Document:

exv10w3

EXHIBIT 10.3

EXECUTION COPY

[RESOURCE CAPITAL FUNDING II, LLC]

FORBEARANCE AND RESERVATION OF RIGHTS

     This FORBEARANCE AND RESERVATION OF RIGHTS (this “Forbearance”), dated as of May 14,
2009, is entered into by and among RESOURCE CAPITAL FUNDING II, LLC (the “Borrower”), LEAF
FINANCIAL CORPORATION (the “Servicer”), MORGAN STANLEY BANK, N.A. (f/k/a Morgan Stanley
Bank) (“Morgan Stanley”), as a Lender and Collateral Agent and MORGAN STANLEY CAPITAL
SERVICES INC. (the “Qualifying Swap Counterparty”).

BACKGROUND

     1. The Borrower, the Servicer, Morgan Stanley, the Backup Servicer and U.S. Bank National
Association, as the Custodian are parties to the Receivables Loan and Security Agreement, dated as
of October 31, 2006 (as amended, supplemented or otherwise modified through the date hereof, the
“RLSA”). Capitalized terms used herein but not defined herein shall have the meanings set
forth in the RLSA.

     2. The Borrower and the Qualifying Swap Counterparty are parties to a Qualifying Interest Rate
Swap dated as of December 22, 2006 (as amended, supplemented or otherwise modified through the date
hereof, and including all swap transactions entered into pursuant thereto, the “Swap
Agreement”).

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

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

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

     SECTION 1. Forbearance.

     (a) The Servicer and the Borrower hereby notify the Forbearing Parties that the
financial statements of Resource America for the quarter ending March 31, 2009, to be
delivered by Borrower on May 15, 2009, will show that the Tangible Net Worth of Resource
America is less than its Minimum Tangible Net Worth (such condition, the “Breach”).
The occurrence of the Breach constitutes each of the events set forth on Schedule A
attached hereto (the “Covenant Failures”), and entitles the Forbearing Parties to
exercise remedies pursuant thereto absent the forbearance provided for hereunder. For the
period commencing on the date hereof and ending on the close of business on May

 

 

28, 2009 (the “Forbearance Period”), the Forbearing Parties will forbear from exercising
their rights and remedies resulting solely from the Covenant Failures. The forbearance
provided herein shall not extend to any Event of Default, Program Termination Event or
Servicer Default other than the Covenant Failures and all of the Forbearing Parties’ rights
and remedies with respect thereto are hereby reserved. Further, the forbearance provided
herein shall not derogate from the Forbearing Parties’ rights to collect, reserve and/or
apply proceeds of Pledged Assets to payment of outstanding liabilities as may be
specifically provided for in the RLSA and the other Transaction Documents. If the foregoing
forbearance is not extended by the Forbearing Parties by the end of the Forbearance Period,
the Borrower and the Servicer hereby acknowledge that the Covenant Failures shall exist and
that each Forbearing Party shall be fully entitled to declare a Program Termination Date and
to exercise all other rights and remedies with respect thereto under the RLSA and the other
Transaction Documents.

     (b) The Borrower hereby notifies the Qualifying Swap Counterparty that one or more of
the Covenant Failures constitutes the “Event of Default” (as defined in the Swap Agreement)
set forth in clause (1) of Section 5(a)(vi) of the Swap Agreement and
entitles the Qualifying Swap Counterparty to exercise remedies pursuant thereto absent the
forbearance provided for hereunder. The Qualifying Swap Counterparty hereby agrees to
forbear from exercising its rights and remedies resulting solely from such “Event of
Default” or the Breach and each of the Qualifying Swap Counterparty and the Borrower hereby
agrees that the “Early Termination Date” under (and as defined in) the Swap Agreement shall
not be declared as a result of such “Event of Default” during the Forbearance Period. If
the foregoing forbearance is not extended by the Qualifying Swap Counterparty by the end of
the Forbearance Period, the Borrower hereby acknowledges that such “Event of Default” shall
exist under the Swap Agreement and that the Qualifying Swap Counterparty shall be fully
entitled to exercise all rights and remedies with respect thereto under the Swap Agreement.

