EXHIBIT 10.4
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") dated as of May 31,
1996, is made by AMERICAN FINANCE GROUP, INC., a Delaware corporation
("Grantor"), to FIRST UNION NATIONAL BANK OF NORTH CAROLINA, for itself and as
agent (solely in such capacity, "Agent") for the financial institutions listed
on Schedule A attached hereto and such other financial institutions as shall
from time to time become parties to the Credit Agreement referred to below (such
entities, together with their respective successors and assigns, being
collectively referred to as the "Lenders").
RECITALS
A. Pursuant to that certain Warehousing Credit Agreement dated as
of the date hereof (as the same from time to time may be
amended, modified, supplemented or restated, the "Credit
Agreement") by and among Grantor, Lenders and Agent, Lenders
have agreed to make certain extensions of credit to Grantor in
the amounts and manner set forth in the Credit Agreement
(collectively, the "Loans").
B. Lenders are willing to make the Loans to Grantor, but only
upon the condition, among others, that Grantor shall have
executed and delivered to Lenders this Security Agreement.
C. All capitalized terms used herein without definition shall
have the meanings given to them in the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and in order
to induce the Lenders to enter into the Credit Agreement, and intending to be
legally bound, Grantor and Agent hereby agree as follows:
Section 1. Grant of Security. As collateral security for the prompt,
complete and indefeasible payment and performance of the Secured Obligations, as
defined in Section 2, below, and in order to induce the Lenders and Agent to
enter into the Credit Agreement and to make the Loans pursuant to and in
accordance with the terms and conditions thereof, Grantor hereby assigns,
pledges and grants to Agent, for itself and for the benefit of the Lenders, a
lien on and security interest in all Grantor's right, title and interest to the
following described Property, whether now existing or owned or hereafter arising
or acquired by Grantor:
(a) All leases, chattel paper, installment sales agreements,
equipment finance agreements, marine vessel or ship charters, management
agreements (including, without limitation, container revenue pooling
arrangements and marine revenue pooling arrangements), contracts, rental
agreements and other agreements, including, without limitation, any and all
related documents, security agreements, schedules, supplements, addenda,
extensions and
guaranties to any of the foregoing (collectively, the "Leases," which term
shall include all "Leases" as defined in the Credit Agreement) covering any
Equipment, all subsequent, new or renewal Leases, and all rentals thereunder
and all proceeds thereof;
(b) All equipment, as such term is defined in Section 9109(2)
of the UCC, including, without limitation, all machinery, all equipment,
furnishings, airplanes, helicopters and other aircraft of United States
registry, aircraft appliances and rotables relating thereto, aircraft logs,
avionics, aircraft engines and propellers and engine appliances relating
thereto, railcars (including, without limitation, xxxxxx cars, flatbeds, Xxxxxx
cars and tanker cars) and other rolling stock, vehicles, forklifts, tractors,
intermodel trailers, over-the-road trailers, refrigerated trailers, chassis,
generator sets, containers (including, without limitation, marine, intermodel
and over-the-road containers) and marine vessels and ships and related engines,
machinery, boats, tackle, outfits, spare gear, fuels, consumables, and other
stores, belongings and appurtenances, whether on board or ashore, including
those which may hereafter be put on board or become appurtenant to or intended
to be used for such a vessel or ship if on shore, mainframe, personal and other
computers, terminals and printers and related components and accessories, all
copiers, telephonic, video, electronic data-processing and data storage
equipment and all packaging, mailing and other office, production or warehouse
equipment of any nature whatsoever (together with all other inventory, as such
term is defined in Section 94109(4) of the UCC, wherever located, and all
fixtures, as such term is defined in Section 9313(1)(a) of the UCC,
collectively, the "Equipment"), together with all attachments, additions,
components, parts, equipment, accessories and accessions thereto, now existing
or hereafter acquired by Grantor, all replacements and substitutions therefor,
wherever located, and all proceeds thereof, and any interest in any of the
foregoing, including, without limitation, any beneficial interest in any trust,
any partnership interest or any residual interest in the Equipment;
(c) All claims, rights and remedies which Grantor may now or
hereafter have against any Affiliate of Grantor, including, without limitation,
all such rights with respect to the maintenance and storage of the Equipment and
the servicing and administration of the Leases;
(d) All governmental or other approvals, permits, licenses,
franchise agreements, authorities or certificates now or hereafter required or
used in connection with the ownership, operation and maintenance of the
Equipment;
(e) All other personal Property of Grantor, now owned or
hereafter acquired, including, without limitation, all business and farm
equipment, equipment leases, deposit accounts, accounts receivable, cash,
instruments, documents, goods, inventory, securities, chattel paper, contracts,
general intangibles (including, without limitation, any interest in any joint
venture or as a partner or a limited partner in any partnership) and any
beneficial interest of Grantor under any trust created with respect to the
Equipment, or any of it; and
(f) All proceeds and products of the foregoing (and proceeds
and products of proceeds and products) in whatever form and whether such
proceeds arise before or after the commencement of any case under the Bankruptcy
Code, by or against Grantor, including, without limitation, all payments under
insurance whether or not Agent or the Lenders is a loss payee thereof, all
proceeds of any governmental taking, and any indemnity, warranty, letter of
credit
(including the right to draw on such letter of credit) or guaranty payable by
reason of any default under, loss of, or damage to or otherwise with respect
to any of the foregoing.
