Document:

Ex 10.10(a) ML Assignment and Assumption Agmt, Date 09/29/06

    
      EXHIBIT
        10.10(a)

      

      

      EXECUTION

      

      ASSIGNMENT,
        ASSUMPTION AND AMENDMENT AGREEMENT

      

      ASSIGNMENT,
        ASSUMPTION AND AMENDMENT
        AGREEMENT,
        dated
        as
        of September 29, 2006 (this “Agreement”),
        among
        LEAF FUNDING, INC., a Delaware corporation (“LEAF
        Funding”),
        LEAF
        INSTITUTIONAL DIRECT MANAGEMENT, LLC, a Delaware limited liability company
        (“LEAF
        IDM”),
        LEAF
        FINANCIAL CORPORATION, a Delaware corporation ("LEAF
        Financial"),
        LEASE
        EQUITY APPRECIATION FUND II, L.P., a Delaware limited partnership (“LEAF
        II”),
        LEAF
        II B SPE, LLC, a Delaware limited liability company (“LEAF
        II B SPE”),
        MERRILL
        LYNCH EQUIPMENT FINANCE LLC,
        a
        Delaware limited liability company (“MLEF”),
        MERRILL LYNCH COMMERCIAL FINANCE CORP., a Delaware corporation ("Lender”),
        and
        U.S. BANK NATIONAL ASSOCIATION, as Custodian and Paying Agent ("U.S.
        Bank").
        

       

      WITNESSETH:
        

       

      WHEREAS,
        capitalized terms used herein not otherwise defined herein shall have the
        meanings ascribed thereto in Appendix A attached hereto;

       

      WHEREAS,
        LEAF
        Funding, LEAF IDM, LEAF Financial, MLEF, the Lender and U.S. Bank are parties
        to
        the Transaction Documents (as such term is defined in that certain Purchase,
        Sale and Contribution Agreement, dated as of April 8, 2003, between LEAF
        Funding
        and LEAF IDM, as amended, supplemented or otherwise modified prior to the
        date
        hereof, and referred to herein as the “Existing
        Transaction Documents”),
        pursuant to which (i) LEAF Funding shall from time to time sell to LEAF IDM,
        and
        LEAF IDM shall from time to time purchase from LEAF Funding, all of LEAF
        Funding’s right, title and interest in, to and under certain Purchased
        Contracts; (ii) LEAF IDM shall from time to time sell to MLEF, and MLEF shall
        from time to time purchase from LEAF IDM, all of LEAF IDM’s right, title and
        interest in, to and under such Purchased Contracts; (iii) the Lender shall
        from
        time to time lend to MLEF amounts sufficient to purchase such Purchased
        Contracts, and MLEF’s obligations to the Lender shall be secured by, among other
        things, MLEF’s right, title and interest in, to and under such Purchased
        Contracts; and (iv) the Servicer shall service such Purchased Contracts;
        

       

      WHEREAS,
        the
        parties hereto intend that MLEF transfer, assign and convey to LEAF II B
        SPE all
        of MLEF’s right title and interest in, to and under the Purchased Contracts and
        the Existing Transaction Documents, and in connection therewith, LEAF II
        B SPE
        shall assume and undertake to perform all of MLEF’s liabilities and obligations
        under the Purchased Contracts and the Existing Transaction
        Documents;

       

      WHEREAS,
        the
        parties hereto intend that LEAF IDM transfer, assign and convey to LEAF II
        all
        of LEAF IDM’s right title and interest in, to and under the Purchased Contracts
        and the Existing Transaction Documents, and in connection therewith, LEAF
        II
        shall

      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      

       

      assume
        and undertake to perform all of LEAF IDM’s liabilities and obligations under the
        Purchased Contracts and the Existing Transaction Documents; and

       

      WHEREAS,
        the
        parties hereto intend to amend the Transaction Documents in order to give
        effect
        to the foregoing transactions on the terms and subject to the satisfaction
        of
        the conditions set forth herein.

       

      NOW,
        THEREFORE,
        in
        consideration of the premises and of the mutual covenants and agreements
        contained herein, the parties hereto hereby agree as follows:

       

      SECTION
        1. Assignment
        and Assumption; Purchase Price.
        On the
        Effective Date (as defined in Section 3 hereof), subject to the terms and
        conditions hereof:

       

      (a) MLEF
        hereby sells, transfers, assigns and otherwise conveys, without recourse,
        to
        LEAF II B SPE and LEAF II B SPE hereby purchases from MLEF, all of MLEF’s right,
        title and interest in, to and under each of the Purchased Contracts owned
        by
        MLEF as of the date hereof, together with all of MLEF’s right, title and
        interest in, to and under each of the Transaction Documents. MLEF’s sale,
        transference and assignment hereunder of the Purchased Contracts and MLEF’s
        right, title and interest in, to and under each of the Transaction Documents
        is
        final and irrevocable from and after the Effective Date, and none of LEAF
        Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall have any
        right to require that such transference and assignment terminate or that
        MLEF
        repurchase such Purchased Contracts or MLEF’s right, title and interest in, to
        and under each of the Transaction Documents from LEAF II B SPE.

       

      (b) MLEF
        delegates, transfers, assigns and otherwise conveys, with recourse, to LEAF
        II B
        SPE, and LEAF II B SPE hereby assumes from MLEF, all of MLEF’s duties,
        obligations and liabilities in, to and under each of the Purchased Contracts
        owned by MLEF as of the date hereof, together with all of MLEF’s right, title
        and interest in, to and under each of the Transaction Documents. MLEF’s
        delegation, transference and assignment hereunder of the Purchased Contracts
        and
        MLEF’s right, title and interest in, to and under each of the Transaction
        Documents is final and irrevocable from and after the Effective Date, and
        none
        of LEAF Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall
        have
        any right to require that such delegation, transference and assignment terminate
        or that MLEF re-assume such duties, obligations and liabilities from LEAF
        II B
        SPE.

       

      (c) LEAF
        IDM
        hereby sells, transfers, assigns and otherwise conveys, without recourse,
        to
        LEAF II and LEAF II hereby purchases from LEAF IDM, all of LEAF IDM’s right,
        title and interest in, to and under each of the Purchased Contracts owned
        by
        LEAF IDM as of the date hereof, together with all of LEAF IDM’s right, title and
        interest in, to and under each of the Transaction Documents. LEAF IDM’s sale,
        transference and assignment hereunder of the Purchased Contracts and LEAF
        IDM’s
        right, title and interest in, to and under each of the Transaction Documents
        is
        final and irrevocable from and after the Effective Date, and none of LEAF
        Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall have any
        right to require that such transference and assignment terminate or that
        LEAF
        IDM repurchase such

      
        
          
          

        

        
          (2)

          
            

          

        

        
          
          

        

      

       

      Purchased
        Contracts or LEAF IDM’s right, title and interest in, to and under each of the
        Transaction Documents from LEAF II.

       

      (d) LEAF
        IDM
        delegates, transfers, assigns and otherwise conveys, with recourse, to LEAF
        II,
        and LEAF II hereby assumes from LEAF IDM, all of LEAF IDM’s duties, obligations
        and liabilities in, to and under each of the Purchased Contracts owned by
        LEAF
        IDM as of the date hereof, together with all of LEAF IDM’s right, title and
        interest in, to and under each of the Transaction Documents. LEAF IDM’s
        delegation, transference and assignment hereunder of the Purchased Contracts
        and
        LEAF IDM’s right, title and interest in, to and under each of the Transaction
        Documents is final and irrevocable from and after the Effective Date, and
        none
        of LEAF Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall
        have
        any right to require that such delegation, transference and assignment terminate
        or that LEAF IDM re-assume such duties, obligations and liabilities from
        LEAF
        II.

       

      (e) Each
        of
        the parties hereto consents to the foregoing sales, transfers, assignments,
        conveyances and delegations and each party hereto hereby acknowledge and
        agrees
        that all property, whether tangible or intangible, as sold, transferred,
        assigned, conveyed and delegated is done so subject to the continuing first
        priority Lien of the Lender therein.

       

      (f) In
        consideration of the foregoing, LEAF II B SPE shall pay to MLEF a net amount
        equal to $188,824,807.55 (the “Purchase
        Price”),
        which
        shall include LEAF II B SPE’s assumption of the indebtedness and liabilities of
        MLEF then due and owing under the Existing Transaction Documents in the
        principal amount of $173,043.222.82. All amounts payable to MLEF in cash
        shall
        be paid in same day funds, without defense, setoff or counterclaim, and shall
        be
        made to an account of MLEF or Affiliate thereof that has been notified to
        LEAF
        II in writing

       

      SECTION
        2. Amendment.
        As of
        the Effective Date:

       

      (a) Purchase,
        Sale and Contribution Agreement.
        The
        Purchase, Sale and Contribution Agreement is hereby amended as
        follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) 
        Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (iii) Each
        reference therein to the phrase “the applicable Collection Account” is hereby
        amended by deleting it in its entirety and, in lieu thereof, inserting the
        phrase “the Collection Account”.

       

      (iv) The
        Definitions and Rules of Construction attached thereto as Appendix A is hereby
        amended and restated in its entirety in the form of Appendix A attached
        hereto.

      
        
          
          

        

        
          (3)

          
            

          

        

        
          
          

        

      

       

      (v) The
        Form
        of Purchase Date Notice attached thereto as Exhibit A is hereby amended and
        restated in its entirety in the form of Exhibit I attached hereto.

       

      (vi) Section
        2.02 thereof is hereby amended by deleting it in its entirety and, in lieu
        thereof, the following:

       

      “SECTION
        2.02 Purchase
        Price.
        In
        consideration of the sale, transference and assignment of the Purchased
        Contracts to be sold, transferred and assigned on any Purchase Date, LEAF
        II
        shall pay to LEAF Funding the Purchase Price for each Purchased Contract
        on the
        applicable Purchase Date, which shall be paid in immediately available funds
        on
        such Purchase Date in accordance with the funding instructions set forth
        in the
        applicable Purchase Date Notice.”

       

      (vii) Section
        2.03 thereof is hereby amended by deleting it in its entirety and, in lieu
        thereof, inserting “Section 2.03 Intentionally Omitted.”

       

      (viii) Section
        3.02(a)(iii)(A)(1) thereof is hereby amended by deleting it in its entirety
        and,
        in lieu thereof, inserting “(1) Intentionally Omitted;”.

       

      (ix) Section
        3.02(f)(i)(A) thereof is hereby amended by deleting it in its entirety and,
        in
        lieu thereof, inserting “(A) Intentionally Omitted;”.

       

      (b) Purchase
        and Sale Agreement.
        The
        Purchase and Sale Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) 
        Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (iii) Each
        reference therein to the phrase “the applicable Collection Account” is hereby
        amended by deleting it in its entirety and, in lieu thereof, inserting the
        phrase “the Collection Account”.

       

      (iv) Section
        2.02 thereof is hereby amended by deleting it in its entirety and, in lieu
        thereof, the following:

       

      “SECTION
        2.02 Purchase
        Price.
        In
        consideration of the sale, transference and assignment of the Purchased
        Contracts to be sold, transferred and assigned on any Purchase Date, LEAF
        II B
        SPE shall pay to LEAF II the Purchase Price for each Purchased Contract on
        the
        applicable Purchase Date, which shall be paid in immediately available funds
        on
        such Purchase Date in accordance with the funding instructions set forth
        in the
        applicable Purchase Date Notice. Notwithstanding

      
        
          
          

        

        
          (4)

          
            

          

        

        
          
          

        

      

       

      anything
        herein or in any other Transaction Document to the contrary, as of each Purchase
        Date, the excess, if any, of the fair market value of any Purchased Contract
        over the Purchase Price for such Purchased Contract on such Purchase Date
        shall
        be deemed to be a contribution to the capital of LEAF II B SPE by LEAF II,
        which
        shall increase LEAF II’s beneficial ownership interest in LEAF II B
        SPE.”

       

      (v) Section
        2.04 thereof is hereby amended by deleting it in its entirety.

       

      (vi) Article
        VIII thereof is hereby amended by inserting the following at the end
        thereof:

       

      “SECTION
        8.14 Relationship
        of LEAF II and LEAF II B SPE.

       

       

      (a) The
        relationship between LEAF II and LEAF II B SPE shall be that of buyer and
        seller. Neither is a trustee or agent for the other, nor does either have
        fiduciary obligations to other. This Agreement shall not be construed to
        create
        a partnership or joint venture between LEAF II and LEAF II B SPE.

       

      (b) LEAF
        II B
        SPE shall maintain at all times a telephone number different from any telephone
        numbers of LEAF II. LEAF II B SPE shall use stationery separate from that
        of
        LEAF II.

       

      (c) LEAF
        II B
        SPE and LEAF II shall take steps to ensure that their respective creditors
        are
        aware that LEAF II B SPE is a legal entity separate and distinct from any
        other
        Entity and maintains its assets, and conducts its operations, separate from
        those of any other Entity. Neither LEAF II B SPE nor LEAF II shall fail to
        correct any known misunderstanding regarding their separate identity. LEAF
        II
        shall not purport to operate as an integrated, single economic unit with
        LEAF II
        B SPE in dealing with any unaffiliated Entity. LEAF II shall not finance
        LEAF II
        B SPE’s operations or guarantee LEAF II B SPE’s obligations. LEAF II B SPE shall
        pay from its own funds, to the extent funds are available, its operating
        expenses and liabilities, including legal fees and expenses, or shall reimburse
        LEAF II for any such expenses or liabilities paid by LEAF II on LEAF II B
        SPE’s
        behalf. LEAF II B SPE shall not hold out the assets or creditworthiness of
        LEAF
        II as being available for the payment of LEAF II B SPE’s liabilities or
        obligations, and LEAF II B SPE shall not hold out its assets or creditworthiness
        as being available for the payment of the liabilities or obligations of LEAF
        II
        or any of its affiliates other than LEAF II B SPE. LEAF II shall not hold
        out
        the assets or creditworthiness of LEAF II B SPE, nor shall LEAF II B SPE
        permit
        LEAF II to hold its assets or creditworthiness, as being available for the
        payment of the liabilities or obligations of LEAF II or any of its affiliates
        (other than LEAF II B SPE). LEAF II shall not hold out the assets
        or

      
        
          
          

        

        
          (5)

          
            

          

        

        
          
          

        

      

       

      creditworthiness
        of it or any of its affiliates (other than LEAF II B SPE) as being available
        for
        the payment of the liabilities or obligations of LEAF II B SPE. LEAF II B
        SPE
        shall not permit the assets or creditworthiness of LEAF II or any of its
        affiliates (other than LEAF II B SPE) to be held out as being available for
        payment of the liabilities or obligations of LEAF II B SPE. Neither LEAF
        II nor
        LEAF II B SPE shall use or permit the separate trust existence of LEAF II
        B SPE
        to be used by LEAF II to abuse creditors or to perpetrate a fraud, injury,
        or
        injustice on creditors.

       

      (d) LEAF
        II
        and LEAF II B SPE shall each conduct its respective business separate and
        apart
        from the business conducted by the other. LEAF II B SPE shall maintain its
        books
        and records distinct and separately identifiable from the corporate records
        of
        LEAF II and any other Entity. LEAF II B SPE shall prepare financial records
        distinct and separately identifiable from the financial records of LEAF II
        or
        any of its affiliates (other than LEAF II B SPE). LEAF II B SPE shall prepare
        and maintain such statements and reports in accordance with generally accepted
        accounting principles. LEAF II shall indicate in such consolidated financial
        statements that the assets of LEAF II B SPE are not available to satisfy
        the
        creditors of any Entity other than LEAF II B SPE. To the extent that LEAF
        II B
        SPE is required to file tax returns under applicable law, LEAF II B SPE shall
        file such tax returns separate from those of any other Entity. LEAF II B
        SPE
        shall keep its funds and bank accounts separate and apart from the funds
        of LEAF
        II and any of its affiliates (other than LEAF II B SPE), and shall maintain
        its
        other assets separately identifiable and distinguishable from the assets
        of LEAF
        II and any of its affiliates (other than LEAF II B SPE). LEAF II B SPE shall
        not
        commingle its funds or other assets with those of any other Entity.

       

      (e) LEAF
        II B
        SPE shall act solely in its own name and solely through its duly Authorized
        Officers or agents. LEAF II B SPE shall comply with the provisions of its
        limited liability company agreement, and shall comply in all material respects
        with the laws of the State of Delaware, insofar as they pertain to its
        separateness. In addition, LEAF II, as the sole member of LEAF II B SPE,
        shall
        execute such consents as may be necessary to authorize action by LEAF II
        B SPE,
        and LEAF II B SPE shall maintain appropriate records of its written consents
        and
        shall observe all requisite corporate formalities insofar as they pertain
        to
        LEAF II B SPE’s separate existence.

       

      (f) All
        transactions between LEAF II and LEAF II B SPE are and shall be duly authorized
        and documented, and recorded accurately in their respective books and records.
        All such transactions shall be fair to each party, constitute exchanges for
        fair
        consideration and for reasonably equivalent value, and shall be made in good
        faith and without any intent to

      
        
          
          

        

        
          (6)

          
            

          

        

        
          
          

        

      

       

      hinder,
        delay, or defraud creditors. LEAF II B SPE shall not take any action, and
        shall
        not engage in transactions with LEAF II or any of its Affiliates (other than
        LEAF II B SPE) except as directed by LEAF II, and LEAF II shall not give
        any
        directions that are prohibited by LEAF II B SPE’s limited liability company
        agreement.”

       

      (c) Loan
        Agreement.
        The
        Loan Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (iii) The
        form
        of Class A Note attached thereto as Exhibit A is hereby amended and restated
        in
        its entirety in the form of Exhibit II attached hereto.

       

      (iv) The
        form
        of Class B Note attached thereto as Exhibit B is hereby deleted in its
        entirety.

       

      (v) Section
        2.01 thereof is hereby amended by deleting it in its entirety and, in lieu
        thereof, the following:

       

      “SECTION
        2.01 Commitment.
        During
        the Effective Period, subject to the terms and conditions herein set forth,
        the
        Lender agrees to make Advances to LEAF II B SPE in an aggregate principal
        amount
        not to exceed the Commitment. The Commitment shall automatically and permanently
        be reduced to zero on the Expiry Date. Subject to the terms, provisions and
        limitations set forth herein, LEAF II B SPE may borrow and repay, but not
        reborrow, Advances on or after the Closing Date and prior to the Expiry
        Date.”

       

      (vi) Section
        2.02(a) thereof is hereby amended by deleting it in its entirety and, in
        lieu
        thereof, the following:

       

      “(a)
        Upon
        receipt of the Purchase Date Notice, and subject to the terms and conditions
        hereof, the Lender shall make Advances to LEAF II B SPE on the applicable
        Purchase Date in an aggregate amount equal to (x) the Advance Rate as of
        such
        date times
        (y) the
        Contract Value of each Purchased Contract to be purchased as of such Purchase
        Date.”

       

      (vii) Section
        2.03(c) thereof is hereby amended by deleting it in its entirety and, in
        lieu
        thereof, the following:

       

      “(c)
        If
        requested in writing by the Lender, all Advances made by the Lender to LEAF
        II B
        SPE shall be evidenced by a single Note duly executed on behalf of LEAF II
        B SPE
        and delivered to and made payable

      
        
          
          

        

        
          (7)

          
            

          

        

        
          
          

        

      

       

      to
        the
        order of the Lender in a principal amount equal to the amount of the
        Commitment.”

       

      (viii) The
        second sentence of Section 2.04 thereof is hereby amended by deleting it
        in its
        entirety and, in lieu thereof, the following:

       

      “Each
        Advance shall bear interest on the principal amount thereof from time to
        time
        outstanding, from the date of on which such Advance is made until such principal
        amount becomes due, at a rate per annum equal to the sum of (i) the LIBO
        Rate,
plus
        (ii) the
        Facility Rate; provided, upon the occurrence of a Servicer Default each Advance
        shall bear interest on the principal amount thereof from time to time
        outstanding, from the date of such occurrence until such principal amount
        becomes due, at a rate per annum equal to the Default Funding
        Rate.”

       

      (ix) Section
        2.05 thereof is hereby amended by deleting the phrase “the Applicable Priority
        of Payments” in its entirety and, in lieu thereof, inserting the phrase “the
        Priority of Payments”.

       

      (x) Section
        3.02(d) thereof is hereby amended by deleting the “and” at the end of clause
        (iii) thereof, deleting the “.” at the end of clause (iv) thereof inserting, in
        lieu thereof “ and;”, and inserting the following the following at the end
        thereof:

       

      “(v)
        immediately prior to and after giving effect to the Advances to be made on
        such
        Purchase Date, (x) the Maximum Advance Amount as of such date does not exceed
        the aggregate amount of the Note Balance as of such date, and (y) the aggregate
        amount of the Note Balance as of such date does not exceed the Commitment
        in
        effect as of such date.”

       

      (xi) Section
        4.01 thereof is hereby amended by inserting the following the following at
        the
        end thereof: 

       

      “(f)
        No
        Proceedings.
        There
        are no proceedings, injunctions, writs, restraining orders or investigations
        pending or, to the best knowledge of LEAF II B SPE, threatened against LEAF
        II B
        SPE before any Governmental Authority (i) asserting the illegality, invalidity
        or unenforceability, or seeking any determination or ruling that would affect
        the legality, validity or enforceability of, this Agreement or any of the
        other
        Transaction Documents, (ii) seeking to prevent the consummation of any of
        the
        transactions contemplated by this Agreement or any of the other Transaction
        Documents, or (iii) seeking any determination or ruling that is reasonably
        likely to affect adversely the financial condition or operations of LEAF
        II B
        SPE or the validity or enforceability of, or the performance by LEAF II B
        SPE of
        its obligations under, this Agreement or any of the other Transaction
        Documents.

      
        
          
          

        

        
          (8)

          
            

          

        

        
          
          

        

      

       

      (g)
        No
        Consents.
        No
        authorization, consent, license, order or approval of, filing, registration
        or
        declaration with, or notice to, any Person, including, without limitation,
        any
        Governmental Authority, is required for LEAF II B SPE in connection with
        the
        execution and delivery of this Agreement or any of the other Transaction
        Documents by LEAF II B SPE or the performance of its obligations under this
        Agreement or any of the other Transaction Documents, except for the filing
        of
        documents required to have been filed on or prior to the Closing Date or
        a
        Purchase Date pursuant to Sections 3.01 and 3.02, all of which were so filed
        and
        are in full force and effect.

       

      (h)
        Ownership;
        Liens.

       

      (i)
        On
        each Purchase Date, LEAF II B SPE is the sole and exclusive owner of each
        Purchased Contract purchased by LEAF II B SPE on such date, each such Purchased
        Contract is free and clear of any Lien and no effective financing statement
        or
        other instrument similar in effect covering such Purchased Contract is on
        file
        in any recording office.

       

      (ii)
        As
        of each Purchase Date, each Purchased Contract shall be acquired by LEAF
        II B
        SPE from LEAF II free and clear of any Lien except Permitted Liens.

       

      (i)
        Location.
        The
        principal place of business and major executive office of LEAF II B SPE,
        and the
        offices where LEAF II B SPE keeps the originals of its books, records and
        documents regarding the Purchased Contracts sold hereunder, are located at
        LEAF
        II B SPE’s address specified in Section 8.09.

       

      (j)
        Valid
        Lien.
        This
        Agreement creates, to secure the Obligations, a valid security interest (as
        defined in the UCC) in the Collateral and, upon the filing of the financing
        statements on Form UCC-1 described in Section 3.01, Lender will have a valid
        first priority perfected security interest in the Collateral (subject to
        Section
        9-315 of the UCC).

       

      (k)
        Solvency.
        LEAF II
        B SPE is solvent and will not become insolvent after giving effect to the
        transactions contemplated by this Agreement. LEAF II B SPE is currently repaying
        all of its indebtedness as such indebtedness becomes due; and, after giving
        effect to the transactions contemplated by this Agreement, LEAF II B SPE
        will
        have adequate capital to conduct its business as presently conducted and
        as
        contemplated by this Agreement.

       

      (l)
        Compliance.
        LEAF II
        B SPE has complied, and will comply on each Purchase Date, in all respects
        with
        all Requirements of Law with respect to it, its business and properties and
        all
        Purchased Contracts sold

      
        
          
          

        

        
          (9)

          
            

          

        

        
          
          

        

      

       

      hereunder.
        LEAF II B SPE has maintained and will maintain all applicable permits,
        certifications and licenses necessary in any respect with respect to its
        business and properties and all Purchased Contracts sold hereunder, LEAF
        II B
        SPE has filed or caused to be filed, and will file, on a timely basis all
        tax
        returns required by any Governmental Authority.

       

      (m)
        No
        Rescission.
        No
        Purchased Contract has been satisfied, subordinated or rescinded or, except
        as
        disclosed in writing to Lender, amended in any manner.

       

      (n)
        No
        Insolvency Event.
        No
        Insolvency Event has occurred with respect to LEAF II B SPE nor, in LEAF
        II B
        SPE’s good faith judgment, is any Insolvency Event anticipated to occur with
        respect to LEAF II B SPE in the foreseeable future.

       

      (o)
        Fraudulent
        Conveyance.
        LEAF II
        B SPE is not entering into the transactions contemplated hereby with any
        intent
        of hindering, delaying or defrauding creditors.

       

      (p)
        Eligible
        Contracts.
        As of
        the relevant Purchase Date:

       

      (i)
        each
        Purchased Contract sold on such date is an Eligible Contract and the transfer,
        sale and conveyance to LEAF II hereunder of such Purchased Contract does
        not
        conflict with, result in a breach of any of the provisions of, or constitute
        (with or without notice or lapse of time or both) a default under, such
        Purchased Contract or violate any Requirement of Law or subject the Lender
        to
        any fine, penalty or liability; and

       

      (ii)
        the
        information set forth in the Purchase Date Notice with respect to each Purchased
        Contract to be purchased on such date, together with the applicable electronic
        data file provided in connection therewith, is and shall be true and
        correct.

       

      (q)
        No
        Proceedings.
        There
        are no proceedings, injunctions, writs, restraining orders or investigations
        pending or, to the best knowledge of an Authorized Officer of LEAF II B SPE,
        threatened with respect to any Purchased Contract before any Governmental
        Authority asserting the illegality, invalidity or unenforceability, or seeking
        any determination or ruling that would affect the legality, validity or
        enforceability of any such Purchased Contract.

       

      (r)
        Legal
        Name.
        The
        legal name of LEAF II B SPE is LEAF II B SPE, LLC.

