UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal quarter ended June 30, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission file number 33-40093
-----------------------
PLM EQUIPMENT GROWTH FUND VI
(Exact name of registrant as specified in its charter)
California 94-3135515
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 800, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
BALANCE SHEETS
(in thousands of dollars, except unit amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
Assets
Equipment held for operating lease, at cost $ 86,040 $ 71,597
Less accumulated depreciation (33,949) (33,895 )
---------------------------------------
Net equipment 52,091 37,702
Cash and cash equivalents 12,441 14,204
Restricted cash 704 792
Accounts receivable, less allowance for doubtful accounts
of $2,205 in 1998 and $2,524 in 1997 1,758 2,560
Investments in unconsolidated special-purpose entities 34,001 46,796
Net investment in direct finance lease 98 153
Prepaid expenses and other assets 68 181
Deferred charges, net of accumulated amortization of
$271 in 1998 and $212 in 1997 430 238
Equipment acquisition deposits -- 1,335
---------------------------------------
Total assets $ 101,591 $ 103,961
=======================================
Liabilities and partners' capital
Liabilities:
Accounts payable and accrued expenses $ 810 $ 1,296
Due to affiliates 2,810 2,822
Lessee deposits and reserve for repairs 1,227 2,691
Note payable 30,000 30,000
---------------------------------------
Total liabilities 34,847 36,809
---------------------------------------
Partners' capital:
Limited partners (8,206,340 limited partnership units as of
June 30, 1998 and 8,247,264 as of December 31, 1997) 66,744 67,152
General Partner -- --
---------------------------------------
Total partners' capital 66,744 67,152
---------------------------------------
Total liabilities and partner's capital $ 101,591 $ 103,961
=======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
STATEMENTS OF OPERATION
(in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Lease revenue $ 4,096 $ 5,729 $ 8,560 $ 11,384
Interest and other income 232 213 326 245
Net gain (loss) on disposition of equipment 4,859 (7 ) 4,921 5
------------------------------------------------------------------
Total revenues 9,187 5,935 13,807 11,634
------------------------------------------------------------------
Expenses
Depreciation and amortization 3,493 2,564 6,994 5,146
Management fees to affiliate 231 307 480 630
Repairs and maintenance 864 1,057 1,734 1,749
Equipment operating expense 525 991 1,300 1,812
Interest expense 502 512 1,013 1,014
Insurance expense to affiliate (113) 43 (127) 111
Other insurance expense 97 171 212 373
General and administrative expenses
to affiliates 218 177 444 396
Other general and administrative expenses 258 462 496 823
Provision for bad debts 29 214 156 55
------------------------------------------------------------------
Total expenses 6,104 6,498 12,702 12,109
------------------------------------------------------------------
Equity in net income (loss) of unconsol-
idated special-purpose entities 3,787 (59 ) 7,569 50
------------------------------------------------------------------
Net income (loss) $ 6,870 $ (622 ) $ 8,674 $ (425)
==================================================================
Partners' share of net income (loss)
Limited partners $ 6,654 $ (839 ) $ 8,241 $ (860)
General Partner 216 217 433 435
------------------------------------------------------------------
Total $ 6,870 $ (622 ) $ 8,674 $ (425)
==================================================================
Net income (loss) per weighted-average
limited partnership unit (8,226,773
units and 8,267,390 units as of
June 30, 1998 and 1997, respectively) $ 0.81 $ (0.10 ) $ 1.00 $ (0.10)
==================================================================
Cash distributions $ 4,326 $ 4,343 $ 8,665 $ 8,705
==================================================================
Cash distributions per weighted-average
limited partnership unit $ 0.50 $ 0.50 $ 1.00 $ 1.00
==================================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
( A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 1996 to June 30, 1998 (in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
----------------------------------------------------------
<S> <C> <C> <C>
Partners' capital as of December 31, 1996 $ 75,790 $ -- $ 75,790
Net income 8,363 869 9,232
Repurchase of limited partnership units (486) -- (486)
Cash distribution (16,515) (869) (17,384)
------------------------------------------------------------
Partners' capital as of December 31, 1997 67,152 -- 67,152
Net income 8,241 433 8,674
Repurchase of limited partnership units (417) -- (417)
Cash distribution (8,232) (433) (8,665)
------------------------------------------------------------
Partners' capital as of June 30, 1998 $ 66,744 $ -- $ 66,744
============================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1998 1997
---------------------------
<S> <C> <C>
Operating activities
Net income (loss) $ 8,674 $ (425 )
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Net gain on disposition of equipment (4,921) (5 )
Equity in net income from unconsolidated
special-purpose entities (7,569) (50 )
Depreciation and amortization 6,994 5,146
Changes in operating assets and liabilities:
Restricted cash 88 (163 )
Accounts receivable, net 598 231
Prepaid expenses and other assets 113 120
Accounts payable and accrued expenses (204) (505 )
Due to affiliates (12) 358
Lessee deposits and reserve for repairs (47) 518
--------------------------------
Net cash provided by operating activities 3,714 5,225
-------------------------------
Investing activities
Payments for equipment purchases and capital improvements (23,815) (6 )
Investment in and equipment purchased and placed in
unconsolidated special-purpose entities (1,265) (1,050 )
Distributions from unconsolidated special-purpose entities 4,950 2,806
Distributions from liquidation of unconsolidated
special-purpose entities 16,679 --
Payments of acquisition fees to affiliate (1,132) --
Payments of lease negotiation fees to affiliate (251) --
Principal payments on direct finance lease 55 147
Proceeds from disposition of equipment 8,384 573
-------------------------------
Net cash provided by investing activities 3,605 2,470
-------------------------------
Financing activities
Payments of short-term note payable -- (1,286 )
Proceeds from short-term loan from affiliate -- 1,000
Cash distribution paid to limited partners (8,232) (8,270 )
Cash distribution paid to General Partner (433) (435 )
Repurchase of limited partnership units (417) (486 )
-------------------------------
Net cash used in financing activities (9,082) (9,477 )
-------------------------------
Net decrease in cash and cash equivalents (1,763) (1,782 )
Cash and cash equivalents at beginning of period 14,204 3,017
--------------------------------
Cash and cash equivalents at end of period $ 12,441 $ 1,235
===============================
Supplemental information
Interest paid $ 1,013 $ 1,005
===============================
Supplemental disclosure of noncash investing and financing activities:
===============================
Sale proceeds included in accounts receivable $ 86 $ 82
===============================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc. (FSI or the
General Partner), the accompanying unaudited financial statements contain all
adjustments necessary, consisting primarily of normal recurring accruals, to
present fairly the financial position of PLM Equipment Growth Fund VI (the
Partnership) as of June 30, 1998 and December 31, 1997, the statements of
operations for the three and six months ended June 30, 1998 and 1997, the
statements of cash flows for the six months ended June 30, 1998 and 1997, and
the statements of changes in partners' capital for the period from December 31,
1996 to June 30, 1998. Certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from the accompanying
financial statements. For further information, reference should be made to the
financial statements and notes thereto included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1997, on file with the
Securities and Exchange Commission.
2. Repurchase of Limited Partnership Units
In 1997, the Partnership agreed to repurchase up to 47,000 limited partnership
units for an aggregate purchase price of up to a maximum of $0.5 million. During
the six months ended June 30, 1998, the Partnership had repurchased 40,924
limited partnership units for $0.4 million. The General Partner may repurchase
the additional units in the future.
3. Cash Distributions
Cash distributions are recorded when paid and totaled $4.3 million and $8.7
million for the three and six months ended June 30, 1998 and 1997, respectively.
Cash distributions to limited partners in excess of net income are considered to
represent a return of capital. None of the cash distributions to the limited
partners for the six months ended June 30, 1998 were deemed to be a return of
capital. Cash distributions to the limited partners of $8.3 million for the six
months ended June 30, 1997 were deemed to be a return of capital. Cash
distributions related to the results from the second quarter of 1998, of $2.0
million, were paid during the third quarter of 1998.
4. Transactions with General Partner and Affiliates
The Partnership's proportional share of the affiliated expenses incurred by the
unconsolidated special-purpose entities (USPEs) during 1998 and 1997 is listed
in the following table (in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees $ 125 $ 99 $ 253 $ 194
Data processing and administrative
expenses 38 29 76 52
Insurance expense 1 8 2 21
</TABLE>
Transportation Equipment Indemnity Company, Ltd. (TEI), an affiliate of the
General Partner, provided certain marine insurance coverage for the
Partnership's equipment and other insurance brokerage services during 1998 and
1997. TEI did not provide the same insurance coverage during 1998 as had been
provided for during 1997. These services were provided by an unaffiliated third
party.
