AMENDMENT NO. 6 TO SECURED LOAN AGREEMENT
EXECUTION COPY
AMENDMENT NO. 6 TO SECURED LOAN AGREEMENT
AMENDMENT TO SECURED LOAN AGREEMENT (this “Amendment”) dated as of March 6, 2009, among WESTLB
AG, NEW YORK BRANCH (the “Lender”), U.S. BANK NATIONAL ASSOCIATION, a national banking
association (the “Collateral Agent” and “Securities Intermediary”), LEASE EQUITY
APPRECIATION FUND II, L.P., a Delaware limited partnership (“LEAF” or the
“Seller”), LEAF FINANCIAL CORPORATION, a Delaware corporation (the “Servicer”),
LEAF FUNDING, INC., a Delaware corporation (the “Originator”) and LEAF FUND II, LLC, a
Delaware limited liability company (the “Borrower”).
WITNESSETH:
WHEREAS, the parties hereto are parties to the Secured Loan Agreement, dated as of June 1,
2005 (as modified, amended or supplemented from time to time, the “Secured Loan
Agreement”);
WHEREAS, pursuant to Section 14.04 of the Secured Loan Agreement, the parties hereto wish to
amend the Secured Loan Agreement and hereby agree that the Secured Loan Agreement is hereby
amended; and
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
SECTION 1. Definitions.
(a) Whenever used in this Amendment, capitalized terms used and not otherwise defined
herein shall have the meanings set forth in Appendix A to the Secured Loan Agreement.
(b) Any term that relates to a document or a statute, rule, or regulation includes any
amendments, modifications, supplements, or any other changes that may have occurred since
the document, statute, rule, or regulation came into being, including changes that occur
after the date of this Amendment.
SECTION 2. Amendments.
(a) Section 2.01(c) is hereby amended by adding immediately before the “.” therein the
following:
“or (iii) when any Funding Termination Event has occurred and is continuing”
(b) Covenants of LEAF. Section 7.02 of the Secured Loan Agreement is
hereby amended by deleting the text of item (jj) thereof and substituting therefor the word
“[Reserved]”.
(c) Event of Default. Section 8.01 of the Secured Loan Agreement is hereby
amended by deleting the text of Subsections (l), (m), (n) and (w) thereof and substituting
therefor the word “[Reserved]”.
(d) Change of Control. The definition of Change of Control in Appendix
A of the Secured Loan Agreement is hereby amended by deleting the text of item (iv)
thereof and substituting therefor the following:
“(iv) any two of the following Persons shall cease to be employed by any LEAF Party in
either (A) the position in which such Person was so employed as of the Closing Date or (B) a
more senior position: Crit XxXxxx, Xxxxx Xxxxxx and Xxxxx X. English.”
(e) The definitions of Advance Amount, Applicable Margin, Facility Termination Event,
Non Performing Asset, Non-Use Fee, Required Credit Support Amount, Required Reserve Account
Floor Amount, Required Reserve Account Percentage, Senior Leverage Ratio, Serviced Portfolio
and Static Pool Test in Appendix A shall be struck in their entirety and replaced
with:
“Advance Amount” means, as of any date of determination, the amount equal to
the least of:
(a) the Advance Rate times the Implicit Principal Balance of all Eligible Contracts on
such date of determination, including the Contracts to be funded on such date;
(b) the Available Commitment, before taking into account the Advance on such date; and
(c) the Advance Rate, calculated assuming that the applicable percentage pursuant to
clause (b) of the definition of Required Credit Support Amount is 13.0%, times the
sum of the Implicit Principal Balance of all Eligible Contracts to be funded on such date.
“Applicable Margin” means, for each Advance, as of any date of determination:
(i) with respect to any Eligible Contracts funded on or prior to February 28, 2009 and prior
to the Facility Termination Date, 1.20%; (ii) with respect to any Eligible Contracts funded
after February 28, 2009 and prior to the Facility Termination Date, 2.50%; and (iii) on or
after the Facility Termination Date, 3.00%.