       

      (s)
        ERISA.
        No Plan
        (as defined in Section 3(3) of ERISA) maintained by LEAF II B SPE or any
        of its
        ERISA Affiliates (as defined in Section

      
        
          
          

        

        
          (10)

          
            

          

        

        
          
          

        

      

       

      414(b),
        (c), (m) or (o) of the Code) has any accumulated funding deficiency (within
        the
        meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
        waived, LEAF II B SPE and each ERISA Affiliate of LEAF II B SPE have, in
        a
        timely manner, made all contributions required to be made by it to any Plan
        and
        Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA) to which
        contributions are or have been required to be made by LEAF II B SPE or such
        ERISA Affiliate, and no event requiring notice to the Pension Benefit Guaranty
        Corporation under Section 302(f) of ERISA has occurred and is continuing
        or
        could reasonably be expected to occur with respect to any such Plan, in any
        case, that could reasonably be expected to result, directly or indirectly,
        in
        any Lien being imposed on the property of LEAF II B SPE or the payment of
        any
        material amount to avoid such Lien. No Reportable Event (as defined in Section
        4043 of ERISA) with respect to LEAF II B SPE or any of its ERISA Affiliates
        has
        occurred or could reasonably be expected to occur that could reasonably be
        expected to result, directly or indirectly, in any Lien being imposed on
        the
        property of LEAF II B SPE or the payment of any material amount to avoid
        such
        Lien.

       

      (t)
        PATRIOT
        Act.
        To the
        extent applicable, LEAF II B SPE is in compliance, in all material respects,
        with the (i) Trading with the Enemy Act, as amended, and each of the
        foreign assets control regulations of the Untied States Treasury Department
        (31
        CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation
        or
        executive order relating thereto, and (ii) the PATRIOT Act. No part of the
        proceeds of any Advance will be used, directly or indirectly, for any payments
        to any governmental official or employee, political party, official of a
        political party, candidate for political office, or anyone else acting in
        an
        official capacity, in order to obtain, retain or direct business or obtain
        any
        improper advantage, in violation of the United States Foreign Corrupt Practices
        Act of 1977, as amended.”

       

      (xii) Section
        5.01(e) thereof is hereby amended by deleting the phrase “the applicable
        Collection Account” in its entirety and, in lieu thereof, inserting the phrase
“the Collection Account”.

       

      (xiii) Section
        5.01(f) thereof is hereby amended by deleting it in its entirety and, in
        lieu
        thereof, inserting the following:

       

      “(f)
        Reporting
        Requirements.

       

      (i)
        LEAF
        II B SPE shall (A) within one Business Day after an Authorized Officer of
        LEAF
        II B SPE obtains knowledge of the occurrence of any Potential Termination
        Event
        or any Termination Event, notify (either orally or in writing) the Lender
        of
        such

      
        
          
          

        

        
          (11)

          
            

          

        

        
          
          

        

      

       

      occurrence
        and (B) as soon as possible and in any event within three Business Days after
        an
        Authorized Officer of LEAF II B SPE obtains knowledge of the occurrence of
        any
        Potential Termination Event or any Termination Event, deliver to Lender,
        the
        Lender a statement of an Authorized Officer of LEAF II B SPE setting forth
        details of such Termination Event or such event and the action that LEAF
        II B
        SPE has taken and proposes to take with respect thereto.

       

      (ii)
        As
        soon as possible and in any event within 10 Business Days after an Authorized
        Officer of LEAF II B SPE obtains knowledge thereof, LEAF II B SPE shall notify
        the Lender of any litigation, investigation or proceeding that could reasonably
        be expected to impair in any respect the ability of LEAF II B SPE to perform
        its
        obligations under this Agreement.

       

      (iii)
        LEAF II B SPE shall promptly deliver to Lender such other information,
        documents, records or reports regarding the Purchased Contracts as Lender
        may
        from time to time reasonably request in order to protect Lender’s interests
        under or as contemplated by this Agreement.”

       

      (xiv) Section
        5.01 thereof is hereby amended by inserting the following at the end
        thereof:

       

      “(g)
        Extension
        or Amendment of Contract Receivables.
        Except
        as otherwise permitted under the Servicing Agreement, LEAF II B SPE will
        not (i)
        extend, amend or otherwise modify the terms of any Purchased Contract or
        (ii)
        rescind or cancel any Purchased Contract.

       

      (h)
        No
        Actions Against Obligors.
        Except
        in accordance with the Servicing Agreement, LEAF II B SPE will not commence
        or
        settle any legal action to enforce any rights under any Purchased
        Contract.”

       

      (xv) Article
        VIII thereof is hereby amended by inserting the following at the end
        thereof:

       

      “SECTION
        8.11 Indemnification.
        Without
        limiting any other rights that any of the Indemnified Parties may have hereunder
        or under any applicable law, LEAF II B SPE hereby agrees to indemnify the
        Indemnified Parties from and against any and all Indemnified Amounts, whether
        direct, indirect or consequential, as a result of or arising from or relating
        to
        or in connection with any of the following:

       

      (a)
        the
        reliance by any of the Indemnified Parties on any representation or warranty
        made by LEAF II B SPE under this Agreement that was incorrect in any respect
        when made or deemed made;

      
        
          
          

        

        
          (12)

          
            

          

        

        
          
          

        

      

       

      (b)
        any
        breach by Lender of any of its obligations under this Agreement or any other
        Transaction Document;

       

      (c)
        any
        claim, litigation, investigation or proceeding relating to any of the foregoing,
        whether or not any Indemnified Party is a party thereto;

       

      (d)
        any
        commingling by LEAF II B SPE of Collections with other funds of LEAF II B
        SPE or
        any of its Affiliates; or

       

      (e)
        any
        breach by LEAF II B SPE of any obligation under, or any violation by LEAF
        II B
        SPE of any Requirement of Law with respect to, any Purchased
        Contract;

       

      provided, however,
        that
        LEAF II B SPE shall not have any obligation to any Indemnified Party pursuant
        to
        this Section 8.11 for any of the foregoing (x) caused by the gross negligence
        or
        willful misconduct of such Indemnified Party as determined by a final judgment
        of a court of competent jurisdiction or (y) that arise out of facts and
        circumstances related to the Purchased Contracts occurring prior to the
        Effective Date. To the extent that the undertaking to indemnify, pay and
        hold
        harmless set forth in this Section 8.11 may be unenforceable because it is
        violative of any law or public policy, LEAF II B SPE shall contribute the
        maximum portion which it is permitted to pay and satisfy under applicable
        law,
        to the payment and satisfaction of all Indemnified Amounts incurred by the
        Indemnified Parties.

       

      Each
        Indemnified Party shall use reasonable efforts to notify LEAF II B SPE in
        advance of making any claim under this Section. Any Indemnified Amounts due
        under this Section shall be payable when incurred and, in any event, within
        ten
        Business Days of submission of a claim by the Indemnified Party. This Section
        shall survive the payment of all amounts otherwise due under this
        Agreement.”

       

      (d) Servicing
        Agreement.
        The
        Servicing Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (iii) Each
        reference therein to the phrase “the applicable Collection Account” or the
        phrase “the applicable Collection Account” is hereby amended by deleting it in
        its entirety and, in lieu thereof, inserting the phrase “the Collection
        Account”.

      
        
          
          

        

        
          (13)

          
            

          

        

        
          
          

        

      

       

      (iv) Each
        reference therein to the phrase “the Applicable Priority of Payments” is hereby
        amended by deleting it in its entirety and, in lieu thereof, inserting the
        phrase “the Priority of Payments”.

       

      (v) Section
        2.01(b) thereof is hereby amended by deleting the phrase “the Master DDA, the
        Collection Accounts and the Reserve Accounts” in its entirety and, in lieu
        thereof, inserting the phrase “the Master DDA and the Collection
        Account”.

       

      (vi) Section
        2.01(c)(iv) thereof is hereby amended by deleting the phrase “and all funds on
        deposit in the applicable Reserve Account” in its entirety.

       

      (vii) Section
        2.01(c)(v) thereof is hereby amended by deleting it in its entirety and,
        in lieu
        thereof, inserting the phrase “Intentionally Omitted”.

       

      (viii) Section
        2.01(f)(ii) thereof is hereby amended by deleting it in its entirety and,
        in
        lieu thereof, inserting the following:

       

      “(ii)
        at
        the Servicer’s expense, with the prior written consent of the Lender, and
        subject to Section 2.01(g), entering into subservicing arrangements with
        any Person for the purpose of administering or collecting the
        Collections.”

       

      (ix) Section
        4.01(b)(i) thereof is hereby amended by deleting the phrase “the Master DDA, the
        Collection Accounts and the Reserve Accounts” in its entirety and, in lieu
        thereof, inserting the phrase “the Master DDA and the Collection
        Account”.

       

      (e) Back-up
        Servicing Agreement.
        The
        Back-up Servicing Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (iii) Section
        2.04 thereof is hereby amended by deleting the phrase “the Applicable Priority
        of Payments” in its entirety and, in lieu thereof, inserting the phrase “the
        Priority of Payments”.

       

      (f) Paying
        Agent Agreement.
        The
        Paying Agent Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

      
        
          
          

        

        
          (14)

          
            

          

        

        
          
          

        

      

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (iii) Each
        reference therein to the phrase “the applicable Collection Account” or the
        phrase “the applicable Collection Account” or the phrase “either Collection
        Account” is hereby amended by deleting it in its entirety and, in lieu thereof,
        inserting the phrase “the Collection Account”.

       

      (iv) Each
        reference therein to the phrase “the Applicable Priority of Payments” is hereby
        amended by deleting it in its entirety and, in lieu thereof, inserting the
        phrase “the Priority of Payments”.

       

      (v) Section
        3(a) thereof is hereby amended by deleting the phrase “the Master DDA, the
        Collection Accounts and the Reserve Accounts” in its entirety and, in lieu
        thereof, inserting the phrase “the Master DDA and the Collection
        Account”.

       

      (vi) Section
        5(b) thereof is hereby amended as follows by deleting it in its entirety
        and, in
        lieu thereof, inserting the phrase “Intentionally Omitted”.

       

      (vii) Sections
        6(b), 6(c) and 6(d) thereof are each hereby amended by deleting it in its
        entirety.

       

      (viii) Section
        7(b) thereof is hereby amended by deleting the phrase “and funds on deposit in
        the applicable Reserve Account, in each case,”; in its entirety.

       

      (g) Custodial
        Agreement.
        The
        Paying Agent Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (h) Master
        DDA Control Agreement.
        The
        Master DDA Control Agreement is hereby amended as follows:

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (i) Master
        DDA Intercreditor Agreement.
        The
        Master DDA Intercreditor Agreement is hereby amended as
        follows:

      
        
          
          

        

        
          (15)

          
            

          

        

        
          
          

        

      

       

      (i) Each
        reference therein to “Borrower” shall be deemed to be a reference to LEAF II B
        SPE, as assignee of MLEF.

       

      (ii) Each
        reference therein to “LEAF SPE” shall be deemed to be a reference to LEAF II, as
        assignee of LEAF IDM.

       

      (j) Addressees.
        Each of
        the Transaction Documents is amended to provide that notice information for
        each
        of the addressees in the Transaction Documents shall be as follows:

       

      If
        to
        LEAF Funding:

      

      LEAF
        Funding, Inc.

      c/o
        LEAF
        Financial Corporation

      1818
        Market Street, 9th
        floor

      Philadelphia,
        PA 19103

       

      Tel: (215)
        569-1844

      Fax: (215)
        569-0675

      Attn: Crit
        DeMent

       

      With
        copies to:

       

      Dar
        Patel, Esq.

      General
        Counsel

      LEAF
        Financial Corporation

      (same
        info as above)

       

      and:

       

      Richard
        Abt, Esq.

      Ledgewood

      1900
        Market Street, Suite 750

      Philadelphia,
        PA 19103

       

      Tel: (215)
        731-9450

      Fax: (215)
        735-2513

       

      If
        to
        LEAF II:

       

      Lease
        Equity Appreciation Fund II, L.P. 

      c/o
        LEAF
        Financial Corporation 

      (same
        as
        above)

       

      If
        to
        LEAF II B SPE:

       

      LEAF
        II B
        SPE, LLC

      c/o
        LEAF
        Financial Corporation 

      (same
        as
        above)

       

      
        
          
          

        

        
          (16)

          
            

          

        

        
          
          

        

      

      If
        to the
        Lender:

       

      Merrill
        Lynch Commercial Finance Corp.

      4
        World
        Financial Center,10th
        Fl.

      New
        York,
        NY 10080

      Tel: (212)
        449-9369

      Fax: (212)
        449-9015

      Attn:
         Jeffrey
        S. Cohen

      

      If
        to
        U.S. Bank:

      

      U.S.
        Bank
        National Association

      180
        East
        Fifth Street

      St.
        Paul,
        MN 55101

      Tel: (651)
        244-0727

      Fax: (651)
        244-1917

      Attn:
        Structured Finance/Leaf Financial

       

      SECTION
        3. Conditions
        Precedent to the Effectiveness of this Agreement.
        This
        Agreement shall become effective as of the date hereof (the “Effective
        Date”)
        provided that each of the following conditions precedent shall have been
        satisfied, or waived by the Lender and U.S. Bank, on or before such
        date:

       

      (a) Purchase
        Price.
        LEAF II
        B SPE shall have paid to MLEF the Purchase Price in accordance with the terms
        and conditions hereof. 

       

      (b) Collection
        Accounts and Reserve Accounts.
        The
        Paying Agent shall have (i) renamed the currently existing “Collection Account
        (Pool A)” as “Merrill Lynch Commercial Finance Corp., as Lender, Account of LEAF
        II B SPE, LLC”, which account, as of the Effective Date and thereafter, shall
        for all purposes of the Transaction Documents be the “Collection Account”, (ii)
        transferred all amounts then on deposit in the Collection Account (Pool B),
        Reserve Account (Pool A) and Reserve Account (Pool B) into the Collection
        Account, and (iii) terminated each of the Collection Account (Pool B), Reserve
        Account (Pool A) and Reserve Account (Pool B).

       

      (c) Delivery
        of Agreements, Documents, Instruments, Etc.
        The
        Lender shall have received each of the following, each, unless otherwise
        noted,
        dated as of Effective Date:

       

      (i) this
        Agreement, executed and delivered by a duly Authorized Officer of each party
        hereto;

       

      (ii) a
        Note,
        executed and delivered by a duly Authorized Officer of LEAF II B
        SPE;

       

      (iii) an
        Effective Date Notice in form of Exhibit III attached hereto executed and
        delivered by a duly Authorized Officer of LEAF Financial, LEAF Funding, LEAF
        IDM, LEAF II and LEAF II B SPE; 

      
        
          
          

        

        
          (17)

          
            

          

        

        
          
          

        

      

       

      (iv) copies
        of
        the organizational documents of each of LEAF II and LEAF II B SPE, certified
        by
        the Secretary of State of the State of Delaware, or, if such document is
        of a
        type that may not be so certified, certified by the secretary of each of
        LEAF II
        and LEAF II B SPE, as applicable, together with a good standing certificate
        from
        the Secretary of State of the State of Delaware and, if applicable, each
        other
        jurisdiction in the United States in which each of LEAF II and LEAF II B
        SPE is
        qualified to do business and, to the extent generally available, a certificate
        or other evidence of good standing as to payment of any applicable franchise
        or
        similar taxes from the appropriate taxing authority of each jurisdiction
        of
        organization, each dated a recent date prior to the Effective Date;

       

      (v) resolutions
        of the board of directors (or any duly authorized committee thereof) or members
        of each of LEAF II and LEAF II B SPE approving and authorizing the execution,
        delivery and performance by such Person of the Transaction Documents to which
        it
        is a party, certified as of the Effective Date by the secretary of each of
        LEAF
        II and LEAF II B SPE, as applicable, as being in full force and effect without
        modification or amendment;

       

      (vi) signature
        and incumbency certificates of the officers of each of LEAF II and LEAF II
        B SPE
        executing the Transaction Documents to which it is a party; 

       

      (vii) executed
        copies of one or more favorable written opinions of counsel for LEAF Financial,
        LEAF Funding, LEAF IDM, LEAF II and LEAF II B SPE in form and substance
        satisfactory to the Lender and its counsel, dated as of the Effective Date
        and
        covering substantially such matters as LEAF II B SPE or the Lender may
        reasonably request (this Agreement constituting a written request by each
        of
        LEAF Financial, LEAF Funding, LEAF IDM, LEAF II and LEAF II B SPE to such
        counsel to deliver such opinions to LEAF II B SPE and the Lender), including,
        without limitation, (x) concerning the potential application to LEAF Funding,
        LEAF II and LEAF II B SPE of the doctrine of “substantive consolidation” under
        the federal bankruptcy laws and (y) concerning the true sale nature of the
        transactions contemplated hereby and the other Transaction Documents;
        and

       

      (viii) financing
        statements relating to the conveyance of the Purchased Contracts, naming
        LEAF II
        as debtor, LEAF II B SPE as secured party and LEAF II B SPE as assignee thereof,
        or other similar instruments or documents, as may be necessary or, in the
        opinion of the Lender, desirable under the UCC of any appropriate jurisdiction
        or other applicable law to perfect LEAF II’s ownership of the Purchased
        Contracts and a first priority security interest therein, which financing
        statements, instruments or documents shall be filed with the Secretary of
        State
        of the State of Delaware and such other filing offices as may be necessary
        or
        appropriate.

      
        
          
          

        

        
          (18)

          
            

          

        

        
          
          

        

      

       

      (d) Representations
        and Warranties.
        As of
        the date hereof, the representations and warranties made herein by LEAF Funding,
        LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE shall be true and correct
        in
        all material respects on and as of such date as if made on and as of such
        date
        (except to the extent such representation or warranty expressly relates to
        an
        earlier date, in which case such representation or warranty shall be true
        and
        correct in all material respects as of such earlier date).

       

      (e) No
        Potential Termination Event or Termination Event.
        No
        Potential Termination Event or Termination Event shall have occurred and
        be
        continuing or shall occur as a result of this Agreement.

       

      SECTION
        4. Representations
        and Warranties.
        To
        induce MLEF, the Lender and U.S. Bank to enter into this Agreement, each
        of LEAF
        Funding, LEAF IDM, LEAF Financial, LEAF II and LEAF II B SPE hereby represent
        and warrant to MLEF, the Lender and U.S. Bank as follows as of the date
        hereof:

       

      (a) Representations
        and Warranties - Transaction Documents.
        The
        representations and warranties made by each of LEAF Funding, LEAF IDM, LEAF
        Financial, LEAF II and LEAF II B SPE in any Transaction Document (giving
        effect
        to the transactions contemplated hereby) are true and correct in all material
        respects on and as of such date as if made on and as of such date (except
        to the
        extent such representation or warranty expressly relates to an earlier date,
        in
        which case such representation or warranty shall be true and correct in all
        material respects as of such earlier date).

       

      (b) Representations
        and Warranties - This Agreement.
        

       

      (i) It
        is
        duly organized and validly existing as a corporation, limited liability company
        or limited partnership, as the case may be, in good standing under the laws
        of
        the State of Delaware. It has full power, authority and legal right to own
        its
        properties and conduct its business, as presently owned and conducted, and
        as is
        proposed to be conducted under this Agreement (and, in the case of LEAF II
        B
        SPE, the Note), and to execute, deliver and perform its obligations under
        this
        Agreement (and, in the case of LEAF II B SPE, the Note).

       

      (ii) It
        is
        duly qualified to do business (or is exempt from such qualification
        requirements), is in good standing, and has obtained all Governmental
        Authorizations in each jurisdiction in which qualification and such Governmental
        Authorization are required in connection with the conduct its business, as
        presently owned and conducted, and as is proposed to be conducted under this
        Agreement (and, in the case of LEAF II B SPE, the Note), and the execution,
        delivery and performance of its obligations under this Agreement (and, in
        the
        case of LEAF II B SPE, the Note), except to the extent that any failure to
        be so
        qualified could not reasonably be expected to have a material adverse
        effect.

       

      (iii) Its
        execution, delivery and performance of this Agreement (and, in the case of
        LEAF
        II B SPE, the Note) and the consummation of the transactions

      
        
          
          

        

        
          (19)

          
            

          

        

        
          
          

        

      

       

      contemplated
        by this Agreement (and, in the case of LEAF II B SPE, the Note) have been
        duly
        and validly authorized by all necessary action on the part of it.

       

      (iv) This
        Agreement (and, in the case of LEAF II B SPE, the Note) constitutes a valid
        and
        legally binding obligation of it, enforceable against it in accordance with
        its
        terms, except as such enforceability may be limited by applicable bankruptcy,
        reorganization, insolvency, moratorium or other similar laws affecting
        creditors’ rights generally, now and hereafter in effect, and except as such
        enforceability may be limited by general principles of equity (whether
        considered in a suit at law or in equity).

       

      (v) Its
        execution and delivery of this Agreement (and, in the case of LEAF II B SPE,
        the
        Note), its performance of the transactions contemplated hereby and its
        fulfillment of the terms hereof and thereof applicable to it do not (A)
        contravene it’s organizational documents, (B) conflict with or violate any
        Requirements of Law applicable to it, (C) violate any provision of, or require
        any filing, registration, consent or approval under, any Requirement of Law
        presently in effect having applicability to it, except for such filings,
        registrations, consents or approvals as have already been obtained or made
        and
        are in full force and effect, and (D) conflict with, result in any breach
        of any
        of the terms or provisions of, or constitute (with or without notice or lapse
        of
        time or both) a default under, any indenture, Purchased Contract, agreement,
        mortgage, deed of trust or other instrument to which it is a party or by
        which
        it or its properties or assets are bound which conflict, violation, default
        or
        breach would have an adverse effect on it’s ability to perform its obligations
        hereunder or on the ownership of the Purchased Contracts.

       

      (vi) There
        are
        no proceedings, injunctions, writs, restraining orders or investigations
        pending
        or, to the best knowledge of it, threatened against it before any Governmental
        Authority (A) asserting the illegality, invalidity or unenforceability, or
        seeking any determination or ruling that would affect the legality, validity
        or
        enforceability of, this Agreement (and, in the case of LEAF II B SPE, the
        Note),
        (B) seeking to prevent the consummation of any of the transactions contemplated
        by this Agreement (and, in the case of LEAF II B SPE, the Note), or (C) seeking
        any determination or ruling that is reasonably likely to affect adversely
        the
        financial condition or operations of it or the validity or enforceability
        of, or
        the performance by it of its obligations under, this Agreement (and, in the
        case
        of LEAF II B SPE, the Note).

       

      (vii) No
        authorization, consent, license, order or approval of, filing, registration
        or
        declaration with, or notice to, any Person, including, without limitation,
        any
        Governmental Authority, is required for it in connection with the execution
        and
        delivery of this Agreement (and, in the case of LEAF II B SPE, the Note)
        by it
        or the performance of its obligations under this Agreement (and, in
        the

      
        
          
          

        

        
          (20)

          
            

          

        

        
          
          

        

      

       

      case
        of
        LEAF II B SPE, the Note), except for the filing of documents required to
        have
        been filed on or promptly after the Effective Date.

       

      (c) No
        Potential Termination Event or Termination Event.
        No
        Potential Termination Event or Termination Event has occurred and is continuing
        or shall occur as a result of this Agreement.

       

      SECTION
        5. Reference
        to and Effect on the Transaction Documents.
        As of
        the Effective Date, any reference in any Transaction Document to a Transaction
        Document shall be to such Transaction Document as amended hereby. 

       

      SECTION
        6. Counterparts.
        This
        Agreement may be executed by one or more of the parties to this Agreement
        on any
        number of separate counterparts (including by facsimile transmission of
        signature pages hereto), and all of said counterparts taken together shall
        be
        deemed to constitute one and the same instrument.

       

      SECTION
        7. Severability.
        Any
        provision of this Agreement which is prohibited or unenforceable in any
        jurisdiction shall, as to such jurisdiction, be ineffective to the extent
        of
        such prohibition or unenforceability without invalidating the remaining
        provisions hereof, and any such prohibition or unenforceability in any
        jurisdiction shall not invalidate or render unenforceable such provision
        in any
        other jurisdiction.

       

      SECTION
        8. Integration.
        This
        Agreement and the other Transaction Documents represent the agreement of
        LEAF
        Funding, LEAF IDM, LEAF Financial, LEAF II, LEAF II B SPE, MLEF, the Lender
        and
        U.S. Bank with respect to the subject matter hereof, and there are no promises,
        undertakings, representations or warranties by LEAF II B SPE, Lender or U.S.
        Bank relative to subject matter hereof not expressly set forth or referred
        to
        herein or in the Transaction Documents.

       

      SECTION
        9. GOVERNING
        LAW
        AND THE
        RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND
        CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
        YORK.

       

      SECTION
        10. PATRIOT
        ACT.
        Purchaser hereby notifies each of LEAF Funding, LEAF IDM, LEAF Financial,
        LEAF
        II, LEAF II B SPE that pursuant to the requirements of the PATRIOT Act, it
        is
        required to obtain, verify and record information that identifies each such
        Person, which information includes the name and address of each such Person
        and
        other information that will allow such Purchaser to identify each of LEAF
        Funding, LEAF IDM, LEAF Financial, LEAF II, LEAF II B SPE in accordance with
        the
        PATRIOT Act.

       

      
        
          
          

        

        
          (21)

          
            

          

        

        
          
          

        

      

       

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

       

      LEAF
        FINANCIAL CORPORATION

       

      By:  

      Name:
        

      Title:
        

       

      LEAF
        FUNDING, INC.

       

      By:  

      Name:
        

      Title:
        

       

      LEAF
        INSTITUTIONAL DIRECT MANAGEMENT, LLC

       

      By:
        LEAF
        Funding, Inc., its sole member

       

      By:  

      Name:
        

      Title:

       

      LEASE
        EQUITY APPRECIATION FUND II, L.P.

       

      By:
        LEAF
        Financial Corporation, its general partner

       

      By:  

      Name:
        

      Title:

       

      LEAF
        II B
        SPE, LLC

       

      By:
        Lease
        Equity Appreciation Fund II, L.P., its sole member

       

      By:
        LEAF
        Financial Corporation, its general partner

       

      By:  

      Name:
        

      Title:

      
        
          
          

        

        
          (22)

          
            

          

        

        
          
          

        

      

       

      MERRILL
        LYNCH EQUIPMENT FINANCE LLC

       

      By:  

      Name:
        

      Title:
        

       

      MERRILL
        LYNCH COMMERCIAL FINANCE CORP.