     SECTION 2. Termination of Funding. The Borrower and the Lender hereby agree that,
notwithstanding this Forbearance or anything to the contrary set forth in the RLSA or any other
Transaction Document, under no circumstances shall the Lender be obligated to make, nor shall the
Borrower request, any additional Loan under the RLSA. For the avoidance of doubt, such termination
of funding shall continue in effect notwithstanding any subsequent extension of the forbearance
granted in Section 1(a).

     SECTION 3. Representations and Warranties. Each of the Borrower and Servicer
represents and warrants that:

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

     (b) except as expressly described in Section 1 above, its representations and
warranties set forth in the RLSA, the Swap Agreement and the other Transaction

-2-

 

Documents are
true and correct as of the date hereof, as though made on and as of such
date (except to the extent such representations and warranties relate solely to an
earlier date and then as of such earlier date), and such representations and warranties
shall continue to be true and correct (to such extent) after giving effect to the
transactions contemplated hereby.

     SECTION 4. Effect of Forbearance; Ratification. Except as expressly set forth herein,
the RLSA, the Swap Agreement and each of the other Transaction Documents remain in full force and
effect and are hereby ratified. This Forbearance shall not be deemed to expressly or impliedly
waive, amend, or supplement any provision of the RLSA or the Swap Agreement other than as
specifically set forth herein.

     SECTION 5. Expenses. The Borrower agrees to pay on demand all reasonable costs and
expenses of the Forbearing Parties and the Qualifying Swap Counterparty (including costs and
expenses of counsel for the Forbearing Parties and the Qualifying Swap Counterparty) incurred in
connection with the preparation, execution and delivery of this Forbearance.

     SECTION 6. Counterparts. This Forbearance may be executed in any number of
counterparts and by different parties on separate counterparts, and each counterpart shall be
deemed to be an original, and all such counterparts shall together constitute but one and the same
instrument.

     SECTION 7. Governing Law. This Forbearance shall be governed by, and construed in
accordance with, the internal laws of the State of New York without regard to the conflicts of law
principles thereof (other than Section 5-1401 of the New York General Obligations Law).

     SECTION 8. Section Headings. The various headings of this Forbearance are inserted
for convenience only and shall not affect the meaning or interpretation of this Forbearance or any
provision hereof.

     SECTION 9. Entire Agreement. This Forbearance is intended by the parties hereto to be
the final expression of their agreement with respect to the subject matter hereof, and is the
complete and exclusive statement of the terms thereof, notwithstanding any representations,
statements or agreements to the contrary heretofore made.

[SIGNATURE PAGES FOLLOW]

-3-

 

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

	 	 	 	 	 
	 	 	RESOURCE CAPITAL FUNDING II, LLC, as

Borrower
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	LEAF FINANCIAL CORPORATION, as

Servicer
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

Forbearance and Reservation of Rights

(Resource Capital

Funding II, LLC)

S-1

 

	 	 	 	 	 
	 	 	MORGAN STANLEY BANK, N.A., as Lender

and Collateral Agent
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

Forbearance and Reservation of Rights

(Resource Capital

Funding II, LLC)

S-2

 

	 	 	 	 	 
	 	 	MORGAN STANLEY CAPITAL SERVICES

INC., as Qualifying Swap Counterparty
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

Forbearance and Reservation of Rights

(Resource Capital

Funding II, LLC)

S-3

 

SCHEDULE A

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

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

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

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

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

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

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

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

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

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

A-1exv10w1

EXECUTION COPY

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

     This First Amendment (this “Amendment”) to the Loan and Security Agreement referenced
below is entered into as of February 23, 2009, among LEAF III B SPE, LLC, a Delaware limited
liability company, as Borrower (the “Borrower”), the Lenders party thereto (the
“Lenders”), U.S. BANK NATIONAL ASSOCIATION, a national banking association organized under
the laws of the United States, as paying agent (together with its successors and assigns in such
capacity, the “Paying Agent”), KEY EQUIPMENT FINANCE INC., a Michigan corporation
(“KEF”), as facility agent and collateral agent (together with its permitted successors in
such capacities, the “Facility Agent” and the “Collateral Agent”) and the REQUIRED
LENDERS.

