SEVENTH AMENDMENT TO RECEIVABLES LOAN AND SECURITY AGREEMENT AND WAIVER

Exhibit 10.8

EXECUTION COPY

SEVENTH AMENDMENT TO RECEIVABLES LOAN AND SECURITY AGREEMENT

AND WAIVER

THIS SEVENTH AMENDMENT TO THE RECEIVABLES LOAN AND SECURITY AGREEMENT AND WAIVER, dated as of July 14, 2009 (this “ Amendment ”), is entered into by and among RESOURCE CAPITAL FUNDING II, LLC (the “ Borrower ”), LEAF FINANCIAL CORPORATION (the “ Servicer ”), U.S. BANK NATIONAL ASSOCIATION, as the Custodian (the “ Custodian ”), and as the Lender’s Bank (the “ Lender’s Bank ”), LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), as the Backup Servicer (the “ Backup Servicer ”), MORGAN STANLEY BANK, N.A. (f/k/a Morgan Stanley Bank) (“ Morgan Stanley ”), as a Lender (the “ Lender ”), and as Collateral Agent (the “ Collateral Agent ”) and MORGAN STANLEY CAPITAL SERVICES INC., as the Qualifying Swap Counterparty (the “ Qualifying Swap Counterparty ”).

R E C I T A L S

The Borrower, the Servicer, Morgan Stanley, the Custodian, the Lender’s Bank and the Backup Servicer are parties to the Receivables Loan and Security Agreement, dated as of October 31, 2006 (as amended, supplemented or otherwise modified from time to time, the “ Agreement ”);

The Borrower and the Qualifying Swap Counterparty are parties to a Qualifying Interest Rate Swap dated as of December 22, 2006 (as amended, supplemented or otherwise modified through the date hereof, and including all swap transactions entered into pursuant thereto, the “ Swap Agreement ”);

The Borrower and the Servicer have requested that (i) the Lender, the Collateral Agent and the Backup Servicer (collectively, the “ Waiving Parties ”) waive certain provisions of the Agreement solely in respect of the Breach described below and (ii) the Qualifying Swap Counterparty waive certain provisions of the Swap Agreement solely in respect of the Breach, each as set forth in Section 3 below. Such Persons are willing to make such waivers, subject to the terms and conditions hereof; and

The parties hereto desire to amend the Agreement on the terms and conditions set forth herein.

NOW THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Certain Defined Terms . Capitalized terms used but not defined herein shall have the meanings set forth for such terms in Section 1.01 of the Agreement.

Amendments to the Agreement . The Agreement is hereby amended to incorporate the changes reflected on Exhibit A hereto.

Waivers . (a)        The Servicer and the Borrower hereby advise the Waiving Parties that the financial statements of Resource America for the quarter ending March 31, 2009, which were delivered by Borrower on or about May 15, 2009, showed that the Tangible Net Worth of Resource America was less than its Minimum Tangible Net Worth (such condition, the “ Breach ”). The occurrence of the Breach constitutes each of the events set forth on Schedule A attached hereto (the “ Covenant Failures ”) that, in each case without giving effect to this Amendment, have occurred and are continuing. Each of the Waiving Parties hereby agrees to irrevocably waive each Covenant Failure which has arisen solely and directly from the Breach. Nothing in this Amendment shall constitute a waiver by the Waiving Parties of any other Event of Default, Program Termination Event, Pool A Termination Event, Pool

B Termination Event, Unmatured Event of Default, Servicer Default or other right under the Agreement, now or in the future, including, without limitation with respect to any subsequent Covenant Failures.

(b)        The Borrower hereby notifies the Qualifying Swap Counterparty that one or more of the Covenant Failures constitutes an “Event of Default” (as defined in the Swap Agreement) set forth in clause (1)  of Section 5(a)(vi) of the Swap Agreement that, without giving effect to this Amendment, has occurred and is continuing. The Qualifying Swap Counterparty hereby agrees to irrevocably waive such “Event of Default” solely with respect to the Breach. Each of the Qualifying Swap Counterparty and the Borrower hereby agrees not to exercise its right to designate an “Early Termination Date” under (and as defined in) the Swap Agreement solely as a result of the “Event of Default” caused by the Breach. Nothing in this Amendment shall constitute a waiver by the Qualifying Swap Counterparty of any other “Additional Termination Event” (as defined in the Swap Agreement), “Termination Event” (as defined in the Swap Agreement) or other right under the Swap Agreement, now or in the future, including, without limitation with respect to any subsequent “Event of Default” under clause (1)  of Section 5(a)(vi) of the Swap Agreement.

Termination of Funding . Notwithstanding anything to the contrary contained in this Amendment, the Agreement or any other Transaction Document, the obligation of the Lender to make any additional Loan under the Agreement shall permanently cease on the date hereof.

Consent . The Qualifying Swap Counterparty hereby consents to Section 2 of this Amendment.

Conditions Precedent . The effectiveness of this Amendment is expressly conditioned upon the receipt by (a) the Waiving Parties of (i) copies of executed signature pages to this Amendment from each of the parties hereto and (ii) such other documents, instruments and opinions as Morgan Stanley may request and (b) the Lender of copies of executed signature pages to (i) that certain Amendment to Amended and Restated Fee Letter, dated as of the date hereof, among the Lender, the Borrower and the Servicer, from each of the parties thereto and (ii) that certain Amendment No. 1 to Securities Account Agreement, dated as of the date hereof, among the Lender, the Borrower, the Servicer and U.S. Bank National Association, from each of the parties thereto.

Representations and Warranties . Each of the Borrower and the Servicer represents and warrants to Morgan Stanley that:

this Amendment has been duly authorized, executed and delivered on its behalf, and the Agreement, as so amended, constitutes its legal, valid and binding obligation enforceable against it in accordance with the terms hereof or thereof;

after giving effect to this Amendment (including Section 3 above), the representations and warranties made by it in the Agreement (as amended by this Amendment), the Swap Agreement and the other Transaction Documents are true and correct as of the date hereof (except to the extent such representations and warranties speak as to a prior date or have been the subject of any prior notice or waiver); and

after giving effect to this Amendment (including Section 3 above), no Program Termination Event, Event of Default, Servicer Default, Unmatured Event of Default, “Termination Event” under the Swap Agreement or “Event of Default” under the Swap Agreement shall exist on the date hereof.

Effect of Amendment . Except as expressly waived, amended and/or modified by this Amendment, all provisions of the Agreement and the Swap Agreement shall remain in full force and effect. After the date hereof, all references in the Agreement to “this Agreement”, “hereof”, or words of similar effect referring to the Agreement shall be deemed to be references to the Agreement as amended by this Amendment. Except as expressly set forth in Section 3 above, this Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Agreement or the Swap Agreement other than as specifically set forth herein.

 

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Counterparts . This Amendment may be executed in any number of counterparts and by different parties on separate counterparts (including by facsimile or electronic transmission), each of which shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument.

Governing Law; Severability . THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Wherever possible each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable laws, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.

Successors and Assigns . This Amendment shall be binding upon the parties hereto and their respective successors and assigns, and shall inure to the sole benefit of the parties hereto.

Section Headings . The various headings of this Amendment are included for convenience only and shall not affect the meaning or interpretation of this Amendment, the Agreement or any provision hereof or thereof.

Continued Effectiveness . Except as specifically provided herein, the Agreement shall remain unmodified and is specifically confirmed to be in full force and effect. Upon the effectiveness of this Amendment, all references in the Agreement and in the other Transaction Documents to the Agreement or the like shall refer to the Agreement as hereby amended.

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

 

 

 

 

 

Exhibit A

 

Exh. A-1

(attached)

SCHEDULE A

“ Covenant Failures ” means the occurrence of any of the following events:

(i) the Event of Default set forth in Section 7.01(k) of the Agreement,

(ii) the Event of Default set forth in Section 7.01(n) of the Agreement,

(iii) the Event of Default set forth in Section 7.01(o) of the Agreement,

(iv) the Event of Default set forth in Section 7.01(q) of the Agreement,

(v) the Event of Default set forth in Section 7.01(r) of the Agreement,

(vi) the Program Termination Event set forth in clause (ii)  of the definition thereof in the Agreement,

(vii) the Program Termination Event set forth in clause (x)  of the definition thereof in the Agreement,

(viii) the Program Termination Event set forth in clause (xi)(2) of the definition thereof in the Agreement and

(ix) the Servicer Default set forth in clause (iv)  of the definition thereof in the Agreement.

[incorporates First Amendment, dated as

of December 21, 2006, Second Amendment,

dated as of February 28, 2007, Third

Amendment, dated as of September 28, 2007,

Fourth Amendment, dated as of December 27, 2007,

Consent to Receivables Loan and Security Agreement

and Custodial Agreement, dated May 9, 2008,

Fifth Amendment, dated as of May 23, 2008 and 2008 ,

Sixth Amendment, dated as of November 13, 2008 and

Seventh Amendment, dated as of July 14, 2009 ]

 

U.S. $250,000,000

RECEIVABLES LOAN AND SECURITY AGREEMENT

Dated as of October 31, 2006

Among

RESOURCE CAPITAL FUNDING II, LLC,

as the Borrower

and

LEAF FINANCIAL CORPORATION,

as the Servicer

and

MORGAN STANLEY BANK, N.A.

as a Lender and Collateral Agent

and

U.S. BANK NATIONAL ASSOCIATION,

as the Custodian and the Lender’s Bank

and

LYON FINANCIAL SERVICES, INC. (D/B/A U.S. BANK PORTFOLIO SERVICES),

as the Backup Servicer

This RECEIVABLES LOAN AND SECURITY AGREEMENT is made as of October 31, 2006, among:

(1) RESOURCE CAPITAL FUNDING II, LLC, a Delaware limited liability company (the “ Borrower ”);

(2) LEAF FINANCIAL CORPORATION, a Delaware corporation (“ LEAF Financial ” or the “ initial Servicer ”), as the Servicer (as defined herein);

(3) MORGAN STANLEY BANK, N.A. (f/k/a Morgan Stanley Bank) (“ Morgan Stanley ”), as a Lender and Collateral Agent (as defined herein);

(4) U.S. BANK NATIONAL ASSOCIATION, as the Custodian and the Lender’s Bank (as each such term is defined herein); and

(5) LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), a Minnesota corporation, as the Backup Servicer (as defined herein).

IT IS AGREED as follows:

ARTICLE I.

DEFINITIONS

SECTION 1.01 Certain Defined Terms . (a) Certain capitalized terms used throughout this Agreement are defined above or in this Section 1.01 .

(b) As used in this Agreement and the exhibits and schedules thereto (each of which is hereby incorporated herein and made a part hereof), the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Accountants’ Report ” has the meaning assigned to that term in Section 6.11(b) .

“ Active Backup Servicer’s Fee ” means, for any Fee Period or portion thereof after the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to the greater of (i) the Active Backup Servicing Fee Rate, multiplied by the Net Eligible Receivables Balance as of the first day of such Fee Period, multiplied by a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360, and (ii) $5,000. The Active Backup Servicer’s Fees shall also include reasonable out-of-pocket expenses incurred by the Backup Servicer in performing its duties as Servicer.

“ Active Backup Servicing Fee Rate ” means 1.00%.

“ Active Backup Servicer’s Indemnified Amounts ” has the meaning assigned to that term in Section 6.09.

“ Adjusted Eurodollar Rate ” means, (i) on and prior to November 23, 2008, with respect to any Interest Period for any Loan allocated to such Interest Period, an interest rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate Margin and (ii) an interest rate per annum equal to the average of the interest rates per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) reported during such Interest Period on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United States dollar deposits having a term of thirty (30) days and in a principal amount of $1,000,000 or more (or, if such page shall cease to be publicly available or, if the information contained on such page, in the Lender’s sole judgment, shall cease to accurately reflect such London Interbank Offered Rate, such rate as reported by any publicly available recognized source of similar market data selected by such Lender that, in the Lender’s reasonable judgment, accurately reflects such London Interbank Offered Rate), and (ii) thereafter, with respect to each other

Interest Period for any Loan allocated to such Interest Period, an interest rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate Margin and (ii) an interest rate per annum equal to the interest rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) reported on the date that is two (2) Business Days prior to the end of the immediately preceding Interest Period on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United States dollar deposits having a term of thirty (30) days and in a principal amount of $1,000,000 or more (or, if such page shall cease to be publicly available or, if the information contained on such page, in the Lender’s sole judgment, shall cease to accurately reflect such London Interbank Offered Rate, such rate as reported by any publicly available recognized source of similar market data selected by such Lender that, in the Lender’s reasonable judgment, accurately reflects such London Interbank Offered Rate).

“ Adjusted Eurodollar Rate Margin ” has the meaning ascribed thereto in the Fee Letter.

“ Adverse Claim ” means a lien, security interest, charge, encumbrance or other right or claim of any Person other than, with (i) respect to the Pledged Assets, any lien, security interest, charge, encumbrance or other right or claim in favor of the Collateral Agent or (ii) any Permitted Lien.

