EXECUTION COPY
SECURED LOAN AGREEMENT
DATED AS OF JUNE 1, 2005
LEAF FUND II, LLC
AS BORROWER
LEAF FUNDING, INC.
AS ORIGINATOR
LEASE EQUITY APPRECIATION FUND II, L.P.
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 ...................................................2
Section 1.02 Accounting Terms and Determinations .............................2
Article II
ADVANCES, NOTE AND PREPAYMENTS
Section 2.01 Advances .........................................................2
Section 2.02 The Note .........................................................3
Section 2.03 Procedures for Borrowing .........................................3
Section 2.04 [Reserved] .......................................................4
Section 2.05 Repayment of Advances; Interest. .................................4
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 ..............................................7
Section 2.10 Purpose of Advances ..............................................8
Section 2.11 Extension of Expected Facility Termination Date ..................8
Section 2.12 Taxes ............................................................8
Article III
PAYMENTS; COMPUTATIONS
Section 3.01 Payments .........................................................9
Section 3.02 Computations ....................................................10
Section 3.03 Settlement Procedures ...........................................10
Article IV
COLLATERAL SECURITY
Section 4.01 Collateral; Security Interest. ..................................12
Section 4.02 Further Documentation ...........................................14
Section 4.03 Changes in Locations, Name, etc .................................15
Section 4.04 Collateral Agent's Appointment as Attorney-in-Fact. .............15
Section 4.05 Reimbursement for Performance by Collateral Agent of
Borrower's Obligations ..........................................16
Section 4.06 Proceeds ........................................................17
Section 4.07 Remedies ........................................................17
Section 4.08 Servicing Rights ................................................18
Section 4.09 Limitation on Duties Regarding Preservation of Collateral .......18
Section 4.10 Powers Coupled with an Interest .................................18
Section 4.11 Release of Security Interest ....................................18
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Section 4.12 Rights of Secured Parties; Limitations on Secured Parties'
Obligations .....................................................19
Section 4.13 [Reserved] ......................................................19
Article V
CONDITIONS PRECEDENT
Section 5.01 Initial Advance .................................................19
Section 5.02 Advances ........................................................22
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 ..................34
Article VII
COVENANTS
Section 7.01 Covenants of Borrower ...........................................37
Section 7.02 Covenants of LEAF ...............................................44
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 ........................................................61
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. .....................................................64
Section 11.03 Objection and Purchase .........................................65
Section 11.04 Borrower's, Servicer's and Collateral Agent's Subsequent
Obligations ....................................................65
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Article XII ACCOUNTS;
REPORTS
Section 12.01 Establishment of Collection Account and Reserve Account. .....66
Section 12.02 Deposits into and Withdrawals from Accounts. ..................68
Section 12.03 Reports. ......................................................70
Section 12.04 Securities Accounts ...........................................70
Article XIII
[INTENTIONALLY OMITTED]
Article XIV
MISCELLANEOUS
Section 14.01 No Waiver; Remedies Cumulative .................................71
Section 14.02 Notices ........................................................71
Section 14.03 Indemnification and Expenses. ..................................73
Section 14.04 Amendments; Waivers ............................................74
Section 14.05 Severability ...................................................75
Section 14.06 Survival .......................................................75
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
WAIVER OF JURY TRIAL ...........................................76
Section 14.11 Acknowledgments ................................................76
Section 14.12 No Proceedings .................................................76
Section 14.13 Assignments; articipations .....................................77
Section 14.14 Servicing. .....................................................77
Section 14.15 Periodic Due Diligence Review ..................................77
Section 14.16 Set-Off ........................................................78
Section 14.17 Confidentiality ................................................78
Section 14.18 Entire Agreement ...............................................78
Section 14.19 Future Assurances ..............................................79
Section 14.20 [Reserved] .....................................................79
Section 14.21 Third-Party Beneficiaries ......................................79
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APPENDICES
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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
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 Borrowing Base Deficiency Notice
EXHIBIT N Schedule of LEAF Indebtedness
EXHIBIT O Schedule of LEAF Insurance
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SECURED LOAN AGREEMENT
SECURED LOAN AGREEMENT, dated as of June 1, 2005, among LEAF
FUND II, 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"), LEASE EQUITY
APPRECIATION FUND II, 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:
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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.
