SECURED LOAN AGREEMENT Dated as of June 19, 2007 LEAF FUND III, LLC, as Borrower LEAF FUNDING, INC., as Originator LEAF EQUIPMENT LEASING INCOME FUND III, L.P., as Seller LEAF FINANCIAL CORPORATION, as Servicer U.S. BANK NATIONAL ASSOCIATION, as...
Dated
as of June 19, 2007
LEAF
FUND III, LLC,
as
Borrower
LEAF
FUNDING, INC.,
as
Originator
as
Seller
LEAF
FINANCIAL CORPORATION,
as
Servicer
U.S.
BANK NATIONAL ASSOCIATION,
as
Collateral Agent and Securities Intermediary
and
WESTLB
AG, NEW YORK BRANCH,
as
Lender
Table
of Contents
Page
Article
I
DEFINITIONS
AND ACCOUNTING MATTERS
|
Section
1.01
|
Defined
Terms
|
1
|
|
Section
1.02
|
Accounting
Terms and Determinations
|
1
|
Article
II
ADVANCES,
NOTE AND PREPAYMENTS
|
Section
2.01
|
Advances.
|
2
|
|
Section
2.02
|
The
Note.
|
2
|
|
Section
2.03
|
Procedures
for Borrowing.
|
3
|
|
Section
2.04
|
[Reserved].
|
3
|
|
Section
2.05
|
Repayment
of Advances; Interest.
|
3
|
|
Section
2.06
|
Illegality;
Substituted Interest Rates
|
4
|
|
Section
2.07
|
Determination
of Borrowing Base; Mandatory Prepayments or Pledge.
|
5
|
|
Section
2.08
|
Optional
Prepayments; Indemnity.
|
6
|
|
Section
2.09
|
Requirements
of Law.
|
6
|
|
Section
2.10
|
Purpose
of Advances
|
7
|
|
Section
2.11
|
Extension
of Expected Facility Termination Date.
|
7
|
|
Section
2.12
|
Taxes.
|
8
|
Article
III
PAYMENTS;
COMPUTATIONS
|
Section
3.01
|
Payments.
|
9
|
|
Section
3.02
|
Computations
|
9
|
|
Section
3.03
|
Settlement
Procedures.
|
9
|
Article
IV
COLLATERAL
SECURITY
|
Section
4.01
|
Collateral;
Security Interest.
|
11
|
|
Section
4.02
|
Further
Documentation
|
13
|
|
Section
4.03
|
Changes
in Locations, Name, etc
|
14
|
|
Section
4.04
|
Collateral
Agent’s Appointment as Attorney-in-Fact.
|
14
|
|
Section
4.05
|
Reimbursement
for Performance by Collateral Agent of Borrower’s
Obligations
|
16
|
|
Section
4.06
|
Proceeds
|
16
|
|
Section
4.07
|
Remedies
|
16
|
|
Section
4.08
|
Servicing
Rights
|
17
|
|
Section
4.09
|
Limitation
on Duties Regarding Preservation of Collateral
|
17
|
|
Section
4.10
|
Powers
Coupled with an Interest
|
18
|
|
Section
4.11
|
Release
of Security Interest
|
18
|
|
Section
4.12
|
Rights
of Secured Parties; Limitations on Secured Parties’
Obligations
|
18
|
|
Section
4.13
|
[Reserved].
|
19
|
i
Article
V
CONDITIONS
PRECEDENT
|
Section
5.01
|
Initial
Advance
|
19
|
|
Section
5.02
|
Initial
and Subsequent Advances
|
21
|
Article
VI
REPRESENTATIONS
AND WARRANTIES
|
Section
6.01
|
Representations
and Warranties Relating to the Borrower
|
24
|
|
Section
6.02
|
Representations
and Warranties of LEAF
|
29
|
|
Section
6.03
|
Representations
and Warranties of the Servicer
|
33
|
Article
VII
COVENANTS
|
Section
7.01
|
Covenants
of Borrower
|
37
|
|
Section
7.02
|
Covenants
of LEAF
|
43
|
|
Section
7.03
|
Covenants
of the Servicer
|
50
|
Article
VIII
EVENTS
OF
DEFAULT
|
Section
8.01
|
Events
of Default
|
56
|
Article
IX
REMEDIES
UPON DEFAULT
|
Section
9.01
|
Remedies.
|
60
|
Article
X
NO
DUTY
OF COLLATERAL AGENT
|
Section
10.01
|
No
Duty of Collateral Agent
|
61
|
Article
XI
PURCHASE
OF RELEASE AND SUBSTITUTION OF CONTRACTS
|
Section
11.01
|
Purchase
of Release and Substitution.
|
62
|
|
Section
11.02
|
Procedure.
|
63
|
|
Section
11.03
|
Objection
and Purchase.
|
65
|
|
Section
11.04
|
Borrower’s,
Servicer’s and Collateral Agent’s Subsequent Obligations.
|
65
|
ii
Article
XIII
[INTENTIONALLY
OMITTED]
|
Section
14.01
|
No
Waiver; Remedies Cumulative
|
71
|
|
Section
14.02
|
Notices
|
71
|
|
Section
14.03
|
Indemnification
and Expenses.
|
72
|
|
Section
14.04
|
Amendments;
Waivers
|
74
|
|
Section
14.05
|
Severability
|
74
|
|
Section
14.06
|
Survival
|
74
|
|
Section
14.07
|
Captions
|
75
|
|
Section
14.08
|
Counterparts
|
75
|
|
Section
14.09
|
GOVERNING
LAW; ETC
|
75
|
|
Section
14.10
|
SUBMISSION
TO JURISDICTION; WAIVERS
|
75
|
|
Section
14.11
|
Acknowledgments
|
76
|
|
Section
14.12
|
No
Proceedings
|
76
|
|
Section
14.13
|
Assignments;
Participations.
|
76
|
|
Section
14.14
|
[Reserved].
|
76
|
|
Section
14.15
|
Periodic
Due Diligence Review
|
77
|
|
Section
14.16
|
Set-Off
|
77
|
|
Section
14.17
|
Confidentiality
|
78
|
|
Section
14.18
|
Entire
Agreement
|
78
|
|
Section
14.19
|
Future
Assurances
|
78
|
|
Section
14.20
|
[Reserved].
|
78
|
|
Section
14.21
|
Third-Party
Beneficiaries
|
78
|
APPENDICES
APPENDIX
A Defined
Terms
EXHIBITS
EXHIBIT
A [Intentionally
Omitted]
EXHIBIT
B Form
of Custodial Agreement
EXHIBIT
C Form
of Interest Rate Hedging Agreement
EXHIBIT
D Eligibility
Criteria
EXHIBIT
E Form
of Contract
EXHIBIT
F Financial
Statements of the Servicer
EXHIBIT
G Underwriting
Guidelines
EXHIBIT
H Form
of Note
EXHIBIT
I Notice
of Borrowing and Pledge
EXHIBIT
J Forms
of Opinion of Counsel to LEAF Parties
EXHIBIT
K Filing
Jurisdictions and Offices
EXHIBIT
L Trade
Names, Etc.
EXHIBIT
M Form
of Borrowing Base Deficiency Notice
EXHIBIT
N Schedule
of LEAF Indebtedness
EXHIBIT
O Schedule
of LEAF Insurance
EXHIBIT
P Form
of Vehicle Lienholder Nominee Agreement
SECURED
LOAN AGREEMENT, dated as of June 19, 2007, among LEAF FUND III, LLC, a Delaware
limited liability company (the “Borrower”), LEAF FUNDING, INC., a
Delaware corporation (in its capacity as originator of Contracts from Approved
Originators, “LEAF Originator”), LEAF EQUIPMENT LEASING INCOME FUND III,
L.P., a Delaware limited partnership (“LEAF” or the “Seller”),
LEAF FINANCIAL CORPORATION, a Delaware corporation (the “Servicer”), U.S.
BANK NATIONAL ASSOCIATION, a national banking association (in its capacity
as
collateral agent, the “Collateral Agent” and, in its capacity as
securities intermediary, the “Securities Intermediary”) and WESTLB AG,
NEW YORK BRANCH (the “Lender”).
WITNESSETH:
WHEREAS,
the Borrower wishes to borrow certain sums from time to time to provide
financing of the purchase of certain Contracts;
WHEREAS,
pursuant to the terms and conditions of the Servicing Agreement such Contracts
shall be serviced by the Servicer;
WHEREAS,
such Contracts and related Collateral shall secure Advances to be made by Lender
hereunder and the other Secured Obligations; and
NOW,
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as
follows:
Article
I
DEFINITIONS
AND ACCOUNTING MATTERS
Section
1.01 Defined
Terms. Whenever used in this Agreement (including, without limitation,
in the preambles and the exhibits hereto), capitalized terms used and not
otherwise defined herein shall have the meanings set forth in Appendix A
attached hereto. Any
and
all terms used in this Agreement which are defined in the UCC shall be construed
and defined in accordance with the meaning and definition ascribed to such
terms
under the UCC, unless otherwise defined in Appendix A.
Section
1.02 Accounting
Terms and Determinations. Except as otherwise expressly provided
herein, all accounting terms used herein shall be interpreted, and all financial
statements and certificates and reports as to financial matters required to
be
delivered to the Lender hereunder shall be prepared, in accordance with
GAAP.
Article
II
ADVANCES,
NOTE AND PREPAYMENTS
Section
2.01 Advances.
(a) Subject
to the terms and conditions of this Loan Agreement, and relying on the
representations, warranties and covenants of the Borrower hereinafter set forth,
the Lender agrees to make one or more loans (each, an “Advance”; and
collectively, the “Advances”) to the Borrower from time to time during
the Commitment Period up to a maximum principal amount at any one time
outstanding equal to the Advance Amount; provided, however, that
no Advance shall be made (i) on a day other than a Permitted Advance Date,
(ii)
in an amount less than the Minimum Advance Amount, (iii) in an amount which
would exceed the Available Commitment on such Permitted Advance Date or (iv)
in
an amount which, when added to the Total Outstanding Advances on such Permitted
Advance Date (before giving effect to the Advance to be made on such Permitted
Advance Date), would result in a Borrowing Base Deficiency after giving effect
to such Advance.
(b) Subject
to the terms and conditions of this Loan Agreement, during the Commitment Period
the Borrower may borrow, repay and reborrow hereunder in accordance with the
procedures set forth in Sections 2.03 and 2.05.
(c) In
no event shall an Advance be made (i) when any Default has occurred and is
continuing or would occur as a result of such Advance or (ii) when any Facility
Termination Event has occurred and is continuing or would occur as a result
of
such Advance.
(d) The
Lender shall have no obligation to make an Advance unless each condition
precedent set forth in Section 5.01 (in connection with the initial
Advance) and Section 5.02 (in connection with the initial Advance and
each subsequent Advance), as applicable, shall have been satisfied as of the
applicable Funding Date.
Section
2.02 The
Note.
(a) The
Advances made by the Lender shall be evidenced by a single promissory note
of
the Borrower substantially in the form of Exhibit H hereto (the
“Note”), duly executed by Borrower, dated the date hereof, payable
to the
order of Lender in a principal amount up to the Maximum Facility Amount and
otherwise duly completed. The Lender shall have the right to have the
Note subdivided, by exchange for promissory notes of lesser denominations or
otherwise.
(b) The
date and amount of each Advance made by the Lender to the Borrower, and each
payment made on account of the principal and interest thereof, shall be recorded
by the Lender on its books and endorsed by the Lender on the schedule attached
to and constituting part of the Note and any continuation
thereof. Such recordation and endorsement shall be conclusive in the
absence of manifest error; provided that the failure of the Lender to
make any such recordation or endorsement or any error in such recordation or
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under the Note.
2
Section
2.03 Procedures
for Borrowing.
(a) The
Borrower may request an Advance hereunder, on any Business Day during the
Commitment Period, by delivering to the Lender, with a copy to the Collateral
Agent, an irrevocable written Notice of Borrowing and Pledge substantially
in
the form of Exhibit I hereto (a “Notice of Borrowing and Pledge”),
appropriately completed and executed by a Responsible Officer of the Borrower,
which Notice of Borrowing and Pledge must be received by the Lender, with a
copy
to the Collateral Agent, no later than 12:00 p.m., New York City time, three
(3)
Business Days prior to the requested Funding Date of such Advance;
provided, that the Borrower shall not request more than one (1) Advance
in any calendar week. Such Notice of Borrowing and Pledge shall (i)
attach a Contract Schedule identifying the Eligible Contracts that the Borrower
proposes to pledge to the Collateral Agent, for the benefit of the Lender and
the Hedge Counterparty, and to be included in the Borrowing Base in connection
with such Advance, (ii) contain the amount of the requested Advance, which
shall
in all events be at least equal to the Minimum Advance Amount, to be made on
such Funding Date and shall also contain the Funding Date Reserve Account
Deposit in connection with such Advance, (iii) specify the requested Funding
Date, (iv) attach an officer’s certificate signed by a Responsible Officer of
the Borrower as to the satisfaction of all of the matters referred to in
Sections 5.02 (a), (b) and (c) hereof (a “Borrowing Base
Certificate”), and (v) attach such other information reasonably requested by
the Lender from time to time prior to the Funding Date set forth in the related
Notice of Borrowing and Pledge.
(b) With
respect to each requested Advance, upon satisfaction of all conditions precedent
set forth in Sections 5.01 (in connection with the initial Advance) and
5.02 (in connection with the initial Advance and each subsequent
Advance)
hereof and the satisfaction of all procedures set forth in this Section
2.03 and Sections 2 and 3 of the Custodial Agreement, (i) the
Lender shall transfer the amount of such Advance to the Collateral Agent for
deposit in the Funding Account on the specified Funding Date; (ii) on the
specified Funding Date, the Collateral Agent shall transfer from the Funding
Account an amount equal to the excess of (x) the amount of such Advance over
(y)
the Funding Date Reserve Account Deposit with respect to such Advance, to such
account as the Borrower shall designate to the Collateral Agent in writing;
and
(iii) unless a Reserve Account Limitation Event would occur, the Collateral
Agent shall deposit in the Reserve Account on the specified Funding Date the
Funding Date Reserve Account Deposit with respect to such Advance.
Section
2.04 [Reserved].
Section
2.05 Repayment
of Advances; Interest.
(a) No
later than the Final Payment Date, the Borrower shall pay to the Lender the
Total Outstanding Advances, plus all accrued and unpaid interest thereon, and
shall pay all other Secured Obligations then accrued, in full. Upon
the Facility Termination Date, (i) the Lender’s commitment to make any new
Advances shall be terminated, (ii) subject to Section 2.11(c), the
Applicable Margin will be equal to the amount in clause (ii) of the definition
of “Applicable Margin” and (iii) the Lender will be entitled to receive the
Additional Principal Payment Amount.
3
(b) The
Borrower hereby promises to pay to the Lender interest on the unpaid principal
amount of each Advance for each Accrual Period for such Advance until the
principal amount of such Advance is paid in full, at a rate per annum equal
to
the LIBOR Rate for such Advance plus the Applicable Margin, calculated on
the basis of the actual number of days elapsed in a year of 360
days. Notwithstanding the foregoing, the Borrower hereby promises to
pay to the Lender interest at the LIBOR Rate plus the Applicable Margin on
any
principal of any Advance and on any other amount payable by the Borrower
hereunder or under the other Loan Documents that shall not be paid in full
when
due (whether at stated maturity, by acceleration or by mandatory prepayment
or
otherwise) for the period from and including the due date thereof to but
excluding the date the same is paid in full. Accrued interest on each
Advance shall be payable on each Payment Date; provided, however,
that, the initial Payment Date for each Advance will be the Payment Date
occurring in the second calendar month following the month in which the Advance
was made.
(c) If,
by the terms of this Loan Agreement or the Note, Borrower at any time is
required or obligated to pay interest at a rate in excess of the maximum rate
permitted by applicable law, the rate of interest shall be deemed to be
immediately reduced to such maximum rate and the portion of all prior interest
payments in excess of such maximum rate shall be applied and shall be deemed
to
have been payments made in reduction of the principal amount due hereunder
and
under the Note.
Section
2.06 Illegality;
Substituted Interest Rates. Notwithstanding any other provisions
herein, (a) if any Requirement of Law or any change therein or in the
interpretation or application thereof shall make it unlawful for the Lender
to
make or maintain any Advances at the LIBOR Rate as contemplated by this Loan
Agreement, or (b) in the event that the Lender shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by reason
of circumstances affecting the LIBOR interbank market neither adequate nor
reasonable means exist for ascertaining the LIBOR Rate, or (c) the Lender shall
have determined (which determination shall be conclusive and binding on the
Borrower) that the LIBOR Rate will not adequately and fairly reflect the cost
to
the Lender of maintaining or funding the Advances based on such LIBOR Rate,
(x)
the obligation of the Lender to make or maintain Advances at the LIBOR Rate
shall forthwith be suspended and the Lender shall promptly notify the Borrower
thereof (by telephone confirmed in writing) and (y) each Advance then
outstanding, if any, shall, from and including the date of the Borrower’s
receipt of notice from the Lender of the occurrence of any condition set forth
in clause (a) , (b) or (c) above, or at such earlier date
as may be required by law, until payment in full thereof, bear interest at
the
rate per annum equal to the greater of the Base Rate and the rate of interest
(including the Applicable Margin) in effect on the date immediately preceding
the date any event described in clause (a), (b) or (c)
above occurred (calculated on the basis of the actual number of days elapsed
in
a year of 360 days). If subsequent to such suspension of the
obligation of the Lender to make or maintain the Advances at the LIBOR Rate
it
becomes lawful for the Lender to make or maintain the Advances at the LIBOR
Rate, or the circumstances described in clause (b) or (c) above no
longer exist, the Lender shall so notify the Borrower and its obligation to
do
so shall be reinstated effective as of the date it becomes lawful for Lender
to
make or maintain the Advances at the LIBOR Rate or the circumstances described
in clause (b) or (c) above no longer exist.
4
Section
2.07 Determination
of Borrowing Base; Mandatory Prepayments or Pledge.
(a) If
at any time the Total Outstanding Advances exceeds the Borrowing Base,
including, without limitation, as a result of any Contract ceasing to be an
Eligible Contract (a “Borrowing Base Deficiency”) the Borrower shall no
later than (i) 12:00 p.m., New York City time, on the second (2nd) Business
Day
after the discovery of such Borrowing Base Deficiency, prepay the outstanding
principal amount of Advances in part or in whole, together with accrued and
unpaid interest on, and other costs relating to, such prepayment under this
Agreement payable by the Borrower with respect to, the principal amount prepaid,
or (ii) 12:00 p.m., New York City time, on the second (2nd) Business Day after
the discovery of such Borrowing Base Deficiency, pledge additional Eligible
Contracts to the Collateral Agent, for the benefit of the Lender and the Hedge
Counterparty, such that after giving effect to such prepayment or pledge the
Total Outstanding Advances do not exceed the Borrowing Base. It is
understood and agreed that, if the Borrower notifies the Lender pursuant to
Section 7.01(m) that it has elected to cure such Borrowing Base
Deficiency pursuant to clause (ii) above and the Collateral Agent shall
have not issued to the Lender a Certification with respect to such additional
pledged Eligible Contracts, complete and free of exceptions, other than those
resolved in accordance with the Custodial Agreement, by 12:00 p.m., New York
City time, on the Certification Date for such additional pledged Contracts,
such
failure to comply with clause (ii) above (or resolve such exceptions in
accordance with the Custodial Agreement) shall be an Event of Default as set
forth in Section 8.01(f).
(b) If
any Contract is not an Eligible Contract by reason of the violation, with
respect to such Contract as of the related Funding Date, of any of the
Eligibility Criteria set forth in Exhibit D hereto, the Borrower shall,
no later than 12:00 p.m., New York City time, on the fifth (5th) Business Day
after the discovery of such violation, obtain the release of the Collateral
Agent’s security interest in such Contract, pursuant to Section 4.11, by
depositing (or causing to be deposited) into the Collection Account the Release
Price for such Contract; provided, however, that, if a Borrowing
Base Deficiency would otherwise occur as a result of such release and payment
of
the related Release Price, the Borrower shall, on the date of such release,
cure
such prospective Borrowing Base Deficiency in the manner set forth in Section
2.07(a)(i) or (a)(ii).
(c) If
any Contract is purchased from the Borrower by the Servicer pursuant to
Section 3.09 of the Servicing Agreement, the Collateral Agent, on the
date of such purchase, shall release its security interest in such Contract,
pursuant to Section 4.11, upon deposit (by or on behalf of the Borrower)
into the Collection Account of the Release Price for such Contract;
provided, however, that, if a Borrowing Base Deficiency would
otherwise occur as a result of such release and payment of the related Release
Price, the Borrower shall, on the date of such release, cure such prospective
Borrowing Base Deficiency in the manner set forth in Section 2.07(a)(i)
or (a)(ii).
(d) If
the Borrower shall purchase the release of any Replaceable Contract from the
security interest of the Collateral Agent hereunder on any Business Day pursuant
to Section 11.01(a), the Collateral Agent shall release its security
interest in such Contract, pursuant to Section 4.11, upon deposit (by or
on behalf of the Borrower) into the Collection Account of the Release Price
for
such Contract; provided, however, that, if a Borrowing Base
Deficiency would otherwise occur as a result of such release and payment of
the
related Release Price, the
5
Borrower
shall, on the date of such release, cure such prospective Borrowing Base
Deficiency in the manner set forth in Section 2.07(a)(i) or
(a)(ii); providedfurther that no such purchase of a release
shall be permissible unless the removal of such Replaceable Contract from the
pool of Contracts is in accordance with the terms of Section 11.01(c) and
Section 11.01(d).
Section
2.08 Optional
Prepayments; Indemnity.
(a) The
Borrower may prepay, in whole but not in part (unless expressly permitted by
a
Loan Document or the Lender consents in writing to a partial prepayment), the
Total Outstanding Advances at any time. Any amounts prepaid shall be
applied to repay the outstanding principal amount of any Advances (together
with
interest thereon) until paid in full. Amounts repaid may be
reborrowed in accordance with the terms of this Loan Agreement. If
the Borrower intends to prepay the Total Outstanding Advances in whole, but
not
in part, from any source, the Borrower shall give five (5) Business Days’ prior
written notice thereof to the Lender, specifying the date and amount of
prepayment. All other Secured Obligations then due and owing shall be
paid in connection with any prepayment of the Total Outstanding
Advances. If such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to such date on the amount prepaid. Notwithstanding
the foregoing, any payment by the Borrower pursuant to Section 2.07 or
Section 11.01 hereof shall not be considered a prepayment and therefore
not subject to this Section 2.08(a).
(b) The
Borrower agrees to indemnify the Lender and to hold it harmless from any cost,
loss or expense which Lender may sustain or incur as a consequence of (i) the
Borrower making any payment or prepayment (other than pursuant to Section
2.07 hereof) of principal of any Advance on a day which is not a Payment
Date, (ii) any failure by the Borrower to take an Advance hereunder after notice
of such Advance has been given pursuant to this Loan Agreement, (iii) any
default by the Borrower in making any prepayment of the Total Outstanding
Advances on the due date therefor, (iv) any acceleration of the maturity of
any
Advances by the Lender in accordance with the terms of this Loan Agreement
(other than by reason of the occurrence of the Expected Facility Termination
Date), including, but not limited to, any cost, loss or expense arising in
liquidating the Collateral and from interest or fees payable by the Lender
to
lenders of funds obtained by it in order to maintain the Advances hereunder,
or
(v) arising from a violation with respect to any Contract of an eligibility
criterion set forth in the Eligibility Criteria annexed hereto as Exhibit
D. Indemnification pursuant to this Section shall survive the
termination of this Loan Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation.
Section
2.09 Requirements
of Law.
(a) If
any Requirement of Law or any change in the interpretation or application
thereof or compliance by the Lender with any request or directive (whether
or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall
subject the Lender to any tax, duty or other charge of any kind whatsoever
with
respect to this Loan Agreement, the Note or any Advance made by it (excluding
taxes imposed on or measured by the Lender’s net or taxable income)
or
6
(ii) shall
impose, modify or hold applicable any reserve, special deposit, compulsory
advance or similar requirement against receivables or other assets held by,
deposits or other liabilities in or for the account of, advances or other
extensions of credit by, or any other acquisition of funds by, any office of
the
Lender which is not otherwise included in the determination of the LIBOR Rate
hereunder;
and
the
result of any of the foregoing is to increase the cost to the Lender, by an
amount which the Lender deems to be material, of making, continuing or
maintaining any Advance or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall pay the Lender, within
ten
(10) Business Days after demand by the Lender, such additional amount or amounts
as will compensate the Lender for such increased cost or reduced amount
receivable.
(b) If
the Lender shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any Person controlling the
Lender with any request or directive regarding capital adequacy (whether or
not
having the force of law) from any Governmental Authority made subsequent to
the
date hereof shall have the effect of reducing the rate of return on the Lender’s
or such Person’s capital as a consequence of its obligations hereunder by an
amount deemed by the Lender to be material, then from time to time, the Borrower
shall pay to the Lender, within twenty (20) days after demand by the Lender,
such additional amount or amounts as will compensate the Lender for such
reduction.
(c) If
the Lender becomes entitled to claim any additional amounts pursuant to this
Section 2.09, it shall notify the Borrower of the event by reason of
which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section 2.09 submitted by the Lender to
the Borrower shall be conclusive in the absence of manifest
error. For clarity, any amounts payable by the Borrower to the Lender
pursuant to this Section 2.09 shall be paid directly to the Lender in
accordance with Section 3.01 (and shall not be deposited in the
Collection Account).
Section
2.10 Purpose
of Advances. Each Advance shall be used solely to finance the purchase
by the Borrower from LEAF of Eligible Contracts that were originated by an
Approved Originator and that are identified to the Lender in writing on each
Contract Schedule, as such Contract Schedule may be amended from time to time
in
accordance with the Custodial Agreement.
Section
2.11 Extension
of Expected Facility Termination Date.
(a) The
Expected Facility Termination Date may only be extended in the Lender’s sole
discretion, upon written request from the Borrower.
(b) If
the Expected Facility Termination Date has not been extended and no other
Facility Termination Event has occurred and is continuing, then the Borrower
shall have no
7
Section
2.12 Taxes.
(a) All
payments made by the Borrower under this Loan Agreement and the Note shall
be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding taxes
imposed on or measured by Lender’s net or taxable income or imposed on the
Lender as a result of a present or former connection between the Lender and
the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from Lender having executed, delivered or performed
its obligations or received a payment under, or enforced, this Agreement or
the
Note). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings (“Non-Excluded Taxes”) are
required to be imposed on the Lender hereunder or under the Note, the Borrower
shall pay such taxes by having the amounts so payable to the Lender increased
to
the extent necessary to yield to the Lender (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or
in
the amounts specified in this Loan Agreement and the Note. Whenever
any Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Lender a certified copy of an original
official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Lender the required receipts or other
required documentary evidence, the Borrower shall indemnify the Lender for
any
incremental taxes, interest or penalties that may become payable by the Lender
as a result of any such failure. The agreements in this Section shall
survive the termination of this Loan Agreement and the payment of the Advances
and all other amounts payable hereunder and under the Note. For
clarity, any amounts payable by the Borrower to the Lender pursuant to this
Section 2.12 shall be paid directly to the Lender in accordance with
Section 3.01 (and shall not be deposited in the Collection
Account).
(b) The
Lender hereby agrees and covenants to deliver to the Borrower on or before
the
Closing Date (or the date such Person becomes a Lender) two valid and complete
original signed copies of either (a) United States IRS Form W-8BEN (or successor
form) including documentation evidencing the Lender’s qualification for a
complete exemption from withholding taxes; (b) United States IRS Form W-8ECI
(or
any successor form) relating to the Lender and entitling it to complete
exemption from withholding on any amounts payable in respect of any Advance;
(c)
United States IRS Form W-8IMY (including any applicable certification,
information, documentation or other reporting requirements required by statute
or regulation); or (d) a United States IRS Form W-9 reflecting that the Lender
is a “United States Person” (within the same meaning of Section 7701(a)(30) of
the IRC), in each case, as applicable. In addition, the Lender agrees
that, from time to time, when a lapse in time or change in circumstances renders
the previous certification obsolete or inaccurate in any material respect,
that
it will
8
deliver
to the Borrower either United States IRS Form W-8BEN, United States IRS Form
W-8ECI, United States IRS Form W-8IMY or United States IRS Form W-9, as
applicable, in order to establish that the Lender is either a “United States
Person” (within the meaning of Section 7701(a)(30) of the IRC) or is entitled to
a continued complete exemption from withholding tax with respect to any amounts
payable in respect of any Advance.
Article
III
PAYMENTS;
COMPUTATIONS
Section
3.01 Payments.
(a) Except
to the extent otherwise provided herein, all payments of principal, interest
and
other amounts to be made by the Borrower to the Lender under this Loan
Agreement, the Note and the other Loan Documents shall be made in Dollars,
in
immediately available funds, without deduction, set-off or counterclaim, to
the
Lender at the following account maintained by WestLB: Account No. ▇▇▇-▇-▇▇▇▇▇▇
maintained at JPMorgan Chase Bank, New York, ABA #▇▇▇▇▇▇▇▇▇, Ref: LEAF Fund
III,
not later than 12:00 p.m., New York City time, on the date on which such payment
shall become due (and each such payment made after such time on such due date
shall be deemed to have been made on the next succeeding Business
Day). Each of LEAF, the Servicer and the Borrower acknowledges that
it has no rights of withdrawal from the foregoing account.
(b) Except
to the extent otherwise expressly provided herein, if the due date of any
payment under this Loan Agreement, the Note or the other Loan Documents would
otherwise fall on a day that is not a Business Day, such date shall be extended
to the next succeeding Business Day, and interest shall accrue and be payable
at
the then applicable rate for any principal so extended for the period of such
extension.
Section
3.02 Computations.
Interest on the Advances shall be computed on the basis of a 360-day
year for
the actual days elapsed in the period for which payable.
Section
3.03 Settlement
Procedures.
(a) All
Receivables paid by Customers in respect of the Contracts shall be collected
and
deposited in the manner set forth under Sections 3.01 and 3.03 of
the Servicing Agreement. Notwithstanding the foregoing, if, on any
day, LEAF, the Borrower or the Servicer receives any Receivables in respect
of
any Contract (other than amounts otherwise on deposit in the Lockbox Account),
LEAF, the Borrower or the Servicer, as applicable, shall deposit such
Receivables to the Lockbox Account no later than the second (2nd) Business
Day
immediately following such receipt. The Servicer shall cause the
withdrawal of all Receivables on deposit in the Lockbox Account and shall
deposit such Receivables into the Collection Account on the second (2nd) Business
Day
after identification thereof by the Servicer. The Servicer shall use
best efforts to identify Receivables on deposit in the Lockbox Account within
five (5) Business Days after the deposit of such Receivables to the Lockbox
Account and in any event shall identify all Receivables on deposit in the
Lockbox Account within fourteen (14) days after the deposit of such Receivables
to the Lockbox Account. Each of LEAF and the Borrower shall (and
shall
9
(b) Funds
deposited in the Collection Account during any month shall be held therein,
in
trust for the Collateral Agent, for the benefit of the Lender and the Hedge
Counterparty, until the next Payment Date. On each Payment Date the
Collateral Agent shall (based on the Monthly Servicer’s Report delivered by the
Servicer pursuant to Section 4.01 of the Servicing Agreement for such
Payment Date) withdraw from the Collection Account all Available Funds and
any
Reserve Account Available Amount then on deposit therein, and apply such funds,
after payment of (i) any amounts necessary to reimburse the Servicer for the
payment of the taxes described in the Servicing Agreement and (ii) any
amounts received from Customers to pay the taxes described in the Servicing
Agreement, to the extent deposited in the Collection Account, as
follows:
first,
from Available Funds and, if Available Funds are insufficient, from the Reserve
Account Available Amount, to the Hedge Counterparty, payment of any Swap
Obligations then due and owing pursuant to each Interest Rate Hedging Agreement,
plus any other amounts then due and owing to the Hedge Counterparty pursuant
to
any Interest Rate Hedging Agreement (including, without limitation, any breakage
fee payable in accordance with any such agreement), plus any past due amounts
not previously paid;
second,
from Available Funds and, if Available Funds are insufficient, from the Reserve
Account Available Amount, pro rata in accordance with the respective amounts
then due and owing to the Servicer, (1) the Servicing Fee then due and owing
plus any past due amounts not previously paid, (2) the amount necessary to
reimburse the Servicer for any Nonrecoverable Advance, (3) solely from the
portion of Available Funds comprised of Receivables with respect to a particular
Contract, the Servicer Advance Reimbursement Amount with respect to such
Contract plus any past due Servicer Advance Reimbursement Amounts with respect
to such Contract not previously paid, (4) all Servicing Charges and (5) if
the
Servicer is no longer LEAF Financial Corporation or one of its Affiliates,
the
amount necessary to reimburse the Servicer for any costs and expenses that
have
been incurred by the Servicer and are reimbursable to it under Section 3.08
of
the Servicing Agreement;
third,
from Available Funds and, if Available Funds are insufficient, from the Reserve
Account Available Amount, pro rata in accordance with the respective amounts
then due and owing, (1) to the Backup Servicer, the Backup Servicer Fee then
due
and owing plus any past due amounts not previously paid, (2) to the successor
Servicer, following the appointment of such successor as Servicer pursuant
to
the Servicing Agreement, an amount equal to (x) $60,000 if such successor
Servicer is the Backup Servicer and (y) the lesser of (A) the actual transition
costs incurred by such successor in connection with such appointment and (B)
$60,000, if such successor Servicer is other than Backup Servicer, and (3)
to
the Collateral Agent, any fees and expenses owed to the Collateral Agent
pursuant to Section 7 of the Custodial Agreement that are due but have not
been
paid by Borrower; provided reimbursement pursuant to clause (3) shall not
exceed $100,000 during any calendar year;
fourth,
from Available Funds and, if Available Funds are insufficient, from the Reserve
Account Available Amount, to the Lender, the Monthly Interest Payment
Amount;
10
fifth,
from Available Funds and, if Available Funds are insufficient, from the Reserve
Account Available Amount, to the Lender, the Non-Use Fee then due and owing
plus
any past due amounts not previously paid in respect of the Non-Use
Fee;
sixth,
from Available Funds and, if Available Funds are insufficient, from the Reserve
Account Available Amount, to the Lender, the Monthly Principal Payment
Amount;
seventh,
on or after the Facility Termination Date, from Available Funds and, if
Available Funds are insufficient, from the Reserve Account Available Amount,
to
the Lender, the Additional Principal Payment Amount, in accordance with Section
12.02(f) hereof;
eighth,
from Available Funds, to the Reserve Account, the amount required to cause
the
Reserve Account Available Amount (after giving effect to payments made pursuant
to clauses first through sixth above on such Payment Date) to
equal the Required Reserve Account Amount; provided, that the
amount of such deposit shall be limited to the extent necessary to prevent
a
Reserve Account Limitation Event;
ninth,
from Available Funds, pro rata in accordance with the respective amounts then
due and owing, to the Lender, the Servicer, the Backup Servicer, the Collateral
Agent and the Securities Intermediary, respectively, any fees or reimbursements
due to such Person pursuant to this Loan Agreement or any other Loan Document
and previously unpaid; and
tenth,
to the Borrower (or to such other Person as the Borrower shall direct), all
remaining Available Funds together with any amounts released from the Reserve
Account in excess of the Required Reserve Account Amount in accordance with
Section 12.02(h) hereof.
The
allocations to be made under this Section shall be described in the related
Monthly Servicer’s Report delivered pursuant to Section 4.01 of the
Servicing Agreement.
Article
IV
COLLATERAL
SECURITY
Section
4.01 Collateral;
Security Interest.
(a) The
Collateral Agent shall hold the Required Documents delivered to it pursuant
to
terms of the Custodial Agreement, as secured party for the benefit of the Lender
and the Hedge Counterparty pursuant to Section 4.01(c), and shall deliver
Certifications to the Lender each to the effect that it has reviewed such
Contract Documents in the manner and to the extent required by the Custodial
Agreement and identifying any exceptions in such Contract Documents as so
reviewed in the Contract Exception Reports.