All of the Property described in subsections (a) through (f) above is herein
collectively called the "Collateral." However, notwithstanding the foregoing,
there shall be excluded from the definition of Collateral all of Grantor's
right, title and interest in, to and under the property described in the
attached Schedule B.
Section 2. Security for Obligations. This Security Agreement secures
the prompt, complete and indefeasible payment and performance of (a) the entire
principal amount, and all interest accrued thereon, of the Loans extended to
Grantor under the Credit Agreement, (b) all commitment, facility, breakage,
prepayment, legal and other fees, expenses, costs and charges (including,
without limitation, reimbursable amounts and indemnified liabilities) owing by
Grantor to the Lenders or Agent under the Credit Agreement and (c) all other
indebtedness, liabilities and obligations of Grantor to the Lenders or Agent
created or arising under or in connection with the Credit Agreement, this
Security Agreement or any of the other Loan Documents (collectively, the
"Secured Obligations").
Section 3. Liability under Leases. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain liable under the Leases to the extent
set forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Security Agreement had not been executed, (b) the
exercise by Agent of any of the rights hereunder shall not release Grantor from
any of its duties or obligations under the Leases and (c) neither Agent nor any
Lender shall have any obligations or liability under the Leases by reason of
this Agreement, nor shall Agent or any Lender be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
Section 4. Representations and Warranties. Grantor hereby represents,
warrants and covenants to Agent, for itself and for the benefit of the Lenders,
as follows:
(a) The principal place of business and chief executive office
of Grantor and the office where Grantor keeps its records and files concerning
the Leases and its copies of the Leases are located at the address specified for
Grantor in Section 16, below. If any Event of Default occurs, at Agent's
request, Grantor shall deliver to Agent the executed original copy of each of
the Leases, and Grantor shall stamp or otherwise xxxx conspicuously all of
Grantor's photocopies of the Leases with the following legend:
THIS WRITING IS NON-NEGOTIABLE. THIS WRITING AND THE
OBLIGATIONS EVIDENCED HEREBY ARE OWNED BY, OR SUBJECT TO THE SECURITY INTEREST
OF, FIRST UNION NATIONAL BANK OF NORTH CAROLINA, FOR ITSELF AND AS AGENT. NO
INTEREST IN THIS WRITING OR THE OBLIGATIONS EVIDENCED HEREBY MAY BE SOLD,
TRANSFERRED OR ASSIGNED TO ANY OTHER PERSON WITHOUT DELIVERY OF THE EXECUTED
COUNTERPART IN THE POSSESSION OF FIRST UNION NATIONAL BANK OF NORTH CAROLINA.
(b) Grantor owns the Collateral free and clear of any lien,
security interest, charge or encumbrance, except for the Permitted Liens, (ii)
the interests of the lessees under the Leases, (iii) other liens, security
interests, charges or other encumbrances expressly permitted under the Credit
Agreement. Grantor has paid or caused to be paid all invoice prices,
transportation and delivery costs, taxes and any acquisition or other fees
relating to the Equipment. Grantor has all necessary authority to encumber and
xxxxx x xxxx on and security interest in the Collateral.
(c) Each item of Equipment the ownership of which, under
applicable law, is or should be evidenced by a certificate of title, is properly
titled in the name of Grantor.
(d) All information furnished or to be furnished Agent or the
Lenders by or on behalf of Grantor in connection with the Collateral and the
Secured Obligations is or will be complete and accurate. Grantor shall defend
and hold harmless Agent and the Lenders, and each of them, against all Persons
whomsoever claiming the Collateral or any part thereof.
(e) This Agreement creates in favor of Agent, for itself and
for the benefit of the Lenders, a valid lien on and security interest in the
Collateral, subject to the Permitted Liens, securing the payment of the Secured
Obligations.