       

      By:  

      Name:
        

      Title:
        

       

      U.S.
        BANK
        NATIONAL ASSOCIATION

       

      By:  

      Name:
        

      Title:

       

      

      
        
          
             

          

          
          

        

        
          (23)

          
            

          

        

        
          
          

          
          

        

      

       

      Appendix
        A

       

      [as
        attached]

       

      

      
        
          
             

          

          
          

        

        
           

          
            

          

        

        
          
          

          
          

        

      

       

      Exhibit
        I

       

      [as
        attached]

       

      

       

      

      
        
          
             

          

          
          

        

        
           

          
            

          

        

        
          
          

          
          

        

      

       

      Exhibit
        II

       

      [as
        attached]

       

      

      
        
          
          

        

        
           

          
            

          

        

        
          
          

        

      

       

      Exhibit
        III

       

      [as
        attached]Commerce Loan Agreement 080406

    

     

    LOAN
      AND SECURITY AGREEMENT

     

    RESOURCE
      AMERICA, INC.

     

    with

     

    COMMERCE
      BANK, N.A., 

     

    as
      Agent,
      Arranger and Issuing Bank 

     

    and

     

    THE
      FINANCIAL INSTITUTIONS 

     

    NOW
      OR
      HEREAFTER LISTED ON SCHEDULE A,

     

    as
      Lenders

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    TABLE
      OF CONTENTS

    

      
        	 	
                PAGE

              
	
                SECTION
                  1. DEFINITIONS
                  AND INTERPRETATION

              	
                1

              
	 	
                1.1

              	
                Terms
                  Defined

              	
                1

              
	 	
                1.2

              	
                Accounting
                  Principles

              	
                9

              
	 	
                1.3

              	
                Construction

              	
                9

              
	 	 	 	 
	
                SECTION
                  2. THE
                  LOANS

              	
                9

              
	 	
                2.1

              	
                Revolving
                  Credit

              	
                9

              
	 	
                2.2

              	
                Letter
                  of Credit

              	
                9

              
	 	
                2.3

              	
                Advances,
                  Conversions, Renewals and Payments

              	
                13

              
	 	
                2.4

              	
                Interest

              	
                15

              
	 	
                2.5

              	
                Additional
                  Interest Provisions

              	
                16

              
	 	
                2.6

              	
                Fees

              	
                17

              
	 	
                2.7

              	
                Prepayments

              	
                18

              
	 	
                2.8

              	
                Use
                  of Proceeds

              	
                18

              
	 	
                2.9

              	
                Indemnity/Loss
                  of Margin

              	
                18

              
	 	
                2.10

              	
                Capital
                  Adequacy

              	
                19

              
	 	
                2.11

              	
                Termination
                  of Loans

              	
                19

              
	 	 	 	 
	
                SECTION
                  3. COLLATERAL

              	
                19

              
	 	
                3.1

              	
                Description

              	
                19

              
	 	
                3.2

              	
                Other
                  Actions

              	
                19

              
	 	
                3.3

              	
                Filing
                  Security Agreement

              	
                20

              
	 	
                3.4

              	
                Power
                  of Attorney

              	
                20

              
	 	 	 	 
	
                SECTION
                  4. CLOSING
                  AND CONDITIONS PRECEDENT TO ADVANCES

              	
                20

              
	 	
                4.1

              	
                Resolutions,
                  Opinions, and Other Documents

              	
                20

              
	 	
                4.2

              	
                Absence
                  of Certain Events

              	
                21

              
	 	
                4.3

              	
                Warranties
                  and Representations at Closing

              	
                21

              
	 	
                4.4

              	
                Compliance
                  with this Agreement

              	
                21

              
	 	
                4.5

              	
                Closing

              	
                21

              
	 	
                4.6

              	
                Non-Waiver
                  of Rights

              	
                21

              
	 	
                4.7

              	
                Conditions
                  to Advances

              	
                22

              
	 	 	 	 
	
                SECTION
                  5. REPRESENTATIONS
                  AND WARRANTIES

              	
                22

              
	 	
                5.1

              	
                Organization
                  and Validity

              	
                22

              
	 	
                5.2

              	
                Places
                  of Business

              	
                23

              
	 	
                5.3

              	
                Pending
                  Litigation

              	
                23

              
	 	
                5.4

              	
                Title
                  to Properties

              	
                23

              
	 	
                5.5

              	
                Consent

              	
                23

              
	 	
                5.6

              	
                Taxes

              	
                23

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	 	
                5.7

              	
                Financial
                  Statements

              	
                24

              
	 	
                5.8

              	
                Full
                  Disclosure

              	
                24

              
	 	
                5.9

              	
                Subsidiaries

              	
                24

              
	 	
                5.10

              	
                Guarantees,
                  Contracts, etc.

              	
                24

              
	 	
                5.11

              	
                Government
                  Regulations, etc.

              	
                24

              
	 	
                5.12

              	
                Names

              	
                25

              
	 	
                5.13

              	
                Other
                  Associations

              	
                26

              
	 	
                5.14

              	
                Regulation
                  O

              	
                26

              
	 	
                5.15

              	
                Solvency

              	
                26

              
	 	
                5.16

              	
                Investment
                  Company

              	
                26

              
	 	
                5.17

              	
                Anti-Terrorism
                  Laws

              	
                26

              
	 	
                5.18

              	
                Bancorp
                  Stock

              	
                27

              
	 	 	 	 
	
                SECTION
                  6. AFFIRMATIVE COVENANTS

              	
                27

              
	 	
                6.1

              	
                Payment
                  of Taxes and Claims

              	
                27

              
	 	
                6.2

              	
                Maintenance
                  of Properties and Corporate Existence

              	
                28

              
	 	
                6.3

              	
                Business
                  Conducted

              	
                28

              
	 	
                6.4

              	
                Litigation

              	
                29

              
	 	
                6.5

              	
                Taxes

              	
                29

              
	 	
                6.6

              	
                Bank
                  Accounts

              	
                29

              
	 	
                6.7

              	
                Employee
                  Benefit Plans

              	
                29

              
	 	
                6.8

              	
                Financial
                  Covenants

              	
                29

              
	 	
                6.9

              	
                Financial
                  and Business Information

              	
                30

              
	 	
                6.10

              	
                Officers'
                  Certificates

              	
                31

              
	 	
                6.11

              	
                Inspection

              	
                31

              
	 	
                6.12

              	
                Information
                  to Participant

              	
                32

              
	 	
                6.13

              	
                Name
                  Changes, Places of Business

              	
                32

              
	 	
                6.14

              	
                Bancorp
                  Stock and Resource Capital Stock

              	
                32

              
	 	 	 	 
	
                SECTION
                  7. NEGATIVE
                  COVENANT

              	
                32

              
	 	
                7.1

              	
                Merger,
                  Consolidation, Dissolution or Liquidation

              	
                32

              
	 	
                7.2

              	
                Loans
                  and Investments

              	
                32

              
	 	
                7.3

              	
                Liens
                  and Encumbrances

              	
                32

              
	 	
                7.4

              	
                Guarantees

              	
                32

              
	 	
                7.5

              	
                Use
                  of Lenders’ Name

              	
                32

              
	 	
                7.6

              	
                Miscellaneous
                  Covenants

              	
                33

              
	 	 
	
                SECTION
                  8. DEFAULT

              	
                33

              
	 	
                8.1

              	
                Events
                  of Default

              	
                33

              
	 	
                8.2

              	
                Cure

              	
                35

              
	 	
                8.3

              	
                Rights
                  and Remedies on Default

              	
                35

              
	 	
                8.4

              	
                Nature
                  of Remedies

              	
                36

              
	 	
                8.5

              	
                Set-Off

              	
                36

              

      

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      

      
        	
                SECTION
                  9. AGENT

              	
                36

              
	 	
                9.1

              	
                Appointment
                  and Authorization

              	
                36

              
	 	
                9.2

              	
                General
                  Immunity

              	
                36

              
	 	
                9.3

              	
                Consultation
                  with Counsel

              	
                37

              
	 	
                9.4

              	
                Documents

              	
                37

              
	 	
                9.5

              	
                Rights
                  as a Lender

              	
                37

              
	 	
                9.6

              	
                Responsibility
                  of Agent

              	
                37

              
	 	
                9.7

              	
                Collections
                  and Disbursements

              	
                37

              
	 	
                9.8

              	
                Indemnification

              	
                38

              
	 	
                9.9

              	
                Expenses

              	
                39

              
	 	
                9.10

              	
                No
                  Reliance

              	
                39

              
	 	
                9.11

              	
                Resignation
                  of Agent

              	
                39

              
	 	
                9.12

              	
                Action
                  on Instructions of Lenders

              	
                39

              
	 	
                9.13

              	
                Several
                  Obligations

              	
                39

              
	 	 	 	 
	
                SECTION
                  10. MISCELLANEOUS

              	
                40

              
	 	
                10.1

              	
                Governing
                  Law

              	
                40

              
	 	
                10.2

              	
                Integrated
                  Agreement

              	
                40

              
	 	
                10.3

              	
                Waiver

              	
                40

              
	 	
                10.4

              	
                Indemnity

              	
                40

              
	 	
                10.5

              	
                Time

              	
                41

              
	 	
                10.6

              	
                Expenses
                  of Agent and Lenders

              	
                41

              
	 	
                10.7

              	
                Brokerage

              	
                41

              
	 	
                10.8

              	
                Notices

              	
                42

              
	 	
                10.9

              	
                Headings

              	
                42

              
	 	
                10.10

              	
                Survival

              	
                43

              
	 	
                10.11

              	
                Amendments

              	
                43

              
	 	
                10.12

              	
                Assignability

              	
                44

              
	 	
                10.13

              	
                Successors
                  and Assigns

              	
                46

              
	 	
                10.14

              	
                Duplicate
                  Originals

              	
                46

              
	 	
                10.15

              	
                Modification

              	
                46

              
	 	
                10.16

              	
                Signatories

              	
                46

              
	 	
                10.17

              	
                Third
                  Parties

              	
                46

              
	 	
                10.18

              	
                Discharge
                  of Taxes, Borrower’s Obligations, Etc.

              	
                46

              
	 	
                10.19

              	
                Withholding
                  and Other Tax Liabilities

              	
                46

              
	 	
                10.20

              	
                Consent
                  of Jurisdiction

              	
                47

              
	 	
                10.21

              	
                Waiver
                  of Jury Trail

              	
                47

              

      

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      EXHIBITS
        AND SCHEDULES

      

      
        	
                Exhibit
                  A

                 

              	
                --

                 

              	
                Form
                  of Authorization Certificate

                 

              
	
                Exhibit
                  B

                 

              	
                --

                 

              	
                Form
                  of Borrowing Request

                 

              
	
                Exhibit
                  C

                 

              	
                --

                 

              	
                Form
                  of Borrowing Base Certificate

                 

              
	
                Exhibit
                  D

                 

              	
                --

                 

              	
                Form
                  of Compliance Certificate

                 

              
	 	 	 
	
                Schedule
                  A

                 

              	
                --

                 

              	
                Schedule
                  of Lenders

                 

              
	
                Schedule
                  B

                 

              	
                --

                 

              	
                Address
                  of Lenders

                 

              
	
                Schedule
                  1.1(b)

                 

              	
                --

                 

              	
                Permitted
                  Liens

                 

              
	
                Schedule
                  5.1

                 

              	
                --

                 

              	
                Borrower's
                  States of Qualifications

                 

              
	
                Schedule
                  5.2

                 

              	
                --

                 

              	
                Places
                  of Business

                 

              
	
                Schedule
                  5.3

                 

              	
                --

                 

              	
                Judgments,
                  Proceedings, Litigation and Orders

                 

              
	
                Schedule
                  5.7

                 

              	
                --

                 

              	
                Federal
                  Tax Identification Numbers

                 

              
	
                Schedule
                  5.9

                 

              	
                --

                 

              	
                Subsidiary
                  and Affiliates

                 

              
	
                Schedule
                  5.11

                 

              	
                --

                 

              	
                Employee
                  Benefit Plans

                 

              
	
                Schedule
                  5.12(a)

                 

              	
                --

                 

              	
                Schedule
                  of Names

                 

              
	
                Schedule
                  5.13(b)

                 

              	
                --

                 

              	
                Trademarks,
                  Patents and Copyrights

                 

              
	
                Schedule
                  5.13

                 

              	
                --

                 

              	
                Other
                  Associations

                 

              
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
        
           

        

        
        

      

      
        iv

        
          

        

      

      
        
        

        
        

      

    

    LOAN
      AND SECURITY AGREEMENT

     

     

    This
      Loan
      and Security Agreement (“Agreement”) is dated the 4th day of August, 2006, by
      and among Resource America, Inc. a Delaware corporation (“Borrower”), Commerce
      Bank, N.A., a national banking association, in its capacity as agent (“Agent”),
      Commerce Bank, N.A. in its capacity as issuing bank (“Issuing Bank”) and each of
      the financial institutions which are now or hereafter identified as Lenders
      on
      Schedule A attached hereto and made a part of this Agreement (as such Schedule
      may be amended, modified or replaced from time to time), (each such financial
      institutions, individually each being a “Lender” and collectively all being
“Lenders”).

     

    BACKGROUND

     

    Borrower
      desires to establish financing arrangements with Lenders for general working
      capital purposes, including interim funding of investments. Lenders are willing
      to make loans and grant extensions of credit to Borrower under the terms and
      provisions hereinafter set forth. 

     

    NOW,
      THEREFORE, in consideration of the mutual covenants set forth in this Agreement,
      the parties hereto, intending to be legally bound hereby, agree as follows:
      

     

    SECTION
      1. DEFINITIONS
      AND INTERPRETATION

     

    1.1 Terms
      Defined:
      As used
      in this Agreement, the following terms have the following respective meanings,
      or the meanings ascribed to them in the referenced Section:

     

    Advance(s)
      - Any
      monies advanced or credit extended to Borrower by any Lender under the Revolving
      Credit, including without limitation cash advances and the Letter of Credit
      Amount with respect to the issuance of Letters of Credit.

     

    Affiliate
      - With
      respect to any Person, (a) any Person which, directly or indirectly through
      one
      or more intermediaries controls, or is controlled by, or is under common control
      with, such Person, or (b) any Person who is a director or officer (i) of such
      Person, (ii) of any Subsidiary of such Person, or (iii) any person described
      in
      clause (a) above. For purposes of this definition, control of a Person shall
      mean the power, directly or indirectly, (x) to vote 10% or more of the Capital
      Stock having ordinary voting power for the election of directors (or comparable
      equivalent) of such Person, or (y) to direct or cause the direction of the
      management and policies of such Person, whether by contract or otherwise.
      Control may be by ownership, contract, or otherwise.

     

    Agreement
      - This
      Loan and Security Agreement, as it may hereafter be amended, supplemented,
      restated or replaced from time to time. 

     

    Anti-Terrorism
      Laws
      - Any
      statute, treaty, law (including common law), ordinance, regulation, rule, order,
      opinion, release, injunction, writ, decree or award of any Governmental
      Authority relating to terrorism or money laundering, including Executive Order
      No. 13224 and the USA Patriot Act.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Asset
      Sale
      - The
      sale, transfer, lease, license or other disposition by Borrower of any Property
      now owned, or hereafter acquired, of any nature whatsoever in any transaction
      or
      series of related transactions other than in the ordinary course of business.
      An
      Asset Sale includes, but is not limited to, a merger, consolidation, division,
      conversion, dissolution or liquidation.

     

    Assignment
      and Acceptance
      - Shall
      have the meaning set forth in Section 10.12.

     

    Authorized
      Officer
      - Any
      officer of Borrower authorized by the by-laws of the Borrower to execute and
      deliver documents on behalf of Borrower, to request Advances or execute
      Borrowing Base Certificates or Quarterly Compliance Certificates, as set forth
      in the authorization certificate delivered to Agent substantially in the form
      of
      Exhibit “A” attached hereto.

     

    Bank
      Affiliate
      - Any
      bank that is controlled by a Lender. A bank shall be deemed controlled by a
      Lender if (i) such Lender, directly or indirectly, or acting through one or
      more
      other Persons, owns, controls or has power to vote twenty-five percent (25%)
      or
      more of any class of voting securities of such bank; or (ii) such Lender
      controls in any manner the election of a majority of the directors or trustees
      of such bank.

     

    Borrowing
      Request
      - A
      document, in the form of Exhibit B attached hereto, and made part hereof, signed
      and delivered to Agent by an Authorized Officer of Borrower.

     

    Borrowing
      Base
      - As of
      the date of determination, an amount equal to the lesser of the (i) Maximum
      Revolving Credit Amount, or (ii) 80% of the market value of the
      Collateral.

     

    Borrowing
      Base Certificate
      - Shall
      have the meaning set forth in Section 6.9(b).

     

    Business
      Day
      - Any
      day that is not a Saturday or Sunday or day on which Agent or any Lender is
      required or permitted to close in Philadelphia, Pennsylvania.

     

    Capitalized
      Lease Obligations
      - Any
      Indebtedness represented by obligations under a lease that is required to be
      capitalized for financial reporting purposes in accordance with
      GAAP.

     

    Capital
      Stock
      - Any
      and all shares, interests, participations or other equivalents (however
      designated) of capital stock of a corporation, any and all other ownership
      interests in a Person (other than a corporation) and any and all warrants or
      options to purchase any of the foregoing.

     

    Closing
      - Shall
      have the meaning set forth in Section 4.5.

     

    Closing
      Date
      - Shall
      have the meaning set forth in Section 4.5.

     

    Collateral
      - The
      Collateral pledged by Borrower pursuant to Section 3.

     

    Consolidation
      Amortization Expense
      - For
      any period, the aggregate consolidated amount of amortization expenses of
      Borrower, as determined in accordance with GAAP.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    Control
      Agreements
      - The
      Securities Account Control Agreement, of even date herewith, among Resource
      Capital Investors, Inc., the Agent, Credit Suisse Securities (USA) LLC and
      Pershing LLC; and the Securities Account Control Agreement, of even date
      herewith, among Resource Capital Manager, Inc., the Agent, Credit Suisse
      Securities (USA) LLC and Pershing LLC.

     

    Default
      - An
      event which with the passage of time, the giving of notice, or both would
      constitute an Event of Default.

     

    Default
      Rate
      - Shall
      have the meaning set forth in Section 2.5(b).

     

    Disqualified
      Stock
      - Any
      Capital Stock which by its terms (or by the terms of any security into which
      it
      is convertible or for which it is exchangeable) or upon the happening of any
      event (i) matures or is mandatorily redeemable for any reason, (ii) is
      convertible or exchangeable for Indebtedness or Capital Stock that meets the
      requirements of clauses (i) and (ii), or (iii) is redeemable at the option
      of
      the holder thereof, in whole or in part in each case on or prior to the Maturity
      Date.

     

    Distribution
      - (i)
      Cash dividends or other cash distributions on any now or hereafter outstanding
      Capital Stock of Borrower; (ii) the redemption, repurchase, defeasance or
      acquisition of such Capital Stock or of warrants, rights or other options to
      purchase such Capital Stock; and (iii) any loans or advances (other than
      salaries), to any shareholder(s), partner(s), or member(s) of
      Borrower.

     

    ERISA
      - The
      Employee Retirement Income Security Act of 1974, as the same may be amended,
      from time to time.

     

    Event
      of Default
      - Shall
      have the meaning set forth in Section 8.1.

     

    Executive
      Order No. 13224
      - The
      Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001,
      as the same has been, or shall hereafter be, renewed, extended, amended or
      replaced.

     

    Expenses
      - Shall
      have the meaning set forth in Section 10.6.

     

    Federal
      Funds Rate
      - For
      any day, the weighted average of the rates on overnight federal funds
      transactions with members of the Federal Reserve System arranged by federal
      funds brokers, as published for such day (or if such day is not a Business
      Day,
      for the next preceding Business Day) by the Federal Reserve Bank of New York,
      or
      if such rate is not so published for any day which is a Business Day, the
      average of quotations for such day on such transactions received by Agent from
      three federal funds brokers of recognized standing selected by
      Agent.

     

    GAAP
      -
      Generally accepted accounting principles as in effect on the Closing Date
      applied in a manner consistent with the most recent audited consolidated
      financial statements of Borrower furnished to Agent and described in Section
      6.9
      hereof.

     

    Government
      Acts
      - Shall
      have the meaning set forth in Section 2.2(f).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    Governmental
      Authority
      - Any
      federal, state or local government or political subdivision, or any agency,
      authority, bureau, central bank, commission, department or instrumentality
      of
      either, or any court, tribunal, grand jury, or arbitration.

     

    Guaranty
      Agreements
      - The
      Guaranty Agreement, of even date herewith, by Resource Capital Investor, Inc.
      for the benefit of the Agent, and the Guaranty Agreement, of even date herewith,
      by Resource Capital Manager, Inc. for the benefit of the Agent. 

     

    Hedging
      Agreements
      - Any
      Interest Hedging Instrument or any other interest rate protection agreement,
      foreign currency exchange agreement, commodity purchase or option agreement,
      or
      any other interest rate hedging device or swap agreement (as defined in 11
      U.S.C. § 101 et. seq.).

     

    IRS -
      The United States Internal Revenue Service.

     

    Indebtedness
      - Of any
      Person at any date, without duplication, (i) all indebtedness of such Person
      for
      borrowed money (including with respect to the Borrower, the Obligations) or
      for
      the deferred purchase price of property or services (other than current trade
      liabilities incurred in the ordinary course of business and payable in
      accordance with customary practices), (ii) any other indebtedness of such Person
      which is evidenced by a note, bond, debenture or similar instrument, (iii)
      all
      Capitalized Lease Obligations of such Person, (iv) the face amount of all
      letters of credit (including the Letters of Credit), issued for the account
      of
      such Person and all drafts drawn thereunder, (v) all obligations of other
      Persons which such Person has guaranteed, (vi) Disqualified Stock, (vii) all
      obligations of such Person under Hedging Agreements, and (viii) all
      liabilities secured by any Lien on any property owned by such Person even though
      such Person has not assumed or otherwise become liable for the payment
      thereof.

     

    Interest
      Hedging Instrument
      - Any
      documentation evidencing any interest rate swap, interest “cap” or “collar” or
      any other interest rate hedging device or swap agreement (as defined in 11
      U.S.C. § 101 et. seq.) between Borrower and a Lender (or any Affiliate of a
      Lender).

     

    Investments
      - Any
      direct or indirect acquisition or investment by any Person, whether by means
      of,
      (i) the purchase or acquisition of Capital Stock or Securities of another
      Person, (ii) a loan, advance, or capital contribution to, or guaranty or
      assumption of Indebtedness of, or purchase or other acquisition of any other
      debt, or equity participation, or interest in another Person, or (iii) the
      purchase or other acquisition (in one transaction or a series of transaction),
      of all or substantially all of the Property or business of another Person,
      or
      assets constituting a business unit, line of business, or division of another
      Person.

     

    Issuing
      Bank
      -
      Commerce Bank, N.A.

     

    L/C
      Fees
      - Shall
      have the meaning set forth in Section 2.6(b).

     

    L/C
      Sublimit
      - An
      amount not to exceed, at any time, twenty percent (20%) of the Maximum Revolving
      Credit Amount.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    Letter
      of Credit
      - Any
      letter of credit (as amended, supplemented, replaced or restated from time
      to
      time) issued by Issuing Bank, pursuant to Section 2.2 of this Agreement, for
      the
      account of Borrower. 

     

    Letter
      of Credit Amount
      - The
      sum of (i) the aggregate undrawn amount of all Letters of Credit outstanding
      at
      any time plus
      (ii) the
      aggregate amount of all drawings under Letters of Credit for which Issuing
      Bank
      has not been reimbursed at such time.

     

    Letter
      of Credit Documents
      - Any
      Letter of Credit, any amendment thereto, any documents delivered in connection
      therewith, any application therefore, or any other documents (all in form and
      substance satisfactory to Issuing Bank), governing or providing for (i) the
      rights and obligations on the parties concerned or at risk, or (ii) any
      collateral security for such obligations.

     

    LIBOR
      - With
      respect to any LIBOR Rate Loan for the LIBOR Interest Period applicable thereto,
      the rate of interest per annum (rounded upwards, if necessary, to the nearest
      1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
      London interbank offered rate for deposits in Dollars at approximately 11:00
      A.M. (London time) 2 Business Days prior to the first day of such LIBOR Interest
      Period for a term comparable to such LIBOR Interest Period; provided however,
      if
      more than one rate is specified on Telerate Page 3750, the applicable rate
      shall
      be the arithmetic mean of all such rates. If, for any reason, such rate is
      not
      available, the term London Interbank Offered Rate shall mean, with respect
      to
      any LIBOR Rate Loan for the LIBOR Interest Period applicable thereto, the rate
      of interest per annum (rounded upwards, if necessary, to the nearest 1/100
      of
      1%) appearing on Reuters Screen LIBOR Page as the London interbank offered
      rate
      for deposits in Dollars at approximately 11:00 A.M. (London time) 2 Business
      Days prior to the first day of such LIBOR Interest Period for a term comparable
      to such LIBOR Interest Period; provided however, if more than one rate is
      specified on Reuters Screen LIBOR Page, the applicable rate shall be the
      arithmetic mean of all such rates.

     

    LIBOR
      Interest Period
      - As to
      LIBOR Rate Loans, a period of thirty days, sixty days or ninety days, as
      selected by Borrower in connection with an Advance constituting a LIBOR Rate
      Loan, commencing on the date designated in the Borrowing Request provided by
      Borrower to Lender pursuant to Section 2.4(a) (including continuations and
      conversions thereof); provided however, (i) if any LIBOR Interest Period would
      end on a day which is not a Business Day, such LIBOR Interest Period shall
      be
      extended to the next succeeding Business Day (except that where the next
      succeeding Business Day falls in the next succeeding calendar month, then on
      the
      next preceding Business Day), (ii) no LIBOR Interest Period shall extend beyond
      the Maturity Date, and (iii) any LIBOR Interest Period with respect to a LIBOR
      Rate Loan that begins on the last Business Day of a calendar month (or on a
      day
      for which there is no numerically corresponding day in the calendar month at
      the
      end of such LIBOR Interest Period) shall end on the last Business Day of the
      relevant calendar month at the end of such LIBOR Interest Period.

     

    LIBOR
      Rate
      - The
      per annum rate of interest denominated as 30-day LIBOR, 60-day LIBOR or 90-day
      LIBOR, as published in the “Money Rates” section of means the per annum rate of
      interest denominated as 30-day LIBOR, 60-day LIBOR or 90-day LIBOR, as published
      in the “Money Rates” section of The
      Wall Street Journal
      on the
      applicable date as such 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     rate
      may change from time to time, plus
      2.25%.  If
      The
      Wall Street Journal
      ceases
      to publish or does not publish a 30-day LIBOR,
      60-day LIBOR or 90-day LIBOR rate, then the Lender shall determine such rate
      using such other indices as the Bank shall determine.

