exv10w3






EXHIBIT 10.3




EXECUTION COPY




SEVENTH AMENDMENT TO




RECEIVABLES LOAN AND SECURITY AGREEMENT




     THIS SEVENTH AMENDMENT TO THE RECEIVABLES LOAN AND SECURITY AGREEMENT, dated as of November
13, 2008 (this “Amendment”), is entered into by and among:



     (1) LEAF CAPITAL FUNDING III, LLC, a Delaware limited liability company, as the borrower (the
“Borrower”);



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



     (3) MORGAN STANLEY BANK, as a Class A Lender (a “Class A Lender”), and as collateral
agent (the “Collateral Agent”);



     (4) MORGAN STANLEY ASSET FUNDING INC., as a Class B Lender (a “Class B Lender”);



     (5) THE ROYAL BANK OF SCOTLAND PLC, as a Class A Lender (a “Class A Lender”), and as a
Class B Lender (a “Class B Lender”) (the Class A Lenders and the Class B Lenders shall be
collectively referred to herein as the “Lenders”);



     (6) U.S. BANK NATIONAL ASSOCIATION, as the custodian (the “Custodian”), and as the
lenders’ bank (the “Lenders’ Bank”);



     (7) LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services), a Minnesota
corporation, as the backup servicer (the “Backup Servicer”); and



     (8) MORGAN STANLEY CAPITAL SERVICES INC., as the Qualifying Swap Counterparty (the
“Qualifying Swap Counterparty”).



R E C I T A L S




     A. WHEREAS, the Borrower, the Servicer, the Lenders, the Collateral Agent, the Custodian, the
Lenders’ Bank and the Backup Servicer are parties to the Receivables Loan and Security Agreement,
dated as of November 1, 2007 (as amended, supplemented or otherwise modified through the date
hereof, the “Agreement”);



     B. WHEREAS, the parties hereto desire to amend the Agreement on the terms and conditions set
forth herein; and



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



 









 





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



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



     3. Conditions Precedent. The effectiveness of this Amendment is expressly conditioned
upon the receipt by the Lenders of (i) executed signature pages to this Amendment from each of the
parties hereto, (ii) executed signature pages to that certain fee letter agreement, dated as of the
date hereof, among the Borrower and each Lender from each of the parties thereto, (iii) an opinion
of counsel to each of the Borrower and the Servicer, in form and substance satisfactory to the
Lenders, covering certain corporate and enforceability matters, (iv) an executed power of attorney,
in form and substance satisfactory to the Lenders, covering any successor Servicer and (v) such
other documents, instruments and opinions as the Lenders may request.



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




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




     (b) after giving effect to this Amendment, the representations and warranties made by
it in the Agreement (as amended by this Amendment) are true and correct as of the date
hereof (except to the extent any such representations or warranties relate to a prior date,
in which case such representation or warranty shall relate to such prior date); and




     (c) after giving effect to this Amendment, no Program Termination Event, Event of
Default, Termination Event or Unmatured Event of Default shall exist on the date hereof.



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



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



     7. Governing Law; Severability. THIS AMENDMENT SHALL BE A CONTRACT MADE UNDER AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS
THEREOF (OTHER



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THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Wherever possible each
provision of this Amendment shall be interpreted in such manner as to be effective and valid under
applicable laws, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining provisions of
this Amendment.



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



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



[remainder of page intentionally left blank]




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



	 	 	 	 	 
	 	LEAF CAPITAL FUNDING III, LLC,

as Borrower

 	 
	 	By:  	/s/ Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	President, COO 	 
	 
	 	LEAF FINANCIAL CORPORATION,

as Servicer

 	 
	 	By:  	/s/ Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	President, COO 	 
	 



Seventh Amendment to RLSA




S-1





 









 





	 	 	 	 	 
	 	MORGAN STANLEY BANK,

as a Class A Lender and as the Collateral Agent

 	 
	 	By:  	/s/ Andrew J. Coon
 	 
	 	 	Name:  	Andrew J. Coon 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	MORGAN STANLEY ASSET FUNDING INC., as a Class B Lender

 	 
	 	By:  	/s/ Andrew J. Coon
 	 
	 	 	Name:  	Andrew J. Coon 	 
	 	 	Title:  	Authorized Signatory 	 
	 



Seventh Amendment to RLSA




S-2





 









 





	 	 	 	 	 
	 	THE ROYAL BANK OF SCOTLAND PLC,

as a Class A Lender and as a Class B Lender



By: Greenwich Capital Markets, Inc., as agent

 	 
	 	By:  	/s/ Jere P. Dieck
 	 
	 	 	Name:  	Jere P. Dieck 	 
	 	 	Title:  	Managing Director 	 
	 
	 	U.S. BANK NATIONAL ASSOCIATION,

as Custodian and as Lenders’ Bank

 	 
	 	By:  	/s/ Diane L. Reynolds
 	 
	 	 	Name:  	Diane L. Reynolds 	 
	 	 	Title:  	Vice President 	 
	 



Seventh Amendment to RLSA




S-4





 









 





	 	 	 	 	 
	 	LYON FINANCIAL SERVICES, INC. (d/b/a U.S. Bank Portfolio Services),

as Backup Servicer

 	 
	 	By:  	/s/ Joseph Andries
 	 
	 	 	Name:  	Joseph Andries 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	MORGAN STANLEY CAPITAL SERVICES INC.,

as the Qualifying Swap Counterparty

 	 
	 	By:  	/s/ Charmaine Fearon
 	 
	 	 	Name:  	Charmaine Fearon 	 
	 	 	Title:  	Authorized Signatory 	 
	 




 









 





Exhibit A




[incorporates Consent, dated as

of December 7, 2007, Second Amendment,

dated as of December 27, 2007,

Third Amendment, dated as of May 16, 2008,

Fourth Amendment, dated as of September 15, 2008,

Fifth Amendment, dated as of October 31, 2008

Sixth Amendment, dated as of November 7, 2008

and Seventh Amendment, dated as of November 13, 2008]




EXECUTION VERSION




 





RECEIVABLES LOAN AND SECURITY AGREEMENT



Dated as of November 1, 2007




Among




LEAF CAPITAL FUNDING III, LLC,




as the Borrower




and




LEAF FINANCIAL CORPORATION,




as the Servicer




and




MORGAN STANLEY BANK




as a Class A Lender and Collateral Agent




and




MORGAN STANLEY ASSET FUNDING INC.




as a Class B Lender




and




THE ROYAL BANK OF SCOTLAND PLC




as a Class A Lender and as a Class B Lender




and




 









 





U.S. BANK NATIONAL ASSOCIATION,




as the Custodian and the Lenders’ 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 November 1, 2007, among:



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



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



     (3) MORGAN STANLEY BANK, as a Class A Lender (“Morgan Stanley” and a “Lender”
hereunder) and Collateral Agent (as defined herein);



     (4) THE ROYAL BANK OF SCOTLAND PLC, as a Class A Lender (“RBS” and a “Lender” hereunder) and
as a Class B Lender (a “Lender” hereunder);



     (5) MORGAN STANLEY ASSET FUNDING INC., as a Class B Lender (“Morgan Stanley AFI” and a
“Lender” hereunder and, together with Morgan Stanley and RBS, the “Lenders”);



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



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



     IT IS AGREED as follows:



ARTICLE I




DEFINITIONS




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



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



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



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



 









 







and (ii) $7,000. The Active Backup Servicer’s Fees shall also include reasonable
out-of-pocket expenses incurred by the Backup Servicer in performing its duties as Servicer.



     “Active Backup Servicing Fee Rate” means 1.50%.



     “Adjusted Eurodollar Rate” means, (i) on and prior to November 23, 2008, with respect
to any Interest Period for any Loan (or portion thereof) allocated to such Interest Period, an
interest rate per annum equal to the average of the interest rates per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) reported during such Interest Period on Reuters LIBOR01 Page
(British Bankers Association Settlement Rate) as the London Interbank Offered Rate for United
States dollar deposits having a term of thirty (30) days and in a principal amount of $1,000,000 or
more (or, if such page shall cease to be publicly available or, if the information contained on
such page, in each applicable Lender’s sole judgment, shall cease to accurately reflect such
London Interbank Offered Rate, such rate as reported by any publicly available recognized source of
similar market data selected by such Lender that, in such Lender’s reasonable judgment, accurately
reflects such London Interbank Offered Rate), and (ii) thereafter, with respect to each other
Interest Period for any Loan (or portion thereof) allocated to such Interest Period, an interest
rate per annum equal to the interest rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) reported on the date that is two (2) Business Days prior to the end of the immediately
preceding Interest Period on Reuters LIBOR01 Page (British Bankers Association Settlement Rate) as
the London Interbank Offered Rate for United States dollar deposits having a term of thirty (30)
days and in a principal amount of $1,000,000 or more (or, if such page shall cease to be publicly
available or, if the information contained on such page, in each applicable Lender’s sole
judgment, shall cease to accurately reflect such London Interbank Offered Rate, such rate as
reported by any publicly available recognized source of similar market data selected by such Lender
that, in such Lender’s reasonable judgment, accurately reflects such London Interbank Offered
Rate).



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



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



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



     “Aggregate Advance Amount” means the Class A Advance Amount plus the Class B Advance
Amount.



2









 





     “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.



     “Allocable Share” means, in respect of any Segregated Collateral Pool at any time,
such Segregated Collateral Pool’s share of any amount, which shall be determined by multiplying
such amount by a fraction, (x) the numerator of which is the aggregate Discounted Balance of all
Pledged Receivables included in such Segregated Collateral Pool at such time and (y) the
denominator of which is the aggregated Discounted Balance of all Pledged Receivables at such time.



     “Amendment Consent Parties” has the meaning assigned to that term in
Section 9.01.



     “Amortized Equipment Cost” means, (i) with respect to all Eligible Receivables (a) as
of the Borrowing Date, the present value of the remaining Scheduled Payments under all Eligible
Receivables (including any Balloon Payment or Put Payment), discounted monthly at the rate at which
the present value of all Scheduled Payments under all Eligible Receivables (including any Balloon
Payment or Put Payment) equals the Purchase Price and, (b) as of any subsequent date of
determination, shall mean the present value of the then remaining Scheduled Payments under all
Eligible Receivables (including any Balloon Payment or Put Payment) discounted monthly at the
aforementioned discount rate, and (ii) with respect to an Eligible Receivable (a) as of the
Borrowing Date, the present value of the remaining Scheduled Payments under such Eligible
Receivable (including any Balloon Payment or Put Payment), discounted monthly at the rate at which
the present value of all Scheduled Payments under all Eligible Receivables (including any Balloon
Payment or Put Payment) equals the Purchase Price and, (b) as of any subsequent date of
determination, shall mean the present value of the then remaining Scheduled Payments under such
Eligible Receivable (including any Balloon Payment or Put Payment) discounted monthly at the
aforementioned discount rate.



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



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



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



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



     “Available Cash” has the meaning assigned to that term in Section 7.01(t)(i).



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



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



3









 





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



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



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



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



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



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



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



4









 







debtors. The Base Rate shall change as and when such banks’ prime commercial lending (or
equivalent) rates change.



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



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



     “Borrowing” means the borrowing of the Class A Loan and the Class B Loan under this
Agreement.



     “Borrowing Date” means, with respect to the Borrowing, the date on which the Borrowing
is funded.



     “Borrowing Limit” means on the Borrowing Date, the least of (i) the Facility Limit,
(ii) the Maximum Advance Amount and (iii) the Aggregate Advance Amount; provided,
however, that at all times, on or after the Program Termination Date, the Borrowing Limit
shall mean the aggregate outstanding principal balance of the Loans.



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



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



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



5









 







judgment of the Lenders, 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.



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



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



     “Check-in Repurchase Event” has the meaning set forth in Section 5.02(e).



     “Check-in Requirements” means the procedures set forth in Section 5.02 of this
Agreement.



     “Class A Advance Amount” means $333,380,316.91.



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     “Class A Facility Limit” means, at any time, with respect to the Class A Notes, the
product of (x) 97.10%, (y) 89%, and (z) the Amortized Equipment Cost with respect to all Pledged
Receivables that are Eligible Receivables.



     “Class A Interest Rate” means (i) from August 8, 2008 through October 31, 2008, the
Adjusted Eurodollar Rate plus 2.50%; (ii) from November 1, 2008 through the Facility Maturity Date,
the Adjusted Eurodollar Rate plus 4.00%; and (iii) from and after the Facility Maturity Date or at
any time upon the occurrence and continuation of any Program Termination Event, the Adjusted
Eurodollar Rate plus 5.00%.



     “Class A Lender” means each Lender in respect of the Class A Loan.



     “Class A Loan” has the meaning set forth in Section 2.01(a).



     “Class A Note” has the meaning set forth in Section 2.01(b).



     “Class B Advance Amount” means $33,712,616.32.



     “Class B Interest Rate” means (i) from August 8, 2008 through October 31, 2008, the
Adjusted Eurodollar Rate plus 12.50%; (ii) from November 1, 2008 through the Facility Maturity
Date, the Adjusted Eurodollar Rate plus 17.50%; and (iii) from and after the Facility Maturity Date
or at any time upon the occurrence and continuation of any Program Termination Event, the Adjusted
Eurodollar Rate plus 20.00%.



     “Class B Lender” means each Lender in respect of the Class B Loan.



     “Class B Loan” means the sum of the Class B Advance Amount plus $1,000,000.



     “Class B Note” has the meaning set forth in Section 2.01(b).



     “Closing Date” means November 7, 2007.



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



     “Collateral Agent” means Morgan Stanley, in its capacity as collateral agent on behalf
of the Secured Parties, and any other Person appointed as Collateral Agent hereunder.



     “Collateral Agent’s Fee” means, for any Fee Period, an amount, payable out of
Collections on the Pledged Receivables and amounts applied to the payment of, or treated as
payments on, the Pledged Receivables, equal to the amount listed in the Fee Letter.



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



     “Collateral Split” has the meaning set forth in Section 7.03(b). The
Collateral Split shall be deemed to occur on the Collateral Split Effective Date.



     “Collateral Split Accrued Expenses” means, as of any date, each of the following
amounts to the extent accrued or invoiced on or prior to such date: all amounts payable under
clauses (i), (ii) (including, without limitation, all applicable swap breakage
costs, indemnities and



7









 







Other Swap Breakage Costs), (iii), (iv), (v), (vi),
(viii) and (xiii) of Section 2.04(a); it being understood and agreed that
extraordinary amounts reasonably expected to be incurred in connection with any Program Termination
Event or the Collateral Split may be invoiced in advance and shall be included in the Collateral
Split Accrued Expenses.



     “Collateral Split Buyout Right” has the meaning set forth in Section 7.04.



     “Collateral Split Effective Date” means (i) the day after the first Remittance Date to
occur following the later of (a) the date on which each applicable Lender’s Collateral Split Buyout
Rights expire pursuant to Section 7.03 and (b) the date on which all Collateral Split
Accrued Expenses are paid in full or (ii) any other date agreed to by the parties hereto and the
Qualifying Swap Counterparty.



     “Collateral Split Notice” has the meaning set forth in Section 7.04(a).



     “Collection Account” means a special trust account (account number 119320000 at the
Lenders’ Bank) in the name of the Borrower and under the control of U.S. Bank National Association,
as securities intermediary, on behalf of the Lenders; provided, that the funds deposited
therein (including any interest and earnings thereon) from time to time shall constitute the
property and assets of the Borrower and the Borrower shall be solely liable for any taxes payable
with respect to the Collection Account.



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



     “Collection Date” means the date on which the aggregate outstanding principal amount
of the Loans have been repaid in full and all interest and Fees and all other Obligations have been
paid in full.



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



     “Collections” means, without duplication, with respect to any Pledged Receivable, all
Scheduled Payments related to such Receivable, all prepayments and related penalty payments with
respect to the Contract related to such Receivable, all overdue payments and related interest and
penalty payments with respect to the Contract related to such Receivable, all Guaranty Amounts, all
Insurance Proceeds, all Servicing Charges, all proceeds under “buyout letters” or other
prepayment/termination agreements and all Recoveries related to such Receivable, all amounts paid
to the Borrower related to such Receivable pursuant to the terms of the Purchase and Sale
Agreement, all amounts paid by the Servicer related to such Receivable in connection with its
obligations under Section 6.20 hereof, and all other payments received with respect to the
Contract related to such Receivable, all cash receipts and proceeds in respect of the Other



8









 







Conveyed Property or Related Security (including, without limitation, the Obligor Collateral)
related to such Receivable, any Servicer Advances related to such Receivable, and any amounts paid
to the Borrower under or in connection with any Qualifying Interest Rate Swap or the hedging
arrangements contemplated thereunder.



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



     “Consolidated EBITDA” means, with respect to LEAF Financial and its consolidated
subsidiaries for any period, the aggregate net income (or loss) of LEAF Financial and its
consolidated subsidiaries for such period plus, without duplication and to the extent
deducted in the calculation of such aggregate net income (or loss) for such period, the sum of (a)
income tax expense, (b) Consolidated Interest Expense (including interest on the Loans) for such
period, (c) depreciation and amortization expense and (d) amortization of intangibles (including,
without limitation, goodwill, trademarks, tradenames, copyrights, patents, patent allocations,
licenses and rights in any of the foregoing and other items treated as intangibles in accordance
with GAAP).



     “Consolidated Interest Expense” means, with respect to LEAF Financial and its
consolidated subsidiaries for any period, the aggregate of the interest expense of LEAF Financial
and its consolidated subsidiaries for such period, as determined in accordance with GAAP, and
including, without duplication, net cash costs under all Qualifying Interest Rate Swaps (excluding
amortization or accretion of original discount or cost).



     “Contract” means a Lease Contract or a Loan Contract.



     “Controlling Holders” means, (i) at any time prior to a Collateral Split, both of the
Primary Lenders acting together and (ii) at any time after a Collateral Split, with respect to any
Loan Agreement and the related Transaction Documents, the holders of a majority of the aggregate
outstanding principal amount of the Class A Notes and the Class B Notes governed by such Loan
Agreement or, if there are only two holders of such Class A Notes and the Class B Notes, all of
such holders of such Class A Notes and the Class B Notes.



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



     “Cumulative Net Loss Rate” means, as of any date of determination following November
1, 2008, an amount (expressed as a percentage) equal to (i) the difference of (x) the aggregate
Discounted Balances of all Pledged Receivables which were Eligible Receivables at the time of their
Pledge hereunder and which became Defaulted Receivables at any time, minus (y) Recoveries
received, divided by (ii) the Purchase Price.



     “Cumulative Net Loss Rate Percentage” means, for each calendar month, the
corresponding percentage set forth in the “Cumulative Net Loss Rate Percentage” column on
Schedule IX hereto.



9









 





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



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



     “Custodian’s Fee” means, for any Fee Period, an amount, payable out of Collections on
the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the
Pledged Receivables, equal to the aggregate fees (and, following a Collateral Split, the aggregate
fees with respect to each related Segregated Collateral Pool, without duplication) listed in that
certain “Schedule of Fees” letter dated October 23, 2007 between U.S. Bank National Association and
LEAF Financial Corporation, as amended, which relate to such Fee Period.



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



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




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




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




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




     (iv) which has been or should be charged off as a result of the occurrence of a
Bankruptcy Event with respect to the related Obligor, 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




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



10









 





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



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



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



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



     “Discount Rate” means, as of any date of determination, a percentage equal to the sum
of (i) 7.20% per annum, (ii) at any time prior to the occurrence of a Servicer Default and the
appointment of the Backup Servicer as Servicer hereunder, the Servicing Fee Rate and the Standby
Backup Servicing Fee Rate, (iii) 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
(iv) a rate per annum equal to 0.05%.



     “Discounted Balance” means, with respect to any 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 with respect 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 such aggregate amount of such
Scheduled Payments to such date of determination at an annual rate equal to the Discount Rate.



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



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



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



11









 





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



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



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



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



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



     “Equity Investment” means $10,210.637.42.



     “Equity Payment” means (a) on any Remittance Date prior to the Facility Maturity Date
and so long as an Equity Event shall not have occurred and then be continuing, the least of (i) the
amount then required to be paid by the Partnership (pursuant to its partnership agreement) to its
limited partners, (ii) 5% times the remaining Collections, if any, to be distributed on such
Remittance Date after giving effect to the application of Collections in accordance with the
priority of payments set forth in clauses (i) through (x) of Section
2.04(a) on such Remittance Date, and (iii) $72,325.35, or (b) on any Remittance Date on or
after the Facility Maturity Date or if an Equity Event shall have occurred and is continuing, zero.



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



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



     “Eurodollar Disruption Event” means any of the following: (i) a determination by any
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) for such Lender to obtain United
States dollars in the London interbank market to make, fund or maintain any Loan, (ii) a
determination by any 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 such Lender of
making, funding or maintaining any Loan or (iii) the inability of any Lender to obtain United
States dollars in the London interbank market to make, fund or maintain any Loan.



12









 





     “Eurodollar Index” means an index based upon an interest rate reported on Reuters
LIBOR01 Page (British Bankers Association Settlement Rate) as the London Interbank Offered Rate for
United States dollar deposits.



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



     “Exception Report” has the meaning set forth in the Custodial Agreement.



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



     “Excluded Assets” means all Receivables and other assets acquired by the Originator
pursuant to the FDIC Purchase Agreement which are not Pledged Assets.



     “Exit Fee” has the meaning set forth in the Fee Letter.



