**Exhibit 10.10**

Conformed Copy Incorporating First, Second 

Third, Fourth, Fifth, Sixth and Seventh Amendments 

 

 

 

U.S. $100,000,000 

RECEIVABLES LOAN AND SECURITY AGREEMENT 

Dated as of March 31, 2006 

Among 

RESOURCE CAPITAL FUNDING, LLC, 

as the Borrower 

and 

LEAF FINANCIAL CORPORATION, 

as the Servicer 

and 

BLACK FOREST FUNDING CORPORATION, 

as aLender 

and 

BAYERISCHEHYPO- UND VEREINSBANK AG, NEW YORK BRANCH 

as the Agent 

and 

U.S. BANK NATIONAL ASSOCIATION, 

as the Custodian and the Agent’s Bank 

and 

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

as the Backup Servicer 

 

 

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

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

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

 
 (3)
BLACK FOREST FUNDING CORPORATION (“Black Forest”), as a Lender (as defined herein); 

 
 (4)
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH (“HVB”), as agent for the Lender (the “Agent”);

 
 (5)
U.S. BANK NATIONAL ASSOCIATION, as the Custodian and the Agent’s Bank (as each such term is defined herein); and 

 
 (6)
LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), a Minnesota corporation, as the Backup Servicer (as defined herein).

IT IS AGREED as follows: 

ARTICLE I. 

DEFINITIONS 

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

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

“Accountants’Report” has the meaning assigned to that term in Section 6.13(b). 

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

“Active Backup Servicing Fee Rate” means 1.00%. 

“Active Backup Servicer’s Indemnified Amounts” has the meaningassigned to that term in Section 6.11. 

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

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

“Adjusted Eurodollar Rate” means, with respect to any Fixed Period for any Loan allocated to such Fixed Period, aninterest rate per annum equal to the sum of (i) the Adjusted Eurodollar Rate Margin and (ii) an interest rate per annum equal to the average of the interest rates per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%)reported during such Fixed Period on Telerate Access Service Page 3750 (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United States dollar deposits having a term of thirty (30) days and in a principalamount of $1,000,000 or more (or, if such page shall cease to be publicly available or, if the information contained on such page, in the Lender’s sole judgment, shall cease to accurately reflect such London Interbank Offered Rate, such rate asreported by any publicly available recognized source of similar market data selected by the Lender that, in the Lender’s reasonable judgment, accurately reflects such London Interbank Offered Rate). 

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

“Adjusted Net Eligible Receivables Balance” means, at any time, an amount equal to (a) the Adjusted EligibleReceivables Balance at such time minus (b) the Pool A Overconcentration Amount at such time, calculated using a Global Overconcentration Amount determined without reference to clause (ii) of the definition of such term minus(c) the Pool B Overconcentration Amount at such time, calculated using a Global Overconcentration Amount determined without reference to clause (ii) of the definition of such term. 

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

“Affected Party” has the meaning assigned to that term in Section 2.13. 

“Affiliate” when used with respect to a Person, means any other Person controlling, controlled by or under commoncontrol with such Person. For the purposes of this 

 

2 

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

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

“Agent’s Bank” means U.S. Bank National Association and its successors and assigns that are Eligible DepositoryInstitutions. 

“Agent’s Bank Fee” means an annual fee, paid in advance, payable out of Collectionson the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to $6,000. 

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

“Allonge” means an allonge in the form attached hereto as Exhibit G, provided that, with respectto each Allonge required to be delivered as part of a Pool B Master Receivable File relating to an Underlying Originator Loan Contract acquired by TRS from the Originator, “Allonge” shall mean an allonge in the form attached heretoas Exhibit G, but with each reference to “RCC Commercial, Inc.” therein replaced by a reference to “Resource TRS, Inc. 

“Amortized Equipment Cost” means, as of any date of determination, (i) for any Pool A Receivable, the net investment with respect to such Pool A Receivables, where “net investment”means (a) the present value of the remaining Scheduled Payments under the related Contract, discounted at the rate at which the present value of all Scheduled Payments under the related Contract, including any Balloon Payment or Put Payment,equals the original equipment cost related to such Receivable, plus (b) the associated amortized indirect costs related to the applicable equipment, amortized using the interest method over the life of the related Contract, provided thatinitial indirect costs will be capped at 5% of the original equipment cost and (ii) for any Pool B Receivable, the net investment with respect to such Pool B Receivable, where “net investment” means (a) the sum of the presentvalues of the remaining Underlying Scheduled Payments under each related Eligible Underlying Contract, discounted at the rate at which the present value of all scheduled payments under such Eligible Underlying Contract, including any Balloon Paymentor Put Payment, equals the original equipment cost related to such Eligible Underlying Contract, plus (b) the associated amortized indirect costs related to the applicable equipment, amortized using the interest method over the life of therelated Underlying Contract, provided that initial indirect costs will be capped at 5% of the original equipment cost. 

“Annualized Default Rate” means, as of any date of determination, an amount (expressed as a percentage) equal to (i) the product of (A) the aggregate Discounted Balances of all Pledged Receivables which wereEligible Receivables at the time of their Pledge hereunder and which either (x) became Defaulted Receivables or Missed Payment/Modified Receivables or (y) were repurchased by the PCA Seller pursuant to the terms of Section 6.1(b) ofthe Purchase and Contribution Agreement and as to which, as of the date of such repurchase, any part of any 

 

3 

Scheduled Payment (or other amount payable under the terms of the related Contract) remained unpaid for more than 60 days after the due date therefor setforth in such Contract, in each case during the six immediately preceding Collection Periods and (B) 2, divided by (ii) the average of the Eligible Receivables Balances as of the first Business Day of each of the six immediately precedingCollection Periods. 

“Annualized Net Loss Rate” means, as of any date of determination, an amount(expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Pledged Receivables which were Eligible Receivables at the time of their Pledge hereunder and which either (1) becameDefaulted Receivables or Missed Payment/Modified Receivables or (2) were repurchased by PCA Seller pursuant to the terms of Section 6.1(b) of the Purchase and Contribution Agreement and as to which, as of the date of such repurchase, anypart of any Scheduled Payment (or other amount payable under the terms of the related Contract) remained unpaid for more than 60 days after the due date therefor set forth in such Contract, in each case during the six immediately precedingCollection Periods minus (y) Recoveries received during the six immediately preceding Collection Periods and (B) 2, divided by (ii) the average of the Eligible Receivables Balances as of the first Business Day of each of thesix immediately preceding Collection Periods. 

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

“Assigned Documents” has the meaning assigned to that term inSection 2.14. 

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

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

“Available Funds” has the meaning assigned to that term inSection 2.05(c). 

“Backup Servicer” means Lyon Financial Services, Inc. (d/b/a U.S. BankPortfolio Services) or any successor Backup Servicer appointed by the Agent pursuant to Section 6.15. 

“Backup Servicer Delivery Date” has the meaning assigned to that term in Section 6.12(e). 

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

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

 

4 

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

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

(b)        such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now orhereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) for such Person or for any substantial part of its property, or shallmake any general assignment for the benefit of creditors, or shall fail to, or admit in writing its inability to, pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors or members shall vote toimplement any of the foregoing. 

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

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

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

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

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

 

5 

“Borrowing Base Certificate” means a report, in substantially the formof Exhibit A, prepared by the Servicer for the benefit of Lender pursuant to Section 6.12(c). 

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

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

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

“Borrowing Limit” means initially $100,000,000 as such amount may be increased pursuant to Section 2.21; provided, however, that at all times, on or after the Program Termination Date, theBorrowing Limit shall mean the aggregate outstanding principal balance of the Loans. 

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

“BUFCO” means Bavaria Universal Funding Corporation. 

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

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

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

 

6 

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

“Cash Reserve Account” has the meaning assigned to that term in Section 2.07. 

“Cash Reserve Account (Northern)” has the meaning assigned to that term in Section 2.07. 

“Cash Reserve Account Agreement” means (i) the Cash Reserve Account Agreement (Northern) or (ii) any Securities Account Agreement substantially similar to the Cash Reserve Account Agreement(Northern), among Originator, the Borrower, the Servicer, the Agent’s Bank and the Agent, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof. 

“Cash Reserve Account Agreement (Northern)” means that certain Securities Account Agreement, dated the date of thisAgreement, among Originator, the Borrower, the Servicer, the Agent’s Bank and the Agent, as such agreement may from time to time be amended, supplemented or otherwise modified in accordance with the terms thereof. 

“Certificate of Title” means with respect to a Vehicle, an original certificate of title issued by the Registrar ofTitles of the applicable State. 

“Change of Control” means that at any time (i) Resource CapitalCorp. shall own directly or indirectly less than 100% of all membership interests of TRS, (ii) TRS shall own directly or indirectly less than 100% of all membership interests of the Borrower, (iii) Resource America shall own directly orindirectly less than 50.1% of all Capital Stock or voting power of the Servicer, (iv) the Servicer shall own directly or indirectly less than 80% of all Capital Stock or voting power of Originator, (v) Resource Capital Corp., TRS or theBorrower merges or consolidates with any other Person without the prior written consent of the Agent, (v) the Servicer or the Originator merges or consolidates with any other Person and the Servicer or the Originator, as applicable, is not thesurviving entity or (vii) either of Crit DeMent or Miles Herman is not employed in a senior management position at the Servicer, is not involved in the day-to-day operations of the Servicer or is not able to perform substantially all of hisduties as an employee of the Servicer during any three month period and, in each case, has not been replaced by a person approved by the Agent in writing within 90 days of any such event. 

“Closing Date” means March 31, 2006. 

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

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

 

7 

“Collection Account” means a special trust account (account number793489000 at the Agent’s Bank) in the name of the Borrower and under the control of the Agent for the benefit of the Lender; provided, that the funds deposited therein (including any interest and earnings thereon) from time to time shallconstitute the property and assets of the Borrower and the Borrower shall be solely liable for any taxes payable with respect to the Collection Account. 

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

“Collection Date” means the date on which the aggregate outstanding principal amount of the Loans have been repaid in full and all Yield and Fees and all other Obligations have been paid in full, and the Lender shall haveno further obligation to make any additional Loans. 

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

“Collections” means, without duplication, with respect to any Pledged Receivable, allScheduled Payments (and, in the case of a Pledged Pool B Receivable after a Pool B Termination Event has occurred with respect to the related Underlying Originator, all Underlying Scheduled Payments) related to such Receivable, all prepayments andrelated penalty payments with respect to the Contract (and any related Underlying Contract related to a Pledged Pool B Receivable after a Pool B Termination Event has occurred with respect to the related Underlying Originator) related to suchReceivable, all overdue payments and related interest and penalty payments with respect to the Contract (and any related Underlying Contract related to a Pledged Pool B Receivable after a Pool B Termination Event has occurred with respect to therelated Underlying Originator) related to such Receivable, all Guaranty Amounts, all Insurance Proceeds, all Servicing Charges, all proceeds under “buyout letters” or other prepayment/termination agreements and all Recoveries related tosuch Receivable, all amounts paid to the Borrower related to such Receivable pursuant to the terms of the Purchase and Contribution Agreement, all amounts paid by the Servicer related to such Receivable in connection with its obligations underSection 6.22 hereof, and all other payments received with respect to the Contract (and, if applicable, Underlying Contract) related to such Receivable, all cash receipts and proceeds in respect of the Other Conveyed Property or RelatedSecurity (including, without limitation, the Obligor Collateral) related to such Receivable, any Servicer Advances related to such Receivable, and any amounts paid to the Borrower under or in connection with any Qualifying Interest Rate Swap or thehedging arrangements contemplated thereunder. 

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

 

8 

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

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

“CP Disruption Event” means, at any time, the inability of the Issuer to raise (whether as a result of a prohibition orany other event or circumstance whatsoever) funds through the issuance of commercial paper notes in the United States commercial paper market, including, without limitation, by virtue of (i) any disruption in the commercial paper market,(ii) insufficient availability under the liquidity or enhancement facility entered into by the Issuer with respect to this Agreement or (iii) a downgrade of the rating of one or more financial institutions extending credit to or for theaccount of the Issuer or having a commitment to extend credit to the Lender under a liquidity or enhancement facility which relates to this Agreement to a level lower than that required by the Rating Agencies. 

“CP Rate” means, with respect to any Fixed Period for all Loans allocated to such Fixed Period, the per annum rateequivalent to the rate (expressed as a percentage and an interest yield equivalent and calculated on the basis of a 360-day year) or, if more than one rate, the weighted average thereof, paid or payable by the Lender from time to time as interest onor otherwise in respect of the commercial paper notes issued by the Lender that are allocated, in whole or in part, by the Lender to fund the advance or maintenance of Loans hereunder (and which may also be allocated in part to the funding of otherassets of the Lender and which commercial paper notes need not mature on the last day of any Fixed Period) allocated to such Fixed Period as determined by the Lender, which rates shall reflect and give effect to (i) certain documentation andtransaction costs (including, without limitation, dealer and placement agent commissions, and incremental carrying costs incurred with respect to commercial paper notes maturing on dates other than those on which corresponding funds are received bythe Lender) associated with the issuance of the Lender’s commercial paper notes, and (ii) other borrowings by the Lender, including borrowings to fund small or odd dollar amounts that are not easily accommodated in the commercial papermarket, to the extent such amounts are allocated, in whole or in part, by the Lender to fund the Lender’s advance or maintenance of Loans during such Fixed Period; provided, that if any component of such rate is a discount rate, incalculating the applicable “CP Rate” for such day, the Lender shall for such component use the rate resulting from converting such discount rate to an interest bearing equivalent rate per annum. 

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

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

 

9 

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

“Custodian” means U.S. BankNational Association or any substitute Custodian appointed by the Agent pursuant to the Custodial Agreement. 

“Custodian’s Fee” means, for any Fee Period, an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to theaggregate fees listed in Exhibit F hereto which relate to such Fee Period. 

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

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

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

(i)      with respect to which any part of any Scheduled Payment(which, for purposes of clarification, shall not include any tax-related payment) owed by the applicable Obligor under the terms of the related Contract remains unpaid for more than 120 days after the due date therefor set forth in such Contract;

(ii)     which has been or should be charged off as a result of the occurrence ofa Bankruptcy Event with respect to the related Obligor or Underlying Obligor, if any, or which has been or should otherwise be deemed uncollectible by the Servicer, in each case, in accordance with the Credit and Collection Policy; or 

(iii)    with respect to which the Servicer has repossessed the related Equipment. 

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

 

10 

“Delinquent Receivable” means, as of any date of determination, anyPledged Receivable (other than a Defaulted Receivable or Missed Payment/Modified Receivable) with respect to which any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remains unpaid for more than 30days but not more than 120 days after the due date therefor set forth in such Contract. 

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

“Discount Rate” means, as of any date of determination, a percentage equal to the sum of (i) the Weighted AverageSwapped Rate as of such date of determination, (ii) the Facility Fee Rate, (iii) at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, the Servicing Fee Rate,(iv) at any time after the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder, the Active Backup Servicing Fee Rate and (v) a rate per annum equal to 0.10%. 

“Discounted Balance” means, with respect to any Contract or Underlying Contract, as of any date of determination, thepresent value of the aggregate amount of Scheduled Payments or, in the case of an Underlying Contract, Underlying Scheduled Payments (including any Balloon Payment or Put Payment but, in any event, calculated without giving effect to any bookedresidual value with respect to any related Equipment) due or to become due under the terms of the related Contract or Underlying Contract after the Cut-Off Date applicable to the Receivable related thereto, which remain unpaid as of such date ofdetermination, calculated by discounting such aggregate amount of such Scheduled Payments (or, in the case of a Pool B Contract, an amount equal to (i) the related Scheduled Payment multiplied by (ii) (a)100% minus (b) the amount ofany loan principal or purchase price which would otherwise be advanced by the Originator to the applicable Obligor pursuant to the terms of such Contract or Underlying Contract, but which was held back by the Originator as a liquidity reserve orsimilar reserve, expressed as a percentage of the total amount of such loan principal or purchase price (it being agreed by the Borrower that no similar hold back shall exist with respect to any Pool A Contract) or, in the case of an UnderlyingContract, such Underlying Scheduled Payments to such date of determination at an annual rate equal to the Discount Rate. 

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

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

 

11 

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

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

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

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

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

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

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

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

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

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

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

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

 

12 

“Equipment Category Percentage” means, with respect toany Equipment Category, the percentage set forth below for such Equipment Category: 

(1)  for Equipment Category“002.00-Furniture”: 15% 

(2)  for Equipment Category “007.005-ATM Machines”: 2% 

(3)  for Equipment Category “0011.000 or 0011.001-Software”: 5% 

(4)  for Equipment Category “012.000 or 102.001-Dry-Cleaning Machines”: 20% 

(5)  for Equipment Category “013.000 or 013.001-Restaurant Equipment”: 20% 

(6)  for Equipment Category “015.000-Compressor Eq.”: 15% 

(7)  for Equipment Category “016.000-Security systems”: 10% 

(8)  for any other Equipment Category: (i) during the period prior to the first anniversary of the Closing Date, 35%, and(ii) thereafter, 30%. 

“ERISA” means the United States Employee Retirement Income Security Act of1974, as amended from time to time. 

“Eurodollar Disruption Event” means any of the following: (i) adetermination by the Lender that it would be contrary to law or to the directive of any central bank or other governmental authority (whether or not having the force of law) to obtain United States dollars in the London interbank market to make,fund or maintain any Loan, (ii) a determination by the Lender that the rate at which deposits of United States dollars are being offered in the London interbank market does not accurately reflect the cost to the Lender of making, funding ormaintaining any Loan or (iii) the inability of the Lender to obtain United States dollars in the London interbank market to make, fund or maintain any Loan. 

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

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

“Facility Amount” means, at any time, the sum of (i) the face amountof outstanding commercial paper notes (net of the amount of all interest scheduled to accrue thereon through their respective stated maturity if such commercial paper notes are issued on a discount basis) of the Issuer issued to fund the purchase ofcommercial paper issued by the Lender to fund Loans hereunder, plus (ii) the aggregate Loans Outstanding hereunder bearing interest at the Non-CP Rate, plus (iii) accrued Yield and Fees with respect to the amounts describedin the foregoing clauses (i) and (ii). 

“Facility Fee” has the meaning ascribed thereto in the FeeLetter. 

 

13 

“Facility Fee Rate” means, as of any date of determination, the amountof the Facility Fee paid on the most recent Remittance Date divided by the average Loans Outstanding during the Fee Period immediately prior to Remittance Date. 

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

“Fee Letter” has the meaning assigned to that term in Section 2.12(a). 

“Fee Period” means a period commencing on (and including) a Remittance Date and ending on (and including) the day prior to the next Remittance Date; provided, that, the initial Fee Periodhereunder shall commence on (and include) the date hereof and end on (and include) May 21, 2006. 

“Fees” has the meaning assigned to that term in Section 2.12(a). 

“FifthAmendment Effective Date” means December 15, 2006. 

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

“Fixed Period” means, for any outstanding Loans, a period determined pursuantto Section 2.04. 

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

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

“GlobalOverconcentration Amount” means, at any time, without duplication, the sum of: 

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

(ii)     the amount by which the sum of the Discounted Balances at such time of all EligibleReceivables related to the three Obligors which, together with any Affiliates thereof, owe the greatest amounts under their respective Contracts, in the aggregate, exceeds an amount equal to (a) the Adjusted Net Eligible Receivables Balanceminus (b) the Facility Amount at such time; 

 

14 

(iii)    the amount by which the sum of theDiscounted Balances of all Eligible Receivables with respect to which the related Contract is a Non-Level Payment Contract exceeds 15% of the sum of the Discounted Balances of all Eligible Receivables at such time; 

(iv)    the amount by which the sum of the Discounted Balances of all Eligible Receivables withrespect to which the related Contract provides for Scheduled Payments to be paid for any period other than monthly exceeds 5% of the sum of the Discounted Balances of all Eligible Receivables at such time; 

(v)     the amount by which the sum of the Discounted Balances of all Eligible Receivablesrelated to Obligor Collateral located in the State of California at such time exceeds 25% of the sum of the Discounted Balances of all Eligible Receivables at such time; 

(vi)    the amount by which the sum of the Discounted Balances of all Eligible Receivables related toObligor Collateral located in any State other than the State of California exceeds 15% of the sum of the Discounted Balances of all Eligible Receivables at such time; 

(vii)   the sum of the amounts for each Equipment Category equal to the amount by which the sum of theDiscounted Balances of all Eligible Receivables related to Equipment within such Equipment Category exceeds the sum of the Discounted Balances of all Eligible Receivables at such time multiplied by the Equipment Category Percentage with respect tosuch Equipment Category; 

(viii)   the amount by which the sum of the Discounted Balances ofall Eligible Receivables (including, without limitation, Vehicle Sublimit Pledged Receivable), with respect to which the related Obligor Collateral is a Vehicle or other type of equipment which requires a security interest therein to be noted on thecertificate of title with respect thereto in order to be perfected, exceeds 15% of the sum of the Discounted Balances of all Eligible Receivables at such time; 

(ix)    the amount by which the sum of the Discounted Balances of all Eligible Receivables which are Vehicle Sublimit Pledged Receivable, exceeds 2% of the sum of theDiscounted Balances of all Eligible Receivables at such time; 

(x)     the amountby which the sum of the Discounted Balances of all Eligible Receivables, with respect to which the related Obligor or any related guarantor is TRS, Resource Capital Corp., the Originator, the Servicer or any Affiliate thereof, exceeds 0% of the sumof the Discounted Balances of all Eligible Receivables at such time; 

(xi)    theamount by which the sum of the Discounted Balances at such time of all Eligible Receivables related to the four Obligors which, together with any Affiliates thereof, owe the fourth, fifth, sixth and seventh greatest amounts under their respectiveContracts, in the aggregate, exceeds an amount equal to the lesser of (a) $7,000,000 and (b) 10% of the sum of the Discounted Balances of all Eligible Receivables at such time; and 

 

15 

(xii)   the amount by which the sum of the DiscountedBalances at such time of all Eligible Receivables with respect to which any payment or other material terms of the related Contract have been modified due to credit related reasons after such Contract was acquired by the Borrower pursuant to thePurchase and Contribution Agreement and with respect to which, as of the date of such modification, any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remained unpaid for 60 days or less after the duedate set forth in such Contract, exceeds 5% of the sum of the Discounted Balances of all Eligible Receivables at such time. 

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

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

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

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

“Independent Accountants” has the meaning assigned to that term in Section 6.13(b). 

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

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

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

“Issuer” means, collectively, BUFCO and any presently existing or future Person administered by HVB or, with theconsent of the Borrower (which such consent shall not be unreasonably withheld) at any time prior to the occurrence of a Program Termination Event (and without the consent of the Borrower at any time after the occurrence of a Program TerminationEvent), any presently existing or future Person not administered by HVB, in either case, whose principal business consists of issuing commercial paper or other securities to (i) fund or maintain loans secured by receivables, accounts,instruments, chattel paper, general intangibles and other similar assets or (ii) fund its acquisition and maintenance of receivables, accounts, instruments, chattel paper, general intangibles and other similar assets. 

 

16 

“Large Contract Percentage” means (i) during the period prior tothe first anniversary of the Closing Date, 50%, and (ii) thereafter, 40%. 

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

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

“Lender” means,collectively, Black Forest and/or any other Person that is an Affiliate of HVB and/or, with the consent of the Borrower (which such consent shall not be unreasonably withheld) at any time prior to the occurrence of a Program Termination Event (andwithout the consent of the Borrower at any time after the occurrence of a Program Termination Event) any other Person that is not an Affiliate of HVB, in each case, that agrees, pursuant to the pertinent Assignment and Acceptance, to make Loanssecured by Pledged Assets pursuant to Article II of this Agreement. 

“Limited Guaranty and IndemnificationAgreement” means that certain Limited Guaranty and Indemnification Agreement, dated as of the date hereof, by Resource Capital Corp. 

“Limited Guaranty and Indemnification Agreement (TRS)” means that certain Limited Guaranty and Indemnification Agreement (Resource TRS, Inc. Obligations), dated as of the Fifth Amendment EffectiveDate, by Resource Capital Corp. 

“Limited PCA Repurchase” means a repurchase of Receivables from theBorrower by TRS pursuant to the terms of Section 6.1 of the Purchase and Contribution Agreement. 

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

“Liquidity/Credit Enhancement Facility” means one or more Liquidity Agreements or similar agreements, to be entered into on or after the date hereof among Lender and/or the Issuer, the financialinstitutions party thereto (including, if applicable and at any time, financial institutions which are not Affiliates of HVB) and the Agent and/or a letter of credit or similar instrument or agreement by the financial institutions party thereto(including, if applicable and at any time, financial institutions which are not Affiliates of HVB) in favor of 

 

17 

Lender and/or the Issuer, together with any related agreements, in each case, to be entered into on or after the date hereof. 

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

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

“Loans Outstanding” means the sum of the principal amounts of Loans loaned to theBorrower for the initial and any subsequent borrowings pursuant to Sections 2.01 and 2.02, reduced from time to time by Collections with respect to any Pledged Receivable received and distributed as repayment of principal amounts ofLoans outstanding pursuant to Section 2.05 and any other amounts received by the Lender to repay the principal amounts of Loans outstanding pursuant to Section 2.20 or otherwise; provided, however, that theprincipal amounts of Loans outstanding shall not be reduced by any Collections with respect to any Pledged Receivable or other amounts if at any time such Collections or other amounts are rescinded or must be returned for any reason. 

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

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

“Lockbox Collection Percentage” means, at any time, a fraction expressed as a percentage equal to (i) the sum of(x) the aggregate dollar amount of payments made by Obligors with respect to Pool A Pledged Receivables directly into the Lockbox Account and (y) the aggregate dollar amount of payments made by Obligors with respect to Pool B PledgedReceivables (or payments made by Underlying Obligors to the extent such amounts do not exceed the amounts concurrently payable by the related Obligors with respect to Pool B Pledged Receivables) directly into the Lockbox Account, in each case,during the three most recently ended Collection Periods, divided by (ii) the aggregate dollar amount of all payments made by Obligors with respect to Pledged Receivables during the three most recently ended Collection Periods. 

 

18 

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

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

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

“Minimum Tangible Net Worth” means, with respect to LEAFFinancial, Tangible Net Worth (measured as of each fiscal quarter end) in an amount not less than the sum of (i) $17,000,000, *plus* (ii) 50% of the aggregate net income of LEAF Financial for each fiscal quarter beginning with thefiscal quarter ending June 30, 2008. 

“Missed Payment/Modified Receivable” means, as of any date ofdetermination, any Pledged Receivable other than a Defaulted Receivable with respect to which: 

(i)      any part of any tax-related payment (which, for purposes of clarification, shall not include any Scheduled Payment or any property taxes payable by the related Obligor but advanced by the Servicerpursuant to Section 6.21 hereof) owed by the applicable Obligor under the terms of the related Contract remains unpaid for more than 120 days after the due date therefor set forth in such Contract; 

(ii)     the first or second Scheduled Payment is not paid in full when due under the relatedContract; or 

(iii)    any payment or other material terms of the related Contract havebeen modified due to credit related reasons after such Contract was acquired by the Borrower pursuant to the Purchase and Contribution Agreement and as of the date of such modification, any part of any Scheduled Payment (or other amount payableunder the terms of the related Contract) remains unpaid for more than 60 days after the due date therefor set forth in such Contract. 

“Monthly Remittance Report” means a report, in substantially the form of Exhibit C, furnished by the Servicer to the Agent for the Lender pursuant to Section 6.12(b). 

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

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

 

19 

“Non-CP Rate” means, with respect to any Fixed Period for any Loanallocated to such Fixed Period, an interest rate per annum equal to the Adjusted Eurodollar Rate; provided, however, that if the Lender shall have notified the Agent and the Borrower that a Eurodollar Disruption Event has occurred, theNon-CP Rate shall be equal to the Base Rate (until the Lender shall have notified the Agent that such Eurodollar Disruption Event has ceased, at which time the Non-CP Rate shall again be equal to the Adjusted Eurodollar Rate). 

“Non-Level Payment Contract” means a Contract that does not provide for level Scheduled Payments during the term ofsuch Contract but does require the Scheduled Payments due on such Contract during the first half of the original term of the Contract (discounted at an annual rate equal to the Discount Rate) to equal at least 33% of the Discounted Balance of suchContract. 

“Northern” means Northern Leasing Systems, Inc. 

“Northern Lease Bailment Agreement” means that certain Lease Bailment Agreement dated as of January 31, 2006 amongJPMorgan Chase Bank, N.A., Northern, Northern Capital Associates X, L.P. and the Originator, as such agreement may from time to time be amended in accordance with the terms thereof; provided, that the Servicer shall not permit the amendmentof such agreement without the consent of the Agent. 

“Northern Lease Bailment Agreement Direction Letter”means that certain letter agreement dated as of the date hereof between JPMorgan Chase Bank, N.A. and the Originator, as such agreement may from time to time be amended in accordance with the terms thereof; provided, that the Servicer shallnot permit the amendment of such agreement without the consent of the Agent. 

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

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

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

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

“Obligor Collateral” means (i) the Equipment leased to an Obligor under a Lease Contract, (ii) the Equipmentand other property pledged by an Obligor to secure its obligations 

 

20 

under a Loan Contract, (iii) the Equipment and other property pledged by an Obligor to secure its obligations under a Practice Acquisition Loan Contractand (iv) the Underlying Originator Loan Collateral and other property pledged by an Obligor to secure its obligations under an Underlying Originator Loan Contract. 