(b) The
“Collateral” shall consist of all of the personal property of the Borrower,
wherever located, and now owned or hereafter acquired, including, without
limitation:
(i) all
Contracts identified on a Notice of Borrowing and Pledge delivered by the
Borrower to the Lender and the Collateral Agent from time to time,
including,
11
without
limitation, all amounts paid or payable thereon or in respect thereof on or
after the related Cut-Off Date;
(ii) all
Substitute Contracts identified on any amendment to Schedule A of the
Acquisition Agreement delivered by the Borrower pursuant to Section
11.02(c) to LEAF, the Servicer, the Lender and the Collateral Agent from
time to time, including, without limitation, all amounts paid or payable thereon
or in respect thereof on or after the related Cut-Off Date;
(iii) all
Contract Documents, and any and all other documents that LEAF or any other
Servicer keeps on file in accordance with its customary procedures relating
to
the Contracts, the Receivables, the Customers or the Equipment;
(iv) all
rights and interests, including security interests, in the Equipment related
to
the Contracts and any other interest of the Borrower in such
Equipment;
(v) all
Receivables (including, without limitation, all Scheduled Payments, prepayments,
Servicing Charges, Recoveries, Residual Proceeds, Guaranty Amounts and Insurance
Proceeds) received—and all rights to receive any Receivables—related to each
Contract due on or after the related Cut-Off Date;
(vi) all
of its rights and benefits, but none of its obligations or burdens, under the
Acquisition Agreement, including its rights related to the delivery
requirements, representations and warranties and the cure, repurchase and
indemnification obligations of LEAF under the Acquisition
Agreement;
(vii) all
of its rights and benefits, but none of the obligations and burdens, under
the
Interest Rate Hedging Agreement;
(viii) [reserved];
(ix) [reserved];
(x) the
Collection Account, the Reserve Account and the balances, investments and all
Proceeds thereof and other items of value attributable or credited to the
Collection Account and the Reserve Account and all rights with respect
thereto;
(xi) all
Receivables on deposit from time to time in the Lockbox Account;
(xii) all
of its “money”, “fixtures”, “accounts”, “chattel paper” (including tangible
chattel paper and electronic chattel paper), “inventory” (including computer
programs embedded therein), “equipment” (including computer programs embedded
therein), “instruments” (including promissory notes), “investment property”,
“documents”, “deposit accounts”, “letters of credit”, “letter of credit rights”,
“general intangibles” (including payment intangibles and software), and
“supporting obligations” as defined in the UCC relating to or constituting any
and all of the foregoing, together with any books and records relating thereto;
and
12
(xiii) any
and all replacements, substitutions, distributions on, or Proceeds or products
of any and all of the foregoing, including, without limitation, all present
and
future claims, demands, causes and choses in action in respect of any or all
of
the foregoing and all payments on or under and all Proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing, including all
Proceeds of the conversion, voluntary or involuntary, into cash or other liquid
property, all cash Proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance Proceeds,
condemnation awards, rights to payment of any and every kind and other forms
of
receivables, instruments and other supporting obligations and other property
which at any time constitute all or part of or are included in the Proceeds
of
any of the foregoing.
(c) As
collateral security for the prompt and complete payment and performance when
due
(whether at the stated maturity, by acceleration or otherwise) of the Secured
Obligations, the Borrower hereby pledges, assigns and transfers to the
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty
and
their respective successors, endorsees, transferees and assigns, and hereby
grants to the Collateral Agent, for the benefit of the Lender and the Hedge
Counterparty and their respective successors, endorsees, transferees and
assigns, a continuing security interest in all of the Borrower’s right, title
and interest in, to and under all of the Collateral whether now owned or
existing or at any time hereafter acquired or arising by the Borrower or in
which the Borrower now has or at any time in the future may acquire any right,
title or interest. The Borrower agrees to ▇▇▇▇ its master computer
records and tapes to evidence the interests granted to the Collateral Agent
hereunder.
(d) The
foregoing pledge, assignment, transfer and grant is made solely to secure the
payment by the Borrower of the Secured Obligations and to secure compliance
with
the provisions of this Loan Agreement and the other Loan
Documents. The Collateral Agent, solely for the benefit of the Lender
and the Hedge Counterparty, accepts such pledge, assignment, transfer and grant,
and agrees to perform to the best of its ability the duties required of it
in
this Loan Agreement and the other Loan Documents to which it is a party, such
that the interests of the Lender and the Hedge Counterparty arising out of
or
related to this Loan Agreement and the other Loan Documents are adequately
and
effectively protected.
Section
4.02 Further
Documentation. a)At any time and from time to time, and at the sole
expense of the Borrower, the Borrower will promptly and duly execute and
deliver, or will promptly cause to be executed and delivered, such further
instruments and documents and take such further actions as are necessary (or
as
are reasonably requested by the Lender or, at the direction of the Lender,
the
Collateral Agent) for the purpose of obtaining or preserving the full benefits
of this Loan Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements
under
the UCC in effect in any jurisdiction with respect to the Liens created hereby
or the taking of any other action necessary to preserve the status of the Liens
on the Collateral created hereby as first priority perfected liens, except
that
UCC financing statements are not required to have been filed against the related
Customer for any Equipment related to any Contract that had an original
equipment cost at origination of less than $25,000, or if such Contract provides
for a “fair market value” purchase option, of less than $50,000. All
financing statements filed by or on behalf of the Borrower with respect to
the
Liens created hereby shall contain the following statement: “A purchase of
a
13
(b) With
respect to any item of Collateral released pursuant to the terms of this
Agreement, the Borrower shall have the right to require the Collateral Agent
and/or Lender to execute (if necessary) and/or deliver a UCC amendment
statement, UCC release or a release agreement (prepared by or on behalf of
the
Borrower) on the date such Collateral is released (or on the next Business
Day,
if such date is not a Business Day) and such other evidence as may be reasonably
requested by the Borrower to evidence the termination of the Collateral Agent’s
security interest in the item of released Collateral. In connection
with any permitted replacement of an item of Equipment under a Contract, all
of
the Collateral Agent and/or Lender’s right, title and interest in and to the
replaced item of Equipment shall terminate and the Collateral Agent, for the
benefit of the Lender and the Hedge Counterparty, shall have a security interest
in all of the Borrower’s right, title and interest in and to any replacement
Equipment.
Section
4.03 Changes
in Locations, Name, etc. The Borrower shall not change its name,
identity, organizational structure (or the equivalent) or jurisdiction of
formation or change the location where it maintains its records with respect
to
the Collateral unless it shall have given the Collateral Agent and the Lender
at
least thirty (30) days’ prior written notice thereof and shall have delivered to
the Collateral Agent all UCC financing statements and amendments thereto and
taken all other actions as are necessary (or as are requested by the Lender
or,
at the direction of the Lender, the Collateral Agent) to continue the status
of
the Collateral Agent’s Liens on the Collateral as perfected first priority
liens, except that UCC financing statements are not required to have been filed
against the related Customer for any Equipment related to any Contract that
had
an original equipment cost at origination of less than $25,000, or if such
Contract provides for a “fair market value” purchase option, of less than
$50,000.
Section
4.04 Collateral
Agent’s Appointment as Attorney-in-Fact.
(a) If
an Event of Default shall have occurred and be continuing, the Borrower hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower, and in the name of the Borrower, or in its own name,
from
time to time at the written direction of the Lender, for the purpose of carrying
out the terms of this Loan Agreement and the other Loan Documents, to take
any
and all appropriate action and to execute any and all documents and instruments
related to the Collateral which may be necessary to accomplish the purposes
of
this Loan Agreement and the other Loan Documents, and, without limiting the
generality of the foregoing, the Borrower hereby gives the Collateral Agent
the
power and right, on behalf of the Borrower, without assent by, but with notice
to, the Borrower, if an Event of Default shall have occurred and be continuing,
to do the following:
(i) in
the name of the Borrower, or its own name, or otherwise, to take possession
of
and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any Collateral and
to
file any
14
(ii) to
pay or discharge taxes and Liens levied or placed on or threatened against
the
Collateral; and
(iii) (A)
to direct any party liable for any payment under any Collateral to make payment
of any and all moneys due or to become due thereunder directly to the Lender
or
as the Lender shall direct; (B) to ask or demand for, collect, receive payment
of and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C)
to
sign and endorse any invoices, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any court
of
competent jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any suit, action
or
proceeding brought against the Borrower with respect to any Collateral; (F)
to
settle, compromise or adjust any suit, action or proceeding described in clause
(E) above and, in connection therewith, to give such discharges or releases
as
the Lender may deem appropriate but, in all cases, will maximize the value
of
the Collateral; (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Collateral Agent were the absolute owner thereof for
all purposes, and to do, at the Lender’s option and the Borrower’s expense, at
any time, and from time to time, all acts and things which the Lender deems
necessary to protect, preserve or realize upon the Collateral and the Collateral
Agent’s Liens thereon and to effect the intent of this Loan Agreement and the
other Loan Documents, all as fully and effectively as the Borrower might do;
and
(H) generally, at any time, or from time to time, to take all other actions
in
the exercise of any right or remedy available to a secured party under the
UCC
of each applicable jurisdiction, any Contract Document, or otherwise by law
or
agreement.
The
Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to
be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable until the payment in full of the
Secured Obligations and the termination of this Loan Agreement.
(b) The
Borrower also authorizes the Collateral Agent, at any time and from time to
time, to execute at the direction of the Lender, in connection with any sale
provided for in Section 4.07 of this Loan Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to
the
Collateral.
(c) The
powers conferred on the Collateral Agent are solely to protect the Collateral
Agent’s interests (for the benefit of the Lender and the Hedge Counterparty) in
the Collateral and shall not impose any duty other than those expressly stated
in the Loan Documents upon the Collateral Agent to exercise any such
powers.
15
Section
4.05 Reimbursement
for Performance by Collateral Agent of Borrower’s Obligations. If LEAF
or the Borrower fails to perform or comply with any of its agreements contained
in this Loan Agreement or the other Loan Documents and the Collateral Agent,
at
the direction of the Lender, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the out-of-pocket costs and
expenses of the Collateral Agent incurred in connection with such performance
or
compliance, together with interest thereon at a rate per annum equal to the
LIBOR Rate for a period of one month plus the margin specified in clause (ii)
of
the definition of “Applicable Margin” herein, shall be payable by LEAF or the
Borrower, as the case may be, to the Collateral Agent on demand and shall
constitute Secured Obligations. For clarity, it is hereby
acknowledged that this Section 4.05 does not create any obligation of the
Collateral Agent to comply with any direction of the Lender other than such
obligations of the Collateral Agent that are expressly set forth elsewhere
in
this Loan Agreement.
Section
4.06 Proceeds.
If an Event of Default shall occur and be continuing, (a) all Proceeds
of
Collateral received by LEAF or the Borrower consisting of cash, checks and
other
cash equivalents shall be held by LEAF or the Borrower in trust for the
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty,
subject to the Intercreditor Agreement segregated from other funds of LEAF
or
the Borrower, and subject to the Intercreditor Agreement shall forthwith upon
receipt by LEAF or the Borrower be turned over to the Collateral Agent in the
exact form received by LEAF or the Borrower (duly endorsed by LEAF or the
Borrower to the Collateral Agent, as applicable) and (b) any and all such
Proceeds received by the Collateral Agent (whether from LEAF or the Borrower
or
otherwise) shall, upon the direction to the Collateral Agent by the Lender,
be
held by the Collateral Agent as collateral security for, and shall be applied
by
the Collateral Agent against, the Secured Obligations (whether matured or
unmatured) in the order set forth in Section 3.03(b). Any
balance of such Proceeds remaining after the Secured Obligations shall have
been
paid in full and this Loan Agreement shall have been terminated shall be paid
over to the Borrower. For purposes hereof, Proceeds shall include,
but not be limited to, all principal and interest payments, all prepayments
and
payoffs, insurance claims, recoveries against Customers, sale and foreclosure
Proceeds, and any other income and all other amounts received with respect
to
the Collateral.
Section
4.07 Remedies.
If an Event of Default shall occur and be continuing, the Lender may
direct the
Collateral Agent to exercise, in addition to all other rights and remedies
granted to it in this Loan Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, the Lender, without further demand of performance
or other further demand, presentment, protest, advertisement or notice of any
kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (each and all of which further demands,
presentments, protests, advertisements and notices are hereby waived), may
direct the Collateral Agent in such circumstances forthwith to collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell (on a servicing released basis, at the option of the Lender),
lease, assign, give option or options to purchase, or otherwise dispose of
and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker’s board or office of the Collateral Agent or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The
16
Section
4.08 Servicing
Rights. Any sale or other disposition by the Collateral Agent of all
or any part of the Collateral shall be made free and clear of any of the
Servicer’s and the Borrower’s rights pursuant to the Servicing Agreement, and
each and every right of the Servicer and the Borrower with respect thereto
shall
terminate as to such Collateral as of the date of such sale or other
disposition.
Section
4.09 Limitation
on Duties Regarding Preservation of Collateral. The Collateral Agent’s
sole duty with respect to the custody, safekeeping and physical preservation
of
the Collateral in its possession, under the UCC or otherwise, shall be to deal
with it in a commercially reasonable manner and in the same manner as the
Collateral Agent deals with similar property for its own
account. None of the Lender, the Hedge Counterparty, the Collateral
Agent or any of their respective directors, managers, officers or employees
shall be liable for failure to demand, collect or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the Borrower
or otherwise if doing (or not doing) so was in a commercially reasonable
manner.
17
Section
4.10 Powers
Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are irrevocable and are powers coupled
with an interest.
Section
4.11 Release
of Security Interest. (x) Upon termination of this Loan Agreement and
repayment to the Lender and the Hedge Counterparty of all interest, principal,
fees and any other amounts then due and payable (including, without limitation,
payment of any Swap Obligations), the Collateral Agent’s security interest
therein shall automatically terminate and the Collateral Agent shall evidence
the release of its security interest in any remaining Collateral in a writing
in
form and substance reasonably satisfactory to the Borrower or (y) upon payment
of a Contract in full by or on behalf of the related Customer or transfer of
a
Contract by the Borrower to the Seller to the extent required or permitted
under
Sections 2.07(b), (c) or (d) of this Loan Agreement and
Section 3.03 or 3.04 of the Acquisition Agreement or Section
3.09 of the Servicing Agreement, as applicable, the Collateral Agent’s
security interest shall automatically terminate, and the Collateral Agent shall
evidence the release of its security interest in any Collateral related to
such
Contract and the related Collateral in a writing in form and substance
reasonably satisfactory to the Borrower; provided that, in either case of
clause (x) or (y) above, if any payment, or any part thereof, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Lender or the Hedge Counterparty upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of LEAF or the Borrower,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or a trustee or similar officer for, LEAF or the Borrower or
any
substantial part of its property, or otherwise, this Loan Agreement, all rights
hereunder and the Liens created hereby (other than Liens referred to in
clause (y) above) shall continue to be effective, or be reinstated, as
though such payments had not been made. For clarity, if each
requirement set forth in clause (x) above shall have been met, the
Collateral Agent’s security interest in any remaining Collateral shall, subject
to the proviso in the immediately preceding sentence, be released in accordance
with this Section 4.11, regardless of whether any of the Secured
Obligations paid by the Borrower prior to such release would be susceptible
to
recovery from the Lender or the Hedge Counterparty after such release in
connection with any insolvency or bankruptcy proceeding with respect to LEAF,
the Borrower or any Customer. In addition, and without limitation of
the foregoing, no release of a security interest in a Contract and the
Collateral related to such Contract in accordance with clause (y) above
shall occur unless and until the entire amount of Insurance Proceeds, Recoveries
and/or Residual Proceeds received with respect to such Contract and related
Equipment following the sale, lease or other disposition of the related
Equipment in accordance with Section 3.01(c)(vii) of the Servicing
Agreement, shall have been delivered to the Collateral Agent for deposit in
the
Collection Account.
Section
4.12 Rights
of Secured Parties; Limitations on Secured Parties’ Obligations. None
of the Collateral Agent, the Lender or the Hedge Counterparty shall have any
obligation or liability under any Contract or any other Collateral by reason
of
or arising out of this Loan Agreement or the receipt by the Collateral Agent,
the Lender or the Hedge Counterparty of any payment relating to such Contract
or
any other Collateral pursuant hereto, nor shall the Collateral Agent, the Lender
or the Hedge Counterparty be obligated in any manner to perform any of the
obligations of LEAF Originator, the Borrower or LEAF under or pursuant to any
Contract or any other Collateral, to make any payment, to make any inquiry
as to
the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Contract or any other
Collateral, to present or file any claim, to take any action to enforce
any
18
Section
4.13 [Reserved].
Article
V
CONDITIONS
PRECEDENT
Section
5.01 Initial
Advance. The obligation of the Lender to make the initial Advance
requested to be made by it hereunder is subject to the satisfaction, immediately
prior to or concurrently with the making of such Advance, of the following
conditions precedent:
(a) Loan
Agreement. The Lender shall have received this Loan Agreement,
executed and delivered by a duly authorized officer of the Borrower, the
Collateral Agent, LEAF Originator, the Servicer and LEAF.
(b) Note. The
Lender shall have received the Note, conforming to the requirements hereof
and
executed and delivered by a duly authorized officer of the
Borrower.
(c) Custodial
Agreement. The Lender shall have received the Custodial
Agreement, conforming to the requirements hereof and executed and delivered
by a
duly authorized officer of LEAF, the Borrower and the Collateral
Agent.
(d) Servicing
Agreement. The Lender shall have received the Servicing
Agreement, conforming to the requirements hereof and executed and delivered
by a
duly authorized officer of the Borrower, the Servicer, the Backup Servicer
and
the Collateral Agent.
(e) Date
and Amount of Initial Advance. The initial Advance shall occur no
later than 30 days after the Closing Date and the amount of such Advance shall
be not less than $100,000,000.
(f) Servicer’s
Certificate. The Lender shall have received a certificate of the
Servicer, dated as of the date hereof, and certifying that each of the Contracts
(i) was underwritten in conformance with the Underwriting Guidelines set forth
in Exhibit G hereto, (ii) meets the Eligibility Criteria set forth in Exhibit
D
hereto and (iii) upon acquisition by LEAF Funding Inc. and its successors in
title, will be serviced by the Servicer in accordance with the Servicing
Agreement.
(g) Organizational
Documents. The Lender shall have received copies of the
certificate of incorporation (or certificate of formation) of each LEAF Party
and each amendment thereto, certified under recent date, from the Secretary
of
State (or other appropriate authority) of the jurisdiction under which such
LEAF
Party is organized.
(h) Filings,
Registrations, Recordings; Lien Searches. All documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create in favor of the Collateral Agent,
for
the benefit of the Lender, and the Hedge Counterparty a perfected first-priority
security interest in the Collateral, subject to no Liens other than
Permitted
19
(i) Closing
Certificates. The Lender shall have received a certificate of the
Secretary or Assistant Secretary of each LEAF Party, dated as of the date
hereof, and certifying (A) that attached thereto is a true, complete and correct
copy of (a) the organizational documents of such LEAF Party, and (b) resolutions
duly adopted by such LEAF Party authorizing the execution, delivery and
performance of this Loan Agreement, the Note and the other Loan Documents to
which it is a party, as applicable, and the borrowings contemplated hereunder,
and that such resolutions have not been amended, modified, revoked or rescinded,
and (B) as to the incumbency and specimen signature of each officer executing
any Loan Documents on behalf of such LEAF Party and authorized to execute any
Notice of Borrowing and Pledge, and such certificate and the resolutions
attached thereto shall be in form and substance satisfactory to the
Lender.
(j) Good
Standing Certificates. The Lender shall have received copies of
certificates evidencing the good standing of each LEAF Party, dated as of a
recent date, from the Secretary of State (or other appropriate authority) of
the
jurisdiction under which such LEAF Party is organized, and, with respect to
the
LEAF Originator, each of Pennsylvania, California, Florida, New York and
Texas.
(k) Legal
Opinions. The Lender shall have received the executed legal
opinions of counsel of the LEAF Parties, addressing the matters set forth in
the
forms attached hereto as Exhibit J, dated the Closing Date and otherwise
in form and substance acceptable to the Lender and covering such other matters
incident to the transactions contemplated by the Loan Documents as the Lender
shall reasonably request.
(l) Fees
and Expenses. The Lender shall have received all fees and
expenses required to be paid by LEAF or the Borrower on or prior to the initial
Funding Date pursuant to Section 14.03(b) hereof.
(m) Financial
Statements. The Lender shall have received the financial
statements for the Servicer as of September 30, 2006 and the Seller, as
referenced in Section 7.02(rr)(ii), as of December 31, 2006.
20
(n) Underwriting
Guidelines; Standard Forms. The Lender shall have received a
certified copy of the Underwriting Guidelines for Contracts originated by a
LEAF
Party, together with a certified copy of each of LEAF’s standard forms of
Contract.
(o) Consents,
Licenses, Approvals, etc. The Lender shall have received copies
certified by each LEAF Party of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance by such
LEAF
Party of, and the validity and enforceability of, the Loan Documents, which
consents, licenses and approvals shall be in full force and effect.
(p) Due
Diligence Review. The Lender shall have completed to its
satisfaction its standard and customary credit and due diligence review of
the
LEAF Parties and shall have approved, in its sole discretion, the operations,
financial condition and standard loan documents of the LEAF Parties, and shall
have approved, in its sole discretion, that each applicable LEAF Party is
qualified as a lessor and servicer.
(q) [Reserved].
(r) No
Material Adverse Change. No Material Adverse Change with respect
to any LEAF Party shall have occurred since December 31, 2006.
(s) Interest
Rate Hedging Agreement. The Borrower shall have executed and
delivered by a duly authorized officer of the Borrower, to the Hedge
Counterparty, the Interest Rate Hedging Agreement.
(t) Additional
Documents. The Lender shall have received copies of all documents
required to be delivered to the Borrower pursuant to Section 2.03(a) of
the Acquisition Agreement, to the extent that such delivery of such documents
is
not otherwise required pursuant to clauses (a) through (s) of this
Section 5.01.
(u) Additional
Matters. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Loan Agreement, the Note and the other Loan Documents
shall
be satisfactory in form and substance to the Lender, and the Lender shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
request.
Section
5.02 Initial
and Subsequent Advances. Lender’s obligation to make any Advance to
the Borrower (including the initial Advance) on any Funding Date is subject
to
the satisfaction of the following further conditions precedent and the giving
of
a Notice of Borrowing and Pledge by Borrower pursuant to Section 2.03(a),
and the acceptance of the proceeds of any Advance by Borrower shall constitute
certification by Borrower that, unless waived by the Lender, the following
conditions shall have been satisfied, as applicable, both immediately prior
to
the making of such Advance and also after giving effect thereto and to the
intended use thereof:
(a) No
Facility Termination Event. No Facility Termination Event shall
have occurred, and no Facility Termination Event will occur as a result of
making such Advance.
21
(b) Representations
and Warranties. Each representation and warranty made by a LEAF
Party in this Loan Agreement and in each other Loan Document to which it is
a
party shall be true and correct when made (or, if any such representation or
warranty is expressly stated to have been made as of a specific date, as of
such
specific date). Each LEAF Party shall also be in compliance with all
governmental licenses and authorizations and qualified to do business and in
good standing in all required jurisdictions where the failure to be in
compliance or so qualified could reasonably be expected to have a Material
Adverse Effect.
(c) Borrowing
Base. The Total Outstanding Advances shall not exceed the
Borrowing Base (after giving effect to such Advance).
(d) Notice
of Borrowing and Pledge; Payoff Letters. The Lender shall have
received a Notice of Borrowing and Pledge (including, without limitation, the
Borrowing Base Certificate and Contract Schedule required to be attached
thereto) with respect to such Advance, as required to be delivered in accordance
with Section 2.03(a) hereof, and the Lender shall have received any
Payoff Letters and related Officer’s Certificates from the Borrower required by
Section 3(c) of the Custodial Agreement, each appropriately
completed and duly executed and delivered.
(e) Certification;
Contract Exception Report. The Collateral Agent shall have
received a complete Contract File with respect to each pledged Eligible Contract
to be funded on the Funding Date and which was required to have been received
by
the Collateral Agent at least two (2) Business Days prior to the funding of
such
Advance, and the Lender shall have received from the Collateral Agent a
Certification in respect of all Contracts to be pledged hereunder prior to
12:00
p.m., New York City time, on the date of such Advance and a corresponding
Contract Exception Report, with only Deficiencies in respect of such Eligible
Contracts as are acceptable to the Lender in its discretion.
(f) Additional
Documents. The Lender shall have received with regard to all
Contracts, such information, documents, agreement, opinions or instruments
as
the Lender requires with respect to Contracts to be pledged hereunder on such
Business Day, each in form and substance satisfactory to the
Lender.
(g) No
Material Adverse Effect. There shall not have occurred one or
more events that constitutes, or could reasonably be expected to constitute,
a
Material Adverse Effect.
(h) [Reserved].
(i) Principal
Balance. The principal amount of such Advance (i) does not exceed
the Available Commitment on such Funding Date and (ii) when added to the Total
Outstanding Advances on such Permitted Advance Date (before giving effect to
the
Advance to be made on such Permitted Advance Date), does not result in a
Borrowing Base Deficiency after giving effect to such Advance.
(j) Eligible
Contract. Each Contract to be funded with such Advance shall be
an Eligible Contract. No Contract was originated in any jurisdiction
in which LEAF or Borrower is required to be licensed in order to own such
Contract and such license has not been obtained prior to LEAF or Borrower,
as
the case may be, owning such Contract. With respect to each
Contract,
22
(k) [Reserved].
(l) [Reserved].
(m) Filings,
Registrations, Recordings. All documents (including, without
limitation, financing statements) required to be filed, registered or recorded
in order to create, in favor of the Collateral Agent, for the benefit of the
Lender and the Hedge Counterparty, a perfected, first-priority security interest
in the Collateral, subject to no Liens other than those created hereunder,
shall
have been properly prepared (and if required, executed) for filing, registration
or recording in each office in each jurisdiction in which such filings,
registrations and recordations are required to perfect such first-priority
security interest, except that UCC financing statements are not required to
have
been filed against the related Customer for any Equipment related to any
Contract that had an original equipment cost at origination of less than
$25,000, or if such Contract provides for a “fair market value” purchase option,
of less than $50,000.
(n) Data
File. Borrower shall have delivered to the Lender and Collateral
Agent at least three (3) Business Days prior to the proposed Funding Date in
computer readable form, a detailed listing of all Contracts to be pledged by
the
Borrower to the Collateral Agent under this Loan Agreement in connection with
the Advance and such other data relating to the Contracts and the other
Collateral as the Lender may request.
(o) Payoff
Letters. The Collateral Agent (with a copy to the Lender or its
agent) shall have received UCC-3 Partial Release Statements (or other
appropriate forms including any “in-lieu” financing statements or amendments to
financing statements) in appropriate form for filing, together with one or
more
Payoff Letters, in each case duly executed by the applicable Prior Lender
releasing the Contracts to be pledged by the Borrower to the Collateral Agent
under this Loan Agreement on such Funding Date from the security interest of
such Prior Lender, and the Lender shall have received a copy of each such Payoff
Letter and each Officer’s Certificate of the Borrower related thereto, in
accordance with the Custodial Agreement.
(p) [Intentionally
Omitted].
(q) Reserve
Account. The Reserve Account Available Amount shall equal or
exceed the Required Reserve Account Amount after giving effect to such Advance
and any Funding Date Reserve Account Deposit related thereto and the deposit
of
such Funding Date Reserve Account Deposit shall not cause a Reserve Account
Limitation Event.
(r) Hedging
Strategy. Borrower shall be in compliance with the Hedging
Strategy with respect to each Advance. Borrower shall have directed
the Hedge Counterparty to deposit into the Collection Account all Swap Payments
payable to the Borrower in respect of any Interest Rate Hedging Agreement and
any Interest Rate Hedging Transaction thereunder.
(s) Audit
Reports. The Lender shall have timely received each Required
Audit Report and each other report required pursuant to Section 4.04 of
the Servicing Agreement.
23
(t) Fees
and Expenses. The Lender shall have received all fees, expenses
and other amounts required to be paid by LEAF or the Borrower on or prior to
such Funding Date pursuant to Section 14.03(b) hereof.
(u) Servicing
Audit Report. Lender shall have received a copy of the most
recent servicing audit report prepared pursuant to Section 4.03 of the
Servicing Agreement.
(v) [Reserved].
Article
VI
REPRESENTATIONS
AND WARRANTIES
Section
6.01 Representations
and Warranties Relating to the Borrower. As of the Effective Date and
each Certification Date, the Borrower represents and warrants to the Lender
and
the Hedge Counterparty that:
(a) Organization
and Good Standing. The Borrower has been duly organized and is
validly existing as a limited liability company in good standing under the
laws
of the State of Delaware, with power and authority to own its properties and
to
conduct its business as such properties are currently owned and such business
is
currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and pledge the Contracts and the
other
Collateral that is granted to the Collateral Agent, for the benefit of the
Lender, and the Hedge Counterparty pursuant to this Loan
Agreement. The Borrower is organized solely under the laws of the
State of Delaware.
(b) Approvals. The
Borrower is duly qualified to do business as a foreign business entity in good
standing and has obtained all necessary licenses, authorizations, consents
and
approvals in all jurisdictions where the failure to do so (either individually
or in the aggregate) would materially and adversely affect the Borrower’s
ability to own the Contracts and the other Collateral that is granted to the
Collateral Agent pursuant to this Loan Agreement, or the validity or
enforceability of the Contracts and the other Collateral or to otherwise perform
the Borrower’s obligations hereunder, under the Note and under the other Loan
Documents; and Borrower is in compliance with all material Requirements of
Law.
(c) Power
and Authority. The Borrower has the power and authority, and the
legal right, to execute, deliver and perform this Loan Agreement, the Note
and
each other Loan Document to which it is a party, and to borrow and to grant
Liens hereunder, and has taken all necessary action (corporate and other) to
duly authorize the borrowings and the granting of Liens on the terms and
conditions of this Loan Agreement, the Note and each other Loan Document to
which it is a party; and the execution, delivery and performance of this Loan
Agreement, the Note and each other Loan Document to which it is a party have
been duly authorized by the Borrower by all necessary action (corporate and
other).
(d) Agreements
Binding. This Loan Agreement, the Note and each other Loan
Document to which the Borrower is a party has been duly and validly executed
and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with its terms,
except as enforceability may be limited by
24
(e) No
Conflicts. The execution, delivery and performance of this Loan
Agreement, the Note and each other Loan Document to which the Borrower is a
party, the consummation of the transactions contemplated hereby and thereby,
and
the fulfillment of the terms hereof and thereof shall not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the certificate of
formation or limited liability company agreement of the Borrower, or any
material indenture, agreement, mortgage, deed of trust or other instrument
to
which the Borrower is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms
of
any such indenture, agreement, mortgage, deed of trust or other instrument,
other than this Loan Agreement, or violate any material law, order, rule or
regulation applicable to the Borrower of any court or of any federal or state
regulatory body, administrative agency or other Governmental Authority having
jurisdiction over the Borrower or any of its properties.
(f) Litigation. There
are no actions, suits or proceedings at law or in equity or investigations
pending or, to the best of the Borrower’s knowledge, threatened by or against
the Borrower, before any court, regulatory body, administrative agency or other
tribunal or Governmental Authority having jurisdiction over the Borrower or
its
properties (A) which challenge or affect the legality, validity or
enforceability of this Loan Agreement, the Note or any of the other Loan
Documents or the transactions contemplated hereby or thereby, or (B) seeking
any
determination or ruling that might have a material adverse effect on the
performance by the Borrower of its obligations under, or the validity or
enforceability of, this Loan Agreement, the Note or any of the other Loan
Documents.
(g) Consents. All
material licenses, approvals, authorizations, consents, orders or other actions
of any person, corporation or other organization, or of any court, governmental
bureau, agency or body or official, required in connection with the conduct
of
the Borrower’s business or the execution, delivery and performance by the
Borrower of this Loan Agreement, the Note and the other Loan Documents to which
the Borrower is a party and the consummation of the transactions contemplated
hereby and thereby have been or will be taken or obtained on or prior to the
Effective Date.
(h) Filing
Offices. Exhibit K-1 correctly describes the jurisdictions
and recording offices in which financing statements should be filed to perfect
the security interests of the Collateral Agent in the Collateral. The
Borrower has been formed solely under the laws of the State of Delaware, and
it
has not changed its jurisdiction of formation since its formation.
(i) Legal
Name. The complete and exact legal name of the Borrower is LEAF
Fund III, LLC. The Borrower has not changed its name since
formation. The Borrower does not and has not since its formation used
any other legal names, trade names, fictitious names, assumed names or “doing
business as” names.
(j) Borrowing
Base. Each Contract included as an Eligible Contract in any
Contract Schedule, Monthly Servicer’s Report or other information provided to
the Lender by or on behalf
25
(k) No
Liens. The Borrower has not assigned, pledged, or otherwise
conveyed or, subject to Permitted Encumbrances, encumbered any of the Collateral
to any Person other than the Collateral Agent, and immediately prior to the
pledge of such Collateral, the Borrower was the sole owner of the Collateral
and
had good and marketable title thereto, free and clear of all Liens, in each
case
except for Permitted Encumbrances or Liens that have been released or are to
be
released simultaneously with the Liens granted in favor of the Collateral Agent
hereunder. No effective security agreement, financing statement or
other public notice similar in effect with respect to all or any part of the
Collateral is or will be on file or of record in any public office, except
such
as have been or may hereinafter be filed pursuant to this Loan Agreement or
a
Loan Document.
(l) Security
Interest. The provisions of this Loan Agreement are effective to
create in favor of the Collateral Agent, for the benefit of the Lender and
the
Hedge Counterparty a valid and enforceable security interest in all right,
title
and interest of the Borrower in, to and under the Collateral. The
security interests and Liens granted hereunder constitute fully perfected
first-priority security interests in, to and under the Collateral, free and
clear of all other Liens other than Permitted Encumbrances, and such security
interests are enforceable against all other Persons, except that UCC financing
statements are not required to have been filed against the related Customer
for
any Equipment related to any Contract that had an original equipment cost at
origination of less than $25,000, or if such Contract provides for a “fair
market value” purchase option, of less than $50,000. There are no
agreements in effect adversely affecting the rights of the Borrower to make,
or
cause to be made, the grant of the security interest in the Collateral
contemplated by Section 4.01.
(m) No
Adverse Selection. The Borrower has not selected Contracts to be
pledged to the Collateral Agent in accordance with the terms of this Loan
Agreement and the other Loan Documents through a process that is adverse to
the
Lender or the Hedge Counterparty.
(n) Servicing
Programs. No license or approval is required for the Borrower’s
use of any program used by the Servicer in the servicing of the Contracts,
other
than those which have been obtained and are in full force and
effect.
(o) Special
Purpose Entity; No Other Business. The Borrower has been formed
solely for the purpose of engaging in transactions of the types contemplated
by
this Loan Agreement. The Borrower engages in no other business
activities other than the purchase of leases of office-, medical-, technology-,
industrial- and other miscellaneous equipment, pledging such leases to warehouse
finance providers, transferring such leases in connection with securitizations
and, to the extent otherwise permitted under the Loan Documents, sale-of-lease
transactions, and other activities relating to the foregoing to the extent
permitted by the organizational documents of the Borrower as in effect on the
date hereof, or as amended with the prior written consent of the
Lender.
26
(p) Bulk
Transfers, etc. The grant of the security interest in the
Collateral by the Borrower to the Collateral Agent pursuant to this Loan
Agreement is in the ordinary course of business for the Borrower and is not
in
violation of the bulk transfer or any similar statutory provisions in effect
in
any applicable jurisdiction. No such Collateral has been or will be sold,
transferred, assigned or pledged by the Borrower to any Person other than the
pledge of such Collateral to the Collateral Agent pursuant to the terms of
this
Loan Agreement.
(q) No
Indebtedness. The Borrower has no Indebtedness, other than
Indebtedness incurred under (or contemplated by) the terms of this Loan
Agreement and the other Loan Documents.
(r) Insolvency. The
Borrower is not insolvent, and will not be made insolvent after giving effect
to
the transactions contemplated by this Agreement.
(s) No
Injunctions. No injunction, writ, restraining order or other
order of any nature adversely affects the Borrower’s performance of its
obligations under this Loan Agreement, the Note or any other Loan Document
to
which the Borrower is a party.
