REVOLVING CREDIT AGREEMENT AND ASSIGNMENT

 

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                    REVOLVING CREDIT AGREEMENT AND ASSIGNMENT

 

                            DATED AS OF MAY 27, 2004

 

                                      AMONG

 

               LEASE EQUITY APPRECIATION FUND I, L.P., AS DEBTOR,

 

                     LEAF FINANCIAL CORPORATION, AS SERVICER,

 

                                       AND

 

                        SOVEREIGN BANK, AS SECURED PARTY

 

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                                TABLE OF CONTENTS

 

The Loans..................................................................... 1

Security Interest and Assignment.............................................. 5

Indebtedness Secured.......................................................... 7

Representations and Warranties of Debtor...................................... 8

Eligibility Requirements......................................................12

Covenants of Debtor...........................................................14

Agreement to Indemnify........................................................19

Agreements Regarding Collections..............................................20

Prepayments; Mandatory Prepayments............................................22

Default.......................................................................23

Certain Defined Terms Not Defined Elsewhere in the Agreement..................27

Miscellaneous.................................................................28

 

EXHIBITS:

 

A     Note

B     Assignment

C     Compliance Certificate

D     Continuing Service Guaranty

E      Borrowing Base Certificate

F     Aging Report

 

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                    REVOLVING CREDIT AGREEMENT AND ASSIGNMENT

 

        THIS REVOLVING CREDIT AGREEMENT AND ASSIGNMENT (this "Agreement") dated

as of May 27, 2004, is made, by and among LEASE EQUITY APPRECIATION FUND I, L.P.

("Debtor"), a Delaware limited partnership with offices at 1845 Walnut Street,

10th Floor, Philadelphia, Pennsylvania 19103, LEAF FINANCIAL CORPORATION

("Servicer"), a Delaware corporation with offices at 1845 Walnut Street,

10th Floor, Philadelphia, Pennsylvania 19103, and SOVEREIGN BANK, a national

banking association with offices at 3 Radnor Corporate Center, Suite 210,

Radnor, PA 19087 ("Secured Party").

 

                                    RECITALS

 

        A.       Until the Commitment Termination Date (as defined below), Debtor

and Secured Party contemplate that Secured Party will from time to time make

loans to Debtor upon the terms and conditions set forth in this Agreement.

 

        B.       In exchange for each Loan, Debtor will assign to Secured Party

one or more leases, equipment finance or secured financing agreements and will

grant to Secured Party a security interest in the equipment or secured financing

agreements, the payments and all collateral covering and proceeds arising under

said leases and agreements.

 

        C.       Servicer shall service the Loans and administer the Contracts

(as defined below) and has agreed to collect the Payments (as defined below)

under all Contracts which are the subject of Loans.

 

        D.       Resource America, Inc. has agreed to execute a Continuing

Service Guaranty ("Service Guaranty") of even date herewith, in the form of

Exhibit D attached hereto, which shall guarantee to Secured Party the prompt

performance when due of all services to be performed by Servicer.

 

        ACCORDINGLY, meaning and intending to be legally bound hereby, the

parties agree as follows:

 

        1.       The Loans.

 

        (a)      Loan. Subject to the terms and conditions of this Agreement,

Secured Party agrees to establish for the benefit of the Debtor a warehouse line

of credit facility (hereinafter, the "Revolving Credit") which shall include

cash advanced (individually, a "Loan" and, collectively, the "Loans") to the

Debtor up to an aggregate principal amount of $10,000,000 (the "Commitment"),

during the period commencing the date hereof and ending on the 364th day

following the date hereof unless earlier terminated pursuant to the terms of

this Agreement (the "Commitment Termination Date"). On or before 2:00 p.m.