During 1998, the Partnership received a $0.1 million loss-of-hire insurance
refund from TEI due to lower claims from the insured Partnership and other
insured affiliated partnerships.
The balance due to affiliates as of June 30, 1998 included $0.2 million due to
FSI and its affiliates for management fees and $2.6 million due to affiliated
USPEs. The balance due to affiliates as of
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
4. Transactions with General Partner and Affiliates (continued)
December 31, 1997 included $0.3 million due to FSI and its affiliates for
management fees and $2.5 million due to an affiliated USPE.
The Partnership's proportional share of USPE-affiliated management fees of $0.1
million was payable as of June 30, 1998 and December 31, 1997.
During the six months ended June 30, 1998, the Partnership purchased an MD-80
commercial aircraft at a cost of $13.4 million, a marine vessel for $9.6
million, and a portfolio of aircraft rotable components for $2.2 million, and
paid FSI $1.4 million for acquisition and lease negotiation fees. In addition,
FSI earned $0.1 million in acquisition and lease negotiation fees for the $1.2
million hushkit installed on an aircraft in a USPE.
5. Equipment
Owned equipment held for operating leases is stated at cost. The components of
owned equipment held for operating leases are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
Marine vessels $ 26,094 $ 16,035
Aircraft and rotable components 21,630 11,919
Rail equipment 15,587 15,657
Trailers 14,040 16,203
Marine containers 8,689 11,783
------------- --------------
86,040 71,597
Less accumulated depreciation (33,949 ) (33,895)
------------- --------------
Net equipment $ 52,091 $ 37,702
============= ==============
</TABLE>
As of June 30, 1998, all of the equipment was on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for 72 marine
containers. As of December 31, 1997, all of the equipment was on lease or
operating in PLM-affiliated short-term trailer rental facilities, except for 92
marine containers and a railcar. The net book value of the off-lease equipment
was $0.3 million and $0.4 million as of June 30, 1998 and December 31, 1997,
respectively.
During the six months ended June 30, 1998, the Partnership completed the
purchase of an MD-82 Stage III commercial aircraft for $14.0 million, including
acquisition fees of $0.6 million paid to FSI for the purchase of this equipment.
The Partnership made a deposit of $1.3 million toward this purchase in 1997,
which is included in the December 31, 1997 balance sheet as equipment
acquisition deposit. Additionally, the Partnership purchased a portfolio of
aircraft rotable components for $2.3 million, including acquisition fees of $0.1
million paid to FSI for the purchase of this equipment, and a marine vessel for
$10.1 million, including acquisition fees of $0.4 million that were paid to FSI
for the purchase of this equipment.
During the six months ended June 30, 1998, the Partnership disposed of or sold a
Boeing 737-200 commercial aircraft, marine containers, trailers, and railcars,
with an aggregate net book value of $5.0 million, for $9.9 million which
includes $1.4 million of unused engine reserves.
During the six months ended June 30, 1997, the Partnership disposed of or sold
marine containers and trailers, with an aggregate net book value of $0.9
million, for $0.9 million.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
6. Investments in Unconsolidated Special-Purpose Entities
The net investments in USPEs included the following jointly-owned equipment and
related assets and liabilities (in thousands of dollars):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------------------------------
<S> <C> <C>
64% interest in a trust owning a 767-200ER commercial aircraft $ 11,744 $ 12,854
53% interest in an entity owning a product tanker 8,996 9,881
30% interest in an entity owning a mobile offshore drilling unit 4,706 5,050
40% interest in a trust owning two commercial aircraft on direct
finance lease 4,431 4,581
50% interest in an entity owning a container feeder vessel 2,389 2,812
20% interest in an entity owning a handymax bulk carrier 1,431 1,513
50% interest in a trust that owned four 737-200A commercial aircraft 304 6,614
17% interest in a trust that owned a commercial aircraft -- 3,491
Net investments $ 34,001 $ 46,796
============= =============
</TABLE>
As of June 30, 1998 and December 31, 1997, the Partnership had an interest in
trusts that own multiple aircraft (the Trusts). One of these Trusts contained
provisions, under certain circumstances, for allocating specific aircraft to the
beneficial owners.
During the six months ended June 30, 1998, the Partnership increased its
investment in a trust owning four commercial aircraft by funding the
installation of a hushkit on an aircraft assigned to the Partnership in the
trust for $1.3 million, including acquisition and lease negotiation fees of $0.1
million that were paid to FSI. In this Trust, the Partnership subsequently sold
the two commercial aircraft assigned to it with a net book value of $6.2 million
for proceeds of $13.1 million. In addition, in the same Trust, an affiliated
program sold the aircraft designated to it. The remaining designated commercial
aircraft in this Trust was transferred out of the Trust to PLM Equipment Growth
Fund III, an affiliated program.
During January 1998, the Partnership received the remaining liquidating proceeds
of $3.5 million from the sale of its 17% interest in a trust that owned a
commercial aircraft.
7. Debt
The General Partner entered into a short-term, joint $50.0 million credit
facility. This facility was amended on June 1, 1998 to temporarily increase the
borrowing capacity of American Finance Group, Inc. (AFG), a subsidiary of PLM
International, Inc., from $50.0 million to $55.0 million until September 1,
1998. On June 8, 1998, this facility was amended again to temporarily increase
AFG's borrowing capacity from $55.0 million to $60.0 million until July 8, 1998.
As of June 30, 1998, the Partnership had no borrowing under the short-term joint
$60.0 million credit facility. Among the other eligible borrowers, PLM Equipment
Growth Fund V had borrowings of $1.6 million, AFG had borrowings of $44.8
million, and TEC Acquisub, Inc., an indirect wholly-owned subsidiary of PLM
International, Inc., had borrowings of $2.0 million under the short-term joint,
$60.0 million credit facility as of June 30, 1998. No other eligible borrower
had any outstanding borrowings.
8. Contingencies
PLM International, Inc. (the Company) and various of its affiliates are named as
defendants in a lawsuit filed as a class action on January 22, 1997 in the
Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251 (the Koch
action). The plaintiffs, who filed the complaint on their own and on behalf of
all class members similarly situated, are six individuals who allegedly invested
in certain California limited partnerships (the Funds) for which the Company's
wholly-owned subsidiary, FSI, acts as the general
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
Contingencies (continued)
partner, including the Partnership, PLM Equipment Growth Funds IV, and V, and
PLM Equipment Growth & Income Fund VII. The complaint asserts eight causes of
action against all defendants, as follows: fraud and deceit, suppression,
negligent misrepresentation and suppression, intentional breach of fiduciary
duty, negligent breach of fiduciary duty, unjust enrichment, conversion, and
conspiracy. Additionally, plaintiffs allege a cause of action against PLM
Securities Corp. for breach of third party beneficiary contracts in violation of
the National Association of Securities Dealers rules of fair practice.
Plaintiffs allege that each defendant owed plaintiffs and the class certain
duties due to their status as fiduciaries, financial advisors, agents, and
control persons. Based on these duties, plaintiffs assert liability against the
defendants for improper sales and marketing practices, mismanagement of the
Funds, and concealing such mismanagement from investors in the Funds. Plaintiffs
seek unspecified compensatory and recissory damages, as well as punitive
damages, and have offered to tender their limited partnership units back to the
defendants.
In March 1997, the defendants removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama, Southern
Division (Civil Action No. 97-0177-BH-C) based on the district court's diversity
jurisdiction, following which plaintiffs filed a motion to remand the action to
the state court. In September 1997, the district court denied plaintiffs' motion
and dismissed without prejudice the individual claims of the California class
representative, reasoning that he had been fraudulently joined as a plaintiff.
In October 1997, defendants filed a motion to compel arbitration of plaintiffs'
claims, based on an agreement to arbitrate contained in the limited partnership
agreement of each Fund, and to stay further proceedings pending the outcome of
such arbitration. Notwithstanding plaintiffs' opposition, the district court
granted the motion in December 1997.
Following various unsuccessful requests that the district court reverse or
otherwise amend its decisions, plaintiffs filed with the U.S. Court of Appeals
for the Eleventh Circuit a notice of appeal from the district court's order
granting defendants' motion to compel arbitration and to stay the proceedings,
and of the district court's order denying plaintiffs' motion to remand and
dismissing the claims of the California plaintiff. This appeal was voluntarily
dismissed by plaintiffs in June 1998 pending settlement of the Koch action, as
discussed below.