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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.
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 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
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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.
(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
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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.
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).
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(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 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); provided further 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. Any such
prepayment of the Total Outstanding Advances (except in connection with the
payment of the Total Outstanding Advances as a result of an Event of Default or
a Facility Termination Event) shall be accompanied by any Prepayment Premium.
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
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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 change the basis of taxation of
payments to the Lender in respect thereof or in respect of any other
amounts payable by the Borrower to the Lender pursuant to this Loan
Agreement or any other Loan Document; or
(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 to a level below that which the Lender or such Person
(taking into consideration the Lender's or such Person's policies with respect
to capital adequacy) 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.
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(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) If, upon the occurrence of the Expected Facility Termination Date,
each of the conditions specified in clause (b) below shall be satisfied, the
Expected Facility Termination Date shall be extended to the second anniversary
of the Closing Date. If the Expected Facility Termination Date shall have been
extended in accordance with the immediately preceding sentence and if, upon the
occurrence of the Expected Facility Termination Date (as so extended), each of
the conditions specified in clause (b) below shall be satisfied, the Expected
Facility Termination Date shall be extended to the third anniversary of the
Closing Date.
(b) The Expected Facility Termination Date shall be extended unless the
following conditions have occurred: (i) a Facility Termination Event shall have
occurred or (ii) the Lender, in its sole and absolute discretion, shall have
delivered, no later than 120 days prior to the first anniversary of the Closing
Date or the second anniversary of the Closing Date, as applicable, a written
notice to the Borrower of its intent to not extend the Facility Termination Date
as described in Section 2.11(a).
(c) 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 obligation to prepay any of the Advances, the Borrower
shall have the right to prepay any or all of the Advances (without premium or
penalty (including the Prepayment Premium) but shall be liable for any loss or
expense the Lender may suffer from interest or fees payable by the Lender to
lenders of funds obtained by it in order to maintain such Advances hereunder)
and the Applicable Margin shall be the amount described in clause (i) of the
definition thereof.
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,
imposed on the Lender as a result of a present or former connection between the
Lender
8
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 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 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
9
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, 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 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 Business Day after identification thereof by the Servicer.
The Servicer shall use best efforts to identify Receivables on deposit in the
Lockbox Account within 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 14 days after the deposit of such Receivables to
the Lockbox Account. Each of LEAF and the Borrower shall (and shall cause the
Servicer to) use its best efforts to prevent the deposit of any funds other than
Proceeds of Collateral into the Collection Account.
(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:
10
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 the lesser of
(A) the actual transition costs incurred by such successor in connection with
such appointment and (B) $60,000, 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;
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, from Available Funds and, if Available Funds are insufficient
on or after the Facility Termination Date, from the Reserve Account Available
Amount, to the Lender, the Additional Principal Payment Amount;
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
11
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.
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, 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;
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(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
(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
13
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, to the end
that the interests of the Lender and the Hedge Counterparty arising out of or
related to this Loan Agreement and the other Loan Documents may be adequately
and effectively be 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 security interest in the collateral described in
this financing statement will violate the rights of the secured party." The
Borrower also hereby authorizes the Collateral Agent to file any such financing
or continuation statement without the signature of the Borrower to the extent
permitted by applicable law. A photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
(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,
14
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 claim or to
take any other action or proceeding in any court of law or equity or
otherwise appropriate, for the purpose of collecting any and all such
moneys due with respect to any Collateral whenever payable;
(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
15
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. The Collateral Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers, and, without
limiting Section 4.08, none of the Collateral Agent or any of its officers,
directors, or employees shall be responsible to the Borrower for any act or
failure to act under this Section 4.04, except for its own negligence or willful
misconduct or breach of the Loan Documents.
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.