(Philadelphia, Pennsylvania time) at least one (1) Business Day prior to its

intention to

 

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borrow a Loan from the Secured Party pursuant to the terms hereof, Debtor shall

have delivered to the Secured Party (x) a written notice ("Loan Request") in the

form attached as Schedule B to Exhibit B hereto, signed by an authorized officer

of the General Partner specifying the requested borrowing date and the principal

amount of such Loan accompanied by (y) a borrowing computation in the form

satisfactory to the Secured Party specifying the Borrowing Limit for such

requested Loan and the aggregate Borrowing Base outstanding on such date and a

list of the Contracts to be assigned in the form of Schedule A to Exhibit B

hereto. No Loan shall be made if, after giving effect thereto, the aggregate

outstanding principal amount of all Loans would exceed the Borrowing Base. Each

Contract offered to Secured Party in connection with a Loan request shall

(i) satisfy all of the conditions attributable to an Eligible Contract (as

defined below) and (ii) be in form and substance satisfactory to the Secured

Party and otherwise comply with the conditions set forth in this Agreement. Each

Loan shall be in the amount equal to or greater than One Hundred Fifty Thousand

Dollars ($150,000.00). Amounts borrowed and repaid may be reborrowed.

 

        (b)      Note. The Loans made under the Revolving Credit shall be

evidenced by a promissory note for the amount of the Commitment (the "Note")

duly executed and delivered by the Debtor to the Secured Party substantially in

the form of Exhibit A attached hereto.

 

        (c)      Disbursement of Loans; Payments. Loans made by the Secured Party

to the Debtor under the Revolving Credit shall be made available by crediting

such proceeds to the Operating Account (as defined below) with the Secured

Party. The Secured Party shall have the unconditional right and discretion (and

the Debtor hereby authorizes the Secured Party) to charge the Operating Account

for all of the Indebtedness (as defined below) as it becomes due from time to

time under this Agreement.

 

        (d)      Term of the Loan, Payments of Principal and Interest. Principal

on Loans advanced under the Commitment shall be due, in full, on the Commitment

Termination Date; provided that at no time shall the aggregate principal of

outstandings exceed the Borrowing Base. If at any time such excess exists,

Debtor will promptly, and in any event within two Business Days, reduce the

outstanding aggregate principal balance of the Loans to an amount equal to or

less than the Borrowing Base. Accrued interest on Loans advanced under the

Commitment shall be paid monthly on the tenth (10th) day of each month and on

the Commitment Termination Date. Loans may be voluntarily prepaid as provided in

Section 9(h) hereof.

 

        (d)      Interest Rate. The interest rate applicable to the Loans will be

determined and adjusted using LIBOR plus two and one-half percent (2.5%)

per annum. "LIBOR" means, with respect to a Unit, the rate per annum (rounded

upwards, if necessary, to the next higher 1/16 of 1%) determined by Secured

Party by dividing (i) the rate per annum determined by Secured Party to equal

the average rate per annum at which deposits (denominated in United States

dollars) in an amount similar to that Unit and with a maturity similar to the

Contract Period for that Unit are offered to Secured Party at

 

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11:00 A.M. London time (or as soon thereafter as practicable) two (2) Eurodollar

Banking Days prior to the first day of that Contract Period by banking

institutions in any Eurodollar market selected by Secured Party by (ii) the

difference of one (1) less the Reserve Percentage. "LIBQR Unit" means a Loan

based on LIBOR or a fluctuating rate of interest based on a Daily LIBOR Index.

"Contract Period" means, relative to a LIBOR Unit, a period that shall commence

on a Eurodollar Banking Day and end one (1) day, one (1) month, two (2) months

or three (3) months thereafter, provided, that (i) if any Contract Period

otherwise would end on a day that is not a Eurodollar Banking Day, it shall end

instead on the next following Eurodollar Banking Day unless that day falls in

another calendar month, in which latter case the Contract Period shall end

instead on the next preceding Eurodollar Banking Day and (ii) if any Contract

Period commences on a day for which there is no numerical equivalent in the

calendar month in which that Contract Period is to end, it shall end on the last

Eurodollar Banking Day of that calendar month. "Eurodollar Banking Day" means

any Banking Day on which banks in the London Interbank Market deal in United

States dollar deposits and on which banking institutions are generally open for

domestic and international business at the place where Secured Party's office is

located and in New York City. "Reserve Percentage" means the percentage

(expressed as a decimal) which Secured Party determines to be the maximum (but

in any case less than 1.00) reserve requirement (including, without limitation,

any emergency, marginal, special, or supplemental reserve requirement)

prescribed for so-called "Eurocurrency liabilities" (or any other category of

liabilities that includes deposits by reference to which the interest rate

applicable to LIBOR Units is determined) under Regulation D (as amended from

time to time) of the Board of Governors of the Federal Reserve System or under

any successor regulation which Secured Party determines to be applicable, with

each change in such maximum reserve requirement automatically, immediately, and

without notice changing the interest rate thereafter applicable to each LIBOR

Unit, it being agreed that LIBOR Units shall be deemed Eurocurrency liabilities

subject to such reserve requirements without the benefit of any credit for

proration, exceptions, or offsets.

