiary is a party or by which it is bound, or by which any of its
properties or assets may be affected, and no event which, with the
giving of notice or the lapse of time, or both, would constitute such
an Event of Default, has occurred and specifying in reasonable detail
the exceptions, if any, to such statement.
As used herein, the term "Subsidiary" or "Subsidiaries" means
and includes (1) Signal Capital Holdings Corporation, (2) Railcar
Trust No. 1992-1, a Delaware business trust (the "Trust") and (3) the
partnership in which the Trust has an interest (the "Partnership").
9. Affirmative Covenants. Maker will, and will cause each Subsidiary
to:
(a) maintain adequate insurance;
(b) duly pay and discharge all taxes or other claims which
might become a lien upon any of its property except to the extent that
such items are being contested in good faith and reserves satisfactory
to Payee have been established with respect thereto;
(c) maintain, preserve and keep its properties in good
repair, working order and condition, and make all reasonable repairs,
replacements, additions, betterments and improvements thereto;
(d) comply with all statutes, rules and regulations and
maintain its corporate existence, and perform its obligations under
and comply with the terms and conditions of the Transaction Documents;
(e) pay all stamp or issuance taxes, and all recording and
filing fees and other charges, if any, payable by reason of the
execution, delivery, issuance recording or filing of this Note and the
Collateral Documents under any applicable ordinance or statute now
existing or hereafter enacted, and
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Maker will at all times indemnify and hold harmless Payee against any
liability in respect thereof;
(f) permit Payee to make or cause to be made, at Maker's
expense, inspections and audits of any books, records and papers of
Maker and to make extracts therefrom at all such reasonable times and
as often as Payee may reasonably require;
(g) apply all dividends and other distribution received
from the Trust, and all other amounts , of any kind or nature,
received (directly or indirectly) with respect to the Trust Interests
or the Shares, to pay this Note, the Redemption Note and the
Acquisition Loan, with such payments to be applied (1) in the case of
payments with respect to the Acquired Trust Interests that are subject
to the First Security Agreement (as defined below), first to the Bank
Loan, second to the balance of the Acquisition Loan, third to this
Note and thereafter to the Redemption Note, and (2) with respect to
all other such payments received by Maker, first to the Bank Loan and
this Note, and second to the balance of the Acquisition Loan and the
Redemption Note, in each case pro rata (in accordance with the
respective aggregate principal and interest then outstanding to Payee,
on the one hand, and the Bank, on the other hand under this Note, the
Redemption Note and the Acquisition Loan), and in the case of payments
received by Signal Capital Holdings Corporation, first to the
Redemption Note and the balance of the Acquisition Loan other than the
Bank Loan, and second to the Bank Loan and this Note, in each case pro
rata (in accordance with the respective aggregate principal and
interest then outstanding to Payee, on the one hand, and the Bank, on
the other hand under this Note, the Redemption Note and the
Acquisition Loan); and
(h) cause all amounts received by the Trust and permitted
under the Transaction Documents to be distributed to the beneficiaries
thereof to be promptly so distributed and applied as provided in
Section 9(g) above.