“Obligor Financing Statement” means a UCC financing statement filed by Originator against an Obligor under a Contract other than a Lease Contract or an Underlying Originator LoanContract substantially in one of the forms attached hereto as Exhibit E-1, in the case of a Lease Contract, in the form attached hereto as Exhibit E-2, and in the case of an Underlying Originator Loan Contract, in the form attachedhereto as Exhibit E-3. 

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

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

“Original Balance” means, with respect to anyReceivable, the Discounted Balance related thereto on the date that the Contract related to such Receivable became effective. 

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

“Originator InsuranceAgreement” means, collectively, (i) that certain letter agreement regarding the Originator’s obligations as named loss payee under Insurance Policies and Underlying Insurance Policies, dated as of the date hereof, among theOriginator, the Servicer, the Borrower, RCC and the Agent, as such agreement may from time to time be amended, restated, supplemented and/or otherwise modified in accordance with the terms thereof and (ii) that certain letter agreementregarding the Originator’s obligations as named loss payee under Insurance Policies and Underlying Insurance Policies, dated as of the Fifth Amendment Effective Date, among the Originator, the Servicer, the Borrower, TRS and the Agent, as suchagreement may from time to time be amended, restated, supplemented and/or otherwise modified in accordance with the terms thereof. 

“Originator Sale Agreement” means (i) with respect to any Receivable acquired by RCC as PCA Seller prior to the Fifth Amendment Effective Date, the applicable “Assignment Agreement (Pool A Contracts)” or“Assignment Agreement (Pool B Contracts),” substantially in one of the forms attached hereto as Exhibit K-1, between Originator, as seller, and RCC, as purchaser, together with all instruments, documents and agreements executed inconnection therewith, as such agreement may from time to time be amended, supplemented or otherwise modified with the consent of the Agent, and (ii) with respect to any Receivable acquired by TRS as PCA Seller on or after to the Fifth AmendmentEffective Date, the applicable “Assignment Agreement (Pool A Contracts)” or “Assignment Agreement (Pool B Contracts),” substantially in one of the forms attached hereto as Exhibit K-2, between Originator, as seller, andTRS, as purchaser, together with all instruments, documents and agreements 

 

21 

executed in connection therewith, as such agreement may from time to time be amended, supplemented or otherwise modified with the consent of the Agent.

“Other Conveyed Property” means, with respect to any Receivable, all of the Borrower’s right, titleand interest in, to and under (i) all Collections and other monies at any time received or receivable with respect to such Receivable after the applicable Cut-Off Date (as defined in the Purchase and Contribution Agreement), (ii) theEquipment or Underlying Equipment related to such Receivable (to the extent of the Borrower’s ownership rights, if any, therein), (iii) in the case of a Receivable related to any Contract, any and all agreements, documents, certificatesand instruments evidencing the Borrower’s security interest or other interest in and to the related Obligor Collateral or any intercreditor agreement with respect thereto, including, without limitation, any Certificate of Title, (iv) theObligor Collateral related to such Receivable including, without limitation, the security interest in such Obligor Collateral granted by the related Obligor to Originator under the related Contract and assigned (1) by Originator to a PCA Sellerunder any Originator Sale Agreement, and (2) by a PCA Seller to the Borrower under the Purchase and Contribution Agreement, (v) the Obligor Financing Statement, if any, related to such Receivable, (vi) the Insurance Policy and anyproceeds from the Insurance Policy relating to such Receivable, including rebates of premiums not otherwise due to an Obligor, (vii) the related Contract and all other items required to be contained in the related Receivable File, any and allother documents or electronic records that the Borrower keeps on file in accordance with its customary procedures relating to such Receivable, the related Obligor Collateral or the related Obligor, (viii) any Security Deposits or Cash Reserverelated to such Receivable, (ix) all property (including the right to receive future Liquidation Proceeds) that secures such Receivable and that has been acquired by or on behalf of the Borrower pursuant to the liquidation of such Receivable,and (x) all present and future rights, claims, demands, causes and chooses in action in respect of any or all of the foregoing and all payments on or under and all proceeds and investments of any kind and nature in respect of any of theforegoing. 

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

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

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

“PCA Seller” means individually, and “PCA Sellers” means collectively, each of RCC in its capacity asseller/contributor under the Purchase and Contribution Agreement prior to the Fifth Amendment Effective Date and TRS in its capacity as seller/contributor under the Purchase and Contribution Agreement on and after the Fifth Amendment Effective Date.

“PCA Seller Assignment Agreement” means that certain Sale, Assignment and Assumption Agreement, dated asof the Fifth Amendment Effective Date, by and between RCC, as seller, and TRS, as buyer. 

 

22 

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

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

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

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

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

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

(vi)    any other investments approved in writing by the Agent and the Rating Agencies. 

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

“Permitted Liens” means: 

(i)     with respect to Obligor Collateral, (A) liens and security interests in favor of the Agent, for the benefit of the Lender, granted pursuant to theTransaction Documents, (B) the interests of an Obligor arising under the Contract to which it is a party in the Obligor Collateral related to such Contract, (C) liens for taxes, assessments, 

 

23 

levies, fees and other governmental and similar charges either not yet due or being contested in good faith and by appropriate proceedings, provided, thatappropriate reserves shall have been established with respect to any such taxes either not yet due or being contested in good faith and by appropriate proceedings, (D) any liens with respect to any mechanics, suppliers, materialmen, laborers,employees, repairmen and other like liens arising in the ordinary course of a servicer’s, lessor’s/lender’s or lessee’s/borrower’s business securing obligations which are not due and payable, and (E) salvage rights ofinsurers with respect to the equipment subject to a Contract under insurance policies maintained pursuant to the Transaction Documents or a Contract; and 

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

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

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

“Pledged Assets” has the meaning assigned to that term in Section 2.15. 

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

“Pledged Pool A Receivables” has the meaning assigned to that term in Section 2.15(a). 

“Pledged Pool B Receivables” has the meaning assigned to that term in Section 2.15(a). 

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

“Pool A Advance Rate Factor” means, as of any date ofdetermination, (a) 2.5 multiplied by (b) the largest of (i) the Pool A Weighted Average Net Loss Rate (which information shall be reported and updated in the Monthly Remittance Report immediately following the end of each calendarquarter) or (ii) the product of (x) Weighted Average Remaining Life with respect to the Pool A Receivables as of such date of determination and (y) the Pool A Annualized Default Rate. 

“Pool A Annualized Default Rate” means, as of any date of determination, the Annualized Default Rate as of such date ofdetermination, calculated by (or in a manner satisfactory to) the Agent solely with respect to Pool A Receivables. 

 

24 

“Pool A Annualized Net Loss Rate” means, as of any date ofdetermination, an amount (expressed as a percentage) equal to (i) the product of (A) (x) the aggregate Discounted Balances of all Pledged Pool A Receivables which were Eligible Pool A Receivables at the time of their Pledge hereunderand which became Defaulted Receivables or Missed Payment/Modified Receivables or (y) were repurchased by the PCA Seller pursuant to the terms of Section 6.1(b) of the Purchase and Contribution Agreement and as to which, as of the date ofsuch repurchase, any part of any Scheduled Payment (or other amount payable under the terms of the related Contract) remained unpaid for more than 60 days after the due date therefor set forth in such Contract, in each case during the siximmediately preceding Collection Periods minus (y) Recoveries related to Pool A Receivable received during the six immediately preceding Collection Periods and (B) 2, divided by (ii) the average of the Eligible Pool AReceivables Balances as of the first Business Day of each of the six immediately preceding Collection Periods. 

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

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

(ii)     an amount equal to the Pool A Net Eligible Receivables Balance multiplied by a percentage equal to 89%; and 

(iii)    an amount equal to: 

 
    
(1.00 - ARFA) X NERBA

    where:
  
ARFA
  
      =
    
the Pool A Advance Rate Factor; and
  
NERBA
  
      =
    
the Pool A Net Eligible Receivables Balance.

“Pool A Contract” means a Lease Contract, a Loan Contract or aPractice Acquisition Loan Contract. 

“Pool A Defaulted Managed Receivables” means, as of any date ofdetermination, any Pool A Managed Receivable: 

(i)      with respect to whichany part of any scheduled payment, or any tax-related payment, owed by the applicable obligor under the terms of the related contract remains unpaid for more than 120 days after the due date therefor set forth in such contract; 

(ii)     with respect to which the first or second scheduled payment is not paid in full whendue under the related contract; 

(iii)    with respect to which any payment or othermaterial terms of the related contract have been modified due to credit related reasons; 

 

25 

(iv)    which has been or should be charged off as aresult of the occurrence of a Bankruptcy Event with respect to the related obligor or which has been or should otherwise be deemed uncollectible by the Servicer, in each case in accordance with the Credit and Collection Policy; or 

(v)     respect to which the Servicer or any Affiliate thereof has repossessed the relatedequipment. 

“Pool A Delinquency Rate” means, as of any date of determination, the Delinquency Rate as ofsuch date of determination, calculated by (or in a manner satisfactory to) the Agent solely with respect to Pool A Receivables. 

“Pool A Facility Fee” has the meaning ascribed thereto in the Fee Letter. 

“Pool AFinanced Middle Ticket Receivables Percentage” means (A) that portion of the Eligible Pool A Receivables Balance related to equipment with an original cost greater than or equal to $100,000 divided by (B) the Eligible Pool AReceivables Balance. 

“Pool A Financed Small Ticket Receivables Percentage” means (A) that portionof the Eligible Pool A Receivables Balance related to equipment with an original cost of less than $100,000 divided by (B) the Eligible Pool A Receivables Balance. 

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

“Pool A Managed Middle Ticket Cumulative Net Loss Rate” means, as of any date of determination with respect to any prior calendar year, an amount (expressed as a percentage) equal to(i) (x) the original cost of the equipment related to all Pool A Managed Middle Ticket Receivables which were originated during such calendar year and which became Pool A Defaulted Managed Receivables at any time during or after suchcalendar year through and including the most recently completed quarter minus (y) the Pool A Managed Receivable Recoveries received by the Originator or the Servicer at any time during or after such calendar quarter related to all Pool AManaged Middle Ticket Receivables which were originated in such calendar year and which became Pool A Defaulted Managed Receivables at any time during or after such calendar year through and including the most recently completed quarter divided by(ii) the aggregate original cost of the equipment related to all Pool A Managed Middle Ticket Receivables which were originated during such calendar year. 

“Pool A Managed Middle Ticket Receivable” means a Pool A Managed Receivable related to equipment with an original cost of greater than or equal to $100,000. 

“Pool A Managed Receivable Recoveries” means, with respect to a Pool A Defaulted Managed Receivable, all payments thatthe Servicer received from or on behalf of the related Obligor in respect of such Pool A Defaulted Managed Receivable or from the repossession, liquidation or re-leasing of the related collateral, including but not limited to scheduled payments,overdue payments, payments under related guarantees and insurance proceeds. 

 

26 

“Pool A Managed Receivables” means all lease or loan agreementsoriginated and/or serviced by the Originator, the Servicer or any Affiliate thereof (other than Resource America). 

“Pool A Managed Small Ticket Cumulative Net Loss Rate” means, as of any date of determination with respect to any prior calendar year, an amount (expressed as a percentage) equal to (i) (x) the original cost ofthe equipment related to all Pool A Managed Small Ticket Receivables which were originated during such calendar year and which became Pool A Defaulted Managed Receivables at any time during or after such calendar year through and including the mostrecently completed quarter minus (y) the Pool A Managed Receivable Recoveries received by the Originator or the Servicer at any time during or after such calendar quarter related to all Pool A Managed Small Ticket Receivables which wereoriginated in such calendar year and which became Pool A Defaulted Managed Receivables at any time during or after such calendar year through and including the most recently completed quarter divided by (ii) the aggregate original cost of theequipment related to all Pool A Managed Small Ticket Receivables which were originated during such calendar year. 

“Pool A Managed Small Ticket Receivable” means a Pool A Managed Receivable related to equipment with an original cost of less than $100,000. 

“Pool A Maximum Managed Middle Ticket Net Loss Rate” means the highest Pool A Managed Middle Ticket Cumulative Net Loss Rate related to any of the most recent four(4) calendar years. For the avoidance of doubt, the Pool A Maximum Managed Middle Ticket Net Loss Rate and the Pool A Maximum Managed Small Ticket Net Loss Rate can occur in different years. 

“Pool A Maximum Managed Small Ticket Net Loss Rate” means the highest Pool A Managed Small Ticket Cumulative Net LossRate related to any of the most recent four (4) calendar years. For the avoidance of doubt, the Pool A Maximum Managed Small Ticket Net Loss Rate and the Pool A Maximum Managed Middle Ticket Net Loss Rate can occur in different years.

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

“Pool AOverconcentration Amount” means, at any time, without duplication, the sum of: 

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

(ii)     the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a remaining term greater than 85 months exceeds 20% of the sum of theDiscounted Balances of all Eligible Pool A Receivables at such time; 

 

27 

(iii)    the amount by which the sum of theDiscounted Balances of all Eligible Pool A Receivables with respect to which the related Contract has a Discounted Balance greater than $1,000,000 exceeds an amount equal to the Large Contract Percentage multiplied by the sum of the DiscountedBalances of all Eligible Pool A Receivables at such time; 

(iv)    the amount by whichthe sum of the Discounted Balances of all Eligible Pool A Receivables related to any vendor of Equipment and/or any Affiliates thereof at such time exceeds the product of the Vendor Overconcentration Limit for such vendor and its Affiliatesmultiplied by the sum of the Discounted Balances of all Eligible Pool A Receivables at such time; 

(v)     the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables arising under a Contract which provides for a Balloon Payment or Put Payment, the amount of which is in excess of10%, but not in excess of 34%, of the original amount of the Scheduled Payments to be made under such Contract, exceeds 15% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time; 

(vi)    the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivablesarising under a Contract which provides for a Balloon Payment or Put Payment, the amount of which is in excess of 34% of the original amount of the Scheduled Payments to be made under such Contract, exceeds $0.0; 

(vii)   the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables arisingfrom Practice Acquisition Loan Contracts at such time exceeds 35% of the sum of the Discounted Balances of all Eligible Pool A Receivables at such time; and 

(viii)  the amount by which the sum of the Discounted Balances of all Eligible Pool A Receivables that are Stand Alone Working Capital Loans at such time exceeds 2% of the sum of theDiscounted Balances of all Eligible Pool A Receivables at such time. 

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

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

(i)      the rolling weighted average of the Pool A Delinquency Rates in respect of any three consecutive Collection Periods exceeds 3.5%; 

(ii)     the Pool A Annualized Default Rate exceeds 4%; or 

(iii)    the Pool A Annualized Net Loss Rate exceeds 3.5%. 

 

28 

“Pool A Weighted Average Net Loss Rate” means the sum of (A) theproduct of (i) the Pool A Maximum Managed Small Ticket Net Loss Rate times (ii) the Pool A Financed Small Ticket Receivables Percentage and (B) the product of (i) the Pool A Maximum Managed Middle Ticket Net Loss Rate times(ii) the Pool A Financed Middle Ticket Receivables Percentage. 

“Pool B Adjusted Advance Amount” hasthe meaning set forth in clause (v) of the definition of Pool B Overconcentration Amount. 

“Pool B AdvanceRate Factor” means, as of any date of determination with respect to any Underlying Originator, (a) 2.0 multiplied by (b) the largest of (i) the largest Pool B Managed Receivable Net Loss Factor with respect to such UnderlyingOriginator related to any of the most recent four prior calendar years (which information shall be updated and reported with respect to such Underlying Obligor in the Monthly Remittance Report immediately following the end of each calendar quarterduring which such Underlying Obligor received a loan or a payment of purchase price under the related Pool B Contract) or (ii) the product of (x) Weighted Average Remaining Life with respect to the related Pool B Contract as of such dateof determination and (y) the Pool B Annualized Default Rate. 

“Pool B Annualized Default Rate”means, as of any date of determination, the Annualized Default Rate as of such date of determination, calculated by (or in a manner satisfactory to) the Agent solely with respect to Pool B Receivables. 

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

“Pool B Borrowing Base” means, at any time, the lower of: 

(i)      97% of the aggregate Pool B Adjusted Advance Amounts with respect to all EligiblePool B Receivables at such time; and 

 

29 

(ii)     95% of the Pool B Net EligibleReceivables Balance at such time; 

provided, that, at all times after December 14, 2007 (the “Pool B AmortizationDate”), the Pool B Borrowing Base shall not exceed the amount of the Pool B Borrowing Base on the Pool B Amortization Date as such amount is reduced from time for any reason, including, without limitation, in connection with any decrease ofthe Discounted Balances of the Pool B Receivables that are Pledged hereunder on the Pool B Amortization Date (the “Pool B Amortization Date Receivables”) and/or any Underlying Contract related thereto, and without giving effect toany facts or circumstances that would increase of the Pool B Borrowing Base for any reason, including, without limitation, in connection with any increase of the Discounted Balances of the Pool B Amortization Date Receivables and/or any UnderlyingContract related thereto after the Pool B Amortization Date 

“Pool B Contract” means an UnderlyingOriginator Loan Contract. 

“Pool B Defaulted Managed Receivables” means, as of any date of determination,any Pool B Managed Receivable: 

(i)      with respect to which any part ofany scheduled payment, or any tax-related payment, owed by the applicable obligor under the terms of the related contract remains unpaid for more than 120 days after the due date therefor set forth in such contract; 

(ii)     with respect to which the first or second scheduled payment is not paid in full whendue under the related contract; 

(iii)    with respect to which any payment or othermaterial terms of the related contract have been modified due to credit related reasons; 

(iv)    which has been or should be charged off as a result of the occurrence of a Bankruptcy Event with respect to the related obligor or which has been or should otherwise be deemed uncollectible by the Servicer, ineach case in accordance with the Credit and Collection Policy; or 

(v)     respect to which theServicer or any Affiliate thereof has repossessed the related equipment. 

“Pool B Facility Fee” has themeaning ascribed thereto in the Fee Letter. 

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

“Pool B Managed Receivable Net Loss Factor” means, as of any date ofdetermination with respect to an Underlying Originator and any prior calendar year, an amount (expressed as a percentage) equal to (i)(x) the aggregate original cost of the equipment related to all Pool B Managed Receivables with respect to anUnderlying Originator which were originated during such calendar year and which became Pool B Defaulted Managed Receivables at any time during or after such calendar year through and including the most recently completed calendar quarterminus (y) the Pool B Managed Receivable Recoveries received by such Underlying 

 

30 

Originator at any time during or after such calendar year related to all such Pool B Managed Receivables which were originated in such calendar year andwhich became Pool B Defaulted Managed Receivables at any time during or after such calendar year divided by (ii) the aggregate original cost of the equipment related to all Pool B Managed Receivables with respect to such Underlying Originatorwhich were originated during such calendar year. 

“Pool B Managed Receivable Recoveries” means, withrespect to a Pool B Defaulted Managed Receivable with respect to an Underlying Originator, all payments that such Underlying Originator received from or on behalf of the related obligor in respect of such Pool B Defaulted Managed Receivable or fromthe repossession, liquidation or re-leasing of the related collateral, including but not limited to scheduled payments, overdue payments, payments under related guarantees and insurance proceeds. 

“Pool B Managed Receivables” means, with respect to an Underlying Originator, all lease or loan agreements originatedand/or serviced by such Underlying Originator or any Affiliate thereof related to equipment with an original cost of less than $100,000. 

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

“Pool B Overconcentration Amount” means, at any time, without duplication, the sum of: 

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

(ii)     [Intentionally omitted]; 

(iii)    the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivablesrelated to any one Underlying Obligor (or Affiliate thereof) at such time exceeds $500,000; 

(iv)    the amount by which the sum of the Discounted Balances of all Eligible Pool B Receivables with respect which the related Contract has a remaining term greater than 84 months exceeds 5% of the sum of theDiscounted Balances of all Eligible Pool B Receivables at such time; and 

(v)     the sum of the amounts by which the Discounted Balance of any Eligible Pool B Receivable related to any one Underlying Originator exceeds the lowest of the following amounts (such lowest amount beingreferred to herein as the “Pool B Adjusted Advance Amount” with respect to such Eligible Pool B Receivable): 

 
 (x)
the sum of (A) Cash Reserves related to such Eligible Pool B Receivable and (B) 1.00 minus the Pool B Advance Rate Factor related to such UnderlyingOriginator multiplied by the aggregate 

 

31 

 
Pool B Underlying Contract DPVs related to all Underlying Contracts sold or pledged by such Underlying Originator with respect to such Eligible Pool BReceivable; 

 
 (y)
100% of the Amortized Equipment Cost with respect to such Eligible Pool B Receivable; and 

 
 (z)
the sum of Cash Reserves related to such Eligible Pool B Receivable and 97% of the Pool B Underlying Contract DPVs related to all Underlying Contracts sold orpledged by such Underlying Originator with respect to such Eligible Pool B Receivable. 

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

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

(i)      the rolling weighted average of the UnderlyingDelinquency Rates with respect to such Underlying Originator in respect of any three consecutive Collection Periods exceeds 8%; 

(ii)     the Pool B Annualized Net Loss Rate with respect to such Underlying Originator in respect of any Collection Period exceeds 6% (or, with respect to the Pool B Annualized Net Loss Ratecalculated in connection with solely the first two Collection Periods following the relevant Applicable Date, 8%); 

(iii)    the current amount of recourse, if any, against such Underlying Originator with respect to its obligations under the related Underlying Originator Loan Contract is less than 5% of the maximum amount of suchrecourse; or 

(iv)    the occurrence of any Bankruptcy Event in respect of suchUnderlying Originator. 

“Pool B Underlying Contract DPV” means, with respect to any Underlying Contract,as of any date of determination, the present value of the aggregate amount of Underlying Scheduled Payments (including any Balloon Payment or Put Payment but, in any event, calculated without giving effect to any booked residual value with respectto any related Equipment) due or to become due under the terms of the related Underlying Contract, which remain unpaid as of such date of determination, calculated by discounting such aggregate amount of Underlying Scheduled Payments to such date ofdetermination at an annual rate equal to the rate per annum of the interest payable under the Pool B Contract related to such Underlying Contract. 

 

32 

“Practice Acquisition Loan Contract” means, collectively, a “TermNote (Level Payments)” together with the “Master Loan and Security Agreement” related thereto and incorporated by reference therein, each in the form attached hereto as Exhibit D-3 (as such exhibit may be updated from time totime by the Borrower with the consent of the Agent) or a loan agreement and promissory note otherwise approved by the Servicer in compliance with the Credit and Collection Policy, pursuant to which Originator makes a loan to an Obligor to enablesuch Obligor to acquire a dental practice, secured by Equipment related to the practice of dentistry and certain non-equipment assets, together with all schedules, supplements and amendments thereto and each other document and instrument relatedthereto. 

“Prepayment Amount” means the principal amount of Loans repaid by the Borrower in connectionwith an optional prepayment of Loans made by the Borrower pursuant to Section 2.20 hereof. 

“PrepaymentDate” means any date on which an optional prepayment of Loans is made by the Borrower pursuant to Section 2.20 hereof. 

“Program Termination Cure Event” means, following the occurrence of a Program Termination Event described in clause (viii) of the definition thereof, the cure of such Program Termination Event,provided that, in any event, no other Program Termination Event shall have occurred and be continuing. 

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

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

(i)        a regulatory, tax or accounting body has ordered that the activitiesof the Lender, the Issuer or any Affiliate thereof contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of the Lender, the Issuer or any Affiliate contemplated hereby may reasonably be expected tocause the Lender, the Issuer or the Person, if any, then acting as the administrator or the manager for the Lender and/or the Issuer, or any of their respective Affiliates to suffer materially adverse regulatory, accounting or tax consequences;

(ii)        an Event of Default has occurred and is continuing;

(iii)       the Facility Maturity Date shall have occurred; 

(iv)       [intentionally omitted]; 

(v)        [intentionally omitted]; 

(vi)       [intentionally omitted]; 

 

33 

(vii)       a Servicer Default hasoccurred and is continuing; or 

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

(ix)        the occurrence of three or more Pool A Termination Events and/or PoolB Termination Events. 

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

“PurchaseDate” has the meaning set forth in the Purchase and Contribution Agreement. 

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

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

“Qualifying Swap Counterparty” means HVB as long as it has a long-term debt rating of at least “A” from S&P and “A2” from Moody’s or posts cash collateral in a manner satisfactory to the Agentand the Rating Agencies or, if HVB does not meet such criteria, any other financial institution that is in the business of entering into interest rate swap transactions, is acceptable to the Agent and has a long-term debt rating of at least“A” from S&P and “A2” from Moody’s or posts cash collateral in a manner satisfactory to the Agent and the Rating Agencies. 

“Rating Agencies” means Moody’s, S&P and Fitch, if and so long as they have rated and are continuing to rate commercial paper notes of the Lender, or such other nationally recognizedstatistical rating organizations as may be designated by the Agent. 

 

34 

“RCC” means RCC Commercial, Inc., a Delaware corporation. 

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

“Receivable File” means with respect to each Receivable: 

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

(i)        true copies ofthe related (1) original, executed Lease Contract, a facsimile copy thereof (with respect to Equipment having an original cost of less than $100,000) or a machine copy of the Lease Contract certified by an authorized officer of the Borrower andstamped “I hereby certify that this is a true and exact copy of the original” (2) delivery/installation certificate or acknowledgment and acceptance of delivery certificate, (3) Insurance Certificate if such Receivable related toEquipment with an original cost in excess of $100,000, (4) other than with respect to a Lease Contract related to Equipment which has an original cost of less than $25,000 if such Lease Contract is a Dollar Purchase Option Contract or $50,000if such Lease Contract is a FMV Contract, a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of therelated UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement and (5) vendor order(s) or invoice(s), and

(ii)        if received by the Servicer or the Borrower, trueexecuted copies of the related (1) corporate resolution, (2) guaranty, (3) automatic loan/lease contract payment plan authorization form, (4) agreement for advances, (5) landlord’s consent, (6) landlord’swaiver and (7) other documents to have been received; 

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

(i)        true copies of the related (1) promissory note, which shall be the original, executed copy thereof, (2) “Master Loan and SecurityAgreement”, (3) Insurance Certificate if such Receivable related to Equipment with an original cost in excess of $100,000 and (4) other than with respect to a Receivable related to Equipment which has an original cost of less than$25,000, a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidence of the submission of the related UCC financing statementfor filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement, and 

(ii)        if received by the Servicer or the Borrower, true, executed copies ofthe related (1) loan agreement, (2) personal guaranty, (3) vendor guaranty, (4) corporate resolution, (5) affidavit for judgment by confession (photocopy only), (6) automatic loan/lease contract payment planauthorization form, (7) agreement to assign lease, (8) landlord’s consent, (9) landlord’s waiver and (10) vendor order(s) or invoice(s); 

 

35 

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

(i)         original, executed copies of the related (1) promissory note, which shall be the original, executed copy thereof (with fully executed, original Allongeattached thereto) unless such Underlying Originator Loan Contract is in the form of a Master Purchase and Sale Agreement,” (2) security agreement, (3) Insurance Certificate if such Underlying Originator Loan Contract related toEquipment with an original cost in excess of $100,000 and (4) a “transmittal order” from the Servicer to a filing service company and an “in process report” from such filing service company to the Servicer (or other evidenceof the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stamped copy of the related UCC financing statement, 

(ii)        if received by the Servicer or the Borrower, true executed copies ofthe related (1) loan agreement, (2) personal guaranty, (3) vendor guaranty, (4) corporate resolution, (5) affidavit for judgment by confession (photocopy only) and (6) automatic loan contract payment plan authorizationform; provided, that, in the case of a Receivable that is Pledged in connection with the initial Borrowing hereunder, the items listed in this clause (ii) need not be included in the Receivable File related to such Receivable prior to the 120thday following the Pledge of such Receivable hereunder, 

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

(i)        original, executed copies of therelated (1) Underlying Lease Contract, (2) delivery/installation certificate or acknowledgment and acceptance of delivery certificate, (3) purchase agreement, (4) Underlying Insurance Certificate if such Underlying Lease Contractrelated to Equipment with an original cost in excess of $100,000, (5) other than with respect to an Underlying Lease Contract related to Equipment which has an original cost of less than $25,000 if such Underlying Lease Contract is a DollarPurchase Option Contract or $50,000 if such Underlying Lease Contract is a FMV Contract a “transmittal order” from the Underlying Originator to a filing service company and an “in process report” from such filing service companyto the Underlying Originator (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Underlying Lease Contract being executed, a file-stamped copy ofthe related UCC financing statement and (6) vendor order or invoice, and 

(ii)        if received by the Servicer or the Borrower, true, executed copies of the following items relating to the Underlying Lease Contract:      (1) corporateresolution, (2) guaranty, (3) automatic lease contract payment plan authorization form, (4) agreement for advances, (5) landlord’s consent and (6) landlord’s waiver; 

 

36 

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

(i)        original, executed copies of the related (1) promissory note,which shall be the original, executed copy thereof, (2) security agreement, (3) Underlying Insurance Certificate if such Underlying Loan Contract related to Equipment with an original cost in excess of $100,000 and (4) other than withrespect to an Underlying Loan Contract related to Equipment which has an original cost of less than $25,000 a “transmittal order” from the Underlying Originator to a filing service company and an “in process report” from suchfiling service company to the Underlying Originator (or other evidence of the submission of the related UCC financing statement for filing in the appropriate filing office) and, within 45 days of the related Contract being executed, a file-stampedcopy of the related UCC financing statement, and 

(ii)        ifreceived by the Servicer or the Borrower, true, executed copies of the following items relating to the Underlying Loan Contract: (1) loan agreement, (2) personal guaranty, (3) vendor guaranty, (4) corporate resolution,(5) affidavit for judgment by confession (photocopy only), (6) automatic loan contract payment plan authorization form, (7) agreement to assign lease, (8) landlord’s consent, (9) landlord’s waiver and(10) vendor order or invoice; and 

In addition, if the Obligor Collateral related to such Receivable (other than aVehicle Sublimit Pledged Receivable) is a Vehicle, the related Receivable File shall include the original copy of the Certificate of Title with respect to such Vehicle which such Certificate of Title notes the owner of such Vehicle as being theBorrower and indicates “Bayerische Hypo- und Vereinsbank AG, New York Branch, as Agent” as the sole lienholder with respect to such Vehicle or (prior to the 90th day after such Receivable was first included in the calculation of theEligible Receivables Balance, if such Certificate of Title has not yet been received by the Servicer or the Borrower) a copy of the application for such Certificate of Title. 