 

        (e)      Interest on overdue Amounts. If Debtor shall fail to timely pay

any amount due to Secured Party under any Loan, Debtor shall continue to pay

Secured Party interest on such unpaid amount at the per annum rate of interest

applicable to that Loan prior to such late payment, provided, however, that if

such payment is not made to Secured Party within five (5) Business Days after

the applicable due date, then interest upon such unpaid amount shall be paid at

a per annum rate equal to three percent (3%) above LIBOR (the "Default Rate").

 

        (f)      Direct and Continuing Liability. Notwithstanding any other

provision of the Note or this Agreement, Debtor shall be liable for the full and

prompt payment of each Loan. Liability for each Loan will be fully recourse to

all of the assets of Debtor (but not to the partners thereof).

 

        (g)      Loans as Debt. The parties intend the Loans to be treated as

debt for tax and all other purposes.

 

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        (h)      Conditions Precedent for All Loans. Secured Party shall not be

obligated to make any Loan to the Debtor hereunder until the following

conditions have been satisfied, in addition to any of the other conditions set

forth herein:

 

                (i)      Debtor shall have executed and delivered the Loan

Request.

 

                (ii)     No Event of Default or event which upon notice, lapse of

time or both would constitute an Event of Default on the date of the proposed

borrowing shall have occurred and be continuing;

 

                (iii)    (A) All representations and warranties of Debtor

contained herein shall continue to be true, correct and complete; (B) Debtor

shall have complied with all covenants contained herein; and (C) there shall

have been no material adverse change in the financial condition, business,

properties, profits or prospects of Debtor; and

 

                (iv)     Debtor shall have executed an assignment ("Assignment")

in the form attached hereto as Exhibit B.

 

        (i)      Conditions Precedent for First Advance. In addition to

conditions stated in Section 1(i) above, Secured Party shall not be obligated to

make the first Loan (the "First Advance") to Debtor hereunder until the

following additional conditions have been satisfied:

 

                (i)      the Secured Party shall have received (A) evidence of

the legal existence and good standing of the Debtor, LEAF Asset Management,

Inc., the Debtor's general partner ("General Partner"), and the Servicer, each

dated as of a recent date and issued by the Secretary of State of the State of

Delaware, (B) a certificate of the secretary or assistant secretary of the

General Partner certifying as to the certificate of limited partnership and

limited partnership agreement of the Debtor, the incumbency and signature of the

officer of the General Partner who has executed this Agreement and the other

documents to be executed in connection herewith and the resolutions of the

General Partner authorizing the execution, delivery and performance of this

Agreement and the borrowing of the Loans hereunder; (C) a certificate of the

secretary or assistant secretary of the General Partner certifying as to the

articles of incorporation and the bylaws of the General Partner; and (D) a

certificate of the secretary or assistance secretary of the Servicer certifying

as to the articles of incorporation and the bylaws of the Servicer and the

incumbency and signature of the officer of the Servicer who has executed this

Agreement on behalf of the Servicer.

 

                (ii)     the Secured Party shall have received a written opinion

of counsel to the Debtor in form and substance satisfactory to the Secured

Party;

 

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                 (iii)    the Secured Party shall have received (A) this

Agreement, (B) the Note, (D) the Custodial Agreement (as defined below), and the

Service Guaranty, each duly executed and in form and substance satisfactory to

the Secured Party;

 

                 (iv)     the Secured Party shall have received a certification by

the Chief Financial Officer of the General Partner that there has not occurred

any material adverse change in the operations and condition (financial or

otherwise) of the Debtor since March 31,2004;

 

                (v)      the Debtor shall have paid the Secured Party's

reasonable costs and expenses incurred in the negotiation and preparation of

this Agreement and all documents executed in connection herewith; and

 

