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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the Prospectus is expected to be made pursuant to Rule 434, check the following box. o


(1)	Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the Securities and Exchange Commission declares our registration statement effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


•	Marlin Business Services, Inc. is offering shares and selling shareholders are offering shares. We will not receive any proceeds from the sale of our shares by the selling shareholders.

•	We anticipate that the initial public offering price will be between $ and $ per share.

•	This is our initial public offering and no public market currently exists for our shares.

•	Proposed trading symbol: Nasdaq National Market — MRLN

The underwriters have a 30-day option to purchase up to additional shares of common stock from us and certain of the selling shareholders to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved of anyone’s investment in these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.

The items in the following summary are described in more detail later in this prospectus. This summary provides an overview of selected information and does not contain all of the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus and the consolidated financial statements and related notes included in this prospectus.

We are a leading provider of equipment leasing solutions primarily to small businesses nationwide. We finance over 60 categories of commercial equipment important to our end user customers including copiers, telephone systems, computers and certain commercial and industrial equipment. Our average lease transaction is approximately $8,000 and we typically do not exceed $150,000 for any single lease transaction. This segment of the equipment leasing market is commonly referred to in the leasing industry as the small-ticket segment. We access our end user customers through our existing network of over 6,800 independent equipment dealers and, to a lesser extent, through relationships with lease brokers and the direct solicitation of existing end user customers. Our telephonic sales model and fully integrated account origination platform provide us with the ability to efficiently contact and service our origination sources and end user customers. As of June 30, 2003, we serviced approximately 73,000 active equipment leases having a total original equipment cost of $569.9 million for approximately 60,000 end user customers.

We were founded in June 1997 by a group of seasoned finance professionals having an average of 15 years of experience providing financing solutions to small businesses. This experience has enabled us to develop and effectively implement a business model that allows us to efficiently originate and process a large volume of small-ticket transactions while managing credit risk through various economic cycles.

The independent equipment dealers through whom we originate a significant portion of our lease transactions have generally not had their financing needs adequately served for two principal reasons. First, large commercial finance companies and large commercial banks typically target their marketing efforts directly toward equipment manufacturers and larger distributors, rather than toward independent equipment dealers. Second, regional banks and middle-market finance companies typically do not have an integrated business model that is competitive in our high-volume, low-balance segment of the market. Our primary focus in building our base of origination sources is to establish relationships with independent equipment dealers to meet their need for high quality, reliable and convenient point-of-sale financing solutions. Our personalized service approach provides equipment dealers with the ability to offer our lease financing and related services to their customers as an integrated part of their selling process, enabling them to sell more equipment and provide better customer service. Each of our sales account executives acts as the single point of contact for his or her origination sources, which we believe differentiates us in the marketplace.

We have achieved strong financial results over the past three fiscal years, with net income increasing from $1.6 million for the year ended December 31, 2000 to $4.5 million for the year ended December 31, 2002. The primary contributing factor to our growth in net income has been the growth in our lease portfolio. Our net investment in direct financing leases grew from $172.5 million at December 31, 2000 to $337.4 million at December 31, 2002. Our growth has continued into 2003. For the six months ended June 30, 2003, our net income was $3.6 million compared to net income of $2.1 million for the same period in 2002. Likewise, our net investment in direct financing leases has grown from $298.3 million at June 30, 2002 to $372.9 million at June 30, 2003.

We have achieved growth in our net income and lease portfolio while maintaining strong asset quality. Our net charge-offs as a percentage of average net investment in direct financing leases was 2.06% for 2002 and

1.91% on an annualized basis for the six months ended June 30, 2003. The delinquency rate on our leases greater than 60 days delinquent was 0.64% of the minimum lease payments receivable at June 30, 2003 and 0.86% at December 31, 2002. Based upon our review of industry data for the small-ticket leasing segment of the equipment financing industry, we believe that our delinquencies and net charge-offs are below industry averages.

Lease financing in the United States represents a highly diversified, large market opportunity. According to the Equipment Leasing Association of America (“ELA”), business investment in equipment is projected to be approximately $668.0 billion in 2003, of which approximately $208.0 billion will be financed through leasing. The equipment leasing market is divided into three segments, which are differentiated by the cost of the equipment: small-ticket, middle-market and large-ticket. We compete in the small-ticket segment of the equipment leasing market, which is comprised of lease transactions in which the cost of the equipment is less than $250,000. According to the ELA’s most recent estimates, the small-ticket segment accounted for approximately 30% of the estimated total new leasing volume originated in 2001, which would equate to an approximate $62.4 billion segment in 2003 assuming comparable volume among the segments for 2003. Based upon this data and our industry experience, we estimate the size of the portion of the small-ticket leasing market in which we operate to be approximately $12 to $15 billion in 2003, of which we have less than a 2% market share.

We lease equipment to end user customers that are primarily small businesses. Small businesses, defined by the Small Business Administration Office of Advocacy as firms having fewer than 500 employees, are an integral part of the United States economy. In 2002, the Office of Advocacy estimates there were approximately 22.9 million small businesses in the United States. These small businesses represent about 99% of all employers, account for more than 50% of the non-farm private gross domestic product, employ more than half of all private sector employees and generate 60% to 80% of the net new jobs each year.

We believe several characteristics distinguish us from our competitors, including our:


	•	*Multiple sales origination channels.* We effectively use multiple sales origination channels to penetrate the highly diversified and fragmented small-ticket equipment leasing market. Our direct origination channels, which account for approximately 66% of our originations, involve: l) establishing relationships with independent equipment dealers; 2) securing preferred financing endorsements from national equipment manufacturers and distributors; and 3) directly soliciting our end user customers for repeat business. Our indirect origination channels, which account for approximately 34% of our originations, consist of relationships with brokers and certain equipment dealers who refer transactions to us for a fee or sell us leases that they originated.

	•	*Highly effective account origination platform.* We have developed a proprietary and fully integrated account origination platform that enables us to solicit, process and service a large number of small-ticket transactions. A key aspect of our platform is that we collect detailed information regarding both our origination sources and our end user customers, which enables us to process and analyze that information so that it can be used across all aspects of our business. Our telephonic direct marketing platform offers origination sources a high level of personalized service through our team of 74 sales account executives, each of whom acts as the single point of contact for his or her origination sources.


	•	*Comprehensive credit process.* We underwrite every origination source, end user customer and transaction. This process is performed in accordance with strictly enforced underwriting criteria and used in conjunction with a human decision making process, enabling us to maintain credit quality as our portfolio has grown.

	•	*Portfolio diversification.* Our portfolio is highly diversified. Our average lease transaction is approximately $8,000 and we generally do not enter into lease transactions having a value in excess of $150,000. As of June 30, 2003: 1) no single end user customer accounted for more than 0.07% of our portfolio; 2) the largest origination source accounted for only 2.9% of our portfolio; 3) we originated leases through approximately 7,600 different origination sources; 4) we financed over 60 equipment categories; and 5) we had leases with customers in all 50 states and the District of Columbia.

	•	*Fully integrated information management system.* We have integrated numerous information technology solutions to optimize our origination, credit, collection and account servicing functions. This high degree of automation and process integration across all aspects of our business results in lower transaction costs, improved operating efficiencies and better credit decisions.

	•	*Access to multiple funding sources.* Through our funding strategy, we have demonstrated our ability to access multiple sources of financing through national credit providers. We currently maintain a $32.5 million revolving bank facility and two commercial paper conduit warehouse facilities which provide us with an additional $200.0 million of credit availability. In addition, we have successfully accessed the asset-backed term securitization market, having completed five on-balance-sheet term note securitizations. This funding strategy has allowed us to achieve competitive pricing and maintain flexibility throughout various economic cycles.

	•	*Experienced management team.* We have an experienced management team averaging 15 years of expertise in providing financing solutions to small businesses.

Our primary objective is to enhance our current position as a provider of equipment financing solutions primarily to small businesses by pursuing a strategy focused on the following organic growth initiatives:


	•	*Expand and enhance our relationships with origination sources.* We believe we can create additional lease financing opportunities by increasing our new origination source relationships and further penetrating our existing origination sources. We expect to do this by adding new sales account executives and continuing to train and season our existing sales force. We believe that our 2002 new lease originations of $203.5 million represented less than 2% of the small-ticket market that we target, leaving us significant opportunity to continue our organic growth.

	•	*Increase portfolio of repeat customers.* Approximately 12% of our end user customers have transacted more than one lease with us. As we seek to expand our end user customer relationships, we have the opportunity to grow our originations by increasing the number of end user customers who transact multiple lease transactions with us. To capitalize on this opportunity, in 2002 we implemented a targeted program of directly soliciting our existing end user customers.

	•	*Strategic regional expansion.* We believe that we can increase originations in certain regions of the country by establishing offices in identified strategic locations. For example,


		we have experienced increased originations in the Southeastern and Central Mountain regions of the country following our opening of offices in those areas.

	•	*Expand product offerings.* We believe we can leverage our existing relationships with approximately 60,000 active end user customers by offering them additional products and services related to the financial services we provide.

An investment in our common stock involves a significant degree of risk. We urge you to carefully consider all of the information described in the section entitled “Risk Factors” beginning on page 9.

Our principal executive office is located at 124 Gaither Drive, Suite 170, Mount Laurel, New Jersey 08054, and our telephone number is (888) 479-9111. Our website address is www.marlinleasing.com. The information found on our website is not, however, a part of this prospectus and any reference to our website is intended to be an inactive textual reference only and is not intended to create any hypertext link.

We formed Marlin Leasing Corporation as a Delaware corporation in June 1997 and have conducted our operations through that entity since that time. On or prior to the completion of this offering we will reorganize our corporate structure such that Marlin Leasing Corporation will become a wholly owned subsidiary of Marlin Business Services, Inc., a newly formed Pennsylvania holding company. Investors in this offering will purchase shares of common stock of Marlin Business Services, Inc.

Prior to the reorganization, Marlin Business Services, Inc. did not commence operations and did not have any assets or liabilities. Accordingly, the consolidated financial statements included in this prospectus are the financial statements of Marlin Leasing Corporation.

In this prospectus, references to the “Company”, “we”, “us” and “our” refer to Marlin Business Services, Inc. and its wholly owned subsidiaries after giving effect to this reorganization, unless the context otherwise requires.

The number of shares of our common stock outstanding after this offering excludes, as of June 30, 2003, shares of our common stock reserved for issuance under our 2003 Equity Compensation Plan, of which shares are currently issuable upon exercise of outstanding options at a weighted average exercise price of $ per share.

This prospectus describes our company after giving effect to our reorganization, which will be completed on or prior to the completion of this offering. Except as otherwise indicated, all information in this prospectus assumes:


	•	no exercise of the underwriters’ over-allotment option;

	•	all outstanding shares of our preferred stock and our outstanding warrants have been converted into, or exercised for, shares of common stock in connection with our reorganization; and

	•	no outstanding options have been exercised since June 30, 2003.

The following financial information should be read together with the financial statements and notes thereto and the “Selected Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections included elsewhere in this prospectus.

⁽¹⁾The change in fair value of warrants is a non-cash expense. Prior to the closing of this offering all warrants will be exercised on a net issuance basis. As a result, upon closing of this offering we will no longer have any outstanding warrants.

We have conducted all of our operations through Marlin Leasing Corporation, a Delaware corporation, since it was formed on June 16, 1997. On or prior to the completion of this offering, Marlin Leasing Corporation will become a direct, wholly owned subsidiary of Marlin Business Services, Inc., a newly-formed Pennsylvania holding company, and all former shareholders of Marlin Leasing Corporation will have become shareholders of Marlin Business Services, Inc. After this reorganization, Marlin Leasing Corporation will continue in existence as our primary operating subsidiary. We will complete this reorganization through the following steps:


	•	all classes of Marlin Leasing Corporation’s redeemable convertible preferred stock will convert to Class A common stock of Marlin Leasing Corporation;

	•	all warrants to purchase Class A common stock of Marlin Leasing Corporation will be exercised on a net issuance, or cashless, basis;

	•	all warrants to purchase Class B common stock of Marlin Leasing Corporation will be exercised on a net issuance basis and the Class B common stock will convert to Class A common stock;

	•	Marlin Leasing Corporation will consummate a forward stock split of its Class A common stock at a ratio to be determined in order to increase the number of shares of Class A common stock authorized and issued prior to the merger described below;

	•	a direct, wholly owned subsidiary of Marlin Business Services, Inc. will merge with and into Marlin Leasing Corporation, and each share of Marlin Leasing Corporation’s Class A common stock will be exchanged for one share of Marlin Business Services, Inc. common stock under the terms of an agreement and plan of merger dated August 27, 2003; and

	•	the Marlin Leasing Corporation 1997 Equity Compensation Plan will be assumed by us and all outstanding options to purchase Marlin Leasing Corporation’s Class A common stock under the 1997 Equity Compensation Plan will be converted into options to purchase shares of our common stock. Immediately thereafter, we will amend and restate the 1997 Equity Compensation Plan as the Marlin Business Services, Inc. 2003 Equity Compensation Plan.

As a result of this reorganization, shares of our common stock will be issued and outstanding, not including the shares of our common stock that we are selling in connection with this offering, and options to purchase shares of our common stock will be outstanding under our 2003 Equity Compensation Plan. Upon the completion of the reorganization, no other options, warrants, preferred stock or other equity securities of ours will be then issued or outstanding.

You should carefully consider the following risk factors before you decide to buy our common stock. You should also consider the other information in this prospectus as well as the other documents incorporated by reference.

Our business requires a substantial amount of cash to operate. Our primary cash requirements include:


	•	funding of equipment leases;

	•	interest and principal on borrowings;

	•	fees and expenses incurred in connection with our financing facilities; and

	•	administrative and other operating expenses.

These cash requirements will increase if our lease originations increase. We historically have obtained the cash required for operations through the following sources:


	•	borrowings under a revolving bank facility;

	•	financing of leases through commercial paper (“CP”) conduit warehouse facilities;

	•	financing of leases through term note securitizations;

	•	sales of leases to third parties;

	•	lease payments received; and

	•	servicing and other fees.

We are and will continue to be dependent upon the availability of credit from our funding sources to continue to originate leases and to satisfy our other working capital needs. If any or all of our funding sources become unavailable on acceptable terms, we may not have access to the funding necessary to conduct our business, which would have a material adverse effect on our financial condition and operating results. We do not have long term commitments from any of our funding sources. There can be no assurance that we will be able to continue to access these or other funding sources.

Revolving Bank Facility. We fund a portion of our lease originations on a short-term basis through a revolving bank facility secured by our interest in the leases and the related equipment. A revolving bank facility provides temporary funding pending the accumulation of sufficient pools of leases for financing through a CP conduit warehouse facility or an on-balance-sheet term note securitization. Our current revolving bank facility expires in August, 2005. Failure to renew or replace our revolving bank facility could have a material adverse effect on our ability to originate leases.

CP Conduit Warehouse Facilities. We depend in part on CP conduit warehouse facilities to repay amounts outstanding under our revolving bank facility and to generate cash for funding new leases. In these transactions, we transfer pools of leases and interests in the related equipment to special purpose, bankruptcy remote subsidiaries. These special purpose entities in turn pledge their interests in the leases and the related equipment to an unaffiliated conduit entity, which generally issues commercial paper to investors. Our ability to complete CP conduit transactions and obtain renewals of lenders’ commitments is affected by a number of factors, including:


	•	conditions in the securities markets;

	•	conditions in the asset-backed securities markets;


	•	conditions in the market for commercial bank liquidity support for CP programs;

	•	the regulatory treatment of liquidity and credit enhancement facilities provided by commercial banks for CP conduit warehouse facilities;

	•	the credit quality of our lease transactions;

	•	the level of lease defaults in our prior securitizations;

	•	compliance of our leases with the eligibility requirements established in connection with our CP conduit warehouse facilities; and

	•	our ability to service the leases.

Our existing CP conduit warehouse facilities expire in July 2004 and December 2004. A failure to renew our existing CP conduit warehouse facilities, increase the funding commitment under existing CP conduit warehouse facilities or add new CP conduit warehouse facilities could have a material adverse effect on our ability to refinance leases originated through our revolving bank facility and, accordingly, on our ability to fund and originate new leases.

Term Note Securitizations. We depend upon on-balance-sheet term note securitizations to refinance amounts outstanding under our CP conduit warehouse facilities and revolving bank facility. A term note securitization differs from a CP conduit warehouse facility primarily in that it typically has a fixed term, fixed interest rates and a fixed principal amount. By reducing outstanding fundings under our CP conduit warehouse facilities and revolving bank facility, term note securitizations increase the amount of funds available to us under these facilities for additional origination and securitization of leases. An inability to complete term note securitizations would result in our inability to refinance amounts outstanding under our CP conduit warehouse facilities and revolving bank facility and negatively impact our ability to originate and service new leases. Our ability to complete term note securitizations is affected by factors similar to those affecting our CP conduit warehouse facilities.

Our financing sources impose covenants, restrictions and default provisions on us, which could lead to termination of our financing facilities, acceleration of amounts outstanding under our financing facilities and our removal as servicer.

The legal agreements relating to our revolving bank facility, our CP conduit warehouse facilities and our term note securitizations contain numerous covenants, restrictions and default provisions relating to, among other things, maximum lease delinquency and default levels, a minimum net worth requirement and a maximum debt to equity ratio. In addition, a change in our Chief Executive Officer or President is an event of default under our revolving bank facility and CP conduit warehouse facilities unless we hire a replacement acceptable to our lenders within 90 days. Such a change is also an immediate event of servicer termination under our term note securitizations. A merger or consolidation with another company in which we are not the surviving entity, likewise, is an event of default under our financing facilities. Further, our revolving bank facility and CP conduit warehouse facilities contain cross default provisions whereby certain defaults under one facility would also be an event of default under the other facilities. An event of default under the revolving bank facility or a CP conduit warehouse facility could result in termination of further funds being made available under these facilities. An event of default under any of our facilities could result in an acceleration of amounts outstanding under the facilities, foreclosure on all or a portion of the leases financed by the facilities and/or our removal as a servicer of the leases financed by the facility. This would reduce our revenues from servicing and, by delaying any cash payment allowed to us under the facilities until the lenders have been paid in full, reduce our liquidity and cash flow. As a result of all of the above, a default under any of our financing facilities could have a material adverse effect on our business, financial condition and operating results.

Our business is dependent on the creditworthiness of our end user customers.

We specialize in leasing equipment to small businesses. Small businesses may be more vulnerable than large businesses to economic downturns and often need substantial additional capital to expand or compete. Moreover, the success of a small business and its ability to make lease payments typically depends upon the management talents and efforts of one person or a small group of persons at the business. The death, disability or resignation of one or more of these persons could have an adverse impact on the operations of that business. Small business leases, therefore, may entail a greater risk of delinquencies and defaults than leases entered into with larger, more creditworthy leasing customers. In addition, there is typically only limited publicly available financial and other information about small businesses and they often do not have audited financial statements. Accordingly, in making credit decisions, our underwriting guidelines rely upon the accuracy of information about these small businesses obtained from the small business owner and/or third party sources, such as credit reporting agencies. If the information we obtain from these sources is incorrect, our underwriting will not be as effective and our ability to make appropriate credit decisions will be impaired. This could have a material adverse effect on our business, financial condition and results of operations.

Defaulted leases and certain delinquent leases do not qualify as collateral against which initial advances may be made under our revolving bank facility or CP conduit warehouse facilities, and we cannot include them in our term note securitizations. An increase in delinquencies or lease defaults could reduce the funding available to us under our facilities and could adversely affect our earnings, possibly materially. In addition, increasing rates of delinquencies or charge-offs could result in adverse changes in the structure of our future revolving bank facilities, CP conduit warehouse facilities and term note securitizations, including increased interest rates payable to investors and the imposition of more burdensome covenants and credit enhancement requirements. Any of these occurrences could have a material adverse effect on our business, financial condition and results of operations.

Our future success depends to a significant extent on the continued service of our senior management team. A change in our Chief Executive Officer or President is an event of default under our revolving bank facility and CP conduit warehouse facilities unless we hire a replacement acceptable to our lenders within 90 days. Such a change is also an immediate event of servicer termination under our term note securitizations. We have entered into employment agreements with our Chief Executive Officer, President and General Counsel, but these agreements do not and will not assure the continued services of these executive officers. The departure of any of our executive officers or key employees could materially adversely affect our business, access to funding, financial condition and results of operations.

We may not be able to maintain our historic rate of growth or effectively manage any future growth that we do achieve.

We have grown our lease originations and overall business significantly since we commenced operations. However, our ability to continue to increase originations at a comparable rate depends upon our ability to implement our disciplined growth strategy and upon our ability to evaluate, finance and service increasing volumes of leases of suitable yield and credit quality. Accomplishing such a result on a cost-effective basis is largely a function of our marketing capabilities, our management of the leasing process, our credit underwriting guidelines, our ability to provide competent, attentive and efficient servicing to our end user customers, our access to financing sources on acceptable terms and our ability to attract and retain high quality employees in all areas of our business.

Even if we are able to continue our growth in lease originations, our future success will be dependent upon our ability to manage our growth. Among the factors we would need to manage are the training, supervision and integration of new employees, as well as the development of infrastructure, systems and procedures within our origination, underwriting, servicing, collections and financing functions in a manner

which enables us to maintain higher volume in originations. Failure to effectively manage these and other factors related to growth in originations and our overall operations could have a material adverse effect on our business, financial condition and results of operations.

In connection with our financing of leases, we record an allowance for credit losses to provide for estimated losses. Our allowance for credit losses is based on, among other things, past collection experience, industry data, lease delinquency data and our assessment of prospective collection risks. Determining the appropriate level of the allowance is an inherently uncertain process and therefore we can offer no assurance that this allowance will be adequate to cover losses in connection with our portfolio of leases. This allowance may prove to be inadequate due to our inability to effectively manage collections, unanticipated adverse changes in the economy or discrete events adversely affecting specific leasing customers, industries or geographic areas. Losses in excess of our allowance for credit losses would cause us to increase our provision for credit losses, reducing or eliminating our operating income and adversely affecting our financial condition.

The business of small-ticket equipment leasing is highly fragmented and competitive. We compete with:


	•	national, regional and local finance and leasing companies;

	•	captive finance and leasing companies affiliated with major equipment manufacturers; and

	•	other sources of financing, including corporate credit card issuers and traditional financial services companies such as commercial banks, savings and loan associations and credit unions.

Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of funds and access to funding sources that are not available to us. A lower cost of funds could enable a competitor to offer leases with yields that are lower than those we use to price our leases, potentially forcing us to decrease our yields or lose origination volume. In addition, certain of our competitors may have higher risk tolerances or different risk assessments, which could allow them to establish more origination source and end user customer relationships and increase their market share. There are few barriers to entry with respect to our business and, therefore, new competitors could enter the business of small-ticket equipment leasing at any time. The companies that typically provide financing for large-ticket or middle-market transactions could begin competing with us on small-ticket equipment leases. We can offer you no assurance that we will continue to be able to compete effectively.

Our business depends in large part on our telecommunications and information management systems. The temporary or permanent loss of our computer systems, telecommunications equipment or software systems, through casualty or operating malfunction, could disrupt our operations and have a material adverse effect on our business, financial condition and results of operations.

We have formed relationships with thousands of origination sources, comprised primarily of independent equipment dealers and, to a lesser extent, lease brokers. We rely on these relationships to generate lease applications and originations. We invest significant time and resources in establishing and maintaining these relationships. Most of these relationships are not formalized in written agreements and those that are formalized by written agreements are typically terminable at will. Our typical relationship does not commit the origination source to provide a minimum number of lease transactions to us nor does it require the origination source to direct all of its lease transactions to us. The decision by a significant number of our

We may be adversely affected by deteriorated economic or business conditions.

Our business, financial condition and results of operations may be adversely affected by various economic factors and business conditions, including the level of economic activity in the markets in which we operate. Delinquencies and credit losses generally increase during economic slowdowns or recessions. Because we extend credit primarily to small businesses, many of our customers may be particularly susceptible to economic slowdowns or recessions and may be unable to make scheduled lease payments during these periods. Therefore, to the extent that economic activity or business conditions deteriorate, our delinquencies and credit losses may increase. Unfavorable economic conditions may also make it more difficult for us to maintain both our new lease origination volume and the credit quality of new leases at levels previously attained. Unfavorable economic conditions could also increase our funding costs or operating cost structure, limit our access to the securitization and other capital markets or result in a decision by lenders not to extend credit to us. Any of these events could significantly harm our operating results.

Our results of operations would be negatively affected by the termination or interruption of, or a decrease in volume under, our property insurance program.

Our end user customers are required to obtain all-risk property insurance for the replacement value of the leased equipment. The end user customer has the option of either delivering a certificate of insurance listing us as loss payee under a commercial property policy issued by a third party insurer or satisfying their insurance obligation through our insurance program. Under our program, the end user customer purchases coverage under a master property insurance policy written by a national third party insurer (our “primary insurer”) with whom our captive insurance subsidiary, AssuranceOne, Ltd., has entered into a 100% reinsurance arrangement. Our operating results would be negatively impacted if there was a termination or interruption of this program or if fewer end user customers elected to satisfy their insurance obligations through our program. Termination or interruption of our program could occur for a variety of reasons, including: 1) adverse changes in laws or regulations affecting our primary insurer or AssuranceOne; 2) a change in the financial condition or financial strength ratings of our primary insurer or AssuranceOne; 3) negative developments in the loss reserves or future loss experience of AssuranceOne which render it uneconomical for us to continue the program; 4) termination or expiration of the reinsurance agreement with our primary insurer, coupled with an inability by us to quickly identify and negotiate an acceptable arrangement with a replacement carrier; or 5) competitive factors in the property insurance market.

Regulatory and legal uncertainties could affect our strategy and results of operations.

Laws or regulations may be adopted with respect to our equipment leases or the equipment leasing and collection processes. Any new legislation or regulation, or changes in the interpretation of existing laws which affect the equipment leasing industry could have a material adverse effect on our business, financial condition and results of operations.

We, like other finance companies, face the risk of litigation, including class action litigation, and regulatory investigations and actions in connection with our business activities. These matters may be difficult to assess or quantify, and their magnitude may remain unknown for substantial periods of time. A substantial legal liability or a significant regulatory action against us could have a material adverse effect on our results of operations and financial condition.

Changes in interest rates may affect our financial condition and results of operations.

Because we generally fund our leases through a revolving bank facility, CP conduit warehouse facilities and term note securitizations, our margins could be adversely affected by an increase in interest rates. Each of our leases is structured so that the sum of all scheduled lease payments will equal the cost of the

equipment to us, less the residual, plus a return on the amount of our investment. This return is known as the yield. The yield on our leases is fixed because the scheduled payments are fixed at the time of lease origination. When we originate or acquire leases, we base our pricing in part on the spread we expect to achieve between the yield on each lease and the effective interest rate we expect to pay when we finance the lease. To the extent that a lease is financed with variable rate funding, increases in interest rates during the term of a lease could narrow or eliminate the spread, or result in a negative spread. A negative spread is an interest cost greater than the yield on the lease. Currently, our revolving bank facility and our CP conduit warehouse facilities have variable rates. As required under our financing facility agreements, we enter into interest rate cap agreements to hedge against the risk of interest rate increases in our CP conduit warehouse facilities. If our hedging strategies are imperfectly implemented or if a counterparty defaults on a hedging agreement, we could suffer losses relating to our hedging activities.

Failure to realize the projected value of residual interests in equipment we finance could have a material adverse effect on our business.

At June 30, 2003, approximately 36% of our leases had fair market value purchase options or fixed purchase options, the latter of which are typically 10% of the original equipment cost. We estimate the residual value of the equipment which is recorded as an asset on our balance sheet. Realization of residual values depends on numerous factors, most of which are outside of our control, including:


	•	the general market conditions at the time of expiration of the lease;

	•	the cost of comparable new equipment;

	•	the obsolescence of the leased equipment;

	•	any unusual or excessive wear and tear on or damage to the equipment;

	•	the effect of any additional or amended government regulations; and

	•	the foreclosure by a secured party of our interest in a defaulted lease.

Our failure to realize our recorded residual values would adversely affect our results of operations and financial condition.

Our operating results may differ from quarter to quarter, and these differences may be significant. Factors that may cause these differences include:


	•	changes in the volume of lease applications, approvals and originations;

	•	changes in interest rates;

	•	the timing of term note securitizations;

	•	the availability of capital;

	•	the degree of competition we face; and

	•	general economic conditions and other factors.

The results of any one quarter may not indicate what our performance in the future may be.

Our management team has historically operated our business as a privately held company. Our management team has never had direct responsibility for managing a publicly traded company. We will incur increased costs as a result of being a public company, particularly in light of recently enacted and proposed changes in laws and regulations and listing requirements.

We may use the proceeds of this offering in ways with which you may disagree.

We intend to use the net proceeds of this offering to repay subordinated debt, pay accrued dividends to our preferred shareholders and for unspecified general corporate purposes, including working capital needs. Our management will have significant discretion in the use of these funds, and you may disagree with the way these funds are utilized. We cannot assure you that the proceeds will be invested in a manner which yields a significant return, or any return at all.

We cannot assure you that a market will develop for our common stock or what the market price of our common stock will be.

The initial public offering price for our common stock will be determined through our negotiations with the underwriters and may not bear any relationship to the market price at which it will trade after this offering. Before this offering, there was no public trading market for our common stock, and we cannot assure you that one will develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at an attractive price or at all. We cannot predict the prices at which our common stock will trade. It is possible that in some future quarter our operating results may be below the expectations of financial market analysts and investors and, as a result of these and other factors, the price of our common stock may fall.

The trading price of our common stock following this offering may fluctuate substantially. The price of our common stock after this offering may be higher or lower than the price you pay, depending on many factors, some of which are beyond our control and may not be related to our operating performance. These fluctuations could cause you to lose part or all of your investment in our shares of common stock. Those factors that could cause fluctuations include, but are not limited to, the following:


	•	price and volume fluctuations in the overall stock market from time to time;

	•	significant volatility in the market price and trading volume of financial services companies;

	•	actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of financial market analysts;

	•	investor perceptions of the equipment leasing industry in general and our company in particular;

	•	the operating and stock performance of comparable companies;

	•	general economic conditions and trends;

	•	major catastrophic events;

	•	loss of external funding sources;

	•	sales of large blocks of our stock or sales by insiders; or

	•	departures of key personnel.

If you purchase shares of common stock sold in this offering, you will experience immediate dilution.

If you purchase shares of our common stock in this offering, you will experience significant immediate dilution, because the price that you pay will be substantially greater than the net tangible book value per share of the shares you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares. You will experience additional dilution upon the exercise of stock options to purchase common stock and the issuance of restricted stock to our employees under our equity compensation plan.

Insiders will continue to have substantial control over us after this offering and could limit your ability to influence the outcome of key transactions, including a change of control.

Our principal shareholders, directors and executive officers and entities affiliated with them will own approximately % of the outstanding shares of our common stock after this offering. As a result, these shareholders, if acting together, would be able to influence or control matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other extraordinary transactions. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. The concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

We do not anticipate paying cash dividends on our shares of common stock in the foreseeable future.

We have never declared or paid any cash dividends on our shares of common stock. We intend to retain any future earnings to fund the operation and expansion of our business and, therefore, we do not anticipate paying cash dividends on our shares of common stock in the foreseeable future.

Common stock available for future sale by our shareholders may adversely affect our stock price.

If our shareholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could fall. These sales could also make it more difficult for us to sell shares of our common stock or equity related securities in the future.

Anti-takeover provisions and our right to issue preferred stock could make a third-party acquisition of us difficult.

We are a Pennsylvania corporation. Anti-takeover provisions of Pennsylvania law could make it more difficult for a third party to acquire control of us, even if such change in control would be beneficial to our shareholders. Our amended and restated articles of incorporation and our bylaws will contain certain other provisions that would make it more difficult for a third party to acquire control of us, including a provision that our board of directors may issue preferred stock without shareholder approval.

We make forward-looking statements in this prospectus that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. Statements regarding the following subjects are forward-looking by their nature:


	•	our business strategy;

	•	our projected operating results;

	•	our ability to obtain external financing;

	•	our understanding of our competition;

	•	industry and market trends;

	•	projected capital expenditures;

	•	the impact of technology on our products, operations and business; and

	•	use of the proceeds of this offering.

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you decide to invest in our common stock:


	•	the factors referenced in this prospectus, including those set forth under the sections captioned “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business”;

	•	general volatility of the securitization and capital markets;

	•	the market price of our common shares;

	•	changes in our business strategy;

	•	availability, terms and deployment of capital;

	•	availability of qualified personnel;

	•	changes in our industry, interest rates or the general economy; and

	•	the degree and nature of our competition.

When we use the words “believe,” “expect,” “anticipate,” “estimate” or similar expressions, we intend to identify forward-looking statements. You should not place undue reliance on these forward-looking statements.

We estimate our net proceeds from the sale of our common stock in this offering will be approximately $ million, or approximately $ million if the underwriters’ over-allotment option is exercised in full, assuming an offering price of $ per share, which is the mid-point of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discount and estimated offering expenses. In addition, shares are being offered by the selling shareholders. We will receive no proceeds from the sale of shares by the selling shareholders.

We intend to use the net proceeds we receive from the offering for the following purposes:


	•	to repay $10.0 million of outstanding subordinated debt plus accrued interest for the current quarterly period, which has a fixed interest rate of 11.0% per annum and is scheduled to mature on March 30, 2006;

	•	to pay approximately $6.3 million of accrued dividends owed on our preferred stock, which accrued at a rate of 7.0% per annum from their respective issue dates through July 24, 2001, and at 8.0% per annum thereafter; and

	•	for general corporate and working capital purposes, including but not limited to investing in lease originations, establishing regional offices in strategic locations and hiring additional sales account executives.

The amounts and timing of our actual expenditures for each purpose may vary significantly depending upon numerous factors, including our volume of lease originations, payments received on existing leases, availability of funding from external sources and the amount of cash, if any, we generate from operations.