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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 Lender shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Borrower, which right or equity is
hereby waived or released. In the event that the Lender elects to direct the
Collateral Agent to take any action described in this Section 4.07, the Borrower
further agrees, at the request of the Lender, to assemble the Collateral and
make it available to the Collateral Agent at places which the Lender shall
reasonably select, whether at the Borrower's premises or elsewhere. The
Collateral Agent shall apply the net Proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Lender or the Hedge Counterparty hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Secured Obligations, in the order and priority specified
in Section 3.03(b). To the extent permitted by applicable law,
17
each of LEAF and the Borrower waives all claims, damages and demands it may
acquire against the Collateral Agent or the Lender arising out of the exercise
by the Collateral Agent or the Lender of any of their respective rights
hereunder, other than those claims, damages and demands arising from the gross
negligence or willful misconduct of the Collateral Agent or the Lender,
respectively. The Collateral Agent shall provide to the Borrower at least 10
days prior notice of a proposed sale or other disposition of Collateral
following an Event of Default, or such shorter notice as is permissible pursuant
to the UCC under the circumstances in which such sale or disposition arises. The
Borrower shall remain liable for any deficiency (plus accrued interest thereon
as contemplated pursuant to Section 2.05(b) hereof) if the Proceeds of any sale
or other disposition of the Collateral are insufficient to pay the Secured
Obligations, including the fees and disbursements of any attorneys employed by
the Lender and the Collateral Agent to collect such deficiency. The Collateral
Agent may sell Collateral pursuant to this Section 4.07 without giving
warranties of any kind. In the event that the purchaser fails to pay for the
Collateral, the Collateral Agent may resell the Collateral, and the Borrower
will be credited with the proceeds of such sale received by the Lender.
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.
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, 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
18
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 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 performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
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:
19
(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 $2,000,000.
(f) [Reserved].
(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
Encumbrances and those created hereunder, shall have been properly prepared and
authorized (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;
evidence that all other actions necessary to perfect Collateral Agent's
first-priority security interest in the Collateral granted under this Loan
Agreement have been taken, 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; and lien search results with respect to LEAF and Borrower
(dated as of a date that is as close to the Closing Date as is practicable, but
in no event dated as of a date occurring more than seven calendar days prior to
the Closing Date) in each such jurisdiction (and in each other jurisdiction as
may be advisable in accordance with the UCC) that are in form and substance
satisfactory to the Lender.
(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,
20
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 initial Funding 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, 2004 and the Seller, as
referenced in Section 7.02 (rr)(ii), as of December 31, 2004.
(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 March 31, 2005.
21
(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.
(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
22
Funding Date and which was required to have been received by the Collateral
Agent at least two 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, the applicable
Originator has been paid by LEAF for all proceeds from the sale of such Contract
to LEAF.
(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
23
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.
(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
24
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 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, 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 instrumentality
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
25
governmental instrumentality 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 II, 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 of the Borrower or the Servicer, or any
calculation of the Borrowing Base made by or on behalf of the Borrower or the
Servicer is (or was) as of the date of such schedule, tape, report, other
information or calculation, an Eligible Contract.
(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
26
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.
(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
27
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.
(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 of 1934, as amended. 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.
28
(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 of
1940, as amended, 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 Pension Benefit
Guaranty Corporation (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.
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 (a) on 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) on any of the Contracts,
the Receivables or the Equipment relating to the Contracts or the other
Collateral, (c) on 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) on the perfection or
priority of any Lien in favor of the Borrower and
29
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 other instrument to which LEAF 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 LEAF is a party, or violate any material law, order, rule or
regulation applicable to LEAF of any court or of any federal or state regulatory
body, administrative agency or other Governmental Authority having jurisdiction
over LEAF 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 LEAF's ability to perform its obligations under this
Agreement or any other Loan Document to which LEAF 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 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.
30
(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 Lease
Equity Appreciation Fund II, 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.
(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
31
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.
(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
32
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 of 1934, as amended. 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 of
1940, as amended, 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 Pension Benefit Guaranty Corporation (or
any successor thereto) under ERISA.
33
(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, 2005 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 power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted pursuant to this Loan Agreement. The Servicer is
organized solely under the laws of the State of Delaware.