     

    LIBOR
      Rate Loans
      - The
      portions of the Advances accruing interest at LIBOR Rates.

     

    Lien
      - Any
      interest of any kind or nature in Property securing an obligation owed to,
      or a
      claim of any kind or nature in Property by, a Person other than the owner of
      the
      Property, whether such interest is based on the common law, statute, regulation
      or contract, and including, but not limited to, a security interest or lien
      arising from a mortgage, encumbrance, pledge, conditional sale or trust receipt,
      a capitalized lease, consignment or bailment for security purposes, a trust,
      or
      an assignment, or as a result of the issuance of any execution or distraint
      process against Borrower. For the purposes of this Agreement, Borrower shall
      be
      deemed to be the owner of any Property which it has acquired or holds subject
      to
      a conditional sale agreement or other arrangement pursuant to which title to
      the
      Property has been retained by or vested in some other Person for security
      purposes. 

     

    Loans
      - The
      unpaid balance of Advances under the Revolving Credit, which may be Prime Rate
      Loans or LIBOR Rate Loans.

     

    Loan
      Documents
      - This
      Agreement, the Revolving Credit Notes, Letter of Credit Documents, the Pledge
      Agreement, the Control Agreements, the Guaranty Agreements and all agreements,
      instruments and documents executed and/or delivered from time to time pursuant
      to this Agreement or in connection therewith, as amended, supplemented, replaced
      or restated from time to time.

     

    Majority
      Lenders
      - At any
      time, Lenders holding Pro Rata Percentages aggregating at least fifty one
      percent (51%) of the total Pro Rata Shares.

     

    Material
      Adverse Effect
      - A
      material adverse effect with respect to (a) the business, assets, properties,
      financial condition, stockholders’ equity, contingent liabilities, prospects,
      material agreements or results of operations of Borrower, or (b) Borrower's
      ability to pay the Obligations in accordance with the terms hereof, or (c)
      the
      validity or enforceability of this Agreement or any of the other Loan Documents
      or the rights and remedies of Agent and/or any Lender hereunder or
      thereunder.

     

    Maturity
      Date
      - shall
      mean August ____, 2009.

     

    Maximum
      Revolving Credit Amount
      - The
      sum of Twenty-Five Million Dollars ($25,000,000).

     

    Net
      Worth
      - At any
      time, the amount by which all of Borrower’s assets exceed all of Borrower’s
      liabilities, as shown on Borrower’s balance sheet prepared in accordance with
      GAAP.

     

    Obligations
      - All
      existing and future debts, liabilities and obligations of every kind or nature
      at any time owing by Borrower to Lenders, Issuing Bank or Agent whether under
      this Agreement, any other Loan Document, or any other existing or future
      instrument, 

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

     

    document
      or agreement, among Borrower and Lenders,
      Issuing Bank or Agent, whether joint or several, related or unrelated, primary
      or secondary, matured or contingent, due or to become due (including debts,
      liabilities and obligations obtained by assignment),
      and whether principal, interest, fees, indemnification obligations hereunder
      or
      Expenses (specifically including interest accruing after the commencement of
      any
      bankruptcy, insolvency or similar proceeding with respect to Borrower, whether
      or not a claim for such post-commencement interest is allowed), including,
      without limitation, debts, liabilities and obligations in respect of the
      Revolving Credit, Reimbursement Obligations and any extensions, modifications,
      substitutions, increases and renewals thereof; the performance of all covenants
      set forth in the Loan Documents; any amount payable by Borrower, pursuant to
      an
      Interest Hedging Instrument; the payment of all amounts advanced by Agent on
      behalf of Lenders to preserve, protect and enforce rights hereunder and in
      the
      Collateral; and all Expenses incurred by Agent and Lenders. Without limiting
      the
      generality of the foregoing, Obligations shall include any other debts,
      liabilities or obligations owing to Agent in connection with any lock box,
      cash
      management, or other services (including electronic funds transfers or automated
      clearing house transactions) provided by Agent to
      Borrower.

     

    Overadvance
      - Shall
      have the meaning set forth in Section 2.1(a)(i).

     

    PBGC
      - The
      Pension Benefit Guaranty Corporation.

     

    Permitted
      Investments
      - (a)
      Investments existing on the Closing Date that are disclosed in Borrower’s
      financial statements; (b) (i) obligations issued or guaranteed by the United
      States of America or any agency thereof, (ii) commercial paper with maturities
      of not more than 180 days and a published rating of not less than A-1 or P-1
      (or
      the equivalent rating) by a nationally recognized investment rating agency,
      (iii) certificates of time deposit and bankers’ acceptances having maturities of
      not more than 180 days and repurchase agreements backed by United States
      government securities of a commercial bank if (A) such bank has a combined
      capital and surplus of at least $500,000,000, or (B) its debt obligations,
      or
      those of a holding company of which it is a Subsidiary, are rated not less
      than
      A (or the equivalent rating) by a nationally recognized investment rating
      agency, and (iv) U.S. money market funds that invest solely in obligations
      issued or guaranteed by the United States of America or an agency thereof;
      (c)
      loans to employees not to exceed $25,000 in the aggregate outstanding at any
      time; (d) Securities purchased by Borrower which are to be packaged into a
      collateralized debt obligation, which is then sold to third party investors,
      and
      (e) other Investments made in the ordinary course of Borrower's business in
      accordance with the description of Borrower's business as disclosed in
      Borrower's filings with the Securities and Exchange Commission.

     

    Permitted
      Liens
      - (a)
      Liens securing taxes, assessments or governmental charges or levies or the
      claims or demands of materialmen, mechanics, carriers, warehousemen, and other
      like persons not yet due; (b) Liens incurred or deposits made in the ordinary
      course of business in connection with workers' compensation, unemployment
      insurance, social security and other like laws; (c) Liens related to Permitted
      Investments; and (d) Liens existing on the Closing Date and shown on Schedule
      1.1(b) attached hereto and made part hereof.

     

    
      Person
        - An
        individual, partnership, corporation, trust, unincorporated association or
        organization, joint venture, limited liability company or partnership, or
        any
        other entity.

      

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

      

    

    Pledge
      Agreements
      - The
      Securities Account Pledge Agreement, of even date herewith, between the Borrower
      and the Agent; the Securities Account Pledge Agreement, of even date herewith,
      between Resource Capital Investor, Inc. and the Agent; and the Securities
      Account Pledge Agreement, of even date herewith, between Resource Capital
      Manager, Inc. and the Agent.

     

    Prime
      Rate Loans
      - The
      portions of the Advances accruing interest at the Prime Rate.

     

    Prime
      Rate
      - means
      the per annum rate of interest designated as the “Prime Rate,” as published in
      the “Money Rates” section of The
      Wall Street Journal
      on the
      applicable date (or the highest “Prime Rate” if more than one is published) as
      such rate may change from time to time. If The
      Wall Street Journal
      ceases
      to be published or goes on strike or is otherwise not published, Lenders may
      use
      a similar published prime or base rate.

     

    Property
      - Any
      interest in any kind of property or asset, whether real, personal or mixed,
      or
      tangible or intangible. 

     

    Pro
      Rata Percentage
      - As to
      each Lender, the pro rata percentage set forth opposite each Lender’s name on
      Schedule A hereto.

     

    Pro
      Rata Share
      - As to
      any Lender, at any time, such Lender’s Pro Rata Percentage of the outstanding
      principal balance of the Maximum Revolving Credit Amount.

     

    Quarterly
      Compliance Certificate
      - Shall
      have the meaning set forth in Section 6.10.

     

    Regulation
      D
      -
      Regulation D of the Board of Governors of the Federal Reserve System, comprising
      Part 204 of Title 12, Code of Federal Regulations, as amended, and any successor
      thereto.

     

    Reimbursement
      Obligations
      -
      Collectively, Borrower's reimbursement obligation for any and all draws under
      Letters of Credit together with the obligation to pay L/C Fees.

     

    Revolving
      Credit
      - Shall
      have the meaning set forth in Section 2.1(a).

     

    Revolving
      Credit Loans
      - Shall
      have the meaning set forth in Section 2.1(a).

     

    Revolving
      Credit Notes
      - Shall
      have the meaning set forth in Section 2.1(b).

     

    Securities
      -
      Collectively, any obligation of an issuer or a share, participation, or other
      interest in an issuer, or in property or an enterprise of an issuer, which
      is,
      or is of a type, dealt in or traded on, financial markets, or which is
      recognized in any area in which it is issued or dealt in, as a medium for
      investment.

     

    
      Securities
        Act
        -
        Securities Act of 1933, as amended.

       

      Settlement
        Date
        - Shall
        have the meaning set forth in Section 2.3(b)(ii).

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

                           
      Senior Debt
      - All
      Indebtedness of Borrower, other than non-recourse debt and Subordinated
      Debt.

     

    Subordinated
      Debt
      -
      Indebtedness of Borrower, subject to payment terms and subordination provisions
      acceptable to Agent in its sole discretion. 

     

    Subsidiary
      - With
      respect to any Person at any time, (i) any corporation more than fifty percent
      (50%) of whose voting stock is legally and beneficially owned directly or
      indirectly by such Person or owned by a corporation more than fifty percent
      (50%) of whose voting stock is legally and beneficially owned directly or
      indirectly by such Person (ii) any trust of which a majority of the beneficial
      interest is at such time owned directly or indirectly, beneficially or of
      record, by such Person or one or more Subsidiaries of such Person; and (iii)
      any
      partnership, joint venture, limited liability company or other entity of which
      ownership interests having ordinary voting power to elect a majority of the
      board of directors or other Persons performing similar functions are at such
      time owned directly or indirectly, beneficially or of record, by, or which
      is
      otherwise controlled directly, indirectly or through one or more intermediaries
      by, such Person or one or more Subsidiaries of such Person. 

     

    1.2 Accounting
      Principles:
      Where
      the character or amount of any asset or liability or item of income or expense
      is required to be determined or any consolidation or other accounting
      computation is required to be made for the purposes of this Agreement, this
      shall be done in accordance with GAAP, to the extent applicable, except as
      otherwise expressly provided in this Agreement.

     

    1.3 Construction:
      No
      doctrine of construction of ambiguities in agreements or instruments against
      the
      interests of the party controlling the drafting shall apply to any Loan
      Documents.

     

    SECTION
      2. THE
      LOANS

     

    2.1 Revolving
      Credit.

     

    a. i) Subject
      to the terms and conditions of this Agreement, each Lender hereby severally
      establishes for the benefit of Borrower a revolving credit facility
      (collectively, the “Revolving Credit”), which shall include Advances extended by
      Lenders to or for the benefit of Borrower from time to time hereunder as well
      as
      the Letter of Credit Amount on Letters of Credit issued for the account of
      Borrower (“Revolving Credit Loans”). The aggregate principal amount of all
      unpaid Advances shall not, at any time, exceed the Borrowing Base. Subject
      to
      such limitation, the outstanding balance of Advances may fluctuate from time
      to
      time, to be reduced by repayments made by Borrower, to be increased by future
      Advances which may be made by Lenders and, subject to the provisions of Section
      8 hereof, shall be due and payable on the Revolving Credit Maturity Date.

     

    If
      the
      aggregate principal amount of all unpaid Advances at any time exceeds the
      Borrowing Base (such excess is referenced to as “Overadvance”), Borrower shall,
      within five (5) Business Days after notice from Agent, (1) repay the Overadvance
      in full or (2) pledge to Lenders sufficient Collateral so that the
      aggregate principal amount of all unpaid Advances does not exceed the Borrowing
      Base.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    (ii) Subject
      to the terms of this Agreement, each Lender severally agrees to lend to Borrower
      an amount equal to such Lender’s Pro Rata Percentage of the Advance requested by
      Borrower. The outstanding balance of Revolving Credit Loans of each Lender
      shall
      not exceed such Lender’s respective Pro Rata Share.

     

    b. At
      Closing, Borrower shall execute and deliver a promissory note to each Lender
      for
      the total principal amount of such Lender’s initial Pro Rata Share
      (collectively, as may be amended, supplemented, replaced or restated from time
      to time, the “Revolving Credit Notes”). Each Revolving Credit Note shall
      evidence Borrower's absolute unconditional obligation to repay such Lender
      for
      all outstanding Advances owed to such Lender, with interest as herein and
      therein provided. Each and every Advance under the Revolving Credit shall be
      deemed evidenced by the Revolving Credit Notes, which are deemed incorporated
      herein by reference and made a part hereof. 

     

    c. The
      term
      of the Revolving Credit shall expire on the Maturity Date. On such date, unless
      having been sooner accelerated by Agent, all Obligations shall be due and
      payable in full, and after such date no further Advances shall be available
      from
      Lenders.

     

    2.2 Letters
      of Credit:

     

    a. As
      a part
      of the Revolving Credit and subject to its terms and conditions (including,
      without limitation, the Borrowing Base), Issuing Bank shall, on behalf of and
      for the benefit of all Lenders, make available the Letters of Credit. The Letter
      of Credit Amount shall not exceed, in the aggregate at any time, the L/C
      Sublimit. Notwithstanding the foregoing, all Letters of Credit shall be in
      form
      and substance reasonably satisfactory to Issuing Bank and Agent. No Letter
      of
      Credit shall have an expiry date later than the Maturity Date. Borrower shall
      execute and deliver to Issuing Bank all Letter of Credit Documents required
      by
      Issuing Bank for such purpose. Each Letter of Credit shall comply with the
      Letter of Credit Documents. Each Letter of Credit issued from time to time
      under
      the Revolving Credit which remains undrawn and the amounts of draws on Letters
      of Credit prior to payment as hereinafter set forth shall reduce, dollar for
      dollar, the amount available to be borrowed by Borrower under the Revolving
      Credit.

     

    b. Immediately
      upon the issuance of any Letter of Credit, Issuing Bank is deemed to have
      granted to each other Lender, and each other Lender is hereby deemed to have
      acquired, an undivided participating interest (without recourse or warranty),
      in
      accordance with each such other Lender’s respective Pro Rata Percentage, in all
      of Issuing Bank’s rights and liabilities with respect to such Letter of Credit.
      Each Lender shall be absolutely and unconditionally obligated without deduction
      or setoff of any kind, to Issuing Bank, according to its Pro Rata Percentage,
      to
      reimburse Issuing Bank on demand for any amount paid pursuant to any draws
      made
      at any time (including, without limitation, following the commencement of any
      bankruptcy,
      reorganization, receivership, liquidation or dissolution proceeding with respect
      to Borrower) under any Letter of Credit. 
       

      c. Issuing
        Bank shall be immediately, absolutely, and unconditionally reimbursed, without
        offset or deduction of any kind, by Borrower for any draws made under a Letter
        of Credit. Such reimbursement shall be made, at the sole option of Agent,
        by
        either a cash payment by Borrower, by Lenders automatically making or having
        deemed made (without 

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    further
      request or approval of Borrower or Lenders), a cash Advance under the Revolving
      Credit or pursuant to repayment terms established by Agent (in its sole
      discretion) upon each draw. All cash Advances made by Agent which constitute
      a
      reimbursement to Issuing Bank for a draw under a Letter of Credit shall be
      repaid to Agent by Lenders, without deduction or setoff of any kind, in
      accordance with Section 2.3(b)(iii). All of Borrower's Reimbursement Obligations
      hereunder with respect to Letters of Credit shall apply unconditionally and
      absolutely to Letters of Credit issued hereunder on behalf of
      Borrower.

     

    d. The
      obligation of Borrower to reimburse Issuing Bank for drawings made (or for
      cash
      Advances made to cover drawings made) under the Letters of Credit shall be
      unconditional and irrevocable and shall be paid strictly in accordance with
      the
      terms of this Agreement under all circumstances including, without limitation,
      the following circumstances:

     

    (i) any
      lack
      of validity or enforceability of any Letter of Credit;

     

    (ii) the
      existence of any claim, setoff, defense or other right that Borrower or any
      other Person may have at any time against a beneficiary or any transferee of
      any
      Letter of Credit (or any persons or entities for whom any such beneficiary
      or
      transferee may be acting), Agent, Issuing Bank, any Lender or any other Person,
      whether in connection with this Agreement, the transactions contemplated herein
      or any unrelated transaction;

     

    (iii) any
      draft, demand, certificate or any other document presented under any Letter
      of
      Credit proving to be forged, fraudulent, invalid or insufficient in any respect
      or any statement therein being untrue or inaccurate in any respect;

     

    (iv) payment
      by Issuing Bank under any Letter of Credit against presentation of a demand,
      draft or certificate or other document that does not comply with the terms
      of
      such Letter of Credit, unless Issuing Bank shall have acted with willful
      misconduct or gross negligence in issuing such payment;

     

    (v) any
      other
      circumstances or happening whatsoever that is similar to any of the foregoing;
      or

     

    (vi) the
      fact
      that a Default or Event of Default shall have occurred and be
      continuing.

     

    Notwithstanding
      anything in this Agreement to the contrary, Borrower will not be liable for
      payment or performance with respect to a Letter of Credit that results from
      the
      gross negligence or willful misconduct of Issuing Bank, except (i) where
      Borrower actually recovers the proceeds for itself or Issuing Bank of any such
      payment made by Issuing Bank; or (ii) in cases where Agent makes payment to
      the
      named beneficiary of a Letter of Credit.

     

    
              
e. If
        by
        reason of (i) any change after the Closing Date in applicable law, regulation,
        rule, decree or regulatory requirement or any change in the interpretation
        or
        application by any judicial or regulatory authority of any law, regulation,
        rule, decree or regulatory requirement or (ii) compliance by Issuing Bank
        or
        Lenders with any direction, reasonable request or requirement (whether or
        not
        having the force of law) of any governmental or monetary authority including,
        without limitation, Regulation D: 

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    A. Issuing
      Bank or Lenders shall be subject to any tax or other levy or charge of any
      nature or to any variation thereof (except for changes in the rate of any tax
      on
      the net income of Issuing Bank or Lenders or its applicable lending office)
      or
      to any penalty with respect to the maintenance or fulfillment of its obligations
      under this Section 2.2, whether directly or by such being imposed on or suffered
      by Issuing Bank or Lenders; or

     

    B. any
      reserve, deposit or similar requirement is or shall be applicable, imposed
      or
      modified in respect of any Letter of Credit issued by Issuing Bank;

     

    and
      the
      result of the foregoing is to directly or indirectly increase the cost to
      Issuing Bank or any Lender of issuing, creating, making or maintaining any
      Letter of Credit or to reduce the amount receivable in respect thereof by
      Issuing Bank or any Lender, then and in any such case, Issuing Bank shall,
      after
      the additional cost is incurred or the amount received is reduced, notify
      Borrower and Borrower shall pay on demand such amounts as may be necessary
      to
      compensate Issuing Bank or any Lender for such additional cost or reduced
      receipt, together with interest on such amount from the date demanded until
      payment in full thereof at a rate per annum equal at all times to the applicable
      interest rate under the Revolving Credit. A certificate signed by an officer
      of
      Issuing Bank as to the amount of such increased cost or reduced receipt showing
      in reasonable detail the basis for the calculation thereof, submitted to
      Borrower by Issuing Bank shall, except for manifest error and absent written
      notice from Borrower to Issuing Bank within ten (10) days after receipt of
      notice, be final, conclusive and binding for all purposes.

     

    f. i) In
      addition to amounts payable as elsewhere provided in this Section 2.2, without
      duplication, Borrower hereby agrees to protect, indemnify, pay and save Agent,
      Issuing Bank and each Lender harmless from and against any and all claims,
      demands, liabilities, damages, losses, costs, charges and expenses (including
      reasonable attorneys' fees) which Agent, Issuing Bank and each Lender may incur
      or be subject to as a consequence, direct or indirect, of (A) the issuance
      of
      the Letters of Credit or (b) the failure of Issuing Bank to honor a drawing
      under any Letter of Credit as a result of any such act or omission, whether
      rightful or wrongful, of any present or future de
      jure
      or
de
      facto
      government or Governmental Authority (all such acts or omissions herein called
      “Government Acts”) in each case except for claims, demands, liabilities,
      damages, losses, costs, charges and expenses arising solely from acts or conduct
      of Issuing Bank constituting gross negligence or willful
      misconduct.

     

    (ii) As
      between Borrower and Issuing Bank, Borrower assumes all risks of the acts and
      omissions of or misuse of the Letters of Credit issued by Issuing Bank by the
      respective beneficiaries of such Letters of Credit, except in the case of gross
      negligence or willful misconduct by Issuing Bank. In furtherance and not in
      limitation of the foregoing, Issuing Bank shall not be responsible: (A) for
      the
      form, validity, sufficiency, accuracy, genuineness or legal effects of any
      document submitted by any party in connection with the application for and
      issuance of such Letters of Credit, even if it should in fact prove to be in
      any
      or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B)
      for
      the validity or sufficiency of any instrument transferring or assigning or
      purporting to transfer or assign any such Letter of Credit or the rights or
      benefits there under or proceeds thereof, in whole or in part, that may prove
      to
      be invalid or ineffective for any reason; (C) for failure of the beneficiary
      of
      any such Letter of Credit to comply fully with conditions required in order
      to
      draw upon such Letter of Credit; (D) for errors, omissions, interruptions or
      delays in transmission or delivery of 

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    any
      messages, by mail, cable, telegraph, telex or
      otherwise, whether or not they are in cipher; (E) for errors in interpretation
      of technical terms; (F) for any loss or delay in the transmission of any
      document or required in order to make a drawing under such Letter of Credit
      or
      of the proceeds thereof, unless caused by Lender's gross negligence or willful
      misconduct; (G) for the misapplication by the beneficiary of any such Letter
      of
      Credit of the proceeds of any drawing under such Letter of Credit; and (H)
      for
      any consequences arising from causes beyond the control of Issuing Bank,
      including, without limitation, any Government Acts. None of the above shall
      affect, impair or prevent the vesting of any of Issuing Bank's rights or powers
      hereunder.

     

    (iii) In
      furtherance and extension and not in limitation of the specific provisions
      hereinabove set forth, any action taken or omitted by Issuing Bank in connection
      with the Letters of Credit issued by it or the related certificates, if taken
      or
      omitted in good faith, shall not create any liability on the part of Issuing
      Bank to Borrower, unless such action or omission constitutes gross negligence
      or
      willful misconduct.

     

    2.3 Advances,
      Conversions, Renewals and Payments: 

     

    a. Except
      to
      the extent otherwise set forth in this Agreement, all payments of principal
      and
      of interest on the Revolving Credit, Reimbursement Obligations, the L/C Fees,
      Expenses and all other fees, charges and any other Obligations of Borrower
      hereunder, shall be made to Agent at its main New Jersey banking office, 1701
      Route 70 East, Cherry Hill, New Jersey 08034, in United States dollars, in
      immediately available funds. Alternatively, Agent, on behalf of all Lenders,
      shall, if Borrower has not made any payment on the due date of such payment,
      have the unconditional right and discretion (and Borrower hereby authorizes
      Agent) to make a cash Advance under the Revolving Credit to pay, and/or to
      charge Borrower's operating account with Agent or any Lender for, all of
      Borrower's Obligations as they become due from time to time under this Agreement
      including without limitation, interest, principal, fees and reimbursement of
      Expenses. Any payments received prior to 2:00 p.m. Eastern time on any Business
      Day shall be deemed received on such Business Day. Any payments (including
      any
      payment in full of the Obligations), received after 2:00 p.m. Eastern time
      on
      any Business Day shall be deemed received on the immediately following Business
      Day.

     

    b. Cash
      Advances which may be made by Lenders from time to time under the Revolving
      Credit shall be made available for the use and benefit of Borrower by crediting
      such proceeds to Borrower's operating account with Agent as designated in the
      Borrowing Request.

     

    (i) All
      cash
      Advances requested by Borrower under the Revolving Credit, must be in the
      minimum amount of One Hundred Thousand ($100,000) and integral multiples
      of One Hundred Thousand ($100,000) in excess thereof. All cash Advances that
      are
      Prime Rate Loans under the Revolving Credit must be requested by 11:00 A.M.,
      Eastern time, on the date such cash Advance is to be made. All requests for
      a
      LIBOR Rate Loan are to be requested by 11:00 a.m. Eastern time, three (3)
      Business Days in advance of the requested LIBOR Rate Loan. Notwithstanding
      anything to the contrary set forth herein, there shall not be more than four
      (4)
      LIBOR Rate Loans outstanding at any one time. Borrower shall provide a Borrowing
      Base Certificate to Agent upon each request for an Advance. All requests for
      a
      cash Advance may be made either by telephone or in writing, provided that,
      all
      telephonic requests 

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    
are
    to be confirmed by Borrower in writing on the same day pursuant to a Borrowing
    Request (and accompanied by a signed Borrowing Base Certificate), which shall
    set forth (x) the amount of the requested Advance, (y) the proposed date of
    borrowing, and (z) if a LIBOR Rate Loan, the requested LIBOR Interest Period,
    and further provided, that such written confirmation may be sent by facsimile
    transmission. No Lender shall be obligated, for any reason whatsoever, to
    advance or reimburse Agent for the share of any other Lender. 

     

           
      (ii) A. Between
      each Settlement Date, (defined below) Agent, in its capacity as a Lender, shall
      have the discretion (without any duty or obligation regardless of any prior
      practice or procedures) to make all cash Advances for the account and on behalf
      of each Lender in accordance with each Lender’s Pro Rata Percentage.
      Periodically but not less frequently than once every week on the same day of
      each week, unless such day is not a Business Day, in which event such
      determination shall be made the next Business Day (“Settlement Date”), Agent
      shall make a determination of the appropriate dollar amount of each Lender’s
      Revolving Credit Loans based upon each such Lender’s Pro Rata Percentage of all
      then outstanding Revolving Credit Loans, which amounts shall be calculated
      as of
      the close of the Business Day immediately preceding each respective Settlement
      Date. Amounts of principal paid to Agent by Borrower from time to time, between
      Settlement Dates, shall be applied to the outstanding balance of Revolving
      Credit Loans made by Agent, as a Lender pursuant hereto, with the outstanding
      balance of Revolving Credit Loans made by each other Lender to be adjusted
      on
      the next Settlement Date. Interest shall accrue and each Lender shall be
      entitled to receive interest at the applicable rate only on the actual
      outstanding dollar amount of its respective outstanding Revolving Credit Loans
      without regard to a prospective settlement. On each Settlement Date, Agent
      shall
      then issue to each Lender a settlement schedule containing information with
      respect to the status of the Revolving Credit Loans and the relevant net
      positions of Lenders and the outstanding balances of their respective Revolving
      Credit Loans as of the close of the Business Day preceding such Settlement
      Date.
      Each settlement schedule shall show the net amount then owing by each Lender
      to
      Agent or by Agent to each such Lender based upon the aggregate cash Advances
      made and payments received since the most recent Settlement Date and settlement
      among Lenders and Agent shall be made in accordance with the direction of Agent
      no later than 11:00 A.M. Eastern time, on each Settlement Date. All remittances
      at any time among Lenders and Agent under this Agreement shall be made in
      immediately available funds by federal funds wire transfer. To the extent Agent
      is not reimbursed by any Lender on a Settlement Date in accordance with Agent’s
      direction, Borrower shall immediately repay Agent on demand the amount of any
      reimbursement not so made by any Lender. 