On June 5, 1997, the Company and the affiliates who are also defendants in the
Koch action were named as defendants in another purported class action filed in
the San Francisco Superior Court, San Francisco, California, Case No. 987062
(the Romei action). The plaintiff is an investor in PLM Equipment Growth Fund V,
and filed the complaint on her own behalf and on behalf of all class members
similarly situated who invested in certain California limited partnerships for
which FSI acts as the general partner, including the Funds. The complaint
alleges the same facts and the same nine causes of action as in the Koch action,
plus five additional causes of action against all of the defendants, as follows:
violations of California Business and Professions Code Sections 17200, et seq.
for alleged unfair and deceptive practices, constructive fraud, unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.
On July 31, 1997, the defendants filed with the district court for the Northern
District of California (Case No. C-97-2847 WHO) a petition (the petition) under
the Federal Arbitration Act seeking to compel arbitration of plaintiff's claims
and for an order staying the state court proceedings pending the outcome of the
arbitration. In connection with this motion, plaintiff agreed to a stay of the
state court action pending the district court's decision on the petition to
compel arbitration. In October 1997, the district court denied the Company's
petition to compel arbitration and in November 1997, agreed to hear the
Company's motion for reconsideration of this order. The hearing on this motion
has been taken off calendar and the district court has dismissed the petition
pending settlement of the Romei action, as discussed below. The state court
action continues to be stayed pending such resolution. In connection with her
opposition to the petition to compel arbitration, the plaintiff filed an amended
complaint with the state court in August 1997 alleging two new causes of action
for violations of the California Securities Law of 1968 (California Corporations
Code Sections 25400 and 25500) and for violation of California
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
8. Contingencies (continued)
Civil Code Sections 1709 and 1710. Plaintiff also served certain discovery
requests on defendants. Because of the stay, no response to the amended
complaint or to the discovery is currently required.
In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of understanding (MOU) related to the settlement of those actions. The MOU
contemplates a settlement and release of all claims in exchange for payment of
up to $6.0 million. The final settlement amount will depend on the number of
authorized claims filed by authorized claimants, the amount of the
administrative costs incurred in connection with the settlement, and the amount
of attorneys' fees awarded by the Alabama district court. The Company will pay
up to $0.3 million of the settlement, with the remainder being funded by an
insurance policy. The defendants will continue to deny each of the claims and
contentions and admit no liability in connection with the proposed settlement.
The settlement remains subject to numerous conditions, including but not limited
to (a) agreement and execution by the parties of a settlement agreement, (b)
notice to and certification of the class for settlement purposes and (c)
preliminary and final approval of the settlement by the Alabama district court.
The Company continues to believe that the allegations of the Koch and Romei
actions are completely without merit and intends to continue to defend this
matter vigorously if the settlement is not consummated.
(this space intentionally left blank)
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of PLM Equipment Growth Fund VI's (the Partnership's) Operating
Results for the Three Months Ended June 30, 1998 and 1997
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repair and maintenance,
equipment operation, and asset-specific insurance expenses) on owned equipment
decreased during the second quarter of 1998 when compared to the same quarter of
1997. The following table presents lease revenues less direct expenses by owned
equipment type (in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1998 1997
------------------------------
<S> <C> <C>
Aircraft, aircraft engines, and components $ 976 $ 865
Rail equipment 806 780
Trailers 584 621
Marine containers 204 465
Marine vessels 168 749
</TABLE>
Aircraft, aircraft engines, and components: Aircraft lease revenues and direct
expenses were $1.1 million and $0.1 million, respectively, for the three months
ended June 30, 1998, compared to $0.9 million and $0.1 million, respectively,
during the same period of 1997. The increase in aircraft contribution was due to
the purchase of an MD-82 Stage III commercial aircraft and a portfolio of
aircraft rotable components during the first quarter of 1998. The increase in
aircraft contribution caused by these purchases was offset, in part, by the sale
of a portfolio of aircraft engines and components during the fourth quarter of
1997.
Rail equipment: Rail equipment lease revenues and direct expenses were $1.0
million and $0.2 million, respectively, for the three months ended June 30,
1998, compared to $1.0 million and $0.3 million, respectively, during the same
period of 1997. The increase in railcar contribution was due to fewer repairs
required during the three months ended June 30, 1998, when compared to the same
period of 1997.
Trailers: Trailer lease revenues and direct expenses were $0.8 million and $0.2
million, respectively, for the three months ended June 30, 1998 and 1997. The
number of trailers owned by the Partnership has been declining over the past 12
months due to sales and dispositions. The result of this declining fleet has
been a decrease in trailer contribution.
Marine containers: Marine container lease revenues and direct expenses were $0.2
million and $7,000, respectively, for the three months ended June 30, 1998,
compared to $0.5 million and $3,000, respectively, during the same quarter of
1997. The number of containers owned by the Partnership has been declining over
the past 12 months due to sales and dispositions. The result of this declining
fleet has been a decrease in container contribution.
Marine vessels: Marine vessel lease revenues and direct expenses were $1.0
million and $0.8 million, respectively, for the three months ended June 30,
1998, compared to $2.5 million and $1.7 million, respectively, during the same
period of 1997. The decrease in marine vessel contribution was due to the sale
of two marine vessels during the fourth quarter of 1997 which was offset, in
part, by the purchase of an additional marine vessel during the last month of
the second quarter of 1998 and a $0.1 million loss-of-hire insurance refund
received during the second quarter of 1998 from Transportation Equipment
Indemnity Company, Ltd. (TEI), an affiliate of the General Partner, due to lower
claims from the insured Partnership and other insured affiliated partnerships.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $4.7 million for the quarter ended June 30, 1998
increased from $4.2 million for the same period in 1997. Significant variances
are explained as follows:
(1) A $0.9 million increase in depreciation and amortization expenses from
1997 levels reflects the purchase of certain assets during 1998, which was
offset in part by the sale of certain equipment during 1998 and 1997 and the
double-declining balance method of depreciation.
(2) A $0.1 million decrease in management fees was due to lower lease
revenues earned by the Partnership during 1998, when compared to the same period
in 1997.
(3) A $0.2 million decrease in the provision for bad debts reflects the
General Partner's evaluation of the collectibility of receivables due from
certain lessees.
(4) A $0.2 million decrease in administrative expenses was due to lower
costs for professional services needed to collect past due receivables due from
certain nonperforming lessees.
(C) Net Gain (Loss) on Disposition of Owned Equipment
The net gain on the disposition of owned equipment for the second quarter of
1998 totaled $4.9 million, and resulted from the sale of a commercial aircraft,
marine containers, trailers, and railcars, with an aggregate net book value of
$4.0 million, for $8.9 million which included $1.4 million of unused engine
reserves. The net loss on the disposition of equipment for the second quarter of
1997 totaled $7,000, and resulted from the sale of marine containers and
trailers, with an aggregate net book value of $0.7 million, for $0.7 million.
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
(USPEs)
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method is shown in the following table by equipment type
(in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1998 1997
------------------------------
<S> <C> <C>
Aircraft $ 3,925 $ 222
Mobile offshore drilling unit 43 (119 )
Marine vessels (181) (162 )
------------------------------------------------ ------------
Equity in net income of USPEs $ 3,787 $ (59 )
================================================ ============
</TABLE>
Aircraft: As of June 30, 1998, the Partnership owned an interest in an entity
that owns a Boeing 767 commercial aircraft, and an interest in a trust that owns
two commercial aircraft on a direct finance lease. As of June 30, 1997, the
Partnership owned an interest in an entity that owns a Boeing 767 commercial
aircraft, an interest in a trust that owns two commercial aircraft on a direct
finance lease, an interest in a trust that held six commercial aircraft, and an
interest in a trust that held four commercial aircraft. During the second
quarter of 1998, lease revenues of $1.3 million and the gain from the sale of
the remaining interest in the trust that held four commercial aircraft of $3.6
million were offset by depreciation and administrative expenses of $0.9 million.
During the same period of 1997, lease revenues of $1.9 million were offset by
depreciation and administrative expenses of $1.7 million. The decrease in lease
revenues during the second quarter of 1998 was due to the sale of the
Partnership's interest in a trust during the first and second quarters of 1998
and the sale of the Partnership's interest in another trust during the fourth
quarter of 1997. Depreciation and administrative expenses also decreased as a
direct result of these sales during 1998 and 1997.