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

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

“Recoveries” means, for any Collection Period during which, or any Collection Period after the date onwhich, any Receivable becomes a Defaulted Receivable or Missed Payment/Modified Receivable and with respect to such Defaulted Receivable or Missed Payment/Modified Receivable, all payments that the Servicer received from or on behalf of the relatedObligor during such Collection Period in respect of such Defaulted Receivable or Missed Payment/Modified Receivable or from the repossession, liquidation or re-leasing of the related 

 

37 

Obligor Collateral, including but not limited to Scheduled Payments, Overdue Payments, Guaranty Amounts and Insurance Proceeds. 

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

“RelatedSecurity” means with respect to any Receivable: 

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

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

(iii)      all proceeds of the foregoing. 

“Release Price” means, with respect to a Pledged Receivable to be released hereunder, an amount equal to the DiscountedBalance of such Pledged Receivable at the time of such release. 

“Remittance Date” means thetwenty-second (22nd) day of each month beginning May, 2006, or, if such date isnot a Business Day, the next succeeding Business Day; provided, that the final Remittance Date shall occur on the Collection Date. 

“Replacement Receivable” has the meaning set forth in Section 2.07 hereof. 

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

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

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

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

“Security Deposit” means any amount paid to the Servicer or the Borrower by an Obligor as a security deposit, which hasnot previously been refunded to such Obligor (for purposes of clarification, a Cash Reserve shall not be deemed to constitute a Security Deposit). 

 

38 

“Security Deposit Account” has the meaning assigned to that term inSection 2.06. 

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

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

“Servicer Advance” hasthe meaning assigned to such term in Section 6.21. 

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

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

(ii)       the failure of the Servicer to satisfy any of its reporting, certification, notification or documentation requirements under the terms hereof or of any other Transaction Document or the failureof the Servicer to observe or perform any material term, covenant or agreement hereunder or under any other Transaction Document (other than those described in clause (i) above) and such failure shall remain unremedied for 15 days after theServicer first has knowledge, whether constructive or actual, of such failure; 

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

(iv)       the occurrence of an Event of Default; 

(v)        the occurrence of a Program Termination Event described in clause (ix) of the definition of Program Termination Events; or 

(vi)       the occurrence of any Bankruptcy Event in respect of the Servicer.

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

 

39 

“Servicing Fee” means, for any Fee Period, an amount, payable out ofCollections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to (i) the Servicing Fee Rate multiplied by (ii) the Net Eligible Receivables Balance as of the firstday of such Fee Period multiplied by (iii) a fraction, the numerator of which shall be the actual number of days in such Fee Period and the denominator of which shall be 360. 

“Servicing Fee Rate” means 1.00%. 

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

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

“Standby BackupServicing Fee Rate” means .034%. 

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

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

“Subsequent Borrowing Date” means each Business Day occurring after the initialBorrowing Date on which the Borrower determines to request an additional Borrowing from the Lender. 

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

“Tangible NetWorth” means, with respect to any Person, the amount calculated in accordance with GAAP (but without giving effect to any adjustments for other comprehensive income pursuant to the Statements of Financial Accounting Standards Nos. 133 and138 issued by the Financial Accounting Standard Board) as (i) the consolidated net worth of such Person and its consolidated subsidiaries, plus (ii) to the extent not otherwise included in such consolidated net worth, unsecuredsubordinated Debt of such Person and its consolidated subsidiaries, the terms and conditions of which are reasonably satisfactory to the Agent, minus (iii) the consolidated intangibles of such Person and its consolidated subsidiaries,including, without limitation, goodwill, trademarks, tradenames, copyrights, patents, patent allocations, 

 

40 

licenses and rights in any of the foregoing and other items treated as intangibles in accordance with GAAP. 

“Transaction Documents” means this Agreement, the Purchase and Contribution Agreement, the Limited Guaranty andIndemnification Agreement, any Originator Sale Agreement, the PCA Seller Assignment Agreement, the Limited Guaranty and Indemnification Agreement (TRS), the Lockbox Intercreditor Agreement, the Collection Account Agreement, the Security DepositAccount Agreement, each Cash Reserve Account Agreement, the Fee Letter, the Custodial Agreement, the Northern Lease Bailment Agreement, Northern Lease Bailment Agreement Direction Letter, the Originator Insurance Agreement and each QualifyingInterest Rate Swap and each document and instrument related to any of the foregoing. 

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

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

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

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

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

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

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

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

(iii)      any payment or other material terms of the related Underlying Contract have beenmodified due to credit related reasons after such Underlying Contract was acquired by Originator; 

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

 

41 

(v)       the related UnderlyingEquipment has been repossessed. 

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

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

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

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

“UnderlyingLease Contract” means a lease contract pursuant to which Underlying Equipment is leased to an Underlying Obligor by an Underlying Originator, together with all schedules, supplements and amendments thereto and each other document andinstrument related to such lease contract. 

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

“Underlying Loan Contract” means, collectively, a promissory note, a loan agreement and a security agreement pursuantto which an Underlying Originator makes a loan to an Underlying Obligor secured by Underlying Equipment owned by such Underlying Obligor, together with all schedules, supplements and amendments thereto and each other document and instrument relatedthereto. 

“Underlying Loan Documents” means, with respect to any Pool B Receivable, the Underlying LoanContract and all agreements, documents or instruments evidencing, securing, 

 

42 

guaranteeing or otherwise relating to the obligations of the Underlying Obligor thereunder, including, without limitation, the note or notes evidencing suchindebtedness. 

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

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

“Underlying Originator Loan Contract” means, collectively, a “Master Purchase and Sale Agreement,” a “Master Loan and Security Agreement,” or a “Loan and Security Agreement,” each of whichcomplies with all of the criteria set forth in Exhibit D-4 hereto (as such exhibit may be updated from time to time by the Borrower with the consent of the Agent), pursuant to which Originator makes a purchase of Underlying Originator LoanCollateral from an Underlying Originator or makes a loan to an Underlying Originator secured by Underlying Originator Loan Collateral, together with all schedules, supplements and amendments thereto and each other document and instrument relatedthereto. 

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

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

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

“Underlying Security Deposit” means any amount paid to an Underlying Originator by an Underlying Obligor as a securitydeposit or as a payment in advance of any amounts to become due under an Underlying Contract, which has not previously been refunded to such Underlying Obligor or applied toward such Underlying Obligor’s obligations under such UnderlyingContract. 

“United States” means the United States of America. 

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

 

43 

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

“Vehicle Sublimit Pledged Receivable” means a PledgedReceivable, with respect to which the related Obligor Collateral or Underlying Collateral is a Vehicle or other type of equipment which requires a security interest therein to be noted on the certificate of title with respect thereto in order to beperfected, but the Borrower has not forwarded to the Custodian for inclusion in the appropriate Receivable File an original Certificate of Title which indicates the owner of the related Vehicle as being the Borrower and indicates “BayerischeHypo- und Vereinsbank AG, New York Branch, as Agent” as the sole lienholder with respect to such Vehicle. 

“Vendor Overconcentration Limit” means, for each of the vendors set forth in the following table, the percentage set forth opposite the name of such vendor, and for any other vendor, 5%: 

 

Vendor

 
  
VendorOverconcentration Limit

 

ToshibaCorporation

 
  
15%

 

GeneralElectric Company

 
  
15%

 

VarianMedical Systems Inc.

 
  
10%

 

CenturyMedical Distributors Ltd.

 
  
10%

 

CTIMolecular Imaging, Inc.

 
  
10%

 

Hitachi,Ltd.

 
  
10%

 

KonicaMinolta Holdings, Inc.

 
  
10%

 

Canon Inc.

 
  
10%

 

KoninklijkePhillips Electronics N.V.

 
  
10%

 

“Weighted Average Remaining Life” means, (the sum of the ratios,numerator of which is the principal portion of the monthly repayment multiplied by the number of the period at such time and denominator of which is the sum of discounted balance of total eligible receivables at such time) divided by 12. 

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

 

44 

“Yield” means, with respect to any Fixed Period for any Loan allocatedto such Fixed Period, the product of: 

YR x L x ED

                360 

 

where:
  YR  
=
  
the Yield Rate for such Fixed Period;
  L  
=
  
the aggregate amount of Loans Outstanding allocated to such Fixed Period; and
  
ED
  
=
  
the actual number of days elapsed during such Fixed Period;

provided, however, that (i) no provision of this Agreement shall require thepayment or permit the collection of Yield in excess of the maximum permitted by applicable law and (ii) Yield shall not be considered paid by any distribution if at any time such distribution is required to be rescinded by the Lender to theBorrower or any other Person for any reason including, without limitation, such distribution becoming void or otherwise avoidable under any statutory provision or common law or equitable action, including, without limitation, any provision of theBankruptcy Code. 

“Yield Rate” means, with respect to any Fixed Period for any Loan allocated to suchFixed Period: 

(i)        to the extent the Lender will be fundingthe applicable Loan on the first day of such Fixed Period through the issuance of commercial paper, a rate equal to the CP Rate for such Fixed Period; and 

(ii)       to the extent the Lender will not be funding the applicable Loan through the issuance of commercial paper and/or to the extent that such Fixed Period(or any portion thereof) shall occur after a Program Termination Date, Pool A Termination Event or Pool B Termination Event (x) a rate equal to the Non-CP Rate for such Fixed Period or (y) such other rate as the Agent and the Borrowershall agree to in writing; 

provided, however, that upon the occurrence of any Event of Default the applicable Yield Rate forall Fixed Periods in effect at the time of such occurrence shall convert to, and for all Fixed Periods that come into effect after any Event of Default shall be, the Default Funding Rate. 

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

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

 

45 

ARTICLE II. 

THE RECEIVABLES FACILITY 

SECTION2.01        Borrowings.   On the terms and conditions hereinafter set forth, the Lender shall make loans (“Loans”) to the Borrower secured by Pledged Assets from time totime during the period from the date hereof until the earlier of the Program Termination Date or the Facility Maturity Date. Separate Loans will be made to finance the Borrower’s acquisition of (x) Pool A Receivables (“Pool ALoans”) and (y) Pool B Receivables (“Pool B Loans”), and no Loan shall finance both Pool A Receivables and Pool B Receivables. Under no circumstances shall the Lender make, or the Borrower request, any Loan if(a) the principal amount of such Loan is less than $500,000, or (b) after giving effect to the Borrowing of such Loan, either (i) a Program Termination Event or an event that but for notice or lapse of time or both would constitute aProgram Termination Event has occurred and is continuing or (ii) the aggregate Facility Amount hereunder would exceed the lesser of (A) the Borrowing Limit and (B) the Borrowing Base. Under no circumstances shall the Lender make, orthe Borrower request, any Loan secured by Pool A Receivables if after giving effect to the Borrowing of such Loan, either (1) the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, wouldexceed the Pool A Borrowing Base or (2) a Pool A Termination Event shall exist. Under no circumstances shall the Lender make, or the Borrower request, any Loan secured by any Pool B Receivable if after giving effect to the Borrowing of suchLoan, either (1) the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, would exceed the Pool B Borrowing Base or (2) a Pool B Termination Event shall exist with respect to theUnderlying Originator related to such Pool B Receivable. 

SECTION2.02        The Initial Borrowing and Subsequent Borrowings. (a) Until the occurrence of the earlier of the Program Termination Date and the Facility Maturity Date, the Lender will make Loans on anyBusiness Day at the request of the Borrower, subject to and in accordance with the terms and conditions of Sections 2.01 and 2.02 and subject to the provisions of Article III hereof. 

(b)        (i)        The initial Borrowing shall bemade on at least four (4) Business Days’ irrevocable written notice from the Borrower to the Agent and each Subsequent Borrowing shall be made on at least three (3) Business Days’ irrevocable written notice from the Borrower tothe Agent (any such written notice, a “Notice of Borrowing”), provided that such Notice of Borrowing is received by the Agent no later than 12:00 noon (New York City time) on the Business Day of receipt. Any Notice of Borrowingreceived after 12:00 noon (New York City time) shall be deemed received prior to 12:00 noon (New York City time) on the following Business Day. Each such Notice of Borrowing shall specify (A) the aggregate amount of such Borrowing, (B) thedate of such Borrowing, (C) the allocation of the Loans as Pool A Loans and Pool B Loans, and (D) the Eligible Pool A Receivables and the Eligible Pool B Receivables to be Pledged in connection with such Borrowing (and upon such Borrowing,such Receivables shall be Pledged Receivables hereunder). On the date of each Borrowing, the Lender shall, upon satisfaction of the applicable conditions set forth in Article III, make available to the Borrower on the applicable BorrowingDate, no later than 2:00 P.M. (New York City time), in same day 

 

46 

funds, the amount of such Borrowing (net of amounts payable to or for the benefit of the Lender), by payment into the account which the Borrower hasdesignated in writing. 

(ii)        Each Notice of Borrowingdelivered to the Agent pursuant to this Section 2.02(b) shall be accompanied by a copy of the Notice of Pledge (and the Receivables Schedule attached thereto), which was sent to the Custodian pursuant to the terms of the CustodialAgreement in connection with the pledge of Eligible Receivables to be made in connection therewith. 

(c)        The Loans shall bear interest at the Yield Rate. 

(d)        Subject to Section 2.20 and the other terms, conditions, provisions and limitations set forth herein, the Borrower may borrow, repay or prepay and reborrow Loans, on and afterthe date hereof and prior to the earlier to occur of the Facility Maturity Date and the Program Termination Date. 

(e)        Determinations by the Lender of the existence of any CP Disruption Event (any such determination to be communicated to the Borrower by written notice from the Agent promptly after the Agentlearns of such event), or of the effect of any CP Disruption Event on its making or maintaining Loans at the CP Rate, shall be conclusive absent manifest error. 

(f)        Determinations by the Lender of the existence of any Eurodollar Disruption Event (any such determination to be communicated to the Borrower bywritten notice from the Agent promptly after the Agent learns of such event), or of the effect of any Eurodollar Disruption Event on its making or maintaining Loans at the Adjusted Eurodollar Rate, shall be conclusive absent manifest error.

SECTION 2.03        [Intentionally Omitted]. 

SECTION 2.04        Determination of FixedPeriods.    (a) Subject to Section 2.04(c), the Yield Rate to apply to all Loans outstanding shall be the CP Rate. The initial Fixed Period applicable to any new Loan arising as a result of a Borrowing shallcommence on, and include, the date of such Borrowing and shall terminate on, and include, the day immediately prior to the next occurring Remittance Date or such earlier date as the Agent may determine (an “Early Fixed Period TerminationDate”); provided, that the initial Fixed Period applicable to the first Loan arising as a result of a Borrowing hereunder shall commence on, and include, the date of such Borrowing and shall terminate on, and include, May 21, 2006 orsuch earlier date as the Agent may determine. All outstanding Loans allocated to one or more initial Fixed Periods or Rollover Fixed Periods maturing on the same date shall be combined and allocated to a single Rollover Fixed Period at the end ofsuch initial Fixed Periods or Rollover Fixed Periods. Each Rollover Fixed Period shall commence on, and include, the Remittance Date following the last day of the immediately preceding Fixed Period (or, if applicable, on an Early Fixed PeriodTermination Date) and shall terminate on, and include, the day immediately prior to the next occurring Remittance Date; provided that, notwithstanding the foregoing, upon the occurrence and during the continuance of any Event of Default, the Lendermay cease to issue commercial paper notes to fund and maintain Loans hereunder, and the applicable Yield Rate for all Fixed Periods in effect at the time of such occurrence shall convert to, and for all Fixed Periods that 

 

47 

come into effect during the continuance of any Event of Default shall be, the Default Funding Rate. 

(b)        So long as no Event of Default or Program Termination Event shall have occurred andbe continuing, each of the Lender and the Agent shall make reasonable efforts to allow Loans to accrue Yield at the CP Rate; provided that neither the Lender nor the Agent shall have any obligation to allow Loans to accrue Yield at the CPRate upon the occurrence of a CP Disruption Event or upon a determination by the Lender, or the Agent on its behalf, that allowing Loans to accrue Yield at the CP Rate would materially impair its ability to issue commercial paper notes generally orwould otherwise be disadvantageous to its business generally. 

SECTION2.05        Remittance Procedures.    The Servicer, as agent for the Agent and the Lender, shall instruct the Agent’s Bank and, if the Servicer fails to do so, the Agent mayinstruct the Agent’s Bank, to apply funds on deposit in the Collection Account as described in this Section 2.05. 

(a)        Yield and Breakage Fees.    On each Business Day (including any Remittance Date), the Servicer shall, and, if the Servicer fails to do so, the Agent may directthe Agent’s Bank to, retain in the Collection Account for transfer at the further direction of the Lender or the Agent or any other duly authorized agent of the Lender (whether on such day or on a subsequent day) collected funds in an amountequal to accrued and unpaid Yield, Pool A Facility Fee and Pool B Facility Fee through such day on the Loans not so previously retained and the amount of any accrued and unpaid Breakage Fees owed to the Lender on such day. On or before the last dayof each Fixed Period, the Agent shall notify the Servicer of the accrued and unpaid Yield, Pool A Facility Fee and Pool B Facility Fee for such Fixed Period and the Servicer shall, on the last day of each Fixed Period, direct the Agent’s Bankto pay collected funds set aside in respect of accrued and unpaid Yield pursuant to this Section 2.05(a) to the Lender (or the designee of the Lender) in respect of payment of such accrued and unpaid Yield for such Fixed Period;provided, however, that in the case of any Loan accruing Yield at the Non-CP Rate, all such accrued and unpaid Yield, shall remain set aside in the Collection Account until the next Remittance Date and, at which time, shall bedisbursed pursuant to Section 2.05(c)(v). On any Business Day on which an amount is set aside in respect of Breakage Fees pursuant to this Section 2.05(a), the Servicer shall direct the Agent’s Bank to pay such funds tothe Lender in payment of such Breakage Fees. 

(b)        Fixed Period LoanPrincipal Repayment.    The Servicer shall, and if the Servicer fails to do so the Agent may, by 10:00 a.m. (St. Paul, Minnesota time) on the last day of each Fixed Period that is not a Remittance Date, direct theAgent’s Bank to transfer collected funds held by the Agent’s Bank in the Collection Account on such date, to pay the Agent for the account of the Lender in payment (or partial payment) of the outstanding principal amount of all Loansallocated to such Fixed Period, in an amount equal to the least of (i) the amount of such collected funds held in the Collection Account other than funds set aside pursuant to Section 2.05(a), (ii) the aggregate outstandingprincipal amount of Loans allocated to such Fixed Period, (iii) if no Program Termination Event shall have occurred and be continuing, an amount equal to the sum of (A) the excess, if any, of the Facility Amount immediately prior to suchdistribution, calculated solely with respect to Loans secured by Pool A Receivables over the Pool A Borrowing Base and (B) the excess, if any, of the Facility Amount immediately prior to 

 

48 

such distribution, calculated solely with respect to Loans secured by Pool B Receivables over the Pool B Borrowing Base (with respect to Pool A Loans andPool B Loans collectively, after giving effect to any Borrowing made on such date and any distributions of amounts on deposit in the Collection Account made on such date) or (iv) if no Program Termination Event shall have occurred and becontinuing, an amount equal to the excess, if any, of the Facility Amount immediately prior to such distribution over the lesser of (A) the Borrowing Base and (B) the Borrowing Limit (after giving effect to any Borrowing made on such dateand any distributions of amounts on deposit in the Collection Account made on such date). 

(c)      Remittance Date Transfers From Collection Account.  The Servicer shall, and if the Servicer fails to do so the Agent may, by 10:00 a.m. (St. Paul, Minnesota time) on each RemittanceDate, direct the Agent’s Bank to transfer collected funds held by the Agent’s Bank in the Collection Account which were remitted to the Collection Account during the Collection Period with respect to such Remittance Date(“Available Funds”), in the following amounts and priority: 

(i)       to the Borrower, in an amount equal to such funds which were paid by Obligors with respect to their obligation under the related Contracts to pay any taxes (it being agreed by the Borrower thatsuch amount shall be promptly paid to the taxing authorities entitled thereto); 

(ii)      to the Agent for the account of the Qualifying Swap Counterparty under each Qualifying Interest Rate Swap, in an amount equal to (and for the payment of) all amounts which are due and payable by theBorrower to such Qualifying Swap Counterparty on such Remittance Date, pursuant to the terms of the applicable Qualifying Interest Rate Swap other than any such amounts which are due and payable by the Borrower pursuant to termination, breakage,tax, indemnity or similar provisions of the applicable Qualifying Interest Rate Swap; 

(iii)     on a pro rata basis, to (x) the Backup Servicer in an amount equal to the Standby Backup Servicer’s Fee (to the extent accrued and unpaid as of the last day of the immediately preceding FeePeriod) at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder and (y) the Custodian, the Custodian’s Fee and (z) the Agent’s Bank, the Agent’s BankFee;; 

(iv)     at any time after the occurrence of a Servicer Default and theappointment of the Backup Servicer as the Servicer hereunder, to the Backup Servicer in an amount equal to (1) the Active Backup Servicer’s Fees which are accrued and unpaid as of the last day of the immediately preceding Fee Period plus(2) any Transition Costs not previously reimbursed to the Backup Servicer plus (3) the Active Backup Servicer’s Indemnified Amounts; 

(v)      at any time prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder, to the Servicer in an amountequal to the Servicing Fee which is accrued and unpaid as the last day of the immediately preceding Fee Period; 

 

49 

(vi)       to the Agent for theaccount of the Lender in an amount equal to (and for the pro rata payment of) (A) the Fees which are due and payable on such Remittance Date pursuant to the terms of the Fee Letter and (B) any Yield on any Loan which is accrued and unpaidas of the last day of the immediately preceding Fee Period; 

(vii)      tothe Agent for the account of the Lender (for application to the repayment of Loans Outstanding) in an amount equal to the sum (in the following order, if the available amount should be insufficient to pay in full such sum), without duplication, of:

    (x)    any Borrowing Base Deficiency; 

    (y)    the excess of the aggregate Facility Amount hereunder, calculatedsolely with respect to Loans secured by Pool A Receivables, over the Pool A Borrowing Base; and 

    (z)    the excess of the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, over the Pool B Borrowing Base; 

(viii)     on a pro rata basis, (A) to the Servicer in an amount equal to any ServicerAdvances (and amounts to be reimbursed as Servicer Advances pursuant to Sections 6.03, 6.04 and 6.15 hereof) not previously reimbursed to the Servicer and (B) to the Agent in an amount equal to the aggregate amount of all other Obligations thendue from the Borrower to the Lender, the Agent or any Affected Party hereunder for the account of such parties as applicable (other than those specified in below); 

(ix)       on or after the occurrence of the Program Termination Date (but prior toany Program Termination Cure Event with respect to the Program Termination Event related to such Program Termination Date), to the Agent for the account of the Lender for the repayment of Loans Outstanding in an amount equal to the lesser of(A) all remaining Available Funds in the Collection Account and (B) an amount necessary to repay the outstanding principal amount of all Loans in full; 

(x)        on or after the occurrence of a Pool A Termination Event, to the Agentfor the account of the Lender for the repayment of Pool A Loans in an amount equal to the lesser of (A) all remaining Available Funds in the Collection Account and (B) an amount necessary to repay the outstanding principal amount of allPool A Loans in full; 

(xi)       on or after the occurrence of a Pool BTermination Event with respect to any Underlying Originator, to the Agent for the account of the Lender for the repayment of Pool B Loans related to such Underlying Originator in an amount equal to the lesser of (A) all remaining AvailableFunds in the Collection Account and (B) an amount necessary to repay the outstanding principal amount of all Pool B Loans related to such Underlying Originator in full; 

(xii)      to the Agent for the account of the Qualifying Swap Counterparty under eachQualifying Interest Rate Swap in an amount equal to (and for the payment of) all 

 

50 

amounts which are due and payable by the Borrower to such Qualifying Swap Counterparty on such Remittance Date pursuant to termination, breakage or similarprovisions of the applicable Qualifying Interest Rate Swap; and 

(xiii)    to the order of theBorrower, any remaining amounts. 

(d)       Borrower DeficiencyPayments.  Notwithstanding anything to the contrary contained in this Section 2.05 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the Facility Amount shall exceed the BorrowingLimit, then the Borrower shall remit to the Agent, prior to any Borrowing and in any event no later than the close of business of the Agent on such day (or if such day is not a Business Day, no later than the close of business of the Agent on thenext succeeding Business Day), a payment (to be applied by the Agent to repay Loans selected by the Agent, in its sole discretion), in such amount as may be necessary to reduce the Facility Amount to an amount less than or equal to the BorrowingLimit. Notwithstanding anything to the contrary contained in this Section 2.05 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the Facility Amount shall exceed the Borrowing Base, then theBorrower shall (X) remit to the Agent, prior to any Borrowing and in any event no later than the close of business of the Agent on such day (or if such day is not a Business Day, no later than the close of business of the Agent on the nextsucceeding Business Day), a payment (to be applied by the Agent to repay Loans selected by the Agent, in its sole discretion), in such amount as may be necessary to reduce the Facility Amount to an amount less than or equal to the Borrowing Base or(Y) Pledge additional Eligible Receivables hereunder, prior to any Borrowing and in any event no later than the close of business of the Agent on such day (or if such day is not a Business Day, no later than the close of business of the Agenton the next succeeding Business Day) in such amount as may be necessary to increase the Borrowing Base to an amount equal to or greater than the Facility Amount. 

(e)       Pool A Deficiency Payments.  Notwithstanding anything to the contrary contained in this Section 2.05 or in any otherprovision in this Agreement, if, on any day prior to the Collection Date, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, would exceed the Pool A Borrowing Base, then the Borrower shallremit to the Agent, prior to any Borrowing and in any event no later than the close of business of the Agent on such day (or if such day is not a Business Day, no later than the close of business of the Agent on the next succeeding Business Day), apayment (to be applied by the Agent to repay Loans with respect to Pool A Receivables selected by the Agent, in its sole discretion), in such amount as may be necessary to reduce such excess to zero. 

(f)       Pool B Deficiency Payments.  Notwithstanding anything to the contrarycontained in this Section 2.05 or in any other provision in this Agreement, if, on any day prior to the Collection Date, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables,would exceed the Pool B Borrowing Base, then the Borrower shall remit to the Agent, prior to any Borrowing and in any event no later than the close of business of the Agent on such day (or if such day is not a Business Day, no later than the closeof business of the Agent on the next succeeding Business Day), a payment (to be applied by the Agent to repay Loans with respect to Pool B Receivables selected by the Agent, in its sole discretion), in such amount as may be necessary to reduce suchexcess to zero. 

 

51 

(g)      Instructions to the Agent’sBank.  All instructions and directions given to the Agent’s Bank by the Servicer, the Borrower or the Agent pursuant to this Section 2.05 shall be in writing (including instructions and directions transmitted to theAgent’s Bank by telecopy), and such written instructions and directions shall be delivered with a written certification that such instructions and directions are in compliance with the provisions of this Section 2.05. The Servicerand the Borrower shall immediately transmit to the Agent by telecopy a copy of all instructions and directions given to the Agent’s Bank by such party pursuant to this Section 2.05. The Agent shall immediately transmit to theServicer and the Borrower by telecopy a copy of all instructions and directions given to the Agent’s Bank by the Agent, pursuant to this Section 2.05. 

SECTION 2.06        Security Deposit Account. 

(a)      On or before the date hereof, the Borrower shall enter into a Security Deposit Account Agreement and open and maintain a segregated trust account (the “Security DepositAccount”) at the Agent’s Bank, for the receipt of amounts representing any Security Deposits with respect to any Pool A Contract by the related Obligor. The Servicer shall promptly deposit into the Security Deposit Account, allSecurity Deposits related to Pledged Pool A Receivables which are in the possession of, or come into the possession of, the Servicer or the Originator. Monies received in the Security Deposit Account shall be invested at the written direction of theServicer in Permitted Investments during the term of this Agreement, and any income or other gain realized from such investment shall be held in the Security Deposit Account, subject to disbursement and withdrawal as herein provided. No suchPermitted Investment shall mature later than the Business Day preceding the next following Remittance Date and shall not be sold or disposed of prior to its maturity. Monies shall be subject to withdrawal in accordance withSection 2.06(d) hereof. 

(b)      The Servicer shall provide to the Borrowermonthly written confirmation of investments of funds held in the Security Deposit Account, describing the Permitted Investments in which such amounts have been invested. Any funds not so invested shall be insured by the Federal Deposit InsuranceCorporation. 

(c)      If any amounts invested as provided in Section 2.06(a)hereof shall be subject to disbursement from the Security Deposit Account as set forth in Section 2.06(d) hereof, the Servicer shall cause such investments of such Security Deposit Account to be sold or otherwise converted to cash to thecredit of such Security Deposit Account. The Servicer shall not be liable for any investment loss resulting from investment of money in the Security Deposit Account in any Permitted Investment in accordance with the terms hereof (other than in itscapacity as obligor under any Permitted Investment and other than to the extent such loss results from the gross negligence or wilful misconduct of the Servicer). 

