AMENDED AND RESTATED SPECIFIC TERMS AND CONDITIONS OF LEASE
ACQUISITION, dated as of March 1, 1995, by and between Federal Leasing Corp., a
New Jersey corporation (the "Company") and its wholly owned subsidiary, FLC
Financial Corp., a Delaware corporation (the "Depositor").
PRELIMINARY STATEMENT
This Specific Terms and Conditions of Lease Acquisition (the "Specific
Lease Acquisition Terms") is intended to incorporate by reference all of the
provisions of the Standard Terms and Conditions of Lease Acquisition attached
hereto as Appendix 1 (the "Standard Lease Acquisition Terms"). Together the
Specific Lease Acquisition Terms and the Standard Lease Acquisition Terms are
intended to form the Lease Acquisition Agreement entered into in connection with
the financing described below.
The Depositor has entered into an Amended and Restated Indenture dated
as of March 1, 1995, (the "Indenture"), with Norwest Bank Minnesota, National
Association (the "Indenture Trustee"), Norwest Bank Minnesota, National
Association (the "Back-up Servicer") and Federal Leasing Corp., as servicer (the
"Servicer"), pursuant to which the Depositor intends to issue one or more series
of Warehouse Notes and Term Notes (the "Notes").
In furtherance thereof, the Depositor and Company have entered into the
Lease Acquisition Agreement to provide for, among other things, the acquisition
by the Depositor of all of the right, title and interest in and to certain Lease
Assets which the Depositor is and will be pledging with the Indenture Trustee
from time to time, and in which the Depositor is and will be from time to time
granting to the Indenture Trustee a security interest, as security for the
Notes. As a precondition to the effectiveness of the Lease Acquisition
Agreement, the Depositor, the Indenture Trustee, the Servicer and the Back-up
Servicer will enter into the Servicing Agreement to provide for the servicing of
the Lease Assets. The acquisition of the Lease Assets by the Depositor is
initially accomplished hereunder by the issuance by the Depositor to the Company
of its common stock in exchange for the contribution by the Company to the
Depositor of the Lease Assets.
In order to further secure the Notes, the Depositor is granting to the
Indenture Trustee a security interest in, among other things, the Depositor's
rights derived under the Lease Acquisition Agreement and the Servicing
Agreement, and the Company agrees that all covenants and agreements made by it
in the Lease Acquisition Agreement with respect to the Lease Assets shall also
be for the benefit and security of the Indenture Trustee, MBIA and all Holders
from time to time of the Notes. In consideration for its contribution and its
representations, warranties, covenants and other agreements under the Lease
Acquisition Agreement, the Company has received all of the Common Stock of the
Depositor and such other consideration as may from time to time be paid
hereunder.
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Section 1. Specific Definitions
"Assignment and Assumption Agreement": shall mean an Assignment and
Assumption Agreement substantially in the form attached hereto as Exhibit B.
"Common Stock": shall mean all of the issued and outstanding shares of
Common Stock of the Depositor, which consists of 1,000 shares having a par value
of $.01 per share.
"Company Address": shall mean 0 Xxxxxx Xxxx Xxxx, Xxxx Xxxxxx Xxx X,
Xxxxxxxx, Xxx Xxxxxx 00000.
"Concentration Limits": shall have the meaning specified in Section
3(c) hereof.
"Demand Note": shall mean the promissory note of the Company, dated May
17, 1994, made payable to the Depositor upon demand, in the principal amount of
$100,000.
"Depositor Address": shall mean 0 Xxxxxx Xxxx Xxxx, Xxxxx X, Xxxxxxxx,
Xxx Xxxxxx 00000.
"Depositor State of Incorporation": shall mean Delaware.
"Existing Indebtedness": shall mean any indebtedness of the Company
which relates to preexisting financings of any Lease Contracts that are covered
by an Assignment and Assumption Agreement, as set forth in Schedule I thereto.
"Initial Acquisition Date": shall mean May 17, 1994.
"Lease Assets": shall also include the Demand Note.
"Obligation Agreement": shall mean the Indenture.
