EXECUTION COPY
AMENDMENT NO. 3 TO
POOLING AND SERVICING AGREEMENT AND INDENTURE OF TRUST
THIRD AMENDMENT, dated as of October 14, 1997 (the "Amendment") to the
Pooling and Servicing Agreement and Indenture of Trust, dated as of July 1,
1995, as amended by Amendment No. 1 thereto dated as of September 1, 1995, and
Amendment No. 2 thereto dated as of December 5, 1995 (the "Agreement"), among
AFG CREDIT CORPORATION, a Delaware corporation, as Transferor, AMERICAN FINANCE
GROUP, INC., a Delaware corporation ("AFG"), as Servicer, and BANKERS TRUST
COMPANY, a banking corporation organized and existing under the laws of the
State of New York, as Trustee (in such capacity, the "Trustee") and as
Collateral Trustee (in such capacity, the "Collateral Trustee").
WHEREAS, the Transferor, AFG, the Trustee and the Collateral Trustee
wish to amend the Agreement in the manner provided for in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. The definition of "Aggregate Net Pool Balance" in Section 1.1 of the
Agreement is amended by deleting the definition in its entirety and replacing it
with the following text:
"Aggregate Net Pool Balance" means, on any date of determination, the
excess of (x) the Aggregate Pool Balance over (y) the sum of the Excess
Concentration Amounts, in each case of such date of determination.
2. The definition of "Applicable Discount Rate" in Section 1.1 of the
Agreement is amended by deleting the text "actively traded" and substituting in
its place the text "two year" and by deleting the text immediately after "U.S.
Treasury securities" and substituting in its place the text "plus (x) 150 basis
points".
3. The definition of "Collections" in Section 1.1 of the Agreement is
amended by inserting the text "(including any Residual Value Insurance
Proceeds), any cash payments made in connection with a substitution under
Section 2.7," after the text "Insurance Proceeds," therein.
4. Section 1.1 of the Agreement is amended by deleting the definition
of "Crossover Date" in its entirety.
5. The definition of "Defaulted Lease" in Section 1.1 of the Agreement
is amended by deleting the text in its entirety and substituting in its place
the following text:
"Defaulted Lease" means an Included Lease as to which (i) the Servicer
has determined in its sole discretion, in accordance with its customary
servicing procedures, that such Lease is not collectible, or (ii) such
Lease is more than three (3) Scheduled Payments past due.
6. The definition of "Delinquent Lease" in Section 1.1 of the Agreement
is amended by deleting the text in its entirety and substituting in its place
the following text:
"Delinquent Lease" shall mean, on any date of determination, each
Included Lease with respect to which more than two (2) Scheduled
Payments are past due.
7. The definition of "Discounted Lease Balance" in Section 1.1 of the
Agreement is amended by adding at the end of such definition the following text:
For the purposes of computing the Aggregate Pool Balance, the
Discounted Lease Balance of Scheduled Payments due more than 84 months
after the date of such computation of such Aggregate Pool Balance,
shall be equal to zero.
8. The definition of "Distribution Date" in Section 1.1 of the
Agreement is amended by adding the words "commencing in February, 1996" after
the words "the fifteenth day of each month" therein.
9. The definition of "Eligible Lease" in Section 1.1 of the Agreement
is amended by deleting subsections (a), (c), (l) and (n) in their entirety and
substituting in each of their places the following text:
(a) which is payable in United States dollars, or, if the Lessee of
such Lease is a Foreign Lessee that is an Eligible Lessee as defined in
clause (B)(ii)(y) of the definition of "Eligible Lessee", meets the
requirement of such clause (B)(ii)(y);
(c) which is not either (i) a Defaulted Lease as of the related Cut Off
Date or (ii) a Delinquent Lease as of such date of determination;
(l) which provides to the Lessee the option, upon a Casualty Loss, to
do one or more of the following: (i) at the Lessee's expense to repair
the Equipment, (ii) to replace the Equipment with similar Equipment of
equal or greater value or (iii) to require that the Lessee pay to the
lessor the Stipulated Loss Value;
(n) which, as of the related Cut Off Date, had a lease term of not less
than 6 months;
10. The definition of "Eligible Lessee" in Section 1.1 of the Agreement
is amended by deleting the text in its entirety and substituting in its place
the following text:
"Eligible Lessee" shall mean at any date of determination, a Lessee
that either (A) (i) has provided a billing address for the related
Lease in the United States of America or (ii) is organized under the
laws of the Unites States of America or any State thereof, or that is
organized under the laws of Canada or any province thereof, or (B) (i)
with respect to which the Lessee is rated investment grade by Moody's
or Standard and Poor's and (ii) with respect to which the Lessee's
related Lease is either (x) denominated in United States Dollars or (y)
denominated in the Lessee's local currency if the lease payments
thereunder are subject to a currency swap acceptable to the Deal Agent
that converts such local currency payments to United States Dollars.
