ORIGINATION & SERVICING AGREEMENT
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ORIGINATION & SERVICING AGREEMENT, dated as of the 4th day of April,
2003 (the "Agreement") by and between LEASE EQUITY APPRECIATION FUND I, L.P.
("LEAF Fund I"), 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 0000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxxxx,
XX 00000 and LEAF FUNDING, INC. ("LEAF Funding"), a Delaware corporation having
its principal place of business at 000 X. Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx,
XX 00000.
WHEREAS, LEAF Fund is engaged in the business acquiring a diversified
portfolio of equipment that it leases to third parties ("Equipment Leases");
WHEREAS, LEAF Fund I desires to retain LEAF Funding (the "Originator")
as originator of such Equipment Leases;
WHEREAS, LEAF Fund I desires to retain LEAF FINANCIAL CORPORATION (the
"Servicer") as servicer of such Equipment Leases; and
WHEREAS, LEAF Funding and LEAF Financial are willing to originate and
service all such Equipment Leases;.
NOW THEREFORE, in consideration of the covenants set forth in the
Agreement and other good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT; STANDARD OF CARE; DUTIES OF THE ORIGINATOR AND SERVICER
The Originator and Servicer are hereby authorized to act as agent
for LEAF Fund I and in such capacity shall originate, manage, service,
administer and make collections on the Equipment Leases and perform any other
reasonable actions that may be required by LEAF Fund I under this Agreement. The
Servicer agrees that its servicing of the equipment leases shall be carried out
in accordance with customary and usual procedures of institutions which service
Equipment Leases, unless there is a specific requirement dictated by LEAF I.
(a) The Originator's duties shall include, without limitation, the
following:
1. Lease Origination
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Originate equipment leases 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 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
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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
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Monthly invoicing including detailed breakdown of lease
payments and misc. items and collection of lease revenues.
Servicer will have the authority to manage the lease
receivables as well as write-off leases.
3. Syndicate Transactions
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Syndicate lease transactions and/or portions of lease
portfolios to third parties, or other additional related
parties, where applicable to enhance income and/or manage
risk.
4. System Development and Integration
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Develop and integrate systems to provide fully automated
processing of leases, including:
o a management system establishing 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 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
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Establish and monitor residual value assessments of equipment
using information from any one or more 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 lease on a month to
month basis; selling equipment to lessees at lease end or end
of lease extension; and selling equipment that is returned at
lease end either to the original vendor or to used equipment
dealers.
6. Ongoing Portfolio Integrity
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Evaluate the 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
leases and perform UCC lien searches.
7. Development and Documentation of Marketing Materials
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Develop marketing material specific to each program,
including:
o sales kit, which shall include sales jacket; along with
lease agreements, rate card, and specific lease products
of a vendor.
o lease program and benefit flyer to assist vendor sales
force in presenting lease option to customers and
2. TERM AND TERMINATION
This Agreement shall be deemed effective upon execution by LEAF I, LEAF
Funding and LEAF Financial. The term of this Agreement shall continue from such
effective date for three (3) years and shall automatically renew for additional
one-year periods unless earlier terminated by LEAF I. LEAF I may terminate this
Agreement at any time by giving the other parties at least thirty (30) days
written notice of such termination, whereupon the obligations of the parties
with respect to the origination and servicing of Equipment Leases shall
terminate to the extent the same have not been performed or are required to have
been performed prior to such termination.
3. FEES AND EXPENSES
In consideration of the above described services, the Originator and
Servicer will 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, I, L.P. and further summarized in the Lease Equity
Appreciation Fund I, L.P. prospectus dated August 15, 2002.
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 I's requirements and receives LEAF I'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
such other addresses as such party may have provided by
written notice.
(c) Choice of Law: Venue: Waiver: Trial by Jury. This Agreement
shall be governed by the internal laws (as opposed to conflict
of laws provisions) and decisions of the Commonwealth of
Pennsylvania. The parties hereto consent to the jurisdiction
of any local, state, or federal court located within
Pennsylvania, and waives any objection relating to improper
venue or forum non conveniens to the conduct of any proceeding
in any such court
IN WITNESS WHEREOF, the parties hereto have executed this Assignment by
their duly authorized officers as of the 4th day of April, 2003.
Lease Equity Appreciation Fund I, L.P. LEAF Funding, Inc.
By: LEAF Asset Management, Inc., By: /s/ Crit XxXxxx
its General Partner -----------------------
Name: Crit XxXxxx
Title: CEO
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President & CEO
LEAF Financial Corporation
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: President
