exv10w2






EXHIBIT 10.2



EXECUTION COPY




[LEAF CAPITAL FUNDING III, LLC]




FORBEARANCE AND RESERVATION OF RIGHTS




     This FORBEARANCE AND RESERVATION OF RIGHTS (this “Forbearance”), dated as of May 14,
2009, is entered into by and among LEAF CAPITAL FUNDING III, LLC (the “Borrower”), LEAF
FINANCIAL CORPORATION (the “Servicer”), MORGAN STANLEY BANK, N.A. (f/k/a Morgan Stanley
Bank) (“Morgan Stanley”), as a Class A Lender and Collateral Agent, MORGAN STANLEY ASSET
FUNDING INC. (“Morgan Stanley AFI”), as a Class B Lender, THE ROYAL BANK OF SCOTLAND PLC
(“RBS”), as a Class A Lender and as a Class B Lender (the Class A Lenders and the Class B
Lenders shall be collectively referred to herein as the “Lenders”) and MORGAN STANLEY
CAPITAL SERVICES INC. (the “Qualifying Swap Counterparty”).



BACKGROUND




     1. The Borrower, the Servicer, Morgan Stanley, Morgan Stanley AFI, RBS, Lyon Financial
Services, Inc. (d/b/a U.S. Bank Portfolio Services), as the Backup Servicer and U.S. Bank National
Association, as the Custodian and the Lenders’ Bank are parties to the Receivables Loan and
Security Agreement, dated as of November 1, 2007 (as amended, supplemented or otherwise modified
through the date hereof, the “RLSA”). Capitalized terms used herein but not defined herein
shall have the meanings set forth in the RLSA.



     2. The Borrower and the Qualifying Swap Counterparty are parties to a Qualifying Interest Rate
Swap dated as of November 1, 2007 (as amended, supplemented or otherwise modified through the date
hereof, and including all swap transactions entered into pursuant thereto, the “Swap
Agreement”).



     3. The Borrower and the Servicer have requested that the Lenders and the Collateral Agent
(collectively, the “Forbearing Parties”) forbear for a period of time from exercising
certain of their rights under the RLSA as set forth in Section 1(a) below. Such Persons
are willing to agree to such forbearance, subject to the terms and conditions hereof.



     4. The Borrower has also requested that the Qualifying Swap Counterparty forbear for a period
of time from exercising certain of its rights under the Swap Agreement as set forth in Section
1(b) below. The Qualifying Swap Counterparty is willing to agree to such forbearance, subject
to the terms and conditions hereof.



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



     SECTION 1. Forbearance.




     (a) The Servicer and the Borrower hereby notify the Forbearing Parties that the
financial statements of Resource America for the quarter ending March 31, 2009, to be
delivered by Borrower on May 15, 2009, will show that the Tangible Net Worth of Resource
America is less than its Minimum Tangible Net Worth (such condition, the



 









 






“Breach”). The occurrence of the Breach constitutes each of the events set
forth on Schedule A attached hereto (the “Covenant Failures”), and entitles
the Forbearing Parties to exercise remedies pursuant thereto absent the forbearance provided
for hereunder. For the period commencing on the date hereof and ending on the close of
business on May 28, 2009 (the “Forbearance Period”), the Forbearing Parties will
forbear from exercising their rights and remedies resulting solely from the Covenant
Failures. The forbearance provided herein shall not extend to any Event of Default, Program
Termination Event or Servicer Default other than the Covenant Failures and all of the
Forbearing Parties’ rights and remedies with respect thereto are hereby reserved. Further,
the forbearance provided herein shall not derogate from the Forbearing Parties’ rights to
collect, reserve and/or apply proceeds of Pledged Assets to payment of outstanding
liabilities as may be specifically provided for in the RLSA and the other Transaction
Documents. If the foregoing forbearance is not extended by the Forbearing Parties by the
end of the Forbearance Period, the Borrower and the Servicer hereby acknowledge that the
Covenant Failures shall exist and that each Forbearing Party shall be fully entitled to
declare a Program Termination Date and to exercise all other rights and remedies with
respect thereto under the RLSA and the other Transaction Documents.