     “Facility Amount” means, at any time, the difference between the aggregate Loans
Outstanding hereunder minus $1,000,000 (the deferred, capitalized portion of the Class B
Arrangement Fee (as defined in the Fee Letter) payable by the Borrower to Morgan Stanley AFI, as
Class B Lender).



     “Facility Deficiency” means, at any time, that either: (i) the Class A Facility Limit
is less than the aggregate outstanding principal balance of the Class A Notes, or (ii) the Facility
Limit is less than the Facility Amount; an amount equal to the amount of such deficiency,
respectively.



     “Facility Limit” means, at any time, with respect to the Class A Notes and the Class B
Notes, collectively, the product of (x) 97.10%, (y) 98%, and (z) the Amortized Equipment Cost with
respect to all Pledged Receivables that are Eligible Receivables.



     “Facility Limit Certificate” means a report, in substantially the form of
Exhibit A, prepared by the Borrower (or the Initial Servicer on its behalf) for the benefit
of Lenders pursuant to Section 6.10(c).



     “Facility Maturity Date” means November 1, 2009, unless extended by all of the Lenders
in their sole discretion, at the written request of the Borrower, by written notice to the other
parties hereto.



     “FDIC Documents” has the meaning specified in the Purchase and Sale Agreement.



     “FDIC Purchase Agreement” means the Loan Sale Agreement between Federal Deposit
Insurance Corporation, as Receiver of Netbank and the Originator with respect to the Pledged
Receivables and other assets.



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



13









 





     “Fee Period” means a period commencing on (and including) a Remittance Date and ending
on (and including) the day prior to the next Remittance Date; provided, that, the initial
Fee Period hereunder shall commence on (and include) the date hereof and end on (and include)
December 13, 2007.



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



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



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



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



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



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



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



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



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



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



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



     “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 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



14









 







Equipment) and general liability (including policies procured by the Borrower or the Servicer,
or any agent thereof, on behalf of the Obligor).



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



     “Interest Coverage Ratio” means, in respect of any fiscal quarter, the ratio
(calculated based on the most recent financial statements of LEAF Financial and its consolidated
subsidiaries delivered pursuant to Section 6.11 hereof) of (a) the Consolidated EBITDA of LEAF
Financial and its consolidated subsidiaries for fiscal quarter to (b) Consolidated Interest Expense
of LEAF Financial and its consolidated subsidiaries for fiscal quarter but excluding accrued and
unpaid interest on subordinated Debt of LEAF Financial to its parent company.



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



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



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



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



     “Lease Contract” means (i) the standard form equipment lease contract of NBBF in the
form delivered to the Servicer and the Lenders and which shall be deemed incorporated herein as
Exhibit D-1 attached hereto or (ii) 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 NBBF or Originator, together with all schedules, supplements and amendments thereto and
each other document and instrument related to such lease.



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



     “Lender” means, any one of and “Lenders” means all of, the Class A Lenders and the
Class B Lenders, and each such Person’s successors and assigns.



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



     “Lenders’ Bank Fee” means an annual fee paid in advance, payable out of Collections on
the Pledged Receivables and amounts applied to the payment of, or treated as payments on, the



15









 







Pledged Receivables, equal to $6,000. The “Lenders’ Bank Fee” shall also include (i) a
one-time acceptance fee of $4,500 payable on the Closing Date and (ii) reasonable out-of-pocket
expenses incurred by the Lenders’ Bank in the performance of its duties; provided, that all
expenses exceeding a total of $50,000 shall be approved in advance by all Lenders and the Borrower
so long as an Event of Default shall not have occurred and then be continuing.



     “Leverage Ratio” means, with respect to LEAF Financial or Resource America, as of any
date of determination, the ratio of (a) all recourse Debt (including (I) in the case of LEAF
Financial, the revolving credit facility with National City Bank, as agent, or other similar types
of credit facilities existing on or after the date hereof, and (II) in the case of Resource
America, similar types of credit facilities), to (b) the Tangible Net Worth of such Person.



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



     “Liquidity Availability Amount” means, with respect to any calendar quarter, the
aggregate amount of funds that any LEAF Managed Entity may draw under revolving lines of any credit
facility that does not have a maturity within 120 days of the last day of such calendar quarter.



     “Loan” means either of the Class A Loan or the Class B Loan and “Loans” means
the Class A Loan and the Class B Loan.



     “Loan Agreement” has the meaning assigned to that term in Section 7.03(c)(i).



     “Loan Contract” means, (i) the standard form equipment loan/security contract of NBBF
delivered to the Servicer and the Lenders and which shall be deemed incorporated herein as
Exhibit D-2 and Exhibit D-3 or (ii) a loan/security agreement and promissory note
otherwise approved by the Servicer in compliance with the Credit and Collection Policy, in each
case, pursuant to which NBBF or the Originator makes a loan to an Obligor secured by Equipment
purchased by such Obligor, together with all schedules, supplements and amendments thereto and each
other document and instrument related thereto.



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



     “Loans Outstanding” means the sum of the principal amounts of all Loans, as reduced
from time to time by Collections with respect to any Pledged Receivable received and distributed as
repayment of principal amounts of Loans outstanding pursuant to Section 2.04 and any other
amounts received by the Lenders to repay the principal amounts of Loans outstanding pursuant to
Section 2.15 or otherwise; provided, however, that the principal amounts of
Loans outstanding



16









 







shall not be reduced by any Collections with respect to any Pledged Receivable or other
amounts if at any time such Collections or other amounts are rescinded or must be returned for any
reason.



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



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



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



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



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



     “Maximum Advance Amount” means, on the Borrowing Date, $367,092,933.23.



     “Minimum Equity Requirement” means $10,000,000.



     “Minimum Tangible Net Worth” means, (i) with respect to Resource America, a Tangible
Net Worth (measured as of each fiscal quarter end) of $125,000,000 and (ii) with respect to LEAF
Financial, a Tangible Net Worth (measured as of each fiscal quarter end) of (x) $34,170,544
plus (y) 75% of the net income from each preceding fiscal quarter (beginning with and
including September 30, 2008) in which net income is positive.



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



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



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



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



     “MS Loan Agreement” has the meaning assigned to that term in
Section 7.03(c)(iv).



17









 





     “MS Primary Lender” means Morgan Stanley; provided, however, that (i)
if Morgan Stanley no longer owns any interest in the Loans, Morgan Stanley AFI shall succeed Morgan
Stanley as MS Primary Lender so long as it owns any interest in the Loans, and (ii) if neither
Morgan Stanley nor Morgan Stanley AFI owns any interest in the Loans, then the Person who acquired
directly or indirectly from Morgan Stanley or Morgan Stanley AFI Loans having the greatest
principal balance of all such Loans shall succeed Morgan Stanley and Morgan Stanley AFI as MS
Primary Lender.



     “NetBank” means NetBank, FSB, Alpharetta, Georgia, a federally chartered savings bank.



     “NBBF” means NetBank Business Finance, a division of NetBank. All references to NBBF
shall also mean NetBank or any other applicable division thereof.



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



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



     “Notes” has the meaning assigned to that term in Section 2.01(b) hereof.



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



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



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



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



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



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



18









 





     “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
Lenders, 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 Lenders, is
acceptable in form and substance to the Lenders.



     “Originator” means LEAF Funding, LLC, a Delaware limited liability company and/or the
Partnership.



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



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



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



     “Other Swap Breakage Cost” has the meaning assigned to that term in Section
2.15 hereof.



19









 





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



     “Owner” means (i) the Originator or (ii) subject to the prior written consent of the
Lenders (such consent not to be unreasonably withheld), the Partnership or any subsidiary thereof
or of the Initial Servicer (each, a “Permitted Transferee”) which acquires all of the membership
interests of the Borrower.



     “Partnership” means, LEAF Equipment Leasing Income Fund III, L.P., a Delaware limited
partnership.



     “Percentage” means, with respect to any Lender at any time, a fraction (expressed as a
percentage) (x) the numerator of which is the outstanding principal amount of such Lender’s Loans
and (y) the denominator of which is the aggregate principal amount of all Loans outstanding at such
time.



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




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




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




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




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




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



20









 






     (vi) any other investments approved in writing by the Lenders;



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



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



     “Permitted Transferee” has the meaning given to such term in the definition of “Owner”
herein.



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



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



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



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



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



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



     “Primary Lender” means each of the MS Primary Lender and the RBS Primary Lender.



     “Priority Documents” means, (i) with respect to a Lease Contract, the related
original, executed Lease Contract (or, in the case of a Lease Contract under a master lease, a
machine or facsimile copy of the related master lease certified by an authorized officer of the
Borrower and



21









 







stamped “I hereby certify that this is a true and exact copy of the original” and an original,
executed schedule thereto describing the related Equipment) and the item listed in clause (4) of
subsection (a)(i) of the definition of Receivable File, and (ii) with respect to a Loan Contract,
the items listed in clauses (1), (2) and (4) of subsection (b)(i) of the definition of Receivable
File. The term “Priority Documents” shall also include a machine copy of the existing Certificate
of Title with respect to any Vehicle subject to a Contract.



     “Program Termination Date” means the date of the occurrence of a Program Termination
Event which has not been waived by the Controlling Holders.



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




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




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




     (iii) Reserved;




     (iv) the rolling weighted average of the Delinquency Rates in respect of any three
consecutive Collection Periods, calculated by the Lenders solely with respect to
Receivables, exceeds 3.5%;




     (v) Reserved;




     (vi) the Cumulative Net Loss Rate, calculated by (or in a manner satisfactory to) the
Lenders solely with respect to Receivables, exceeds the applicable Cumulative Net Loss Rate
Percentage on the last day of the corresponding calendar month;




     (vii) Reserved;




     (viii) Reserved;




     (ix) Reserved;




     (x) a Servicer Default has occurred and is continuing; or




     (xi) (1) any Qualifying Swap Counterparty (other than the Initial Qualifying Swap
Counterparty) ceases to maintain the long-term debt ratings required of a Qualifying Swap
Counterparty and (A) does not post cash collateral in a manner acceptable to the Lenders
within 45 days or (B) is not replaced within 45 days by a replacement acceptable to the
Lenders 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



22









 






     (xii) the occurrence of three or more Termination Events.



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



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



     “Purchase Price” means $385,772,014.15.



     “Put Payment” means with respect to any 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 of the related Equipment at the end of the term of such lease.



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



     “Qualifying Swap Counterparty” means (A) Morgan Stanley Capital Services Inc. (or any
successors or permitted assigns) or (B) any Lender or any Affiliate of a Lender, provided that in
the case of a Person set forth in this clause (B) or any successors or permitted assigns of Morgan
Stanley Capital Services Inc., such Person or its credit support provider (x) shall have (i) a
short-term rating of at least “A1+” or the equivalent and (ii) a long-term rating of at
least “AA-” or the equivalent from S&P, Moody’s or Fitch (and no lower than the equivalent rating
by any of them) and (y) is otherwise acceptable to the Collateral Agent and the Controlling
Holders.



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



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



     “RBS Collateral Agent” has the meaning assigned to that term in
Section 7.03(c)(v).



     “RBS Loan Agreement” has the meaning assigned to that term in
Section 7.03(c)(i).



     “RBS Primary Lender” means RBS; provided, however, that if RBS no
longer owns any interest in the Loans, then the Person who acquired directly or indirectly from RBS
Loans having the greatest principal balance of all such Loans shall succeed RBS as RBS Primary
Lender.



23









 





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



     “Receivable File” means with respect to each Receivable:



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




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




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



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




     (i) (1) the original, executed payment schedule or promissory note (if any) and
certified copies of all amendments thereto, (2) a true, executed copy of the related “Master
Agreement” or “Finance Agreement” and all amendments thereto, (3) a true copy of the related
Insurance Certificate if such Receivable is related to Equipment with an Amortized Equipment
Cost in excess of $100,000 and (4) other than with respect to a Receivable related to
Equipment which has an Amortized Equipment Cost of less than



24









 






$25,000, a “transmittal order” from the Servicer to a filing service company and an “in
process report” from such filing service company to the Servicer (or other evidence of the
submission of the related UCC financing statement for filing in the appropriate filing
office) and, within 45 days of the related Contract being executed, a file-stamped copy of
the related UCC financing statement; and




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



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



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



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



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



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



     “Related Custodial Agreement” has the meaning assigned to that term in
Section 7.03(c)(iii).



     “Related Lender” means each Lender determined as follows:




     (i) with respect to Morgan Stanley, so long as Morgan Stanley is the MS Primary Lender,
its Related Lenders shall be Morgan Stanley AFI and any other Person to whom Morgan Stanley
or Morgan Stanley AFI has directly or indirectly assigned any of the Loans;



25









 






     (ii) with respect to Morgan Stanley AFI, so long as Morgan Stanley AFI is the MS
Primary Lender, its Related Lenders shall be each other Person to whom Morgan Stanley or
Morgan Stanley AFI has directly or indirectly assigned any of the Loans;




     (iii) with respect to any Person that has succeeded Morgan Stanley or Morgan Stanley
AFI as MS Primary Lender, its Related Lenders shall be each other Person who acquired any
Loans directly or indirectly from Morgan Stanley or Morgan Stanley AFI;




     (iv) with respect to RBS so long as RBS is the RBS Primary Lender, its Related Lenders
shall be each other Person to whom RBS has directly or indirectly assigned any of the Loans;
and




     (v) with respect to any Person that has succeeded RBS as the RBS Primary Lender, its
Related Lenders shall be each other Person who acquired any Loans directly or indirectly
from RBS.




     “Related Security” means with respect to any Receivable:




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




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




     (iii) all proceeds of the foregoing.



     “Release Price” means, with respect to a Pledged Receivable to be released hereunder,
an amount equal to the present value of the then remaining Scheduled Payments under such Pledged
Receivables (including any Balloon Payment or Put Payment) discounted monthly at the discount rate
used in calculating the Amortized Equipment Cost, plus interest accrued thereon from and
including the Remittance Date immediately preceding the date such Pledged Receivable is to be
released through (but not including) the next succeeding Remittance Date.



     “Remittance Date” means the (23rd) day of each month beginning December,
2007, or, if such date is not a Business Day, the next succeeding Business Day; provided, that the
first Remittance Date shall occur on December 13, 2007; provided, further, that the final
Remittance Date shall occur on the Collection Date.



     “Reuters LIBOR01 Page” means the display page so designated on the Reuters Monitor
Money Rates Service or any other page that may replace that page on that service for the purpose of
displaying comparable rates or prices.



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



     “Rollover Interest Period” means any Interest Period other than any Interest Period
applicable to the Loan arising as a result of the Borrowing on the Borrowing Date.



26









 





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



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



     “Secured Parties” means each Class A Lender, each Class B Lender, the Servicer, the
Backup Servicer and any other successor Servicer, the Custodian, the Lenders’ Bank, each Qualified
Swap Counterparty and their respective successors and assigns.



     “Segregated Collateral Pool” means each pool of Pledged Assets selected by the
Collateral Agent or the MS Primary Lender pursuant to Section 7.03(b).



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



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



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




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




     (ii) the failure of the Servicer to satisfy any of its reporting, certification,
notification or documentation requirements under the terms hereof or of any other
Transaction Document or the failure of the Servicer to observe or perform any material term,
covenant or agreement hereunder or under any other Transaction Document (other than those
described in clause (i) above) and such failure shall remain unremedied for 10 days (or,
with respect to a failure with respect to any such requirement set forth in (x) Sections
6.10(b) or 6.10(d) hereof, 5 Business Days or (y) Section 6.10(e)
hereof, 1 Business Day) after the Servicer first has knowledge, whether constructive or
actual, of such failure;




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




     (iv) the occurrence of an Event of Default;




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




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



27









 





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



     “Servicing Agreement Electronic Images” has the meaning set forth in Section
5.03.



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



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



     “Servicing Fee Rate” means 1.00%.



     “Standby Backup Servicer’s Fee” means, for any Fee Period or portion thereof prior to
the occurrence of a Servicer Default and the appointment of the Backup Servicer as Servicer
hereunder, an amount, payable out of Collections on the Pledged Receivables and amounts applied to
the payment of, or treated as payments on, the Pledged Receivables, equal to the greater of (i) the
Standby Backup Servicing Fee Rate, multiplied by the Eligible Receivables Balance as of the first
day of such Fee Period, multiplied by a fraction, the numerator of which shall be the actual number
of days in such Fee Period and the denominator of which shall be 360, or (ii) $2,800. The “Standby
Backup Servicer’s Fee” shall also include (i) a one-time acceptance fee of $6,000 payable on
November 13, 2008 and (ii) reasonable out-of-pocket expenses incurred by the Standby Backup
Servicer in the performance of its duties.



     “Standby Backup Servicing Fee Rate” means .0220%.



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



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



     “Successor Servicing Agreement” has the meaning set forth in Section 6.01(a).



     “Swapped Rate” means, with respect to any Qualifying Interest Rate Swap, the annual
rate of interest (expressed as a percentage) which the Borrower, as the fixed-rate payor, is



28









 







required to pay under such Qualifying Interest Rate Swap in order to receive the floating rate
of interest provided for under such Qualifying Interest Rate Swap.



     “Tangible Net Worth” means, with respect to any Person, the amount calculated in
accordance with GAAP as (i) the consolidated net worth of such Person and its consolidated
subsidiaries (excluding any mark-to-market gain or loss on any swap or other hedging agreement
(only to the extent included in such consolidated net worth) that is secured by collateral which is
not marked-to-market), plus (ii) to the extent not otherwise included in such consolidated
net worth, the unsecured subordinated Debt of such Person and the unsecured subordinated Debt of
each of such Person’s consolidated subsidiaries, in each case, which has been issued to such
Person’s or consolidated subsidiary’s parent, the terms and conditions of which are reasonably
satisfactory to the Lenders, minus (iii) the consolidated intangibles of such Person and
its consolidated subsidiaries, including, without limitation, goodwill, trademarks, tradenames,
copyrights, patents, patent allocations, licenses and rights in any of the foregoing and other
items treated as intangibles in accordance with GAAP, plus (iv) all preferred stock issued
by such Person.



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



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



     “Termination Event” means the occurrence, on or after 60 days after the Borrowing
Date, of any of the following events:




     (i) the rolling weighted average of the Delinquency Rates in respect of any three
consecutive Collection Periods, calculated by the Lenders solely with respect to
Receivables, exceeds 3.5%; or




     (ii) the Cumulative Net Loss Rate, calculated by (or in a manner satisfactory to) the
Lenders solely with respect to Receivables, exceeds the applicable Cumulative Net Loss Rate
Percentage on the last day of the corresponding calendar month.



     “Titling Requirements” means, (i) in the case of any Vehicle leased or sold to an
Obligor pursuant to a Contract, the Certificate of Title for such Vehicle indicates the Obligor, as
owner, and the Borrower or an Approved Lienholder, as lienholder, or (ii) in the event that any
Vehicle leased or sold to an Obligor pursuant to a Contract indicates NBBF, as owner, on the
related



29









 







Certificate of Title, then within 90 days after the Closing Date the Certificate of Title for
such Vehicle shall indicate the Borrower, as owner, and an Approved Lienholder, as lienholder.



     “Transaction Documents” means this Agreement, the Purchase and Sale Agreement, the
Lockbox Intercreditor Agreement, the Collection Account Agreement, the Fee Letter, the Custodial
Agreement, the Originator Insurance Agreement, the FDIC Documents, the Class A Notes, the Class B
Notes, each lease bailment agreement with a sub-custodian, each Qualifying Interest Rate Swap and
each document and instrument related to any of the foregoing.



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



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



     “Underlying Originator” means Netbank or other originator of a Contract, other than
the Originator, engaged, in the ordinary course of business in providing financing to Obligors for
the purposes of acquiring or leasing the related Equipment.



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



     “United States” means the United States of America.



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



     “Vehicle” means a new or a used automobile, minivan, sports utility vehicle, light
duty truck or heavy duty truck, or any other equipment, ownership of which is subject to a motor
vehicle certificate of title statute.



     “Warehouse Facility” means the facility in the aggregate amount of up to $250,000,000,
as evidenced by the Receivables Loan and Security Agreement, dated as of October 31, 2006, among
Resource Capital Funding II, LLC as borrower, LEAF Financial, Morgan Stanley Bank, as lender, and
U.S. Bank National Association, as same may be modified, amended, or supplemented from time to
time.



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



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



     “Weighted Average Swapped Rate” means, as of any date of determination, the weighted
average (weighted solely based on the Calculated Swap Amortizing Balances of such Qualifying



30









 







Interest Rate Swaps as of such date of determination) of the Swapped Rates of the Qualifying
Interest Rate Swaps in effect on such date of determination.



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



     SECTION 1.03 Interpretation following Collateral Split. On and after the Collateral
Split Effective Date, all terms in this Article I and all terms defined elsewhere in this
Agreement shall have the meanings set for herein in each of the Loan Agreements, in each case as
modified by Section 7.03 hereof.



     SECTION 1.04 Computation of Time Periods. Unless otherwise stated in this Agreement,
in the computation of a period of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each mean “to but excluding.”