(f) No consent, authorization, approval or other action by,
and no notice to or filing with, any Governmental Agency, regulatory body,
lessee or other person or entity, other than such as have been obtained, is
required either (i) for the grant by Grantor of the lien and security interest
granted hereby or for the execution, delivery or performance of this Agreement
by Grantor or (ii) for the perfection or exercise by Agent of its rights and
remedies hereunder.
(g) The Leases constitute valid and enforceable obligations of
the respective lessees thereunder, enforceable against such lessees in
accordance with their terms, except as the enforceability thereof may be subject
to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium
or other similar laws relating to or affecting the rights of creditors and by
general principles of equity. Each item of Equipment subject to any Lease has
been delivered to, and accepted by, the lessee under the respective Lease. No
event of default or termination, and no event which with the giving of notice or
lapse of time, or both, would constitute such an event, has occurred on the part
of any party under any of the Leases (except such events which, in the
aggregate, do not constitute an Event of Default or Potential Event of Default).
There does not exist in respect of any Lease any claim, offset, defense or other
right on the part of the lessee thereunder to reduce in any manner the amounts
payable under such Lease.
Section 5. Documentation.
(a) Grantor shall from time to time, at the expense of
Grantor, promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable that Agent may
request in order to perfect with first priority and otherwise protect the lien
and security interest granted hereby, subject to the Permitted Liens, or to
enable Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Grantor shall execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, and make such
recordings, as may be necessary or desirable, or as Agent may request, in order
to perfect and preserve the lien and security interest granted or purported to
be granted hereby, including, without limitation, execution and filing of such
instruments and recordings as may be necessary under federal law relating to the
creation and perfection of a security interest in any of the Equipment.
(b) Subject to Section 5.1 of the Credit Agreement, Grantor
shall, to the best of its ability, furnish to Agent from time to time statements
and schedules further identifying and describing the Collateral (including,
without limitation, the locations and condition thereof) and such other reports
in connection with the Collateral as Agent may reasonably request, all in
reasonable detail.
Section 6. Equipment. Grantor shall:
(a) Cause the Equipment to be kept in jurisdictions where all
action required by Section 5, above, has been taken with respect to the
Equipment; provided, however, that a lessee under a Lease may use or keep
Equipment in such other locations as are permitted under the Lease delivered to
Agent.
(b) Cause each lessee under the Leases to maintain and
preserve the Equipment covered by its Lease strictly in accordance with the
terms and provisions thereof and otherwise to perform in a timely manner all
obligations of the lessee under its Lease. Without limitation of the foregoing,
Grantor shall cause the Equipment to be maintained and preserved, by the lessee
or otherwise, in the same condition, repair and working order as when delivered
to the lessee, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual and shall forthwith, or in the case of any loss or damage
to any of the Equipment as quickly as practicable after the occurrence thereof,
make or cause to be made, by the lessee or otherwise, all repairs, replacements
and other improvements in connection therewith which are necessary or desirable
to such end. Grantor shall promptly furnish to Agent a statement respecting any
loss or damage to any of the Equipment.
(c) Pay promptly when due, or cause to be so paid in
accordance with the Leases, all property and other taxes, fees, assessments and
governmental charges or levies imposed upon or in respect of the Equipment or
this Agreement and all claims, including claims for labor, materials and
supplies, against the Equipment.
(d) Perform in a timely manner all obligations of Grantor
under the Leases.
Section 7. Insurance.
(a) Grantor shall cause the lessees under the Leases to
maintain insurance on the Equipment strictly in accordance with the terms and
provisions of the Leases. Without limitation of the foregoing, Grantor shall at
its own expense maintain such additional insurance with respect to the Equipment
in such amounts, against such risks, in such form and with such insurers as set
forth in the Credit Agreement. Each policy, whether obtained in accordance with
the terms and provisions of a Lease or in accordance with this Section 7(a),
shall (i) if for property damage insurance, contain endorsements naming Agent as
principal loss payee as to any property owned by Borrower and (ii) if for
liability insurance, contain endorsements naming Agent and each Lender as an
additional insured. Each such policy shall in addition (A) contain an agreement
by the insurer that any loss thereunder shall be payable to Agent or Lenders, as
the case may be, notwithstanding any action, inaction or breach of
representation or warranty by the Grantor or any lessee under the Leases; (B)
provide that there shall be no recourse against Agent or any Lender for payment
of premiums or other amounts with respect thereto; and (C) provide that at least
fifteen (15) days' prior written notice of cancellation or lapse or material
change in coverage shall be given to Agent by the insurer. Grantor shall, if so
requested by Agent, deliver to Agent original or duplicate policies of such
insurance and, as often as provided under the Credit Agreement, a report of a
reputable insurance broker with respect to such insurance. Further, Grantor
shall, at the request of Agent, duly execute and deliver confirmatory
instruments of assignment of such insurance policies to comply with the
requirements of Section 5, above, and cause the respective insurers to
acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained
pursuant to this Section 7 may be paid directly to the person who incurred
liability covered by such insurance. In case of any loss involving damage to
Equipment when Section 7(c), above, is not applicable, Grantor shall make or
cause to be made, by the lessee or otherwise, the necessary repairs to or
replacements of such Equipment, and any proceeds of insurance maintained
pursuant to this Section 7 shall be paid to Grantor, the lessee or otherwise, as
the case may be, as reimbursement for the costs of such repairs or replacements.