(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 Collateral
or 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
34
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 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 the Servicer 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 the Servicer 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 the
Servicer or the Borrower.
(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.
35
(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.
(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
36
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 Pension Benefit
Guaranty Corporation (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, 2005 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.
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
37
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.
(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.
38
(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 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 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 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.
(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) or sell all or substantially
all of its assets 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
39
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 to the extent otherwise expressly
permissible under 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 jurisdiction of formation. The Borrower 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.
(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.
40
(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.
(dd) The Borrower shall deliver or cause to be delivered to the
Collateral Agent two 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.
41
(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 have been provided on the books of
the Borrower, 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.
(nn) The Borrower will provide the Lender with not less than 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.
42
(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 Indebtedness
under this Loan Agreement and the Note, Borrower shall not incur any long term
or working capital debt.
(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
43
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 later of (i) June 21, 2005 and
(ii) the first Funding 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 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 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."
44
(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 $50,000,000.
(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.
(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
45
(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 be accompanied by a statement of a Responsible
Officer of LEAF setting forth details of the occurrence referred to therein and
stating what action LEAF has taken or proposes to take with respect thereto.
(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
46
(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 ordinary course of LEAF's business and (c) upon fair and reasonable
terms no less favorable to LEAF than it would obtain in a comparable
arm's-length transaction.
(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 to the extent otherwise expressly
permissible under 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
47
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.
(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 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
48
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) [Reserved].
(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 provided on the books of
LEAF, 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.
(ll) LEAF will provide the Lender with not less than 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
49
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:
(i) as soon as available and in any event within 45 days after
the end of each of the first three 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:
50
(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 in accordance with, and
only in accordance with, the following procedure:
(i) The Servicer shall deliver to the Lender written notice of
any proposed amendment to the Underwriting Guidelines, the Schedule of
LEAF Indebtedness or the Credit 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 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.
51
(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) 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.
(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) 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
52
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.
(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 Servicer or by the Servicer 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 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
53
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 to the extent otherwise expressly
permissible 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 other fees which may be collected in the ordinary course
of servicing the Contracts. The Servicer shall take such reasonable and lawful
actions as the Lender shall request to enforce the Servicer'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.
(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.
54
(aa) The Servicer shall deliver or cause to be delivered to the
Collateral Agent two 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 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
the Servicer'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.
(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
55
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, 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, or (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
56
(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
(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 1.0% 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)
57
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 is (i) curable by means other than payment of money
and continues unremedied for a period of thirty (30) Business Days after the
earlier of (a) the Servicer or any LEAF Party received written notification from
the Lender and (b) the date on which the Servicer or LEAF Party becomes aware of
such matter; or (ii) is not curable and continues unremedied for a period of one
(1) Business Day; or
(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
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(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 instrumentality 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
(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 clause eighth 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 is reasonably likely to have a Material Adverse Effect on the
Lender, the Contracts or the other Collateral, in the reasonable opinion of the
Lender, 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 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
59
(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) above, such
event or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(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) discovering 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 within the
definition of Release Price) the Servicer or the Borrower shall have failed to
deposit the Release Price into the Collection Account and any conditions above
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 (x) an Interest Coverage Ratio of at least 1.10:1.0 or
(y) a Senior Leverage Ratio no greater than 7.5:1.0 or (ii) the Servicer shall
have failed to maintain a (a) "Minimum Tangible Net Worth" (defined as
stockholders' equity plus subordinated debt less intangibles) of $7,500,000 or
(b) minimum stockholders' equity of $1,000,000 or (iii) LEAF shall have
defaulted (after giving effect to any and all notice, grace and cure periods) in
respect of any material Indebtedness for borrowed money); or
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(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
payable, without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
(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. (a) 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
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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. 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, instrument, opinion, notice, letter, telegram or other document
delivered to it by any other Person and which, reasonably in good faith, it
believes to be genuine and which has been signed by the proper party or parties.
The Collateral Agent may rely on and shall be protected in acting upon the
written instructions of the Person authorized to deliver such instructions.
