Buyout Letter
A letter or communication from the lessor to the lessee that provides for transfer of ownership in consideration for a payoff of the lease and the buyout option.

Commitment Letter
A document issued by a lender and/or lessor after they have decided to offer financing to a company but before they are ready to complete the formal documents.  Commitment letters are usually short and describe only the essential terms of the pending agreement.  By setting out the general terms of the pending agreement, commitment letters solidify each party’s commitment to move forward with the deal. They also ensure that the parties have, in fact, come to terms with one another on the major points of the deal.

Exhibit A (Asset Listing)
A document listing the various assets (normally machinery or equipment) that Utica Leaseco purchased from a company and is leasing back to it.

Fair Market Value
The price that an interested and willing buyer would pay and an interested and willing seller would accept on the open market assuming a reasonable period of time for an agreement to arise.

Forced Liquidation Value
The value of the assets when sold as quickly as possible, such as in an auction. Lenders and lessors evaluate the asset offered as collateral at its forced sale price and not on the price the asset will command when sold in the normal course of trading.

AMEA definition:  A professional opinion of the estimated most probable price expressed in terms of currency which could typically be realized at a properly advertised and conducted public auction sale, held under forced sale conditions and under present day economic trends, as of the effective date of the appraisal report.  Conclusions taken into consideration are physical location, difficulty of removal, physical condition, adaptability, specialization, marketability, overall appearance and psychological appeal.  Further, the ability for he asset group to draw sufficient prospective buyers to insure competitive offers is considered.  All assets are to be sold on a piecemeal basis “as is” with purchasers responsible for removal of assets at their own risk and expense.  Any deletions or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the price indicated.

Landlord Waiver
A document in which a landlord acknowledges that certain property on its tenant’s premises is owned by a third party (the lessor) and is leased to the tenant and in which a landlord agrees to recognize and not interfere with the lessor’s rights to access its property.

Lease Term
The duration of a contract in which a tenant is allowed to use property for a specified period of time and rent.

Orderly Liquidation Value
The gross amount, expressed in terms of money, that could be typically realized from a liquidation sale, given a reasonable amount of time to find a purchaser (or purchasers) with the seller being compelled to sell on an as-is, where-is basis, as of a specified date. Buyer and seller further acknowledge that if an acceptable price cannot be negotiated within the time period specified the final option would be to offer the assets for sale at public auction (see Forced Liquidation Value).

AMEA definition:  A professional opinion of the estimated most probable price expressed in terms of currency which the subject equipment could typically realize at a privately negotiated sale, properly advertised and professionally managed, by a seller obligated to sell over an extended period of time, usually within six to twelve months, as of the effective date of the appraisal report.  Further, the ability of the asset group to draw sufficient prospective buyers to insure competitive offers is considered.  All assets are to be sold on a piecemeal basis “as is” with purchasers responsible for removal of assets at their own risk and expense.  Any deletions or additions to the total assets appraised could change the psychological and/or monetary appeal necessary to gain the value indicated.

Payoff Letter
A letter or communication from a secured party or owner with a financial interest in the asset that provides payoff terms for release of that interest or ownership.

Payout Option (or Purchase Option)
An option included in the lease contract that allows the lessee the possibility to buy the leased equipment at a predetermined price based on when the option is being exercised.

Personal Guaranty
Agreement that one will be liable for one’s own or a third party’s debts or obligations. A personal guaranty signifies that the lender can lay claim to the guarantor’s assets in case the borrower defaults. The lender’s actions are usually based on whose assets are easier to take control of and sell. Once signed, a personal guarantee can only be cancelled by the lender.

Personal Property
A type of property which can include any asset other than real estate. The distinguishing factor between personal property and real estate is that personal property is movable. That is, the asset is not fixed permanently to one location as with real property such as land or buildings. Examples of personal property include business equipment, vehicles, collectibles, and inventory.

Real Property
Land and all the things that are permanently attached to it (trees, buildings, and stationary mobile homes). Anything that is not real property is personal property and personal property is anything that isn’t nailed down, dug into or built onto the land.

Rental Schedule
A document that outlines each monthly payment amount, due date, and optional purchase option throughout the entire lease term.

Termination Statement
In asset-based lending, it is a statement releasing a lender’s claim or security interest in a borrower’s assets when a debt is fully paid, and terminating a previously filed Financing Statement. The Uniform Commercial Code requires secured lenders to sign a termination statement, generally known as Form UCC-3 to clear the borrower’s name of liens listed in public records.

UCC
The Uniform Commercial Code is a set of legal statutes adopted in the United States to provide consistent and uniform laws for conducting business and regulating commercial transactions.

UCC Filing
A financing statement which is filed to perfect a security interest and provide a public notice of a security agreement between a debtor and a secured party.  The financing statement describes certain types of collateral or property used as surety for the security agreement.