We may find it necessary or advisable to use portions of the net proceeds we receive from this offering for other purposes, and we will have broad discretion in applying the net proceeds of this offering. Pending the uses described above, we intend to invest the net proceeds of this offering in short-term, investment-grade, interest-bearing securities.

We presently intend to retain future earnings, if any, to finance the expansion of our business and do not expect to pay any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors may deem relevant.


	•	actual capitalization as of June 30, 2003;

	•	pro forma capitalization after giving effect to our reorganization, which is described in detail in the “Reorganization” section of this prospectus and which includes: 1) the conversion of all outstanding shares of redeemable convertible preferred stock into shares of Class A common stock; 2) the exercise of all outstanding warrants for shares of Class A common stock on a net issuance basis based on an assumed initial public offering price of $ per share, which is the mid-point of the range set forth on the cover page of this prospectus after deducting the estimated underwriting discount and estimated offering expenses payable by us; 3) the proposed forward stock split of all Class A common stock on a 1: basis; and 4) the exchange of all Class A common stock in the merger for an equal number of shares of our common stock; and

	•	pro forma as adjusted capitalization after giving effect to: 1) the sale by us of million shares of common stock in this offering, at an assumed initial public offering price of $ per share; 2) the payment of accrued dividends owed on our redeemable convertible preferred stock and the repayment of our outstanding subordinated debt plus accrued interest with the proceeds from this offering.

You should read this table in conjunction with the sections of this prospectus captioned “Reorganization,” “Use of Proceeds,” “Selected Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as the audited consolidated financial statements and related notes included elsewhere in this prospectus.

⁽¹⁾As of the closing of this offering, we will have the following additional shares available for issuance under our 2003 Equity Compensation Plan: 1) shares underlying options outstanding at a weighted average exercise price of $ per share, of which shares are currently exercisable; and 2) shares available for future issuance.

As of June 30, 2003, our pro forma net tangible book value was approximately $ million, or approximately $ per share of common stock. Pro forma net tangible book value per share represents the amount of our total assets less intangible assets and less our total pro forma liabilities, divided by the total pro forma number of shares of common stock outstanding, in each case after giving effect to our reorganization, which is described in detail in the section of this prospectus captioned “Reorganization.”

After giving effect to the sale of our shares of common stock in this offering at an assumed initial public offering price of $ per share and our receipt of the estimated net proceeds of the offering, our pro forma as adjusted net tangible book value as of June 30, 2003 would have been approximately $ million, or $ per share. This represents an immediate increase in pro forma net tangible book value of $ per share to existing shareholders and an immediate dilution of $ per share to new investors in this offering. The following table illustrates this per share dilution:

The following table summarizes, as of June 30, 2003, on the pro forma basis described above, the differences between existing shareholders and the new investors with respect to the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid before deducting the underwriters’ discount and our estimated offering expenses.

On a pro forma basis taking into account the full effect of our reorganization, as of June 30, 2003, there were options outstanding to purchase a total of shares of our common stock at a weighted average exercise price of $ . To the extent any of these options are exercised, there will be further dilution to new investors.

The selected financial information set forth below under the captions “Statement of Operations Data” and “Balance Sheet Data” as of December 31, 2000, 2001 and 2002 and for each of the years in the three year period ended December 31, 2002 are derived from our consolidated financial statements that have been audited by KPMG LLP, independent auditors. The comparable selected financial data as of and for the six months ended June 30, 2002 and 2003 and as of and for the years ended December 31, 1998 and 1999 are derived from our unaudited consolidated financial statements and includes all adjustments, consisting of normal recurring adjustments, which we consider necessary for a fair presentation of our financial condition and results of operations as of such dates and for such periods then ended under generally accepted accounting principles. The selected financial data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this registration statement.

⁽²⁾Includes a $1.3 million charge incurred in connection with the write-off of the securitized gain on sale previously recorded.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto and with “Selected Financial Information” included elsewhere in this prospectus. This discussion contains certain statements of a forward-looking nature that involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated by such forward-looking statements.

We are a leading provider of equipment financing solutions primarily to small businesses nationwide. We finance over 60 categories of commercial equipment important to businesses including copiers, telephone systems, computers, and certain commercial and industrial equipment. We access our end user customers through origination sources comprised of our existing network of over 6,800 independent equipment dealers and, to a lesser extent, through relationships with lease brokers and through direct solicitation of our end user customers.

Our revenue consists of interest and fees from our leases and, to a lesser extent, income from our property insurance program and other fee income. Our expenses consist of interest expense and operating expenses, which include salaries and benefits and other general and administrative expenses. Our leases are fixed rate transactions with terms generally ranging from 36 to 60 months. At June 30, 2003, the average term was 45 months and the average transaction size was $8,000.

Our leases are classified under generally accepted accounting principles as direct financing leases, and we recognize interest income over the term of the lease. Direct financing leases transfer substantially all of the benefits and risks of ownership to the equipment lessee. A lease is classified as a direct financing lease if the creditworthiness of the lessee and the collectibility of the lease payments are reasonably certain and the lease meets at least one of the following criteria:


	•	it transfers ownership to the lessee by the end of the lease term;

	•	it contains a bargain purchase option;

	•	the term at inception is at least 75% of the estimated useful life of the leased equipment; or

	•	the present value of the minimum lease payments is at least 90% of the fair market value of the leased equipment at inception of the lease.

Our investment in leases is reflected in our financial statements as “net investment in direct financing leases.” Net investment in direct financing leases consists of the sum of total minimum lease payments receivable and the estimated residual value of leased equipment, less unearned lease income. Unearned lease income consists of the excess of the total future minimum lease payments receivable plus the estimated residual value expected to be realized at the end of the lease term plus deferred net initial direct costs and fees less the cost of the related equipment.

Since our founding, we have funded our business through a combination of variable rate borrowings and fixed rate asset securitization transactions, as well as through the issuance from time to time of subordinated debt and equity to private investors. Our variable rate financing sources consist of a revolving bank facility and two CP conduit warehouse facilities. We issue fixed rate term debt through the asset-backed securitization market. Typically, leases are funded through variable rate borrowings for a period of time, generally one to nine months, and then refinanced through the term note securitization market at fixed rates. All of our term note securitizations have been accounted for as on-balance sheet transactions

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. Preparation of these financial statements requires us to make estimates and judgments that affect reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. On an ongoing basis, we evaluate our estimates, including credit losses, residuals, initial direct costs and fees, other fees, valuation of warrants and realizability of deferred tax assets. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially lead to materially different results under different assumptions and conditions. Our consolidated financial statements are based on the selection and application of critical accounting policies, the most significant of which are described below.

Income recognition. Interest income is recognized under the effective interest method. The effective interest method of income recognition applies a constant rate of interest equal to the internal rate of return on the lease. When a lease is 90 days or more delinquent, the lease is classified as being on non-accrual and we do not recognize interest income on that lease until the lease is less than 90 days delinquent.

Fee income is comprised of late fees, interim rent and residual gains and losses. Late fees and interim rent, which is a partial payment for the period between equipment installation and lease commencement, are recognized into income when earned, net of amounts deemed to be unrecoverable.

Residual gains and losses are recognized when earned. Residuals that are 120 days or more beyond the lease termination date are charged against income. We review residual performance results periodically and, based on such review, revise our residual estimates downward, as necessary.

Insurance income is recognized on an accrual basis as earned over the term of the lease. Payments that are 120 days or more past due are charged against income. Ceding commissions, losses and loss adjustment expenses are recorded in the period incurred and netted against insurance income.

Initial direct costs and fees. We defer initial direct costs incurred and fees received to originate our leases in accordance with SFAS No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases. The initial direct costs and fees we defer are part of the net investment in direct financing leases and are amortized to interest income using the effective interest method. We defer third party commission costs as well as certain internal costs directly related to the origination activity. The costs include evaluating the prospective lessee’s financial condition, evaluating and recording guarantees and other security arrangements, negotiating lease terms, preparing and processing lease documents and closing the transaction. The fees we defer are documentation fees collected at lease inception. The realization of the deferred initial direct costs, net of fees deferred, is predicated on the net future cash flows generated by our lease portfolio.

Lease residual values. A direct financing lease is recorded at the aggregate future minimum lease payments plus the estimated residual values less unearned income. Residual values reflect the estimated amounts to be received at lease termination from lease extensions, sales or other dispositions of leased equipment. These estimates are based on industry data and on our experience. Management performs periodic reviews of the estimated residual values and any impairment, if other than temporary, is recognized in the current period.

Warrants. We have issued warrants to purchase our stock to the holders of our subordinated debt. In accordance with EITF Issue No. 96-13, codified in EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company’s Own Stock, we have classified the warrants’ fair value as a liability since the warrant holders have the ability to put the shares of Class A common stock exercisable under the warrants under certain conditions to us for cash settlement. Subsequent changes in the fair value of the warrants have been recorded in the accompanying statement of operations. Under the terms of the warrant agreement, the put option will expire upon the completion of this offering and therefore the liability will be reclassified to equity upon closing.

Allowance for credit losses. We monitor collections and payments from our end user customers and maintain an allowance for estimated credit losses based upon our historical experience, aging of accounts and any specific end user customer collection issues identified such as bankruptcy. While our credit losses have historically been within expectations and provisions established, we cannot guarantee that we will continue to experience the same credit loss rates as in the past. If circumstances change, for example if we experience higher than expected defaults or bankruptcies, our estimates of the recoverability of amounts due to us could be materially lower than actual results.

The provision for credit losses is the periodic cost of maintaining an appropriate allowance for credit losses. To the degree we add new leases to our portfolio, or to the degree credit quality is worse than expected, we record a provision to increase the allowance for credit losses for the estimated net losses to be incurred in our lease portfolio. Our policy is to charge-off the estimated unrecoverable portion of accounts once they reach 121 days delinquent.

Securitization transactions. Periodically, we transfer pools of leases to special purpose entities (“SPEs”) for use in securitization transactions. On April 1, 2001, we adopted the requirements of SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, which applied prospectively to all of our securitization transactions occurring after June 30, 2001. The adoption of SFAS No. 140 did not have a material impact on our operating results or financial position. Our transfers of leases to the SPEs for use in the securitizations transactions are structured as on-balance-sheet financing transactions and are, therefore, not given sales accounting treatment due to certain call provisions retained by us as well as the fact that the SPEs also hold the residual assets for the securitized leases. As a result, these transactions have been treated as secured borrowings, with the transferred leases remaining on our balance sheet as part of the net investment in direct financing leases and the related liabilities being reflected on our balance sheet as debt and secured borrowings.

Income taxes. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities and any necessary valuation allowance recorded against net deferred tax assets. The process involves summarizing temporary differences resulting from the different treatment of items, for example, leases for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheet. Our management must then assess the likelihood that deferred tax assets will be recovered from future taxable income or tax carry-back availability and, to the extent our management believes recovery is not likely, a valuation allowance must be established. To the extent that we establish a valuation allowance in a period, an expense must be recorded within the tax provision in the statement of operations.

Our net operating loss carryforwards (“NOLs”) for federal and state income tax purposes were approximately $10.1 million as of December 31, 2002. The NOLs expire in periods beginning 2006 to 2018. The Tax Reform Act of 1986 contains provisions that may limit the NOLs available to be used in any given year upon the occurrence of certain events, including significant changes in ownership interest. A change in the ownership of a company greater than 50% within a three-year period results in an annual limitation on a company’s ability to utilize its NOLs from tax periods prior to the ownership change. Management believes that the proposed reorganization and initial public offering will not have a material

effect on its ability to utilize these NOLs. No valuation allowance has been established against net deferred tax assets related to our NOLs, as our management believes these NOLs will be realizable through reversal of existing deferred tax liabilities, and future taxable income. If actual results differ from these estimates or these estimates are adjusted in future periods, we may need to establish a valuation allowance, which could materially impact its financial position and results of operations.

Net income. Net income increased $1.5 million, or 68.4%, from $2.1 million for the six months ended June 30, 2002 to $3.6 million for the six months ended June 30, 2003. The increase in net income was primarily driven by an increase in our net investment in direct financing leases and expanding net interest and fee margin. During the six months ended June 30, 2003, we generated 14,390 new leases with a cost of $110.3 million compared to 12,387 leases with a cost of $98.6 million generated for the six month period ended June 30, 2002. The weighted average implicit interest rate on new leases originated was 14.22% for the six month period ended June 30, 2002 compared to 14.33% for same period in 2003. Overall, our net investment in direct financing leases grew 25.0%, from $298.3 million at June 30, 2002 to $372.9 million at June 30, 2003.

Net interest and fee margin. Net interest and fee income increased $4.7 million, or 33.7%, from $13.7 million for the six months ended June 30, 2002 to $18.4 million for the six months ended June 30, 2003. The increase in the annualized net interest and fee margin represents an increase of 38 basis points from 10.30% in the six month period ended June 30, 2002 to 10.68% for the same period in 2003.

Interest income, net of amortized initial direct costs and fees, increased $4.1 million, or 22.9%, from $17.7 million for the six month period ended June 30, 2002 to $21.8 million for the six month period ended June 30, 2003. The increase in interest income was due to a 28.9% growth in the average net investment in direct financing leases outstanding which increased $77.1 million from $266.8 million for the six month period ended June 30, 2002 to $343.9 million for the same period in 2003. For the six month period ended June 30, 2003 compared to the same period in 2002, our weighted average cost of borrowing as a percentage of average net investment in direct financing leases declined 122 basis points while our interest income yield declined less significantly, by 61 basis points. Our ability to sustain pricing and

Fee income increased $826,000, or 19.6%, from $4.2 million for the six month period ended June 30, 2002 to $5.0 million for the same period in 2003. The increase in fee income resulted primarily from higher late fees earned of $314,000 and additional residual gains of $208,000 on lease terminations and increases in early prepayment gains and interim rents earned in the period. Fee income, as a percentage of the average net investment in direct financing leases, declined 23 basis points from 3.16% annualized for the six month period ended June 30, 2002 to 2.93% annualized for the same period in 2003 primarily due to lower average late fees earned as a result of fewer delinquent accounts.

Interest expense increased $260,000 from $8.2 million for the six month period ended June 30, 2002 to $8.5 million for the same period in 2003. Interest expense, as a percentage of the average net investment in direct financing leases, decreased 122 basis points from 6.14% annualized for the six month period ended June 30, 2002 to 4.92% annualized for the same period in 2003 due to the declining interest rate environment and the resulting impact on our weighted average borrowing costs.

Insurance and other income. Insurance and other income increased $357,000, or 28.1%, from $1.3 million for the six month period ended June 30, 2002 to $1.6 million for the same period in 2003. The increase is primarily related to higher insurance income of $342,000 from a 26.9% increase in the number of insured accounts.

Salaries and benefits expense. Salaries and benefits expense increased $1.2 million, or 32.1%, from $3.7 million for the six months ended June 30, 2002 to $4.9 million for the same period in 2003. For the six months ended June 30, 2003 compared to the same period in 2002, sales compensation increased $531,000 related to additional hiring of sales account executives and higher commissions earned for the period. In addition, collection salaries increased $106,000 due to higher collection commissions earned associated with improved portfolio delinquency performance. Compensation in management and support areas increased $537,000 of which $420,000 was related to management incentive bonus accruals. Total headcount increased from 181 at June 30, 2002 to 212 at June 30, 2003.

General and administrative expense. General and administrative expenses increased $867,000, or 32.9%, from $2.6 million for the six months ended June 30, 2002 to $3.5 million for the same period in 2003. The increase in general and administrative expenses was due primarily to an increase in professional fees of $459,000 and increased spending in postage, bank fees, depreciation and data processing costs supporting growth in the lease portfolio.

Financing related costs. Financing related costs include commitment fees paid to our financing sources and costs pertaining to our interest rate caps used to limit our exposure to an increase in interest rates. Financing related costs decreased $95,000 from $805,000 for the six month period ended June 30, 2003 to $710,000 for the same period in 2002 due to lower commitment fees in the period.

Change in fair value of warrants. Warrants issued in connection with subordinated debt increased in value $482,000 for the six month period ended June 30, 2002 compared to $779,000 for the same period in 2003. The warrant value was $514,000 as of December 31, 2001 and $996,000 at June 30, 2002. The warrant value was $1.4 million at December 31, 2002 and $2.2 million at June 30, 2003. The increase is primarily a result of the increase in the estimated fair market value of our common stock used in valuing our warrants.

Provision for credit losses. The provision for credit losses increased $247,000, or 7.0%, from $3.5 million for the six months ended June 30, 2002 to $3.8 million for the same period in 2003. The increase in our provision for credit losses was a result of the increased charge-offs and growth of our lease portfolio. Net charge-offs were $3.0 million for the six month period ended June 30, 2002 and $3.3 million for the same period in 2003.

Provision for income taxes. The provision for income taxes increased 59.0%, from $1.8 million for the six month period ended June 30, 2002 to $2.8 million for the same period in 2003. The increase is directly attributable to the increase in pretax income. Our effective tax rate was 45.7% for six month period ended June 30, 2002 and 44.3% for the same period in 2003. The decrease is due to a higher effective tax rate applied to our deferred tax balance in 2002 as a result of higher projected taxable income in future periods and certain changes in state tax rates.

Net income. Net income increased $1.8 million, or 66.5%, from $2.7 million for the year ended December 31, 2001 to $4.5 million for the year ended December 31, 2002. The increase in net income is attributable to an increase in the net investment in direct financing leases, expanding net interest and fee margin and improved asset quality. For the year ended December 31, 2002, we generated 25,368 new leases with a cost of $203.5 million compared to 23,207 new leases with a cost of $171.4 million for the year ended December 31, 2001. The weighted average implicit interest rate on new leases originated was 15.82% for the year ended December 31, 2001 compared to 14.17% for the same period in 2002. Overall, the net investment in direct financing leases grew 31.4%, from $256.8 million at December 31, 2001 to $337.4 million at December 31, 2002.

Net interest and fee margin. Net interest and fee income increased $9.3 million, or 47.3%, from $19.5 million for the year ended December 31, 2001 to $28.8 million for the year ended December 31, 2002. The increase in the net interest and fee margin represents an increase of 65 basis points from 9.32% for the year ended December 31, 2001 to 9.97% for the same period in 2002.

Interest income, net of amortized initial direct costs and fees, increased $8.5 million, or 28.8%, from $29.3 million for the year ended December 31, 2001 to $37.8 million for the year ended December 31, 2002. The increase is due to a 37.7% growth in average net investment in direct financing leases which increased $79.0 million from $209.4 million for the year ended December 31, 2001 to $288.4 million for the same period in 2002. For the year ended December 31, 2002 compared to the same period in 2001, our weighted average cost of borrowing declined 185 basis points while our interest income yield declined less significantly, by 91 basis points. Our ability to sustain pricing and increase our net interest and fee margin was due to a less competitive leasing environment and the amount of direct business recorded during the period.

Fee income increased $1.8 million from $7.1 million for the year ended December 31, 2001 to $8.9 million for the same period in 2002. The increase in fee income resulted primarily from additional residual gains

on lease terminations, which includes income from lease extensions, of $926,000, higher late fees earned of $501,000 and increases in early prepayment gains and interim rents earned. Fee income, as a percentage of the average net investment in direct financing leases, declined 29 basis points from 3.38% for the year ended December 31, 2001 to 3.09% for the year ended December 31, 2002 primarily due to lower average late fees earned as a result of fewer delinquent accounts.

Interest expense increased $1.0 million from $16.9 million for the year ended December 31, 2001 to $17.9 million for same period in 2002. Interest expense, as a percentage of average net investment in direct financing leases, decreased 185 basis points from 8.06% for the year ended December 31, 2001 to 6.21% for the same period in 2002 due to the declining interest rate environment and the resulting impact on our weighted average borrowing costs.

Insurance and other income. Insurance and other income increased $639,000, from $2.1 million for the year ended December 31, 2001 to $2.7 million for the same period in 2002. The increase is primarily related to higher insurance income of $855,000 related to a 33.9% increase in the number of insured accounts offset by lower miscellaneous income earned in the period.

Salaries and benefits expense. Salaries and benefits expense increased $2.8 million, or 52.8%, from $5.3 million for the year ended December 31, 2001 to $8.1 million for the same period in 2002. The increase in compensation expense is attributable to overall increases in compensation levels and increases to headcount. In 2002, sales compensation increased $793,000 related to additional hiring of sales account executives and higher commissions earned. In addition, collection and operations salaries increased $808,000 of which $551,000 was related to additional collection hires and higher commissions earned associated with improved portfolio delinquency performance. In 2002, management and support department compensation increased $1.1 million related to accrued management incentive bonuses and employee severance of $352,000 and $440,000, respectively. Total headcount increased from 168 at December 31, 2001 to 201 at December 31, 2002.

General and administrative expense. General and administrative expenses increased $1.1 million, or 24.6%, from $4.6 million for the year ended December 31, 2001 to $5.7 million for the same period in 2002. The increase in general and administrative expenses was due primarily to higher occupancy costs, professional fees, audit and tax fees and temporary employee services. Additionally, we spent more on bank processing fees, data processing, marketing, postage and credit bureau reports as a result of increased lease originations.

Financing related costs. Financing related costs increased $359,000, from $1.3 million for the year ended December 31, 2001 to $1.6 million for the same period in 2002. The increase was due to higher costs associated with interest cap agreements in the period.

Change in fair value of warrants. Warrants issued in connection with subordinated debt increased in value $908,000 from $514,000 at December 31, 2001 to $1.4 million at December 31, 2002 primarily as a result of increases in the estimated fair market value of our common stock used in valuing our warrants.

Provision for credit losses. The provision for credit losses increased $1.0 million, or 15.7%, from $5.9 million for the year ended December 31, 2001 to $6.9 million for the same period in 2002. The increase in our provision for credit losses was a result of the increased charge-offs and growth of our lease portfolio. Net charge-offs were $4.6 million for the period ended December 31, 2001 and $5.9 million for the same period in 2002.

Provision for income taxes. The provision for income taxes increased 120.3%, from $1.7 million for the year ended December 31, 2001 to $3.7 million for the same period in 2002. The increase is directly attributable to the increase in pretax income. Our effective tax rate was 35.8% for the year ended December 31, 2001 compared to 45.2% for the year ended December 31, 2002. The increase in the 2002

effective tax rate was due to the impact of the changes in fair value of warrants and an increase in our effective tax rate applied to our deferred tax balances as a result of higher projected taxable income in future periods and certain changes in state tax rates.

Net income. Net income increased $1.1 million, or 73.4%, from $1.6 million for the year ended December 31, 2000 to $2.7 million for the year ended December 31, 2001. The increase in net income is attributable to an increase in the net investment in direct financing leases, expanding net interest margins and lower operating expense levels as a percentage of average net investment in direct financing leases. For the year ended December 31, 2001, we generated 23,207 new leases with a cost of $171.4 million compared to 20,010 new leases with a cost of $141.7 million for the year ended December 31, 2000. The implicit weighted average interest rate on new leases originated was 16.60% for the year ended December 31, 2000 compared to 15.82% for the same period in 2001. Overall, the net investment in direct financing leases grew 48.9%, from $172.5 million at December 31, 2000 to $256.8 million at December 31, 2001.

Net interest and fee margin. Net interest and fee income increased $8.5 million, or 76.8%, from $11.0 million for the year ended December 31, 2000 to $19.5 million for the year ended December 31, 2001. The increase in our net interest and fee margin represents an increase of 52 basis points from 8.80% for the year ended December 31, 2000 to 9.32% for the same period in 2001.

Interest income, net of amortized initial direct costs and fees, increased $11.1 million, or 60.8%, from $18.2 million for the year ended December 31, 2000 to $29.3 million for the year ended December 31, 2001. The increase was due to growth in average net investment in direct financing leases of $83.9 million, from $125.5 million for the year ended December 31, 2000 to $209.4 million for the same period in 2001. In 2001, our weighted average cost of borrowing declined 119 basis points while our interest income yield declined less significantly, by 52 basis points. Our ability to sustain pricing and increase our net interest and fee margin was due to a less competitive leasing environment and the amount of direct business recorded during the period.

Fee income increased $2.7 million from $4.4 million for the year ended December 31, 2000 to $7.1 million for the year ended December 31, 2001. The increase in fee income resulted primarily from higher late fees earned of $2.1 million from a higher number of delinquent accounts and additional residual gains on lease

terminations, which include income on lease extensions, of $316,000 and increases in early prepayment gains and interim rents earned. Fee income, as a percentage of the average net investment in direct financing leases, declined 15 basis points from 3.53% for the year ended December 31, 2000 to 3.38% for the same period in 2001 as a result of lower interim rent and early prepayment gains.

Interest expense increased $5.3 million, or 45.4%, from $11.6 million for the year ended December 31, 2000 to $16.9 million for the year ended December 31, 2001. Our interest expense, as a percentage of average net investment in direct financing leases, decreased 119 basis points from 9.25% for the year ended December 31, 2000 to 8.06% for the year ended December 31, 2001 due to the declining interest rate environment and the resulting impact on our weighted average borrowing costs.

Insurance and other income. Insurance and other income increased $263,000, or 14.4%, from $1.8 million for the year ended December 31, 2000 to $2.1 million for the same period in 2001. The increase was primarily related to higher insurance income of $866,000 related to a 60.9% increase in the number of insured accounts under the program offset by a decrease in miscellaneous income earned in the period.

Salaries and benefits expense. Salaries and benefits expense increased $1.6 million, or 45.0%, from $3.7 million for the year ended December 31, 2000 to $5.3 million for the same period in 2001. In 2001, sales compensation increased $640,000 as a result of additional hiring of sales account executives and higher commissions earned. In addition, collection compensation increased $755,000 due to additional staff hires in support of growth in the portfolio. Compensation in management and support areas increased $301,000. Total headcount increased from 133 at December 31, 2000 to 168 at December 31, 2001.

General and administrative expense. General and administrative expenses increased $1.2 million, or 34.8%, from $3.4 million for the year ended December 31, 2000 to $4.6 million for the same period in 2001. The increase in general and administrative expenses was due primarily to higher occupancy costs of $165,000 related to our Mount Laurel office expansion, higher professional fees of $231,000 and increases in collections, depreciation, marketing, postage and credit bureau report spending.

Financing related costs. Financing related costs increased $320,000, from $939,000 for the year ended December 31, 2000 to $1.3 million for the same period in 2001. The increase was due to higher commitment fees incurred of $444,000 offset by a decrease in costs associated with our interest rate cap agreements during the period.

Change in fair value of warrants. Warrants issued in connection with subordinated debt decreased in value $208,000 from $722,000 at December 31, 2000 to $514,000 at December 31, 2001 primarily as a result of a decline in the estimated fair market value of our common stock.

Provision for credit losses. The provision for credit losses increased by $3.4 million, or 137.0%, from $2.5 million for the year ended December 31, 2000 to $5.9 million for same period in 2001. The increase in our provision for credit losses was a result of the increased charge-offs and growth in our lease portfolio. Net charge-offs were $1.7 million for the year ended December 31, 2000 and $4.6 million for the same period in 2001.

Provision for income taxes. The provision for income taxes increased 92.2%, from $881,000 for the year ended December 31, 2000 to $1.7 million for the same period in 2001. The increase is directly attributable to the increase in pretax income. Our effective tax rate was 36.0% for the year ended December 31, 2000 compared to 35.8% for the year ended December 31, 2001.

We manage expenditures using a comprehensive budgetary review process. Expenses are monitored by departmental heads and are reviewed by senior management monthly. The ratio of salaries and benefits and general and administrative expenses as a percent of the average net investment in direct financing leases shown below are metrics used by management to monitor productivity and spending levels.


⁽¹⁾	Includes a $1.3 million charge incurred in connection with the write-off of the securitized gain on sale previously recorded. Excluding the $1.3 million charge, the adjusted percentage is 4.47%.

Key growth indicators management evaluates regularly are sales account executive staffing levels and the activity of our origination sources, which are shown below.

Our leases offer our end user customers the option to own the purchased equipment at lease expiration. As of June 30, 2003, approximately 64% of our leases were one dollar purchase option leases, 21% were fair market value leases and 15% were fixed purchase option leases, the latter of which typically are 10% of the original equipment cost. As of June 30, 2003, there were $33.8 million of residual assets retained on our balance sheet.

The chart below presents the residual collection results from January 1, 2000 through June 30, 2003 for fair market value and fixed purchase option leases that have reached their expiration date as compared to the original recorded residuals for those leases. The amount collected is the total proceeds received from our end user customers at lease expiration, from end of term purchase negotiations or renewal rents or from third parties through the resale of the equipment.

⁽¹⁾Excludes initial direct costs and fees deferred and anticipated collections.

The higher net charge-off percentage for the year ended December 31, 2001 compared to 2002 was primarily due to $618,000 of charge-offs related to a dealer program that was discontinued in 2000. We

The lower net charge-off percentage for the six month period ended June 30, 2003 compared to 2002 was a result of the changes made to our collection practices in 2002.

Our business requires a substantial amount of cash to operate and grow. Our primary liquidity need is for new lease originations. In addition, we need liquidity to pay interest and principal on our borrowings, to pay fees and expenses incurred in connection with our securitization transactions, to fund infrastructure and technology investment and to pay administrative and other operating expenses. We are dependent upon the availability of financing from a variety of funding sources to satisfy these liquidity needs. Historically, we have relied upon four principal types of third party financing to fund our operations:


	•	borrowings under a revolving bank facility;

	•	financing of leases in CP conduit warehouse facilities;

	•	financing of leases through term note securitizations; and

	•	private placement of equity and debt securities with third party investors.

Cash and Cash Equivalents. Our objective is to maintain a low cash balance, investing any free cash in leases. We generally fund our lease originations and growth using advances under our revolving bank facility and our CP conduit warehouse facilities. As of June 30, 2003, we had $71.7 million and as of December 31, 2002 we had $18.9 million in total cash and cash equivalents.

As of June 30, 2003, $65.4 million of our cash was classified as restricted cash, compared to $12.6 million at December 31, 2002. Restricted cash consists primarily of the cash reserve and advance payment accounts related to our term note securitizations. The restricted cash balance at June 30, 2003 included a $51.8 million prefunded cash balance in connection with our 2003-1 term note securitization. This prefunding account is expected to be used on or before September 15, 2003 to acquire leases for inclusion in the asset pool related to the 2003-1 term note securitization.

Borrowings. Our aggregate outstanding secured borrowings amounted to $393.0 million at June 30, 2003 and $315.4 million at December 31, 2002. In addition, we had outstanding subordinated debt of $9.6 million at June 30, 2003 and $9.5 million at December 31, 2002.

At June 30, 2003, our external financing sources, maximum facility amounts, amounts outstanding and unused available commitments, subject to certain minimum equity restrictions and other covenants and conditions, are summarized below:

⁽²⁾Our term note securitizations are one-time fundings that pay down over time without any ability for us to draw down additional amounts. As of June 30, 2003, we had completed five on-balance-sheet term note securitizations.

Revolving bank facility. Our $32.5 million revolving bank facility is secured by leases that meet specified eligibility criteria. Funding under this facility is based on a borrowing base formula and factors in an assumed discount rate and advance rate against the pledged leases. During the six months ended June 30, 2003 and the year ended December 31, 2002, we had weighted average outstanding borrowings under this facility of $12.7 million for both periods and incurred interest expense under this facility of $254,000 and $551,000, respectively. This facility expires on August 31, 2005.

CP conduit warehouse facilities. We have two CP conduit warehouse facilities that allow us to borrow, repay and re-borrow based on a borrowing base formula.

Our $125.0 million CP conduit warehouse facility is secured by leases that meet specified eligibility criteria. We obtain funding under this facility through a special-purpose, bankruptcy remote subsidiary to which we transfer eligible leases. Funding under this facility is based on a borrowing base formula and factors in an assumed discount rate and advance rate against the pledged collateral combined with specific portfolio concentration criteria. Currently, the maximum advance rate under this facility is 88.5% of our borrowing base. Interest on borrowings under the facility is charged at a floating rate based on commercial paper rates and averaged 1.93% for the six month period ended June 30, 2003. Our weighted average outstanding borrowings under this facility were $35.2 million for the six months ended June 30, 2003 compared to $38.7 million for the year ended December 31, 2002. We incurred interest expense under this facility of $339,000 for the six months ended June 30, 2003 compared to $955,000 for the year ended December 31, 2002. This facility expires on December 21, 2004.

Our $75.0 million CP conduit warehouse facility is also secured by leases that meet specified eligibility criteria. We obtain funding under this facility through a special-purpose, bankruptcy remote subsidiary to which we transfer eligible leases. Funding under the facility is based on a borrowing base formula and factors in an assumed discount rate and advance rate against the pledged collateral combined with specified portfolio concentration criteria. Currently, the maximum advance rate under this facility is 87.0% of our borrowing base. The facility is scheduled to expire on July 9, 2004, but may, at the option of the committed lenders, be renewed through July 9, 2005. Interest on borrowings under the facility is charged at a floating rate based on commercial paper rates and averaged 2.46% for the six month period ended June 30, 2003. We had weighted average outstanding borrowings under this facility of $64.9 million for the six months ended June 30, 2003 compared to $10.3 for the year ended December 31, 2002. We incurred interest under this facility of $799,000 for the six months ended June 30, 2003, compared to $287,000 for the year ended December 31, 2002.

Term note securitizations. Since our founding, we have completed five on-balance-sheet term note securitizations. In connection with each securitization transaction, we have transferred leases to our wholly owned, special-purpose bankruptcy remote subsidiaries and issued term debt collateralized by such commercial leases to institutional investors in private securities offerings. Our Series 1999-2 transaction, which was our first term note securitization, was repaid in full on January 15, 2003. Our Series 2000-1, 2001-1, 2002-1 and 2003-1 transactions are rated by Moody’s Investors Service and Fitch Ratings. Moody’s ratings for each of our outstanding securitizations are as follows: Class A notes — A1 for 2001 Class A notes and A2 for all others; Class B notes — Baa2; and Class C notes — Ba2.

As of June 30, 2003, $333.2 million of our net investment in direct financing leases was pledged to our term note securitizations. Each of our term note securitizations is summarized below:

⁽¹⁾Represents the weighted average coupon rate for all tranches of the securitization.