     

    B. Each
      Lender is absolutely and unconditionally obligated without setoff or deduction
      of any kind, to remit to Agent on the Settlement Date any amount showing
      to be owing to Agent by such Lender on the settlement schedule for such date.
      Agent shall also be entitled to recover any and all actual losses and damages
      (including without limitation, reasonable attorneys’ fees) from any party
      failing to remit payment on the Settlement Date in accordance with this
      Agreement. Agent may set off the obligations of such party under this paragraph
      against any distributions or payments of the Obligations, which such party
      would
      otherwise make available at any time.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
             
        (iii) A.  In lieu
        of the
        procedure set forth in the preceding subparagraph (ii), Agent may provide
        Lenders with notice that Borrower has requested a cash Advance, on the same
        Business Day as such request, and request each Lender to provide Agent with
        such
        Lender’s Pro Rata Percentage of such requested cash Advance prior to Agent’s
        making such cash Advance. Upon receipt of such notice from Agent prior to
        12:00
        p.m., Eastern time, each Lender shall remit to Agent its respective Pro Rata
        Percentage of such requested cash Advance, prior to 1:00 P.M. Eastern time,
        on
        the Business Day Agent is scheduled to make such cash Advance in accordance
        with
        Section 2.3(b) hereof. Neither Agent nor any other Lender shall be obligated,
        for any reason whatsoever, to remit or advance the share of any other Lender.
        Agent shall not be required to make the full amount of the requested cash
        Advance unless and until it receives funds representing each other Lender’s Pro
        Rata Percentage of such requested cash Advance, but Agent shall advance to
        Borrower that portion of the requested cash Advance equal to the Pro Rata
        Percentages of such requested cash Advance which it has received from Lenders.
        

    

     

    B. If
      Agent
      does not receive each other Lender’s Pro Rata Percentage of such requested cash
      Advance, and Agent elects, in its sole discretion, to make the requested cash
      Advance on behalf of Lenders or any of them, Agent shall be entitled to recover
      each Lender’s Pro Rata Percentage of each cash Advance together with interest at
      a per annum rate equal to the Federal Funds Rate during the period commencing
      on
      the date such cash Advance is made and ending on (but excluding) the date Agent
      recovers such amount. Each Lender is absolutely and unconditionally obligated,
      without deduction or setoff of any kind, to forward to Agent its Pro Rata
      Percentage of each cash Advance made pursuant to the terms of this Agreement.
      To
      the extent Agent is not reimbursed by such Lender, Borrower shall repay Agent
      immediately on demand, such amount. Agent shall also be entitled to recover
      any
      and all actual losses and damages (including, without limitation, reasonable
      attorneys’ fees) from any Lender failing to so advance upon demand of Agent.
      Agent may set off the obligations of a Lender under this paragraph against
      any
      distributions or payments of the Obligations, which Agent would otherwise make
      available to such Lender at any time. 

     

    (iv) To
      the
      extent and during the time period in which any Lender fails to provide or delays
      providing its respective payment to Agent pursuant to clause (ii) or (iii)
      above, such Lender’s percentage of all payments of the Obligations (but not its
      Pro Rata Percentage of future Advances required to be funded by such Lender)
      shall decrease to reflect the actual percentage which its actual outstanding
      Loans bears to the total outstanding Loans of all Lenders. During the time
      period in which any Lender fails to provide or delays providing its respective
      payment to Agent pursuant to clause (ii) or (iii) above, such Lender shall
      not
      be entitled to give instructions to Agent or to approve, disapprove, consent
      to
      or vote on any matters relating to this Agreement and the other Loan Documents.
      All amendments, waivers and other modifications of this Agreement and the Loan
      Documents may be made without regard to such Lender
      and, for purposes of the definition of Majority Lenders, such Lender shall
      be
      deemed not to be a Lender.

     

    
      2.4 Interest:

       

      a. The
        unpaid principal balance of Advances under the Revolving Credit shall bear
        interest, at Borrower's option, at the Prime Rate plus 1% or the LIBOR Rate,
        as
        indicated in the Borrowing Request. If no LIBOR Interest Period is designated
        in
        any Borrowing Request, the LIBOR Interest Period shall be deemed to be a
        one
        month period. 

        
          
            
            

          

          
            15

            
              

            

          

          
            
            

          

        

      

    

     

    b. Changes
      in the interest rate applicable to Prime Rate Loans shall become effective
      on
      the same day that there is a change in the Prime Rate. 

     

    c. Interest
      on Prime Rate Loans shall be payable monthly, in arrears, on the first day
      of
      the calendar month next succeeding the Closing Date, on the first day of each
      calendar month thereafter, and on the Maturity Date. Interest on LIBOR Rate
      Loans shall be payable, in arrears, on the last day of each LIBOR Interest
      Period, and on the Maturity Date.

     

    d. If
      prior
      to the first day of any LIBOR Interest Period, (i) any Lender shall have
      determined in good faith (which determination shall be conclusive and binding
      upon Borrower), that by reason of circumstances affecting the relevant market,
      adequate and reasonable means do not exist for ascertaining the LIBOR Rate
      for
      such LIBOR Interest Period, or (ii) dollar deposits in the principal amounts
      of
      the LIBOR Rate Loans to which such LIBOR Interest Period is to be applicable,
      are not generally available in the London Interbank market, such Lender shall
      give facsimile or telephonic notice thereof to Agent and Borrower, as soon
      as
      practicable thereafter, and will also give prompt written notice to Borrower
      when such conditions no longer exist. If such notice is given (A) any LIBOR
      Rate
      Loans requested to be made on the first day of such LIBOR Interest Period shall
      be made as Prime Rate Loans, (B) any Loans that were to have been converted
      on
      the first day of such LIBOR Interest Period to, or continued as, LIBOR Rate
      Loans shall be converted to, or continued as, Prime Rate Loans, and (C) each
      outstanding LIBOR Rate Loan shall be converted on the last day of the
      then-current LIBOR Interest Period thereof, to Prime Rate Loans. Until such
      notice has been withdrawn by such Lender, no further LIBOR Rate Loans shall
      be
      made or continued as such, nor shall Borrower have the right to convert Prime
      Rate Loans to LIBOR Rate Loans.

     

    e. Notwithstanding
      any other provision herein, if the adoption of or any change in any law, treaty,
      rule or regulation or final, non-appealable determination of an arbitrator
      or a
      court or other Governmental Authority or in the interpretation or application
      thereof occurring after the Closing Date shall make it unlawful for any Lender
      to make or maintain LIBOR Rate Loans as contemplated by this Agreement, (a)
      such
      Lender shall promptly give written notice of such circumstances to Agent and
      Borrower (which notice shall be withdrawn whenever such circumstances no longer
      exist), (b) the commitment of Lender hereunder to make LIBOR Rate Loans,
      continue LIBOR Rate Loans as such and convert a Prime Rate Loan to LIBOR Rate
      Loans shall forthwith be canceled and, until such time as it shall no longer
      be
      unlawful for Lender to make or maintain LIBOR Rate Loans, Lender shall then
      have
      a commitment only to make a Prime Rate Loan when a LIBOR Rate Loan is requested
      and (c) Lender's Loans then outstanding as LIBOR Rate Loans, if any, shall
      be
      converted automatically to
      Prime
      Rate Loans on the respective last days of the then current LIBOR Interest
      Periods with respect to such Loans or within such earlier period as required
      by
      law. If any such conversion of a LIBOR Rate Loan occurs on a day which is not
      the last day of the then current Interest Period with respect thereto, Borrower
      shall pay to Lender such amounts, if any, as may be required pursuant to Section
      2.9(b).

     

    2.5 Additional
      Interest Provisions:

     

    a. Interest
      on the Loans shall be calculated on the basis of a year of three hundred sixty
      (360) days but charged for the actual number of days elapsed.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    b. After
      the
      occurrence and during the continuance of an Event of Default hereunder, the
      per
      annum effective rates of interest on all outstanding principal under the Loans,
      shall be increased by three hundred (300) basis points (“Default Rate”).
      Borrower agrees that the Default Rate payable to Lenders is a reasonable
      estimate of Lenders' damages and is not a penalty.

     

    c. All
      contractual rates of interest chargeable on outstanding principal under the
      Loans shall, as permitted by law, continue to accrue and be paid even after
      Default, an Event of Default, maturity, acceleration, judgment, bankruptcy,
      insolvency proceedings of any kind or the happening of any event or occurrence
      similar or dissimilar.

     

    d. In
      no
      event whatsoever shall the aggregate of all amounts deemed interest hereunder
      and charged or collected pursuant to the terms of this Agreement exceed the
      highest rate permissible under any law which a court of competent jurisdiction
      shall, in a final determination, deem applicable hereto. In the event that
      such
      court determines any Lender has charged or received interest hereunder in excess
      of the highest applicable rate, Lenders shall apply, in its sole discretion,
      and
      set off such excess interest received by Lenders against other Obligations
      due
      or to become due and such rate shall automatically be reduced to the maximum
      rate permitted by such law.

     

    2.6 Fees:

     

    a. There
      shall be an initial fee for the Loan of $250,000, which shall be paid by the
      Borrower to the Issuing Bank simultaneously with the execution of this
      Agreement. 

     

    b. Borrower
      shall pay to Agent, for the ratable benefit of each Lender in accordance with
      its respective Pro Rata Percentage, per annum letter of credit fees equal to
      the
      face amount of each Letter of Credit multiplied by 225 basis points, payable
      in
      equal quarterly installments in arrears, on the first day of each calendar
      quarter following the issuance of a Letter of Credit. On the date of issuance
      of
      a Letter of Credit, Borrower shall pay to Issuing Bank, for the sole account
      of
      Issuing Bank, a fronting fee equal to the greater of (i) twelve (12) basis
      points multiplied by the face amount of each Letter of Credit and (ii) Five
      Hundred Dollars ($500), together with all of Issuing Bank’s standard charges
      (including without limitation all cable and wire transfer charges) for the
      administration of each such Letter of Credit. All such fees are collectively,
      the “L/C Fees”.

    c. Borrower
      shall unconditionally pay to Agent, for the ratable benefit of each Lender
      in
      accordance with its respective Pro Rata Percentage, a late charge equal to
      five
      percent (5%) of any and all payments of principal or interest on the Loans
      that
      are not paid within fifteen (15) days of the due date. Such late charge shall
      be
      due and payable regardless of whether Agent has accelerated the Obligations.
      Borrower agrees that any late fee payable to Lenders is a reasonable estimate
      of
      Lenders’ damages and is not a penalty.

     

    d. All
      fees
      provided for in this Section 2.6 shall be based on a three hundred sixty (360)
      day year and charged for the actual number of days elapsed. 

     

    e. All
      fees
      shall be deemed fully earned when paid, shall be non-refundable and shall not
      be
      subject to refund or rebate.

    

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

     

    2.7 Prepayments:
      Borrower may prepay the Revolving Credit in whole or in part at any time or
      from
      time to time, without penalty or premium, other than any breakage cost under
      Section 2.9(b) of this Agreement. Any prepayment shall be accompanied by all
      accrued and unpaid interest and breakage cost, if any. 

     

    2.8 Use
      of
      Proceeds:
      The
      extensions of credit under and proceeds of the Revolving Credit shall be used
      for working capital purposes, including interim funding of Permitted
      Investments. 

     

    2.9 Indemnity/Loss
      of Margin:

     

    a. In
      the
      event that any present or future law, rule, regulation, treaty or official
      directive or the interpretation or application thereof by any central bank,
      monetary authority or governmental authority, or the compliance with any
      guideline or request of any central bank, monetary authority or governmental
      authority (whether or not having the force of law) imposes, modifies or deems
      applicable any deposit insurance, reserve, special deposit, or other similar
      requirement with respect to deposits in or for the account of, or loans or
      advances or commitment to make loans or advances by, or letters of credit issued
      or commitment to issue letters of credit by a Lender and the result of any
      of
      the foregoing is to increase the costs of a Lender, reduce the income receivable
      by or return on equity of such Lender or impose any expense upon such Lender
      with respect to any advances or extensions of credit or commitments to make
      advances or extensions of credit under this Agreement, such Lender shall so
      notify Agent in writing. Within fifteen (15) days notice from Agent, Borrower
      agrees to pay such Lender the amount of such increase in cost, reduction in
      income, reduced return on equity or capital, or additional expense after
      presentation by such Lender of a statement concerning such increase in cost,
      reduction in income, reduced return on equity or capital, or additional expense.
      Such statement shall set forth a brief explanation of the amount and such
      Lender’s calculation of the amount (in determining such amount such Lender may
      use any reasonable averaging and attribution methods), which statement shall
      be
      conclusively deemed correct absent manifest error. 

     

    b. Borrower
      shall pay to each Lender, on the date of prepayment of a LIBOR Rate Loan, any
      loss or expense which each Lender may sustain or incur (other than through
      such
      Lender's gross negligence or willful misconduct) as a consequence of (a) default
      by Borrower in making
      a
      borrowing of, conversion into, or extension of, LIBOR Rate Loans after Borrower
      has given a notice requesting the same in accordance with the provisions of
      this
      Agreement, and (b) the making of a prepayment of LIBOR Rate Loans on a day
      which
      is not the last day of a LIBOR Interest Period with respect thereto. With
      respect to LIBOR Rate Loans, such indemnification shall equal the excess, if
      any, of (i) the amount of interest which would have accrued on the amount so
      prepaid, or not so borrowed, converted, or extended, for the period from the
      date of such prepayment, or of such failure to borrow, convert, or extend to
      the
      last day of the applicable LIBOR Interest Period (or in the case of a failure
      to
      borrow, convert, or extend, the LIBOR Interest Period that would have commenced
      on the date of such failure) in each case at the applicable rate of interest
      for
      such LIBOR Rate Loans provided for herein over (ii) the amount of interest
      (as
      reasonably determined by Agent) which would have accrued to such Lender on
      such
      amount by placing such amount on deposit for a comparable period with leading
      banks in the 

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    
interbank Eurodollar market. This covenant shall survive
    the termination
    of this Agreement, and the payment of the Obligations.

     

    2.10 Capital
      Adequacy:
      If any
      present or future law, governmental rule, regulation, policy, guideline,
      directive or similar requirement (whether or not having the force of law)
      imposes, modifies, or deems applicable any capital adequacy, capital maintenance
      or similar requirement which affects the manner in which any Lender allocates
      capital resources to its commitments (including any commitments hereunder),
      and
      as a result thereof, in the reasonable opinion of such Lender, the rate of
      return on such Lender’s capital with regard to the Loans and/or its obligations
      hereunder is reduced to a level below that which such Lender could have achieved
      but for such circumstances taking into account such Lender’s policies regarding
      capital adequacy, then in such case, and within thirty (30) days of notice
      from
      Agent to Borrower, from time to time, Borrower shall pay such Lender such
      additional amount or amounts as shall compensate such Lender for such reduction
      in its rate of return. Such notice shall contain the statement of such Lender
      with regard to any such amount or amounts, which shall, in the absence of
      manifest error, be binding upon Borrower. In determining such amount, such
      Lender may use any reasonable method of averaging and attribution that it deems
      applicable.

     

    2.11 Termination
      of Loans:
      This
      Agreement shall terminate, except for those provisions that expressly survive
      the terms hereof, on the later of : (1) repayment to Agent, Issuing Bank, and
      Lenders of all Obligations hereunder, or (2) the Maturity Date.

     

    SECTION
      3. COLLATERAL

     

    3.1 Description:
      As
      security for the payment of the Obligations, and satisfaction by Borrower of
      all
      covenants and undertakings contained in this Agreement and the other Loan
      Documents, (i) the Borrower shall pledge to Issuing Bank, on behalf of itself
      and the Lenders, and grant a lien on and security interest in 408,290 shares
      of
      common stock of The Bancorp, Inc. (the “Bancorp Stock”); (ii) the Borrower shall
      cause its affiliates, Resource Capital Investor, Inc. and Resource Capital
      Manager, Inc. to pledge to Issuing Bank, on behalf of itself and the Lenders,
      and grant a lien on and security interest in 1,200,000 shares of common stock
      (1,100,000 shares and 100,000 shares, respectively) of Resource Capital Corp.
      (the “Resource Capital Stock” and together with the Bancorp Stock, the
“Collateral”); and (iii) Resource Capital Investor, Inc. and Resource
      Capital Manager, Inc. shall each execute and deliver the Guaranty Agreements.
      The Borrower shall execute and deliver, and cause to be executed and delivered,
      the Pledge Agreements and shall cause the execution of the Control
      Agreements.

     

    3.2 Other
      Actions:
      Borrower shall do anything further that may be reasonably required by Issuing
      Bank to secure Issuing Bank and effectuate the intentions and objects of this
      Agreement, including, without limitation, the execution and delivery of security
      agreements, contracts and any other documents required hereunder. At Issuing
      Bank's request, Borrower shall also immediately deliver (with execution by
      Borrower of all necessary documents or forms to reflect, implement or enforce
      the Liens described herein) to Issuing Bank all items of which Issuing Bank
      must
      receive possession to obtain a perfected security interest.

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    3.3 Filing
      Security Agreement:
      A
      carbon, photographic or other reproduction or other copy of this Agreement
      or of
      a financing statement is sufficient as and may be filed in lieu of a financing
      statement.

     

    3.4 Power
      of Attorney:
      Each of
      the officers of Issuing Bank is hereby irrevocably made, constituted and
      appointed the true and lawful attorney for Borrower (without requiring any
      of
      them to act as such) with full power of substitution to do the following: (a)
      in
      the event Borrower fails or refuses to do so, execute in the name of Borrower
      any schedules, assignments, instruments, documents and statements that Borrower
      is obligated to give Issuing Bank hereunder or is necessary to perfect (or
      continue or evidence the perfection of such security interest or Lien) Issuing
      Bank's security interest or Lien in the Collateral; (b) during the continuance
      of an Event of Default, endorse the name of Borrower upon any and all checks,
      drafts, money orders and other instruments for the payment of monies that are
      payable to Borrower and constitute collections on such Borrower's Accounts
      or
      proceeds of other Collateral; and (c) during the continuance of an Event of
      Default, do such other and further acts in the name of Borrower that Issuing
      Bank may reasonably deem necessary or desirable to enforce any Account or other
      Collateral.

     

    SECTION
      4. CLOSING
      AND CONDITIONS PRECEDENT TO ADVANCES

     

    Closing
      under this Agreement is subject to the following conditions precedent (all
      documents to be in form and substance satisfactory to Agent and Agent’s
      counsel): 

     

    4.1 Resolutions,
      Opinions, and Other Documents:
      Borrower shall have delivered or caused to be delivered to Agent and each Lender
      the following: 

     

    a. this
      Agreement and the Revolving Credit Notes, all properly executed; 

     

    b. each
      other Loan Document;

     

    c. the
      Guaranty Agreements;

     

    d. the
      Pledge Agreements;

     

    e. the
      Control Agreements;

     

    f. the
      original stock certificates of the Bancorp Stock, duly endorsed in blank for
      transfer, by the Borrower;

     

    g. a
      letter
      of counsel to the Borrower addressed to the Agent under Rule 144 of the
      Securities Act, in form and substance acceptable to counsel to the
      Agent;

     

    h. the
      registration statement dated May 24, 2006, filed with the United States
      Securities Exchange Commission, with respect to the Resource Capital
      Stock;

     

    i. certified
      copies of (i) resolutions of the board of directors (or comparable governing
      body) of Borrower authorizing the execution of this Agreement, and the Revolving
      Credit Notes, to be issued hereunder and each other Loan Document; and (ii)
      Borrower's Articles or Certificate of Incorporation (as applicable) and By-laws,
      or other appropriate organizational documents;

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

    

    j. an
      incumbency certificate for Borrower identifying all Authorized Officers, with
      specimen signatures;

     

    k. a
      written
      opinion of Borrower's independent counsel addressed to Agent for the benefit
      of
      all Lenders and opinions of such other counsel as Agent deems
      necessary;

     

    l. certification
      by the chief financial officer of Borrower that there has not occurred any
      material adverse change in the operations and condition (financial or otherwise)
      of Borrower since March 31, 2006;

     

    m. payment
      by Borrower of all fees including, without limitation, any Expenses associated
      with Loans or Letters of Credit incurred to the Closing Date;

     

    n. Uniform
      Commercial Code, judgment, federal and state tax lien searches against Borrower,
      at Borrower's expense, showing that the Property of Borrower is not subject
      to
      any Liens except for Permitted Liens, together with Good Standing and Corporate
      Tax Lien Search Certificates showing no Liens on Borrower's Property (other
      than
      Permitted Liens), and showing Borrower to be in good standing in its
      jurisdiction of organization and each other jurisdiction where the failure
      to be
      in good standing would have a Material Adverse Effect; and

     

    o. Such
      other documents requested by Agent.

     

    4.2 Absence
      of Certain Events:
      At the
      Closing Date, no Event of Default or Default hereunder shall have occurred
      and
      be continuing.

     

    4.3 Warranties
      and Representations at Closing:
      The
      warranties and representations contained in this Agreement shall be true and
      correct in all material respects on the Closing Date with the same effect as
      though made on and as of that date. Borrower shall not have taken any action
      or
      permitted any condition to exist, which would have been prohibited by any
      Section hereof. 

     

    4.4 Compliance
      with this Agreement:
      Borrower shall have performed and complied in all material respects, with all
      agreements, covenants and conditions contained herein including,
      without limitation, the provisions of Sections 6 and 7 hereof, which are
      required to be performed or complied with by Borrower before or at the Closing
      Date.

     

    4.5 Closing:
      Subject
      to the conditions of this Section 4, the Revolving Credit shall be made
      available on the date (“Closing Date”) this Agreement is executed and all of the
      conditions contained in Section 4.1 hereof are completed (the
“Closing”).

     

    4.6 Non-Waiver
      of Rights:
      By
      completing the Closing hereunder, or by making advances hereunder, Agent and
      Lenders do not thereby waive a breach of any warranty or representation made
      by
      Borrower hereunder or any agreement, document, or instrument delivered to Agent
      or any Lender, or otherwise referred to herein, and any claims and rights of
      

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    Agent or any Lender resulting from any breach or
      misrepresentation by Borrower, or any of them, are specifically reserved by
      Agent and Lenders. 

     

    4.7 Conditions
      to Advances:
      Each
      request by Borrower for an Advance under the Revolving Credit in any form
      following the Closing Date and any request for a Letter of Credit shall
      constitute an automatic representation and warranty, the truth and accuracy
      of
      such representation and warranty of which shall be a further condition to the
      funding of each Advance, by Borrower to the effect that (without waiving,
      impairing or limiting the rights of Agent and Lenders under Section 8
      below):

     

    a. There
      has
      not occurred any event or occurrence since the date of delivery of Borrower's
      most recent financial statements, which has resulted in, or has had, a Material
      Adverse Effect. 

     

    b. No
      Event
      of Default or Default then exists;

     

    c. Each
      Advance is within and complies with the terms and conditions of this Agreement
      including without limitation the notice provisions contained in Section 2.3
      hereof; and

     

    d. Each
      representation and warranty set forth in this Agreement is then true and correct
      in all material respects; provided that Borrower may update all Schedules and
      prepare additional Schedules so that all such Schedules and the representations
      and warranties, taken together, accurately reflect the state of Borrower's
      affairs as of the date of a request for an Advance by giving written notice
      thereof to Agent, and further provided that such updated and additional
      Schedules do not reflect events or conditions which constitute violations of
      Section 6 or 7 hereof or otherwise reflect material adverse developments.

     

    SECTION
      5. REPRESENTATIONS
      AND WARRANTIES

     

    To
      induce
      Agent, Lenders and Issuing Bank to complete the Closing, and make the initial
      Advances under the Revolving Credit to Borrower, Borrower warrants and
      represents to Agent, Lenders and Issuing Bank that: 

     

    5.1 Organization
      and Validity: 

     

    a. Borrower
      is a corporation duly organized, and validly existing under the laws of the
      State of Delaware, is duly qualified, is validly existing and in good standing
      and has lawful power and authority to engage in the business it conducts in
      each
      state where the nature and extent of its business requires qualification, except
      where the failure to so qualify will not have a Material Adverse Effect. A
      list
      of all states and other jurisdictions where Borrower is qualified to do business
      is attached hereto as shown on Schedule 5.1, attached hereto and made a part
      hereof. 

     

    b. The
      making and performance of this Agreement and the other Loan Documents will
      not
      violate or result in a default (immediately or with the passage of time) under
      any law, government rule or regulation, or the charter, minutes, bylaw
      provisions, or operating agreement of Borrower, or any material contract,
      agreement or instrument to which Borrower is 

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    
a
    party, or by which it is bound. Borrower is not in violation of and has not
    knowingly caused any Person to violate any term of any material agreement or
    instrument to which it or such Person is a party or by which it may be bound
    or
    of its charter, minutes, bylaws, trust agreement, or operating agreement.
     

    c. Borrower
      has all requisite power and authority to enter into and perform this Agreement
      and to incur the obligations herein provided for, and has taken all proper
      and
      necessary action to authorize the execution, delivery and performance of this
      Agreement, the Loan Documents and the documents and related agreements required
      hereby. 

     

    d. This
      Agreement, the Loan Documents and all related agreements and documents required
      to be executed and delivered by Borrower hereunder, when delivered, will be
      valid and binding upon Borrower, and enforceable in accordance with their
      respective terms subject to bankruptcy, insolvency, reorganization or similar
      laws affecting creditors’ rights generally.

     

    5.2 Places
      of Business:
      The
      only places of business of Borrower, and the places where Borrower keeps and
      intends to keep its Property and records concerning its Property, are at the
      addresses shown on Schedule 5.2 attached hereto and made a part
      hereof. 