“ Affected Party ” has the meaning assigned to that term in Section 2.09 .

“ Affiliate ” when used with respect to a Person, means any other Person controlling, controlled by or under common control with such Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agreement ” means this Receivables Loan and Security Agreement, as the same may be amended, restated, supplemented and/or otherwise modified from time to time hereafter in accordance with its terms.

“ Allonge ” means an allonge in the form attached hereto as Exhibit G .

“ Amortized Equipment Cost ” means, as of any date of determination, (i) for any Pool A Receivable, the net investment with respect to such Pool A Receivables, where “net investment” means (a) the present value of the remaining Scheduled Payments under the related Contract, discounted at the rate at which the present value of all Scheduled Payments under the related Contract, including any Balloon Payment or Put Payment, equals the original equipment cost related to such Receivable, plus (b) the associated amortized indirect costs related to the applicable equipment, amortized using the interest method over the life of the related Contract and (ii) for any Pool B Receivable, the net investment with respect to such Pool B Receivable, where “net investment” means (a) the sum of the present values of the remaining Underlying Scheduled Payments under each related Eligible Underlying Contract, discounted at the rate at which the present value of all scheduled payments under such Eligible Underlying Contract, including any Balloon Payment or Put Payment, equals the original equipment cost related to such Eligible Underlying Contract, plus (b) the associated amortized indirect costs related to the applicable equipment, amortized using the interest method over the life of the related Underlying Contract.

“ Annualized Default Rate ” means, as of any date of determination after the end of the first Collection Period following the date hereof, an amount (expressed as a percentage) equal to (i) the product of (A) the aggregate Discounted Balances of all Pledged Receivables which were Eligible Receivables at the time of their Pledge hereunder and which became Defaulted Receivables during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods and (B) 2 (if six or more Collection Periods have occurred since the date hereof), 2.4 (if five Collection Periods have occurred since the date hereof), 3 (if four Collection Periods have occurred since the date hereof), 4 (if three Collection Periods have occurred since the date hereof), 6 (if two Collection Periods have occurred since the date hereof) or 12 (if one Collection Period has occurred since the date hereof) 2 , divided by (ii) the average of the Eligible Receivables Balance as of the first last Business Day of each of the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods such date of determination .

 

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“ Annualized Net Loss Rate ” means, as of any date of determination after the end of the first Collection Period following the date hereof, an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Pledged Receivables which were Eligible Receivables at the time of their Pledge hereunder and which became Defaulted Receivables during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods minus (y) Recoveries received during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods and (B)  2 (if six or more Collection Periods have occurred since the date hereof), 2.4 (if five Collection Periods have occurred since the date hereof), 3 (if four Collection Periods have occurred since the date hereof), 4 (if three Collection Periods have occurred since the date hereof), 6 (if two Collection Periods have occurred since the date hereof) or 12 (if one Collection Period has occurred since the date hereof) divided by (ii) 2, divided by (ii) the average of the Eligible Receivables Balance as of the first last Business Day of each of the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods such date of determination .

“ Applicable Date ” has the meaning set forth in definition of Pool B Annualized Net Loss Rate.

“ Approved Lienholder ” means any Person that (i) has entered into a Nominee Lienholder Agreement, a copy of which has been delivered by the Collateral Agent to the Custodian and (ii) appears on the list of approved lienholders provided by LEAF Financial Corporation to the Custodian from time to time.

“ Assigned Documents ” has the meaning assigned to that term in Section 2.10 .

“ Assignment ” has the meaning set forth in the Purchase and Sale Agreement.

“ Assignment and Acceptance ” has the meaning assigned to that term in Section 9.04 .

“ Available Funds ” has the meaning assigned to that term in Section 2.04(c) .

“ Backup Servicer ” means Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services) or any successor Backup Servicer appointed by the Lender pursuant to Section 6.13 .

“ Backup Servicer Delivery Date ” has the meaning assigned to that term in Section 6.10(d) .

“ Balloon Payment ” means a payment due, or which may be required, at the end of the term of a Contract or Underlying Contract (which constitutes a loan) equal to the principal amount under such Contract or Underlying Contract which remains outstanding after the payment of all regular scheduled payments of principal during the term of such Contract or Underlying Contract.

“ Bankruptcy Code ” means Title 11, United States Code, 11 U.S.C. §§ 101 et seq ., as amended.

“ Bankruptcy Event ” shall be deemed to have occurred with respect to a Person if either:

(a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or

(b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as

 

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they become due, or, if a corporation or similar entity, its board of directors or members shall vote to implement any of the foregoing.

“ Base Rate ” means, on any date, a fluctuating rate of interest per annum equal to the arithmetic average of the rates of interest publicly announced by JPMorgan Chase Bank and Citibank, N.A. (or their respective successors) as their respective prime commercial lending rates (or, as to any such bank that does not announce such a rate, such bank’s “base” or other rate determined by the Lender to be the equivalent rate announced by such bank), except that, if any such bank shall, for any period, cease to announce publicly its prime commercial lending (or equivalent) rate, the Lender shall, during such period, determine the Base Rate based upon the prime commercial lending (or equivalent) rates announced publicly by the other such bank or, if each such bank ceases to announce publicly its prime commercial lending (or equivalent) rate, based upon the prime commercial lending (or equivalent) rate or rates announced publicly by one or more other banks selected by the Lender. The prime commercial lending (or equivalent) rates used in computing the Base Rate are not intended to be the lowest rates of interest charged by such banks in connection with extensions of credit to debtors. The Base Rate shall change as and when such banks’ prime commercial lending (or equivalent) rates change.

“ Borrower ” has the meaning assigned to that term in the preamble hereto.

“ Borrower Pension Plan ” means a “pension plan” as such term is defined in section 3(2) of ERISA, which is subject to title IV of ERISA and to which the Borrower or any ERISA Affiliate of Borrower may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

“ Borrowing ” means a borrowing of Loans under this Agreement.

“ Borrowing Base ” means, at any time, the sum of the Pool A Borrowing Base plus the Pool B Borrowing Base at such time.

“ Borrowing Base Certificate ” means a report, in substantially the form of Exhibit A attached hereto prior to the Seventh Amendment Effective Date , prepared by the Borrower (or the initial Servicer on its behalf) for the benefit of Lender pursuant to Section 6.10(c) .

“ Borrowing Base Deficiency ” means, at any time, that the Borrowing Base is less than the Facility Amount, an amount equal to the amount of such deficiency.

“ Borrowing Base Surplus ” means, at any time, that the Borrowing Base exceeds the Facility Amount, an amount equal to the amount of such excess.

“ Borrowing Date ” means, with respect to any Borrowing, the date on which such Borrowing is funded, which date, other than in the case of the initial Borrowing, shall be a Subsequent Borrowing Date.

“ Borrowing Limit ” means $250,000,000, as such amount may be increased pursuant to Section 2.16 ; provided , however , that at all times, on or after the Program Termination Date, the Borrowing Limit shall mean the aggregate outstanding principal balance of the Loans.

“ Breakage Fee ” means, for Loans allocated to any Interest Period during which such Loans are repaid (in whole or in part) prior to the end of such Interest Period, the breakage costs, if any, related to such repayment plus the amount, if any, by which (i) interest (calculated without taking into account any Breakage Fee), which would have accrued on the amount of the payment of such Loans during such Interest Period (as so computed) if such payment had not been made, as the case may be, exceeds (ii) the sum of (A) interest actually received by the Lender in respect of such Loans for such Interest Period and, if applicable, (B) the income, if any, received by the Lender from the Lender’s investing the proceeds of such payments on such Loans.

 

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“ Business Day ” means a day of the year other than a Saturday or a Sunday or any other day on which banks are authorized or required to close in New York City, St. Paul, Minnesota or Salt Lake City, Utah; provided , that, if any determination of a Business Day shall relate to a Loan bearing interest at the Adjusted Eurodollar Rate, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“ Calculated Swap Amortizing Balance ” means, with respect to a Qualifying Interest Rate Swap and as of any date of determination, the projected scheduled amortizing balance of the Pledged Receivables which were Pledged during the period ending on the Remittance Date on which such Qualifying Interest Rate Swap became effective and beginning on the day following the immediately preceding Remittance Date, determined by the Servicer and accepted by the Lender based upon the Discounted Balance of such Pledged Receivables as of such date of determination, adjusted for prepayments using an absolute prepayment speed which, in the judgment of the Lender, is consistent with the speed with which the Pledged Receivables have prepaid in the past.

“ Capital Stock ” of any Person means any and all shares, interests, rights to purchase, warrants, options, contingent share issuances, participations or other equivalents of or interest in equity (however designated) of such Person.

“ Cash Reserve ” means any amount paid to the Originator, the Servicer or the Borrower by an Obligor that is an Underlying Originator as a cash reserve which may be drawn upon if amounts due under the related Underlying Originator Loan Contract are not paid when due (or by the end of any cure period related thereto), which has not previously been refunded to such Obligor or applied toward such Obligor’s obligations under such Underlying Originator Loan Contract.

“ Cash Reserve Account ” has the meaning assigned to that term in Section 2.06 .

“ Cash Reserve Account Agreement ” means any Securities Account Agreement with respect to any Cash Reserve Account established by an Originator, among the Borrower, the Servicer, the Lender’s Bank and the Lender, in form and substance satisfactory to the parties thereto, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof.

“ Certificate of Title ” means with respect to a Vehicle, (i) if such Vehicle is registered in Florida, (x) to the extent the related Receivable has been originated by an Originator, an original certificate of title or (y) to the extent the related Receivable has been Originated by a Person other than an Originator, (A) an original certificate of title or (B) if the original certificate of title has been sent to the registered owner of such Vehicle, an original computer confirmation of lien, (ii) if such Vehicle is registered in Kansas, a true copy of the application for certificate of title and registration, (iii) if such Vehicle is registered in Kentucky, an original notice of lien, (iv) if such Vehicle is registered in Maryland, an original notice of security interest filing, (v) if such Vehicle is registered in Minnesota, an original lien card, (vi) if such Vehicle is registered in Missouri, an original notice of recorded lien, (vii) if such Vehicle is registered in Montana, a true copy of the application for certificate of title, (viii) if such Vehicle is registered in New York, an original notice of lien, (ix) if such Vehicle is registered in Oklahoma, an original, file-stamped lien entry form, (x) if such Vehicle is registered in Wisconsin, an original lien confirmation card or (xi) if such Vehicle is registered in any other State, an original certificate of title, in each case issued by the Registrar of Titles of the applicable State listing the lienholder of record with respect to such Vehicle (it being understood and agreed that solely for purposes of clauses (i)  through (x)  above (other than clauses (i)(x) and (i)(y)(A) ), the “original” of any document required thereby shall consist of whatever documentation has been issued by the Registrar of Titles of the related State to the lienholder).

“ Change of Control ” means that at any time (i) Owner shall own directly or indirectly less than 100% of all membership interests of the Borrower, (ii) Resource America shall own directly or indirectly less than 50.1% of all Capital Stock or voting power of the initial Servicer, (iii) the initial Servicer shall own directly or indirectly less than 80% of all Capital Stock or voting power of Originator and Owner, (iv) Resource America, Owner, the Originator or the Borrower merges or consolidates with any other Person without the prior written consent of the Lender, (v) the initial Servicer, the Owner or the Originator merges or consolidates with any other Person and the initial Servicer, the Owner or the Originator, as applicable, is not the surviving entity or (vi) either of Crit DeMent or Miles Herman is not employed in a senior management position at the initial Servicer, is not involved in the day-to-day operations

 

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of the initial Servicer or is not able to perform substantially all of his duties as an employee of the initial Servicer during any three month period and, in each case, has not been replaced by a person approved by the Lender in writing within 90 days of any such event.

“ Closing Date ” means October 31, 2006.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Collateral Agent ” means the Lender in its capacity as collateral agent on behalf of the Secured Parties.

“ Collateral Receipt ” has the meaning assigned to that term in the Custodial Agreement.

“ Collection Account ” means a special trust account (account number 106682000 at the Lender’s Bank) in the name of the Borrower and under the control of the Lender; provided , that the funds deposited therein (including any interest and earnings thereon) from time to time shall constitute the property and assets of the Borrower and the Borrower shall be solely liable for any taxes payable with respect to the Collection Account.

“ Collection Account Agreement ” means that certain Collection Account Agreement, dated the date of this Agreement, among the Borrower, the Servicer, the Lender’s Bank and the Lender, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof.

“ Collection Date ” means the date on which the aggregate outstanding principal amount of the Loans have been repaid in full and all interest and Fees and all other Obligations have been paid in full, and the Lender shall have no further obligation to make any additional Loans.

“ Collection Period ” means, (i) with respect to any Remittance Date (including the initial Remittance Date), the period beginning on, and including, the first day of the most recently ended calendar month and ending on, and including, the last day of the most recently ended calendar month; provided , that the final Collection Period shall begin on, and include, the first day of the then current calendar month and shall end on the Collection Date and (ii) in any context other than with respect to any Remittance Date, a calendar month.