Section 2. Issuance of Common Stock and Contribution and Sale of Lease
Assets
2.01 Authorization and Issuance of Common Stock by the Depositor.
Subject to all the terms and conditions of the Lease Acquisition Agreement and
in reliance upon the representations, warranties and covenants set forth in the
Lease Acquisition Agreement, as of the Initial Acquisition Date the Depositor
hereby issues to the Company the Common Stock. Such Common Stock shall be issued
in the name of, and delivered directly to, the Company and the Company hereby
agrees to obtain directly from the Depositor such Common Stock, all in
accordance with the terms of the Lease Acquisition Agreement.
2.02 Lease Acquisition. On the Initial Acquisition Date, in return for
the Common Stock, and on each subsequent Acquisition Date, in return for the
payment of purchase price in the amount of the net proceeds from the related
Warehouse Funding or the issuance of a new Series of Notes, the Company hereby
transfers, assigns, sells, grants and contributes to the Depositor, without
recourse except as provided in Section 3.03 of the Standard Lease Acquisition
Terms, all of the
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Company's right, title and interest in and to all of the Lease Assets related to
the Lease Contracts now or hereafter listed on each Series Lease Schedule,
whether now existing or hereafter arising, and the Demand Note. The Company
hereby acknowledges that its transfer of the Lease Assets and the Demand Note to
the Depositor is absolute and irrevocable, without reservation or retention of
any interest whatsoever by the Company.
2.03 Assumption of Indebtedness by the Depositor. By the execution of
an Assignment and Assumption Agreement, subject to all the terms and conditions
of the Lease Acquisition Agreement and in reliance upon the representations,
warranties and covenants set forth in the Lease Acquisition Agreement, on the
Initial Acquisition Date and on any related subsequent Acquisition Date the
Depositor hereby agrees to assume the related Existing Indebtedness and the
Depositor agrees to repay the Existing Indebtedness with the proceeds of the
sale of any Obligations on the related Delivery Date simultaneously with the
issuance of such Obligations.
Section 3. Representations and Warranties of the Company.
(a) The following shall modify the indicated representations and
warranties set forth in Section 3.01(a) of the Standard Lease Acquisition Terms:
(xii) Except as indicated in the Concentration Limits set forth in
Section 3(c) hereof, the Lease Contract has regular rental payments
(excluding payments required pursuant to a PUT or a terminal rental
adjustment clause ("TRAC")) that do not increase by more than 200%
during the remaining term of the Lease Contract.
(xvi) Except with respect to any Warehouse Funded Lease Contract, each
Customer under each Lease Contract will have made at least two lease
payments with respect to such Lease Contract, including any security
deposit or advance payment made by the Customer upon the execution of
the Lease Contract or the delivery of the Equipment; except that up to
10% of the Aggregate Initial IPB may account for Lease Contracts
pursuant to which the related Customers have made less than two
payments.
(b) The Company represents and warrants that none of the Equipment is
titled equipment.
(c) The following items shall constitute the "Concentration Limits"
with respect to all Lease Assets acquired by the Depositor:
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Type of Limit Description of Limit
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State No more than 22% of the Aggregate IPB consists of
Lease Contracts to Customers located in
California.
State No more than 15% of the Aggregate IPB consists of
Lease Contracts to Customers located in Florida.
State No more than 30% of the Aggregate IPB consists of
Lease Contracts to Customers located in New
Jersey.
State No more than 20% of the Aggregate IPB consists of
Lease Contracts to Customers located in New York.
State No more than 8% of the Aggregate IPB consists of
Lease Contracts to Customers located in each of
Georgia and Pennsylvania.
State No more than 15% of the Aggregate IPB consists of
Lease Contracts to Customers located in
Connecticut.
State No more than 5% of the Aggregate IPB consists of
Lease Contracts to Customers located in any other
single state.
Equipment No more than 45% of the Aggregate IPB relates to
Lease Contracts on medical equipment.
Equipment No more than 30% of the Aggregate IPB relates to
Lease Contracts on office equipment.