                (vi)      The Secured Party shall have received a true and correct

copy of the original policies of insurance or such other evidence of insurance

as the Secured Party may reasonably require that shall evidence that the Debtor

has procured an insurance policy of the type described in Section 6(o) hereof,

 

        (j)      Condition Subsequent to Closing. Within ten (10) days of the

execution of this Agreement, the Debtor shall cause the execution and delivery

to the Secured Party of an inter-creditor agreement by and among the Debtor, the

Secured Party, Information Leasing Corporation and ALFA Financial Corporation,

OFC Capital Division, which shall be in form and substance satisfactory to the

Secured Party.

 

        (k)      Extension of Commitment Termination Date. If the Debtor shall

desire to extend the Commitment Termination Date, it shall give a written notice

("Requested Extension Notice") to the Secured Party that shall be executed by an

authorized officer of the General Partner and shall set forth the date to which

the Commitment Termination Date is sought to be extended. A Requested Extension

Notice shall contain an express representation and warranty that all of the

representations and warranties contained in Section 4 hereof are true and

correct as if made on the date of such Requested Extension Notice. Any Requested

Extension Notice in order to be effective shall be given not more than

ninety (90) days nor less than thirty (30) days prior to the Commitment

Termination Date. Within thirty (30) days after its receipt of such Requested

Extension Notice, the Secured Party shall give notice to the Debtor as to

whether or not the Secured Party has approved such request, which approval shall

be subject to the sole and absolute discretion of the Secured Party. The failure

by the Secured Party to respond to a Requested Extension Notice within

thirty (30) days after the Secured Party's receipt thereof shall constitute the

disapproval of the Secured Party of the extension of the Commitment Termination

Date requested in such Requested Extension Notice.

 

        2.       Security Interest and Assignment.

 

        (a)      Security Interest. For value received, Debtor hereby assigns

over to and grants to Secured Party a security interest (the "Security

Interest") in and to all of the

 

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Debtor's right, title and interest in and to the following properties, rights,

interests and privileges, whether now owned or hereafter acquired, and in all

products thereof and cash and non-cash proceeds of insurance policies from the

loss thereof (all of which properties, rights, interests, privileges and

proceeds are hereinafter called the "Collateral").

 

                (i)      Contracts. All lease agreements, conditional sale

contracts, pay-per-use agreements, notes, security agreements and/or financing

documents and agreements of any kind arising out of a lease, rental or provision

of, or financing of Equipment (as defined below) and other secured financing

agreements entered into between Debtor as lessor, seller, provider or lender and

the entity named therein as lessee, purchaser, user or borrower (together with

any guarantors or other parties obligated in respect of the Contracts, an

"Obligor" or the "Obligors"), together with any master lease agreements or other

documents which relate to the above described documents, all of which are in

each case covered by or identified in any Assignment (collectively the

"Contracts");

 

                (ii)     Goods. All goods and other property and rights covered

by or securing any Contract assigned to Secured Party, together with all

accessories, accessions, attachments and appurtenances appertaining or attached

to or used in connection with any of such property, whether now owned or

hereafter acquired (the "Equipment");

 

                (iii)    Obligor Guaranties. All guaranties given to Debtor, or

under which Debtor has rights, by any person or entity guaranteeing the payment

and/or performance of any Contract assigned to Secured Party (an "Obligor

Guaranty");

 

                (iv)     Rights and Payments. All right, title and interest of

Debtor in, under and to the Contracts, and all rents and other sums due and to

become due thereunder, including any and all extensions or renewals thereof

("Payments");

 

                 (v)      Software. All software products and license agreements

or rights covered under any Contract assigned to Secured Party (to the extent

Debtor has transferable rights in such software);

 

                (vi)     Other Security. All instruments, documents of title,

accounts, general intangibles, or money in each case related to, or property of

any kind securing the payment of, any Contract assigned to Secured Party except

as the same may now or hereafter be pledged or sold to Information Leasing

Corporation pursuant to the Master Program Agreement dated September 29, 2003 or

to ALFA Financial Corporation, OFC Capital Division pursuant to the Master Loan

and Security Agreement dated November 26,2003, as both may hereafter be amended

(the "Excluded Assets");