ARTICLE II




THE RECEIVABLES FACILITY




     SECTION 2.01 Borrowings. (a) On the Borrowing Date, subject to the terms and
conditions hereinafter set forth, Morgan Stanley, as Class A Lender, and Morgan Stanley AFI, as
Class B Lender, shall make the term loan in principal amounts equal to (i) in the case of the Class
A Lenders, the Class A Advance Amount (the “Class A Loan” and a “Loan”), and (ii)
in the case of the Class B Lenders, the Class B Advance Amount, respectively, to the Borrower
secured by Pledged Assets. On the Borrowing Date, no Loan shall be made if (i) the Aggregate
Advance Amount shall exceed the Maximum Advance Amount, (ii) any Program Termination Event or an
event that but for notice or lapse of time or both would constitute a Program Termination Event
shall have occurred and be continuing or (iii) the Facility Amount, after giving effect to such
Borrowing, would exceed the Borrowing Limit.



     (b) The Class A Loan shall be evidenced by one or more promissory notes substantially in the
form of Exhibit H-1 (each, a “Class A Note” and collectively the “Class A Notes”)
and the Class B Loan shall be evidenced by one or more promissory notes substantially in the form
of Exhibit H-2 (each, a “Class B Note” and collectively the “Class B Notes” and,
together with the Class A Notes, collectively, the “Notes”).



     SECTION 2.02 The Borrowing.



     (a) Reserved.



     (b) (i) The Borrowing shall be made on at least two (2) Business Days’ irrevocable written
notice from the Borrower to the applicable Lender (such written notice, the “Notice of
Borrowing”), provided that such Notice of Borrowing is received by such Lender no later than
12:00 noon (New York City time) on the Business Day of receipt. Any Notice of Borrowing received
after 12:00 noon (New York City time) shall be deemed received prior to 12:00 noon (New York City
time) on the following Business Day. The Notice of Borrowing



31









 







shall specify (A) the aggregate amount of the Borrowing, (B) the date of the Borrowing, (C)
the allocation of the Loans as Class A Loans and Class B Loans and (D) in an electronic file
acceptable to the Lenders, the Eligible Receivables to be Pledged in connection with the Borrowing
(and upon the Borrowing, such Receivables shall be Pledged Receivables hereunder). On the date of
the Borrowing, upon satisfaction of the applicable conditions set forth in Article III Morgan
Stanley, as Class A Lender, and Morgan Stanley AFI, as Class B Lender, shall make available to the
Borrower the portion of the Borrowing constituting the Class A Advance Amount and the Class B
Advance Amount, respectively, on the Borrowing Date, no later than 2:00 P.M. (New York City time),
in same day funds (net of amounts payable to or for the benefit of each related Lender), by payment
into the account which the Borrower has designated in writing.




     (ii) The Notice of Borrowing delivered to a Lender pursuant to this
Section 2.02(b) shall be in an electronic file format acceptable to such Lender (A)
accompanied by a copy of the Notice of Pledge (and the Receivables Schedule attached
thereto), which was sent to the Custodian pursuant to the terms of the Custodial Agreement
in connection with the pledge of Eligible Receivables to be made in connection therewith and
(B) specifying for each Receivables pledged therein the information set forth on Exhibit B
hereto.




     (iii) The Class A Loan shall bear interest at the Class A Interest Rate and the Class B
Loan shall bear interest at the Class B Interest Rate.




     (iv) The Borrower may not reborrow any amounts that are repaid with respect to the
Loans.




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



     SECTION 2.03 Determination of Interest Periods and Interest Rates.



     (a) The initial Interest Period applicable to the Borrowing shall commence on, and include,
the date of the Borrowing and shall terminate on, and include, the day immediately prior to the
next occurring Remittance Date. Each Rollover Interest Period shall commence on, and include, the
Remittance Date following the last day of the immediately preceding Interest Period and shall
terminate on, and include, the day immediately prior to the next occurring Remittance Date.



     (b) The interest rate per annum (the “Interest Rate”) applicable to any Loan for any
Interest Period shall be equal to the applicable Class A Interest Rate (for the Class A Notes) or
the applicable Class B Interest Rate (for the Class B Notes); provided, however,
that if a Lender shall have notified the Borrower that a Eurodollar Disruption Event has occurred,
the Interest Rate for all Loans shall be equal to the Base Rate until such Eurodollar Disruption
Event has



32









 







ceased, at which time the Interest Rate shall again be equal to the applicable Class A
Interest Rate and applicable Class B Interest Rate.



     SECTION 2.04 Remittance Procedures. Subject to Section 7.03(c)(i)(E) (if then
applicable) and the proviso set forth in Section 2.04(a), the Servicer, as agent for the
Lenders, with the prior written consent of the Collateral Agent, shall instruct the Lenders’ Bank
and, if the Servicer fails to do so, the Collateral Agent shall instruct the Lenders’ Bank, to
apply funds on deposit in the Collection Account as described in this Section 2.04.



     (a) Remittance Date Transfers From Collection Account. The Servicer shall, with the
prior written consent of the Collateral Agent, and if the Servicer fails to do so, the Collateral
Agent shall, by 10:00 a.m. (St. Paul, Minnesota time) on each Remittance Date, direct the Lenders’
Bank to transfer collected funds held by the Lenders’ 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; provided,
however, that if the Lenders’ Bank does not receive such instruction from (i) the Servicer
(accompanied by the Collateral Agent’s written consent) or (ii) the Collateral Agent by 10:00 a.m.
(St. Paul, Minnesota time) on such Remittance Date, subject to the provisions of the Discrepancy
Procedure, the Lenders’ Bank shall apply such funds in accordance with the information calculated
by the Servicer on the related Monthly Remittance Report:




     (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 that such amount shall be promptly paid to the taxing authorities entitled
thereto), together with (provided the current Scheduled Payment has been paid in full) late
fees, interest on overdue amounts and other amounts not in respect of Scheduled Payments;




     (ii) to the related 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 the Borrower to such Qualifying Swap Counterparty on such Remittance Date, pursuant to
the terms of the applicable Qualifying Interest Rate Swap or this Agreement;




     (iii) on a pro rata basis, to (v) 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 Fee Period) at any time prior to the occurrence of a
Servicer Default and the appointment of the Backup Servicer as the Servicer hereunder and
(w) the Custodian, the Custodian’s Fee, (x) the Collateral Agent, the Collateral Agent’s
Fee, (y) the Lenders’ Bank, the Lenders’ Bank Fee and (z) each Lender, only on the
Remittance Date occurring in November 2008, all of such Lender’s portion of the “Amendment
Fee” (as defined in that certain Amendment Fee Letter, dated as of November 13, 2008, among
the Borrower and each Lender);




     (iv) 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 amount equal to the
Servicing Fee which is accrued and unpaid as of the last day of the



33









 







immediately preceding Fee Period and, at any time after the occurrence of a Servicer
Default and the appointment 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 Successor Servicer’s
Indemnified Amounts;




     (v) on a pro rata basis, (x) to the Collateral Agent, any
indemnification amounts then due and payable to the Collateral Agent and (y) to the
Custodian, any indemnification amounts then due and payable to the Custodian;




     (vi) to the parties hereto on a pro rata basis, all reasonable (and
reasonably documented) costs and expenses of such parties (including, without limitation
reasonable attorney’s fees) incurred in connection with the Collateral Split;




     (vii) (A) first, to each Class A Lender, in an amount equal to (and for the pro
rata payment of) interest (including post-petition interest) on its Class A Loans
which is accrued and unpaid as of the last day of the immediately preceding Fee Period; and
then (B) second, to each Class B Lender, in an amount equal to (and for the pro
rata payment of) interest (including post-petition interest) on its Class B Loans
which is accrued and unpaid as of the last day of the immediately preceding Fee Period;




     (viii) to the Servicer in an amount equal to any Servicer Advances (and amounts to be
reimbursed as Servicer Advances pursuant to Section 6.19) not previously reimbursed
to the Servicer;




     (ix) so long as no Termination Event or Event of Default has occurred and is
continuing, and prior to the Facility Maturity Date, to the holders of the Class A Notes,
pro rata, the Target Principal Amount;




     (x) if the principal amount of all Class A Notes shall have been paid in full,
pro rata, to the holders of the Class B Notes until the principal amount of
all Class B Notes shall have been paid in full;




     (xi) to the Owner, so long as no Termination Event or Event of Default has occurred and
is continuing, and prior to the Facility Maturity Date (and, at any time after a Collateral
Split, no Termination Event or Event of Default under either the MS Loan Agreement or the
RBS Loan Agreement has occurred and is continuing), the Equity Payment;




     (xii) (A) to the holders of the Class A Notes, all remaining amounts to pay principal
of the Class A Notes until the principal amount of all Class A Notes shall have been paid in
full, and (B) thereafter, to the holders of the Class B Notes until the principal amount of
all Class B Notes shall have been paid in full;




     (xiii) (A) first, to the Class A Lenders, pro rata, in an amount equal to the aggregate
amount of all other Obligations then due from the Borrower to the Class A Lenders or any
Affected Party hereunder related to the Class A Lenders for the account



34









 







of such parties as applicable; and then (B) second, to the Class B Lenders, pro rata,
in an amount equal to the aggregate amount of all other Obligations then due from the
Borrower to the Class B Lenders or any Affected Party hereunder related to the Class B
Lenders for the account of such parties as applicable;




     (xiv) (A) first, to Morgan Stanley, as Class A Lender, in an amount equal to (and for
the pro rata payment of) the Fees, if any, which are due and payable to it
on such Remittance Date pursuant to the terms of the Fee Letter; and then (B) second, to
Morgan Stanley AFI, as Class B Lender, in an amount equal to (and for the pro
rata payment of) the Fees, if any, which are due and payable to it on such
Remittance Date pursuant to the terms of the Fee Letter;




     (xv) at any time after a Collateral Split, to the Collateral Agent under the RBS Loan
Agreement for application in accordance with the priority of payments set forth in
Section 2.04(a) of the RBS Loan Agreement; and




     (xvi) to the order of the Borrower, any remaining amounts.



     (b) Subordination. In the event that any Lender receives a payment or other
distribution hereunder other than in accordance with the priority of payments set forth in
Section 2.04(a), such Lender promptly shall pay over all such amounts to the Person(s) to
whom such amounts are due in accordance with the priority of payments set forth in Section
2.04(a).



     (c) Deficiency Payments. Notwithstanding anything to the contrary contained in this
Section 2.04 or in any other provision in this Agreement, if, on any day prior to the
Collection Date, a Facility Deficiency shall have occurred, then the Borrower shall remit to the
respective Lenders no later than the close of business of such Lender on such day (or if such day
is not a Business Day, no later than the close of business of such Lender on the next succeeding
Business Day), (i) so long as no Termination Event or Event of Default shall have occurred and be
continuing, the amount required to eliminate any Facility Deficiency or (ii) if any Termination
Event or Event of Default shall have occurred and is continuing, the entire outstanding Facility
Amount, first to the Class A Notes until paid in full, and then to the Class B Notes until paid in
full.



     (d) Remittance Reports. On each Remittance Date, the Servicer shall deliver to the
Lenders an electronic file, in a form acceptable to the Lenders, setting forth all of the
information set forth on Schedule VII.



     (e) Instructions to the Lenders’ Bank. All instructions and directions given to the
Lenders’ Bank by the Servicer, the Borrower or the Lenders pursuant to this Section 2.04
shall be in writing (including instructions and directions transmitted to the Lenders’ Bank in
electronic format), 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 2.04. The Servicer and the Borrower shall immediately transmit to the Lenders by
telecopy a copy of all instructions and directions given to the Lenders’ Bank by such party
pursuant to this Section 2.04. Each applicable Lender shall immediately transmit to the
Servicer



35









 







and the Borrower by telecopy a copy of all instructions and directions given to the Lenders’
Bank by the Lenders, pursuant to this Section 2.04.



     SECTION 2.05 Reserved.



     SECTION 2.06 Reserved.



     SECTION 2.07 Payments and Computations, Etc. (a) All amounts to be deposited or paid
by the Borrower or the Servicer to any Lender hereunder shall be paid or deposited in accordance
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 such Lender. The Borrower shall, to the extent permitted by law, pay
to each applicable Lender interest on all amounts not paid or deposited when due hereunder (whether
owing by the Borrower or the Servicer) at the Base 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 such Lender in respect
of each of the Class A Notes and the Class B Notes and shall be paid in accordance with Section
2.04(a). Any Obligation hereunder shall not be reduced by any distribution of any portion of
Collections with respect to any Pledged Receivable if at any time such distribution is rescinded or
returned by a Lender to the Borrower or any other Person for any reason. All computations of
interest and all computations of 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 on the basis of a year of 360 days (or 365 or
366 days for interest calculated at the Base Rate) 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 be included in the computation of payment of interest or any fee payable
hereunder, as the case may be; provided, however, that with respect to the
calculation of interest, such extension of time shall not be included in more than one Interest
Period.



     (c) If the Borrowing requested by the Borrower and approved by the Lenders pursuant to
Section 2.02 is not for any reason whatsoever, except as a result of the gross negligence
or willful misconduct of a Lender or an Affiliate thereof, made or effectuated, as the case may be,
on the date specified therefor, the Borrower shall indemnify such Lender against any loss, cost or
expense incurred by such Lender related thereto (other than any such loss, cost or expense solely
due to the gross negligence or willful misconduct of such Lender 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 the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund Loans or maintain Loans made by such Lender during such
Interest Period. The applicable Lender shall provide to the Borrower documentation setting forth
the amounts of any loss, cost or expense referred to in the previous sentence, such documentation
to be conclusive absent manifest error.



36









 





     SECTION 2.08 Fees. (a) The Borrower shall pay Morgan Stanley, as Class A Lender, and
Morgan Stanley AFI, as Class B Lender, certain fees, including the Exit Fee (the “Fees”),
in the amounts and on the dates set forth in a fee letter (the “Fee Letter”), dated the
date hereof, among the Borrower, Morgan Stanley and Morgan Stanley AFI.



     (b) All of the Fees payable pursuant to this Section 2.08 (other than Fees payable on
or prior to the Borrowing Date) shall be payable solely from amounts available for application
pursuant to, and subject to the priority of, payment set forth in, Section 2.04.



     SECTION 2.09 Increased Costs; Capital Adequacy. (a) If, due to either (i) the
introduction of or any change (including, without limitation, any change by way of imposition 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 any Lender
under this Agreement being subject to United 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 any Lender or any Affiliate,
successor or assign or participant 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 2.09(c) by such Lender, on behalf of such Affected
Party, pay to such Lender, 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, request or accounting principle or (ii) the compliance by
any Affected Party with any law, guideline, rule, regulation, directive, request or accounting
principle from any central bank, other governmental authority, agency or accounting authority
(whether or not having 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 Affected Party, as a consequence of its
obligations hereunder or any related document or arising in connection herewith or therewith to a
level below that which 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 be material, 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), each Lender shall be paid, on behalf of such Affected Party (from
Collections with respect to Pledged Receivables pursuant to, and subject to the priority of payment
set forth in, Section 2.04), such additional amounts as will compensate such Affected Party
for such reduction.



     (c) In determining any amount provided for in this Section 2.09, the Affected Party
may use any reasonable averaging and attribution methods. Each Lender, on behalf of any Affected
Party making a claim under this Section 2.09, shall submit to the Borrower a certificate
setting forth in reasonable detail the basis for and the computations of such additional or
increased costs, which certificate shall be conclusive absent demonstrable error.



37









 





     (d) If, as a result of any event or circumstance similar to those described in
Section 2.09(a) or 2.09(b), any Affected Party (that is a Lender) is required to
compensate a bank or other financial institution (including, without limitation, any Affiliate of
Morgan Stanley) providing liquidity support, credit enhancement or other similar support to such
Affected Party in connection with this Agreement, then, upon demand by such Affected Party, the
Borrower shall pay, in accordance with Section 2.04, to such Affected Party such additional
amount or amounts as may be necessary to reimburse such Affected Party for any amounts paid by it,
and shall notify each Qualified Swap Counterparty of such payment.



     SECTION 2.10 Collateral Assignment of Agreements. The Borrower hereby collaterally
assigns to the Collateral Agent (and its successors and assigns) for the benefit of the Secured
Parties, all of the Borrower’s right and title to and interest in, to and under (but not any
obligations under) the Purchase and Sale Agreement, each Qualifying Interest Rate Swap, the
Contract related to each Pledged Receivable, all other agreements, documents and instruments
evidencing, securing or guarantying 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, the Borrower confirms and agrees that the Collateral
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
remedies under each Assigned Document, but without any obligation on the part of the Collateral
Agent or any of its Affiliates to perform any of the obligations of the Borrower under any such
Assigned Document. In addition, each of the Servicer and the Borrower confirms and agrees that the
Servicer and the Borrower will, upon receipt of notice or discovery thereof, promptly send to the
Collateral Agent and each Lender a notice of (i) any breach of any representation, warranty,
agreement or covenant under any such 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 the Collateral
Agent shall terminate upon the Collection Date.



     SECTION 2.11 Grant of a Security Interest. 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 Borrower hereby (i) collaterally
assigns and pledges to the Collateral Agent (and its successors and assigns), for the benefit of
the Secured Parties, and (ii) grants a security interest to the Collateral Agent (and its
successors and assigns), for the benefit of the Secured Parties, in all property of the Borrower,
whether tangible or intangible and whether now owned or existing or hereafter arising or acquired
and wheresoever located (collectively, the “Pledged Assets”), including, without
limitation, all of the Borrower’s right, title and interest in, to and under:



     (a) all Receivables purchased by, or otherwise transferred or pledged to (pursuant to the
terms of the Purchase and Sale Agreement) the Borrower under the Purchase and Sale Agreement from
time to time (such Receivables, the “Pledged Receivables”, all Other Conveyed Property
related to the Pledged Receivables purchased by (or otherwise transferred or pledged pursuant to
the terms of the Purchase and Sale Agreement) to the Borrower under the Purchase and Sale
Agreement, all Related Security related to the Pledged Receivables, all interest of the Borrower in
all Obligor Collateral related to the Pledged Receivables (together with all security



38









 







interests in and Insurance Proceeds related to such Obligor Collateral and all proceeds from
the disposition of such Obligor Collateral, whether by sale to the related Obligors or otherwise),
all Collections and other monies due and to become due under the Contracts related to the Pledged
Receivables received on or after the date such Pledged Receivables were purchased by (or
purportedly purchased by) the Borrower under the Purchase and Sale Agreement;



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



     (c) the Collection Account, the Lockbox, the Lockbox Account, and all other bank and similar
accounts relating to Collections with respect to Pledged 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, and such other accounts;



     (d) the Records relating to any Pledged Receivables;



     (e) all UCC financing statements filed by the Borrower against the Originator under or in
connection with the Purchase and Sale Agreement;



     (f) Reserved;



     (g) each Qualifying Interest Rate Swap, 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 the then existing Pledged Receivables.


The Borrower hereby authorizes the Collateral Agent to file financing statements describing as the
collateral covered thereby as “all of the debtor’s personal property or assets” or words to that
effect, notwithstanding that such wording may be broader in scope than the collateral described in
this Agreement.




     SECTION 2.12 Evidence of Debt. Each Lender shall maintain an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from the related Loan (and its
related Class A Note and Class B Note) owing to such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to time hereunder. The
entries made in such account(s) of such Lender shall be conclusive and binding for all purposes,
absent manifest error.



     SECTION 2.13 Release of Pledged Receivables. (a) Subject to Section 2.15
hereof, upon the repayment of the Loans and all other Obligations payable to each Secured Party
under this Agreement and any other Transaction Document, the security interest of the Collateral



39









 







Agent in each Pledged Receivable and the related Other Conveyed Property and Related Security
shall be released and the Borrower hereby authorized to file, on behalf of the Collateral Agent,
UCC termination statements in respect thereof.



     (b) The Borrower shall notify the Collateral Agent of any Release Price to be paid pursuant to
this Section 2.13 on the Business Day on which such Release Price shall be paid specifying
the Pledged Receivables to be released and the Release Price.



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



     SECTION 2.14 Treatment of Amounts Paid by the Borrower. Amounts paid by the Borrower
pursuant to Section 2.13 on account of Pledged Receivables shall be treated as payments on
Pledged Receivables hereunder.



     SECTION 2.15 Prepayment; Certain Indemnification Rights; Termination. (a) The
Borrower may prepay, in whole or in part, the outstanding principal amount of any Class A Notes
and/or Class B Notes. All such prepayments with respect to the Class A Notes shall be made on a
pro rata basis among the Class A Lenders. All such prepayments with respect to the Class B Notes
shall be made on a pro rata basis among the Class B Lenders. Any amounts so prepaid shall be
applied to repay the outstanding principal amount of Loans allocated to an Interest Period or
Interest Periods selected by the related Lender. If the Borrower intends to make an optional
prepayment pursuant to this Section 2.15(a), the Borrower shall give five (5) Business
Days’ prior written notice thereof to the Lenders, specifying the intended Prepayment Date, the
intended Prepayment Amount, a calculation of any applicable Breakage Fee and any amounts payable by
the Borrower in connection with the termination of a Qualified Interest Rate Swap (such cost, an
“Other Swap Breakage Cost”). Any such optional prepayment shall be accompanied by all
interest accrued with respect thereto and the Breakage Fee and Other Swap Breakage Cost with
respect to the applicable Prepayment Amount and Prepayment Date. If such notice is given, the
principal amount specified in such notice (together with all interest accrued with respect thereto
and the Breakage Fee and Other Swap Breakage Cost related thereto) shall be due and payable on the
Prepayment Date specified therein. Notwithstanding the foregoing, any payment by the Borrower
required pursuant to Section 2.04(c) or, in connection with the occurrence of an Event of
Default, pursuant to Section 7.01 hereof shall not be considered an optional prepayment and
no Breakage Fee or Other Swap Breakage Cost shall be required to be paid in respect thereof.