(d)      Disbursements from the Security Deposit Account shall be made, to the extent funds therefore are available, only as follows: 

(i)       for deposit in the Collection Account in accordance with the direction ofthe Servicer prior to 2:00 p.m. New York time on the Business Day prior to any Remittance Date to the extent that the Servicer, in accordance with the terms of a Pool A Contract, has determined that amounts in respect of a Security Deposit shall beapplied as 

 

52 

full or partial Recoveries or, in its discretion, as a full or partial Scheduled Payment under such Pool A Contract; 

(ii)       the Security Deposit with respect to a Pledged Pool A Receivable shall bepaid to or upon the order of the Servicer at any time that the Pool A Contract with respect to which such Security Deposit has been made is no longer a Pledged Pool A Receivable, whether through maturity of such Pool A Contract or substitution orrepurchase by the Servicer, for further disposition by the Servicer in accordance with the terms of the related Pool A Contract or applicable law; and 

(iii)      any amounts remaining in the Security Deposit Account upon the Collection Date shall be distributed to or at the direction of the Servicer for furtherdisposition in accordance with the terms of the related Contract or applicable law. 

SECTION2.07            (a) On or before the date hereof, the Borrower shall enter into the Cash Reserve Account Agreement (Northern) and open and maintain a segregated trust account (the“Cash Reserve Account (Northern)”) at the Agent’s Bank, for the receipt of amounts representing any Cash Reserves funded with respect to the Pool B Contract entered into with Northern. From time to time after the date hereof,the Borrower shall enter into a Cash Reserve Account Agreement and open and maintain a segregated trust account (any such account, together with the Cash Reserve Account (Northern), a “Cash Reserve Account”) at the Agent’sBank, for the receipt of amounts representing any Cash Reserves funded with respect to any Pool B Contract. The Servicer shall promptly deposit into the Cash Reserve Account, all Cash Reserves related to Pledged Pool B Receivables which are in thepossession of, or come into the possession of, the Servicer or the Originator. Monies received in any Cash Reserve Account shall be invested at the written direction of the Servicer in Permitted Investments during the term of this Agreement, and anyincome or other gain realized from such investment shall be held in such Cash Reserve Account, subject to disbursement and withdrawal as herein provided. No such Permitted Investment shall mature later than the Business Day preceding the nextfollowing Remittance Date and shall not be sold or disposed of prior to its maturity. Monies shall be subject to withdrawal in accordance with Section 2.07(d) hereof. 

(b)      The Servicer shall provide to the Borrower monthly written confirmation of investments of fundsheld in each Cash Reserve Account, describing the Permitted Investments in which such amounts have been invested. Any funds not so invested shall be insured by the Federal Deposit Insurance Corporation. 

(c)      If any amounts invested as provided in Section 2.07(a) hereof shall be subject todisbursement from a Cash Reserve Account as set forth in Section 2.07(d) hereof, the Servicer shall cause such investments of such Cash Reserve Account to be sold or otherwise converted to cash to the credit of such Cash Reserve Account.The Servicer shall not be liable for any investment loss resulting from investment of money in the Cash Reserve Account in any Permitted Investment in accordance with the terms hereof (other than in its capacity as obligor under any PermittedInvestment and other than to the extent such loss results from the gross negligence or willful misconduct of the Servicer). 

 

53 

(d)       Disbursements from any Cash Reserve Accountshall be made, to the extent funds therefore are available, only as follows: 

(i)        for deposit in the Collection Account in accordance with the direction of the Servicer prior to 2:00 p.m. New York time on the Business Day prior to any Remittance Date to the extent thatthe Servicer, in accordance with the terms of a Pool B Contract, has determined that amounts in respect of a Cash Reserve shall be applied as full or partial Recoveries or, in its discretion, as a full or partial Scheduled Payment under such Pool BContract; 

(ii)      the Cash Reserve with respect to a Pool B Contract shallbe paid to or upon the order of the Servicer at any time that the related Pool B Loan has been repaid in full and the Pool B Contract with respect to which such Cash Reserve has been made is no longer a Pledged Receivable, whether through maturityof such Contract or substitution or repurchase by the Servicer, for further disposition by the Servicer in accordance with the terms of the related Pool B Contract or applicable law; and 

(iii)     any amounts remaining in the Cash Reserve Account upon the Collection Date shall bedistributed to or at the direction of the Servicer for further disposition in accordance with the terms of the related Pool B Contract or applicable law. 

SECTION 2.08        [Intentionally omitted.] 

SECTION 2.09        [Intentionally omitted.] 

SECTION2.10        [Intentionally omitted.] 

SECTION2.11        Payments and Computations, Etc.    (a) All amounts to be deposited or paid by the Borrower or the Servicer to the Lender hereunder shall be paid or deposited inaccordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in lawful money of the United States in immediately available funds to the Collection Account or such other account as is designated by the Lender.The Borrower shall, to the extent permitted by law, pay to the Agent interest on all amounts not paid or deposited when due hereunder (whether owing by the Borrower or the Servicer) at the Non-CP Rate, plus 2%, payable on demand; provided,however, that such interest rate shall not at any time exceed the maximum rate permitted by applicable law. Such interest shall be for the account of, and distributed by the Agent to, the Lender. Any Obligation hereunder shall not be reducedby any distribution of any portion of Collections with respect to any Pledged Receivable if at any time such distribution is rescinded or returned by the Lender to the Borrower or any other Person for any reason. All computations of interest and allcomputations of Yield, Breakage Fee and other fees hereunder (including, without limitation, the Fees, the Active Backup Servicer’s Fee, the Standby Backup Servicer’s Fee, the Custodian’s Fee and the Servicing Fee) shall be made onthe basis of a year of 360 days for the actual number of days (including the first but excluding the last day) elapsed. 

(b)     Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case beincluded in the computation of payment of Yield, 

 

54 

interest or any fee payable hereunder, as the case may be; provided, however, that with respect to the calculation of Yield, such extension oftime shall not be included in more than one Interest Period. 

(c)      If any Borrowingrequested by the Borrower and approved by the Lender and the Agent pursuant to Section 2.02 is not for any reason whatsoever, except as a result of the gross negligence or wilful misconduct of the Lender, the Agent or an Affiliatethereof, made or effectuated, as the case may be, on the date specified therefor, the Borrower shall indemnify the Lender against any loss, cost or expense incurred by the Lender related thereto (other than any such loss, cost or expense solely dueto the gross negligence or willful misconduct of the Lender, the Agent or an Affiliate thereof), including, without limitation, any loss (including cost of funds and reasonable out-of-pocket expenses), cost or expense incurred by reason of theliquidation or reemployment of deposits or other funds acquired by the Lender to fund Loans or maintain Loans during such Fixed Period. The Lender shall provide to the Borrower documentation setting forth the amounts of any loss, cost or expensereferred to in the previous sentence, such documentation to be conclusive absent manifest error. 

SECTION2.12        Fees.    (a) The Borrower shall pay the Lender (either directly or through the Agent) certain fees (the “Fees”) in the amounts and on the dates setforth in a fee letter (the “Fee Letter”), dated the date hereof, among the Borrower, the Agent and the Lender. 

(b)      All of the Fees payable pursuant to this Section 2.12 (other than Fees payable on the date hereof) shall be payable solely from amounts available for application pursuant to, and subject tothe priority of, payment set forth in, Section 2.05. 

SECTION2.13        Increased Costs; Capital Adequacy.    (a) If, due to either (i) the introduction of or any change (including, without limitation, any change by way ofimposition or increase of reserve requirements) in or in the interpretation of any law or regulation (including, without limitation, any law or regulation resulting in any interest payments paid to a Lender under this Agreement being subject toUnited States withholding tax) or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to the Agent, theLender, or any Affiliate, successor or assign thereof (each of which shall be an “Affected Party”) of agreeing to make or making, funding or maintaining any Loan (or any reduction of the amount of any payment (whether of principal,interest, fee, compensation or otherwise) to any Affected Party hereunder), as the case may be, the Borrower shall, from time to time, within ten days after written demand complying with Section 2.13(c) by the Agent, on behalf of suchAffected Party, pay to the Agent, on behalf of such Affected Party, additional amounts sufficient to compensate such Affected Party for such increased costs or reduced payments. 

(b)      If either (i) the introduction of or any change in or in the interpretation of any law,guideline, rule or regulation, directive or request or (ii) the compliance by any Affected Party with any law, guideline, rule, regulation, directive or request from any central bank or other governmental authority or agency (whether or nothaving the force of law), including, without limitation, compliance by an Affected Party with any request or directive regarding capital adequacy, has or would have the effect of reducing the rate of return on the capital of any 

 

55 

Affected Party, as a consequence of its obligations hereunder or any related document or arising in connection herewith or therewith to a level below thatwhich any such Affected Party could have achieved but for such introduction, change or compliance (taking into consideration the policies of such Affected Party with respect to capital adequacy), by an amount deemed by such Affected Party to bematerial, then, from time to time, after demand by such Affected Party (which demand shall be accompanied by a statement setting forth the basis of such demand), the Agent shall be paid, on behalf of such Affected Party (from Collections withrespect to Pledged Receivables pursuant to, and subject to the priority of payment set forth in, Section 2.05), such additional amounts as will compensate such Affected Party for such reduction. 

(c)      In determining any amount provided for in this Section 2.13, the Affected Party mayuse any reasonable averaging and attribution methods. The Agent, on behalf of any Affected Party making a claim under this Section 2.13, shall submit to the Borrower a certificate setting forth in reasonable detail the basis for and thecomputations of such additional or increased costs, which certificate shall be conclusive absent demonstrable error. 

(d)      If, as a result of any event or circumstance similar to those described in Section 2.13(a) or 2.13(b), any Affected Party (that is an Issuer or a Lender) is required to compensate abank or other financial institution (including, without limitation, HVB) providing liquidity support, credit enhancement or other similar support to such Affected Party in connection with this Agreement, then, upon demand by the Agent, on behalf ofsuch Affected Party, the Borrower shall pay, in accordance with Section 2.05, to the Agent, on behalf of such Affected Party such additional amount or amounts as may be necessary to reimburse such Affected Party for any amounts paid byit. 

SECTION 2.14        Collateral Assignment ofAgreements.    The Borrower hereby collaterally assigns to the Agent, for the benefit of the Lender, all of the Borrower’s right and title to and interest in, to and under (but not any obligations under) the Purchase andContribution Agreement, any Originator Sale Agreement, the PCA Seller Assignment Agreement, each Qualifying Interest Rate Cap, the Contract related to each Pledged Receivable, all other agreements, documents and instruments evidencing, securing orguarantying any Pledged Receivable and all other agreements, documents and instruments related to any of the foregoing (the “Assigned Documents”).    Without limiting any obligation of the Servicer hereunder, theBorrower confirms and agrees that the Agent (or any designee thereof, including, without limitation, the Servicer), following an Event of Default or a Program Termination Event, shall have the right to enforce the Borrower’s rights and remediesunder each Assigned Document, but without any obligation on the part of the Agent, the Lender or any of their respective Affiliates to perform any of the obligations of the Borrower under any such Assigned Document. In addition, each of the Servicerand the Borrower confirms and agrees that the Servicer and the Borrower will, upon receipt of notice or discovery thereof, promptly send to the Agent a notice of (i) any breach of any representation, warranty, agreement or covenant under anysuch Assigned Document or (ii) any event or occurrence that, upon notice, or upon the passage of time or both, would constitute such a breach, in each case, immediately upon learning thereof. The parties hereto agree that such assignment to theAgent shall terminate upon the Collection Date. 

 

56 

SECTION 2.15        Grant of a SecurityInterest.    To secure the prompt and complete payment when due of the Obligations and the performance by the Borrower of all of the covenants and obligations to be performed by it pursuant to this Agreement, the Borrowerhereby (i) collaterally assigns and pledges to the Agent, on behalf of the Lender (and its successors and assigns) and (ii) grants a security interest to the Agent, on behalf of the Lender (and its successors and assigns), in all of thefollowing property whether tangible or intangible and whether now owned or existing or hereafter arising or acquired and wheresoever located (collectively, the “Pledged Assets”) and all of the Borrower’s right, title andinterest in, to and under the Pledged Assets: 

(a)       all Pool AReceivables and Pool B Receivables purchased by or contributed (or otherwise transferred or pledged pursuant to the terms of the Purchase and Contribution Agreement) to the Borrower under the Purchase and Contribution Agreement from time to time(such Pool A Receivables, the “Pledged Pool A Receivables”, and such Pool B Receivables, the “Pledged Pool B Receivables”), all Other Conveyed Property related to the Pledged Receivables purchased by or contributed(or otherwise transferred or pledged pursuant to the terms of the Purchase and Contribution Agreement) to the Borrower under the Purchase and Contribution Agreement, all Related Security related to the Pledged Receivables, all interest of theBorrower in all Obligor Collateral related to the Pledged Receivables (together with all security interests in and insurance proceeds related to such Obligor Collateral and all proceeds from the disposition of such Obligor Collateral, whether bysale to the related Obligors or otherwise), any Security Deposits or Cash Reserve related to such Pledged Receivables, all Collections and other monies due and to become due under the Contracts (and, if applicable, Underlying Contracts) related tothe Pledged Receivables received on or after the date such Pledged Receivables were purchased by or contributed to (or purportedly purchased by or contributed to) the Borrower under the Purchase and Contribution Agreement; 

(b)      the Assigned Documents, including, in each case, without limitation, all moniesdue and to become due to the Borrower under or in connection therewith; 

(c)       the Collection Account, the Lockbox, the Lockbox Account, the Security Deposit Account, each Cash Reserve Account and all other bank and similar accounts relating to Collections with respect toPledged Receivables (whether now existing or hereafter established) and all funds held therein, and all investments in and all income from the investment of funds in the Collection Account, the Lockbox Account, the Security Deposit Account, eachCash Reserve Account and such other accounts; 

(d)      the Records relatingto any Pledged Receivables; 

(e)      all UCC financing statements filed bythe Borrower against the PCA Sellers in connection with the Purchase and Contribution Agreement; 

(f)       all UCC financing statements filed by the PCA Seller against the Originator and assigned to the Borrower under or in connection with the Purchase and Contribution Agreement; 

 

57 

(g)      each Qualifying Interest Rate Cap,any other interest rate protection agreement entered into with respect to the transactions contemplated under the RLSA and, in each case, all payments thereunder; 

(h)      all Liquidation Proceeds relating to any Pledged Receivables; and 

(i)       all proceeds of the foregoing property described in clauses (a) through(g) above, including interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for or on account of the sale or other disposition of any or all of thethen existing Pledged Receivables. 

SECTION 2.16       Evidence ofDebt.  The Lender shall maintain an account or accounts evidencing the indebtedness of the Borrower to the Lender resulting from each Loan owing to the Lender from time to time, including the amounts of principal and interest payableand paid to the Lender from time to time hereunder. The entries made in such account(s) of the Lender shall be conclusive and binding for all purposes, absent manifest error. 

SECTION 2.17        [Intentionally omitted.] 

SECTION 2.18        Release of Pledged Receivables.        (a) Subject to Section 2.20 hereof, upon the repaymentof any Loan, the Borrower may obtain the release of any Pledged Receivable and the related Other Conveyed Property or Related Security securing such Loan (including, without limitation, the release of any security interest of the Agent or theBorrower therein) by depositing into an account designated by the Agent the Release Price therefor on the date of such repayment; provided, that the foregoing release shall only be available if, after giving effect thereto and the applicationof the proceeds thereof in accordance with the terms hereof, there shall not be a Borrowing Base Deficiency, Program Termination Event, Pool A Termination Event or a Pool B Termination Event (and such Pool B Termination Event is related to suchPledged Receivable), or an event that but for notice or lapse of time or both would constitute any of the foregoing events. 

(b)      The Borrower shall notify the Agent of any Release Price to be paid pursuant to this Section 2.18 on the Business Day on which such Release Price shall be paid specifying the PledgedReceivables to be released and the Release Price. 

(c)       Promptly after theCollection Date has occurred, the Lender and the Agent, in accordance with their respective interests, shall re-assign and transfer to the Borrower, for no consideration but at the sole expense of the Borrower, their respective remaining interestsin the Pledged Assets, free and clear of any Adverse Claim resulting solely from an act by the Lender or the Agent but without any other representation or warranty, express or implied, by or recourse against the Lender or the Agent. 

SECTION 2.19        Treatment of Amounts Paid by the Borrower.  Amounts paid bythe Borrower pursuant to Section 2.18 on account of Pledged Receivables shall be treated as payments on Pledged Receivables hereunder. 

 

58 

SECTION 2.20        Prepayment; CertainIndemnification Rights; Termination.  (a) The Borrower may prepay, in whole or in part, the outstanding principal amount of any Loans advanced hereunder. Any amounts so prepaid shall be applied to repay the outstanding principalamount of Loans allocated to a Fixed Period or Fixed Periods selected by the Agent. Amounts prepaid pursuant to this Section 2.20(a) may be reborrowed in accordance with the terms of this Agreement. If the Borrower intends to make an optionalprepayment pursuant to this Section 2.20(a), the Borrower shall give five (5) Business Days’ prior written notice thereof to the Agent, specifying the intended Prepayment Date, the intended Prepayment Amount, whether the Loans beingprepaid are Pool A Loans or Pool B Loans, a calculation of any applicable Breakage Fee and the Pledged Receivables that the Borrower shall request to have released pursuant to Section 2.18 in connection with such prepayment (and the DiscountedBalance thereof). Any such optional prepayment of the outstanding principal amount of any Loans advanced hereunder shall be accompanied by all Yield accrued with respect thereto. If such notice is given, the principal amount specified in such notice(together with all Yield accrued with respect thereto) shall be due and payable on the Prepayment Date specified therein. 

(b)     Without limiting any other provision hereof, the Borrower agrees to indemnify the Lender, the Agent and any Affiliate thereof (including, without limitation, any Affiliate acting as a Qualifying SwapCounterparty) and to hold each such Person harmless from any cost, loss or expense which it may sustain or incur as a consequence of (i) the Borrower making any optional prepayment pursuant to Section 2.20(a) hereof, (ii) any defaultby the Borrower in making any optional prepayment pursuant to Section 2.20(a) hereof after notice of such prepayment has been given, (iii) any failure by the Borrower to take an Loan hereunder after notice of such Loan has been givenpursuant to this Agreement, (iv) any acceleration of the maturity of any Loans by the Agent or Lender in accordance with the terms of this Agreement, including, but not limited to, any Breakage Fees, any cost, loss or expense arising related tothe terminating or amending of any Qualifying Interest Rate Swap and from interest or fees payable by the Lender or Issuer to lenders of funds obtained by it in order to advance or maintain the Loans hereunder. Indemnification pursuant to thisSection shall survive the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. 

(c)     Notwithstanding any other provision hereof, the Borrower shall not terminate or amend this Agreement or any other Transaction Document or reduce the Borrowing Limit prior to theFacility Maturity Date without the Agent’s prior written consent, which consent may be withheld in the Agent’s sole discretion. 

SECTION 2.21        Increase of Borrowing Limit.  The Borrower may, upon 90 days’ prior written notice to the Agent and the Lender, request that theBorrowing Limit be increased, which request may be granted in the sole discretion, and with the written consent, of the Lender, it being agreed that the Borrower shall pay to the Lender the fee related to such increase that is required pursuant tothe terms of the Fee Letter. 

 

59 

ARTICLE III. 

CONDITIONS OF LOANS 

SECTION3.01        Conditions Precedent to Initial Borrowing.  The initial Borrowing hereunder is subject to the conditions precedent that: 

(a)      the Arrangement Fee (as such term is defined in the Fee Letter) shall have been paid in full andall other acts and conditions (including, without limitation, the obtaining of any necessary regulatory approvals and the making of any required filings, recordings or registrations) required to be done and performed and to have happened prior tothe execution, delivery and performance of this Agreement and all related documents and to constitute the same legal, valid and binding obligations, enforceable in accordance with their respective terms, shall have been done and performed and shallhave happened in due and strict compliance with all applicable laws; and 

(b)      the Agentshall have received on or before the date of such Borrowing the items listed in Schedule I hereto, each in form and substance satisfactory to the Agent and the Lender. 

SECTION 3.02        Conditions Precedent to All Borrowings.  Each Borrowing (including the initial Borrowing, except as explicitly setforth below) by the Borrower from the Lender shall be subject to the further conditions precedent that: 

(a)      With respect to any such Borrowing (other than the initial Borrowing), on or prior to the date of such Borrowing, the Servicer shall have delivered to the Agent, in form and substance satisfactory tothe Agent, the most recent Monthly Remittance Report required by the terms of Section 6.12(b); 

(b)      After giving effect to such Borrowing requested by the Borrower the following statements shall be true (and the Borrower shall be deemed to have certified that): 

(i)     the Facility Amount will not exceed the lesser of the (x) Borrowing Limit and(y) the Borrowing Base; 

(ii)    the Facility Amount, calculated solely withrespect to Loans secured by Pool A Receivables, will not exceed the Pool A Borrowing Base; and 

(iii)   the Facility Amount, calculated solely with respect to Loans secured by Pool B Receivables, will not exceed the Pool B Borrowing Base; 

(c)     On the Borrowing Date of such Borrowing, the following statements shall be true andcorrect, and the Borrower by accepting any amount of such Borrowing shall be deemed to have represented that: 

(i)     the representations and warranties contained in Section 4.01 are true and correct in all material respects, before and after giving effect to the 

 

60 

Borrowing to take place on such Borrowing Date and to the application of proceeds therefrom, on and as of such day as though made on and as of such date;

(ii)       no event has occurred and is continuing, or would resultfrom such Borrowing, which constitutes a Program Termination Event hereunder or an event that but for notice or lapse of time or both would constitute a Program Termination Event; 

(iii)      with respect to any Borrowing of a Pool A Loan, no event has occurred and iscontinuing, or would result from such Borrowing, which constitutes a Pool A Termination Event hereunder or an event that but for notice or lapse of time or both would constitute a Pool A Termination Event; 

(iv)      with respect to any Borrowing of a Pool B Loan, no event has occurred and iscontinuing, or would result from such Borrowing, which constitutes a Pool B Termination Event with respect to the Underlying Originator related to the Pool B Receivable securing such Pool B Loan or an event that but for notice or lapse of time orboth would constitute such a Pool B Termination Event; 

(v)      (a) theprincipal amount of such Loan being advanced on such Borrowing Date is not less than $500,000, (b) on and as of such Borrowing Date, after giving effect to such Borrowing, the Facility Amount does not exceed the lesser of (A) the BorrowingLimit and (B) the Borrowing Base, (c) on and as of such Borrowing Date, after giving effect to such Borrowing, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool A Receivables, does not exceedthe Pool A Borrowing Base, and (d) on and as of such Borrowing Date, after giving effect to such Borrowing, the aggregate Facility Amount hereunder, calculated solely with respect to Loans secured by Pool B Receivables, does not exceed the PoolB Borrowing Base; 

(vi)     (A) the Borrower has delivered to the Agent a copy ofthe Notice of Borrowing and the related Notice of Pledge (together with the attached Receivables Schedule) pursuant to Section 2.02, each appropriately completed and executed by the Borrower, (B) the Borrower has delivered or causedto have been delivered to the Custodian the Notice of Pledge and each item listed in the definition of Receivable File with respect to the Receivables being Pledged hereunder three (3) or, in the case of the initial Borrowing Date hereunder,four (4) Business Days prior to such Borrowing Date, (C) the Contract related to each Receivable being Pledged hereunder on such Borrowing Date has been duly assigned by Originator to TRS and duly assigned by TRS to the Borrower and dulyassigned by the Borrower to the Agent and (D) by 2:30 P.M. (New York City time) on the Business Day immediately preceding such Borrowing Date, a Collateral Receipt from the Custodian confirming that, interalia, the ReceivableFiles received on or before such Business Day conform with the Receivables Schedule delivered to the Custodian and the Agent pursuant to Section 2.02; 

 

61 

(vii)     all terms and conditions of thePurchase and Contribution Agreement required to be satisfied in connection with the assignment of each Receivable being Pledged hereunder on such Borrowing Date (and the Other Conveyed Property and Related Security related thereto), including,without limitation, the perfection of the Borrower’s interests therein (other than with respect to Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMVContracts), shall have been satisfied in full, and all filings (including, without limitation, UCC filings) required to be made by any Person and all actions required to be taken or performed by any Person in any jurisdiction to give the Agent, forthe benefit of the Lender, a first priority perfected security interest in such Receivables, Related Security and the Other Conveyed Property related thereto and the proceeds thereof shall have been made, taken or performed; 

(viii)    (A) the Servicer shall have taken or caused to be taken all steps necessary under allapplicable law (including the filing of an Obligor Financing Statement) in order to cause a valid, subsisting and enforceable perfected, first priority security interest to exist in Originator’s favor in the Obligor Collateral securing eachReceivable being Pledged hereunder on such Borrowing Date (other than with respect to Equipment which has a value of less than $25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV Contracts),(B) Originator shall have assigned such perfected, first priority security interest to TRS pursuant to any Originator Sale Agreement, (C) TRS shall have assigned the perfected, first priority security interest in the Obligor Collateral tothe Borrower pursuant to the Purchase and Contribution Agreement and (D) the Borrower shall have assigned the perfected, first priority security interest in the Obligor Collateral (and the proceeds thereof) referred to in clause (A) aboveto the Agent, for the benefit of the Lender, pursuant to Section 2.15 hereof; 

(ix)      if the Obligor Collateral related to any Receivable (other than a Vehicle Sublimit Pledged Receivable) securing such Borrowing is a Vehicle, the Borrower shall have delivered to the applicableRegistrar of Titles an application for a Certificate of Title for such Vehicle which such Certificate of Title shall indicate the Borrower as the owner of the related Vehicle and indicate “Bayerische Hypo- und Vereinsbank AG, New York Branch,as Agent” as the sole lienholder with respect to such Vehicle; and 

(x)      the Borrower shall have taken all steps necessary under all applicable law in order to cause to exist in favor of the Agent, for the benefit of the Lender, a valid, subsisting and enforceable firstpriority perfected security interest in the Borrower’s interest in the Obligor Collateral related to each Receivable being Pledged hereunder on such Borrowing Date (other than with respect to Underlying Equipment which has a value of less than$25,000 and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV Contracts); 

 

62 

(d)      No law or regulation shallprohibit, and no order, judgment or decree of any federal, state or local court or governmental body, agency or instrumentality shall prohibit or enjoin, the making of such Loans by the Lender in accordance with the provisions hereof; and

(e)      The Lender shall have received and found to be satisfactory withrespect to Pledged Receivables being Pledged in connection with such Borrowing, which have been previously pledged to any lender by Originator, TRS, the Borrower or any Affiliate thereof under any other financing facility, evidence of the release ofany liens granted in connection with such financing with respect to any such Pledged Receivables. 

(f)      [Intentionally Omitted.] 

(g)     If Receivables related to Allegiant Partners Incorporated are being Pledged by the Borrower in connection with such Borrowing, National City Bank shall have executed and delivered to the Borrower and theAgent a release letter in the form attached hereto as Exhibit L and the Borrower shall have duly filed with the appropriate office in California a UCC-3 partial release evidencing the release contained in such release letter and otherwise in a formsatisfactory to the Agent. 

SECTION 3.03        Advances Do Not Constitute aWaiver.  No advance of a Loan hereunder shall constitute a waiver of any condition to the Lender’s obligation to make such an advance unless such waiver is in writing and executed by the Lender. 

ARTICLE IV. 

REPRESENTATIONS ANDWARRANTIES

SECTION 4.01        Representations and Warranties of theBorrower.    The Borrower hereby represents and warrants, as of the date hereof, on each Borrowing Date and on the first day of each Rollover Fixed Period, as follows: 

(a)      Each Receivable designated as an Eligible Receivable on any Borrowing BaseCertificate or Monthly Remittance Report is an Eligible Receivable. Each Receivable included as an Eligible Receivable in any calculation of the Borrowing Base or the Eligible Receivables Balance is an Eligible Receivable. 

(b)      The Borrower is a limited liability company duly organized, validly existing andin good standing under the laws of the jurisdiction of its formation and has the power and all licenses necessary to own its assets and to transact the business in which it is engaged and is duly qualified and in good standing under the laws of eachjurisdiction where the transaction of such business or its ownership of the Pledged Receivables requires such qualification. 

(c)      [Intentionally omitted.] 

(d)      The Borrower has the power, authority and legal right to make, deliver and perform this Agreement and each of the Transaction Documents to which it is a party and 

 

63 

all of the transactions contemplated hereby and thereby, and has taken all necessary action to authorize the execution, delivery and performance of thisAgreement and each of the Transaction Documents to which it is a party, and to grant to the Agent, for the benefit of the Lender, a first priority perfected security interest in the Pledged Assets on the terms and conditions of this Agreement. ThisAgreement and each of the Transaction Documents to which the Borrower is a party constitutes the legal, valid and binding obligation of the Borrower, enforceable against it in accordance with their respective terms, except as the enforceabilityhereof and thereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws of general application affecting creditors’ rights generally and by general principles of equity (whether such enforceability isconsidered in a proceeding in equity or at law). No consent of any other party and no consent, license, approval or authorization of, or registration or declaration with, any governmental authority, bureau or agency is required in connection withthe execution, delivery or performance by the Borrower of this Agreement or any Transaction Document to which it is a party or the validity or enforceability of this Agreement or any such Transaction Document or the Pledged Receivables, other thansuch as have been met or obtained. 