R E C I T A L S:

     WHEREAS, the Borrower, the Lenders, the Paying Agent, and KEF, as Facility Agent and the
Collateral Agent, are parties to the Loan and Security Agreement, dated as of May 30, 2008 (as
amended, supplemented and otherwise modified from time to time, the “Loan and Security
Agreement”);

     WHEREAS, the parties hereto desire to amend the Loan and Security Agreement pursuant to
Section 9.10(a) thereof to make certain amendments thereto as further described in this Amendment;

     NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     Section 1. Amendments to the Loan and Security Agreement. Effective as of the
execution and delivery of this Amendment by all parties hereto:

          (a) Section 2.16 of the Loan and Security Agreement is hereby amended by adding, as new
Section 2.16(d), the following:

          (d) If a Contract to be replaced in connection with the acquisition by the Borrower
of a Substitute Contract, the Borrower may request the removal and substitution of such
Contract subject to the satisfaction of the conditions precedent described in Section 3.02
hereof to the same extent as if the Substitute Contract to replace such Contract hereunder
was originally pledged hereunder on the Closing Date. Upon the satisfaction of the
conditions specified in this Section 2.16(d) and any conditions to the repurchase or
substitution of Contracts under the Purchase and Contribution Agreement and the Servicing
Agreement, including the requirements set forth in the definition of “Substitute
Contract”, the Collateral Agent shall, upon receipt of the Request for Release and
Receipt, release the Replaced Contract for which a Substitute Contract is being
substituted, together with its related Conveyed Assets from the Lien of the Loan and Security Agreement; provided, the foregoing release shall
only be available if, after giving effect thereto and the substitution of the Substitute
Contract therefor, there shall not be an Event of Default.

 

 

          (b) Section 2.20(a) of the Loan and Security Agreement is hereby amended by replacing the
section in its entirety with the following:

          (a) On or after the date of the First Amendment to this Agreement, the Borrower shall
not enter into any new Hedging Agreements with respect to any Advance. With respect to each
Advance occurring prior to such date, the Borrower shall have entered into, and shall
maintain, one or more the Hedge Agreements, having a notional amount at least equal to or
greater than ninety-six percent (96%) of the outstanding principal balance of such Advance.

          (c) Section 4.01(p) of the Loan and Security Agreement is hereby amended by (1) deleting the
period (“.”) appearing at the end of clause (iii) thereof and inserting a semi-color (“;”) in place
thereof and (2) adding the following clause (iv) at the end of such section:

          (iv) the weighted average life of all Purchased Contracts pledged under this Agreement
(including the Substitute Contracts to be acquired and pledged, but excluding Replaced
Contracts to be released, on such Purchase Date) does not exceed by a period greater than
one and a half (1.5) calendar months the shortest weighted average life of all Purchased
Contracts pledged under this Agreement reported in the most recently delivered Purchase Date
Notice or Servicer Report (excluding the Substitute Contracts to be acquired, but including
Replaced Contracts to be released, for Replaced Contracts on such Purchase Date).

     Section 2. Representations and Warranties. The Borrower represents and warrants that
(i) it has the power and is duly authorized to execute and deliver this Amendment, (ii) this
Amendment has been duly authorized, executed and delivered, (iii) it is and will continue to be
duly authorized to perform its respective obligations under the Transaction Documents and this
Amendment, (iv) the execution, delivery and performance by it of this Amendment shall not (1)
result in the breach of, or constitute (alone or with notice or with the lapse of time or both) a
default under, any material agreement or instrument to which it is a party, (2) violate (A) any
provision of law, statute, rule or regulation, or organizational documents or other constitutive
documents, (B) any order of any Governmental Authority or (C) any provision of any material
indenture, agreement or other instrument to which it is a party or by which it or any of its
property is or may be bound, or (3) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by the Borrower other than
pursuant to the Transaction Documents, (v) this Amendment and each of the Transaction Documents to
which it is a party or by which it or its assets may be or is bound constitutes its legal, valid
and binding obligations, enforceable against it (subject, as to the enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting creditors’
rights generally and to general principles of equity), (vi) except as publicly disclosed, there are
no actions, suits, investigations (civil or criminal) or proceedings at law or in equity or by or
before any Governmental Authority pending or, to its knowledge, threatened against or affecting it
or any of its business, property or rights (1) which involve any Transaction Documents or (2) which would be materially likely to result in a material adverse effect on
its business, assets, operations or financial condition and (vii) it is not in default or violation
with respect to any law, rule or regulation, judgment, writ, injunction or decree order of any
court,

2

 

governmental authority, regulatory agency or arbitration board or tribunal. Except as
expressly amended by the terms of this Amendment, all terms and conditions of the Loan and Security
Agreement shall remain in full force and effect and are hereby ratified in all respects.