(c) (i) Upon the occurrence and during the continuance of any
event of default (including, without limitation, any Event of Default) under any
document or instrument evidencing or relating to any of the Secured Obligations
or (ii) upon the actual or constructive total loss of any Equipment, all
insurance payments in respect of such Equipment shall be paid to and applied by
Agent as specified in Section 13(d), below, except, with respect only to clause
(i) insofar as the Lease covering such Equipment provides for the insurance
payments to be paid to the lessee for purposes of repairing the Equipment.
Section 8. Leases.
(a) Grantor shall keep its principal place of business and
chief executive office and the office where it keeps its records and files
concerning the Leases and its copies of the Leases at the location specified in
Schedule C or, upon thirty (30) days' prior written notice to Agent, at another
location in a jurisdiction where all action required by Section 5, above, shall
have been taken with respect to the Leases, Equipment and other Collateral.
Grantor shall hold and preserve such records and files concerning the Leases and
shall permit representatives of Agent at any time during normal business hours
to inspect and make abstracts from such records and files.
(b) Except as otherwise provided in this Section 8(b), Grantor
shall continue to collect, at its own expense, all amounts due or to become due
Grantor under the Leases, and shall direct that all amounts so due or to become
due under the Leases shall be paid directly to the Lockbox Account as provided
in Section 5.9 of the Credit Agreement. In connection with such collections
Grantor may take, and at Agent's direction shall take, such action as Grantor or
Agent may deem necessary or advisable to enforce collection of the Leases. If
any Event of Default shall have occurred and be continuing, Agent shall have the
right at any time, upon written notice to Grantor of its intention to do so, (i)
to direct the lessees under the Leases to make payment of all amounts due or to
become due thereunder directly to Agent and, upon such direction and at the
expense of Grantor, to enforce collection of any of the Leases in the same
manner and to the same extent as Grantor might have done and (ii) to require
that all amounts received by Grantor in respect of the Leases be received in
trust for the benefit of Agent and the Lenders hereunder and be segregated from
other funds of Grantor. Any amounts so segregated shall, at Agent's request, be
forthwith paid over to Agent to be held as cash collateral and either (A)
released to Grantor after the complete and indefeasible payment of all Secured
Obligations, or (B) if any event of default (including, without limitation, any
Event of Default) shall have occurred and be continuing under any document or
instrument evidencing or relating to any of the Obligations, applied as provided
in Section 13(d), below. If Agent notifies Grantor of Agent's intention to
direct lessees to make Lease payments directly to Agent or to require Grantor to
segregate and hold such payments in trust, Grantor shall enter into written
agreements satisfactory to Agent to implement such intention; provided, however,
that failure of Grantor to enter such agreement will not limit Agent's rights
under this Agreement.
(c) Grantor shall accept no prepayment from any lessee of
amounts due under any of the Leases without obtaining the prior written consent
of Agent, except such amounts as are required under any Lease to be paid in
advance (including, without limitation, a security deposit or a maintenance
reserve account).
Section 9. Transfers and Other Liens. Grantor shall not:
(a) Except as expressly permitted by the Credit Agreement, or
except as may be provided in a writing executed in accordance with the
provisions of the Credit Agreement, sell, assign (by operation of law or
otherwise), lease, charter or otherwise dispose of any of the Collateral without
the prior written consent of Agent.
(b) Create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral, other
than the Permitted Liens.