“Collection Sub-Account” has the meaning assigned to that term in Section 6.24(a).

“ Collections ” means, without duplication, with respect to any Pledged Receivable, all Scheduled Payments (and, in the case of a Pledged Pool B Receivable after a Pool B Program Termination Event has occurred with respect to the related Underlying Originator , all Underlying Scheduled Payments) related to such Receivable, all prepayments and related penalty payments with respect to the Contract (and any related Underlying Contract related to a Pledged Pool B Receivable after a Pool B Program Termination Event has occurred with respect to the related Underlying Originator ) related to such Receivable, all overdue payments and related interest and penalty payments with respect to the Contract (and any related Underlying Contract related to a Pledged Pool B Receivable after a Pool B Program Termination Event has occurred with respect to the related Underlying Originator ) related to such Receivable, all Guaranty Amounts, all Insurance Proceeds, all Servicing Charges, all proceeds under “buyout letters” or other prepayment/termination agreements and all Recoveries related to such Receivable, all amounts paid to the Borrower related to such Receivable pursuant to the terms of the Purchase and Sale Agreement, all amounts paid by the Servicer related to such Receivable in connection with its obligations under Section 6.20 hereof, and all other payments received with respect to the Contract (and, if applicable, Underlying Contract) related to such Receivable, all cash receipts and proceeds in respect of the Other Conveyed Property or Related Security (including, without limitation, the Obligor Collateral) related to such Receivable, any Servicer Advances related to such Receivable, and any amounts paid to the Borrower under or in connection with any Qualifying Interest Rate Swap or the hedging arrangements contemplated thereunder.

“ Commitment Percentage ” has the meaning assigned to that term in Section 9.04(b) .

 

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“ Computer Tape or Listing ” means the computer tape or listing (whether in electronic form or otherwise) generated by the Servicer on behalf of the Borrower, which provides information relating to the Receivables included in the Net Eligible Receivables Balance.

“ Contract ” means a Pool A Contract or a Pool B Contract.

“ Credit and Collection Policy ” means (i) collectively, the “Operations Policies & Procedures” memorandum, the “Limited Recourse Term Debt Facility” memorandum of the Servicer, and certain other items, as annexed hereto as Schedule IV as such policy may hereafter be amended, modified or supplemented from time to time in compliance with this Agreement and (ii) with respect to any Servicer other than LEAF Financial, that Servicer’s collection policies for similar assets in effect from time to time.

“ Critical Defaults ” has the meaning assigned to that term in Section 5.01(u) hereof.

“ Custodial Agreement ” means that certain Custodial Agreement dated as of the date hereof among the Servicer, the Borrower, the Lender and the Custodian, together with all instruments, documents and agreements executed in connection therewith, as such Custodial Agreement may from time to time be amended, restated, supplemented and/or otherwise modified in accordance with the terms thereof.

“ Custodian ” means U.S. Bank National Association (or a sub-custodian on its behalf) or any substitute Custodian appointed by the Lender pursuant to the Custodial Agreement.

“ Custodian’s Fee ” means, for any Fee Period, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to the aggregate fees listed in that certain “Schedule of Fees” letter dated October 19, 2006 between U.S. Bank National Association and Leaf Financial Corporation which relate to such Fee Period.

“ Debt ” of any Person means (i) indebtedness of such Person for borrowed money, (ii) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments related to transactions that are classified as financings under GAAP, (iii) obligations of such Person to pay the deferred purchase price of property or services, (iv) obligations of such Person as lessee under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases, (v) obligations secured by an Adverse Claim upon property or assets owned (under GAAP) by such Person, even though such Person has not assumed or become liable for the payment of such obligations and (vi) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor, against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (v) above.

“ Default Funding Rate ” means an interest rate per annum equal to 1.50% plus the Base Rate.

“ Defaulted Receivable ” means, as of any date of determination, any Pledged Receivable:

 

(i)

with respect to which any part of any Scheduled Payment, or any tax-related payment, owed by the applicable Obligor under the terms of the related Contract remains unpaid for more than 120 days after the due date therefor set forth in such Contract;

 

(ii)

with respect to which the first or second Scheduled Payment is not paid in full when due under the related Contract;

 

(iii)

with respect to which any payment or other material terms of the related Contract have been modified due to credit related reasons after such Contract was acquired by the Borrower pursuant to the Purchase and Sale Agreement;

 

(iv)

which has been or should be charged off as a result of the occurrence of a Bankruptcy Event with respect to the related Obligor or Underlying Obligor, if any, or which has been or

 

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should otherwise be deemed uncollectible by the Servicer, in each case, in accordance with the Credit and Collection Policy; or

 

(v)

with respect to which the Servicer has repossessed the related Equipment.

“ Delinquency Rate ” means, as of any date of determination, an amount (expressed as a percentage) equal to (i) the aggregate Discounted Balances of all Delinquent Receivables as of the last day of the immediately preceding Collection Period divided by (ii) the Net Eligible Receivables Balance as of such day.

“ Delinquent Receivable ” means, as of any date of determination, any Pledged Receivable (other than a Defaulted Receivable) with respect to which any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remains unpaid for more than 60 days but not more than 120 days after the due date therefor set forth in such Contract.

“ Depository Institution ” means a depository institution or trust company, incorporated under the laws of the United States or any State thereof, that is subject to supervision and examination by federal and/or State banking authorities.

“ Discount Rate ” means, as of any date of determination, a percentage equal to the sum of (i) the Weighted Average Swapped Rate as of such date of determination, (ii) the Adjusted Eurodollar Rate Margin, (iii) at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, the Servicing Fee Rate and the Standby Backup Servicing Fee Rate, (iv) at any time after the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, the Active Backup Servicing Fee Rate and (vi) a rate per annum equal to 0.05%.

“ Discounted Balance ” means, with respect to any Contract or Underlying Contract, as of any date of determination, the present value of the aggregate amount of Scheduled Payments or, in the case of an Underlying Contract, Underlying Scheduled Payments (including any Balloon Payment or Put Payment but, in any event, calculated without giving effect to any booked residual value with respect to any related Equipment) due or to become due under the terms of the related Contract or Underlying Contract after the Cut-Off Date applicable to the Receivable related thereto, which remain unpaid as of such date of determination, calculated by discounting such aggregate amount of such Scheduled Payments or, in the case of an Underlying Contract, such Underlying Scheduled Payments to such date of determination at an annual rate equal to the Discount Rate.

“ Discrepancy Procedure ” has the meaning assigned to that term in the eighth paragraph of Section 6.13 .

“ Dollar Purchase Option Contract ” means a Contract or an Underlying Contract, as applicable, (i) in connection with which an agreement was executed which grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract or Underlying Contract for $1.00 or other nominal consideration at the end of the initial term of such Contract or Underlying Contract or (ii) grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract for $1.00 or other nominal consideration at the end of the initial term of such Contract.

“ Eligible Depository Institution ” means a Depository Institution the short term unsecured senior indebtedness of which is rated at least Prime-1 by Moody’s, A-1 by S&P, and F1 by Fitch, if rated by Fitch.

“ Eligible Pool A Receivable ” means, at any time, a Pledged Pool A Receivable with respect to which each of the representations and warranties regarding the Contract related to such Pledged Pool A Receivable contained in Schedule III-A hereto is true and correct at such time.

“ Eligible Pool A Receivables Balance ” means, at any time, the aggregate Discounted Balances of all Eligible Pool A Receivables which are Pledged hereunder to secure Loans at such time.

 

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“ Eligible Pool B Receivable ” means, at any time, a Pledged Pool B Receivable with respect to which each of the representations and warranties regarding the Contract related to such Pledged Pool B Receivable contained in Schedule III-B hereto is true and correct at such time.

“ Eligible Pool B Receivables Balance ” means, at any time, the aggregate Discounted Balances of all Eligible Pool B Receivables which are Pledged hereunder to secure Loans at such time.

“ Eligible Pool B Underlying Lease Contract ” means, at any time, an Underlying Lease Contract with respect to which each of the representations and warranties contained in Schedule III-C hereto is true and correct at such time.

“ Eligible Pool B Underlying Loan Contract ” means, at any time, an Underlying Loan Contract with respect to which each of the representations and warranties contained in Schedule III-C hereto is true and correct at such time.

“ Eligible Receivable ” means, at any time, a Pledged Receivable which is an Eligible Pool A Receivable or an Eligible Pool B Receivable at such time.

“ Eligible Receivables Balance ” means, at any time, the aggregate Discounted Balances of all Eligible Receivables which are Pledged hereunder to secure Loans at such time.

“ Eligible Underlying Contract ” means an Eligible Pool B Underlying Lease Contract or Eligible Pool B Underlying Loan Contract.

“ Eligible Underlying Originator ” means an Underlying Originator that has been approved by the initial Servicer in accordance with the Credit and Collection Policy.

“ Equipment ” means the equipment or Vehicle (i) leased to an Obligor, or serving as collateral for a loan to an Obligor, under a Contract together with any replacement parts, additions and repairs thereof, and any accessories incorporated therein and/or affixed thereto or (ii) leased to an Underlying Obligor, or serving as collateral for a loan to an Underlying Obligor, under a Underlying Contract together with any replacement parts, additions and repairs thereof, and any accessories incorporated therein and/or affixed thereto.

“ Equipment Category ” means any of the Equipment Categories set forth on Schedule V hereto, as such schedule may be updated from time to time by the Borrower with the consent of the Lender (which such consent shall not be unreasonably withheld).

“Equity Event” means (i) the occurrence and continuation of any Other Default, unless waived by the Lender in its sole discretion or (ii) the Delinquency Rate in respect of the most recent Collection Period, calculated by the Lenders solely with respect to Receivables, exceeds 3.5%.

“Equity Payment” means (a) on any Remittance Date prior to the Facility Maturity Date and so long as an Equity Event shall not have occurred and then be continuing, the lesser of (i) the amount then required to be paid by the Owner (pursuant to its indenture) to its noteholders, and (ii) $64,316, or (b) on any Remittance Date on or after the Facility Maturity Date or if an Equity Event shall have occurred and is continuing, zero.

“ ERISA ” means the United States Employee Retirement Income Security Act of 1974, as amended from time to time.

“ ERISA Affiliate ” means a corporation, trade or business that is, along with any Person, a member of a controlled group of corporations or a controlled group of trades or businesses, as described in section 414 of the Internal Revenue Code of 1986, as amended, or section 4001 of ERISA.

“ Eurodollar Disruption Event ” means any of the following: (i) a determination by the Lender that it would be contrary to law or to the directive of any central bank or other governmental authority (whether or not having the

 

9

force of law) to obtain United States dollars in the London interbank market to make, fund or maintain any Loan, (ii) a determination by the Lender that the rate at which deposits of United States dollars are being offered in the London interbank market does not accurately reflect the cost to the Lender of making, funding or maintaining any Loan or (iii) the inability of the Lender to obtain United States dollars in the London interbank market to make, fund or maintain any Loan.

“ Eurodollar Index ” means an index based upon an interest rate reported on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United States dollar deposits.

“ Event of Default ” has the meaning assigned to that term in Section 7.01 .

“ Exception Sublimit Receivable ” means a Pool A Receivable arising under a Lease Contract related to Equipment having an original cost of less than $100,000 as to which the original, executed Lease Contract has not been forwarded to the Custodian for inclusion in the related Receivable File.

“Excluded Amounts” has the meaning assigned to that term in Section 2.11.

“ Facility Amount ” means, at any time, the sum of the aggregate Loans Outstanding hereunder bearing interest at the Interest Rate, plus accrued interest and Fees with respect to such amounts.

“ Facility Maturity Date ” means the third anniversary of the date of this Agreement.

“ Fee Letter ” has the meaning assigned to that term in Section 2.08(a) .

“ Fee Period ” means a period commencing on (and including) a Remittance Date and ending on (and including) the day prior to the next Remittance Date; provided , that, the initial Fee Period hereunder shall commence on (and include) the date hereof and end on (and include) December 22, 2006.

“ Fees ” has the meaning assigned to that term in Section 2.08(a) .

“ Fitch ” means Fitch, Inc. (or its successors in interest).

“ FMV Contract ” means a Contract or an Underlying Contract, as applicable, which (i) in connection with which any agreement was executed which grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract or Underlying Contract for the fair market value thereof at the end of the initial term of such Contract or Underlying Contract or (ii) grants the related Obligor or Underlying Obligor, as applicable, a right to purchase the Equipment or Underlying Equipment leased under such Contract for the fair market value thereof at the end of the initial term of such Contract.

“ GAAP ” means generally accepted accounting principles as in effect from time to time in the United States.