For purposes of this definition, any Lessee the obligations of which
under the related Lease are fully and unconditionally guaranteed by an
entity that would be an Eligible Lessee under the preceding sentence,
shall be deemed to be an Eligible Lessee.
11. Section 1.1 of the Agreement is amended by adding the following
definition after "Floating Pool" and before "Governmental Authority";
"Foreign Lessee" shall mean an Eligible Lessee that (i) has not
provided a billing address for the related Lease in the United States
of America or (ii) is not organized under the laws of the United States
of America or any State thereof, or that is not organized under the
laws of Canada or any province thereof.
12. Section 1.1 of the Agreement is amended by adding the following
definition after "Responsible Officer" and before "Retransfer Agreement":
"Restricted Note" shall have the meaning specified in Section 6.13.
13. The definition of "Servicing Fee Percentage" in Section 1.1 of the
Agreement is amended by deleting the text in its entirety and substituting in
its place the following text:
"Servicing Fee Percentage" shall mean .40%.
14. Section 1.1 of the Agreement is amended by adding the following
definition after "Target Repayment Percentage" and before "Tax Collections":
"Targeted Holder" shall mean each holder of a Restricted Note, each
holder of a participation with respect to a Restricted Note, and each
holder of a right to receive any amount in respect of the Transferor
Interest; provided, however, that any Person holding more than one
interest, each of which would cause such Person to be a Targeted
Holder, shall be treated as a single Targeted Holder.
15. Subsection 2.1(d)(ii)(A) of the Agreement is amended by deleting
the words "and stamp the related Lease Files or otherwise mark such Leases with
a legend to the effect that such Leases have been transferred to the Trust for
the benefit of the Noteholders and the Holder of the Transferor Interest".
16. Section 2.5(q) of the Agreement is amended in its entirety to read
as follows:
The Transferor shall maintain a net worth, exclusive of the
Transferor Interest, that is, at any date of determination, at
least equal to 5% of the sum of the original cost of the
Equipment relating to all Included Leases.
17. Section 2.6(b)(i) of the Agreement is amended by deleting the word
"fifth" in the first line therein and inserting in its place the word "third".
18. Section 2.6(b)(viii) of the Agreement is deleted in its entirety.
19. Section 2.7(a) of the Agreement is amended by adding the text
"and/or cash" after the text "a Lease and the related Equipment" in the first
sentence therein.
20. Section 2.7(c)(iii) of the Agreement is amended by adding the text
", except to the extent that cash or additional Substitute Leases has been
contributed equal to any deficiency" after the word "replaced" therein.
21. Section 2.7(c)(iv) of the Agreement is deleted in its entirety.
22. Section 6.1 of the Agreement is amended by adding the text
"Notwithstanding the above, Notes issued pursuant to a Variable Funding Series
may be issued in an amount equal to the maximum commitment of each Purchaser, as
specified in the appropriate Supplement." to the end of the paragraph therein.
23. Subsection 6.13(a) of the Agreement is amended by:
(a) adding the text "if, after such transfer, the value of the
transferee's interest (direct or indirect) in the Trust will exceed 50%
of the total value of such transferee" to the end of the second
sentence thereof.
(b) adding the text "(i)" between the words "Transfer creates" in the
third sentence thereof and adding the text "or (ii) would cause there
to be more than one hundred Targeted Holders. Any transfer that would
cause the number of Targeted Holders to exceed one hundred shall be
deemed void" to the end of the third sentence thereof.
(c) deleting the text "(i)" in the second paragraph thereof and
deleting the text following the words "disseminated firm buy or sell
quotations" and replacing it with the text ".".
24. Subsection 6.14(a) of the Agreement is amended by:
(a) adding the following text to the end of the first sentence thereof:
"; provided, however that any such issuance or reallocation shall not
cause the number of Targeted Holders to exceed one hundred."
(b) deleting the last sentence thereof.
25. Sections 11.6 and 11.24 of the Agreement are amended by deleting
the text "each Rating Agency" therein and substituting in its place the text
"Moody's and Standard and Poor's".