(t) Tax
Returns. The Borrower has filed (on a consolidated basis or
otherwise) on a timely basis all tax returns (including, without limitation,
all
foreign, federal, state, local and other tax returns) required to be filed,
is
not liable for taxes payable by any other Person and has paid or made adequate
provisions for the payment of all taxes, assessments and other governmental
charges due from the Borrower. No tax lien or similar adverse claim
has been filed, and no claim is being asserted, with respect to any such tax,
assessment or other governmental charge. Any taxes, fees and other
governmental charges payable by the Borrower in connection with the execution
and delivery of this Loan Agreement, the Note and the other Loan Documents
and
the transactions contemplated hereby or thereby have been paid or shall have
been paid if and when due.
(u) [Intentionally
Omitted].
(v) No
Fraudulent Conveyance. As of the Effective Date and immediately
after giving effect to each Advance, the fair value of the assets of the
Borrower is greater than the fair value of its liabilities (including, without
limitation, contingent liabilities of the Borrower), and the Borrower is and
will be solvent, is and will be able to pay its debts as they mature and does
not and will not have an unreasonably small capital to engage in the business
in
which it is engaged and proposes to engage. Borrower does not intend
to incur, or believe that it has incurred, debts beyond its ability to pay
such
debts as they mature. Borrower is not contemplating the commencement
of insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of Borrower or any of its assets. Borrower is not
transferring any Collateral with any intent to hinder, delay or defraud any
of
its creditors. The Borrower has given fair consideration and
reasonably equivalent value in exchange for the sale of the Contracts and
related assets by LEAF under the Acquisition Agreement.
(w) No
Subsidiaries. The Borrower has no subsidiaries.
27
(x) Accurate
Disclosure. The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of the LEAF Parties
to the Lender or the Collateral Agent in connection with the negotiation,
preparation or delivery of this Loan Agreement, the Note and the other Loan
Documents or included herein or therein or delivered pursuant hereto or thereto
are true and correct in every material respect, or (in the case of projections)
are based on good faith reasonable estimates, on the date as of which such
information is stated or certified and does not and will not contain an untrue
statement of a material fact, or omit to state any material fact necessary
to
make the statements herein or therein contained, in the light of the
circumstances under which they were made, not misleading. There is no
fact known to a Responsible Officer of the Borrower that, after due inquiry,
would reasonably be expected to have a Material Adverse Effect that has not
been
disclosed herein, in the other Loan Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished
to
the Lender and the Collateral Agent for use in connection with the transactions
contemplated hereby or thereby.
(y) Use
of Proceeds. No proceeds of any Advances will be used by the
Borrower to acquire any security in any transaction which is subject to
Section 13 or 14 of the Securities Exchange Act. No part of the
proceeds of any Advances will be used for “purchasing” or “carrying” any “margin
stock” within the respective meanings of each of the quoted terms under, or for
any other purpose which violates or would be inconsistent with the provisions
of, Regulation T, U or X.
(z) Investment
Company Act. The Borrower is not an “investment company” or an
“affiliated person” of or “promoter” or “principal underwriter” for an
“investment company” as such terms are defined in the Investment Company Act,
nor is the Borrower otherwise subject to regulation thereunder. The
Borrower is not subject to regulation under any Federal or state statute or
regulation which limits its ability to incur Indebtedness.
(aa) No
Default. No Default has occurred and is
continuing. Borrower is not in default in the performance, observance
or fulfillment of any obligation, covenant or condition in any agreement or
instrument to which it is a party or by which it is bound the result of which
could reasonably be expected to have a Material Adverse Effect.
(bb) Underwriting
Standards. Each of the Contracts was underwritten and is being
serviced in conformance with the Underwriting Guidelines and the Servicing
Agreement.
(cc) ERISA. The
Borrower is in compliance with ERISA and has not incurred and does not expect
to
incur any liabilities (except for premium payments arising in the ordinary
course of business) to the PBGC (or any successor thereto) under
ERISA.
(dd) [Reserved].
(ee) Ownership
of Borrower. LEAF owns beneficially and of record 100% of the
issued and outstanding beneficial ownership interest in the Borrower free and
clear of all Liens.
28
Section
6.02 Representations
and Warranties of LEAF. As of the Effective Date and each Purchase
Date, LEAF represents and warrants to the Lender and the Hedge Counterparty
that:
(a) Organization
and Good Standing. LEAF has been duly organized and is validly
existing as a limited partnership in good standing under the laws of the State
of Delaware, with power and authority to own its properties and to conduct
its
business as such properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power, authority and
legal right to acquire, own and sell the Contracts and the other Collateral
that
is sold to the Borrower pursuant to the Acquisition Agreement and pledged to
the
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty,
pursuant to this Loan Agreement. LEAF is organized solely under the
laws of the State of Delaware.
(b) Approvals. LEAF
is duly qualified to do business as a foreign business entity in good standing
and has obtained all necessary licenses, authorizations, consents and approvals,
in each state in which any Equipment relating to the Contracts or other
Collateral or any Customer is located, or is not required under applicable
law
to effect such qualification, except where failure to do so would not have
a
material adverse effect on (a) the ability of LEAF to perform its obligations
under the Loan Documents or otherwise to conduct its business (including,
without limitation, the origination, purchase, ownership, servicing and sale
of
the Contracts), (b) any of the Contracts, the Receivables or the Equipment
relating to the Contracts or the other Collateral, (c) the ability of LEAF,
the
Borrower or the Collateral Agent to realize upon or enforce any of the
Contracts, the Receivables or the Equipment relating to the Contracts or the
other Collateral or (d) the perfection or priority of any Lien in favor of
the
Borrower and required by the Loan Documents or any Lien created under the Loan
Documents in favor of the Collateral Agent. LEAF is in compliance
with all material Requirements of Law.
(c) Power
and Authority. LEAF has the power and authority, and the legal
right, to execute, deliver and perform this Loan Agreement and each other Loan
Document to which it is a party; and the execution, delivery and performance
of
this Loan Agreement and each other Loan Document to which it is a party have
been duly authorized by LEAF by all necessary action (corporate and
other).
(d) Agreements
Binding. This Loan Agreement and each other Loan Document to
which LEAF is a party has been duly and validly executed and delivered by LEAF
and constitutes a legal, valid and binding obligation of LEAF, enforceable
against LEAF in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings
in
equity or at law).
(e) No
Conflicts. The execution, delivery and performance of this Loan
Agreement and each other Loan Document to which LEAF is a party, the
consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof shall not conflict with, result
in
any breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the certificate of formation
or
limited partnership agreement of LEAF, or any material indenture, agreement,
mortgage, deed of trust or
29
(f) Litigation. There
are no actions, suits or proceedings at law or in equity or investigations
pending or, to the best of LEAF’s knowledge, threatened against LEAF, before any
court, regulatory body, administrative agency or other tribunal or Governmental
Authority having jurisdiction over LEAF or the Borrower or its respective
properties (A) asserting the invalidity of this Loan Agreement, the Note or
any of the other Loan Documents, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Loan Agreement, the Note or any
other Loan Documents to which LEAF or the Borrower is a party, or
(C) seeking any determination or ruling that would, if adversely decided,
reasonably be expected to have a material adverse effect on the performance
by
LEAF or the Borrower of its respective obligations under, or the validity or
enforceability of, this Loan Agreement, the Note or any of the other Loan
Documents or the business, operations, condition (financial or otherwise) or
prospects of LEAF or the Borrower.
(g) Consents. All
material licenses, approvals, authorizations, consents, orders or other actions
of any person, corporation or other organization, or of any court, governmental
bureau, agency, or body or official, required in connection with the conduct
of
LEAF’s business or the execution, delivery and performance by LEAF of this Loan
Agreement and the other Loan Documents to which LEAF is a party and the
consummation of the transactions contemplated hereby and thereby have been
or
will be taken or obtained on or prior to the Effective Date.
(h) No
Default. LEAF is not in default in the performance, observance or
fulfillment of any obligation, covenant or condition in any agreement or
instrument to which it is a party or by which it is bound the result of which
could reasonably be expected to have a material adverse effect on its ability
to
perform its obligations under the Loan Documents.
(i) Filing
Offices. Exhibit K-1 correctly describes the jurisdictions
and recording offices in which financing statements should be filed to perfect
the security interests of the Borrower in the Collateral. Exhibit
K-2 correctly describes the jurisdictions and recording offices in which
financing statements filed prior to the effective date of Revised Article 9
of
the UCC may have been filed and remain effective with respect to the
Collateral. LEAF has been formed solely under the laws of the State
of Delaware, and it has not changed its jurisdiction of formation since its
formation.
(j) Legal
Name. The complete and exact legal name of LEAF is LEAF Equipment
Leasing Income Fund III, L.P. LEAF has not changed its name since
formation. LEAF does not and has not since its formation used any
other legal names, trade names, fictitious names, assumed names or “doing
business as” names, other than as disclosed on Exhibit L
hereto.
30
(k) [Reserved].
(l) No
Liens. LEAF has not assigned, pledged, or otherwise conveyed or
encumbered (other than Permitted Encumbrances) any of the Collateral to any
Person other than the Borrower, and immediately prior to the sale of such
Collateral to the Borrower, LEAF was the sole owner of the Collateral and had
good and marketable title thereto, free and clear of all Liens (other than
Permitted Encumbrances), in each case except for Liens that have been released
or are to be released simultaneously with such sale, or for Equipment relating
to any Contract that had an original equipment cost of less than (x) $25,000
or
(y) if such Contract provides for a “fair market value” purchase option,
$50,000. No security agreement, financing statement or other public
notice similar in effect with respect to all or any part of the Collateral
is or
will be on file or of record in any public office, except such as have been
or
may hereinafter be filed pursuant to this Loan Agreement or a Loan Document
or
such as have been released or are to be released simultaneously with the sale
of
such Collateral to the Borrower.
(m) Security
Interest. The provisions of the Acquisition Agreement are
effective to create in favor of the Borrower a valid and enforceable
precautionary security interest in all right, title and interest of LEAF in,
to
and under the Collateral. The precautionary security interests and
Liens granted under the Acquisition Agreement, if the sales are recharacterized,
will constitute fully perfected first-priority security interests in, to and
under the Collateral, free and clear of all other Liens (other than Permitted
Encumbrances), and such security interests are enforceable against all other
Persons, except that UCC financing statements are not required to have been
filed against the related Customer for any Equipment related to any Contract
that had an original equipment cost at origination of less than $25,000, or
if
such Contract provides for a “fair market value” purchase option, of less than
$50,000. There are no agreements in effect adversely affecting the
rights of LEAF to sell the Collateral to the Borrower pursuant to the
Acquisition Agreement.
(n) No
Adverse Selection. LEAF has not selected Contracts to be sold to
the Borrower in accordance with the terms of the Acquisition Agreement and
the
other Loan Documents through a process that is adverse to the Lender or the
Hedge Counterparty.
(o) [Intentionally
Omitted].
(p) [Intentionally
Omitted].
(q) Bulk
Transfers, Etc. The sale of the Collateral by LEAF to the
Borrower pursuant to the Acquisition Agreement is in the ordinary course of
business for LEAF and does not violate the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.
(r) No
Indebtedness. LEAF has no Indebtedness, other than Indebtedness
set forth in the Schedule of LEAF Indebtedness attached to this Loan Agreement
as Exhibit N hereto; provided that the Schedule of LEAF
Indebtedness may be amended in accordance with the terms of Section
7.02(c).
(s) No
Injunctions. No injunction, writ, restraining order or other
order of any nature adversely affects LEAF’s performance of its obligations
under this Loan Agreement or any other Loan Document to which LEAF is a
party.
31
(t) Tax
Returns. LEAF has filed (on a consolidated basis or otherwise) on
a timely basis all tax returns (including, without limitation, all foreign,
federal, state, local and other tax returns) required to be filed, is not liable
for taxes payable by any other Person (other than Customers in respect of the
related Equipment in accordance with the Contracts and its customary practices)
and has paid or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from LEAF. No tax lien
or similar adverse claim has been filed, and no claim is being asserted, with
respect to any such tax, assessment or other governmental charge except for
those being contested in good faith and for which adequate reserves have been
made. Any taxes, fees and other governmental charges payable by LEAF
in connection with the execution and delivery of this Loan Agreement and the
other Loan Documents and the transactions contemplated hereby or thereby have
been paid or shall have been paid if and when due except for those being
contested in good faith and for which adequate reserves have been
made.
(u) [Intentionally
Omitted].
(v) No
Fraudulent Conveyance. As of the Effective Date and immediately
after giving effect to each sale of Contracts pursuant to the Acquisition
Agreement, the fair saleable value of the assets of LEAF is greater than the
fair value of its liabilities (including, without limitation, contingent
liabilities of LEAF), and LEAF is and will be solvent, is and will be able
to
pay its debts as they mature and does not and will not have an unreasonably
small capital or remaining assets to engage in the business in which it is
engaged and proposes to engage. LEAF does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as
they
mature. LEAF is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of
a
receiver, liquidator, conservator, trustee or similar official in respect of
LEAF or any of its assets. LEAF is not transferring any Collateral
with any intent to hinder, delay or defraud any of its
creditors. LEAF has received fair consideration and reasonably
equivalent value in exchange for the sale of the Contracts by LEAF under the
Acquisition Agreement.
(w) Accurate
Disclosure. The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of the LEAF Parties
to the Lender or the Collateral Agent in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents
or
included herein or therein or delivered pursuant hereto or thereto are true
and
correct in every material respect, or (in the case of projections) are based
on
reasonable estimates, on the date as of which such information is stated or
certified and does not and will not contain an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements herein
or therein contained, in the light of the circumstances under which they were
made, not misleading. There is no fact known to a Responsible Officer
of LEAF that, after due inquiry, would reasonably be expected to have a Material
Adverse Effect that has not been disclosed herein, in the other Loan Documents
or in a report, financial statement, exhibit, schedule, disclosure letter or
other writing furnished to the Lender and the Collateral Agent for use in
connection with the transactions contemplated hereby or thereby.
(x) Use
of Proceeds. No proceeds of any Advances will be used by LEAF to
acquire any security in any transaction which is subject to Section 13 or 14
of
the Securities Exchange Act.
32
No
part
of the proceeds of any sale of Collateral to the Borrower or Advances will
be
used for “purchasing” or “carrying” any “margin stock” within the respective
meanings of each of the quoted terms under, or for any other purpose which
violates or would be inconsistent with the provisions of, Regulation T, U or
X.
(y) Investment
Company Act. LEAF is not an “investment company” or an
“affiliated person” of or “promoter” or “principal underwriter” for an
“investment company” as such terms are defined in the Investment Company Act,
nor is LEAF otherwise subject to regulation thereunder. LEAF is not
subject to regulation under any Federal or state statute or regulation which
limits its ability to incur Indebtedness.
(z) [Reserved].
(aa) Underwriting
Standards. Each of the Contracts was underwritten conformance
with the Underwriting Guidelines.
(bb) ERISA. LEAF
is in compliance with ERISA and has not incurred and does not expect to incur
any liabilities (except for premium payments arising in the ordinary course
of
business) to the PBGC (or any successor thereto) under ERISA.
(cc) Compliance
with Law. The Contracts to be pledged as Collateral were
originated by an Approved Originator of LEAF, and the origination and collection
practices used by such Approved Originator and LEAF with respect to the
Contracts have been, in all respects legal, proper, prudent and customary in
the
equipment lease origination business.
(dd) No
Other Business. LEAF engages in no other business activities
other than (i) the origination and the purchase from Approved Originators of
leases of office-, medical-, technology-, industrial- and other miscellaneous
equipment, pledging such leases to warehouse finance providers, transferring
such leases in connection with securitizations and asset sale transactions
and
other activities relating to the foregoing to the extent permitted by the
organizational documents of LEAF as in effect on the date hereof, or as amended
with the prior written consent of the Lender, or (ii) any other business
activity, so long as such business activity does not cause a material adverse
effect on the business activities specified above.
(ee) Financial
Statements. The unaudited balance sheets of LEAF as at March 31,
2007 and the related statements of income for the fiscal periods ended on such
date, heretofore furnished to Lender, have been prepared in accordance with
GAAP.
(ff) Insurance. Set
forth on Exhibit O hereto or as otherwise delivered to the Lender from
time to time, is a true and accurate list of all insurance maintained by
LEAF. Each such policy is in full force and effect and all premiums
due and owing thereon are current.
Section
6.03 Representations
and Warranties of the Servicer. As of the Effective Date and each
Purchase Date, the Servicer represents and warrants to the Lender and the Hedge
Counterparty that:
(a) Organization
and Good Standing. The Servicer has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with
33
(b) Approvals. The
Servicer is duly qualified to do business as a foreign corporation in good
standing and has obtained all necessary licenses, authorizations, consents
and
approvals, in each state in which any Equipment relating to the Contracts or
other Collateral or any Customer is located, or is not required under applicable
law to effect such qualification, except where the failure to so qualify would
not have a material adverse effect on the ability of the Servicer to perform
its
duties under the Loan Documents to which the Servicer is a party. The
Servicer is in compliance with all material Requirements of Law.
(c) Power
and Authority. The Servicer has the power and authority, and the
legal right, to execute, deliver and perform this Loan Agreement and each other
Loan Document to which it is a party; and the execution, delivery and
performance of this Loan Agreement and each other Loan Document to which it
is a
party have been duly authorized by the Servicer by all necessary action
(corporate and other).
(d) Agreements
Binding. This Loan Agreement and each other Loan Document to
which the Servicer is a party has been duly and validly executed and delivered
by the Servicer and constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
(e) No
Conflicts. The execution, delivery and performance of this Loan
Agreement and each other Loan Document to which the Servicer is a party, the
consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof shall not conflict with, result
in
any breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the certificate of incorporation
or by-laws of the Servicer, or any material indenture, agreement, mortgage,
deed
of trust or other instrument to which the Servicer is a party or by which it
is
bound, or result in the creation or imposition of any Lien (except the Liens
created by the Loan Documents) upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other instrument
to
which the Servicer is a party, or violate any material law, order, rule or
regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other Governmental Authority having
jurisdiction over the Servicer or any of its properties or in any way have
a
material adverse effect on the interest of the Collateral Agent, the Lender
or
the Borrower in any Contract or affect the Servicer’s ability to perform its
obligations under this Agreement or any other Loan Document to which the
Servicer is a party.
(f) Litigation. There
are no actions, suits or proceedings at law or in equity or investigations
pending or, to the best of the Servicer’s knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
tribunal or Governmental Authority having jurisdiction over the Servicer or
the
Borrower or its respective properties (A) asserting the invalidity of this
Loan Agreement, the Note or any of the other Loan
34
(g) Consents. All
licenses, approvals, authorizations, consents, orders or other actions of any
person, corporation or other organization, or of any court, governmental bureau,
agency, or body or official, required in connection with the conduct of the
Servicer’s business or the execution, delivery and performance by the Servicer
of this Loan Agreement and the other Loan Documents to which the Servicer is
a
party and the consummation of the transactions contemplated hereby and thereby
have been or will be taken or obtained on or prior to the Effective
Date.
(h) No
Default. The Servicer is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any
agreement or instrument to which it is a party or by which it is bound the
result of which could reasonably be expected to have a material adverse effect
on its ability to perform its obligations under the Loan Documents.
(i) Filing
Offices. The Servicer is incorporated solely under the laws of
the State of Delaware, and it has not changed its jurisdiction of incorporation
since its formation.
(j) Legal
Name. The complete and exact legal name of the Servicer is LEAF
Financial Corporation. The Servicer has not changed its name since
formation (except the Servicer was previously Fidelity Leasing Corporation
and
F.L. Partnership Management, Inc.). The Servicer does not and has not
since its formation used any other legal names, trade names, fictitious names,
assumed names or “doing business as” names, other than as disclosed on
Exhibit L hereto.
(k) Borrowing
Base. As of each Certification Date, each Monthly Servicer’s
Report or other information provided to the Lender by the Servicer, or any
calculation of the Borrowing Base made by the Servicer is (or was) as of the
date of such schedule, tape, report, other information or calculation, true
and
correct.
(l) No
Liens. The Servicer has not assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any Person other than the
Seller, the Borrower or the Collateral Agent. No security agreement,
financing statement or other public notice similar in effect with respect to
all
or any part of the Collateral is or will be on file or of record in any public
office, except such as have been or may hereinafter be filed pursuant to this
Loan Agreement or a Loan Document or such as have been released or are to be
released simultaneously with the sale of such Collateral to the
Borrower.
35
(m) No
Injunctions. No injunction, writ, restraining order or other
order of any nature adversely affects the Servicer’s performance of its
obligations under this Loan Agreement or any other Loan Document to which the
Servicer is a party.
(n) Tax
Returns. The Servicer has filed (on a consolidated basis or
otherwise) on a timely basis all tax returns (including, without limitation,
all
foreign, federal, state, local and other tax returns) required to be filed,
is
not liable for taxes payable by any other Person (other than Customers in
respect of the related Equipment in accordance with the Contracts and the
Servicer’s customary practices) and has paid or made adequate provisions for the
payment of all taxes, assessments and other governmental charges due from the
Servicer. No tax lien or similar adverse claim has been filed, and no
claim is being asserted, with respect to any such tax, assessment or other
governmental charge, except for those that are being contested in good faith
and
for which adequate reserves have been made. Any taxes, fees and other
governmental charges payable by the Servicer in connection with the execution
and delivery of this Loan Agreement and the other Loan Documents and the
transactions contemplated hereby or thereby have been paid or shall have been
paid if and when due, except for those that are being contested in good faith
and for which adequate reserves have been made.
(o) Accurate
Disclosure. The information, reports, financial statements,
exhibits and schedules furnished in writing by or on behalf of the LEAF Parties
to the Lender or the Collateral Agent in connection with the negotiation,
preparation or delivery of this Loan Agreement and the other Loan Documents
or
included herein or therein or delivered pursuant hereto or thereto are true
and
correct in every material respect, or (in the case of projections) are based
on
reasonable estimates, on the date as of which such information is stated or
certified and does not and will not contain an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements herein
or therein contained, in the light of the circumstances under which they were
made, not misleading. There is no fact known to a Responsible Officer
of the Servicer that, after due inquiry, would reasonably be expected to have
a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to the Lender and the Collateral Agent for
use
in connection with the transactions contemplated hereby or thereby.
(p) [Reserved.]
(q) Servicing
Standards. Each of the Contracts is being serviced in conformance
with the Servicing Agreement.
(r) ERISA. The
Servicer is in compliance with ERISA and has not incurred and does not expect
to
incur any liabilities (except for premium payments arising in the ordinary
course of business) to the PBGC (or any successor thereto) under
ERISA.
(s) Compliance
with Law. The servicing and collection practices used by the
Servicer with respect to the Contracts have been, in all material respects
in
accordance with the servicing standard set forth in Section 3.02 of the
Servicing Agreement.
(t) Financial
Statements. The unaudited balance sheets of the Servicer as of
March 31, 2007 and the related statements of income for the fiscal periods
ended
on such date, attached hereto as Exhibit F, furnished to Lender, have
been prepared in accordance with GAAP.
36
Article
VII
COVENANTS
Section
7.01 Covenants
of Borrower. The Borrower covenants and agrees with the Lender and the
Hedge Counterparty that, so long as any Advance is outstanding and until the
later to occur of the payment in full of all Secured Obligations and the
termination of this Loan Agreement:
(a) The
Borrower will at all times ensure that (A) its managers and officers act
independently and in its interests, (B) it shall at all times maintain at
least one independent manager who is not currently and has not been formerly
an
officer, director, manager or employee of the Borrower or an Affiliate thereof
(other than a limited purpose corporation, business trust, partnership or other
entity organized for the purpose of acquiring, financing or otherwise investing,
directly or indirectly, in assets or receivables originated, owned or serviced
by LEAF or an Affiliate thereof), (C) its assets are not commingled with
those of LEAF, any other Affiliate of the Borrower or any other Person,
(D) its board of managers duly authorizes all of its corporate actions, and
(E) it maintains separate and accurate records and books of account and
such books and records are kept separate from those of LEAF and any other
Person.
(b) The
Borrower shall hold such appropriate meetings of its board of managers or
distribute appropriate unanimous consents in lieu of a meeting as are necessary
to authorize all the Borrower’s corporate actions required by law to be
authorized by the board of managers, shall keep minutes of such meetings and
of
meetings of its stockholder(s) and observe all other customary corporate
formalities.
(c) The
Borrower shall at all times hold itself out to the public under the Borrower’s
own name as a legal entity separate and distinct from its
Affiliates.
(d) The
Borrower shall not incur any Indebtedness, other than the Indebtedness
contemplated by this Loan Agreement and the other Loan Documents.
(e) To
the extent that the Borrower and any of its stockholders or Affiliates have
offices in the same location, there shall be a fair and appropriate allocation
of overhead costs among them, and each such entity shall bear its fair share
of
such expenses.
(f) The
Borrower will preserve and maintain its legal existence as a Delaware limited
liability company organized solely under the laws of the State of
Delaware.
(g) The
Borrower will preserve and maintain all of its material rights, privileges,
licenses and franchises.
(h) The
Borrower will comply with the requirements of all applicable Requirements of
Law
(including, without limitation, the Truth in Lending Act and all environmental
laws).
(i) The
Borrower will maintain accurate and complete records and books of account with
respect to the Collateral and the Borrower’s business, in which complete entries
will be made in accordance with GAAP.
37
(j) The
Borrower shall give notice to the Lender and the Hedge Counterparty,
promptly: (i) upon the Borrower becoming aware of, and in any
event within one (1) Business Day after, the occurrence of any Default or any
event of default or default under any other Loan Document, any Other Financing
Facility, or any other material agreement of the Borrower; (ii) upon, and
in any event within three (3) Business Days after, service of process on the
Borrower, or any agent thereof for service of process, in respect of any legal
or arbitrable proceedings affecting the Borrower (1) that questions or
challenges the validity or enforceability of any of the Loan Documents or (2)
in
which the amount in controversy exceeds $1,000,000; (iii) upon the Borrower
becoming aware of any event or change in circumstances which could reasonably
be
expected to have a Material Adverse Effect or to cause a Default; and
(iv) of entry of a judgment or decree in respect of the Borrower, its
assets or the Collateral in an amount in excess of $1,000,000. Each
notice pursuant to this clause (j) shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
(k) The
Borrower shall furnish to the Lender and the Hedge Counterparty, as soon as
available, copies of any and all proxy statements, financial statements and
reports which the Borrower sends to its shareholders, and copies of all (if
any)
regular, periodic and special reports, and all registration statements filed
with the Securities and Exchange Commission or any Governmental Authority which
supervises the issuance of securities by the Borrower and any press releases
concerning the Borrower.
(l) The
Borrower will furnish to the Lender and the Hedge Counterparty from time to
time
statements and schedules further identifying and describing the Collateral
and
such other reports in connection with the Collateral as the Lender or the Hedge
Counterparty may reasonably request, all in reasonable detail.
(m) Upon
discovery by the Borrower of any Borrowing Base Deficiency (including, without
limitation, pursuant to a notice delivered by the Lender or the Servicer to
the
Borrower), the Borrower shall deliver a Borrowing Base Deficiency Notice to
the
Lender no later than 12:00 p.m., New York City time, on the second (2nd)
Business Day succeeding such discovery (and, in any event, prior to any
prepayment to be made by the Borrower pursuant to Section 2.07(a)(i)),
which Borrowing Base Deficiency Notice shall (x) contain a description of the
cause of such deficiency, and (y) set forth the manner in which the Borrower
will cure such deficiency pursuant to, and in accordance with, Section
2.07(a). If at any time there exists a Borrowing Base Deficiency, the
Borrower shall cure the same in accordance with Section 2.07(a)
hereof. If the Borrower has elected to cure such Borrowing Base
Deficiency in the manner described in Section 2.07(a)(i), the Borrower
shall prepay the amount described therein on the second (2nd) Business
Day
immediately succeeding such discovery. If the Borrower has elected to
cure such Borrowing Base Deficiency in the manner described in Section
2.07(a)(ii), it shall deliver the necessary Funding Date Documentation and
related Contract Schedule (identifying the Eligible Contracts to be pledged
as
additional Collateral) to the Collateral Agent on the second (2nd) Business
Day
succeeding such discovery.
(n) Prior
to the termination of this Loan Agreement and each other Loan Document and
the
payment of all outstanding Secured Obligations and any other amounts payable
pursuant hereto and thereto, the Borrower will not sell all or substantially
all
of its assets without the prior written consent of the Lender.
38
(o) [Reserved].
(p) The
Borrower shall (i) not enter into any transaction of merger or consolidation
or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) without the prior written consent of
the
Lender, and (ii) preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its organization.
(q) The
Borrower will defend the Collateral against, and will take such other action
as
is necessary to remove, any Lien, security interest or claim on or to the
Collateral, other than the security interests created under this Loan Agreement,
and the Borrower will defend the right, title and interest of the Collateral
Agent in and to any of the Collateral against the claims and demands of all
Persons whomsoever.
(r) The
Borrower will not incur or permit any Lien to exist on its assets other than
Liens arising under the Loan Documents.
(s) Except
as contemplated by the Loan Documents (including the Servicing Agreement),
the
Borrower will not lease, transfer, assign, sell or otherwise dispose of any
Collateral without the prior written consent of the Lender, and in any case
unless the Proceeds of such sale are applied to repay the Advances, and after
giving effect to such transaction, any Advances then outstanding do not exceed
the Borrowing Base.
(t) The
Lender shall not authorize the Borrower to, and the Borrower shall not (without
the prior written consent of the Lender), enter into any transaction, including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Person (including, without limitation any
Affiliate, any shareholder, director, manager, officer or employee (or any
relative thereof) of the Borrower or any such Affiliate) unless such transaction
is (a) not otherwise prohibited under this Loan Agreement or any other Loan
Document, (b) in the ordinary course of the Borrower’s business and
(c) upon fair and reasonable terms no less favorable to the Borrower than
it would obtain in a comparable arm’s-length transaction.
(u) Without
the prior written consent of the Lender, the Borrower will not, nor will it
permit or allow others to, amend, modify, terminate or waive any provision
of
any Contract Document, except in accordance with the Loan
Documents. Notwithstanding the foregoing, the Borrower may, without
the prior written consent of the Lender, waive any assumption fees, late payment
charges, charges for checks returned for insufficient funds, or other fees
which
may be collected in the ordinary course of servicing the
Contracts. The Borrower shall take such actions as the Lender shall
request to enforce the Borrower’s rights under the Contracts, and, at any time
during which a Default shall have occurred and be continuing, shall take such
actions as are necessary to enable the Collateral Agent (at the direction of
the
Lender) to exercise such rights in the Collateral Agent’s own name.
(v) The
Borrower will observe all corporate procedures required by its certificate
of
formation, its limited liability company agreement and the laws of its
39
(w) The
Borrower will pay its operating expenses and liabilities from its own assets;
provided, however, that the Borrower’s organizational expenses and
the expenses incurred in connection with the negotiation and execution of this
Loan Agreement and the other Loan Documents may be paid by LEAF.
(x) The
Borrower will not have any of its indebtedness guaranteed by LEAF or any
Affiliate of LEAF. Furthermore, the Borrower will not hold itself
out, or permit itself to be held out, as having agreed to pay or as being liable
for the debts of LEAF and the Borrower will not engage in business transactions
with LEAF, except on an arm’s-length basis. The Borrower will not
hold LEAF out to third parties as other than an entity with assets and
liabilities distinct from the Borrower. The Borrower will cause any
financial statements consolidated with those of LEAF to state that the Borrower
is a separate corporate entity with its own separate creditors who, in any
liquidation of the Borrower, will be entitled to be satisfied out of the
Borrower’s assets prior to any value in the Borrower becoming available to the
Borrower’s equity holders. The Borrower will not act in any other
matter that could foreseeably mislead others with respect to the Borrower’s
separate identity.
(y) The
Borrower shall take all actions necessary to maintain the accuracy of the
factual assumptions set forth in the legal opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, special counsel to LEAF and the Borrower, issued in connection with
the Acquisition Agreement and relating to the issues of substantive
consolidation and true sale of the Contracts.
(z) Except
as otherwise provided herein or in any other Loan Document, the Borrower shall
not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Lien upon or with respect to,
any
Contract, any Receivables related thereto or any other Collateral related
thereto, or upon or with respect to any account to which any collections of
any
Contract are sent, or assign any right to receive income in respect thereof
or
(ii) create or suffer to exist any Lien upon or with respect to any of the
Borrower’s assets.
(aa) The
Borrower will not account for or treat (whether in financial statements or
otherwise) the transactions contemplated by the Acquisition Agreement in any
manner other than the sale or capital contribution of Contracts and other
Collateral by LEAF to the Borrower, it being understood that the Advances to
the
Borrower under this Loan Agreement will be treated as debt on the consolidated
financial statements of LEAF.
(bb) The
Borrower will not amend, modify, waive or terminate any terms or conditions
of
the Acquisition Agreement without the prior written consent of the Lender and
shall perform its obligations thereunder.
(cc) The
Borrower will not amend, modify or otherwise make any change to its certificate
of formation without the prior written consent of the Lender.
40
(dd) The
Borrower shall deliver or cause to be delivered to the Collateral Agent two
(2)
Business Days before each Funding Date the Funding Date Documentation with
respect to the Contracts being pledged hereunder on such Funding
Date.
(ee) The
Borrower shall deliver to the Lender on each Purchase Date a copy of the
Assignment delivered to it on such Purchase Date.
(ff) The
Borrower shall be in compliance with the Hedging Strategy with respect to each
Advance.
(gg) The
Borrower will use the proceeds of the Advances solely for the purposes set
forth
in Section 2.10 hereof.
(hh) The
Borrower shall promptly give notice to the Lender of the occurrence of
(a) any Facility Termination Event, specifying the event and the action
which the Borrower proposes to take with respect thereto, (b) any event or
occurrence which will or could reasonably be expected to adversely affect the
collectibility of any material portion of the Contracts or the ability of LEAF
to service such Contracts or the ability of LEAF or the Borrower to perform
its
obligations under any Loan Document to which it is a party or any other event
or
occurrence which individually or in the aggregate could reasonably be expected
to materially and adversely affect LEAF’s or the Borrower’s financial condition,
operations, business or prospects or the interests of the Lender and/or the
Hedge Counterparty under this Loan Agreement, the Note or any other Loan
Document.
(ii) The
Borrower shall pay and discharge all taxes and governmental charges upon it
or
against any of its properties or assets or its income prior to the date after
which penalties attach for failure to pay, except (a) to the extent that
the Borrower shall be contesting in good faith in appropriate proceedings its
obligation to pay such taxes or charges, adequate reserves having been set
aside
for the payment thereof, or (b) with respect to such taxes and charges which
are
not material in either nature or amount such that any failure to pay or
discharge them, and any resulting penalties, either in any one instance or
in
the aggregate, would not materially and adversely affect the financial
condition, operations, business or prospects of the Borrower or the interests
of
the Lender and/or the Hedge Counterparty under this Loan Agreement, the Note
or
any other Loan Document.
(jj) At
the request of the Lender, the Borrower shall execute such financing statements
as Lender determines may be required by law to perfect, maintain and protect
the
security interest of Collateral Agent in the Collateral and in the Proceeds
thereof.
(kk) [Reserved].
(ll) The
Borrower shall pay to the Lender, on demand, any and all fees, costs or expenses
which the Lender pays to a bank or other similar institution arising out of
or
in connection with the return of payments from the Borrower deposited for
collection by the Lender.
(mm) The
Borrower shall pay and perform, as and when due, all of its obligations of
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto
41
(nn) The
Borrower will provide the Lender with not less than thirty (30) days’ prior
written notice of any change in the form of organization or jurisdiction of
formation of the Borrower to permit the Lender to make any additional filings
necessary to continue the Collateral Agent’s perfected security interest in the
Collateral, except that UCC financing statements are not required to have been
filed against the related Customer for any Equipment related to any Contract
that had an original equipment cost at origination of less than $25,000, or
if
such Contract provides for a “fair market value” purchase option, of less than
$50,000.
(oo) The
Borrower shall comply (i) in all material respects with all Requirements of
Law and any change therein or in the application, administration or
interpretation thereof (including, without limitation any request, directive,
guideline or policy, whether or not having the force of law) by any Governmental
Authority charged with the administration or interpretation thereof; and (ii)
with all indentures, mortgages, deeds of trust, agreements, or other instruments
or contractual obligations to which it is a party, including without limitation,
each Loan Document to which it is a party, or by which it or any of its
properties may be bound or affected, or which may affect the Contracts, if
the
failure to comply therewith could, individually or in the aggregate, result
in a
Material Adverse Effect.