Additional liquidity is provided by our cash flow from operations. For the six months ended June 30, 2003 and December 31, 2002, we generated cash flow from operations of $14.0 million and $16.9 million, respectively.

Investing activities primarily relate to lease origination activity. For the six months ended June 30, 2003, we used cash in investing activities of $39.0 million. For the year ended December 31, 2002, we used cash in investing activities of $86.6 million.

We expect cash from operations, additional borrowings on existing and future credit facilities, the completion of additional on-balance-sheet term note securitizations, and the proceeds of this offering to be adequate to support our operations and projected growth over the next eighteen months.

We use interest rate cap agreements to limit our exposure to an increase in interest rates and the risk that interest collected under our fixed rate leases will not be sufficient to service the interest due on the commercial paper issued under our CP conduit warehouse facilities. We purchase interest rate caps from highly rated counterparties, typically rated AA- or better, and with notional principal protection that mirrors the amortization of our lease collateral. As of June 30, 2003, the fair market value of the interest rate caps purchased was $112,000, representing $145.7 million of notional principal. Our outstanding interest rate cap agreements do not meet the hedge accounting requirements of SFAS No. 133, Accounting for Derivatives and accordingly are marked to market through finance related costs.

In addition to our scheduled maturities on our credit facilities and term debt, we have future cash obligations under various types of contracts. We lease office space and office equipment under long-term operating leases. The contractual obligations under our agreements, credit facilities, term securitizations, operating leases, and commitments under non-cancelable contracts as of December 31, 2002 were as follows:

We are exposed to market risk associated with changes in interest rates. To provide some protection against potential interest rate increases associated with our variable rate facilities, we have entered into derivative financial transactions in the form of interest rate caps. The interest rate caps are used to limit our exposure to an increase in interest rates in the underlying variable rate facilities. As of June 30, 2003, we held interest rate caps with a notional amount of $145.7 million with several financial institutions at various terms which is used as the basis to calculate amounts to be received under the interest rate caps.

The following table provides information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates, including debt obligations. For debt obligations, the table presents principal cash flows and related weighted average interest rates as of June 30, 2003 expected as of and for each year ended through December 31, 2007 and for periods thereafter.

In November 2002, the Financial Accounting Standards Board, or FASB, issued Interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, or FIN 45. FIN 45 requires a guarantor to recognize a liability at the inception of the guarantee for the fair value of the obligation undertaken in issuing the guarantee and include more detailed disclosure with respect to guarantees. FIN 45 is effective for guarantees issued or modified after December 31, 2002. The adoption of this accounting pronouncement did not have a material effect on our consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, or FIN 46. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and to existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply to all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The adoption of this accounting pronouncement did not have a material effect on our consolidated financial statements.

Since inception, we have completed five term note securitizations. In connection with each transaction, we have established a bankruptcy remote special-purpose subsidiary and issued term debt to institutional investors. Under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125, our securitizations do not qualify for sales accounting treatment due to certain call provisions that we maintain as well as the fact that the special purpose entities used in connection with the securitizations also hold the residual assets. Accordingly, assets and related debt of the special purpose entities are included in our consolidated balance sheets. Our leases and restricted cash are assigned as collateral for these borrowings and there is no further recourse to the general credit of the Company. Collateral in excess of these borrowings represents our maximum loss exposure.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 Derivative Instruments and Hedging Activities. This statement amends and clarifies financial and accounting and reporting for derivative instruments embedded in other contracts, and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. In particular, this statement: 1) clarifies under what circumstances a contract with an initial net investment meets the characteristics of

a derivative; 2) clarifies when a derivative contains a financing component; 3) amends the definition of an underlying to conform it to language used in FIN 45; and 4) amends certain other existing pronouncements. This Statement is effective for hedging relationships designated after June 30, 2003 and for contracts entered into or modified after June 30, 2003, except for provisions relating to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003 which should continue to be applied in accordance with their respective dates. The adoption of this accounting pronouncement did not have a material effect on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement establishes standards for how an issuer classifies and measures certain financial instruments and characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability or an asset in some circumstances. Many of those instruments were previously classified as equity. This Statement does not apply to features that are embedded in a financial instrument that is not a derivative in its entirety. For example, it does not change the accounting treatment for conversion features, or conditional redemption features. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this accounting pronouncement did not have a material effect on our consolidated financial statements.

We are a leading provider of equipment financing solutions primarily to small businesses nationwide. We finance over 60 categories of commercial equipment important to our end user customers, including copiers, telephone systems, computers, and certain commercial and industrial equipment. Our average lease transaction was approximately $8,000 at June 30, 2003, and we typically do not exceed $150,000 for any single lease transaction. This segment of the equipment leasing market is commonly known in the industry as the small-ticket segment. We access our end user customers through origination sources comprised of our existing network of over 6,800 independent commercial equipment dealers and, to a lesser extent, through relationships with lease brokers and direct solicitation of our end user customers. We use a highly efficient telephonic direct sales model to market to our origination sources. Through these origination sources, we are able to deliver convenient and flexible equipment financing to our end user customers. Our typical financing transaction involves a non-cancelable, full-payout lease with payments sufficient to recover the purchase price of the underlying equipment plus an expected profit.

We were founded in June 1997 by a group of seasoned finance professionals, each with an average of 15 years of experience providing financing solutions to small businesses. This experience has enabled us to develop and effectively implement our business model, which allows us to efficiently originate and process a large volume of small-ticket transactions while managing credit risk through various economic cycles.

The small-ticket equipment leasing market is highly fragmented. We estimate that there are up to 75,000 independent equipment dealers who sell the types of equipment we finance. We focus primarily on an underserved segment of the market, the small and mid-size independent equipment dealers. This segment is underserved because: 1) the large commercial finance companies and large commercial banks typically concentrate their efforts on marketing their products and services directly to equipment manufacturers and larger distributors, rather than the independent equipment dealers; and 2) many smaller commercial finance companies and regional banking institutions have not developed the systems and infrastructure required to adequately service these equipment dealers on high volume, low-balance transactions. We focus on establishing our relationships with independent equipment dealers to meet their need for high quality, convenient point-of-sale lease financing programs. We provide equipment dealers with the ability to offer our lease financing and related services to their customers as an integrated part of their selling process, allowing them to increase their sales and provide better customer service. We believe our personalized service approach appeals to the independent equipment dealer by providing each dealer with a single point of contact to access our flexible lease programs, obtain rapid credit decisions and receive prompt payment of the equipment cost.

We have developed a proprietary and fully integrated account origination platform that enables us to solicit, process and service a large number of low balance financing transactions. From our inception in 1997 to June 30, 2003, we processed approximately 225,000 lease applications and originated nearly 100,000 new leases. A key element to this platform is our ability to obtain detailed information on our origination sources and end user customers at all stages of a financing transaction, and effectively manage that information so it can be used across all aspects of our operations. Another important component of our origination platform is our contact management system, which systematically organizes and directs our solicitation efforts through telephony and technology applications. Our 74 sales account executives have instant desktop access to our data warehouse of origination source account information and the necessary applications to manage that information to generate new business. Our credit team utilizes our internal data and on-line reporting to assess the performance of all transactions referred by a particular origination source, identify and respond to portfolio trends and review detailed reports based on information stored in our systems. This enterprise-wide approach to information management allows us to grow our small-ticket lease portfolio organically while maintaining control over distribution, credit, pricing and terms. We believe

Effectively managing credit risk at the origination source, as well as at the transaction and portfolio levels, has enabled us to maintain credit quality as our portfolio has grown. At June 30, 2003, our greater than 60 day delinquency rate as a percentage of minimum lease payments receivable was 0.64%, and our annual net charge-off rate to our average net investment in direct financing leases for the six months ended June 30, 2003 was 1.91%. At December 31, 2002, our greater than 60 day delinquency rate as a percentage of minimum lease payments receivable was 0.86%, and our net charge-off rate to our average net investment in direct financing leases was 2.06%. Based on our review of available data for the small-ticket segment of the equipment leasing industry, we believe that our delinquency and charge-off rates are below industry averages. We attribute our relatively low historical delinquency and loss rate levels to: 1) our comprehensive credit underwriting process, which applies a rules-based human decision making process that our management team has developed and refined based on their extensive experience in providing financing to small businesses; 2) our effective collection strategies; and 3) our diversified portfolio, which is comprised of approximately 60,000 active end user customers, none of which accounted for more than 0.07% of our portfolio at June 30, 2003.

We fund our business through a diverse funding strategy that involves a variety of financing sources. We utilize a revolving bank facility and two commercial paper conduit warehouse facilities, each of which is provided by a national credit provider. In addition, we have completed five on-balance-sheet term securitizations. Collectively, our financing strategy has provided us with sufficient funding capacity to maintain and grow our business. We believe that our asset quality, consistent financial performance and experienced management team have enabled us to access funding through multiple sources at competitive rates during fluctuating economic conditions, which in turn has allowed us to consistently grow our lease portfolio.

The ELA estimates that in 2003 business investment in equipment will be approximately $668.0 billion, of which approximately $208.0 billion will be financed through leasing. The equipment leasing market is divided into three segments which are differentiated by the cost of the equipment: small-ticket, middle-market and large-ticket. We compete in the highly-fragmented small-ticket segment of the lease financing market, which is comprised of lease transactions that are below $250,000 in equipment cost. According to the ELA’s most recent estimates, the small-ticket segment accounted for approximately 30% of the estimated total new leasing volume originated in 2001, which would equate to an approximate $62.4 billion segment in 2003 assuming comparable volume among the segments for 2003. Based upon this data and our industry experience, we estimate the size of the portion of the small-ticket leasing market in which we operate to be approximately $12 to $15 billion, of which we have less than a 2% market share.

Our end user customers are primarily small businesses. Small businesses, defined by the Small Business Administration Office of Advocacy as firms having fewer than 500 employees, are an integral part of the United States economy. In 2002, the Office of Advocacy estimates there were approximately 22.9 million small businesses in the United States. These small businesses:


	•	represent approximately 99% of all employers;

	•	account for more than 50% of the non-farm private gross domestic product;

	•	employ more than half of all private sector employees; and

	•	generate 60% to 80% of the net new jobs each year.

Traditionally, depository institutions such as commercial banks and thrift institutions, as well as non-depository institutions such as finance, leasing, mortgage, brokerage and insurance companies, have served the financing needs of small businesses. However, the recent trends of tightened bank lending standards and consolidation in the banking industry have driven small businesses to consider lease financing as a viable alternative for securing their equipment acquisitions.

We believe several characteristics distinguish us from our competitors, including our:


	•	*Multiple sales origination channels.* We use multiple sales origination channels to effectively penetrate the highly diversified and fragmented small-ticket equipment leasing market. Our direct origination channels, which account for approximately 66% of our originations, involve: 1) establishing relationships with independent equipment dealers; 2) securing endorsements from national equipment manufacturers and distributors to become the preferred lease financing source for the independent dealers that sell their equipment; and 3) directly soliciting our existing end user customer base for repeat business. Our indirect origination channels account for approximately 34% of our originations and consist of our relationships with brokers and certain equipment dealers who refer transactions to us for a fee or sell us leases that they originated.

	•	*Highly effective account origination platform.* Our telephonic direct marketing platform offers origination sources a high level of personalized service through our team of 74 sales account executives, each of whom acts as the single point of contact for his or her origination sources. Our business model is built on a real-time, fully integrated customer information database and a contact management and telephony application that facilitate our account solicitation and servicing functions. Our origination platform enables us to: 1) identify and frequently contact thousands of origination source prospects in a cost efficient manner; 2) closely monitor and assess the effectiveness of the sales account executives responsible for converting these prospects into account relationships; and 3) provide an expert resource to facilitate the independent equipment dealer’s use of various types of lease financing as a sales tool.

	•	*Comprehensive credit process.* We believe that asset quality is dependent upon effectively managing credit risk at the origination source as well as at the transaction and portfolio levels. Our comprehensive credit process starts with the qualification and ongoing review of our origination sources. We expend considerable effort to align ourselves only with qualified and stable origination sources. Once the origination source is approved, our credit process focuses on analyzing and underwriting the end user customer and the specific financing transaction, regardless of whether the transaction was originated through our direct or indirect origination channels. Our credit analysts apply our proprietary underwriting guidelines to each transaction. These guidelines, which are frequently reviewed and updated by our Senior Credit Committee, have been developed based on our management’s extensive industry experience and our ongoing detailed review and analysis of our portfolio mix and performance.

	•	*Portfolio diversification.* Our average lease transaction is approximately $8,000, and we typically will not exceed $150,000 for any single lease transaction. As of June 30, 2003, no single end user customer accounted for more than 0.07% of our portfolio and leases from our largest origination source accounted for only 2.9% of our portfolio. In addition, we have financed over 60 equipment categories and had leases outstanding in all 50 states and the District of Columbia. This highly diversified portfolio helps to mitigate credit risk.


	•	*Fully integrated information management system.* Our business integrates information technology solutions to optimize the sales origination, credit, collection and account servicing functions. Throughout a transaction, we collect a significant amount of information on our origination sources and end user customers. The enterprise-wide integration of our systems enables data collected by one group, such as credit, to be used by other groups, such as sales or collections, to better perform their functions. We use highly efficient data retrieval and query tools to deliver real time information to our employees’ desktops. This high degree of automation and process integration across all aspects of our business results in lower transaction costs, improved operating efficiencies and better credit decisions.

	•	*Highly sophisticated collections environment.* Our centralized collections department is structured to collect delinquent accounts, minimize credit losses and collect post charge-off recovery dollars. Our collection strategy utilizes a life-cycle approach, where a single collector handles an account through its entire delinquency period. This approach allows the collector to consistently communicate with the end user customer’s decision maker to ensure that delinquent customers are providing consistent information. It also creates account ownership by the collectors, which is the foundation of our pay for performance incentive compensation plans.

	•	*Access to multiple funding sources.* We have established and maintained diversified funding capacity through multiple facilities with several national credit providers. Our proven ability to consistently access funding at competitive rates through various economic cycles provides us with the liquidity necessary to manage our business.

	•	*Experienced management team.* Our executive officers average 15 years of experience in providing financing solutions primarily to small businesses. Prior to our formation in 1997, our founders played key roles in the development and management of the leasing operations of Advanta Business Services, a subsidiary of Advanta Corp. As we have grown, our founders have expanded the management team with a group of successful, seasoned executives. Following our offering, our executive officers will beneficially own approximately % of our common stock.

Our history of organic growth demonstrates our ability to succeed through various economic cycles. Our primary objective is to enhance our current position as a provider of equipment financing solutions primarily to small businesses by pursuing a strategy focused on the following organic growth initiatives:


	•	*Expand and enhance our relationships with origination sources.* We believe we can increase our new origination source relationships and seek additional lease financing opportunities from our existing origination sources. We believe that our 2002 new lease originations of $203.5 million represented less than 2% of the small-ticket market that we target, leaving us significant opportunity to continue our organic growth. We expect to continue our growth by adding new sales account executives and continuing to train and season our existing sales force. We provide extensive training and mentoring to our sales account executives. As a result, as a sales account executive’s tenure with us increases, so does his or her productivity. We also provide ongoing training to our origination sources on how to use our financing services as a way to increase their sales, thereby increasing the business we get from these sources.

	•	*Increase portfolio of repeat customers.* Our existing portfolio of end user customers offers us the opportunity for repeat business. As of June 2003, we had approximately 60,000


		different end user customers, of which approximately 7,100 had more than one lease with us. We have an opportunity to grow our portfolio by increasing the percentage of customers who have more than one lease with us. As a result, during 2002 we formed an end user sales group that proactively solicits our existing end user customer base for additional lease transactions. We believe that this group can be successful in further increasing our repeat customer business and thus create future portfolio growth.

	•	*Strategic regional expansion.* We have been able to increase our penetration in the Southeast and Central Mountain regions of the United States by establishing regional offices in Georgia and Colorado. We are continuing to evaluate opportunities to establish additional regional offices in other areas of the United States, with the leading region at this time being the Midwest. By strategically expanding our regional offices, we believe we can increase originations in areas of the country that are currently under-weighted in our portfolio.

	•	*Expand product offerings.* We believe that we can leverage our existing relationships with our end user customers by strategically offering them other products or services. By doing this, we believe we can increase our profitability and enhance our relationships with our origination sources. Our property insurance product is one example of an opportunity that we analyzed, pursued and successfully implemented. To the extent that we are able to replicate this success with other products and services, we would create additional growth opportunities.

Overview of Origination Process. We access our end user customers through origination sources comprised of our extensive network of independent equipment dealers and, to a lesser extent, through relationships with lease brokers and the direct solicitation of our end user customers. We use a highly efficient telephonic direct sales model to market to our origination sources. Through these sources, we are able to deliver convenient and flexible equipment financing to our end user customers.

Our origination process begins with our database of thousands of origination source prospects located throughout the United States. We developed and continually update this database by purchasing marketing data from third parties, such as Dun & Bradstreet, Inc., by joining industry organizations and by attending equipment trade shows. The independent equipment dealers we target typically have had limited access to lease financing programs, as the traditional providers of this financing generally have concentrated their efforts on the equipment manufacturers and larger distributors.

The prospects in our database are systematically distributed to our sales force for solicitation and further data collection. Sales account executives access prospect information and related marketing data through our contact management software. This contact management software enables the sales account executives to sort their origination sources and prospects by any data field captured, schedule calling campaigns, fax marketing materials, send e-mails, produce correspondence and documents, manage their time and calendar, track activity, recycle leads and review management reports. We have also integrated predictive dialer technology into the contact management system, enabling our sales account executives to create efficient calling campaigns to any subset of the origination sources in the database.

Once a sales account executive converts a prospect into an active relationship, that sales account executive becomes the origination source’s single point of contact for all dealings with us. This approach, which is a cornerstone of our origination platform, offers our origination sources a personal relationship through which they can address all of their questions and needs, including matters relating to pricing, credit, documentation, training and marketing. The sales account executives are paid commissions on their originations, thereby properly incenting them to provide the best possible service. This single point of

contact approach distinguishes us from our competitors, many of whom require the origination sources to interface with several people in various departments, such as sales support, credit and customer service, for each application submitted. Since many of our origination sources have little or no prior experience in using lease financing as a sales tool, our personalized, single point of contact approach facilitates the leasing process for them. Other key aspects of our platform aimed at facilitating the lease financing process for the origination sources include:


	•	ability to submit applications via fax, phone, internet, mail or e-mail;

	•	credit decisions generally within two hours;

	•	one-page, plain-English form of lease for transactions under $50,000;

	•	overnight or ACH funding to the origination source once all lease conditions are satisfied;

	•	value-added portfolio reports, such as application status and volume of lease originations;

	•	on-site or telephonic training of the equipment dealer’s sales force on leasing as a sales tool; and

	•	custom leases and programs.

Sales Origination Channels. We use direct and indirect sales origination channels to effectively penetrate a multitude of origination sources in the highly diversified and fragmented small-ticket equipment leasing market. All of the sales account executives in our New Jersey headquarters and our Colorado, Georgia and Pennsylvania regional offices use our proprietary telephonic direct marketing sales model to solicit these origination sources and end user customers.


	•	Direct Channels. Our direct sales origination channels, which account for approximately 66% of our originations, involve:


	—	*Independent equipment dealer solicitations.* This origination channel focuses on soliciting and establishing relationships with independent equipment dealers in a variety of equipment categories located across the United States. Our typical independent equipment dealer has less than $2.0 million in annual revenues and fewer than 20 employees. Service is a key determinant in becoming the preferred provider of financing recommended by these equipment dealers. At June 30, 2003, we had 58 sales account executives in this direct origination channel, including a dedicated team of 11 sales account executives who focus solely on copier and office equipment dealers.

	—	*National account endorsements.* This channel focuses on securing endorsements from national equipment manufacturers and distributors and then leveraging those endorsements to become the preferred lease financing source for the independent dealers that sell the manufacturers’ or distributors’ equipment. Once the national account team receives an endorsement, the equipment dealers that sell the endorsing manufacturer’s or distributor’s products are contacted by our sales account executives in the independent equipment dealer channel. This allows us to quickly and efficiently leverage the endorsements into new business opportunities with many new equipment dealers located nationwide. At June 30, 2003, we had three sales account executives in the national account group and 37 active national account endorsements.

	—	*End user customer solicitations.* This channel focuses on soliciting our existing portfolio of approximately 60,000 end user customers for additional equipment


		leasing opportunities. We view our existing end user customers as an excellent source for additional business for various reasons, including that we already have their credit information and lease payment histories and they have already shown a propensity to finance their equipment. At June 30, 2003, we had four sales account executives focused solely on the direct solicitation of our end user customers.


	•	Indirect Channels. Our indirect origination channels account for approximately 34% of our originations and consist of our relationships with lease brokers and certain equipment dealers who refer end user customer transactions to us for a fee or sell us leases that they originated with an end user customer. We conduct our own independent credit analysis on each end user customer in an indirect lease transaction. We have written agreements with most of our indirect origination sources whereby they provide us with certain representations and warranties about the underlying lease transaction. The origination sources in our indirect channels generate leases that are similar to our direct channels. We view these indirect channels as an opportunity to extend our lease origination capabilities through relationships with smaller originators who have limited access to the capital markets and funding. At June 30, 2003, we had nine sales account executives focused on our indirect origination channels.

Our recruiting process identifies potential sales account executive candidates through sales recruiters, referrals, the internet and print advertising. Candidates are screened for previous sales experience and communication skills, phone presence and teamwork orientation. Due to our extensive training program and systematized sales approach, we do not regard previous leasing or finance industry experience as being necessary. Our location of offices near large urban centers gives us access to large numbers of qualified candidates.

Each new sales account executive undergoes up to a 60-day comprehensive training program shortly after he or she is hired. The training program covers the fundamentals of lease finance and introduces the sales account executive to our origination and credit policies and procedures. It also covers technical training on our databases and our information management tools and techniques. At the end of the program, the sales account executives are tested to ensure they meet our standards.

In addition to our formal training program, sales account executives also receive extensive on-the-job training and mentoring. All sales account executives sit in groups, providing newer sales account executives the opportunity to learn first hand from their more senior peers. In addition, our sales managers frequently monitor and coach a sales account executive during phone calls, enabling the individual to receive immediate feedback.

Beyond our formal training program, our sales account executives receive significant continuing education and training. These programs include periodic detailed presentations on our contact management system, underwriting guidelines and sales enhancement techniques.

Equipment leases. The type of lease products offered by each of our sales origination channels share common characteristics, and we generally underwrite our leases using the same criteria. We seek to reduce the financial risk associated with our lease transactions through the use of full pay-out leases. A full pay-out lease provides that the non-cancelable rental payments due during the initial lease term are sufficient to recover the purchase price of the underlying equipment plus an expected profit. The initial non-cancelable lease term is equal to or less than the equipment’s economic life. Initial terms generally range from 36 to 60 months. At June 30, 2003, the average original term of the leases in our portfolio was


	•	address any maintenance or service issues directly with the equipment dealer or manufacturer;

	•	insure the equipment against property and casualty loss;

	•	pay all taxes associated with the equipment;

	•	use the equipment only for business purposes; and

	•	make all scheduled payments regardless of the performance of the equipment.

When appropriate throughout the term of the lease, we charge late fees, prepayment penalties, and loss and damage waiver fees. Our standard lease contract provides that in the event of a default, we can require payment of the entire balance due under the lease through the initial term and can seize and remove the equipment for subsequent sale, refinancing or other disposal at our discretion, subject to any limitations imposed by law.

At the time of application, end user customers select a purchase option that will allow them to purchase the equipment at the end of the contract term for either one dollar, the fair market value of the equipment or a specified percentage of the original equipment cost. At June 30, 2003, approximately 64% of our leases had one dollar purchase options, 21% had fair market value purchase options and 15% had purchase options at a specified percentage, typically 10% of the original equipment cost. We seek to realize our recorded residual in leased equipment at the end of the initial lease term by collecting the purchase option price from the end user customer, re-marketing the equipment in the secondary market or receiving additional rental payments pursuant to the contract’s automatic renewal provision.

Property Insurance on Leased Equipment. Our lease agreements specifically require the end user customers to obtain all-risk property insurance in an amount equal to the replacement value of the equipment and to designate us as the loss payee on the policy. If the end user customer already has a commercial property policy for its business, it can satisfy its obligation under the lease by delivering a certificate of insurance that evidences us as a loss payee under that policy. At June 30, 2003, approximately 57% of our end user customers insured the equipment under their existing policies. For the others, we offer an insurance product through a master property insurance policy underwritten by a third party national insurance company that is licensed to write insurance under our program in all 50 states and the District of Columbia. This master policy names us as the beneficiary for all of the equipment insured under the policy and provides the end user customer with all-risk coverage for the replacement cost of the equipment.

In May 2000, we established AssuranceOne, Ltd., our Bermuda-based, wholly owned captive insurance subsidiary, to enter into a reinsurance contract with the issuer of the master property insurance policy. Under this contract, AssuranceOne reinsures 100% of the risk under the master policy, and the issuing insurer pays AssuranceOne the policy premiums, less a ceding fee based on annual net premiums written. The reinsurance contract expires in May 2006.

We believe that our portfolio is well diversified. At June 30, 2003, we had 72,771 active leases in our portfolio, representing an aggregate minimum lease payments receivable of $432.1 million. With respect to our portfolio at June 30, 2003:


	•	the average original lease transaction was $7,832;

	•	approximately 84% of the number of leases had a remaining balance of $10,000 or less, with an average remaining balance of $5,939;

	•	our active leases were spread among 59,561 different end user customers, with the largest single end user customer accounting for only 0.07% of the aggregate minimum lease payments receivable;

	•	over 66% of the aggregate minimum lease payments receivable were with end user customers who had been in business more than five years;

	•	the portfolio was spread among 7,640 origination sources, with the largest source accounting for only 2.9% of the aggregate minimum lease payments receivable, and our ten largest origination sources accounting for only 11.2% of the aggregate minimum lease payments receivable;

	•	there were 67 different equipment categories financed, with the largest categories set forth below, as a percentage of the June 30, 2003 aggregate minimum lease payments receivable:


	•	we had leases outstanding with end user customers located in all 50 states and the District of Columbia, with our largest states of origination set forth below, as a percentage of the June 30, 2003 aggregate minimum lease payments receivable:

A critical element of our business operations is our ability to collect detailed information on our origination sources and end user customers at all stages of a financing transaction and to effectively manage that information so that it can be used across all aspects of our business. Our information management system integrates a number of technologies to optimize our sales origination, credit, collection and account servicing functions. Applications used across our business include:


	•	*a sales information database* that: 1) summarizes vital information on our prospects, origination sources, competitors and end user customers compiled from third party data, trade associations, manufacturers, transaction information and data collected through the sales solicitation process; 2) systematically analyzes call activity patterns to improve outbound calling campaigns; and 3) produces detailed reports using a variety of data fields to evaluate the performance and effectiveness of our sales account executives;

	•	*a credit performance database* that stores extensive portfolio performance data on our origination sources and end user customers. Our credit staff has on-line access to this information to monitor origination sources, end user customer exposure, portfolio concentrations and trends and other credit performance indicators. Using programming models developed by us, we are able to produce reports capable of assessing historical results as well as projecting portfolio performance under multiple scenarios;

	•	*predictive auto dialer technology* that is used in both the sales origination and collection processes to improve the efficiencies by which these groups make their thousands of daily phone calls;

	•	*imaging technology* that enables our employees to retrieve to their desktops all documents evidencing a lease transaction and instantly fax or e-mail copies to the origination source or end user customer, thereby further improving our operating efficiencies and service levels; and

	•	*an integrated voice response unit* that enables our end user customers the opportunity to quickly and efficiently obtain certain information from us about their account.

Our information technology platform infrastructure is industry standard and fully scalable to support future growth. The foundation of our platform is a Microsoft NT local area network, the architecture and underlying bandwidth which provide a foundation for the addition of a substantial number of additional PCs and components. The network equipment supporting this network is mainstream and widely utilized. Our systems are backed up nightly and a full set of data tapes is sent to an off-site storage provider weekly. In addition, we have contracted with a third party for disaster recovery services.

Credit underwriting is separately performed and managed apart from asset origination. Each sales origination channel has one or more credit team supporting it. Our credit teams are located in our New Jersey headquarters and our Colorado and Georgia regional offices. At June 30, 2003, we had 19 credit analysts managed by five credit managers having an average of eight years of experience. Each credit analyst is measured monthly against a discrete set of performance variables, including decision turnaround time, approval and loss rates, and adherence to our underwriting policies and procedures.

Our typical financing transaction involves three parties: the origination source, the end user customer and us. The key elements of our comprehensive credit underwriting process include the pre-qualification and ongoing review of origination sources, the performance of due diligence procedures on each end user customer and the monitoring of overall portfolio trends and underwriting standards.

Pre-qualification and ongoing review of origination sources. Each origination source must be pre-qualified before we will accept applications from it. The origination source must submit a source profile, which we use to review the origination source’s credit bureau information and a Dun & Bradstreet, Inc. report and check its references. Over time, our proprietary database has captured credit profiles on thousands of origination sources. We regularly track all applications and lease originations by source, assessing whether the origination source has a high application decline rate and analyzing the delinquency rates on the leases originated through that source. Any unusual situations that arise involving the origination source are noted in the source’s file. Each origination source is reviewed on a regular basis using portfolio performance statistics as well as any other information noted in the source’s file. We will place an origination source on watch status if its portfolio performance statistics are consistently below our expectations. If the origination source’s statistics do not improve in a timely manner, we often stop accepting applications from that origination source. Our knowledge of our origination sources is extensive and is frequently updated with new information.

End user customer review. Each end user customer’s application is reviewed using our rules-based set of underwriting guidelines that focus on commercial and consumer credit data. These underwriting guidelines have been developed and refined by our management team based on their lengthy experience in extending credit to small businesses. The guidelines are reviewed and revised as necessary by our Senior Credit Committee, which is comprised of our CEO, President, General Counsel, Vice President of Credit and Vice President of Collections. Our underwriting guidelines require a thorough credit investigation of the end user customer, including an analysis of the personal credit of the owner, who often guarantees the transaction, verification of the corporate name, location and time in business and review of bank and trade references.

Credit approvals are granted based on respective levels of authority as follows:

Origination sources can submit a credit application for the end user customer via telephone, facsimile, mail or electronic transmission. A credit analyst with proper authority will review the application by obtaining commercial information reports and generic scores from online databases maintained by the reporting agencies such as Dun & Bradstreet, Inc. and Experian Information Solutions, Inc. In most instances, the personal credit of the business owner will also be reviewed by obtaining consumer credit reports from one of the consumer reporting agencies such as Trans Union, Experian or Equifax. We seek to obtain consumer credit information on the owner even if there is no personal guaranty required on the transaction, because the owner’s personal credit report can provide insight as to how the owner will handle the business credit. Each application is also screened through our origination source performance database to ensure that we have no performance or delinquency issues in our existing portfolio of transactions with the referring origination source. The credit analyst may also consider other factors in the credit decision process, including:


	•	length of time in business;

	•	confirmation of actual business operations and ownership;

	•	management history, including prior business experience;

	•	size of the business, including the number of employees and financial strength of the business;

	•	bank and trade references;

	•	legal structure of business; and

	•	fraud indicators.

Transactions over $75,000 often receive a higher level of scrutiny, including review of financial statements or tax returns and review of the business purpose of the equipment to the end user customer.

Within two hours of receipt of the application, the credit analyst is usually ready to render a credit decision. If there is insufficient information to render a credit decision, a request for more information will be made by the credit analyst. Credit approvals are valid for a 90-day period from the date of initial approval. In the event that the funding does not occur within the 90-day initial approval period, a re-approval may be issued after the credit analyst has reprocessed all the relevant credit information to determine that the creditworthiness of the applicant has not deteriorated.

In most instances after a lease is approved, a phone audit with the end user customer is performed by us, or in some instances by the origination source, prior to funding the transaction. The purpose of this audit is to verify information on the credit application, review the terms and conditions of the lease contract, confirm the customer’s satisfaction with the equipment, and obtain additional billing information. We will

The chart below illustrates the selectivity of our lease approval process from our inception to June 30, 2003.

Monitoring of portfolio trends and underwriting standards. Credit personnel use our databases and our information management tools to monitor the characteristics and attributes of our overall portfolio. Reports are frequently produced to analyze origination source performance, end user customer delinquencies, portfolio concentrations, trends, and other related indicators of portfolio performance. Any significant findings are presented to the Senior Credit Committee for review and action.

Our internal credit audit and surveillance team is responsible for ensuring that the credit department adheres to all underwriting guidelines. The audits produced by this department are designed to monitor our origination sources, fraud indicators, regional office operations, appropriateness of exceptions to credit policy and documentation quality. Management reports are regularly generated by this department detailing the results of these auditing activities.

We service all of the leases we originate. Account servicing involves a variety of functions performed by numerous work groups, including:


	•	entering the lease into our accounting and billing system;

	•	preparing the invoice information;

	•	filing Uniform Commercial Code financing statements on leases in excess of $25,000;

	•	paying the equipment dealers for leased equipment;

	•	billing, collecting and remitting sales, use and property taxes to the taxing jurisdictions;

	•	assuring compliance with insurance requirements;

	•	providing customer service to the leasing customers; and

	•	managing residuals by seeking to realize our recorded residual in leased equipment at the end of the initial lease term.

Our integrated lease processing and accounting systems automate many of the functions associated with servicing high volumes of small-ticket leasing transactions.

Our centralized collections department is structured to collect delinquent accounts, minimize credit losses and collect post-default recovery dollars. Our collection strategy utilizes a life-cycle approach, under which a single collector handles an account through an account’s entire period of delinquency. This approach allows the collector to consistently communicate with the end user customer’s decision maker to ensure that delinquent customers are providing consistent information. It also creates account ownership by the collectors, allowing us to evaluate them based on the delinquency level of their assigned accounts. The collectors are individually accountable for their results and a significant portion of their compensation is based on the delinquency performance of their accounts. The collection managers review and assess each collector’s call activity and delinquency levels daily.