 

                (vii)    Substitutions, Renewals, Replacements, Improvements. All

enhancements to and substitutions, renewals and replacements of, and

improvements to, any of the foregoing;

 

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                (viii)   Proceeds. All cash and noncash proceeds of any of the

foregoing including, but not limited to, insurance proceeds and casualty loss

payments ("Proceeds");

 

                (ix)     General Corporate Assets. Except for the Excluded Assets

(i) all of Debtor's inventory now owned or hereafter acquired; (ii) all of the

Debtor's documents of title now owned or hereafter acquired; (iii) all of the

Debtor's accounts now existing or hereafter arising; (iv) all of the Debtor's

general intangibles, contract rights, chattel paper, documents, and instruments

now existing or hereafter acquired or arising; (v) all guaranties of the

Debtor's existing and future accounts and general intangibles and all other

security held by the Debtor for the payment or satisfaction thereof; (vi) the

goods or the services, the sale or lease or performance of which gave rise to

any account or general intangible of the Debtor, including any returned goods;

(vii) all of the Debtor's Equipment now owned or hereafter acquired; (viii) any

balance or share belonging to the Debtor of any deposit, agency or other account

with any Secured Party and any other amounts which may be owing from to time by

any Secured Party to the Debtor; (ix) all letters of credit; (x) all property of

any nature whatsoever of the Debtor now or hereafter in the possession of or

assigned or hypothecated to the Secured Party for any purpose; (xi) monies,

deposit accounts, certificates of deposit; and (xii) all Proceeds of all of the

foregoing, including all Proceeds of other Proceeds and all rights of Debtor, or

any subsidiary of Debtor, as servicer and/or administrator for any chattel paper

and equipment of third parties.

 

        (b)      No Assumption by Secured Party. Secured Party shall not be

deemed by reason of any Assignment to have assumed any of Debtor's, or any

lessor's or vendor's, obligations under any Contract.

 

        3.       Indebtedness Secured.

 

        (a)      Security for Loan Related to Assignment and Other Indebtedness.

The Collateral, together with all other property of the Debtor of any kind held

by the Secured Party, shall constitute one general, continuing collateral

security for and shall secure the full and prompt payment of all Loans made

pursuant to this Agreement and all other amounts due to Secured Party under this

Agreement, whether now existing or hereafter incurred, direct or indirect,

absolute or contingent, and including any sums advanced and any reasonable costs

and expenses, including, but not limited to, attorneys' fees, incurred by

Secured Party pursuant to or in connection with this Agreement (all of which is

herein sometimes referred to as the "Indebtedness") and shall be retained by the

Secured Party as collateral security until all of the Indebtedness has been

satisfied in full, except as otherwise provided in Section 3(b) below.

 

        (b)      Periodic Releases. Provided no Event of Default shall have

occurred and be continuing, at such time as Secured Party has received the

payment in full of the Prepayment Amount (as hereinafter defined) with respect

to any Contract relating to a Loan outstanding under this Agreement, upon the

Debtor's written request, Secured Party

 

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shall release its Security Interest in the Contract and the other Collateral

directly related to the Contract within one (1) Business Day of the receipt of

such payment of the Prepayment Amount, without recourse to, and without

representations or warranties by, Secured Party of any kind whatsoever,

provided, however, that no release of a Contract and related Collateral shall be

effective unless authorized by the Secured Party in writing in accordance with

the provisions of Section 6 of the Custodial Agreement. Upon Secured Party's

release of Collateral as provided above, the released Collateral shall no longer

constitute security for the payment of any Indebtedness.

 

        4.       Representations and Warranties of Debtor.

 

        Debtor represents and warrants (each representation and warranty shall

be considered as having been made and restated concurrently with the making of

any Loan as an inducement to Secured Party to make such Loan) that:

 

        (a)      Organization and Qualification. Debtor is a limited partnership

organized, validly existing and in good standing under the laws the

State of Delaware; and Debtor is duly qualified and in good standing as a

foreign business entity authorized to do business in each state or jurisdiction

where such qualification is necessary or where lack of qualification would have

a materially adverse affect on Secured Party's rights and remedies with respect

to the Collateral.