(pp) The
Borrower shall not enter into any transaction which adversely affects the
Collateral or the Lender’s rights under this Loan Agreement, the Note or any
other Loan Document.
(qq) The
Borrower shall not Guarantee or otherwise in any way become liable with respect
to the obligations or liabilities, of any other Person, except (a) for the
obligations of Affiliates of the Borrower to the Lender and (b) by customary
endorsement of instruments or items of payment for deposit to the general
account of the Borrower or for delivery to the Lender.
(rr) The
Borrower shall deliver a Borrowing Base Certificate to the Lender (a) on each
Lender Authorization Date or (b) any other Business Day, from time to time,
reasonably designated by the Lender.
(ss) The
Borrower shall not make any investment in any Person through the direct or
indirect holding of securities or otherwise, other than in the ordinary course
of business or in connection with the future securitization of
Contracts.
(tt) The
Borrower shall not declare or pay any dividends, except to the extent otherwise
expressly permitted under this Loan Agreement.
(uu) Except
for routine and customary salary advances or loans to employees in connection
with relocation expenses consistent with past practice of LEAF and its
Affiliates, the Borrower
shall not make any unsecured loans or other advances of money to officers,
managers, employees, stockholders, or affiliates in excess of $50,000 in the
aggregate. Other than the
42
(vv) The
Borrower shall not do any of the following if it will adversely affect the
payment or performance of, or the Borrower’s ability to pay and/or perform, its
obligations to the Lender or in respect of any other Secured Obligations with
respect to this Loan Agreement, the Note or any other Loan Document to which
it
is a party: (i) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of the Borrower’s membership interests, except in
connection with employment or similar agreements with officers and managers
of
the Borrower consistent with past practice, or (ii) make any change in the
Borrower’s capital structure, or (iii) make any material change in any of its
business objectives, purposes or operations which could reasonably be expected
to adversely affect the payment or performance of, or the Borrower’s ability to
pay and/or perform, its obligations to the Lender or any other party with
respect to this Loan Agreement, the Note or any other Loan Document to which
it
is a party.
(ww) With
respect to each item of Equipment with respect to which a Lien Certificate
is
necessary to perfect a security interest in such Equipment, the Borrower shall,
or shall cause the Servicer on behalf of the Borrower to, use its best efforts
to collect such Lien Certificate from the applicable Registrar of Titles as
promptly as practicable. If any such Lien Certificate showing LEAF Originator
as
first lienholder is not received by the Collateral Agent within 120 days after
the Certification Date with respect to the related Contract, such Contract
shall
cease to be an Eligible Contract and, if a Borrowing Base Deficiency results,
the Borrower shall take the action specified in Section
2.07.
(xx) The
Borrower shall not permit the Senior Managers to engage in any business in
the
leasing industry (other than the leasing business of the LEAF Parties and its
Affiliates) so long as such Senior Managers are employees, officers, managers
or
directors of the Borrower or any other LEAF Party.
Section
7.02 Covenants
of LEAF. LEAF covenants and agrees with the Lender and the Hedge
Counterparty, that, so long as any Advance is outstanding and until the later
to
occur of the payment in full of all Secured Obligations and the termination
of
this Loan Agreement:
(a) LEAF
shall have paid to the Lender all fees and expenses owed to the Lender under
the
Engagement Letter on the earlier of (i) June 30, 2007 and (ii) the Closing
Date.
(b) All
transactions and dealings between LEAF and its Affiliates will be conducted
on
an arm’s-length basis.
(c) LEAF
may amend (w) the Forms of Contract attached to this Loan Agreement as
Exhibit E, (x) the Underwriting Guidelines attached to this Loan
Agreement as Exhibit G, (y) the Schedule of LEAF Indebtedness attached to
this Loan Agreement as Exhibit N and/or (z) the Credit and Collection
Policies of LEAF attached to the Servicing Agreement as Exhibit B thereto
in accordance with, and only in accordance with, the following
procedure:
(i) LEAF shall
deliver to the Lender written notice of any proposed amendment to the
Underwriting Guidelines, the Schedule of LEAF Indebtedness or the Credit
43
and
Collection Policies of LEAF; provided that such notice shall meet the
requirements set forth in clause (v) below;
(ii) the
Lender shall have ten (10) Business Days following the date of its receipt
of
such written notice to reject such proposed amendment;
(iii) such
proposed amendment shall not be effective prior to the expiration of the latest
ten-Business Day period specified in clause (ii) above;
(iv) such
proposed amendment shall become effective at the expiration of the latest
ten-Business Day period specified in clause (ii) above unless the Lender
shall have delivered to LEAF a written objection to such proposed amendment
prior to the expiration of such ten-Business Day period; and
(v) in
order for the written notice specified in clause (i) above to be valid,
such notice must contain (A) a covenant to the effect that the amendment
proposed in such notice will not result in any Material Adverse Effect and
(B) a
reference to this Section 7.02(c) and must contain the following
statement in bold, uppercase type: “IF YOU WISH TO PREVENT
THIS PROPOSED AMENDMENT FROM BECOMING EFFECTIVE, YOU MUST DELIVER A WRITTEN
OBJECTION TO THE AMENDMENT TO LEAF WITHIN TEN BUSINESS DAYS AFTER YOUR RECEIPT
OF THIS NOTICE.”
(d) At
all times during the term of this Loan Agreement, LEAF, together with the
Servicer, will maintain financing facilities, including repurchase facilities
and warehouse lines of credit, that satisfy each of the following criteria:
(A)
such financing facilities are extended by third party lenders (“Financing
Facility Lenders”) that are not Affiliates of LEAF, (B) the terms of such
financing facilities are substantially similar in form and substance to the
financing facilities available to LEAF as of the Closing Date and (C) the
aggregate amount of commitments from such Financing Facility Lenders is not
less
than $100,000,000.
(e) Prior
to the termination of this Loan Agreement and each other Loan Document and
the
payment of all outstanding Secured Obligations and any other amounts payable
pursuant hereto and thereto, LEAF will not sell all or substantially all of
its
assets, except to the Borrower, without the prior written consent of the
Lender.
(f) LEAF
shall not amend or otherwise modify the Underwriting Guidelines, except in
accordance with Section 7.02(c) of this Loan Agreement.
(g) LEAF
shall not, prior to the date which is one year and one day after the termination
of this Loan Agreement, petition or otherwise invoke the process of any court
or
government authority for the purpose of commencing or sustaining a case against
the Borrower under any federal or state bankruptcy, insolvency or similar law
or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or
other similar official of the Borrower or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the
Borrower.
44
(h) LEAF
shall at all times hold itself out to the public under LEAF’s own name as a
legal entity separate and distinct from its Affiliates.
(i) To
the extent that LEAF and the Borrower and any of their respective stockholders
or Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.
(j) LEAF
will preserve and maintain its legal existence as a Delaware limited partnership
organized solely under the laws of the State of Delaware.
(k) LEAF
will preserve and maintain all of its material rights, privileges, licenses
and
franchises.
(l) LEAF
will comply with the requirements of all applicable Requirements of Law
(including, without limitation, the Truth in Lending Act and all environmental
laws).
(m) LEAF
will maintain accurate and complete records and books of account with respect
to
the Collateral and LEAF’s business, in which complete entries will be made in
accordance with GAAP.
(n) LEAF
shall keep all of its property useful and necessary in its business in good
working order and condition (ordinary wear and tear excepted). LEAF
shall maintain insurance coverage in the form of a fidelity bond which covers,
among other things, employee dishonesty, forgery or alteration, theft,
disappearance and destruction, robbery and safe burglary, property (other than
money and securities) and computer fraud in an aggregate amount of at least
in
each case $1,000,000 and shall not reduce such coverage without the written
consent of the Lender. LEAF shall also maintain such other insurance
with financially sound and reputable insurance companies, and with respect
to
property and risks of a character usually maintained by entities engaged in
the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such
entities. Each insurance policy referred to in the preceding sentence
shall name the Collateral Agent (by name or as assignee of LEAF), for the
benefit of the Lender and the Hedge Counterparty, as loss payee to the extent
of
its insurable interest (including its interest in the
Collateral). All insurance companies issuing insurance pursuant to
this section shall receive, as of any date of determination, a rating of at
least “A” by A.M. Best Co.
(o) LEAF
shall give notice to the Lender, promptly: (i) upon LEAF
becoming aware of, and in any event within one (1) Business Day after, the
occurrence of any Default or any event of default or default under any other
Loan Document, any Other Financing Facility, or any other material agreement
of
LEAF or the Borrower; (ii) upon, and in any event within three (3) Business
Days after, service of process on LEAF, or any agent thereof for service of
process, in respect of any legal or arbitrable proceedings affecting LEAF or
the
Borrower (1) that questions or challenges the validity or enforceability of
any
of the Loan Documents or (2) in which the amount in controversy exceeds
$1,000,000; (iii) upon LEAF becoming aware of any event or change in
circumstances which could reasonably be expected to have a Material Adverse
Effect or to cause a Default; and (iv) of entry of a judgment or decree in
respect of LEAF, its assets or the Collateral in an amount in excess of
$1,000,000. Each notice pursuant to this clause (o)
shall
45
(p) LEAF
shall furnish to the Lender, as soon as available, copies of any and all proxy
statements, financial statements and reports which LEAF sends to its
shareholders, and copies of all (if any) regular, periodic and special reports,
and all registration statements filed with the Securities and Exchange
Commission or any Governmental Authority which supervises the issuance of
securities by any LEAF Party and any press releases concerning any LEAF
Party.
(q) LEAF
will furnish to the Lender, from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender may reasonably request, all in reasonable
detail.
(r) LEAF
shall not permit the Senior Managers to engage in any business in the leasing
industry (other than the leasing business of the LEAF Parties and its
Affiliates) so long as such Senior Managers are employees, officers, managers
or
directors of LEAF or any other LEAF Party.
(s) LEAF
shall at all times act as the managing member of the Borrower in accordance
with
the Borrower’s operating agreement, and LEAF shall not remove the Person who is
acting as independent manager of the Borrower or otherwise appoint a successor
independent manager of the Borrower unless the Lender shall have consented
to
such removal or appointment in writing within five (5) Business Days of
Borrower’s written request for Lender’s consent (Lender’s failure to provide any
such written consent within five (5) Business Days shall be deemed a consent
to
such removal or appointment).
(t) LEAF
shall (i) not enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation, winding up or dissolution) or sell all or substantially all of
its
assets without the prior written consent of the Lender unless otherwise
expressly permitted under the Loan Documents, and (ii) preserve and maintain
its
corporate existence, rights, franchises and privileges in the jurisdiction
of
its organization.
(u) LEAF
will defend the Collateral against, and will take such other action as is
necessary to remove, any Lien, security interest or claim on or to the
Collateral, other than the security interests created under this Loan Agreement,
and LEAF will defend the right, title and interest of the Collateral Agent,
for
the benefit of the Lender and the Hedge Counterparty, in and to any of the
Collateral against the claims and demands of all Persons
whomsoever.
(v) The
Lender shall not authorize LEAF to, and LEAF shall not (without the prior
written consent of the Lender), enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Person (including, without limitation any Affiliate,
any shareholder, director, manager, officer or employee (or any relative
thereof) of LEAF or any such Affiliate) unless such transaction is (a) not
otherwise prohibited under this Loan Agreement or any other Loan Document,
(b)
in the
46
(w) Without
the prior written consent of the Lender, LEAF will not, nor will it permit
or
allow others to, amend, modify, terminate or waive any provision of any Contract
Document, except in accordance with the Loan Documents. LEAF shall
take such reasonable and lawful actions as the Lender shall request to enforce
LEAF’s rights under the Contracts, and, following the occurrence of a Default,
shall take such actions as are necessary to enable the Lender to exercise such
rights in the Lender’s own name.
(x) LEAF
will observe all corporate procedures required by its certificate of formation,
its limited partnership agreement and the laws of its jurisdiction of
formation. LEAF will maintain its corporate existence in good
standing under the laws of its jurisdiction of formation and will promptly
obtain and thereafter maintain qualifications to do business as a foreign
business entity in any other state in which it does business and in which it
is
required to so qualify.
(y) LEAF
will pay its operating expenses and liabilities from its own
assets.
(z) LEAF
will not hold itself out, or permit itself to be held out, as having agreed
to
pay or as being liable for the debts of the Borrower and LEAF will not engage
in
business transactions with the Borrower, except on an arm’s-length
basis. LEAF will not hold the Borrower out to third parties as other
than an entity with assets and liabilities distinct from LEAF. LEAF
will cause any financial statements consolidated with those of the Borrower
to
state that the Borrower is a separate corporate entity with its own separate
creditors who, in any liquidation of the Borrower, will be entitled to be
satisfied out of the Borrower’s assets prior to any value in the Borrower
becoming available to LEAF’s equity holders. LEAF will not act in any
other matter that could foreseeably mislead others with respect to the
Borrower’s separate identity.
(aa) LEAF
shall take all actions necessary to maintain the accuracy of the factual
assumptions set forth in the legal opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
special counsel to the Borrower and LEAF, issued in connection with the
Acquisition Agreement and relating to the issues of substantive consolidation
and true sale of the Contracts.
(bb) Except
as otherwise provided herein or in any other Loan Document, LEAF shall not
sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create
or
suffer to exist any Lien upon or with respect to, any Contract, any collections
related thereto or any other Collateral related thereto, or upon or with respect
to any account to which any collections of any Contract are sent, or assign
any
right to receive income in respect thereof.
(cc) LEAF
will not account for or treat (whether in financial statements or otherwise)
the
transactions contemplated by the Acquisition Agreement in any manner other
than
the sale or contribution of Contracts and other Collateral by LEAF to the
Borrower, it being understood that the Advances to the Borrower under this
Loan
Agreement will be treated as debt on the consolidated financial statements
of
LEAF.
47
(dd) LEAF
will not amend, modify, waive or terminate any terms or conditions of the
Acquisition Agreement without the prior written consent of the Lender, and
shall
perform its obligations thereunder.
(ee) LEAF
shall deliver or cause to be delivered to the Collateral Agent two (2) Business
Days before each Funding Date the Funding Date Documentation with respect to
the
Contracts being pledged hereunder on such Funding Date.
(ff) LEAF
shall deliver to the Lender on each Purchase Date a copy of the Assignment
delivered to it on such Purchase Date.
(gg) LEAF
shall promptly give notice to the Lender of the occurrence of (a) any
Facility Termination Event, specifying the event and the action which LEAF
proposes to take with respect thereto or (b) any event or occurrence which
will
or could reasonably be expected to adversely affect the collectibility of any
material portion of the Contracts or the ability of LEAF or the Borrower to
perform its obligations under any Loan Document to which it is a party or any
other event or occurrence which individually or in the aggregate could
reasonably be expected to materially and adversely affect LEAF’s or the
Borrower’s financial condition, operations, business or prospects or the
interests of the Lender and/or the Hedge Counterparty under this Loan Agreement,
the Note or any other Loan Document.
(hh) LEAF
shall pay and discharge all taxes and governmental charges upon it or against
any of its properties or assets or its income prior to the date after which
penalties attach for failure to pay, except (a) to the extent that LEAF
shall be contesting in good faith in appropriate proceedings its obligation
to
pay such taxes or charges, adequate reserves having been set aside for the
payment thereof, or (b) with respect to such taxes and charges which are not
material in either nature or amount such that any failure to pay or discharge
them, and any resulting penalties, either in any one instance or in the
aggregate, would not materially and adversely affect the financial condition,
operations, business or prospects of LEAF or the interests of the Lender and/or
the Hedge Counterparty under this Loan Agreement, the Note or any other Loan
Document.
(ii) At
the request of the Lender, LEAF shall prepare (and execute, if required) such
financing statements as Lender determines may be required by law to perfect,
maintain and protect the security interest of Collateral Agent, for the benefit
of the Lender, and the Hedge Counterparty, in the Collateral and in the Proceeds
thereof.
(jj) As
of the last day of each fiscal quarter commencing March 31, 2009, LEAF shall
maintain “partners equity” (as reflected in its financial statements) plus an
amount “Due to General Partner” of no less than 75.00% of “partners
equity” as of February 7, 2009 (the last day of its offering period pursuant to
its Prospectus dated February 7, 2007) as reported in its March 31, 2009
financial statements.
(kk) LEAF
shall pay and perform, as and when due, all of its obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been
48
(ll) LEAF
will provide the Lender with not less than thirty (30) days’ prior written
notice of any change in the form of organization, or jurisdiction of formation
of LEAF to permit the Lender to make any additional filings necessary to
continue the Collateral Agent’s perfected security interest in the Collateral,
except that UCC financing statements are not required to have been filed against
the related Customer for any Equipment related to any Contract that had an
original equipment cost at origination of less than $25,000, or if such Contract
provides for a “fair market value” purchase option, of less than
$50,000.
(mm) LEAF
shall, and shall cause each of its Subsidiaries to, comply (i) in all
material respects with all Requirements of Law and any change therein or in
the
application, administration or interpretation thereof (including, without
limitation any request, directive, guideline or policy, whether or not having
the force of law) by any Governmental Authority charged with the administration
or interpretation thereof; and (ii) with all indentures, mortgages, deeds of
trust, agreements, or other instruments or Contractual Obligations to which
it
is a party, including without limitation, each Loan Document to which it is
a
party, or by which it or any of its properties may be bound or affected, or
which may affect the Contracts, if the failure to comply therewith could,
individually or in the aggregate, result in a Material Adverse
Effect.
(nn) LEAF
shall not enter into any transaction which adversely affects the Collateral
or
the Lender’s or the Hedge Counterparty’s rights under this Loan Agreement, the
Note or any other Loan Document.
(oo) Except
for routine and customary salary advances or loans to employees in connection
with relocation expenses consistent with past practice of LEAF and its
Affiliates, LEAF shall not make any unsecured loans or other advances of money
to officers, managers, employees, stockholders, or affiliates in excess of
$50,000 in the aggregate.
(pp) LEAF
shall not do any of the following if it will have a material adverse effect
on
the payment or performance of, or LEAF’s ability to pay and/or perform, its
obligations to the Lender or in respect of any other Secured Obligations with
respect to this Loan Agreement, the Note or any other Loan Document to which
it
is a party: (i) redeem, retire, purchase or otherwise acquire,
directly or indirectly, any of LEAF’s stock, except in connection with
employment or similar agreements with officers and managers of LEAF consistent
with past practice, or (ii) make any change in LEAF’s capital structure, or
(iii) make any material change in any of its business objectives, purposes
or
operations which could reasonably be expected to materially and adversely affect
the payment or performance of, or LEAF’s ability to pay and/or perform, its
obligations to the Lender or any other party with respect to this Loan
Agreement, the Note or any other Loan Document to which it is a
party.
(qq) LEAF
shall not grant or otherwise create any Lien on the beneficial ownership of
the
Borrower.
(rr) LEAF
shall deliver to the Lender:
49
(i) as soon as
available and in any event within forty-five (45) days after the end of each
of
the first three (3) quarterly fiscal periods of each fiscal year of LEAF, copies
of the unaudited balance sheet of LEAF as at the end of such period and the
related unaudited statements of income and of cash flow for such period and
for
the portion of the fiscal year through the end of such period, setting forth
in
each case in comparative form the figures for the previous fiscal year,
accompanied by a certificate of a Responsible Officer of LEAF, which
certificate shall state that such financial statements fairly present the
financial conditions and results of operations of LEAF in accordance with GAAP,
as at the end of, and for, such period (subject to normal year-end
adjustments);
(ii) as
soon as available and in any event within 120 days after the end of each fiscal
year of LEAF, copies of the audited financial statements for LEAF for such
fiscal year, setting forth in each case in comparative form the figures for
the
previous fiscal year, accompanied by an opinion thereon of independent certified
public accountants of recognized national standing, which opinion shall not
be
qualified as to scope of audit or going concern and shall state that such
financial statements fairly present the financial condition and results of
operations of LEAF as at the end of, and for, such fiscal year in accordance
with GAAP;
(iii) concurrently
with the delivery of the financial statements referred to in clauses (i) and
(ii) above, a compliance certificate in form and substance satisfactory to
the
Lender showing (including calculations thereof) that LEAF is in compliance
with
each of the financial covenants contained in Section 7.02(a) and
(d); and
(iv) from
time to time such other information regarding the financial condition,
operations, or business of the LEAF Parties and their Affiliates as the Lender
may reasonably request.
Section
7.03 Covenants
of the Servicer. The Servicer covenants and agrees with the Lender and
the Hedge Counterparty, that, so long as any Advance is outstanding and until
the later to occur of the payment in full of all Secured Obligations and the
termination of this Loan Agreement:
(a) All
transactions and dealings between the Servicer and the Borrower will be
conducted on an arm’s-length basis. The parties acknowledge and agree
that the Servicer’s duties under the Loan Documents are performed on an arms’
length basis.
(b) The
Servicer shall not amend or otherwise modify the Underwriting Guidelines, except
in accordance with Section 7.03(c) of this Loan Agreement.
(c) The
Servicer may amend (w) the Forms of Contract attached to this Loan Agreement
as
Exhibit E, (x) the Underwriting Guidelines attached to this Loan
Agreement as Exhibit G, (y) the Schedule of LEAF Indebtedness attached to
this Loan Agreement as Exhibit N and/or (z) the Credit and Collection
Policies of LEAF attached to the Servicing Agreement as Exhibit B thereto
in accordance with, and only in accordance with, the following
procedure:
50
(ii) the
Lender shall have ten (10) Business Days following the date of its receipt
of
such written notice to reject such proposed amendment;
(iii) such
proposed amendment shall not be effective prior to the expiration of the latest
ten-Business Day period specified in clause (ii) above;
(iv) such
proposed amendment shall become effective at the expiration of the latest
ten-Business Day period specified in clause (ii) above unless the Lender
shall have
delivered to the Servicer a written objection to such proposed amendment prior
to the expiration of such ten-Business Day period; and in
order
for the written notice specified in clause (i) above to be valid,
such notice must contain (A) a covenant to the effect that the amendment
proposed in such notice will not result in any Material Adverse Effect and
(B) a
reference to this Section 7.03(c) and must contain the following
statement in bold, uppercase type: “IF YOU WISH TO PREVENT
THIS PROPOSED AMENDMENT FROM BECOMING EFFECTIVE, YOU MUST DELIVER A WRITTEN
OBJECTION TO THE AMENDMENT TO THE SERVICER WITHIN TEN BUSINESS DAYS AFTER YOUR
RECEIPT OF THIS NOTICE.”
(d) The
Servicer shall not, prior to the date which is one year and one day after the
termination of this Loan Agreement, petition or otherwise invoke the process
of
any court or government authority for the purpose of commencing or sustaining
a
case against the Borrower under any federal or state bankruptcy, insolvency
or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Borrower or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of
the
Borrower.
(e) The
Servicer shall at all times hold itself out to the public under the Servicer’s
own name as a legal entity separate and distinct from its
Affiliates.
(f) To
the extent that the Servicer and the Borrower and any of their respective
stockholders or Affiliates have offices in the same location, there shall be
a
fair and appropriate allocation of overhead costs among them, and each such
entity shall bear its fair share of such expenses.
(g) With
respect to the initial Servicer only and subject to Section 5.02 of the
Servicing Agreement, the Servicer will preserve and maintain its legal existence
as a Delaware corporation organized solely under the laws of the State of
Delaware.
(h) The
Servicer will preserve and maintain all of its material rights, privileges,
licenses and franchises.
51
(i) The
Servicer will comply with the requirements of all applicable Requirements of
Law
(including, without limitation, the Truth in Lending Act and all environmental
laws).
(j) The
Servicer will maintain accurate and complete records and books of account with
respect to the Collateral and the Servicer’s business, in which complete entries
will be made in accordance with GAAP.
(k) With
respect to the initial Servicer only, the Servicer shall keep all of its
property useful and necessary in its business in good working order and
condition (ordinary wear and tear excepted). The Servicer shall
maintain insurance coverage in the form of a fidelity bond which covers, among
other things, employee dishonesty, forgery or alteration, theft, disappearance
and destruction, robbery and safe burglary, property (other than money and
securities) and computer fraud in an aggregate amount of at least in each case
$1,000,000 and shall not reduce such coverage without the written consent of
the
Lender. The Servicer shall also maintain such other insurance with
financially sound and reputable insurance companies, and with respect to
property and risks of a character usually maintained by entities engaged in
the
same or similar business similarly situated, against loss, damage and liability
of the kinds and in the amounts customarily maintained by such
entities. Each insurance policy referred to in the preceding sentence
shall name the Collateral Agent (by name or as assignee of the Servicer), for
the benefit of the Lender and the Hedge Counterparty, as loss payee to the
extent of its insurable interest (including its interest in the
Collateral). All insurance companies issuing insurance pursuant to
this section shall receive, as of any date of determination, a rating of at
least “A” by A.M. Best Co.
(l) The
Servicer shall give notice to the Lender, promptly: (i) upon the
Servicer becoming aware of, and in any event within one (1) Business Day after,
the occurrence of any Default or any event of default or default under any
other
Loan Document or any other material agreement of the Servicer or the Borrower;
(ii) upon, and in any event within three (3) Business Days after, service
of process on the Servicer, or any agent thereof for service of process, in
respect of any legal or arbitrable proceedings affecting the Servicer or the
Borrower (1) that questions or challenges the validity or enforceability of
any
of the Loan Documents or (2) in which the amount in controversy exceeds
$1,000,000; (iii) upon the Servicer becoming aware of any event or change
in circumstances which could reasonably be expected to have a Material Adverse
Effect or to cause a Default; and (iv) of entry of a judgment or decree in
respect of the Servicer, its assets or the Collateral in an amount in excess
of
$1,000,000. Each notice pursuant to this clause (k) shall be
accompanied by a statement of a Responsible Officer of the Servicer setting
forth details of the occurrence referred to therein and stating what action
the
Servicer has taken or proposes to take with respect thereto.
(m) The
Servicer shall furnish to the Lender, as soon as available, copies of any and
all proxy statements, financial statements and reports which the Servicer sends
to its shareholders, and copies of all (if any) regular, periodic and special
reports, and all registration statements filed with the Securities and Exchange
Commission or any Governmental Authority which supervises the issuance of
securities by any LEAF Party and any press releases concerning any LEAF
Party.
52
(n) The
Servicer will furnish to the Lender, from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Lender may reasonably request, all in
reasonable detail.
(o) No
later than 12:00 p.m., New York City time, on each Determination Date, the
Servicer shall deliver, or cause to be delivered, to the Lender, the Borrower,
the Collateral Agent and the Backup Servicer, in a computer-readable format
acceptable to each such Person, a Monthly Servicer’s Report executed by a
Responsible Officer or agent of the Servicer containing among other things,
(i)
all information necessary to enable the Collateral Agent to make any withdrawal
and deposit required by Section 12.02 of this Loan Agreement, to give any
notice required by Section 12.02 of this Loan Agreement and to make the
allocations to required to be made on the next Payment Date pursuant to
Section 3.03(b) of this Loan Agreement, (ii) all information to be
provided to Lender and the Borrower specified by Exhibit A to the
Servicing Agreement, (iii) a listing of all Contracts purchased or replaced
by
the Borrower, the Servicer or the Seller during the related Collection Period
or
on the related Business Day, as applicable, and each Contract which became
a
Defaulted Contract or which was paid in full during the related Collection
Period shall be identified by account number (as set forth in the Contract
Schedule), and (iv) all additional information that the Borrower shall have
delivered to the Servicer, for inclusion in such Monthly Servicer’s Report,
pursuant to Section 11.02(c) of this Loan Agreement. In
addition to the information set forth in the preceding sentence, the Monthly
Servicer’s Report shall also contain the following information: (a) the NPA
Ratio and Annualized Default Ratio for the last Collection Period, and the
average of each of the NPA Ratio and Annualized Default Ratio for the three
(3)
most recently ended Collection Periods; (b) whether to the knowledge of the
Servicer any Facility Termination Event has occurred as of such Determination
Date; (c) whether to the knowledge of the Servicer a Servicer Termination Event
has occurred; and (d) such other information reasonably requested by the
Lender. The Servicer shall deliver to the Lender, the Borrower, the
Collateral Agent and the Backup Servicer a hard copy of any such Monthly
Servicer’s Report upon request of such Person.
(p) [Reserved].
(q) [Reserved].
(r) The
Servicer will defend the Collateral against, and will take such other action
as
is necessary to remove, any Lien, security interest or claim on or to the
Collateral, other than the security interests created under this Loan Agreement
and Permitted Encumbrances, and the Servicer will defend the right, title and
interest of the Collateral Agent, for the benefit of the Lender and the Hedge
Counterparty, in and to any of the Collateral against the claims and demands
of
all Persons whomsoever.
(s) [Reserved].
(t) Without
the prior written consent of the Lender, the Servicer will not, nor will it
permit or allow others to, amend, modify, terminate or waive any provision
of
any Contract Document, except in accordance with under the Loan
Documents. Notwithstanding the foregoing, the Servicer may, without
the prior written consent of the Lender, waive any assumption fees, late payment
charges, charges for checks returned for insufficient funds, or
53
(u) The
Servicer will observe all corporate procedures required by its certificate
of
incorporation, its by-laws and the laws of its jurisdiction of
formation. The Servicer will maintain its corporate existence in good
standing under the laws of its jurisdiction of formation and will promptly
obtain and thereafter maintain qualifications to do business as a foreign
corporation in any other state in which it does business and in which it is
required to so qualify.
(v) The
Servicer will pay its operating expenses and liabilities from its own
assets.
(w) The
Servicer will not hold itself out, or permit itself to be held out, as having
agreed to pay or as being liable for the debts of the Borrower and the Servicer
will not engage in business transactions with the Borrower, except on an
arm’s-length basis. The Servicer will not hold the Borrower out to
third parties as other than an entity with assets and liabilities distinct
from
the Servicer. The Servicer will cause any financial statements
consolidated with those of the Borrower to state that the Borrower is a separate
corporate entity with its own separate creditors who, in any liquidation of
the
Borrower, will be entitled to be satisfied out of the Borrower’s assets prior to
any value in the Borrower becoming available to the Servicer’s equity
holders. The Servicer will not act in any other matter that could
foreseeably mislead others with respect to the Borrower’s separate
identity.
(x) [Reserved].
(y) Except
as otherwise provided herein or in any other Loan Document, the Servicer shall
not sell, assign (by operation of law or otherwise) or otherwise dispose of,
or
create or suffer to exist any Lien upon or with respect to, any Contract, any
collections related thereto or any other Collateral related thereto, or upon
or
with respect to any account to which any collections of any Contract are sent,
or assign any right to receive income in respect thereof.
(z) The
Servicer will not amend, modify, waive or terminate any terms or conditions
of
the Servicing Agreement without the prior written consent of the Lender, and
shall perform its obligations thereunder.
(aa) The
Servicer shall deliver or cause to be delivered to the Collateral Agent two
(2)
Business Days before each Funding Date the Funding Date Documentation with
respect to the Contracts being pledged hereunder on such Funding
Date.
(bb) The
Servicer shall deliver to the Lender on each Purchase Date a copy of the
Assignment delivered to it on such Purchase Date.
(cc) The
Servicer shall promptly give notice to the Lender of the occurrence, to its
knowledge, of (a) any Facility Termination Event, specifying the event and
the action which the Servicer proposes to take with respect thereto, (b) any
event or occurrence which will or could reasonably be expected to adversely
affect the collectibility of any material portion of the Contracts or the
ability of the Servicer to service such Contracts or the ability of the Servicer
or
54
(dd) The
Servicer shall pay and discharge all taxes and governmental charges upon it
or
against any of its properties or assets or its income prior to the date after
which penalties attach for failure to pay, except (a) to the extent that
the Servicer shall be contesting in good faith in appropriate proceedings its
obligation to pay such taxes or charges, adequate reserves having been set
aside
for the payment thereof, or (b) with respect to such taxes and charges which
are
not material in either nature or amount such that any failure to pay or
discharge them, and any resulting penalties, either in any one instance or
in
the aggregate, would not materially and adversely affect the financial
condition, operations, business or prospects of the Servicer or the interests
of
the Lender and/or the Hedge Counterparty under this Loan Agreement, the Note
or
any other Loan Document.
(ee) [Reserved].
(ff) The
Servicer shall pay and perform, as and when due, all of its obligations of
whatever nature, except where the amount or validity thereof is currently being
contested in good faith by appropriate proceedings and reserves in conformity
with GAAP with respect thereto have been provided on the books of the Servicer,
and except to the extent that the failure to do so could not individually or
in
the aggregate reasonably be expected to result in a Material Adverse
Change.
(gg) [Reserved].
(hh) The
Servicer shall, and shall cause each of its Subsidiaries to, comply (i) in
all material respects with all Requirements of Law and any change therein or
in
the application, administration or interpretation thereof (including, without
limitation any request, directive, guideline or policy, whether or not having
the force of law) by any Governmental Authority charged with the administration
or interpretation thereof; and (ii) with all indentures, mortgages, deeds of
trust, agreements, or other instruments or Contractual Obligations to which
it
is a party, including without limitation, each Loan Document to which it is
a
party, or by which it or any of its properties may be bound or affected, or
which may affect the Contracts, if the failure to comply therewith could,
individually or in the aggregate, result in a Material Adverse
Effect.
(ii) The
Servicer shall not enter into any transaction which adversely affects the
Collateral or the Lender’s or the Hedge Counterparty’s rights under this Loan
Agreement, the Note or any other Loan Document.
(jj) [Reserved.]
(kk) The
Servicer shall not do any of the following if it will have a material adverse
effect on the payment or performance of, or the Servicer’s ability to pay and/or
perform, its obligations to the Lender or in respect of any other Secured
Obligations with respect to this Loan Agreement, the Note or any other Loan
Document to which it is a party: (i) redeem, retire,
55
purchase
or otherwise acquire, directly or indirectly, any of the Servicer’s stock,
except in connection with employment or similar agreements with officers and
directors of the Servicer consistent with past practice, (ii) make any change
in
the Servicer’s capital structure or (iii) make any material change in any of its
business objectives, purposes or operations which could reasonably be expected
to materially and adversely affect the payment or performance of, or the
Servicer’s
ability to pay and/or perform, its obligations to the Lender or any other party
with respect to this Loan Agreement, the Note or any other Loan Document to
which it is a party.
(ll) The
Servicer shall not grant or otherwise create any Lien on the beneficial
ownership of the Borrower.