Our collectors are grouped into teams that support a single sales origination channel. By supporting a single channel, the collector is able to gain knowledge about the origination sources and the types of transactions and other characteristics within that channel. Our collection activities begin with phone contact when a payment becomes ten days past due and continue throughout the delinquency period. We utilize a predictive dialer that automates outbound telephone dialing. The dialer is used to focus on and reduce the number of accounts that are between ten and 30 days delinquent. A series of collection notices are sent once an account reaches the 30-, 60-, 75- and 90-day delinquency stages. Collectors input notes directly into our servicing system, enabling them to monitor the status of problem accounts and promptly take any necessary actions. In addition, late charges are assessed when a leasing customer fails to remit payment on a lease by its due date. If the lease continues to be delinquent, we may exercise our remedies under the terms of the contract, including acceleration of the entire lease balance, litigation and/or repossession. Bankrupt accounts are assigned to a bankruptcy paralegal and accounts with more than $30,000 outstanding are assigned to more experienced collection personnel.

After an account becomes 120 days or more past due, it is charged-off and referred to our internal recovery group, consisting of a lawyer and a team of paralegals. This group has the task of maximizing recoveries on all charged-off accounts. The group utilizes several resources to achieve its goal, including: 1) initiating litigation against the end user customer and any personal guarantor using our internal legal staff; 2) referring the account to an outside law firm or collection agency; and/or 3) repossessing and remarketing the equipment through third parties. Much of the litigation initiated internally by our recovery staff is filed in small claims court, resulting in a productive, cost-efficient manner by which we can formally pursue a customer for a small charged-off amount.

Although most states do not directly regulate the equipment lease financing business, certain states require licensing of lenders and finance companies, impose limitations on interest rates and other charges, mandate disclosure of certain contract terms and constrain collection practices and remedies. Under certain circumstances, we may also be required to comply with the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These acts require, among other things, that we provide notice to credit applicants of their right to receive a written statement of reasons why application for credit is declined. The Federal Trade Commission’s Telemarketing Sales Rule and similar statutes or rules in certain states governing telemarketing practices are generally not applicable to our business-to-business sales platform.

Our insurance operations are subject to various types of governmental regulation. First, we are required to maintain insurance producer licenses in the states in which we sell our insurance product. Second, our wholly owned insurance company subsidiary, AssuranceOne Ltd., is a Class 1 Bermuda insurance company and, as such, is subject to the Insurance Act 1978 of Bermuda, as amended, and related regulations.

We believe that we are currently in compliance with all material statutes and regulations that are applicable to our business.

We compete with a variety of equipment financing sources that are available to small businesses, including:


	•	national, regional and local finance companies that provide leases and loan products;

	•	financing through captive finance and leasing companies affiliated with major equipment manufacturers;

	•	corporate credit cards; and

	•	commercial banks, savings and loan associations and credit unions.

Our principal competitors in the highly fragmented and competitive small-ticket equipment leasing market are smaller finance companies and local and regional banks. Other providers of equipment lease financing include American Express Company, CIT Group, De Lage Landen Financial, GE Commercial Equipment Finance and Wells Fargo Bank, National Association. Many of these companies are substantially larger than us and have considerably greater financial, technical and marketing resources than we do. While these larger competitors provide lease financing to the marketplace, many of them are not our primary competitors given that our marketing focus is on independent equipment dealers and their end user customers. Nevertheless, there can be no assurances that these or other large competitors will not increase their focus on our market and begin to more directly compete with us.

Some of our competitors have a lower cost of funds and access to funding sources that are not available to us. A lower cost of funds could enable a competitor to offer leases with yields that are less than the yields we use to price our leases, which might force us to lower our yields or lose lease origination volume. In addition, certain of our competitors may have higher risk tolerances or different risk assessments, which could enable them to establish more origination sources and end user customer relationships and increase their market share. We compete on the quality of service we provide to our origination sources and end user customers. We have and will continue to encounter significant competition and there can be no assurance that we will be able to successfully compete in our chosen market.

As of June 30, 2003, we employed 212 people. None of our employees are covered by a collective bargaining agreement. We believe that our relations with our employees are good.

Our headquarters are located in Mount Laurel, New Jersey, where we lease 29,265 square feet under a lease that expires in January 2005. We also lease 5,621 square feet of office space in Philadelphia, Pennsylvania, where we perform our lease recording and acceptance functions. Our Philadelphia lease expires in May 2008. In addition, we have regional offices in Norcross, Georgia, which is a suburb of Atlanta, and Greenwood Village, Colorado, which is a suburb of Denver. Our Georgia office is 6,043 square feet and the lease expires in July 2008, and our Colorado office is 5,914 square feet and the lease expires in August 2006. We believe our leased facilities are adequate for our current needs. Our Mount Laurel, New Jersey lease expires in January 2005. We are currently in negotiations for the development and leasing of a new headquarters facility that we expect to be sufficient to support our planned growth. We have already initiated discussions with property owners and developers to identify the options we may have to lease new headquarters space in southern New Jersey.

We are party to various legal proceedings. We do not believe that any of the pending proceedings are likely to have a material adverse effect on our business, financial condition or results of operations. However, there can be no assurance that an unfavorable decision in any such legal proceeding will not occur, or if it did, that it would not have a material adverse effect on our business, financial condition or results of operations.

The following table sets forth information about our executive officers and directors as of the date of this prospectus.

It is currently anticipated that one additional director, who will be independent under current and proposed Securities and Exchange Commission rules and Nasdaq Stock Market listing requirements, will be appointed to our board of directors shortly after the closing of this offering.

Daniel P. Dyer has been Chairman of our Board of Directors, Chief Executive Officer and Treasurer since co-founding our Company in 1997. Prior to that, from 1986 to 1997, Mr. Dyer served in a number of positions, most recently as Senior Vice President and Chief Financial Officer of Advanta Business Services, where he was responsible for that subsidiary’s financial and treasury functions. Mr. Dyer is a member of the Small Ticket Council of the ELA and has also served on the ELA’s Industry Data Committee. Mr. Dyer received his undergraduate degree in accounting and finance from Shippensburg University and is a licensed certified public accountant.

Gary R. Shivers has been President and Director since co-founding our Company in 1997. Prior to that, from 1986 to 1997, Mr. Shivers served in a number of positions, most recently as Senior Vice President and General Manager of the Equipment Leasing Division for Advanta Business Services, where he was involved in strategic planning, sales and marketing, credit and collections and asset management. Mr. Shivers is a former member of the Small Ticket Council of the ELA and a participant in the ELA Future Council Roundtable. Mr. Shivers received his undergraduate degree in business administration and his MBA from LaSalle University.

George D. Pelose has been our Senior Vice President, General Counsel and Secretary since 1999. Prior to that, from 1997 to 1999, Mr. Pelose was an attorney with Merrill Lynch Asset Management, providing legal and transactional advice to a portfolio management team that invested principally in bank loans and high-yield debt securities. From 1994 to 1997, Mr. Pelose was an associate at Morgan, Lewis & Bockius LLP in the firm’s Business & Finance section where he worked on a variety of corporate transactions, including financings, mergers, acquisitions, private placements and public offerings. From 1991 to 1994, Mr. Pelose attended law school. From 1986 to 1991, Mr. Pelose was a corporate loan officer in the commercial lending division of PNC Bank. Mr. Pelose received both his undergraduate degree in economics and his law degree from the University of Pennsylvania, both with honors. Mr. Pelose is licensed to practice law in New Jersey and Pennsylvania.

Lawrence J. DeAngelo has been a Director since July 2001. Mr. DeAngelo is a Managing Director of Peachtree Equity Partners, a private equity firm based in Atlanta, Georgia. Prior to co-founding Peachtree in 2002, Mr. DeAngelo held numerous positions at Wachovia Capital Associates, the private equity investment group of Wachovia Bank, from 1996 to 2002, the most recent of which was Managing Director. From 1995 to 1996, Mr. DeAngelo worked at Seneca Financial Group, and from 1992 to 1995,

Mr. DeAngelo worked in the Corporate Finance Department at Kidder, Peabody & Co. From 1990 to 1992, Mr. DeAngelo attended business school. From 1988 to 1990, Mr. DeAngelo was a management consultant with Peterson & Co. Consulting. Mr. DeAngelo received his undergraduate degree in economics from Colgate University and his MBA from the Yale School of Management.

Kevin J. McGinty has been a Director since February 1998. Mr. McGinty is a Managing Director and co-founder of Peppertree Partners. Prior to founding Peppertree in 2000, Mr. McGinty served as a Managing Director of Primus Venture Partners during the period from 1990 to 2000. In both organizations Mr. McGinty was involved in private equity investing, both as a principal and as a limited partner. From 1970 to 1990, Mr. McGinty was employed by Society National Bank, now KeyBank, N.A., where in his final position he was an Executive Vice President. Mr. McGinty received his undergraduate degree in economics from Ohio Wesleyan University and his MBA in finance from Cleveland State University.

James W. Wert has been a Director since February 1998. Mr. Wert is President and CEO of Clanco Management Corp., which is headquartered in Cleveland, Ohio. Prior to joining Clanco in 2000, Mr. Wert served as Chief Financial Officer and then Chief Investment Officer of KeyCorp, a financial services company based in Cleveland, Ohio, and its predecessor, Society Corporation, until 1996, after holding a variety of capital markets and corporate banking leadership positions spanning his 25 year banking career. Mr. Wert also serves as Vice Chairman and Director of Park-Ohio Holdings, Inc., and is a director of Continental Global Group, Inc. and Paragon Holdings, Inc. Mr. Wert received his undergraduate degree in finance from Michigan State University in 1971 and completed the Stanford University Executive Program in 1982.

Loyal W. Wilson has been a Director since February 1998. Mr. Wilson is a Managing Director of Primus Venture Partners, Inc., a Cleveland, Ohio-based venture capital firm that invests in private companies at all stages of development. Mr. Wilson has been a Managing Partner of Primus Venture Partners since 1983 and a Managing Director since 1993. From 1973 to 1983, Mr. Wilson was employed by First Chicago Corporation. Mr. Wilson also serves on the board of directors of Corinthian Colleges, Inc. and STERIS Corporation. Mr. Wilson is a former director of DeVry, Inc. Mr. Wilson received his undergraduate degree in economics from the University of North Carolina at Chapel Hill and his MBA from Indiana University.

Our board of directors currently consists of six members. The bylaws that we intend to adopt prior to the offering will authorize seven directors, and shortly after the closing of this offering the board of directors expects to appoint an additional independent director to the board. Each director will hold office initially for a term expiring at the annual meeting of our shareholders to be held in 2004. Thereafter, all board members will serve one-year terms and will be elected at the annual meeting of our shareholders.

After our board of directors identifies and appoints the new independent director, which is expected to occur shortly after the closing of this offering, the board will appoint an audit committee that will fully comply with the audit committee independence standards under current and proposed Securities and Exchange Commission rules and Nasdaq Stock Market listing requirements. Until the audit committee is appointed, the full board of directors will fulfill all duties and responsibilities required of an audit committee.

Once the audit committee is appointed, it will assist the board in overseeing and reviewing: 1) the integrity of our financial reports and financial information provided to the public and to governmental and regulatory agencies; 2) the adequacy of our internal accounting systems and financial controls; 3) the annual independent audit of our financial statements, including the independent auditor’s qualifications and


	•	will have sole authority to select, evaluate, terminate and replace our independent auditors;

	•	will have sole authority to approve in advance all audit and non-audit engagement fees and terms with our independent auditors;

	•	will review the activities, plan, scope of authority, organizational structure and qualifications of our internal auditors; and

	•	will review our audited financial statements, public filings and earnings press releases prior to issuance, filing or publication.

The specific functions and responsibilities of the audit committee will be set forth in the audit committee charter. Our board of directors expects that at least one member of our audit committee will qualify as an audit committee financial expert as defined under current and proposed SEC and Nasdaq Stock Market rules and regulations and the other members of our audit committee will satisfy the financial literacy requirements for audit committee members under current such rules and regulations.

Our board of directors has established a compensation committee, which will be composed of three independent directors after the closing of this offering, Messrs. McGinty (chairman), DeAngelo and Wilson. The principal functions of the committee are to:


	•	evaluate the performance of our named executive officers and approve their compensation;

	•	prepare an annual report on executive compensation for inclusion in our proxy statement;

	•	review and approve compensation plans, policies and programs, considering their design and competitiveness;

	•	administer and review changes to our equity incentive plans pursuant to the terms of the plans; and

	•	review our non-employee independent director compensation levels and practices and recommend changes as appropriate.

The compensation committee will review and approve corporate goals and objectives relevant to chief executive officer compensation, evaluate the chief executive officer’s performance in light of those goals and objectives, and recommend to the board the chief executive officer’s compensation levels based on its evaluation.

Our board of directors has established a nominating and corporate governance committee, which will be composed of three independent directors after the closing of this offering, Messrs. DeAngelo (chairman), McGinty and Wert. This committee is responsible for seeking, considering and recommending to the board qualified candidates for election as directors and recommending a slate of nominees for election as directors at our annual meeting. The committee will develop corporate governance guidelines for our company and recommend such guidelines to our board of directors. The committee will review and make recommendations on matters involving general operation of the board and its committees, and will annually recommend to the board nominees for each committee of the board.

The non-employee independent members of our board of directors will receive compensation of $3,750 per quarter for their service on the board of directors. Non-employee independent members of our board of directors will be granted an option to purchase 5,000 shares of our common stock upon the later to occur of their initial appointment or election to our board of directors and the consummation of this offering. These options will vest in four equal annual installments. In addition, non-employee independent members of our board of directors will be eligible to receive annual grants of 1,500 options under our 2003 Equity Compensation Plan. The annual option grants will vest in one year over four equal quarterly installments. The per share exercise price of all options granted to non-employee independent members of our board of directors will be equal to the fair market value per share on the date the option is granted.

The chairman of the audit committee will receive additional compensation of $2,500 per quarter and the other members of the audit committee will receive additional compensation of $1,500 per quarter for their service on the audit committee. The chairman of the compensation committee will receive additional compensation of $750 per quarter and the other members of the compensation committee will receive additional compensation of $500 per quarter for their service on the compensation committee.

The following table sets forth the compensation awarded or paid, or earned or accrued for services rendered to us in all capacities during the fiscal year ended December 31, 2002 by our Chief Executive Officer and the two other most highly compensated officers whose total salary and bonus exceeded $100,000 in fiscal 2002. We refer to these officers as our named executive officers in other parts of this prospectus. In accordance with SEC rules, the compensation described in the table does not include medical, group life insurance or other benefits which are available generally to all our salaried employees and perquisites and other personal benefits which do not exceed the lesser of $50,000 or 10% of the officers’ total salary and bonus disclosed in this table.

⁽²⁾Includes contributions made by us to our 401(k) plan on behalf of the officers and reimbursement of life insurance premiums pursuant to such officers’ employment agreements.

We expect to enter into amended and restated employment agreements with our named executive officers prior to the closing of this offering. Such employment agreements will set forth the base salary, bonus levels and equity incentives for each named executive officer. The employment agreements will also contain confidentiality, non-compete, non-solicitation and severance provisions. The terms of the employment agreements will be approved by the compensation committee.

We have established and maintained a retirement savings plan under section 401(k) of the Internal Revenue Code to cover our eligible employees. The Internal Revenue Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pretax basis through contributions to the 401(k) plan. We match 25% of the first four percent of each eligible employee’s deferral amount. Our 401(k) plan also permits us to make discretionary profit sharing contributions on behalf of eligible employees. Our matching and discretionary contributions vest after three years. Our matching and discretionary contributions to the 401(k) plan totaled $107,000 in 2001 and $125,000 in 2002.

In connection with the reorganization that will be effected on or prior to this offering, we intend to assume the Marlin Leasing Corporation 1997 Equity Compensation Plan and convert outstanding options under that plan to options to purchase our common stock. We also intend, after the assumption, to amend and restate the 1997 Equity Compensation Plan and rename it the Marlin Business Services, Inc. 2003 Equity Compensation Plan. We believe that the plan will link the personal interests of participants to those of our shareholders.

Under the plan, we may grant nonqualified or incentive stock options, stock awards, stock appreciation rights, performance units or other stock-based awards to our officers, directors, employees and key consultants. The plan will be administered by our compensation committee.

An aggregate of shares of our common stock will be available for grant under the plan, subject to a proportionate increase or decrease in the event of a stock split, reverse stock split, stock dividend, or other adjustment to our common stock. Under the plan, the maximum number of shares of our common stock that may be granted to any individual during any calendar year is .

The members of the board of directors have previously approved the grant of options to the following executive officers at an exercise price equal to the initial public offering price as shown in the following table:

We will grant options to our non-employee independent directors as described under the caption “Director Compensation” above. We expect that the plan will be approved by our shareholders in connection with the reorganization. The compensation committee may terminate or amend the plan to the extent shareholder approval is not required by law. Termination or amendment will not adversely affect options previously granted under the plan.

The following table sets forth, for the year ended December 31, 2002, certain information regarding options granted to each of the named executive officers, including the potential realizable value over the ten-year term of the options, based upon assumed rates of stock appreciation of 5% and 10%, compounded annually. These assumed rates of appreciation comply with the rules of the Securities and Exchange

⁽¹⁾The expiration date of the options is ten years after the grant date. The options granted will vest and become exercisable in four equal annual installments of 25%, commencing on the first anniversary of the grant date.

The following table contains information concerning option holdings of each of the named executive officers at December 31, 2002. None of these officers exercised any options during the year ended December 31, 2002.

⁽¹⁾The value of in-the-money stock options at December 31, 2002 represents the difference or a portion of the difference between the exercise price of such options and the fair value of our common stock as of December 31, 2002. The fair value of our common stock on December 31, 2002 utilized for financial reporting purposes on such date was $5.96 per share. The actual value of in-the-money stock options will depend upon the trading price of our common stock on the date of sale of the underlying common stock and may be higher or lower than the amount set forth in the table above.

We obtain all of our commercial, healthcare and other insurance coverage through The Selzer Company, an insurance broker located in Warrington, Pennsylvania. Richard Dyer, the brother of Daniel P. Dyer, the Chairman of our Board of Directors, Chief Executive Officer and Treasurer, is the President of The Selzer Company. We do not have any contractual arrangement with The Selzer Group or Richard Dyer, nor do we pay either of them any direct fees.

Joseph Dyer, the brother of Daniel P. Dyer, the Chairman of our Board of Directors, Chief Executive Officer and Treasurer, is a vice president in our treasury group and was paid compensation in excess of $60,000 for such services in 2002.

The following table sets forth information with respect to the beneficial ownership of our common stock as of June 30, 2003, and after the sale of shares in this offering, by:


	•	each person or entity known by us to own beneficially more than 5% of our stock;

	•	each of our named executive officers;

	•	each of our directors; and

	•	all of our directors and executive officers as a group.

Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities for which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be the beneficial owner of securities as to which such person has no economic interest. For purposes of determining our total number of shares outstanding prior to the offering, we have assumed the conversion of all preferred stock into common stock and the exercise of all warrants.

⁽²⁾Shares being tendered to pay the warrant exercise prices will be deemed to have a fair market value per share equal to the public offering price.

⁽³⁾Consists of common shares owned by Primus Capital Fund IV Limited Partnership (1,916,957 prior to the offering and after the offering) and Primus Executive Fund Limited Partnership (79,872 prior to the offering and after the offering). Mr. Wilson shares voting power and investment power with respect to such shares with four other directors of Primus Venture Partners, Inc. Mr. Wilson disclaims beneficial ownership of all shares held by Primus Capital Fund IV Limited Partnership and Primus Executive Fund Limited Partnership except to the extent of his pecuniary interest therein.

⁽⁴⁾All of such shares are held directly by WCI (Private Equity), LLC. Mr. DeAngelo shares voting power with respect to such shares with three other directors of Peachtree Equity Partners. Mr. DeAngelo disclaims beneficial ownership of all such shares held by WCI (Private Equity), LLC except to the extent of his pecuniary interest therein.

⁽⁵⁾The address of these individuals is c/o Marlin Business Services, Inc., 124 Gaither Drive, Suite 170, Mount Laurel, NJ 08054.

⁽⁶⁾Includes options to purchase 49,150 shares that are currently exercisable or will become exercisable within 60 days following June 30, 2003.

⁽⁷⁾Includes options to purchase 53,375 shares that are currently exercisable or will become exercisable within 60 days following June 30, 2003.

⁽⁸⁾Consists of options to purchase 16,529 shares that are currently exercisable or will become exercisable within 60 days following June 30, 2003. Mr. Wert’s address is c/o Clanco Management Corp., 30195 Chagrin Blvd., Suite 250, Cleveland, OH 44124.

⁽⁹⁾Consists of options to purchase 12,709 shares that are currently exercisable or will become exercisable within 60 days following June 30, 2003. Mr. McGinty’s address is c/o Peppertree Partners, L.L.C., 30195 Chagrin Blvd., Suite 275, Cleveland, OH 44124.

⁽¹⁰⁾Includes options to purchase 180,913 shares that are currently exercisable or will become exercisable within 60 days following June 30, 2003.

At the closing of this offering our authorized capital stock will consist of 75.0 million shares of common stock, par value $.01 per share, and 5.0 million shares of preferred stock, par value $.01 per share. Marlin Business Services, Inc. is a Pennsylvania corporation and is subject to the Pennsylvania Business Corporation Law of 1988.

Under the amended and restated articles of incorporation that we intend to adopt prior to this offering, 75.0 million shares of common stock will be authorized and, immediately after the sale of the shares of common stock in this offering, we will have million shares of common stock outstanding. Holders of our common stock will be entitled to receive, as, when and if declared by the board of directors from time to time, such dividends and other distributions in cash, stock or property from our assets or funds legally available for such purposes subject to any dividend preferences that may be attributable to preferred stock that may be authorized.

Holders of our common stock will be entitled to one vote for each share held of record on all matters on which shareholders may vote, except with respect to the election of directors in which case shareholders will be entitled to multiply the number of shares held of record by the number of directors to be elected and distribute such number of votes for one or among two or more nominees. There will be no preemptive, conversion, redemption or sinking fund provisions applicable to the common stock. All outstanding shares of our common stock will be fully paid and non-assessable. In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the assets available for distribution.

Our board of directors, without further action by the shareholders, will be authorized to issue up to an aggregate of 5.0 million shares of preferred stock. As of the effective date of the offering, no shares of preferred stock will be outstanding and we have no plans to issue a new series of preferred stock. Our board of directors, without shareholder approval, will be able to issue preferred stock with dividend rates, redemption prices, preferences on liquidation or dissolution, conversion rights, voting rights and any other

preferences, which rights and preferences could adversely affect the voting power of the holders of common stock. Issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions or other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage or delay a third party from acquiring, a majority of our outstanding common stock.

Under Pennsylvania law, any action that may be taken at a meeting of the shareholders may be taken without a meeting if such action is authorized by the unanimous written consent of all shareholders entitled to vote at a meeting for such purposes.

Our articles of incorporation and bylaws will provide that special meetings of our shareholders may be called only by the board of directors, the chairman of our board of directors or our chief executive officer. This provision may make it more difficult for shareholders to take action opposed by the board of directors.

The bylaws that we intend to adopt prior to this offering will provide that the vote of a majority of all directors or the vote of the majority of the outstanding stock entitled to vote is required to alter, amend or repeal our bylaws.

Section 1741 of the Pennsylvania Business Corporation Law provides the power to indemnify any officer or director acting in his capacity as our representative who was, is or is threatened to be made a party to any action or proceeding for expenses, judgments, penalties, fines and amounts paid in settlement in connection with such action or proceeding. The indemnity provisions apply whether the action was instituted by a third party or arose by or in our right. Generally, the only limitation on our ability to indemnify our officers and directors is if the act violates a criminal statute or if the act or failure to act is finally determined by a court to have constituted willful misconduct or recklessness. The bylaws that we intend to adopt prior to this offering will provide a right of indemnification to the full extent permitted by law for expenses, attorney’s fees, damages, punitive damages, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by any director or officer whether or not the indemnified liability arises or arose from any threatened, pending or completed proceeding by or in our right by reason of the fact that such director or officer is or was serving as our director, officer or employee or, at our request, as a director, officer, partner, fiduciary or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, unless the act or failure to act giving rise to the claim for indemnification is finally determined by a court to have constituted willful misconduct or recklessness. Our bylaws will provide for the advancement of expenses to an indemnified party upon receipt of an undertaking by the party to repay those amounts if it is finally determined that the indemnified party is not entitled to indemnification. Our bylaws will authorize us to take steps to ensure that all persons entitled to the indemnification are properly indemnified, including, if the board of directors so determines, purchasing and maintaining insurance.

Our articles of incorporation will provide that none of our directors shall be personally liable to us or our shareholders for monetary damages for a breach of fiduciary duty as a director, except for liability:


	•	for any breach of such person’s duty of loyalty;

	•	for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law;


	•	for the payment of unlawful dividends and certain other actions prohibited by Pennsylvania corporate law; and

	•	for any transaction resulting in receipt by such person of an improper personal benefit.

We maintain directors’ and officers’ liability insurance to provide directors and officers with insurance coverage for losses arising from claims based on breaches of duty, negligence, error and other wrongful acts. At present, there is no pending litigation or proceeding, and we are not aware of any threatened litigation or proceeding, involving any director, officer, employee or agent where indemnification will be required or permitted under our articles of incorporation or bylaws.

Pennsylvania Control-Share Acquisitions Law. Generally, subchapters 25E, F, G, H, I and J of the Pennsylvania corporate laws place certain procedural requirements and establish certain restrictions upon the acquisition of voting shares of a corporation which would entitle the acquiring person to cast or direct the casting of a certain percentage of votes in an election of directors. Subchapter 25E of the Pennsylvania corporate laws provides generally that, if a company were involved in a “control transaction,” shareholders of the company would have the right to demand from a “controlling person or group” payment of the fair value of their shares. For purposes of subchapter 25E, a “controlling person or group” is a person or group of persons acting in concert that, through voting shares, has voting power over at least 20% of the votes which shareholders of the company would be entitled to cast in the election of directors. A control transaction arises, in general, when a person or group acquires the status of a controlling person or group. In general, Subchapter 25F of the Pennsylvania corporate laws delays for five years and imposes conditions upon “business combinations” with an “interested shareholder”. The term “business combination” is defined broadly to include various merger, consolidation, division, exchange or sale transactions, including transactions utilizing our assets for purchase price amortization or refinancing purposes. An “interested shareholder,” in general, would be a beneficial owner of at least 20% of our voting shares. In general, Subchapter 25G of the Pennsylvania corporate laws suspends the voting rights of the “control shares” of a shareholder that acquires for the first time 20% or more, 33 1/3% or more, or 50% or more of a company’s shares entitled to be voted in an election of directors. The voting rights of the control shares generally remain suspended until such time as the “disinterested” shareholders of the company vote to restore the voting power of the acquiring shareholder. Subchapter 25H of the Pennsylvania corporate laws provides in certain circumstances for the recovery by a company of profits made upon the sale of its common stock by a “controlling person or group” if the sale occurs within 18 months after the controlling person or group became such and the common stock was acquired during such 18 month period or within 24 months before such period. In general, for purposes of Subchapter 25H, a “controlling person or group” is a person or group that: 1) has acquired; 2) offered to acquire; or 3) publicly disclosed or caused to be disclosed an intention to acquire voting power over shares that would entitle such person or group to cast at least 20% of the votes that shareholders of the company would be entitled to cast in the election of directors. If the disinterested shareholders of a company vote to restore the voting power of a shareholder who acquires control shares subject to Subchapter 25G, such company would then be subject to subchapters 25I and J of the Pennsylvania corporate laws. Subchapter 25I generally provides for a minimum severance payment to certain employees terminated within two years of such approval. Subchapter 25J, in general, prohibits the abrogation of certain labor contracts prior to their stated date of expiration. The above descriptions of subchapters of the Pennsylvania corporate laws summarize the material anti-takeover provisions contained in the Pennsylvania corporate laws but are not a complete discussion of those provisions. These provisions may discourage open market purchases of our stock or a non-negotiated tender or exchange offer for our stock and, accordingly, may be considered disadvantageous by a shareholder who would desire to participate in any such transaction.

Section 1715 of the Pennsylvania Business Corporation Law. Under Section 1715 of the Pennsylvania Business Corporation Law, our directors are not required to regard the interests of the shareholders as being dominant or controlling in considering our best interests. The directors may consider, to the extent they deem appropriate, such factors as:


	•	the effects of any action upon any group affected by such action, including our shareholders, employees, suppliers, customers and creditors, and communities in which we have offices or other establishments;

	•	our short-term and long-term interests, including benefits that may accrue to us from our long-term plans and the possibilities that these interests may be best served by our continued independence;

	•	the resources, intent and conduct of any person seeking to acquire control of us; and

	•	all other pertinent factors.

Section 1715 further provides that any act of our board of directors, a committee of the board of directors or an individual director relating to or affecting an acquisition or potential or proposed acquisition of control to which a majority of our disinterested directors have assented will be presumed to satisfy the standard of care set forth in the Pennsylvania Business Corporation Law, unless it is proven by clear and convincing evidence that our disinterested directors did not consent to such act in good faith after reasonable investigation. As a result of this and the other provisions of Section 1715, our directors are provided with broad discretion with respect to actions that may be taken in response to acquisitions or proposed acquisitions of corporate control.

Section 1715 may discourage open market purchases of our common stock or a non-negotiated tender or exchange offer for our common stock and, accordingly, may be considered disadvantageous by a shareholder who would desire to participate in any such transaction. As a result, Section 1715 may have a depressive effect on the price of our common stock.

Blank-Check Preferred Stock. The ability of the board of directors to establish the rights of, and to issue, substantial amounts of preferred stock without the need for shareholder approval, may have the effect of discouraging, delaying or preventing a change in control. Such preferred stock, among other things, may be used to create voting impediments with respect to any changes in control or to dilute the stock ownership of holders of common stock seeking to obtain control.

We have in place a registration agreement granting registration rights to certain holders of shares of our common stock who received their shares upon: 1) the conversion of preferred stock of Marlin Leasing Corporation to common stock of Marlin Leasing Corporation and the subsequent exchange of such common stock in connection with this offering; or 2) the net exercise of warrants to purchase common stock of Marlin Leasing Corporation and the subsequent exchange of such common stock in connection with this offering. Certain of our shareholders are also subject to restrictions under lock-up agreements with the underwriters in this offering. The rights of shareholders under the registration agreement and the restrictions to which shareholders are subject under the lock-up agreements are summarized below. The summary of the registration agreement is not complete and is subject to, and entirely qualified by, reference to the registration agreement, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part.

Pursuant to the terms of the registration agreement, we have offered to include in this offering shares held by shareholders who are party to the registration agreement. Because this offering is underwritten, the registration agreement:


	•	requires the selling shareholders to enter into the purchase agreement with the underwriters of this offering;

	•	permits the underwriters, based on marketing factors, to limit the number of shares a selling shareholder may sell in this offering; and

	•	conditions the selling shareholders’ participation in this offering on compliance with applicable provisions of the registration agreement.

Shareholders holding an aggregate of shares who are party to the registration agreement and who have elected not to sell their shares in this offering or who have elected to sell less than 100% of their shares in this offering will have piggyback and demand registration rights under the registration agreement following this offering.


	•	*Piggyback Registration Rights.* In the event that we propose to register additional shares in either a primary or secondary offering in the future, we have granted shareholders who are party to the registration agreement the right to include all or a portion of their shares in such offering at our sole expense. In the case of an underwritten primary or secondary offering, these piggyback registration rights are subject to certain cutback rights by the underwriters of the offering.

	•	*Demand Registration Rights.* Shareholders who are party to our registration agreement also have certain demand registration rights that they may exercise after the completion of this offering. These demand registration rights include:


	—	the right to request, upon a vote of the holders of a majority of shares of common stock subject to the registration agreement, the registration of all or a portion of such shares on Form S-1. Such right may be exercised up to two times with the registration at our sole expense. These holders may also exercise the right to request the registration of their shares on Form S-1 up to two additional times at their own expense.

	—	the right to request, upon the vote of the holders of a majority of shares of common stock subject to the registration agreement, the registration of all or a


		portion of such shares on Form S-2 or Form S-3 at our sole expense, assuming our eligibility to use such form(s) to effect the registration. Such right may be exercised an unlimited number of times.

These demand registration rights are subject to certain restrictions, including: 1) underwriters’ cutback rights in any underwritten offering; 2) a limitation on demand registrations to once every 180 days during the first 18 months following our initial public offering and once per every 360 days thereafter; and 3) our right to postpone for up to 90 days the registration of shares pursuant to a shareholders’ demand in the event that our board of directors determines that such demand registration would be expected to have a material adverse effect on any plan or proposal by us to engage in a merger, consolidation, tender offer, asset acquisition or other similar transaction.

At the request of the underwriters, we and various holders of shares of our common stock have entered into lock-up agreements that prohibit them from offering, selling, contracting to sell, or otherwise disposing of or hedging their shares for specified periods of time following the date of this prospectus.


	•	*Directors, Executive Officers and Certain Other Parties.* Each of our executive officers and directors, together with certain other shareholders have entered into an agreement with the underwriters of this offering pursuant to which each of these persons or entities may not, for a period of 180 days after the date of this prospectus, without the prior written approval of U.S. Bancorp Piper Jaffray Inc. on behalf of the underwriters: 1) offer, pledge, sell, assign, encumber, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock; or 2) enter into any swap transaction or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock. As of August 29, 2003, a total of 4,549,763 shares of our common stock were covered by these lock-up agreements.

	•	*Company.* In addition, under the purchase agreement for this offering, we have entered into a lock-up agreement with our underwriters under which we may not, for a period of 180 days after the date of this prospectus, without the prior written approval of U.S. Bancorp Piper Jaffray on behalf of the underwriters: 1) offer, pledge, sell, assign, encumber, contract to sell, sell any option or contract to purchase, purchase any option or contract sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock; or 2) enter into any swap transaction or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of common stock.