26. Subsection 13.1(c) of the Agreement is amended by deleting the text
"provided" and substituting in its place the text "provided, that such amendment
will not cause the Trust to be classified as an association taxable as a
corporation for federal income tax purposes; provided, further,".
27. Subsection 13.2(d)(ii) of the Agreement is amended by deleting the
text "Exhibit J" and substituting in its place the text "Exhibits C and J".
28. Paragraph 1(d) of Schedule 3 to the Agreement is amended by
deleting the text "25% of the Aggregate Pool Balance" and substituting in its
place the text "(i) 35% of the Aggregate Pool Balance as long as the Aggregate
Pool Balance is less than $50,000,000 or (ii) 25% of the Aggregate Pool Balance
as long as the Aggregate Pool Balance exceeds $50,000,000, provided that to the
extent a Lease was an Included Lease when the Aggregate Pool Balance was less
than $50,000,000, it shall remain an Included Lease when the Aggregate Pool
Balance exceeds $50,000,000."
29. Paragraph 2(a) of Schedule 3 to the Agreement is hereby amended by
replacing the chart therein with the chart attached hereto as Exhibit I.
30. Paragraph 2(b) of Schedule 3 to the Agreement is amended by
deleting the text "$10,000,000" and adding the text "10% of the Asset Base."
31. Paragraph 3 of Schedule 3 to the Agreement is amended by deleting
the text in its entirety and substituting in its place the following text:
Other Lease Requirements: Utilizing the Definition of "Eligible Lease"
in the Pooling and Servicing Agreement and Indenture of Trust; (a) the
sum of the Discounted Lease Balances of all Included Leases, calculated
for each Lease at the date of origination of each such Lease by AFG,
would not, on a cumulative basis, exceed 90% of the sum of the original
cost of the Equipment relating to all Included Leases; (b) Leases
having remaining terms greater than 72 months, as of the related Cut
Off Date, may not comprise greater than 15% of the Asset Base; and (c)
Leases of Foreign Lessees may not exceed 10% of the Asset Base.
32. Section 3(d) of Exhibit B to the Agreement is amended by deleting
the words "and to stamp such Leases or otherwise mark such Leases with a legend
to the effect that such Leases have been transferred to the Trust for the
benefit of the Noteholders and the Holder of the Transferor Interest".
33. Section 6(d) of Exhibit B to the Agreement is deleted in its
entirety.
34. Exhibit C to the Agreement is amended by deleting the text
"2.6(b)(viii)" from the heading of such Exhibit and substituting in its place
the text "13.2(d)(ii)".
35. Pages 2 and 3 of Exhibit H to the Agreement is hereby amended and
replaced to substantially conform with Exhibit H attached as Exhibit II hereto.
36. Except as expressly amended, modified and supplemented hereby, the
provisions of the Agreement are and shall remain in full force and effect.
37. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, PROVIDED, HOWEVER,
THAT THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE TRUSTEE AND THE COLLATERAL
TRUSTEE SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
38. Capitalized terms used in this Amendment without definition shall
have the meanings assigned to them in the Agreement.
39. This Amendment may be executed in two or more counterparts (and by
different parties on separate counterparts), each or which shall be an original,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed by their respective officers as of the day and year first above
written.
AFG CREDIT CORPORATION,
as Transferor
By:
Title:
AMERICAN FINANCE GROUP, INC.
as Servicer
By:
Title:
BANKERS TRUST COMPANY,
as Trustee
By:
Title:
BANKERS TRUST COMPANY,
as Collateral Trustee
By:
Title:
Exhibit I
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Percentage of Aggregate
Pool Balance
Category
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1. Included Leases of any individual Lessee that
are rated AA- or higher by Standard & Poor's
and Aa3 or higher by Moody's 20%
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2. Included Leases of any individual Lessee that
are rated between investment grade and (i)
AA- by Standard & Poor's and (ii) Aa3 by 9%
Moody's
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3. Included Leases of any individual Lessee that
are not rated investment grade by Moody's and 3%
Standard & Poor's
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4. Included Leases of all Lessees that operate 40%
in the same industry.*
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5. Included Leases that relate to the same type 40%
of Equipment**
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6. Included Leases for which the Scheduled 10%
Payments are payable semi-annually
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* Based upon Primary Standard Industrial Classification Code Number.
** As determined by AFG Credit Corporation in accordance with its
customary procedures.