Section 10. Attorney-in-Fact. Grantor hereby irrevocably appoints Agent
as the Grantor's attorney-in-fact (which appointment is coupled with an
interest), with full authority in the place and stead of Grantor and in the name
of Grantor, Agent, or otherwise, from time to time in Agent's discretion, to
take any action and to execute any instrument which Agent may deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the rights of
Grantor under Section 8, above), including, without limitation:
(a) to obtain and adjust insurance required to be paid to
Agent, for itself and for the benefit of the Lenders, pursuant to Section 7,
above;
(b) to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(c) to receive, indorse and collect any drafts or other
instruments and documents in connection with clauses (a) and (b), above;
(d) to file claims or take any action or institute any
proceedings which Agent may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of Agent with respect
to any of the Collateral; and
(e) to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Collateral without
the signature of Grantor where permitted by law.
Section 11. Agent May Perform. If Grantor fails to perform any
agreement contained herein, then Agent may perform, or cause performance of,
such agreement, and the expenses of the Agent incurred in connection therewith
shall be payable by Grantor under Section 14(b), below.
Section 12. Agent's Duties. The powers conferred on Agent hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, Agent shall have no duty as to any Collateral or as to the taking
of any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral.
Section 13. Remedies. If any Event of Default shall have occurred and
be continuing, in addition to all other rights and remedies as may be granted or
available to Agent or the Lenders under this Security Agreement, the Credit
Agreement or any of the other Loan Documents:
(a) Agent, in lieu of or in addition to exercising any other
power hereby granted, may without notice, demand or declaration of default,
which are hereby waived by
Grantor, proceed by an action or actions in equity or at law for the seizure
and sale of the Collateral or any part thereof, for the specific performance
of any covenant or agreement herein contained or in aid of the execution of
any power herein granted, for the foreclosure or sale of the Collateral or any
part thereof under the judgment or decree of any court of competent
jurisdiction, for the appointment of a receiver pending any foreclosure
hereunder or the sale of the Collateral or any part thereof or for the
enforcement of any other appropriate equitable or legal remedy; and upon the
commencement of judicial proceedings by Agent to enforce any right under this
Agreement, Agent shall be entitled as a matter of right against Grantor to
such appointment of a receiver, without regard to the adequacy of the security
by virtue of this Agreement or any other collateral or to the solvency of
Grantor.
(b) Agent may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party on default under the
Uniform Commercial Code as adopted in the State of North Carolina, whether or
not the Uniform Commercial Code applies to the affected Collateral, and also may
(i) require Grantor to, and Grantor hereby agrees that at its expense and upon
request of Agent it shall forthwith, assemble all or part of the Collateral as
directed by Agent and make it available to Agent at such places reasonably
convenient to all parties as Agent may designate and (ii) without notice except
as specified below, sell the Collateral or any part thereof in one or more sales
at public or private sales, at any of Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Agent may deem commercially reasonable. Grantor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days' notice
to Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. Agent shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given. Agent may adjourn any public or private sale from time to
time by public announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to be which it was so
adjourned.
(c) All cash proceeds received by Agent in respect of any sale
of, collection from or other realization upon all or any part of the Collateral
shall be applied as follows:
(i) First, to the payment of all costs and
expenses incident to the enforcement of this Agreement, including but not
limited to compensation to the agents, contractors and attorneys of Agent;
(ii) Second, to the payment of all other Secured
Obligations; and
(iii) Third, the remainder, if any, to Grantor or to
whomever may be lawfully entitled to receive such remainder; provided, however,
that Grantor shall remain liable to Agent and the Lenders, as applicable, for
any deficiency in the Obligations remaining after the application of such
proceeds as provided in this Section 13(d); and, provided further, that nothing
herein contained shall in any way limit or restrict the Lenders' rights to
proceed directly against Grantor without first causing Agent to exhaust, or in
any manner to exercise its rights in respect of, the Collateral.
(d) The Lenders, or any of them, shall have the right to
become the purchaser at any public sale made pursuant to the provisions of this
Section 13 and shall have the right to credit against the amount of the bid made
therefor the amount payable to the purchasing Lender or Lenders out of the net
proceeds of such sale. Recitals contained in any conveyance to any purchaser at
any sale made hereunder shall conclusively establish the truth and accuracy of
the matters therein stated, including, without limitation, nonpayment of the
Secured Obligations and advertisement and conduct of such sale in the manner
provided herein. Grantor does hereby ratify and confirm all legal acts that
Agent may do in carrying out the provisions of this Security Agreement.