	•	*Other Shareholders.* Under the terms of our shareholders’ agreement, each of our other shareholders party to the shareholders’ agreement has agreed not to sell any of his or her shares of common stock during the period beginning seven days prior to and ending 90 days following the effective date of this offering without the approval of U.S. Bancorp Piper Jaffray on behalf of the underwriters. As of August 29, 2003, 1,085,430 shares of our common stock were locked-up pursuant to the provisions of our shareholders’ agreement, excluding shares otherwise covered by the 180-day lock-up described above.

Prior to this offering, there has been no public market for our common stock. Future sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices. Since a large number of shares will be restricted from sale shortly after this offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

Upon completion of this offering, we will have outstanding an aggregate of shares of common stock, assuming no exercise of the underwriters’ over-allotment option, excluding shares issuable upon exercise of outstanding options. Of these shares, all of the shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act of 1933, unless such shares are purchased by affiliates as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock, excluding shares issuable upon exercise of outstanding options which will be covered by a separate registration statement as described below, held by existing shareholders are restricted securities as that term is defined in Rule 144 under the Securities Act. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration described below under Rules 144, 144(k) or 701 promulgated under the Securities Act.

Beginning 180 days after the date of this prospectus, approximately restricted shares subject to lock-up agreements between the underwriters and certain of our larger shareholders, including our officers and directors, will become eligible for sale in the public market under Rule 144, Rule 144(k) or Rule 701 as described below, and beginning 90 days after the date the registration statement of which this prospectus is a part is declared effective, approximately additional restricted shares subject to our shareholders’ agreement will become eligible for sale in the public market under Rule 144, Rule 144(k) or Rule 701 as described below. The lock-up agreements provide that the shareholders will not, directly or indirectly, sell or otherwise dispose of any shares of common stock without the prior written consent of U.S. Bancorp Piper Jaffray on behalf of the underwriters for a period of 180 days from the date of this prospectus. U.S. Bancorp Piper Jaffray, acting on behalf of the underwriters, may release all or any portion of the securities subject to the lock-up agreements without notice.

Under Rule 144, beginning 90 days after the date the registration statement of which this prospectus is a part is declared effective, a person, or persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, which includes the holding period of any prior owner other than an affiliate, would generally be entitled to sell within any three month period a number of shares that does not exceed the greater of:


	•	1% of the outstanding shares of our common stock then outstanding, which will equal approximately shares immediately after this offering; or


	•	the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.

Under Rule 144(k), a person who was not an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years,

In general, under Rule 701 of the Securities Act, any of our employees, consultants or advisors, other than affiliates, who purchase or receive shares from us in connection with a compensatory stock purchase plan or option plan or other written agreement will be eligible to resell such shares beginning 90 days after the effective date of the registration statement of which this prospectus is a part, subject only to the manner of sale provisions of Rule 144, and by affiliates under Rule 144 without compliance with its holding period.

We intend to file a registration statement under the Securities Act to register all shares of common stock issued, issuable or reserved for issuance under our 2003 Equity Compensation Plan. This registration statement is expected to be filed as soon as practicable after the date of this prospectus and will automatically become effective upon filing. Following this filing, shares registered under this registration statement will, subject to the lock-up agreements described above and Rule 144 volume limitations applicable to our affiliates, be available for sale in the open market.

The underwriters named below have severally agreed to buy from us and from the selling shareholders, subject to the terms and conditions set forth in the purchase agreement, the number of shares listed opposite their names below. The underwriters are committed to purchase and pay for all of the shares, if any are purchased.

The underwriters have advised us and the selling shareholders that the underwriters propose to offer the shares to the public at $ per share. The underwriters propose to offer the shares to certain dealers at the same price less a concession of not more than $ per share. The underwriters may allow and the dealers may reallow a concession of not more than $ per share on sales to certain other brokers and dealers. After the offering, these figures may be changed by the underwriters.

We and certain of the selling shareholders have granted to the underwriters an option to purchase up to an additional shares of common stock from us at the same price to the public, and with the same underwriting discount, as set forth on the cover of this prospectus. The underwriters may exercise this option any time during the 30-day period after the date of this prospectus, but only to cover over-allotments, if any. To the extent the underwriters exercise the option, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of the additional shares as it was obligated to purchase under the purchase agreement.

At our request, the underwriters are reserving up to shares of the common stock to be issued by us and offered hereby for sale at the initial public offering price to directors, officers, employees and friends. The number of shares of common stock available for sale to the general public in the public offering will be reduced to the extent these persons purchase these reserved shares. Any reserved shares which are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered hereby.

The following table shows the underwriting fees to be paid to the underwriters by us and by the selling shareholders in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the over-allotment option.

We estimate that our total expenses for this offering, excluding the underwriting discount, will be approximately $ .

We and the selling shareholders have agreed to indemnify the underwriters against certain liabilities, including civil liabilities under the Securities Act of 1933, or to contribute to payments that the underwriters may be required to make in respect to those liabilities.

We and each of our directors, executive officers and certain principal shareholders and the selling shareholders have agreed to certain restrictions on our ability to sell additional shares of our common stock for a period of 180 days after the date of this prospectus. We have agreed not to offer, pledge, sell, assign, encumber, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or to enter into any swap transaction or other arrangement that transfers to another person or entity any of the economic consequences of ownership of the common stock, in each case without the written consent of U.S. Bancorp Piper Jaffray. The agreements provide exceptions for: 1) sales to the underwriters pursuant to the purchase agreement; 2) our sales in connection with the exercise of options granted and the granting of options to purchase up to an additional shares under our equity compensation plans; and 3) certain other transactions.

Prior to the offering, there has been no public market for the common stock. The initial public offering price for the shares of common stock offered by this prospectus was negotiated by us and the underwriters. The factors considered in determining the initial public offering price include the history of and the prospects for the industry in which we compete, our past and present operations, our historical results of operations, our prospects for future earnings, the recent market prices of securities of comparable companies and the general condition of the securities markets at the time of the offering and other relevant factors. There can be no assurance that the initial public offering price of the common stock will correspond to the price at which the common stock will develop and continue after this offering.

To facilitate the offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock during and after the offering. Specifically, the underwriters may over-allot or otherwise create a short position in the common stock for their own account by selling more shares of common stock than have been sold to them by us and the selling shareholders. The underwriters may elect to cover any such short position by purchasing shares of common stock in the open market or by exercising the over-allotment option granted to the underwriters. In addition, the underwriters may stabilize or maintain the price of the common stock by bidding for or purchasing shares of common stock in the open market and may impose penalty bids. If penalty bids are imposed, selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if shares of common stock previously distributed in the offering are repurchased, whether in connection with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price of the common stock at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of our common stock to the extent that it discourages resales of our common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on the Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time.

In connection with this offering, the underwriters and dealers may engage in passive market making transactions in the shares of our common stock in accordance with Rule 103 of Regulation M promulgated by the Securities and Exchange Commission. In general, a passive market maker may not bid for, or purchase, shares of our common stock at a price that exceeds the highest independent bid. In addition, the net daily purchases made by any passive market maker generally may not exceed 30% of its average daily trading volume in the common stock during a specified two month prior period, or 200 shares, whichever is greater. A passive market maker must identify passive market making bids as such on the Nasdaq National Market electronic inter-dealer reporting system. Passive market making may stabilize or maintain the market price of our common stock above independent market levels. Underwriters and dealers are not required to engage in passive market making and may end passive market making activities at any time.

The validity of the shares of our common stock offered hereby will be passed upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Certain legal matters will be passed upon for the underwriters by Sidley Austin Brown & Wood LLP, Chicago, Illinois.

The consolidated financial statements of Marlin Leasing Corporation and Subsidiaries as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002, have been included herein in reliance upon the report of KPMG LLP, independent accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The aforementioned report indicates that the Company adopted Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, on January 1, 2001.

We have filed with the Securities and Exchange Commission a registration statement on Form S-1 with respect to the common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules which are part of the registration statement. For further information with respect to us and our common stock, reference is made to the registration statement and its exhibits and schedules. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. You may read and copy any document we file at the Securities and Exchange Commission’s Public Reference Room at 450 Fifth Street NW, Washington, D.C. 20549. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about the Public Reference Room. Our Securities and Exchange Commission filings are also available to the public from the Securities and Exchange Commission’s web site at http://www.sec.gov.

Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, will file periodic reports, proxy statements and other information with the Securities and Exchange Commission. Such periodic reports, proxy statements and other information will be available for inspection and copying at the Securities and Exchange Commission’s Public Reference Room and will also be available on the web site of the Securities and Exchange Commission referred to above.

We have audited the accompanying consolidated balance sheets of Marlin Leasing Corporation and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2002. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Marlin Leasing Corporation and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, on January 1, 2001.

Marlin Leasing Corporation (“Company”) was incorporated in the state of Delaware on June 16, 1997. The Company provides equipment leasing solutions primarily to small businesses nationwide in a segment of the equipment leasing market commonly referred to in the leasing industry as the small-ticket segment. The Company finances over 60 categories of commercial equipment important to its end user customers including copiers, telephone systems, computers and certain commercial and industrial equipment.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used when accounting for income recognition, the residual values of leased equipment, the allowance for credit losses, deferred initial direct costs and fees, late fee receivables, valuations of warrants and income taxes. Actual results could differ from those estimates.

The consolidated financial statements and related notes thereto, as of June 30, 2003 and for the six months ended June 30, 2002 and 2003 are unaudited and, in the opinion of management, include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of results for these interim periods. The results of operations for the six months ended June 30, 2003 are not necessarily indicative of the results expected for the entire year.

The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Restricted cash consists primarily of the cash reserve, advance payment accounts and cash held by the trustee related to the Company’s term securitizations. The restricted cash balance at June 30, 2003 also includes a prefunded cash balance of $51,751 (unaudited) in connection with the Company’s 2003-1 term securitization. This prefunding account will be used on or before September 15, 2003 to acquire lease contracts for inclusion in the asset pool related to the 2003-1 term securitization. The restricted cash balance also includes amounts due from securitizations representing reimbursements of servicing fees and excess spread income.

The Company uses the direct finance method of accounting to record income from direct financing leases. At the inception of a lease, the Company records the minimum future lease payments receivable, the estimated residual value of the leased equipment and the unearned lease income. Initial direct costs and fees related to lease originations are deferred as part of the investment and amortized over the lease term. Unearned lease income is the amount by which the total lease receivable plus the estimated residual value exceeds the cost of the equipment. Unearned lease income, net of initial direct costs and fees, is recognized as revenue over the lease term on the interest method.

Yields implicit in the Company’s direct financing leases are fixed at the inception of the lease and generally range from 12% to 20%. Residual values of the equipment under lease generally range from $1 to 15% of the cost of equipment and are based on the type of equipment leased and the lease term.

The Company securitizes lease receivables using wholly-owned special purpose entities. Under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125, the Company’s securitizations do not qualify for sales accounting treatment due to certain call provisions that the Company maintains as well as the fact that the special purpose entities used in connection with the securitizations also hold the residual assets for the securitized leases. Accordingly, assets and related debt (see note 10) of the special purpose entities are included in the accompanying consolidated balance sheets.

An allowance for credit losses is maintained at a level that represents management’s best estimate of probable losses based upon an evaluation of known and inherent risks in the Company’s lease portfolio as of the balance sheet date. Management’s evaluation is based upon regular review of the lease portfolio and considers such factors as the level of recourse provided, if any, delinquencies, historical loss experience, current economic conditions, and other relevant factors. Actual losses may vary from current estimates. These estimates are reviewed periodically and as adjustments become necessary, they are recorded in earnings in the period in which they become known.

The Company records property and equipment at cost. Equipment capitalized under capital leases are recorded at the present value of the minimum lease payments due over the lease term. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets or lease term, whichever is shorter. The Company generally uses depreciable lives that range from three to seven years based on equipment type.

Included in other assets on the consolidated balance sheets are transaction costs associated with warehouse facilities and term securitization transactions that are being amortized over the estimated lives of the related warehouse facilities and the term securitization transactions using a method which approximates the interest method. In addition, other assets includes prepaid expenses, accrued fee income, the fair value

of derivative instruments and progress payments on equipment purchased to lease. Other assets is comprised of the following:

The Company enters into interest-rate cap agreements to economically offset potential increases in interest rates on the Company’s outstanding variable rate borrowings. Because these derivatives do not meet the hedge accounting provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, the Company recognizes the fair value of the interest-rate cap agreements on the balance sheet and records changes in fair value of the derivative instruments currently in earnings within financing related costs in the accompanying statements of operations. These agreements are recorded in other assets and are stated at $163, $199 and $112 (unaudited) as of December 31, 2001 and 2002 and June 30, 2003, respectively.

In June 1998, the Financial Accounting Standards Board issued SFAS No 133. SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. SFAS No. 133 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. SFAS No. 133, as amended by SFAS No. 137 and SFAS No. 138, cannot be applied retroactively and was adopted as required on January 1, 2001. The impact of adopting SFAS No. 133 was a reduction in the carrying amount of interest-rate cap agreements to fair value as of January 1, 2001 of $497, or $311 after tax, which was recorded as a cumulative effect of a change in accounting principle. The Company previously deferred and amortized the cost of its interest-rate caps to interest expense over the term of the related debt.

Fee income consists of fees for delinquent lease payments, cash collected on early termination of leases and equipment rental fees for interim periods between the installation of equipment and the commencement of a lease. Fee income also includes gains on realization of residual values (which includes income from lease renewals). Income is recognized from these fees on the accrual basis. Fee income was $4,424, $7,093 and $8,907 during the years ended December 31, 2000, 2001 and 2002, and $4,218 (unaudited) and $5,044 (unaudited) during the six months ended June 30, 2002 and 2003, respectively, of which gains on realization of residual values amounted to $28, $344, $1,270, $525 (unaudited) and $733 (unaudited), respectively.

Other income consists primarily of equipment insurance income, net of related claims, income from lease syndications and gains on sales of leases.

Financing related costs consist of bank commitment fees and the change in fair value of interest-rate cap agreements.

The Company follows the intrinsic value method of accounting for stock-based employee compensation in accordance with Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees, and related interpretations. The Company records deferred compensation for option grants to employees for the amount, if any, by which the fair value per share exceeds the exercise price per share at the measurement date, which is generally the grant date. This deferred compensation is recognized over the vesting period.

Under SFAS No. 123, Accounting for Stock-Based Compensation, compensation expense related to stock options granted to employees and directors is computed based on the fair value of the stock option at the date of grant using the Black-Scholes option pricing model. Pursuant to the disclosure requirements of SFAS No. 123, had compensation expense for stock option grants been determined based upon the fair value at the date of grant, the Company’s net income would have decreased as follows:

For purposes of determining the above disclosure required by SFAS No. 123, the Company determined the value of the options on their grant date using the minimum value method and the Black-Scholes option pricing model. Key assumptions used to apply this pricing model were as follows:

In 2003, the Company issued stock options with an exercise price less than the estimated fair market value of the stock at the grant date. The weighted average fair value of stock options issued with an exercise price less than the market price of the stock at the grant date for the six months ended June 30, 2003, was $2.13 (unaudited).

The weighted average fair value of stock options issued with an exercise price greater than the estimated fair market value of the stock at the grant date for the years ended December 31, 2000, 2001 and 2002 and six months ended June 30, 2002 was zero as the exercise price on the Company’s option was greater than the estimated fair market value of the Common Stock.

The Company accounts for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of the asset and liability method under which deferred taxes are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities, given the provisions of the enacted tax laws. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. Based upon the level of historical taxable income and

projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences.

The Company follows SFAS No. 128, Earnings Per Share. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed based on the weighted average number of common shares outstanding and the dilutive impact of the exercise or conversion of common stock equivalents, such as stock options, warrants and convertible preferred stock, into shares of Common Stock as if those securities were exercised or converted.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, or FIN 46. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns or both. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate but in which it has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and to existing entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply to all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established. The adoption of this accounting pronouncement did not have a material effect on the Company’s consolidated financial statements.

Since inception, the Company has completed five term note securitizations. In connection with each transaction, the Company has established a bankruptcy remote special-purpose subsidiary and issued term debt to institutional investors. Under SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB Statement 125, the Company’s securitizations do not qualify for sales accounting treatment due to certain call provisions that the Company maintains as well as the fact that the special purpose entities used in connection with the securitizations also hold the residual assets. Accordingly, assets and related debt of the special purpose entities are included in the accompanying consolidated balance sheets. The Company’s leases and restricted cash are assigned as collateral for these borrowings and there is no further recourse to the general credit of the Company. Collateral in excess of these borrowings represents the Company’s maximum loss exposure.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 Derivative Instruments and Hedging Activities. This statement amends and clarifies financial accounting and reporting for derivative instruments embedded in other contracts, and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities. In particular, this statement: 1) clarifies under what circumstances a contract with an initial net investment meets the characteristics of a derivative; 2) clarifies when a derivative contains a financing component; 3) amends the definition of an underlying to conform it to language used in FIN 45; and 4) amends certain other existing pronouncements. This Statement is effective for hedging relationships designated after June 30, 2003 and for contracts entered into or modified after June 30, 2003, except for provisions of this statement relating to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003 which should continue to be applied in accordance with their respective dates. The adoption of this accounting pronouncement did not have a material effect on the Company’s consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement establishes standards for how an issuer classifies and measures certain financial instruments and characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability, or an asset in some circumstances. Many of those instruments were previously classified as equity. This Statement does not apply to features that are embedded in a financial instrument that is not a derivative in its entirety, for example, it does not change the accounting treatment for conversion features, or conditional redemption features. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for public companies at the beginning of the first interim period beginning after June 15, 2003. The adoption of this accounting pronouncement did not have a material effect on the consolidated financial statements.

The Company had previously accounted for its warrants in accordance with EITF Issue No. 88-9, Put Warrants. The holders of the Company’s warrants, which were issued in connection with subordinated debt, may put the shares of Class A Common Stock exercisable under the warrants to the Company at fair value upon certain circumstances further described in Note 10. In accordance with EITF Issue No. 88-9, the Company had classified and measured the put warrants in equity. In connection with the Company’s planned initial public offering (the “Offering”), the Company was required to adopt EITF Issue 96-13, codified in EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company’s Owned Stock, since the provisions of EITF Issue No. 88-9 are applicable to nonpublic companies. Under EITF Issue No. 96-13, the put warrants are classified as a liability and measured at fair value, with changes in fair value reported in earnings. The effect of this change in accounting principle on net income was an increase of $101 and $208 for the years ended December 31, 2000 and 2001, respectively, and a decrease of $908, $482 (unaudited), and $779 (unaudited) for the year ended December 31, 2002 and the six months ended June 30, 2002 and 2003, respectively. Additionally, the warrants to purchase Class A Common Stock were reclassified from stockholders’ equity to liabilities and were $514, $1,422, and $2,201 (unaudited) as of December 31, 2001 and 2002 and June 30, 2003, respectively.

On or prior to the completion of the Offering, the Company intends to become a direct, wholly owned subsidiary of Marlin Business Services, Inc. (“Marlin”), a newly-formed Pennsylvania holding company, and all former shareholders of the Company will become shareholders of Marlin. After the reorganization, the Company will continue in existence as a primary operating subsidiary. The reorganization will be completed through the following steps: 1) all classes of the Company’s redeemable convertible Preferred Stock will convert to Class A Common Stock of the Company; 2) all warrants to purchase Class A Common Stock of the Company will be exercised on a net issuance basis and all warrants to purchase Class B Common Stock of the Company will be exercised on a net issuance basis and the Class B Common Stock will convert to Class A Common Stock; 3) the Company will consummate a forward stock split of its Class A Common Stock at a ratio to be determined in order to increase the number of shares of Class A Common Stock authorized and issued prior to the merger described below; 4) a direct, wholly-owned subsidiary of Marlin, will merge with and into the Company, upon which each share of Class A Common Stock the Company will be exchanged for one share of Marlin Common Stock; and 5) all outstanding options to purchase the Company’s Class A Common Stock will be exchanged for options to purchase shares of Common Stock of Marlin based on the same exchange ratio used for the reorganization.

Marlin has approved the filing of a registration statement in connection with the sale of its Common Stock in the Offering. The Company intends to repay its subordinated debt and accrued dividends on its redeemable convertible preferred stock with proceeds from the Offering. As of June 30, 2003, the subordinated debt is carried net of $421 (unaudited) of unamortized discount. The Company also has unamortized deferred transaction costs associated with the subordinated debt of $75 (unaudited) as of June 30, 2003. Upon repayment, the Company will record a loss on the extinguishment of debt representing the amount of the unamortized discount and deferred transaction costs that exists as of the debt repayment.

Minimum lease payments receivable under lease contracts and the amortization of unearned lease income, net of initial direct costs and fees deferred, is as follows as of December 31, 2002:

The Company’s leases are assigned as collateral for borrowings as further discussed in note 9.

Initial direct costs and fees deferred were $10,790, $12,428 and $13,130 (unaudited) as of December 31, 2001 and 2002 and June 30, 2003, respectively, and are netted in unearned income and will be amortized to income using the level yield method.

Income is not recognized on leases when a default on monthly payment exists for a period of 90 days or more. Income recognition resumes when a lease becomes less than 90 days delinquent. As of December 31, 2001 and 2002 and June 30, 2003, the Company maintained direct finance lease receivables which were on a nonaccrual basis of $2,268, $1,475 and $1,143 (unaudited), respectively. As of December 31, 2001 and 2002 and June 30, 2003, the Company had minimum lease receivables in which the terms of the original lease agreements had been renegotiated in the amount of $587, $2,295 and $2,025 (unaudited), respectively.

As of December 31, 2001 and 2002, and June 30, 2003, leases approximating 11%, 12% and 12% (unaudited), respectively, of the net investment balance of leases by the Company were located in the state of California. No other state accounted for more than 10% of the net investment balance of leases owned and serviced by the Company as of such dates. As of December 31, 2001 and 2002 and June 30, 2003 no single vendor source accounted for more than 5% of the net investment balance of leases owned by the Company. The largest single obligor accounted for less than 1% of the net investment balance of leases owned by the Company as of December 31, 2001 and 2002 and June 30, 2003. Although the Company’s portfolio of leases includes lessees located throughout the United States, such lessees’ ability to honor their contracts may be substantially dependent on economic conditions in these states. All such contracts are collateralized by the related equipment. The Company leases to a variety of different industries, including retail, service, manufacturing, medical and restaurant, among others. To the extent that the economic or regulatory conditions prevalent in such industries change, the lessees’ ability to honor their lease obligations may be adversely impacted. The estimated residual value of leased equipment was comprised of 55.9%, 50.1% and 52.7% (unaudited) of copiers as of December 31, 2001 and 2002 and June 30, 2003, respectively. No other group of equipment represented more than 10% of equipment

residuals as of December 31, 2001 and 2002 and June 30, 2003. Improvements and other changes in technology could adversely impact the Company’s ability to realize the recorded value of this equipment.

Net investments in direct financing leases are charged-off when they are contractually past due 121 days based on the historical net loss rates realized by the Company. Net losses represent lease net investment in direct financing leases less anticipated collections which amounted to $215, $863 and $924 at December 31, 2000, 2001 and 2002, respectively, and $884 (unaudited) and $826 (unaudited) at June 30, 2002 and 2003, respectively. Recoveries of amounts previously charged-off are credited to the allowance when received.

Depreciation and amortization expense was $429, $551, $645, $315 (unaudited) and $341 (unaudited) for the years ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2002 and 2003, respectively.

The Company is involved in legal proceedings, which include claims, litigation and class action suits arising in the ordinary course of business. While the outcome of any litigation can not be predicted, management believes that the aggregate liabilities, if any, resulting from those actions will not have a material adverse effect on the consolidated financial position or results of operations.

As of December 31, 2002, the Company leases office space for its headquarters in Mt. Laurel, New Jersey, and its offices in Englewood, Colorado, and Tucker, Georgia. In April 2003, the Company entered into a lease agreement for office space in Philadelphia, Pennsylvania. These lease commitments are accounted for as operating leases.

The Company has entered into several capital leases to finance corporate property and equipment.

The following is a schedule of future minimum lease payments for capital and operating leases as of December 31, 2002:

Rent expense was $363, $499, $498, $255 (unaudited) and $254 (unaudited) for the years ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2002 and 2003, respectively.

The Company has employment agreements with certain senior officers that extend through July 26, 2004.

Borrowings outstanding under the Company’s revolving credit facilities and long-term debt consist of the following:

At the end of each period, the Company has the following minimum lease payments receivable assigned as collateral:

As of December 31, 2002 and June 30, 2003, the Company has committed revolving lines of credit with various banks to provide up to $32,500 in borrowings at LIBOR plus 2.125%. The credit facility expires on August 31, 2005. For the years ended December 31, 2000, 2001 and 2002, and the six months ended June 30, 2002 and 2003, the weighted average interest rates were 8.75%, 7.27%, 4.32%, 4.20% (unaudited) and 3.99% (unaudited), respectively. For the years ended December 31, 2000, 2001 and 2002 and the six

months ended June 30, 2002 and 2003, the Company incurred commitment fees on the unused portion of the credit facility of $199, $194, $142, $57 (unaudited) and $44 (unaudited), respectively.

00-A Warehouse Facility — During December 2000, the Company entered into a $75 million commercial paper warehouse facility (“the 00-A Warehouse Facility”). This facility was increased to $125 million on May 31, 2001. The 00-A Warehouse Facility expires in December 2004. The 00-A Warehouse Facility is credit enhanced through a third party financial guarantee insurance policy. The 00-A Warehouse Facility allows the Company on an ongoing basis to transfer lease receivables to a wholly-owned, bankruptcy remote, special purpose subsidiary of the Company, which issues variable rate notes to investors carrying an interest rate equal to the rate on commercial paper issued to fund the notes during the interest period. For the years ended December 31, 2001 and 2002, and the six months ended June 30, 2002 and 2003, the weighted average interest rates were 4.61%, 2.46% 2.46% (unaudited) and 1.93% (unaudited), respectively. There are no amounts outstanding under this facility as of December 31, 2002 and June 30, 2003. The 00-A Warehouse Facility requires that the Company limit its exposure to adverse interest rate movements on the variable rate notes through entering into interest rate cap agreements. As of December 31, 2001 and 2002 and June 30, 2003, the Company had interest rate cap transactions with notional values of $47.0 million, $33.8 million and $76.7 million (unaudited), respectively, at rates of 6.47%, 6.30% and 6.05% (unaudited), respectively. The fair value of these interest rate cap transactions was $163, $126 and $69 (unaudited) as of December 31, 2001 and 2002 and June 30, 2003, respectively.

02-A Warehouse Facility — During April 2002, the Company entered into a $75 million commercial paper warehouse facility (“the 02-A Warehouse Facility”). The 02-A Warehouse Facility expires in April 2004. The 02-A Warehouse Facility is credit enhanced through a third party financial guarantee insurance policy. The 02-A Warehouse Facility allows the Company on an ongoing basis to transfer lease receivables to a wholly-owned, bankruptcy remote, special purpose subsidiary of the Company, which issues variable rate notes to investors carrying an interest rate equal to the rate on commercial paper issued to fund the notes during the interest period. For the year ended December 31, 2002 and the six months ended June 30, 2002 and 2003, the weighted average interest rate was 2.79%, 0% and 2.46% (unaudited), respectively. The 02-A Warehouse Facility requires that the Company limit its exposure to adverse interest rate movements on the variable rate notes through entering into interest rate cap agreements. As of December 31, 2002, and June 30, 2003, the Company had interest rate cap transactions with notional values of $62.2 million and $69.0 million (unaudited) at rates of 6.12% and 5.97% (unaudited), respectively. The fair value of these interest rate cap transactions was $73 and $43 (unaudited) as of December 31, 2002 and June 30, 2003, respectively.

Additionally, in February 1998, the Company issued a warrant in connection with a one-year term warehouse facility. Under the terms of the warrant, the holder can purchase 186,616 shares of the Company’s common stock at any time over a ten year period. The exercise price varies over the life of the warrant based on a book value formula specified in the warrant agreement. On the date of issuance, the exercise price was zero and the fair value of the warrant was based upon the fair value of the Company’s common stock and amortized into interest expense over the one year term of the facility. The Company has recorded the fair value of the warrant within stockholders’ equity since there is no cash or net-cash settlement option.

99-2 Transaction — On December 15, 1999, the Company closed a $86.9 million term securitization (“Series 1999-2 Notes”). In connection with the Series 1999-2 transaction, three tranches of notes were issued to investors in the form of $75.7 million Class A Notes, $7.2 million Class B Notes and $4.0 million Class C Notes. The weighted fixed rate coupon payable to investors was 8.09%. On January 15, 2003, the Company exercised the option to redeem the Series 1999-2 Notes in whole and the outstanding balances were paid in full.

00-1 Transaction — On September 26, 2000, the Company closed a $96.9 million term securitization (“Series 2000-1 Notes”). In connection with the Series 2000-1 transaction, three tranches of notes were issued to investors in the form of $86.5 million Class A Notes, $6.6 million Class B Notes and $3.8 million Class C Notes. The weighted average fixed rate coupon payable to investors is 7.96%.

01-1 Transaction — On June 25, 2001, the Company closed a $115.8 million term securitization (“Series 2001-1 Notes”). In connection with the Series 2001-1 transaction, three tranches of notes were issued to investors in the form of $103.3 million Class A Notes, $7.9 million Class B Notes and $4.6 million Class C Notes. The weighted average fixed rate coupon payable to investors is 5.84%.

02-1 Transaction — On June 25, 2002, the Company closed a $184.4 million term securitization (“Series 2002-1 Notes”). In connection with the Series 2002-1 transaction, three tranches of notes were issued to investors in the form of $166.3 million Class A Notes, $12.7 million Class B Notes and $5.4 million Class C Notes. The weighted average fixed rate coupon payable to investors is 4.36%.

03-1 Transaction — On June 25, 2003, the Company closed a $204.9 million term securitization (“Series 2003-1 Notes”). In connection with the Series 2003-1 transaction, three tranches of notes were issued to investors in the form of $197.3 million Class A Notes, $2.0 million Class B Notes and $5.6 million Class C Notes. The weighted average fixed rate coupon payable to investors is 3.05%.

The Series 1999-2, 2000-1, 2001-1, 2002-1 and 2003-1 Notes payable are collateralized by substantially all of the Company’s direct financing leases. The Company is restricted from selling, transferring, or assigning the leases or placing liens or pledges on these leases.

Under the revolving bank facility, warehouse facilities and term securitization agreements, the Company is subject to numerous covenants, restrictions and default provisions relating to, among other things, maximum lease delinquency and default levels, a minimum net worth requirement and a maximum debt to equity ratio. A change in the Chief Executive Officer or President is an event of default under the revolving bank facility and warehouse facilities unless a replacement acceptable to the Company’s lenders is hired within 90 days. Such an event is also an immediate event of servicer termination under the term securitizations. A merger or consolidation with another company in which the Company is not the surviving entity is an event of default under the financing facilities. In addition, the revolving bank facility and warehouse facilities contain cross default provisions whereby certain defaults under one facility would also be an event of default on the other facilities. An event of default under the revolving bank facility or warehouse facilities could result in termination of further funds being available under such facility. An event of default under any of the facilities could result in an acceleration of amounts outstanding under the facilities, foreclosure on all or a portion of the leases financed by the facilities and/or the removal of the

Company as servicer of the leases financed by the facility. As of December 31, 2001 and 2002 and June 30, 2003 the Company was in compliance with terms of the warehouse facilities and term securitization agreements.

On March 30, 1999, the Company issued $5.0 million of Senior Subordinated Notes (“1999 Notes”). Under the terms of the definitive agreement (“1999 Note Agreement”), the 1999 Notes are due March 30, 2006 and bear interest at 11.0% payable quarterly. The 1999 Notes are subject to certain mandatory prepayment provisions as stipulated in the 1999 Note Agreement. In addition, the 1999 Notes may be redeemed at the option of the Company based upon certain conditions as defined in the 1999 Note Agreement. The 1999 Note Agreement includes terms and conditions which subordinate the rights of the noteholder to the rights of the Company’s senior lenders. In connection with issuance of the 1999 Notes, the Company issued to the noteholder a warrant to purchase 315,001 shares of Class A Common Stock at $5.92 per share, exercisable over ten years. The 1999 Notes were recorded on the balance sheet net of a $481 discount attributable to the estimated fair value of the warrant at the date of grant, determined using the Black-Scholes option pricing model. The discount is being amortized to interest expense over the term of the 1999 Notes and was $50, $56, $64, $32 (unaudited) and $35 (unaudited) for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003, respectively. As of December 31, 2001 and 2002 and June 30, 2003, the carrying value of the 1999 Notes were net of unamortized discount of $341, $277 and $241 (unaudited), respectively.

On April 7, 2000, the Company issued $5.0 million of Senior Subordinated Notes (“2000 Notes”). Under the terms of the definitive agreement (“2000 Note Agreement”), the 2000 Notes are due March 30, 2006 and bear interest at 11.0% payable quarterly. The 2000 Notes are subject to certain mandatory prepayment provisions as stipulated in the 2000 Note Agreement. In addition, the 2000 Notes may be redeemed at the option of the Company based upon certain conditions as defined in the 2000 Note Agreement. The 2000 Note Agreement includes terms and conditions which subordinate the rights of the noteholder to the rights of the Company’s senior lenders. In connection with issuance of the 2000 Notes, the Company issued to the noteholder a warrant to purchase 225,249 shares of Class A Common Stock at $7.01 per share, exercisable over ten years. The 2000 Notes were recorded on the balance sheet net of a $321 discount attributable to the estimated fair value of the warrant at the date of grant, determined using the Black-Scholes option pricing model. The discount is being amortized to interest expense over the term of the 2000 Notes and was $26, $42, $48, $23 (unaudited) and $26 (unaudited) for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003, respectively. As of December 31, 2001 and 2002 and June 30, 2003, the carrying value of the 2000 Notes were net of unamortized discount of $252, $204 and $177, (unaudited) respectively.

The holders of the warrants issued in connection with the 1999 Notes and 2000 Notes may put the shares of Class A Common Stock exercisable under the warrants to the Company at fair value upon: 1) an event of noncompliance, as defined in the Company’s certificate of incorporation; 2) termination of any two of the Company’s founding shareholders; or 3) at any time after July 26, 2006. In accordance with Emerging Issues Task Force (“EITF”) Issue No. 96-13, codified in EITF Issue No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled In, a Company’s Own Stock, the Company has classified the warrants as a liability since the warrant holders have the ability to put the shares of Class A Common Stock exercisable under the warrants to the Company for cash settlement.