     (b) The Borrower hereby notifies the Qualifying Swap Counterparty that one or more of
the Covenant Failures constitutes the “Additional Termination Event” (as defined in the Swap
Agreement) set forth in clause (i) of Part 1(j) of the Swap Agreement and
entitles the Qualifying Swap Counterparty to exercise remedies pursuant thereto absent the
forbearance provided for hereunder. The Qualifying Swap Counterparty hereby agrees to
forbear from exercising its rights and remedies resulting solely from such “Additional
Termination Event” or the Breach and each of the Qualifying Swap Counterparty and the
Borrower hereby agrees that the “Early Termination Date” under (and as defined in) the Swap
Agreement shall not be declared as a result of such “Additional Termination Event” during
the Forbearance Period. If the foregoing forbearance is not extended by the Qualifying Swap
Counterparty by the end of the Forbearance Period, the Borrower hereby acknowledges that
such “Additional Termination Event” shall exist under the Swap Agreement and that the
Qualifying Swap Counterparty shall be fully entitled to exercise all rights and remedies
with respect thereto under the Swap Agreement.



     SECTION 2. Representations and Warranties. Each of the Borrower and Servicer
represents and warrants that:




     (a) except as expressly described in Section 1 above, no event or condition has
occurred and is continuing which would constitute an Event of Default, a Termination Event,
a Program Termination Event, a Servicer Default, a “Termination Event” under the Swap
Agreement, an “Event of Default” under the Swap Agreement, or any event that, if it
continued uncured, with the lapse of time or notice, or both, would constitute any of the
foregoing events; and




     (b) except as expressly described in Section 1 above, its representations and
warranties set forth in the RLSA, the Swap Agreement and the other Transaction Documents are
true and correct as of the date hereof, as though made on and as of such date (except to the
extent such representations and warranties relate solely to an earlier



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date and then as of such earlier date), and such representations and warranties shall
continue to be true and correct (to such extent) after giving effect to the transactions
contemplated hereby.



     SECTION 3. Effect of Forbearance; Ratification. Except as expressly set forth
herein, the RLSA, the Swap Agreement and each of the other Transaction Documents remain in full
force and effect and are hereby ratified. This Forbearance shall not be deemed to expressly or
impliedly waive, amend, or supplement any provision of the RLSA or the Swap Agreement other than as
specifically set forth herein.



     SECTION 4. Expenses. The Borrower agrees to pay on demand all reasonable costs and
expenses of the Forbearing Parties and the Qualifying Swap Counterparty (including costs and
expenses of counsel for the Forbearing Parties and the Qualifying Swap Counterparty) incurred in
connection with the preparation, execution and delivery of this Forbearance.



     SECTION 5. Counterparts. This Forbearance may be executed in any number of
counterparts and by different parties on separate counterparts, and each counterpart shall be
deemed to be an original, and all such counterparts shall together constitute but one and the same
instrument.



     SECTION 6. Governing Law. This Forbearance shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to the conflicts of law
principles thereof (other than Section 5-1401 of the New York General Obligations Law).



     SECTION 7. Section Headings. The various headings of this Forbearance are inserted
for convenience only and shall not affect the meaning or interpretation of this Forbearance or any
provision hereof.



     SECTION 8. Entire Agreement. This Forbearance is intended by the parties hereto to
be the final expression of their agreement with respect to the subject matter hereof, and is the
complete and exclusive statement of the terms thereof, notwithstanding any representations,
statements or agreements to the contrary heretofore made.



[SIGNATURE PAGES FOLLOW]





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     IN WITNESS WHEREOF, the parties have executed this Forbearance as of the date first written
above.



	 	 	 	 	 
	 	 	LEAF CAPITAL FUNDING III, LLC, as

Borrower
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	LEAF FINANCIAL CORPORATION, as

Servicer
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






Forbearance and Reservation

of Rights (Leaf Capital

Funding III, LLC)





S-1









 








	 	 	 	 	 
	 	 	MORGAN STANLEY BANK, N.A., as a Class A

Lender and Collateral Agent
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






Forbearance and Reservation

of Rights (Leaf Capital

Funding III, LLC)








S-2









 








	 	 	 	 	 
	 	 	MORGAN STANLEY ASSET FUNDING INC.,

as a Class B Lender
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






Forbearance and Reservation

of Rights (Leaf Capital

Funding III, LLC)






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	 	 	THE ROYAL BANK OF SCOTLAND PLC, as a

Class A Lender and as a Class B Lender
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






Forbearance and Reservation

of Rights (Leaf Capital

Funding III, LLC)






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	 	 	MORGAN STANLEY CAPITAL SERVICES

INC., as Qualifying Swap Counterparty
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 






Forbearance and Reservation

of Rights (Leaf Capital

Funding III, LLC)






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SCHEDULE A



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




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



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



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



     (iv) the Event of Default set forth in Section 7.01(s) of the RLSA,



     (v) the Event of Default set forth in Section 7.01(z) of the RLSA,



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



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



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



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



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