Article
VIII
EVENTS
OF
DEFAULT
Section
8.01 Events
of Default. Each of the following events shall constitute
an event of default (an “Event of Default”) under this Loan
Agreement:
(a) Default
in the Payment of any Advance. The Borrower shall default in the
payment of any principal of or interest on any Advance when due (whether at
stated maturity, upon acceleration or at mandatory or optional prepayment or
otherwise), and such default shall continue for two (2) Business Days; or the
Servicer shall fail to deposit (or remit to the Collateral Agent for deposit)
any amount required to be deposited by it in the Collection Account (or remitted
by it to the Collateral Agent for deposit in the Collection Account) and such
failure shall continue for two (2) Business Days; or
(b) Default
in the Payment of any Other Amount. The Borrower shall default in
the payment of any other amount payable by it under this Loan Agreement or
under
any other Loan Document after notification by the Lender of such default or
the
discovery of such default by a Responsible Officer of the Borrower or LEAF,
and
such default shall have continued unremedied for three (3) Business Days;
or
(c) Final
Payment Date. All Advances and any other amounts payable to the
Lender have not been paid to the Lender by the Final Payment Date;
or
(d) Voluntary
Bankruptcy Event. A LEAF Party shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner or liquidator of itself, of the Collateral or of all or a
substantial part of such LEAF Party’s property, (ii) make a general assignment
for the benefit of its creditors, (iii) commence a voluntary case under the
Bankruptcy Code, (iv) file a petition seeking to take advantage of any other
law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (v) fail
to
controvert in a timely and appropriate manner, or acquiesce in writing to,
any
petition filed against it in an involuntary case under the Bankruptcy Code
or
any other law referred to in clause (iv) above, (vi) cease to conduct its
business, (vii) take any corporate or other action for the purpose of effecting
any of the foregoing, or (viii) admit in writing its inability to pay its debts
as such debts become due; or
56
(e) Involuntary
Bankruptcy Event. A proceeding or case shall be commenced,
without the application or consent of any LEAF Party, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts,
(ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator or
the
like of any LEAF Party, the Collateral or any substantial part of any LEAF
Party’s property, or (iii) similar relief in respect of any LEAF Party under any
law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts,
and such proceeding or case shall continue undismissed; the Collateral or any
other assets of any LEAF Party are attached, seized, levied upon or subjected
to
a writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of such LEAF Party, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 or more days; or an
order for relief against any LEAF Party shall be entered in an involuntary
case
under the Bankruptcy Code; any LEAF Party shall have concealed, removed or
permitted to be concealed or removed any part of its property with intent to
hinder, delay or defraud its creditors or made or suffered a transfer of any
of
its property which is fraudulent under any bankruptcy, fraudulent conveyance
or
other similar law; or
(f) Borrowing
Base Deficiency. The Borrower shall have failed to cure a
Borrowing Base Deficiency in the manner, and within two (2) Business Days,
set
forth in Section 2.07(a); or
(g) Failure
to Maintain a Valid Perfected First Priority Security
Interest. The Collateral Agent shall at any time fail to have a
valid, perfected, first priority security interest in Contracts with an
Aggregate Implicit Principal Balance, as of any date of determination, equal
to
or greater than 1.00% of the Aggregate Implicit Principal Balance of all
Contracts as of such date of determination, and the Collateral related thereto,
for the benefit of the Lender and the Hedge Counterparty, free and clear of
all
Liens or any purchase by the Borrower of a Contract under the Acquisition
Agreement shall, for any reason, cease to create in favor of the Borrower a
perfected ownership interest in such Contract and the other Collateral related
thereto, except that UCC financing statements are not required to have been
filed against the related Customer for any Equipment related to any Contract
that had an original equipment cost at origination of less than $25,000, or
if
such Contract provides for a “fair market value” purchase option, of less than
$50,000; provided, however, that if an event described in this
clause (g) is cured by the repurchase of Contracts pursuant to
Section
3.03 of the Acquisition Agreement within five (5) Business Days after the
discovery of such event by any Person, together with the payment of any required
indemnity, such event shall cease to constitute an Event of Default;
or
(h) Cross
Default. Any LEAF Party shall be in default under any note,
indenture, loan agreement, guaranty, swap agreement or any other Contractual
Obligation to which it is a party, which default involves the failure to pay
an
amount in excess of $1,000,000 and which default (i) involves the failure to
pay
a matured obligation, or (ii) permits the acceleration of the maturity of
obligations by any other party to or beneficiary of such note, indenture, loan
agreement, guaranty, swap agreement or other Contractual Obligation;
or
(i) Breach
of Term, Covenant or Agreement. Any LEAF Party or the Servicer
(if the Servicer is a LEAF Party) shall fail to perform or observe any term,
covenant or agreement under this Loan Agreement, the Note or any other Loan
Document which failure (i) is curable by
57
(j) Breach
of Representation or Warranty. Any representation or warranty
made or deemed to be made by any LEAF Party or the Servicer (if the Servicer
is
a LEAF party) (or any of their respective officers) under or in connection
with
this Loan Agreement or any other Loan Document, any remittance report or other
information or report delivered pursuant hereto or any other Loan Document
shall
prove to have been false or incorrect in any material respect when made;
provided, however, that if any breach described above is cured by
the repurchase of Contracts pursuant to Section 3.03 of the Acquisition
Agreement, together with the payment of any required indemnity, such breach
shall cease to constitute an Event of Default; or
(k) [Reserved];
or
(l) 3-Month
Rolling Average of the NPA Ratio. The average of the NPA Ratios
for the three most recently ended Collection Periods is greater than
(i) 3.00% for the Serviced Portfolio, or (ii) 2.50% for the Securitized
Portfolio; or
(m) 3-Month
Rolling Average of the Annualized Default Ratio. The average of
the Annualized Default Ratios on the Serviced Portfolio for the three most
recently ended Collection Periods is equal to or greater than 3.50%;
or
(n) [Reserved];
or
(o) Unsatisfied
Judgment. A final, nonappealable judgment by any competent court
in the United States of America for the payment of money in an amount in excess
of $1,000,000 shall be rendered against any LEAF Party and the same remains
undischarged for a period of sixty (60) days after the entry thereof;
or
(p) [Reserved];
or
(q) Materially
Adverse Litigation. There shall be any action, suit or
proceedings at law or in equity or investigations pending against LEAF or the
Borrower, before any court, regulatory body, administrative agency or other
tribunal or Governmental Authority having jurisdiction over LEAF or the Borrower
or its respective properties (A) asserting the invalidity of this Loan
Agreement, the Note or any of the other Loan Documents, (B) seeking to
prevent the consummation of any of the transactions contemplated by this Loan
Agreement, the Note or any other Loan Documents to which LEAF or the Borrower
is
a party; or (C) seeking any determination or ruling that might have a
material adverse effect on the interests of the Lender or the Hedge Counterparty
under this Loan Agreement or any other Loan Document, including, without
limitation, a Material Adverse Effect on the performance by LEAF or the Borrower
of its respective obligations under, or the validity or enforceability of,
this
Loan Agreement, the Note or any of the other Loan Documents or the business,
operations, condition (financial or otherwise) or prospects of LEAF or the
Borrower; or
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(r) Change
of Control. Any Change of Control shall occur with respect to
LEAF or the Borrower, unless the Lender shall have expressly consented to such
Change of Control in writing; or
(s) Reserve
Account Limitation Event. The amount of any deposit to the
Reserve Account required pursuant to clauseeighth of Section
3.03(b) is limited in accordance with the proviso thereto in order
to prevent a Reserve Account Limitation Event; or
(t) Servicer
Termination Event. A Servicer Termination Event, (if the Servicer
is a LEAF Party) other than the Servicer Termination Event set forth in
Section 6.01(a)(ix) of the Servicing Agreement, shall have occurred and
be continuing; or
(u) Required
Audits. An exception shall exist in the Required Audit Reports
which, in the reasonable opinion of the Lender, is reasonably likely to have
a
material adverse effect on the Lender, the Contracts or the other Collateral,
and such exception has remained uncured for a period of thirty (30) days after
the earlier of written notice to the Servicer of the existence of such exception
or of the date that the Servicer has knowledge that such exception shall be
included in the related Required Audit Report.
(v) Material
Adverse Change. The Lender shall have reasonable cause to believe
that (i) there has been a Material Adverse Effect with respect to the Collateral
or the Lender’s rights under this Loan Agreement, the Note or any other Loan
Document or (ii) any LEAF Party shall have suffered any Material Adverse Change;
or
(w) Static
Pool Test. The Cumulative Net Loss exceeds the applicable
percentages found in the column titled “Event of Default” in the definition of
“Static Pool Test”; or
(x) [Reserved];
or
(y) Termination
of Loan Documents. The Custodial Agreement, the Acquisition
Agreement, the Note, the Servicing Agreement or this Agreement (except in
accordance with its terms or with the mutual consent of the parties thereto),
shall for whatever reason be terminated or cease to be in full force and effect,
or the enforceability of any material portion thereof shall be contested in
any
legal or arbitrable proceeding by any LEAF Party thereto; or
(z) ERISA
Default. (i) Any Person shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect to
any
Plan, or any Lien in favor of the PBGC or a Plan shall arise on the assets
of a
LEAF Party or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any
Single Employer Plan, which Reportable Event or commencement of proceedings
or
appointment of a trustee is, in the reasonable opinion of the Lender, likely
to
result in the termination of such Plan for purposes of Title IV of ERISA, (iv)
any Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) a LEAF Party or any Commonly Controlled Entity shall incur any
liability in connection with a withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi)
59
(aa) [Reserved];
or
(bb) Failure
to Answer. The Lender shall reasonably request, specifying the
reasons for such request, information, and/or written responses to such
requests, regarding the Collateral or the financial well-being of any LEAF
Party
and a response reasonably addressing such request or information shall not
have
been provided within ten (10) Business Days of such request; or
(cc) Failure
to Deliver Monthly Servicer’s Report. The Servicer shall have
failed to deliver the Monthly Servicer’s Report in accordance with the Servicing
Agreement and such condition continues unremedied for a period of two (2)
Business Days after the earlier to occur of (x) the discovery of such failure
by
a Servicing Officer or a Responsible Officer of the Servicer or (y) the date
on
which written notice has been received by a Servicing Officer or a Responsible
Officer of the Servicer; or
(dd) Failure
of Servicing Duties. The Seller shall have failed to deposit the
Release Price into the Collection Account with respect to any Contract required
to be repurchased pursuant to Section 3.03 of the Acquisition Agreement;
or (with respect to any other Contract, including such other Contracts described
in the definition of Release Price) the Servicer or the Borrower shall have
failed to deposit the Release Price into the Collection Account and any of
such
failures in this clause (dd) continue unremedied for a period of one (1)
Business Day; or
(ee) Material
Delegation of Servicer’s Duties. The Servicer transfers,
delegates or assigns a material portion of its servicing duties in violation
of
the Servicing Agreement; or
(ff) Failure
to Maintain Minimum Capital Requirements. (i) LEAF shall have
failed to maintain a Senior Leverage Ratio no greater than 8.0:1.0 or (ii)
the
Servicer shall have (a) failed to maintain a “minimum tangible net worth”
(defined as stockholders’ equity plus subordinated debt less intangibles) of
$7,500,000.00 or (b) defaulted (after giving effect to any and all notice,
grace
and cure periods) in respect of any material Indebtedness for borrowed money);
or
(gg) Registration
under Investment Company Act Required. The Borrower shall be
required to register as an “investment company” under the Investment Company
Act.
Article
IX
REMEDIES
UPON DEFAULT
Section
9.01 Remedies.
(a) Upon
the occurrence and continuation of one or more Events of Default, and in
addition to the remedies provided in Section 4.07 of this Loan
Agreement and otherwise provided in this Loan Agreement, the Lender may
immediately declare the principal amount of the Advances then outstanding under
the Note to be immediately due and payable, together with all interest thereon
and fees and expenses accruing under this Loan Agreement. Upon such
declaration, the balance then outstanding on the Note shall become immediately
due and
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(b) Upon
the occurrence and continuation of one or more Events of Default, and in
addition to the remedies provided in Section 4.07 of this Loan Agreement
and otherwise provided
in this Loan Agreement, the Collateral Agent (at the direction of the Lender)
shall have the right to obtain physical possession of the Servicing Records
and
all other files of the LEAF Parties relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the LEAF Parties or any third party acting for the LEAF Parties
and the LEAF Parties shall deliver (or cause to be delivered) to the Collateral
Agent and the Backup Servicer such assignments as the Collateral Agent (at
the
direction of the Lender) shall request. The Lender shall have the
right to demand transfer of all servicing rights and obligations to a new
servicer (including, without limitation, the Backup Servicer) acceptable to
the
Lender, and the Borrower shall pay to such new servicer a servicing fee or
any
other amounts necessary to assure the ability of the Lender to find an
appropriate successor servicer. The Collateral Agent (at the
direction of the Lender) may deduct any such fees from the Proceeds of the
Collateral prior to applying any such Proceeds to the other Secured
Obligations. The Servicer shall cooperate fully with the Lender,
Collateral Agent and the successor Servicer during the transition of servicing
duties. The Lender and the Collateral Agent shall be entitled to
specific performance of all agreements of the LEAF Parties contained in the
Loan
Documents.
Article
X
NO
DUTY
OF COLLATERAL AGENT
Section
10.01 No
Duty of Collateral Agent. b)The powers conferred on the Collateral
Agent hereunder are solely to protect the interests in the Collateral of the
Collateral Agent, for the benefit of the Lender and the Hedge
Counterparty. The Collateral Agent shall not exercise any powers
granted hereby except at the written direction of the Lender or as otherwise
expressly required under the Loan Documents, and no duties or obligations of
the
Collateral Agent shall be implied under the Loan Documents. The
Collateral Agent shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers, and none of it or any of its
officers, directors, employees or agents shall be responsible to the LEAF
Parties for any act or failure to act hereunder, except for its or their own
negligence or willful misconduct or breach of the Loan Documents. In
no event will the Collateral Agent or any of its officers, directors, employees
or agents be liable for any consequential, indirect or special
damages.
(b) Except
as expressly set forth in the Loan Documents, the Collateral Agent makes no
warranty or representation and shall have no responsibility as to the
completeness, validity, sufficiency, value, genuineness, ownership or
transferability of the Contracts or any of the documents in the Contract Files
and will not be required to and will not make any representations as to the
validity or value of any of the Contracts or any of the documents in the
Contract Files.
(c) Except
as provided in Section 10.01(a) hereof, the Collateral Agent shall
not be liable for any error of judgment, or for any act done or step taken
or
omitted by it, in good faith, or for any mistakes of fact or law, or for
anything that it may do or refrain from doing in connection
herewith. The Collateral Agent may rely on and shall be protected in
acting upon any certificate,
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(d) The
Collateral Agent shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if the Collateral Agent
believes that repayment of such funds (repaid in accordance with the terms
of
this Agreement) or adequate indemnity against such risk or liability is not
reasonably assured to it.
Article
XI
PURCHASE
OF RELEASE AND SUBSTITUTION OF CONTRACTS
Section
11.01 Purchase
of Release and Substitution.
(a) Subject
to the limitations set forth in Section 11.01(c) and Section
11.01(d), the Borrower shall be entitled, pursuant to Section
11.01(c), or required, pursuant to Section 11.01(d), upon three (3)
Business Days’ notice to the Servicer, the Collateral Agent and the Lender, to
purchase the release, in the case of an optional purchase, of a Replaceable
Contract or, in the case of a purchase with respect to which a purchase or
replacement is mandatory, of a Defaulted Contract (and in each case the
Equipment and other Collateral related thereto), from the security interest
of
the Collateral Agent by remitting, in accordance with the terms of Section
2.07, the Release Price for such Contract to the Collateral Agent for
deposit in the Collection Account; provided, however, that no such
purchase of the release of such Contracts shall be made if (i) such
purchase is made with any intent to hinder, delay, or defraud any entity to
which the Borrower is or will become indebted; (ii) there shall be any
reason to believe that the Borrower is insolvent or that such purchase will
render the Borrower insolvent on the date thereof or as a result of such
purchase; (iii) at the time of such purchase, the Borrower is engaged in
business, or about to engage in business, for which the assets remaining with
it
after the purchase will be an unreasonably small amount of capital; or
(iv) the Borrower intends or believes that it will incur debts beyond its
ability to pay as such debts mature.
(b) Subject
to the limitations set forth in Section 11.01(c) and Section
11.01(d), the Borrower shall be further entitled, pursuant to Section
11.01(c), or required, pursuant to Section 11.01(d), upon three (3)
Business Days’ notice to the Servicer, the Collateral Agent and the Lender, to
obtain the release, in the case of an optional replacement, of a Replaceable
Contract by replacing such Replaceable Contract (and the Equipment and other
Collateral related thereto) or, in the case of a replacement with respect to
which a purchase or replacement is mandatory, of a Defaulted Contract by
replacing such Defaulted Contract (and the Equipment and other Collateral
related thereto), with one or more Substitute Contracts (and the Equipment
and
other Collateral related thereto); provided that each such removal of a
Replaceable Contract or Defaulted Contract and replacement thereof with one
or
more Substitute Contracts shall satisfy the following conditions
precedent:
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(i) based
on the Underwriting Guidelines, each Substitute Contract shall be of equal
or
better credit quality to the related Replaceable Contract;
(ii) each
Substitute Contract shall meet each eligibility criterion set forth in
Exhibit D to this Loan Agreement and shall thus qualify as an Eligible
Contract;
(iii) the
Final Due Date of each Substitute Contract shall be on or prior to the Final
Due
Date of the related Replaceable Contract or Defaulted Contract; and
(iv) after
giving effect to the removal of a Replaceable Contract or Defaulted Contract
from the pool of Eligible Contracts and the addition of one or more related
Substitute Contracts to the pool of Eligible Contracts, the Aggregate Implicit
Principal Balance of such Substitute Contracts, as of the date of such removal
and addition, shall not be less than the Implicit Principal Balance of such
Replaceable Contract or Defaulted Contract as of the date of such removal and
addition.
(c) Notwithstanding
anything in this Loan Agreement to the contrary, neither any optional purchase
of the release of a given Replaceable Contract pursuant to Section
11.01(a) nor any optional substitution of a given Replaceable Contract with
a Substitute Contract pursuant to Section 11.01(b) shall be permissible
unless, after giving effect to the removal of such given Replaceable Contract
pursuant to Section 11.01(a) or (b), as applicable, the aggregate
of the Release Prices of all Replaceable Contracts removed from the pool of
Contracts (in each case, as of the date of removal of such Replaceable Contract,
but without giving effect to any required purchase of or substitution for
Defaulted Contracts pursuant to Section 11.01(d)) after the Closing Date
is less than or equal to 5.00% of the Maximum Advance Amount as of such date
of
determination.
(d) LEAF,
acting through the Borrower, shall be required to purchase the release of a
given Defaulted Contract pursuant to Section 11.01(a) or substitute a
given Defaulted Contract with a Substitute Contract pursuant to Section
11.01(b) so long as the aggregate of the Release Prices of all Defaulted
Contracts (in each case, as of the date of removal of such Defaulted Contract)
so purchased or substituted for after the Closing Date is less than or equal
to
5.00% of the Maximum Advance Amount as of such date of
determination.
Section
11.02 Procedure.
(a) Pursuant
to the related Monthly Servicer Report, the Borrower shall notify LEAF, the
Servicer, the Collateral Agent and the Lender of its release of any Replaceable
Contract or Defaulted Contract pursuant to Section 11.01(a) on such
Business Day or to substitute one or more Substitute Contracts for a Replaceable
Contract or Defaulted Contract pursuant to Section 11.01(b) on such
Business Day.
(b) The
Borrower, in accordance with the terms of Section 2.07(d), shall remit to
the Servicer for deposit into the Collection Account the Release Price for
each
Replaceable Contract or Defaulted Contract, the release of which the Borrower
shall have elected, or shall have been required, to purchase, pursuant to
Section 11.01(a), on such Business Day.
63
(c) Pursuant
to the related Monthly Servicer Report, the Borrower shall deliver to the
Servicer, for inclusion in such Monthly Servicer’s Report for the related
Determination Date: (i) a list of each Replaceable Contract or Defaulted
Contract to be removed from the pool of Contracts on such Business Day pursuant
to Section 11.01(a) or (b), which shall be deleted by LEAF from
Schedule A to the Acquisition Agreement, (ii) a supplement to Schedule A to
the
Acquisition Agreement setting forth for each Substitute Contract to be added
to
the pool of Eligible
Contracts on such Business Day pursuant to Section 11.01(b) all
information required to be listed with respect to a Contract on such Schedule
A,
(iii) an irrevocable written notice of the pledge by the Borrower to the
Collateral Agent of a security interest in each such Substitute Contract, in
the
form in which such a pledge is required to be expressed in any Notice of
Borrowing and Pledge, (iv) an Officers’ Certificate executed by a Responsible
Officer of the Borrower, (A) certifying that each such Substitute Contract
is an
"Eligible Contract", (B) specifying each Replaceable Contract or Defaulted
Contract for which one or more Substitute Contracts has been substituted, (C)
certifying that each requirement under Section 11.02(b) has been
satisfied with respect to the addition of each such Substitute Contract, (D)
certifying that the removal of each such Replaceable Contract and Defaulted
Contract is in accordance with the terms of Section 11.01(c) and
Section 11.01(d), respectively, and (E) containing the certifications
required in any Borrowing Base Certificate as to the satisfaction of all matters
referred to in Section 5.02(a), (b) and (c) hereof, and
(iv) such additional information concerning such Substitute Contracts and/or
Replaceable Contracts or Defaulted Contracts as may be needed for the Servicer
to prepare such Monthly Servicer’s Report pursuant to Section 4.01 of the
Servicing Agreement and otherwise to carry out its duties as Servicer under
the
Servicing Agreement.
(d) Subject
to the provisions of Section 11.03, the delivery of any Officers’
Certificate and supplement to Schedule A to the Acquisition Agreement
pursuant
to Section 11.02(a) shall be conclusive evidence, without further act or
deed, that (i) the Borrower pledged to the Collateral Agent, for the
benefit of the Lender and the Hedge Counterparty, and pursuant to Section
11.01 hereof all of the Borrower’s right, title and interest in and to the
Substitute Contracts identified in such supplement, and the related rights
associated with such Contract, (ii) the Borrower pledged to the Collateral
Agent, for the benefit of the Lender and the Hedge Counterparty, all of the
Borrower’s right, title and interest in and to the Equipment and all other
Collateral related to each such Substitute Contract, and (iii) the Collateral
Agent, on behalf of the Lender and the Hedge Counterparty, is directed to
release to the Borrower, without representation or warranty, all of the Lender’s
and Collateral Agent’s right, title and interest in and to the Replaceable
Contracts identified in such Officers’ Certificate and release its security
interest in the Equipment and all other Collateral relating
thereto. The Borrower shall deliver to the Collateral Agent all
documentation with respect to each Substitute Contract that is required to
be
delivered in respect of any Contract pursuant to Sections 2 and 3
of the Custodial Agreement, within the time specified under the Custodial
Agreement. The Borrower shall promptly request the Collateral Agent
in writing to deliver to or upon the order of the Borrower the original executed
counterpart of each Replaceable Contract for which substitution has been made
pursuant to Section 11.01 hereof and the Collateral Agent shall deliver
to the Borrower the original executed counterpart of each Replaceable Contract
for which substitution has been made pursuant to Section 11.01 hereof in
accordance with the provisions of Section 6 of the Custodial
Agreement.
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Section
11.03 Objection
and Purchase.
If
the
Lender objects to any purchase of release or substitution of Contracts within
ten (10) days of receipt of the Monthly Servicer’s Report providing notice
thereof pursuant to Section 4.01 of the Servicing Agreement, on the
grounds either that any Substitute Contract is not an Eligible Contract within
the meaning of the definition thereof or that such purchase of release or
substitution is otherwise not permitted under the provisions of Section
11.01 hereof, the
Borrower shall be entitled to present such additional information as it deems
appropriate in an effort to demonstrate that such Contract is an Eligible
Contract and that such purchase of release or substitution is permitted under
the provisions of Section 11.01 hereof. Following such
presentation, the procurement of release or substitution shall remain effective
if each Person originally objecting to the substitution withdraws the
objection. If the conditions specified in the preceding sentence are
not satisfied, or if at any time it is established that any Contract was not,
at
the time of substitution, an Eligible Contract, then the Borrower shall be
required to purchase the release of such Substitute Contract in accordance
with
the provisions of Section 11.01(a) hereof.
Section
11.04 Borrower’s,
Servicer’s and Collateral Agent’s Subsequent Obligations.
Upon
any
removal of a Replaceable Contract from the pool of Contracts pursuant to
Section 11.01(a) or (b), the Borrower’s, the Servicer’s and the
Collateral Agent’s obligations under the Loan Documents with respect to such
Replaceable Contract and the Collateral related thereto shall
cease. Upon the addition of a Substitute Contract to the pool of
Eligible Contracts pursuant to Section 11.01(b), the Borrower, the
Servicer and the Collateral Agent shall each thereafter have the same
obligations with respect to such Substitute Contract and the Collateral related
thereto as it has with respect to all other Contracts subject to the terms
of
the Loan Documents.
Article
XII
ACCOUNTS;
REPORTS
Section
12.01 Establishment
of Collection Account, Reserve Account and Funding Account.
(a) The
Borrower, for the benefit of the Lender and the Hedge Counterparty, shall
establish and maintain in the name of the Collateral Agent an Eligible Account
(the “Collection Account”), bearing a designation clearly indicating that
the funds deposited therein are subject to the Lien of the Collateral Agent
for
the benefit of the Lender and the Hedge Counterparty. The Collection Account
shall initially be established with the Collateral Agent.
(b) The
Borrower, for the benefit of the Lender and the Hedge Counterparty, shall
establish and maintain in the name of the Collateral Agent an Eligible Account
(the “Reserve Account”), bearing a designation clearly indicating that
the funds deposited therein are subject to the Lien of the Collateral Agent
for
the benefit of the Lender and the Hedge Counterparty. The Reserve
Account shall initially be established with the Collateral Agent.
65
(c) The
Borrower shall establish and maintain in the name of the Collateral Agent an
Eligible Account (the “Funding Account”). The Funding Account
shall be initially established with the Collateral Agent.
(d) Funds
on deposit in the Collection Account and the Reserve Account shall be invested
by the Collateral Agent (or any custodian with respect to funds on deposit
in
any such account) in Permitted Investments selected in writing by the Lender
and
the Borrower (pursuant to standing instructions or otherwise). In the
absence of any contrary instruction, the investments that
shall be deemed to have been selected shall be the investments specified in
clause (iv) of the definition of “Permitted Investments” set forth in Appendix A
to this Loan Agreement. Other than as agreed upon between the Lender
and the Borrower, funds on deposit in the Collection Account or the Reserve
Account shall be invested in Permitted Investments that will mature so that
such
funds will be available at the close of business on the Business Day immediately
preceding the following Payment Date. All Permitted Investments will
be held to maturity.
(e) All
Investment Earnings of monies deposited in the Collection Account shall be
deposited by the Collateral Agent in the Collection Account no later than the
close of business on the day they are received, and any loss resulting from
such
investments shall be charged to the Collection Account. All
Investment Earnings of monies deposited in the Reserve Account shall be
deposited by the Collateral Agent in the Reserve Account no later than the
close
of business on the day they are received, and any loss resulting from such
investments shall be charged to the Reserve Account. Neither the
Servicer nor the Lender will direct the Collateral Agent to make any investment
of any funds held in the Collection Account or the Reserve Account unless the
security interest granted and perfected in such account will continue to be
perfected in such investment, in either case without any further action by any
Person.
(f) If
(i) the Lender shall have failed to give investment directions for any funds
on
deposit in the Collection Account or the Reserve Account to the Collateral
Agent
by 12:00 p.m., New York City time (or such other time as may be agreed by the
Lender and the Collateral Agent), on any Business Day; or (ii) a Default or
Event of Default shall have occurred and be continuing but the Secured
Obligations shall not have been declared due and payable, or, if such amounts
shall have been declared due and payable following an Event of Default, amounts
collected or receivable from the Collateral are being applied as if there had
not been such a declaration, then the Collateral Agent shall, to the fullest
extent practicable, invest and reinvest funds in the Collection Account and
the
Reserve Account in one or more Permitted Investments pursuant to
paragraph (d) above.
(g) The
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty,
shall possess all right, title and interest in all funds on deposit from time
to
time in the Collection Account and in all Proceeds thereof and all such funds,
investments, Proceeds and income shall be part of the Collateral. The
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty,
shall possess all right, title and interest in all funds on deposit from time
to
time in the Reserve Account and in all Proceeds thereof and all such funds,
investments, Proceeds and income shall be part of the
Collateral. Except as otherwise provided herein, the Collection
Account and the Reserve Account shall be under the sole dominion and control
of
the Collateral Agent for the benefit of the Lender and the Hedge
Counterparty. If, at any time, either the Collection Account or the
Reserve Account ceases to be an Eligible Account, the Servicer (in the
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(h) With
respect to the Facility Account Property:
(A) any
Facility Account Property shall be held solely in Eligible Accounts; and, except
as otherwise provided herein, each such Eligible Account shall be subject to
the
exclusive custody and control of the Collateral Agent, and the Collateral Agent
shall have sole signature authority with respect thereto;
(B) any
Facility Account Property that constitutes physical property shall be delivered
to the Collateral Agent in accordance with paragraphs (1)(a) and (b) of the
definition of “Delivery” in Appendix A to this Loan Agreement and shall
be held, pending maturity or disposition, solely by the Collateral Agent or
a
securities intermediary (as such term is defined in Section 8-102(a)(14) of
the
UCC) acting solely for the Collateral Agent;
(C) any
Facility Account Property that is a book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations shall be delivered
in
accordance with paragraph (1)(c) of the definition of “Delivery” in
Appendix A to this Loan Agreement and shall be maintained by the Collateral
Agent, pending maturity or disposition, through continued book-entry
registration of such Facility Account Property as described in such paragraph;
and
(D) any
Facility Account Property that is an “uncertificated security” under
Article 8 of the UCC and that is not governed by clause (c) above shall be
delivered to the Collateral Agent in accordance with paragraph (1)(d) of
the definition of “Delivery” in Appendix A to this Loan Agreement and
shall be maintained by the Collateral Agent, pending maturity or disposition,
through continued registration of the Collateral Agent’s (or its nominee’s)
ownership of such security.
Effective
upon Delivery of any Facility Account Property in the form of physical property,
book-entry securities or uncertificated securities, the Collateral Agent shall
be deemed to have purchased such Facility Account Property for value, in good
faith and without notice of any adverse claim thereto.
67
The
Collateral Agent shall not enter into any subordination or intercreditor
agreement with respect to the Facility Account Property other than, to the
extent applicable, this Loan Agreement or as contemplated by the Loan
Documents.
Section
12.02 Deposits
into and Withdrawals from Accounts.
(a) If,
on any day, the Servicer receives any Scheduled Payments, the Servicer shall,
upon identification thereof, deposit such Scheduled Payments to the Lockbox
Account no later than the second (2nd) Business
Day
immediately following such receipt. In addition, the Servicer
shall,
upon identification thereof, deposit or cause to be deposited in the Lockbox
Account all other Receivables (including, without limitation, any Residual
Proceeds, Recoveries, Guaranty Amounts and Insurance Proceeds) received or
collected by the Servicer, in accordance with, and within the time specified
under, Section 3.03(a) of this Agreement. Pending such
deposit, such Scheduled Payments and other Receivables shall be held by the
Servicer in trust for the benefit of the Lender and the Hedge
Counterparty.
The
Servicer or the Borrower, as applicable, shall deposit or cause to be deposited
in the Collection Account (i) each Swap Payment paid by the Hedge Counterparty
pursuant to any Interest Rate Hedging Agreement, on the date of receipt of
such
payment (it being understood that the Borrower shall instruct the Hedge
Counterparty, pursuant to each Interest Rate Hedging Agreement and each Interest
Rate Hedging Transaction thereunder, to deposit each such Swap Payment into
the
Collection Account), (ii) the Release Price for any Contract, the Collateral
Agent’s security interest in which is released pursuant to Section
2.07(b) of this Loan Agreement, within the time specified under Section
2.07(b) of this Loan Agreement (it being understood that the Collateral
Agent shall, on the date of receipt of any such Release Price from LEAF, on
behalf of the Borrower, pursuant to Section 3.03 of the Acquisition
Agreement, deposit such amount in the Collection Account), (iii) the Release
Price for any Contract, the Collateral Agent’s security interest in which is
released pursuant to Section 2.07(c) of this Loan Agreement, within the
time specified under Section 2.07(c) of this Loan Agreement, (iv) the
Release Price for any Contract, the Collateral Agent’s security interest in
which is released pursuant to Section 2.07(d) of this Loan Agreement,
within the time specified under Section 2.07(d) of this Loan Agreement
(it being understood that the Collateral Agent shall, on the date of receipt
of
any such Release Price from the Borrower deposit such amount in the Collection
Account), (v) any Prepayment Amount for any Payment Date, no later than such
Payment Date and (vi) each Servicer Advance for such Payment Date required
to be
made under Section 3.04 of the Servicing Agreement, no later than such
Payment Date (it being understood that the Collateral Agent shall, on the date
of receipt of any such Servicer Advance from the Servicer, deposit such amount
in the Collection Account). Pending the deposit of such funds in the
Collection Account (or the delivery of such amounts to the Collateral Agent
for
deposit in the Collection Account), such funds shall be held by the Servicer
or
the Borrower, as applicable, in trust for the benefit of the Lender and the
Hedge Counterparty.
(b) On
each Payment Date (and, in each case, prior to the making of any required
payments on such Payment Date pursuant to Sections 3.03(b) and
12.02(c) of this Loan Agreement), the Collateral Agent shall deposit
in
the Collection Account the Reserve Account Available Amount for such Payment
Date, if any, withdrawn from the Reserve Account in accordance with this Loan
Agreement.
68
(c) On
each Payment Date, the Collateral Agent shall (based on the Monthly Servicer’s
Report delivered by the Servicer pursuant to Section 4.01 of the
Servicing Agreement) withdraw all Available Funds and any Reserve Account
Available Amount on deposit in the Collection Account, and apply such funds
in
the manner set forth in Section 3.03(b) of this Loan
Agreement.
(d) No
party hereto shall withdraw or otherwise remove, or permit the removal by any
Person other than the Collateral Agent of, any funds in the Collection Account
or the Reserve Account,
other than in accordance with this Agreement and the other Loan Documents then
in effect. Neither the Servicer nor the Borrower shall instruct the
Collateral Agent to withdraw or otherwise remove any funds in the Collection
Account or the Reserve Account except as provided in the Loan
Documents. Notwithstanding anything in this clause (d) to the
contrary, the Servicer shall instruct the Collateral Agent to pay to the
Borrower amounts paid into the Collection Account that are not Receivables
on a
Contract or other amounts required to be deposited into the Collection Account
pursuant to this Agreement or any of the other Loan Documents (including,
without limitation, any reasonable out-of-pocket expenses incurred by the
Servicer in enforcing a Defaulted Contract, to the extent not previously
retained) if the Borrower or Servicer shall have notified the Lender (with
a
copy to the Collateral Agent, in the case of any amount to be withdrawn from
the
Collection Account) in writing of the amount to be remitted to the
Borrower.
(e) On
each Funding Date, the Lender shall deliver to the Collateral Agent, for deposit
into the Reserve Account, the Funding Date Reserve Account Deposit, if any,
with
respect to each Advance made on such Funding Date, in accordance with Section
2.03(b) of this Loan Agreement, subject to such deposit not causing a
Reserve Account Limitation Event.
(f) In
the event that the Monthly Servicer’s Report with respect to any Determination
Date shall state that the Available Funds on such Determination Date are less
than the sum of the amounts payable on the related Payment Date pursuant to
clauses first through sixth of Section 3.03(b) of this Loan
Agreement (such deficiency being a “Deficiency Claim Amount”), then on
such Determination Date, the Servicer shall deliver to the Collateral Agent,
the
Borrower and the Lender, by hand delivery, telex or facsimile transmission,
a
written notice in substantially the form of Exhibit M attached hereto (a
“Deficiency Notice”) specifying the Deficiency Claim Amount and the
Reserve Account Available Amount for the related Payment Date. Such
Deficiency Notice shall direct the Collateral Agent to remit from the Reserve
Account the Reserve Account Available Amount for deposit in the Collection
Account on such Payment Date. Upon the occurrence of the Facility
Termination Date or during the existence of an Event of Default, all amounts
on
deposit in the Reserve Account shall be deposited into the Collection Account
for distribution on the immediately following Payment Date.
(g) Any
Deficiency Notice shall be delivered by 12:00 p.m., New York City time, on
the
related Determination Date. The amounts distributed pursuant to a
Deficiency Notice shall be deposited by the Collateral Agent into the Collection
Account.
(h) To
the extent that, on any Payment Date after giving effect to the payments
required to be made on such Payment Date pursuant to clauses first
through eighth of Section 3.03(b) of this Loan Agreement, the
Reserve Account Available Amount exceeds the Required Reserve
69
Section
12.03 Reports.
(a) Upon
discovery by the Servicer of any Contract ceasing to be an Eligible Contract,
if
a Borrowing Base Deficiency exists or will result therefrom, the Servicer shall
deliver (or shall cause
the
Borrower to deliver) to the Lender a Borrowing Base Deficiency Notice no later
than 12:00 p.m., New York time, on the Business Day immediately succeeding
such
discovery.
(b) The
Borrower shall deliver to the Lender and/or permit any representative of the
Lender to inspect any copies of property, books, valuations, records, audits
or
other information related to the Collateral as the Lender may request upon
two
(2) Business Days’ prior written notice.
(c) The
Collateral Agent shall, upon request from the Servicer, provide the Servicer
with sufficient information regarding the amount of Receivables with respect
to
the Contracts received by the Collateral Agent from the Lockbox Account and
the
other accounts held in the name of the Collateral Agent to permit the Servicer
to perform its duties under the Servicing Agreement.
Section
12.04 Securities
Accounts. The Collateral Agent agrees that the Collection
Account and the Reserve Account held by it hereunder shall each be maintained
as
a “securities account” as defined in the UCC as in effect in New York, and U.S.