10. Negative Covenants. Except with the consent in writing of Payee,
Maker will not, and will not permit any Subsidiary to:
(a) incur, or permit to exist, any indebtedness for borrowed
money, other than (i) as specified in Section 7(e) and (ii) with
respect to any Subsidiary, the liabilities arising under the
Transaction Documents, and (iii) with respect to Signal Capital
Holdings Corporation, indebtedness existing at the time of the
transfer of shares of Signal
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Capital Holdings Corporation to Maker pursuant to the Purchase
Agreement;
(b) create, assume, or permit to exist, any mortgage, pledge,
lien or encumbrance of or upon, or security interest in, any of its
property or assets now owned or hereafter acquired except (i) the
liens created by the Collateral Documents; (ii) a lien created by
Maker in favor of the Bank (the "First Security Agreement"), securing
the Acquisition Loan; (iii) the liens created by the Transaction
Documents; (iv) liens for taxes or other governmental charges which
are not delinquent or which are being contested in good faith and for
which a reserve satisfactory to Payee shall have been established; (v)
liens (if any) on the assets of Signal Capital Holdings Corporation
existing at the time of the conveyance of shares in Signal Capital
Holdings Corporation to Maker pursuant to the Purchase Agreement; and
(vi) liens encumbering property acquired by Signal Capital Holdings
Corporation on or after the date hereof at the time such property is
acquired, but only so long as (A) recourse with respect to such
indebtedness is limited to the property securing such indebtedness and
neither Maker nor Signal Capital Holdings Corporation has any personal
liability in respect of such indebtedness and (B) such liens encumber
only the property that is subject thereto at the time such property is
acquired by Signal Capital Holdings Corporation, and do not encumber
any other property of Signal Capital Holdings Corporation;
(c) enter into any merger or consolidation or sell or lease
or otherwise dispose of any of its assets to a related or unrelated
party;
(d) lend or advance money, credit or property to or invest in
(by capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except investments in United States
Government obligations and certificates of deposits of any banking
institution with combined capital and surplus of at least
$500,000,000;
(e) assume, endorse, be or become liable for or guarantee the
obligations of any person, except (i) by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of
business, (ii) as specified in Section 7(e) and (iii) with respect to
the Transaction Documents, as contemplated by the Purchase Agreement;;
(f) declare or pay any dividends on, or make any distribution
with respect to (upon liquidation or otherwise) its capital stock, or
purchase, redeem, retire or otherwise
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acquire any of its capital stock at any time outstanding, except that
the foregoing shall not limit (1) any distributions by the Trust made
pro rata to its beneficiaries, provided that the entire amount of any
such distributions or dividends shall be applied to pay amounts due
under this Note and the Bank Loan in accordance with Section 9(g)
above or (2) the redemption of shares of Signal Capital Holdings
Corporation from Payee as contemplated by the Purchase Agreement;
(g) enter into any agreement or take any action (or cause
or permit the Trust to enter into any agreement or take any action)
which has the effect of amending, modifying, supplementing, waiving or
otherwise affecting any of the Transaction Documents, provided,
however, Signal Capital Holdings Corporation may agree with the bank
that it will consent to the transfer of the Acquired Trust Interests
and will exercise its rights under the Trust in a manner which will
require the consent of the holder of the Acquired Trust Interests; or
(h) engage in any activity other than the holding and
management of the Shares, the Trust Interests, the Trust assets, the
Partnership assets and the assets acquired pursuant to Section 5.9 of
the Purchase Agreement.
11. Events of Default. If any one or more of the following events
("Events of Default") shall occur, the entire unpaid balance of the principal
of and interest on this Note shall immediately become due and payable upon
written notice to that effect given to Maker by Payee, except that in the case
of the occurrence of any Event of Default described in paragraph (f) of this
Section 11, no such notice shall be required:
(a) Failure to make any payment of principal or interest due
under this Note or the Redemption Note issued by Signal Capital
Holdings Corporation to Payee when due; or,
(b) Failure to observe any of the agreements of Maker
contained in Section 10 hereof, or failure of Signal Capital Holdings
Corporation to observe any of its agreements contained in Section 10
of the Redemption Note; or,
(c) Failure by the Maker or Signal Capital Holdings
Corporation to perform any other term, condition or covenant of the
Purchase Agreement, any of the Collateral Documents, this Note, the
Redemption Note or any other agreement, instrument or document
delivered pursuant hereto or thereto or in connection herewith or
therewith which shall remain
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unremedied for a period of 30 days after notice thereof shall have
been given by Payee to Maker; or,
(d) All or any portion of the Acquisition Loan shall not be
paid when due and payable, upon maturity, by acceleration or
otherwise, or the holder of the Acquisition Loan or any of its agents
shall have taken any action (judicial or otherwise) to commence
enforcement, foreclosure, sale or other proceedings or to exercise any
other right or remedy with respect to any collateral securing the
Acquisition Loan, provided, however, during the first year of this