“ Global Overconcentration Amount ” means, at any time (x) after the first anniversary of the Closing Date or (y) the aggregate outstanding principal balance of the Loans is greater than $35,000,000, without duplication, the sum of:

 

(i)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables related to any one Obligor (or any Affiliate thereof) at such time exceeds $3,000,000;

 

(ii)

the amount by which the sum of the Discounted Balances at such time of all Eligible Pool A Receivables related to the three Obligors which, together with any Affiliates thereof, owe the greatest amounts under their respective Contracts, in the aggregate, exceeds $9,500,000;

 

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(iii)

the amount by which the sum of the Discounted Balances of all Eligible Receivables with respect to which the related Contract is a Non-Level Payment Contract exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time;

 

(iv)

the amount by which the sum of the Discounted Balances of all Eligible Receivables with respect to which the related Contract provides for Scheduled Payments to be paid for any period other than monthly exceeds 10% of the sum of the Discounted Balances of all Eligible Receivables at such time;

 

(v)

the amount by which the sum of the Discounted Balances of all Eligible Receivables related to Obligor Collateral located in the State of California at such time exceeds 30% of the sum of the Discounted Balances of all Eligible Receivables at such time;

 

(vi)

the amount by which the sum of the Discounted Balances of all Eligible Receivables related to Obligor Collateral located in any State other than the State of California exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time;

 

(vii)

the amount by which the sum of the Discounted Balances of all Eligible Receivables related to Equipment within any one Equipment Category exceeds the sum of the Discounted Balances of all Eligible Receivables at such time multiplied by 50%;

 

(viii)

the amount by which the sum of the Discounted Balances of all Eligible Receivables, with respect to which the related Obligor Collateral is a Vehicle or other type of equipment which requires a security interest therein to be noted on the Certificate of Title with respect thereto in order to be perfected, exceeds 50% of the sum of the Discounted Balances of all Eligible Receivables at such time;

 

(ix)

[reserved];

 

(x)

the amount by which the sum of the Discounted Balances of all Eligible Receivables, with respect to which the related Obligor is a Government Entity, exceeds 10% of the sum of the Discounted Balances of all Eligible Receivables at such time;

 

(xi)

the amount by which the sum of the Discounted Balances of all Eligible Receivables, which are Exception Sublimit Receivables, exceeds 10% of the sum of the Discounted Balances of all Eligible Receivables at such time (it being understood and agreed that, notwithstanding anything herein to the contrary (including clauses (x)  and (y)  above), this component of the Global Overconcentration Amount shall apply at all times on and after the Closing Date); and

 

(xii)

the amount by which the sum of the Discounted Balances of all Eligible Receivables with respect to which the related Obligor Collateral is a work vehicle exceeds 20% of the sum of the Discounted Balances of all Eligible Receivables at such time.

“ Government Entity ” means the United States, any State, any political subdivision of a State and any agency or instrumentality of the United States or any State or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“ Guaranty Amounts ” means any and all amounts paid by any guarantor with respect to the applicable Contract.

“ Holdback Amount ” means, with respect to any Pool B Receivable, the amount of any loan principal or purchase price which would otherwise be advanced by the Originator to the applicable Obligor pursuant to the terms of such Contract, but which was held back by the Originator as a liquidity reserve or similar reserve.

 

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“ Included Repurchased Receivable ” means any Receivable repurchased by the Originator pursuant to Section 6.1(b) of the Purchase and Sale Agreement with respect to which, as of the date of repurchase, any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remained unpaid after the due date therefor set forth in such Contract.

“ Indemnified Amounts ” has the meaning assigned to that term in Section 8.01 .

“ Independent Accountants ” has the meaning assigned to that term in Section 6.11(b) .

“ Initial Qualified Swap Counterparty ” means Morgan Stanley Capital Services Inc., a Delaware corporation and its successors and permitted assigns.

“ Insurance Certificate ” means the insurance certificate related to the Insurance Policy with respect to such Receivable (which insurance certificate shall list the Servicer or the Originator as a loss payee).

“ Insurance Policy ” means, with respect to any Obligor Collateral, the insurance policy maintained by or on behalf of the Obligor pursuant to the related Contract that covers physical damage to the related Equipment (in an amount sufficient to insure completely the value of such Equipment) and general liability (including policies procured by the Borrower or the Servicer, or any agent thereof, on behalf of the Obligor).

“ Insurance Proceeds ” means, with respect to an item of Obligor Collateral and a related Contract, any amount paid under an Insurance Policy or an Underlying Insurance Policy issued with respect to such Obligor Collateral and/or the related Contract.

“ Interest Period ” means, for any outstanding Loans, a period determined pursuant to Section 2.03(a) .

“ Interest Rate ” has the meaning assigned to such term in Section 2.03(b) .

“ LEAF Credit Facility Document ” has the meaning assigned to such term in Section 5.01(y) .

“ LEAF Financial ” has the meaning assigned to that term in the preamble hereto.

“ LEAF Managed Entity ” means any Person for which LEAF Financial has contractually agreed (pursuant to any agreement, including, without limitation, a partnership agreement or other organizational document, management agreement or servicing agreement) to act as a manager or a servicer with respect to the equipment leases and loans owned by such Person and which is (i) contractually obligated to purchase all such leases and loans only from LEAF Financial and its affiliates and only at such seller’s cost basis and (ii) not contractually limited in when it can purchase such leases and loans.

“ Lease Contract ” means (i) a “Master Lease Schedule” in the form attached hereto as Exhibit D-1(b) , Exhibit D-1(c) , Exhibit D-1(d) , together with a “Master Lease Agreement” in the form attached hereto as Exhibit D-1(a) which is related to, and incorporated by reference into, a “Master Lease Schedule” (as such exhibits may be updated from time to time by the Borrower with the consent of the Lender), (ii) a “Lease Agreement” in the form attached hereto as Exhibit D-1(e) or (iii) a lease agreement otherwise approved by the Servicer in compliance with the Credit and Collection Policy, pursuant to which Equipment is leased to an Obligor by Originator, together with all schedules, supplements and amendments thereto and each other document and instrument related to such lease.

“ Lender ” means, collectively, Morgan Stanley and/or any other Person that is an Affiliate of Morgan Stanley and/or, with the consent of the Borrower (which such consent shall not be unreasonably withheld) at any time prior to the occurrence of a Program Termination Event (and without the consent of the Borrower at any time after the occurrence of a Program Termination Event), any other Person that is not an Affiliate of Morgan Stanley, in each case, that agrees, pursuant to the pertinent Assignment and Acceptance, to make Loans secured by Pledged Assets pursuant to Article II of this Agreement.

 

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“ Lender’s Bank ” means U.S. Bank National Association and its successors and assigns that are Eligible Depository Institutions.

“ Lender’s Bank Fee ” means an annual fee paid in advance, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to $7,000. The “Lender’s Bank Fee” shall also include (i) a one-time acceptance fee of $4,500 payable on the Closing Date and (ii) reasonable out-of-pocket expenses incurred by the Lender’s Bank in the performance of its duties.

“ Liquidation Proceeds ” means, with respect to a Receivable with respect to which the related Obligor Collateral has been repossessed or foreclosed upon by the Servicer, all amounts realized with respect to such Receivable net of (i) reasonable expenses of the Servicer incurred in connection with the collection, repossession, foreclosure and/or disposition of the related Obligor Collateral and (ii) amounts that are required to be refunded to the Obligor on such Receivable; provided , however , that the Liquidation Proceeds with respect to any Receivable shall in no event be less than zero.

“ Loan ” means each loan advanced by the Lender to the Borrower on a Borrowing Date pursuant to Article II .

“ Loan Contract ” means, collectively, (i) a “Term Note (Level Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-2(a) (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender), (ii) a “Term Note (Level Payments)” or “Term Note (Step Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-2(b) (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender), (iii) a “Finance Agreement” in one of the forms attached as Exhibit D-2(c) or similar agreement approved in writing by the Lender (in its reasonable discretion), or (iv) a loan agreement and promissory note otherwise approved by the Servicer in compliance with the Credit and Collection Policy as to which the Servicer has notified the Collateral Agent in writing, in each case, pursuant to which the Originator makes a loan to an Obligor secured by Equipment purchased by such Obligor, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“ Loans Outstanding ” means the sum of the principal amounts of Loans loaned to the Borrower for the initial and any subsequent borrowings pursuant to Sections 2.01 and 2.02 , reduced from time to time by Collections with respect to any Pledged Receivable received and distributed as repayment of principal amounts of Loans outstanding pursuant to Section 2.04 and any other amounts received by the Lender to repay the principal amounts of Loans outstanding pursuant to Section 2.15 or otherwise; provided , however , that the principal amounts of Loans outstanding shall not be reduced by any Collections with respect to any Pledged Receivable or other amounts if at any time such Collections or other amounts are rescinded or must be returned for any reason.

“ Lockbox ” means a post office box to which Collections with respect to any Pledged Receivable are remitted for retrieval by the Lockbox Bank and for deposit by the Lockbox Bank into the Lockbox Account.

“ Lockbox Account ” means the deposit account (account number 153910088597 at the Lockbox Bank) in the name of “U.S. Bank NA as Securities Intermediary for LEAF Financial and various lenders”.

“ Lockbox Bank ” means U.S. Bank National Association and its successors in interest.

“ Lockbox Intercreditor Agreement ” means the Amended and Restated Lockbox Intercreditor Agreement, dated as of April 18, 2005, among the Lockbox Bank, the Servicer, the Borrower, and certain other parties.

“ Material Adverse Effect ” means a material adverse effect on (i) the ability of the Borrower, the Originator and/or the Servicer to conduct its business, (ii) the ability of the Borrower, the Originator and/or the Servicer to perform its respective obligations under this Agreement and/or any other Transaction Document to which it is a party, (iii) the validity or enforceability of this Agreement and/or any other Transaction Document to which the Borrower, the Originator and/or the Servicer is a party, (iv) the rights and remedies of the Lender under this

 

13

Agreement and/or any of the Transaction Documents and/or (v) the validity, enforceability or collectibility of all or any portion of the Pledged Receivables.

“ Minimum Tangible Net Worth means, (i) with respect to Resource America, a Tangible Net Worth (measured as of each fiscal quarter end) of not less than $ 125,000,000 100,000,000 and (ii) with respect to the Owner, a Tangible Net Worth (measured as of each fiscal quarter end) of not less than (x) $2,500,000 plus , (y) only if the Owner Issuance Condition has been satisfied, the product of 50.00%, times the aggregate outstanding principal balance of the Owner Secured Recourse Promissory Notes held by Persons that are not Affiliates of the Owner.

“ Monthly Remittance Report ” means a report, in substantially the form of Exhibit C , furnished by the Servicer to the Lender and each Qualifying Swap Counterparty pursuant to Section 6.10(b) and to the Backup Servicer pursuant to Section 6.10(d) .

“ Moody’s ” means Moody’s Investors Service, Inc. (or its successors in interest).

“ Morgan Stanley ” has the meaning assigned to that term in the preamble hereto.

“ Netbank Facility ” means the facility evidenced by the Receivables Loan and Security Agreement, dated as of November 1, 2007, among Leaf Capital Funding III, LLC, as borrower, LEAF Financial, Morgan Stanley, Morgan Stanley Asset Funding Inc., The Royal Bank of Scotland, U.S. Bank National Association and Lyon Financial Services, Inc. (d/b/a U.S. Bank Portfolio Services), as the same may be modified, amended, or supplemented from time to time.

“ Net Eligible Receivables Balance ” means, at any time, (i) the Eligible Receivables Balance at such time, minus (ii) the Overconcentration Amount at such time.

“ Nominee Lienholder Agreement ” means either (i) a “Vehicle Lienholder Nominee Agreement” in the form attached hereto as Exhibit E (with such modifications as the Collateral Agent may approve) or (ii) any other nominee lienholder agreement or collateral agency agreement approved in writing by the Collateral Agent.

“ Non-Level Payment Contract ” means a Contract that does not provide for level Scheduled Payments during the term of such Contract.

“ Notice of Borrowing ” has the meaning assigned to that term in Section 2.02(b) hereof.

“ Notice of Pledge ” has the meaning assigned to that term in the Custodial Agreement.

“ Obligations ” means all present and future indebtedness and other liabilities and obligations (howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or due or to become due) of the Borrower to the Secured Parties arising under this Agreement and/or any other Transaction Document and shall include, without limitation, all liability for principal of and interest on the Loans, indemnifications and other amounts due or to become due by the Borrower to the Secured Parties under this Agreement and/or any other Transaction Document, including, without limitation, interest, fees and other obligations that accrue after the commencement of an insolvency proceeding (in each case whether or not allowed as a claim in such insolvency proceeding).

“ Obligor ” means, collectively, each Person obligated to make payments under a Contract.

“ Obligor Collateral ” means (i) the Equipment leased to an Obligor under a Lease Contract, (ii) the Equipment and other property pledged by an Obligor to secure its obligations under a Loan Contract, (iii) the Equipment and other property pledged by an Obligor to secure its obligations under a Practice Acquisition Loan Contract and (iv) the Underlying Originator Loan Collateral and other property pledged by an Obligor to secure its obligations under an Underlying Originator Loan Contract.

 

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“ Obligor Financing Statement ” means a UCC financing statement filed by Originator against an Obligor under a Contract which evidences a security interest in the related Obligor Collateral.