“Facility Termination Event” means the occurrence of any of the following: (i)
an Event of Default; (ii) a Funding Termination Event that remains in effect for two
consecutive Payment Dates as reported in the Monthly Servicer Report or otherwise; (iii) the
Cumulative Net Loss for all contracts in the Serviced Portfolio originated in a calendar
quarter exceeded the applicable percentages found in the column titled “Facility Termination
Event” in the definition of “Static Pool Test” for two or more consecutive calendar
quarters after such pool of contracts was originated; (iv) any event or circumstance
described in Subsections (d), (e), (h), (o) and (v) of Section 8.01
shall occur with respect to any LEAF Party; (v) any event or circumstance described in
Subsection (q) of Section 8.01 shall occur with respect to LEAF; (vi) a
Servicer Termination Event (if the Servicer is a LEAF Party) set forth in Subsections
(vii), (viii), (ix), (x), (xi), (xii) and (xiii) of Section 6.01(a) of
the Servicing Agreement, shall have
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occurred and be continuing; (vii) any Change of Control
shall occur with respect to LEAF or the Borrower, unless the Lender shall have expressly
consented to such Change of Control in writing; (viii) LEAF shall have failed to maintain a
Senior Leverage Ratio no greater than 8.0:1.0; (ix) the Servicer shall have failed to
maintain (a) “Minimum Tangible Net Worth” (defined as stockholders’ equity plus subordinated
debt less intangibles, with no SFAS 133/138 adjustments) of $30,000,000 or (b) minimum
stockholders’ equity of $6,000,000 (with no SFAS 133/138 adjustments); and (x) LEAF shall
have defaulted (after giving effect to any and all notice, grace and cure periods) in
respect of any material Indebtedness for borrowed money.
“Non Performing Asset” means a Contract which is not a Defaulted Contract and
for which a related Customer is more than 121 days but less than 181 days contractually
delinquent.
“Non-Use Fee” means, with respect to any Payment Date on or prior to the
Facility Termination Date, a fee in an amount equal to the product of (a) one-twelfth
(1/12th), (b) 0.50%, and (c) the Maximum Facility Amount minus the daily average
Total Outstanding Advances during the preceding calendar month.
Required Credit Support Amount” means, the greatest of: (a) the product of (i)
the Weighted Average Life of the Eligible Contracts as of such date of determination
(including any Eligible Contracts to be funded on such date) multiplied by (ii) 3.0
multiplied by (iii) the average of the Annualized Default Ratios on the Securitized
Portfolio for the three most recently ended Collection Periods beginning with the calendar
quarter ending March 31, 2009; (b) the product of the Aggregate Implicit Principal Balance
of all Eligible Contracts times 9.45%, for all dates on or prior to March 31, 2009, 9.90 %,
for all dates after March 31, 2009 but on or prior to April 30, 2009, 10.35%, for all dates
after April 30, 2009 but on or prior to May 31, 2009, 10.80%, for all dates after May 31,
2009 but on or prior to June 30, 2009, 11.25%, for all dates after June 30, 2009 but on or
prior to July 31, 2009, 11.70%, for all dates after July 31, 2009 but on or prior to August
30, 2009 and 13.0%, for all dates after August 30, 2009; or (c) $15,000,000.
“Required Reserve Account Floor Amount” means $750,000.
“Required Reserve Account Percentage” means (a) on any date prior to a Reserve
Account Step-Up Event or any date after a Reserve Account Step-Up Event has been cured for
the third consecutive Collection Period, 1.00% and (b) on any date on or after a Reserve
Account Step-Up Event which has not been cured for three consecutive Collection Periods,
3.00%.
“Senior Leverage Ratio” means, with respect to LEAF, the result obtained by
dividing LEAF’s Combined Recourse Debt by LEAF’s Adjusted Partner’s Capital.
For such determination, “Combined Recourse Debt” means all of LEAF’s debts and
liabilities, but excluding third party accounts payable, accrued expenses, non-recourse
debt, SFAS 133/138 adjustments (if any) and intercompany obligations less applicable cash
then on deposit in the “Lockbox Account,” and “Adjusted Partner’s Capital” means
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partner’s
capital plus subordinated debt, if any (in accordance with GAAP with no SFAS 133/138
adjustments) plus “Due to General Partner”. For such determination, “Due to General
Partner” means amounts, as set forth in the financial statements of LEAF, that are due to
LEAF Financial Corporation and its affiliates, as general partner of LEAF, for management
fees and expenses due for servicing the Securitized Portfolio in addition to amounts LEAF
Financial Corporation has paid for property taxes due on the Securitized Portfolio that have
been billed to Customers.