Mobile offshore drilling unit: As of June 30, 1998 and 1997, the Partnership
owned an interest in a mobile offshore drilling unit. During the second quarter
of 1998, revenues of $0.3 million were offset by depreciation and administrative
expenses of $0.3 million. During the same period of 1997, revenues of $0.3
million were offset by depreciation and administrative expenses of $0.4 million.
The decrease in depreciation and administrative expenses was primarily due to
the double-declining balance method of depreciation.
Marine vessels: As of June 30, 1998, the Partnership owned an interest in
entities that own three marine vessels. As of June 30, 1997, the Partnership
owned an interest in entities that own two marine vessels. During the second
quarter of 1998, revenues of $1.2 million were offset by depreciation and
administrative expenses of $1.4 million. During the same period of 1997,
revenues of $0.5 million were offset by depreciation and administrative expenses
of $0.6 million. The primary reason for the increases in revenues and expenses
was due to the purchase of an interest in an additional entity that owns a
marine vessel during 1997.
(E) Net Income (Loss)
As a result of the foregoing, the Partnership's net income for the three months
ended June 30, 1998 was $6.9 million, compared to a net loss of $0.6 million
during the same period of 1997. The Partnership's ability to acquire, operate,
and liquidate assets, secure leases, and re-lease those assets whose leases
expire is subject to many factors, and the Partnership's performance in the
second quarter of 1998 is not necessarily indicative of future periods. In the
second quarter of 1998, the Partnership distributed $4.1 million to the limited
partners, or $0.50 per weighted-average limited partnership unit.
Comparison of the Partnership's Operating Results for the Six Months Ended June
30, 1998 and 1997
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repair and maintenance,
equipment operation, and asset-specific insurance expenses) on owned equipment
decreased during the six months ended June 30, 1998, when compared to the same
period of 1997. The following table presents lease revenues less direct expenses
by owned equipment type (in thousands of dollars):
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1998 1997
------------------------------
<S> <C> <C>
Aircraft, aircraft engines, and components $ 1,865 $ 1,786
Rail equipment 1,670 1,647
Trailers 1,235 1,424
Marine containers 435 862
Marine vessels 268 1,643
</TABLE>
Aircraft, aircraft engines, and components: Aircraft lease revenues and direct
expenses were $2.1 million and $0.2 million, respectively, for the six months
ended June 30, 1998, compared to $1.9 million and $0.1 million, respectively,
during the same period of 1997. The increase in aircraft contribution was due to
the purchase of an MD-82 Stage III commercial aircraft and a portfolio of
aircraft rotable components during the first quarter of 1998. The increase in
aircraft contribution caused by these purchases was offset, in part, by the sale
of a portfolio of aircraft engines and components during the fourth quarter of
1997.
Rail equipment: Rail equipment lease revenues and direct expenses were $2.1
million and $0.4 million, respectively, for the six months ended June 30, 1998
and 1997. The increase in railcar contribution was due to lower repairs required
during 1998 when compared to the same period of 1997.
Trailers: Trailer lease revenues and direct expenses were $1.6 million and $0.4
million, respectively, for the six months ended June 30, 1998, compared to $1.8
million and $0.4 million, respectively, during the same period of 1997. The
number of trailers owned by the Partnership has been declining over the past 12
months due to sales and dispositions. The result of this declining fleet has
been a decrease in trailer contribution.
Marine containers: Marine container lease revenues and direct expenses were $0.4
million and $9,000, respectively, for the six months ended June 30, 1998,
compared to $0.9 million and $6,000, respectively, during the same quarter of
1997. The number of containers owned by the Partnership has been declining over
the past 12 months due to sales and dispositions. The result of this declining
fleet has been a decrease in container contribution.
Marine vessels: Marine vessel lease revenues and direct expenses were $2.3
million and $2.1 million, respectively, for the six months ended June 30, 1998,
compared to $4.8 million and $3.1 million, respectively, during the same period
of 1997. The decrease in marine vessel contribution was due to the sale of two
marine vessels during the fourth quarter of 1997 which was offset in part by the
purchase of an additional marine vessel during the last month of the second
quarter of 1998 and a $0.1 million loss-of-hire insurance refund received during
the second quarter of 1998 from TEI due to lower claims from the insured
Partnership and other insured affiliated partnerships.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $9.6 million for the six months ended June 30, 1998
increased from $8.1 million for the same period in 1997. Significant variances
are explained as follows:
(1) A $1.8 million increase in depreciation and amortization expenses from
1997 levels reflects the purchase of certain assets during 1998, which was
offset in part by the sale of certain equipment during 1998 and 1997 and the
double-declining balance method of depreciation.
(2) A $0.1 million increase in the provision for bad debts reflects the
General Partner's evaluation of the collectibility of receivables due from
certain lessees. Also, during 1997, the Partnership collected certain
receivables that were previously reserved for as a bad debt. No similiar
collections occurred during 1998.
(3) A $0.2 million decrease in management fees was due to lower lease
revenues earned by the Partnership during 1998, when compared to the same period
in 1997.
(4) A $0.3 million decrease in administrative expenses was due to lower
costs for professional services needed to collect past due receivables due from
certain nonperforming lessees.
(C) Net Gain on Disposition of Owned Equipment
The net gain on the disposition of owned equipment for the six months ended June
30, 1998 totaled $4.9 million, and resulted from the sale of a commercial
aircraft, marine containers, trailers, and railcars, with an aggregate net book
value of $5.0 million, for $9.9 million which included $1.4 million of unused
engine reserves. The net gain on the disposition of equipment for the six months
ended June 30, 1997 totaled $5,000, and resulted from the sale of marine
containers and trailers, with an aggregate net book value of $0.9 million, for
$0.9 million.
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method is shown in the following table by equipment type
(in thousands of dollars):
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1998 1997
------------------------------
<S> <C> <C>
Aircraft $ 7,843 $ 450
Mobile offshore drilling unit 108 (130 )
Marine vessels (382) (270 )
------------------------------------------------ ------------
Equity in net income of USPEs $ 7,569 $ 50
================================================ ============
</TABLE>
Aircraft: As of June 30, 1998, the Partnership owned an interest in an entity
that owns a Boeing 767 commercial aircraft, and an interest in a trust that owns
two commercial aircraft on a direct finance lease. As of June 30, 1997, the
Partnership owned an interest in an entity that owns a Boeing 767 commercial
aircraft, an interest in a trust that owns two commercial aircraft on a direct
finance lease, an interest in a trust that held six commercial aircraft, and an
interest in a trust that held four commercial aircraft. During the six months
ended June 30, 1998, revenues of $2.9 million and the gain from the sale of an
interest in the trust that held four commercial aircraft of $6.9 million were
offset by depreciation and administrative expenses of $1.9 million. During the
same period of 1997, lease revenues of $3.9 million were offset by depreciation
and administrative expenses of $3.4 million. The decrease in lease revenues
during the six months ended June 30, 1998 was due to the sale of the
Partnership's interest in a trust during 1998 and the sale of the Partnership's
interest in another trust during the fourth quarter of 1997. Depreciation and
administrative expenses also decreased as a direct result of these sales during
1998 and 1997.
Mobile offshore drilling unit: As of June 30, 1998 and 1997, the Partnership
owned an interest in a mobile offshore drilling unit. During the six months
ended June 30, 1998, revenues of $0.6 million were offset by depreciation and
administrative expenses of $0.5 million. During the same period of 1997,
revenues of $0.5 million were offset by depreciation and administrative expenses
of $0.6 million. The contribution from this equipment increased during 1998,
when compared to the same period of 1997, due to a higher lease rate earned on
this equipment and lower depreciation and administrative expenses due to the
double-declining balance method of depreciation.
Marine vessels: As of June 30, 1998, the Partnership owned an interest in
entities that own three marine vessels. As of June 30, 1997, the Partnership
owned an interest in entities that own two marine vessels. During the six months
ended June 30, 1998, revenues of $2.3 million were offset by depreciation and
administrative expenses of $2.7 million. During the same period of 1997,
revenues of $0.9 million were offset by depreciation and administrative expenses
of $1.1 million. The primary reason for the increases in revenues and expenses
was due to the purchase of an interest in an additional entity that owns a
marine vessel during 1997.