 

        (b)      Authorization. Debtor is duly authorized to execute and deliver

this Agreement, and is and will (as long as this Agreement is in effect and

thereafter until payment in full of all amounts due and owing Secured Party

pursuant to any Note or this Agreement) continue to be, duly authorized to

perform all of Debtor's obligations to Secured Party under this Agreement and

under each Note, instrument and document delivered in connection with this

Agreement.

 

        (c)      No Conflict. The execution and delivery of this Agreement by

Debtor does not, and the performance by Debtor of its obligations under this

Agreement will not, conflict with any provision of law, rule or regulation or of

its certificate of limited partnership or limited partnership agreement or of

any agreement or court or administrative order, judgment or decree binding upon

Debtor.

 

        (d)      Financial Statements. Debtor has delivered to Secured Party

copies of (i) Debtor's most recent annual audited financial statements, prepared

and certified by an independent firm of certified public accountants

satisfactory to Secured Party, in conformity with generally accepted accounting

principles applied on a basis consistent with that of the preceding fiscal year

and presenting fairly Debtor's financial condition as at such date, and the

results of Debtor's operations for the twelve (12) month period then ended and

(ii) Debtor's most recent quarterly financial statements, prepared in conformity

with generally accepted accounting principles applied on a basis consistent with

that of the preceding fiscal quarter and presenting fairly Debtor's financial

condition as at such date and the results of its operations for the quarter then

ended, certified as true and

 

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correct by the president, executive vice president, controller or chief

financial officer of Debtor's general partner, and since the date of the above

described financial statements there has been no material adverse change in

Debtor's financial condition.

 

        (e)      Litigation and Contingent Liabilities. There are no judicial or

administrative proceedings pending or, to Debtor's knowledge, threatened against

the Debtor in any court or any governmental authority except as shown on

Schedule 4(e) attached hereto and made a part hereof. There are, to Debtor's

knowledge, no investigations (civil or criminal) pending or threatened against

the Debtor in any court or before any governmental authority. No executive

officer of the General Partner has been indicted in connection with or convicted

of engaging in any criminal conduct, or is currently subject to any lawsuit or

proceeding or, to Debtor's knowledge, under investigation in connection with any

anti-racketeering or other conduct or activity which may result in the

forfeiture of any property to any governmental authority. Other than any

liability incident to the litigation or proceedings disclosed in such schedule,

Debtor has no contingent liabilities not provided for or disclosed in the

financial statements referred to in Section 4(d).

 

        (f)      Addresses. Debtor's records concerning that part of the

Collateral constituting accounts or chattel paper are kept at the address

specified on the first page hereof, which is Debtor's chief executive office and

principal place of business.

 

        (g)      Trade names. Debtor has not conducted and does not conduct

business under any trade name or assumed name other than those set forth on

Schedule 4(g) attached hereto.

 

        (h)      Taxes. The Debtor has filed all tax returns (federal, state, and

local) required to be filed and has paid all taxes, assessments, and

governmental charges and levies thereon to be due, including interest and

penalties.

 

        (i)      No Default. The Debtor has satisfied all judgments and the

Debtor is not in default with respect to any judgment, writ, injunction, decree,

material rule, or material regulation of any court, arbitrator, or federal,

state, municipal, or other governmental authority, commission, board, bureau,

agency, or instrumentality, domestic or foreign.

 

        (j)      Compliance With Laws. To the best of Debtor's knowledge, Debtor

has complied with all applicable laws and has obtained all the necessary

authorizations, certificates, permits, licenses and approvals required by any

governmental authority.

 

        (k)      Solvency.

 

                (i)      The present fair salable value of the assets of Debtor

after giving effect to the funding of the Loans hereunder exceeds the amount

that will be required to be paid on or in respect of the debts and other

liabilities (including contingent liabilities) of Debtor as they mature;

 

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                (ii)     The assets of Debtor do not constitute unreasonably

small capital for Debtor to conduct its business as now conducted and as

proposed to be conducted, including the capital needs of Debtor; and

 

                (iii)    Debtor does not intend to, nor does Debtor believe that

it will, incur debts beyond its ability to pay such debts as they mature (taking

into account the timing and amounts of cash to be received by Debtor and of

amounts to be payable on or in respect of debt of Debtor). The cash available to

Debtor, after taking into account all other anticipated uses of the cash of

Debtor, is anticipated to be sufficient to pay all amounts on or in respect of

the Indebtedness when the Indebtedness or any part thereof is required to be

paid.