     

    5.3 Pending
      Litigation:
      There
      are no judgments or judicial or administrative orders, proceedings, litigation
      or investigations (civil or criminal) pending, or to Borrower's knowledge,
      threatened, against Borrower in any court or before any governmental authority
      or arbitration board or tribunal except as shown on Schedule 5.3, attached
      hereto and made a part hereof, none of which are likely to have a Material
      Adverse Effect. Borrower is not in default with respect to any order of any
      court, governmental authority, regulatory agency or arbitration board or
      tribunal. Neither Borrower nor any executive officer of Borrower has been
      indicted or convicted in connection with or is engaging in any criminal conduct,
      or is currently subject to any lawsuit or proceeding or, to Borrower's
      knowledge, under investigation in connection with any anti-racketeering or
      criminal conduct or activity. 

     

    
      5.4 Title
        to Properties:
        Borrower has good and marketable title (except with respect to its leasehold
        interests in real property) to all of its Property free from Liens, and free
        from the claims of any other Person, except for Permitted Liens.

       

      5.5 Consent:
        No
        consent, approval or authorization of, or filing, registration, or qualification
        with, any Governmental Authority or any other Person on the part of Borrower
        is
        necessary or required in connection with Borrower's execution, delivery,
        and
        performance of this Agreement or the other Loan Documents. 

       

      5.6 Taxes:
        All tax
        returns required to be filed by Borrower in any jurisdiction have in fact
        been
        filed, and all taxes, assessments, fees and other governmental charges upon
        Borrower, or upon any of its Property, income or franchises, which are shown
        to
        be due and payable on such returns have been paid, except for those taxes
        being
        contested in good faith with due diligence by appropriate proceedings for
        which
        appropriate reserves have been maintained under GAAP. Borrower is not aware
        of
        any proposed additional tax assessment or tax to be assessed 

        
          
            
            

          

          
            23

            
              

            

          

          
            
            

          

        

against or applicable to Borrower that would
        be reasonably likely to have
        a Material Adverse Effect. 

    

     

    5.7 Financial
      Statements:
      Borrower's audited financial statements for the year ended December 31,
      2005, and the related income statement and statement of cash flow as of such
      date (complete copies of which have been delivered to Agent), have been prepared
      in accordance with GAAP and present fairly, the financial position of Borrower
      as of such date and the results of its opera-tions for such period. Borrower's
      fiscal year ends on September 30 of each calendar year. Borrower's federal
      tax
      identification number and state organizational identification number are as
      shown on Schedule 5.7, attached hereto and made a part hereof.

     

    5.8 Full
      Disclosure:
      Neither
      the financial statements referred to in Section 4.7 and Section 5.7, nor
      this Agreement nor any other Loan Document or any written reports or
      certificates, or other financial statements or reports furnished by Borrower
      to
      Agent or any Lender in connection with the negotiation of the Loans or this
      Agreement or contained in any financial statements or documents relating to
      Borrower, as of the time they were furnished, contained any untrue statement
      of
      a material fact or omit a material fact necessary to make the statements
      contained therein or herein not misleading; provided that, with respect to
      projected financial information, Borrower represents and warrants only that
      such
      information represents Borrower's expectations regarding future performance
      based upon historical information and reasonable assumptions, it being
      understood, however, that actual results may differ from the projected results
      described in the financial projections. There is no fact known to Borrower,
      which has not been disclosed in writing to Agent, which has or could have a
      Material Adverse Effect.

     

    5.9 Subsidiaries:
      Borrower has no Subsidiaries or Affiliates, except as shown on Schedule 5.9
      attached hereto and made a part hereof.

     

    5.10 Guarantees,
      Contracts, etc.: 

     

    a. Borrower
      does not own, or hold any Investments, in any Person except Permitted
      Investments.

     

    b. Borrower
      is not a party to any contract or agreement, or subject to any charter or other
      corporate restriction, which has or could have a Material Adverse
      Effect.

     

    c. Except
      as
      otherwise specifically provided in this Agreement, Borrower has not agreed
      or
      consented to cause or permit any of its Property whether now owned or hereafter
      acquired to be subject in the future (upon the happening of a contingency or
      otherwise) to a Lien not permitted by this Agreement. 

     

    5.11 Government
      Regulations, etc.: 

     

    a. The
      use
      of the proceeds of the Revolving Credit and Borrower's issuance of the Revolving
      Credit Notes, will not directly or indirectly violate or result in a violation
      of Section 7 of the Securities Exchange Act of 1934, as amended, or
      Regulations U, T, and X of the Board of Governors of the Federal Reserve
      System, 12 C.F.R., Chapter II. Borrower does not 

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    
own
    nor intend to carry or purchase any “margin stock” within the meaning of said
    Regulation U.

     

    b. Borrower
      has obtained all licenses, permits, franchises or other governmental
      authorizations necessary for the ownership of its Property and for the conduct
      of its business, except those which, if not obtained, would have or could have
      a
      Material Adverse Effect. 

     

    c. As
      of the
      date hereof, no employee benefit plan (“Pension Plan”), as defined in Section
      3(2) of ERISA, maintained by Borrower or under which Borrower could have any
      liability under ERISA (i) has failed to meet the minimum funding standards
      established in Section 302 of ERISA; (ii) has failed to comply with all
      applicable requirements of ERISA and of the Internal Revenue Code, including
      all
      applicable rulings and regulations there under; (iii) has engaged in or been
      involved in a prohibited transaction under Section 406 of ERISA or
      Section 4975 of the Internal Revenue Code which would subject Borrower to
      any liability; or (iv) has been terminated if such termination would
      subject Borrower to any liability. Borrower has not assumed, or received notice
      of a claim asserted against Borrower for, withdrawal liability (as defined
      in
      Section 4207 of ERISA) with respect to any multi- employer pension plan and
      is not a member of any Controlled Group (as defined in ERISA). Borrower has
      timely made all contributions when due with respect to any multi-employer
      pension plan in which it participates and no event has occurred triggering
      a
      claim against Borrower for withdrawal liability with respect to any
      multi-employer pension plan in which Borrower participates. All Pension Plans
      and multi-employer pension plans to which Borrower participates are shown on
      Schedule 5.11, attached hereto and made a part hereof.

     

    d. Borrower
      is not in violation of, and has not received written notice that, it is in
      violation of, or has knowingly caused any Person to violate any applicable
      statute, regulation or ordinance of the United States of America, or of any
      state, city, town, municipality, county
      or
      of any other jurisdiction, or of any agency, or department thereof, (including
      without limitation, security laws and regulations). 

     

    5.12 Names: 

     

    a. Borrower
      has not conducted business under or used any other name (whether corporate
      or
      assumed) except for the names shown on Schedule 5.12(a), attached hereto and
      made a part hereof. Borrower is the sole owner of all names shown on such
      Schedule 5.12(a) and any and all business done and all invoices issued in such
      trade names are Borrower's sales, business and invoices. Each trade name of
      Borrower represents a division or trading style of Borrower and not a separate
      corporate subsidiary or affiliate or independent entity. 

     

    b. All
      registered trademarks, patents or copyrights, or such as to which applications
      for registration have been submitted, which any Borrower uses, plans to use
      or
      has a right to use are shown on Schedule 5.12(b), attached hereto and made
      a
      part hereof. Borrower is the sole owner of such intellectual Property except
      to
      the extent any other Person has claims or rights in such Property, as such
      claims and rights are described on Schedule 5.12(b). Borrower is not in
      violation of any rights of any other Person with respect to such intellectual
      Property. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    5.13 Other
      Associations:
      Borrower is not engaged, and has no interest in, any joint venture or
      partnership with any other Person except as shown on Schedule 5.13, attached
      hereto and made a part hereof. 

     

    5.14 Regulation
      O:
      No
      director, executive officer, and to Borrower's knowledge, no principal
      shareholder or equity holder of Borrower is a director, executive officer,
      or
      principal shareholder of any Lender. For the purposes hereof the terms
“director” (when used with reference to a Lender), “executive officer” and
“principal shareholder” have the respective meanings assigned thereto in
      Regulation O issued by the Board of Governors of the Federal Reserve
      System.

     

    5.15 Solvency:
      Borrower is solvent, able to pay its debts as they become due, and has capital
      sufficient to carry on its business and all businesses in which it is about
      to
      engage, and now owns Property having a value both at fair valuation and at
      present fair salable value greater than the amount required to pay its debts.
      Borrower will not be rendered insolvent by the execution and delivery of this
      Agreement, or any of the other documents executed in connection with this
      Agreement, or the Acquisition, or by performance of the transactions
      contemplated hereunder or thereunder or thereby. 

     

    5.16 Investment
      Company:
      Borrower is not (a) an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
      as amended, (b) a “holding company” or a “subsidiary company” of a “holding
      company,” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company,” within the meaning of the Public Utility Holding Company
      Act of 1935, as amended, or (c) subject to any other law which purports to
      regulate or restrict its ability to borrow money or to consummate the
      transactions contemplated by this Loan Agreement or the other Loan Documents
      or
      to perform its obligations hereunder or thereunder.

    5.17 Anti-Terrorism
      Laws:

     

    a. General.
      Neither
      Borrower nor any Subsidiary of Borrower is in violation of any Anti-Terrorism
      Law or engages in or conspires to engage in any transaction that evades or
      avoids, or has the purpose of evading or avoiding, or attempts to violate,
      any
      of the prohibitions set forth in any Anti-Terrorism Law.

     

    b. Executive
      Order No. 13224.
      Neither
      Borrower nor any Subsidiary of Borrower, or to Borrower's knowledge, any of
      its
      respective agents acting or benefiting in any capacity in connection with the
      Loans, Letters of Credit or other transactions hereunder, is any of the
      following (each a “Blocked Person”):

     

    (i) a
      Person
      that is listed in the annex to, or is otherwise subject to the provisions of,
      the Executive Order No. 13224;

     

    (ii) a
      Person
      owned or controlled by, or acting for or on behalf of, any Person that is listed
      in the annex to, or is otherwise subject to the provisions of, the Executive
      Order No. 13224;

    
       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

    

    (iii) a
      Person
      with which Lender is prohibited from dealing or otherwise engaging in any
      transaction by any Anti-Terrorism Law;

     

    (iv) a
      Person
      that commits, threatens or conspires to commit or supports “terrorism” as
      defined in the Executive Order No. 13224;

     

    (v) a
      Person
      that is named as a “specially designated national” on the most current list
      published by the U.S. Treasury Department Office of Foreign Asset Control at
      its
      official website or any replacement website or other replacement official
      publication of such list; or

     

    (vi) a
      Person
      who is affiliated with a Person listed above.

     

    5.18 Bancorp
      Stock:
      Borrower acquired the shares of Bancorp Stock on the dates and in the amounts
      set forth on Schedule
      5.18,
      attached hereto and made a part hereof. All such shares of Bancorp Stock are
      restricted securities under Rule 144 of the Securities Act. The one year holding
      period, as defined in Rule 144(d) of the Securities Act, as to 323,286 shares
      of
      Bancorp Stock as set forth on Schedule 5.18 has elapsed, and, as to 85,004
      shares of Bancorp Stock as set forth on Schedule 5.18, will elapse on September
      19, 2006. The Agent, as pledgee of the Bancorp Stock, can sell such Bancorp
      Stock pursuant to Rule 144 of the Securities Act.
      The two
      year holding period, as defined in Rule 144(k) of the Securities Act, as to
      182,500 shares of Bancorp Stock, has elapsed, as to 140,786 shares of Bancorp
      Stock, will elapse on July 14, 2006, and as to 85,004 shares of Bancorp Stock,
      will elapse on September 19, 2007.

     

    Borrower
      has all requisite power and authority to pledge the Bancorp Stock as collateral
      for the Obligations.

     

    SECTION
      6. AFFIRMATIVE
      COVENANTS

     

    Borrower
      covenants that until all of the Obligations to Agent, Lenders and Issuing Bank
      are paid and satisfied in full and the Revolving Credit and Letters of Credit
      have been terminated:

     

    6.1 Payment
      of Taxes and Claims:
      Borrower shall pay, before they become delinquent, (a) all taxes, assessments
      and governmental charges or levies imposed upon it or its Property, and (b)
      all
      claims or demands of material men, mechanics, carriers, warehousemen, landlords
      and other Persons entitled to the benefit of statutory or common law Liens,
      which, in either case, if unpaid, would result in the imposition of a Lien
      upon
      its Property; provided, however, that Borrower shall not be required to pay
      any
      such tax, assessment, charge, levy, claim or demand if the amount, applicability
      or validity thereof shall at the time be contested in good faith and by
      appropriate proceedings by Borrower, and if Borrower shall have set aside on
      its
      books adequate reserves in respect thereof, in accordance with GAAP; which
      deferment of payment is permissible so long as no Lien other than a Permitted
      Lien has been entered and Borrower's title to, and its right to use, its
      Property are not materially ad-versely affected thereby.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    6.2 Maintenance
      of Properties and Corporate Existence: 

     

    a. Property:
      Borrower shall maintain its Property in good condition and make all renewals,
      replacements, additions, betterments and improvements thereto in the ordinary
      course of business, as Borrower deems reasonably necessary in good faith in
      the
      exercise of its business judgment, and will pay and discharge when due the
      cost
      of repairs and maintenance to its Property.

     

    b. Property
      Insurance, Environmental Insurance, Public and Products Liability
      Insurance:
      Borrower shall maintain insurance (i) on all insurable tangible Property against
      fire, flood, casualty and such other hazards (including, without limitation,
      extended coverage, workmen's compensation, boiler and machinery, with inflation
      coverage by endorsement) and (ii) against public liability, product liability
      and business interruption, in each case in such amounts, with such deductibles
      and with such insurers as are customarily used by companies operating in the
      same industry as Borrower. At or prior to Closing, Borrower shall furnish Agent
      with duplicate original policies of insurance or such other evidence of
      insurance as Agent may require. In the event Borrower fails to procure or cause
      to be procured any such insurance or to timely pay or cause to be paid the
      premium(s) on any such insurance, Agent may do so for Borrower, but Borrower
      shall continue to be liable for the same. Borrower further covenants that all
      insurance premiums owing under its current policies have been paid. Borrower
      shall notify Agent, immediately, upon Borrower's receipt of a notice of
      termination, cancellation, or non-renewal from its insurance company of any
      such
      policy

     

    c. Financial
      Records:
      Borrower shall keep current and accurate books of records and accounts in which
      full and correct entries will be made of all of its business transactions,
      and
      will reflect in its financial statements adequate accruals and appropriations
      to
      reserves, all in accordance with GAAP. Borrower shall not change its fiscal
      year
      end date. 

    d. Corporate
      Existence and Rights:
      Borrower shall do (or cause to be done) all things necessary to preserve and
      keep in full force and effect its existence, good standing in all jurisdictions
      where its failure to be in good standing might result in a Material Adverse
      Effect, and all of its rights, licenses and franchises, the absence of which
      might result in a Material Adverse Effect.

     

    e. Compliance
      with Laws:
      Borrower shall (i) be in compliance with any and all laws, ordinances,
      governmental rules and regulations, and court or administrative orders or
      decrees to which it is subject, whether federal, state or local, (including
      without limitation, securities laws, statutes, ordinances, rules, regulations
      and notices); (ii) obtain and maintain any and all licenses, permits, franchises
      or other governmental authorizations necessary to the ownership of its Property
      or to the conduct of its business, which violation or failure to obtain or
      maintain causes or might cause a Material Adverse Effect. Borrower shall timely
      satisfy all assessments, fines, costs and penalties imposed by any governmental
      body against Borrower or any Property of Borrower. 

     

    6.3 Business
      Conducted:
      Borrower shall continue in the business presently operated by it using its
      best
      efforts to maintain its customers and goodwill. Borrower shall not engage,
      directly or indirectly, in any material respect in any line of business
      substantially different from the business conducted by Borrower immediately
      prior to the Closing Date, unless such line of business is reasonably related
      to
      such business so conducted prior to the Closing Date. 

    
      
        
        

      

      
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    6.4 Litigation:
      Borrower shall give prompt notice to Agent of (a) the commencement against
      Borrower of any litigation claiming from Borrower more than Two Hundred Fifty
      Thousand Dollars ($250,000) in excess of any available insurance coverage
      Borrower may have for such claim, and (b) any other claims made against
      Borrower, or investigations or proceedings commenced against Borrower, the
      existence of which or adverse disposition of which might have a Material Adverse
      Effect. 

     

    6.5 Taxes:
      Borrower shall pay all taxes (other than taxes based upon or measured by any
      Lender's income or revenues or any personal property tax), if any, in connection
      with the issuance of the Revolving Credit Notes and the recording of any lien
      documents. The obligations of Borrower hereunder shall survive the payment
      of
      Borrower's Obligations hereunder and the termination of this
      Agreement 

     

    6.6 Bank
      Accounts:
      Borrower shall maintain its principal depository and disbursement account(s)
      with Agent.

     

    6.7 Employee
      Benefit Plans:
      Borrower will (a) fund all its Pension Plan(s) in a manner that will satisfy
      the
      minimum funding standards of Section 302 of ERISA, or will promptly satisfy
      any
      accumulated funding deficiency that arises under Section 302 of ERISA,
      (b) furnish Agent, promptly upon Agent’s request of the same, with copies
      of all reports or other statements filed with the United States Department
      of
      Labor, the Pension Benefit Guaranty Corporation (“PBGC”) or the IRS, with
      respect to all Pension Plan(s), or which Borrower, or any member of a Controlled
      Group, may receive from the United States Department of Labor, the IRS or the
      PBGC, with respect to all such Pension Plan(s), and (c) promptly advise Agent
      of
      the occurrence of any reportable event (as defined in Section 4043 of ERISA,
      other than a reportable event
      for
      which the thirty (30) day notice requirement has been waived by the PBGC)
      or prohibited transaction (under Section 406 of ERISA or Section 4975
      of the Internal Revenue Code) with respect to any such Pension Plan(s) and
      the
      action which Borrower propose to take with respect thereto. Borrower will make
      all contributions when due with respect to any multi-employer pension plan
      in
      which it participates and will promptly advise Agent (i) upon its receipt of
      notice of the assertion against it of a claim for withdrawal liability,
      (ii) upon the occurrence of any event which to the best of Borrower's
      knowledge, would trigger the assertion of a claim for withdrawal liability
      against any Borrower, and (iii) upon the occurrence of any event which, to
      the
      best of Borrower's knowledge, would place Borrower in a Controlled Group as
      a
      result of which any member (including Borrower) thereof may be subject to a
      claim for withdrawal liability, whether liquidated or contingent.

     

    6.8 Financial
      Covenants:
      Borrower shall maintain and comply with the following financial
      covenants:

     

    a. Net
      Worth:
      Borrower shall maintain a minimum Net Worth of not less than
      $150,000,000.

    

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

    

    b. Senior
      Debt to Net Worth:
      Borrower shall maintain a Senior Debt to Net Worth Ratio of not greater than
      2.0.

     

    6.9 Financial
      and Business Information:
      Borrower shall deliver to Agent and each Lender the following: 

     

    a. Financial
      Statements:
      such
      data, reports, statements and information, financial or otherwise, as Agent
      may
      reasonably request, including, without limitation: 

     

    (i) within
      one hundred and twenty (120) days after the end of each fiscal year of Borrower,
      consolidated financial statements of Borrower and each of its Subsidiaries
      for
      such year on a consolidated and consolidating basis, eliminating inter-company
      transactions, including the balance sheet as at the end of such fiscal year
      and
      a statement of cash flows and income statement for such fiscal year, setting
      forth in the consolidated statements in comparative form, the corresponding
      figures as at the end of and for the previous fiscal year, all in reasonable
      detail, including all supporting schedules, and audited and certified on an
      unqualified basis by independent public accountants of recognized standing,
      selected by Borrower and reasonably satisfactory to Agent, to have been prepared
      in accordance with GAAP and such independent public accountants shall also
      unqualifiedly certify that in making the examinations necessary to their
      certification mentioned above they have reviewed the terms of this Agreement
      and
      the accounts and conditions of Borrower during the accounting period covered
      by
      the certificate and that such review did not disclose the existence of any
      condition or event which constitutes a Default or an Event of Default (or if
      such conditions or events existed, describing them) together with copies of
      any
      management letters provided by such accountants to management of
      Borrower;

     

    (ii) within
      forty-five (45) days after the end of each calendar quarter, the consolidated
      and consolidating income and cash flow statements of Borrower and its
      Subsidiaries for such quarter and for the expired portion of the fiscal year
      ending with the end of such
      quarter, setting forth in comparative form the corresponding figures for the
      corresponding periods of the previous fiscal year, and the consolidated and
      consolidating balance sheet of Borrower and its Subsidiaries as at the end
      of
      such quarter, setting forth in comparative form the corresponding figures as
      at
      the end of the corresponding periods of the previous fiscal year, all in
      reasonable detail and certified by Borrower's chief financial officer to have
      been prepared from the books and records of Borrower; and

     

    (iii) together
      with the annual financial statements required under clause (a)(i) above,
      Borrower's annual financial statement projections for the upcoming fiscal year,
      including the projected income statements and balance sheets of Borrower and
      its
      Subsidiaries on a quarter-by-quarter basis.

     

    b. Borrowing
      Base Certificate:
      with
      each requested Advance, and monthly, not later than fifteen (15) days following
      each month-end, a signed borrowing base certificate in the form of Exhibit
“C”
attached hereto and made a part hereof (“Borrowing Base
      Certificate”);

     

    c. Notice
      of Event of Default:
      promptly upon becoming aware of the existence of any condition or event which
      constitutes an Event of Default or Default under thisAgreement,
      a written notice specifying the nature and period of existence thereof and
      what
      action Borrower is taking (and proposes to take) with respect
      thereto; 

    
      
        
        

      

      
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    d. Notice
      of Claimed Default:
      promptly upon receipt by Borrower, a copy of any notice of default, oral or
      written, given to Borrower, or any of them, by any creditor for Indebtedness
      for
      borrowed money, otherwise holding long term Indebtedness of Borrower, or any
      of
      them, in excess of Two Hundred Fifty Thousand Dollars ($250,000);
      and

     

    e. Securities
      and Other Reports:
      if
      Borrower shall be required to file reports with the Securities and Exchange
      Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
      of
      1934, as amended, promptly upon its becoming available, one copy of each
      financial statement, report, notice or proxy statement sent by Borrower to
      stockholders generally, and, a copy of each regular or periodic report, and
      any
      registration statement, or prospectus in respect thereof, filed by Borrower
      with
      any securities exchange or with federal or state securities and exchange
      commissions or any successor agency.

     

    6.10 Officers'
      Certificates:
      Along
      with the financial statements delivered to Agent at the end of each fiscal
      quarter pursuant to Section 6.9(a)(ii) hereof and the annual financial
      statements delivered pursuant to Section 6.9(a)(i) hereof, Borrower shall
      deliver to Agent a certificate (“Quarterly Compliance Certificate”) (in the form
      of Exhibit “D” attached hereto and made part hereof) from an Authorized Officer
      of Borrower (and as to certificates accompanying the annual financial statements
      of Borrower, also certified by Borrower’s independent certified public
      accountant) setting forth:

     

    a. Event
      of Default
      - that
      the signer has reviewed the terms of this Agreement, and has made (or caused
      to
      be made under his/her supervision) a review of the transactions and conditions
      of Borrower from the beginning of the accounting period covered by the financial
      statements being delivered therewith to the date of the certificate, and that
      such review has not disclosed the existence during such period of any condition
      or event which constitutes
      a Default or an Event of Default or, if any such condition or event exists,
      specifying the nature and period of existence thereof and what action Borrower
      has taken or proposes to take with respect thereto. 

     

    b. Covenant
      Compliance
      - the
      information (including detailed calculations) required in order to establish
      that Borrower is in compliance with the requirements of Section 6.8 of this
      Agreement, as of the end of the period covered by the financial statements
      delivered.

     

    6.11 Inspection:
      Borrower will permit any of Agent’s officers or other representatives to visit
      and inspect any of the locations of Borrower at any time during normal business
      hours to examine and audit all of Borrower's books of account, records, reports
      and other papers, to make copies and extracts there from and to discuss its
      affairs, finances and accounts with its officers, employees and independent
      certified public accountants. Borrower hereby irrevocably authorizes and directs
      all such accountants and auditors to exhibit and deliver to Agent copies of
      any
      and all of such Borrower's financial statements, or other accounting records
      of
      any sort, in the accountant’s or auditor’s possession. All such inspections
      shall, during the continuance of an Event of Default, be at Borrower's expense
      at the standard rates charged by Agent for such activities (plus Agent’s
      reasonable out-of-pocket expenses). 

    
      
        
        

      

      
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    6.12 Information
      to Participant:
      Each
      Lender may divulge to any participant, co-lender or assignee or prospective
      participant, co-lender or assignee it is permitted to obtain in the Loans,
      or
      any portion thereof, all information, and furnish to such Person copies of
      any
      reports, financial statements, certificates, and documents obtained under any
      provision of this Agreement, or related agreements and documents provided that
      such Person agrees to such confidentiality provisions as may be reasonably
      satisfactory to Borrower and Agent. 

     

    6.13 Name
      Changes, Places of Business:
      Borrower shall give thirty (30) days prior written notice to Agent of any name
      change or change in the location of any of its respective places of business
      or
      the establishment of any new, or the discontinuance of any existing place of
      business. 

     

    6.14 Bancorp
      Stock:
      Borrower shall deliver, or cause to be delivered, to Agent, not later than
      five
      (5) days from the date of filing with the United States Securities and Exchange
      Commission, each updated prospectus for the Bancorp Stock.  Borrower shall
      remain an Affiliate (as defined in Rule 144 of the Securities Act) of the
      Bancorp at all times during the term of this Agreement.

     

    SECTION
      7. NEGATIVE
      COVENANTS:

     

    Borrower
      covenants that until all of the Obligations to Agent, Lenders and Issuing Bank
      are paid and satisfied in full and the Revolving Credit, including the Letters
      of Credit have been terminated, that:

     

    7.1 Merger,
      Consolidation, Dissolution or Liquidation: 

     

    a. Borrower
      shall not engage in any Asset Sale, other than liquidation or sale of Securities
      in the ordinary course of Borrower's business.

     

    b. Borrower
      shall not merge or consolidate with any other Person, or commence a dissolution
      or liquidation. 

     

    7.2 Loans
      and Investments:
      Borrower shall not make any Investments in any Person, other than Permitted
      Investments. 