     (b) Without limiting any other provision hereof, the Borrower agrees to indemnify each Lender,
the Qualifying Swap Counterparty and any Affiliate thereof 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 2.15(a) hereof, (ii) any default by the
Borrower in making any optional prepayment pursuant to Section 2.15(a) hereof after notice
of such prepayment has been given, (iii) any failure by the Borrower to take a Loan hereunder after
notice of such Loan has been given pursuant to this Agreement, (iv) any



40









 







acceleration of the maturity of any Loans by any Lender in accordance with the terms of this
Agreement, including, but not limited to, any Breakage Fees, any cost, loss or expense arising
related to the termination (in whole or in part) or amendment of any Qualifying Interest Rate Swap
and from interest or fees payable by such Lender to lenders of funds obtained by it in order to
advance or maintain the Loans hereunder. Indemnification pursuant to this Section 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 the Facility
Maturity Date without the Lenders’ prior written consent, which consent may be withheld in each
Lender’s sole discretion.



     (d) At any time prior to the occurrence of a Termination Event or an Event of Default, the
Borrower shall have the right to deliver written notice, which notice shall be sent to the Lenders
and the holders of the Class B Notes (the “Class B Buyout Notice”) designating a purchaser
for (without recourse, warranty or representation (other than the holders of such Class B Notes own
such Class B Notes free and clear of any liens created or granted by the holders of such Class B
Notes)) the entire (but not less than the entire) outstanding principal amount of Class B Notes
(and all associated rights, titles, claims and privileges associated therewith, including rights
under this Agreement) for an amount (the “Class B Buyout Price”) equal to the outstanding
principal amount of, and accrued but unpaid interest on, the Class B Notes (including any
make-whole premium payable) and all other amounts then payable to the holder(s) of the Class B
Notes under this Agreement. The purchase of the Class B Notes pursuant to this Section shall close
no later than the date specified in such Class B Buyout Notice, which date shall be subject to the
prior written approval of the holder of the Class B Notes. The Class B Buyout Price shall be
remitted by wire transfer in immediately available federal funds to the holder(s) of the Class B
Notes to account(s) specified by such holder(s). Interest shall be calculated to but excluding the
Business Day on which such purchase shall occur if the Class B Buyout Price is wired to the
holder(s) of the Class B Notes prior to 1:00 pm New York time and interest shall be calculated to
and including such Business Day if the Class B Notes Buyout Price is wired to the holder(s) of the
Class B Notes later than 1:00 pm New York time.



ARTICLE III




CONDITIONS OF LOANS




     SECTION 3.01 Conditions Precedent to Borrowing. The Borrowing hereunder is subject to
the conditions precedent that:



     (a) the Class A Arrangement Fee and the Class B Arrangement Fee (as such terms are defined in
the Fee Letter) shall have been paid in full in accordance with the terms of the Fee Letter and all
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 to the execution, delivery and performance of this
Agreement and all related documents and to constitute the same



41









 







legal, valid and binding obligations, enforceable in accordance with their respective terms,
shall have been done and performed and shall have happened in due and strict compliance with all
applicable laws; and



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



     SECTION 3.02 Conditions Precedent to All Borrowings. The Borrowing by the Borrower
from the Lenders shall be subject to the further conditions precedent that:



     (a) Reserved;



     (b) After giving effect to the 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 Borrowing Limit; and




     (ii) the Facility Amount will not exceed the Facility Limit.



     (c) On the Borrowing Date, the following statements shall be true and correct, and the
Borrower by accepting any amount of the 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 Borrowing to take
place on the 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 result from the 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) no event has occurred and is continuing, or would result from the Borrowing,
which constitutes a Termination Event hereunder or an event that but for notice or lapse of
time or both would constitute a Termination Event;




     (iv) Reserved;




     (v) the requirements set forth in Section 2.01(a) hereof shall have been
complied with;




     (vi) (a) the Borrower has delivered to each Lender a copy of the applicable 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 caused to have been delivered to the Custodian the Notice
of Pledge with respect to the Receivables being Pledged hereunder three (3) Business Days
prior to the Borrowing Date, and (c) the Contract related to each Receivable being Pledged
hereunder on the Borrowing Date has



42









 







been duly assigned by the Originator to the Borrower and duly assigned by the Borrower
to the Collateral Agent;




     (vii) all terms and conditions of the Purchase and Sale Agreement required to be
satisfied in connection with the assignment of each Receivable being Pledged hereunder on
the 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 an Amortized Equipment Cost of less than $25,000
and is leased under Dollar Purchase Option Contracts or $50,000 and is leased under FMV
Contracts), 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 Collateral Agent 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 Initial Servicer shall have taken or caused to be taken all steps
necessary under all applicable 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 each Receivable
being Pledged hereunder on the Borrowing Date (other than with respect to Equipment which
has an Amortized Equipment Cost of less than $25,000 and is leased under Dollar Purchase
Option Contracts or $50,000 and is leased under FMV Contracts), (B) the Originator shall
have assigned the perfected, first priority security interest in the Obligor Collateral to
the Borrower pursuant to the Purchase and Sale Agreement and (C) the Borrower shall have
assigned the perfected, first priority security interest in the Obligor Collateral (and the
proceeds thereof) referred to in clause (A) above to the Collateral Agent, pursuant to
Section 2.11 hereof;




     (ix) Reserved; and




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



     (d) No law or regulation shall prohibit, and no order, judgment or decree of any Government
Entity shall prohibit or enjoin, the making of such Loans by any Lender in accordance with the
provisions hereof; and



     (e) The Lenders shall have received and found to be satisfactory with respect to Pledged
Receivables being Pledged in connection with the Borrowing, which have been previously pledged to
any lender by the Originator, the Borrower or any Affiliate thereof under



43









 







any other financing facility, evidence of the release of any liens granted in connection with
such financing with respect to any such Pledged Receivables.



     (f) Unless a credit agreement and/or security agreement, including but not limited to any such
agreement with National City Bank, as agent, related to Receivables being Pledged by the Borrower
in connection with the Borrowing, shall have provided for an automatic release of the Agent’s or
Collateral Agent’s, as applicable, lien and security interest in such Receivables granted
thereunder, the applicable agent or lender shall have executed and delivered to the Borrower and
the Collateral Agent a partial release letter and the Borrower shall have duly filed with the
appropriate filing office a UCC-3 partial release evidencing the release contained in such release
letter, in each case in a form satisfactory to the Collateral Agent.



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



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




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



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



     (b) The Borrower is a limited liability company duly organized, validly existing and in 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 each jurisdiction where the transaction of such
business or its ownership of the Pledged Receivables requires such qualification.



     (c) 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 all of the transactions
contemplated hereby and thereby, and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and each of the Transaction Documents to which it is a
party, and to grant to the Collateral Agent a first priority perfected security interest in the
Pledged Assets on the terms and conditions of this Agreement. This Agreement 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 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 general principles of equity (whether such




44











 




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 Government Entity, bureau or agency is required in connection with the 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 than such as have been met or obtained.




     (d) The execution, delivery and performance 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 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 body or administrative agency or the certificate of formation or
limited liability company agreement of the Borrower 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.



     (e) No litigation or administrative proceeding of or before any court, tribunal or
governmental body is presently pending or, to the knowledge of the Borrower, threatened against the
Borrower or any properties of Borrower or with respect to this Agreement, which, if adversely
determined, could have a Material Adverse Effect.



     (f) In selecting the Receivables to be Pledged pursuant to this Agreement, no selection
procedures were employed which are intended to be adverse to the interests of any Lender.



     (g) The grant of the security interest in the Pledged Assets by the Borrower to the Collateral
Agent pursuant to this Agreement, is in the ordinary course of business for the Borrower and 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 of such Assets to the Collateral Agent pursuant to
the terms of this Agreement.



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



     (i) The Borrower has been formed solely for the purpose of engaging in the transactions
contemplated by this Agreement and the other Transaction Documents.



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



     (k) The Borrower has filed (on a consolidated basis or otherwise) on a timely basis all tax
returns (including, without limitation, all foreign, federal, state, local and other tax returns)
required to be filed, is not liable for taxes payable by any other Person and has paid or made
adequate provisions for the payment of all taxes, assessments and other governmental charges due
from the Borrower except for those taxes being contested in good faith by appropriate proceedings
and in respect of which no penalty may be assessed from such contest and it has



45









 




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 Borrower, as
applicable, in connection with the execution and delivery of this Agreement and the other
Transaction Documents and the transactions contemplated hereby or thereby have been paid or shall
have been paid if and when due.




     (l) 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 at One
Commerce Square, 2005 Market Street, 15th Floor, Philadelphia, PA 19103.



     (m) The Borrower’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 Lenders upon
receipt of a notice delivered to the Lenders pursuant to Section 6.18), 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 Lenders upon receipt of a notice delivered to
the Lenders pursuant to Section 6.18).



     (n) 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 become due; and the
Borrower, after giving effect to the transactions contemplated hereby, will have adequate capital
to conduct its business.



     (o) The Borrower has no subsidiaries.



     (p) The Borrower has given fair consideration and reasonably equivalent value in exchange for
the sale of the Pledged Receivables by the Originator under the Purchase and Sale Agreement.



     (q) No Monthly Remittance Report or Facility Limit 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
furnished by the Borrower to the Lenders 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 Lenders, as the case may 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 not misleading.



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



     (s) 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 Assets contemplated by
Section 2.11.



46









 





     (t) The Borrower is not an “investment company” or an “affiliated person” of or “promoter” or
“principal underwriter” for an “investment company” as such terms are defined in the Investment
Company Act of 1940, as amended, nor is the Borrower otherwise subject to regulation thereunder.



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



     (v) Reserved.



     (w) The Borrower is in compliance with ERISA in all material respects. No steps have been
taken to terminate any Borrower Pension Plan which could result in material liability, and no
contribution failure has occurred with respect to any Borrower Pension Plan sufficient to give rise
to a lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred
with respect to any Borrower Pension Plan which could result in the Borrower or any ERISA Affiliate
of Borrower incurring any material liability, fine or penalty.



     (x) There is not now, nor will there be at any time in the future, any agreement or
understanding 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 governmental charges.



     (y) Notwithstanding anything to the contrary in the Warehouse Facility, no Pledged Receivable
constitutes (for purposes of the Warehouse Facility) either an “Eligible Pool A Receivable” or an
“Eligible Pool B Receivable”, in each case as defined under the Warehouse Facility.



     SECTION 4.02 Representations and Warranties of the Servicer. The Servicer (so long as
the Servicer is not the Backup Servicer as successor Servicer) hereby represents and warrants, as
of the date hereof, on the Borrowing Date, on each Remittance Date and on the first day of each
Rollover Interest Period, as follows:



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



     (b) The Servicer is a corporation duly organized, validly existing and in good standing 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 and itself) and is duly qualified and in good standing under
the laws of each jurisdiction where its servicing of the Pledged Receivables requires such
qualification.



     (c) The Servicer 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 all of the transactions
contemplated hereby and thereby, and has taken all necessary action to authorize the execution,
delivery and performance of this Agreement and each of the Transaction Documents








47









 










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 accordance with 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 general principles
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 Government Entity 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 such Transaction Document, other than
such as have been met or obtained.




     (d) 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 hereto or 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 body or 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.



     (e) No litigation or administrative proceeding of or before any court, tribunal or
governmental 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 Agreement, which, if adversely
determined, could have a Material Adverse Effect.



     (f) 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 Servicer is a party.



     (g) The Servicer has filed (on a consolidated basis or otherwise) on a timely basis all
material tax returns (including, without limitation, all foreign, federal, state and local income
tax returns) required to be filed, is not liable for taxes payable by any other Person (other than
any Person within the Servicer’s consolidated group or similar group) and has paid or made adequate
provisions for the payment of all material 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 the execution 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.



     (h) The chief executive office of the Servicer (and the location of the Servicer’s records
regarding the Pledged Receivables (other than those delivered to the Custodian)) is located at One
Commerce Square, 2005 Market Street, 15th Floor, Philadelphia, PA 19103.



48









 





     (i) 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 time to by the Lenders upon
receipt of a notice delivered to the Lenders pursuant to Section 6.18), the Servicer has
not changed its name since its formation; the Servicer 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 Lenders upon receipt of a notice delivered to
the Lenders pursuant to Section 6.18).



     (j) The Servicer is solvent and will not become insolvent after giving effect to the
transactions 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.



     (k) As of the date hereof and as of the date of delivery of any Monthly Remittance Report or
Facility Limit Certificate, no Monthly Remittance Report or Facility Limit Certificate (each if
prepared by the Servicer or to the extent that information contained therein is supplied by the
Servicer), information, exhibit, financial statement, document, book, record or report furnished or
to be furnished by the Servicer to the Lenders in connection with this Agreement is or will be
inaccurate in any material respect, 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 not misleading.



     (l) The Servicer is not an “investment company” or an “affiliated person” of or “promoter” or
“principal underwriter” for an “investment company” as such terms are defined in the Investment
Company Act of 1940, as amended, nor is the Servicer otherwise subject to regulation thereunder.



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



     (n) 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 and reporting
procedures and systems (including, without limitation, the Credit and Collection Policy).



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



     (p) The Servicer is in compliance with ERISA in all material respects. No steps have been
taken to terminate any Servicer Pension Plan which could result in material liability, and no
contribution failure has occurred with respect to any Servicer Pension Plan sufficient to give rise
to a lien under section 302(f) of ERISA. No condition exists or event or transaction has occurred
with respect to any Servicer Pension Plan which could result in the Servicer or any ERISA Affiliate
of Servicer incurring any material liability, fine or penalty.



     (q) There is not now, nor will there be at any time in the future, any agreement or
understanding between the Servicer and the Borrower (other than as expressly set forth herein),



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providing for the allocation or sharing of obligations to make payments or otherwise in
respect of any taxes, fees, assessments or other governmental charges.




     (r) Notwithstanding anything to the contrary in the Warehouse Facility, no Pledged Receivable
constitutes (for purposes of the Warehouse Facility) either an “Eligible Pool A Receivable” or an
“Eligible Pool B Receivable”, in each case as defined under the Warehouse Facility.



     SECTION 4.03 Resale of Receivables Upon Breach of Covenant or Representation and Warranty
by Borrower. The Borrower or the Servicer, as the case may be, shall inform the other parties
to this Agreement and the Qualifying Swap Counterparty promptly, in writing, upon the discovery of
any breach of the representations, warranties and/or covenants contained in Section 4.01,
Section 4.02 or Section 5.01; provided, however, that the failure
to provide any such notice shall not diminish, in any manner 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 LEAF Purchase Event under and as
defined in the Purchase and Sale Agreement, the Borrower shall have an obligation to, and the
Borrower shall, resell to the Originator pursuant to the Purchase and Sale Agreement (and the
Collateral Agent may enforce such obligation of the Borrower to sell) any Pledged Receivable
adversely affected by any such breach. The Servicer shall notify the Collateral Agent promptly, in
writing, of any failure by the Borrower to so resell any such Pledged Receivable. In connection
with the resale of such Pledged Receivable, 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
and the Collateral Agent, in consideration for payment (and automatically upon deposit in the
Collection Account), of the Release Price shall be deemed to have released its security interest in
such Pledged Receivables. It is understood and agreed that the obligation of the Borrower to resell
to the Originator, and the obligation of the Originator to purchase, any Receivables which are
adversely affected by a LEAF Purchase Event 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.



     SECTION 4.04 Representations and Warranties of the Lenders. (A) Each of Morgan
Stanley, as Class A Lender, and Morgan Stanley AFI, as Class B Lender, hereby represents and
warrants, on the Borrowing Date and on the first day of each Rollover Interest Period and (B) each
Lender hereby represents and warrants on the first day of each Rollover Interest Period following
the date on which it became a Lender hereunder, that it is a “qualified purchaser” within the
meaning of Section 3(c)(7) of the Investment Company Act.



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 of formation, 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 promptly



50









 




obtain 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 its
interests 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, director or 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 or a
limited purpose corporation, business trust, partnership or other entity organized for the purpose
of acquiring, financing or otherwise investing, directly or indirectly, in assets or receivables
originated, owned or serviced by Originator or an Affiliate of any of them), (iii) its assets are
not commingled with those of Originator or any other Affiliate of the Borrower, (iv) its members
duly authorize all of its limited liability company actions, (v) it maintains separate and accurate
records and books of account and such books and records are kept separate from those of Originator
and any other Affiliate of the Borrower and (vi) it maintains minutes of the meetings and other
proceedings of the members. Where necessary, the Borrower will obtain proper authorization from
its members for limited liability company action.



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



     (d) The Borrower will not have any of its indebtedness guaranteed by Originator or any
Affiliate thereof. 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, and the Borrower will
not engage in business transactions with Originator, except on an arm’s-length basis. The Borrower
will not hold Originator out to third parties as other than an entity with assets and liabilities
distinct from the Borrower. The Borrower will cause any of its financial statements consolidated
with those of Originator to state that the Borrower is a separate corporate entity with its own
separate creditors who, in any liquidation of the Borrower, will be entitled to be satisfied out of
the Borrower’s assets prior to any value in the Borrower becoming available to the Borrower’s
equity holders. The Borrower will not act in any other matter that could foreseeably mislead
others with respect to the Borrower’s separate identity.



     (e) In its capacity as Servicer, LEAF Financial will, to the extent necessary, maintain
separate records on behalf of and for the benefit of the Lenders, act in accordance with
instructions and directions, delivered in accordance with the terms hereof, from the Borrower,
and/or the Lenders 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, and not in any other capacity.



     (f) The Servicer (if LEAF Financial or an Affiliate thereof) 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 America
(including any consolidated financial statements) shall disclose the effects of the transactions
contemplated by the Purchase and Sale Agreement as a sale of Receivables,



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Related Security and Other Conveyed Property to 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 to the Borrower under this Agreement will be treated as debt on the consolidated
financial statements of Resource America.




     (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 the Originator and the Borrower, issued in connection with the Purchase and Sale
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 the Servicer 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, any Collections related
thereto or any other Pledged Assets related thereto, or upon or with respect to any account to
which any Collections of any Receivable are sent, or assign any right to receive income in respect
thereof. Except as otherwise provided herein 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, the Servicer
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
dispose of (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 to Section 2.15(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 Lenders.



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



     (k) The Borrower will not amend, modify, waive or terminate any terms or conditions of the
Purchase and Sale Agreement or any Qualifying Interest Rate Swap without the written consent of the
Controlling Holders and the Collateral Agent, and shall perform its obligations thereunder.



     (l) The Borrower will not make any amendment, modification or other change to its certificate
of formation or limited liability company agreement that would materially and adversely affect the
Lenders without each Lender’s prior written consent, and shall notify the



52









 




Lenders prior to making any amendment, modification or other change to its certificate of
formation or limited liability company agreement prior to the effectiveness thereof.




     (m) 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 the prior written consent of the Lenders (and the Lenders hereby agree to take commercially
reasonable efforts to respond 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 Collection Policy without the prior
written consent of the Lenders; provided, that if the Lenders have not responded to a written
request for such consent within ten (10) Business Days of receipt thereof, the Lenders shall be
deemed to have consented to such request.



     (n) If the Borrower or the Servicer receives any 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 identification
thereof.



     (o) The Servicer shall cause:




     (i) the Obligor under each Contract to remit all payments owed or otherwise payable by
such Obligor under such Contract (or any servicer on its behalf) to the Lockbox or by wire
transfer to the Lockbox Account;




     (ii) the Lockbox 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) Prior to the closing of any securitization transaction with respect to any Pledged
Receivables, the Servicer shall deliver to the Primary Lenders a complete list, in form and
substance satisfactory to each Primary Lender, identifying all assets which constitute or
constituted Pledged Receivables at any time on or following the Closing Date and prior to the date
of such securitization transaction.



     (q) The Borrower shall deliver to the Lenders 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 Borrower shall promptly notify the Lenders of
the occurrence of any Servicer Default, Event of Default, Program Termination Event, Termination
Event (and any event that, if it continues uncured, would, with lapse of time or notice or lapse of
time and notice, constitute any Servicer Default, Event of Default, Program Termination Event or
Termination Event).



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     (s) Each of the Servicer (if the Servicer is LEAF Financial or an Affiliate thereof) and the
Borrower shall take all actions (in the case of Obligor Collateral with an Amortized Equipment Cost
over $100,000) and all commercially reasonable actions (in the case of Obligor Collateral with an
Amortized Equipment Cost of $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.



     (t) On the Borrowing Date, a Qualifying Interest Rate Swap, in form and substance satisfactory
to the Lenders, 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 as of such Remittance Date shall have
been performed.



     (u) The Pledged Receivables shall not be refinanced with any proceeds of the Warehouse
Facility.



     (v) The Borrower shall not acquire any debt obligation or interest therein if, after giving
effect to such acquisition, more than 40 percent of the debt obligations or interests therein held
by the Borrower (as determined under the rules of Treasury Regulation 301.7701(i)-1(c)) would
consist of real estate mortgages or interests therein (as defined in Treasury Regulation
301.7701(i)-1(d)).



     (w) If the Obligor Collateral related to any Receivable securing the Borrowing is a Vehicle,
the Borrower shall, within 40 days after the Closing Date, deliver to the applicable Registrar of
Titles an application for a Certificate of Title for such Vehicle satisfying the Titling
Requirements.