(E) Net Income (Loss)
As a result of the foregoing, the Partnership's net income for the six months
ended June 30, 1998 was $8.7 million, compared to a net loss of $0.4 million
during the same period of 1997. The Partnership's ability to acquire, operate,
and liquidate assets, secure leases, and re-lease those assets whose leases
expire is subject to many factors, and the Partnership's performance in the six
months ended June 30, 1998 is not necessarily indicative of future periods. In
the six months ended June 30, 1998, the Partnership distributed $8.2 million to
the limited partners, or $1.00 per weighted-average limited partnership unit.
(II) FINANCIAL CONDITION -- CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS
For the six months ended June 30, 1998, the Partnership generated $8.7 million
in operating cash (net cash provided by operating activities, plus
non-liquidating distributions from USPEs) to meet its operating obligations,
maintain working capital reserves, and maintain the current level of
distributions (total for the six months ended June 30, 1998 of $8.7 million) to
the partners. However, based on current operating lease revenues and near-term
trends, the General Partner made the decision to reduce the level of cash
distribution from 10% to 8% for the quarter ended June 30, 1998. Cash
distributions will remain at the reduced rate until operating lease revenues and
near-term trends show improvement.
During the six months ended June 30, 1998, the Partnership sold owned equipment
for proceeds of $9.9 million of which the Partnership received $9.8 million.
Included in the sale proceeds was $1.4 million of unused engine reserves. The
Partnership also sold its interest in a USPE for $13.1 million and received $3.6
million that was due from the sale of its interest in a USPE during late 1997.
During the six months ended June 30, 1998, the Partnership completed the
purchase of an MD-82 Stage III commercial aircraft for $14.1 million, including
acquisition and lease negotiation fees of $0.7 million that were paid to PLM
Financial Services, Inc. (FSI or the General Partner). FSI is a wholly-owned
subsidiary of PLM International, Inc. The Partnership made a deposit of $1.3
million toward this purchase in 1997, which is included in the December 31, 1997
balance sheet as an equipment acquisition deposit.
The Partnership also purchased a portfolio of aircraft rotable components for
$2.3 million, including acquisition and lease negotiation fees of $0.1 million
that were paid to FSI for this equipment and a marine vessel for $10.2 million,
including acquisition and lease negotiation fees of $0.5 million that were paid
to FSI for this equipment. In addition, the Partnership increased its investment
in a trust that owned two commercial aircraft by funding the installation of a
hushkit on an aircraft for $1.3 million including acquisition and lease
negotiation fees of $0.1 million that were paid to FSI, subsequently, the
Partnership sold its interest in this trust during the six months ended June 30,
1998.
The General Partner entered into a short-term, joint $50.0 million credit
facility. This facility was amended on June 1, 1998 to temporarily increase the
borrowing capacity of American Finance Group, Inc. (AFG), a subsidiary of PLM
International, Inc., from $50.0 million to $55.0 million until September 1,
1998. As of August 11, 1998, TEC Acquisub, Inc., an indirect wholly-owned
subsidiary of PLM International, Inc., had borrowings of $2.0 million and AFG
had borrowings of $43.0 million under the short- term joint $55.0 million credit
facility. No other eligible borrower had any outstanding borrowings.
(III) YEAR 2000 COMPLIANCE
The General Partner is currently addressing the Year 2000 computer software
issue and is creating a timetable for carrying out any program modifications
that may be required. The General Partner does not anticipate that the cost of
those modifications allocable to the Partnership will be material.
(IV) ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public company's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the Partnership's fiscal year ended December
31, 1998, with earlier application permitted. The effect of adoption of these
statements will be limited to the form and content of the Partnership's
disclosures and will not impact the Partnership's results of operations, cash
flow, or financial position.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair value. This statement is effective for all
quarters of fiscal years beginning after June 15, 1999. As of June 30, 1998, the
General Partner is reviewing the effect this standard will have on the
Partnership's consolidated financial statements.
(V) OUTLOOK FOR THE FUTURE
Several factors may affect the Partnership's operating performance in 1998 and
beyond, including changes in the markets for the Partnership's equipment and
changes in the regulatory environment in which that equipment operates.
The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is intended to reduce its exposure to volatility in individual
equipment sectors.
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of some of these
factors, or of their occurrence, makes it difficult for the General Partner to
clearly define trends or influences that may impact the performance of the
Partnership's equipment. The General Partner continually monitors both the
equipment markets and the performance of the Partnership's equipment in these
markets. The General Partner may decide to reduce the Partnership's exposure to
equipment markets if it determines that it cannot operate equipment to achieve
acceptable rates of return. Alternatively, the General Partner may make a
determination to enter equipment markets in which it perceives opportunities to
profit from supply/demand instabilities or other market imperfections.
The Partnership intends to use excess cash flow, if any, after making payments
of expenses and loan principal, maintaining working capital reserves, and making
cash distributions, to acquire additional equipment during the first seven years
of Partnership operations, which concludes December 31, 1999. The General
Partner believes that these acquisitions may cause the Partnership to generate
additional earnings and cash flow for the Partnership.
(VI) FORWARD-LOOKING INFORMATION
Except for the historical information contained herein, this Form 10-Q contains
forward-looking statements that involve risks and uncertainties, such as,
statements of the Partnership's plans, objectives, expectations, and intentions.
The cautionary statements made in this Form 10-Q should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-Q. The Partnership's actual results could differ materially from
those discussed here.
(this space intentionally left blank)
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 First Amendment to Restated Warehousing Credit Agreement among
American Finance Group, Inc., First Union National Bank of
North Carolina, and Bank of Montreal, dated as of June 1,
1998.
10.2 Second Amendment to Restated Warehousing Credit Agreement
among American Finance Group, Inc., First Union National Bank,
and Bank of Montreal, dated as of June 8, 1998.
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM EQUIPMENT GROWTH FUND VI
By: PLM Financial Services, Inc.
General Partner
Date: August 11, 1998 By: /s/ Richard K Brock
-------------------
Richard K Brock
Vice President and
Corporate Controller
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 13,145
<SECURITIES> 0
<RECEIVABLES> 3,963
<ALLOWANCES> (2,205)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 86,040
<DEPRECIATION> (33,949)
<TOTAL-ASSETS> 101,591
<CURRENT-LIABILITIES> 0
<BONDS> 30,000
0
0
<COMMON> 0
<OTHER-SE> 66,744
<TOTAL-LIABILITY-AND-EQUITY> 101,591
<SALES> 0
<TOTAL-REVENUES> 13,807
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11,533
<LOSS-PROVISION> 156
<INTEREST-EXPENSE> 1,013
<INCOME-PRETAX> 8,674
<INCOME-TAX> 0
<INCOME-CONTINUING> 8,674
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,674
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
AMENDMENT NO. 1
TO AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT
(American Finance Group, Inc.)
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED WAREHOUSING CREDIT
AGREEMENT dated as of June 1, 1998 (the "Amendment"), is entered into by and
among AMERICAN FINANCE GROUP, INC., a Delaware corporation ("Borrower"), FIRST
UNION NATIONAL BANK ("FUNB"), BANK OF MONTREAL ("BMO") and each other financial
institution which may hereafter execute and deliver an instrument of assignment
pursuant to Section 11.10 of the Credit Agreement (as defined below) (any one
financial institution individually, a "Lend ," and collectively, "Lenders"), and
FUNB, as agent on behalf of Lenders (not in its individual capacity, but solely
as agent, "Agent"). Capitalized terms used herein without definition shall have
the same meanings herein as given to them in the Credit Agreement.
RECITALS
A. Borrower, Lenders and Agent have entered into that Amended and Restated
Warehousing Credit Agreement dated as of December 2, 1997 (as the same may
from time to time be amended, the "Credit Agreement"), pursuant to which
Lenders have agreed to extend and make available to Borrower certain
advances of money.
B. Borrower desires that Lenders and Agent amend the Credit Agreement to
increase the Commitments set forth on Schedule A to the Credit Agreement
from $50,000,000 to $55,000,000 for a period of ninety (90) days from the
date first written above.
C. Subject to the representations and warranties of Borrower and upon the
terms and conditions set forth in this Amendment, Lenders and Agent are
willing to so amend the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and
intending to be legally bound, the parties hereto agree as follows:
Section 1. Amendments.
1.1 Commitment. The definition of "Commitment" set forth in Section 1.1 of
the Credit Agreement is amended by deleting it in its entirety and replacing it
with the following:
"Commitment" means, with respect to each Lender, the amounts set forth
on Schedule A, for each period as set forth therein, and "Commitments" means,
for each such period, all such amounts collectively, as each may be amended from
time to time upon the execution and delivery of an instrument of assignment
pursuant to Section 11.10, which amendments shall be evidenced on Schedule 1.1.
and by deleting Schedule A in its entirety and replacing such schedule with a
new Schedule A in the form attached to this Amendment as Attachment I.