     

    7.3 Liens
      and Encumbrances:
      Borrower shall not cause or permit or agree or consent to cause or permit in
      the
      future (upon the happening of a contingency or otherwise), the Collateral
      whether now owned or hereafter acquired, to be subject to a Lien or be subject
      to any claim, except for Permitted Liens.

     

    7.4 Guarantees:
      Except
      for the endorsement in the ordinary course of business of negotiable instruments
      for deposit or collection, and for Permitted Indebtedness, Borrower shall not
      become or be liable, directly or indirectly, primary or secondary, matured
      or
      contingent, in any manner, whether as guarantor, surety, accommodation maker,
      or
      otherwise, for the existing or future Indebtedness of any kind of any Person,
      other than its Subsidiaries. 

     

    7.5 Use
      of
      Lenders’ Name:
      Borrower shall not use any Lender’s name (or the name of any of any Lender’s
      Affiliates) or Agent’s name in connection with any of its business, operations
      except to identify the existence of the Revolving Credit and the names of
      Lenders and Agent in the ordinary course of Borrower's business. Nothing herein
      contained is intended to permit or authorize Borrower to make any commitment
      or
      contract on behalf of any Lender or Agent.

     

    
      
        
        

      

      
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    7.6 Miscellaneous
      Covenants: 

     

    a. Borrower
      shall not become or be a party to any contract or agreement which at the time
      of
      becoming a party to such contract or agreement materially impairs Borrower's
      ability to perform under this Agreement, or under any other instru-ment,
      agreement or document to which Borrower is a party or by which it is or may
      be
      bound. 

     

    b. Borrower
      shall not carry or purchase any “margin stock” within the meaning of Regulations
      U, T or X of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
      Chapter II.

     

    SECTION
      8. DEFAULT

     

    8.1 Events
      of Default:
      Each of
      the following events shall constitute an event of default (“Event of
      Default”):

     

    a. Payments
      - if
      Borrower fails to make any payment on account of the Obligations, whether
      principal, interest, or any fees within ten (10) days of the due date of such
      payment or fails to immediately reimburse Issuing Bank for any draw under any
      Letter of Credit; or 

     

    b. Other
      Charges
      - if
      Borrower fails to pay any other charges, Expenses or other monetary obligations
      owing to any Lender, Issuing Bank or Agent arising out of or incurred
      in connection with this Agreement within ten (10) days after notice that such
      payment was not made when due or demanded, as applicable; or 

     

    c. Covenant
      Defaults
      - if
      Borrower fails to perform, comply with or observe any covenant or undertaking
      contained in this Agreement and (other than with respect to the covenants
      contained in Sections 7 and 8.1 for which no cure period shall exist), such
      failure continues for fifteen (15) days after the occurrence thereof; provided,
      however, if such default is capable of being cured, it shall not constitute
      an
      Event of Default if corrective action is instituted by the Borrower within
      fifteen (15) days of the default and diligently pursued until the default is
      cured, and such default is cured within thirty (30) days of the default;
      or

     

    d. Financial
      Information
      - if any
      statement, report, financial statement, or certificate made or delivered at
      any
      time by Borrower, or any of its officers, employees or agents, to Agent or
      any
      Lender is not true and correct, in all material respects, when made;
      or

     

    e. Warranties
      or Representations
      - if any
      warranty, representation or other statement by or on behalf of Borrower
      contained in or pursuant to this Agreement, or in any document, agreement or
      instrument furnished in compliance with, relating to, or in reference to this
      Agreement, is false, erroneous, or misleading in any material respect when
      made
      or deemed made; or

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    f. Agreements
      with Others
      - (i) if
      Borrower shall default beyond any grace period in payment of principal or
      interest of any Indebtedness of Borrower in excess of $250,000 in the aggregate,
      or (ii) if Borrower otherwise defaults under the terms of any such Indebtedness,
      if the effect of such default is to enable the holder of such Indebtedness
      to
      accelerate the payment of Borrower's obligations, which are the subject thereof,
      prior to the maturity date or prior to the regularly scheduled date of payment;
      

     

    g. Other
      Agreements with Lenders
      - if
      Borrower breaches or violates the terms of, or if a default or an Event of
      Default, occurs under, any other existing or future agreement (related or
      unrelated) between Borrower or among Borrower or Agent, Issuing Bank or any
      Lender or all Lenders (subject to any applicable grace or cure period which
      may
      be contained in such other agreement); or 

     

    h. Judgments
      - if any
      final judgment for the payment of money in excess of $250,000 in the aggregate
      (i) which is not fully and unconditionally covered by insurance or (ii) for
      which Borrower has not established a cash or cash equivalent reserve in the
      full
      amount of such judgment, shall be rendered by a court of record against Borrower
      and such judgment shall continue unsatisfied and in effect for a period of
      sixty
      (60) consecutive days without being vacated, discharged, satisfied or bonded
      pending appeal; or

     

    i. Assignment
      for Benefit of Creditors, etc.
      - if
      Borrower makes or proposes an assignment for the benefit of creditors generally,
      offers a composition or extension to creditors, or makes or sends notice of
      an
      intended bulk sale of any business or assets now or hereafter owned or conducted
      by Borrower; or 

     

    j. Bankruptcy,
      Dissolution, etc.
      - upon
      the commencement of any action for the dissolution or liquidation of Borrower,
      or the commencement of any case or proceeding for reorganization
      or liquidation of Borrower, or any of its, debts under the Bankruptcy Code
      or
      any other state or federal law, now or hereafter enacted for the relief of
      debtors, whether instituted by or against such Borrower; provided however,
      that
      Borrower shall have sixty (60) days to obtain the dismissal or discharge of
      any
      involuntary proceeding filed against it, it being understood that during such
      sixty (60) day period, no Lender shall be obligated to make Advances hereunder
      and Agent may seek adequate protection in any bankruptcy proceeding; or

     

    k. Receiver
      - upon
      the appointment of a receiver, liquidator, custodian, trustee or similar
      official or fiduciary for Borrower, or for Borrower's Property; or

     

    l. Execution
      Process, Seizure, etc.
      - the
      issuance of any execution or distraint process against any Property of Borrower;
      or 

     

    m. Termination
      of Business
      - if
      Borrower ceases any material portion of its business operations as presently
      conducted; or 

     

    n. Pension
      Benefits, etc.
      - if
      Borrower fails to comply with ERISA, so that proceedings are commenced to
      appoint a trustee under ERISA to administer Borrower's employee plans or the
      Pension Benefit Guaranty Corporation institutes proceedings to appoint a trustee
      to administer such plan(s), or to permit the entry of a Lien to secure any
      deficiency or claim or a “reportable event” as defined under ERISA occurs; or

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    o. Investigations
      - any
      indication or evidence received by Agent that reasonably leads it to believe
      Borrower may have directly or indirectly been engaged in any type of activity
      which, would be reasonably likely to result in the forfeiture of any material
      property of Borrower to any governmental entity, federal, state or local;
      or

     

    p. Default
      Under Pledge Agreements or Control Agreements
      - if any
      event of default occurs pursuant to the Pledge Agreements or the Control
      Agreements; or

     

    q. Default
      Under Guaranty Agreements
      - if any
      event of default occurs pursuant to the Guaranty Agreements, the Guaranty
      Agreements are no longer enforceable, or either of the Guarantors claims the
      Guaranty Agreement to which it is a party is not binding upon such
      Guarantor.

     

    8.2 Cure:
      Nothing
      contained in this Agreement or the Loan Documents shall be deemed to compel
      Agent, Issuing Bank and/or Lenders to accept a cure of any Event of Default
      hereunder. 

     

    8.3 Rights
      and Remedies on Default: 

     

    a. In
      addition to all other rights, options and remedies granted or available to
      Agent
      or Lenders under this Agreement or the Loan Documents, or otherwise available
      at
      law or in equity, upon or at any time after the occurrence and during the
      continuance of a Default or an Event of Default, Agent may, in its discretion,
      direct Lenders, and the Majority Lenders shall have the option to instruct
      Agent
      to direct Lenders, to, withhold or cease making Advances under the Revolving
      Credit.

    b. In
      addition to all other rights, options and remedies granted or available to
      Agent
      under this Agreement or the Loan Documents (each of which is also then
      exercisable by Agent), Agent may, in its discretion, or at the written direction
      of Majority Lenders shall, upon or at any time after the occurrence and during
      the continuance of an Event of Default, terminate the Credit Facility and
      declare the Obligations immediately due and payable, all without demand, notice,
      presentment or protest or further action of any kind (it also being understood
      that the occurrence of any of the events or conditions set forth in Sections
      8.1(i),(j) or (k) shall automatically cause an acceleration of the
      Obligations).

     

    c. In
      addition to all other rights, options and remedies granted or available to
      Agent, under this Agreement or the Loan Documents (each of which is also then
      exercisable by Agent), upon or at any time after the occurrence and during
      the
      continuance of an Event of Default Agent may, in its discretion, or at the
      written direction of Majority Lenders shall, direct Borrower to deliver and
      pledge to Agent, for the ratable benefit of Agent, all Lenders and Issuing
      Bank,
      cash collateral in the amount of all outstanding Letters of Credit.

     

    d. In
      addition to all other rights, options and remedies granted or available to
      Agent
      under this Agreement or the Loan Documents (each of which is also then
      exercisable by Agent), Agent may, or at the written direction of Majority
      Lenders shall, upon or at any time following the occurrence of an Event of
      Default, exercise all rights under the UCC and any other applicable law or
      in
      equity, and under all Loan Documents permitted to be exercised after the
      occurrence of an Event of Default.

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    e. Borrower
      hereby authorizes Agent, as secured party, to make any necessary filings under
      Rule 144 of the Securities Act in order to sell the Bancorp Stock upon an Event
      of Default.

     

    8.4 Nature
      of Remedies:
      All
      rights and remedies granted Agent or Lenders hereunder and under the Loan
      Documents, or otherwise available at law or in equity, shall be deemed
      concurrent and cumulative, and not alternative remedies, and Agent may proceed
      with any number of remedies at the same time until all Obligations are satisfied
      in full. The exercise of any one right or remedy shall not be deemed a waiver
      or
      release of any other right or remedy, and Agent, upon or at any time after
      the
      occurrence of an Event of Default, may proceed against Borrower, at any time,
      under any agreement, with any available remedy and in any order. 

     

    8.5 Set-Off:

     

    a. If
      any
      bank account of Borrower with Agent, any Lender or any participant is attached
      or otherwise liened or levied upon by any third party, Agent, as agent for
      Lenders shall have and be deemed to have, without notice to Borrower, the
      immediate right of set-off and may apply the funds or amount thus set-off
      against any of the Obligations hereunder. 

     

    b. In
      addition to all other rights, options and remedies granted or available to
      Agent
      under this Agreement or the Loan Documents (each of which is also then
      exercisable by Agent), upon or at any time after the acceleration of the
      Obligations, Agent (or any Lender) shall have and be deemed to have, without
      notice to Borrower, the immediate right of set off against any bank account
      of
      Borrower with Agent or any Lender, or of Borrower with any other subsidiary
      or Affiliate or any participant and may apply the funds or amount thus set
      off
      against any of the Obligations hereunder.

     

    SECTION
      9. AGENT

     

    9.1 Appointment
      and Authorization:
      Each
      Lender, and each subsequent holder of any of the Revolving Credit Notes by
      its
      acceptance thereof, hereby irrevocably appoints and authorizes Agent to take
      such action on its behalf and to exercise such powers under this Agreement
      as
      are expressly delegated to Agent by the terms hereof, together with such powers
      as are reasonably incidental thereto. Notwithstanding any provision to the
      contrary contained elsewhere herein, or in any other Loan Document, the Agent
      shall have no duties or responsibilities, except those expressly set forth
      herein, nor shall Agent have to be deemed to have any fiduciary relationship
      with any Lender or participant, and no implied covenants, functions,
      responsibilities, duties, obligations, or liabilities shall be read into this
      Agreement, or any other Loan Documents, or otherwise exist against Agent.
      Without limiting the generality of the foregoing sentence, the use of the term
      “agent” herein, and in the other Loan Documents with reference to Agent, is not
      intended to connote any fiduciary or other implied (or express) obligations
      arising under agency doctrine of any applicable law. Instead, such term is
      used
      merely as a matter of market custom, and is intended to create or reflect only
      an administrative relationship between independent contracting
      parties.

     

    9.2 General
      Immunity:
      Subject
      to the provisions of this Agreement, Agent will handle all transactions relating
      to the Loans and all other Obligations, including, without 

    
      
        
        

      

      
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    limitation, all transactions with respect to Letters of
      Credit, this Agreement, the Loan Documents and all related documents in
      accordance with its usual banking practices. In performing its duties as Agent
      hereunder, Agent will take the same care as it takes in connection with loans
      in
      which it alone is interested. However, neither Agent nor any of its directors,
      officers, agents or employees shall be liable for any action taken or omitted
      to
      be taken by it or them hereunder or in connection herewith except for its or
      their own gross negligence or willful misconduct.

     

    9.3 Consultation
      with Counsel:
      Agent
      may consult with legal counsel and any other professional advisors or
      consultants deemed necessary or appropriate and selected by Agent and shall
      not
      be liable for any action taken or suffered in good faith by it in accordance
      with the advice of such counsel.

     

    9.4 Documents:
      Agent
      shall not be under a duty to examine into or pass upon the effectiveness,
      genuineness or validity of this Agreement or any other Loan Document or any
      other instrument or document furnished pursuant hereto or in connection
      herewith, and Agent shall be entitled to assume that the same are valid,
      effective and genuine and what they purport to be. In addition Agent shall
      not
      be liable for failing to make any inquiry concerning the accuracy, performance
      or observance of any of the terms, provisions or conditions of such instrument
      or document. 

     

    9.5 Rights
      as a Lender:
      With
      respect to its applicable Pro Rata Percentage of the Revolving Credit Loans,
      Agent shall have the same rights and powers hereunder as any other Lender and
      may exercise the same as though it were not Agent, and the term “Lender” or
“Lenders” shall, unless the context otherwise indicates, include Agent in its
      individual capacity.  Subject
      to the provisions of this Agreement, Agent may accept deposits from, lend money
      to and generally engage in any kind of banking or trust business with Borrower
      and its Affiliates as if it were not Agent.

     

    9.6 Responsibility
      of Agent:
      It is
      expressly understood and agreed that the obligations of Agent hereunder are
      only
      those expressly set forth in this Agreement and that Agent shall be entitled
      to
      assume that no Event of Default or Default has occurred and is continuing,
      unless Agent has actual knowledge of such fact. Except to the extent Agent
      is
      required by Lenders pursuant to the express terms hereof to take a specific
      action, Agent shall be entitled to use its discretion with respect to exercising
      or refraining from exercising any rights which may be vested in it by, or with
      respect to taking or refraining from taking any action or actions that it may
      be
      able to take under or in respect of, this Agreement and the Loan Documents.
      Agent shall incur no liability under or in respect of this Agreement and the
      Loan Documents by acting upon any notice, consent, certificate, warranty or
      other paper or instrument believed by it to be genuine or authentic or to be
      signed by the proper party or parties, or with respect to anything that it
      may
      do or refrain from doing in the reasonable exercise of its judgment, or that
      may
      seem to it to be necessary or desirable under the circumstances.

     

    9.7 Collections
      and Disbursements: 

     

    a. Agent
      will have the right to collect and receive all payments of the Obligations,
      and
      to collect and receive all reimbursements for draws made under the Letters
      of
      Credit, together with all fees, charges or other amounts due under this
      Agreement and the Loan 

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    Documents
      and to distribute such payments to Lenders
      and Issuing Bank in accordance with the terms of Section 2.3. 

               
      

                                
      b. Agent
      shall pay to each Lender, on each Settlement Date, from the interest actually
      received by Agent from Borrower, a sum equal to the interest calculated for
      the
      actual number of days elapsed on the basis of a year of 360 days, on each
      Lender’s outstanding balance of its Revolving Credit at the rate equal to the
      applicable rate of interest chosen by Borrower with respect to such Lender’s Pro
      Rata Percentage of the Advances outstanding. If Agent should for any reason
      receive less than the full amount of the interest or other compensation due
      under the Loan Documents, each Lender’s share of such interest or compensation
      shall decrease in proportion to each Lender’s Pro Rata Percentage.

     

    c. If
      any
      such payment received by Agent is rescinded, determined to be unenforceable
      or
      invalid or is otherwise required to be returned for any reason at any time,
      whether before or after termination of this Agreement and the Loan Documents,
      each Lender will, upon written notice from Agent, promptly pay over to Agent
      its
      Pro Rata Percentage of the amount so rescinded, held unenforceable or invalid
      or
      required to be returned, together with interest and other fees thereon if also
      required to be rescinded or returned. 

     

    d. All
      payments by Agent and Lenders to each other hereunder shall be in immediately
      available funds. Agent will at all times maintain proper books of account and
      records reflecting the interest of each Lender in the Revolving Credit and
      the
      Letters of Credit, in a manner customary to Agent’s keeping of such records,
      which books and records shall be available for inspection by each Lender at
      reasonable times during normal business hours, at such
      Lender’s sole expense. In the event that any Lender shall receive any payments
      in reduction of the Obligations in an amount greater than its applicable Pro
      Rata Percentage in respect of indebtedness to Lenders evidenced hereby
      (including, without limitation amounts obtained by reason of setoffs), such
      Lender shall hold such excess in trust
      (to the
      extent such Lender is lawfully able to do so) for Agent (on behalf of all other
      Lenders) and shall promptly remit to Agent such excess amount so that the
      amounts received by each Lender hereunder shall at all times be in accordance
      with its applicable Pro Rata Percentage. To the extent necessary for each
      Lender’s actual percentage of all outstanding Revolving Credit Loans to equal
      its applicable Pro Rata Percentage, the Lender having a greater share of any
      payment(s) than its applicable Pro Rata Percentage shall acquire a participation
      in the applicable outstanding balances of the Pro Rata Shares of the other
      Lenders as determined by Agent.

     

    9.8 Indemnification:
      To the
      extent not promptly paid by Borrower, each Lender hereby indemnifies Agent
      (and
      Issuing Bank with respect to Letters of Credit) ratably according to their
      respective Pro Rata Percentages, from and against any and all liabilities,
      obligations, losses, damages, penalties, actions, judgments, suits, costs,
      expenses or disbursements of any kind or nature whatsoever that may be imposed
      on, incurred by or asserted against Agent (or Issuing Bank, as the case may
      be)
      in any way relating to or arising out of this Agreement or any other Loan
      Document or any action taken or omitted by Agent (or Issuing Bank, as the case
      may be) under or related to this Agreement or the other Loan Documents or the
      Loans, provided that no Lender shall be liable for any portion of such
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      costs, expenses or disbursements resulting solely from Agent’s (or Issuing
      Bank’s, as the case may be) gross negligence or willful misconduct. Agent

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    
shall have the right to deduct, from any amounts to be
    paid by Agent to
    any Lender hereunder, any amounts owing to Agent by such Lender by virtue of
    this paragraph.

     

    9.9 Expenses: 

     

    a. All
      reasonable out-of-pocket costs and out-of- pocket expenses incurred by Agent
      in
      connection with the creation, amendment, administration, termination and
      enforcement of the Loans (including without limitation, audit expenses, counsel
      fees and expenditures to protect, preserve and defend Agent’s and each Lender’s
      rights and interest under the Loan Documents) shall, to the extent not
      reimbursed by Borrower, be shared and paid on demand by Lenders pro rata based
      on their applicable Pro Rata Percentage. 

     

    b. Agent
      may
      deduct from payments or distributions to be made to Lenders such funds as may
      be
      necessary to pay or reimburse Agent for such costs or expenses. 

     

    9.10 No
      Reliance:
      By
      execution of or joining in this Agreement, each Lender acknowledges that it
      has
      entered into this Agreement and the Loan Documents solely upon its own
      independent investigation and is not relying upon any information supplied
      by or
      any representations made by Agent. Each Lender shall continue to make its own
      analysis (including any credit analysis) and evaluation of Borrower. Agent
      makes
      no representation or warranty and assumes no responsibility with respect to
      the
      financial condition or Property of Borrower; the accuracy, sufficiency or
      currency of any information concerning the financial condition, prospects or
      results of operations of Borrower; or for sufficiency, authenticity, legal
      effect, validity or enforceability of the Loan Documents. Agent assumes no
      responsibility or liability with respect to the collectibility of the
      Obligations or the performance by any Borrower of any obligation under the
      Loan
      Documents.

     

    9.11 Resignation
      of Agent:
      Agent
      may resign at any time upon thirty (30) days prior written notice thereof to
      Lenders and Borrower. Upon any resignation, the Majority Lenders shall have
      the
      right to appoint a successor Agent. Upon the acceptance of the appointment
      as a
      successor Agent hereunder by such successor Agent, such successor Agent shall
      thereupon succeed to and become vested with all rights, powers, obligations
      and
      duties of the retiring Agent and the retiring Agent shall be discharged from
      its
      duties and obligations hereunder.

     

    9.12 Action
      on Instructions of Lenders:
      With
      respect to any provision of this Agreement, or any issue arising there under,
      concerning which Agent is authorized to act or withhold action by direction
      of
      Lenders (or as the case may be under this Agreement, the Majority Lenders),
      Agent shall in all cases be fully protected in so acting, or in so refraining
      from acting, hereunder in accordance with written instructions signed by
      Lenders. Such instructions and any action taken or failure to act pursuant
      thereto shall be binding on all Lenders.

     

    9.13 Several
      Obligations:
      The
      obligation of each Lender is several, and neither Agent nor any other Lender
      shall be responsible for any obligation or commitment hereunder of any other
      Lender.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    SECTION
      10. MISCELLANEOUS

     

    10.1 GOVERNING
      LAW:
      THIS
      AGREEMENT, AND ALL MATERS ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
      ALL
      RELATED AGREEMENTS AND DOCUMENTS, SHALL BE GOVERNED BY AND CONSTRUED IN
      ACCORDANCE WITH THE SUBSTANTIVE LAWS COMMONWEALTH OF PENNSYLVANIA. THE
      PROVISIONS OF THIS AGREEMENT AND ALL OTHER AGREEMENTS AND DOCUMENTS REFERRED
      TO
      HEREIN ARE TO BE DEEMED SEVERABLE, AND THE INVALIDITY OR UNENFORCEABILITY OF
      ANY
      PROVISION SHALL NOT AFFECT OR IMPAIR THE REMAINING PROVISIONS WHICH SHALL
      CONTINUE IN FULL FORCE AND EFFECT. 

     

    10.2 Integrated
      Agreement:
      The
      Loan Documents, all related agreements, and this Agreement shall be construed
      as
      integrated and complementary of each other, and as augmenting and not
      restricting Lenders’ and Agent’s rights and remedies. If, after applying the
      foregoing, an inconsistency still exists, the provisions of this Agreement
      shall
      constitute an amendment thereto and shall control. 

     

    10.3 Waiver:
      No
      omission or delay by Agent or Lenders in exercising any right or power under
      this Agreement or any related agreements and documents will impair such right
      or
      power or be construed to be a waiver of any default, or Event of Default (unless
      such Event of Default has been waived in accordance with the terms of this
      Agreement), or an acquiescence therein, and any single or partial exercise
      of
      any such right or power will not preclude other or further exercise thereof
      or
      the exercise of any other right, and as to Borrower no waiver will be valid
      unless in writing and signed by Agent and then only to the extent
      specified. 

     

    10.4 Indemnity:
      (a)
      Borrower releases and shall indemnify, defend and hold harmless Agent, Issuing
      Bank and Lenders, and their respective officers, employees and agents, of and
      from any claims, demands, liabilities, obligations, judgments, injuries, losses,
      damages and costs, and expenses (including without limitation, reasonable legal
      fees) resulting from (i) acts or conduct of Borrower under, pursuant, or related
      to this Agreement and the other Loan Documents, (ii) Borrower's breach or
      violation of any representation, warranty, covenant or undertaking contained
      in
      this Agreement or the other Loan Documents, (iii) Borrower's failure to comply
      with any or all laws, statutes, ordinances, governmental rules, regulations
      or
      standards, whether federal, state or local, or court or administrative orders
      or
      decrees, (including without limitation securities laws, etc.) and all costs,
      expenses, fines, penalties or other damages resulting there from, and (iv)
      any
      claim by any other creditor of Borrower against any Lender arising out of any
      transaction whether hereunder or in any way related to the Loan Documents and
      all costs, expenses, fines, penalties or other damages resulting therefrom,
      unless resulting solely from acts or conduct of Agent, Issuing Bank, or Lenders
      constituting willful misconduct or gross negligence. The obligations of Borrower
      under this Section 10.4 shall survive the occurrence of any and all events
      whatsoever, including without limitation, payment of the Obligations or
      investigation by or knowledge of Lenders.

     

    (b) Promptly
      after receipt by an indemnified party under subsection (a) above of notice
      of
      the commencement of any action by a third party, such indemnified party shall,
      if a claim in respect thereof is to be made against the indemnifying party
      under
      such subsection, 

    
       

      
        
          
          

        

        
          40

          
            

          

        

        
          
          
notify
          the indemnifying party in writing of the commencement thereof. The omission
          so
          to notify the indemnifying party shall relieve the indemnifying party from
          any
          liability which it may have to any indemnified party under such subsection
          only
          if the indemnifying party is unable to defend such actions as a result
          of such
          failure to so notify. In case any such action shall be brought against
          any
          indemnified party and it shall notify the indemnifying party of the commencement
          thereof, the indemnifying party shall be entitled to participate therein
          and, to
          the extent that it shall wish, jointly with any other indemnifying party
          similarly notified, to assume the defense thereof, with counsel satisfactory
          to
          such indemnified party (who shall not, except with the consent of the
          indemnified party, be counsel to the indemnified party), and, after notice
          from
          the indemnifying party to such indemnified party of its election so to
          assume
          the defense thereof, the indemnifying party shall not be liable to such
          indemnified party under such subsection for any legal expenses of other
          counsel
          or any other expenses, in each case subsequently incurred by such indemnified
          party, in connection with the defense thereof other than reasonable costs
          of
          investigation.

      

    

     

    10.5 Time:
      Whenever Borrower shall be required to make any payment, or perform any act,
      on
      a day which is not a Business Day, such payment may be made, or such act may
      be
      performed, on the next succeeding Business Day. Time is of the essence in the
      performance under all provisions of this Agreement and all related agreements
      and documents. 

