SIXTH AMENDMENT TO REVOLVING
CREDIT AGREEMENT AND ASSIGNMENT
THIS SIXTH AMENDMENT TO REVOLVING CREDIT AGREEMENT AND ASSIGNMENT (this
"Sixth Amendment") made as of June 20, 2004, by and among LEAF FINANCIAL
CORPORATION, a Delaware corporation with offices at 1845 Walnut Street, 10th
Floor, Philadelphia, Pennsylvania 19103 ("Leaf Financial") and LEAF FUNDING,
INC., a Delaware corporation with offices at 110 S. Poplar Street, Suite 101,
Wilmington, Delaware 19801 ("Leaf Funding", and together with Leaf Financial,
each a "Debtor" and, collectively, the "Debtors") and NATIONAL CITY BANK, a
national banking association with offices at One South Broad, 13th Floor,
Philadelphia, Pennsylvania 19107 ("Secured Party").
BACKGROUND
A. On June 11, 2002, Leaf Financial and Secured Party entered into that
certain Revolving Credit Agreement and Assignment (the "Credit Agreement"),
pursuant to which Secured Party promised from time to time to make loans to Leaf
Financial, evidenced by a master note of even date therewith.
B. On April 1, 2003, the Credit Agreement was amended to add Leaf
Funding as a debtor pursuant to a Second Amendment to the Credit Agreement of
even date therewith. The Credit Agreement has thereafter been amended from time
to time.
C. Debtors and Secured Party mutually desire to further amend the
Credit Agreement and are entering into this Sixth Amendment to set forth their
entire understanding and agreement with respect thereto.
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, and intending to be legally bound hereby, the
parties hereto agree that the Credit Agreement is further amended as follows:
Amendments. The Credit Agreement is hereby further amended in the
following respects effective as of the date hereof:
1. The "Commitment" amount described in Section 1(a) of the
Credit Agreement is hereby increased up to an aggregate principal amount of
Twenty Million Dollars ($20,000,000).
2. Section 6(p) of the Credit Agreement is hereby amended and
restated as follows:
Financial Covenants. The Borrowers shall, on a combined basis:
(i) maintain a minimum ADJUSTED NET WORTH of Eight
Hundred Thousand Dollars ($800,000) from the date hereof and
hereafter through and including the termination of this
Agreement, plus fifty percent (50%) of consolidated quarterly
net income (without any reduction for losses) commencing with
the quarter ended September 30, 2002.
(ii) maintain an INTEREST COVERAGE RATIO of at least
1.10:1 to be measured quarterly from the quarter ending
December 31, 2003 until termination of this Agreement. As used
herein "Interest Coverage Ratio" means earnings before
interest expense, taxes, depreciation and amortization
("EBITDA") divided by interest expense (excluding non-cash
interest expense on Subordinated Debt).
(iii) maintain a SENIOR LEVERAGE RATIO (as defined
below) no greater than 5:1.
As used herein "Adjusted Net Worth" means Net Worth
plus the non-current portion of Subordinated Debt. "Net Worth"
means the sum of capital stock, plus retained earnings, plus
paid-in-surplus, minus treasury stock. "Subordinated Debt"
means all Borrowers' debt which is specifically junior and
subordinated to the Indebtedness on terms satisfactory to
Secured Party. The "Senior Leverage Ratio" shall be calculated
by dividing the Borrowers' Combined Recourse Debt by the
Borrowers' Adjusted Net Worth. "Combined Recourse Debt" means
all Borrowers' debts, liabilities and obligations, excluding
all accounts payable, income taxes payable, accrued
liabilities, non-subordinated debt, intercompany borrowings
and non-recourse debt.
3. The definition "Borrowing Base" in Section 11 of the Credit
Agreement is hereby amended and restated as follows:
"Borrowing Base" shall mean the lesser of (i) eighty-five
percent (85%) of the present value of the cash flow stream
from the underlying leases or (ii) the original underlying
lease amount.
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4. The "Commitment Termination Date" described in Section 1(a)
of the Credit Agreement shall occur on April 30, 2005, unless earlier terminated
pursuant to the terms of the Credit Agreement.
B. Consent. Secured Party hereby consents to the foregoing Amendment
and waives all prohibitions thereto in the Credit Agreement. Such consent and
waiver does not, however, constitute a waiver to any future actions prohibited
by the Credit Agreement.
C. General Provisions.
1. Except as expressly set forth herein, the Credit Agreement
remains unmodified and will continue in full force and effect. The parties
hereto will construe all other provisions of the Credit Agreement to give effect
to the provisions hereof.
2. This Sixth Amendment shall be binding upon and shall inure
to the benefit of the parties hereto and their nominees, successors and assigns.
3. This Sixth Amendment may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all parties have not signed the same
counterpart.
4. This Sixth Amendment shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed and delivered this Sixth
Amendment to Revolving Credit Agreement and Assignment as of the date first
above written.
DEBTORS:
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Address for Notices: LEAF FINANCIAL CORPORATION, a
- ------------------------------ Delaware corporation
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
By:
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Miles Herman, President
Address for Notices: LEAF FUNDING, INC., a Delaware
- ------------------------------ corporation
c/o Leaf Financial Corporation
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
By:
--------------------------------------
Miles Herman, Senior Vice President
SECURED PARTY:
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NATIONAL CITY BANK, a national
banking association
By:
--------------------------------------
Name:
Title:
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