(e)      The execution, delivery andperformance of this Agreement and all other agreements and instruments executed and delivered or to be executed and delivered pursuant hereto or thereto in connection with the Pledge of the Pledged Assets will not (i) create any Adverse Claimon the Pledged Assets or (ii) violate any provision of any existing law or regulation or any order or decree of any court, regulatory body or administrative agency or the certificate of formation or limited liability company agreement of theBorrower or any contract or other agreement to which or the Borrower is a party or by which the Borrower or any property or assets of the Borrower may be bound. 

(f)       No litigation or administrative proceeding of or before any court, tribunal or governmental body is presently pending or, to the knowledge of theBorrower, threatened against the Borrower or any properties of Borrower or with respect to this Agreement, which, if adversely determined, could have a material effect on the business, assets or financial condition of the Borrower or which woulddraw into question the validity of this Agreement, any Transaction Document to which the Borrower is a party or any of the other applicable documents forming part of the Pledged Assets. 

(g)      In selecting the Receivables to be Pledged pursuant to this Agreement, noselection procedures were employed which are intended to be adverse to the interests of the Lender. 

(h)      The grant of the security interest in the Pledged Assets by the Borrower to the Agent, for the benefit of the Lender pursuant to this Agreement, is in the ordinary course of business for the Borrowerand is not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction. No such Pledged Assets have been sold, transferred, assigned or pledged by the Borrower to any Person, other than the Pledge ofsuch Assets to the Agent, for the benefit of the Lender, pursuant to the terms of this Agreement. 

 

64 

(i)      The Borrower has no Debt or otherindebtedness which, in the aggregate, exceeds $10,000, other than Debt incurred under the terms of the Transaction Documents. 

(j)      The Borrower has been formed solely for the purpose of engaging in transactions of the types contemplated by this Agreement. 

(k)     No injunction, writ, restraining order or other order of any nature adversely affectsthe Borrower’s performance of its obligations under this Agreement or any Transaction Document to which the Borrower is a party. 

(l)      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 taxreturns) required to be filed, is not liable for taxes payable by any other Person and has paid or made adequate provisions for the payment of all taxes, assessments and other governmental charges due from the Borrower except for those taxes beingcontested in good faith by appropriate proceedings and in respect of which no penalty may be assessed from such contest and it has established proper reserves on its books. No tax lien or similar adverse claim has been filed, and no claim is beingasserted, with respect to any such tax, assessment or other governmental charge. Any taxes, fees and other governmental charges payable by the Borrower, as applicable, in connection with the execution and delivery of this Agreement and the otherTransaction Documents and the transactions contemplated hereby or thereby have been paid or shall have been paid if and when due. 

(m)    The chief executive office of the Borrower (and the location of the Borrower’s records regarding the Pledged Receivables (other than those delivered to the Custodian)) is located at1818 Market Street, 9th Floor, Philadelphia, PA 19103. 

(n)     TheBorrower’s legal name is as set forth in this Agreement; other than as disclosed on Schedule II hereto (as such schedule may be updated from time to by the Agent upon receipt of a notice delivered to the Agent pursuant toSection 6.20), the Borrower has not changed its name since its formation; the Borrower does not have tradenames, fictitious names, assumed names or “doing business as” names other than as disclosed on Schedule II hereto(as such schedule may be updated from time to by the Agent upon receipt of a notice delivered to the Agent pursuant to Section 6.20). 

(o)     The Borrower is solvent and will not become insolvent after giving effect to the transactions contemplated hereby; the Borrower is paying its debts as they becomedue; and the Borrower, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business. 

(p)     The Borrower has no subsidiaries. 

(q)     The Borrower has given fair consideration and reasonably equivalent value in exchange for the sale of the Pledged Receivables by the PCA Sellers under the Purchase and Contribution Agreement. 

 

65 

(r)     No Monthly Remittance Report orBorrowing Base Certificate (each if prepared by the Borrower or to the extent that information contained therein is supplied by the Borrower), information, exhibit, financial statement, document, book, record or report furnished or to be furnishedby the Borrower to the Agent or the Lender in connection with this Agreement is or will be inaccurate in any material respect as of the date it is or shall be dated or (except as otherwise disclosed in writing to the Agent or the Lender, as the casemay be, at such time) as of the date so furnished, and no such document contains or will contain any material misstatement of fact or omits or shall omit to state a material fact or any fact necessary to make the statements contained therein notmisleading. 

(s)     No proceeds of any Loans will be used by the Borrower toacquire any security in any transaction, which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended. 

(t)      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 Pledged Assetscontemplated by Section 2.14. 

(u)     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, noris the Borrower otherwise subject to regulation thereunder. 

(v)     No Event ofDefault or Unmatured Event of Default has occurred and is continuing. 

(w)    Each ofthe Pledged Receivables was underwritten and is being serviced in conformance with Originator’s standard underwriting, credit, collection, operating and reporting procedures and systems (including, without limitation, the Credit and CollectionPolicy). 

(x)     [Intentionally Omitted.] 

(y)     The Borrower is in compliance with ERISA and has not incurred and does not expect toincur 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. 

(z)     There is not now, nor will there be at any time in the future, any agreement orunderstanding between the Servicer and the Borrower (other than as expressly set forth herein), providing for the allocation or sharing of obligations to make payments or otherwise in respect of any taxes, fees, assessments or other governmentalcharges. 

SECTION 4.02        Representations and Warranties of theServicer.  The Servicer (so long as the Servicer is not the Backup Servicer as successor Servicer) hereby 

 

66 

represents and warrants, as of the date hereof, on each Borrowing Date, on each Remittance Date and on the first day of each Rollover Fixed Period, asfollows: 

(a)      Each Receivable designated as an Eligible Receivable onany Borrowing Base Certificate or Monthly Remittance Report is an Eligible Receivable. Each Receivable included as an Eligible Receivable in any calculation of the Borrowing Base or the Eligible Receivables Balance is an Eligible Receivable.

(b)      [Intentionally omitted.] 

(c)      The Servicer is a corporation duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its incorporation and has the power and all licenses necessary to own its assets and to transact the business in which it is engaged (which includes servicing Receivables on behalf of third parties anditself) and is duly qualified and in good standing under the laws of each jurisdiction where its servicing of the Pledged Receivables requires such qualification. 

(d)      The Servicer has the power, authority and legal right to make, deliver and performthis Agreement and each of the Transaction Documents to which it is a party and all of the transactions contemplated hereby and thereby, and has taken all necessary action to authorize the execution, delivery and performance of this Agreement andeach of the Transaction Documents to which it is a party. This Agreement and each of the Transaction Documents to which the Servicer is a party constitutes the legal, valid and binding obligation of the Servicer, enforceable against it in accordancewith their respective terms, except as the enforceability hereof and thereof may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws of general application affecting creditors’ rights generally and by generalprinciples of equity (whether such enforceability is considered in a proceeding in equity or at law). No consent of any other party and no consent, license, approval or authorization of, or registration or declaration with, any governmentalauthority, bureau or agency is required in connection with the execution, delivery or performance by the Servicer of this Agreement or any Transaction Document to which it is a party or the validity or enforceability of this Agreement or any suchTransaction Document, other than such as have been met or obtained. 

(e)      The execution, delivery and performance of this Agreement by the Servicer and all other agreements and instruments executed and delivered or to be executed and delivered by the Servicer pursuant heretoor thereto in connection with the Pledge of the Pledged Assets will not (i) create any Adverse Claim on the Pledged Assets or (ii) violate any provision of any existing law or regulation or any order or decree of any court, regulatory bodyor administrative agency or the certificate of incorporation or bylaws of the Servicer or any material contract or other agreement to which the Servicer is a party or by which the Servicer or any of its property or assets may be bound. 

(f)      No litigation or administrative proceeding of or before any court, tribunal orgovernmental body is presently pending or, to the knowledge of the Servicer, threatened against the Servicer or any properties of the Servicer or with respect to this 

 

67 

Agreement, which, if adversely determined, could have a material effect on the business, assets or financial condition of the Servicer or which would drawinto question the legality, validity or enforceability of this Agreement, any Transaction Document to which the Servicer is a party. 

(g)     [Intentionally omitted.] 

(h)     [Intentionally omitted.] 

(i)      [Intentionally omitted.] 

(j)      [Intentionally omitted.] 

(k)     No injunction, writ, restraining order or other order of any nature adversely affects the Servicer’s performance of its obligations under this Agreement or any Transaction Document to which the Serviceris a party. 

(l)      The Servicer has filed (on a consolidated basis orotherwise) 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 provisionsfor the payment of all taxes, assessments and other governmental charges due from the Servicer except for those taxes being contested in good faith by appropriate proceedings and in respect of which it has established proper reserves on its books.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 Servicer in connection with theexecution and delivery of this Agreement and the other Transaction Documents to which it is a party and the transactions contemplated hereby or thereby have been paid or shall have been paid if and when due. 

(m)    The chief executive office of the Servicer (and the location of the Servicer’s recordsregarding the Pledged Receivables (other than those delivered to the Custodian)) is located at 1818 Market Street, 9th Floor, Philadelphia, PA 19103. 

(n)     The Servicer’s legal name is as set forth in this Agreement; other than as disclosed on Schedule II hereto (as such schedule may be updated from timeto by the Agent upon receipt of a notice delivered to the Agent pursuant to Section 6.20), the Servicer has not changed its name since its formation; the Servicer does not have tradenames, fictitious names, assumed names or “doingbusiness as” names other than as disclosed on Schedule II hereto (as such schedule may be updated from time to by the Agent upon receipt of a notice delivered to the Agent pursuant to Section 6.20). 

(o)     The Servicer is solvent and will not become insolvent after giving effect to thetransactions contemplated hereby; the Servicer is paying its debts as they become due; and the Servicer, after giving effect to the transactions contemplated hereby, will have adequate capital to conduct its business. 

(p)     [Intentionally omitted.] 

 

68 

(q)     [Intentionally omitted.] 

(r)      As of the date hereof and as of the date of delivery of any Monthly RemittanceReport or Borrowing Base Certificate, no Monthly Remittance Report or Borrowing Base Certificate (each if prepared by the Servicer or to the extent that information contained therein is supplied by the Servicer), information, exhibit, financialstatement, document, book, record or report furnished or to be furnished by the Servicer to the Agent or the Lender in connection with this Agreement is or will be inaccurate in any material respect, and no such document contains or will contain anymaterial misstatement of fact or omits or shall omit to state a material fact or any fact necessary to make the statements contained therein not misleading. 

(s)     [Intentionally omitted.] 

(t)     [Intentionally omitted.] 

(u)     TheServicer 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 of1940, as amended, nor is the Servicer otherwise subject to regulation thereunder. 

(v)     No Event of Default or Unmatured Event of Default has occurred and is continuing. 

(w)    Each of the Pledged Receivables was underwritten and is being serviced in conformance with Originator’s and the Servicer’s standard underwriting, credit, collection, operating andreporting procedures and systems (including, without limitation, the Credit and Collection Policy). 

(x)     Any Computer Tape or Listing made available by the Servicer to the Agent was complete and accurate in all material respects as of the date on which such Computer Tape or Listing was made available.

(y)     The Servicer is in compliance with ERISA and has not incurred and doesnot 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. 

(z)     There is not now, nor will there be at any time in the future, any agreement orunderstanding between the Servicer and the Borrower (other than as expressly set forth herein), providing for the allocation or sharing of obligations to make payments or otherwise in respect of any taxes, fees, assessments or other governmentalcharges. 

SECTION 4.03      Resale of Receivables Upon Breach of Covenant orRepresentation and Warranty by Borrower.  The Borrower or the Servicer, as the case may be, shall inform the other parties to this Agreement promptly, in writing, upon the discovery of any breach of the representations, warrantiesand/or covenants contained in Section 4.01, 

 

69 

Section 4.02 or Section 5.01; provided, however, that the failure to provide any such notice shall not diminish, in anymanner whatsoever, any obligation of the Borrower under this Section 4.03 to sell any Pledged Receivable. Upon the discovery by or notice to the Borrower of any such breach that also constitutes a Seller Purchase Event under and asdefined in the Purchase and Contribution Agreement, the Borrower shall have an obligation to, and the Borrower shall, resell to TRS pursuant to the Purchase and Contribution Agreement (and the Agent may enforce such obligation of the Borrower tosell) any Pledged Receivable adversely affected by any such breach. The Servicer shall notify the Agent promptly, in writing, of any failure by the Borrower to so resell any such Pledged Receivable. In connection with the resale of such PledgedReceivable, the Borrower shall remit funds in an amount equal to the Release Price for such Pledged Receivable to the Collection Account on the date of such resale. It is understood and agreed that the obligation of the Borrower to resell to TRS,and the obligation of TRS to purchase, any Receivables which are adversely effected by a Seller Purchase Event is not intended to, and shall not, constitute a guaranty of the collectibility or payment of any Receivable which is not collected, notpaid or uncollectible on account of the insolvency, bankruptcy, or financial inability to pay of the related Obligor. 

ARTICLE V.

GENERAL COVENANTS OF THE BORROWER AND THE SERVICER 

SECTION 5.01        General Covenants.  (a) The Borrower will observe all corporate procedures required by its certificate offormation, limited liability company agreement and the laws of its jurisdiction of formation. The Borrower will maintain its limited liability company existence in good standing under the laws of its jurisdiction of formation and will promptlyobtain and thereafter maintain qualifications to do business as a foreign limited liability company in any other state in which it does business and in which it is required to so qualify under applicable law. 

(b)      The Borrower will at all times ensure that (i) its members act independently and in itsinterests and in the interests of its creditors, (ii) it shall at all times maintain at least one independent manager who (A) is not currently and has not been during the five years preceding the date of this Agreement an officer, directoror employee of the Borrower or an Affiliate thereof (other than acting as independent manager or in a similar capacity) and (B) is not a member of the Borrower or an Affiliate thereof (other than a special independent member of the Borrower ora 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 Originator, TRS oran Affiliate of any of them), (iii) its assets are not commingled with those of Originator, TRS or any other Affiliate of the Borrower, (iv) its members duly authorize all of its limited liability company actions, (v) it maintainsseparate and accurate records and books of account and such books and records are kept separate from those of Originator, TRS and any other Affiliate of the Borrower and (vi) it maintains minutes of the meetings and other proceedings of themembers. Where necessary, the Borrower will obtain proper authorization from its members for limited liability company action. 

 

70 

(c)     The Borrower will pay its operating expenses andliabilities from its own assets. 

(d)     The Borrower will not have any of its indebtednessguaranteed by Originator, TRS or any Affiliate of any of them. 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 Originator or TRS, and the Borrower willnot engage in business transactions with Originator or TRS, except on an arm’s-length basis. The Borrower will not hold Originator or TRS out to third parties as other than an entity with assets and liabilities distinct from the Borrower. TheBorrower will cause any of its financial statements consolidated with those of Originator or TRS 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 tobe 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 theBorrower’s separate identity. 

(e)     In its capacity as Servicer, LEAF Financial will, tothe extent necessary, maintain separate records on behalf of and for the benefit of the Agent and the Lender, act in accordance with instructions and directions, delivered in accordance with the terms hereof, from the Borrower, the Agent and/or theLender in connection with its servicing of the Pledged Receivables hereunder, and will ensure that, at all times when it is dealing with or in connection with the Pledged Receivables in its capacity as Servicer, it holds itself out as Servicer, andnot in any other capacity. 

(f)      The Servicer (if LEAF Financial or an Affiliatethereof) shall, to the extent required by applicable law, disclose all material transactions associated with this transaction in appropriate regulatory filings and public announcements. The annual financial statements of Resource Capital Corp.(including any consolidated financial statements) shall disclose the effects of the transactions contemplated by the Purchase and Contribution Agreement as a sale or capital contribution of Receivables, Related Security and Other Conveyed Propertyto the Borrower, and the annual financial statements of the Borrower shall disclose the effects of the transactions contemplated by this Agreement as a loan to the extent required by and in accordance with GAAP, it being understood that the Loans tothe Borrower under this Agreement will be treated as debt on the consolidated financial statements of Resource Capital Corp.. 

(g)     The Borrower shall take all other actions necessary to maintain the accuracy of the factual assumptions set forth in the legal opinions of Thacher Proffitt & Wood LLP, as special counsel to LEAFFinancial, Originator, TRS, RCC and the Borrower, issued in connection with the Purchase and Contribution Agreement and relating to the issues of substantive consolidation and true conveyance of the Pledged Receivables. 

(h)     Except as otherwise provided herein or in any other Transaction Document, neither the Borrower nor theServicer shall sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or (if the Servicer is LEAF Financial or an Affiliate thereof) suffer to exist any Adverse Claim upon or with respect to, any Pledged Receivable, anyCollections related thereto or any other Pledged Assets related thereto, or upon or with respect to 

 

71 

any account to which any Collections of any Receivable are sent, or assign any right to receive income in respect thereof. Except as otherwise providedherein or in any other Transaction Document, the Borrower shall not create or suffer to exist any Adverse Claim upon or with respect to any of the Borrower’s assets. Except as otherwise provided herein or in any other Transaction Document, theServicer shall not create, or (if the Servicer is LEAF Financial or an Affiliate thereof) permit any action to be taken by any Person to create, any Adverse Claim upon or with respect to any of the Borrower’s assets. 

(i)      The Borrower will not merge or consolidate with, or convey, transfer, lease or otherwise disposeof (whether in one transaction or in a series of transactions), all or substantially all of its assets (whether now owned or hereafter acquired) other than with respect to asset dispositions in connection with an optional prepayment pursuant toSection 2.20(a) hereof, or acquire all or substantially all of the assets or capital stock or other ownership interest of any Person without the prior written consent of the Agent. 

(j)      The Borrower will not account for or treat (whether in financial statements or otherwise) thetransactions contemplated by the Purchase and Contribution Agreement in any manner other than a sale or capital contribution and absolute assignment of Receivables, Related Security and Other Conveyed Property by the applicable PCA Seller to theBorrower constituting a “true conveyance” for bankruptcy purposes. 

(k)     TheBorrower will not amend, modify, waive or terminate any terms or conditions of the Purchase and Contribution Agreement without the written consent of the Agent, and shall perform its obligations thereunder. 

(l)      The Borrower will not amend, modify or otherwise make any change to its certificate of formationwithout the consent of the Agent. 

(m)    Neither the Borrower nor (if the Servicer is LEAF Financialor an Affiliate thereof) the Servicer will make or allow to be made any material amendment to the Credit and Collection Policy without the prior written consent of the Agent (and the Agent hereby agrees to take commercially reasonable efforts torespond to any request for such consent in a timely manner). Neither the Borrower nor (if the Servicer is LEAF Financial or an Affiliate thereof) the Servicer will make or allow to be made any non-material amendment to the Credit and CollectionPolicy without the prior written consent of the Agent; provided, that if the Agent has not responded to a written request for such consent within ten (10) Business Days of receipt thereof, the Agent shall be deemed to have consented to suchrequest. Neither the Borrower nor (if the Servicer is LEAF Financial or an Affiliate thereof) the Servicer will make or allow to be made any material amendment to the Credit and Collection Policy without delivering prior written notice of suchmaterial amendment to Moody’s and S&P. 

(n)     If the Borrower or the Servicer receivesany Collections with respect to any Pledged Receivable, the Borrower or the Servicer, as applicable, will remit such Collections to the Collection Account within one (1) Business Day of the Borrower’s or the Servicer’s identificationthereof. 

(o)     The Servicer shall cause: 

 

72 

(i)      the Obligor under each Contractto remit all payments owed or otherwise payable (including, without limitation, amounts payable by the Obligor in its role as a servicer of Underlying Contracts sold to the Originator) by such Obligor under such Contract (or any servicer on itsbehalf) to the Lockbox or by wire transfer to the Lockbox Account; 

(ii)     theLockbox Bank to deposit all Collections with respect to any Pledged Receivable in the Lockbox into the Lockbox Account on each Business Day; and 

(iii)    the Lockbox Bank to remit all Collections with respect to any Pledged Receivable on deposit in the Lockbox Account (or any sub-account thereof or any related account)to the Collection Account on each Business Day. 

(p)     The Borrower shall deliver or cause tobe delivered to the Custodian four (4) Business Days prior to the initial Borrowing Date hereunder and three (3) Business Days prior to any other Borrowing Date hereunder a Notice of Pledge and each item listed in the definition ofReceivable File with respect to the Receivables being Pledged hereunder on such Borrowing Date. 

(q)     The Borrower shall deliver to the Agent on each Purchase Date a copy of the Assignment delivered to it on such Purchase Date. 

(r)      Each of the Servicer (and, if the Servicer is not LEAF Financial or an Affiliate thereof, upon the Servicer gaining knowledge thereof) and the Borrowershall promptly notify the Agent of the occurrence of any Servicer Default, Event of Default, Program Termination Event, Pool A Termination Event or Pool B Termination Event. 

(s)     The Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the Borrower shall take all actions necessary to maintain a Lockbox CollectionPercentage of at least 80% at all times. 

(t)      Each of the Servicer (if the Servicer isLEAF Financial or an Affiliate thereof) and the Borrower shall take all actions (in the case of Obligor Collateral with an original cost over $100,000) and all commercially reasonable actions (in the case of Obligor Collateral with an original costof $100,000 or less) necessary to ensure that the Originator is at all times named as loss payee under each Insurance Policy with respect to Obligor Collateral related to a Pledged Receivable. 

(u)     On each Remittance Date, a Qualifying Interest Rate Swap, in form and substance satisfactory to theAgent, shall be duly executed by the Borrower and a Qualifying Swap Counterparty, and any amounts required to have been paid thereunder as of such Remittance Date shall have been paid and any obligations required to have been performed thereunder asof such Remittance Date shall have been performed. 

(v)     Each of the Servicer (if the Serviceris LEAF Financial or an Affiliate thereof) and the Borrower shall take all actions necessary to ensure that each Pool B Contract purchased by the Borrower under the Purchase and Contribution Agreement contains “Seller 

 

73 

Events of Default” or similar events of default (“Parallel Defaults”) which (i) would occur if a Pool B Termination Event withrespect to the related Underlying Originator occurred, (ii) would entitle the Borrower, as assignee of the Originator’s rights under such Contract, to deliver, or cause the delivery of, redirection notices which would require allUnderlying Obligors to make all payments under Underlying Contracts sold or pledged to the Originator under such Contract to the Lockbox Account or an account designated by the Borrower or such Servicer and (iii) would entitle the Borrower, asassignee of the Originator’s rights under the Contract, to receive 100% of all payments under the Underlying Contracts sold or pledged to the Originator under such Contract in the event of such a Parallel Default. If a Parallel Default or any“Seller Events of Default” or similar events of default under a Pool B Contract related to the financial condition of the applicable Underlying Originator, the tangible net worth of the applicable Underlying Originator or any cross default(a Parallel Default or any such “Seller Events of Default” or similar events of default being referred to herein as “Critical Defaults”) shall occur, then each of the Servicer (if the Servicer is LEAF Financial or anAffiliate thereof) and the Borrower shall take all actions necessary to ensure (x) that no such Critical Default is waived and (y) the prompt delivery to all related Underlying Obligors of a redirection notice which would require suchUnderlying Obligors to make all payments under Underlying Contracts sold or pledged to the Originator under such Contract to the Lockbox Account. Each of the Servicer and the Borrower shall notify the Agent promptly upon learning of the occurrenceof any “Seller Event of Default” or similar event of default under any Pool B Contract. 

(w)     Each of the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the Borrower shall take all actions necessary to ensure that any intercreditor agreement related to any Pool B Contractpurchased by the Borrower under the Purchase and Contribution Agreement shall name the Borrower as a lender or similar party thereunder within 60 days of the Closing Date. 

(x)      Within 60 days of the Closing Date, each of the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the Borrower shall take all actionsnecessary to ensure that a control agreement satisfactory to the Agent is executed with respect to any lockbox subaccount containing funds payable to the Originator or any assignee thereof in connection with any Pool B Contract. 

(y)      [Intentionally omitted.] 

(z)      [Intentionally Omitted.] 

(aa)    Within 45 days of the Closing Date, the Borrower shall have provided the Agent with evidence of theexecution of an amendment to effect the changes agreed upon by Borrower and Agent for the Pool B Contract relating to Axis Capital, Inc. Within 45 days of the Closing Date, the Borrower shall have provided the Agent with evidence (which may be acertificate satisfactory to the Agent) that all Pool B Contracts that are Pledged hereunder have been amended to the extent needed to make the same changes agreed upon by Borrower and Agent with respect to the Pool B Contracts in the forms relatingto Axis Capital, Inc. and the Radiance Capital LLC. 

 

74 

ARTICLE VI. 

ADMINISTRATION AND SERVICING; CERTAIN COVENANTS 

SECTION6.01        Appointment and Designation of the Servicer.  (a) The Borrower, the Lender and the Agent hereby appoint the Person designated by the Agent from time to time (with the approvalof the Lender), pursuant to this Section 6.01 (the “Servicer”), as their agent to service, administer and collect the Pledged Receivables and otherwise to enforce their respective rights and interests in and under thePledged Receivables and the other Pledged Assets. The Servicer shall collect such Pledged Receivables under the conditions referred to above by means of the collection procedures as set forth in the Credit and Collection Policy, to the extentconsistent with the provisions of this Article VI. Unless otherwise specified by the Borrower, the Servicer’s authorization under this Agreement shall terminate on the Collection Date. Until the Agent gives notice to the Borrower of adesignation of a new Servicer upon the occurrence and during the continuance of any Servicer Default, or consents in writing to the appointment by the Borrower of a new Servicer, LEAF Financial is hereby designated as, and hereby agrees to performthe duties and obligations of, the Servicer, pursuant to the terms hereof at all times until the earlier of the Agent’s designation of the Backup Servicer or any other Person as the new Servicer (upon the occurrence and during the continuanceof any Servicer Default), the delivery by the Agent of its written consent to the appointment by the Borrower of a new Servicer or the Collection Date. Upon the occurrence and during the continuance of any Servicer Default, the Agent may at any time(with the approval of the Lender) designate as Servicer the Backup Servicer, or any other Person with demonstrated experience in servicing equipment leases and loans, to succeed LEAF Financial or any successor Servicer, on the condition in each casethat any such Person so designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms hereof. Each of the Borrower and LEAF Financial hereby grants to any successor Servicer an irrevocable power of attorney totake any and all steps in the Borrower’s, LEAF Financial’s or the Servicer’s name, as applicable, and on behalf of the Borrower or LEAF Financial, necessary or desirable, in the determination of such successor Servicer, to service,administer or collect any and all Pledged Receivables including, without limitation, to make withdrawals from the Security Deposit Account pursuant to Section 2.06 and any Cash Reserve Account pursuant to Section 2.07.

(b)      The Servicer is hereby authorized to act for the Borrower and the Agent and, insuch capacity, shall manage, service, administer and arrange collections on the Pledged Receivables and perform the other actions required by the Servicer under this Agreement for the benefit of the Agent and the Lender. The Servicer agrees that itsservicing of the Pledged Receivables shall be carried out in accordance with customary and usual procedures of institutions which service equipment lease and loan contracts and receivables and, to the extent more exacting, the degree of skill andattention that the Servicer exercises from time to time, with respect to all comparable equipment lease and loan contracts and receivables that it services for itself or others in accordance with the Credit and Collection Policy (or if the BackupServicer has been appointed as Servicer, the Backup Servicer’s customary collection policies) and, to the extent more exacting, the requirements of this Article VI. The Servicer’s duties shall include, without limitation, collectingand posting of all Collections with respect to any Pledged Receivable, responding to inquiries of Obligors on the Pledged Receivables, investigating delinquencies, sending invoices, payment statements or payment books to Obligors, reporting 

 

75 

any required tax information to Obligors, policing the collateral, enforcing the terms of the Contracts (and any documents related thereto) related to anyPledged Receivables, complying with the terms of the Lockbox Agreement, accounting for Collections with respect to any Pledged Receivable, furnishing monthly and annual statements to the Agent with respect to distributions and performing the otherduties specified herein. 

(c)      The Servicer will require each Underlying Originator withrespect to Pool B Receivables to (i) service all Underlying Contracts in a manner consistent with the applicable Underlying Originator Credit and Collection Policy (which the Servicer has reviewed and approved in accordance with the Credit andCollection Policy) and (ii) provide a monthly data feed, which shall be in form and content satisfactory to the Servicer, to the Servicer. The Servicer shall provide servicing similar to the servicing that the Servicer is obligated to providehereunder with respect to any Underlying Contracts to the extent that the related Underlying Originator fails to service such Underlying Contracts in a manner consistent with the applicable Underlying Originator Credit and Collection Policy.

