EXHIBIT 10.1
FORM OF ORIGINATION & SERVICING AGREEMENT
EXHIBIT 10.1
ORIGINATION & SERVICING AGREEMENT
ORIGINATION & SERVICING AGREEMENT, dated as of the 15 day of April,
2005 (the "Agreement") by and between LEASE EQUITY APPRECIATION FUND II, L.P.
("LEAF Fund II"), a Delaware limited partnership having its principal place of
business at 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx, XX 00000, LEAF
FINANCIAL CORPORATION, INC. ("LEAF Financial"), a Delaware corporation having
its principal place of business at 000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
XX 00000, and LEAF FUNDING, INC. ("LEAF Funding"), a Delaware corporation having
its principal place of business at 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx,
XX 00000.
WHEREAS, LEAF Fund II is engaged in the business of acquiring a
diversified portfolio of equipment that it leases to third-parties ("Equipment
Leases"), and to a limited extent financing the acquisition of equipment by end
users("Secured Loans");
WHEREAS, LEAF Fund II desires to retain LEAF Funding (the "Originator")
as the originator of the Equipment Leases and the Secured Loans;
WHEREAS, LEAF Fund II desires to retain LEAF Financial (the "Servicer")
as the servicer of the Equipment Leases and the Secured Loans; and
WHEREAS, LEAF Funding and LEAF Financial are willing to originate and
service all of the Equipment Leases and Secured Loans;
NOW THEREFORE, in consideration of the covenants set forth in this
Agreement and other good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement agree as follows:
1. APPOINTMENT; STANDARD OF CARE; DUTIES OF THE ORIGINATOR AND THE SERVICER
The Originator and the Servicer are each hereby authorized to act as
an agent for LEAF Fund II and in that capacity shall originate, manage, service,
administer and make collections on the Equipment Leases and Secured Loans and
perform any other reasonable actions that may be required by LEAF Fund II under
this Agreement. The Servicer agrees that its servicing of the Equipment Leases
and Secured Loans shall be carried out in accordance with customary and usual
procedures of institutions which service equipment leases and Secured Loans,
unless there is a specific requirement dictated by LEAF II.
(a) The Originator's duties shall include, without limitation, the
following:
1. Lease Origination
Originate Equipment Leases and Secured Loans through direct
and indirect origination strategies. Direct originations will
involve marketing to direct vendors' and resellers, which will
offer leasing as a financing option as part of the vendors and
resellers' overall equipment package. The indirect strategy
will involve acquiring Equipment Leases from other equipment
lessors, including captives of manufacturers, banks and other
financial services companies.
(b) The Servicer's duties shall include, without limitation, the
following:
1. Underwriting
Development and ongoing updates of credit evaluation systems,
including automatic extraction of credit information from
online databases; credit scoring and credit analyst review.
2. Receivables Management
Monthly invoicing including detailed breakdown of lease
payments and misc. items and collection of lease revenues. The
Servicer will have the authority to manage the lease
receivables as well as write-off Equipment Leases.
3. Syndicate Transactions
Syndicate Equipment Lease transactions and/or portions of
Equipment Lease portfolios to third-parties, or other
additional related parties, where applicable to enhance income
and/or manage risk.
4. System Development and Integration
Develop and integrate systems to provide fully automated
processing of Equipment Leases, including:
o a management system establishing Equipment Leasing program
relationships with direct sales organizations;
o sales and marketing database management systems that
provide vendor sales relationship development and tracking
tools;
o application management system;
o credit scoring system that automates the task of
evaluating high volumes of small ticket Equipment Lease
applications;
o contract management system that provides electronic
invoice generation, payment posting technologies and
collections and customer service screens;
o accounting and financial management system that will
provide financial management of portfolio from
securitization reporting to financial pro forma generating
tools and investor reporting.
5. Set Residuals and Manage Residual Realization
Establish and monitor residual value assessments of equipment
using information from any one or more of a number of sources,
including management's prior experience, secondary market
publications, interviews with manufacturers and used equipment
dealers, auction sales guides, historical sales data, industry
organizations and valuation companies.
Manage residual realization by: re-leasing equipment to
existing lessees; automatically extending Equipment Leases on
a month to month basis; selling equipment to lessees at the
end of the Equipment Lease or at the end of the extension of
the Equipment Lease; and selling equipment that is returned at
the end of the Equipment Lease either to the original vendor
or to used equipment dealers.
6. Ongoing Portfolio Integrity
Evaluate the Equipment Lease portfolio on an ongoing basis,
including review for completeness and accuracy of
documentation; review and verify lessee and user payment
histories; evaluate underlying equipment or other collateral
and verify values; obtain credit reports and/or credit scores
for a representative number of Equipment Leases and perform
UCC lien searches.
7. Development and Documentation of Marketing Materials
Develop marketing material specific to each program,
including:
o a sales kit, which shall include a sales jacket along with
lease agreements, a rate card, and specific lease products
of a vendor; and
o a lease program and a benefit flyer to assist vendor sales
forces in presenting the lease option to customers.
8. Secured Loans
To the extent applicable, the Servicer's duties described
above in this Section 1(b) shall include the Secured Loans.
2. TERM AND TERMINATION
This Agreement shall be deemed effective on execution by LEAF II, LEAF
Funding and LEAF Financial. The term of this Agreement shall continue from that
effective date for three (3) years and shall automatically renew for additional
one-year periods unless earlier terminated by LEAF II. LEAF II may terminate
this Agreement at any time by giving the other parties at least thirty (30) days
written notice of termination. At the termination date specified in LEAF II's
notice, the obligations of the other parties with respect to the origination and
servicing of the Equipment Leases and Secured Loans shall terminate to the
extent they have not yet been performed or are not required by this Agreement to
have been performed before that termination date.
3. FEES AND EXPENSES
In consideration of the above described services, the Originator and
the Servicer shall receive certain fees and be reimbursed for expenses as set
forth in the Amended and Restated Agreement of Limited Partnership of Lease
Equity Appreciation Fund II, L.P.
4. MISCELLANEOUS PROVISIONS
(a) Assignability. The rights and obligations of LEAF Funding and
LEAF Financial may only be assigned if the proposed
assignee(s) meets LEAF II's requirements and receives LEAF
II's written approval prior to the assignment.
(b) Notices. Notices under this Agreement shall be deemed to have
been given if mailed, postage prepaid, by registered or
certified mail, return receipt required, or by courier service
to the other parties at the address stated above or at any
other address as a party may have provided by written notice
to the other parties.
(c) Choice of Law; Venue; Waiver; Trial by Jury. This Agreement
shall be governed by the internal laws (as opposed to the
conflict of laws provisions) and decisions of the Commonwealth
of Pennsylvania. The parties to this Agreement consent to the
jurisdiction of any local, state, or federal court located
within Pennsylvania, and waive any objection relating to
improper venue or forum non conveniens to the conduct of any
proceeding in any such court and further waive any right to
have any claim or dispute arising from or related to this
Agreement by parties to this Agreement against one or more
parties to this Agreement, whether or not there are any
additional third-parties to the action or proceeding, heard by
a jury.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Assignment by their duly authorized officers as of the15 day of April, 2005.
Lease Equity Appreciation Fund II, L.P. LEAF Funding, Inc.
By: LEAF Financial Corporation By:
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Name: Crit XxXxxx
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its General Partner Title: CEO
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By:
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Name: Xxxxx Xxxxxx
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Title: President & COO
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LEAF Financial Corporation
By:
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Name:
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Title:
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