     (x) In connection with satisfying the Titling Requirements, the Servicer shall take
commercially reasonable efforts to deliver or cause to be delivered to the Custodian in accordance
with this Agreement and the Custodial Agreement, the original certificate of title for each Vehicle
registered in Florida.



     (y) Notwithstanding anything to the contrary set forth herein, neither the Borrower nor the
Servicer shall permit, without the prior written consent of the Lenders, (i) any voluntary
prepayment in full by an Obligor or any other Person on behalf of such Obligor of the then current
remaining balance of any Pledged Receivable evidenced by a Loan Contract (including, without
limitation, all principal and interest due with respect to such Pledged Receivable, but excluding
any penalties, costs and fees with respect thereto) or (ii) any voluntary prepayment in full by an
Obligor or any other Person on behalf of such Obligor of all of the periodic payments payable under
the terms of the related Contract with respect to any Pledged Receivable evidenced by a Lease
Contract (including, without limitation, all scheduled payments due with respect to such Pledged
Receivable, but excluding any penalties, costs and fees with respect thereto).



     (z) Within the applicable time period required by any agreement, document or instrument
related to a credit facility, provided to (i) LEAF Financial, Resource America, any LEAF Managed
Entity or any of such Person’s respective Affiliates that have entered into any



54









 




credit facility where such Person is a lender (a “LEAF Affiliate Borrower”) or (ii)
any subsidiary of LEAF Financial, Resource America or any LEAF Managed Entity (each, a “LEAF
Credit Facility Document”), but in any event no later than two days following the Servicer’s
knowledge thereof, the Servicer shall notify the Collateral Agent and each Lender if (i) LEAF
Financial, Resource America, any of their respective subsidiaries or any LEAF Affiliate Borrower
fails to observe or perform any covenant or agreement under any LEAF Credit Facility Document or
(ii) any event of default, servicer default, unmatured event of default or unmatured servicer
default (each such event set forth in clause (i) or (ii), an “Other
Default”) occurs under any such LEAF Credit Facility Document, whether or not such Other
Default is called, waived or cured.




     (aa) LEAF Financial shall not and shall not cause any subordinated Debt of LEAF Financial or
any of its consolidated subsidiaries, in either case, which has been issued to such Person’s
parent, to be accelerated prior to the Facility Maturity Date.



     SECTION 5.02 Check-in Requirements.



     (a) The Borrower hereby covenants and agrees that, (i) not later than 20 days after the
Borrowing Date, it shall cause to be delivered to the Custodian the Priority Documents related to
Contracts whose aggregate Amortized Equipment Cost constitutes not less than 50% of the aggregate
Amortized Equipment Cost of all Contracts, and (ii) not later than 40 days after the Borrowing
Date, it shall cause to be delivered to the Custodian the Priority Documents for each Pledged
Receivable; provided, however, that the Borrower shall be permitted to deliver to the Custodian a
machine copy of any original, executed Contract (certified as a true copy (a “Certified True Copy”)
by an officer of either the Obligor or the Borrower or its predecessor as lessor or lender
thereunder) for Contracts whose aggregate Amortized Equipment Cost constitutes not more than 5% of
the aggregate Amortized Equipment Cost of all Contracts.



     (b) The Borrower hereby covenants and agrees that if the aggregate Discounted Balance of all
Contracts for which the Custodian has received only a Certified True Copy exceeds the aforesaid 5%
limit for any period exceeding fifteen days, then on the first Business Day after such fifteenth
day it shall resell the Pledged Receivables related to all such Contracts to the Originator,
deposit the Release Price for each such Pledged Receivable to the Collection Account and remit to
the respective Lenders (no later than the close of business of such Lender on such Business Day),
pro tanto, as a partial prepayment of the outstanding principal amount of the Notes
(together with interest accrued and unpaid on such prepayment through such date of prepayment),
pro rata according to their respective Percentages, and otherwise comply with the
requirements of Section 4.03 hereof with respect to all such Pledged Receivables.



     (c) The Custodian hereby agrees that, within one Business Day (to the extent the number of
Receivable Files received on any Business Day is no greater than 1,000 and that such Receivable
Files are delivered to the Custodian in the same order as the Receivable Schedule) or within such
greater number of Business Days as the parties hereto mutually agree (to the extent the number of
Receivable Files received on any Business Day exceeds 1,000), it shall deliver to the Borrower,
each Lender and the Servicer (i) a Collateral Receipt for all Receivable Files received on that
date and (ii) an Exception Report) covering any Deficiencies noted in such Collateral Receipt.
Additionally, on each Business Day, the Custodian hereby agrees to deliver to



55









 




Borrower, each Lender and the Servicer a cumulative report of any uncured Deficiencies
identified in all prior Collateral Receipts.




     (d) The Borrower hereby covenants and agrees that, (i) subject to the proviso in Section
5.02(a) hereof, not later than 60 days after the Borrowing Date, it shall cause to be delivered
to the Custodian every item constituting the Receivable File for each Pledged Receivable, including
every item identified in each Exception Report delivered by the Custodian pursuant to Section
5.02(c) hereof and (ii) for each Pledged Receivable with respect to which it shall not have
complied with the immediately preceding clause (i), it shall, to the extent it has not complied
therewith within fifteen noncomplying days after receipt of an Exception Report with respect to any
such Deficiency pursuant to this Section 5.02(d), on the first Business Day after, resell
the Pledged Receivables related to all such Contracts to the Originator, deposit the Release Price
for each such Pledged Receivable to the Collection Account and remit to the respective Lenders (no
later than the close of business of such Lender on such Business Day), pro tanto,
as a partial prepayment of the outstanding principal amount of the Notes (together with interest
accrued and unpaid on such prepayment through such date of prepayment), pro rata
according to their respective Percentages, and otherwise comply with the requirements of
Section 4.03 hereof with respect to all such Pledged Receivables.



     (e) The events described in subsections (b) and (d)(ii) hereof shall constitute a Check-in
Repurchase Event.



     SECTION 5.03 Delivery of Servicing Agreement Electronic Images to the Backup Servicer.
On or prior to November 26, 2008, the Servicer shall deliver to the Backup Servicer electronic
images of all existing servicing agreements and vendor contracts related to the Pledged Receivables
(“Servicing Agreement Electronic Images”) in an electronic format mutually acceptable to
the Servicer and the Backup Servicer. On each Backup Servicer Delivery Date following November 26,
2008, the Servicer shall deliver to the Backup Servicer all Servicing Agreement Electronic Images
in an electronic format mutually acceptable to the Servicer and the Backup Servicer with respect to
all then existing servicing agreements and vendor contracts which had not previously been delivered
to the Backup Servicer.



ARTICLE VI




ADMINISTRATION AND SERVICING; CERTAIN COVENANTS




     SECTION 6.01 Appointment and Designation of the Servicer. (a) The Borrower and the
Lenders hereby appoint the Person designated by the Controlling Holders from time to time, 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 the Pledged 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 extent consistent 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 Controlling Holders give notice
to the Borrower of a designation of a new Servicer upon the occurrence and during the continuance
of any Servicer Default, or consents in writing to the appointment by the



56









 




Borrower of a new Servicer, LEAF Financial is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Servicer, pursuant to the terms hereof at all times
until the earlier of the Controlling Holders’ designation of the Backup Servicer or any other
Person as the new Servicer (upon the occurrence and during the continuance of any Servicer
Default), the delivery by the Controlling Holders of their 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 Controlling Holders may at any time 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 case that
any such Person so designated shall agree to perform the duties and obligations of the Servicer
pursuant to (i) the terms hereof or (ii) such other terms as are agreed to in writing by such
successor Servicer and the Controlling Holders, and which (x) require such successor Servicer to
service the Pledged Receivables in a commercially reasonable manner that is (A) consistent with the
servicing of similar equipment leases and loans by such successor Servicer and (B) no less
stringent than the servicing standard required by the Credit and Collection Policy and (y) does not
provide for payment of servicing or other fees which in the aggregate exceed the Servicing Fee as
in effect on the date hereof without the prior written consent of the Lenders (such other terms
described in this clause (ii) being set forth in a separate servicing agreement, such
agreement, a “Successor Servicing Agreement”).




     Each of the Borrower and LEAF Financial hereby grants to any successor Servicer an irrevocable
power of attorney to take 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. In accordance therewith, each of the Borrower and LEAF Financial shall deliver an
executed power of attorney in the form of Exhibit J hereto to each of the Backup Servicer
and the Collateral Agent.



     (b) The Servicer is hereby authorized to act for the Borrower and the Lenders and, in such
capacity, shall manage, service, administer and arrange collections on the Pledged Receivables and
perform the other actions required by the Servicer under this Agreement (including, without
limitation, the covenant set forth in Section 5.01(y) hereof) for the benefit of the
Lenders. The Servicer agrees that its servicing 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 and attention
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 Backup Servicer or any other successor Servicer has been appointed
as Servicer, the Backup Servicer’s or such other successor 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, collecting and 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 any required tax information to Obligors, policing the collateral, enforcing the terms of
the Contracts (and any documents related thereto) related to any Pledged Receivables, complying
with the terms of the Lockbox Agreement, accounting for Collections



57









 




with respect to any Pledged Receivable, furnishing monthly and annual statements to the
Lenders with respect to distributions and performing the other duties specified herein.




     (c) Following the occurrence of a Servicer Default which is then continuing, the Collateral
Agent, at the direction of the Controlling Holders acting in their sole discretion, may direct the
Obligors to make all payments under the Pledged Receivables directly to the Backup Servicer, a
successor Servicer, the Collateral Agent or any lockbox or account established by any of such
parties. Any Collections received in any lockbox or account established pursuant to this clause
(c) (or received directly by any Lender or the Collateral Agent) shall be applied to the
Obligations in accordance with the priority of payments set forth in Section 2.04.



     (d) To the extent consistent with the standards, policies and procedures otherwise required
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 authorized to 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 to collect 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 realize in 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 in accordance 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 or the Lenders (provided that if the
Servicer is acting in the name of the Borrower or the Lenders, the Servicer shall have obtained the
Borrower’s or the Lenders’ consent, as the case may be, which consent shall not be unreasonably
withheld), a legal proceeding 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 Pledged Receivable 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 or the Lenders, as the case may be, shall thereupon be
deemed to have automatically 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 or the Lenders, 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 or the Lenders, 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 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 to carry 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 in interest or a holder entitled
to enforce such suit or legal proceeding, the



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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 of Receivables;
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 the Contracts 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 related Contracts and Insurance Policies
as will, in the reasonable judgment of the Servicer, maximize the amount to be received by the
Borrower and the Lenders 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 any intervening 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 the standards, 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 number of 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 circumstances involved (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 Lenders 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
value of 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 customary practices 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 the related 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 case in 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/or repossession 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 remitted directly by the Servicer to the Collection Account without deposit into
any intervening account as soon as practicable, but in no event later than one (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 to reimbursement of any such tax as a Servicer Advance.



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     SECTION 6.04 Insurance Regarding Equipment. (a) At the time of the Pledge of any
Receivable hereunder, the Servicer shall require each Obligor to obtain and maintain (or with
respect to an Underlying Originator, cause such Underlying Originator to obtain and maintain)
Insurance Policies in accordance with the terms of the Credit and Collection Policy and its
customary servicing procedures and shall furnish evidence of such insurance (except if the
Equipment relating to such Obligor has an aggregate Amortized Equipment Cost of $100,000 or less)
to the Lenders.



     (b) The Servicer may, and upon the request of the Collateral 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 and the Lenders. 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 and the Lenders 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 not an 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 Obligor Collateral. (a) The Initial
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 favor of the Collateral Agent 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 a Loan 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 as debtor and
the Collateral Agent as the secured party, (B) filing Obligor Financing Statements against all
Obligors purchasing or leasing Obligor Collateral, and (C) other than with respect to a Lease
Contract related to Equipment which has an Amortized Equipment Cost of less than $25,000 if such
Lease Contract is a Dollar Purchase Option Contract or $50,000 if such Lease Contract is a FMV
Contract, causing the filing of UCC-3 assignment statements in the applicable jurisdictions
adequately describing the Equipment and other collateral being transferred by the Underlying
Originator to the Originator and naming the applicable Underlying Originator as the assignor and
Originator as the assignee, (ii) ensure that 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, or may
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 Collateral Agent, such Obligor Collateral,
Other Conveyed Property and Related Security is free and clear of all Adverse Claims other than
Permitted Liens; and



     (b) The Initial 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 Collateral Agent including but not
limited to, obtaining the execution by the Borrower and the recording, registering, filing,
rerecording,



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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 the recordation of the Borrower’s or the applicable Approved Lienholder’s lien on the
Certificate of Title for any Vehicle included in such Obligor Collateral, all in accordance with
the Titling Requirements. Without limiting the generality of the foregoing, the Borrower and each
Lender each hereby authorizes the Initial Servicer, and the Initial 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 in any 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 Collateral Agent as may be necessary, due to the relocation of such
Obligor Collateral or for any other reason.




     SECTION 6.06 Pledged Receivable Receipts. The Servicer shall make a deposit 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 No Rights of Withdrawal. Until the Collection Date, the Borrower 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 such account.



     SECTION 6.08 Permitted Investments. The Borrower shall, pursuant to written
instruction, direct the Lenders’ Bank (and if the Borrower fails to do so, the Lenders may,
pursuant to written instruction, direct the Lenders’ Bank) to invest, or cause the investment of,
funds on deposit in the Collection Account in Permitted Investments, from the date of this
Agreement until the Collection Date. Absent any such written instruction, the Lenders’ Bank shall
invest, or cause the investment of, such funds in Permitted Investments described 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 or disposed of prior to its maturity. All such Permitted Investments shall be
registered in the name of a securities intermediary or its nominee for the benefit of the Lenders,
and otherwise comply with assumptions 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, shall be
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 amount of any actual loss incurred, in respect of
any such investment, immediately upon realization of such loss. None of the Lenders’ Bank or any
Lender shall be liable for the amount of any loss incurred, in respect of any investment, or lack
of investment, of funds held in the Collection Account.



     SECTION 6.09 Servicing Compensation. As compensation for its activities hereunder,
the Servicer shall be entitled to be paid the Servicing Fee from the Collection Account as provided
in Section 2.04(a). The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to reimbursement
therefor, except with respect to reasonable expenses of the Servicer incurred in



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connection with the repossession and disposition of any Obligor Collateral (which the Servicer
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 the transfer 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 or any other successor Servicer as the Servicer hereunder, the
Backup Servicer shall be entitled 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 or any such other successor
Servicer, acting in its capacity as the Servicer, in connection with its obligations under Sections
6.05(a) and (b) hereof (such expenses, the “Successor Servicer’s Indemnified Amounts”).




     SECTION 6.10 Reports to the Lenders and the Backup Servicer; Account Statements; Servicing
Information. (a) The Borrower will deliver to the Lenders and each Qualifying Swap
Counterparty, (i) on the Program Termination Date, a report identifying the Pledged Receivables
(and any information with respect thereto requested by the Lenders) on the day immediately
preceding the Program Termination Date, and (ii) upon a Lender’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 such Lender) as of such day.



     (b) At least five (5) Business Days prior to each Remittance Date, the Servicer shall prepare
and deliver, or have delivered, to the Lenders and each Qualifying Swap Counterparty (i) a Monthly
Remittance Report and any other information reasonably requested by a Lender, relating to all
Pledged 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 Lenders, all information reasonably requested by the Lenders relating to all
Pledged Receivables. If any Monthly Remittance Report indicates the existence of a Facility
Deficiency, the Borrower shall, on the date of delivery of such Monthly Remittance Report, prepay
to the Lenders, for the account of the Lenders, a portion of the Loans as is necessary to cure such
Facility Deficiency, in accordance with Section 2.04(c) hereof.



     (c) By no later than the Borrowing Date, the Borrower (or the Initial Servicer on its behalf)
shall also prepare and deliver to the Lenders a Facility Limit Certificate containing information
accurate as of the date of delivery of such Facility Limit Certificate. If any Facility Limit
Certificate indicates the existence of a Facility Deficiency, the Borrower shall on the date of
delivery of such Facility Limit Certificate prepay to the Lenders, for the account of the Lenders,
a portion of the Loans, to the extent necessary to cure such Facility Deficiency, in accordance
with Section 2.04(c) hereof.



     (d) At least five (5) Business Days prior 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) the Monthly Remittance Report in respect of the immediately-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 (x) the information with respect to the



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Pledged Receivables during such Collection Period which was necessary for preparation of such
Monthly Remittance Report and (y) any other information which is reasonably requested by the Backup
Servicer or the Collateral Agent.




     (e) No later than the second Business Day of each calendar week commencing with the week
beginning on November 24, 2008 (each such day, a “Weekly Reporting Date”), the Servicer
shall prepare and deliver, or have delivered, to the Lenders and the Backup Servicer a computer
tape or a diskette or any other electronic transmission in a format acceptable to the Backup
Servicer containing any information which is reasonably requested by the Backup Servicer or the
Collateral Agent.



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



     (g) Each of the Borrower and the Servicer shall prepare and deliver, or have delivered, to the
Lenders, the Collateral Agent and the Backup Servicer any information which is reasonably requested
by the Backup Servicer, the Collateral Agent or any Lender.



     SECTION 6.11 Statements as to Compliance; Financial Statements. (a) The Servicer
shall deliver to the Backup Servicer, the Borrower and the Lenders on or before March 31st of each
year, beginning with 2008, an Officer’s 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,
2007 in the case of the first such review) and of its performance under this Agreement has been
made under such officer’s supervision, and (y) to the best of such officer’s knowledge, based on
such review, the Servicer has fulfilled all of its obligations under this Agreement 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 officer and the
nature and status thereof and the action being taken to cure such default.



     (b) 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 Lenders
(the “Independent Accountants”), who may also render other services to the Servicer, the
Backup Servicer, any other successor Servicer or to the Borrower, to deliver to the Borrower and
the Lenders, on or before March 31st of each year, beginning 2008, with respect to the twelve (12)
months ended the immediately preceding December 31, a statement (the “Accountant’s Report”)
addressed to the Board of Directors of the Servicer and to the Lenders, to the effect that such
firm has examined such Facility Limit Certificates and Monthly Remittance Reports 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 was made 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’ Report shall further state that (i) a
review in accordance with agreed upon procedures was made; and (ii) except as disclosed in the
Accountant’s Report, no exceptions or errors in the Facility Limit Certificates and Monthly
Remittance Reports examined were found except for (A) such exceptions as the Independent
Accountants believe to be



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immaterial and (B) such other exceptions as shall be set forth in the Accountants’ Report.
The Accountants’ Report shall also indicate that the firm is independent of the Borrower and the
Servicer within the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.




     (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 or Resource America, the Borrower shall deliver to the
Lenders two copies of:




     (i) a balance sheet of the Borrower and Resource America 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 be
prepared 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 Borrower or Resource America, as
applicable, stating that such balance sheet presents fairly the financial condition of the
Borrower or Resource America, as the case may be, and has been prepared in accordance with
GAAP consistently applied; and




     (ii) statements of income, stockholders’ equity and cash flow of the Borrower and
Resource America for such calendar quarter 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 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 Borrower or Resource America, as applicable, stating that such financial
statements present fairly the financial condition and results of operations of the Borrower
or Resource America, as the case may be, 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 America, LEAF Financial shall deliver to the Lenders 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
comparative 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 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 balance sheet presents
fairly the financial condition of the companies being reported 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, in each case, setting forth in comparative form the



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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 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 fairly the financial condition and results of operations 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 ninety (90) days after the end of each fiscal year
of the Borrower or Resource America, LEAF Financial shall deliver to the Lenders two copies of:




     (i) a balance sheet of the Borrower and Resource America 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 certified public accountants of
nationally recognized standing acceptable to the Lenders stating that such balance sheet
presents fairly the financial condition of the Borrower or Resource America, as applicable,
and has been 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 and
Resource America for such fiscal year, 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 nationally recognized standing acceptable to the Lenders stating that such
financial statements present fairly the financial condition of the Borrower or Resource
America, as applicable, and have been prepared in accordance with GAAP consistently applied
(except for changes in application in which such accountants concur).



     (f) As soon as available and no later than ninety (90) days after the end of each fiscal year
of Resource America, LEAF Financial shall deliver to the Lenders two copies of:




     (i) a consolidated and consolidating balance sheet of Resource America and 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 certified public accountants of
nationally recognized standing acceptable to the Lenders stating that such balance sheet
presents 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 Resource America and its consolidated subsidiaries (including Originator) 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 nationally recognized standing acceptable to the Lenders stating that such
financial statements present fairly the financial condition of the



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companies being reported upon and have been prepared in accordance with GAAP
consistently applied (except for changes in application in which such accountants concur).



     SECTION 6.12 Access to Certain Documentation; Obligors; Background Check. (a) The
Collateral Agent (and its agents or professional advisors) shall at the expense of the Borrower,
have the right under this Agreement, once during each calendar quarter, 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, financial statements or other information of the Servicer and
the Borrower, or held by another for the Servicer or the Borrower or on its behalf, concerning this
Agreement, provided, that, prior to the occurrence of an Event of Default, the Borrower
shall not be responsible for the expenses of the Collateral Agent to the extent that such expenses
exceed $25,000 in the aggregate in any calendar year. Each Lender (and its agents or professional
advisors) shall, at the expense of the Borrower and as frequently as such Lender may desire, have
the right under this Agreement after the occurrence and during the 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. Each Lender and the Collateral Agent (and its respective agents and
professional advisors) shall coordinate examinations and audits under this Section 6.12(a)
in order to minimize expense and inconvenience to the Borrower. Each Lender and the Collateral
Agent (and its respective agents and professional advisors) shall treat as confidential any
information obtained during the aforementioned examinations which is not already publicly known or
available; provided, however, that each Lender and the Collateral Agent may
disclose such information if required to do so by law or by any regulatory authority and may
disclose information relevant to the tax treatment and tax structure of the transactions
contemplated by this Agreement.