(e) Any sale of the Collateral or any part thereof pursuant to
the provisions of this Section 13 shall operate to divest all right, title,
interest, claim and demand of Grantor in and to the Property sold and shall be a
perpetual bar against Grantor. Nevertheless, if requested by Agent so to do,
Grantor shall join in the execution, acknowledgement and delivery of all proper
conveyances, assignments and transfers of the Property so sold. It shall not be
necessary for Agent to have physically present or constructively in its
possession any of the Collateral at any such sale, and Grantor shall deliver all
of the Collateral to the purchaser at such sale on the date of sale and, if it
should be impossible or impracticable then to take actual delivery of the
Collateral, the title and right of possession to the Collateral shall pass to
the purchaser at such sale as completely as if the same had been actually
present and delivered. Grantor agrees that if Grantor retains possession of the
Property or any part thereof subsequent to such sale, Grantor shall be
considered a tenant at sufferance of the purchaser and shall, if Grantor remains
in possession after demand to remove, be guilty of forceful detainer and be
subject to eviction and removal, forcible or otherwise, with or without process
of law, and all damages by reason thereof are hereby expressly waived by
Grantor.
(f) Subject to any requirements of applicable law, Grantor
agrees that neither Grantor nor any of its Affiliates under its control shall at
any time have or assert any right, under any law pertaining to the marshalling
of assets, the sale of Property in the inverse order of alienation, the
administration of estates of decedents, appraisement, valuation, stay, extension
or redemption now or hereafter in force in order to prevent or hinder the rights
of Agent or any purchaser of the Collateral or any part thereof under this
Security Agreement, and Grantor, to the extent permitted by applicable law,
hereby waives the benefit of all such laws.
(g) Upon any sale made under the powers of sale herein granted
and conferred, the receipt of Agent shall be sufficient discharge to the
purchaser or purchasers at any sale for the purchase money, and such purchaser
or purchasers and the heirs, devisees, personal representatives, successors and
assigns thereof shall not, after paying such purchase money and receiving such
receipt of Agent, be obliged to see to the application thereof or be in anywise
answerable for any loss, misapplication or nonapplication thereof.
(h) Each and every right, power or remedy hereby granted to
Agent or the Lenders is in addition to, and not in derogation of, any right,
power or remedy granted by the Credit Agreement or any of the other Loan
Documents and shall be cumulative and not exclusive, and each and every right,
power or remedy, whether specifically hereby granted or otherwise existing, may
be exercised from time to time and as often and in such order as may be deemed
expedient by Agent, and the exercise of any such right, power or remedy shall
not be deemed a waiver of the right to exercise, at the same time or thereafter,
any other right, power or remedy. No delay or omission by Agent or the Lenders
in the exercise of any right, power or remedy shall impair any such right, power
or remedy or operate as a waiver thereof or of any other right, power or remedy
then or thereafter existing. Any and all covenants in this instrument may from
time to time, by an instrument in writing executed in accordance with the
provisions of the Credit Agreement, be waived to such extent and in such manner
as set forth in such written instrument, but no such waiver shall ever affect or
impair Agent's or any Lender's rights hereunder, except to the extent
specifically stated in such written instrument.
(i) Notwithstanding the foregoing, Agent and the Lenders agree
not to interfere with a lessees's quiet enjoyment of Equipment under a Lease
approved by the Lenders, so long, but only so long, as no event of default or
termination, and no event which with the giving of notice or lapse of time, or
both, would constitute such an event, has occurred under such Lease.
Section 14. Indemnity and Expenses.
(a) Grantor agrees to indemnify Agent and the Lenders, and
each of them, from and against any and all claims, losses and liabilities
growing out of or resulting from this Security Agreement (including, without
limitation, enforcement of this Security Agreement), except claims, losses or
liabilities resulting from such Person's gross negligence or willful misconduct.
(b) Grantor shall upon demand pay to Agent or any Lender, as
the case may be, the amount of any and all reasonable expenses, including the
reasonable fees and disbursements of their counsel and or any experts and
agents, which the Agent or such Lender may incur in connection with (i) the
administration of this Security Agreement, (ii) the custody, preservation, use
or operation of, sale of, collection from or other realization upon any of the
Collateral, (iii) the exercise or enforcement of any of the rights of the Agent
hereunder or (iv) the failure by Grantor to perform or observe any of the
provisions hereof.
Section 15. Amendments; Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by Grantor herefrom, shall in any
event be effective unless the same shall be in writing and executed in
accordance with the Credit Agreement, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 16. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including facsimile, telecopied or telex
communication) and hand delivered, sent by Federal Express or other nationally
recognized overnight courier with confirmation of receipt, mailed by U.S. Mail
with return receipt requested, or sent by facsimile, telecopy or telex: if to
Grantor, at its address at Xxx Xxxxxx, Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: General Counsel (Facsimile
No. (000) 000-0000); and if to Agent, at its address at One First Union
Center, 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, Attention:
Xxxxxx Xxxxxxxx, Specialized Industries Division (Facsimile No. (704) 374-
4092) or, as to each party, at such other address as shall be designated by
such party in a written notice to the other party complying as to delivery
with the terms of this Section 16. All such notices and communications shall,
when hand delivered be effective upon delivery, when sent by facsimile,
telecopy or telex communication be effective when sent and the appropriate
answerback received, when sent by Federal Express or other nationally
recognized overnight courier be effective on the next succeeding Business Day,
and when mailed by U.S. Mail be effective three (3) Business Days after being
deposited into the U.S. Mails.