Subsequent changes in the fair value of the warrants have been recorded in the accompanying consolidated statements of operations. In connection with the Company’s planned Offering (see Note 4), the warrant holders are obligated to exercise all outstanding warrants into shares of Class A Common Stock thereby eliminating the liability.

The subordinated debt agreements contain restrictive covenants which prohibit the payment of dividends, limit new indebtedness and include minimum net worth, maximum capital expenditures, and portfolio performance guidelines. As of December 31, 2001 and 2002 and June 30, 2003, the Company was in compliance with the provisions of such debt covenants.

Scheduled principal payments on outstanding debt as of December 31, 2002 are as follows:

Deferred income tax expense results principally from the use of different revenue and expense recognition methods for tax and financial accounting purposes. The Company estimates these differences and adjusts to actual based upon preparation of the tax return. The sources of these temporary differences and related tax effects were as follows:

As of December 31, 2002, the Company had net operating loss carryforwards (“NOLs”) for federal and state income tax purposes of approximately $10.1 million. Federal NOLs expire in years 2017 and 2018, while state NOLs expire in years 2006 through 2018.

The Tax Reform Act of 1986 contains provisions that may limit the NOLs available to be used in any given year upon the occurrence of certain events, including significant changes in ownership interest. A change in the ownership of a company greater than 50% within a three-year period results in an annual limitation on the Company’s ability to utilize its NOLs from tax periods prior to the ownership change. Management believes the Reorganization and the Offering will not have a material effect on the Company’s ability to utilize these NOLs. No valuation allowance has been established against net deferred tax assets related to the Company’s NOLs, as the Company believes these NOLs will be realizable through reversal of existing deferred tax liabilities, and future taxable income.

The following is a reconciliation of the statutory federal income tax rate to the effective income tax rate:

As of December 31, 2002, the authorized, issued and outstanding shares of redeemable convertible preferred stock (Preferred Stock) and their carrying amounts and liquidation values are as follows:

In February 1998, the Company issued 48,000 shares of Class A Redeemable Convertible Preferred Stock (“Class A”) and 2,000 shares of Class B Redeemable Convertible Preferred Stock (“Class B”) for $4,800 and $200, respectively. In March 1999, each share of Class B was converted into one share of Class A. Each share of Class A is convertible into 25.47 shares of the Company’s Class A Common Stock.

During March through June 1999, the Company issued 50,000 shares of Class C Redeemable Convertible Preferred Stock (“Class C”) for $5,000. Each share of Class C is convertible into 18.09 shares of the Company’s Class A Common Stock.

In July 2001, the Company issued 71,500 shares of Class D Redeemable Convertible Preferred Stock (“Class D”) for $7,150, of which $2,150 represented the conversion of Senior Subordinated Convertible Notes issued in February 2001. Each share of Class D is convertible into 21.05 shares of the Company’s Class A Common Stock.

Each share of Preferred Stock has voting rights equal to the number of shares of Class A Common Stock issuable upon conversion. From the date of issuance through July 24, 2001, each share of Class A, Class B, and Class C accrued dividends at a rate of 7% per year on its $1 liquidation preference plus all accrued and unpaid dividends. Beginning on July 25, 2001, each share of Class A, Class C and Class D accrued dividends at a rate of 8% per year on its $100 per share liquidation preference plus all accrued and unpaid dividends.

The holders of Preferred Stock may require the Company to redeem the Preferred Stock for its $100 liquidation preference per share plus all accrued and unpaid dividends, upon 1) a change in ownership of the Company; 2) a fundamental change in the ownership or operations of the Company, as defined in the certificate of incorporation; 3) termination of any two of the Company’s three founding shareholders; 4) at any time after July 26, 2006; or 5) an event of noncompliance as defined in the certificate of incorporation. Under the agreement, the Company may require the holders of Preferred Stock to convert to Common Stock upon the closing of a Qualified Public Offering as defined in the certificate of incorporation. Since the redemption of the Preferred Stock is outside the control of the Company, the Preferred Stock is classified outside of stockholders’ equity. The Preferred Stock is carried at its current redemption value in the accompanying balance sheets.

Upon the closing of the Offering, the Company will require the conversion of all outstanding shares of Preferred Stock (See note 3).

As of December 31, 2001 and 2002 and June 30, 2003 accrued and unpaid dividends on the Preferred Stock were $2,871, $4,491 and $5,366 (unaudited), respectively.

The following is a reconciliation of net income and shares used in computing basic and diluted earnings per share:

The shares used in computing diluted earnings per share exclude options to purchase 267,049, 452,864, 131,775, 436,344 and 122,100 shares of Class A Common Stock for the years ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2002 and 2003, respectively, and warrants to purchase 540,250 shares of Class A Common Stock for the years ended December 31, 2000, 2001 and 2002 and the six months ended June 30, 2002 and 2003 as the inclusion of such shares would be anti-dilutive.

In August 1997, the Company adopted an Equity Compensation Plan (the “Equity Plan”). Under the terms of the Equity Plan, as amended, employees, certain consultants and advisors, and nonemployee members of the Company’s board of directors have the opportunity to receive incentive and nonqualified grants of stock options, stock purchase rights and restricted stock. The aggregate number of shares under the Equity Plan that may be issued pursuant to stock options or restricted stock grants is 730,858. Stock options vest over four years. All options expire not more than ten years after the date of grant.

Information with respect to options granted under the Option Plan is summarized as follows:

There were 80,744 and 13,419 (unaudited) shares available for future grants under the Option Plan as of December 31, 2002 and June 30, 2003, respectively. The following table summarizes information about stock options outstanding as of December 31, 2002:

During the six months ended June 30, 2003, in connection with the grant of options to employees, the Company recorded deferred compensation of $64 (unaudited) representing the difference between the exercise price and the fair value of the Company’s Class A Common Stock on the date such options were granted. Deferred compensation is included as a component of stockholders’ equity and is being amortized to expense ratably over the four-year vesting period of the options. During 2002, the Company recorded $69 of compensation expense in connection with the modification of stock options in connection with the departure of a former employee.

Under the Equity Plan, the Company allowed employees to purchase Class A Common Stock at fair value. Shares purchased under the Equity Plan for the years ended December 31, 2001 and 2002 and the six months ended June 30, 2002 and 2003 were 211, 26,697, 2,804 (unaudited) and 65,759 (unaudited), respectively. Under this stock purchase program, the Company accepted full recourse, interest-bearing, promissory notes from employees repayable over five years. Under the terms of this program, the Company extended loans for additional shares based upon an employee’s investment in the Company’s common stock. Pursuant to the Company’s Shareholders’ Agreement, the Company has the right of first refusal and the option to purchase shares, at fair value from employees that terminate employment. Amounts due the Company are shown as stock subscription receivable in equity. Shares reacquired from employees are retired.

The Company adopted an amended 401(k) plan (“the Plan”) which became effective January 1, 2002. The Company’s employees are entitled to participate in the Plan, which provides savings and investment opportunities. Employees can contribute up to the maximum annual amount allowable per IRS guidelines. The Plan also provides for Company contributions equal to 25% of an employee’s contribution percentage up to a maximum employee contribution of 4%. The Company’s contributions to the Plan for the years ended December 31, 2000, 2001 and 2002 and for the six months ended June 30, 2002 and 2003, were approximately $57, $107, $125, $33 (unaudited)and $127 (unaudited), respectively.

The carrying amount of the Company’s cash approximates fair value as of December 31, 2001 and 2002 and June 30, 2003.

The Company maintains cash reserve accounts as a form of credit enhancement in connection with the Series 2003-1, 2002-1, 2001-1, 2000-1, and 1999-2 term securitizations. The book value of such cash reserve accounts is included in restricted cash on the accompanying balance sheet. The fair values of the cash reserve accounts are determined based on a discount rate equal to the weighted coupon payable on the term notes and the estimated life for each term securitization. The restricted cash balance at June 30, 2003 also includes a pre-funded cash balance in connection with the Company’s 2003-1 term securitization of $51,751 (unaudited). This pre-funding account will be used on or before September 15, 2003 to acquire lease contracts for inclusion in the asset pool related to the 2003-1 term securitization.

The fair value of the Company’s debt and secured borrowings was estimated by discounting cash flows at current rates offered to the Company for debt and secured borrowings of the same or similar remaining maturities.

The carrying amount of the Company’s accounts payable approximates fair value as of December 31, 2001 and 2002 and June 30, 2003.

The fair value of the Company’s interest-rate cap agreements was $163, $199 and $112 (unaudited) as of December 31, 2001 and 2002 and June 30, 2003, respectively, as determined by third party valuations.

The following summarizes the carrying amount and estimated fair value of the Company’s financial instruments:

Until , all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

The expenses (other than the underwriters’ discounts) payable in connection with this offering are as follows:

All expenses are estimated except for the Securities and Exchange Commission registration fee and the NASD filing fee.

Section 1741 of the Pennsylvania Business Corporation Law provides the power to indemnify any officer or director acting in his capacity as our representative who was, is or is threatened to be made a party to any action or proceeding for expenses, judgments, penalties, fines and amounts paid in settlement in connection with such action or proceeding. The indemnity provisions apply whether the action was instituted by a third party or arose by or in our right. Generally, the only limitation on our ability to indemnify our officers and directors is if the act violates a criminal statute or if the act or failure to act is finally determined by a court to have constituted willful misconduct or recklessness. Our bylaws provide a right to indemnification to the full extent permitted by law for expenses, attorney’s fees, damages, punitive damages, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by any director or officer whether or not the indemnified liability arises or arose from any threatened, pending or completed proceeding by or in our right by reason of the fact that such director or officer is or was serving as our director, officer or employee or, at our request, as a director, officer, partner, fiduciary or trustee of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, unless the act or failure to act giving rise to the claim for indemnification is finally determined by a court to have constituted willful misconduct or recklessness. Our bylaws provide for the advancement of expenses to an indemnified party upon receipt of an undertaking by the party to repay those amounts if it is finally determined that the indemnified party is not entitled to indemnification. Our bylaws authorize us to take steps to ensure that all persons entitled to the indemnification are properly indemnified, including, if the board of directors so determines, purchasing and maintaining insurance.

Our articles of incorporation provide that none of our directors shall be personally liable to us or our shareholders for monetary damages for a breach of fiduciary duty as a director, except for liability:


	•	for any breach of such person’s duty of loyalty;

	•	for acts or omissions not in good faith or involving intentional misconduct or a knowing violation of law;

	•	for the payment of unlawful dividends and certain other actions prohibited by Pennsylvania corporate law; and

	•	for any transaction resulting in receipt by such person of an improper personal benefit.

We maintain directors and officers’ liability insurance to provide directors and officers with insurance coverage for losses arising from claims based on breaches of duty, negligence, error and other wrongful acts. At present, there is no pending litigation or proceeding, and we are not aware of any threatened litigation or proceeding, involving any director, officer, employee or agent where indemnification will be required or permitted under the articles of incorporation or our bylaws.

The Purchase Agreement provides that the underwriters are obligated, under certain circumstances, to indemnify directors, officers, and controlling persons of the Registrant against certain liabilities, including liabilities under the Act. Reference is made to Section of the form of Purchase Agreement which will be filed by amendment as Exhibit 1.1 hereto.

In the preceding three years, the Registrant has issued the following securities that were not registered under the Act:

During the past three years, we have issued an aggregate of 95,565 shares of Class A common stock, par value $0.01 per share to our employees pursuant to stock purchase rights under our 1997 Equity Compensation Plan for an aggregate purchase price of $460,000. All sales and issuances were deemed to be exempt from registration under Section 4(2) of the Act, or Regulation D or Regulation S promulgated thereunder.

Since our inception we have also issued an aggregate of 171,500 shares of preferred stock, par value of $0.01 per share. These shares include: 1) 50,000 shares of Class A preferred stock issued in February 1998 at a purchase price per share of $100, for a total of $5.0 million; 2) 40,000 shares of Class C preferred stock issued in March 1999 at a purchase price per share of $100 for a total of approximately $4.0 million; 3) 10,000 shares of Class C preferred stock issued in June 1999 at a purchase price per share of $100 for a total of approximately $1.0 million; and 4) 71,500 shares of Class D preferred stock issued in July 2001 at a purchase price per share of $100 for a total of approximately $7.2 million. All such sales and issuances were deemed to be exempt from registration under the Securities Act by virtue of Section 4(2), Regulation D or Regulation S promulgated thereunder.

Since our inception, we have issued warrants to purchase 726,868 shares of common stock at a weighted average exercise price of $5.98 per share. All such issuances were made under the exemption from registration provided under Section 4(2) of the Act.

Pursuant to our equity compensation plan, since our inception, we have granted options to purchase a total of 717,439 shares of common stock consisting of 717,439 options granted prior to June 30, 2003 at a weighted average exercise price of $6.25 per share. No options were granted after June 30, 2003. For a more detailed description of our equity compensation plan, see Management — Equity Compensation Plan. In granting the options and selling the underlying securities upon exercises of the options, we are relying

All information for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission is either included in the financial statements or is not required under the related instructions or is inapplicable, and therefore has been omitted.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, the Act, may be permitted to directors, officers and controlling persons of the registrant pursuant to provisions described in Item 14 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding), is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby (1) undertakes to provide to the underwriter at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser; (2) agrees that for purposes of determining any liability under the Act, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be deemed to be part of this registration statement as of the time it was declared effective; and (3) agrees that for purposes of determining any liability under the Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the township of Mt. Laurel, State of New Jersey, on September 5, 2003.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Each person whose signature appears below in so signing also makes, constitutes and appoints Daniel P. Dyer and Gary R. Shivers and each of them acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement and a related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and in each case to file the same, with all exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof.

II-5 EX-10.6 3 w89427exv10w6.txt MASTER LEASE RECEIVABLES ASSET-BACKED...AGREEMENT EXHIBIT 10.6 EXECUTION ================================================================================ MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT by and among MARLIN LEASING CORP. as the Servicer, MARLIN LEASING RECEIVABLES CORP. IV as the Obligors' Agent, and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee and Back-up Servicer, Dated as of December 1, 2000 ================================================================================ TABLE OF CONTENTS

i Section 5.06. Final Distribution................................................................ 39 Section 5.07. Persons Deemed Owners............................................................. 41 Section 5.08. Cancellation...................................................................... 41 Section 5.09. Book-Entry Notes.................................................................. 41 Section 5.10. Notices to Clearing Agency........................................................ 42 Section 5.11. Definitive Notes.................................................................. 42 Article VI ADMINISTRATION AND SERVICING OF THE TRUST ESTATE............................................. 43 Section 6.01. Retention of Servicer; Responsibilities of Servicer............................... 43 Section 6.02. Standard of Care.................................................................. 45 Section 6.03. Credit and Collection Policy...................................................... 45 Section 6.04. Maintenance of Interest in the Trust Estate....................................... 45 Section 6.05. Servicing Compensation; Payment of Certain Expenses by Servicer................... 46 Section 6.06. Servicer's Certificate............................................................ 46 Section 6.07. Annual Statement as to Compliance................................................. 46 Section 6.08. Financial Statements and Independent Accountant's Servicing Certificate Review.... 47 Section 6.09. Access to Certain Documentation and Information Regarding the Pledged Property.... 48 Section 6.10. Other Necessary Data.............................................................. 49 Section 6.11. Release of Contracts.............................................................. 50 Section 6.12. Removal Related to Upgrades or Trade-ins and Delinquent Contracts................. 51 Section 6.13. Notification to Noteholders of Defaults and Events of Default..................... 51 Section 6.14. Security Deposits................................................................. 51 Section 6.15. Removal of Nonconforming Pledged Property......................................... 52 Section 6.16. Substitution of Contracts......................................................... 52 Article VII ACCOUNTS AND ALLOCATIONS.................................................................... 53 Section 7.01. Establishment of Facility Accounts; Establishment of Advance Payment Accounts..... 53 Section 7.02. Collections and Allocations....................................................... 54 Section 7.03. Investment of Funds in each Facility Account and the Advance Payment Account...... 54 Article VIII THE SERVICER AND THE OBLIGORS.............................................................. 55 Section 8.01. Liability of Servicer; Indemnities................................................ 55 Section 8.02. Merger, Consolidation, or Assumption of the Obligations of Servicer............... 56 Section 8.03. Limitation on Liability of Servicer and Others.................................... 56 Section 8.04. Servicer Not to Resign............................................................ 57 Section 8.05. Reserved.......................................................................... 57 Section 8.06. Indemnities of the Obligors....................................................... 57 Section 8.07. Limitation on Liability of the Obligors........................................... 58

ii Article IX SERVICER TERMINATION......................................................................... 58 Section 9.01. Events of Servicer Termination.................................................... 58 Section 9.02. Back-up Servicer to Act; Taking of Bids; Appointment of Successor Servicer........ 59 Section 9.03. Notification of Event of Servicer Termination..................................... 61 Section 9.04. Waiver of Past Defaults........................................................... 61 Section 9.05. Effects of Servicer Termination................................................... 61 Section 9.06. Responsibilities of Back-up Servicer.............................................. 62 Section 9.07. Back-up Servicer Compensation..................................................... 64 Section 9.08. Merger or Consolidation of, or Assumption of the Obligation of Back-up Servicer... 65 Section 9.09. Back-up Servicer Termination or Resignation....................................... 65 Section 9.10. Limitation on Liability of Back-up Servicer and Others............................ 66 Section 9.11. Representations and Warranties of the Back-up Servicer............................ 67 Article X EVENTS OF DEFAULT AND REMEDIES................................................................ 68 Section 10.01. Events of Default................................................................. 68 Section 10.02. Collection of Indebtedness and Suits for Enforcement by Trustee; Authority of Series Controlling Party....................................................... 68 Section 10.03. Limitation on Suits............................................................... 70 Section 10.04. Unconditional Right of Holders to Receive Principal and Interest.................. 71 Section 10.05. Restoration of Rights and Remedies................................................ 71 Section 10.06. Rights and Remedies Cumulative.................................................... 71 Section 10.07. Delay or Omission Not Waiver...................................................... 71 Section 10.08. Control by Holders................................................................ 72 Section 10.09. Waiver of Past Defaults........................................................... 72 Section 10.10. Undertaking for Costs............................................................. 73 Section 10.11. Action on Notes................................................................... 73 Article XI THE TRUSTEE.................................................................................. 73 Section 11.01. Certain Duties and Responsibilities............................................... 73 Section 11.02. Notice of Defaults................................................................ 75 Section 11.03. Certain Rights of Trustee......................................................... 76 Section 11.04. Not Responsible for Recitals or Issuance of Notes................................. 77 Section 11.05. May Hold Notes.................................................................... 77 Section 11.06. Compensation and Indemnity........................................................ 77 Section 11.07. Disqualification; Conflicting Interests........................................... 77 Section 11.08. Corporate Trustee Required; Eligibility........................................... 78 Section 11.09. Resignation and Removal; Appointment of Successor................................. 78 Section 11.10. Acceptance of Appointment by Successor............................................ 79 Section 11.11. Merger, Conversion, Consolidation or Succession to Business....................... 79 Section 11.12. Preferential Collection of Claims Against Obligors................................ 80 Section 11.13. Appointment of Authenticating Agent............................................... 80

iii Section 11.14. Paying Agent...................................................................... 82 Section 11.15. Appointment of Co-Trustee or Separate Trustee..................................... 83 Article XII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS' AGENT................................... 84 Section 12.01. Obligors' Agent to Furnish Trustee Names and Addresses of Holders................. 84 Section 12.02. Preservation of Information; Communications to Holders............................ 85 Section 12.03. Reports by Trustee................................................................ 86 Section 12.04. Reports by Obligors' Agent........................................................ 86 Section 12.05. Trustee Internet Website.......................................................... 86 Article XIII MASTER AGREEMENT SUPPLEMENTS............................................................... 87 Section 13.01. Supplements Affecting All Series, or the Master Agreement Generally............... 87 Section 13.02. Supplements Authorizing a Series of Notes......................................... 90 Section 13.03. Execution of Master Agreement Supplements......................................... 90 Section 13.04. Effect of Master Agreement Supplements............................................ 91 Section 13.05. Reference in Notes to Master Agreement Supplements................................ 91 Article XIV COVENANTS................................................................................... 91 Section 14.01. Payment of Principal and Interest................................................. 91 Section 14.02. Maintenance of Non-U.S. Office or Agency.......................................... 91 Section 14.03. Consolidation, Merger, Sale of Assets............................................. 92 Section 14.04. Negative Covenants................................................................ 93 Section 14.05. Performance of Obligations; Servicing of Each Series Trust Estate................. 94 Section 14.06. Money for Note Payments to Be Held in Trust....................................... 95 Section 14.07. Corporate Existence............................................................... 96 Section 14.08. Payment of Taxes and Other Claims................................................. 97 Section 14.09. Amendment of Organizational Documents............................................. 97 Section 14.10. Rule 144A Information............................................................. 97 Section 14.11. Further Instruments and Acts...................................................... 98 Section 14.12. Compliance with Laws.............................................................. 98 Section 14.13. Income Tax Characterization....................................................... 98 Article XV MISCELLANEOUS PROVISIONS..................................................................... 98 Section 15.01. Counterparts...................................................................... 98 Section 15.02. Governing Law..................................................................... 98 Section 15.03. Notices........................................................................... 98 Section 15.04. Severability of Provisions........................................................ 99 Section 15.05. Binding Effect.................................................................... 99 Section 15.06. Exhibits.......................................................................... 99 Section 15.07. Calculations...................................................................... 99 Section 15.08. Further Assurances................................................................ 100

iv Section 15.09. Nonpetition Covenant.............................................................. 100 Section 15.10. Special Supplement Agreement...................................................... 100