     (b) The Collateral Agent (and its respective agents or professional advisors) shall, at the
ratable expense of the Lenders (based on Percentages), have the right under this Agreement to
contact Obligors once with respect to any Receivable which is Pledged hereunder to request that
each such Obligor verify and confirm by return letter the existence and amount of such Receivable,
the type of Equipment leased under or securing the related Contract and such other information as
such Lender deems reasonable under the circumstances (each such return letter to be mailed to a
post office box established by such Lender). The Servicer and the Borrower hereby agree to
cooperate with each Lender (and its respective agents or professional advisors) in connection with
any attempt thereby to contact any such Obligor and shall provide to each such Lender such
information as is needed in order to facilitate such contact. Each Lender (and its respective
agents and professional advisors) shall treat as confidential any information obtained during any
such contact with any such Obligor which is not already publicly known or available; provided,
however, that each Lender (and its respective agents or professional advisors) may disclose such
information if required to do so by law or by any regulatory authority and may disclose information
relevant to the tax treatment and tax structure of the transactions contemplated by this Agreement.



     (c) Each Lender (or its respective agents and/or third party professional advisors) may, from
time to time, cause comprehensive background checks on newly-hired senior



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management, key employees and principals of each of Resource Capital Corp., the Initial
Servicer and Originator to be completed by an investigation service acceptable to such Lender, at
the Borrower’s expense.




     SECTION 6.13 Backup Servicer. If a Servicer Default shall occur, then the Controlling
Holders may, by notice to the Servicer, the Borrower and the Backup Servicer, terminate all of the
rights and 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 be vested in the Backup Servicer or any other
successor Servicer appointed by the Controlling Holders pursuant to and under this Section, and,
without limitation, the Backup Servicer or any other successor Servicer appointed hereunder is
hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and 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. The Servicer agrees to
cooperate with the Lenders and the Backup Servicer or other successor Servicer in effecting 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 the
Backup Servicer or such other successor Servicer, at the Servicer’s expense, with all records, in
electronic or other form, reasonably requested by the Backup Servicer or such other successor
Servicer, in such form as the Backup Servicer may reasonably request and at such times as the
Backup Servicer or such other successor Servicer may reasonably request, to enable such Person to
assume the servicing functions hereunder and the transfer to such Person for administration by it
of all cash amounts which at the time should be or should have been deposited by the Servicer in
the Collection Account or thereafter be received by the Servicer with respect to the Pledged
Receivables. Additionally, the Servicer agrees to cooperate in providing, at the Servicer’s
expense, the Backup Servicer or any other successor Servicer as successor Servicer, with reasonable
access (including at the premises of the Servicer) to Servicer’s employees and any and all books,
records or other information reasonably requested by it to enable the Backup Servicer or such other
successor Servicer, as successor Servicer, to assume the servicing functions hereunder. Neither
any Lender nor the Backup Servicer or any other successor Servicer shall be deemed to have breached
any obligation hereunder as a result of a failure to make or delay in making any 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 Backup Servicer
(including as successor Servicer) or any other successor Servicer undertakes to perform only such
duties and obligations as are specifically set forth in this Agreement, it being understood by all
parties hereto that there are no implied duties or obligations of the Backup Servicer or such other
successor Servicer hereunder.



     The Active Backup Servicer’s Fees and Transition Costs shall be paid out of Collections with
respect to any Pledged Receivable as set forth in Section 2.04(a) 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 Collections
with respect to any Pledged Receivable as set forth in Section 2.04(a) prior to the date,
if any, that the Backup Servicer assumes the responsibilities of the Servicer pursuant to this
Section.



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     Any obligations of LEAF Financial under any Transaction Document 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 (with a copy delivered to
the Backup Servicer) pursuant to this Section 6.13, the Backup Servicer shall be (and the
Backup Servicer hereby agrees to be) the successor in all respects to 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 relating thereto 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 this Section 6.13 shall not be considered a
default by the Backup Servicer or any other successor Servicer hereunder; provided, further,
however, that the Backup Servicer or such other successor Servicer, as successor Servicer, shall
have (i) no liability with respect to any obligation which was required to be performed by the
terminated Servicer prior to the date that the Backup Servicer or such other successor Servicer
becomes the successor to the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer, (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 or such other successor Servicer shall pay any
income taxes 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 obligations of any prior Servicer, including the original
Servicer. The indemnification obligations of the Backup Servicer or any other successor Servicer,
upon becoming a successor Servicer, are expressly limited to those arising on account of its
failure to act in good faith and with reasonable care under the circumstances. In addition,
neither the Backup Servicer nor any other successor Servicer shall have any liability relating to
the representations and warranties of the Servicer contained in Article IV. Notwithstanding the
above, Morgan Stanley (or, following the Collateral Split Effective Date, the Primary Lender under
the related Loan Agreement) may, or shall, if the Backup Servicer or any other successor Servicer
is unable to so act, appoint itself, or appoint any other established servicing institution
acceptable to the Lenders in their sole 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 the Lenders
notify the Servicer to discontinue performing servicing functions under this Agreement, the Backup
Servicer or any other successor Servicer (or Morgan Stanley (or, following the Collateral Split
Effective Date, the Primary Lender under the related Loan Agreement) if there is no Backup Servicer
or other successor Servicer) shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Lenders 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 such compensation shall be in excess of that
permitted the Servicer hereunder, unless (i) agreed to by the Lenders and (ii) such compensation
shall be on commercially competitive terms and rates. The Borrower, the Lenders and such successor
shall take such action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. The parties hereto agree that in no event will the Backup Servicer or any other
successor Servicer be liable for any special, indirect or consequential damages.



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     Each of the Backup Servicer and any other successor Servicer 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 responsibilities, obligations and duties of the Servicer hereunder,
within ten (10) Business Days of receiving from a Lender a notice requesting the Backup Servicer or
such other successor Servicer to do so.



     Notwithstanding anything contained in this Agreement to the contrary, absent specific
knowledge by 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
any audit 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 nonstandard practice 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 Financial Services, Inc. becomes aware of Errors or Continued Errors, Lyon Financial
Services, Inc. shall, with the prior consent of the Lenders, use commercially reasonable efforts to
reconstruct and reconcile any affected data to correct such Errors 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 2.04(a) hereof.



     Within four (4) Business Days after each Remittance Date, provided that the Backup Servicer
shall have received the information specified in Section 6.10(d) 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 delivered
to the Backup Servicer by the Servicer pursuant to Section 6.10(d) with respect to such
Remittance Date to the corresponding Monthly Remittance Report delivered to the Backup Servicer by
the Servicer pursuant to Section 6.10(d) and shall:



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



     (b) confirm the distributions to be made on such Remittance Date pursuant to Section
2.04(a) 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 the Lenders 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 Lenders may agree.



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     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 Lenders. In the
event of a discrepancy as described in the preceding sentence, the Servicer and the Backup Servicer
shall attempt to reconcile such discrepancy within five (5) Business Days after reporting such
discrepancy, but in the absence of a reconciliation, distributions on the related Remittance Date
shall be made consistent 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 Lenders regarding the progress, 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 in April, July, October or January, the Servicer shall cause independent
accountants acceptable to the Lenders, at the Servicer’s expense, to examine such Monthly
Remittance Report and attempt to reconcile such discrepancy at the earliest possible date (and the
Servicer shall promptly provide the Lenders 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. The provisions of this paragraph shall be referred to herein as the
“Discrepancy Procedure”.



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



     The Backup Servicer or any other successor 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 or such other successor Servicer become
the successor Servicer pursuant to the terms of this Agreement; provided, however, that the Backup
Servicer or such other successor Servicer, as applicable, shall remain liable for the performance
of all of its duties and obligations hereunder to the same extent as if no such subservicing had
occurred.



     In no event shall the Backup Servicer or any other successor Servicer (either prior to or
after its appointment hereunder as Servicer) be responsible 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 military
disturbances, nuclear or natural catastrophes or acts of God.



     The Backup Servicer may, upon one hundred twenty (120) days’ prior written notice to each of
the parties hereto, resign as Backup Servicer. If the Backup Servicer resigns under this
Agreement, then the Controlling Holders (with the consent of the Servicer if no Program Termination
Event or Event of Default has occurred and is then continuing) during such period may appoint a
successor backup servicer, whereupon such successor backup servicer shall succeed to the rights,
powers and duties of such Backup Servicer, and the term “Backup Servicer”, shall mean such
successor backup servicer, effective upon its acceptance of such appointment and its delivery of a
duly executed counterpart of this Agreement and an acknowledgment to the Backup Servicer and the
other parties hereto, and such former Backup Servicer’s rights, powers and duties as Backup
Servicer, shall be terminated (other than the



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covenant of the Backup Servicer set forth in Section 9.08, which expressly survives
termination of this Agreement), without any other or further act or deed on the part of such former
Backup Servicer or any of the parties to this Agreement. Such resigning Backup Servicer shall
cooperate with the Custodian, the Collateral Agent and the successor backup servicer in order to
transfer its rights and obligations as Backup Servicer hereunder to such successor Backup Servicer.




     SECTION 6.14 Additional Remedies of Lenders Upon Event of Default. During the
continuance of any Event of Default, each Lender, in addition to the rights specified in
Section 7.01, shall have the right to take all actions now or hereafter existing at law, in
equity or by statute to protect its interests and enforce its rights and remedies (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 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 or shall be deemed
to be a waiver of any Event of Default.



     SECTION 6.15 Waiver of Defaults. The Controlling Holders 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 Default arising
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 Controlling Holders and
no such waiver shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly so waived.



     SECTION 6.16 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 force a directors and officers liability insurance policy in an amount not less than
$1,000,000 naming the Collateral Agent as loss payee with an insurance company reasonably
acceptable to the Lenders.



     The Servicer shall deliver a copy of the insurance policy required under this Section
6.16 to the Lenders 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 and the Lenders, claims under any
such policy in a timely fashion in 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
Lenders of such claim.



     SECTION 6.17 Segregation of Collections. The Servicer shall not commingle funds
constituting 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 6.18 UCC Matters; Protection and Perfection of Pledged Assets. The Borrower
will not change the jurisdiction of its formation, make any change to its corporate



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name or use any tradenames, fictitious names, assumed names, “doing business as” names or
other names (other than those listed on Schedule 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 6.18 after compliance with all terms and conditions of this Section 6.18
related thereto) unless, prior to the effective date of any such jurisdiction change, name change
or use, the Borrower notifies the Collateral Agent of such change in writing and delivers to the
Collateral Agent such executed financing statements as the Collateral Agent may request to reflect
such jurisdiction, name change or use, together with such other documents and instruments as the
Collateral Agent may request in connection therewith. The Borrower will not change the location of
its chief executive office or 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 Collateral
Agent of such change of location in writing and delivers to the Collateral Agent such executed
financing statements as the Collateral Agent may reasonably request to reflect such change of
location, together with such Opinions of Counsel, documents and instruments as the Collateral 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 further
action that the Collateral Agent may reasonably request in order to perfect, protect or more fully
evidence the Collateral Agent’s interest in the Pledged Assets acquired hereunder, or to enable the
Collateral Agent to exercise or enforce any of its respective rights hereunder. Without limiting
the generality of the foregoing, the Borrower will, upon the request of the Collateral 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 Collateral Agent may request, and (ii) mark its master data processing
records evidencing such Pledged Receivables with a legend acceptable to the Collateral Agent,
evidencing that the Collateral Agent has acquired an interest therein as provided in this
Agreement. The Collateral 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 the
Borrower’s obligation to make such filings as evidence that such filings have been made. The
Borrower hereby authorizes the Collateral Agent to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to 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. The Borrower hereby ratifies and authorizes the filing by the Collateral
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 Pledged Receivables,
or any part thereof, shall be sufficient as a financing statement. The Borrower shall, upon the
request of the Collateral Agent at any time after the occurrence of an Event of Default and at the
Borrower’s expense, notify the Obligors obligated to pay any Pledged Receivables, or any of them,
of the security interest of the Collateral Agent in the Pledged Assets. If the Borrower fails to
perform any of its agreements or obligations under this Section 6.18, the Collateral Agent
may (but shall not be required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Borrower upon the Collateral Agent’s demand therefor. For purposes of enabling the
Collateral Agent to exercise its rights described in the preceding sentence and elsewhere in this
Article VI, the Borrower hereby authorizes the Collateral Agent and its successors and
assigns to take any and all steps in


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 the Borrower’s name and on behalf of the Borrower necessary or desirable, in the determination
of the Collateral Agent, to collect all amounts due under any and all Pledged Receivables,
including, without limitation, endorsing the Borrower’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 6.19 Servicer Advances. The Servicer may, in its sole discretion, make an
advance in respect of any payment due on a Pledged Receivable (other than a Defaulted Receivable)
to the extent such payment has not been received by the Servicer as of its due date and the
Servicer reasonably expects 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 Period on or prior to the
Business Day immediately preceding the related Remittance Date. The Servicer shall be entitled to
reimbursement for such Servicer Advances from monies in the Collection Account as provided in
Section 2.04(a) hereof.



     SECTION 6.20 Repurchase of Receivables 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 and the Initial Qualifying Swap Counterparty promptly, in writing, upon
the discovery of any breach of the Servicer’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 any manner
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 such breach (and provided that a Facility 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 Collateral Agent may, enforce such obligation of the
Servicer (if LEAF Financial or an Affiliate thereof), to repurchase any Pledged Receivable
materially and adversely affected by such breach. The Borrower shall notify the Collateral Agent
promptly, in writing, of any failure by the Servicer to so repurchase any such Pledged 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. The obligations of the Servicer under this Section 6.20 are in
addition to, and in no way limit, any obligations of the Servicer in its individual capacity under
the Purchase and Sale Agreement. It is understood and agreed that the obligation 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.



     SECTION 6.21 Compliance with Applicable Law. The Servicer and the Borrower shall at
all times comply in all material respects 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, the
Magnuson-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



73









 




Act and of the Uniform Consumer Credit Code and all other consumer credit laws and equal
credit opportunity and disclosure laws) in the conduct of its business.




     SECTION 6.22 Receipt of Certificates of Title. Any Receivable with respect to which
the Obligor Collateral includes a Vehicle and for which the Servicer shall not have (i) received a
Certificate of Title satisfying the Titling Requirements 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 Facility Limit, shall no longer be deemed to be an Eligible Receivable and,
therefore, shall no longer be included in the calculation of the Facility Limit. In the case of
any Receivable excluded from the calculation of the Facility Limit pursuant to the previous
sentence, the Receivable so excluded from the calculation of the Facility Limit may at a later time
be included in the calculation of the Facility Limit, provided, that (i) the Custodian
shall 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 Eligible Receivable at such time.



     SECTION 6.23 Lenders’ Bank Limitation of Liability. (a) The Lenders’ 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 obligations
under this Agreement. Neither the Lenders’ 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 than damages which result from the gross negligence
or willful misconduct of it or them. In no event will the Lenders’ Bank or any of its officers,
directors, employees or agents be liable for any consequential, indirect or special damages.



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



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



     (d) The Lenders’ 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 in accordance with the opinion of such
counsel.



     (e) The Lenders’ Bank shall not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder, or in the exercise of its
rights or powers, if the Lenders’ Bank believes that repayment of such funds (repaid in accordance
with the terms of this Agreement) or adequate indemnity against such risk or liability is not
reasonably assured to it.



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



     (g) The parties hereto agree that in no event will the Lenders’ Bank be liable for special,
indirect or consequential damages.



ARTICLE VII




EVENTS OF DEFAULT




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



     (a) the occurrence of any Bankruptcy Event with respect to the Borrower, Owner, Resource
America, 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
other information 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 the Borrower become aware, or are notified by a
Lender, 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 the
repurchase of Receivables pursuant to Article VI of the Purchase and Sale Agreement or by a
repayment hereunder, or repurchase pursuant to Sections 4.03 or 6.20 hereof, such
breach shall cease to constitute an Event of Default; or



     (c) (i) the Borrower or the Servicer shall fail 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) Business Days;
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, Owner, Resource America or the Servicer shall fail to pay (and such 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 the acceleration
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) the Originator, the Borrower or any of their respective subsidiaries shall have suffered
any material adverse change to its business, financial condition or any other condition which, in
any Lender’s sole discretion, constitutes a material impairment of the Originator or the Borrower’s
ability to perform its Obligations; or



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     (f) (i) the Collateral Agent shall at any time fail to have a valid, perfected, first priority
security interest 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 Sale Agreement shall, for any reason, cease to create in favor of the Borrower 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 Sale Agreement or by a repayment hereunder or repurchase
pursuant to Sections 4.03 or 6.20 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 any material 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 or under any other Transaction Document; or



     (h) the Servicer’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 Sale Agreement or any other Transaction Document or any material
provision of any of them shall cease to be in full 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) either (1) the Facility Amount exceeds the Facility Limit or (2) the aggregate outstanding
principal amount of the Class A Notes exceeds the Class A Facility Limit; and, in each case, 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 be in 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 fails to qualify as a Qualifying Swap Counterparty and does not post cash collateral in a
manner satisfactory to the Lenders is not replaced by a Qualifying Swap Counterparty within 45 days
of such counterparty’s failure to so qualify, (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 swap agreement represented by the Borrower or the
Servicer to be a Qualifying Interest Rate Swap shall fail to be, or cease to be, a Qualifying
Interest Rate Swap; or



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



     (p) either (i) the provisions of the Transaction 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
Lenders, or otherwise ceases to act as the Backup Servicer, and such Backup Servicer is not
replaced by a new Backup Servicer satisfactory to the Lenders within 45 days of such resignation,
removal or other event; or



     (q) the occurrence of three or more Termination Events; or



     (r) the Facility Maturity Date shall have occurred and the aggregate outstanding principal
amount of the Loans and all accrued Fees and interest and other Obligations have not been paid in
full; or



     (s) any occurrence of an event described in clause (ii) of the definition of Other
Default; or



     (t) (i) as of November 30, 2008, the available unrestricted cash on hand (the “Available
Cash”) of LEAF Financial is less than $3,000,000, (ii) as of December 31, 2008, the Available
Cash of LEAF Financial is less than $3,000,000, (iii) as of January 31, 2009, the Available Cash of
LEAF Financial is less than $4,000,000, (iv) as of February 28, 2009, the Available Cash of LEAF
Financial is less than $5,000,000, (v) on any date of determination during the period beginning on
December 1, 2008 and ending on December 31, 2008, (x) the rolling 30-day average of Available Cash
of LEAF Financial is less than $2,000,000 or (y) the Available Cash of LEAF Financial is less than
$1,600,000, (vi) on any date of determination during the period beginning on January 1, 2009 and
ending on January 31, 2009, (x) the rolling 30-day average of Available Cash of LEAF Financial is
less than $3,000,000 or (y) the Available Cash of LEAF Financial is less than $2,400,000, (vii) on
any date of determination during the period beginning on February 1, 2009 and ending on February
28, 2009, (x) the rolling 30-day average of Available Cash of LEAF Financial is less than
$4,000,000 or (y) the Available Cash of LEAF Financial is less than $3,200,000 or (viii)
thereafter, on any date of determination, (x) the rolling 30-day average of Available Cash of LEAF
Financial is less than $5,000,000 or (y) the Available Cash of LEAF Financial is less than
$4,000,000; or



     (u) as of the last day of any fiscal quarter, the Interest Coverage Ratio of LEAF Financial
and its consolidated subsidiaries (measured for the then current fiscal quarter) is less than 1.30
to 1.00; or



     (v) as of the last day of each fiscal quarter, the Leverage Ratio of Resource America shall be
greater than 2.00 to 1.00; or



     (w) as of the last day of each fiscal quarter, the Leverage Ratio of LEAF Financial shall be
greater than 5.00 to 1.00; or



77









 





     (x) as of the last day of any calendar month, the Liquidity Availability Amount with respect
to all LEAF Managed Entities is less than $100,000,000; or



     (y) (A) for the fiscal quarter of LEAF Financial and its consolidated subsidiaries ending on
September 30, 2008, the amount equal to (i) the total revenues of LEAF Financial and its
consolidated subsidiaries for such period, minus (ii) the total expenses of LEAF Financial
and its consolidated subsidiaries for such period, plus (iii) an amount equal to such
Person’s provision for losses on investments for such period, is less than ($2,700,000), (B) for
the fiscal quarter of LEAF Financial and its consolidated subsidiaries ending on December 31, 2008,
the amount equal to (i) the total revenues of LEAF Financial and its consolidated subsidiaries for
such period, minus (ii) the total expenses of LEAF Financial and its consolidated
subsidiaries for such period, plus (iii) an amount equal to such Person’s provision for
losses on investments for such period, is less than $1,400,000 or (C) thereafter, for any two
consecutive fiscal quarters of LEAF Financial and its consolidated subsidiaries, the amount equal
to the consolidated net income of LEAF Financial and its consolidated subsidiaries for such period
is a negative number; or



     (z) the occurrence of any “Event of Default” or “Program Termination Event” under and as
defined in the Warehouse Facility;


then the Controlling Holders may, by notice to the Borrower and each Qualifying Swap Counterparty,
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 of such event. Upon any such declaration or
automatic occurrence, (i) the Borrower shall cease purchasing Receivables from Originator under the
Purchase and Sale Agreement and (ii) at the option of each Primary Lender in its sole discretion,
such Primary Lender may (x) declare the related Loans made to the Borrower by such Primary Lender
and its Related Lenders hereunder and all interest 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 Obligations immediately) or (y) deliver a Collateral Split Notice to the Collateral
Agent and the other Parties hereto pursuant to Section 7.03. Any Collections received in
any such account (or received directly by any Lender or the Collateral Agent) shall be applied to
the Obligations in accordance with the priority of payments set forth in Section 2.04(a).
In addition, upon any such declaration or upon any such automatic occurrence, the Lenders and the
Collateral Agent 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.