Bank National Association hereby agrees that it is and will act as a “securities
intermediary” (in such capacity, the “Securities Intermediary”) for the
Collateral Agent as the sole “entitlement holder” (as defined in Section
8-102(a)(7) of the UCC) with respect to each such account. The
parties hereto agree that the Collection Account and the Reserve Account shall
be governed by the laws of the State of New York, and regardless of any
provision in any other agreement, the “securities intermediary’s jurisdiction”
(within the meaning of Section 8-110 of the UCC) shall be the State of New
York. The Securities Intermediary acknowledges and agrees that (a)
each item of property (whether investment property, financial asset, security,
instrument or cash) credited to the Collection Account and the Reserve Account
shall be treated as a “financial asset” within the meaning of Section
8-102(a)(9) of the UCC and (b) notwithstanding anything to the contrary, if
at
any time the Securities Intermediary shall receive any order from the Collateral
Agent directing transfer or redemption of any financial asset relating to the
Collection Account or the Reserve Account, the Securities Intermediary shall
comply with such entitlement order without further consent by LEAF, the
Borrower, the Lender or any other person. In the event of any
conflict of any provision of this Section 12.04 with any other provision
of this Agreement or any other agreement or document, the provisions of this
Section 12.04 shall prevail.
70
Article
XIII
[INTENTIONALLY
OMITTED]
Article
XIV
MISCELLANEOUS
Section
14.01 No
Waiver; Remedies Cumulative. No failure or delay on the part of the
Lender in exercising any right, remedy, power or privilege under this Loan
Agreement, the Note or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of, or any abandonment
or discontinuance of steps to enforce any right, remedy, power or
privilege under this Loan Agreement, the Note or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
rights, remedies or privileges thereunder. The rights, remedies,
powers and privileges provided in this Loan Agreement, the Note or any other
Loan Documents are cumulative and may be exercised singularly or concurrently
and are not exclusive of any other rights, remedies, powers or privileges
provided by law.
Section
14.02 Notices.
Except as otherwise expressly permitted by this Loan Agreement, all
notices,
requests and other communications provided for under the Loan
Documents (including without limitation any modifications of, or
waivers, requests or consents under, this Loan Agreement) shall be given or
made
in writing (including without limitation by telecopy) delivered to the intended
recipient at the address specified for each party hereto below; or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party:
THE
BORROWER: LEAF
Fund III, LLC
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
CFO
Telecopier
No.:
▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇
THE
ORIGINATOR: LEAF
Funding, Inc.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President and COO
Telecopier
No.:
▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇
71
THE
SELLER:
LEAF Equipment Leasing Income Fund III, L.P.
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇,
President
Telecopier
No.:
▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇
THE
SERVICER: LEAF
Financial Corporation
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇,
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇,
President
Telecopier
No.:
▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇
THE
LENDER: WestLB
AG, New York Branch
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset
Securitization Group
Telecopier
No.:
▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇
THE
COLLATERAL
AGENT: U.S.
Bank National Association
EP-MN-WS3D
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇.
▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance/
LEAF
III
- WestLB
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇
Except
as
otherwise provided in this Loan Agreement, all notices given shall be effective
only on receipt, when transmitted by telecopy (evidenced by electronic receipt)
or personally delivered to any officer of the Person entitled to receive such
notices and demands at the address of such Person for witness hereunder, or
by
registered or certified United States mail, or, otherwise, upon receipt, in
each
case given or addressed as aforesaid.
Section
14.03 Indemnification
and Expenses.
(a) Each
of LEAF and the Borrower agrees to hold the Lender, the Collateral Agent, the
Backup Servicer, each successor Servicer and the Hedge Counterparty and each
of
their officers, directors, managers, agents and employees (each, an
“Indemnified Party”) harmless from and indemnify each Indemnified Party
against all liabilities, losses, damages, judgments, costs and expenses of
any
kind which may be imposed on, incurred by or asserted against such Indemnified
Party in any suit, action, claim or proceeding relating to or arising out of
this Loan Agreement, the Note, any other Loan Document, any Collateral or any
transaction contemplated hereby or thereby, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Loan
Agreement, the Note, any other Loan Document, any Collateral
72
(i) indemnified
amounts to the extent a final judgment of a court of competent jurisdiction
holds that such indemnified amounts resulted from gross negligence or willful
misconduct on the part of any successor Servicer or the Indemnified Party
seeking indemnification;
(ii) taxes
(including interest and penalties imposed thereon) imposed by the jurisdiction
in which such Indemnified Party’s principal executive office is located, on or
measured by the overall net income of such Indemnified Party;
(iii) indemnified
amounts to the extent that they are or result from lost profits (other than
principal, yield and fees with respect to the Advances); and
(iv) indemnified
amounts to the extent that they constitute claims against any LEAF Party for
consequential, special, indirect or punitive damages; and
(y)
LEAF
shall not have any obligation to indemnify any Indemnified Party for indemnified
amounts to the extent the same includes losses in respect of Contracts that
are
uncollectible on account of the insolvency, bankruptcy or lack of
creditworthiness of the related Customer or would constitute recourse to LEAF
for losses in respect of uncollectible receivables.
(b) Each
of LEAF and the Borrower agrees to pay as and when billed by any Indemnified
Party all reasonable fees, costs and expenses incurred by the Lender in
connection with the development, preparation and execution of, this Loan
Agreement, the Note, any other Loan Document, any Collateral or any other
documents prepared in connection herewith or therewith, and any amendment,
supplement or modification thereto, the enforcement
73
(c) LEAF
and the Borrower shall be liable jointly and severally under this Section
14.03, except to the extent of any liability the Borrower may have as a
result of this non-applicability to it
of
Section 14.03(a)(y). The liability of the Servicer under the
Loan Documents shall be several and not joint to any other LEAF
Party.
Section
14.04 Amendments;
Waivers. Any term or provision of a Loan Document may be amended,
supplemented or otherwise modified only by an instrument in writing signed
by
LEAF, the Servicer, the Borrower, the Lender and (to the extent any such
modification or supplement would have an adverse effect on the interest of
the
Collateral Agent or the Backup Servicer) the Collateral Agent and/or the Backup
Servicer; provided that any such amendment, supplement or other
modification that shall affect any right or obligation of the Hedge Counterparty
under this Loan Agreement shall require the prior written consent of the Hedge
Counterparty (such consent not to be unreasonably withheld);
providedfurther that (x) any amendment to Appendix A to
this Loan Agreement that shall result in a change to the definition of any
term
used in the Servicing Agreement or (y) an amendment to any other provision
of
this Loan Agreement, which amendment shall affect any right or obligation of
the
Backup Servicer (as successor to the Servicer), shall also require the prior
written consent of the Backup Servicer. Any provision of a Loan
Document that affects the rights of the Lender may be waived only by the written
agreement of the Lender. In the case of any waiver of a Default or
Event of Default, any Default or Event of Default waived shall be deemed to
be
cured and not continuing; but no such waiver shall extend to any subsequent
or
other Default or Event of Default, or impair any right consequent
thereon.
Section
14.05 Severability.
Any provision of this Loan Agreement, the Note or any other Loan Document
which
is prohibited, unenforceable or not authorized in any jurisdiction shall, as
to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or thereof or affecting the validity, enforceability or
legality of such provisions in any other jurisdiction.
Section
14.06 Survival.
The obligations set forth in Sections 2.08, 2.09, 2.12,
14.03, 14.10, 14.11 and 14.16 hereof shall
survive
the execution and delivery of this Loan Agreement and the repayment of the
Advances and the termination of this Loan Agreement. In addition,
each representation and warranty made or deemed to be made by a request for
a
borrowing herein or pursuant hereto shall survive the making of such
representation and warranty, and the Lender shall not be deemed to have waived,
by reason of making any Advance, any Default that may arise because any such
representation or warranty shall have proved to be false or misleading,
notwithstanding that the Lender may have had notice or knowledge or reason
to
believe that such representation or warranty was false or misleading at the
time
such Advance was made.
74
Section
14.07 Captions.
The table of contents and captions and section headings appearing herein
are
included solely for convenience of reference and are not intended to affect
the
interpretation of any provision of this Loan Agreement.
Section
14.08 Counterparts.
This Loan Agreement may be executed in any number of counterparts,
all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Loan Agreement by signing any such
counterpart.
Section
14.09 GOVERNING
LAW; ETC. THIS LOAN AGREEMENT SHALL
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO CHOICE
OF
LAW DOCTRINE (BUT WITH REFERENCE TO SECTION 5-1401 AND SECTION 5-1402 OF THE
NEW
YORK GENERAL OBLIGATIONS LAW, WHICH BY THEIR RESPECTIVE TERMS APPLY TO THIS
LOAN
AGREEMENT), AND SHALL CONSTITUTE A SECURITY AGREEMENT WITHIN THE MEANING OF
THE
UNIFORM COMMERCIAL CODE.
Section
14.10 SUBMISSION
TO JURISDICTION;
WAIVERS. EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF
THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE
COURTS FROM ANY THEREOF;
(B) CONSENTS
THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND, TO THE
EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE
TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(C) AGREES
THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY
SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION
14.02 OF THIS LOAN AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE ANOTHER
PARTY HERETO SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES
THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN
ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER
JURISDICTION.
`
75
(E) EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT
OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section
14.11 Acknowledgments.
Each party hereto hereby acknowledges that:
(a) it
has been advised by counsel in the negotiation, execution and delivery of this
Loan Agreement, the Note and the other Loan Documents;
(b) the
Lender has no fiduciary relationship to LEAF, the Servicer, the Borrower or
any
of their respective Affiliates, and the relationship between the Borrower and
the Lender is solely that of debtor and creditor; and
(c) no
joint venture exists between the Lender and LEAF, the Servicer or the
Borrower.
Section
14.12 No
Proceedings. Each party hereto agrees not to institute against,
or join any other person in instituting against, the Lender any bankruptcy,
reorganization, arrangement, insolvency, liquidation or similar proceeding
for
one year and one day after the amounts owing under this Agreement and all other
credit agreements executed by the Lender have been paid in full.
Each
party hereto agrees not to institute against, or join any other person in
instituting against, the Borrower any bankruptcy, reorganization, arrangement,
insolvency, liquidation or similar proceeding for one year and a day after
the
amounts owing under this Agreement and all other credit agreements executed
by
the Borrower have been paid in full.
Section
14.13 Assignments;
Participations.
(a) This
Loan Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. None of
LEAF, the Servicer or the Borrower may assign any of its rights, without prior
written notice to the Lender, or obligations, without the prior written consent
of the Lender, hereunder under the Note or under any other Loan
Document. The Lender may assign, participate or otherwise transfer to
any Affiliate of the Lender or, except during the existence of an Event of
Default with the prior written consent of the Borrower, to any other Person,
all
or any of its rights or obligations under this Loan Agreement.
(b) Each
of LEAF, the Servicer and the Borrower agrees to cooperate with the Lender
in
connection with any such assignment or transfer, to execute and deliver such
replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents in order to give effect to such assignment or
transfer. Except during the existence of an Event of Default, any
costs or expenses incurred by LEAF, the Servicer and/or the Borrower in
connection with any such cooperation shall be at the expense of the Lender
and
its assignee.
Section
14.14 [Reserved].
76
Section
14.15 Periodic
Due Diligence Review. Each of LEAF, the Servicer and the Borrower
acknowledges that the Lender has the right to perform continuing due diligence
reviews with respect to the Contracts, for purposes of verifying compliance
with
the representations, warranties and covenants made hereunder, or otherwise,
and
each of LEAF, the Servicer and the Borrower agrees that upon reasonable (but
no
less than two (2) Business Days’) prior notice to LEAF, the Servicer, the
Borrower and/or the Collateral Agent, as the case may be (which prior notice
shall not be required after the occurrence and during the continuation of an
Event of Default), the Lender or its authorized representatives, attorneys
or
accountants, subject to applicable Requirements of Law (including any and all
Securities and Exchange Commission’s rules and regulations), will be permitted
during normal business hours to examine, inspect,
and make copies of, the Contracts Files and any and all documents, records,
agreements, instruments, property, books, valuations, records, audits or other
information relating to such Contracts and the other Collateral in the
possession or under the control of LEAF, the Servicer, the Borrower and/or
the
Collateral Agent. Each of LEAF, the Servicer and the Borrower also
shall, subject to applicable Requirements of Law (including any and all
Securities and Exchange Commission’s rules and regulations), make available to
the Lender a knowledgeable financial or accounting officer or its independent
public accountants for the purpose of answering questions respecting the
Contracts Files and the Contracts. The Lender may underwrite such
Contracts itself or engage a mutually agreed upon third party underwriter to
perform such underwriting. Each of LEAF, the Servicer and the
Borrower agrees to cooperate with the Lender and any third party underwriter
in
connection with such underwriting, including, but not limited to, providing
the
Lender and any third party underwriter with access to any and all documents,
records, agreements, instruments or information relating to such Contracts
in
the possession, or under the control, of LEAF, the Servicer or the Borrower,
as
the case may be. Each of LEAF, the Servicer and the Borrower further agrees
that
LEAF, the Servicer or the Borrower, as the case may be, shall reimburse the
Lender for all out-of-pocket costs and expenses incurred by the Lender in
connection with the activities of the Lender pursuant to this Section
14.15; providedthat, except during the existence of a Default
or an Event of Default, such reimbursement shall be limited to any single
exercise of the rights granted under this Section 14.15 during any twelve
month period.
Section
14.16 Set-Off.
In addition to any rights and remedies of the Lender provided by this
Loan Agreement, the Note and the other Loan Documents and by law, the Lender
shall have the right, without prior notice to the Borrower, the Servicer or
LEAF, any such notice being expressly waived by the Borrower, the Servicer
and
LEAF to the extent permitted by applicable law, upon any amount becoming due
and
payable by the Borrower, the Servicer or LEAF under this Loan Agreement, the
Note or any other Loan Documents (whether at the stated maturity, by
acceleration or otherwise) to, during the existence of an Event of Default,
set-off and appropriate and apply against such amount any and all deposits
(general or special, time or demand, provisional or final), in any currency,
and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by the Lender or any Affiliate thereof to or for the credit or
the
account of the Borrower, the Servicer or LEAF, as applicable. The
Lender agrees promptly to notify the Borrower, the Servicer or LEAF, as
applicable, after any such set-off and application made by the Lender;
provided that the failure to give such notice shall not affect the
validity of such set-off and application.
77
Section
14.17 Confidentiality.
Each party hereto agrees to keep confidential the terms of this Loan
Agreement,
the Note and the other Loan Documents; provided, that each party hereto
shall have the right to disseminate such information (i) to the Collateral
Agent, the Servicer, the Backup Servicer or any outside accounting firm
performing analyses in connection with this Loan Agreement, the Note or any
other Loan Document or the transactions contemplated hereunder or thereunder
which agrees to comply with the provisions of this Section 14.17, to any
proposed assignee or transferee of the Lender which agrees to comply with the
provisions of this Section 14.17, (ii) to their respective employees,
directors, managers, agents, attorneys, accountants and other professional
advisors (other than competitors of the Lender) who agree to comply with the
provisions of this Section 14.17, (iii) upon the request or demand of any
examiner
or other Governmental Authority having jurisdiction over such party, (iv) in
response to any order of any court or other Governmental Authority, (v) as
may otherwise be required pursuant to any Requirement of Law (including, without
limitation, any filing of information with the United States Securities and
Exchange Commission required under the Securities Exchange Act), (vi) in
connection with the exercise of any remedy hereunder, and (vii) to any other
Person which agrees to comply with the provisions of this Section 14.17
if such dissemination is necessary in connection with this Loan Agreement,
the
Note or any other Loan Document or the transactions contemplated hereunder
or
thereunder, in the good faith determination of the Lender.
Section
14.18 Entire
Agreement. This Loan Agreement, the Note and the other Loan Documents
constitute the entire agreement among the parties relative to the subject matter
hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Loan Agreement, the Note and the
other Loan Documents. Subject to Section 14.21, nothing
in this Loan Agreement, the Note or in the other Loan Documents, expressed
or
implied, is intended to confer upon any party other than the parties hereto
and
thereto any rights, remedies, obligations or liabilities under or by reason
of
this Loan Agreement, the Note or the other Loan Documents.
Section
14.19 Future
Assurances. LEAF, the Servicer and the Borrower shall do, execute,
acknowledge and deliver all and every such further acts, deeds, conveyances,
assignments, notices of assignment, transfers and assurances as the Lender
shall
from time to time require for better assuring, conveying, assigning,
transferring and confirming unto the Collateral Agent the property and rights
pledged or assigned or intended now or hereafter so to be, or which LEAF, the
Servicer or the Borrower may be or may hereafter become bound to convey, pledge
or assign to the Collateral Agent, or for carrying out the intention or
facilitating the performance of the terms of this Loan Agreement, the Note
or
any of the other Loan Documents, or for filing, registering or recording of
the
UCC financing statements.
Section
14.20 [Reserved].
Section
14.21 Third-Party
Beneficiaries. Except as may be otherwise provided in this Agreement,
no other person will have any right or obligation hereunder. The
Hedge Counterparty is an express third-party beneficiary of this
Agreement. Each of the parties to the Acquisition Agreement hereby
agrees that the Lender shall be permitted but not obligated to enforce the
rights of the Borrower directly thereunder in the place and stead of the
Borrower but the Lender shall not have any obligations under the Acquisition
Agreement.
78
[SIGNATURE
PAGE FOLLOWS]
79
IN
WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly
executed and delivered as of the day and year first above written.
|
|
BORROWER:
|
LEAF
FUND III, LLC
|
By:
Name:
Title:
|
|
ORIGINATOR:
|
LEAF
FUNDING, INC.
|
By:
Name:
Title:
|
|
By: LEAF
ASSET MANAGEMENT
LLC,
|
|
|
as
General Partner
|
By:
Name:
Title:
|
|
SERVICER:
|
LEAF
FINANCIAL CORPORATION
|
By:
Name:
Title:
|
|
LENDER:
|
WESTLB
AG, NEW YORK
BRANCH
|
By:
Name:
Title:
By:
Name:
Title:
COLLATERAL
AGENT/
|
SECURITIES
INTERMEDIARY:
|
U.S.
BANK NATIONAL ASSOCIATION
|
By:
Name:
Title:
APPENDIX
A
DEFINED
TERMS
“Accounting
Date” means, for any date of determination, the last day of the Collection
Period immediately preceding such date of determination.
“Accrual
Period” means, with respect to any Advance and any Payment Date, the period
beginning on the 21st day of
the month
preceding such Payment Date and ending on the 20th day of
the month
in which the Payment Date occurs; provided that with respect to any
Advance, the initial Accrual Period therefor shall begin on the related Funding
Date and end on the 20th day of
the second
month following the month in which such Funding Date occurred.
“Acquisition
Agreement” means the Acquisition Agreement between the Borrower and LEAF,
dated as of June 19, 2007, pursuant to which the Borrower will acquire from
time
to time the Contracts, as such Acquisition Agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
“Additional
Principal Payment Amount” means, with respect to any Payment Date on or
after the Facility Termination Date, the sum of (a) the remaining Available
Funds on such Payment Date, after all payments referred to in
clauses first through sixth of the priority of payments set
forth in Section 3.03(b) of this Loan Agreement, and (b) all amounts on
deposit in the Reserve Account on such Payment Date.
“Advance”
shall have the meaning assigned to such term in Section 2.01 of this Loan
Agreement.
“Advance
Amount” means, as of any date of determination, the amount equal to the
least of:
(a)
the
Advance Rate multiplied by the Aggregate Implicit Principal Balance of all
Eligible Contracts on such date of determination, including the Contracts to
be
funded on such date;
(b)
the
Available Commitment, before taking into account the Advance on such date;
and
(c)
the
Aggregate Implicit Principal Balance of all Eligible Contracts to be funded
on
such date.
“Advance
Rate” means, as of any date of determination, the percentage equal to the
difference of (a) one hundred percent (100%) and (b) the sum of (i) the Required
Credit Support Amount as of such date of determination, and (ii) the Required
Reserve Account Percentage.
“Affected
Contract” means a Contract as to which a Specified Event has
occurred.
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“Affected
Property” shall have the meaning set forth in Section 6 of the
Custodial Agreement.
“Affiliate”
means, with respect to any Person, any other Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, “control” (together with the
correlative meanings of “controlled by” and “under common control with”) means
possession, directly or indirectly, of the power (a) to vote 10.00% or more
of
the securities or interests (on a fully diluted basis) having ordinary voting
power for the directors, managers, or managing partners (or their equivalent)
of
such Person, or (b) to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities
or
interests, by contract, or otherwise.
“Aggregate
Implicit Principal Balance” means, with respect to any date of determination
and either the Contracts or the Eligible Contracts (as applicable, depending
on
the context in which such term is used), the sum of the Implicit Principal
Balances for all Contracts or all Eligible Contracts, as the case may be, as
of
the related Accounting Date.
“Annualized
Default Ratio” means, with respect to any Collection Period, the fraction,
expressed as a percentage, equal to twelve (12) times (a) the sum of the
Implicit Principal Balances (in each case, as of the date on which the Contract
became a Defaulted Contract) of all Contracts that became Defaulted Contracts
during such Collection Period (including any Defaulted Contracts that were
removed from the pool of Contracts pursuant to Section 11.01 during such
Collection Period), to (b) the Aggregate Implicit Principal Balance of all
Eligible Contracts as of the close of business on the last day of such
Collection Period.
“Applicable
Margin” means, for each Advance and (i) any date prior to the Facility
Termination Date, 0.95% or (ii) any date that occurs on or after the Facility
Termination Date, 1.85%.
“Approved
Originator” means (x) LEAF Funding, Inc. and (y) any third party Originator
approved by LEAF, in accordance with the Underwriting Guidelines, for the
origination of Contracts to be purchased by LEAF.
“Assignment”
means an Assignment executed by the Seller, substantially in the form of
Exhibit A attached to the Acquisition Agreement.
“Authorized
Representative” shall have the meaning set forth in Section 16
of the Custodial Agreement.
“Available
Commitment” means, as of any date of determination, the amount by which the
Maximum Facility Amount exceeds the Total Outstanding Advances.
“Available
Funds” means, with respect to any Determination Date, the sum of
(i) the Receivables received or collected with respect to each Contract
during the related Collection Period and payable during such Collection Period
or a prior Collection Period, (ii) all amounts in respect of payments of
Release Prices deposited in the Collection Account during the related Collection
Period or the related Business Day, as applicable, (iii) Investment Earnings
with respect to the Collection Account as of the related Payment Date, (iv)
following the
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“Backup
Servicer” means Lyon Financial Services Inc., d/b/a U.S. Bank Portfolio
Services, a Minnesota corporation, or any successor backup servicer appointed
as
herein provided.
“Backup
Servicer Fee” means, with respect to any Payment Date, the fee payable to
the Backup Servicer, in an amount equal to the greater of (a) the product of
(i)
one-twelfth (1/12th), (ii)
0.0215% and
(iii) the Aggregate Implicit Principal Balance of Eligible Contracts as of
the
first day of the related Collection Period and (b) $1,750 per Collection
Period.
“Bankruptcy
Code” means the law codified and enacted as Title 11 of the United States
Code, entitled “Bankruptcy” and any successor statute thereto, in either case,
as now or hereafter in effect.
“Base
Rate” means the prime rate publicly announced by WestLB from time to
time.
“Borrower”
means LEAF Fund III, LLC, a Delaware limited liability company.
“Borrowing
Base” means, as of any date of determination, the product of (i) the
Aggregate Implicit Principal Balance of Eligible Contracts as of such date,
multiplied by (ii) the then applicable Advance Rate.
“Borrowing
Base Certificate” has the meaning assigned to such term in
Section 2.03(a) of this Loan Agreement.
“Borrowing
Base Deficiency” shall have the meaning provided in Section 2.07
hereof.
“Borrowing
Base Deficiency Notice” means a written notice from the Borrower to the
Lender substantially in the form of Exhibit M to this Loan
Agreement.
“Business
Acquisition Loan” means a Contract under which a loan is made by the lender
under the Contract to the Customer where the Customer uses the proceeds of
such
loan to acquire all of the assets of a business (including, without limitation,
if so specified in the related Contract, any intangible assets of such
business), the assets of which are collateral for such loan.
“Business
Day” means any day other than (i) a Saturday or Sunday or (ii) a day on
which the New York Stock Exchange, the Federal Reserve Bank of New York, the
Lender, the Servicer or the Collateral Agent is authorized or obligated by
law
or executive order to be closed. Any action required to be taken on a
day which falls on a day other than a Business Day shall be taken on the next
Business Day.
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“Certification”
shall have the meaning set forth in Section 3(a) of the Custodial
Agreement.
“Certification
Date” means (i) with respect to the initial Funding Date, the date that is
thirty (30) days after such date, (ii) with respect to the Funding Date for
a
Contract (as described in the related Contract Schedule) other than the initial
Funding Date, such Funding Date, (iii) with respect to a Borrowing Base
Deficiency Notice, the second (2nd) Business Day immediately succeeding the
delivery of such Borrowing Base Deficiency Notice by the Borrower pursuant
to
Section 7.01(m) of this Loan Agreement and (iv) with respect to the
addition of a Substitute Contract to the pool of Eligible Contracts as a
replacement for a Replaceable Contract, the Business Day on which such
Substitute Contract is added to the pool of Eligible Contracts.
“Change
of Control” means any event or circumstance as a result of which (i) LEAF no
longer owns 100% of the beneficial ownership of the Borrower, (ii) any Person
or
“group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange
Act) other than a Person or group that owns a majority of the beneficial
ownership of a LEAF Party on the date of this Loan Agreement: (A) acquires
beneficial ownership of 50.00% or more of any outstanding class of beneficial
ownership of such LEAF Party having ordinary voting power in the election of
directors or managers, as applicable, of such LEAF Party or (B) obtains the
power (regardless of whether exercised) to elect a majority of such LEAF Party’s
directors or managers, as applicable, (iii) either LEAF or the Borrower merges
or consolidates with, or sells all or substantially all of its assets to, any
other Person, or (iv) any two of the following four Persons shall cease to
be
employed by any LEAF Party in either (A) the position in which such Person
was
so employed as of the Closing Date or (B) a more senior position: Crit ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. English, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.
“Closing
Date” means June 19, 2007.
“Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
“Collateral”
shall have the meaning provided in Section 4.01(b) of this Loan
Agreement.
“Collateral
Agent” means U.S. Bank National Association, as collateral agent under this
Loan Agreement, the Custodial Agreement and the Servicing Agreement, and its
successors and permitted assigns thereunder consented to by Lender.
“Collection
Account” means the account designated as such, established and maintained
pursuant to Section 12.01(a) of this Loan Agreement.
“Collection
Account Property” means the Collection Account, all amounts and investments
held from time to time in the Collection Account (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities
or
otherwise) and all Proceeds of the foregoing.
“Collection
Period” means, with respect to any Contract and the first Payment Date after
the Funding Date of such Contract, the period beginning on the Cut-Off Date
with
respect to such Contract and ending on the close of business on the last day
of
the calendar
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“Commonly
Controlled Entity” means, as to any Person, an entity, whether or not
incorporated, which is under common control with such Person within the meaning
of Section 4001 of ERISA or is part of a group which includes such Person and
which is treated as a single employer under Section 414 of the
Code.
“Commitment
Period” means the period commencing on the Effective Date and ending on the
Business Day immediately preceding the Facility Termination Date.
“Computer
Tape” shall have the meaning provided in Section 2.01(k) of the
Servicing Agreement.
“Contract”
means any contract for the lease or financing of Equipment executed by a
Customer, and (i) identified on a Contract Schedule delivered to Lender (in
electronic format substantially in the form of such Contract Schedule delivered
on the Closing Date), (ii) which is subject to the security interest of the
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty,
under this Loan Agreement and (iii) which has not been released from the Lien
of
the Collateral Agent as provided in Section 4.11 of this Loan
Agreement.
“Contract
Documents” means, with respect to any Contract, (i) each Required Document
(regardless of whether such document has been delivered to the Collateral Agent
under the Custodial Agreement), and (ii) the Servicing Documents.
“Contract
Exception Report” shall have the meaning set forth in Section 3 of
the Custodial Agreement.
“Contract
File” means, with respect to any Contract, all Required Documents related to
such Contract.
“Contract
Schedule” means, with respect to any Certification Date, the schedule of
Eligible Contracts (x) in respect of which an Advance is to be made on the
related Funding Date, (y) which are to be pledged as additional Collateral
in
connection with the cure of a Borrowing Base Deficiency in accordance with
Section 2.07(a)(ii), or (z) which are to be pledged as Substitute
Contracts in connection with the removal of Replaceable Contracts in accordance
with Sections 2.07(d) and 11.01(b), in electronic format
acceptable to the Collateral Agent, to be annexed to the Custodial Agreement
as
Exhibit 5, setting forth the following information with respect to
each such Contract: (a) a number identifying the Contract, (b) the type of
Contract, (c) the number identifying the Customer, (d) the name of the
Customer, (e) the
A-5
“Contractual
Obligation” means as to any Person, any provision of any agreement,
instrument or other undertaking to which such Person is a party or by which
it
or any of its property is bound or any provision of any security issued by
such
Person.
“Credit
and Collection Policies of LEAF” means the credit and collections policies
pursuant to which the Servicer services Contracts, a copy of which is annexed
to
the Servicing Agreement as Exhibit B thereto, as amended from time to
time in accordance with Section 7.02(c) of this Loan
Agreement.
“Cumulative
Net Loss” means, with respect to the last day of any Collection Period, the
ratio of (a) the sum of (i) all credit losses or reserves recognized by the
Borrower in accordance with GAAP and (ii) the Implicit Principal Balances (in
each case, as of the date on which the Contract became a Defaulted Contract)
of
all Contracts that became Defaulted Contracts during the period between the
Closing Date and the last day of such Collection Period, for which no loss
or
reserve has been recognized, to (b) the Aggregate Implicit Principal Balance
of
all Eligible Contracts as of their respective Funding Dates.
“Custodial
Agreement” means the Custodial Agreement, dated as of the date hereof, among
the Borrower, the Collateral Agent, the Servicer and the Lender, substantially
in the form of Exhibit B hereto, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms
thereof.
“Customer”
means, with respect to each Contract, the lessee under such Contract, including
any guarantor of such lessee and its successors and assigns.
“Cut-Off
Date” means with respect to any Contract, the date specified in the Notice
of Borrowing and Pledge with respect to the Advance to which such Contract
relates.
“Damages”
shall have the meaning provided in Section 5.01(a) of the Servicing
Agreement.
“Default”
means an Event of Default or any condition, act or event that with notice or
lapse of time or both would constitute an Event of Default.
“Defaulted
Contract” means any Contract as of the earliest of (i) the Accounting
Date as of which any one Scheduled Payment with respect to such Contract
(aggregating together, for purposes of determining such amount, all due and
unpaid Scheduled Payments, or due and unpaid portions of one or more Scheduled
Payments) has not been received by the Servicer and remains unpaid for a period
of 181 or more days as of such Accounting Date (determined without giving effect
to any Servicer Advances) and (ii) the date on which the
A-6
“Deficiency”
means a failure of a document to correspond to the information on the Contract
Schedule or the absence of a Required Document from a Contract File pursuant
to
Section 2 of the Custodial Agreement.
“Deficiency
Claim Amount” has the meaning assigned to such term in
Section 12.02(f) of this Loan Agreement.
“Deficiency
Notice” has the meaning assigned to such term in
Section 12.02(f) of this Loan Agreement.
“Delinquent
Contract” means a Contract which is not a Defaulted Contract and for which
the related Customer is more than 31 days contractually delinquent with respect
to more than 10.00% of a Scheduled Payment (without giving effect to any
applicable grace periods); provided, however, that no
extension of a Contract in accordance with Section 3.01(c)(v) of the
Servicing Agreement shall be taken into account in the determination as to
whether a Contract shall be a Delinquent Contract with respect to any date
of
determination during the calendar month in which such extension shall have
been
granted.
“Delivery”
means with respect to assets held in the Collection Account or the Reserve
Account, as the case may be:
(1) (a) with
respect to bankers’ acceptances, commercial paper, negotiable certificates of
deposit and other obligations that constitute “instruments” within the meaning
of Section 9-102(a)(47) of the UCC, transfer thereof:
(i) by
physical delivery to the Securities Intermediary, indorsed to, or registered
in
the name of, the Securities Intermediary or the Collateral Agent or either
of
their nominees or indorsed in blank;
(ii) by
the Securities Intermediary continuously maintaining possession of such
instrument in the State of New York; and
(iii) by
the Securities Intermediary continuously indicating by book-entry that such
instrument is credited to the Collection Account or the Reserve Account, as
the
case may be;
(b) with
respect to a “certificated security” (as defined in Section 8-102(a)(4) of the
UCC), transfer thereof:
(i) by
physical delivery of such certificated security to the Securities Intermediary,
provided that if the certificated security is in registered form, it
shall
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(ii) by
the Securities Intermediary continuously maintaining possession of such
certificated security in the State of New York; and
(iii) by
the Securities Intermediary continuously indicating by book-entry that such
certificated security is credited to the Collection Account or the Reserve
Account, as the case may be;
(c) with
respect to any security issued by the U.S. Treasury, the Federal Home Loan
Mortgage Corporation or the Federal National Mortgage Association that is a
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations, the following procedures, all in accordance with
applicable law, including applicable federal regulations and Articles 8 and
9 of the UCC, transfer thereof:
(i) by
(x) book-entry registration of such property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a security intermediary which
is also a “depositary” pursuant to applicable federal regulations and issuance
by such securities intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Securities Intermediary
of
the purchase by the securities intermediary on behalf of the Securities
Intermediary of such book-entry security; the making by such securities
intermediary of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Securities Intermediary and continuously
indicating that such securities intermediary holds such book-entry security
solely as agent for the Securities Intermediary or (y) continuous
book-entry registration of such property to a book-entry account maintained
by
the Securities Intermediary with a Federal Reserve Bank; and
(ii) by
the Securities Intermediary continuously indicating by book-entry that property
is credited to the Collection Account or the Reserve Account, as the case may
be;
(d) with
respect to any asset in the Collection Account or the Reserve Account, as the
case may be, that is an “uncertificated security” (as defined in
Section 8-102(a)(18) of the UCC) and that is not governed by
clause (c) above or clause (e) below:
(i) transfer
thereof:
(A) by
registration to the Securities Intermediary or the Collateral Agent as the
registered owner thereof, on the books and records of the issuer thereof;
or
(B) by
another Person (not a securities intermediary) who either becomes the registered
owner of the uncertificated security on behalf of the
A-8
Securities
Intermediary, or having become the registered owner, acknowledges in writing
that it holds for the Securities Intermediary; or
(ii) the
issuer thereof has agreed that it will comply with instructions originated
by
the Securities Intermediary with respect to such uncertificated security without
further consent of the registered owner thereof; or
(e) in
the case of each security in the custody of or maintained on the books of a
clearing corporation (as defined in Section 8-102(a)(5)) or its nominee, by
causing:
(i) the
relevant clearing corporation to credit such security to a securities account
of
the Securities Intermediary at such clearing corporation; and
(ii) the
Securities Intermediary to continuously indicate by book-entry that such
security is credited to the Collection Account or the Reserve Account, as the
case may be;
(f) with
respect to a “security entitlement” (as defined in Section 8-102(a)(17) of
the UCC) to be transferred to or for the benefit of the Securities Intermediary
and not governed by clauses (c) or (e) above: if a securities
intermediary (A) indicates by book-entry that the underlying “financial
asset” (as defined in Section 8-102(a)(9) of the UCC) has been credited to
be the Securities Intermediary’s “securities account” (as defined in
Section 8-501(a) of the UCC), (B) receives a financial asset from the
Securities Intermediary or acquires the underlying financial asset for the
Securities Intermediary, and in either case, accepts it for credit to the
Securities Intermediary’s securities account or (C) becomes obligated under
other law, regulation or rule to credit the underlying financial asset to the
Securities Intermediary’s securities account, the making by the securities
intermediary of entries on its books and records continuously identifying such
security entitlement as belonging to the Securities Intermediary and
continuously indicating by book-entry that such securities entitlement is
credited to the Securities Intermediary’s securities account; and by the
Securities Intermediary continuously indicating by book-entry that such security
entitlement (or all rights and property of the Securities Intermediary
representing such securities entitlement) is credited to the Collection Account
or the Reserve Account, as the case may be; and
(g) with
respect to cash or money, by:
(i)
the
delivery of such cash or money to the Securities Intermediary,
(ii)
the
Securities Intermediary treating such cash or money as a financial asset
maintained by such Securities Intermediary for credit to the Collection Account
or the Reserve Account, as the case may be, in accordance with the provisions
of
Article 8 of the UCC, and
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(iii)
the
Securities Intermediary continuously indicating by book-entry that such cash
or
money is credited to the Collection Account or the Reserve Account;
and
(2) In
the case of any such asset, such additional or alternative procedures as are
now
or may hereafter become appropriate to effect the complete transfer of ownership
of, or control over, any such assets in the Collection Account or the Reserve
Account, as the case may be, to the Securities Intermediary free and clear
of
any adverse claims, consistent with changes in applicable law or regulations
or
the interpretation thereof.
