Ronald and Barbara Kimmich - Page 5




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          subordinate to GCC's lease rights and the rights of the                     
          underlying end-user lessees.5  Petitioner's purchase of the                 
          equipment was subject only to the underlying lessees' rights and            
          Elmco's rights under the Security Agreement.  Also, on December             
          22, 1982, Elmco, pursuant to the "Collateral Assignment",                   
          assigned its rights in petitioner's three Equity Promissory Notes           
          and the Buyer Acquisition Note to GCC.6                                     




          5    The Lease Agreement between GCC and petitioner contained the           
          following legend:                                                           
               THIS LEASE AGREEMENT HAS BEEN ASSIGNED BY, AND IS                      
               SUBJECT TO, A SECURITY INTEREST GRANTED BY, LESSOR                     
               [Petitioner] TO SELLER [Elmco] PURSUANT TO A SECURITY                  
               AGREEMENT DATED AS OF DECEMBER 22, 1982, AND TO A                      
               SECURITY INTEREST GRANTED BY SELLER [Elmco] TO LESSEE                  
               [GCC] PURSUANT TO A COLLATERAL ASSIGNMENT AGREEMENT                    
               DATED AS OF DECEMBER 22, 1982 BETWEEN LESSEE [GCC] AND                 
               SELLER [Elmco].                                                        
          6    The Collateral Assignment provided that Elmco's assignment             
          of its rights in the collateral to GCC was limited as follows:              
                    3.  Security Interest Only.  The rights to the                    
               Collateral granted to the Secured Party [GCC] hereunder                
               shall constitute a security interest only.  The Secured                
               Party shall not proceed against any of the Collateral, or              
               collect the proceeds therefrom, or exercise any other rights           
               hereunder with respect to the Collateral so long as the                
               Assignor [Elmco] is not in default hereunder.  Monies                  
               received by the Assignor from the Collateral during and                
               attributable to any period when the Assignor is not in                 
               default hereunder shall be received by Assignor free and               
               clear of the rights of the Secured Party under this                    
               Assignment, and the Secured Party shall have no claim to and           
               shall not be entitled to trace such monies in the hands of             
               the Assignor.                                                          





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