“ Officer’s Certificate ” means a certificate signed by the president, the secretary, the chief financial officer or any vice president of any Person.

“ Opinion of Counsel ” means a written opinion of independent counsel acceptable to the Lender, which opinion, if such opinion or a copy thereof is required by the provisions of this Agreement or any other Transaction Document to be delivered to the Borrower or the Lender, is acceptable in form and substance to the Lender.

“ Originator ” means LEAF Funding, Inc., a Delaware corporation.

“ Originator Insurance Agreement ” means that certain letter agreement regarding the Originator’s obligations as named loss payee under Insurance Policies and Underlying Insurance Policies, dated as of the date hereof, among the Originator, the Servicer, the Borrower and the Lender, as such agreement may from time to time be amended, restated, supplemented and/or otherwise modified in accordance with the terms thereof.

“ Other Commercial Contract ” means any agreement approved by the Servicer in compliance with the Credit and Collection Policy, in each case, pursuant to which the commercial Obligor thereunder agrees to make periodic payments in connection with any loan, services, rental or sale, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“ Other Conveyed Property ” means, with respect to any Receivable, all of the Borrower’s right, title and interest in, to and under (i) all Collections and other monies at any time received or receivable with respect to such Receivable after the applicable Cut-Off Date (as defined in the Purchase and Sale Agreement), (ii) the Equipment or Underlying Equipment related to such Receivable (to the extent of the Borrower’s ownership rights, if any, therein), (iii) in the case of a Receivable related to any Contract, any and all agreements, documents, certificates and instruments evidencing the Borrower’s security interest or other interest in and to the related Obligor Collateral or any intercreditor agreement with respect thereto, including, without limitation, any Certificate of Title, (iv) the Obligor Collateral related to such Receivable including, without limitation, the security interest in such Obligor Collateral granted by the related Obligor to Originator under the related Contract and assigned by Originator to the Borrower under the Purchase and Sale Agreement, (v) the Obligor Financing Statement, if any, related to such Receivable, (vi) the Insurance Policy and any proceeds from the Insurance Policy relating to such Receivable, including rebates of premiums not otherwise due to an Obligor, (vii) the related Contract and all other items required to be contained in the related Receivable File, any and all other documents or electronic records that the Borrower keeps on file in accordance with its customary procedures relating to such Receivable, the related Obligor Collateral or the related Obligor, (viii) any Security Deposits or Cash Reserve related to such Receivable, (ix) all property (including the right to receive future Liquidation Proceeds) that secures such Receivable and that has been acquired by or on behalf of the Borrower pursuant to the liquidation of such Receivable, and (x) all present and future rights, claims, demands, causes and chooses in action in respect of any or all of the foregoing and all payments on or under and all proceeds and investments of any kind and nature in respect of any of the foregoing.

“ Other Default ” has the meaning set forth in Section 5.01(y) .

“ Overconcentration Amount ” means, at any time, the sum of the Pool A Overconcentration Amount at such time and the Pool B Overconcentration Amount at such time.

“ Overdue Payment ” means, with respect to a Collection Period, all payments due in a prior Collection Period that the Servicer receives from or on behalf of an Obligor during such Collection Period, including any Servicing Charges.

“ Owner ” means LEAF Commercial Finance Fund, LLC.

“ Owner Issuance Condition ” shall be deemed to be satisfied if, on or prior to October 1, 2008 or such other date, not later than June 1, 2009, as the Owner shall have provided by prior written notice to the Lender, (i) the

 

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Owner has received offering proceeds of at least $1,000,000 from the issuance of the Owner Secured Recourse Promissory Notes and (ii) such proceeds have been released to the Owner (and not returned to the subscribers of the Owner Secured Recourse Promissory Notes) from the escrow account described in the Owner Private Placement Memorandum.

“ Owner Private Placement Memorandum ” means that certain Private Placement Memorandum, dated October 1, 2007, as supplemented or restated from time to time, and titled “Leaf Commercial Finance Fund, LLC Secured Recourse Promissory Notes”, a copy of which has been provided to the Collateral Agent by the Owner.

“ Owner Secured Promissory Notes ” means the Secured Recourse Promissory Notes issued by the Owner pursuant to the Indenture described in Owner Private Placement Memorandum.

“ Parallel Defaults ” has the meaning assigned to that term in Section 5.01(u) hereof.

“ Permitted Investments ” means any one or more of the following:

 

(i)

direct obligations of, or obligations fully guaranteed as to principal and interest by, the United States or any agency or instrumentality thereof, provided such obligations are backed by the full faith and credit of the United States;

 

(ii)

repurchase obligations (the collateral for which is held by a third party or the Trustee), with respect to any security described in clause (i) above, provided that the long-term unsecured obligations of the party agreeing to repurchase such obligations are at the time rated by Moody’s and S&P in one of their two highest long-term rating categories and if rated by Fitch, in one of its two highest long-term rating categories;

 

(iii)

certificates of deposit, time deposits, demand deposits and bankers’ acceptances of any bank or trust company incorporated under the laws of the United States or any State thereof or the District of Columbia, provided that the short-term commercial paper of such bank or trust company (or, in the case of the principal depository institution in a depository institution holding company, the long-term unsecured debt obligations of the depository institution holding company) at the date of acquisition thereof has been rated by Moody’s and S&P in their highest short-term rating category, and if rated by Fitch, in its highest short-term rating category;

 

(iv)

commercial paper (having original maturities of not more than 270 days) of any corporation incorporated under the laws of the United States or any State thereof or the District of Columbia, having a rating, on the date of acquisition thereof, of no less than A-1 by Moody’s, P-1 by S&P and F-1 if rated by Fitch;

 

(v)

money market mutual funds, including funds managed by the Lender’s Bank or its Affiliates, registered under the Investment Company Act of 1940, as amended, having a rating, at the time of such investment, of no less than Aaa by Moody’s, AAA by S&P and AAA if rated by Fitch; and

 

(vi)

any other investments approved in writing by the Lender.

provided , that no such instrument shall be a Permitted Investment if such instrument evidences the right to receive either (a) interest only payments with respect to the obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument, where the principal and interest payments with respect to such instrument provide a yield to maturity exceeding 120% of the yield to maturity at par of such underlying obligation. Each Permitted Investment may be purchased by the Lender’s Bank or through an Affiliate of the Lender’s Bank.

“ Permitted Liens ” means:

 

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(i)

with respect to Obligor Collateral, (A) liens and security interests in favor of the Collateral Agent, granted pursuant to the Transaction Documents, (B) the interests of an Obligor arising under the Contract to which it is a party in the Obligor Collateral related to such Contract, (C) liens for taxes, assessments, levies, fees and other governmental and similar charges either not yet due or being contested in good faith and by appropriate proceedings, provided, that appropriate reserves shall have been established with respect to any such taxes either not yet due or being contested in good faith and by appropriate proceedings, (D) any liens with respect to any mechanics, suppliers, materialmen, laborers, employees, repairmen and other like liens arising in the ordinary course of a servicer’s, lessor’s/lender’s or lessee’s/borrower’s business securing obligations which are not due and payable, and (E) salvage rights of insurers with respect to the equipment subject to a Contract under insurance policies maintained pursuant to the Transaction Documents or a Contract; and

 

(ii)

with respect to Underlying Collateral, in addition to the Permitted Liens described in clause (i) above, (x) liens in favor of Originator or the Borrower, granted by the applicable Underlying Obligor, in each case, solely to the extent assigned to the Collateral Agent and (y) the interests of an Underlying Obligor arising under the Underlying Contract to which it is a party in the Underlying Originator Loan Collateral related to such Underlying Contract.

“ Person ” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture, government (or any agency or political subdivision thereof) or other entity.

“ Pledge ” means the pledge of any Receivable pursuant to Article II .

“ Pledged Assets ” has the meaning assigned to that term in Section 2.11 .

“ Pledged Receivables ” means Pledged Pool A Receivables and Pledged Pool B Receivables.

“ Pledged Pool A Receivables ” has the meaning assigned to that term in Section 2.11(a) .

“ Pledged Pool B Receivables ” has the meaning assigned to that term in Section 2.11(a) .

“ Pledged Receivables Balance ” means, at any time, the aggregate Discounted Balances of all Receivables which are Pledged hereunder to secure Loans at such time.

“ Pool A Annualized Net Loss Rate ” means, as of any date of determination after the end of the third Collection Period following the date hereof, an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Pledged Pool A Receivables which were Eligible Pool A Receivables at the time of their Pledge hereunder and which became Defaulted Receivables during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods minus (y) Recoveries related to Pool A Receivable received during the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods and (B) 2 (if six or more Collection Periods have occurred since the date hereof), 2.4 (if five Collection Periods have occurred since the date hereof), 3 (if four Collection Periods have occurred since the date hereof), 4 (if three Collection Periods have occurred since the date hereof), 6 (if two Collection Periods have occurred since the date hereof) or 12 (if one Collection Period has occurred since the date hereof) divided by (ii) the Eligible Pool A Receivables Balance as of the first Business Day of the six (or such lesser number of Collection Periods since the date hereof) immediately preceding Collection Periods.

“ Pool A Borrowing Base ” means, at any time, the lowest of:

 

(i)

98% of the Amortized Equipment Cost with respect to all Eligible Pool A Receivables; and

 

(ii)

an amount equal to the Pool A Net Eligible Receivables Balance multiplied by a percentage equal to 92%.

 

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“ Pool A Contract ” means a Lease Contract, a Loan Contract, a Practice Acquisition Loan Contract, a Real Estate Contract or an Other Commercial Contract.

“ Pool A Lease File ” has the meaning assigned to that term in clause (a)  of the definition of “Receivable File”.

“ Pool A Loan ” has the meaning assigned to that term in Section 2.01 .

“ Pool A Loan File ” has the meaning assigned to that term in clause (b)  of the definition of “Receivable File”.

“ Pool A Net Eligible Receivables Balance ” means, at any time, (i) the Eligible Pool A Receivables Balance at such time minus (ii) the Pool A Overconcentration Amount at such time.

“ Pool A Overconcentration Amount ” means, at any time, (x) after the first anniversary of the Closing Date or (y) the aggregate outstanding principal balance of the Loans is greater than $35,000,000, without duplication, the sum of:

 

(i)

an amount equal to the Global Overconcentration Amount at such time multiplied by a fraction the numerator of which is the aggregate Discounted Balances of all Eligible Pool A Receivables at such time and the denominator of which is the aggregate Discounted Balances of all Eligible Receivables at such time;

 

(ii)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a remaining term greater than 85 months and equal to or less than 120 months exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

 

(iii)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a remaining term greater than 120 months exceeds 15% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

 

(iv)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a Discounted Balance greater than $1,000,000 exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

 

(v)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables related to any one vendor of Equipment (or Affiliate thereof) at such time exceeds 35% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

 

(vi)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables arising under a Contract which provides for a Balloon Payment or Put Payment, the amount of which is in excess of 34% of the original amount of the Scheduled Payments to be made under such Contract, exceeds 20% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time;

 

(vii)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables arising from Practice Acquisition Loan Contracts at such time exceeds 50% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time; and

 

(viii)

the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables that are Stand Alone Working Capital Loans at such time exceeds 15% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time.

 

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“ Pool A Receivable ” means the rights to all payments from an Obligor under a Pool A Contract, including, without limitation, any right to the payment with respect to (i) Scheduled Payments, (ii) any prepayments or overdue payments made with respect to such Scheduled Payments, (iii) any Guaranty Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any Recoveries.

“ Pool A Termination Event ” means the occurrence of any of the following events:

 

(i)

the rolling weighted average of the Delinquency Rates in respect of any three consecutive Collection Periods, calculated by the Lender solely with respect to Pool A Receivables, exceeds 3.5%;

 

(ii)

the Annualized Default Rate, calculated by (or in a manner satisfactory to) the Lender solely with respect to Pool A Receivables, exceeds 4.0%; or

 

(iii)

the Pool A Annualized Net Loss Rate exceeds 3.5%.

“ Pool B Annualized Net Loss Rate ” means with respect to any Underlying Originator, as of any date of determination at least three Collection Periods after the date that the Pool B Receivable related to such Underlying Originator is Pledged hereunder (the “ Applicable Date ”), an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Underlying Contracts related to such Underlying Originator which were Eligible Underlying Contracts at the time of the Pledge of the related Pool B Receivable hereunder and as to which an Underlying Contract Event of Default has occurred during the six (or such lesser number of Collection Periods since the Applicable Date) immediately preceding Collection Periods minus (y) recoveries received by the Underlying Originator during the six (or such lesser number of Collection Periods since the Applicable Date) immediately preceding Collection Periods and (B) 2 (if six or more Collection Periods have occurred since the Applicable Date), 2.4 (if five Collection Periods have occurred since the Applicable Date), 3 (if four Collection Periods have occurred since the Applicable Date), 4 (if three Collection Periods have occurred since the Applicable Date), 6 (if two Collection Periods have occurred since the Applicable Date) or 12 (if one Collection Period has occurred since the Applicable Date) divided by (ii) the aggregate Discounted Balances of all Underlying Contracts related to such Underlying Originator which are Eligible Underlying Contracts as of the first Business Day of the six (or such lesser number of Collection Periods since the Applicable Date) immediately preceding Collection Periods.