In
each
case of delivery contemplated herein, the Securities Intermediary shall make
appropriate notations on its records, and shall cause the same to be made on
the
records of its nominees, indicating that securities are held in trust pursuant
to and as provided in this Agreement.
“Determination
Date” means, with respect to any Collection Period, the fourth Business Day
preceding the Payment Date in the next calendar month.
“Discount
Rate” means, with respect to each Contract and any date of determination, a
rate equal to the sum of (x) as applicable, either (i) the related Fixed Swap
Rate or (ii) the lowest strike rate price related to any outstanding interest
rate cap, (y) the Applicable Margin and (z) 1.10%.
“Dollars”
and “$” means lawful money of the United States of America.
“Effective
Date” means the date upon which the conditions precedent set forth in
Section 5.01 shall have been satisfied.
“Electronic
Ledger” means the electronic master record of the Contracts.
“Eligible
Account” means either (a) a segregated trust account with an Eligible Bank
or (b) a segregated trust account with the corporate trust department of a
depository institution with corporate trust powers organized under the laws
of
the United States of America or any state thereof or the District of Columbia
(or any United States branch or agency of a foreign bank), provided that such
institution also must have a rating of “P-1” or higher from Moody’s and of
“A-1+” or higher from Standard & Poor’s with respect to long-term deposit
obligations and must be acceptable to the Lender and the
Borrower. Such Eligible Bank or depository institution (other than
the Collateral Agent) shall have been approved in writing by the Lender and
the
Borrower.
“Eligible
Bank” means any depository institution (which shall initially be the
Collateral Agent) acceptable to the Lender and the Borrower, organized under
the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any United States branch or agency of a foreign bank),
which is subject to supervision and examination by federal or state banking
authorities and which at all times (a) has a net worth in excess of $100,000,000
and (b) has either (i) a rating of “P-1” or higher from Moody’s and of “A-1+” or
higher from Standard & Poor’s with respect to short-term deposit
obligations, or (ii) if such institution has issued long-term unsecured debt
obligations, a rating of “Aa2” or higher
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“Eligible
Contract” means a Contract which satisfies the eligibility characteristics
set forth on Exhibit D hereto on and as of the applicable Certification
Date and which continues to satisfy such eligibility characteristics at all
times thereafter while such Eligible Contract is included in the Borrowing
Base.
“Engagement
Letter” means the Engagement Letter dated as of June 5, 2007, between WestLB
and LEAF.
“Equipment”
means the equipment financed or leased to Customers pursuant to the Contracts,
together with any replacement parts, additions and repairs thereof, and any
accessories incorporated therein and/or affixed thereto.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from
time
to time.
“Event
of Default” shall have the meaning provided in Section 8.01 of this
Loan Agreement.
“Expected
Facility Termination Date” means the third anniversary of the Closing Date,
subject to extension in accordance with Section 2.11.
“Facility
Account Property” means the Collection Account Property and/or the Reserve
Account Property, as the case may be.
“Facility
Termination Date” means the earlier to occur of (a) the Expected Facility
Termination Date, (b) the date on which an Event of Default occurs and is not
cured or waived and (c) the date on which a Facility Termination Event
occurs.
“Facility
Termination Event” means the occurrence of any of the
following: (i) an Event of Default, (ii) the average of the
Annualized Default Ratios on the Serviced Portfolio for the three most recently
ended Collection Periods exceeds 2.50%, (iii) the average of the NPA Ratios
for
the Serviced Portfolio for the three most recently ended Collection Periods
equals or exceeds 2.00%, (iv) the average of the NPA Ratios for the Securitized
Portfolio for the three most recently ended Collection Periods equals or exceeds
1.50% or (v) the Cumulative Net Loss exceeds the applicable percentages
found in the column titled “Facility Termination Event” in the definition of
“Static Pool Test”; provided, however, that any such Facility
Termination Event (other than clause (ii)) may be waived by the
Lender.
“FDIC”
means the Federal Deposit Insurance Corporation.
“Final
Due Date” means, with respect to each Contract, the final date on which
payment is due thereunder.
“Final
Payment Date” shall mean August 21, 2017.
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“Financing
Facility Lenders” shall have the meaning provided in Section 7.02(d)
of this Loan Agreement.
“Fixed
Swap Rate” means, with respect to each Contract and any date of
determination, the fixed rate payable by the Borrower under the Interest Rate
Hedging Transaction entered into with respect to the related Funding
Date.
“Forms
of Contract” means the forms of Contract attached hereto as Exhibit
E, as such forms may be amended or supplemented from time to time in
accordance with Section 7.02(c) of this Loan Agreement; provided that
Contracts acquired from a Person other than a LEAF Party may not be in the
form
of any form attached to Exhibit E.
“Funding
Date” means the date on which an Advance is made; provided,
however, that, with respect to a Substitute Contract, the representations
and warranties set forth in Section 3.01(a) of the Acquisition Agreement
and each of the Eligibility Criteria set forth in Exhibit D to this Loan
Agreement, “Funding Date” shall mean the Business Day on which such Substitute
Contract is added to the pool of Eligible Contracts.
“Funding
Date Documentation” means, with respect to any Contract:
(A) the
one and only executed original counterpart of such Contract in LEAF’s
possession, or a machine copy thereof certified by an officer of LEAF that
such
copy is a true and complete copy thereof;
(B) copies
of an insurance policy, if any, evidence of insurance, if any, and any other
copies of documents evidencing or related to any insurance policy with respect
to such Contract;
(C) copies
of all UCC financing statements required to be filed to perfect the security
interest in the related Equipment and all other Collateral related thereto,
including (1) file-stamped copies of all UCC-1 financing statements required
to
be filed to perfect LEAF’s security interest in such Contract and all other
Collateral related thereto, or (2) to the extent any such financing statements
are not available at the time of the related Advance, evidence that the
originator has, in a timely manner, directed a nationally recognized search
company to file such financing statements, file stamped copies of which shall
be
provided to the Collateral Agent promptly upon receipt from such search
company;
(D) copies
of evidence of a guaranty, if any, and any other copies of documents evidencing
or relating to any guaranty with respect to such Contract; and
(E) copies
of any additional documents—other than Servicing Documents—that LEAF keeps on
file with respect to such Contract.
“Funding
Date Reserve Account Deposit” means, with respect to each Advance, an amount
equal to the lesser of (a) the amount of such Advance or (b) the excess, if
any,
of (i)
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“GAAP”
means generally accepted accounting principles as in effect from time to time
in
the United States of America, applied on a consistent basis.
“Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government and any
court or arbitrator having jurisdiction over any LEAF Party or any of its
properties.
“Guarantee”
means, as to any Person (the “Guaranteeing person”), any obligation of
the Guaranteeing person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the “primary obligations”) of any
other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
Guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however,
that the term Guarantee shall not include the endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
guarantee of any Guaranteeing person shall be deemed to be the lower of (a)
an
amount equal to the stated or determinable amount of the primary obligation
in
respect of which such Guarantee is made and (b) the maximum amount for which
such Guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee, unless such primary obligation and the maximum amount
for which such Guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee shall be such Guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by
the
Guaranteeing person in good faith.
“Guaranty
Amounts” means, with respect to any Contract, any and all amounts paid by
any guarantor indicated on such Contract.
“Hedge
Counterparty” means WestLB AG, New York Branch or any successor to or
assignee of WestLB AG, New York Branch under the Interest Rate Hedging Agreement
acceptable to the Borrower.
“Hedging
Strategy” means an interest rate hedging strategy entered into by the
Borrower for the purpose of providing protection against fluctuations in
interest rates, pursuant to which strategy, with respect to each Payment Date
and all Advances made since the immediately preceding Payment Date, the Borrower
will enter into an Interest Rate Hedging Transaction with the Hedge Counterparty
whereby the Borrower will make payments to the Hedge Counterparty based on
a
certain fixed rate and will receive from the Hedge Counterparty
Swap
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“Implicit
Principal Balance” means, with respect to any Contract, as of any date of
determination, the present value of the remaining stream of Scheduled Payments
due with respect to such Contract as of the applicable Accounting Date, and
calculated by discounting such Scheduled Payments (assuming each Scheduled
Payment is received on the last day of its related Collection Period) to such
Accounting Date at an annual rate equal to the Discount Rate, compounded
monthly; provided, however, that immediately after the payment to
the Lender of the Release Price in respect of any Contract, the Implicit
Principal Balance of such Contract shall be zero; providedfurther
that with respect to any Contract that has become a Defaulted Contract, the
Implicit Principal Balance shall be zero (except when used in the definition
of
“Release Price”); providedfurther that such deemed reduction to
zero of the Implicit Principal Balance of such Defaulted Contract (pursuant
to
the immediately preceding proviso) shall not constitute a release by the
Collateral Agent of its security interest in such Defaulted
Contract.
“Indebtedness”
means with respect to any Person, without duplication, (a) all obligations
of
such Person for borrowed money, (b) all obligations of such Person evidenced
by
bonds, debentures, notes or similar instruments, (c) all indebtedness of others
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed (only to the extent of the fair market value of such asset if
such
indebtedness has not been assumed by such Person), (d) all Guarantees of such
Person, (e) all capitalized lease obligations of such Person, and (f) all
obligations of such Person as an account party in respect of letters of credit
and similar instruments issued for the account of such Person.
“Indemnified
Party” has, when used herein, the meaning assigned to such term in
Section 14.03(a) of this Loan Agreement, and, when used in the Servicing
Agreement, has the meaning assigned to such term in Section 5.01 of the
Servicing Agreement.
“Independent
Accountants” means any firm of independent certified public accountants of
recognized national standing and reasonably acceptable to the
Lender.
“Insurance
Proceeds” means, with respect to any Contract, any item of Equipment subject
to such Contract and any Collection Period, any casualty amount received during
such Collection Period pursuant to an insurance policy issued with respect
to
such Equipment and the related Contract, net of any costs of collecting such
amounts not otherwise reimbursed.
“Intercreditor
Agreement” means the Amended and Restated Intercreditor Agreement dated as
of March 30, 2007 among Sovereign Bank, a national banking association, OFC
Capital, a division of ALFA Financial Corporation, an Alabama corporation,
National City Commercial Capital Corporation f/k/a Information Leasing
Corporation, an Ohio corporation, Commerce Bank, National Association, a
national banking association, National City Bank, a national banking
association, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Equipment Finance LLC, a Delaware
limited
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“Interest
Carryover Shortfall” means, with respect to any Advance and any Payment
Date, the excess of the Interest Payment Amount for such Advance for the
immediately preceding Payment Date over the amount in respect of interest on
such Advance that was actually paid to Lender on such preceding Payment Date,
plus interest (calculated on the basis of the actual number of days elapsed
in
the Accrual Period for such Advance and a 360-day year) on the amount of
interest due but not paid to Lender on the preceding Payment Date, to the extent
permitted by applicable law, at a per annum rate equal to the sum of the LIBOR
Rate for such Advance plus the Applicable Margin.
“Interest
Payment Amount” means, with respect to any Advance and any Payment Date,
interest (calculated on the basis of the actual number of days elapsed in the
Accrual Period for such Advance and a 360-day year) accrued on such Advance
during the applicable Accrual Period for such Advance equal to the sum of the
LIBOR Rate for a period of one month plus the Applicable Margin.
“Interest
Rate Hedging Agreement” means an ISDA Master Agreement and Schedule thereto
entered into between the Borrower and the Hedge Counterparty, substantially
in
the form of Exhibit C to this Loan Agreement.
“Interest
Rate Hedging Transaction” means a transaction that is entered into under an
Interest Rate Hedging Agreement, the terms of which are reflected on a
confirmation that is executed by the Borrower and the Hedge
Counterparty.
“Interim
Certification” means a lease schedule and exception report in form and
substance reasonably satisfactory to Lender.
“Investment
Company Act” means the Investment Company Act of 1940, as
amended.
“Investment
Earnings” means, with respect to each of the Collection Account and the
Reserve Account, the investment earnings on amounts on deposit in the applicable
account.
“LEAF”
means LEAF Equipment Leasing Income Fund III, L.P., a Delaware limited
partnership.
“LEAF
Originator” means LEAF Funding, Inc.
“LEAF
Parties” means the Borrower, the Servicer, LEAF Originator and
LEAF.
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“Lender” means WestLB AG, New York Branch and its successors and assigns
under the Loan Agreement.
“Lender
Authorization Date” means the second Business Day immediately preceding each
Payment Date.
“LIBOR
Rate” means that the rate for a Reset Date will be the rate for deposits in
U.S. Dollars for a period of one month which appears on the Telerate Page 3750
as of 11:00 a.m., London time, on the day that is two (2) London Banking Days
preceding that Reset Date; provided, however, that, if such rate
does not appear on the Telerate Page 3750, the LIBOR Rate for that Reset Date
shall be determined pursuant to the Reference Banks LIBOR Determination Method;
providedfurther that if such rate cannot be calculated by the
above methods, the LIBOR Rate will be the Base Rate.
“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or
any
preference, priority or other security agreement or preferential arrangement
of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement and any financing lease having
substantially the same economic effect as any of the foregoing).
“Lien
Certificate” means, with respect to any item of Equipment with respect to
which a Lien Certificate is necessary to perfect a security interest in such
Equipment, an original certificate of title, certificate of lien or other
notification issued by the Registrar of Titles of the applicable state to a
secured party that indicates that the lien of the secured party on such
Equipment is recorded on the original certificate of title.
“Loan
Agreement” means the Secured Loan Agreement, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
“Loan
Documents” means, collectively, this Loan Agreement, the Note, the Custodial
Agreement, the Servicing Agreement, the Acquisition Agreement, the Interest
Rate
Hedging Agreement, the Intercreditor Agreement and all other documents and
instruments executed and delivered in connection herewith or
therewith.
“Lockbox
Account” means the account maintained in the name of the Securities
Intermediary as agent for certain parties to the Intercreditor Agreement,
including the Collateral Agent on behalf of the Lender and the Hedge
Counterparty, into which account shall be deposited all Receivables that
constitute remittances of payments (including, without limitation, Scheduled
Payments and prepayments) in respect of Contracts by Customers, and as to which
solely U.S. Bank National Association, as collateral agent, custodian or paying
agent for the various certain entities with interests in such account, shall
have the ability to withdraw funds.
“Lockbox
Agreement” means the Treasury Management Services Terms and Conditions of
the Lockbox Bank, together with all amendments and supplements
thereto.
“Lockbox
Bank” means, initially, U.S. Bank National Association, in its capacity as
securities intermediary on behalf of the parties to the Intercreditor Agreement,
and any successor thereto.
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“London
Banking Day” means a Business Day on which trading in Dollars is conducted
by and between banks in the London interbank market.
“Material
Adverse Change” means a material adverse change in, or the disclosure or
discovery of any information not previously disclosed to Lender which Lender
deem material and adverse relating to, the business, operations, properties,
condition (financial or otherwise) or prospects of any LEAF Party, in each
case,
individually, or with its respective Subsidiaries, taken as a
whole. Any determination as to whether any change, effect, event,
occurrence or circumstance constitutes a Material Adverse Change shall be made
in accordance with a standard of good faith and commercial reasonableness with
respect to the facts and circumstances then prevailing.
“Material
Adverse Effect” means a material adverse effect on (a) the Contracts,
(b) the property, business or financial condition of any LEAF Party (c) the
ability of any LEAF Party to perform its obligations under any of the Loan
Documents to which it is a party, (d) the validity or enforceability of any
of the Loan Documents, (e) the rights and remedies of the Lender under any
of the Loan Documents, (f) solely with respect to any determination related
to the obligations of the Borrower, the timely payment of the principal of
or
interest on the Advances or other amounts payable in connection therewith,
(g)
the enforceability or collectibility of a material portion of the Contracts
or
(h) the Collateral.
“Maximum
Advance Amount” means, as of any date of determination, the largest amount
of Total Outstanding Advances that have been outstanding at any one time during
the period from the Closing Date up to and including such date of determination,
which amount shall not be in excess of Maximum Facility Amount.
“Maximum
Facility Amount” means $200,000,000.
“Minimum
Advance Amount” means $1,000,000.
“Monthly
Interest Payment Amount” means, with respect to any Payment Date, the
aggregate of the Interest Payment Amounts with respect to each Advance for
such
Payment Date, in each case together with any related Interest Carryover
Shortfall for such Payment Date and such Advance.
“Monthly
Principal Payment Amount” means, with respect to any Payment Date, the
amount necessary to reduce the Total Outstanding Advances to an amount equal
to
the Borrowing Base, in each case calculated as of the opening of business on
such Payment Date.
“Monthly
Servicer’s Report” means an Officers’ Certificate of the Servicer delivered
pursuant to Section 4.01 of the Servicing Agreement, substantially in the
form of Exhibit A of the Servicing Agreement.
“Moody’s”
means ▇▇▇▇▇’▇ Investors Service, Inc., or its successor.
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“Multiemployer
Plan” means a Plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
“Non-Excluded
Taxes” shall have the meaning provided in Section 2.12 of this Loan
Agreement.
“Non-Performing
Asset” means a Contract which is not a Defaulted Contract and for which a
related Customer is more than 121 days contractually delinquent.
“Non-Use
Fee” means, with respect to any Payment Date, a fee in an amount equal to
the product of (a) one-twelfth (1/12th), (b) 0.35%, and (c) the Maximum Facility
Amount minus the daily average Total Outstanding Advances during the preceding
calendar month.
“Nonrecoverable
Advance” means a Servicer Advance that the Servicer determines in good
faith, and in accordance with its customary servicing practices, is unlikely
to
be eventually repaid from Scheduled Payments made by or on behalf of the related
Customer in accordance with Section 3.04 of the Servicing
Agreement.
“Note”
shall have the meaning assigned to such term in Section 2.02(a) of this
Loan Agreement.
“Notice
of Borrowing and Pledge” shall have the meaning provided in
Section 2.03(a) of this Loan Agreement.
“NPA
Ratio” means, with respect to any Collection Period, the fraction, expressed
as a percentage, equal to (a) the sum of the Implicit Principal Balances
(in each case, as of the date on which the Contract became a Non-Performing
Asset) of all Contracts that became Non-Performing Assets during the related
Collection Period, to (b) the Aggregate Implicit Principal Balance of all
Eligible Contracts as of the close of business on the last day of such
Collection Period.
“Officers’
Certificate” means a certificate signed by the chairman of the board, the
president, any executive vice president, any vice president, any treasurer
or
secretary of the Borrower or the Servicer, as appropriate.
“Opinion
of Counsel” means an opinion of counsel acceptable to the Lender, in form
and substance acceptable to the Lender.
“Originator”
means (a) a leasing company (including, without limitation, LEAF Funding, Inc.)
that leased an item of Equipment to a Customer and that originated and assigned
the respective Contract to LEAF Funding, Inc. or (b) a third party (which in
no
event shall be an Affiliate of LEAF) who purchased a Contract from the
originator of such Contract and who sold such Contract to LEAF.
“Other
Financing Facility” means one or more financing facilities, including
repurchase facilities and warehouse lines of credit, entered into by LEAF or
any
of its Affiliates pursuant to which one or more lenders provide funding to
LEAF
or any of its Affiliates (or any
A-18
“Other
Lenders” means any Person who provides financing to, or is entitled to
receive payments from, LEAF or any of its Affiliates pursuant to any Other
Financing Facility.
“Overdue
Payment” means, with respect to any Defaulted Contract and any given
Collection Period, all payments due in a prior Collection Period that the
Servicer receives from or on behalf of a Customer during such given Collection
Period on such Defaulted Contract, including any Servicing Charges.
“Payment
Date” means (i) the 21st day
of each month
(or if such day is not a Business Day, the next succeeding Business Day)
beginning on August 21, 2007, (ii) each other Business Day on which a
prepayment of the Advances is required under Section 2.07 of this Loan
Agreement, (iii) each Prepayment Date, (iv) the Facility Termination Date,
(v)
each day on which the Borrower is required to make a payment to the Hedge
Counterparty under an Interest Rate Hedging Agreement and (vi) each Business
Day
after the occurrence of an Event of Default and following the acceleration
of
the Total Outstanding Advances pursuant to Section 9.01 of this Loan
Agreement that is designated by the Lender as a Payment Date.
“Payoff
Letter” means a letter that (i) is addressed to the Borrower or LEAF, (ii)
is signed by a Prior Lender, (iii) identifies particular Previously Financed
Contracts, (iv) specifies that, upon receipt of a specified dollar amount by
such Prior Lender, all Liens and other interests of such Prior Lender in such
Contracts shall automatically be released and, if applicable, transferred to
the
LEAF or Borrower, without any further action by any Person and (v) delivers
to
the Lender (or its agent) and the Collateral Agent executed original partial
or
full releases, as applicable, with respect to such Contracts for filing in
appropriate UCC recording offices, and authorizes the Lender (or the Collateral
Agent at the direction of the Lender) to file such releases upon the receipt
of
such specified dollar amount.
“PBGC”
means the Pension Benefit Guaranty Corporation or any entity succeeding to
any
or all of its functions under ERISA.
“Permitted
Advance Date” means, during the Commitment Period, but in no event more
often than once per week, the date that is three (3) Business Days following
the
Borrower’s delivery of a Notice of Borrowing and Pledge to the
Lender.
“Permitted
Encumbrances” means (i) the interests of the Customer under the Contract;
(ii) any Liens for taxes, assessments, levies, fees and other governmental
and similar charges not due and payable; (iii) any Liens with respect to
any mechanics, suppliers, material, men, 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; (iv) the Lien and security interest granted to the
Collateral Agent under and pursuant to the Loan Agreement, and the respective
rights of the Lender, the Collateral Agent, Custodian, the Backup Servicer
and
the Servicer under the Loan Documents; (v) salvage rights of insurers with
respect to the equipment subject to a Contract under insurance policies
maintained pursuant to the Loan Documents or a Contract; and (vi) the Lien
and security interest
A-19
“Permitted
Investments” means:
(i) Direct
obligations of, and obligations fully guaranteed as to timely payment by, the
United States of America;
(ii)
Demand deposits, time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United States
of
America or any state thereof (or any domestic branch of a foreign bank) and
subject to supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of
the investment or contractual commitment to invest therein, the commercial
paper
or other short-term unsecured debt obligations (other than such obligations
the
rating of which is based on the credit of a Person other than such depository
institution or trust company) thereof shall have a short-term credit rating
of
“A-1+” or better by S&P and “P-1” or better from Moody’s;
(iii) Commercial
paper having, at the time of the investment or contractual commitment to invest
therein, a rating from Moody’s of “P-1” or better and a rating of “A-1+” or
better from S&P;
(iv) Investments
in money market funds having a rating from Moody’s of “P-1” or better and a
rating of “A-1+” or better from S&P (which may be managed by the Collateral
Agent or its Affiliates);
(v) Demand
deposits, time deposits and certificates of deposit that are fully insured
by
the FDIC;
(vi) Bankers’
acceptances issued by any depository institution or trust company referred
to in
clause (ii) above;
(vii) Repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full faith
and credit of the United States of America, in either case entered into with
a
depository institution or trust company (acting as principal) described in
clause (ii) above; and
(viii) Any
other investments approved in writing by Lender;
provided
that Permitted Investments may be purchased by or through the Collateral Agent
or any of its Affiliates.
“Person”
means any individual, corporation, company, association, partnership, joint
venture, limited liability company, trust, unincorporated association,
government (or any agency, instrumentality or political subdivision thereof)
or
any other entity of whatever nature.
A-20
“Plan”
means any Person that is (i) an “employee benefit plan” (as defined in Section
3(3) of ERISA) that is subject to the provisions of Title I of ERISA, (ii)
a
“plan” (as defined in Section 4975(e)(1) of the Code) that is subject to Section
4975 of the Code or (iii) any entity whose underlying assets include assets
of a
plan described in (i) or (ii) above by reason of such plan’s investment in the
entity or otherwise.
“Prepaid
Contract” means any Contract with respect to which the Customer shall have
(a) exercised its contractual right, or has otherwise arranged, to prepay or
otherwise terminate the Contract prior to the Final Due Date thereunder and
(b)
paid to the Servicer the full amount of the termination payment required by
such
Contract.
“Prepayment
Amount” means the amount deposited by the Borrower in the Collection Account
in connection with any optional prepayment of the Total Outstanding Advances
and
other Secured Obligations pursuant to Section 2.08 of this Loan
Agreement.
“Prepayment
Date” means any date on which an optional prepayment of Advances is made by
the Borrower pursuant to Section 2.08(a) hereof.
“Previously
Financed Contract” means any Contract that at any time was subject to a Lien
in favor of a Prior Lender (other than the Lien arising hereunder).
“Prior
Lender” means any Person (other than the Lender) that has held a Lien on a
Contract to be included in the Borrowing Base.
“Proceeds”
means whatever is receivable or received from or upon the sale, lease, license,
collection, use, exchange or other disposition, whether voluntary or
involuntary, of any Collateral, including “proceeds” as defined in the UCC, any
and all proceeds of any insurance, indemnity, warranty or guaranty payable
under
or in connection with any of the Collateral, any and all payments (in any form
whatsoever) made or due and payable from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting
under
color of Governmental Authority), any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral or for or
on
account of any damage or injury to or conversion of any Collateral by any
Person, any and all other tangible or intangible property received upon the
sale
or disposition of Collateral, and all proceeds of proceeds.
“Purchase
Date” has the meaning assigned to such term in Section 2.01(c) of the
Acquisition Agreement.
“Purchase
Price” means the price paid by the Borrower to LEAF under the Acquisition
Agreement for sold Contracts and other Collateral related thereto.
“PUT
Payment” means, with respect to any Contract, the payment made pursuant to a
provision in such Contract obligating the Customer to purchase the related
Equipment upon termination.
“Receivables”
means, with respect to any Contract and any Determination Date, all of, and
the
right to receive all of (a) the Scheduled Payments, (b) any
prepayments made with
A-21
respect
of such Contract, (c) any Guaranty Amounts, (d) any Insurance
Proceeds, (e) any Residual Proceeds, (f) any Recoveries, and
(g) any other collections on or amounts payable under such Contract
(excluding any amounts in respect of payments of Release Prices deposited in
the
Collection Account); provided, however, that Scheduled Payments on
Contracts deposited to the Collection Account during such Collection Period
(or
any earlier Collection Period) that are remitted by the related Customer as
a
partial prepayment and that are required to be deposited to the Collection
Account during the next succeeding Collection Period or any other subsequent
Collection Period shall be treated hereunder as “Collections” with respect to
such next succeeding Collection Period or any other subsequent Collection Period
and not as “Collections” for the Collection Period relating to such
Determination Date.
“Recoveries”
means, with respect to any Collection Period occurring during or after the
date
on which any Contract becomes a Defaulted Contract and with respect to such
Defaulted Contract, all payments that the Servicer received from or on behalf
of
a Customer during such Collection Period in respect of such Defaulted Contract
or from liquidation or re-leasing of the related Equipment, including but not
limited to Scheduled Payments, Overdue Payments, Guaranty Amounts and Insurance
Proceeds, as reduced by any reasonably incurred out-of-pocket expenses incurred
by the Servicer in enforcing such Defaulted Contract.
“Reference
Banks” means three major banks that are engaged in transactions in the
London interbank market, selected by the Hedge Counterparty.
“Reference
Banks LIBOR Determination Method” means that the LIBOR Rate for a Reset Date
will be determined on the basis of the rates at which deposits in U.S. Dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time
on
the day that is two (2) London Banking Days preceding that Reset Date to prime
banks in the London interbank market for a period of one month commencing on
that Reset Date. The Hedge Counterparty will request the principal
London office of each of the Reference Banks to provide a quotation of its
rate. If at least two (2) such quotations are provided, the rate for
that Reset Date will be the arithmetic mean of the quotations. If
fewer than two (2) quotations are provided as requested, the rate for that
Reset
Date will be the arithmetic mean of the rates quoted by major banks in New
York
City, selected by the Hedge Counterparty, at approximately 11:00 a.m., New
York
City time, on that Reset Date for loans in U.S. Dollars to leading European
banks for a period of one month commencing on that Reset Date.
“Registrar
of Titles” means, with respect to any state and any item of Equipment with
respect to which a Lien Certificate is necessary to perfect a security interest
in such Equipment, the Governmental Authority responsible for the registration
of, and the issuance of certificates of title relating to, such Equipment and
liens thereon.
“Regulations
T, U and X” means Regulations T, U and X of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended, modified
or supplemented and in effect from time to time.
“Release
Price” means, with respect to any Contract that (x) is repurchased from the
Borrower pursuant to Section 3.03 of the Acquisition Agreement and the
Collateral Agent’s security interest in which is released pursuant to Section
2.07(b) of this Loan Agreement, (y) is
A-22
“Release
Schedule” means a schedule of Contracts to be released to the Borrower in
accordance with Section 5(c) or (6) of the Custodial Agreement, in
electronic format acceptable to the Collateral Agent, which schedule shall
set
forth the following information with respect to each
Contract: (i) the name and address of each Customer under such
Contract, and (ii) the contract number of such Contract.
“Replaceable
Contract” means a Non-Performing Asset, a Defaulted Contract or a Prepaid
Contract that is removed from the pool of Contracts by the Borrower in
accordance with Section 11.01 of this Loan Agreement.
“Reportable
Event” means any of the events set forth in Section 4043(c) of ERISA,
other than those events as to which the notice period is waived under
Sections .21, .22, .23, .26, .27 or .28 of PBGC Reg.
§ 4043.
“Reported
Companies” means LEAF, if the Servicer is LEAF, the Backup Servicer, if the
Backup Servicer is appointed as successor Servicer under the Servicing Agreement
and, if applicable, any other successor Servicer appointed under the Servicing
Agreement; together, in each case, with the Affiliates of such Person on a
consolidated basis.
“Reported
Companies’ Financial Statements” means the Reported Companies’ audited,
consolidated financial statements including all notes to the audited financial
statements and auditors opinion regarding the audited financial
statements.
“Request
for Release and Receipt of Document” shall have the meaning set forth in
Section 6(b) of the Custodial Agreement.
“Request
Notice” has the meaning assigned to such term in Section 2.02(c) of
the Acquisition Agreement.
“Required
Audit Report” means any report required to be delivered pursuant to
Section 4.04 of the Servicing Agreement.
“Required
Credit Support Amount” means, as of any date of determination, the greater
of (a) the product of (i) the Weighted Average Life of the Eligible Contracts
as
of such date of determination multiplied by (ii) 2.5 multiplied by (iii) the
Annualized Default Ratio for the Securitized Portfolio as of the most recent
Determination Date, and (b) 9.00%.
A-23
“Required
Documents” shall mean, with respect to a Contract, each instrument,
agreement, document, certificate or other writing, now or hereafter executed
or
delivered in respect of such Contract which is required to be included in the
Contract File pursuant to Section 2 of the Custodial Agreement, which
shall include (i) any document with respect to such Contract delivered pursuant
to Section 2.03(a) of the Loan Agreement or Sections 2 and
3 of the Custodial Agreement, (ii) the Contract Schedule
for such
Contract (which shall be annexed to Exhibit 5 to the Custodial
Agreement), and (iii) the Funding Date Documentation for such
Contract. For clarity, the Required Documents with respect to any
Contract shall not include the Servicing Documents with respect to such
Contract.
“Required
Reserve Account Amount” means as of any date of determination, the greater
of (i) the product of the Required Reserve Account Percentage and the Aggregate
Implicit Principal Balance of Eligible Contracts (including without limitation
the Aggregate Implicit Principal Balance of Eligible Contracts to be funded
on
such date of determination, if any) and (ii) the Required Reserve Account Floor
Amount as of such date of determination.
“Required
Reserve Account Floor Amount” means (a) on the first day on which the
Aggregate Implicit Principal Balance of all Eligible Contracts is less than
or
equal to $10,000,000, the Required Reserve Account Floor Amount will equal
$100,000 and will not thereafter decrease below that amount, (b) on the first
day on which the Aggregate Implicit Principal Balance of all Eligible Contracts
is greater than $10,000,000 but less than or equal to $20,000,000, the Required
Reserve Account Floor Amount will increase to $200,000 and will not thereafter
decrease below that amount and (c) on the first day on which the Aggregate
Implicit Principal Balance of all Eligible Contracts is greater than
$20,000,000, the Required Reserve Account Floor Amount will increase to $250,000
and will not thereafter decrease below that amount.
“Required
Reserve Account Percentage” means 1.00%.
“Requirement
of Law” means as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court or
other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
“Reserve
Account” means the account designated as such, established and maintained
pursuant to Section 12.01(b) of this Loan Agreement.
“Reserve
Account Available Amount” means, as of any date, all amounts then on deposit
in the Reserve Account (including, without limitation, all Investment Earnings
with respect to the Reserve Account).
“Reserve
Account Limitation Event” means any deposit into the Reserve Account which
would, if made, cause the cumulative amount of all Funding Date Reserve Account
Deposits and deposits to the Reserve Account pursuant to
clauseeighth of Section 3.03(b) made since the Closing Date
to exceed 5.00% of the Maximum Advance Amount as of the date of such
deposit.
A-24
“Reserve
Account Property” means the Reserve Account, all amounts and investments
held from time to time in the Reserve Account (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities
or
otherwise) and all the Proceeds of the foregoing.
“Reset
Date” means, with respect to each Advance, the first day of the Accrual
Period for such Advance.
“Residual
Proceeds” means, with respect to any Contract that is not a Defaulted
Contract and the related Equipment, the net proceeds (including Insurance
Proceeds) of any sale, present value of rent streams to be received for a
release (including any lease renewal) or other disposition of such
Equipment.
“Responsible
Officer” means, as to any Person other than the Collateral Agent, the
managing member, chief executive officer, president, chief operating officer,
chief investment officer or the chief financial officer of such Person;
provided, that in the event any such officer is unavailable at any time
he or she is required to take any action hereunder, Responsible Officer shall
mean any officer authorized to act on such officer’s behalf as demonstrated to
the Lender to its satisfaction; with respect to the Collateral Agent,
“Responsible Officer” means any officer of the Corporate Trust Department of the
Collateral Agent, including any Senior Vice President, any Vice President,
any
Assistant Vice President, any Assistant Secretary, any Trust Officer or
Assistant Trust Officer, or any other officer of the Collateral Agent, in each
case, with direct responsibility for the administration of this
Agreement.
“Resulting
Entity Eligibility Criteria” means, with respect to any Person described in
Section 5.02(b) of the Servicing Agreement, the following criteria: that
such Person shall be acceptable to the Lender or the Borrower.
“Scheduled
Payment” means, with respect to each Contract and any Payment Date, the
periodic payment (exclusive of any amounts in respect of taxes) and any PUT
Payments or other balloon payments originally set forth in such Contract due
from the related Customer in the related Collection Period.
“Secured
Obligations” means the unpaid principal amount of, and interest on the
Advances, any Swap Obligations and all other obligations and liabilities of
the
Borrower to the Lender or the Hedge Counterparty (for whose benefit the
Collateral Agent holds its security interest in the Collateral pursuant to
Section 4.01(c)) or any Indemnified Party (including, but not limited to,
fees, expenses and indemnification payments owed to the Collateral Agent under
Sections 7 and 13 of the Custodial Agreement or to the Backup
Servicer under the Servicing Agreement) whether direct or indirect, absolute
or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of or in connection with this Loan Agreement, the Note,
any
other Loan Document and any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to the Lender, the
Hedge Counterparty or otherwise). For purposes hereof, “interest”
shall include, without limitation, interest accruing after the maturity of
the
Advances and interest accruing after the filing of any petition in bankruptcy,
or the
A-25
“Securities
Exchange Act” means the Securities Exchange Act of 1934, as
amended.
“Securities
Intermediary” has the meaning assigned to such term in Section 12.04
of this Loan Agreement.