 

        (l)      Other Contracts. Neither the execution and delivery of this

Agreement, nor compliance with the terms and provisions hereof, will conflict

with or result in a breach of any other contract, agreement or instrument to

which Debtor is a party or by which it is bound, or constitute a default under

any such agreement or instrument.

 

        (m)      Title to Properties; Leases. Debtor has good and marketable

title to its property, free and clear of all liens except for the Permitted

Liens. Any Contract to be assigned under this Agreement is valid and subsisting

and is in full force and effect.

 

        (n)      Public Utility Holding Company Act. The Debtor is not a "holding

company," or a "subsidiary company" of a "holding company," or an "affiliate" of

a "holding company" or of a "subsidiary company" of a "holding company," or a

"public utility" within the meaning of the Public Utility Holding Company Act of

1935, as amended.

 

        (o)      Disclosure of Confidential Information. In the event that the

Debtor provides to the Secured Party written confidential information belonging

to Debtor, if Debtor shall denominate such information in writing as

"confidential," Secured Party shall thereafter maintain such information in

confidence in accordance with the standards of care and diligence that each

utilizes in maintaining its own confidential information. This obligation of

confidence shall not apply to such portions of the information which (i) are in

the public domain, (ii) are disclosed with the Debtor's consent, (iii) must be

disclosed either pursuant to any governmental requirement or to persons

regulating the activities of Secured Party provided, Secured Party shall

endeavor to provide notice to the Debtor as soon as practicable in the event

Debtor desires to enjoin the disclosure of such information, or (iv) as may be

required by law or regulation or order of any governmental authority in any

judicial, arbitration or governmental proceeding.

 

        (p)      Regulation O. No director or executive officer of the General

Partner or principal shareholder of the Debtor is a director, executive officer

or principal shareholder of the Secured Party. For the purposes hereof the terms

"director" "executive officer" and "principal shareholder" (when used with

reference to the Secured Party), have the

 

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respective meanings assigned thereto in Regulation O issued by the Board of

Governors of the Federal Reserve System.

 

        (q)      Environmental Matters. Except as shown on Schedule 4(g) attached

hereto and made part hereof:

 

                (i)      To the best of Debtor's knowledge, no Equipment

presently owned, leased or operated by Debtor contains, or has previously

contained, any substances defined or designated as hazardous or toxic waste,

hazardous or toxic material, hazardous or toxic substance or similar term

(hereinafter, collectively, "Hazardous Substances") under any and all Federal,

foreign, state, local or municipal laws, rules, orders, regulations, statutes,

ordinances, codes, decrees regulating, relating to or imposing liability or

standards of conduct concerning pollution, protection of the environment, or the

impact of pollutants, contaminants, or toxic or hazardous substances on human

health or the environment (collectively, the "Environmental Laws") in amounts or

concentrations which (i) constitute or constituted a violation of, or (ii) could

give rise to liability under, any Environmental Law;

 

                (ii)     To the best of Debtor's knowledge, Debtor is in

compliance, and, for the duration of all applicable statutes of limitations

periods, has been in compliance with all applicable Environmental Laws, and

there is no contamination at, under or about any properties presently owned,

leased, or operated by Debtor or violation of any Environmental Law with respect

to such properties which could reasonably be expected to interfere with any of

their continued operations or reasonably be expected to impair the fair saleable

value thereof;

 

                (iii)    Debtor has not received any notice of violation, alleged

violation, non-compliance, liability or potential liability regarding

environmental matters or compliance with Environmental Laws and Debtor has no

knowledge that any such notice will be received or is being threatened;

 

                (iv)     To the best of Debtor's knowledge, Hazardous Substances

have not been transported or disposed of in a manner or to a location which are

reasonably likely to give rise to liability of Debtor under any Environmental

Law; and

 

                (v)      No judicial proceeding or governmental or administrative

action is pending, or to the knowledge of Debtor, threatened under any

Environmental Law to which Debtor is, or to Debtor's knowledge will be, named as

a party, nor are there any consent decrees or other decrees, consent orders,

administrative orders or other orders, or other administrative or judicial

requirements outstanding, the implementation of which is reasonably likely to

have a material adverse effect on Debtor's business, financial condition,

Collateral or prospects under any Environmental Law.