SECTION 2. LIMITATIONS ON AMENDMENTS
2.1 The amendments set forth in Section 1, above, are effective for the
purposes set forth herein and shall be limited precisely as written and shall
not be deemed to (i) be a consent to any amendment, waiver or modification of
any other term or condition of any Loan Document or (ii) otherwise prejudice any
right or remedy which Lenders or Agent may now have or may have in the future
under or in connection with any Loan Document.
2.2 This Amendment shall be construed in connection with and as part of the
Loan Documents and all terms, conditions, representations, warranties, covenants
and agreements set forth in the Loan Documents, except as herein amended, are
hereby ratified and confirmed and shall remain in full force and effect.
SECTION 3. REPRESENTATIONS AND WARRANTIES In order to induce Lenders and
Agent to enter into this Amendment, Borrower represents and warrants to each
Lender and Agent as follows:
(a) Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Loan Documents (other than those
which expressly speak as of a different date which shall be true as of such
different date) are true, accurate and complete in all material respects as of
the date hereof and (ii) no Event of Default, or event which constitutes a
Potential Event of Default, has occurred and is continuing;
(b) Borrower has the corporate power and authority to execute and deliver
this Amendment and to perform its Obligations under the Credit Agreement, as
amended by this Amendment, and each of the other Loan Documents to which it is a
party;
(c) The certificate of incorporation, bylaws and other organizational
documents of Borrower delivered to each Lender as a condition precedent to the
effectiveness of the Credit Agreement are true, accurate and complete and have
not been amended, supplemented or restated and are and continue to be in full
force and effect;
(d) The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its Obligations under the Credit Agreement, as
amended by this Amendment, and each of the other Loan Documents to which it is a
party have been duly authorized by all necessary corporate action on the part of
Borrower;
(e) The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its respective Obligations under the Credit
Agreement, as amended by this Amendment, and each of the other Loan Documents to
which it is a party do not and will not contravene (i) any law or regulation
binding on or affecting Borrower, (ii) the certificate of incorporation, bylaws,
or other organizational documents of Borrower, (iii) any order, judgment or
decree of any court or other governmental or public body or authority, or
subdivision thereof, binding on Borrower or (iv) any contractual restriction
binding on or affecting Borrower;
(f) The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its Obligations under the Credit Agreement, as
amended by this Amendment, and each of the other Loan Documents to which it is a
party do not require any order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by any
governmental or public body or authority, or subdivision thereof, binding on
Borrower, except as already has been obtained or made; and
(g) This Amendment has been duly executed and delivered by Borrower and is
the binding Obligation of Borrower, enforceable against it in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting creditors'
rights.
4. REAFFIRMATION. Borrower hereby reaffirms its Obligations under each Loan
Document to which it is a party.
5. EFFECTIVENESS. This Amendment shall become effective upon the last to
occur of:
(a) The execution and delivery of this Amendment, whether the same or
different copies, by each of Borrower, Lenders and Agent.
(b) The execution and delivery by Borrower to FUNB of a promissory note
substantially in the form of Exhibit A hereto which promissory note shall be a
"Note" under and as defined in the Credit Agreement.
(c) The execution and delivery by PLMI to Agent of the Acknowledgment of
Amendment and Reaffirmation of Guaranty attached to this Amendment.
(d) The delivery to Agent of a certificate of secretary or assistant
secretary of Borrower and PLMI (i) certifying that the certified copies of the
certificate of incorporation and bylaws of Borrower or PLMI, as the case may be,
delivered to Agent on the Closing Date are true and accurate and remain in full
force and effect and have not been amended since the Closing Date, (ii)
attaching true and correct copies of all resolutions of the board of directors
of Borrower or PLMI, as the case may be, duly adopted by such board, and
relating to the authorization, execution, delivery and performance of this
Amendment and the Credit Agreement as amended thereby or the Acknowledgement of
Amendment and Reaffirmation of Guaranty and (iii) setting forth the name, title
and signatures of the authorized signers for Borrower or PLMI, as the case may
be.
(e) The delivery to Agent of an originally executed favorable opinion of
counsel on behalf of Borrower and Guarantor, in form and substance satisfactory
to Lenders, dated as of the date hereof and addressed to Lenders, together with
copies of any officer's certificate or legal opinion of other counsel or law
firm specifically identified and expressly relied upon by such counsel.
(f) The delivery to Agent of a certificate, dated as of the date hereof, of
the Chief Financial Officer or Corporate Controller of Borrower to the effect
that the representations and warranties of Borrower contained in Section 4 of
the Credit Agreement and in the other Loan Documents are true, accurate and
complete in all material respects as of the date hereof as though made on such
date (other than those which expressly speak as of a different date which shall
be true as of such different date) and no Event of Default or Potential Event of
Default has occurred and is continuing.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.
SECTION 7. CLAIMS, COUNTERCLAIMS, DEFENSES, RIGHTS OF SET-OFF. BORROWER
HEREBY REPRESENTS AND WARRANTS TO AGENT AND EACH LENDER THAT IT HAS NO KNOWLEDGE
OF ANY FACTS THAT WOULD SUPPORT A CLAIM, COUNTERCLAIM, DEFENSE OR RIGHT OF
SET-OFF.
8. 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
executed as of the date first written above.
BORROWER AMERICAN FINANCE GROUP, INC.
By:
Richard K. Brock
Vice President & Corporate Controller
LENDERS FIRST UNION NATIONAL BANK
By:
Printed name:
Title:
BANK OF MONTREAL
By:
Printed name:
Title:
AGENT FIRST UNION NATIONAL BANK , as Agent
By:
Printed name:
Title:
By
Printed Name:
Title:
<PAGE>
ATTACHMENT I
Revised Schedule A
<PAGE>
SCHEDULE A
COMMITMENTS
For the period from and including June 1, 1998 through August 30, 1998:
LENDER COMMITMENT PRO RATA SHARE
First Union National Bank $40,000,000 72.73%
Bank of Montreal $15,000,000 27.27%
At all other times:
LENDER COMMITMENT PRO RATA SHARE
First Union National Bank $35,000,000 70%
Bank of Montreal $15,000,000 30%
<PAGE>
EXHIBIT A
REVOLVING PROMISSORY NOTE
(First Union National Bank)
$40,000,000.00 San Francisco, California
Date: June 1, 1998
AMERICAN FINANCE GROUP, INC., a Delaware corporation (the "Borrower"),
FOR VALUE RECEIVED, hereby unconditionally promises to pay to the order of First
Union National Bank ("FUNB"), in lawful money of the United States of America,
the aggregate principal amount of FUNB's Pro Rata Share of all Loans outstanding
under the Credit Agreement referred to below, payable in the amounts, on the
dates and in the manner set forth below.
This revolving promissory note (the "Note") is one of the Notes
referred to in that certain Amended and Restated Warehousing Credit Agreement
dated as of December 2, 1997 (as the same may from time to time be further
amended, modified, supplemented, renewed, extended or restated, the "Credit
Agreement") by and among the Borrower, FUNB, solely in its capacity as agent
(the "Agent") for FUNB and Bank of Montreal and such other financial
institutions as shall from time to time become "Lenders" pursuant to Section
11.10 of the Credit Agreement (such entities, together with their respective
successors and assigns being collectively referred to herein as the "Lenders"),
and the Lenders. All capitalized terms used but not defined herein shall have
the same meaning as given to them in the Credit Agreement.
1. Principal Payments. Subject to the terms and conditions of the
Credit Agreement, the entire principal amount outstanding under each Loan shall
be due and payable on the Maturity Date with respect to such Loan, with any and
all unpaid and not previously due and payable principal amounts under the Loans
being due and payable on the Commitment Termination Date.
2. Interest Rate. The Borrower further promises to pay interest on the
sum of the daily unpaid principal balance of all Loans outstanding on each day
in lawful money of the United States of America, from the Closing Date until all
such principal amounts shall have been repaid in full, which interest shall be
payable at the rates per annum and on the dates determined pursuant to the
Credit Agreement.
3. Place of Payment. All amounts payable hereunder shall be payable to
the Agent, on behalf of FUNB, at the office of First Union National Bank, One
First Union Center, 301 South College Street, Charlotte, North Carolina 28288,
Attention: Elisha Sabido, or such other place of payment as may be specified by
the Agent in writing.