Section 17. Continuing Security Interest; Etc. This Security Agreement
shall create a continuing lien and security interest on and in the Collateral
and shall (a) remain in full force and effect until the full and indefeasible
payment of the Secured Obligations and performance in full of all of Grantor's
obligations hereunder and under any documents or instruments evidencing or
relating to any of the Secured Obligations; (ii) be binding upon Grantor, its
successors and assigns; provided, however, that Grantor shall not have the right
to assign its rights or obligations hereunder or any interest herein except as
provided in a writing executed in accordance with the Credit Agreement; and
(iii) inure to the benefit of Agent and the Lenders and their respective
successors, transferees and assigns. Upon the complete and indefeasible payment
of the Secured Obligations and performance in full of all of Grantor's
obligations hereunder and under any documents or instruments evidencing or
relating to any of the Obligations, the lien and security interest granted
hereby shall terminate and all rights to the Collateral shall revert to Grantor.
Upon any such termination, Agent shall, at Grantor's expense, execute and
deliver to Grantor such documents as Grantor shall reasonably request to
evidence such termination.
Section 18. Governing Law; Terms. This Security Agreement shall be
governed by and construed in accordance with the laws of the State of North
Carolina, as applied to contracts entered into by North Carolina residents and
to be performed entirely within North Carolina, except to the extent that the
validity or perfection of the security interest hereunder or remedies hereunder
in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the State of North Carolina, including federal law.
Unless otherwise defined herein, terms used in Division 9 of the Uniform
Commercial Code as adopted in the State of North Carolina are used herein as
therein defined.
Section 19. Severability. If any provision of this Security Agreement
is held to be unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Agreement shall be deemed
valid and enforceable to the full extent possible.
Section 20. Releases. No release from the lien of this Security
Agreement of any part of the Collateral by Agent or the Lenders shall in anywise
alter, vary or diminish the force, effect or lien of this Security Agreement on
the balance of the Collateral.
Section 21. Subrogation. This Security Agreement is made with full
substitution and subrogation of Agent, for the benefit of itself and the other
Lenders, in and to all covenants and warranties by others heretofore given or
made in respect of the Collateral or any part thereof.
Section 22. Nature of Agreement. This Security Agreement will be deemed
to be and may be enforced from time to time as an assignment, chattel mortgage,
contract, deed of trust, financing statement, or security agreement, and from
time to time as any one or more thereof as is appropriate under applicable state
law.
Section 23. Counterparts. This Security Agreement may be signed in any
number of counterparts, and by different parties hereto in separate
counterparts, with the same effect as if the signatures to each such counterpart
were upon a single instrument. All counterparts shall be deemed an original of
this Security Agreement.
Section 24. Headings. The section headings used in this Security
Agreement are intended principally for convenience and shall not, by themselves,
determine the rights and obligations of the parties to this Security Agreement.
Section 25. Entire Agreement. This Security Agreement, the Credit
Agreement and the other Loan Documents and all documents or instruments
delivered or to be delivered to Agent or the Lenders, hereunder or thereunder,
as the case may be, contain all of the terms and conditions agreed upon by the
parties relating to the subject matter of this Security Agreement and supersede
any and all prior and contemporaneous agreements, negotiations, correspondence,
understandings and communications of the parties, whether oral or written,
respecting that subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
GRANTOR AMERICAN FINANCE GROUP, INC.