(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(d), 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
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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:
(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% 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
63
Contract) so purchased or substituted for after the Closing Date is less than or
equal to 5% 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.
(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
64
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.
Section 11.03 Objection and Purchase.
If the Lender objects to any purchase of release or
substitution of Contracts within ten 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 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.
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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.
(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.,
66
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 (c) 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 case of the Collection Account) or the Borrower
(in the case of the Reserve Account), for the benefit of the Lender and the
Hedge Counterparty, shall within five Business Days (or such longer period as to
which the Lender may consent) establish a new Collection Account or Reserve
Account, as the case may be, as an Eligible Account and shall transfer any cash
and/or any investments to such new Collection Account or Reserve Account. In
connection with the foregoing, the Servicer agrees that, in the event that the
Collection Account is not an account with the Collateral Agent, the Servicer
shall notify the Lender in writing promptly upon the cessation of the Collection
Account to be an Eligible Account. In connection with the foregoing, the
Borrower agrees that, in the event that the Reserve Account is not an account
with the Collateral Agent, the Borrower shall notify the Lender in writing
promptly upon the cessation of the Reserve Account to be an Eligible Account.
(h) With respect to the Facility Account Property:
(A) any Facility Account Property shall be held
solely in the 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
67
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.
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 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
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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 Section 12.02(f) of this
Loan Agreement.
(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
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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 Account Amount for all Advances as
of such Payment Date, the Collateral Agent shall withdraw from the Reserve
Account an amount equal to such excess and pay such amount to the Borrower
pursuant to clause tenth of Section 3.03(b) of this Loan Agreement on such
Payment Date.
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
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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.
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:
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THE BORROWER: LEAF Fund II, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, CFO
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
THE ORIGINATOR: LEAF Funding, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, President
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
THE SELLER: Lease Equity Appreciation Fund II, 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
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Securitization Group
Telecopier No.: 212-852-6000
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
THE COLLATERAL AGENT: U.S. Bank National Association
EP-MN-WS3D
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
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
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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, 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 or any transaction contemplated hereby
or thereby, as a result of (i) the failure by such LEAF Party to comply in any
material respect with any applicable law, rule or regulation with respect to any
Contract or any item of Equipment, or the nonconformity of any Contract or the
origination or servicing thereof with any such applicable law, rule or
regulation, (ii) except as permitted by the Loan Documents, commingling of the
Proceeds of the Collateral at any time with other funds or (iii) the breach by
such LEAF Party of any of its respective representations, warranties or
covenants contained in this Loan Agreement or any other Loan Document, except,
in each case, to the extent arising from such Indemnified Party's gross
negligence or willful misconduct or breach of its obligations. In any suit,
proceeding or action brought by the Lender in connection with any Collateral for
any sum owing thereunder, or to enforce any provisions of such Collateral, LEAF
and the Borrower, as the case may be, will save, indemnify and hold each
Indemnified Party harmless from and against all reasonable expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by such LEAF Party of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to or in favor of such account debtor or obligor or its successors from a LEAF
Party. The Lender hereby acknowledges that, notwithstanding the fact that the
Secured Obligations are secured by the Collateral, each Secured Obligation is
otherwise a non-recourse obligation of the Borrower. Notwithstanding anything
herein to the contrary, (x) neither LEAF nor the Borrower shall have any
obligation to indemnify any Indemnified Party for any of the following:
(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
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(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 or preservation of any
Indemnified Party's rights and remedies hereunder or thereunder, any waiver
hereunder or thereunder, and the consummation and administration of the
transactions contemplated hereby and thereby, including without limitation (i)
the reasonable fees, disbursements and expenses of counsel to the Lender
including, without limitation, such fees and disbursements incurred in advising
the Lender from time to time as to its rights and remedies under this Loan
Agreement, the Note or any other Loan Document, and (ii) all the due diligence,
inspection, testing and review costs and expenses incurred by the Lender with
respect to Collateral under this Loan Agreement; provided that, unless a Default
or an Event of Default has occurred and is continuing, the Lender shall only be
entitled to those costs and expenses incurred in connection with a single
inspection/due diligence/testing/review during any twelve month period.