“Serviced Portfolio” means the aggregate amount of contracts for the lease or
financing of equipment serviced by the Servicer.
“Static Pool Test” means, the Cumulative Net Loss of the Serviced Portfolio
shall not exceed the percentages specified below, otherwise either a Reserve Account Step-Up
Event or a Facility Termination Event will be deemed to have occurred.
Cumulative Net Losses
| Reserve Account | Facility | |||||||
| Calendar Quarter Since Contract Origination | Step-Up Event | Termination Event | ||||||
1 |
2.50 | % | 3.00 | % | ||||
2 |
3.50 | % | 4.00 | % | ||||
3 |
4.00 | % | 4.50 | % | ||||
4 |
4.25 | % | 4.75 | % | ||||
5 |
4.50 | % | 5.00 | % | ||||
6 |
4.75 | % | 5.25 | % | ||||
7 |
5.25 | % | 5.75 | % | ||||
8 |
5.50 | % | 6.00 | % | ||||
9 and after |
5.75 | % | 6.25 | % | ||||
(d) The following definitions shall be added to Appendix A to the Secured Loan
Agreement in the appropriate alphabetical order:
“Funding Termination Event” means the occurrence of any of the following: (i)
the average of the Annualized Default Ratios on the Serviced Portfolio for the three most
recently ended Collection Periods exceeds 4.50%; (ii) the average of the Annualized Default
Ratios on the Securitized Portfolio for the three most recently ended Collection Periods
exceeds 3.50%; (iii) the average of the NPA Ratios for the Serviced Portfolio for the three
most recently ended Collection Periods exceeds 4.75%; or (iv) the average of the NPA Ratios
for the Securitized Portfolio for the three most recently ended Collection Periods exceeds
3.50%.
“Reserve Account Step-Up Event” means the occurrence of any of the following:
(i) the average of the Annualized Default Ratios on the Serviced Portfolio for the three
most recently ended Collection Periods exceeds 3.50%; (ii) the average of the NPA Ratios for
the Serviced Portfolio for the three most recently ended Collection Periods exceeds 3.75%;
(iii) the average of the NPA Ratios for the Securitized Portfolio for the three most
recently ended Collection Periods exceeds 2.50%; (iv) the average of
the Annualized Default Ratios on the Securitized Portfolio for the three most recently
ended Collection Periods exceeds 2.50%; and (v) the Cumulative Net Loss for all contracts in
the Serviced Portfolio originated in a calendar quarter exceeded the
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applicable percentages
found in the column titled “Reserve Account Step-Up Event” in the definition of “Static Pool
Test”.
(e) On or after the effective date of this Amendment, all references to the amount in
clause (ii) of the definition of “Applicable Margin” in the Secured Loan
Agreement shall mean and be a reference to the amount in clause (iii) of the
definition of “Applicable Margin” in this Amendment and all references to the amount
in clause (i) of the definition of “Applicable Margin” in the Secured Loan Agreement
shall mean and be a reference to the amount in clause (i) or clause (ii), as
applicable, of the definition of “Applicable Margin” in this Amendment.
(d) The Eligibility Criteria set forth in Exhibit D are hereby amended by:
(i) striking the text “and the Territory of Guam” from the second sentence of paragraph
(xxxvi) thereof;
(ii) deleting the word [Reserved] in paragraph (xlvii) thereof and substituting
therefor “With respect to any Contract to be funded after February 28, 2009, the Implicit
Principal Balance of such Contract is not greater than $500,000.”; and
(iii) deleting Section (liii) in its entirety and replacing it with the following:
“(liii) Each of the following criteria shall be satisfied with respect to each Contract
as of any date of determination:
(A) [reserved];
(B) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the percentage of Eligible Contracts (by Aggregate Implicit Principal Balance, as
of any date of determination) that do not provide for level Scheduled Payments thereunder
will not exceed 5.00% of the Aggregate Implicit Principal Balance of all Eligible Contracts;
(C) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the weighted average remaining term of all of the Eligible Contracts does not
exceed 48 months;
(D) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the percentage of the Equipment (by Aggregate Implicit Principal Balance, as of
any date of determination) with Customers located in any one state does not exceed 25.00% of
the Aggregate Implicit Principal Balance of the Eligible Contracts;
(E) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the percentage of the Eligible Contracts (by Aggregate Implicit
Principal Balance, as of any date of determination) with related Equipment that is of
the one type of Equipment most commonly related to the Eligible Contracts does not exceed
25.00%.