By
J. Xxxxxxx Xxxxxxx
Chief Financial Officer
AGENT FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
for itself and as Agent on behalf of the Lenders
By
Xxxx X. Xxxxxxx
Vice President
SCHEDULE A
SECURITY AGREEMENT
(Lenders)
First Union National Bank of North Carolina
SCHEDULE B
EXCLUDED PROPERTY
1. Pooling and Servicing Agreement and Indenture of Trust dated as of July
1, 1995, among AFG Credit Corporation, a Delaware corporation, as
transferor, American Finance Group, Inc., a Delaware corporation, as
servicer, and Bankers Trust Company, a banking corporation organized
and existing under the laws of the State of New York, as trustee and
collateral trustee
2. Master Purchase Agreement dated as of January 30, 1996, by and between
American Finance Group, Inc., a Delaware corporation, and AFG/Eireann
Limited Partnership II, a limited partnership organized under the laws
of the Commonwealth of Massachusetts
SCHEDULE C
LOCATION OF LEASES
00 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
AMENDMENT TO SECURITY AGREEMENT
THIS AMENDMENT TO SECURITY AGREEMENT dated as of December 2, 1997
("Amendment"), is made by AMERICAN FINANCE GROUP, INC., a Delaware corporation
("Grantor"), to FIRST UNION NATIONAL BANK OF NORTH CAROLINA ("FUNB"), not in its
individual capacity as a "Lender", but solely as agent ("Agent") for the
financial institutions listed on Schedule A attached hereto and such other
financial institutions as shall from time to time become parties to the Amended
and Restated Credit Agreement referred to below (such entities, together with
their respective successors and assigns, being individually referred to as a
"Lender" and collectively referred to as the "Lenders").
RECITALS
A. Grantor, FUNB and Fleet Bank, N.A. (the "Prior Lenders"), and Agent,
as agent for the Prior Lenders, entered into that Warehousing Credit Agreement
dated as of May 31, 1996, as amended by that Amendment No. 1 to Warehousing
Credit Agreement dated as of November 5, 1996, and that Amendment No. 2 to
Warehousing Credit Agreement dated as of October 3, 1997 and that Amendment No.
3 to Warehousing Credit Agreement dated as of November 3, 1997 (as so amended,
the "AFG Credit Agreement"), pursuant to which the Prior Lenders have agreed to
extend and make available to Grantor certain advances of credit (collectively,
the "Loans").
B. Grantor and Agent have also entered into that Security Agreement
dated as of May 31, 1996 (the "Security Agreement"), whereby Grantor has granted
a security interest to Agent in certain personal property of Grantor to secure
the payment and performance of Grantor's obligations under the AFG Credit
Agreement.
C. Grantor and FUNB, as the sole remaining Prior Lender having a
Commitment under the AFG Credit Agreement, desire to amend and restate the AFG
Credit Agreement as set forth in that Amended and Restated Warehousing Credit
Agreement dated as of December 2, 1997 ("Amended and Restated Credit
Agreement").
D. Bank of Montreal ("BMO") desires, as of and from the Closing Date,
to become a Lender under the Amended and Restated Credit Agreement.
E. Lenders have agreed to continue to make the Loans to Grantor under
the Amended and Restated Credit Agreement, but only upon the condition, among
others, that Grantor shall have executed and delivered to Agent this Amendment
to add BMO to the Security Agreement as a Lender thereunder.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and in order
to induce the Lenders to enter into the Amended and Restated Credit Agreement,
and intending to be legally bound, Grantor and Agent hereby agree as follows:
Section 1. Amendment. Schedule A to the Security Agreement is hereby
deleted in its entirety and the attached Schedule A is hereby substituted
therefor.
Section 2. Releases. No release from the lien of the Security
Agreement, as amended by this Amendment, of any part of the Collateral (as
described and defined in the Security Agreement) by Agent or the Lenders shall
in anyway alter, vary or diminish the force, effect or lien of the Security
Agreement, as amended by this Amendment, on the balance of the Collateral.
Section 3. Full Force And Effect; Entire Agreement. Except to the
extent expressly provided in this Amendment, the terms and conditions of the
Security Agreement shall remain in full force and effect. This Amendment and the
Security Agreement 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.
Section 4. Governing Law; Terms. This Amendment shall be governed by
and construed in accordance with the laws of the State of North Carolina, as
applied to contracts entered into by North Carolina residents and to be
performed entirely within North Carolina, except to the extent that the validity
or perfection of the security interest hereunder or remedies hereunder in
respect of any particular Collateral are governed by the laws of a jurisdiction
other than the State of North Carolina, including federal law.
Section 5. Counterparts. This Amendment may be signed in any number of
counterparts, and by different parties hereto in separate counterparts, with the
same effect as if the signatures to each such counterpart were upon a single
instrument. All counterparts shall be deemed an original of this Amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the date first above written.
GRANTOR
AMERICAN FINANCE GROUP, INC.,
a Delaware corporation
By:
J. Xxxxxxx Xxxxxxx
Chief Financial Officer
AGENT
FIRST UNION NATIONAL BANK OF NORTH CAROLINA, for itself and as Agent on behalf
of the Lenders
By:
Printed Name:
Title:
SCHEDULE A TO
AMENDMENT TO SECURITY AGREEMENT
LENDERS
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BANK OF MONTREAL