(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);
provided further 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
74
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.
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;
75
(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.
(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 a 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.
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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.
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
77
connection with the activities of the Lender pursuant to this Section 14.15;
provided that, 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.
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 of
1934), (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
78
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.
[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 II, LLC
By:____________________________
Name:
Title:
ORIGINATOR: LEAF FUNDING, INC.
By:____________________________
Name:
Title:
SELLER: LEASE EQUITY APPRECIATION FUND II, L.P.
By: LEAF FINANCIAL CORPORATION,
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 21th 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 1, 2005, 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 times the 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 sum of the 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% 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, 1.10% 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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acceleration of the Total Outstanding Advances pursuant to Section 9.01 of this
Loan Agreement, the amount of money or property collected pursuant to Section
9.01 of this Loan Agreement since the preceding Determination Date by the Lender
or the Collateral Agent for distribution pursuant to Section 3.03(b) of this
Loan Agreement, (v) any Prepayment Amount for the related Payment Date, (vi) any
Swap Payments for the related Payment Date, plus (vii) the aggregate of any
Servicer Advances made by the Servicer for the related Payment Date.
"Backup Servicer" means ▇▇▇▇▇ Financial Services Inc., d/b/a
U.S. Bank Portfolio Services Corp., 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) 0.034% and (iii) the Aggregate
Implicit Principal Balance of Eligible Contracts as of the first day of the
related Collection Period and (b) $1,500 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 II, 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 Funding
Date for a Contract (as described in the related Contract Schedule), such
Funding Date, (ii) 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 (iii) 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 of 1934, as amended) 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% 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 21, 2005.
"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 month immediately preceding
the month of such first Payment Date. With respect to any such
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Contract and each subsequent Payment Date, the calendar month immediately
preceding such Payment Date. Unless otherwise specified, any amount stated "as
of the close of business on the last day of a Collection Period" shall be
determined after giving effect to any Receivables received in respect of any
Contract during such Collection Period and any charge-offs or any other account
activity with respect to such Contract during such Collection Period (in each
case, as of the end of the day on such last day) and the application of such
Receivables to, and the effect of any such charge-offs or other account activity
on, the due and unpaid Scheduled Payments on such Contract, the Implicit
Principal Balance of such Contract and any fees, penalties or other amounts owed
by the related Customer.
"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 vendor's name,
(f) the state of the Customer's billing address, (g) the zip code of the
Customer's
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billing address, (h) the Implicit Principal Balance, (i) the Delinquency status,
(j) the remaining term, (k) the Scheduled Payment, (l) the aggregate amount of
remaining Scheduled Payments, (m) the Equipment type, including a notation as to
whether the Equipment is a titled vehicle, (n) the original cost of the
Equipment and (o) a notation specifying which Contracts are Previously Financed
Contracts, as such schedule may be amended upon any purchase of Contracts made
in accordance with the terms of this Loan Agreement.
"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, 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 Servicer
determines in accordance with its customary practice that the remaining
scheduled
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payments under the related Contract are deemed to be fully or partially
uncollectible; 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 Defaulted Contract with
respect to any date of determination during the calendar month in which such
extension shall have been granted.
"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% 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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be indorsed to, or registered in the name of, the Securities
Intermediary or the Collateral Agent or indorsed in blank;
(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
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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 from
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Moody's and of AA or higher from Standard & Poor's with respect to long-term
unsecured debt obligations. Such depository institution (other than the
Collateral Agent) shall have been approved in writing by the Lender.
"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 14, 2005, 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 first
anniversary of the Closing Date; provided, however, that, until the first
anniversary of the Closing Date, the "Expected Facility Termination Date" shall
be deemed to be the first anniversary of the Closing Date subject to extension
in accordance with Section 2.11; and, if then extended, during the period
beginning on the first and ending on the second anniversary of the Closing Date,
the "Expected Facility Termination Date" shall be deemed to be the second
anniversary of the Closing Date subject to extension in accordance with Section
2.11; and, if further extended, during the period beginning on the second and
ending on the third anniversary of the Closing Date, the "Expected Facility
Termination Date" shall be deemed to be 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 2.5%, (iii) the average of the NPA Ratios for the
Serviced Portfolio for the three most recently ended Collection Periods equals
or exceeds 2.0%, (iv) the average of the NPA Ratios for the Securitized
Portfolio for the three most recently ended Collection Periods equals or exceeds
1.5% or (v) the Cumulative Net Loss exceeds the percentages found in the column
titled "Facility Termination Event" in the
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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 December 20, 2015.