     Section 3. Defined Terms; Headings. All capitalized terms used herein, unless
otherwise defined herein, have the same meanings provided herein or in Appendix A to Purchase and
Contribution Agreement. The headings of the various Sections of this Amendment have been inserted
for convenience of reference only and shall not be deemed to be part of this Amendment.

     Section 4. Limited Amendment. This Amendment is limited precisely as written and
shall not be deemed to (a) be a consent to a waiver or any other term or condition of the Loan and
Security Agreement, the other Transaction Documents or any of the documents referred to therein or
executed in connection therewith or (b) prejudice any right or rights any Lender, the Required
Lenders or Hedging Agreement counterparty may now have or may have in the future under or in
connection with the Loan and Security Agreement, the other Transaction Documents or any documents
referred to therein or executed in connection therewith. Whenever the Loan and Security Agreement
is referred to in the Loan and Security Agreement or any of the instruments, agreements or other
documents or papers executed and delivered in connection therewith, it shall be deemed to mean the
Loan and Security Agreement, as the case may be, as modified by this Amendment. Except as hereby
amended, no other term, condition or provision of the Loan and Security Agreement shall be deemed
modified or amended, and this Amendment shall not be considered a novation.

     Section 5. Construction; Severability. This Amendment is a document executed pursuant
to the Loan and Security Agreement and shall (unless otherwise expressly indicated therein) be
construed, administered or applied in accordance with the terms and provisions thereof. If any one
or more of the covenants, agreements, provisions or terms of this Amendment shall be held invalid
in a jurisdiction for any reason whatsoever, then, in such jurisdiction, such covenants,
agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Amendment and shall in no way affect the validity or enforceability of
the other covenants, agreements, provisions or terms of this Amendment.

     Section 6. Counterparts; Facsimile Signature. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. The parties may execute facsimile
copies of this Amendment and the facsimile signature of any such party shall be deemed an original
and fully binding on said party.

     Section 7. Governing Law. This Amendment shall be governed and construed in
accordance with the applicable terms and provisions of Section 9.08 (Governing Law; Jurisdiction;
Consent to Service of Process; Waiver of Jury Trial) of the Loan and Security Agreement, which
terms and provisions are incorporated herein by reference.

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

3

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to the Loan and
Security Agreement to be duly executed by their respective authorized officers as of the day and
year first written above.

	 	 	 	 	 
	BORROWER: 	 LEAF III B SPE, LLC

 	 
	 	By:  	/s/ Miles Herman
 	 
	 	 	Name:  	Miles Herman 	 
	 	 	Title:  	President/COO 	 
	 
	FACILITY AGENT,
COLLATERAL AGENT
AND AS A REQUIRED LENDER:
  	KEY EQUIPMENT FINANCE INC.
 	 
	 	By:  	/s/ Todd T. Oliver
 	 
	 	 	Name:  	Todd T. Oliver 	 
	 	 	Title:  	Designated Signer 	 
	 
	PAYING AGENT:  	U.S. BANK NATIONAL ASSOCIATION

 	 
	 	By:  	                               /s/ Tamara Schultz-Fugh
 	 
	 	 	Name:  	Tamara Schultz-Fugh  	 
	 	 	Title: 	Vice President 	 
	 
	A REQUIRED LENDER:  	RELATIONSHIP FUNDING COMPANY, LLC

 	 
	 	By:  	/s/ R. Scott Chisholm
 	 
	 	 	Name:  	R. Scott Chisholm 	 
	 	 	Title:  	Authorized Signer 	 
	 

First Amendment to Loan and Security Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00158-of-00352.parquet"}]]