(d)      To the extent consistent with the standards, policies and procedures otherwiserequired hereby, the Servicer shall have full power and authority, acting alone, to do any and all things in connection with such managing, servicing, administration and collection that it may deem necessary or desirable. The Servicer is authorizedto release liens on Obligor Collateral in order to collect insurance proceeds with respect thereto and to liquidate such Obligor Collateral in accordance with its customary standards, policies and procedures; provided, however, that,notwithstanding the foregoing, the Servicer shall not, (i) except pursuant to an order from a court of competent jurisdiction, release an Obligor from payment of any unpaid amount under any Pledged Receivable or (ii) waive the right tocollect the unpaid balance of any Pledged Receivable from such Obligor, except that, subject to Section 6.02(a), the Servicer may forego collection efforts if the amount which the Servicer, in its reasonable judgment, expects to realizein connection with such collection efforts is determined by the Servicer, in its reasonable judgment, to be less than the reasonably expected costs of pursuing such collection efforts and if the Servicer would forego such collection efforts inaccordance with its customary procedures. The Servicer is hereby authorized to commence, in its own name (in its capacity as Servicer), if possible, or in the name of the Borrower, the Agent or the Lender (provided that if the Servicer isacting in the name of the Borrower, the Agent or the Lender, the Servicer shall have obtained the Borrower’s, the Agent’s or the Lender’s consent, as the case may be, which consent shall not be unreasonably withheld), a legalproceeding to enforce any Pledged Receivable (or any terms or provisions of the related Contract) or to commence or participate in any other legal proceeding (including, without limitation, a bankruptcy proceeding) relating to or involving a PledgedReceivable or any related Contract, Obligor or Obligor Collateral. If the Servicer commences or participates in such a legal proceeding in its own name, the Borrower, the Agent or the Lender, as the case may be, shall thereupon be deemed to haveautomatically assigned such Pledged Receivable to the Servicer solely for purposes of commencing or participating in any such proceeding as a party or claimant, and the Servicer is authorized and empowered by the Borrower, the Agent or the Lender,as the case may be, to execute and deliver in the Servicer’s name any notices, demands, claims, complaints, responses, affidavits or other documents or instruments in connection with any such proceeding. The Borrower, the Agent or the Lender,as the case may be, shall furnish the Servicer with any powers of attorney and other documents which the Servicer may reasonably request in writing 

 

76 

and which the Servicer deems necessary or appropriate and take any other steps which the Servicer may deem necessary or appropriate to enable the Servicer tocarry out its servicing and administrative duties under this Agreement. If, however, in any suit or legal proceeding it is held that the Servicer may not prosecute such suit or legal proceeding on the grounds that it is not an actual party ininterest or a holder entitled to enforce such suit or legal proceeding, the Borrower shall take such steps as the Servicer deems necessary to prosecute such suit or legal proceeding, including bringing suit in its name. 

SECTION 6.02        Collection of Receivable Payments; Modification and Amendment ofReceivables; Lockbox Agreements.  (a) Consistent with and subject to the standards, policies and procedures required by this Agreement, the Servicer shall collect all payments called for under the terms and provisions of theContracts related to the Pledged Receivables (and the terms and provisions of any documents related thereto) as and when the same shall become due and shall follow such collection procedures with respect to the Pledged Receivables and the relatedContracts and Insurance Policies as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the Borrower and the Lender with respect thereto. 

(b)      The Servicer shall remit all payments by or on behalf of the Obligors received directly by the Servicer to the Collection Account, without deposit into anyintervening account as soon as practicable, but in no event later than the end of business on the Business Day of identification thereof as payments by or on behalf of the Obligors. 

SECTION 6.03        Realization Upon Receivables.  Consistent with thestandards, policies and procedures required by this Agreement, the Servicer shall use its best efforts to repossess (or otherwise comparably convert the ownership of) and liquidate any Obligor Collateral securing a Pledged Receivable within a numberof days consistent with the Credit and Collection Policy of an uncured failure of the related Obligor to make any payment which it is obligated to make under the related Contract or an earlier date that would be customary under the circumstancesinvolved (as determined in accordance with the Credit and Collection Policy) and, in any case, in a manner as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the Borrower and the Lender with respect thereto;provided, however, that the Servicer need not repossess (or otherwise comparably convert the ownership of) and liquidate the Obligor Collateral securing such a Pledged Receivable if, in the reasonable opinion of the Servicer, the valueof such Obligor Collateral does not exceed by more than an insignificant amount the cost to repossess (or otherwise comparably convert the ownership of) and liquidate such Obligor Collateral. The Servicer is authorized to follow such customarypractices and procedures as it shall deem necessary or advisable, consistent with the standard of care required by Section 6.01, which practices and procedures may include reasonable efforts to realize upon any guaranties, selling therelated Obligor Collateral at public or private sale, the submission of claims under an Insurance Policy and other actions by the Servicer in order to realize upon such Pledged Receivable. The foregoing is subject to the provision that, in any casein which the Obligor Collateral shall have suffered damage, the Servicer shall not expend funds in connection with any repair or towards the repossession of such Obligor Collateral, unless it shall determine in its discretion that such repair and/orrepossession shall increase the proceeds of liquidation of the related Pledged Receivable by an amount greater than the amount of such expenses. All Liquidation Proceeds shall be 

 

77 

remitted directly by the Servicer to the Collection Account without deposit into any intervening account as soon as practicable, but in no event later thanone (1) Business Day after identification thereof as Liquidation Proceeds. The Servicer shall pay on behalf of the Borrower any personal property taxes assessed on repossessed Obligor Collateral, and the Servicer shall be entitled toreimbursement of any such tax as a Servicer Advance. 

SECTION6.04        Insurance Regarding Equipment.  (a) Without limiting the effect of any other provision hereof, the Servicer shall monitor the status of the Insurance Policies required underthe Contracts in accordance with the terms of the Credit and Collection Policy and its customary servicing procedures. The Servicer shall determine that each Obligor has obtained and maintains (or with respect to an Underlying Originator, caused theUnderlying Obligor to obtain and maintain) a physical loss and damage insurance policy (except if the Equipment or Underlying Equipment relating to such Obligor or Underlying Obligor, as applicable, had an aggregate original cost of $100,000 orless), a general public liability and any other insurance policy required by the Credit and Collection Policy or any Contract or Underlying Contract related to a Pledged Receivable (including during the repossession of the related Equipment orUnderlying Equipment) and, if any Obligor has failed to do so, the Servicer shall make all commercially reasonable efforts to enforce all rights under the related Contract or Underlying Contract to ensure that such Obligor obtains or cause to beobtained such insurance policies; provided, however, that, notwithstanding any other provision hereof, in the event that such Obligor fails to obtain or cause to be obtained any such insurance policies, the Servicer shall obtain suchinsurance policies on the Obligor’s behalf and at the Obligor’s expense within thirty (30) days of the execution of such Contract. 

(b)      The Servicer may, and upon the request of the Agent shall, sue to enforce or collect upon the Insurance Policies, in its own name (but in its capacity as Servicer), if possible,or as agent of the Borrower, the Agent and the Lender. If the Servicer elects to commence a legal proceeding to enforce an Insurance Policy, the act of commencement shall be deemed to be an automatic assignment of the rights of the Borrower, theAgent and the Lender under such Insurance Policy to the Servicer for purposes of collection only. If, however, in any enforcement suit or legal proceeding it is held that the Servicer may not enforce an Insurance Policy on the grounds that it is notan actual party in interest or a holder entitled to enforce the Insurance Policy, the Borrower shall take such steps as the Servicer deems necessary to enforce such Insurance Policy, including bringing suit in its name. 

SECTION 6.05        Maintenance of Security Interests in ObligorCollateral.  (a) The Servicer and the Borrower shall take all steps necessary, under all applicable law, in order to (i) cause a valid, subsisting and enforceable first priority perfected security interest to exist in favorof the Agent (for the benefit of the Lender) in the Borrower’s interests in the Obligor Collateral, all Other Conveyed Property and all Related Security related to each Receivable (and the proceeds thereof) being Pledged hereunder, to secure aLoan on the Borrowing Date thereof including (A) the filing of a UCC financing statement in the applicable jurisdiction adequately describing the Obligor Collateral, Other Conveyed Property and all Related Security and naming the Borrower asdebtor and the Agent as the secured party, (B) filing Obligor Financing Statements against all Obligors purchasing or leasing Obligor Collateral, (C) other than with respect to an Underlying Lease Contract related to Equipment which has anoriginal cost of less than $25,000 if such Underlying Lease Contract is a Dollar 

 

78 

Purchase Option Contract or $50,000 if such Underlying Lease Contract is a FMV Contract, causing the filing of UCC-3 assignment statements in the applicablejurisdictions adequately describing the Underlying Originator Loan Collateral being transferred thereunder and naming the applicable Underlying Originator as the assignor and Originator as the assignee, and (D) other than with respect to anUnderlying Lease Contract related to Equipment which has an original cost of less than $25,000 if such Underlying Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Underlying Lease Contract is a FMV Contract, causing the filingof UCC-3 assignment statements in the applicable jurisdictions adequately describing the Underlying Originator Loan Collateral being transferred thereunder and naming the applicable Originator as the assignor and TRS as the assignee (ii) ensurethat such security interest is and shall be prior to all other liens upon and security interests in the Borrower’s interests in such Obligor Collateral, Other Conveyed Property and Related Security (and the proceeds thereof) that now exist, ormay hereafter arise or be created other than Permitted Liens, and (iii) ensure that immediately prior to the Pledge of such Receivable by the Borrower to the Agent (for the benefit of the Lender), such Obligor Collateral, Other ConveyedProperty and Related Security is free and clear of all Adverse Claims other than Permitted Liens; and 

(b)      The Servicer shall take all steps, as are necessary (subject to Section 6.05(a)), to maintain perfection of the security interest in the Borrower’s interests in the Obligor Collateral,Other Conveyed Property and Related Security related to each Pledged Receivable (and the proceeds thereof) in favor of the Agent, for the benefit of the Lender, including but not limited to, obtaining the execution by the Borrower and the recording,registering, filing, rerecording, refiling, and reregistering of all security agreements, financing statements and continuation statements as are necessary to maintain and/or perfect such security interests granted by the Borrower and therecordation of the Agent’s lien on such Obligor Collateral’s Certificate of Title (if such Obligor Collateral is a Vehicle and the related Receivable is not a Vehicle Sublimit Pledged Receivable). Without limiting the generality of theforegoing, the Borrower and the Agent each hereby authorizes the Servicer, and the Servicer agrees, to take any and all steps necessary (subject to Section 6.05(a)) to re-perfect the security interest in the Borrower’s interests inany Obligor Collateral (and the Borrower’s interests therein), Other Conveyed Property and Related Security related to each Pledged Receivable (and the proceeds thereof) in favor of the Agent, for the benefit of the Lender, as may be necessary,due to the relocation of such Obligor Collateral or for any other reason. 

(c)      In theevent that the combination of the sale of a Receivable by Originator to a PCA Seller under any Originator Sale Agreement and the sale or contribution of a Receivable by a PCA Seller to the Borrower under the Purchase and Contribution Agreement andthe Pledge of such Receivable by the Borrower to the Agent, for the benefit of the Lender, hereunder are insufficient, without a notation on a related Vehicle’s Certificate of Title, or without fulfilling any additional administrativerequirements under the laws of the state in which such Vehicle is located, to assign the ownership of such Vehicle to the Borrower or to perfect a security interest in such Vehicle (and the proceeds thereof) in favor of the Agent, for the benefit ofthe Lender, the parties hereto agree that Originator’s designation, if any, as the owner on the Certificate of Title with respect to such Vehicle is in its capacity as agent of TRS, the Borrower and the Agent, for the benefit of the Lender, astheir interests may appear, until such notations are made or additional administrative requirements are fulfilled, and the Servicer (if the Servicer is Leaf Funding) shall take all steps necessary to ensure that the Originator acts in such capacity.

 

79 

(d)      The Servicer shall promptly (or, if the Serviceris unable or refuses to act, the Agent may) take all steps as are necessary to evidence the Borrower’s ownership in any Vehicle related to each Pledged Receivable other than a Vehicle Sublimit Pledged Receivable (which is a lease or secured bylease payments) and to create and maintain perfection of the security interest of the Agent in any Vehicle related to each Pledged Receivable other than a Vehicle Sublimit Pledged Receivable (and the proceeds of such Vehicle), including, if requiredby applicable law, having a notation of the Borrower’s ownership (in the case of a Vehicle which is subject to a lease), and the Agent’s security interest, recorded on such Vehicle’s certificate of title. 

SECTION 6.06        Pledged Receivable Receipts.  The Servicer shall make adeposit into the Collection Account in an amount equal to the Collections with respect to any Pledged Receivable received, or made by, or on behalf of it, within one Business Day of such Collections being received, or made by, or on behalf of it.

SECTION 6.07        [Intentionally omitted.] 

SECTION 6.08        [Intentionally omitted.] 

SECTION 6.09        No Rights of Withdrawal.  Until the Collection Date, theBorrower shall have no rights of direction or withdrawal, with respect to amounts held in the Collection Account or the Lockbox Account, except with respect to funds not related to any Pledged Assets, which were incorrectly deposited into any suchaccount. 

SECTION 6.10        Permitted Investments.  TheBorrower shall, pursuant to written instruction, direct the Agent’s Bank (and if the Borrower fails to do so, the Agent may, pursuant to written instruction, direct the Agent’s Bank) to invest, or cause the investment of, funds on depositin the Collection Account in Permitted Investments, from the date of this Agreement until the Collection Date. Absent any such written instruction, the Agent’s Bank shall invest, or cause the investment of, such funds in Permitted Investmentsdescribed in clause (v) of the definition thereof. A Permitted Investment acquired with funds deposited in the Collection Account shall mature not later than the Business Day immediately preceding any Remittance Date, and shall not be sold ordisposed of prior to its maturity. All such Permitted Investments shall be registered in the name of the Securities Intermediary (as defined in the Securities Account Agreement) or its nominee for the benefit of the Lender, and otherwise comply withassumptions of the legal opinion of Thacher Proffitt & Wood LLP, delivered in connection with this Agreement. All income and gain realized from any such investment, as well as any interest earned on deposits in the Collection Account, shallbe distributed in accordance with the provisions of Article II hereof. The Borrower shall deposit in the Collection Account, as the case may be (with respect to investments made hereunder of funds held therein), an amount equal to the amountof any actual loss incurred, in respect of any such investment, immediately upon realization of such loss. None of the Agent’s Bank or the Agent shall be liable for the amount of any loss incurred, in respect of any investment, or lack ofinvestment, of funds held in the Collection Account. 

SECTION6.11        Servicing Compensation.  As compensation for its activities hereunder, the Servicer shall be entitled to be paid the Servicing Fee from the Collection 

 

80 

Account as provided in Section 2.05(c).    The Servicer shall be required to pay all expenses incurred by it in connectionwith its servicing activities hereunder and shall not be entitled to reimbursement therefor, except with respect to reasonable expenses of the Servicer incurred in connection with the repossession and disposition of any Obligor Collateral (which theServicer may retain from the proceeds of the disposition of such Obligor Collateral) and any Servicer Advances made by the Servicer pursuant hereto. The Servicing Fee may not be transferred in whole, or in part, except in connection with thetransfer of all the Servicer’s responsibilities and obligations under this Agreement. At any time after the occurrence of a Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder, the Backup Servicer shall beentitled to receive an amount, payable out of Collections on the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the Pledged Receivables, equal to expenses incurred by the Backup Servicer, acting in its capacityas the Servicer, in connection with its obligations under Sections 6.05(a), (b) and (d) hereof (such expenses, the “Active Backup Servicer’s Indemnified Amounts”). 

SECTION 6.12          Reports to the Agent; Account Statements; ServicingInformation.  (a)  The Borrower will deliver to the Agent, (i) on the Program Termination Date, a report identifying the Pledged Receivables (and any information with respect thereto requested by the Agent) on the dayimmediately preceding the Program Termination Date, and (ii) upon the Agent’s reasonable request and upon reasonable notice, on any other Business Day, a report identifying the Pledged Receivables (and any information with respect thereto,reasonably requested by the Agent) as of such day. 

(b)        At least four (4)Business Days prior to each Remittance Date, the Servicer shall prepare and deliver, or have delivered to the Agent for the Lender, (i) a Monthly Remittance Report and any other information reasonably requested by the Agent, relating to allPledged Receivables (including, if requested, a Computer Tape or Listing), all information in the Monthly Remittance Report and all other such information to be accurate as of the last day of the immediately preceding Collection Period, and(ii) in an electronic format mutually acceptable to the Servicer and the Agent, all information reasonably requested by the Agent relating to all Pledged Receivables. If any Monthly Remittance Report indicates the existence of a Borrowing BaseDeficiency, the Borrower shall, on the date of delivery of such Monthly Remittance Report, prepay to the Agent, for the account of the Lender, a portion of the Loans as is necessary to cure such Borrowing Base Deficiency (or otherwise cure suchBorrowing Base Deficiency). 

(c)        By no later than 12:00 noon (New York Citytime) on the third Business Day immediately preceding a Borrowing, the Borrower shall also prepare and deliver to the Agent for the Lender a Borrowing Base Certificate containing information accurate as of the date of delivery of such Borrowing BaseCertificate. If any Borrowing Base Certificate indicates the existence of a Borrowing Base Deficiency, the Borrower shall on the date of delivery of such Borrowing Base Certificate prepay to the Agent, for the account of the Lender, a portion of theLoans or Pledge additional Eligible Receivables, in either case, to the extent necessary to cure such Borrowing Base Deficiency. 

(d)        [Intentionally omitted.] 

 

81 

(e)        At least four (4) Business Daysprior to each Remittance Date (each such day, a “Backup Servicer Delivery Date”), the Servicer shall prepare and deliver, or have delivered, to the Backup Servicer (i) a Monthly Remittance Report in respect of theimmediately-preceding Collection Period and (ii) a computer tape or a diskette or any other electronic transmission in a format acceptable to the Backup Servicer containing the information with respect to the Pledged Receivables during suchCollection Period which was necessary for preparation of such Monthly Remittance Report or is reasonably requested by the Backup Servicer. 

(f)        The Borrower shall deliver to the Agent all reports it receives pursuant to the Purchase and Contribution Agreement within one Business Day of the receipt thereof.

SECTION 6.13          Statements as to Compliance; FinancialStatements. (a) The Servicer shall deliver to the Agent, the Backup Servicer, the Borrower and the Lender on or before March 31st of each year, beginning with 2007, an Officers’ Certificate stating, as to each signatory thereof,that (x) a review of the activities of the Servicer during the preceding calendar year (or the portion of the preceding calendar year commencing on the date of this Agreement and ending December 31, 2006 in the case of the first suchreview) and of its performance under this Agreement has been made under such officer’s supervision, and (y) to the best of such officers’ knowledge, based on such review, the Servicer has fulfilled all of its obligations under thisAgreement throughout such calendar year (or portion thereof, as the case may be) or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officers and the nature and status thereof and theaction being taken to cure such default. 

(b)        (i)  The Servicer(if LEAF Financial or an Affiliate thereof) shall, at its expense, cause a firm of nationally recognized independent certified public accountants acceptable to the Agent (the “Independent Accountants”), who may also render otherservices to the Servicer, the Backup Servicer or to the Borrower, to deliver to the Borrower and the Agent, on or before March 31 of each year, beginning 2007, with respect to the twelve (12) months ended the immediately precedingDecember 31, a statement (the “Accountant’s Report”) addressed to the Board of Directors of the Servicer and to the Agent, to the effect that such firm has examined such Borrowing Base Certificates and Monthly RemittanceReports prepared by the Servicer during the twelve (12) months ended the immediately preceding December 31 as it deemed necessary in order to issue the Accountants’ Report and issued its report thereon, and that such examination wasmade in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as such firm considered necessary in the circumstances. The Accountants’ Reportshall further state that (i) a review in accordance with agreed upon procedures was made; and (ii) the Servicer (if the Backup Servicer has been appointed Servicer hereunder in connection with (A) a Servicer Default specified inclauses (i), (ii), (iii), (v) or (vi) of the definition of such term or (B) an Event of Default specified in clauses (g) or (h) of Section 7.01 of the RLSA) shall, at the expense of LEAF Financial, cause to bedelivered to the Agent, on or before March 31 of each year, an “SAS 70 Audit” addressed to the Agent with respect to the Servicer’s performance of its duties as Servicer hereunder during the twelve (12) months ended theimmediately preceding December 31.” 

 

82 

(ii)        The Servicer (if theBackup Servicer has been appointed Servicer hereunder) shall, at its expense, cause to be delivered to the Agent, on or before March 31 of each year, beginning 2007, an “SAS 70 Audit” addressed to the Agent with respect to theServicer’s performance of its duties as Servicer hereunder during the twelve (12) months ended the immediately preceding December 31. 

(c)        As soon as available and no later than forty-five (45) days after the end of each calendar quarter in each fiscal year of the Borrower, the Borrower shalldeliver to the Lender and the Agent two copies of: 

(i)        abalance sheet of the Borrower as of the end of such calendar quarter, setting forth in comparative form the corresponding figures for the most recent year-end for which an audited balance sheet has been prepared, which balance sheet shall beprepared and presented in accordance with, and provide all necessary disclosure required by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of the Borrowerstating that such balance sheet presents fairly the financial condition of the Borrower and has been prepared in accordance with GAAP consistently applied; and 

(ii)       statements of income, stockholders’ equity and cash flow of the Borrower for such calendar quarter setting forth in comparative form thecorresponding figures for the comparable period one year prior thereto (subject to normal year-end adjustments), which such statements shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP andshall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of the Borrower stating that such financial statements present fairly the financial condition and results of operations ofthe Borrower and have been prepared in accordance with GAAP consistently applied. 

(d)        As soon as available and no later than forty-five (45) days after the end of each calendar quarter in each fiscal year of Resource Capital Corp., the Servicer (if LEAF Financial or anAffiliate thereof) shall deliver to the Lender and the Agent two copies of: 

(i)        a consolidated and consolidating balance sheet of Resource Capital Corp. and its consolidated subsidiaries (including the Borrower) as of the end of such calendar quarter, setting forth incomparative form the corresponding figures for the most recent year-end for which an audited balance sheet has been prepared, which such balance sheet shall be prepared and presented in accordance with, and provide all necessary disclosure requiredby, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of Resource Capital Corp. stating that such balance sheet presents fairly the financial condition of thecompanies being reported upon and has been prepared in accordance with GAAP consistently applied; and 

 

83 

(ii)       consolidated andconsolidating statements of income, stockholders’ equity and cash flow of Resource Capital Corp. and its consolidated subsidiaries (including the Borrower) for such calendar quarter, in each case, setting forth in comparative form thecorresponding figures for the comparable period one year prior thereto (subject to normal year-end adjustments), which such statements shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP andshall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of Resource Capital Corp. stating that such financial statements present fairly the financial condition and results ofoperations of the companies being reported upon and have been prepared in accordance with GAAP consistently applied. 

(e)        As soon as available and no later than forty-five (45) days after the end of each calendar quarter in each fiscal year of Resource America, the Servicer (if LEAF Financial or anAffiliate thereof) shall deliver to the Lender and the Agent two copies of: 

(i)        a consolidated balance sheet of Resource America and its consolidated subsidiaries (including Originator and Servicer) as of the end of such calendar quarter, setting forth in comparativeform the corresponding figures for the most recent year-end for which an audited balance sheet has been prepared, which such balance sheet shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP andshall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of Resource America stating that such balance sheet presents fairly the financial condition of the companies beingreported upon and has been prepared in accordance with GAAP consistently applied; and 

(ii)       consolidated statements of income, stockholders’ equity and cash flow of Resource America and its consolidated subsidiaries (including Originator and Servicer) for such calendar quarter, ineach case, setting forth in comparative form the corresponding figures for the comparable period one year prior thereto (subject to normal year-end adjustments), which such statements shall be prepared and presented in accordance with, and provideall necessary disclosure required by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of Resource America stating that such financial statements present fairlythe financial condition and results of operations of the companies being reported upon and have been prepared in accordance with GAAP consistently applied. 

(f)        As soon as available and no later than ninety (90) days after the end of each fiscal year of the Borrower, the Servicer (if LEAF Financialor an Affiliate thereof) shall deliver to the Lender and the Agent two copies of: 

(i)        a balance sheet of the Borrower as of the end of the fiscal year, setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm ofindependent certified public accountants 

 

84 

of nationally recognized standing acceptable to the Agent stating that such balance sheet presents fairly the financial condition of the Borrower and hasbeen prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur); and 

(ii)       statements of income, stockholders’ equity and cash flow of the Borrower for such fiscal year, setting forth in comparative form the figures for the previous fiscalyear and accompanied by an opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Agent stating that such financial statements present fairly the financial condition of the Borrower and havebeen prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur). 

(g)        As soon as available and no later than ninety (90) days after the end of each fiscal year of Resource Capital Corp., the Servicer (if LEAF Financial or an Affiliate thereof) shalldeliver to the Lender and the Agent two copies of: 

(i)        aconsolidated and consolidating balance sheet of Resource Capital Corp. and its consolidated subsidiaries (including the Borrower) as of the end of the fiscal year, setting forth in comparative form the figures for the previous fiscal year andaccompanied by an opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Agent stating that such balance sheet presents fairly the financial condition of the companies being reported uponand has been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur); and 

(ii)        consolidated and consolidating statements of income, stockholders’ equity and cash flow of Resource Capital Corp. and its consolidatedsubsidiaries (including the Borrower) for such fiscal year; in each case setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certified public accountants of nationallyrecognized standing acceptable to the Agent stating that such financial statements present fairly the financial condition of the companies being reported upon and have been prepared in accordance with GAAP consistently applied (except for changes inapplication in which such accountants concur). 

(h)        As soon as availableand no later than ninety (90) days after the end of each fiscal year of Resource America, the Servicer (if LEAF Financial or an Affiliate thereof) shall deliver to the Lender and the Agent two copies of: 

(i)        a consolidated and consolidating balance sheet of Resource Americaand its consolidated subsidiaries (including Originator and Servicer) as of the end of the fiscal year, setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certifiedpublic accountants of nationally recognized standing acceptable to the Agent stating that such balance sheet presents fairly the financial condition of the companies being reported upon and has been prepared in accordance with GAAP 

 

85 

consistently applied (except for changes in application in which such accountants concur); and 

(ii)       consolidated and consolidating statements of income, stockholders’equity and cash flow of Resource America and its consolidated subsidiaries (including Originator and TRS) for such fiscal year; in each case setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion ofa firm of independent certified public accountants of nationally recognized standing acceptable to the Agent stating that such financial statements present fairly the financial condition of the companies being reported upon and have been prepared inaccordance with GAAP consistently applied (except for changes in application in which such accountants concur). 

(i)        As soon as available and no later than forty-five (45) days after the end of each calendar quarter in each fiscal year of LEAF Financial, the Servicer (if LEAF Financial or anAffiliate thereof) shall deliver to the Lender and the Agent two copies of: 

(i)        a consolidated balance sheet of LEAF Financial and its consolidated subsidiaries as of the end of such calendar quarter, setting forth in comparative form the corresponding figures for themost recent year-end for which an audited balance sheet has been prepared, which such balance sheet shall be prepared and presented in accordance with, and provide all necessary disclosure required by, GAAP and shall be accompanied by a certificatesigned by the financial vice president, treasurer, chief financial officer or controller of LEAF Financial stating that such balance sheet presents fairly the financial condition of the companies being reported upon and has been prepared inaccordance with GAAP consistently applied; and 

(ii)        consolidated statements of income, stockholders’ equity and cash flow of LEAF Financial and its consolidated subsidiaries for such calendar quarter, in each case, setting forth incomparative form the corresponding figures for the comparable period one year prior thereto (subject to normal year-end adjustments), which such statements shall be prepared and presented in accordance with, and provide all necessary disclosurerequired by, GAAP and shall be accompanied by a certificate signed by the financial vice president, treasurer, chief financial officer or controller of LEAF Financial stating that such financial statements present fairly the financial condition andresults of operations of the companies being reported upon and have been prepared in accordance with GAAP consistently applied. 

(j)        As soon as available and no later than ninety (90) days after the end of each fiscal year of LEAF Financial, the Servicer (if LEAF Financial or an Affiliate thereof) shall deliver tothe Lender and the Agent two copies of: 

(i)        a consolidatedand consolidating balance sheet of LEAF Financial and its consolidated subsidiaries as of the end of the fiscal year, setting forth in comparative form the figures for the previous fiscal year and accompanied by an 

 

86 

opinion of a firm of independent certified public accountants of nationally recognized standing acceptable to the Agent stating that such balance sheetpresents fairly the financial condition of the companies being reported upon and has been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur); and 

(ii)       consolidated and consolidating statements of income, stockholders’equity and cash flow of LEAF Financial and its consolidated subsidiaries for such fiscal year; in each case setting forth in comparative form the figures for the previous fiscal year and accompanied by an opinion of a firm of independent certifiedpublic accountants of nationally recognized standing acceptable to the Agent stating that such financial statements present fairly the financial condition of the companies being reported upon and have been prepared in accordance with GAAPconsistently applied (except for changes in application in which such accountants concur). 

SECTION6.14          Access to Certain Documentation; Obligors; Background Check.  (a)  The Lender or the Agent (and their respective agents or professional advisors) shall at theexpense of the Borrower, have the right under this Agreement, once during each calendar quarter until the first anniversary of the date hereof, and semi-annually thereafter, to examine and audit, during business hours or at such other times as mightbe reasonable under applicable circumstances, any and all of the books, records, financial statements or other information of the Servicer and/or the Borrower, or held by another for the Servicer or the Borrower or on its behalf, concerning thisAgreement, provided, that, prior to the occurrence of an Event of Default, the Borrower shall not be responsible for the expenses of the Agent and the Lender to the extent that such expenses exceed $25,000 in the aggregate in any calendaryear. The Lender or the Agent (and their respective agents or professional advisors) shall, at the expense of the Borrower and as frequently as the Lender or the Agent may desire, have the right under this Agreement after the occurrence and duringthe continuance of an Event of Default, to examine and audit, during business hours or at such other times as might be reasonable under applicable circumstances, any and all of the books, records or other information of the Servicer or the Borrower,or held by another for the Servicer or the Borrower or on its behalf, concerning this Agreement. The Lender or the Agent shall coordinate their examinations and audits under this Section 6.14(a) in order to minimize expense andinconvenience to the Borrower. The Lender and the Agent (and their respective agents and professional advisors) shall treat as confidential any information obtained during the aforementioned examinations which is not already publicly known oravailable; provided, however, that the Lender or the Agent may disclose such information if required to do so by law or by any regulatory authority. 