Exhibit A Form of Back-up Servicer Verification Certificate Exhibit B Form of Trustee Website Investor Certification Schedule 1 Required Fields for List of Contracts v This MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT, dated as of December 1, 2000, with respect to the Marlin Leasing Receivables Master Facility, by and among Marlin Leasing Corp., a Delaware corporation, as Servicer, Marlin Leasing Receivables Corp. IV, a Nevada corporation, as the Obligors' Agent and Wells Fargo Bank Minnesota, National Association, a national banking association, as Trustee. WITNESSETH: In consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: Article I DEFINITIONS Section 1.01. Definitions. Whenever used in this Master Agreement, the following words and phrases shall have the following meanings: (i) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (ii) all other terms used herein which are defined in the Trust Indenture Act (as hereinafter defined), either directly or by reference therein, have the meanings assigned to them therein; (iii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (iv) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Master Agreement as a whole and not to any particular Article, Section or other subdivision, "or" is not exclusive and "including" means including without limitation; and (v) any references contained herein to agreements, documents and instruments are to the same as they may be amended or modified from time to time. Act. When used with respect to any Holder, has the meaning specified in Section 1.02 hereof. Actuarial Method. The method of allocating a Scheduled Payment with respect to any Contract between principal and interest, pursuant to which (i) the portion of such payment that is allocated to interest is the product of (a) one-twelfth of the Applicable Discount Rate with respect to such Contract multiplied by (b) the applicable Contract Principal Balance (before giving effect to such principal payment) and (ii) the remainder of such payment is allocated to principal. Advance Payment. Means, with respect to any Contract, any Scheduled Payment or a portion thereof made by or on behalf of a User which does not become due until a subsequent Collection Period. Advance Payments shall be applied as "Collections" with respect to the Collection Period(s) in which such Scheduled Payments are due. Advance Payment Account. Has the meaning ascribed in Section 7.01(c) hereof. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Agreement or Master Agreement. This Master Lease Receivables Asset-Backed Financing Facility Agreement, as the same may be amended, restated or otherwise modified from time to time. Applicable Discount Rate. With respect to any Contract shall have the meaning set forth in the Series Supplement under which such Contract is pledged to the Trustee. Authenticating Agent. Means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Notes. Authorized Officer. Means, with respect to any Obligor or the Obligors' Agent, any President, Vice President or Director of Securitization of such Obligor or of the Obligors' Agent. Back-up Servicer. Means Wells Fargo Bank Minnesota, National Association and any successor thereto. Back-up Servicer Fee: With respect to a Series, has the meaning specified in the related Series Supplement. Back-up Servicer Resignation Notice. Has the meaning specified in Section 9.09(b) hereof. 2 Back-up Servicer Termination Notice. Has the meaning specified in Section 9.09(a) hereof. Bearer Notes. Shall have the meaning specified in Section 4.01 hereof. Book-Entry Notes. Shall mean Notes registered in the name of a Clearing Agency or its nominee as described in Section 5.09 hereof. Booked Residual. Means, with respect to any Contract on any date of determination, the residual value of the Equipment subject to such Contract, as reflected in Marlin's servicing system. Borrowing Base. Has the meaning specified therefor in the related Series Supplement. Broker. Means (i) the Person (excluding the Transferor and any equipment vendor) that arranges for the lease of an item of Equipment to a User pursuant to a Contract between the Transferor and the User of such Equipment, or (ii) any Person from whom the Transferor purchased a Contract in respect of which the Transferor is not an original party (other than pursuant to a vendor program); provided, however, that the term "Broker" shall not include (a) any Person who serves as an intermediary between the Transferor and any vendor or manufacturer with whom the Transferor has a program agreement and Marlin has made the credit decision and is the initial lessor (except with respect to the Provident Capital Group programs, where Provident Capital Group or an Affiliate thereof may be the initial lessor) or (b) any Person who merely provides the Transferor with lease referral information with Marlin performing the credit decision analysis relating to a prospective lessee and where Marlin is the initial lessor. Broker Agreement. Any agreement between the Transferor and a Broker pursuant to which the Transferor has acquired Contracts. Business Day. Any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, Mt. Laurel, New Jersey, Minneapolis, Minnesota or Reno, Nevada are authorized or obligated by law, executive order or governmental decree to be closed. Calculation Date. The last day of a Collection Period. Amounts calculated from Calculation Date balances shall be calculated from such balances as of the close of business on the Calculation Date. Clearstream Bank. Shall mean Centrale de Livraison de Valeurs Mobilieres S.A. Charged-Off Contract. Means a Contract (i) as to which a notice of acceleration has been sent to the relevant User, (ii) as to which an Insolvency Event has occurred with respect to the User, (iii) all or any portion of which has been or should have been, in accordance with the Credit and Collection Policy, written off the related Obligor's books as uncollectible, (iv) with respect to which the Servicer has elected not to 3 make a Servicer Advance, or (v) as to which any Scheduled Payment, or part thereof in excess of 10% of such Scheduled Payment, remains unpaid for 121 days (as of the 20th calendar day of the month) or more from the original due date for such payment. Class. With respect to any Series, all the Notes of such Series having the same specified payment terms and priorities in payment. Clearing Agency. Shall mean The Depository Trust Company, or any other organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. Clearing Agency Participant. Shall mean a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. Closing Date. With respect to a Series, has the meaning specified therefor in the relevant Series Supplement. Code. Means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. Collection Period. With respect to any Settlement Date, the immediately preceding calendar month; provided, that if, with respect to any Contract, the Cut-Off Date applicable thereto is a day other than the first day of a calendar month, then the initial Collection Period with respect to such Contract shall be the period commencing on such Cut-Off Date and ending at the end of the calendar month in which such Cut-Off Date occurs. Collections. With respect to a Series Trust Estate and any Collection Period, all cash collections and other cash proceeds of the Contracts and the Related Security, including without limitation, Scheduled Payments, Prepayments, Residual Receipts, Recoveries, Investment Earnings and Insurance Proceeds received from such Series Trust Estate by the Servicer, the Trustee, the Transferor or the Obligors and Servicer Advances made in respect thereof, in each case, during such Collection Period (or, if the related Cut-Off Date is later than the first day of such Collection Period, from such Cut-Off Date through the end of such Collection Period); provided, that "Collections" shall not include (i) Advance Payments until (and only to the extent that) such amounts are required to be deposited in the applicable Series Account for distribution to the related Noteholders in accordance with Section 7.02, and (ii) Servicing Charges and provided, further, that any amounts paid under any Series Support in reduction of the principal amount of any Note, any interest thereon or any other amount in connection therewith shall not constitute Collections. Commission. Means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at anytime after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. 4 Commonly Controlled Entity. Means each Obligor and each entity, whether or not incorporated, which is affiliated with any of the foregoing pursuant to Section 414(b), (c), (m) or (o) of the Code. Companion Series. Shall mean (i) each Series which has been paired with one or more other Series (which Series may be prefunded or partially prefunded), such that the reduction of the Outstanding Amount of such Series results in the increase of the Outstanding Amount of such other Series, as described in the related Series Supplements, and (ii) such other Series. Computer Tape. Collectively, the computer tapes generated by the Transferor which provide information relating to the Contracts and which were, or will be, used by the Transferor in selecting the Contracts sold or contributed to the Obligors pursuant to a Transfer Agreement Supplement. Contract. Each of the agreements conveyed by the Transferor to an Obligor pursuant to the Master Transfer Agreement and subsequently pledged by such Obligor to the Trustee pursuant hereto and any Supplement, including, as applicable, schedules, supplements and amendments thereto, pursuant to which specified Equipment is leased to, or loans are made to, a User or which are identified on the List of Contracts delivered on the related Pledge Date. Contract Balance Remaining. Means, with respect to any Contract (or other lease in the Servicer's servicing portfolio), as of any date, the aggregate (undiscounted) amount of all unpaid Scheduled Payments due under such Contract (or other lease). Contract File. With respect to each Contract, the following documents: (i) The executed original counterparts of the Contract that constitutes "chattel paper" for purposes of Sections 9-105(1)(b) and 9-305 of the UCC (bearing the original signatures of an employee of Marlin, together with the facsimile copy of the signature of the User or the original signature of the User) or an "instrument" for purposes of Sections 9-105(1)(i) and 9-305 of the UCC; (ii) A copy of any related Broker Agreement; (iii) Copies of all documents (which may be in microfiche or imaged form or on the Servicer's computerized information system), if any, that the Transferor or the Servicer keeps on file for benefit of the Transferor in accordance with the Transferor's or Servicer's customary procedures indicating that the Equipment is owned by the Transferor and copies of any and all other material documents (including, if any, delivery and acceptance notices, guaranties, and vendor recourse agreements) that the Transferor or the Servicer keeps on file for the benefit of the Transferor in accordance with the Transferor's or Servicer's customary procedures relating to any individual Contract, Broker, User or Equipment (including, without limitation, any documents providing or relating to any credit support of or for the User of such Contract); and 5 (iv) Copies (together with all amendments, assignments, and continuations thereof and including evidence of filing with the appropriate office) of all UCC financing statements filed with respect to the Contracts, identifying the User as debtor and the Transferor as secured party, if any. Contract Principal. With respect to any Contract for any Collection Period, an amount equal to the excess of (i) the Scheduled Payment due on such Contract during such Collection Period over (ii) the product of (x) the Contract Principal Balance as of the opening of business on the first day of such Collection Period and (y) one-twelfth of the Applicable Discount Rate for such Contract. Contract Principal Balance. As of any date in the case of a Contract, the present value of the Scheduled Payments to become due on and after the date of calculation (excluding all Scheduled Payments due on or prior to, but not received as of such date of calculation), discounted monthly in arrears at one-twelfth of the Applicable Discount Rate. Corporate Trust Office. The principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Master Agreement is specified in Section 15.03 hereof. Coupons. Any interest or other coupons attached to a Note. Credit and Collection Policy. The credit and collection policies and practices of the Transferor, as the same may be modified from time to time in accordance with the terms of this Master Agreement. Crossover Amounts. Any amounts designated as "Crossover Amounts" in a Series Supplement. Cut-Off Date. With respect to any Contract, the close of business on the day prior to the related Pledge Date or the related Transfer Date, as appropriate. Default. Means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. Definitive Notes. Has the meaning specified in Section 5.09 hereof. Delinquent Contract. A Contract, other than a Charged-Off Contract, as to which any Scheduled Payment, or part thereof in excess of 10% of such Scheduled Payment, remains unpaid for more than 30 days from the original due date for such payment. Depositaries. Shall mean the Person(s), if any, specified in the applicable Supplement, in its capacity as depositary for the respective accounts of any Clearing Agency or any Foreign Clearing Agencies. 6 Depository Agreement. Shall mean, if applicable with respect to any Series or Tranche, the agreement among the Obligors' Agent, the Trustee and a Clearing Agency, or as otherwise provided in the related Series Supplement. Determination Date. With respect to a Collection Period, the date which is three Business Days prior to the earliest Settlement Date relating to such Collection Period. Dollars or $. The lawful money of the United States. Eligible Contract. With respect to any Series, as defined in the related Series Supplement. Eligible Investments. Any of the following: (a) marketable obligations of the United States of America which are backed by the full faith and credit of the United States of America; (b) marketable obligations directly and fully guaranteed by the full faith and credit of the United States of America; (c) bankers' acceptances and certificates of deposit and other interest bearing obligations denominated in Dollars and issued by any commercial bank with capital, surplus and undivided profits aggregating at least $100,000,000, the short term unsecured and unguaranteed securities of which are rated at least "A-1+" by S&P and "P-1" by Moody's; (d) repurchase obligations for underlying securities of the types described in clauses (a), (b) and (c) above entered into with any commercial bank of the type described in clause (c) above; (e) commercial paper rated at least "A-1+" by S&P and "P-1" by Moody's; (f) freely redeemable shares in money market funds (including funds for which the Trustee, any Noteholder or any affiliates of either of the foregoing may act as sponsor or advisor or for which any of the foregoing Persons may receive fee income) which invest solely in obligations, bankers' acceptances, certificates of deposit, repurchase agreements and commercial paper of the types described in clauses (a) through (e), which money market funds are rated at least "AAAm" or "AAAm-g" by S&P and "Aa1" by Moody's; and (g) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of any foreign bank) and subject to supervision and examination by federal or state banking or depository institution authorities; provided, that at the time such investment, or the commitment to make such investment, is entered 7 into, the short-term unsecured and unguaranteed debt rating of such depository institution or trust company shall be at least "P-1" by Moody's and the long-term unsecured and unguaranteed debt rating of such depositary institution or trust company shall be at least "AA-" by S&P. Each of the Eligible Investments may be purchased by the Trustee through an Affiliate of the Trustee. Notwithstanding anything set forth in clauses (a)-(g) above, any Eligible Investment purchased with funds on deposit in any Facility Account, Advance Payment Account or Series Account must mature no later than the Business Day prior to the next Settlement Date for the applicable Series. ERISA. Shall mean the Employee Retirement Income Security Act of 1974, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time. Equipment. The equipment leased to a User pursuant to any Contract. Euroclear Operator. Shall mean Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System. Event of Default. Has the meaning specified in Section 10.01 hereof. Event of Servicer Termination. An Event described in Section 9.01 hereof. Exchange Act. Means the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder. Facility Account. Shall have the meaning ascribed in Section 7.01(a) hereof. Facility Shadow Rating. Means the rating which would be assigned to the Outstanding Notes with respect to any Series, if such Outstanding Notes were not provided insurance or other credit support by any Series Support Provider. Final Date. With respect to any Series, the date on which all amounts due to the related Series Secured Parties have been indefeasibly paid in full. Foreign Clearing Agency. Shall mean Clearstream Bank and the Euroclear Operator. Government Contract. Means a Contract of Equipment under which the User is a federal, state or local government or government agency (or any agency or instrumentality thereof). 8 Governmental Authority. The United States of America, any State or other political subdivision of either of the foregoing and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. Group. Shall mean, with respect to any Series, the group of Series, if any, in which the related Series Supplement specifies such Series is to be included. Holder or Noteholder. Shall mean, (i) with respect to a Book-Entry Note, the Person who is the owner of such Book-Entry Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency) or (ii) with respect to a Definitive Note, the Person who is the owner of such Definitive Note, as reflected in the books of the Note Registrar. Increased Servicer Fee. With respect to any Series, the amount, if any, of the fee payable in accordance with Section 9.02(b) hereof to a successor Servicer appointed pursuant to Section 9.02(b) hereof and the related Series Supplement that is in excess of the Servicer Fee. Indebtedness. Means, with respect to any Person at any time, (a) indebtedness or liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or other instruments, or for the deferred purchase price of property or services (excluding trade obligations and accrued expenses incurred in the ordinary course of business and not overdue); (b) obligations of such Person as lessee under leases which are, should have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases; (c) current liabilities of such Person in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (d) obligations issued for or liabilities incurred on the account of such Person; (e) obligations or liabilities of such Person arising under acceptance facilities; (f) reimbursement obligations with respect to letters of credit; (g) obligations of such Person under any guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss; (h) obligations of such Person secured by any lien on property or assets of such Person, whether or not the obligations have been assumed by such Person; or (i) obligations of such Person under any interest rate or currency exchange agreement. Indemnified Amounts. Has the meaning set forth in Section 8.01(b) hereof. Indemnified Party. Has the meaning set forth in Section 8.01(b) hereof. Independent Accountant. A firm of nationally recognized independent certified public accountants appointed by Marlin and/or the Servicer (if other than Marlin), as applicable, within the meaning of the Securities Act. 9 Initial Unpaid Amounts. Shall mean with respect to a Contract, the excess of the aggregate amount of all Scheduled Payments due prior to the related Cut-Off Date over the aggregate of all Scheduled Payments made prior to the related Cut-Off Date with respect to such Contract. Insolvency Event. Means, with respect to a specified Person, either of the following events: (i) a case or proceeding shall have been commenced against such Person seeking a decree or order in respect of such Person (a) under Title 11 of the United States Code, as now constituted or hereafter amended or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law, (b) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Person or of any substantial part of such Person's assets, or (c) ordering the winding-up or liquidation of the affairs of such Person, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or such court shall enter a decree or order granting the relief sought in such case or proceeding; or (ii) the commencement by such Person of a voluntary case under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person for any substantial part of such Person's assets, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. Insurance Policy. With respect to an item of Equipment and the related Contract, any insurance policy or similar agreement required to be maintained by the User pursuant to such Contract that covers physical damage to the Equipment and loss or theft of the Equipment (including policies procured by the Transferor or the Servicer (including those from an affiliate of the Transferor or Servicer) on behalf of the User) or covering any liabilities arising from such item of Equipment or the use thereof by the User. Insurance Proceeds. With respect to an item of Equipment and the related Contract, any amount received during a Collection Period pursuant to an Insurance Policy issued with respect to such item of Equipment and the related Contract. Investment Earnings. Any income earned from the investment of funds from time to time on deposit in any Facility Account, Advance Payment Account or Series Account in accordance with Section 7.03 hereof and the Series Supplements, net of any investment expenses and losses on any such investments. 10 Lien. Any security interest, mortgage, deed of trust, lien (statutory or otherwise), charge, pledge, equity, hypothecation, assignment, deposit arrangement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing. List of Contracts. With respect to any specified group of Contracts, a printed or electronic list of such Contracts, certified by an Authorized Officer of the Obligors' Agent. Each List of Contracts shall include for each Contract listed thereon as of the related Cut-Off Date, the information specified on Schedule 1 hereto. Majority Control Parties. Shall mean those Series Controlling Parties for the outstanding Series, the Maximum Series Limit of which represent, in the aggregate, 66 2/3% or more of the aggregate Maximum Series Limit for all outstanding Series. Marlin. Shall mean Marlin Leasing Corp., a Delaware corporation. Master Agreement Supplements. Shall have the meaning ascribed in Section 13.01(a) hereof. Master Transfer Agreement. That certain Master Lease Acquisition and Sale Agreement, dated as of December 1, 2000, by and between the Transferor and the Obligors' Agent. Maturity Date. When used with respect to any Note, means the date on which the principal of such Note becomes due and payable in full as therein or herein provided, whether on the final scheduled Settlement Date or by declaration of acceleration, prepayment or otherwise. Maximum Series Limit. Means, with respect to any Series, the aggregate principal amount of all Notes of such Series which have been committed to at the date of determination as set forth in the related Series Supplement. Moody's. Moody's Investors Service and its successors. Multiemployer Plan. Means a multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity makes contributions or has liability. Non-Monthly Payment Contracts. Means any Contract that does not require the User to make monthly payments. Note Register and Note Registrar. Have the respective meanings specified in Section 5.04 hereof. 11 Noteholders' Agent. Means any Person designated by one or more Noteholders to be their "agent". Notes. Any Note authenticated and delivered under this Master Agreement. Obligors. Means each Person designated as an "Obligor" in this Master Agreement or in a Series Supplement with respect to the related Series of Notes, or any successor thereto. Obligors' Agent. Marlin Leasing Receivables Corp. IV, a Nevada corporation, and its successors and permitted assigns. Obligors' Order or Obligors' Request. Means a written request or order signed by an Authorized Officer of the Obligors' Agent and delivered to the Trustee. Officer's Certificate. Means a certificate signed by an Authorized Officer of an Obligor or the Obligors' Agent. Offset Amount. The meaning ascribed to such term in Section 6.14 hereof. Opinion of Counsel. A written opinion of counsel, who may be counsel employed by the Servicer or other counsel, in each case acceptable to the named recipients thereof. Organizational Documents. With respect to any Obligor, such Obligor's articles of incorporation and by-laws, partnership agreement, trust agreement, limited liability company agreement, or other charter-type governing instruments. Original Issue Date. Means, for any Series, Class or Tranche of Notes, the date of original issue of such Series, Class or Tranche of Notes, as specified in the related Series Supplement. Original Servicer Fee Rate. With respect to any Series, the rate at which the Servicing Fee is calculated, as specified on the related Series Supplement. Outstanding. When used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Master Agreement except, (i) Notes theretofore cancelled by the Note Registrar or delivered to the Note Registrar for cancellation; and (ii) Notes for whose payment or prepayment money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent for the Holders of such Notes in connection with a proposed termination and for which termination notice has been provided; and 12 (iii) Lost, destroyed or stolen Notes in lieu of which other Notes have been authenticated and delivered pursuant to Section 5.05 hereof, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Obligors; provided, however, that any Notes which have been paid with proceeds of the related Series Support shall continue to remain Outstanding for purposes of this Master Agreement until the related Series Support Provider has been paid as subrogee hereunder or reimbursed as evidenced by a written notice from the related Series Support Provider delivered to the Trustee, and the related Series Support Provider shall be deemed to be the Holder thereof to the extent of any payments thereon made by the related Series Support Provider; provided, further, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any related document, Notes owned by the Obligors or any other obligor upon the Notes, the Transferor or any Affiliate of any of the foregoing shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not an Obligor, any other obligor upon the Notes, the Transferor or any Affiliate of any of the foregoing Persons. Outstanding Amount. Means, with respect to any Series the aggregate principal amount of all Notes of such Series which are Outstanding at the date of determination after giving effect to all distributions of principal on such date of determination. Overdue Payment. Any Scheduled Payment due on a Contract and not received during the Collection Period in which such Scheduled Payment was due. Paying Agent. Means the Paying Agent appointed pursuant to Section 11.14 hereof. PBGC. Means the Pension Benefit Guaranty Corporation or any successor agency, corporation or instrumentality of the United States to which the duties and powers of the Pension Benefit Guaranty Corporation are transferred. Person. Any legal person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, Governmental Authority or any other entity. Plan. Means any pension plan (other than a Multiemployer Plan) covered by Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in respect of which a Commonly Controlled Entity has liability. 13 Pledge. Means each Pledge by the related Obligors of all or any portion of the related Series Trust Estate to the Trustee for the benefit of the related Noteholders in accordance with Section 3.01 hereof. Pledge Date. Shall have the meaning specified therefor in the related Series Supplement. Pledge Notice. A written notice pursuant to which the Obligors with respect to a Series pledge property to the Trustee as part of the related Series Trust Estate. Pledged Property. With respect to any Series Trust Estate, the property described as Pledged Property in the related Series Supplement. Predecessor Note. With respect to any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 5.05 hereof in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. Prepayment. With respect to a Collection Period and a Contract (except a Charged-Off Contract), the payment by the related User of all remaining Scheduled Payments due on such Contract, including, without limitation, by way of application of any Security Deposit for such Contract, so long as such amount is designated by the User as a prepayment and the Servicer has consented to such prepayment. Advance Payments and Residual Receipts are not "Prepayments." Prepayment Amount. Means, with respect to any Contract and without duplication: (a) the Contract Principal Balance of such Contract (without any deduction for any Security Deposit paid by the related User, unless such Security Deposit has been applied to the Contract Principal Balance pursuant to the Credit and Collection Policy and deposited into the applicable Facility Account as a Collection) as of the date of reconveyance of such Contract to the related Obligor by the Trustee, plus (b) the product of (i) the Contract Principal Balance as of the date of reconveyance, and (ii) one-twelfth of the Applicable Discount Rate, plus (c) the Booked Residual for such Contract, plus (d) the amount of all Scheduled Payments due and payable thereon and not made. Principal Terms. Shall mean, with respect to any Series, (i) the name or designation; (ii) the initial Outstanding Amount and the maximum Outstanding Amount (or method for calculating such amounts); (iii) the interest rate or rates (or method for the determination thereof); (iv) the Settlement Date or dates and the date or dates from which interest shall accrue; (v) the method for allocating Collections to Noteholders of such Series; (vi) the designation of any Series Accounts and the terms governing the operation of any such Series Accounts; (vii) the method of calculating the Servicing Fee with respect thereto; (viii) the terms of any form of Series Support with respect thereto; (ix) the Series Termination Date; (x) the number of Classes of Notes of such Series and, if such Series consists of more than one Class, the rights and priorities of each such Class; 14 (xi) whether the Notes of such Series may be issued as Bearer Notes and any limitations imposed thereon; (xii) the priority of such Series with respect to any other Series; (xiii) the Group, if any, to which such Series belongs; (xiv) whether such Series is a Companion Series to one or more other Series; and (xv) any other terms of such Series. Proceeding. Means any suit in equity, action at law or other judicial or administrative proceeding. Property. Shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Rating Agencies. S&P and Moody's or any other nationally recognized statistical rating agency then rating any Notes. Record Date. Means, with respect to any Series, as specified in the related Series Supplement. Records. Means, with respect to any Contract, such Contract, all contracts and other documents, books, records and other information (including, without limitation, Contract Files, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Contract, any Related Security therefor and the related User. Recoveries. Means all amounts received in respect of a Charged-Off Contract, including, without limitation, amounts received in connection with the sale or other disposition of the related Equipment, Insurance Proceeds with respect to the related Equipment, or any other payments made by or on behalf of the related User, including any amounts paid by the Transferor relating to a Security Deposit, net of costs of collection, in connection with such Charged-Off Contract; provided, that in no event may Recoveries in respect of a Charged-Off Contract be less than zero. Refinance Proceeds. Shall mean with respect to any Collection Period, (i) any proceeds of the issuance of a new series of notes or the issuance of certificates in connection with a securitization of leases and loans, remitted by the Obligors to the Trustee on the Settlement Date following such Collection Period for deposit into the related Series Account and application in accordance with the related Series Supplement, and (ii) any amounts remitted to the Trustee by the Obligors in accordance with the related Series Supplement for deposit into the related Series Account and application in accordance with the related Series Supplement. Registered Holder. Means the Person in whose name a Note is registered on the Note Register on the applicable Record Date. Registered Notes. Has the meaning set forth in Section 4.01 hereof. Related Security. With respect to any Contract: 15 (i) the related Transfer Agreement Supplement (including, without limitation, all rights, remedies, powers and privileges thereunder), pursuant to which, among other things, the Contract, the Contract Files and the related Equipment have been contributed to the related Obligor or Obligors by the Transferor, and the Broker Agreements, if any, relating to such Contracts; (ii) such Obligor's or Obligors' interest in the related Equipment, together with all security interests and/or liens and all property subject thereto from time to time securing or purporting to secure payment of such Contract, whether pursuant to such Contract or otherwise, together with all UCC financing statements covering any such property filed by or otherwise filed in favor of the Transferor and/or such Obligors; (iii) all guarantees, letters of credit, indemnities, warranties, insurance policies (including, without limitation, the Insurance Policies), and proceeds and premium refunds thereof and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Contract whether pursuant to the Contract or otherwise (including, without limitation, the Security Deposits); (iv) the Residual Receipts and Recoveries related to such Contract; (v) the Contract Files and other instruments, documents, agreements, Computer Tapes, books and Records relating to such Contract; and (vi) all proceeds of the foregoing. Release Events. Has the meaning ascribed in Section 6.11 hereof. Replaced Contract. Has the meaning set forth in Section 6.16. Requirements of Law. Any law, treaty, rule or regulation, or final determination of an arbitrator or Governmental Authority, and, when used with respect to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person. Residual Receipts. All amounts in respect of Booked Residuals received by the Servicer, all proceeds of the sale of Equipment received by the Servicer in the event the related User does not purchase the Equipment at the end of the related Contract, any amounts collected by the Servicer as judgments against a User or others related to the failure of such User to pay any required amounts relating to the Booked Residual under the related Contract or to return the Equipment, including any amounts paid by the Transferor relating to a Security Deposit, plus any amounts not otherwise described above which are received by the Servicer and applied against the Booked Residual of such Contract in accordance with the Servicer's servicing standards, in each case as reduced by any reasonably incurred out-of-pocket expenses incurred by the Servicer in enforcing such Contract or in liquidating such Equipment; provided, that in no event may Residual Receipts in respect of a Contract or any Equipment be less than zero. 16 Responsible Officer. When used with respect to the Trustee, any officer assigned to its Corporate Trust Office (or any successor thereto), including any managing director, principal, vice president, assistant vice president, assistant treasurer, assistant secretary, trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and having direct responsibility for the administration of this Master Agreement, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Rule 144A Information. Has the meaning specified in Section 14.10 hereof. S&P. Standard & Poor's Ratings Group and its successors. Scheduled Payments. With respect to a Settlement Date and a Contract, the stated contractually-required periodic rental payments or payments of principal and interest (exclusive of any amounts in respect of insurance or taxes but inclusive of any "balloon" payment due from such User) set forth in such Contract due from the User in the related Collection Period. Securities Act. The Securities Act of 1933, as amended, and the applicable published rules and regulations thereunder. Security Deposit. Any amount paid to the Transferor by a User as a security deposit or as a payment in advance of any amounts to become due on a Contract, which has not previously been refunded to such User or applied toward such User's obligations under such Contract. Series. With respect to any Notes means those Notes issued pursuant to the same Series Supplement. Series Accounts. Any deposit, trust, escrow, collateral, reserve or similar account established and maintained by the Trustee for the benefit of the Noteholders of any Series or Class as specified in any Series Supplement. Series Closing Date. With respect to any Series, the date designated in the related Series Supplement as the closing date for such Series. Series Controlling Party. With respect to any Series on any date the Person or Persons designated as such in the related Series Supplement. Series Event of Default. Shall have the meaning specified therefor in the related Series Supplement. Series Related Documents. With respect to a Series, has the meaning specified therefor in the related Supplement. 17 Series Secured Obligations. Has the meaning specified therefor in the related Series Supplement. Series Secured Parties. Has the meaning specified therefor in the related Series Supplement. Series Supplement. With respect to any Series, a supplement to this Master Agreement, executed and delivered in connection with the original issuance of the Notes of such Series, and all amendments thereof and supplements thereto. Series Support. The rights and benefits provided to the Trustee or the Noteholders of any Series or Class pursuant to any letter of credit, financial guaranty insurance policy, surety bond, cash collateral account, spread account, guaranteed rate agreement, maturity liquidity facility, interest rate swap agreement, default swap agreement, tax protection agreement, derivative contract or other similar arrangement. The subordination of any Series or Class to another Series or Class shall be deemed to be a Series Support. Notwithstanding that such Series Support may be held by or in favor of the Trustee for the benefit of any Series or Class, only those Series or Classes to which such Series Support relates shall have any rights with respect thereto and all payments thereunder received by the Trustee shall be distributed exclusively as prescribed in the Series Supplement relating to such Series or Class. Series Support Provider. The Person providing any Series Support, other than the Noteholders of any Series or Class which is subordinated to another Class or Series. Series Support Provider Default. Has the meaning specified therefor in the relevant Series Supplement. Series Termination Date. Has the meaning ascribed in the relevant Series Supplement. Series Trust Estate. With respect to a Series, has the meaning specified therefor in the related Series Supplement. Series Trustee Secured Obligations. With respect to a Series, has the meaning specified therefor in the related Series Supplement. Servicer. The Person performing the duties of the Servicer hereunder, initially, Marlin. Servicer Advance. With respect to any Series, any amount which the Servicer elects to advance with respect to Overdue Payments, in accordance with the related Series Supplement. Servicer Fee. With respect to each Series, the fee payable to the Servicer on each Settlement Date in consideration of the Servicer's performance of its duties 18 pursuant to Article VI with respect to the Series Trust Estate related to such Series, payable as provided in the related Series Supplement. Servicer Termination Notice. The notice described in Section 9.01(a) hereof. Servicer's Certificate. With respect to each Series Trust Estate, a written informational statement, substantially in the form prescribed by the related Series Supplement, to be provided by the Servicer in accordance with the related Series Supplement and signed by a Servicing Officer and furnished to the Trustee by the Servicer. Servicing Charges. The sum of (i) any late payment charges paid by a User on a Delinquent Contract after application of any such charges to amounts then due under such Contract and (ii) any other incidental charges, security deposits (other than Security Deposits applied as Offset Amounts pursuant to Section 6.14 hereof) or fees received from a User, including (x) insurance premium payments and reimbursements, tax payments, late charges, documentation fees, extension fees, administrative charges and maintenance payments and (y) prepayment charges paid by a User in connection with a Prepayment. Servicing Officer. Those officers of the Servicer involved in, or responsible for, the administration and servicing of the Contracts, as identified on the list of Servicing Officers furnished by the Servicer to the Trustee, the Noteholders and each Series Support Provider from time to time. Settlement Date. With respect to a Series, has the meaning specified therefor in the related Series Supplement. Solvent. Means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guarantees and pension plan liabilities) at any time shall be computed as the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can be reasonably expected to become an actual or matured liability. State. Any state of the United States of America and, in addition, its territories and possession and the District of Columbia. Substitute Contract. Has the meaning set forth in Section 6.16 hereof. 19 Tranche. All the Notes of a Series (or of a Class within a Series) having the same date of authentication. Transfer Agreement Supplement. Means each Supplement to the Master Lease Acquisition and Sale Agreement executed and delivered pursuant to the Master Transfer Agreement. Transfer Date. Means any date on which a Substitute Contract is pledged pursuant to Section 6.16 hereof. Transferor. Marlin in its capacity as the Transferor under the Master Transfer Agreement, and its successors and permitted assigns. Transferor Breach. Has the meaning set forth in Section 6.15 hereof. Transition Cost. Any documented expenses reasonably incurred by a successor Servicer or the Trustee in connection with a transfer of servicing from the Servicer to a successor Servicer as successor Servicer pursuant to Section 6.05 hereof, but not to exceed $50,000 per Series. Trust Indenture Act. Means the Trust Indenture Act of 1939, as amended from time to time. Trustee. Means the Person named as the "Trustee" in the first paragraph of this Master Agreement until a successor Trustee shall have become such pursuant to the applicable provisions of this Master Agreement, and thereafter "Trustee" shall mean or include the Person who is then the Trustee hereunder. UCC. The Uniform Commercial Code as in effect in the applicable jurisdiction. Unregistered Note. Any Note which is not a Bearer Note and which is part of a Series or Class of Notes which has been designated in the related Series Supplement as being a Series or Class of Unregistered Notes. User. Any obligor under any Contract, whose obligations thereunder constitute the principal source of payments under any Contract, including any guarantor (excluding the Servicer) of such obligations. User Termination Event. Has the meaning set forth in Section 6.12 hereof. Section 1.02. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Master Agreement to be given or taken by the Holders of the related Notes may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents 20 duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Obligors' Agent. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Master Agreement and (subject to Section 11.01) conclusive in favor of the Trustee and the Obligors, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Obligors' Agent or the Obligors in reliance thereon, whether or not notation of such action is made upon such Note. Section 1.03. Notice to Holders; Waiver. Where this Master Agreement or any Series Supplement provides for notice to the Holders of the related Notes of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Note Register, or if in writing and by facsimile, to the facsimile number provided by a Holder to the Person giving such notice, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. Where this Master Agreement or any Series Supplement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 21 Where any Series Supplement provides for notice to the Rating Agencies, failure to give such notice shall not affect any rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default. Section 1.04. Alternate Payment and Notice Provisions. Notwithstanding any provision of this Master Agreement, any Series Supplement or any of the Notes to the contrary, the Obligors' Agent may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Master Agreement or the related Series Supplement for such payments or notices. The Obligors' Agent will furnish to the Trustee a copy of each such agreement and the Trustee will cause payments to be made and notices to be given in accordance with such agreements provided the Trustee is not adversely affected thereby. Section 1.05. Conflict with Trust Indenture Act. If this Master Agreement is qualified under the Trust Indenture Act and any provision hereof limits, qualifies or conflicts with another provision hereof that is deemed to be included in and to govern this Master Agreement by any of the provisions of the Trust Indenture Act, such provision deemed to be included herein shall control. Section 1.06. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.07. Successors and Assigns. All covenants and agreements in this Master Agreement or any Series Supplement by the Obligors or by the Obligors' Agent, on behalf of the Obligors or in its or their individual capacity, shall bind its or their successors and assigns, whether so expressed or not. All agreements by the Trustee and the Servicer in this Master Agreement or any Series Supplement shall bind its successors and assigns. Section 1.08. Benefits of Agreement. To the extent specified in the related Series Supplement, each of the related Series Support Providers and their successors and assigns shall be a third-party beneficiary to the provisions of this Master Agreement and such Series Supplement, insofar as such provisions apply to the related Notes, and shall be entitled to rely upon and, so long as no Series Support Provider Default shall have occurred and be continuing with respect to such Series Support Provider, directly to enforce such provisions of this Master Agreement and such Series Supplement. Except as aforesaid, nothing in this Master Agreement or any Series Supplement or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the 22 Holders of the related Notes, and any other party secured hereunder, and any other Person with an ownership interest in any part of the related Series Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Master Agreement. The related Series Support Provider may disclaim any of its rights and powers under this Master Agreement (in which case the Trustee may exercise such right or power hereunder), but not its duties and obligations under the related Series Support, upon delivery of a written notice to the Trustee and to the Obligors' Agent. Section 1.09. Allocation of Series to Groups. To the extent so provided in the Series Supplement for any Series or in an amendment to this Master Agreement executed pursuant to subsection 13.01(a), specified Series may be allocated in whole or in part to one or more Groups as may be provided in such Series Supplement or amendment for the purpose of receiving Crossover Amounts with respect to the Series Trust Estate(s) of such other Series in such Group. Any such Series Supplement or amendment may provide that (i) such allocation to one or more particular Series or Groups may terminate upon the occurrence of certain events specified therein and (ii) that upon the occurrence of any such event, the related Crossover Amounts may be reallocated to other Series or Groups or to all Series, all as shall be provided in such Series Supplement or amendment. Section 1.10. Status of Obligors' Agent. By its execution and delivery of a Series Supplement, each Obligor shall be deemed to have designated and appointed Marlin Leasing Receivables Corp. IV to act as its agent hereunder, under the Master Transfer Agreement and each Transfer Agreement Supplement and under each other related Series Related Document. The Obligors' Agent is responsible for executing and fulfilling all other duties expressly assigned to it in this Master Agreement, the Master Transfer Agreement and each Transfer Agreement Supplement and the Series Related Documents. The Obligors may, at any time in their discretion, remove the Obligors' Agent and appoint a new Obligors' Agent, which shall have duties described in this Section 1.10. Article II REPRESENTATIONS, WARRANTIES AND COVENANTS Section 2.01. Representations, Warranties and Covenants of Obligors. By its execution and delivery of a Series Supplement, each Obligor will be deemed to have made each of the following representations, warranties and covenants to the Trustee, the Noteholders of the related Series and any Series Support Provider for the related Series on which representations, warranties and covenants the Trustee relies in accepting the related Series Trust Estate in trust, on which the Noteholders of the related Series have relied in agreeing to purchase the related Notes and on which such Series Support Provider, if any, relies in agreeing to issue the related Series Support. Such representations, warranties and covenants are deemed to be made and affirmed on the 23 Series Closing Date for the related Series, and shall survive the date of the making or remaking of such representations and warranties. The covenants of each of the Obligors with respect to a Series shall continue until the Final Date of such Series. (a) Each Obligor represents and warrants, as to itself, that: (i) Existence and Power. Such Obligor is a legal entity duly organized, validly existing and in good standing under the laws of the State of its incorporation or formation (as set forth on Exhibit F to the related Series Supplement), and has all power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted. (ii) No Conflict. The execution, delivery and performance by such Obligor of this Master Agreement and the other Series Related Documents to which it is a party, are within its powers, have been duly authorized by all necessary action, do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Lien on assets of such Obligor or its Subsidiaries (except the interest conveyed to the Trustee); and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. Each of the Series Related Documents to which such Obligor is a party has been duly executed and delivered by such Obligor. (iii) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by such Obligor of this Master Agreement and the other Series Related Documents to which such Obligor is a party, except for such authorizations, approvals, actions, notices and filings as have already been obtained, taken or made in connection with Government Contracts. (iv) Binding Effect. Each of this Master Agreement and the other Series Related Documents to which such Obligor is a party constitutes the legal, valid and binding obligation of such Obligor, enforceable against each Obligor, jointly and severally, in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally or general equitable principles. (v) Compliance with Law. No practice, procedure or policy employed or proposed to be employed by such Obligor in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to 24 such Obligor which, if enforced, would have a material adverse effect on such Obligor, any Pledged Property or the collectibility or value thereof, or the ability of such Obligor to perform its obligations hereunder or under any Series Related Documents. (vi) Accuracy of Information. All information furnished in writing by such Obligor to the Trustee on or prior to the related Series Closing Date for purposes of or in connection with the Series Related Documents or any Pledge is true, accurate and complete in every material respect on the date such information is stated or certified, and all such information thereafter furnished by such Obligor to the Trustee will be, true, accurate and complete in every material respect, on the date such information is stated or certified. (vii) Good Title; Perfection. Immediately prior to each Pledge hereunder, such Obligor shall be the legal and beneficial owner of the Contracts subject to such Pledge and is either the owner or, with respect to Equipment valued at greater than $25,000, has taken or is taking all requisite steps to obtain on its behalf a first priority perfected security interest in, all Equipment related thereto and the Related Security with respect thereto, free and clear of any Lien except as created by this Master Agreement and the other Series Related Documents, and such Obligor has the legal right to Pledge the Contracts and the associated Collections and Related Security to the Trustee. (viii) No Proceedings. There are no proceedings or investigations pending or, to the best knowledge of such Obligor, threatened before any Governmental Authority (i) asserting the invalidity of the Series Related Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Series Related Documents, (iii) seeking any determination or ruling that, in the reasonable judgment of such Obligor, would materially and adversely affect the performance by such Obligor of its obligations under the Series Related Documents or (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of the Series Related Documents. (ix) Financing Statements. Such Obligor has not filed any financing statements with respect to the interests of the Obligors' Agent, Marlin Leasing Receivables IV LLC ("MLR IV LLC") or the Transferor in the Contracts under any names other than "Marlin Leasing Receivables Corp. IV," "Marlin Leasing Receivables IV LLC" or "Marlin Leasing Corp." (x) Investment Company Act. Such Obligor is not an "investment company" or an "affiliated person" of, or a "promoter" or "principal underwriter" for, an "investment company," in each case within the meaning of the Investment Company Act of 1940, as amended. 