“ Pool B Borrowing Base ” means, at any time, (x) the sum of the amounts calculated with respect to each Eligible Pool B Receivable, equal to the least of:

 

(i)

the sum of (A) 92% of the aggregate Discounted Balance of all related Underlying Contracts and (B) the amount of funds on deposit in the Cash Reserve Account related to such Eligible Pool B Receivable;

 

(ii)

100% of the Amortized Equipment Cost with respect to such Eligible Pool B Receivable at such time (calculated without giving effect to any associated amortized indirect costs related to the applicable Equipment) minus the Holdback Amount for such Eligible Pool B Receivable; or

 

(iii)

the Discounted Balance of such Eligible Pool B Receivable

minus (y) the Pool B Overconcentration Amount.

“ Pool B Contract ” means an Underlying Originator Loan Contract.

“ Pool B Loan ” has the meaning assigned to that term in Section 2.01 .

“ Pool B Master Receivable File ” has the meaning assigned to that term in clause (c)  of the definition of “Receivable File”.

 

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“ Pool B Micro Ticket Receivables ” means a Pool B Receivable related to equipment with an original cost of less than $3000 and with respect to which the related Obligor is an Obligor approved in writing by the Lender in its sole discretion.

“ Pool B Net Eligible Receivables Balance ” means, at any time, (i) the Eligible Pool B Receivables Balance at such time minus (ii) the Pool B Overconcentration Amount at such time.

“ Pool B Overconcentration Amount ” means, at any time, (x) after the first anniversary of the Closing Date or (y) the aggregate outstanding principal balance of the Loans is greater than $35,000,000, without duplication, the sum of:

 

(i)

an amount equal to the Global Overconcentration Amount at such time multiplied by a fraction the numerator of which is the aggregate Discounted Balances of all Eligible Pool B Receivables at such time and the denominator of which is the aggregate Discounted Balances of all Eligible Receivables at such time;

 

(ii)

the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables related to any one Underlying Originator (or Affiliate thereof) at such time exceeds $25,000,000;

 

(iii)

the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables related to any one Underlying Obligor (or Affiliate thereof) at such time exceeds $1,000,000;

 

(iv)

the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables with respect which the related Contract has a remaining term greater than 84 months exceeds 20% of the sum of the Discounted Balances of all Eligible Pool B Receivables at such time; and

 

(v)

the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables that are Pool B Micro Ticket Receivables at such time exceeds $15,000,000.

“ Pool B Receivable ” means the rights to all payments from an Obligor under a Pool B Contract, including, without limitation, any right to the payment with respect to (i) Scheduled Payments and Underlying Scheduled Payments, (ii) any prepayments or overdue payments made with respect to such Scheduled Payments and Underlying Scheduled Payments, (iii) any Guaranty Amounts, (iv) any Insurance Proceeds, (v) any Servicing Charges and (vi) any Recoveries.

“ Pool B Termination Event ” means, with respect to an Underlying Originator, the occurrence of any of the following events:

 

(i)

other than with respect to Pool B Micro Ticket Receivables, the rolling weighted average of the Underlying Delinquency Rates with respect to such Underlying Originator in respect of any three consecutive Collection Periods exceeds 8%;

 

(ii)

other than with respect to Pool B Micro Ticket Receivables, the Pool B Annualized Net Loss Rate with respect to such Underlying Originator in respect of any Collection Period exceeds 6%;

 

(iii)

other than with respect to Pool B Micro Ticket Receivables, the current amount of recourse, if any, against such Underlying Originator with respect to its obligations under the related Underlying Originator Loan Contract is less than 5% of the maximum amount of such recourse;

 

(iv)

with respect to Pool B Micro Ticket Receivables only, the rolling weighted average of the Underlying Delinquency Rates with respect to such Underlying Originator in respect of any three consecutive Collection Periods exceeds 10%;

 

(v)

with respect to Pool B Micro Ticket Receivables only, the Pool B Annualized Net Loss Rate with respect to such Underlying Originator in respect of any Collection Period exceeds 25%;

 

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(vi)

with respect to Pool B Micro Ticket Receivables only, the current amount of recourse, if any, against such Underlying Originator with respect to its obligations under the related Underlying Originator Loan Contract is less than 5% of the maximum amount of such recourse; or

 

(vii)

the occurrence of any Bankruptcy Event in respect of such Underlying Originator.

“ Pool B Underlying Lease File ” has the meaning assigned to that term in clause (d)  of the definition of “Receivable File”.

“ Pool B Underlying Loan File ” has the meaning assigned to that term in clause (e)  of the definition of “Receivable File”.

“ Practice Acquisition Loan Contract ” means, collectively, (i) a “Term Note (Level Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-3 (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender) or a “Finance Agreement” in one of the forms attached as Exhibit D-2(c) (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender) or (ii) a loan agreement and promissory note otherwise approved by the Servicer in compliance with the Credit and Collection Policy as to which the Servicer has notified the Collateral Agent in writing, in each case, pursuant to which Originator makes a loan to an Obligor to enable such Obligor to acquire a dental, medical, osteopathic medical, optometric or veterinary practice, secured by Equipment related to the practice of dentistry, medicine or veterinary medicine and certain non-equipment assets, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“ Prepayment Amount ” means the principal amount of Loans repaid by the Borrower in connection with an optional prepayment of Loans made by the Borrower pursuant to Section 2.15 hereof.

“ Prepayment Date ” means any date on which an optional prepayment of Loans is made by the Borrower pursuant to Section 2.15 hereof.

“ Prepayment Premium ” has the meaning ascribed thereto in the Fee Letter.

“ Program Termination Cure Event ” means the occurrence of any of the following events:

 

(i)

following the occurrence of a Program Termination Event described in clause (iv), (v ), (vi), (vii), (viii ) or ( ix vi ) of the definition thereof, such Program Termination Event is cured within the following two Collection Periods and two further Collection Periods pass without the occurrence of such a Program Termination Event; or

 

(ii)

following the occurrence of a Program Termination Event described in clause (xi) of the definition thereof, such Program Termination Event is cured;

provided that, in any event, no other Program Termination Event shall have occurred and be continuing.

“ Program Termination Date ” means the earliest of (i) the date of occurrence of any event described in Section 7.01(a) hereof, (ii) the date of the declaration of the Program Termination Date pursuant to any other subsection of Section 7.01 or (iii) the date of the declaration of the Program Termination Date by, and at the option of, the Lender upon the occurrence of a Program Termination Event.

“ Program Termination Event ” means the occurrence of any of the following events:

 

(i)

a regulatory, tax or accounting body has ordered that the activities of the Lender or any Affiliate thereof contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of the Lender or any Affiliate contemplated hereby may reasonably be expected to cause the Lender or the Person, if any, then acting as the administrator or the manager

 

21

for the Lender or any of its Affiliates to suffer materially adverse regulatory, accounting or tax consequences;

 

(ii)

an Event of Default has occurred and is continuing;

 

(iii)

the Facility Maturity Date shall have occurred;

 

(iv)

other than with respect to Pool B Micro Ticket Receivables, the Annualized Default Rate exceeds 4.5 5.0 %;

 

(v)

other than with respect to Pool B Micro Ticket Receivables, the rolling weighted average of the Delinquency Rates in respect of any three consecutive Collection Periods exceeds 4.0 4.5 %;

 

(vi)

other than with respect to Pool B Micro Ticket Receivables, the Annualized Net Loss Rate exceeds 4.0 4.5 %;

 

(vii)

with respect to Pool B Micro Ticket Receivables only, the Annualized Default Rate exceeds 25.0%; [reserved];

 

(viii)

with respect to Pool B Micro Ticket Receivables only, the rolling weighted average of the Delinquency Rates in respect of any three consecutive Collection Periods exceeds 10.0%; [reserved];

 

(ix)

with respect to Pool B Micro Ticket Receivables only, the Annualized Net Loss Rate exceeds 25.0%; [reserved];

 

(x)

a Servicer Default has occurred and is continuing; or

 

(xi)

(1) any Qualifying Swap Counterparty ceases to maintain the long-term debt ratings required of a Qualifying Swap Counterparty and (A) does not post cash collateral in a manner acceptable to the Lender within 45 days and (B) is not replaced within 45 days by a replacement acceptable to the Lender or (2) the Borrower fails to comply with any term, covenant or agreement hereunder related to the maintenance of any Qualifying Interest Rate Swaps ; or

 

(xii)

the occurrence of three or more Pool A Termination Events and/or Pool B Termination Events .

“ Purchase and Sale Agreement ” means that certain Purchase and Sale Agreement, dated as of the date hereof, between the Originator, as seller, and the Borrower, as purchaser, together with all instruments, documents and agreements executed in connection therewith, as such Purchase and Sale Agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms hereof.

“ Purchase Date ” has the meaning set forth in the Purchase and Sale Agreement.

“ Put Payment ” means with respect to any Contract or Underlying Contract constituting a lease, the payment, if any, required to be made by the Obligor under the terms of such lease in connection with the required purchase by such Obligor or Underlying Obligor of the related Equipment or Underlying Equipment at the end of the term of such lease.

“ QSC Subordinated Termination Payment ” means a termination payment required to be made by the Borrower to a Qualifying Swap Counterparty upon the termination of the related Qualifying Interest Rate Swap pursuant to an event of default or termination event (other than Illegality or Tax Event) (each as defined in the related Qualifying Interest Rate Swap) as to which the Qualifying Swap Counterparty was the defaulting party or the sole affected party under the Qualifying Interest Rate Swap.

 

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“ Qualifying Interest Rate Swap ” means (X) an interest rate swap agreement (i) between the Borrower and a Qualifying Swap Counterparty, (ii) under which the Borrower shall receive a floating rate of interest based on a Eurodollar Index acceptable to the Lender in exchange for the payment by the Borrower of a fixed rate of interest equal to the applicable Swapped Rate, (iii) the effective date of which is a Borrowing Date, (iv) having a varying notional balance which is, as of the effective date thereof, in an amount equal to the aggregate principal amount of the Loans advanced on such effective date and (v) which shall otherwise be on such terms and conditions and pursuant to such documentation as shall be acceptable to the Lender or (Y) an alternative interest rate hedging agreement agreed to in writing by the Borrower and the Lender.

“ Qualifying Swap Counterparty ” means Morgan Stanley Capital Services Inc. (or any successors or permitted assigns) or any other financial institution that is in the business of entering into interest rate swap transactions, is acceptable to the Lender and has a long-term senior unsecured debt rating of “A” or higher (or the equivalent) by each Rating Agency then rating such long-term senior unsecured debt) or posts cash collateral in a manner and amount satisfactory to the Lender.

“ Rating Agencies ” means Moody’s, S&P and Fitch, or any other nationally recognized statistical rating organizations as may be designated by the Lender.

“ Real Estate Contract ” means a loan agreement and promissory note, finance agreement or similar agreement, in each case, (i) in a form approved in writing by the Lender (in its reasonable discretion) and that is consistent with the Credit and Collection Policy and (ii) pursuant to which the Originator makes a loan to an Obligor secured by rentals or other receivables arising from the use of real property, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“ Receivable ” means a Pool A Receivable or a Pool B Receivable.