"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;
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(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) the Required Reserve Account Amount (after giving
effect to such Advance) over (ii) the Reserve Account Available Amount on the
Funding Date (prior to giving effect to such Advance).
"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.
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"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
Payments based on the LIBOR Rate, all with respect to a notional amount equal to
the Total Outstanding Advances as of the date of such Interest Rate Hedging
Transaction (including, without limitation, the aggregate sum of the Advances
made since the immediately preceding Payment Date).
"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; provided further 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"); provided further 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.
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"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 Intercreditor Agreement
dated as of about April 18, 2005 among ▇▇▇▇▇▇▇ ▇▇▇▇▇ Commercial Finance Corp.,
LEAF Funding, Inc., LEAF Institutional Direct Management, LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Equipment Finance LLC, Sovereign Bank, OFC Capital, National City Commercial
Capital Corporation, Commerce Bank, National City Bank, LEAF Equity Appreciation
Fund I, L.P., LEAF, LEAF Fund I, LLC, the Servicer, the Borrower, the Lender and
U.S. Bank National Association and such other Persons who may be parties
thereto.
"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 Coverage Ratio" means, on a quarterly basis,
earnings before gross interest expense, taxes, depreciation and amortization,
divided by gross interest expense.
"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.
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"LEAF" means Lease Equity Appreciation Fund II, L.P., a
Delaware limited partnership.
"LEAF Originator" means LEAF Funding, Inc.
"LEAF Parties" means the Borrower, the Servicer, LEAF
Originator and LEAF.
"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 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;
provided further 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
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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.
"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 $75,000,000.
"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.
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"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.
"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 on or
prior to the Facility Termination Date but occurring (i) after October 21, 2005
and up to February 21, 2006, a fee in an amount equal to the product of (a)
one-twelfth (1/12th), (b) 0.20%, and (c) the Maximum Facility Amount minus the
daily average Total Outstanding Advances during the preceding calendar month and
(ii) after February 21, 2006, 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.
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"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 trust or
similar limited purpose entity formed to facilitate such financing) for the
purpose of financing the origination or purchase of leases.
"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 22, 2005, (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 which occurs three (3)
Business Days following the Borrower's delivery of a Notice of Borrowing and
Pledge to the Lender, with a copy to the Collateral Agent.
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"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 in the rights of a Customer under the Contract granted by the
Customer to the lessor/lender under the Contract..
"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
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(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.
"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.
"Prepayment Premium" means, (a) if such prepayment is made by
Borrower using funds other than proceeds of a financing arranged by WestLB or
any of its Affiliates, (i) with respect to any Prepayment Date that occurs on or
prior to the last day of the eighteenth calendar month following the month of
the Closing Date, the product of 1.0% and the Maximum Facility Amount, and (ii)
with respect to any Prepayment Date that occurs after the last day of the
eighteenth calendar month following the month of the Closing Date, the product
of 0.5% and the Maximum Facility Amount or (b) if such prepayment is made by
Borrower using the proceeds of a financing arranged by WestLB or any of its
Affiliates, zero.
"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
A-21
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 2.02(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 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 releasing 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 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 such quotations are provided, the rate
for that Reset Date will be the arithmetic mean
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of the quotations. If fewer than two 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 purchased from the
Borrower pursuant to Section 3.09 of the Servicing Agreement and the Collateral
Agent's security interest in which is released pursuant to Section 2.07(c) of
this Loan Agreement, or (z) is repurchased from the Borrower pursuant to Section
3.04 of the Acquisition Agreement and the Collateral Agent's security interest
in which is released pursuant to Section 2.07(d) of this Loan Agreement, an
amount equal to (i) the Implicit Principal Balance of such Contract as of the
date of such purchase or repurchase, as applicable, plus (ii) all Scheduled
Payments with respect to such Contract due on or prior to such date of purchase
or repurchase, as applicable, but not received through such date, minus (iii)
any Servicer Advances made in respect thereof which have not been reimbursed.