     

    10.6 Expenses
      of Agent and Lenders:
      At
      Closing and from time to time thereafter, Borrower will pay upon demand of
      Agent
      all reasonable costs, fees and expenses of (i) Agent in connection with the
      analysis, negotiation, preparation, execution, administration, delivery and
      termination of this Agreement, and other Loan Documents and the documents and
      instruments referred to herein and therein, and any amendment, amendment and
      restatement, supplement, waiver or consent relating hereto or thereto, whether
      or not any such amendment, amendment and restatement, supplement, waiver or
      consent is executed or becomes effective, search costs, the reasonable fees,
      expenses and disbursements of counsel for Agent, any fees or expenses incurred
      by Agent under Section 6.11 for which Borrower is obligated thereunder, and
      reasonable charges of any expert consultant to Agent, and (ii) Agent, Issuing
      Bank, and each Lender in connection with the enforcement of Agent’s, Issuing
      Bank’s and Lenders’ rights hereunder, or the collection of any payments owing
      from, Borrower under this Agreement and/or the other Loan Documents or the
      protection, preservation or defense of the rights of Agent, Issuing Bank and
      Lenders hereunder and under the other Loan Documents, including any refinancing
      or restructuring of the credit arrangements provided under this Agreement and
      other Loan Documents in the nature of a “work-out” or of any insolvency or
      bankruptcy proceedings, or otherwise (including the reasonable fees and
      disbursements of counsel for Agent, Issuing Bank and any Lender) (collectively,
      the “Expenses”).

     

    10.7 Brokerage:
      This
      transaction was brought about and entered into by Agent, Lenders and Borrower
      acting as principals and without any brokers, agents or finders being the
      effective procuring cause hereof. Borrower represents that it has not committed
      Agent or any Lender to the payment of any brokerage fee, commission or charge
      in
      connection with this transaction. If any such claim is made on Agent or any
      Lender by any broker, finder or agent or other person allegedly engaged by
      Borrower, Borrower hereby indemnify, defend and save such party harmless against
      such claim and further will defend, with counsel satisfactory to Agent, any
      action or actions to recover on such claim, at Borrower's own cost and expense,
      including such party’s reasonable counsel fees. Borrower further agrees that
      until any such claim or demand is adjudicated in such party’s favor, the amount
      demanded shall be deemed a liability of Borrower under this
      Agreement. 

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    10.8 Notices: 

     

    a. Any
      notices or consents required or permitted by this Agreement shall be in writing
      and shall be deemed given if delivered in person or if sent by telecopy or
      by
      nationally recognized overnight courier, or via first class, Certified or
      Registered mail, postage prepaid, as follows, unless such address is changed
      by
      written notice hereunder: 

     

    
      	
              If
                to Agent to:

            	
              Commerce
                Bank, N.A.

              
                1701
                  Route 70 East

                Cherry
                  Hill, NJ 08034

                Attn:
                  Mr. Gerard Grady

                Telecopy:
                  (856) 751-6884

              

            

    

     

    

    
      	
              With
                copies to:

            	
              Blank
                Rome LLP

              One
                Logan Square

              Philadelphia,
                PA 19103

              Attn:
                Robert I. Tuteur, Esquire

              Telecopy:
                (215) 832-5687

            

    

    

    
      	
              If
                to Borrower to:

            	
              Resource
                America, Inc.

              1845 Walnut Street, 10th Floor

              Philadelphia,
                PA 19103

              
                Attn:
                  Steven J. Kessler

                
                  Telecopy:
                    (215) 546-4785

                

              

            

    

     

    
      	
              With
                copies to:

            	
              Ledgwood,
                a professional corporation

            

    

    
      	 	
              1900
                Market Street, Suite 750

            

    

    
      	 	
              Philadelphia,
                PA 19103

            

    

    
      	 	
              Attn:
                Shelle Weisbaum, Esquire

            

    

    
      	 	
              Telecopy:
                (215) 735-2315

            

    

    

    If
      to
      Lenders: to
      the
      addresses set forth on Schedule B.

    

    b. Any
      notice sent by Agent, any Lender or Borrower by any of the above methods shall
      be deemed to be given when so received. 

     

    c. Agent
      shall be fully entitled to rely upon any facsimile transmission or other writing
      purported to be sent by any Authorized Officer (whether requesting an Advance
      or
      otherwise) as being genuine and authorized.

     

    10.9 Headings:
      The
      headings of any paragraph or Section of this Agreement are for convenience
      only
      and shall not be used to interpret any provision of this Agreement. 

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

    10.10 Survival:
      All
      warranties, representations, and covenants made by Borrower herein, or in any
      agreement referred to herein or on any certificate, document or other instrument
      delivered by it or on its behalf under this Agreement, shall be considered
      to
      have been relied upon by Agent and Lenders, and shall survive the delivery
      to
      Lenders of the Revolving Credit Notes, regardless of any investigation made
      by
      Lenders or on their behalf. All statements in any such certificate or other
      instrument prepared and/or delivered for the benefit of Agent and any and all
      Lenders shall constitute warranties and representations by Borrower hereunder.
      Except as otherwise expressly provided herein, all covenants made by Borrower
      hereunder or under any other agreement or instrument shall be deemed continuing
      until all Obligations are satisfied in full. All indemnification obligations
      under this Agreement, including under Section 2.2, 5.5, 10.4 and 10.7, shall
      survive the termination of this Agreement and payment of the Obligations for
      a
      period of two (2) years.

     

    10.11 Amendments:

     

    a. Neither
      the amendment or waiver of any provision of this Agreement or any other Loan
      Document (other than Letter of Credit Documents), nor the consent to any
      departure by Borrower therefrom, shall in any event be effective unless the
      same
      shall be in writing and signed by Majority Lenders (or by Agent at the direction
      of Majority Lenders), or if Lenders shall not be parties thereto, by the parties
      thereto and consented to by Majority Lenders, and each such amendment, waiver
      or
      consent shall be effective only in the specific instance and for the specific
      purpose for which given; provided that, no amendment, waiver, or consent shall
      do any of the following: (a) increase the Maximum Revolving Credit Amount
      (except as contemplated under Section 2.1(d)) or the Pro Rata Share of any
      Lender, without the written consent of each Lender affected thereby,
      (b) except as otherwise expressly provided in this Agreement, reduce the
      principal of, or interest on, any Revolving Credit Note or any Reimbursement
      Obligations or any fees hereunder, without the written consent of each Lender
      affected thereby, (c) postpone any date fixed for any payment with respect
      to principal of, or interest on, any Revolving Credit Note or any Reimbursement
      Obligations or any fees hereunder, without the written consent of each Lender
      affected thereby, (d) amend or waive this Section 10.11, or change the
      definition of Majority Lenders without the written consent of each Lender,
      or
      (e) release any Guarantor, without the written consent of each Lender; and
      provided further that, no amendment, waiver, or consent affecting the rights
      or
      duties of Agent or Issuing Bank under any Loan Document shall in any event
      be
      effective, unless in writing and signed by Agent and/or Issuing Bank, as
      applicable, in addition to Lenders required hereinabove to take such action.
      Notwithstanding any of the foregoing to the contrary, the consent of Borrower
      shall not be required for any amendment, modification or waiver of the
      provisions of Section 8 of this Agreement. In addition, Borrower and Lenders
      hereby authorize Agent to modify this Agreement by unilaterally amending or
      supplementing Schedule A or Schedule B from time to time in the manner requested
      by Borrower, Agent or any Lender in order to reflect any assignments or
      transfers of the Loans as provided for hereunder; provided however, that Agent
      shall promptly deliver a copy of any such modification to Borrower and each
      Lender.

     

    b. After
      an
      acceleration of the Obligations, Agent shall have the right, with communication
      (to the extent reasonably practicable under the circumstances) with all Lenders,
      to exercise or refrain from exercising any and all right, remedies, privileges
      and options under the Loan Documents and available at law or in equity to
      protect and enforce the rights of the 

    
       

      
        
          
          

        

        
          43

          
            

          

        

        
          
          
Lenders
          and collect the Obligations, including, without limitation, instituting
          and
          pursuing all legal actions against Borrower or to collect the Obligations,
          or
          defending any and all actions brought by Borrower or other Person; or incurring
          Expenses or otherwise making expenditures to protect the Loans, the Collateral
          or Lenders’ rights or remedies.

      

    

     

    c. To
      the
      extent Agent is required to obtain or otherwise elects to seek the consent
      of
      Lenders to an action Agent desires to take, if any Lender fails to notify Agent,
      in writing, of its consent or dissent to any request of Agent hereunder within
      five (5) Business Days of such Lender’s receipt of such request, such Lender
      shall be deemed to have given its consent thereto.

     

    10.12 Assignability:

     

    a. Borrower
      shall not have the right to assign or delegate its obligations and duties under
      this Agreement or any other Loan Documents or any interest therein except with
      the prior written consent of Agent and Lenders.

     

    b. Notwithstanding
      subsection (c) of this Section 10.12, nothing herein shall restrict, prevent
      or
      prohibit any Lender from (i) pledging or granting a security interest in its
      Loans hereunder to a Federal Reserve Bank in support of borrowings made by
      such
      Lender from such Federal Reserve Bank, or (ii) granting assignments or
      participations in the Revolving Credit Loans hereunder to its parent and/or
      to
      any Affiliate of such Lender or to any other existing Lender or Affiliate.
      Any
      Lender may make, carry or transfer Loans at, to or for the account of, any
      of
      its branch offices or the office of an Affiliate of such Lender except to the
      extent such transfer would result in increased costs to Borrower.

     

    c. Each
      Lender may, with the consent of Agent (such consent not to be unreasonably
      withheld or delayed) and (if no Event of Default is outstanding) with the
      consent of Borrower (such consent not to be unreasonably withheld or delayed),
      but without the consent of any other Lender, assign to one or more banks or
      other financial institutions all or a portion of its rights and obligations
      under this Agreement and the Revolving Credit Notes; provided that, (i) for
      each
      such assignment, the parties thereto shall execute and deliver to Agent, for
      its
      acceptance (if properly completed and executed in accordance with the terms
      hereof), and recording in its books and records, an assignment and acceptance
      in
      form and substance satisfactory to Agent (“Assignment and Acceptance”), together
      with any Revolving Credit Note subject to such assignment, and a processing
      and
      recordation fee of $3,500 payable to Agent for its own account payable by
      assignee, (ii) no such assignment shall be for less than a Pro Rata Share
      of $5,000,000 or, if less, the entire remaining Pro Rata Percentage of such
      Lender of the Revolving Credit Loan, and (iii) each such assignment shall be
      of
      a uniform, and not a varying, percentage of all rights and obligations under
      and
      in respect of both the Pro Rata Share of such Lender and all Revolving Credit
      Loans of such Lender. Upon such execution and delivery of the Assignment and
      Acceptance to Agent, from and after the date specified as the effective date
      in
      the Assignment and Acceptance (the “Acceptance Date”), (x) the assignee
      thereunder shall be a party hereto, and, to the extent that rights and
      obligations hereunder have been assigned to it pursuant to such Assignment
      and
      Acceptance, such assignee shall have the rights and obligations of a Lender
      hereunder and (y) the assignor thereunder shall, to the extent that rights
      and obligations hereunder have been assigned by it pursuant to such Assignment
      and Acceptance,

    
      
        
        

      

      
        44

        
          

        

      

      
        
        
 relinquish
        its rights (other than any rights it may have pursuant to Section 9.4 which
        will
        survive) and be released from its obligations under this Agreement (and,
        in the
        case of an Assignment and Acceptance covering all or the remaining portion
        of an
        assigning Lender’s rights and obligations under this Agreement, such Lender
        shall cease to be a party hereto).

    

     

    d. Within
      5
      Business Days after demand by Agent, Borrower shall execute and deliver to
      Agent
      in exchange for any surrendered Revolving Credit Note (which the assigning
      Lender agrees to promptly deliver to Borrower) a new Revolving Credit Note
      to
      the order of the assignee in an amount equal to the Pro Rata Share assumed
      by it
      pursuant to such Assignment and Acceptance, and if the assigning Lender has
      retained a Pro Rata Share hereunder, a new Revolving Credit Note to the order
      of
      the assigning Lender in an amount equal to the Pro Rata Share retained by it
      hereunder. Such new Revolving Credit Note shall re-evidence the indebtedness
      outstanding under the old Revolving Credit Notes or Revolving Credit Notes,
      and
      shall be in an aggregate principal amount equal to the aggregate principal
      amount of such surrendered Revolving Credit Note, shall be dated the Closing
      Date and shall otherwise be in substantially the form of the Revolving Credit
      Note subject to such assignments.

     

    e. Each
      Lender may sell participations (without the consent of Agent, Borrower or any
      other Lender) to one or more parties in or to all or a portion of its rights
      and
      obligations under this Agreement (including without limitation, all or a portion
      of its Pro Rata Share, the Revolving Credit Loans owing to it and the Revolving
      Credit Note held by it); provided that, (i) such Lender’s obligations under
      this Agreement (including without limitation, its Pro Rata Share to Borrower
      hereunder) shall remain unchanged, (ii) such Lender shall remain solely
      responsible to the other parties hereto for the performance of such obligations,
      (iii) such Lender shall remain the holder of any such Revolving Credit Note
      for
      all purposes of this Agreement, (iv) Borrower, Agent, and the other Lenders
      shall continue to deal solely and directly with such Lender in connection with
      such Lender’s rights and obligations under this Agreement and (v) such Lender
      shall not transfer, grant, assign or sell any participation under which the
      participant shall have rights to approve any amendment or waiver of this
      Agreement except to the extent such amendment or waiver would (A) extend
      the final maturity date or the date for the payments of any installment of
      fees
      or principal or interest of any Revolving Credit Loan or Reimbursement
      Obligations in which such participant is participating, (B) reduce the amount
      of
      any installment of principal of the Loans or Letter of Credit reimbursement
      obligations in which such participant is participating, (C) except as
      otherwise expressly provided in this Agreement, reduce the interest rate
      applicable to the Revolving Credit Loans or Reimbursement Obligations in which
      such participant is participating, or (D) except as otherwise expressly
      provided in this Agreement, reduce any Fees payable hereunder.

     

    f. Each
      Lender agrees that, without the prior written consent of Borrower and Agent,
      it
      will not make any assignment or sell a participation hereunder in any manner
      or
      under any circumstances that would require registration or qualification of,
      or
      filings in respect of, any Revolving Credit Loan, Revolving Credit Note, or
      other Obligation under the securities laws of the United States of America
      or of
      any jurisdiction.

     

    g. In
      connection with the efforts of any Lender to assign its rights or obligations
      or
      to participate interests, Agent or such Lender may disclose any information
      in
      its possession regarding Borrower, its finances and/or Property.

     

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

    10.13 Successors
      and Assigns:
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      assigns of each of the parties. Borrower may not transfer, assign or delegate
      any of its duties or obligations hereunder.

     

    10.14 Duplicate
      Originals:
      Two or
      more duplicate originals of this Agreement may be signed by the parties, each
      of
      which shall be an original but all of which together shall constitute one and
      the same instrument. This Agreement may be executed in counterparts, all of
      which counterparts taken together shall constitute one completed fully executed
      document.

     

    10.15 Modification:
      No
      modification hereof or any agreement referred to herein shall be binding or
      enforceable unless in writing and signed by Borrower, Agent and Lenders except
      as provided in Section 10.11 hereof. Any modification in accordance with the
      terms hereof shall be binding on all parties hereto, whether or not each is
      a
      signatory thereto. 

     

    10.16 Signatories:
      Each
      individual signatory hereto represents and warrants that he is duly authorized
      to execute this Agree-ment on behalf of his principal and that he executes
      the
      Agreement in such capacity and not as a party. 

     

    10.17 Third
      Parties:
      No
      rights are intended to be created hereunder, or under any related agreements
      or
      documents for the benefit of any third party donee, creditor or incidental
      beneficiary of Borrower. Nothing contained in this Agreement shall be construed
      as a delegation to Agent or any Lender of Borrower's duty of performance,
      including, without limitation, Borrower's duties under any account or contract
      with any other Person. 

     

    10.18 Discharge
      of Taxes, Borrower's Obligations, Etc.:
      Agent,
      in its sole discretion, shall have the right at any time, and from time to
      time,
      if Borrower fails to timely perform in accordance with this Agreement, to:
      (a)
      pay for the performance of any of Borrower's Obligations hereunder, and (b)
      discharge taxes or Liens, at any time levied or placed on any of Borrower's
      Property in violation of this Agreement unless such entity is in good faith
      with
      due diligence by appropriate proceedings contesting such taxes or Liens and
      maintaining proper reserves therefore in accordance with GAAP. Expenses and
      advances shall be added to the Revolving Credit, bear interest at the same
      rate
      applied to the Revolving Credit, until reimbursed to Agent. Such payments and
      advances made by Agent shall not be construed as a waiver by Agent or Lenders
      of
      an Event of Default under this Agreement. 

     

    10.19 Withholding
      and Other Tax Liabilities:
      Each
      Lender shall have the right to refuse to make any Advances from time to time
      unless Borrower shall, at Agent’s request, have given to Agent evidence,
      reasonably satisfactory to Agent, it has properly deposited or paid, as required
      by law, all withholding taxes and all federal, state, city, county or other
      taxes due up to and including the date of the requested Advance. Copies of
      deposit slips showing payment shall likewise constitute satisfactory evidence
      for such purpose. In the event that any lien, assessment or tax liability
      against Borrower, or any of them, shall arise in favor of any taxing authority,
      whether or not notice thereof shall be filed or recorded as may be required
      by
      law, Agent shall have the right (but shall not be obligated, nor shall Agent
      or
      any Lender hereby assume the duty) to pay any such lien, assessment or tax
      liability by virtue of which such charge shall have arisen; provided, however,
      that Agent shall not pay any such tax, assessment or lien if the amount,
      applicability or validity thereof is being contested in good faith and by
      appropriate proceedings 

    
      
        
        

      

      
        46

        
          

        

      

      
        
        
by
        such
        entity. In order to pay any such lien, assessment or tax liability, Agent
        shall
        not be obliged to wait until said lien, assessment or tax liability is filed
        before taking such action as hereinabove set forth. Any sum or sums which
        Agent
        (shared ratably by Lenders) shall have paid for the discharge of any such
        lien
        shall be added to the Revolving Credit and shall be paid by Borrower to Agent
        with interest thereon, upon demand, and Agent shall be subrogated to all
        rights
        of such taxing authority against Borrower. 

    

     

    10.20 Consent
      to Jurisdiction:
      Borrower, Agent, Issuing Bank and each Lender hereby irrevocably consent to
      the
      non-exclusive jurisdiction of the Courts of the Commonwealth of Pennsylvania
      or
      the United States District Court for Commonwealth of Pennsylvania in any and
      all
      actions and proceedings whether arising hereunder or under any other agreement
      or undertaking. Borrower waives any objection which Borrower may have based
      upon
      lack of personal jurisdiction, improper venue or forum
      non conveniens.
      Borrower irrevocably agrees to service of process by certified mail, return
      receipt requested to the address of the appropriate party set forth
      herein.

     

    10.21 Waiver
      of Jury Trial:
      BORROWER, AGENT, ISSUING BANK AND EACH LENDER HEREBY WAIVE ANY AND ALL RIGHTS
      IT
      MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION, PROCEEDING OR
      COUNTERCLAIM ARISING WITH RESPECT TO RIGHTS AND OBLIGATIONS OF THE PARTIES
      HERETO OR UNDER THE LOAN DOCUMENTS OR WITH RESPECT TO ANY CLAIMS ARISING OUT
      OF
      ANY DISCUSSIONS, NEGOTIATIONS OR COMMUNICATIONS INVOLVING OR RELATED TO ANY
      PROPOSED RENEWAL, EXTENSION, AMENDMENT, MODIFICATION, RESTRUCTURE, FORBEARANCE,
      WORKOUT, OR ENFORCEMENT OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN
      DOCUMENTS.

     

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF, the undersigned parties have executed this Agreement the day
      and year first above written.

     

    
      	
              BORROWER:

               

            	 	
              RESOURCE
                AMERICA, INC.

               

            
	 	 	 
	 	 	
              By:
                 _____________________________

               

              Name: _____________________________

               

              Title: _____________________________

               

            
	 	 	 
	
              AGENT:

               

            	 	
              COMMERCE
                BANK, N.A., as Agent

               

            
	 	 	
              By:
                 _____________________________

               

              Name: _____________________________

               

              Title: _____________________________

               

            
	 	 	 
	
              LENDERS:

               

            	 	
              COMMERCE
                BANK, N.A., as Lender

               

            
	 	 	
              By:
                 _____________________________

               

              Name: _____________________________

               

              Title: _____________________________

               

            

    

    
      
        
          

        

        
        

      

      
        48

        
          

        

      

      
        
        

        
        

      

    

    Exhibit
      A - Form of Authorization Certificate

     

    

    Authorization
      Certificate

    

     

    Date:
      _______________

     

    Commerce
      Bank, N.A.

    Attn:
      Gerard Grady

    1701
      Route 70 East

    Cherry
      Hill, NJ 08034

    

    Dear
      Jerry:

    

    The
      following individuals are authorized to request loan advances against Resource
      America, Inc.’s ("Borrower") Revolving Credit, and transfer funds from any of
      the Borrower’s accounts per written instructions received via fax:

    

    

    Authorized
      Person   Title    Signature

    

    

    1. _________________ 
      _____________________ _______________________

    

    2. _________________ 
      _____________________ _______________________

    

    3. _________________ 
      _____________________ _______________________

    

    

    Resource
      America, Inc.

    

    

    By:_____________________________________

    Name:

    Title:

    

    Accepted:

    

    Commerce
      Bank, N.A.

    

    

    By:       

    Name:

    Title:

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Exhibit
      B - Form of Borrowing Request

     

     

    Form
      of Borrowing Request

     

    

    To: COMMERCE
      BANK, N.A.
      ("Agent")

    Attn:
      Gerard Grady

    1701
      Route 70 East

    Cherry
      Hill, NJ 08034 

    

    

    Resource
      America, Inc. (“Borrower”) hereby requests an Advance in the amount of
      $___________ pursuant to Section 2.3 of that certain Loan Agreement, by and
      among Agent, Borrower, and Lenders dated August __, 2006 (the "Loan
      Agreement"). Borrower hereby requests that such Advance be a (select one) Prime
      Rate Loan/LIBOR Rate Loan. If a LIBOR Rate Loan, then the requested LIBOR
      Interest Period is ______________. Capitalized terms used in this Borrowing
      Request, unless otherwise defined herein, shall have the meaning set forth
      in
      the Loan Agreement.

     

    Borrower
      hereby represent and warrant to Lenders as follows:

     

    a. There
      exists no Default or Event of Default under the Loan Agreement.

     

    b. All
      representations, warranties and covenants made in the Loan Agreement are true
      and correct as of the date hereof.

     

    c. The
      aggregate principal amount of all Advances outstanding under the Revolving
      Credit, after giving effect to this request are $_____________.

     

    d. The
      number of LIBOR Rate Loans after giving effect to this Advance request will
      be
      ____ (may not exceed four).

     

    RESOURCE
      AMERICA, INC.

    

    

    By:       

    Name:

    Title:

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Exhibit
      C - Form of Borrowing Base Certificate

     

    

    BORROWING
      BASE CERTIFICATE #___________

    

    

    Dated:_________________

    

    To
      induce
      Lenders, as defined in the Loan Agreement (as defined below), to make Advances
      under the Revolving Credit established pursuant to a Loan Agreement
      dated August ___, 2006, among Commerce Bank, N.A., as agent and issuing
      bank, Borrower and Lenders, and any amendments thereto (herein called the
      "Agreement"), Borrower hereby certifies, as of the date above, as follows
      (capitalized terms, used without further definition herein, shall have the
      meanings set forth in the Loan Agreement):

     

    1. The
      Borrowing Base, determined in accordance with the Agreement, is as
      follows:

    

    a. Market
      value of Collateral     
$___________

    

    b. 80%
      of
      Item
      (a)                                                                                     
$  

    

    c. Maximum
      Revolving Credit
      Amount                                                 
$  

    

    d. Borrowing
      Base - lesser of item (b) or
      (c)                                      
$  

    

    e. Current
      outstanding amount of Advances

    (Prior
      to
      requested
      Advance)                                                 
$  

    

    f. Plus:
      Advance
      Request                                                                       
$

    

    g. Sum
      of
      item (e) plus
      (f)                                                                        
$  

    

    h. Excess
      availability
      /(overadvance)*                                                 
$  

    *Calculated
      by the Borrowing Base (d)

    minus
      item (g).

    

    

    (2) Borrower
      hereby certifies that there is no Default or Event of Default outstanding under
      the Agreement.

    

    (3) Borrower
      hereby certifies that the information contained herein is true and
      correct.

    

    Resource
      America, Inc.

    

    

    By:_______________________________

    Name:

    Title:

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Exhibit
      D - Form of Compliance Certificate

     

     

    ____________,
      200__

    Commerce
      Bank, N.A.

    Attn:
      Gerard Grady

    1701
      Route 70 East

    Cherry
      Hill, NJ 08034

    

    

    The
      undersigned, an Authorized Officer of Resource America, Inc. ("Borrower"),
      gives
      this certificate to Commerce Bank, N.A. ("Agent"), in accordance with the
      requirements of Section 6.10 of that certain Loan Agreement dated August
      ___, 2006, by and among Agent, Borrower, and Lenders ("Loan Agreement").
      Capitalized terms used in this Certificate, unless otherwise defined herein,
      shall have the meanings set forth in the Loan Agreement.

     

    1. Based
      upon my review of the consolidated balance sheets and statements of income
      of
      Borrower for the fiscal period ending _____________, 2006, copies of which
      are
      attached hereto, I hereby certify that:

    

    a. Borrower's
      Net Worth is     ;

    

    b. Borrower's
      Senior Debt to Net Worth Ratio is   ;

    

    Attached
      as Schedule "A" are the details underlying such financial covenant
      calculations.

    

    2. No
      Default exists on the date hereof, other than: ____________________ [if none,
      so
      state]; and

    

    3. No
      Event
      of Default exists on the date hereof, other than: __________________ [if none,
      so state].

    

    RESOURCE
      AMERICA, INC.

    

    By:     

    Name:

    Title:

    

     

    

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    SCHEDULE
      A

     

    
 

    
      	
              Lenders

            	
              Pro
                Rata
                Percentage

            	
               

              Pro
                Rata Share

            
	 	 	 
	
              Commerce
                Bank, N.A.

            	
              100%

            	
              25,000,000

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      B

     

    

     

    Commerce
      Bank, N.A.

    1701
      Route 70 East

    Cherry
      Hill, NJ 08034

    Attn: Mr.
      Gerard Grady

    Telecopy:
      (856) 751-6884

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