 

        (r)      Landlord or Warehouseman's Liens. To the best of the Debtor's

knowledge, no owner of any premises occupied by the Debtor and/or warehouseman

of any warehouse where the Collateral, or any of it, is kept presently holds or

may in the

 

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future hold an interest in or a claim against the Collateral, and, if so

required by the Secured Party, the Debtor shall procure such landlord and/or

warehouseman's consent to allow the Secured Party on such premises to dispose of

or deal with any Collateral located thereon.

 

        5.        Eligibility Requirements.

 

        Each of the Loans made pursuant to this Agreement will be made on the

basis that the Contracts assigned to Secured Party with respect to each Loan

are, at the time that the Loan is made, and will be at all times thereafter

until payment in full of such Loans continue to be, Eligible Contracts. In order

for a Contract to be an "Eligible Contract", all of the following conditions

must be true, correct and satisfied with respect to the Contract, the Payments

due under the Contract and the related Collateral:

 

        (a)      Waiver of Defenses. The Contract provides that the Obligor under

the Contract waives all defenses, set-offs, counterclaims, deductions or

allowance or adjustment against the assignee of the lessor, vendor or financier.

 

        (b)      Bona Fide Transaction. The Contract arises from a bonafide lease

or sale of the Equipment or other secured financing arrangement, in the ordinary

course of business of the Obligor described in the Contract. The Obligor's

billing address and the Equipment is located in the United States of America or

where the Uniform Commercial Code is applicable.

 

        (c)      Compliance with Laws; Validity, Enforceability; No Liens. The

Contract complies in all material respects with all applicable laws and

regulations (including, without limitation, interest/usury laws); the Contract

is genuine, valid, enforceable in accordance with its terms, accurately

describes the related Equipment and Collateral and the Payments due under the

Contract, and is in all respects what it purports to be; the Contract, the

Payments due under the Contract, the related Equipment and Collateral and all

proceeds thereof are not subject to any lien, claim or security interest except

the interest of the Obligor and Debtor under the Contract and the lien in

Secured Party's favor.

 

        (d)      Good Title. At the time of the Loan made with respect to the

Contract, Debtor had (i) good title to the Contract and either good title or a

first priority interest in Collateral, free of all liens, claims or security

interests; and (ii) all legal power, right and authority to assign the Contract

to Secured Party.

 

        (e)      Interest Transferred. A first priority perfected security

interest in the Contract, the Payments due under the Contract, and each Obligor

Guaranty related to the Contract, free of all liens, claims or security

interests, and valid security interest superior to the rights of all others in

the Collateral, and all proceeds thereof, shall be vested in Secured Party by

the Assignment.

 

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        (f)      Entire Agreement. The Contract represents the total and complete

agreement between Debtor and Obligor with respect to the Collateral and Debtor

has entered into no other agreements, whether written or oral, with the Obligor

in respect of the Collateral.

 

        (g)      Written Agreements. At the time a Loan is made with respect to a

Contract, Debtor has informed Secured Party in writing of all agreements entered

into in connection with the Contract and fully executed copies (all original

copies if requested by Secured Party) of all those agreements will be delivered

to Secured Party simultaneously with delivery of the Contract.

 

        (h)      Capacity and Authority. Each party to the Contract or any

Obligor Guaranty has all the legal capacity, power and right required for it to

enter into the Contract or Obligor Guaranty and any supplemental agreements, and

to perform its obligations thereunder; all such actions have received all

corporate or governmental authorization required by any applicable charter,

by-law, constitution, law rule or regulation.

 

        (i)      No Obligor Default. No Obligor Default (as defined below in

Section 9(c)), or event which with the passage of time or giving of notice, or

both, would become an Obligor Default, exists and Debtor had no knowledge of any

fact that may impair the Contract's validity. No Obligor is in bankruptcy,

receivership, reorganization or,