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(F) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) with respect to which (1) a Lien Certificate is
necessary to perfect a security interest in the related Equipment does not exceed 20.00% of
the Aggregate Implicit Principal Balance of all of the Eligible Contracts, (2) the Contract
was originated in, or the related Customer and Equipment are located in, the Commonwealth of
Puerto Rico does not exceed 3.00% of the Aggregate Implicit Principal Balance of all of the
Eligible Contracts or (3) the Equipment constitutes a fixture under applicable law in effect
in the State jurisdiction in which such Equipment is located, does not exceed 10.00% of the
Aggregate Implicit Principal Balance of all of the Eligible Contracts; provided that for any
Contract for which the related Equipment constitutes a fixture under applicable law, the
encumbrancer of the related real property shall have executed a waiver and consent in the
form of the Waiver & Consent — Landlord/Mortgagee attached hereto as Exhibit A, or in such
other commercially reasonable form containing the following key elements: name of property
owner, landlord or mortgagee; the list of Equipment in or subject to the related Contract;
acknowledgement that such Equipment belongs to the owner thereof under the related Contract;
the ability of the LEAF Originator, the Borrower or the Servicer to remove the Equipment in
a reasonable fashion and consistent with the Servicer’s or LEAF’s current requirements as
indicated in its policy and procedures; and, in substance, either or both of (x) a waiver by
the encumbrancer of the real property of any claim on the Equipment that is prior to the
LEAF Originator or its assigns or (y) a statement by the encumbrancer that the Equipment
shall not constitute a fixture.
(G) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) having the same related vendor or any one or more
related vendors each of whom are Affiliates of each other (1) does not exceed 6.00% of the
Aggregate Implicit Principal Balance of all Eligible Contracts or (2) if the unsecured
senior indebtedness of such vendor or of each such affiliated vendor is rated investment
grade by either Xxxxx’x or Standard & Poor’s, does not exceed 10.00% of the Aggregate
Implicit Principal Balance of all Eligible Contracts;
(H) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the Aggregate Implicit Principal Balance of Eligible Contracts (as of any date of
determination) with respect to which any one Person or any Affiliate of such Person is the
related Customer does not exceed 2.50% of the Aggregate Implicit Principal Balance of all
Eligible Contracts;
(I) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the Aggregate Implicit Principal Balance of Eligible Contracts (as of any date of
determination) with respect to which any three (3) Persons who are not Affiliates of each
other (but including any Affiliates of each such Person) is the related
Customer does not exceed 7.00% of the Aggregate Implicit Principal Balance of all
Eligible Contracts;
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(J) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the Aggregate Implicit Principal Balance of Eligible Contracts (as of any date of
determination) having a deferred first Scheduled Payment does not exceed 5.00% of the
Aggregate Implicit Principal Balance of all Eligible Contracts, and no such deferral period
exceeds 90 days; and
(K) after giving effect to the addition of the Contract to the pool of Eligible
Contracts, the percentage of the Eligible Contracts (by Aggregate Implicit Principal
Balance, as of any date of determination) that are Business Acquisition Loans is not greater
than 5.00% of the Aggregate Implicit Principal Balance of the Eligible Contracts.
SECTION 3. Effective Date. The effective date of this Amendment shall be February 28,
2009.
SECTION 4. Representations and Warranties.