(b)        The Lender or the Agent (and their respective agents or professional advisors) shall, at their own expense, have the right under this Agreementto contact a reasonable number of Obligors with respect to any Receivables which are Pledged hereunder in order to procure such information related to such Obligor, the related Contract and the Receivables as the Lender or the Agent deems reasonableunder the circumstances. The Servicer and the Borrower hereby agree to cooperate with the Lender and the Agent (and their respective agents or professional advisors) in connection with any attempt thereby to contact any such Obligor and shallprovide to the Lender and the Agent such information as is needed in order to facilitate 

 

87 

such contact. The Lender and the Agent (and their respective agents and professional advisors) shall treat as confidential any information obtained duringany such contact with any such Obligor which is not already publicly known or available; provided, however, that the Lender or the Agent (and their respective agents or professional advisors) may disclose such information if required to do so by lawor by any regulatory authority. 

(c)        The Agent (or its agents and/or thirdparty professional advisors) may, from time to time, cause comprehensive background checks on newly-hired senior management, key employees and principals or each of TRS, Resource Capital Corp., the Servicer and Originator to be completed by aninvestigation service acceptable to the Agent, at the Borrower’s expense. 

SECTION6.15          Backup Servicer.  If a Servicer Default shall occur, then the Agent may, by notice to the Servicer, the Borrower and the Backup Servicer, terminate all of the rightsand obligations of the Servicer under this Agreement. Upon the delivery to the Servicer of such notice, all authority and power of the Servicer under this Agreement, whether with respect to the Pledged Assets or otherwise, shall pass to and bevested in the Backup Servicer pursuant to and under this Section (unless the Agent shall have appointed a different successor Servicer pursuant to Section 6.01 hereof or the Backup Servicer is unable to act as Servicer and a successor isappointed as provided in the fourth paragraph of this Section 6.15), and, without limitation, the Backup Servicer is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, anyand all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination or to perform the duties of the Servicer under this Agreement including, withoutlimitation, to make withdrawals from the Security Deposit Account pursuant to Section 2.06 and any Cash Reserve Account pursuant to Section 2.07. The Servicer agrees to cooperate with the Agent and the Backup Servicer ineffecting the termination of the Servicer’s responsibilities and rights hereunder, including, without limitation, providing notification to the Obligors of the assignment of the servicing function, providing notification to the Agent’sBank of the Backup Servicer’s right to make withdrawals from the Security Deposit Account pursuant to Section 2.06 and any Cash Reserve Account pursuant to Section 2.07, providing the Backup Servicer, at theServicer’s expense, with all records, in electronic or other form, reasonably requested by the Backup Servicer, in such form as the Backup Servicer may reasonably request and at such times as the Backup Servicer may reasonably request, toenable the Backup Servicer to assume the servicing functions hereunder and the transfer to the Backup Servicer for administration by it of all cash amounts which at the time should be or should have been deposited by the Servicer in the CollectionAccount or thereafter be received by the Servicer with respect to the Pledged Receivables.” Neither the Agent nor the Backup Servicer shall be deemed to have breached any obligation hereunder as a result of a failure to make or delay in makingany distribution as and when required hereunder caused by the failure of the Servicer to remit any amounts received by it or to deliver any documents held by it with respect to the Pledged Assets. 

The Active Backup Servicer’s Fees and Transition Costs shall be paid out of Collections with respect to any Pledged Receivable asset forth in Section 2.05(c) on and after the date, if any, that the Backup Servicer assumes the responsibilities of the Servicer pursuant to this Section. The Standby Backup Servicer’s Fees and Transition Costs shall be paid out of

 

88 

Collections with respect to any Pledged Receivable as set forth in Section 2.05(c) prior to the date, if any, that the Backup Servicer assumesthe responsibilities of the Servicer pursuant to this Section. 

Any obligations of LEAF Financial under any TransactionDocument other than in its capacity as Servicer shall continue in effect notwithstanding LEAF Financial’s termination as Servicer. 

On and after the time the Servicer receives a notice of termination pursuant to this Section 6.15, the Backup Servicer shall be (and the Backup Servicer hereby agrees to be) the successor in all respectsto the Servicer in its capacity as Servicer under this Agreement and the transactions set forth or provided for herein and shall have all the rights and powers and be subject thereafter to all the responsibilities, duties and liabilities relatingthereto placed on the Servicer by the terms and provisions hereof; provided, however, that any failure to perform such duties or responsibilities caused by the Servicer’s failure to provide information required by thisSection 6.15 shall not be considered a default by the Backup Servicer hereunder; provided, further, however, that the Backup Servicer, as successor Servicer, shall have (i) no liability with respect to anyobligation which was required to be performed by the terminated Servicer prior to the date that the Backup Servicer becomes the successor to the Servicer or any claim of a third party based on any alleged action or inaction of the terminatedServicer, (ii) no obligation to perform any repurchase or advancing obligations, if any, of the Servicer, (iii) no obligation to pay any taxes required to be paid by the Servicer (provided that the Backup Servicer shall pay any incometaxes for which it is liable), (iv) no obligation to pay any of the fees and expenses of any other party to the transactions contemplated hereby, and (v) no liability or obligation with respect to any Servicer indemnification obligationsof any prior Servicer, including the original Servicer. The indemnification obligations of the Backup Servicer, upon becoming a successor Servicer, are expressly limited to those arising on account of its failure to act in good faith and withreasonable care under the circumstances. In addition, the Backup Servicer shall have no liability relating to the representations and warranties of the Servicer contained in Article IV. Notwithstanding the above, the Agent may, if the BackupServicer shall be unwilling to so act, or shall, if the Backup Servicer is unable to so act, or if the Lender so requests in writing to the Agent, appoint itself, or appoint any other established servicing institution acceptable to the Agent in itssole discretion, as the successor to the Servicer hereunder in the assumption of all or any part of the responsibilities, duties or liabilities of the Servicer hereunder. Pending appointment of a successor to the Servicer hereunder, and after theAgent notifies the Servicer to discontinue performing servicing functions under this Agreement, the Backup Servicer (or the Agent if there is no Backup Servicer) shall act in such capacity as hereinabove provided. In connection with such appointmentand assumption, the Agent may make such arrangements for the compensation of such successor out of payments on Pledged Receivables as it and such successor shall agree; provided, however, that, except as provided herein, no suchcompensation shall be in excess of that permitted the Servicer hereunder, unless (i) agreed to by the Lender and (ii) such compensation shall be on commercially competitive terms and rates. The Borrower, the Agent and such successor shalltake such action, consistent with this Agreement, as shall be necessary to effectuate any such succession. 

The BackupServicer hereby agrees that it shall, and shall take all actions necessary so that it shall at all times be ready to, assume all the rights and powers and all of the  

 

89 

responsibilities, obligations and duties of the Servicer hereunder, within five (5) Business Days of receiving from the Agent a notice requesting theBackup Servicer to do so. 

Notwithstanding anything contained in this Agreement to the contrary, absent specific knowledgeby any Lyon Financial Services, Inc. account representative assigned to this transaction from time to time, or written notice detailing specific Errors (as defined below) or other deficiencies, Lyon Financial Services, Inc., as successor Servicer,is authorized to accept and rely on all accounting records (including computer records) and work product of the prior Servicer hereunder relating to the Contracts (collectively, the “Predecessor Servicer Work Product”) without anyaudit or other examination thereof, and Lyon Financial Services, Inc. shall have no duty, responsibility, obligation or liability for the acts and omissions of the prior Servicer. If any error, inaccuracy, commission or incorrect or nonstandardpractice or procedure (collectively, “Errors”) exists in any Predecessor Servicer Work Product and such Errors cause Lyon Financial Services, Inc. to make or continue any errors (collectively, “Continued Errors”),Lyon Financial Services, Inc. shall have no liability for such Continued Errors; provided, however, that Lyon Financial Services, Inc. agrees to use its best efforts to prevent Continued Errors. In the event that Lyon FinancialServices, Inc. becomes aware of Errors or Continued Errors, Lyon Financial Services, Inc. shall, with the prior consent of the Agent, use its best efforts to reconstruct and reconcile any affected data as is commercially reasonable to correct suchErrors and Continued Errors and to prevent future Continued Errors. Lyon Financial Services, Inc. shall be entitled to recover its costs thereby expended as Servicer Advances in accordance with Section 2.05(c) hereof. 

Prior to each Remittance Date, provided that the Backup Servicer shall have received the information specified inSection 6.12(e) within the time specified therein, the Backup Servicer shall compare the information on the computer tape or diskette (or other means of electronic transmission acceptable to the Backup Servicer) most recently deliveredto the Backup Servicer by the Servicer pursuant to Section 6.12(e) with respect to such Remittance Date to the corresponding Monthly Remittance Report delivered to the Backup Servicer by the Servicer pursuant toSection 6.12(e) and shall: 

(a)      confirm that such Monthly Remittance Reportis complete on its face; 

(b)      confirm the distributions to be made on such RemittanceDate pursuant to Section 2.05(c) hereof to the extent the Backup Servicer is able to do so given the information provided to it by the Servicer (it being hereby agreed that the Backup Servicer shall promptly notify the Servicer and theAgent if such information is insufficient and that the Servicer shall promptly provide to the Backup Servicer any additional information required by the Backup Servicer); 

(c)      confirm the mathematical computations of information in such Monthly Remittance Report; and 

(d)      confirm such other information as the Backup Servicer and the Agent may agree; 

 

90 

In the event of any discrepancy between the information set forth in subparagraphs(b) or (c) above as calculated by the Servicer and that determined or calculated by the Backup Servicer, the Backup Servicer shall promptly report such discrepancy to the Servicer and the Agent. In the event of a discrepancy as describedin the preceding sentence, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancy prior to the related Remittance Date, but in the absence of a reconciliation, distributions on the related Remittance Date shall be madeconsistent with the information calculated by the Servicer, the Servicer and the Backup Servicer shall attempt to reconcile such discrepancy prior to the next Remittance Date, and the Servicer shall promptly report to the Agent regarding theprogress, if any, which shall have been made in reconciling such discrepancy. If the Backup Servicer and the Servicer are unable to reconcile such discrepancy with respect to such Monthly Remittance Report by the next Remittance Date that falls inApril, July, October or January, the Servicer shall cause independent accountants acceptable to the Agent, at the Servicer’s expense, to examine such Monthly Remittance Report and attempt to reconcile such discrepancy at the earliest possibledate (and the Servicer shall promptly provide the Agent with a report regarding such event). The effect, if any, of such reconciliation shall be reflected in the Monthly Remittance Report for the next succeeding Remittance Date. 

Other than as specifically set forth in this Agreement, the Backup Servicer shall have no obligation to supervise, verify, monitor oradminister the performance of the Servicer and shall have no liability for any action taken or omitted by the Servicer. 

The Backup Servicer may allow a subservicer to perform any and all of its duties and responsibilities hereunder, including but not limited to its duties as successor Servicer hereunder, should the Backup Servicer become the successorServicer pursuant to the terms of this Agreement; provided, however, that the Backup Servicer shall remain liable for the performance of all of its duties and obligations hereunder to the same extent as if no such subservicing hadoccurred. 

In no event shall the Backup Servicer (either prior to or after its appointment hereunder as Servicer) beresponsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation, acts of terrorism, civil or militarydisturbances, nuclear or natural catastrophes or acts of God. 

SECTION6.16        Additional Remedies of Agent Upon Event of Default. During the continuance of any Event of Default, the Agent, in addition to the rights specified in Section 7.01, shall have theright, in its own name and as agent for the Lender, to take all actions now or hereafter existing at law, in equity or by statute to enforce its rights and remedies and to protect the interests, and enforce the rights and remedies, of the Lender(including the institution and prosecution of all judicial, administrative and other proceedings and the filings of proofs of claim and debt in connection therewith). Except as otherwise expressly provided in this Agreement, no remedy provided forby this Agreement shall be exclusive of any other remedy, each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy or shall bedeemed to be a waiver of any Event of Default. 

 

91 

SECTION 6.17        Waiver of Defaults.Upon consent of the Lender, the Agent may waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Defaultarising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall be effective unless it shall be in writing and signed by the Agent on the Lender’s behalf and no such waiver shall extend to anysubsequent or other default or impair any right consequent thereon except to the extent expressly so waived. 

SECTION6.18        Maintenance of Certain Insurance. On the date hereof the Servicer shall obtain, and at all times thereafter during the term of its service as Servicer the Servicer shall maintain, in forcean “errors and omissions” insurance policy in an amount not less than $1,000,000 naming the Agent as sole loss payee and with an insurance company reasonably acceptable to the Lender and the Agent. 

During the term of its service as Servicer, the Servicer shall maintain in force an employee fidelity insurance policy, in each case, inan amount not less than $1,000,000 naming the Agent as sole loss payee and otherwise in a form that would cover any loss of Collections with respect to any Pledged Receivable by the Servicer hereunder caused by employee dishonesty and with aninsurance company reasonably acceptable to the Lender and the Agent. 

The Servicer shall deliver a copy of each insurancepolicy required under this Section 6.18 to the Agent on the date hereof together with a certification from the applicable insurance company that such policy is in force on the date hereof. 

The Servicer shall prepare and present, on behalf of itself, the Agent and the Lender, claims under any such policy in a timely fashionin accordance with the terms of such policy, and upon, the filing of any claim on any policy described in this Section, the Servicer shall promptly notify the Agent of such claim. 

SECTION 6.19        Segregation of Collections. The Servicer shall not commingle fundsconstituting Collections with respect to any Pledged Receivable with any other funds of the Servicer; provided, that such commingling may occur in the Lockbox Account so long as the Lockbox Intercreditor Agreement is in full force and effect.

SECTION 6.20        UCC Matters; Protection and Perfection of PledgedAssets. The Borrower will not change the jurisdiction of its formation, make any change to its corporate name or use any tradenames, fictitious names, assumed names, “doing business as” names or other names (other than those listed onSchedule II hereto, as such schedule may be revised from time to time to reflect name changes and name usage permitted under the terms of this Section 6.20 after compliance with all terms and conditions of thisSection 6.20 related thereto) unless, prior to the effective date of any such jurisdiction change, name change or use, the Borrower notifies the Agent of such change in writing and delivers to the Agent such executed financing statementsas the Agent may request to reflect such jurisdiction, name change or use, together with such other documents and instruments as the Agent may request in connection therewith. The Borrower will not change the location of its chief executive officeor the location of its records regarding the Pledged Receivables unless, prior to the effective date of any such change of location, the Borrower notifies the Agent of such change of location in writing and  

 

92 

delivers to the Agent such executed financing statements as the Agent may reasonably request to reflect such change of location, together with such Opinionsof Counsel, documents and instruments as the Agent may request in connection therewith. The Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all further instruments and documents, and take all furtheraction that the Agent may reasonably request in order to perfect, protect or more fully evidence the Lender’s interest in the Pledged Assets acquired hereunder, or to enable the Lender or the Agent to exercise or enforce any of their respectiverights hereunder. Without limiting the generality of the foregoing, the Borrower will, upon the request of the Agent: (i) execute (if necessary) and file such financing or continuation statements, or amendments thereto or assignments thereof,and such other instruments or notices, as may be necessary or appropriate or as the Agent may request, and (ii) mark its master data processing records evidencing such Pledged Receivables with a legend acceptable to the Agent, evidencing thatthe Lender has acquired an interest therein as provided in this Agreement. The Agent shall be entitled to conclusively rely on the filings or registrations made by or on behalf of the Borrower without any independent investigation and theBorrower’s obligation to make such filings as evidence that such filings have been made. The Borrower hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto and assignments thereof, relativeto all or any of the Pledged Receivables and the Other Conveyed Property and the Related Security related thereto and the proceeds of the foregoing now existing or hereafter arising, without the signature of the Borrower where permitted by law. TheBorrower hereby ratifies and authorizes the filing by the Agent of any such financing statement made prior to the date hereof. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the PledgedReceivables, or any part thereof, shall be sufficient as a financing statement. The Borrower shall, upon the request of the Agent at any time after the occurrence of an Event of Default and at the Borrower’s expense, notify the Obligorsobligated to pay any Pledged Receivables, or any of them, of the security interest of the Lender in the Pledged Assets. If the Borrower fails to perform any of its agreements or obligations under this Section 6.20, the Agent may (butshall not be required to) itself perform, or cause performance of, such agreement or obligation, and the expenses of the Agent incurred in connection therewith shall be payable by the Borrower upon the Agent’s demand therefor. For purposes ofenabling the Agent to exercise its rights described in the preceding sentence and elsewhere in this Article VI, the Borrower and the Lender hereby authorize each of the Agent and its successors and assigns to take any and all steps in theBorrower’s name and on behalf of the Borrower and the Lender necessary or desirable, in the determination of the Agent, to collect all amounts due under any and all Pledged Receivables, including, without limitation, endorsing theBorrower’s name on checks and other instruments representing Collections with respect to any Pledged Receivable and enforcing such Pledged Receivables and the related Contracts and, if any, the related guarantees. 

SECTION 6.21        Servicer Advances. The Servicer may, in its sole discretion, make anadvance in respect of any payment due on a Pledged Receivable (other than a Defaulted Receivable or Missed Payment/Modified Receivable) to the extent such payment has not been received by the Servicer as of its due date and the Servicer reasonablyexpects such payment will be ultimately recoverable (a “Servicer Advance”). The Servicer shall deposit into the Collection Account in immediately available funds the aggregate of all Servicer Advances to be made during a Fee Periodon or prior to the Business Day immediately preceding the related 

 

93 

Remittance Date. The Servicer shall be entitled to reimbursement for such Servicer Advances from monies in the Collection Account as provided inSection 2.05(c) hereof. 

SECTION 6.22        Repurchase ofReceivables Upon Breach of Covenant or Representation and Warranty by Servicer. The Borrower or the Servicer, as the case may be, shall inform the other parties to this Agreement promptly, in writing, upon the discovery of any breach of theServicer’s representations, warranties and/or covenants pursuant to Section 4.02, Section 6.05 or Article V; provided, however, that the failure to provide any such notice shall not diminish, in anymanner whatsoever, any obligation of the Servicer hereunder to repurchase any Pledged Receivable. Unless such breach shall have been cured by the last day of the first full calendar month following the discovery by or notice to the Servicer of suchbreach (and provided that a Borrowing Base Deficiency exists on such last day), the Servicer (if LEAF Financial or an Affiliate thereof) shall have an obligation, and the Borrower shall and the Agent may, enforce such obligation of the Servicer (ifLEAF Financial or an Affiliate thereof), to repurchase any Pledged Receivable materially and adversely affected by such breach. The Borrower shall notify the Agent promptly, in writing, of any failure by the Servicer to so repurchase any suchPledged Receivable. In consideration of the repurchase of such Pledged Receivable, the Servicer shall remit funds in an amount equal to the Release Price for such Pledged Receivable to the Collection Account on the date of such repurchase. Theobligations of the Servicer under this Section 6.22 are in addition to, and in no way limit, any obligations of the Servicer in its individual capacity under the Purchase and Contribution Agreement. It is understood and agreed that theobligation of the Servicer to purchase any Receivables is not intended to, and shall not, constitute a guaranty of the collectibility or payment of any Receivable which is not collected, not paid or uncollectible on account of the insolvency,bankruptcy, or financial inability to pay of the related Obligor. 

SECTION6.23        Compliance with Applicable Law. The Servicer and the Borrower shall at all times comply with all requirements of applicable federal, state and local laws, and regulations thereunder(including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, theMagnuson-Moss Warranty Act, the Federal Reserve Board’s Regulations “B” and “Z”, the Soldiers’ and Sailors’ Civil Relief Act of 1940 and state adaptations of the National Consumer Act and of the Uniform ConsumerCredit Code and all other consumer credit laws and equal credit opportunity and disclosure laws) in the conduct of its business. 

SECTION 6.24        Receipt of Certificates of Title. Any Receivable (other than a Vehicle Sublimit Pledged Receivable) with respect to which the Obligor Collateral includes a Vehicle and forwhich the Servicer shall not have (i) received a Certificate of Title indicating the Borrower as the owner of the related Vehicle and “Bayerische Hypo- und Vereinsbank AG, New York Branch, as Agent” as the sole lienholder with respectto such Vehicle from the applicable Registrar of Titles and (ii) delivered such Certificate of Title to the Custodian within 90 days of the first day of inclusion of such Pledged Receivable in the calculation of the Eligible ReceivablesBalance, shall no longer be deemed to be an Eligible Receivable and, therefore, shall no longer be included in the calculation of the Eligible Receivables Balance. In the case of any Receivable excluded from the calculation of the EligibleReceivables Balance pursuant to the previous sentence, the Receivable so excluded from the calculation of the Eligible 

 

94 

Receivables Balance may at a later time be included in the calculation of the Eligible Receivables Balance, provided, that (i) the Custodianshall have received the Certificate of Title described above with respect to such Receivable from the applicable Registrar of Titles and delivered such Certificate of Title to the Custodian and (ii) such Receivable is otherwise an EligibleReceivable at such time. 

SECTION 6.25        Agent’s Bank Limitation ofLiability. (a) The Agent’s Bank undertakes to perform only such duties and obligations as are specifically set forth in this Agreement, it being expressly understood by the parties hereto that there are no implied duties or obligationsunder this Agreement. Neither the Agent’s Bank nor any of its officers, directors, employees or agents shall be liable, directly or indirectly, for any damages or expenses arising out of the services performed under this Agreement other thandamages which result from the gross negligence or willful misconduct of it or them. In no event will the Agent’s Bank or any of its officers, directors, employees or agents be liable for any consequential, indirect or special damages.

(b)      The Agent’s Bank shall not be liable for any error of judgment, or for anyact done or step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for anything which it may do or refrain from doing in connection herewith. 

(c)      The Agent’s Bank may rely on and shall be protected in acting upon any certificate, instrument, opinion, notice, letter, telegram or other documentdelivered to it by any other Person and which in good faith it believes to be genuine and which has been signed by the proper party or parties. The Agent’s Bank may rely on and shall be protected in acting upon the written instructions of anydesignated officer of the Borrower, the Servicer, the Lender or the Agent. 

(d)      TheAgent’s Bank may consult with counsel reasonably satisfactory to it and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and inaccordance with the opinion of such counsel. 

(e)      The Agent’s Bank shall not berequired 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 Agent’s Bank believes that repayment of such funds (repaid inaccordance with the terms of this Agreement) or adequate indemnity against such risk or liability is not reasonably assured to it. 

(f)      The Agent’s Bank shall not be deemed to be a fiduciary of any party hereto. 

ARTICLEVII. 

EVENTS OF DEFAULT 

SECTION 7.01        Events of Default. If any of the following events (“Events of Default”) shall occur: 

 

95 

(a)      the occurrence of any Bankruptcy Event withrespect to the Borrower, TRS, Resource Capital Corp., the Originator or the Servicer; or 

(b)      any representation or warranty made or deemed to be made by the Borrower or the Servicer (or any of its officers) under or in connection with this Agreement (or any remittance report or otherinformation or report delivered pursuant hereto) or any other Transaction Document shall prove to be false or incorrect in any respect and shall remain false or incorrect for a period fifteen (15) Business Days after the Servicer or theBorrower become aware, or are notified by the Lender, the Agent, the Custodian or any other Person, that such representation or warranty is false or incorrect; provided, however, that if any breach described above is cured by therepurchase of Receivables pursuant to Article VI of the Purchase and Contribution Agreement or by a repayment pursuant to Section 2.17 hereof, or repurchase pursuant to Sections 4.03 or 6.22 hereof, such breach shallcease to constitute an Event of Default; or 

(c)      (i) the Borrower or the Servicer shallfail to perform or observe any term, covenant or agreement hereunder or under any other Transaction Document (other than described in clause (ii) below) in any material respect and such failure remains unremedied for fifteen (15) BusinessDays or (ii) either the Servicer or the Borrower shall fail to make any payment or deposit to be made by it when due hereunder or under any other Transaction Document and such failure remains unremedied for two (2) Business Days; or

(d)      the Borrower, TRS, Resource Capital Corp. or the Servicer shall fail to pay (andsuch failure remains unremedied for two (2) Business Days) any principal of or premium or interest on any Debt in an amount in excess of $10,000,000, when the same becomes due and payable (whether by scheduled maturity, required prepayment,acceleration, demand or otherwise); or any other default under any agreement or instrument relating to any Debt of the Borrower or the Servicer or any other event, shall occur if the effect of such default or event is to accelerate, or to permit theacceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; or 

(e)      [Intentionally omitted]; or 

(f)      (i) the Lender shall at any time fail to have a valid, perfected, first priority securityinterest in any of the Pledged Assets (other than Equipment which has a value of less than (x) $25,000 if such Equipment is leased under Dollar Purchase Option Contracts or (y) $50,000 if such Equipment is leased under FMV Contracts) or(ii) any purchase by the Borrower of a Receivable and the Collections, Related Security and Other Conveyed Property with respect thereto under the Purchase and Contribution Agreement shall, for any reason, cease to create in favor of theBorrower a perfected ownership interest in such Receivable and the Collections, Related Security and the Other Conveyed Property with respect thereto; provided, however, that if an event described in the foregoing clause (i) or(ii) is cured by the repurchase of Receivables pursuant to Article VI of the Purchase and Contribution Agreement or by a repayment pursuant to Section 2.17 hereof 

 

96 

or repurchase pursuant to Sections 4.03 or 6.22 hereof, within five Business Days, such event shall cease to constitute an Event of Default; or

(g)        the Borrower or the Servicer shall have suffered anymaterial adverse change to its financial condition or operations which would affect the collectibility of the Pledged Receivables or the Borrower’s or the Servicer’s ability to conduct its business or fulfill its obligations hereunder orunder any other Transaction Document; or 

(h)        theServicer’s or the Borrower’s activities are terminated for any reason, including any termination thereof by a regulatory, tax or accounting body; or 

(i)         the occurrence of a Change of Control; or 

(j)         the Purchase and Contribution Agreement or any other Transaction Document or any material provision of any of them shall cease to be infull force and effect and enforceable in accordance with its terms, or the Servicer, the Borrower, or any Affiliate of the Servicer or the Borrower shall so assert in writing; or 

(k)        the occurrence of a Servicer Default; or 

(l)         (i) the Facility Amount exceeds the lesser of (x) theBorrowing Limit and such event shall remain unremedied for one Business Day or (y) the Borrowing Base and such event shall remain unremedied for two Business Days; (ii) the aggregate Facility Amount hereunder, calculated solely withrespect to Loans made with respect to Pool A Receivables, exceeds the Pool A Borrowing Base and such event shall remain unremedied for two Business Days or (iii) the aggregate Facility Amount hereunder, calculated solely with respect to Loansmade with respect to Pool B Receivables, exceeds the Pool B Borrowing Base and such event shall remain unremedied for two Business Days; or 

(m)        the auditor’s opinion accompanying the audited annual financial statements of the Servicer or the Borrower is qualified in any manner; or

(n)        (i) any Qualifying Interest Rate Swap shall cease to bein full force and effect, (ii) the Borrower or the Servicer fail to comply with any hedging requirement hereunder or (iii) the counterparty under any Qualifying Interest Rate Swap or former or purported Qualifying Interest Rate Swap failsto qualify as a Qualifying Swap Counterparty and does not post cash collateral in a manner satisfactory to the Agent and the Rating Agencies is not replaced by a Qualifying Swap Counterparty within 45 days of such counterparty’s failure to soqualify, (iv) the occurrence of any default by the Borrower or Servicer in the observance or performance of any of the terms or provisions of any Qualifying Interest Rate Swap or (v) any interest rate cap agreement represented by theBorrower or the Servicer to be a Qualifying Interest Rate Swap shall fail to be, or cease to be, a Qualifying Interest Rate Cap; or 

(o)        LEAF Financial shall, at any time, permit its Tangible Net Worth to be less than the Minimum Tangible Net Worth; or 

 

97 

(p)        [Intentionallyomitted]; or 

(q)        either (i) the provisions of theTransaction Documents relating to the Backup Servicer or its duties under any of the Transaction Documents cease to be in full force and effect and enforceable in accordance with their terms, or the Backup Servicer shall so assert in writing,(ii) Lyon Financial Services, Inc. or any successor Backup Servicer resigns, is removed by the Agent or the Lender, or otherwise ceases to act as the Backup Servicer, and such Backup Servicer is not replaced by a new Backup Servicersatisfactory to the Agent within 45 days of such resignation, removal or other event; 

then the Agent may, by notice to the Borrower,declare the Program Termination Date to have occurred; provided, that, in the case of any event described in Section 7.01(a) above, the Program Termination Date shall be deemed to have occurred automatically upon the occurrence ofsuch event. Upon any such declaration or automatic occurrence, (i) the Borrower shall cease purchasing Receivables from TRS under the Purchase and Contribution Agreement, (ii) the Lender may cease issuing commercial paper notes to fund ormaintain the Loans hereunder, (iii) the Liquidity/Credit Enhancement Facility may be drawn upon by the Lender from time to time thereafter in order to retire the maturing commercial paper notes issued to fund or maintain the Loans hereunder(and the Loans hereunder, whether maintained by the amounts so drawn under the Liquidity/Credit Enhancement Facility or otherwise, shall bear interest at the Default Funding Rate), (iv) at the option of the Lender in its sole discretion, theLender may declare the Loans made to the Borrower hereunder and all Yield and all Fees accrued on such Loans and any other Obligations to be immediately due and payable (and the Borrower shall pay such Loans and all such amounts and Obligationsimmediately), (v) at the option of the Lender in its sole discretion, the Agent, on behalf of the Lender, may direct the Obligors to make all payments under the Pledged Receivables directly to the Backup Servicer, the Agent, the Lender or anylockbox or account established by any of such parties. In addition, upon any such declaration or upon any such automatic occurrence, the Agent and the Lender shall have, in addition to all other rights and remedies under this Agreement or otherwise,all other rights and remedies provided under the UCC of the applicable jurisdiction and other applicable laws, which rights shall be cumulative. If any Event of Default shall have occurred, the Non-CP Rate and the CP Rate shall be increased to theDefault Funding Rate, effective as of the date of the occurrence of such Event of Default, and shall remain at the Default Funding Rate. 