Note, maturity alone of the Acquisition Loan without any declaration
of default or acceleration or other action by the Bank shall not be an
Event of Default unless and until such condition continues for a total
of 180 days; or,
(e) Any representation or warranty of Maker contained in the
Purchase Agreement, any of the Collateral Documents, this Note, the
Redemption Note or in any certificate, statement or report made in
compliance with any of the foregoing, shall have been false in any
material respect when made; or,
(f) Maker or any Subsidiary or any endorser or guarantor
hereof shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, be adjudicated insolvent or bankrupt, petition
or apply to any tribunal for the appointment of a receiver of any
trustee for it or a substantial part of its assets, or shall commence
any proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or if there
shall have been filed any such petition or application, or any such
proceeding shall have been commenced against it, which remains
undismissed for a period of thirty days or more, or Maker or any
Subsidiary or endorser or guarantor hereof by any act or omission
shall indicate its consent to approval of or acquiescence in any such
petition, application or proceeding or the appointment of a receiver
of or any trustee for it or any substantial part of any of its
properties, or shall suffer any such receivership or trusteeship to
continue undischarged for a period of thirty days or more; or
(g) Any judgment against Maker or any Subsidiary or any
attachment, levy or execution against any of its properties for any
amount shall remain unpaid, unstayed on appeal, undischarged, unbonded
or undismissed for a period of thirty days or more (other than any
such matters involving an amount not in excess of $100,000 in the
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aggregate that relate solely to assets contributed to Signal Capital
Holdings Corporation pursuant to Section 5.9 of the Purchase Agreement
and for which neither Maker nor Signal Capital Holdings Corporation
has any recourse liability); or,
(h) Any of the Collateral Documents, or any lien or security
interest granted under any thereof, shall (except in accordance with
its terms), in whole or in part, terminate, cease to be effective, or
cease to be the legally valid, binding and enforceable obligation of
Maker or Signal Capital Holdings Corporation; or any lien or security
interest created or required to be created thereunder shall, in whole
or in part, fail to be created and maintained as a perfected first
priority lien or security interest, subject only to those exceptions
(if any) expressly permitted by this Note, the Redemption Note and the
Collateral Documents; or the Guaranty shall be accelerated pursuant to
the terms thereof;
(i) Without the prior written consent of Payee, Maker shall,
or shall enter into any agreement to, sell, assign, convey, pledge,
hypothecate or otherwise transfer to a related or unrelated party
(except pursuant to (1) the Collateral Documents and the First
Security Agreement and (2) agreements of sale and agreements to sell
pursuant to which all indebtedness under the Acquisition Loan, this
Note and the Redemption Note is to be paid in full) any of the
collateral that is subject to the lien of the Collateral Documents
(including, without limitation, any shares in Signal Capital Holdings
Corporation) or the Acquired Trust Interests, or Signal Capital
Holdings Corporation shall enter into any agreement to, sell, assign,
convey, pledge, hypothecate or otherwise transfer any beneficial
interest in the Trust to a related or unrelated party; or,
(j) Signal Capital Holdings Corporation shall, or shall
enter into any agreement to, issue any capital stock, or any option,
warrant or other right to acquire capital stock, or any instrument or
agreement convertible into or exchangeable for capital stock; other
than any such issuance with respect to common stock if after giving
effect to all such issuances (and assuming all exercises, conversions
and exchanges by persons other than Payee, but assuming no such
exercise, exchange or conversion by Payee) the shares subject to the
lien of the Pledge Agreement shall constitute not less than and not
more than 79% (both in terms of rights to dividends and distributions
and rights to vote, for the election of directors or otherwise) of the
capital stock of Signal Capital Holdings Corporation.
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12. Remedies.
(a) In the event of the occurrence of any Event of Default,
Payee may, but shall not be required to exercise any right or remedy
available to Payee under the Purchase Agreement, this Note, any of the
Collateral Documents or applicable law (including but not limited to
the rights and remedies of a secured party under the Uniform
Commercial Code), and without limiting the generality of the
foregoing, may exercise all rights and remedies of Payee under the
Collateral Documents. Amounts received by Payee may be applied by
Payee to the payment of this Note and of any other liabilities, claims
or obligations of Maker to Payee under or in connection with this
Note, the Collateral Documents or the Purchase Agreement, in such
order as Payee may elect. Each and every right and remedy hereby
granted to Payee or allowed to it by law, shall be cumulative and not
exclusive the one of the other, and may be exercised by Payee from
time to time and as often as may be necessary. Payee may assign and
transfer this Note to any other person, firm or corporation and may
deliver and repledge the collateral security or any party thereof to
the assignee or transferee of this Note, who shall thereupon become
vested with all the powers and rights above given to Payee in respect
thereof, and Payee shall thereafter be forever released and discharged
of and from all responsibility or liability to Maker for or on account
of the collateral security so delivered.