"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 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. ss. 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.
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"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) 9.0%.
"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 1.0%.
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"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
clause eighth of Section 3.03(b) made since the Closing Date to exceed 5% of the
Maximum Advance Amount as of the date of such deposit.
"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.
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"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
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding.
"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 Lease Equity Appreciation Fund II, 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 subordinated debt, if any.
"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.
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"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.
"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 1, 2005, 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 $5,000 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.
A-27
"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;
(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, the Cumulative Net Loss shall not exceed the percentages specified
below, otherwise either a Facility Termination Event or an Event of Default,
will be deemed to have occurred.
CUMULATIVE NET LOSSES
TIME SINCE CONTRACT FACILITY TERMINATION
ORIGINATION 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.
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"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.
"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.
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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 to
the extent otherwise permissible under 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%
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
the LEAF Originator 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 interest on the Lien Certificate in the
manner set forth above. In the case of each such Contract 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, the
Seller will, within 30 days of the acquisition of the Contract by the
Borrower, initiate all necessary state registration or recording
D-7
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% 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% 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%.
(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
20.0% 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 3.0% 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 State
jurisdiction in which such Equipment is located, does not
exceed 30.0% 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
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
D-8
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% 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% 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, 4.0% 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) 3.0%
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,
$1,500,000;
(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, 9.0% 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) 7.0% of the Aggregate Implicit
Principal Balance of all Eligible Contracts;
(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 10.0% of the Aggregate Implicit
Principal Balance of all Eligible Contracts; and
D-9
(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 15.0% 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 7.5% of the Aggregate Implicit Principal Balance
of the Eligible Contracts.
Notwithstanding anything to the contrary contained herein, the
concentration limits in clauses (B), (C), (D), (E), (F), (G), (J) and (K) above
will have no force or effect until the first date on which the Aggregate
Implicit Principal Balance of Eligible Contracts is greater than or equal to
$15,000,000.
D-10
EXHIBIT E
FORM OF CONTRACT
(on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
D-1
EXHIBIT F
FINANCIAL STATEMENTS OF THE SERVICER AS OF SEPTEMBER 30, 2004
(on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
F-1
EXHIBIT G
UNDERWRITING GUIDELINES
(on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇ BRANCH
PROMISSORY NOTE
June 21, 2005
Amount: U.S. $75,000,000
FOR VALUE RECEIVED, LEAF FUND II, 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 SEVENTY-FIVE MILLION DOLLARS (U.S. $75,000,000) 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 1, 2005, among Lender, Borrower, LEAF Funding Inc, Lease Equity
Appreciation Fund II, 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 II, LLC
By: __________________________________
Name:
Title:
H-1
EXHIBIT I
NOTICE OF BORROWING AND PLEDGE
(on file with the Borrower and Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
I-1
EXHIBIT J
FORMS OF OPINIONS OF COUNSEL TO LEAF PARTIES
(on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
Servicer: (on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ 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.: 212-852-6000 Attention: ▇▇▇ ▇▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇ Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Ladies/Gentlemen:
Reference is made to the Secured Loan Agreement, dated as of June 1,
2005 (the "Loan Agreement"; capitalized terms used but not otherwise defined
herein shall have the meaning given them in the Loan Agreement), among LEAF Fund
II, LLC, a Delaware limited liability company (the "Borrower"), LEAF Funding,
Inc., a Delaware corporation ("LEAF Originator"), Lease Equity Appreciation Fund
II, 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 II, LLC
By: ________________________________
Name:
Title:
M-2
EXHIBIT N
SCHEDULE OF LEAF INDEBTEDNESS
(on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
N-1
EXHIBIT O
SCHEDULE OF LEAF INSURANCE
(on file with Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP)
O-1