SECTION 7.02        Additional Remedies of the Agent.  (a) If, (i) upon the Lender’s declaration that the Loans made to the Borrower hereunderare immediately due and payable pursuant to Section 7.01 or (ii) on the Facility Maturity Date, the aggregate outstanding principal amount of the Loans, all accrued Fees and Yield and any other Obligations are not immediately paidin full, then the Agent, in addition to all other rights specified hereunder, shall have the right, in its own name and as agent for the Lender, to immediately sell in a commercially reasonable manner, in a recognized market (if one exists) at suchprice or prices as the Agent may reasonably deem satisfactory, any or all Pledged Assets and apply the proceeds thereof to the Obligations. 

(b)        The parties recognize that it may not be possible to sell all of the Pledged Assets on a particular Business Day, or in a transaction with the same purchaser, or inthe same manner because the market for such Pledged Assets may not be liquid. Accordingly, the Agent 

 

98 

may elect, in its sole discretion, the time and manner of liquidating any Pledged Assets, and nothing contained herein shall obligate the Agent to liquidateany Pledged Assets on the date the Lender declares the Loans made to the Borrower hereunder to be immediately due and payable pursuant to Section 7.01 or to liquidate all Pledged Assets in the same manner or on the same Business Day.

(c)        Any amounts received from any sale or liquidation of the PledgedAssets pursuant to this Section 7.02 in excess of the Obligations will be returned to the Borrower, its successors or assigns, or to whosoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction mayotherwise direct. 

(d)        The Agent and the Lenders shall have, in addition toall the rights and remedies provided herein and provided by applicable federal, state, foreign, and local laws (including, without limitation, the rights and remedies of a secured party under the Uniform Commercial Code of any applicable state, tothe extent that the Uniform Commercial Code is applicable, and the right to offset any mutual debt and claim), all rights and remedies available to the lenders at law, in equity or under any other agreement between the Lender and the Borrower.

(e)        Except as otherwise expressly provided in this Agreement, no remedyprovided for by this Agreement shall be exclusive of any other remedy, each and every remedy shall be cumulative and in addition to any other remedy, and no delay or omission to exercise any right or remedy shall impair any such right or remedy orshall be deemed to be a waiver of any Program Termination Event or Event of Default. 

ARTICLE VIII. 

INDEMNIFICATION 

SECTION 8.01        Indemnities by the Borrower.  Without limiting any other rights which the Agent, the Lender, the Backup Servicer (whether in its capacity as Backup Servicer orsuccessor Servicer), the Agent’s Bank, the Custodian or any of their respective Affiliates may have hereunder or under applicable law, the Borrower hereby agrees to indemnify the Agent, the Lender, the Custodian, the Backup Servicer, theAgent’s Bank and each of their respective Affiliates (each, an “Indemnified Party” for purposes of this Article VIII) from and against any and all damages, losses, claims, liabilities and related costs and expenses,including reasonable attorneys’ fees and disbursements (all of the foregoing being collectively referred to as “Indemnified Amounts”), awarded against or incurred by any of them arising out of or as a result of this Agreementor in respect of any Pledged Assets, excluding, however, (A) Indemnified Amounts to the extent resulting solely from gross negligence, bad faith or willful misconduct on the part of an Indemnified Party, (B) taxes (including interest andpenalties 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 or (C) Indemnified Amounts to the extentthat they are or result from lost profits (other than principal, Yield and Fees with respect to the Loans). Without limiting the foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from anyof the following (to the extent not resulting solely from gross negligence, bad faith or willful misconduct on the part of an Indemnified Party): 

 

99 

(i)        any Pledged Receivabletreated as or represented by the Borrower to be an Eligible Receivable which is not at the applicable time an Eligible Receivable; 

(ii)       reliance on any representation or warranty made or deemed made by the Borrower or any of its officers under or in connection with this Agreement, which shall have beenfalse or incorrect in any material respect when made or deemed made or delivered; 

(iii)      the failure by the Borrower to comply with any term, provision or covenant contained in this Agreement or any agreement executed in connection with this Agreement, or with any applicable law, rule orregulation with respect to any Pledged Assets, or the nonconformity of any Pledged Assets with any such applicable law, rule or regulation; 

(iv)      the failure to vest and maintain vested in the Agent, for the benefit of the Lender, or to transfer to the Agent, for the benefit of the Lender, a firstpriority perfected security interest in the Receivables which are, or are purported to be, Pledged Receivables, together with all related Other Conveyed Property, Collections, Related Security and other Pledged Assets related thereto (including,without limitation, the Borrower’s interest in and to any and all Obligor Collateral with respect to such Receivables), free and clear of any Adverse Claim whether existing at the time of the related Borrowing or at any time thereafter;

(v)       the failure to maintain, as of the close of business on eachBusiness Day prior to the Collection Date, a Facility Amount which is less than or equal to the lesser of (x) the Borrowing Limit on such Business Day and (y) the Borrowing Base on such Business Day; 

(vi)      the failure to maintain, as of the close of business on each Business Day priorto the Collection Date, a Facility Amount, calculated solely with respect to Loans secured by Pool A Receivables, which is less than or equal to the Pool A Borrowing Base; 

(vii)     the failure to maintain, as of the close of business on each Business Day prior to theCollection Date, a Facility Amount, calculated solely with respect to Loans secured by Pool B Receivables, which is less than or equal to the Pool B Borrowing Base; 

(viii)    the failure to file, or any delay in filing, financing statements or other similarinstruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Receivables which are, or are purported to be, Pledged Receivables or the other Pledged Assets related thereto, whether at the time ofany Borrowing or at any subsequent time; 

(ix)      any dispute, claim,offset or defense (other than the discharge in bankruptcy of an Obligor) to the payment of any Receivable which is, or is purported to be, a Pledged Receivable (including, without limitation, a defense based on such 

 

100 

Receivable (or the Contract evidencing such Receivable) not being a legal, valid and binding obligation of such Obligor enforceable against it in accordancewith its terms); 

(x)      any failure of the Borrower to perform its dutiesor obligations in accordance with the provisions of this Agreement; 

(xi)     thefailure of the Borrower to pay when due any taxes payable in connection with the Pledged Receivables or the Pledged Assets related thereto; 

(xii)     any repayment by the Agent or the Lender of any amount previously distributed in payment of Loans or payment of Yield or Fees or any other amount due hereunder,in each case which amount the Agent or the Lender believes in good faith is required to be repaid; 

(xiii)    the commingling by the Borrower of Collections of Pledged Receivables at any time with other funds; 

(xiv)    any investigation, litigation or proceeding related to this Agreement or the use of proceeds of Loans or the Pledged Assets; 

(xv)     any failure by the Borrower to give reasonably equivalent value to a PCA Seller inconsideration for the transfer by such PCA Seller to the Borrower of any Receivable or any attempt by any Person to void or otherwise avoid any such transfer under any statutory provision or common law or equitable action, including, withoutlimitation, any provision of the Bankruptcy Code; 

(xvi)    any failure by a PCA Sellerto give reasonably equivalent value to Originator in consideration for the transfer by Originator to such PCA Seller of any Receivable or any attempt by any Person to void or otherwise avoid any such transfer under any statutory provision or commonlaw or equitable action, including, without limitation, any provision of the Bankruptcy Code; 

(xvii)   any failure of the Borrower or any of its agents or representatives to remit to the Collection Account, Collections of Pledged Receivables remitted to the Borrower or any such agent or representative; 

(xviii)  any failure on the part of the Borrower duly to observe or perform in any material respect anycovenant or agreement under any Qualifying Interest Rate Cap; and/or 

(xix)    anyContract related to any Pledged Receivable being rejected by an Obligor under Section 365 of the Bankruptcy Code in the event that a Bankruptcy Event has occurred with respect to such Obligor. 

Any amounts subject to the indemnification provisions of this Section 8.01 shall be paid by the Borrower to the Agent on behalf of theapplicable Indemnified Party within two (2) Business Days following the Agent’s written demand therefor on behalf of the applicable Indemnified Party (and the Agent shall pay such amounts to the applicable Indemnified Party promptly after

 

101 

the receipt by the Agent of such amounts). The Agent, on behalf of any Indemnified Party making a request for indemnification under thisSection 8.01, shall submit to the Borrower a certificate setting forth in reasonable detail the basis for and the computations of the Indemnified Amounts with respect to which such indemnification is requested, which certificate shall beconclusive absent demonstrable error. 

If the Borrower has made any payments in respect of Indemnified Amounts to theAgent, on behalf of an Indemnified Party pursuant to this Section 8.01 and such Indemnified Party thereafter collects any of such amounts from others, such Indemnified Party will promptly repay such amounts collected to the Borrower,without interest. 

SECTION 8.02        Indemnities byServicer.    (a)  Without limiting any other rights which any Indemnified Party may have hereunder or under applicable law, the Servicer (if LEAF Financial or one of its Affiliates) hereby agrees to indemnify eachIndemnified Party from and against any and all damages, losses, claims, liabilities and related costs and expenses (including reasonable attorneys’ fees and disbursements) (all of the foregoing being collectively referred to as“Servicer Indemnified Amounts”) suffered or sustained by any Indemnified Party as a consequence of any of the following, excluding, however, Servicer Indemnified Amounts resulting solely from (A) any gross negligence, bad faithor willful misconduct of any Indemnified Party claiming indemnification hereunder, (B) taxes (including interest and penalties imposed thereon) imposed by the jurisdiction in which such Indemnified Party’s principal executive office islocated, on or measured by the overall net income of such Indemnified Party; (C) Indemnified Amounts to the extent that they are or result from lost profits (other than principal, Yield and Fees with respect to the Loans); and(D) Indemnified Amounts to the extent the same includes losses that arise solely due to Receivables being uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or would constitute recourse toServicer for such losses: 

(i)        the inclusion, in anycomputations made by it in connection with any Borrowing Base Certificate or Monthly Remittance Report or other report prepared by it hereunder, of any Pledged Receivables which were not Eligible Receivables as of the date of any such computation;

(ii)       reliance on any representation or warranty made by theServicer (if LEAF Financial or one of its Affiliates) or any of its officers under or in connection with this Agreement, which shall have been false or incorrect in any material respect when made or delivered; 

(iii)      the failure by the Servicer (if LEAF Financial or any of its Affiliates) tocomply with (A) any term, provision or covenant contained in this Agreement, or any agreement executed in connection with this Agreement, or (B) any applicable law, rule or regulation applicable to it with respect to any Pledged Assets;

(iv)      any action or inaction by the Servicer (if LEAF Financial or oneof its Affiliates) that causes the Agent, for the benefit of the Lender, not to have a first priority perfected security interest in the Receivables that are, or are purported to be, Pledged Receivables, together with all related Other ConveyedProperty, Collections, Related 

 

102 

Security and other Pledged Assets related thereto (including without limitation, the Borrower’s interest in and to any and all Obligor Collateral withrespect to such Receivables), free and clear of any Adverse Claim whether existing at the time of the related Borrowing or any time thereafter; 

(v)       the commingling by the Servicer (if LEAF Financial or one of its Affiliates) of the Collections of Pledged Receivables at any time with any otherfunds; 

(vi)      any failure of the Servicer (if LEAF Financial or one ofits Affiliates) or any of its agents or representatives (including, without limitation, agents, representatives and employees of the Servicer acting pursuant to authority granted under Section 6.01 hereof) to remit to Collection Account,Collections of Pledged Receivables remitted to the Servicer or any such agent or representative; 

(vii)     the failure by the Servicer (if LEAF Financial or any of its Affiliates) to perform any of its duties or obligations in accordance with the provisions of this Agreement or errors or omissions related tosuch duties; and/or 

(viii)     notwithstanding whether any Pledged Receivableshall have been repurchased by the Servicer pursuant to Section 6.22, any of the events or facts giving rise to a breach of any of the Servicer’s representations, warranties, agreements and/or covenants set forth in Article Vor Article VI. 

(b)       Any Servicer Indemnified Amounts shall be paid by theServicer (if LEAF Financial or one of its Affiliates) to the Agent, for the benefit of the applicable Indemnified Party, within two (2) Business Days following receipt by the Servicer of the Agent’s written demand therefor (and the Agentshall pay such amounts to the applicable Indemnified Party promptly after the receipt by the Agent of such amounts). 

(c)       If the Servicer has made any indemnity payments to the Agent, on behalf of an Indemnified Party pursuant to this Section 8.02 and such Indemnified Party thereafter collects any ofsuch amounts from others, such Indemnified Party will promptly repay such amounts collected to the Servicer, without interest. 

Each applicable Indemnified Party shall deliver to the indemnifying party under Section 8.01 and Section 8.02, within a reasonable time after such Indemnified Party’s receipt thereof, copies of all notices anddocuments (including court papers) received by such Indemnified Party relating to the claim giving rise to the Indemnified Amounts. 

ARTICLEIX. 

MISCELLANEOUS 

SECTION 9.01        Amendments and Waivers.  (a) Except as provided in Section 9.01(b), no amendment or modification of any provision of thisAgreement shall be effective without the written agreement of the Borrower, the Servicer, the Backup Servicer, the Custodian, the Agent’s Bank, the Agent and the Lender, and no termination or waiver of any provision of this Agreement or consentto any departure therefrom by the Borrower or the 

 

103 

Servicer shall be effective without the written concurrence of the Agent, the Backup Servicer and the Lender. Any waiver or consent shall be effective onlyin the specific instance and for the specific purpose for which given. 

(b)       Notwithstanding the provisions of Section 9.01(a), in the event that there is more than one Lender, the written consent of each Lender shall be required for any amendment,modification or waiver (i) reducing any outstanding Loans, or the Yield thereon, (ii) postponing any date for any payment of any Loan, or the Yield thereon, (iii) modifying the provisions of this Section 9.01, or(iv) increasing the Borrowing Base or the Borrowing Limit. 

(c)       Notwithstanding any other provision of this Section 9.01, (i) the Agent shall provide written notice of each amendment or waiver of any provision of this Agreement to each of S&Pand Moody’s and (ii) no material amendment or material waiver of any provision of this Agreement shall be effective unless the Agent shall have received a written confirmation from each of S&P and Moody’s that such amendment orwaiver shall not cause the rating of the then outstanding commercial paper notes issued by BUFCO to be downgraded to a level less than A-1/P-1, as applicable, or withdrawn. 

SECTION 9.02        Notices, Etc.    All notices and other communications provided for hereunder shall, unless otherwise statedherein, be in writing (including telex communication, communication by facsimile copy or electronic mail) and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth under its name on the signature pages hereofor specified in such party’s Assignment and Acceptance or at such other address (including, without limitation, an electronic mail address) as shall be designated by such party in a written notice to the other parties hereto. All such noticesand communications shall be effective, upon receipt, or in the case of notice by facsimile copy or electronic mail, when verbal communication of receipt is obtained, except that notices and communications pursuant to Article II shall not beeffective until received. 

SECTION 9.03        No Waiver;Remedies.    No failure on the part of the Agent or the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunderpreclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 

SECTION 9.04        Binding Effect; Assignability; MultipleLenders.    (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Servicer, the Agent, the Lender, the Backup Servicer, the Custodian, the Agent’s Bank and their respectivesuccessors and permitted assigns. This Agreement and the Lender’s rights and obligations hereunder and interest herein shall be assignable in whole or in part (including by way of the sale of participation interests therein) by the Lender andits successors and assigns; provided, however, that (i) the commercial paper issued by any assignee of the Lender or its successors and assigns shall have a rating from a nationally recognized rating agency at least equal to therating of the commercial paper of the Lender at the time of the applicable assignment and (ii) HVB shall remain the Agent hereunder after any such assignment. None of the Borrower, the Servicer or the Backup Servicer may assign any of itsrights and obligations hereunder or any interest herein without the prior written consent of the Lender and the Agent. The parties to each 

 

104 

assignment or participation made pursuant to this Section 9.04 shall execute and deliver to the Agent, for its acceptance and recording in itsbooks and records, an assignment and acceptance agreement (an “Assignment and Acceptance”) or a participation agreement or other transfer instrument reasonably satisfactory in form and substance to the Agent and the Borrower. Eachsuch assignment or participation shall be effective as of the date specified in the applicable Assignment and Acceptance or other agreement or instrument only after the execution, delivery, acceptance and recording thereof as described in thepreceding sentence. The Agent shall notify the Borrower of any assignment or participation thereof made pursuant to this Section 9.04. The Lender may, in connection with any assignment or participation or any proposed assignment orparticipation pursuant to this Section 9.04, disclose to the assignee or participant or proposed assignee or participant any information relating to the Borrower and the Pledged Assets furnished to the Lender by or on behalf of theBorrower or the Servicer; provided, however, that the Lender shall not disclose any such information until it has obtained an agreement from such assignee or participant or proposed assignee or participant that it shall treat asconfidential (under terms mutually satisfactory to the Agent, the Borrower, the Servicer and such assignee or participant or proposed assignee or participant) any information obtained which is not already publicly known or available. 

(b)       Whenever the term “Lender” is used herein, it shall mean Black Forest and/or anyother Person which shall have executed an Assignment and Acceptance; provided, however, that each such party shall have a pro rata share of the rights and obligations of the Lender hereunder in such percentage amount (the“Commitment Percentage”) as shall be obtained by dividing such party’s commitment to fund Loans hereunder by the total commitment of all parties to fund Loans hereunder. Unless otherwise specified herein, any right at any timeof the Lender to enforce any remedy, or instruct the Agent to take (or refrain from taking) any action hereunder, shall be exercised by the Agent only upon direction by such parties that hold a majority of the Commitment Percentages at such time.

(c)       Subject to Section 9.04(a), each of the parties hereto herebyagrees to execute any amendment to this Agreement that is required in order to facilitate the addition of any new Lender hereunder as contemplated by this Section 9.04 and which does not have any adverse affect on the Borrower, theOriginator, the Servicer, TRS or any Affiliate thereof. 

(d)       Any bank or otherfinancial institution (including, without limitation, HVB) providing liquidity support, credit enhancement or other similar support under the Liquidity/Credit Enhancement Facility may assign, in whole or in part, its rights and obligationsthereunder without the consent of the Borrower or the Servicer. 

SECTION9.05        Term of This Agreement.    This Agreement including, without limitation, the Borrower’s obligation to observe its covenants set forth in Articles V andVI and the Servicer’s obligation to observe its covenants set forth in Articles V and VI, shall remain in full force and effect until the Collection Date; provided, however, that the rights and remedies withrespect to any breach of any representation and warranty made or deemed made by the Borrower or the Servicer pursuant to Articles III and IV and the indemnification and payment provisions of Article VIII and Article IXand the provisions of Section 9.08 and Section 9.09 shall be continuing and shall survive any termination of this Agreement. 

 

105 

SECTION 9.06        **GOVERNING LAW; JURYWAIVER**.    **THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAWPRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE LENDER IN THE PLEDGED RECEIVABLES, OR REMEDIES HEREUNDER, IN RESPECT THEREOF,ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING DIRECTLY ORINDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.**

SECTION 9.07        Costs, Expenses and Taxes.  (a)  In addition to the rights of indemnification granted to the Backup Servicer ((whether in its capacity as Backup Serviceror successor Servicer), the Custodian, the Agent’s Bank, the Agent, the Lender and its Affiliates under Section 8.01 hereof, the Borrower agrees to pay on demand all reasonable (and reasonably documented) costs and expenses of theBackup Servicer, the Custodian, the Agent’s Bank, the Lender and the Agent incurred in connection with the preparation, execution, delivery or administration of, or any waiver or consent issued or amendment prepared in connection with, thisAgreement, the other Transaction Documents and the other documents to be delivered hereunder or in connection herewith or therewith or incurred in connection with any amendment, waiver or modification of this Agreement, any other TransactionDocument, and any other documents to be delivered hereunder or thereunder or in connection herewith or therewith that is necessary or requested (and, with respect to the Lender or a Rating Agency, actually entered into) by any of the Borrower, theServicer, the Lender or a Rating Agency or made necessary or desirable as a result of the actions of any regulatory, tax or accounting body affecting the Lender and its Affiliates, or which is related to an Event of Default, including, withoutlimitation, the reasonable fees and out-of-pocket expenses of counsel for the Backup Servicer, the Custodian, the Agent’s Bank, the Agent and the Lender with respect thereto and with respect to advising the Backup Servicer, the Custodian, theAgent’s Bank, the Agent and the Lender as to their respective rights and remedies under this Agreement and the other documents to be delivered hereunder or in connection herewith, and all costs and expenses, if any (including reasonable counselfees and expenses), incurred by the Backup Servicer, the Custodian, the Agent’s Bank, the Agent or the Lender in connection with the enforcement of this Agreement and the other documents to be delivered hereunder or in connection herewith.

(b)       The Borrower shall pay on demand any and all stamp, sales, excise and othertaxes and fees payable or determined to be payable in connection with the execution, delivery, filing and recording of this Agreement, the other documents to be delivered hereunder or any agreement or other document providing liquidity support,credit enhancement or other similar support to the Lender which is specific to this Agreement or the funding or maintenance of Loans hereunder. 

(c)       [Intentionally omitted.] 

 

106 

(d)       The Borrower shall pay on demand all othercosts, expenses and taxes (excluding franchise and income taxes) incurred by the Agent, the Lender and/or any Issuer or any general or limited partner or member or shareholder thereof related to this Agreement, any other Transaction Document or anyQualifying Interest Rate Swap or similar interest rate cap agreement (“Other Costs”), including, without limitation, the portion of the cost of rating such Issuer’s commercial paper by independent financial rating agencieswhich is allocable to commercial paper issued to purchase commercial paper of the Lender issued to fund Loans hereunder, the taxes (excluding franchise and income taxes) resulting from such Issuer’s or Lender’s operations which areallocable to the provision of Loans hereunder, and the reasonable fees and out-of-pocket expenses of counsel for the Agent, the Lender and/or the Issuer or any counsel for any general or limited partner or member or shareholder thereof, with respectto (i) advising such Person as to its rights and remedies under this Agreement and the other documents to be delivered hereunder or in connection herewith, (ii) the enforcement of this Agreement and the other documents to be deliveredhereunder or in connection herewith and (iii) advising such Person as to the issuance of the Issuer’s commercial paper notes that were issued to purchase commercial paper of the Lender issued to fund Loans hereunder and action inconnection with such issuance. 

(e)       Without limiting any other provision hereof,the Borrower shall pay on demand all costs, expenses and fees of the Backup Servicer prior to the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer hereunder related to its duties under this Agreement.

(f)       Any Person making a claim under this Section 9.07 shall submitto the Borrower a notice setting forth in reasonable detail the basis for and the computations of the applicable costs, expenses, taxes or similar items. 

SECTION 9.08        No Proceedings.  Each of the Backup Servicer, Custodian, Agent’s Bank, the Borrower, the Agent, the Servicer and the Lender herebyagrees that it will not institute against, or join any other Person in instituting against, any Lender whose commercial paper was issued to fund Loans advanced hereunder or any Issuer whose commercial paper was issued to purchase such commercialpaper of the Lender, any proceedings of the type referred to in the definition of Bankruptcy Event so long as any commercial paper issued by such Lender or Issuer shall be outstanding or there shall not have elapsed one year and one day since thelast day on which any such commercial paper shall have been outstanding. The Servicer, the Backup Servicer, the Custodian and the Agent’s Bank each hereby agree that it will not institute against, or join any other Person in institutingagainst, the Borrower any proceedings of the type referred to in the definition of Bankruptcy Event (a) prior to the Collection Date and (b) so long as any commercial paper issued by a Lender which is an Issuer shall be outstanding orthere shall not have elapsed one year and one day since the last day on which any such commercial paper shall have been outstanding. 

SECTION 9.09        Recourse Against Certain Parties.  No recourse under or with respect to any obligation, covenant or agreement (including, withoutlimitation, the payment of any fees or any other obligations) of the Lender or the Agent as contained in this Agreement or any other agreement, instrument or document entered into by the Borrower, the Lender or the Agent pursuant hereto or inconnection herewith shall be had against any administrator of the 

 

107 

Borrower, the Lender or the Agent or any incorporator, affiliate, stockholder, officer, employee or director of the Borrower, the Lender or the Agent or ofany such administrator, as such, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or otherwise; itbeingexpresslyagreedandunderstood that theagreements of each party hereto contained in this Agreement and all of the other agreements, instruments and documents entered into by the Borrower, the Lender or the Agent pursuant hereto or in connection herewith are, in each case, solely thecorporate obligations of such party (and nothing in this Section 9.09 shall be construed to diminish in any way such corporate obligations of such party), and that no personal liability whatsoever shall attach to or be incurred by anyadministrator of the Borrower, the Lender or the Agent or any incorporator, stockholder, affiliate, officer, employee or director of the Borrower, the Lender or the Agent or of any such administrator, as such, or any of them, under or by reason ofany of the obligations, covenants or agreements of the Borrower, the Lender or the Agent contained in this Agreement or in any other such instruments, documents or agreements, or which are implied therefrom, and that any and all personal liabilityof every such administrator of the Borrower, the Lender or the Agent and each incorporator, stockholder, affiliate, officer, employee or director of the Borrower, the Lender or the Agent or of any such administrator, or any of them, for breaches bythe Borrower, the Lender or the Agent of any such obligations, covenants or agreements, which liability may arise either at common law or in equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and inconsideration for the execution of this Agreement. The provisions of this Section 9.09 shall survive the termination of this Agreement. 

SECTION 9.10        Execution in Counterparts; Severability; Integration.  This Agreement may be executed in any number of counterparts and by different partieshereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to thisAgreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement. In the event that any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, thevalidity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. This Agreement contains the final and completeintegration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all prior oral or writtenunderstandings other than the Fee Letter. 

SECTION 9.11        TaxCharacterization.  Notwithstanding any provision of this Agreement, the parties hereto intend that the Loans advanced hereunder shall constitute indebtedness of the Borrower for federal income tax purposes. 

SECTION 9.12        Excess Funds.  The Lender shall be required to make paymentof the amounts required to be paid pursuant hereto only if the Lender has Excess Funds (as defined below). If a Lender does not have Excess Funds, the excess of the amount due hereunder over the amount paid shall not constitute a “claim”(as defined in Section 101(5) of the Bankruptcy Code) against the Lender until such time as the Lender has Excess Funds. If the Lender does not have sufficient Excess Funds to make any payment due hereunder, then the Lender may pay a lesseramount and make additional payments that in the aggregate equal the 

 

108 

amount of deficiency as soon as possible thereafter. For purposes of this Section 9.12 “Excess Funds” shall mean, as of any date ofdetermination, funds of the Lender not required, after giving effect to all amounts on deposit in the bank accounts entitled “Black Forest Funding Corporation Commercial Paper Account” or “Black Forest Funding Corporation OperatingAccount - Deutsche Bank Trust Company Americas, as Collateral Agent and Assignee,” to pay or provide for the payment of all matured and maturing commercial paper or variable notes on the date of such determination.” 

**[Signature page to follow.]**

 

109 

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

 

THE BORROWER:
 
RESOURCE CAPITAL FUNDING, LLC
 
By:
 
 
  
Name:
  
Title:
 
c/o Resource Capital Corp.

1845 Walnut Street, 10th Floor,

Philadelphia, PA 19103

Attention:  Thomas C. Elliott

Facsimile No.:  215-546-4785

ConfirmationNo.:                                          

THE SERVICER:
 
LEAF FINANCIAL CORPORATION
 
By:
 
 
  
Name:
  
Title:
 
1818 Market Street, 9th Floor,

Philadelphia,PA 19103

Attention:  Miles Herman

Facsimile No.:  640-6363

ConfirmationNo.:                                          

 

-cx- 

THE AGENT:
 
BAYERISCHE HYPO- UND VEREINSBANK AG,

NEW YORK BRANCH
 
By:
 
 
  
Title:
 
By:
 
 
  
Title:
 
150 East 42nd Street

New York, NY10017

Attention:                                                       

FacsimileNo.:                                                

ConfirmationNo.:                                           

THE LENDER:
 
BLACK FOREST FUNDING CORPORATION
  
By:
 
 
   
Title:
 
48 Wall Street, 27th Floor

New York, NY 10005

Attn: Lori Gebron

Facsimile #: 212-346-9012
 
With copy to:
 
HVB Risk Management Products Inc.

150 E. 42nd Street

New York, NY 10017

Attn: Susan Abbass

Fax: 212-672-5593

 

cxi 

THE CUSTODIAN AND

THEAGENT’S BANK:
  
U.S. BANK NATIONAL ASSOCIATION
 
By:
 
 
  
Name:
  
Title:
 
EP-MN-WS3D

60 Livingston Ave.

St. Paul, MN 55107

Attention:  Diane Reynolds

Facsimile No.:  (651) 495-8090

Confirmation No.:  (651) 495-3923

THE BACKUP SERVICER
 
LYON FINANCIAL SERVICES, INC. (D/B/A

U.S. BANK PORTFOLIO SERVICES)
 
By:
 
 
  
Name:
  
Title:
 
U.S. Bank Portfolio Services

1310 Madrid Street

Marshall, MN 56258

Attention: Joe Andries

Facsimile No.: (866) 806-0775

Confirmation No.: (507) 532-7129

 

cxii