     SECTION 7.02 Additional Remedies of the Lenders. (a) Following the occurrence of the
Program Termination Date, the Collateral Agent shall not foreclose upon or sell the Pledged Assets,
except in accordance with this Section 7.02.



     (b) Upon the occurrence of the Program Termination Date and at the written direction of the
Controlling Holders, the Collateral Agent shall foreclose upon and promptly sell the Pledged Assets
in a commercially reasonable manner, in a recognized market (if one exists), at such price or
prices as the Collateral Agent may reasonably deem satisfactory in consultation with the Lenders,
and shall apply the proceeds thereof to the Obligations in accordance with the



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priority of payments set forth in Section 2.04. 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 in the same manner because the market for such Pledged Assets may not
be liquid. Accordingly, the Collateral Agent may elect, in its sole discretion, the time and
manner of liquidating any Pledged Assets, and nothing contained herein shall obligate the
Collateral Agent to liquidate any Pledged Assets immediately on the Program Termination Date or to
liquidate all Pledged Assets in the same manner or on the same Business Day. For the avoidance of
doubt, once the Collateral Agent has begun the foreclosure process, each Program Termination Event
which caused the Program Termination Date to occur may not be cured without the prior written
consent of the Lenders and the Collateral Agent.




     (c) Any amounts received from any sale or liquidation of the Pledged Assets 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 may otherwise direct.



     (d) Each of the Class A Lenders, the Class B Lenders, the Collateral Agent and the Initial
Qualifying Swap Counterparty shall have, in addition to all 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, to the extent that the Uniform Commercial Code is applicable, and the right to offset any
mutual debt and claim), all rights and remedies available to such Person at law, in equity or under
any other agreement between such Person and the Borrower.



     (e) Except as otherwise expressly provided in this Agreement, no remedy provided 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 or shall be deemed to be a waiver of any Program Termination Event or
Event of Default.



     SECTION 7.03 Collateral Splitting.



     (a) Following the occurrence of a Program Termination Event, but prior to the exercise of
remedies by the Collateral Agent pursuant to Section 7.02, each Primary Lender shall have
the right (but no obligation) to deliver a written notice (a “Collateral Split Notice”) to
the Collateral Agent, each of the other parties hereto and the Qualifying Swap Counterparty
requesting that the Collateral Agent divide the Pledged Receivables (and the related Pledged
Assets) into Segregated Collateral Pools in accordance with subsection (b) below.



     (b) If a Collateral Split Notice has been delivered by any Primary Lender pursuant to
subsection (a) above, then upon the expiration of the Collateral Split Buyout Rights (and
assuming such rights have not been exercised), the Collateral Agent shall promptly and randomly
select two portions of the Pledged Receivables (and the related Pledged Assets) to be
“Segregated Collateral Pools” with respect to each of the Primary Lenders and their
respective Related Lenders. Each Segregated Collateral Pool shall have an aggregate Discounted
Balance equal to (x) the sum of the Percentages for the applicable Primary Lender and its Related
Lenders, multiplied by (y) the aggregate Discounted Balance of all Pledged Receivables at
such



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time (such selection not to result in the separation of Pledged Receivables with the same
Obligor into multiple Segregated Collateral Pools). Notwithstanding the foregoing, if at such time
RBS is a Primary Lender and each Primary Lender and its Related Lenders, collectively, have
aggregate Percentages equal to 50%, then (A) the MS Primary Lender shall promptly cause the Pledged
Receivables (and the related Pledged Assets) to be split into two Segregated Collateral Pools based
on the procedure described in the two preceding sentences (except such splitting need not be
random) and (B) no later than three (3) Business Days following the date on which such split
occurs, RBS shall select which Segregated Collateral Pool shall constitute the Segregated
Collateral Pool with respect to RBS, as Primary Lender, and its Related Lenders. The remaining
Segregated Collateral Pool shall constitute the Segregated Collateral Pool with respect to Morgan
Stanley, as Primary Lender, and its Related Lenders. The division of the Pledged Receivables (and
the related Pledged Assets) in accordance with this subsection (b) into Segregated
Collateral Pools and the designation of each such Segregated Collateral Pool to the related Lenders
shall be hereinafter referred to as the “Collateral Split”.




     (c) Notwithstanding anything to the contrary contained in this Agreement or any other
Transaction Document, from and after the Collateral Split Effective Date:




     (i) The Loans made by the MS Primary Lender and its Related Lenders, on the one hand,
and the RBS Primary Lender and its Related Lenders, on the other hand (each, a “Lender
Group”), shall be deemed to be governed by two separate “Loan Agreements”. Each
Loan Agreement shall be evidenced by this Agreement as in effect on the Collateral Split
Effective Date, together with any subsequent amendments thereto made in accordance with
Section 9.01 hereof. The terms and conditions of each Loan Agreement and the
Persons deemed to be parties thereto shall be the same as the terms of this Agreement as in
effect on the Collateral Split Effective Date (as subsequently and separately amended in
accordance with Section 9.01 hereof); provided, however, that (A)
each reference herein to a “Lender” or the “Lenders” shall be deemed to refer solely to the
Lenders in the applicable Lender Group (and their subsequent successors and assigns), and
the Lenders in one Lender Group shall not be deemed to be parties to the Loan Agreement for
the other Lender Group, and shall not have any rights, privileges, duties or obligations
under such other Loan Agreement except to the extent expressly provided in Sections
2.04 and 9.01 thereof, (B) each reference herein to the “Collateral Agent” shall
be deemed to refer to the Primary Lender of the applicable Lender Group on the Collateral
Split Effective Date (and its subsequent successors and assigns), (C) each reference to the
“Loans” or “Notes” (or any similar or related term) shall be deemed to refer solely to the
Loans or Notes of the applicable Lender Group, (D) each reference to the “Pledged
Receivables” or the other “Pledged Assets” (or any similar or related term) shall be deemed
to refer to the Pledged Receivables and/or Pledged Assets included in the applicable Lender
Group’s Segregated Collateral Pool, (E) Section 2.04(a) of the Loan Agreement for
the RBS Lender Group (as defined below) (the “RBS Loan Agreement”) shall be replaced
in its entirety with the language set forth on Schedule 2.04(a) hereto and any
reference in the MS Loan Agreement or the related Transaction Documents to Section
2.04 of the RBS Loan Agreement shall be understood to refer to Schedule 2.04(a),
(F) the Backup Servicer shall continue to be a party to the Loan Agreement related to the MS
Primary Lender and its Related Lenders (the “Morgan Stanley Lender Group”) on the
terms and conditions set forth therein, but shall not be deemed to be a



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party to the Loan Agreement related to the RBS Primary Lender and its Related Lenders
(the “RBS Lender Group”) and shall have no rights, privileges, duties or obligations
thereunder, and (G) the security interest granted to the Collateral Agent by the Borrower
pursuant to Section 2.11 of this Agreement or any other provision of the Transaction
Documents shall continue in effect (and shall be assigned to the RBS Collateral Agent to the
extent specified in subsection (v) below), and no new grant shall be deemed to be
made pursuant to Section 2.11 of either Loan Agreement For the avoidance of doubt,
(I) the parties hereto intend that this subsection (i), upon taking effect, shall be
treated as an amendment and restatement of the terms of this Agreement (as such terms apply
separately to the Loans of each Lender Group and its related Segregated Collateral Pool) and
not as a cancellation, termination or novation of this Agreement;




     (ii) Without limiting the generality of subsection (i) above, LEAF Financial or
the Person then acting as Servicer shall continue to be the Servicer (in separate
capacities) with respect to each Loan Agreement and each Segregated Collateral Pool until
removed by the applicable Controlling Holders in accordance with Section 6.01 of the
applicable Loan Agreement;




     (iii) Without limiting the generality of subsection (i) above, U.S. Bank
National Association or the Person then acting as Custodian shall continue to be the
Custodian (in separate capacities) with respect to each Loan Agreement and each Segregated
Collateral Pool until removed in accordance with the applicable Loan Agreement and the
Related Custodial Agreement. The rights, privileges, duties and obligations of the
Custodian with respect to each Loan Agreement and the related Segregated Collateral Pool
shall be governed by a custodial agreement (the “Related Custodial Agreement” with
respect thereto) having all the same terms and conditions as the Custodial Agreement in
effect on the Collateral Split Effective Date, except that (A) each Related Custodial
Agreement shall only apply to the related Segregated Collateral Pool, (B) all references
therein to the “RLSA” (and all terms defined by reference to the “RLSA”) shall be deemed to
refer solely to the related Loan Agreement and the respective terms defined therein (as
modified by subsection (i) above). Except as otherwise expressly provided in
Section 2.04 of the Loan Agreement related to the other Segregated Collateral Pool,
the Custodian’s Fees and other amounts due to the Custodian in respect of a particular
Segregated Collateral Pool shall be paid solely from Collections on such Segregated
Collateral Pool in accordance with Section 2.04 of the related Loan Agreement. Each
reference to the “Custodial Agreement” or the “Custodian” in a Loan Agreement or any other
related agreement shall be deemed to refer solely to the Related Custodial Agreement with
respect to such Loan Agreement and the Person appointed as Custodian thereunder;




     (iv) Without limiting the generality of subsection (i) above, but subject to
the remainder of this subsection (iv), U.S. Bank National Association or the Person
then acting as Lenders’ Bank shall continue to be the Lenders’ Bank (in separate capacities)
with respect to each Loan Agreement and each Segregated Collateral Pool until removed in
accordance with the applicable Loan Agreement. Promptly following the Collateral Split
Effective Date, and unless otherwise agreed to in writing by the MS Primary Lender, the RBS
Lender Group shall promptly establish a separate collection account to



81









 






be used to receive Collections in respect of its Segregated Collateral Pool (the
“RBS Collection Account”) which may be in the name of the Lender’s Bank under the
RBS Loan Agreement, the RBS Primary Lender or an affiliate of the RBS Primary Lender, and
each of the parties to the RBS Loan Agreement shall cooperate with the RBS Primary Lender in
establishing the RBS Collection Account on substantially the same terms and conditions as
the current Collection Account has been established under the Transaction Documents;
provided that the RBS Lender Group shall have no obligation to use U.S. Bank
National Association or any of its Affiliates as account bank with respect to such account.
From the Collateral Split Effective Date until the date on which the RBS Collection Account
has been established and is operational, each reference in the Loan Agreements to the
“Collection Account” shall continue to refer to the Collection Account in existence on the
Collateral Split Effective Date, and Collections in respect of both Segregated Collateral
Pools shall continue to be deposited into such account in accordance with the applicable
Loan Agreement. The Servicer for each Lender Group shall take all actions necessary to
ensure that each Segregated Collateral Pool is accounted for separately, and that
Collections in respect of each pool are applied in accordance with the applicable Loan
Agreement. From and after the date on which the RBS Collection Account has been established
and is operational, (A) the Servicer for the RBS Lender Group shall provide notice to the
Obligors in respect of the Pledged Receivables in the related Segregated Collateral Pool and
take commercially reasonably steps to ensure that such Obligors make all payments in respect
of such Receivables to the RBS Collection Account or an associated Lockbox Account, (B) the
RBS Lender Group shall no longer have any rights, privileges, duties or obligations under
the Collection Account Agreement, and all references therein to the “Lenders” or the
“Collateral Agent” shall refer solely the Collateral Agent appointed under the Loan
Agreement for the MS Lender Group and the Lenders included in such group (the “MS Loan
Agreement”), (C) all references in the Collection Account Agreement to the “RLSA” (and
all terms defined by reference to the “RLSA”) shall be deemed to refer solely to the MS Loan
Agreement and the respective terms defined therein (as modified by subsection (i)
above), and (D) each reference to the “Collection Account” or the “Collection Account
Agreement” in the RBS Loan Agreement or any other related agreement shall be deemed to refer
solely to the RBS Collection Account and the account control agreement established with
respect thereto. Except as otherwise expressly provided in Section 2.04 of the Loan
Agreement related to the other Segregated Collateral Pool, the Lenders’ Bank Fees and other
amounts due to the Lenders’ Bank in respect of a particular Segregated Collateral Pool shall
be paid solely from Collections on such Segregated Collateral Pool in accordance with
Section 2.04 of the related Loan Agreement. If any Servicer, Lender or other party
to either Loan Agreement receives any Collections in respect of the unrelated Segregated
Collateral Pool, it shall hold such amounts in trust for the Persons to whom such amounts
are due and shall promptly remit such amounts to the related Servicer for such Segregated
Collateral Pool;




     (v) The rights, privileges, duties and obligations, if any, of the Lenders in each
Lender Group and the related Collateral Agents under or in respect of the Purchase and Sale
Agreement, the Lockbox Intercreditor Agreement, the Originator Insurance Agreement, the FDIC
Documents, and each Nominee Lienholder Agreement shall apply solely with respect to their
related Loans, Loan Agreements and Segregated Collateral



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Pools. Morgan Stanley (or such other Person as shall be acting as Collateral Agent on
the Collateral Split Effective Date) hereby assigns and delegates to the new Collateral
Agent for the RBS Lender Group (the “RBS Collateral Agent”), and the new Collateral
Agent hereby accepts and assumes, effective as of the Collateral Split Effective Date, all
of Morgan Stanley’s rights, privileges, duties and obligations in respect of the new
Collateral Agent’s Segregated Collateral Pool (including, without limitation, its security
interest in the Pledged Receivables and other Pledged Assets included in such Segregated
Collateral Pool granted pursuant to Section 2.11 of this Agreement).
Notwithstanding the foregoing, each of the Lenders and the Collateral Agent shall retain any
rights to indemnification under the Transaction Documents arising in connection with
circumstances in existence prior to the Collateral Split Effective Date; provided,
that from any after the Collateral Split Effective Date, any claims for indemnification in
respect of such circumstances shall be payable solely from Collections in respect of its
related Segregated Collateral Pool, except to the extent expressly provided in Section
2.04 of the unrelated Loan Agreement;




     (vi) The “Secured Parties” in respect of each Loan Agreement shall be comprised of each
related Lender, the related Collateral Agent, the related Custodian, the related Lender’s
Bank, the “Secured Parties” under (and as defined in) the other Loan Agreement and, in the
case of the MS Loan Agreement, the Backup Servicer and their respective successors and
assigns in such capacities, and the Collateral Agent for such Loan Agreement shall be deemed
to hold its security interest in the related Segregated Collateral Pool solely for the
benefit of such Persons. Each of the Secured Parties shall be entitled to receive payments
in respect of the Obligations owed to it under its related Loan Agreement and the other
related transaction documents solely to the extent funds are available thereunder in
accordance with the priority of payments set forth in Section 2.04 of its related
Loan Agreement or Section 2.04 of the unrelated Loan Agreement. For the avoidance
of doubt, a Collateral Split shall be considered a modification of the relative rights of
the Secured Parties only and not the termination of any existing grant of a security
interest by the Borrower. In connection with a Collateral Split, each of the Borrower and
the Collateral Agent under this Agreement (prior to the Collateral Split Effective Date)
shall cooperate with the RBS Collateral Agent in taking any actions as may be necessary to
ensure the continued perfection and priority of such Collateral Agent’s security interest in
the Segregated Collateral Pool for the RBS Lender Group, including, without limitation,
filing (or authorizing the filing of) any necessary UCC financing statements or financing
statement amendments (including assignments); and




     (vii) The Equity Payment payable to the Owner in accordance with the priority of
payments set forth in Section 2.04 of this Agreement (prior to the Collateral Split
Effective Date) shall, following the Collateral Split Effective Date, be divided into two
payments, one payable under each Loan Agreement in accordance with the priority of payments
set forth in Section 2.04 thereof. The amount of each such partial payment shall
equal each relevant Lender Group’s Allocable Share of the entire Equity Payment then due;
provided, that in no event shall any partial payment be made under a Loan Agreement, if, at
such time, any Termination Event or Event of Default has occurred and is continuing under
such Loan Agreement.



83









 





     (d) Any Lender Group replacing the Servicer with respect to its Loan Agreement shall promptly
deliver to the Lenders in the other Lender Group prompt notice of such replacement, together with a
copy of the executed Successor Servicing Agreement and all amendments thereto.



     (e) Borrower agrees to pay all reasonable (and reasonably documented) costs and expenses of
the parties hereto (including, without limitation reasonable attorney’s fees) incurred in
connection with the Collateral Split on the Remittance Date immediately prior to the Collateral
Split Effective Date in accordance with the priority of payments set forth in Section
2.04(a)(vi).



     SECTION 7.04 Collateral Split Buyout Rights. If any Primary Lender delivers a
Collateral Split Notice pursuant to Section 7.03(a), then the other Primary Lender and each
of its Related Lenders shall have the right (its “Collateral Split Buyout Right”) to
purchase 100% (but, subject to the following sentence, not less than 100%) of the Loans made by
such notifying Lender and its Related Lenders (the “Buyout Loans”), which Collateral Split
Buyout Right shall terminate if not exercised within ten (10) days following the date on which the
Collateral Split Notice is delivered. If more than one Lender desires to exercise its Collateral
Split Buyout Right with respect to the Buyout Loans, it shall be entitled to purchase up to its
ratable share (based on Percentages) of such Loans. Upon the exercise of its Collateral Split
Buyout Right, each exercising Lender shall purchase its ratable share of the Buyout Loans by paying
a purchase price to the selling Lenders equal to such exercising Lender’s ratable share of (i) the
outstanding principal balance of the Buyout Loans on the date of assignment, plus (ii) the
amount of unpaid interest accrued thereon through such date. Such assignment shall be made in
accordance with Section 9.04 hereof pursuant to documentation that is reasonably acceptable
to the buyer and seller, except that such assignment documentation shall not require any
representation or warranty by, or recourse to, the seller, other than the representation that the
Loans (or sold portion thereof) are being conveyed to the buyer free and clear of any lien or other
encumbrance created by or through the buyer. If any selling Lender is the Collateral Agent,
concurrently with any assignment of the Buyout Loans pursuant to the foregoing provisions of this
Section 7.04, the Collateral Agent shall assign and delegate to the purchasing Lender with
the greatest interest in Class A Notes, or if no purchasing Lender is a Class A Lender, to the
purchasing Lender with the greatest interest in the Class B Notes, or in either case, such Person’s
designee, all of its rights and obligations as Collateral Agent under this Agreement pursuant to
documentation reasonably acceptable to the Collateral Agent, such assignee and the other purchasing
Lenders, if any, and the Borrower or the Servicer, as applicable, if such documentation shall
diminish any rights or increase any obligations of such Person thereunder; provided,
however, that if any rights or obligations of the Borrower or the Servicer would be
materially and adversely affected by such assignment and delegation, then the consent of the
Borrower and the Servicer, as applicable, shall be required with respect to such assignment and
delegation documentation. In connection with any assignment pursuant to this Section 7.04,
the selling Lenders shall be entitled to retain all of their rights in respect of any unpaid fees,
as well as any claims for indemnity or similar rights arising from circumstances in existence prior
to date of assignment. The preceding sentence shall survive the assignment by any applicable
selling Lender of its Loans or other rights under this Agreement.



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ARTICLE VIII




INDEMNIFICATION




     SECTION 8.01 Indemnities by the Borrower. Without limiting any other rights which any
Class A Lender, any Class B Lender, the Collateral Agent, the Backup Servicer (whether in its
capacity as Backup Servicer or successor Servicer), the Lenders’ Bank, the Custodian, the Initial
Qualifying Swap Counterparty or any of their respective Affiliates may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify each Lender, the Collateral Agent, the
Custodian, the Backup Servicer, the Lenders’ Bank, the Initial Qualifying Swap Counterparty 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 Agreement or 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
and penalties imposed thereon) imposed by the jurisdiction in which such Indemnified Party’s
principal executive office is located, on or measured by the overall net income of such Indemnified
Party or (C) Indemnified Amounts to the extent that they are or result from lost profits (other
than principal, interest 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 any of the following (to the extent not resulting solely from gross negligence, bad faith or
willful misconduct on the part of an Indemnified Party):




     (i) any Pledged Receivable treated 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 been false
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 or regulation 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 Collateral Agent or to transfer to
the Collateral Agent a first priority 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;



85









 






     (v) the failure to maintain, as of the close of business on each Business 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 Facility Limit on such Business Day;




     (vi) the failure to maintain, as of the close of business on each Business Day prior to
the Collection Date, a Facility Amount, which is less than or equal to the Facility Limit;




     (vii) Reserved;




     (viii) the failure to file, or any delay in filing, financing statements or other
similar instruments 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 of the
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 Receivable (or the
Contract evidencing such Receivable) not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms);




     (x) any failure of the Borrower to perform its duties or obligations in accordance with
the provisions of this Agreement or any other Transaction Document;




     (xi) the failure 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 a Lender of any amount previously distributed in payment of
Loans or payment of interest or Fees or any other amount due hereunder, in each case which
amount such 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 Originator in
consideration for the transfer by Originator 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, without limitation, any provision of
the Bankruptcy Code;




     (xvi) Reserved;



86









 






     (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 any covenant or agreement under any Qualifying Interest Rate Swap; and/or




     (xix) any Contract 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 applicable Lender on behalf of the applicable Indemnified Party within two (2)
Business Days following such Lender’s written demand therefor on behalf of the applicable
Indemnified Party (and such Lender shall pay such amounts to the applicable Indemnified Party
promptly after the receipt by such Lender of such amounts). Each Lender, on behalf of any related
Indemnified Party making a request for indemnification under this Section 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 be conclusive absent demonstrable error.




