THIRD AMENDMENT TO REVOLVING
CREDIT AGREEMENT AND ASSIGNMENT
THIS THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT AND ASSIGNMENT (this
"Amendment") made as of June 18, 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, Inc.", and together with Leaf
Financial, each a "Borrower" and, collectively, the "Borrowers") and COMMERCE
BANK, NATIONAL ASSOCIATION, a national banking association with offices at 1701
Route 70 East, Cherry Hill, New Jersey 08034 ("Secured Party").
BACKGROUND
A. On May 28, 2003, Borrowers and Secured Party entered into Revolving
Credit Agreement and Assignment (the "Credit Agreement") pursuant to which
Secured Party promised from time to time to make loans to Borrowers evidenced by
that certain Master Note of even date therewith. The Credit Agreement was
thereafter amended pursuant to (i) a First Amendment to Revolving Credit
Agreement and Assignment dated as of December 19, 2003, and (ii) a Second
Amendment to Revolving Credit Agreement and Assignment dated as of May 28, 2004.
B. Borrowers and Secured Party mutually desire to further amend the
Credit Agreement and are entering into this 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:
A. 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
Fifteen Million Dollars ($15,000,000).
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 June 30, 2003.
(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 minus
intangible assets (as it appears on Borrower's financial
statements). "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, contingent liabilities
(including guaranties computed as the maximum liability
guaranteed and any partially recourse debt to the maximum
extent of such recourse) and non-recourse debt.
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3. The definition "Borrowing Base" in Section 12 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.
4. The "Commitment Termination Date" shall occur on November
30, 2004, 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 Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their nominees, successors and assigns.
3. This 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 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
Amendment as of the date first above written.
BORROWERS:
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LEAF FINANCIAL CORPORATION
By:
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Miles Herman,
President and Chief Operating Officer
LEAF FUNDING, INC.
By:
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Miles Herman, Senior Vice President
SECURED PARTY:
COMMERCE BANK, NATIONAL ASSOCIATION
By:
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Name:
Title:
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