4. Application of Payments; Acceleration. Payments on this Note shall
be applied in the manner set forth in the Credit Agreement. The Credit Agreement
contains provisions for acceleration of the maturity of the Loans upon the
occurrence of certain stated events and also provides for mandatory and optional
prepayments of principal prior to the stated maturity on the terms and
conditions therein specified.
Each Advance made by FUNB to the Borrower constituting FUNB's Pro Rata
Share of a Loan pursuant to the Credit Agreement shall be recorded by FUNB on
its books and records. The failure of FUNB to record any Advance or any
repayment or prepayment made on account of the principal balance thereof shall
not limit or otherwise affect the obligations of the Borrower under this Note
and under the Credit Agreement to pay the principal, interest and other amounts
due and payable hereunder and thereunder.
5. Default. The Borrower's failure to pay timely any of the principal
amount due under this Note or any accrued interest or other amounts due under
this Note on or within five (5) calendar days after the date the same becomes
due and payable shall constitute a default under this Note. Upon the occurrence
of a default hereunder or an Event of Default under the Credit Agreement, all
unpaid principal, accrued interest and other amounts owing hereunder shall, at
the option of Required Lenders, be immediately collectible by the Lenders and
the Agent pursuant to the Credit Agreement and applicable law.
6. Waivers. The Borrower waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note, and shall pay
all costs of collection when incurred by or on behalf of the Lenders, including,
without limitation, reasonable attorneys' fees, costs and other expenses as
provided in the Credit Agreement.
7. Governing Law. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of North Carolina, excluding
conflict of laws principles that would cause the application of laws of any
other jurisdiction.
8. Successors and Assigns. The provisions of this Note shall inure to
the benefit of and be binding on any successor to the Borrower and shall extend
to any holder hereof.
BORROWER AMERICAN FINANCE GROUP, INC.,
a Delaware corporation
By
Richard K. Brock
Vice President & Corporate Controller
<PAGE>
ACKNOWLEDGEMENT OF AMENDMENT
AND REAFFIRMATION OF GUARANTY
(PLMI/AFG)
SECTION 1. PLM International, Inc. ("PLMI") hereby acknowledges and
confirms that it has reviewed and approved the terms and conditions of this
Amendment No. 1 to Amended and Restated Warehousing Credit Agreement
("Amendment").
SECTION 2. PLMI hereby consents to this Amendment and agrees that its
Guaranty of the Obligations of Borrower under the Credit Agreement shall
continue in full force and effect, shall be valid and enforceable and shall not
be impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection herewith.
SECTION 3. PLMI represents and warrants that, after giving effect to
this Amendment, all representations and warranties contained in its Guaranty are
true, accurate and complete as if made on the date hereof.
GUARANTOR PLM INTERNATIONAL, INC.
By
Richard K. Brock
Vice President & Corporate Controller
<PAGE>
AMENDMENT NO. 2
TO AMENDED AND RESTATED WAREHOUSING CREDIT AGREEMENT
(American Finance Group, Inc.)
THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED WAREHOUSING CREDIT
AGREEMENT dated as of June 8, 1998 (the "Amendment"), is entered into by and
among AMERICAN FINANCE GROUP, INC., a Delaware corporation ("Borrower"), FIRST
UNION NATIONAL BANK ("FUNB"), BANK OF MONTREAL ("BMO") and each other financial
institution which may hereafter execute and deliver an instrument of assignment
pursuant to Section 11.10 of the Credit Agreement (as defined below) (any one
financial institution individually, a "Lend ," and collectively, "Lenders"), and
FUNB, as agent on behalf of Lenders (not in its individual capacity, but solely
as agent, "Agent"). Capitalized terms used herein without definition shall have
the same meanings herein as given to them in the Credit Agreement.
RECITALS
A. Borrower, Lenders and Agent have entered into that Amended and Restated
Warehousing Credit Agreement dated as of December 2, 1997, as amended by
that certain Amendment No. 1 to Amended and Restated Warehousing Credit
Agreement dated as of June 1, 1998 (as the same may from time to time be
further amended, the "Credit Agreement"), pursuant to which Lenders have
agreed to extend and make available to Borrower certain advances of money.
B. Borrower desires that Lenders and Agent amend the Credit Agreement to
increase the Commitments set forth on Schedule A to the Credit Agreement
from $55,000,000 to $60,000,000 for a period of thirty (30) days from the
date first written above.
C. Subject to the representations and warranties of Borrower and upon the
terms and conditions set forth in this Amendment, Lenders and Agent are
willing to so amend the Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and
intending to be legally bound, the parties hereto agree as follows:
Section 1. Amendments.
1.1 Commitment. The definition of "Commitment" set forth in Section 1.1 of
the Credit Agreement is amended by deleting Schedule A in its entirety
and replacing such schedule with a new Schedule A in the form attached
to this Amendment as Attachment I.
2. LIMITATIONS ON AMENDMENTS.
2.1 The amendments set forth in Section 1, above, are effective for the
purposes set forth herein and shall be limited precisely as written
and shall not be deemed to (i) be a consent to any amendment, waiver
or modification of any other term or condition of any Loan Document or
(ii) otherwise prejudice any right or remedy which Lenders or Agent
may now have or may have in the future under or in connection with any
Loan Document.
2.2 This Amendment shall be construed in connection with and as part of
the Loan Documents and all terms, conditions, representations,
warranties, covenants and agreements set forth in the Loan Documents,
except as herein amended, are hereby ratified and confirmed and shall
remain in full force and effect.
3. REPRESENTATIONS AND WARRANTIES. In order to induce Lenders and Agent to enter
into this Amendment, Borrower represents and warrants to each Lender and Agent
as follows:
(a) Immediately after giving effect to this Amendment (i) the
representations and warranties contained in the Loan Documents (other
than those which expressly speak as of a different date which shall be
true as of such different date) are true, accurate and complete in all
material respects as of the date hereof and (ii) no Event of Default,
or event which constitutes a Potential Event of Default, has occurred
and is continuing;
(b) Borrower has the corporate power and authority to execute and deliver
this Amendment and to perform its Obligations under the Credit
Agreement, as amended by this Amendment, and each of the other Loan
Documents to which it is a party;
(c) The certificate of incorporation, bylaws and other organizational
documents of Borrower delivered to each Lender as a condition
precedent to the effectiveness of the Credit Agreement are true,
accurate and complete and have not been amended, supplemented or
restated and are and continue to be in full force and effect;
(d) The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its Obligations under the Credit Agreement,
as amended by this Amendment, and each of the other Loan Documents to
which it is a party have been duly authorized by all necessary
corporate action on the part of Borrower;
(e) The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its respective Obligations under the Credit
Agreement, as amended by this Amendment, and each of the other Loan
Documents to which it is a party do not and will not contravene (i)
any law or regulation binding on or affecting Borrower, (ii) the
certificate of incorporation, bylaws, or other organizational
documents of Borrower, (iii) any order, judgment or decree of any
court or other governmental or public body or authority, or
subdivision thereof, binding on Borrower or (iv) any contractual
restriction binding on or affecting Borrower;
(f) The execution and delivery by Borrower of this Amendment and the
performance by Borrower of its Obligations under the Credit Agreement,
as amended by this Amendment, and each of the other Loan Documents to
which it is a party do not require any order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with, or exemption by any governmental or public body or
authority, or subdivision thereof, binding on Borrower, except as
already has been obtained or made; and
(g) This Amendment has been duly executed and delivered by Borrower and is
the binding Obligation of Borrower, enforceable against it in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, liquidation,
moratorium or other similar laws of general application and equitable
principles relating to or affecting creditors' rights.
4. REAFFIRMATION. Borrower hereby reaffirms its Obligations under each Loan
Document to which it is a party.
5. EFFECTIVENESS. This Amendment shall become effective upon the last to occur
of:
(a) The execution and delivery of this Amendment, whether the same or
different copies, by each of Borrower, Lenders and Agent.
(b) The execution and delivery by Borrower to FUNB of a promissory note
substantially in the form of Exhibit A hereto which promissory note
shall be a "Note" under and as defined in the Credit Agreement.
(c) The execution and delivery by PLMI to Agent of the Acknowledgment of
Amendment and Reaffirmation of Guaranty attached to this Amendment.