Equipment No more than 6% of the Aggregate IPB relates to
Lease Contracts on automotive equipment.
Equipment No more than 13% of the Aggregate IPB relates to
Lease Contracts on industrial tools and equipment.
Equipment No more than 6% of the Aggregate IPB relates to
Lease Contracts on printing and related equipment.
Equipment No more than 25% of the Aggregate IPB relates to
Lease Contracts on food processing equipment.
Equipment No more than 2.5% of the Aggregate IPB relates to
Lease Contracts on any other single type of
equipment.
Zip Code No more than 2% of the Aggregate IPB relates to
Lease Contracts of Customers located in any one
zip code, and the
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aggregate IPB of Lease Contracts having Customers
in the 25 most represented zip codes do not total
more than 40% of the Aggregate IPB.
Lessee No more than 1.5% of the Aggregate IPB consists of
Lease Contracts to any one Customer, and the
aggregate IPB of Lease Contracts with the 25 most
represented Customers do not total more than 40%
of the Aggregate IPB.
Term No more than 2% of the Aggregate IPB relates to
Lease Contracts with original terms exceeding 60
months.
Payment Frequency No more than 15% of the Aggregate IPB relates to
Lease Contracts that contain Scheduled Payments
less frequently than monthly.
Step Payments No more than 10% of the Aggregate IPB relates to
Lease Contracts that contain Scheduled Payments
that vary in amount.
Step Payments No more than 5% of the Aggregate IPB relates to
Lease Contracts that have unlimited increases in
rental payments, provided that the increases occur
no later than the 25th rental payment (such rental
payments do not include PUT and TRAC payments),
and then remains constant for the remainder of the
term of the Lease Contract; and no more than an
additional 5% of the Aggregate IPB relates to
Lease Contracts that have rental payments
(excluding PUT and TRAC payments) that do not
increase by more than 300% during the remaining
term of the Lease Contract.
PUT Payments No more than 10% of the Aggregate IPB relates to
Lease Contracts that contain PUT Payments.
TRAC Payments No Lease Contract contains TRAC Payments and at
least 90% of the Aggregate IPB relates to Lease
Contracts that are expected to generate residual
cash flows.
Loss & Damage Waivers No more than 2% of the Aggregate IPB relates to
Lease Contracts that contain loss and damage
waiver provisions or any other performance
obligation by the Depositor or the Company.
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(d) Exceptions to the Concentration Limits above are set forth on
Exhibit C hereto.
(e) Notwithstanding anything herein to the contrary, the inclusion of
Substitute Lease Contracts or Warehouse Funded Lease Contracts in the Trust
Estate shall not cause any Lease Contract to violate the restrictions enumerated
in (a) through (c) above, or cause the Aggregate IPB of the Lease Contracts to
exceed the applicable percentages enumerated in (a) through (c) above.
Section 4. Lease Acquisition Agreement Comprised of Specific Lease
Acquisition Terms and Standard Lease Acquisition Terms.
This Specific Lease Acquisition Terms incorporates by reference all of
the provisions of the Standard Lease Acquisition Terms attached hereto as
Appendix 1, which together form the Lease Acquisition Agreement. Notwithstanding
the foregoing, if any provision of the Standard Lease Acquisition Terms
conflicts with the provisions of the Specific Lease Acquisition Terms, the
provisions of the Specific Lease Acquisition Terms shall control.
Section 5. Counterparts
The Lease Acquisition Agreement may be executed in one or more
counterparts all of which together shall constitute one original document.
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IN WITNESS WHEREOF, the Company and the Depositor have caused the Lease
Acquisition Agreement to be duly executed by their respective officers thereunto
duly authorized as of the date and year first above written.
FEDERAL LEASING CORP.,
Company
By: /s/ Xxxx Xxxxx, Chairman
-------------------------
Name: Xxxx Xxxxx
Title: Chairman
FLC FINANCIAL CORP.
Depositor
By: /s/ Xxxx Xxxxx, Pres.ident
---------------------------
Xxxxx:Xxxx Xxxxx
Title: President