Borrower, LEAF and Servicer each hereby severally certifies as to itself that its respective
representations and warranties set forth in Article VI of the Secured Loan Agreement (and any other
representations and warranties made by Borrower, LEAF or Servicer in the Secured Loan Agreement)
are true and correct on the date hereof with the same force and effect as if made on the date
hereof, except to the extent such representations and warranties speak specifically to an earlier
date in which case they shall have been true and correct on such date. In addition, Borrower, LEAF
and Servicer each severally represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) that (a) no unwaived Facility Termination Event (nor any
event that but for notice or lapse of time or both would constitute an unwaived Facility
Termination Event) shall have occurred and be continuing as of the date hereof nor shall any
unwaived Facility Termination Event (nor any event that but for notice or lapse of time or both
would constitute an unwaived Facility Termination Event) occur due to this Amendment becoming
effective, (b) Borrower, LEAF and Servicer each has the power and authority to execute and deliver
this Amendment and has taken or caused to be taken all necessary actions to authorize the execution
and delivery of this Amendment, (c) no consent of any other person (including, without limitation,
members or creditors of Borrower, LEAF or Servicer), and no action of, or filing with any
governmental or public body or authority is required to authorize, or is otherwise required in
connection with the execution and performance of this Amendment, other than such that have been
obtained, (d) the Secured Loan Agreement, as amended by this Amendment, constitutes the legal,
valid and binding obligation of Servicer, LEAF and the Borrower, enforceable against them in
accordance with its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, moratorium, reorganization and other similar laws of general application affecting
creditors’ rights generally and by general principles of equity (whether such enforceability is
considered in a proceeding in equity or law), and (e) the execution, delivery and performance of
this Amendment will not violate any provision of any existing law or regulation or any order or
decree of any court, regulatory body or administrative agency or the certificate of formation or
the limited liability company
agreement of Servicer, LEAF or Borrower or any material indenture, agreement, mortgage, deed
of trust or other instrument to which Servicer, LEAF or the Borrower is a party or by which it is
bound.
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SECTION 5. Ratification. Upon execution of this Amendment, the Secured Loan Agreement
shall be amended in accordance herewith, and the respective rights, limitations, obligations,
duties, liabilities and immunities of the parties shall hereafter be determined, exercised and
enforced subject in all respects to such amendments, and the terms of this Amendment shall be a
part of the Secured Loan Agreement for any and all purposes. Except as modified and expressly
amended by this Amendment, the Amendment is in all respects ratified and confirmed, and all the
terms, provisions and conditions thereof shall be and remain in full force and effect.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL, IN ACCORDANCE WITH SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF.
SECTION 7. Counterparts. For the purpose of facilitating the execution of this
Amendment and for other purposes, this Amendment may be executed simultaneously in any number of
counterparts, each of which shall be deemed to be an original and together shall constitute and be
one and the same instrument.
SECTION 8. Severability of Provisions. If any one or more of the provisions or terms
of this Amendment shall be for any reason whatsoever held invalid, then such provisions or terms
shall be deemed severable from the remaining provisions or terms of this Amendment and shall in no
way affect the validity or enforceability of the other provisions or terms of this Amendment.
SECTION 9. Amendment. This Amendment may be amended or modified from time to time by
the parties hereto, but only by an instrument in writing signed by each of the parties hereto.
SECTION 10. Headings. The Section headings are not part of this Amendment and shall
not be used in its interpretation.
[REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year
first above written.
| LEAF FUND II, LLC, as Borrower |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | VP, Equipment Leasing | |||
| LEASE EQUITY APPRECIATION FUND II, L.P., as Seller |
||||
| By: | LEAF FINANCIAL CORPORATION, | |||
| as General Partner | ||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | President/ COO | |||
| LEAF FINANCIAL CORPORATION, as Servicer |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | President/ COO | |||
| LEAF FUNDING, INC., as Originator |
||||
| By: | /s/ Xxxxx Xxxxxx | |||
| Name: | Xxxxx Xxxxxx | |||
| Title: | Senior Vice President | |||
Amendment No. 6 to Secured Loan Agreement — LEAF II
| U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent and Securities Intermediary |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | Vice President | |||
Amendment No. 6 to Secured Loan Agreement — LEAF II
| WESTLB AG, NEW YORK BRANCH, as Lender |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Name: | Xxxxxxx X. Xxxxx | |||
| Title: | Executive Director | |||
| By: | /s/ Xxxxxxxxx Xxxxxx | |||
| Name: | Xxxxxxxxx Xxxxxx | |||
| Title: | Director | |||
Amendment No. 6 to Secured Loan Agreement — LEAF II