(d) The delivery to Agent of a certificate of secretary or assistant
secretary of Borrower and PLMI (i) certifying that the certified
copies of the certificate of incorporation and bylaws of Borrower or
PLMI, as the case may be, delivered to Agent on the Closing Date are
true and accurate and remain in full force and effect and have not
been amended since the Closing Date, (ii) attaching true and correct
copies of all resolutions of the board of directors of Borrower or
PLMI, as the case may be, duly adopted by such board, and relating to
the authorization, execution, delivery and performance of this
Amendment and the Credit Agreement as amended thereby or the
Acknowledgement of Amendment and Reaffirmation of Guaranty and (iii)
setting forth the name, title and signatures of the authorized signers
for Borrower or PLMI, as the case may be.
(e) The delivery to Agent of an originally executed favorable opinion of
counsel on behalf of Borrower and Guarantor, in form and substance
satisfactory to Lenders, dated as of the date hereof and addressed to
Lenders, together with copies of any officer's certificate or legal
opinion of other counsel or law firm specifically identified and
expressly relied upon by such counsel.
(f) The delivery to Agent of a certificate, dated as of the date hereof,
of the Chief Financial Officer or Corporate Controller of Borrower to
the effect that the representations and warranties of Borrower
contained in Section 4 of the Credit Agreement and in the other Loan
Documents are true, accurate and complete in all material respects as
of the date hereof as though made on such date (other than those which
expressly speak as of a different date which shall be true as of such
different date) and no Event of Default or Potential Event of Default
has occurred and is continuing.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA.
SECTION 7. CLAIMS, COUNTERCLAIMS, DEFENSES, RIGHTS OF SET-OFF. BORROWER HEREBY
REPRESENTS AND WARRANTS TO AGENT AND EACH LENDER THAT IT HAS NO KNOWLEDGE OF ANY
FACTS THAT WOULD SUPPORT A CLAIM, COUNTERCLAIM, DEFENSE OR RIGHT OF SET-OFF.
8. 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
executed as of the date first written above.
BORROWER AMERICAN FINANCE GROUP, INC.
By:
Richard K. Brock
Vice President & Corporate Controller
LENDERS FIRST UNION NATIONAL BANK
By:
Printed name:
Title:
BANK OF MONTREAL
By:
Printed name:
Title:
AGENT FIRST UNION NATIONAL BANK , as Agent
By:
Printed name:
Title:
By
Printed Name:
Title:
<PAGE>
ATTACHMENT I
Revised Schedule A
<PAGE>
SCHEDULE A
COMMITMENTS
For the period from and including June 8, 1998 through July 8, 1998:
LENDER COMMITMENT PRO RATA SHARE
First Union National Bank $45,000,000 75%
Bank of Montreal $15,000,000 25%
For the period from and including June 1, 1998 through August 30, 1998,
excluding the period from June 8, 1998 through July 8, 1998:
LENDER COMMITMENT PRO RATA SHARE
First Union National Bank $40,000,000 72.73%
Bank of Montreal $15,000,000 27.27%
At all other times:
LENDER COMMITMENT PRO RATA SHARE
First Union National Bank $35,000,000 70%
Bank of Montreal $15,000,000 30%
<PAGE>
EXHIBIT A
REVOLVING PROMISSORY NOTE
(First Union National Bank)
$45,000,000.00 San Francisco, California
Date: June 8, 1998
AMERICAN FINANCE GROUP, INC., a Delaware corporation (the "Borrower"),
FOR VALUE RECEIVED, hereby unconditionally promises to pay to the order of First
Union National Bank ("FUNB"), in lawful money of the United States of America,
the aggregate principal amount of FUNB's Pro Rata Share of all Loans outstanding
under the Credit Agreement referred to below, payable in the amounts, on the
dates and in the manner set forth below.
This revolving promissory note (the "Note") is one of the Notes
referred to in that certain Amended and Restated Warehousing Credit Agreement
dated as of December 2, 1997, as amended by that certain Amendment No. 1 to
Amended and Restated Warehousing Credit Agreement dated as of June 1, 1998 and
by that certain Amendment No. 2 to Amended and Restated Warehousing Credit
Agreement dated as of even date herewith (as the same may from time to time be
further amended, modified, supplemented, renewed, extended or restated, the
"Credit Agreement") by and among the Borrower, FUNB, solely in its capacity as
agent (the "Agent") for FUNB and Bank of Montreal and such other financial
institutions as shall from time to time become "Lenders" pursuant to Section
11.10 of the Credit Agreement (such entities, together with their respective
successors and assigns being collectively referred to herein as the "Lenders"),
and the Lenders. All capitalized terms used but not defined herein shall have
the same meaning as given to them in the Credit Agreement.
1. Principal Payments. Subject to the terms and conditions of the Credit
Agreement, the entire principal amount outstanding under each Loan
shall be due and payable on the Maturity Date with respect to such
Loan, with any and all unpaid and not previously due and payable
principal amounts under the Loans being due and payable on the
Commitment Termination Date.
2. Interest Rate. The Borrower further promises to pay interest on the
sum of the daily unpaid principal balance of all Loans outstanding on
each day in lawful money of the United States of America, from the
Closing Date until all such principal amounts shall have been repaid
in full, which interest shall be payable at the rates per annum and on
the dates determined pursuant to the Credit Agreement.
3. Place of Payment. All amounts payable hereunder shall be payable to
the Agent, on behalf of FUNB, at the office of First Union National
Bank, One First Union Center, 301 South College Street, Charlotte,
North Carolina 28288, Attention: Elisha Sabido, or such other place of
payment as may be specified by the Agent in writing.
4. Application of Payments; Acceleration. Payments on this Note shall be
applied in the manner set forth in the Credit Agreement. The Credit
Agreement contains provisions for acceleration of the maturity of the
Loans upon the occurrence of certain stated events and also provides
for mandatory and optional prepayments of principal prior to the
stated maturity on the terms and conditions therein specified.
Each Advance made by FUNB to the Borrower constituting FUNB's Pro Rata
Share of a Loan pursuant to the Credit Agreement shall be recorded by FUNB on
its books and records. The failure of FUNB to record any Advance or any
repayment or prepayment made on account of the principal balance thereof shall
not limit or otherwise affect the obligations of the Borrower under this Note
and under the Credit Agreement to pay the principal, interest and other amounts
due and payable hereunder and thereunder.
5. Default. The Borrower's failure to pay timely any of the principal
amount due under this Note or any accrued interest or other amounts
due under this Note on or within five (5) calendar days after the date
the same becomes due and payable shall constitute a default under this
Note. Upon the occurrence of a default hereunder or an Event of
Default under the Credit Agreement, all unpaid principal, accrued
interest and other amounts owing hereunder shall, at the option of
Required Lenders, be immediately collectible by the Lenders and the
Agent pursuant to the Credit Agreement and applicable law.
6. Waivers. The Borrower waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note, and
shall pay all costs of collection when incurred by or on behalf of the
Lenders, including, without limitation, reasonable attorneys' fees,
costs and other expenses as provided in the Credit Agreement.
7. Governing Law. This Note shall be governed by, and construed and
enforced in accordance with, the laws of the State of North Carolina,
excluding conflict of laws principles that would cause the application
of laws of any other jurisdiction.
8. Successors and Assigns. The provisions of this Note shall inure to the
benefit of and be binding on any successor to the Borrower and shall
extend to any holder hereof.
BORROWER AMERICAN FINANCE GROUP, INC.,
a Delaware corporation
By
Richard K. Brock
Vice President & Corporate Controller
<PAGE>
ACKNOWLEDGEMENT OF AMENDMENT
AND REAFFIRMATION OF GUARANTY
(PLMI/AFG)
SECTION 1. PLM International, Inc. ("PLMI") hereby acknowledges and
confirms that it has reviewed and approved the terms and conditions of this
Amendment No. 2 to Amended and Restated Warehousing Credit Agreement
("Amendment").
SECTION 2. PLMI hereby consents to this Amendment and agrees that its
Guaranty of the Obligations of Borrower under the Credit Agreement shall
continue in full force and effect, shall be valid and enforceable and shall not
be impaired or otherwise affected by the execution of this Amendment or any
other document or instrument delivered in connection herewith.
SECTION 3. PLMI represents and warrants that, after giving effect to this
Amendment, all representations and warranties contained in its Guaranty are
true, accurate and complete as if made on the date hereof.
GUARANTOR PLM INTERNATIONAL, INC.
By
Richard K. Brock
Vice President & Corporate Controller
<PAGE>