(b) In the event that this Note is placed in the hands of an
attorney for collection by reason of any default hereunder, Maker
agrees to pay all reasonable attorney's fees, costs and other charges
in connection herewith. Maker promises to pay all expenses of any
nature as soon as incurred whether in or out of court and whether
incurred before or after this Note shall become due at its maturity
date or otherwise and costs which Payee may deem necessary or proper
in connection with the satisfaction of the indebtedness or the
administration, supervision, preservation, protection (including but
not limited to maintenance of adequate insurance) of or the
realization upon the collateral.
(c) Maker hereby waives presentment, demand for payment,
protest, notice of protest, notice of dishonor, and any or all other
notices or demands in connection with the delivery, acceptance,
performance, default, or enforcement of this Note, and consents to any
and all delays, extensions of time, renewals, releases of Maker and of
any security, waivers or modifications that may be granted or
consented to by Payee with regard to the time of payment or with
respect
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to any other provisions of this Note and agrees that no such action or
failure to act on the part of Payee shall in any way affect or impair
the obligations of Maker or be construed as a waiver by Payee of, or
otherwise affect, its right to avail itself of any remedy hereunder
with the same force and effect as if Maker had expressly consented to
such action or inaction upon the party of Payee.
13. Payments. All payments by Maker on account of principal or
interest shall be made in lawful money of the United States of America in
immediately available funds. If any payment of principal or interest becomes
due on a day on which the banks in Chicago, Illinois or New York, New York, are
required or permitted by law to remain closed, such payment may be made on the
next succeeding business day on which such banks are open, and such extensions
shall be included in computing interest in connection with such payment. All
payment shall be made to the following account, or such other account as may
from time to time be designated in writing by Payee:
Name of Bank: PNC Bank, Delaware
Address: 300 Delaware Avenue, Wilmington DE 19801
ABA Number: 031100089
Name of Account: Itel Rail Holdings Corporation
Account Number: 5795135488
14. Miscellaneous.
(a) All agreements, representations and warranties made
herein shall survive the delivery of this Note. Maker waives trial by
jury, set-off and counterclaim of any nature or description in any
litigation in any court with respect to, in connection with, or
arising out of, this Note or any instruments or document delivered
pursuant hereto or the validity, protection, interpretation,
collection or enforcement hereof.
(b) No modification or waiver of or with respect to any
provision of this Note, or consent to any departure by Maker from any
of the terms or conditions hereof, shall in any event be effective
unless it shall be in writing and signed by Payee, and then such
waiver or consent shall be effective only in the specific instance and
for the purpose for which given. No notice to or demand on Maker in
any case shall, of itself, entitle it to any other or further notice
or demand in similar or other circumstances.
(c) Each and every right granted to Payee hereunder or under
any other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall
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be cumulative and may be exercised from time to time. No failure on
the part of Payee or the holder of this Note to exercise, and no delay
in exercising, any right shall operate as a waiver thereof, nor shall
any single or partial exercise of any right preclude any other or
future exercise thereof or the exercise of any other right.
15. Notices. All notices, requests and other communications pursuant
to this Note shall be in writing, either by letter (delivered by hand or sent
by certified mail, return receipt requested) or telegram, addressed as follows:
(a) if to Maker: SCAP Associates L.L.C.
885 Third Avenue
Suite 2400
New York, New York 10022
Attention: Douglas H. Wolf
Facsimile Number: (212) 826-5617
and
(b) if to Payee: Itel Rail Holdings Corporation
200 West Ninth Street Plaza
Wilmington, Delaware 19801
Facsimile Number: (302) 658-0468
with a copy to: Itel Corporation
Two North Riverside Plaza
Chicago, Illinois 60606
Attention: General Counsel
Facsimile Number: (312) 902-1512
Any notice, request or communication hereunder shall be deemed to have been
given when deposited in the mails, postage prepaid, or in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
aforesaid. Any party may change the person or address to whom or which the
notices are to be given hereunder, but any such notice shall be effective only
when actually received by the party to whom it is addressed.
16. Governing Law; Severability. This Note and the rights and
obligations of the parties hereunder shall be construed and interpreted in
accordance with the laws of the State of New York. The provisions of this Note
are severable and if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof,
in such jurisdiction and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision in this
Note in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned has executed and delivered this
Note in New York, New York on this day of July, 1994.
SCAP ASSOCIATES L.L.C.
By ___________________________
(Title)