“Securitized
Portfolio” means the Contracts sold by the Seller to the Borrower pursuant
to the Acquisition Agreement.
“Seller”
means LEAF Equipment Leasing Income Fund III, L.P., a Delaware limited
partnership.
“Senior
Leverage Ratio” means, with respect to LEAF, the result obtained by dividing
LEAF’s Combined Recourse Debt by LEAF’s Adjusted Partner’s
Capital. For such determination, “Combined Recourse Debt” means all
of LEAF’s debts and liabilities, but excluding third party accounts payable,
accrued expenses, non-recourse debt and intercompany obligations, and “Adjusted
Partner’s Capital” means partner’s capital plus “Due to General Partner” plus
subordinated debt, if any. For such determination (including Section
7.02(jj)), “Due to General Partner” means amounts, as set forth in the financial
statements of LEAF, that are due to LEAF Financial Corporation and its
affiliates, as general partner of LEAF, for management fees and expenses due
for
servicing the Securitized Portfolio in addition to amounts LEAF Financial
Corporation has paid for property taxes due on the Securitized Portfolio that
have been billed to Customers.
“Senior
Managers” means, with respect to each LEAF Party, its Chairman, President,
Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
Chief
Investment Officer and Senior Vice President of Sales and
Marketing.
“Serviced
Portfolio” means the aggregate amount of Contracts serviced by the
Servicer.
“Servicer”
means LEAF Financial Corporation or any successor servicer appointed as provided
in this Loan Agreement and the Servicing Agreement.
“Servicer
Advance” means, with respect to any Determination Date, an amount equal to
the Scheduled Payments or portion thereof for each Contract, other than a
Defaulted Contract or a Non-Performing Asset or any other Contract for which
an
advance would otherwise constitute a Nonrecoverable Advance, which were due
in
the immediately preceding Collection Period but not received prior to the last
day of such Collection Period.
“Servicer
Advance Reimbursement Amount” means, with respect to any Contract and any
Payment Date, an amount equal to the amount, if any, of the Servicer Advance
made by the Servicer with respect to such Contract on the immediately preceding
Payment Date.
A-26
“Servicer
Termination Event” has the meaning assigned to such term in
Section 6.01 of the Servicing Agreement.
“Servicing
Agreement” means the Servicing Agreement, dated as of June 19, 2007, among
the Borrower, the Lender, the Backup Servicer, the Collateral Agent and the
Servicer for the servicing of Contracts, as the same may be amended, modified
or
supplemented from time to time in accordance with the terms
thereof.
“Servicing
Charges” means, with respect to any given Collection Period, the sum of
(a) all late payment charges paid by Customers on Delinquent Contracts
after payment in full of any Scheduled Payments due at the time of receipt
of
such payments relating to such Delinquent Contracts and (b) any other
incidental charges or fees received from a Customer, including but not limited
to, late fees, collection fees and bounced check charges.
“Servicing
Documents” means all Servicing Records, servicing agreements (including,
without limitation, the Servicing Agreement), servicing rights, pledge
agreements (including, without limitation, the Custodial Agreement), and any
other collateral pledged or otherwise relating to the Contracts, together with
all files, documents, instruments, certificates, correspondence, accounting
books and records relating thereto or to the Contract Documents.
“Servicing
Fee” means, with respect to any Payment Date, the fee payable to the
Servicer in accordance with Section 3.03(b) in an amount equal to the
product of (i) one-twelfth of 1.00% and (ii) the Implicit Principal Balance
of
all Contracts as of the related Determination Date; provided, that, if the
Backup Servicer is acting as Servicer, the Servicing Fee shall in no event
be
less than $6,000 per Collection Period.
“Servicing
Officer” means any officer or employee of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts, whose name
appears on a list of servicing officers contained in an Officers’ Certificate
delivered by the Servicer to the Lender, the Collateral Agent and the Backup
Servicer, as such list may be amended from time to time.
“Servicing
Records” shall have the meaning provided in Section 14.15(b) of this
Loan Agreement.
“Single
Employer Plan” means any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.
“Specified
Event” means, with respect to any Contract, the occurrence of any of the
following:
(a) the
payment and performance in full of all obligations of the Customer under such
Contract;
(b) such
Contract becoming a Defaulted Contract and the acquisition and sale of the
related Equipment or other related Collateral in connection with the enforcement
of such Contract pursuant to Section 3.01(c)(vii) of the Servicing
Agreement, or the receipt or collection of any other Recoveries in respect
of
such Contract;
A-27
(c) such
Contract becoming a Delinquent Contract;
(d) such
Contract becoming a Non-Performing Asset;
(e) the
collection of Insurance Proceeds payable against the Customer’s balance in
respect of the related Equipment; or
(f) such
Contract becoming a Replaceable Contract that is removed from the pool of
Contracts pursuant to Article XI of this Loan Agreement.
“Standard
& Poor’s” means Standard & Poor’s Ratings Services, or its
successor.
“Static
Pool Test” means, for all Contracts purchased by the Borrower, with respect
to whether there is a Facility Termination Event or an Event of Default, the
applicable percentage specified below.
|
Cumulative
Net Losses
|
||
|
Time
since Contract
origination
|
Facility
Termination Event
|
Event
of Default
|
|
0
–
12 months
|
2.25%
|
2.50%
|
|
13
– 18 months
|
3.25%
|
3.50%
|
|
19
– 24 months
|
3.75%
|
4.00%
|
|
25
– 30 months
|
4.00%
|
4.25%
|
|
31
– 36 months
|
4.25%
|
4.50%
|
|
37
– 42 months
|
4.50%
|
4.75%
|
|
43
– 48 months
|
5.00%
|
5.25%
|
|
49
– 60 months
|
5.25%
|
5.50%
|
|
61
+ months
|
5.50%
|
5.75%
|
“Subsidiary”
means, as to any Person, a corporation, partnership or other entity of which
shares of stock or other ownership interests having ordinary voting power (other
than stock or such other ownership interests having such power only by reason
of
the happening of a contingency) to elect a majority of the board of directors
or
other managers of such corporation, partnership or other entity are at the
time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such
Person.
“Substitute
Contract” means an Eligible Contract that is added to the pool of Eligible
Contracts by the Borrower as a substitute for a Replaceable Contract, in
accordance with Sections 11.01(b) and (c) of this Loan
Agreement.
“Swap
Obligations” means any amounts due and payable to the Hedge Counterparty
pursuant to the terms of any Interest Rate Hedging Agreement, including, without
limitation, any amounts set forth in the confirmation of any Interest Rate
Hedging Agreement.
“Swap
Payment” means any payment by the Hedge Counterparty to the Borrower
pursuant to an Interest Rate Hedging Agreement.
“Termination
Value” means, with respect to any Contract, the “Termination Value” (if any)
payable by a Customer pursuant to such Contract.
A-28
“Total
Outstanding Advances” means, as of any date of determination, the unpaid
principal amount of all Advances outstanding hereunder.
“UCC”
means the Uniform Commercial Code as in effect from time to time in the
applicable jurisdiction.
“Underwriting
Guidelines” means the credit approval guidelines used by LEAF in the
purchase of Contracts, a copy of which is annexed to this Loan Agreement as
Exhibit G, as amended from time to time in accordance with Section
7.02(c).
“Weighted
Average Life” means, with respect to any date of determination, the weighted
average life of the Eligible Contracts as of such date of determination (after
giving effect to the Eligible Contracts to be financed on such date of
determination, if any). The Weighted Average Life shall be expressed
as a number of years (with any portion of a year being expressed as a
decimal).
“WestLB”
means WestLB AG, New York Branch.
A-29
EXHIBIT
A
[INTENTIONALLY
OMITTED]
A-1
EXHIBIT
B
FORM
OF CUSTODIAL AGREEMENT
B-1
EXHIBIT
C
FORM
OF INTEREST RATE HEDGING AGREEMENT
C-1
EXHIBIT
D
ELIGIBILITY
CRITERIA
To
be an
Eligible Contract, a Contract (and the related Contract Documents, Equipment
and
other Collateral) must satisfy, and maintain at all times, the following
eligibility characteristics, subject to any exceptions thereto approved in
writing by the Lender in its sole discretion:
(i) The
information set forth in the Contract Schedule was produced from the Electronic
Ledger and was true and correct in all material respects, with respect to such
Contract, as of the close of business on the Cut-Off Date of such
Contract.
(ii) The
Contract is, pursuant to its terms, an absolute and unconditional obligation
of
the Customer, non-cancelable prior to the expiration of the initial term of
such
Contract (without regard to any event affecting the Equipment, the obsolescence
of any Equipment, any claim of such Customer against the Originator, any the
LEAF Party, the Servicer or any other Person, any change in circumstance of
such
Customer or any other circumstance whatsoever). Such Contract, if
prepayable, provides that any prepayment shall be in an amount sufficient to
pay
the Release Price of such Contract. Such Contract does not provide
for the substitution, exchange or addition of any other items of Equipment
pursuant to such Contract; and the rights with respect to such Contract are
assignable by the lessor thereunder without the consent of any
Person. Such Contract is net to the lessor of any maintenance, taxes,
insurance or other expenses and contains provisions requiring the Customer
to
assume all risk of loss or malfunction of the related Equipment.
(iii) The
Seller has delivered (or caused to be delivered) to the Collateral Agent, no
later than 12:00 p.m., New York City time, two (2) Business Days prior to the
applicable Funding Date, the Funding Date Documentation pertaining to such
Contract, including, without limitation, the sole original counterpart of the
Contract, as amended.
(iv) As
of the applicable Funding Date, the Contract has not been amended, waived,
altered or modified in any material respect except in writing, and copies of
all
such writings are attached to such Contract. On or after the
applicable Funding Date, such Contract will not be amended, waived, altered
or
modified in any respect except in accordance with the Loan
Documents.
(v) The
Contract constitutes tangible chattel paper within the meaning of the UCC as
in
effect in the States of New York and Delaware.
(vi) There
is only one executed counterpart of the Contract in LEAF’s possession which
constitutes “tangible chattel paper” under the UCC as in effect in the State of
New York.
(vii) By
the Funding Date with respect to such Contract, the Seller will have caused
the
portions of the Electronic Ledger relating to such Contract to be clearly and
unambiguously identified to show that such Contract has been sold or contributed
to the
D-1
Borrower
by the Seller pursuant to the Acquisition Agreement and pledged by the Borrower
to the Collateral Agent in accordance with the terms of the Loan
Agreement.
(viii) The
Contract was not originated in, nor is it subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable any sale,
transfer and assignment of such Contract under the Acquisition Agreement
(including, without limitation, any repurchase thereunder) or the pledge thereof
pursuant to the Loan Agreement or pursuant to transfers of the
Note. Neither the Seller nor the Borrower has entered into any
agreement with any account debtor that prohibits, restricts or conditions the
assignment of such Contract.
(ix) The
Contract is in full force and effect in accordance with its respective terms
and
none of the Seller, the Borrower, the Servicer or any Customer has or will
have
suspended or reduced any payments or obligations due or to become due thereunder
by reason of a default by the other party to such Contract.
(x) As
of the applicable Cut-Off Date, no Scheduled Payment with respect to such
Contract has not been received and remained unpaid for a period of 30 or
more days (without regard to advances, if any, made by the
Servicer).
(xi) With
respect to each Contract, as of the applicable Cut-Off Date, (a) the related
Customer was not the subject of any insolvency or bankruptcy proceeding, (b)
there has been no default, breach or violation and no event permitting
acceleration under such Contract, (c) there are no proceedings pending or
threatened in connection with which such Customer and (d) no Governmental
Authority has alleged that such Contract is illegal or unenforceable, and none
of the related Scheduled Payments are subject to any set-off, rescission,
reduction or credit of any kind.
(xii) As
of the applicable Funding Date, the Contract is not a Defaulted
Contract.
(xiii) The
Contract is the valid, binding and legally enforceable obligation of the parties
thereto, enforceable in accordance with its terms, subject, as to enforcement,
to applicable bankruptcy, insolvency, reorganization and other similar laws
of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity regardless of whether enforcement is sought
in a
court of law or equity.
(xiv) All
parties to the Contract had authority and capacity to execute such
Contract.
(xv)
[Reserved].
(xvi) [Reserved].
(xvii) The
Contract is not a consumer lease.
(xviii) The
Contract is not subject to any Guarantee by the Seller or any of its
Affiliates.
D-2
(xix) All
actions, filings (including UCC filings) and recordings as are required by
any
Loan Document or that may be necessary to perfect a first priority security
interest of the Borrower or the Collateral Agent, for the benefit of the Lender
and the Hedge Counterparty, in, or the contribution or sale by the Seller to
the
Borrower of, the Contract and the related Collateral being acquired hereunder
have been accomplished and are in full force and effect. All such
filings and recordings required to assign the security interest of the Seller
to
the Borrower and the interest of the Borrower in such security interest to
the
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty,
in
the Equipment underlying such Contract have been filed in accordance with the
Loan Documents and are in full force and effect.
(xx) The
Contract is substantially in the form of the Forms of Contract attached to
the
Loan Agreement as Exhibit E, except for any Contract acquired from a
Person other than a LEAF party or any immaterial modifications or deviations
from such Form of Contract that do not and will not adversely affect the
interests of the Lender or the Hedge Counterparty.
(xxi) The
Contract was originated by the LEAF Originator or was purchased from a third
party Approved Originator in the LEAF Originator’s ordinary course of
business. The Contract meets the Seller’s Underwriting Guidelines,
which are attached to the Loan Agreement as Exhibit G and which shall not
be amended except in accordance with Section 7.02(c) of the Loan
Agreement. The origination and collection practices used by the
Seller and any third party Originator with respect to such Contract are in
all
respects legal, proper, prudent and customary in the equipment financing and
servicing business. If the Contract was originated by a third party
Originator, such Person originated such Contract in the ordinary course of
its
business.
(xxii) No
selection procedures adverse to the Lender or the Hedge Counterparty were
utilized in selecting the Contract from those lease contracts owned by the
Seller or the Borrower.
(xxiii) The
Equipment subject to the Contract was properly delivered to the Customer in
good
repair, without defects and in satisfactory order and is in proper working
order. The related Customer has accepted the Equipment leased to
it. Such Equipment has not suffered any loss or damage that has not
been repaired. No the Lease Party has any notice or other knowledge
of any defects in such Equipment.
(xxiv) The
Contract obligates the related Customer to make all Scheduled Payments
thereunder in full, notwithstanding the collection by the lessor of a security
deposit with respect thereto. The calculation of the Implicit
Principal Balance of the related Receivable does not include any security
deposits or advance payments collected by or on behalf of the lessor which
are
applied to Scheduled Payments.
(xxv) With
respect to each Contract, the related Customer has not been released, in whole
or in part, from any of its obligations in respect of such Contract; such
Contract has not been satisfied, cancelled or subordinated, in whole, or in
part, or rescinded, and no Equipment subject to such Contract has been released
from such Contract, in whole or
D-3
in
part,
nor has any instrument been executed that would effect any such satisfaction,
release, cancellation, subordination or rescission.
(xxvi) The
Customer is not a merchant with respect to the Equipment leased under the
Contract unless such Customer utilizes the related Equipment in its operations
and does not lease such Equipment to a third party.
(xxvii)
All requirements of applicable federal, state and local laws, and regulations
thereunder, including, without limitation, usury laws, truth-in-lending laws
and
equal credit opportunity laws, in respect of the Contract have been complied
with in all material respects, and such Contract complied in all material
respects from and after the time it was originated or with all legal
requirements of the jurisdiction in which it was originated, the jurisdiction
in
which the related Equipment is located, and each other jurisdiction, if any,
applicable to such Contract and/or the other Collateral related
thereto.
(xxviii) The
Contract is not and will not be subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, whether arising out
of
transactions concerning such Contract or otherwise, and the operation of any
of
the terms of such Contract or the exercise by the Seller or the Customer of
any
right under such Contract will not render such Contract unenforceable in whole
or in part, and no such right of rescission, set-off, counterclaim or defense,
including a defense arising out of a breach of the Customer’s right of quiet
enjoyment of the related Equipment, has been asserted with respect
thereto.
(xxix) Each
of the Seller, the LEAF Originator and any third party Originator has duly
fulfilled all obligations on the lessor’s part to be fulfilled under or in
connection with the Contract, including, without limitation, giving any notices
or consents necessary to effect the acquisition of the Collateral by the
Borrower and the pledge of the Collateral by the Borrower to the Collateral
Agent, for the benefit of the Lender and the Hedge Counterparty, and has done
nothing to impair the rights of the Borrower, the Lender, the Hedge
Counterparty, or the Collateral Agent in such Contract or payments with respect
thereto.
(xxx) The
Contract and the Seller’s interest in the related Equipment and the other
related Collateral have not been sold, transferred, assigned or pledged by
the
Seller to any Person other than the Borrower (except for such interests in
the
Collateral which shall be terminated on or prior to the Closing Date or the
related Funding Date). Immediately prior to the conveyance of the
Contract to the Borrower pursuant to the Acquisition Agreement, the Seller
was
the sole owner thereof and had good and indefeasible title thereto, free of
any
Lien. Upon execution and delivery of the applicable Assignment by the
Seller, the Borrower will have good and indefeasible title to and will be sole
owner of the Contract, the related Receivables and the Seller’s interest in the
related Equipment and other Collateral free of any Lien (other than the Lien
of
the Collateral Agent for the benefit of the Lender and the Hedge
Counterparty).
(xxxi) The
Contract requires that the Customer maintain the related Equipment in working
condition, reasonable wear and tear excepted, in accordance with
the
D-4
manufacturers’
specifications and that the Customer obtain and maintain physical damage
insurance covering such Equipment in an amount sufficient to insure completely
such Equipment. If the Contract had an initial book value in excess
of $100,000, such Contract requires that the Customer provide written proof
of
insurance coverage and maintain such insurance coverage under such Contract
that
is of a type customary for the equipment covered thereby and consistent with
industry practice for monitoring compliance thereof. Such insurance coverage
is
in full force and effect; provided, however, that the Servicer may
provide insurance coverage through its errors and omissions insurance policy,
which covers failure of the Customer to maintain physical damage insurance
to
the Equipment in an amount sufficient to insure completely the Equipment and
which is in full force and effect.
(xxxii)
The Seller has no knowledge that the Contract will not be fully performed in
accordance with its terms.
(xxxiii) No
Customer under the Contract is the United States of America, any state or local
government thereof, any agency, department or instrumentality of the United
States of America, any state or local government thereof or any other government
or governmental body. No Customer or vendor under the Contract is an
Affiliate of any LEAF Party or is affiliated with any Senior
Manager. For these purposes a Customer or vendor is “affiliated” with
a Senior Manager, if such Senior Manager or any member of such Senior Manager’s
family is a material investor, director, manager, consultant or employee of,
or
performs any analogous role with respect to, such Customer or
vendor.
(xxxiv) The
Contract does not include an unsecured lease for the payment of franchise fees
by the Customer.
(xxxv)
If the Equipment or other Collateral relating to the Contract is the subject
of
any cross collateralization or other security arrangement, (a) the Seller
has obtained a waiver from all third parties with any right or claim against
any
Contract, Equipment or other Collateral of such party’s rights to the Contract
conveyed to the Borrower and the Equipment subject to such Contract and
(b) the Seller waives any rights it has or may have with respect to the
Contract or other Collateral due to the cross-collateralization.
(xxxvi) The
Contract was originated in the United States of America. The related
Equipment and the related Customer are located in the United States of America,
and the related Scheduled Payments are payable in U.S. dollars. The
references in this clause (xxxvi) to the “United States of America” include each
state thereof and the District of Columbia but exclude all of its territories,
possessions or other dependent areas other than the Commonwealth of Puerto
Rico
and the Territory of Guam.
(xxxvii) The
Contract provides for Scheduled Payments thereunder. Such Scheduled
Payments were established at the time such Contract was
originated. Unless the Contract provides for a deferred first
Scheduled Payment, the Customer has made at least one payment with respect
to
such Contract, which may be a security deposit or advance payment, on or before
the related Funding Date.
D-5
(xxxviii) If
the Contract does not provide for level Scheduled Payments, such Contract
nevertheless (x) requires at least one Scheduled Payment during the first 90
days after its origination and (y) the Scheduled Payments due on such Contract
during the first half of the original term of the Contract discounted in the
manner set forth under the definition of “Implied Principal Balance” equal at
least 33.00% of the Implied Principal Balance of such Contract calculated in
each case as of its date of origination.
(xxxix) No
Customer is an individual person; provided, however, that a
Customer may be a sole proprietorship.
(xl) The
Equipment subject to the Contract is not located at any location different
from
the location of such Equipment specified in such Contract.
(xli) The
Customer has not subleased any of the related Equipment.
(xlii) There
are no unpaid brokerage or other fees owed to third parties relating to the
origination of the Contract.
(xliii) With
respect to each Contract, the LEAF Originator had valid title to, or a first
priority perfected security interest in, each related item of Equipment in
accordance with the Seller’s Underwriting Guidelines, all right title and
interest in which has been transferred to the Seller; provided that the
Seller shall not be required to file UCC financing statements to perfect the
security interest in the Equipment relating to any Contract that had an original
equipment cost at origination of less than $25,000, or if such Contract provides
for a “fair market value” purchase option, of less than
$50,000. Neither the sale to the Borrower of the Collateral nor the
pledge of a security interest in such Collateral by the Borrower to the
Collateral Agent, for the benefit of the Lender and the Hedge Counterparty
violates the terms of or provisions of such Contract or of any lease or any
other agreement to which either the Lease Party is a party or by which it is
bound.
(xliv) The
transfer, assignment and conveyance of the Contracts and other related
Collateral by the Seller pursuant to the Acquisition Agreement is not subject
to
and will not result in any tax, fee or governmental charge payable by the Seller
to any federal, state or local government (“Transfer Taxes”) other than
Transfer Taxes which have or will be paid by the Seller as due. In
the event that the Borrower receives actual notice of any Transfer Taxes arising
out of the transfer, assignment and conveyance of the Contracts and other
related Collateral, on written demand by the Borrower, or upon the Seller
otherwise being given notice thereof, the Seller shall pay, and otherwise
indemnify and hold the Borrower, the Lender, the Hedge Counterparty and the
Collateral Agent harmless, on an after-tax basis, from and against any and
all
such Transfer Taxes. None of the Lender, the Hedge Counterparty or the
Collateral Agent shall have any obligation to pay any such Transfer
Taxes.
(xlv) Each
Contract that is in the form of a “master agreement” with one or more equipment
schedules attached thereto provides that each such schedule constitutes a
separate contract from any other schedule.
D-6
(xlvi) [Reserved].
(xlvii) [Reserved].
(xlviii) As
of the applicable Funding Date, the Implicit Principal Balance of the Contract
is not greater than $1,500,000.
(xlix) As
of the Cut-off Date, the remaining term of the Contract is not more than 85
months.
(l) The
Contract (A) was (1) originated by the LEAF Originator or (2) originated by
a
third party Approved Originator and sold by such Originator to the LEAF
Originator and in each case, the origination or purchase of such Contract by
the
Originator was funded by the Seller pursuant to the agreement between the Seller
and the Originator and all right, title and interest of the Originator in such
Contract was, upon such funding, acquired by the Seller, (B) was sold or
contributed by the Seller to the Borrower and (C) was pledged by the Borrower
to
the Collateral Agent (for the benefit of the Lender and the Hedge Counterparty)
without any fraud or misrepresentation in any case.
(li) There
exists a Contract File pertaining to the Contract and such Contract File
contains the related Contract Documents including, without limitation, a fully
executed original of the Contract. Each of such documents which is
required to be signed by the lessee has been signed by the lessee in the
appropriate spaces. All blanks on any form described above have been
properly filled in and each form has otherwise been correctly
prepared. Notwithstanding the above, a copy of the complete Contract
File for each Contract, which fulfils in all material respects the documentation
requirements of the Seller’s Underwriting Guidelines as in effect at the time of
purchase has been delivered to the Collateral Agent by the Seller, on behalf
of
the Borrower by the related Funding Date.
(lii) If
the Contract is a Contract with respect to which a Lien Certificate is necessary
to perfect a security interest in the related Equipment, the Lien Certificate
for such item of Equipment shows, or if a new or replacement Lien Certificate
is
being applied for with respect to such Equipment the Lien Certificate shall
have
been received within 90 days of the applicable Funding Date, and will show
(a)
the LEAF Originator, (b) the Collateral Agent or (c) a nominee of the existing
lienholder, pursuant to an agreement in the form attached hereto as Exhibit
P,
named as the secured party under the related Contract as the holder of a first
priority security interest in such Equipment. In the case of each
such Contract with respect to which the Lien Certificate for the related item
of
Equipment has not yet been returned from the Registrar of Titles, the Seller
will, within 30 days of the origination or acquisition thereof by the LEAF
Originator initiate all necessary state registration or recording procedures
to
reflect the LEAF Originator’s, the Collateral Agent’s or such nominee’s interest
(as applicable) on the Lien Certificate in the manner set forth
above. In the case of each such Contract (x) that provides for a
“fair market value” purchase option for titled vehicle Equipment with an
original equipment cost at origination of $50,000 or more or (y) for which
the
originator of such
D-7
Contract
is the party listed on the Lien Certificate as the owner, the Seller will,
in
either case, within 30 days of the acquisition of the Contract by the Borrower,
initiate all necessary state registration or recording procedures to reflect
the
Borrower’s ownership interest on the certificate of title as the sole secured
party with respect to the related Equipment.
(liii) Each
of the following criteria shall be satisfied with respect to each Contract
as of
any date of determination:
(A) [reserved];
(B) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the percentage of Eligible Contracts (by Aggregate Implicit Principal Balance,
as of any date of determination) that do not provide for level Scheduled
Payments thereunder will not exceed 10.00% of the Aggregate Implicit Principal
Balance of all Eligible Contracts;
(C) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the weighted average remaining term of all of the Eligible Contracts does not
exceed 48 months;
(D) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the percentage of the Equipment (by Aggregate Implicit Principal Balance, as
of
any date of determination) with Customers located in any one state does not
exceed 30.00% of the Aggregate Implicit Principal Balance of the Eligible
Contracts;
(E) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) with related Equipment that is of
the
one type of Equipment most commonly related to the Eligible Contracts does
not
exceed 30.00%.
(F) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) with respect to which (1) a Lien
Certificate is necessary to perfect a security interest in the related Equipment
does not exceed 30.00% of the Aggregate Implicit Principal Balance of all of
the
Eligible Contracts, (2) the Contract was originated in, or the related Customer
and Equipment are located in, the Commonwealth of Puerto Rico or the Territory
of Guam does not exceed 6.00% of the Aggregate Implicit Principal Balance of
all
of the Eligible Contracts or (3) the Equipment constitutes a fixture under
applicable law in effect in the jurisdiction in which such Equipment is located,
does not exceed 30.00% of the Aggregate Implicit Principal Balance of all of
the
Eligible Contracts; provided that, for any Contract for which the related
Equipment constitutes a fixture under applicable law, the encumbrancer of the
related real property shall have executed a waiver and consent in the form
of
the
D-8
Waiver
& Consent – Landlord/Mortgagee attached hereto as Exhibit A, or in
such other commercially reasonable form containing the following key elements:
name of property owner, landlord or mortgagee; the list of Equipment in or
subject to the related Contract; acknowledgement that this Equipment belongs
to
the owner thereof under the related Contract; the ability of the LEAF
Originator, the Borrower or the Servicer to remove the Equipment in a reasonable
fashion and consistent with the Servicer’s or LEAF’s current requirements as
indicated in its policy and procedures; and, in substance, either or both of
(x)
a waiver by the encumbrancer of the real property of any claim on the Equipment
that is prior to the LEAF Originator or its assigns or (y) an statement by
the
encumbrancer that the Equipment shall not constitute a fixture;
(G) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) having the same related vendor or
any
one or more related vendors each of whom are Affiliates of each other (1) does
not exceed 15.00% of the Aggregate Implicit Principal Balance of all Eligible
Contracts or (2) if the unsecured senior indebtedness of such vendor or of
each
such affiliated vendor rated investment grade by either ▇▇▇▇▇’▇ or Standard
& Poor’s, does not exceed 20.00% of the Aggregate Implicit Principal Balance
of all Eligible Contracts;
(H) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the Aggregate Implicit Principal Balance of Eligible Contracts (as of any date
of determination) with respect to which any one Person or any Affiliate of
such
Person is the related Customer does not exceed (1) if the Aggregate Implicit
Principal Balance of the Eligible Contracts is less than $25,000,000, 4.00%
of
the Aggregate Implicit Principal Balance of all Eligible Contracts, (2) if
the
Aggregate Implicit Principal Balance of the Eligible Contracts is less than
$50,000,000 but is greater than $25,000,000, the greater of (x) $1,000,000
and
(y) 3.00% of the Aggregate Implicit Principal Balance of all Eligible Contracts
and (3) if the Aggregate Implicit Principal Balance of the Eligible Contracts
is
greater than $50,000,000, 3.00% of the Aggregate Implicit Principal Balance
of
all Eligible Contracts;
(I) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the Aggregate Implicit Principal Balance of Eligible Contracts (as of any date
of determination) with respect to which any three Persons who are not Affiliates
of each other (but including any Affiliates of each such Person) is the related
Customer does not exceed (1) if the Aggregate Implicit Principal Balance of
the
Eligible Contracts is less than $25,000,000, 9.00% of the Aggregate Implicit
Principal Balance of all Eligible Contracts and (2) if the Aggregate Implicit
Principal Balance of the Eligible Contracts is greater than $25,000,000, the
greater of (x) $2,250,000 and (y) 7.00% of the Aggregate Implicit Principal
Balance of all Eligible Contracts;
D-9
(J) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the Aggregate Implicit Principal Balance of Eligible Contracts (as of any date
of determination) having a deferred first Scheduled Payment does not exceed
10.00% of the Aggregate Implicit Principal Balance of all Eligible Contracts;
and
(K) after
giving effect to the addition of the Contract to the pool of Eligible Contracts,
the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) that are Business Acquisition Loans
is
not greater than 15.00% of the Aggregate Implicit Principal Balance of the
Eligible Contracts; provided, however, that the percentage of the
Eligible Contracts (by Aggregate Implicit Principal Balance, as of any date
of
determination) that are Business Acquisition Loans that are not assigned to
specific tangible assets is not greater than 7.50% of the Aggregate Implicit
Principal Balance of the Eligible Contracts.
D-10
EXHIBIT
E
FORM
OF CONTRACT
(on
file
with Sidley Austin LLP)
|
|
1.
|
E-1
EXHIBIT
F
FINANCIAL
STATEMENTS OF THE SERVICER AS OF MARCH 31, 2007
(on
file
with Sidley Austin LLP)
F-1
EXHIBIT
G
UNDERWRITING
GUIDELINES
(on
file
with Sidley Austin LLP)
▇-▇
▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇
▇▇, ▇▇▇ ▇▇▇▇ BRANCH
PROMISSORY
NOTE
June
19,
2007
Amount:
U.S. $200,000,000.00
FOR
VALUE
RECEIVED, LEAF FUND III, LLC (the “Borrower”) unconditionally promises to pay on
the Final Payment Date (as defined in the Loan Agreement referred to below)
to
the order of WESTLB AG, NEW YORK BRANCH (the “Lender”) in Federal or other
immediately available funds in lawful money of the United States the principal
sum of TWO HUNDRED MILLION DOLLARS (U.S. $200,000,000.00) or, if less, the
aggregate unpaid principal amount of the Advances made by Lender to Borrower
pursuant to the Loan Agreement, and to pay interest thereon from the date hereof
until this Note is repaid in like money at the rates per annum and in the manner
set forth in the Loan Agreement.
The
principal of and interest on this Note shall be payable in immediately available
funds without set-off or counterclaim, in the manner set forth in the Loan
Agreement.
This
Note
is issued pursuant to the terms of the Secured Loan Agreement dated as of June
19, 2007, among Lender, Borrower, LEAF Funding, Inc., LEAF Equipment Leasing
Income Fund III, L.P., LEAF Financial Corporation and U.S. Bank National
Association (as amended, supplemented or otherwise modified from time to time
in
accordance with the terms thereof, the “Loan Agreement”), and is subject to the
terms thereof and is entitled to the benefits therein provided.
Upon
the
occurrence of an Event of Default (as defined in the Loan Agreement), the
principal of and accrued interest on this Note may be declared due and payable
in the manner and with the effect provided in the Loan Agreement, without
presentment, demand, protest or notice of any kind, each of which is hereby
expressly waived by Borrower.
THIS
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK.
LEAF
FUND
III, LLC
By: __________________________________
Name:
Title:
H-1
EXHIBIT
I
NOTICE
OF BORROWING AND PLEDGE
(on
file
with the Borrower and Sidley Austin LLP)
I-1
EXHIBIT
J
FORMS
OF OPINIONS OF COUNSEL TO LEAF PARTIES
(on
file
with Sidley Austin LLP)
J-1
EXHIBIT
K-1
FILING
JURISDICTIONS AND OFFICES
LEAF
Secretary
of State of the State of Delaware.
Borrower
Secretary
of State of the State of Delaware.
K-1
EXHIBIT
K-2
FILING
JURISDICTIONS AND OFFICES
LEAF
Secretary
of State of the State of Delaware.
Borrower
Secretary
of State of the State of Delaware.
K-2
EXHIBIT
L
TRADE
NAMES, ETC.
Borrower: None
LEAF: (on
file with Sidley Austin LLP)
Servicer:
(on file with Sidley Austin LLP)
L-1
EXHIBIT
M
FORM
OF BORROWING BASE DEFICIENCY NOTICE
[DATE]
WestLB
AG,New York
Branch U.S.
Bank National Association,
1211
Avenue of the
Americas ▇▇-▇▇-▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attention:
Asset Securitization
Group ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier
No.:
▇▇▇-▇▇▇-▇▇▇▇ Attention:
▇▇▇ ▇▇▇▇▇▇
Telephone
No.:
▇▇▇-▇▇▇-▇▇▇▇ Telecopier
No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Ladies/Gentlemen:
Reference
is made to the Secured Loan Agreement, dated as of June 19, 2007 (the “Loan
Agreement”; capitalized terms used but not otherwise defined herein shall have
the meaning given them in the Loan Agreement), among LEAF Fund III, LLC, a
Delaware limited liability company (the “Borrower”), LEAF Funding, Inc., a
Delaware corporation (“LEAF Originator”), LEAF Equipment Leasing Income Fund
III, L.P., a Delaware limited partnership (the “Seller” or “LEAF”), LEAF
Financial Corporation, a Delaware corporation (the “Servicer”), WestLB AG, New
York Branch (the “Lender”) and U.S. Bank National Association, a national
banking association (the “Collateral Agent” and the “Securities
Intermediary”).
In
accordance with Section 7.01(m) of the Loan Agreement, the undersigned Borrower
hereby notifies you that the certain equipment leases listed below (the
“Contracts”) no longer satisfy each of the eligibility criteria listed on
Exhibit D of the Loan Agreement. A description of each such
violation is as follows:
(1) Contract
#: .
(2) Date
originally pledged to the Collateral Agent:
.
(3) Outstanding
Implicit Principal Balance of such Contract: $
.
(4) Paragraph
number(s) of violated eligibility
criteria: .
(5) Description
of the violation of eligibility
criteria:
M-1
The
undersigned Borrower hereby
notifies you that it shall no later than [on the date hereof prepay the
outstanding principal amount of Advances in part or in whole, together with
accrued and unpaid interest on, and other costs relating to such prepayment
under the Loan Agreement payable by the Borrower with respect to, the principal
amount prepaid] [the second (2nd) Business Day after the date hereof pledge
additional Eligible Contracts to the Collateral Agent, for the benefit of the
Lender and the Hedge Counterparty (which shall be in all respects acceptable
to
the Lender)], such that after giving effect to such [prepayment] [pledge] the
Total Outstanding Advances will not exceed the Borrowing Base.
Very
truly yours,
LEAF
FUND
III, LLC
By: __________________________________
Name:
Title:
M-2
EXHIBIT
N
SCHEDULE
OF LEAF INDEBTEDNESS
(on
file
with Sidley Austin LLP)
N-1
EXHIBIT
O
SCHEDULE
OF LEAF INSURANCE
(on
file
with Sidley Austin LLP)
O-1
EXHIBIT
P
FORM
OF VEHICLE LIENHOLDER NOMINEE AGREEMENT
P-1