     If the Borrower has made any payments in respect of Indemnified Amounts to a Lender, 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 by Servicer. (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 each Indemnified 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 faith or 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 is
located, 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, interest 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 to Servicer for
such losses:




     (i) the inclusion, in any computations made by it in connection with any Facility Limit
Certificate or Monthly Remittance Report or other report prepared by it



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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 the Servicer (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) to
comply 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 one of its
Affiliates) that causes the Collateral Agent 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 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 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 other funds;




     (vi) any failure of the Servicer (if LEAF Financial or one of its 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 to such duties; and/or




     (viii) notwithstanding whether any Pledged Receivable shall have been repurchased by
the Servicer pursuant to Section 6.20, 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 V or Article VI.



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



     (c) If the Servicer has made any indemnity payments to a Lender, on behalf of an Indemnified
Party pursuant to this Section 8.02 and such Indemnified Party thereafter collects



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any of such 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 and documents (including court papers) received by
such Indemnified Party relating to the claim giving rise to the Indemnified Amounts.



ARTICLE IX




MISCELLANEOUS




     SECTION 9.01 Amendments and Waivers. No amendment or modification of any provision of
this Agreement shall be effective without the written agreement of the Borrower, the Servicer, the
Controlling Holders and, to the extent any of their rights or obligations hereunder are adversely
affected thereby, the Backup Servicer or other successor Servicer, the Custodian, the Lenders’
Bank, each Qualifying Swap Counterparty and, at any time after the Collateral Split Effective Date,
each related “Secured Party” (which shall not be unreasonably withheld) under (and as defined in)
(a) the MS Loan Agreement (in the case of amendments to the RBS Loan Agreement) or (b) the RBS Loan
Agreement (in the case of amendments to the MS Loan Agreement) (the “Amendment Consent
Parties”); and no waiver of any provision of this Agreement or consent to any departure
therefrom by the Borrower or the Servicer shall be effective without the written concurrence of the
Controlling Holders and the Amendment Consent Parties; provided, however, that at
all times the written agreement of all of the affected Lenders shall be required with respect to
any amendment or modification of, or waiver or consent with respect to, any provision of this
Agreement which would (i) extend the due date for the payment of principal or interest on the Class
A Loan or the Class B Loan, (ii) reduce the principal or interest payable in respect of any Class A
Note or any Class B Note, (iii) subject to Section 7.03, result in the release of the
security interest of the Collateral Agent in any Pledged Asset or (iv) modify the definition of
“Controlling Holders”, Section 2.04(a), Article VII or this Section 9.01;
and provided, further, that at any time after the Collateral Split Effective Date,
the consent of the Amendment Consent Parties with respect to each Loan Agreement shall only be
required in respect of any amendment or modification of, or waiver or consent with respect to, any
provision of such Loan Agreement which would modify Section 2.04(a) (including any defined
terms used therein) or this Section 9.01 (including any defined terms used herein). Any
waiver or consent shall be effective only in the specific instance and for the specific purpose for
which given.



     SECTION 9.02 Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, 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 on Schedule VI hereto or 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 notices and communications shall be effective, upon receipt, or in the
case of notice by facsimile copy or electronic mail, when verbal communication of receipt is



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obtained, except that notices and communications pursuant to Article II shall not be
effective until received.




     SECTION 9.03 No Waiver; Remedies. No failure on the part of any 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 hereunder preclude 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; Multiple Lenders. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower, the Servicer, the Lenders, the
Collateral Agent, the Backup Servicer or any other successor Servicer, as applicable, the
Custodian, the Lenders’ Bank and their respective successors and permitted assigns. This Agreement
and each Lender’s rights and obligations hereunder (and under its related Note) and interest herein
shall be assignable in whole or in part (including by way of the sale of participation interests
therein) by such Lender and its successors and assigns; provided, however, that if
either of Morgan Stanley or Morgan Stanley AFI assigns all or any portion of its Notes to any third
party at any time prior to the Collateral Split, then RBS shall have the right (but no obligation)
to sell to the assigning party a portion of its Notes of the same class sold to such third party
such that, after giving effect to the assignment by Morgan Stanley or Morgan Stanley AFI to such
third party and the assignment by RBS pursuant to this proviso, the aggregate amount of Notes of
the sold class that are held by Morgan Stanley or Morgan Stanley AFI, on the one hand, and RBS, on
the other hand, will be equal; and, provided, further, that if RBS assigns all or
any portion of its Notes to any third party at any time prior to the Collateral Split, then
whichever of Morgan Stanley or Morgan Stanley AFI is then holding Notes of the sold class shall
have the right (but no obligation) to sell to RBS a portion of its Notes of such class such that,
after giving effect to the assignment by RBS to such third party and the assignment by Morgan
Stanley or Morgan Stanley AFI, as the case may be, to RBS pursuant to this proviso, the aggregate
amount of Notes of the sold class that are held by Morgan Stanley or Morgan Stanley AFI, on the one
hand, and RBS, on the other hand, will be equal (it being understood and agreed that, for the
avoidance of doubt, neither of the two preceding provisos shall apply to any pledge or other
hypothecation by any such Lender of its rights and obligations hereunder or interests herein solely
to the extent that such pledge or hypothecation does not constitute a sale). The purchase price
for any assignment made pursuant to either proviso of the foregoing sentence shall be based on the
same discount to par, or premium over par, that applies to the relevant third party assignment,
taking into account any fees or other arrangements that would affect the economics of such
assignment. None of the Borrower, the Servicer or the Backup Servicer or any other successor
Servicer may assign any of its rights and obligations hereunder or any interest herein without the
prior written consent of the Lenders; provided that the Borrower shall be permitted, on not less
than 10 Business Days’ prior written notice to the other parties hereto and with the prior written
consent of the Lenders, to be provided in the sole discretion of the Lenders, to assign all of its
rights and obligations hereunder to, and simultaneously with the transfer of all Pledged Assets to,
a Permitted Transferee which shall have assumed in a writing satisfactory to the Lenders all such
rights and obligations and acquired all such Pledged Assets. The parties to each assignment or
participation made pursuant to this Section 9.04 shall execute and deliver to the
applicable Lender, for its acceptance and recording in its books and records, an assignment and
acceptance agreement (an “Assignment and 



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Acceptance”) or a participation agreement or other transfer instrument reasonably
satisfactory in form and substance to (i) the parties to such Assignment and Acceptance and (ii)
prior to an Event of Default, the Borrower. Each such 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
the preceding sentence. Each Lender shall notify the Borrower of any assignment or participation
thereof made pursuant to this Section 9.04. Each Lender may, in connection with any
assignment or participation or any proposed assignment or participation 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 such Lender by or on
behalf of the Borrower or the Servicer; provided, however, that such 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 as confidential (under terms
mutually satisfactory to such Lender, 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, and may disclose information relevant to the tax treatment and tax structure of the
transactions contemplated by this Agreement.




     (b) Reserved.



     (c) Subject to Section 9.04(a), each of the parties hereto hereby agrees 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
effect on the Borrower, the Originator, the Servicer or any Affiliate thereof.



     SECTION 9.05 Term of This Agreement. This Agreement including, without limitation,
the Borrower’s obligation to observe its covenants set forth in Articles V and VI
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 with respect 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 IX and the provisions of Section 9.08 and Section 9.09 shall be
continuing and shall survive any termination of this Agreement.



     SECTION 9.06 GOVERNING LAW; JURY WAIVER; CONSENT TO JURISDICTION. (a) 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 LAW PRINCIPLES
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 LENDERS 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.



     (b) 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



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OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER.




     (c) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES
HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED
BY NEW YORK LAW.



     SECTION 9.07 Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification granted to the Backup Servicer or any other successor Servicer (whether in its
capacity as Backup Servicer or successor Servicer), the Custodian, the Lenders’ Bank, the
Collateral Agent, each Lender and its respective Affiliates under Section 8.01 hereof, the
Borrower agrees to pay on demand all reasonable (and reasonably documented) costs and expenses of
the Backup Servicer or such other successor Servicer, the Custodian, the Lenders’ Bank, the
Collateral Agent and each Lender incurred in connection with the preparation, execution or delivery
of, or any waiver or consent issued or amendment prepared in connection with, this Agreement, 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 Transaction Document, 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 such Lender, actually entered into) by any of the Borrower, the Servicer, the Collateral Agent,
such Lender or made necessary or desirable as a result of the actions of any regulatory, tax or
accounting body affecting such Lender and its Affiliates, or which is related to an Event of
Default, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Backup Servicer or any other successor Servicer, as applicable, the Custodian, the Lenders’
Bank, the Collateral Agent and each Lender with respect thereto and with respect to advising the
Backup Servicer or any other successor Servicer, the Custodian, the Lenders’ Bank, the Collateral
Agent and each 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 counsel fees and expenses), incurred by the Backup Servicer or any other
successor Servicer, the Custodian, the Lenders’ Bank, the Collateral Agent or any Lender in
connection with the enforcement of this Agreement and the other documents to be delivered hereunder
or in connection herewith.



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     (b) The Borrower shall pay on demand any and all stamp, sales, excise and other taxes 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 any
Lender which is specific to this Agreement or the funding or maintenance of Loans hereunder.



     (c) The Borrower shall pay on demand all other costs, expenses and taxes (excluding franchise
and income taxes) incurred by any Lender or the Initial Qualifying Swap Counterparty or any
shareholder thereof related to this Agreement, any other Transaction Document or any Qualifying
Interest Rate Swap or similar interest rate cap agreement (“Other Costs”), including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel for such Lender or
the Initial Qualifying Swap Counterparty with respect to (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 and (ii) the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith; provided, however, that the Borrower
shall have no obligation to pay the fees and out-of-pocket expenses of counsel to the Initial
Qualifying Swap Counterparty related to the initial negotiation, execution and delivery of any
Qualifying Interest Rate Swap.



     (d) 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.



     (e) Any Person making a claim under this Section 9.07 shall submit to 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. The Servicer, the Backup Servicer, any other successor
Servicer, the Custodian, the Collateral Agent, each Class A Lender, each Class B Lender and the
Lenders’ Bank each hereby agree that it will not institute against, or join any other Person in
instituting against, the Borrower any proceedings of the type referred to in the definition of
Bankruptcy Event prior to two years and one day after the Collection Date.



     SECTION 9.09 Recourse Against Certain Parties. No recourse under or with respect to
any obligation, covenant or agreement (including, without limitation, the payment of any fees or
any other obligations) of any Lender as contained in this Agreement or any other agreement,
instrument or document entered into by the Borrower or such Lender pursuant hereto or in connection
herewith shall be had against any administrator of the Borrower or such Lender or any incorporator,
affiliate, stockholder, officer, employee or director of the Borrower or such Lender or of any such
administrator, as such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of each party hereto contained in
this Agreement and all of the other agreements, instruments and documents entered into by the
Borrower or any Lender pursuant hereto or in connection herewith are, in each case, solely the
corporate obligations of such party (and nothing in this Section 9.09 shall be construed to
diminish in any way such



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corporate obligations of such party), and that no personal liability whatsoever shall attach
to or be incurred by any administrator of the Borrower or any Lender or any incorporator,
stockholder, affiliate, officer, employee or director of the Borrower or such Lender or of any such
administrator, as such, or any of them, under or by reason of any of the obligations, covenants or
agreements of the Borrower or such Lender contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that any and all personal
liability of every such administrator of the Borrower or any Lender and each incorporator,
stockholder, affiliate, officer, employee or director of the Borrower or such Lender or of any such
administrator, or any of them, for breaches by the Borrower or such Lender 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 in consideration 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 parties hereto 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 this Agreement 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, the validity, 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 complete integration 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 written
understandings other than the Fee Letter.



     SECTION 9.11 Tax Characterization. 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 Calculation of Performance Triggers. Notwithstanding anything to the
contrary herein, Included Repurchased Receivables shall be treated as Pool Receivables for purposes
of each calculation of the Cumulative Net Loss Rate, and Delinquency Rate required to be made
hereunder (but for no other purpose).



ARTICLE X




THE COLLATERAL AGENT




     SECTION 10.01 Authorization and Action. Each Lender hereby designates and appoints
Morgan Stanley as initial Collateral Agent hereunder (subject to Section 7.03), and
authorizes the Collateral Agent to take such actions as agent on its behalf and to exercise such
powers as are delegated to the Collateral Agent by the terms of this Agreement together with such
powers as are reasonably incidental thereto. In performing its functions and duties hereunder, the
Collateral Agent shall act solely as agent for the Lenders and does not assume nor



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shall be deemed to have assumed any obligation or relationship of trust or agency with or for
the Borrower, the Servicer, any other Person or any of their respective successors or assigns. The
Collateral Agent shall not be required to take any action that exposes the Collateral Agent to
personal liability or that is contrary to this Agreement or applicable law. The appointment and
authority of the Collateral Agent hereunder shall terminate at the indefeasible payment in full of
the Obligations.




     SECTION 10.02 No Implied Duties. The Collateral Agent shall be obligated to perform
only the duties as are specifically set forth in this Agreement, and no implied covenants,
obligations or any fiduciary relationship with any Lender or any other Person shall be read into
this Agreement against the Collateral Agent.



     SECTION 10.03 Limits on Liability. Neither the Collateral Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any acts, omissions, errors of
judgment or mistakes of fact or law made, taken or omitted to be made or taken by it in accordance
with this Agreement and the other Transaction Documents (including acts, omissions, errors or
mistakes with respect to the Collateral), except for those arising out of or in connection with the
Collateral Agent’s gross negligence or willful misconduct or (ii) responsible in any manner to any
Secured Party for any recitals, statements, representations or warranties made by the Borrower or
the Servicer contained in this Agreement or any other Transaction Document or in any certificate,
report, statement or other document referred to or provided for in, or received under or in
connection with, this Agreement or any other Transaction Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other
Transaction Document or any other document furnished in connection herewith, or for any failure of
the Borrower, its Affiliates or any Servicer to perform its obligations hereunder or thereunder, or
for the satisfaction of any condition specified in Article III. The Collateral Agent may
consult with counsel, accountants and other experts, and any opinion or advice of any such counsel,
any such accountant and any such other expert shall be full and complete authorization and
protection in respect of any action taken or suffered by the Collateral Agent hereunder in
accordance therewith. The Collateral Agent shall have the right at any time to seek instructions
concerning the administration of the Pledged Assets from any court of competent jurisdiction. The
Collateral Agent may conclusively rely, and shall be fully protected in acting, upon any
resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order,
bond or other paper or document which it has no reasonable reason to believe to be other than
genuine and to have been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or parties. Absent its gross
negligence or willful misconduct, the Collateral Agent may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Collateral Agent and conforming to the requirements of this Agreement and
the other Transaction Documents, if any.



     SECTION 10.04 Acknowledgement. Each Lender hereby acknowledges and agrees that its
rights and obligations as a “Lender” under the Collection Account Agreement are being held by
Morgan Stanley in its capacity as Collateral Agent for the benefit of the Secured Parties.



     SECTION 10.05 Additional Exculpatory Provisions. The Collateral Agent shall not be
under any obligation to any Secured Party to ascertain or to inquire as to the observance or



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performance of any of the agreements or covenants contained in, or conditions of, this
Agreement or any other Transaction Document, or to inspect the properties, books or records of the
Borrower or the Servicer, except as specified herein. The Collateral Agent shall not be deemed to
have knowledge of any Program Termination Event unless the Collateral Agent has received notice
from the Borrower, the Servicer or a Secured Party.




     SECTION 10.06 Non-Reliance on Collateral Agent. Each Lender expressly acknowledges
that neither the Collateral Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by
the Collateral Agent hereafter taken, including, without limitation, any review of the affairs of
the Borrower, its Affiliates or any Servicer, shall be deemed to constitute any representation or
warranty by the Collateral Agent. Each Lender represents and warrants to the Collateral Agent that
it has and will, independently and without reliance upon the Collateral Agent or any other Lender
and based on such documents and information as it has deemed appropriate, made its own appraisal of
and investigation into the business, operations, property, prospects, financial and other
conditions and creditworthiness of the Borrower and its Affiliates and made its own decision to
enter into this Agreement.



     SECTION 10.07 Reimbursement and Indemnification. The Lenders severally agree to
reimburse and indemnify the Collateral Agent and each of its officers, directors, employees,
representatives and agents ratably (based on their respective portions of the Loans), to the extent
not paid or reimbursed by the Borrower or the Servicer for any amounts for which the Collateral
Agent, acting in its capacity as Collateral Agent, is entitled to with respect to (i) reimbursement
by the Borrower hereunder and (ii) any other expenses incurred by the Collateral Agent, in
connection with the administration and enforcement of this Agreement or any other Transaction
Document; provided, however, that (i) RBS and its assigns will not be responsible
for any expenses which the Collateral Agent elects to incur in its discretion exceeding $50,000 in
the aggregate without the prior approval of RBS and its assigns, as applicable.



     SECTION 10.08 Collateral Agent in its Individual Capacity. The Collateral Agent and
each of its Affiliates may make loans to, accept deposits from and generally engage in any kind of
business with the Borrower or any Affiliate of the Borrower as though the Collateral Agent were not
the Collateral Agent hereunder.



     SECTION 10.09 Successor Collateral Agent. The Collateral Agent may, upon thirty (30)
Business Days’ prior written notice to the Borrower, the Servicer, the Lenders, the Backup Servicer
or any other successor Servicer, as applicable, the Custodian and the Lenders’ Bank resign as
Collateral Agent; provided, that each Lender agrees to become the successor Collateral
Agent in such capacity hereunder in accordance with the next sentence with the approval of the
Controlling Holders. If the Collateral Agent resigns under this Agreement, then the Controlling
Holders during such period shall appoint from among the Lenders a successor collateral agent,
whereupon such successor agent shall succeed to the rights, powers and duties of such Collateral
Agent, and the term “Collateral Agent”, shall mean such successor agent, effective upon its
acceptance of such appointment and its delivery of a duly executed counterpart of this Agreement
and an acknowledgment to the Collateral Agent, and such former Collateral Agent’s rights, powers
and duties as Collateral Agent, shall be terminated, without any other or further act or deed on
the part of such former agent or any of the parties to this Agreement; provided,



96









 




however, that if Morgan Stanley resigns as Collateral Agent, RBS shall have the option
to assume the duties of the Collateral Agent upon the effectiveness of such resignation. After
such retiring agent’s resignation hereunder as Collateral Agent, the provisions of this Article
X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent, under this Agreement. Notice of the appointment of a successor Collateral Agent,
shall be provided by the resigning Collateral Agent and the new Collateral Agent to the Borrower,
the Servicer, the Lenders, the Backup Servicer or other successor Servicer, the Custodian and the
Lenders’ Bank. Such resigning Collateral Agent shall cooperate with the Custodian and the
successor Collateral Agent in order to transfer is rights and obligations as Collateral Agent
hereunder to such successor Collateral Agent (including, in order to transfer, assign and perfect
the security interest of such Collateral Agent for the benefit of the Secured Parties in the
Collateral, and hereby authorizes the filing of all financing statement and/or the recordation of
all certificates, instruments or other records necessary under the laws of any applicable state).




     SECTION 10.10 Release of Collateral. Subject to Sections 2.13 and
4.03, the Collateral Agent shall not release its interest in any of the Pledged Assets
without the prior written consent of all of the Lenders.



[Signature page to follow.]




97









 





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



	 	 	 	 	 	 	 
	THE BORROWER:	 	LEAF CAPITAL FUNDING III, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	THE SERVICER:	 	LEAF FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	CLASS A LENDER AND THE

COLLATERAL AGENT	 	MORGAN STANLEY BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	CLASS B LENDER	 	MORGAN STANLEY ASSET FUNDING INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 






S-1









 






	 	 	 	 	 	 	 
	CLASS A LENDER	 	THE ROYAL BANK OF SCOTLAND PLC	 	 
	 
	 	 	 	 	 	 
	 	 	By: Greenwich Capital Markets, Inc., as agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	CLASS B LENDER	 	THE ROYAL BANK OF SCOTLAND PLC	 	 
	 
	 	 	 	 	 	 
	 	 	By: Greenwich Capital Markets, Inc., as agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	THE CUSTODIAN AND	 	U.S. BANK NATIONAL ASSOCIATION	 	 
	THE LENDERS’ BANK:
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

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

U.S. BANK PORTFOLIO SERVICES)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 







S-2