“ Receivable File ” means with respect to each Receivable:

(a) if such Receivable is related to a Lease Contract the following items (collectively, a “ Pool A Lease File ”):

 

(i)

(1) the related original, executed Lease Contract and certified copies of amendments thereto (or, in the case of a Lease Contract under a master lease, a machine or facsimile copy of the related master lease and all amendments thereto, in each case certified by an authorized officer of the Borrower and stamped “I hereby certify that this is a true and exact copy of the original” and an original, executed schedule thereto describing the related Equipment and certified copies of amendments thereto) unless such Lease Contract is related to an Exception Sublimit Receivable, in which event the executed Lease Contract and all amendments thereto (or, in the case of Lease Contracts under a master lease, the related schedule and all amendments thereto) may be a machine or facsimile copy certified in the manner described above, (2) a true, executed copy of the related delivery/installation certificate or acknowledgment and acceptance of delivery certificate if such Receivable is related to Equipment with an original cost in excess of $50,000, (3) a true copy of the Insurance Certificate if such Receivable is related to Equipment with an original cost in excess of $100,000, (4) other than with respect to a Lease Contract related to Equipment which has an original cost of less than $25,000 if such Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Lease Contract is a FMV Contract, a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement and (5) vendor order(s) or invoice(s); and

 

(ii)

copies of any additional documents, other than servicing related documents (except for vendor contracts), that the Borrower keeps on file with respect to such Receivable;

 

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(b) if such Receivable is related to a Loan Contract or a Practice Acquisition Loan Contract the following items (collectively, a “ Pool A Loan File ”):

 

(i)

(1) if a promissory note was executed by the related Obligor in connection with such Loan Contract or Practice Acquisition Loan Contract, the original of such executed promissory note and certified copies of amendments thereto (with a fully executed, original Allonge attached thereto); provided that, with regard to any “Finance Agreement”, no executed promissory note or fully executed, original Allonge need be included, (2) a true, executed copy of the related “Master Loan and Security Agreement”, “Finance Agreement” or similar agreement pursuant to which the Originator made the related loan to the related Obligor (and all amendments thereto), (3) a true copy of the related Insurance Certificate if such Receivable is related to Equipment with an original cost in excess of $100,000 and (4) other than with respect to a Receivable related to Equipment which has an original cost of less than $25,000, a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement; and

 

(ii)

copies of any additional documents, other than servicing related documents (except for vendor contracts), that the Borrower keeps on file with respect to such Receivable;

(c) if such Receivable is related to an Underlying Originator Loan Contract the following items (collectively, a “ Pool B Master Receivable File ”):

 

(i)

(1) if a promissory note was executed by the related Obligor in connection with such Underlying Originator Loan Contract, the original of such executed promissory note and certified copies of amendments thereto (with a fully executed, original Allonge attached thereto); provided that, with regard to any “Finance Agreement”, no executed promissory note or fully executed, original Allonge need be included, (2) a true, executed copy of the related security agreement and certified copies of all amendments thereto, unless such Underlying Originator Loan Contract is in the form of a “Master Purchase and Sale Agreement” , “Finance Agreement” or such other form of agreement approved in writing by the Lender (in its reasonable discretion) that, in any case, includes language granting to the purchaser thereunder a security interest in all the related Underlying Originator Loan Collateral and other property pledged by the related Obligor to secure its obligations under such Underlying Originator Loan Contract, and (3) a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement; and

 

(ii)

copies of any additional documents, other than servicing related documents (except for vendor contracts), that the Borrower keeps on file with respect to such Receivable;

(d) if such Receivable is related to a Underlying Originator Loan Contract which finances an Underlying Lease Contract the following items (collectively, a “ Pool B Underlying Lease File ”):

 

(i)

(1) the related original, executed Underlying Lease Contract and certified copies of amendments thereto (or, in the case of an Underlying Lease Contract under a master lease, a machine or facsimile copy of the related master lease and all amendments thereto, in each case certified by an authorized officer of the Borrower and stamped “I hereby certify that this is a true and exact copy of the original” and an original, executed schedule thereto describing the related Equipment and certified copies of amendments thereto) and (2) other than with respect to an Underlying Lease Contract related to Equipment which has an original cost of less than $25,000 if such Underlying Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Underlying Lease Contract is a FMV Contract, a “transmittal order” from the Underlying Originator to a filing service company and an “in process report” from such filing service

 

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company to the Underlying Originator (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Underlying Lease Contract being executed, a file-stamped copy of the related UCC financing statement; and

 

(ii)

copies of any additional documents, other than servicing related documents (except for vendor contracts), that the Borrower keeps on file with respect to such Receivable;

(e) if such Receivable is related to an Underlying Originator Loan Contract which finances an Underlying Loan Contract the following items (collectively, a “ Pool B Underlying Loan File ”):

 

(i)

(1) the original, executed promissory note and certified copies of amendments thereto (with fully executed, original Allonge attached thereto), (2) a true, executed copy of the related security agreement and (3) other than with respect to an Underlying Loan Contract related to Equipment which has an original cost of less than $25,000 a “transmittal order” from the Underlying Originator to a filing service company and an “in process report” from such filing service company to the Underlying Originator (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement; and

 

(ii)

copies of any additional documents, other than servicing related documents (except for vendor contracts), that the Borrower keeps on file with respect to such Receivable.

In addition, if the Obligor Collateral related to such Receivable is a Vehicle, the related Receivable File shall include the original copy of the Certificate of Title with respect to such Vehicle, which such Certificate of Title satisfies the Titling Requirements or (prior to the 90th day after such Receivable was first included in the calculation of the Eligible Receivables Balance, if such Certificate of Title has not yet been received by the Servicer or the Borrower) a copy of the application for such Certificate of Title.

“ Receivables Schedule ” has the meaning assigned to that term in the Custodial Agreement.

“ Records ” means all documents, books, records and other information (including, without limitation, tapes, disks, punch cards and related property and rights) maintained with respect to Receivables and the related Obligors which the Borrower has itself generated, in which the Borrower has acquired an interest pursuant to the Purchase and Sale Agreement or in which the Borrower has otherwise obtained an interest.

“ Recoveries ” means, for any Collection Period during which, or any Collection Period after the date on which, any Receivable becomes a Defaulted Receivable and with respect to such Defaulted Receivable, all payments that the Servicer received from or on behalf of the related Obligor during such Collection Period in respect of such Defaulted Receivable or from the repossession, liquidation or re-leasing of the related Obligor Collateral, including but not limited to Scheduled Payments, Overdue Payments, Guaranty Amounts and Insurance Proceeds.

“ Registrar of Titles ” means with respect to any State, the governmental agency or body responsible for the registration of, and the issuance of certificates of title relating to, motor vehicles and liens thereon.

“ Related Security ” means with respect to any Receivable:

 

(i)

any and all security interests or liens and property subject thereto from time to time securing or purporting to secure payment of such Receivable;

 

(ii)

all guarantees, indemnities, warranties, letters of credit, insurance policies and proceeds and premium refunds thereof and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable; and

 

(iii)

all proceeds of the foregoing.

 

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“Release Amount” means on any Remittance Date, the least of (i) the “Amount”, if any, set forth on Schedule VII that is scheduled to be paid to the Borrower on such Remittance Date pursuant to Section 2.04(c)(xv), (ii) such amount requested in writing by the Borrower at least four (4) Business Days prior to such Remittance Date, if any, (iii) the difference between (a) $900,000.00 and (b) the aggregate of all payments made to the Borrower pursuant to Section 2.04(c)(xv) on all Remittance Dates prior to such Remittance Date and (iv) the Collection Sub-Account balance on such Remittance Date.

“ Release Price ” means, with respect to a Pledged Receivable to be released hereunder, an amount equal to the Discounted Balance of such Pledged Receivable at the time of such release plus interest accrued thereon at the Discount Rate from and including the Remittance Date immediately preceding the date such Pledged Receivable is to be released through (but not including) the next succeeding Remittance Date.

“ Remittance Date ” means the twenty-third (23 ^rd ) day of each month beginning December, 2006, or, if such date is not a Business Day, the next succeeding Business Day; provided, that the final Remittance Date shall occur on the Collection Date.

“ Resource America ” means Resource America, Inc., a Delaware corporation.

“ Rollover Interest Period ” means any Interest Period other than any Interest Period (i) applicable to the Loan arising as a result of the Borrowing on the initial Borrowing Date or (ii) applicable to any new Loan arising as a result of a Borrowing on a Subsequent Borrowing Date.

“ S&P ” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (or its successors in interest).

“ Scheduled Payments ” means, with respect to any Receivable, the periodic payments payable under the terms of the related Contract (but not including any such periodic payment to the extent paid in advance by the related Obligor).

“ Secured Parties ” means the Lender, the Servicer, the Backup Servicer, the Custodian, the Lender’s Bank, each Qualified Swap Counterparty and their respective successors and assigns.

“ Security Deposit ” means any amount paid to the Servicer or the Borrower by an Obligor as a security deposit or as a payment in advance of any amounts to become due under a Contract, which has not previously been refunded to such Obligor or applied toward such Obligor’s obligations under such Contract (for purposes of clarification, a Cash Reserve shall not be deemed to constitute a Security Deposit).

“ Security Deposit Account ” has the meaning assigned to that term in Section 2.05 .

“ Security Deposit Account Agreement ” means that certain Securities Account Agreement, dated the date of this Agreement, among the Borrower, the Servicer, the Lender’s Bank and the Lender, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof.

“ Servicer ” means, at any time, LEAF Financial or any other Person then authorized, pursuant to Section 6.01 , to service, administer and collect Pledged Receivables.

“ Servicer Advance ” has the meaning assigned to such term in Section 6.19 .

“ Servicer Default ” means the occurrence of any of the following events:

 

(i)

the failure of the Servicer to deliver any payments, collections or proceeds which it is obligated to deliver under the terms hereof or of any other Transaction Document at the times it is obligated to make such deliveries under the terms hereof or of any other Transaction Document, and such failure remains unremedied for two Business Days;

 

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(ii)

the failure of the Servicer to satisfy any of its reporting, certification, notification or documentation requirements under the terms hereof or of any other Transaction Document or the failure of the Servicer to observe or perform any material term, covenant or agreement hereunder or under any other Transaction Document (other than those described in clause (i) above) and such failure shall remain unremedied for 10 days (or, with respect to a failure with respect to any such requirement set forth in Section 6.10(e) hereof, 1 Business Day) after the Servicer first has knowledge, whether constructive or actual, of such failure;

 

(iii)

any representation, warranty or statement of the Servicer made herein or in any other Transaction Document shall prove to be incorrect in any material respect, and, solely if such incorrect representation, warranty or statement can be remedied, such representation, warranty or statement is not made true within 15 days;

 

(iv)

the occurrence of an Event of Default;

 

(v)

the occurrence of a Program Termination Event described in clauses (iv), (v ), (vi), (vii), (viii), (ix ) or ( xii vi ) of the definition of Program Termination Events; or

 

(vi)

the occurrence of any Bankruptcy Event in respect of the Servicer.

“ Servicer Pension Plan ” means a “pension plan” as such term is defined in section 3(2) of ERISA, which is subject to title IV of ERISA and to which the Servicer or any ERISA Affiliate of Servicer may have any liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA.

“ Servicing Agreement Electronic Images ” has the meaning set forth in Section 5.02 .

“ Servicing Charges ” means the sum of (a) all late payment charges paid by Obligors under Contracts after payment in full of any Scheduled Payments due in a prior Collection Period and Scheduled Payments for the related Collection Period and (b) any other incidental charges or fees received from an Obligor, including, but not limited to, late fees, collection fees, taxes and charges for insufficient funds.

“ Servicing Fee ” means, for any Fee Period, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to (i) the Servicing Fee Rate multiplied by (ii) the Net Eligible Receivables Balance as of the first day of such Fee Period multiplied by (iii) a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360. Upon assuming the duties of the Servicer hereunder, the Backup Servicer shall also be entitled to receive a one-time acceptance fee of $60,000, which shall be considered part of the “Servicing Fee” hereunder but shall be in addition to the amount set forth in the sentence above.

“ Servicing Fee Rate ” means 1.00%.

“Seventh Amendment Effective Date” means July 14, 2009.

“ Stand Alone Working Capital Loan ” means a loan to a dental, medical, osteopathic medical, optometric or veterinary practice that may be secured by all assets of such dental, medical, osteopathic medical, optometric or veterinary practice or that might be unsecured.

“ Standby Backup Servicer’s Fee ” means, for any Fee Period or portion thereof prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to the greater of (i) the Standby Backup Servicing Fee Rate, multiplied by the Net Eligible Receivables Balance as of the first day of such Fee Period, multiplied by a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360, or (ii) $1,500. The

 

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“Standby Backup Servicer’s Fee” shall also include (i) a one-time acceptance fee of $6,000 payable on November 13, 2008 and (ii) reasonable out-of-pocket expenses incurred by the Standby Backup Servicer in the performance of its duties.

“ Standby Backup Servicing Fee Rate ” means .0310%.

“ State ” means one of the fifty states of the United States or the District of Columbia.

“ Subsequent Borrowing ” means a Borrowing which occurs on a Subsequent Borrowing Date.

“ Subsequent Borrowing Date ” means each Business Day occurring after the initial Borrowing Date on an additional Borrowing is funded from the Lender to the Borrower.

“ Swapped Rate ” means, with respect to any Qualifying Interest Rate Swap, the annual rate of interest (expressed as a percentage) which the Borrower, as the fixed-rate payor, is required to pay under such Qualifying Interest Rate Swap in order to receive the floating rate of interest provided for under such Qualifying Interest Rate Swap.

“ Tangible Net Worth ” means, with respect to any Person, the amount calculated in accordance with GAAP as (i) the consolidated net worth of such Person and its consolidated subsidiaries (excluding, solely with respect to the Owner and only to the extent otherwise included in such consolidated net worth, any mark-to-market gain or loss on any swap or other hedge transaction of the Owner and its consolidated subsidiaries), plus (ii) to the extent not otherwise included in such consolidated net worth, unsecured subordinated Debt of such Person (and, solely with respect to the Owner and only to the extent not otherwise included in such consolidated net worth, (x) intercompany Debt of the Owner and (y) the aggregate outstanding principal balance of the Owner Secured Recourse Promissory Notes held by Persons that are not Affiliates of the Owner) and its consolidated subsidiaries, the terms and conditions of which are reasonably satisfactory to the Lender, minus (iii) the consolidated intangibles of such Person and its consolidated subsidiaries, including, without limitation, goodwill, trademarks, tradenames, copyrights, patents, patent allocations, licenses and rights in any of the foregoing and other items treated as intangibles in accordance with GAAP.

“Targeted Advance Rate” means, on any Remittance Date, a fraction, (i) the numerator of which is the sum of the aggregate principal balance of the Loans as of the immediately preceding Remittance Date after giving effect to distributions of principal on such Remittance Date in accordance with the priority of payments in Section 2.04(c), and (ii) the denominator of which is the aggregate Amortized Equipment Cost of all Pledged Receivables as of the immediately preceding Remittance Date.

“Target Principal Amount” means, for any Remittance Date, the lesser of (a) the product of (i) the Targeted Advance Rate for such Remittance Date, times (ii) the amount equal to the aggregate Amortized Equipment Cost of all Pledged Receivables as of the immediately preceding Remittance Date less the aggregate Amortized Equipment Cost of all Pledged Receivables as of such Remittance Date and (b) the aggregate principal balance of the Loans as of such Remittance Date prior to any principal payments on the Loans.

“ Titling Requirements ” means that:

 

(i)

in the case of any Vehicle leased or sold to an Obligor pursuant to a Pool A Contract, the Certificate of Title for such Vehicle indicates the Obligor, as owner, and the Borrower or an Approved Lienholder, as lienholder;

 

(ii)

in the case of any Vehicle leased or sold to an Underlying Obligor pursuant to an Underlying Contract, the Certificate of Title for such Vehicle indicates the Underlying Obligor, as owner, and an Approved Lienholder, as lienholder.

“ Transaction Documents ” means this Agreement, the Purchase and Sale Agreement, the Lockbox Intercreditor Agreement, the Collection Account Agreement, the Security Deposit Account Agreement, each Cash

 

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Reserve Account Agreement, the Fee Letter, the Custodial Agreement, the Originator Insurance Agreement, any lease bailment agreement with a sub-custodian and each Qualifying Interest Rate Swap and each document and instrument related to any of the foregoing.

“ Transition Costs ” means any documented expenses and allocated cost of personnel reasonably incurred by the Backup Servicer in connection with a transfer of servicing from the Servicer to the Backup Servicer as the successor Servicer; provided, that such expenses and allocated costs do not exceed $60,000.

“ UCC ” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.

“ Underlying Collateral ” means the Underlying Equipment leased or sold to an Underlying Obligor, or serving otherwise as collateral for a loan to an Underlying Obligor under an Underlying Contract.

“ Underlying Contract ” means an Underlying Lease Contract or an Underlying Loan Contract.

“ Underlying Contract Event of Default ” means, as of any time of determination, the occurrence and continuation of any of the following events with respect to any Underlying Contract:

 

(i)

any Underlying Scheduled Payment (or other amount payable under the terms of the related Underlying Contract) remains unpaid for more than 120 days after the due date therefor set forth in such Underlying Contract;

 

(ii)

the first or second Underlying Scheduled Payment is not paid in full when due under the related Underlying Contract;

 

(iii)

any payment or other material terms of the related Underlying Contract have been modified due to credit related reasons after such Underlying Contract was acquired by Originator;

 

(iv)

such Underlying Contract has been or should be charged off as a result of the occurrence of a Bankruptcy Event with respect to the related Underlying Obligor, if any, or has been or should otherwise be deemed uncollectible by the Underlying Originator in accordance with its credit and collection policy; or

 

(v)

the related Underlying Equipment has been repossessed.

“ Underlying Delinquency Rate ” means with respect to any Underlying Originator, as of any date of determination, an amount (expressed as a percentage) equal to (i) the aggregate Discounted Balances of all Underlying Contracts related to such Underlying Originator as to which any part of any Underlying Scheduled Payment (or other amount payable under the terms of the related Underlying Contract) remains unpaid for more than 30 days but not more than 120 days after the due date therefor set forth in such Underlying Contract as of the last day of the immediately preceding Collection Period divided by (ii) the aggregate Discounted Balances with respect to all Eligible Pool B Underlying Lease Contracts and Eligible Pool B Underlying Loan Contracts related to such Underlying Originator as of such day.

“ Underlying Equipment ” means the equipment or Vehicle leased or sold to an Underlying Obligor by an Underlying Originator, or serving as collateral for a loan to an Underlying Obligor by an Underlying Originator, under an Underlying Contract together with any replacement parts, additions and repairs thereof, and any accessories incorporated therein and/or affixed thereto.

“ Underlying Insurance Certificate ” means with respect to any Pool B Receivable, the insurance certificate related to the Underlying Insurance Policy with respect to the Underlying Contract relating to such Receivable (which insurance certificate shall list the Originator or the Underlying Originator as the loss payee).

“ Underlying Insurance Policy ” means, with respect to any Underlying Collateral, the insurance policy maintained by or on behalf of the Obligor pursuant to the related Contract that covers physical damage to the related

 

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Equipment (in an amount sufficient to insure completely the value of such Equipment) and general liability (including policies procured by the Borrower or the Servicer, or any agent thereof, on behalf of the Obligor).

“ Underlying Lease Contract ” means a lease contract, finance agreement and/or similar agreement(s) (in any case, which is in the form of a lease) pursuant to which Underlying Equipment is leased to an Underlying Obligor by an Underlying Originator, together with all schedules, supplements and amendments thereto and each other document and instrument related to such lease contract.

“ Underlying Lease Documents ” means, with respect to any Pool B Receivable, the Underlying Lease Contract and all agreements, documents or instruments evidencing, securing, guaranteeing or otherwise relating to the obligations of the Underlying Obligor thereunder.

“ Underlying Loan Contract ” means, collectively, a promissory note, a loan agreement, finance agreement, security agreement and/or similar agreement(s), pursuant to which an Underlying Originator makes a loan to an Underlying Obligor secured by Underlying Equipment owned by such Underlying Obligor, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“ Underlying Loan Documents ” means, with respect to any Pool B Receivable, the Underlying Loan Contract and all agreements, documents or instruments evidencing, securing, guaranteeing or otherwise relating to the obligations of the Underlying Obligor thereunder, including, without limitation, the note or notes evidencing such indebtedness.

“ Underlying Obligor ” means, collectively, each Person obligated to make payments under an Underlying Contract.

“ Underlying Originator ” means an Obligor engaged, in the ordinary course of business in providing financing to Underlying Obligors for the purposes of acquiring Underlying Equipment.

“ Underlying Originator Credit and Collection Policy ” means the credit and collection policy of an Underlying Originator, as such policy may hereafter be amended, modified or supplemented from time to time in compliance with this Agreement.

“ Underlying Originator Loan Collateral ” means Underlying Loan Contracts and Underlying Lease Contracts and all other assets of the Underlying Originators which secure the obligations of Underlying Originators under an Underlying Originator Loan Contract, or which are sold to the Originator by Underlying Originators under an Underlying Originator Loan Contract, in each case whether now owned or hereafter acquired, and including without limitation the Underlying Loan Documents, the Underlying Lease Documents, Underlying Security Deposit (if any) and the Underlying Equipment related thereto, together with all proceeds of every kind and nature, including proceeds of proceeds, of any and all of the foregoing.

“ Underlying Originator Loan Contract ” means, collectively, a “Master Purchase and Sale Agreement,” a “Master Loan and Security Agreement,” a “Loan and Security Agreement,” a “Finance Agreement” or similar agreement in a form approved in writing by the Lender (in its reasonable discretion), each of which complies with all of the criteria set forth in Exhibit D-4 hereto (as such exhibit may be updated from time to time by the Borrower with the consent of the Lender), pursuant to which Originator makes a purchase of Underlying Originator Loan Collateral from an Underlying Originator or makes a loan to an Underlying Originator secured by Underlying Originator Loan Collateral, together with all schedules, supplements and amendments thereto and each other document and instrument related thereto.

“ Underlying Scheduled Payments ” means, with respect to any Underlying Contract, the periodic payments payable under the terms of such Underlying Contract (but not including any such periodic payment to the extent paid in advance by the related Underlying Obligor).

“ Underlying Security Deposit ” means any amount paid to an Underlying Originator by an Underlying Obligor as a security deposit or as a payment in advance of any amounts to become due under an Underlying

 

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Contract, which has not previously been refunded to such Underlying Obligor or applied toward such Underlying Obligor’s obligations under such Underlying Contract.

“ United States ” means the United States of America.

“ Unmatured Event of Default ” means any event that, if it continues uncured, will, with lapse of time or notice or lapse of time and notice, constitute an Event of Default.

“ Vehicle ” means a new or a used automobile, minivan, sports utility vehicle, light duty truck or heavy duty truck.

“ Weekly Collection Period ” means, with respect to any calendar week, the period beginning on, and including, the first day of the most recently ended calendar week and ending on, and including, the last day of the most recently ended calendar week.

“ Weekly Reporting Date ” has the meaning set forth in Section 6.10(e) .

“ Weighted Average Swapped Rate ” means, as of any date of determination, the weighted average (weighted solely based on the Calculated Swap Amortizing Balances of such Qualifying Interest Rate Swaps as of such date of determination) of the Swapped Rates of the Qualifying Interest Rate Swaps in effect on such date of determination.

SECTION 1.02 Other Terms . All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.

SECTION 1.03 Computation of Time Periods . Unless otherwise stated in this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

ARTICLE II.

THE RECEIVABLES FACILITY

SECTION 2.01 Borrowings . On the terms and conditions hereinafter set forth, the Lender shall make loans (“ Loans ”) to the Borrower secured by Pledged Assets from time to time during the period from the date hereof until the earlier of the Program Termination Date or the Facility Maturity Seventh Amendment Effective Date. Separate Loans will be made to finance the Borrower’s acquisition of (x) Pool A Receivables (“ Pool A Loans ”) and (y) Pool B Receivables (“ Pool B Loans ”), and no Loan shall finance both Pool A Receivables and Pool B Receivables. Under Notwithstanding anything else to the contrary set forth in this Agreement or in any other Transaction Document, under no circumstances shall the Lender make, or the Borrower request, any Loan if (a) the principal amount of such Loan is less than (i) with respect to the initial Borrowing only, $10,000,000 and (ii) with respect to any Subsequent Borrowing, $500,000, or (b) after giving effect to the Borrowing of such Loan, either (i) a Program Termination Event or an event that but for notice or lapse of time or both would constitute a Program Termination Event has occurred and is continuing or (ii) the aggregate Facility Amount hereunder would exceed the lesser of (A) the Borrowing Limit and (B) the Borrowing Base. Under no circumstances shall the Lender make, or the Borrower request, any Loan secured by Pool A Receivables if after giving effect to the Borrowing of such Loan, either (1) the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, would exceed the Pool A Borrowing Base or (2) a Pool A Termination Event shall exist. Under no circumstances shall the Lender make, or the Borrower request, any Loan secured by any Pool B Receivable if after giving effect to the Borrowing of such Loan, either (1) the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, would exceed the Pool B Borrowing Base or (2) a Pool B Termination Event shall exist with respect to the Underlying Originator related to such Pool B Receivable on or after the Seventh Amendment Effective Date .

 

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SECTION 2.02 The Initial Borrowing and Subsequent Borrowings.

(a) Until the occurrence of the earlier of the Program Termination Date and the Facility Maturity Seventh Amendment Effective Date, the Lender will make Loans on any Business Day at the request of the Borrower, subject to and in accordance with the terms and conditions of Sections 2.01 and 2.02 and subject to the provisions of Article III hereof.

(b) (i) The initial Borrowing shall be made on at least five (5) Business Days’ irrevocable written notice from the Borrower to the Lender and each Subsequent Borrowing shall be made on at least three (3) Business Days’ irrevocable written notice from the Borrower to the Lender (any such written notice, a “ Notice of Borrowing ”), provided that such Notice of Borrowing is received by the Lender no later than 12:00 noon (New York City time) on the Business Day of receipt. Any Notice of Borrowing received after 12:00 noon (New York City time) shall be deemed received prior to 12:00 noon (New York City time) on the following Business Day. Each such Notice of Borrowing shall specify (A) the aggregate amount of such Borrowing, (B) the date of such Borrowing, (C) the allocation of the Loans as Pool A Loans and Pool B Loans, and (D) the Eligible Pool A Receivables and the Eligible Pool B Receivables to be Pledged in connection with such Borrowing (and upon such Borrowing, such Receivables shall be Pledged Receivables hereunder). On the date of each Borrowing, the Lender shall, upon satisfaction of the applicable conditions set forth in Article III , make available to the Borrower on the applicable Borrowing Date, no later than 2:00 P.M. (New York City time), in same day funds, the amount of such Borrowing (net of amounts payable to or for the benefit of the Lender), by payment into the account which the Borrower has designated in writing.

 

(ii)

Each Notice of Borrowing delivered to the Lender pursuant to this Section 2.02(b) shall be in an electronic file format acceptable to the Lender (A) accompanied by a copy of the Notice of Pledge (and the Receivables Schedule attached thereto), which was sent to the Custodian pursuant to the