25 (xi) Solvency. Such Obligor is Solvent and is not in default under any mortgage, borrowing agreement or other instrument or agreement pertaining to indebtedness for borrowed money. (xii) Taxes. Such Obligor has filed all federal, state and local tax returns which are required to be filed by it and has paid all taxes and other governmental charges, including any assessments received by it, to the extent that such taxes have become due. (xiii) ERISA. Such Obligor is in compliance with ERISA and has not incurred and does not reasonably expect to incur any liabilities to the PBGC under ERISA in connection with any Plan or Multiemployer Plan or to contribute now or in the future in respect of any Plan or Multiemployer Plan. (b) Each Obligor covenants, as to itself, that: (i) Use of Proceeds. No proceeds of any sale of the Notes will be used (i) for a purpose which violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 13 or Section 14 of the Securities Exchange Act of 1934, as amended. (ii) Places of Business; State of Incorporation. Except in accordance with Section 3.05(b), such Obligor will not (x) move its chief executive office from 639 Isbell Road, Suite 390, Reno, Nevada 89509 to another location and/or maintain any Records at any other locations and (y) change its state and jurisdiction of incorporation or formation from the jurisdiction set forth on Exhibit F to the related Series Supplement. (iii) ERISA. Such Obligor shall not, and shall not cause or permit any Commonly Controlled Entity to, cause or permit to occur an event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA. Section 2.02. Representations, Warranties and Covenants of Servicer. The Servicer hereby makes the following representations, warranties and covenants to the Trustee, the Noteholders of the related Series and any Series Support Provider for the related Series on which representations, warranties and covenants the Trustee relies in accepting the related Series Trust Estate in trust and in authenticating the related Notes, on which the Noteholders of such Series have relied in purchasing their Notes and on which such Series Support Provider, if any, relies in agreeing to issue the related Series Support. Such representations, warranties and covenants shall be deemed to be made and affirmed on each Series Closing Date and shall survive the date of the making or remaking of such representations and warranties. Each of the Servicer's covenants shall continue until the Final Date of the last Outstanding Series. 26 (a) The Servicer represents and warrants, as to itself and its responsibilities, that: (i) Organization and Good Standing. The Servicer is a corporation duly organized, validly existing in good standing under the laws of the State of Delaware (or, if other than Marlin, in the applicable state of its incorporation), has the power to own its assets and to transact the business in which it is presently engaged, and had at all relevant times and now has the power, authority and legal right to service the related Series Trust Estate. (ii) Power and Authority. The Servicer has the power, authority and legal right to execute, deliver and perform this Master Agreement and the other Series Related Documents to which it is a party and the execution, delivery and performance of this Master Agreement and the other Series Related Documents to which it is a party have been duly authorized by the Servicer by all necessary corporate action. (iii) Binding Obligation. This Master Agreement and the other Series Related Documents to which the Servicer is a party (assuming due authorization, execution and delivery by each of the other parties hereto and thereto), constitute legal, valid and binding obligations of the Servicer, enforceable against the Servicer in accordance with their respective terms, except that (A) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws (whether statutory, regulatory or decisional) now or hereafter in effect relating to creditors' rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, whether in a proceeding at law or in equity. (iv) No Conflict. The execution, delivery and performance by the Servicer of this Master Agreement and the other Series Related Documents to which it is a party, are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any material agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Lien on any assets of the Servicer or its Subsidiaries, other than as contemplated by the Master Transfer Agreement (if Marlin is the Servicer making such representation and warranty) and this Master Agreement. (v) No Proceedings. There are no proceedings or investigations to which the Servicer, or any of the Servicer's Affiliates, is a party pending or, to the best of the Servicer's knowledge, threatened before any court or other Governmental Authority (A) asserting the invalidity of this Master Agreement or 27 any of the other Series Related Documents, (B) seeking to prevent the consummation of any of the transactions contemplated by this Master Agreement or any of the other Series Related Documents or (C) seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Master Agreement or any of the other Series Related Documents to which it is a party. (vi) Approvals. All approvals, authorizations, consents, orders or other actions of any Governmental Authority or any other Person required to be obtained or taken by, or on the part of, the Servicer in connection with the execution and delivery of this Master Agreement or any of the other Series Related Documents to which it is a party have been or will be taken or obtained on or prior to the date so required to be taken or obtained. (vii) Compliance with Law. No practice, procedure or policy employed or proposed to be employed by the Servicer in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to the Servicer which, if enforced, would have a material adverse effect on the Servicer or the ability of the Servicer to perform its obligations hereunder or under any Series Related Document. (viii) Information. Each certificate, information, exhibit, financial statement, document, book or record or report furnished by the Servicer to the Trustee, the Obligors, the Rating Agencies, any Noteholder or any Series Support Provider in connection with this Master Agreement, any Series Supplement, any Series Related Document or the transactions contemplated hereby is accurate in all material respects as of its date, when considered as a whole with other such documents, and no such document contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not materially misleading as of its date. (ix) Place of Business. The chief executive office of the Servicer is, as of the date hereof, and has been for the four months prior to the date hereof, at 124 Gaither Drive, Suite 170, Mount Laurel, NJ 08054. (x) Financing Statements. The Servicer has not filed any financing statements with respect to the interests of the Obligors' Agent, MLR IV LLC or the Transferor in the Contracts under any names other than "Marlin Leasing Receivables Corp. IV," "Marlin Leasing Receivables IV LLC" or "Marlin Leasing Corp." (xi) Event of Servicer Termination. To the best knowledge of the Servicer, there has not been an Event of Servicer Termination. (b) The Servicer, for itself and on behalf of each related Series Obligor, covenants as to the Pledged Property comprising each Series Trust Estate: 28 (i) Lien in Force. The Servicer shall not release or assign any Lien in favor of the Trustee on any Contract, item of Equipment or other Related Security related to any Contract in whole or in part, except as expressly permitted hereunder. (ii) Fulfill Obligation. The Servicer will duly fulfill and comply, in all material respects, with all obligations on the part of the "lessor" to be performed and fulfilled under or in connection with each Contract and all of the Servicer's other obligations to be fulfilled under or in connection with each Series Trust Estate. The Servicer will not amend, rescind, cancel or modify any Contract or any term or provision thereof, except as contemplated herein, and the Servicer will not do anything that would materially impair the rights of the Noteholders or any Series Support Provider with respect to any Series Trust Estate, except as contemplated herein. (iii) Books and Records. The Servicer (1) will (A) maintain its books and records separate from the books and records of any Obligor, (B) maintain bank accounts separate from those of any Obligor and (C) conduct its business in an office separate from that of any Obligor and (2) will not (X) take any action that would cause the dissolution or liquidation of any Obligor, (Y) guarantee (directly or indirectly), endorse or otherwise become contingently liable (directly or indirectly) for the obligations of any Obligor (except as expressly permitted hereunder) or (Z) institute against any Obligor, or join any other person in instituting against any Obligor, any case, proceeding or other action under any existing or future bankruptcy, insolvency or similar laws. Section 2.03. Representations and Warranties of Trustee. On the Closing Date, the Trustee represents and warrants to the Noteholders of the related Series, the Servicer, the Obligors and any Series Support Provider for the related Series as to itself and its responsibilities: (a) Organization and Good Standing. The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America; (b) Authorization. The Trustee has the power, authority and legal right to execute, deliver and perform this Master Agreement and the other Series Related Documents, and the execution, delivery and performance of this Master Agreement and the other Series Related Documents has been duly authorized by the Trustee by all necessary corporate action; (c) No Violation. The execution, delivery and performance by the Trustee of this Master Agreement and the other Series Related Documents (a) does not violate any provision of any law or any order, writ, judgment, or decree of any court, arbitrator, or governmental authority applicable to the Trustee or any of its assets, (b) does not violate any provision of the corporate charter or by-laws of the Trustee, (c) does 29 not result in the creation or imposition of any Lien on any properties included in the Series Trust Estate (other than the Lien created hereby) and (d) does not violate any provision of, or constitute, with or without notice or lapse of time, a default under, the provisions of any mortgage, indenture, contract, agreement, or other undertaking to which the Trustee is a party, which violation or default could reasonably be expected to materially and adversely affect the Trustee's performance or ability to perform its duties under this Master Agreement the other Series Related Documents or the transactions contemplated in this Master Agreement or the other Series Related Documents; (d) Governmental Authority. The execution, delivery and performance by the Trustee of this Master Agreement and the other Series Related Documents does not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency regulating the banking and corporate trust activities of the Trustee; and (e) Due Execution and Enforceability. This Master Agreement and the other Series Related Documents have been duly executed and delivered by the Trustee and constitutes the legal, valid, and binding agreement of the Trustee, enforceable in accordance with its and their respective terms, and the Trustee meets the requirements of Section 11.08 hereof. Article III PLEDGING THE TRUST ESTATE Section 3.01. Series Trust Estates. In order to secure the due and punctual payment of the principal of and interest on the Notes of the related Series and all other Series Secured Obligations of the related Series when and as the same shall become due and payable, whether as scheduled, by declaration of acceleration, prepayment or otherwise, according to the terms of this Master Agreement, the related Series Supplement and the related Notes, the related Series Obligors, pursuant to the related Series Supplement, shall pledge the related Series Trust Estate to the Trustee, all for the benefit of the Trustee for the benefit of the Holders of the Notes of the related Series and the other Series Secured Parties. Section 3.02. Preservation of Series Collateral. Subject to the rights, powers and authorities granted to the Trustee and the related Series Controlling Party herein and in the related Series Supplement, the related Series Obligors shall take all such action as is necessary and proper with respect to the related Series Trust Estate in order to preserve and maintain such Series Trust Estate. The Obligors will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such instruments of transfer or take such other steps or actions as may be necessary, or required by the Series Controlling Party, to perfect the security interests granted hereunder in the Series Trust Estate, to ensure that such security 30 interests rank prior to all other Liens and to preserve the priority of such security interests and the validity and enforceability thereof. Upon any delivery of any portion of any Series Trust Estate to the Trustee, the Obligors shall be obligated to execute such documents and perform such actions as are necessary to create in the Trustee for the benefit of the related Series Secured Parties a valid first Lien on, and valid and perfected first priority security interest in, such Series Trust Estate so delivered, free and clear of any other Lien, together with satisfactory assurances thereof, and to pay any reasonable costs incurred by any of the Series Secured Parties or otherwise in connection with such delivery. Section 3.03. Waiver of Stay or Extension Laws; Marshalling of Assets. Each Obligor covenants, to the fullest extent permitted by applicable law, that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law wherever enacted, now or at any time hereafter in force, in order to prevent or hinder the enforcement of this Master Agreement, any Series Supplement or any part hereof or thereof, to the fullest extent permitted by applicable law, for itself and all who may claim under it, hereby waives the benefit of all such laws, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Each Obligor, for itself and all who may claim under it, waives, to the fullest extent permitted by applicable law, all right to have any Series Trust Estate or any portion thereof marshaled upon any foreclosure or other disposition thereof. Section 3.04. Noninterference, Etc. No Obligor shall (i) waive or alter any of its rights under any portion of any Series Trust Estate (or any agreement or instrument relating thereto) without the prior written consent of the Series Controlling Party; or (ii) take any action, or fail to take any action, if such action or failure to take action will interfere with the enforcement of any rights under the Series Related Documents. Section 3.05. Obligor Changes. (a) Change in Name, Structure, Jurisdiction of Formation, Etc. No Obligor shall change its name, identity, jurisdiction of formation or incorporation or corporate structure unless it shall have given the Trustee at least 30 days' prior written notice thereof and shall have effected any necessary or appropriate filings of financing statements or amendments thereto in order to maintain the Trustee's first priority perfected security interest in each Series Trust Estate. (b) Relocation of the Obligors. No Obligor shall change its principal executive office or its jurisdiction of formation or incorporation unless it gives the Trustee at least 30 days' prior written notice of any relocation of its principal executive office or its jurisdiction of formation or incorporation. If any Obligor so relocates its principal executive office or principal place of business, such Obligor shall give prior 31 written notice thereof to the Trustee and shall effect whatever appropriate recordations and filings are necessary in order to maintain the Trustee's first priority, perfected security interest in each related Series Trust Estate. Section 3.06. Limited Recourse to Obligors. (a) Notwithstanding anything to the contrary contained herein, the Trustee and each Holder by such Holder's acceptance of a Note hereunder agree that the obligations of the related Obligors hereunder, including, without limitation, the obligations of the related Obligors in respect of the Notes shall be payable solely from the related Series Trust Estate (including any Crossover Amounts included in such Series Trust Estate), and that neither the Trustee nor any Holder shall look to any other Property or assets of such Obligors, or to the Property or assets of any other Obligor, including, specifically but without limitation, the Series Trust Estate with respect to any other Series. No recourse shall be had for the payment of any amount owing in respect of any Obligors' obligations hereunder or for any payment obligation or claim arising out of or based on this Master Agreement against any Affiliate, agent, stockholder, employee, officer, director or incorporator of such Obligor. (b) The Obligors' obligation to pay certain fees or expenses under, or claims arising out of, this Master Agreement shall be limited to moneys available to such Obligors from the related Series Trust Estate in accordance with the payment priority set forth in the related Series Supplement, and to the extent such funds are insufficient to pay such fees or expenses, it shall not constitute a claim against the Obligors. Section 3.07. Authorization of Actions to Be Taken by the Trustee. (a) The Trustee may take all actions it deems necessary or appropriate in order to enforce or exercise its rights under each Series Supplement in accordance with and subject to the provisions thereof. Subject to the provisions thereof, the Trustee shall have power to institute and to maintain suits and proceedings to prevent any impairment of the related Series Trust Estate by any acts which may be unlawful or in violation of the related Series Supplement or this Master Agreement, and suits and proceedings to preserve or protect its interests and the interests of the Holders of the related Notes and any Series Support Provider in the related Series Trust Estate (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security hereunder or be prejudicial to the interests of such Holders, any such Series Support Provider or the Trustee). (b) The Trustee is authorized to receive any funds for the benefit of the Holders and any Series Support Provider distributed under the related Series Supplement and to make further distributions of such funds to the Holders of the related Notes and any Series Support Providers according to the provisions of such Series Supplement. 32 Section 3.08. Termination of Security Interests. Upon the payment in full of all Series Secured Obligations, the Trustee shall, at the written request of the related Obligors and with the written consent of the Series Support Provider, if any, deliver such certificates, notices, and instruments stating that all Series Secured Obligations have been paid in full, and releasing the Trustee's Lien on the related Series Trust Estate with respect to such Series Secured Obligations. Section 3.09. Filing; Maintenance of Contract Files. On or prior to the initial Pledge Date with respect to a Series, the related Series Obligors shall, and shall cause the Transferor to, file blanket UCC-1 financing statements with respect to the related Series Trust Estate (which, in the case of any UCC-1 Financing Statement filed by such Obligors against the Transferor, shall be assigned by such Obligors to the Trustee). Notwithstanding the foregoing, it is expressly agreed that no such UCC-1 Financing Statement shall be filed with respect to any particular piece of Equipment, except to the extent then required by the Credit and Collection Policy, or as may otherwise be required in the related Transfer Agreement Supplement or any applicable Series Supplement. On or prior to each Pledge Date the related Obligors shall, and shall cause the Transferor to, mark their respective internal records (including, in the case of the Contractor, its electronic ledger) to reflect (x) the sale and conveyance of the related Pledged Property from the Transferor to the related Obligors and (y) the Pledge of the related Pledged Property to the Trustee. Section 3.10. Costs and Expenses. The related Obligors agree to pay all reasonable costs and disbursements (and in the event the related Obligors are unable to pay such costs and disbursements, the Servicer shall pay such amounts) in connection with the perfection and the maintenance of perfection and priority, as against all third parties, of the Trustee's rights, title and interests in and to each Series Trust Estate (other than the Equipment, except as otherwise expressly agreed to herein). Article IV NOTE FORMS Section 4.01. Forms Generally. The Notes of each Series shall be in substantially the form set forth in the related Series Supplement, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Master Agreement or the related Series Supplement, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. 33 The Notes of any Series or Class may be issued in bearer form ("Bearer Notes") with attached interest coupons and any other applicable coupon (collectively, the "Coupons") or in fully registered form (but which may be uncertificated) ("Registered Notes") and shall, to the extent represented by physical certificates, be substantially in the form of the exhibits with respect thereto attached to the applicable Series Supplement. The Trustee's certificate of authentication shall be in substantially the form set forth in this Article. The Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner (provided that if any Notes are to be listed on any securities exchange, then in any such manner as may be permitted by the rules of any such securities exchange, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes). Section 4.02. Form of Trustee's Certificate of Authentication. Except as provided in Section 11.13, the Trustee shall authenticate each Note with a certificate of authentication in substantially the following form: "This is one of the Notes designated herein referred to in the within-mentioned Master Agreement and the within-mentioned Series Supplement thereto. WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By ________________________ Authorized Signatory" Section 4.03. Securities Legend. Each Unregistered Note issued hereunder will contain the following legend limiting sales to "Qualified Institutional Buyers" within the meaning of Rule 144A under the Securities Act and to "Qualified Purchasers" as defined in Section 3(c)(7) of the Investment Company Act of 1940: THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE SECURITIES ARE "RESTRICTED SECURITIES" THAT 34 HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE OBLIGORS AND THEIR AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION AND (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED PURCHASER WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. Article V THE NOTES Section 5.01. Amount Limited; Issuable in Series. The aggregate principal amount of Notes which may be authenticated and delivered and Outstanding at any time under this Master Agreement is not limited; provided that any Series Supplement may so limit the aggregate principal amount of Notes of the related Series. The Notes shall be issued in one or more Series, and may be issued in Classes and/or Tranches within a Series (and Tranches within a Class). No Series of Notes shall be issued under this Master Agreement unless (i) such Notes have been authorized pursuant to a Series Supplement, (ii) all conditions precedent to the issuance thereof, as specified in the related Series Supplement, shall have been satisfied and (iii) confirmation is obtained from the Rating Agencies that such issuance will not result in a change in any Facility Shadow Rating. All Notes of each Series issued under this Master Agreement shall be in all respects equally and ratably entitled to the benefits hereof and secured by the related Series Trust Estate without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Master Agreement and the related Series Supplement. 35 Section 5.02. Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the related Obligors or the Obligors' Agent by any of its Authorized Officers. The signature of any of these officers on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at the time of execution of such Notes the proper officers of the Obligors or the Obligors' Agent shall bind the related Obligors, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Master Agreement and the related Series Supplement, and upon satisfaction of all the conditions set forth in the related Series Supplement, the Obligors' Agent may deliver Notes of the related Series (including Notes of any Class or Tranche within such Series) executed by the Obligors' Agent to the Trustee or Authenticating Agent for authentication, together with an Obligors' Order for the authentication and delivery of such Notes and an Officer's Certificate that all conditions precedent for such issuance have been satisfied, and the Trustee in accordance with the Obligors' Order shall authenticate and make available for delivery such Notes. Each Note shall be dated the date of its authentication. No Note shall be entitled to any benefit under this Master Agreement or any Series Supplement or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Master Agreement and the related Series Supplement. Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Obligors' Agent, and the Obligors' Agent shall deliver such Note to the Trustee or the Authenticating Agent for cancellation as provided in Section 5.08 together with a written statement (which need not comply with Section 1.02 and need not be accompanied by an Opinion of Counsel) stating that such Note has never been issued and sold by the Obligors' Agent, for all purposes of this Master Agreement such Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Master Agreement. Section 5.03. Temporary Notes. Pending the preparation of definitive Notes of any Series (or of any Class or Tranche within a Series), the Obligors' Agent may execute, and upon receipt of an Obligors' Order the Trustee or the Authenticating Agent shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, reproduced or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive 36 Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes of any Series (or of any Class or Tranche within a Series) are issued, the Obligors' Agent will cause definitive Notes of that Series (or Class or Tranche) to be prepared without unreasonable delay. After the preparation of definitive Notes of such Series (or Class or Tranche), such temporary Notes shall be exchangeable for definitive Notes of such Series (or Class or Tranche) upon surrender of the temporary Notes at the office or agency of the Obligors. Upon surrender for cancellation of any one or more temporary Notes the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery, in exchange therefor a like principal amount of definitive Notes of the same Series (or Class or Tranche) and tenor of authorized denominations. Until so exchanged, the temporary Notes of any Series (or Class or Tranche) shall in all respects be entitled to the same benefits under this Master Agreement and the related Series Supplement as definitive Notes of such Series (or Class or Tranche). Section 5.04. Registration, Registration of Transfer and Exchange, Transfer Restrictions. The Obligors' Agent shall cause to be kept a register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Obligors' Agent shall provide for the registration of Notes and of transfers of the Notes. The Trustee is hereby initially appointed "Note Registrar" for the purpose of registering Notes and transfers of the Notes as herein provided. Upon any resignation of any Note Registrar, the Obligors' Agent shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of the Note Registrar. If a Person other than the Trustee is appointed by the Obligors' Agent as Note Registrar, the Obligors' Agent will give the Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Registrar, and the Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Trustee shall have the right to conclusively rely upon a certificate executed on behalf of the Note Registrar by an executive officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and number of such Notes. Upon surrender for registration of transfer of any Note at the office or agency of the Obligors, the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like tenor and aggregate principal amount. At the option of a Registered Noteholder, Registered Notes (of the same Series and Class) may be exchanged for other Registered Notes of authorized denominations upon surrender of the Registered Notes to be exchanged at any such office or agency; Registered Notes, including Registered Notes received in exchange for Bearer Notes, may not be exchanged 37 for Bearer Notes. At the option of the Holder of a Bearer Note, subject to applicable laws and regulations, Bearer Notes may be exchanged for other Bearer Notes or Registered Notes (of the same Series and Class) of authorized denominations upon surrender of the Bearer Notes to be exchanged at an office or agency of the Note Registrar located outside the United States. Each Bearer Note surrendered pursuant to this Section shall have attached thereto all unmatured Coupons; provided that any Bearer Note so surrendered after the close of business on the Record Date preceding the relevant payment date after the expected final payment date need not have attached the Coupon relating to such payment date (in each case, as specified in the applicable Series Supplement). Whenever any Notes are so surrendered for exchange, the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery, the Notes which the Holder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the related Obligors, evidencing the same debt, and entitled to the same benefits under this Master Agreement and the related Series Supplement, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Obligors' Agent or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Obligors' Agent, the Trustee and the Note Registrar duly executed by the Holder thereof or his attorney duly authorized in writing with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in the City of New York or the city in which the Corporate Trust Office is located, or by a member firm of a national securities exchange, and such other documents as the Trustee may require. No service charge shall be made for any registration of transfer or exchange of Notes, but the Obligors' Agent or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 5.03 or 5.05 not involving any transfer. No Holder of an Unregistered Note shall transfer its Note, unless such transfer is made (x) (i) in accordance with Rule 144A of the Securities Act or (ii) pursuant to an exemption from registration provided by Rule 144 under the Securities Act (if available) and the registration and qualification requirements under applicable state securities laws and (y) to a qualified purchaser within the meaning of to Section 3(c)(7) of the Investment Company Act of 1940. No Note may be held by more than 99 Holders. The preceding provisions of this Section 5.04 notwithstanding, the Obligors' Agent shall not be required to make, and the Note Registrar need not register transfers or exchanges of Notes selected for redemption or of any Note for a period of 15 days preceding the due date for any payment with respect to such Note. 38 Section 5.05. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note (together, in the case of Bearer Notes, with all unmatured Coupons (if any) appertaining thereto) is surrendered to the Trustee, the Obligors' Agent shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of the same Series and Tranche, of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Obligors' Agent and the Trustee and the related Series Support Provider, if any (unless a Series Support Provider Default shall have occurred and be continuing) (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by them to hold each of them and any agent of any of them harmless, then, in the absence of notice to the Obligors' Agent, the Trustee or the related Series Support Provider that such Note has been acquired by a bona fide purchaser, the Obligors' Agent shall execute and upon its request the Trustee shall authenticate and make available for delivery (in the case of Bearer Notes, outside the United States), in exchange for or in lieu of any such destroyed, lost or stolen Note, a new Note (of the same Series and Class) of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable in full, the Obligors' Agent in its discretion may, instead of issuing a new Note, cause the related Obligors to pay such Note. Upon the issuance of any new Note under this Section, the Obligors' Agent or the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the reasonable fees and expenses of the Trustee and its counsel) connected therewith. Every new Note of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the related Obligors, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Master Agreement and the related Series Supplement equally and proportionately with any and all other Notes of the same Series duly issued hereunder and under the related Series Supplement. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. Section 5.06. Final Distribution. (a) The Servicer shall give the Trustee and the Series Support Provider, if any, at least 30 days prior notice of the Settlement Date on which the Noteholders of any Series or Class may surrender their Notes for payment of the final distribution on and cancellation of such Notes. Not later than the fifth Business Day of 39 the month in which the final distribution in respect of such Series or Class is payable to Noteholders, the Trustee (based solely on the information provided to the Trustee by the Servicer) shall provide notice to the Noteholders of such Series or Class specifying (i) the date upon which final payment of such Series or Class will be made upon presentation and surrender of Notes of such Series or Class at the office or offices therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such payment date is not applicable, payments being made only upon presentation and surrender of such Notes at the office or offices therein specified (which, in the case of Bearer Notes, shall be outside the United States). The Trustee shall give such notice to the Note Registrar and the Paying Agent (if it is not acting in either capacity) at the time such notice is given to Noteholders. (b) Notwithstanding a final distribution to the Noteholders of any Series or Class, except as otherwise provided in this paragraph, all funds then on deposit in the applicable Facility Account and any Series Account allocated to such Noteholders shall continue to be held in trust for the benefit of such Noteholders and the Paying Agent or the Trustee shall pay such funds to such Noteholders upon surrender of their Notes. In the event that all such Noteholders shall not surrender their Notes for cancellation within six months after the date specified in the notice from the Trustee described in paragraph (a), the Trustee shall give a second notice to the remaining such Noteholders to surrender their Notes for cancellation and receive the final distribution with respect thereto (which surrender and payment, in the case of Bearer Notes, shall be outside the United States). If within one year after the second notice all such Notes shall not have been surrendered for cancellation, the Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining such Noteholders concerning surrender of their Notes, and the cost thereof shall be paid out of the funds in the Series Account held for the benefit of the Noteholders. The Trustee and the Paying Agent shall upon written request pay to the related Obligors any moneys held by them for the payment of principal or interest that remains unclaimed for two years. After payment to the related Obligors, Noteholders entitled to the money must look to the related Obligors for payment as general creditors unless an applicable abandoned property law designates another Person. (c) Any notice required or permitted to be given to a Holder of Registered Notes shall be given by first-class mail, postage prepaid, at the address of such Holder as shown in the Note Register. No notice shall be required to be mailed to a Holder of Bearer Notes or Coupons but shall be given as provided below. Any notice so mailed within the time prescribed in this Master Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder receives such notice. In addition, (a) if and so long as any Series or Class is listed on the Luxembourg Stock Exchange and such Exchange shall so require, any notice to Noteholders shall be published in a newspaper of general circulation in Luxembourg within the time period prescribed in this Master Agreement and (b) in the case of any Series or Class with respect to which any Bearer Notes are outstanding, any notice required or permitted to be given to Noteholders of such Series or Class shall be published in an authorized newspaper within the time period prescribed in this Master Agreement. 40 Section 5.07. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the related Obligors, the Obligors' Agent, the related Series Support Provider, the Trustee and any agent of any of them may treat (a) the Person in whose name any Registered Note is registered as the owner of such Registered Note for the purpose of receiving distributions pursuant to the terms of the applicable Series Supplement and for all other purposes whatsoever, and (b) the bearer of a Bearer Note or Coupon as the owner of such Bearer Note or Coupon for the purpose of receiving distributions pursuant to the terms of the applicable Series Supplement and for all other purposes whatsoever; and none of the Obligors, the Obligors' Agent, the related Series Support Provider, the Trustee nor any agent of any of them, shall be affected by notice to the contrary. Section 5.08. Cancellation. All Notes surrendered for payment, prepayment in whole or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by the Trustee. The Obligors' Agent may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Obligors' Agent may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Notes previously authenticated hereunder which the Obligors' Agent has not issued and sold, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Master Agreement. All cancelled Notes held by the Trustee shall be held or destroyed by the Trustee in accordance with its standard retention or disposal policy as in effect at the time. Section 5.09. Book-Entry Notes. Unless otherwise specified in the related Series Supplement for any Series or Class, the Notes of each Series, upon original issuance, shall be issued in the form of one or more typewritten Notes representing the Book-Entry Notes, to be delivered to the Clearing Agency specified in the applicable Series Supplement, by, or on behalf of, the related Obligors. The Notes shall initially be registered on the Note Register in the name of the Clearing Agency or its nominee, and no Noteholder will receive a definitive certificate representing such Noteholder's interest in the Notes, except as provided in Section 5.11. Unless and until definitive, fully registered Notes ("Definitive Notes") have been issued to the applicable Noteholders pursuant to Section 5.11 or as otherwise specified in any such Series Supplement: (a) the provisions of this Section shall be in full force and effect; (b) the related Obligors, the Servicer and the Trustee may deal with the Clearing Agency and the Clearing Agency Participants for all purposes (including the making of distributions) as the authorized representatives of the respective Noteholders; 41 (c) to the extent that the provisions of this Section conflict with any other provisions of this Master Agreement, the provisions of this Section shall control; and (d) the rights of the respective Noteholders shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Noteholders and the Clearing Agency or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Notes are issued pursuant to Section 5.11, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the related Notes to such Clearing Agency Participants. For purposes of any provision of this Master Agreement requiring or permitting actions with the consent of, or at the direction of, Noteholders evidencing a specified percentage of the aggregate Maximum Series Limit of Notes, such direction or consent may be given by Noteholders (acting through the Clearing Agency and the Clearing Agency Participants) owning Notes evidencing the requisite percentage of the Maximum Series Limits. Section 5.10. Notices to Clearing Agency. Whenever any notice or other communication is required to be given to Noteholders of any Series or Class with respect to which Book-Entry Notes have been issued, unless and until Definitive Notes shall have been issued to the related Noteholders, the Trustee shall give all such notices and communications to the applicable Clearing Agency. Section 5.11. Definitive Notes. (a) If Book-Entry Notes have been issued with respect to any Series or Class and (i) the Obligors' Agent advises the Trustee that the Clearing Agency is no longer willing or able to discharge properly its responsibilities under the Depository Agreement with respect to such Series or Class and the Trustee or the Obligors' Agent is unable to locate a qualified successor or (ii) the Obligors' Agent, at its option, advises the Trustee that it elects to terminate the book-entry system with respect to such Series or Class through the Clearing Agency, then upon surrender to the Trustee of any such Notes by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration of Definitive Notes, the Obligors' Agent shall execute and the Trustee shall authenticate and the Note Registrar shall deliver such Definitive Notes. Neither the Obligors' Agent nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. The Trustee shall recognize the Holders of such Definitive Notes as Noteholders hereunder. (b) If a Series Supplement so provides, the Notes of such Series or any Class thereof will be evidenced by Definitive Notes. 42 (c) The holding of Bearer Notes shall be proved by the production of such Bearer Notes or by a certificate, satisfactory to the Obligors' Agent, executed by any bank, trust company or recognized securities dealer, wherever situated, satisfactory to the Obligors' Agent. Each such certificate shall be dated and shall state that on the date thereof a Bearer Note bearing a specified serial number was deposited with or exhibited to such bank, trust company or recognized securities dealer by the Person named in such certificate. Any such certificate may be issued in respect of one or more Bearer Notes specified therein. The holding by the Person named in any such certificate of any Bearer Note specified therein shall be presumed to continue for a period of one year from the date of such certificate unless at the time of any determination of such holding (i) another certificate bearing a later date issued in respect of the same Bearer Note shall be produced, (ii) the Bearer Note specified in such certificate shall be produced by some other Person or (iii) the Bearer Note specified in such certificate shall have ceased to be outstanding. The appointment of any proxy shall be proved by having the signature of the Person executing the proxy guaranteed by any bank, trust company or recognized securities dealer satisfactory to the Trustee. Article VI ADMINISTRATION AND SERVICING OF THE TRUST ESTATE Section 6.01. Retention of Servicer; Responsibilities of Servicer. (a) The Obligors hereby appoint the Servicer, and the Servicer hereby accepts such appointment, for the purpose of administering and servicing each Series Trust Estate; provided, however, that the Servicer shall administer and service each Series Trust Estate materially and only in conformance with the terms of this Master Agreement and shall take no action to affect adversely the interests of the Trustee, the Noteholders or any Series Support Provider in any Series Trust Estate. In consideration of such retention, the Obligors hereby agree to pay to the Servicer the Servicer Fee, such Servicer Fee to be paid as provided in each Series Supplement and none of the Trustee, any Noteholder or any Series Support Provider shall have any responsibility for the payment of such fee. (b) The Servicer, for the benefit of the Trustee, the Noteholders and any Series Support Provider, shall be responsible for managing, servicing and administering each Series Trust Estate, enforcing and making collections on the Contracts, any Insurance Policies and any Related Security and enforcing any security interest in each item of Equipment, each in accordance with the standards and procedures set forth in this Master Agreement. The Servicer's responsibilities shall include collecting and posting of all payments, responding to inquiries of Users, investigating delinquencies, applying the Security Deposits, accounting for collections and furnishing monthly and annual statements to the Trustee with respect to each Series Trust Estate and distributions to be made hereunder, making Servicer Advances to the extent required by a Series Supplement, providing appropriate Federal income tax information to the Trustee for use in providing information to the Noteholders, collecting and remitting sales and 43 property taxes on behalf of taxing authorities and maintaining the perfected first priority security interest of the Trustee in each Series Trust Estate. Subject to the terms of this Section 6.01 and Section 6.02 of this Master Agreement, the Servicer shall have full power and authority, acting at its sole discretion, to do any and all things in connection with such managing, servicing, administration, enforcement and collection of the Contracts and the other property comprising each Series Trust Estate that it may deem necessary or desirable, including the prudent delegation of such responsibilities. Without limiting the generality of the foregoing, the Servicer shall, and is hereby authorized and empowered by the Obligors and the Trustee, subject to Section 6.02 hereof, to execute and deliver (on behalf of itself, the Noteholders, the Trustee or any of them) any and all instruments of satisfaction or cancellation, or of release or discharge and all other comparable instruments, with respect to the Contracts and the other property comprising each Series Trust Estate in accordance with (and to the extent permitted pursuant to) Section 6.11. The Servicer may also, for itself and on behalf of the Obligors, in the Servicer's sole discretion, waive any prepayment charge, late payment charge or penalty, or any other Servicing Charges that may become due from any User in the ordinary course of servicing any Contract. The Trustee shall execute and deliver any powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder as may be prepared by the Servicer, at the Servicer's expense, and delivered to the Trustee for execution and delivery. The Trustee is not responsible for any legal insufficiencies in any such powers of attorney or other documents. (c) The Servicer shall conduct the management, servicing, administration, collection or enforcement actions of or in connection with each Series Trust Estate in the following manner: (i) The Servicer may sue to enforce or collect upon Contracts as agent for the Obligors and the Trustee. If the Servicer elects to commence a legal proceeding to enforce a Contract, the act of commencement shall be deemed to be an automatic assignment of the Contract to the Servicer for purposes of collection only. If, however, in any enforcement suit or legal proceeding, it is held that the Servicer may not enforce a Contract on the ground that it is not a real party in interest or a holder entitled to enforce the Contract, then the related Obligor(s) and/or the Trustee shall, at the Servicer's written request and upon receipt from the Servicer of satisfactory indemnity, take such steps as the Servicer deems necessary to enforce the Contract, including bringing suit in its name or the names of the related Obligor(s) and/or the Trustee and/or the related Noteholders; (ii) The Servicer shall exercise any rights of recourse against third parties that exist with respect to any Contract in accordance with the Servicer's usual practice. In exercising recourse rights, the Servicer is authorized on the Trustee's behalf to reassign the Contract to the person against whom recourse exists to the extent necessary, and at the price set forth in the document creating the recourse. The Servicer will not reduce or diminish such recourse rights, except to the extent that it exercises such rights; 44 (iii) The Servicer may grant to the User under any Contract any rebate, refund or adjustment that the Servicer in good faith believes is required because of the Prepayment in full of such Contract; provided, however, that the Servicer will not permit any rescission or cancellation of any Contract or take any action with respect to any Contract which would materially impair the rights of the Trustee in the Contract or the proceeds thereof; (iv) In the event that the Servicer acquires title to any item of Equipment in the enforcement of any Contract, the Servicer shall use its best efforts to sell or otherwise dispose promptly of such item of Equipment, consistent with the standard of care set forth in Section 6.02 hereof; and (v) The Servicer may not allow an offset of the amount of any Security Deposit against any Scheduled Payment or Booked Residual under such Contract, except as expressly permitted in Section 6.14 hereof. Section 6.02. Standard of Care. In managing, administering and servicing each Series Trust Estate and enforcing and making collections on the Contracts and any Related Security and Insurance Policies related to the Contracts pursuant to this Master Agreement, the Servicer will exercise that degree of skill and care consistent with that which the Servicer customarily exercises with respect to similar contracts owned or serviced by it. The Servicer shall comply with the Credit and Collection Policy and with all applicable Federal and State laws and regulations; shall maintain all State and Federal licenses and franchises necessary for it to perform its servicing responsibilities hereunder and thereunder; and shall not materially impair the rights of the Trustee, the Noteholders or any Series Support Provider in any Contracts or payments thereunder. The Servicer shall comply with all applicable Requirements of Law, the noncompliance with which would, individually or in the aggregate, materially and adversely affect the ability of the Servicer to perform its obligations under this Master Agreement, the related Series Supplements or the related Series Related Documents. Section 6.03. Credit and Collection Policy. The Servicer shall not amend or modify the provisions of the Credit and Collection Policy if such amendment or modification would, in the reasonable good faith business judgment of the Servicer, materially and adversely affect the interests of any Noteholder, the Trustee, or any Series Support Provider, without first obtaining the prior written consent of the Series Controlling Party of each affected Series. Section 6.04. Maintenance of Interest in the Trust Estate. The Servicer shall, in accordance with customary servicing procedures and at its own expense, use its best efforts to maintain perfection and priority of the Trustee's interest in each Series Trust Estate (other than with respect to the Equipment (unless otherwise required herein) and other than with respect to the Pledged Property removed 45 from the Trust Estate pursuant to Section 6.11, 6.12 or 6.15 hereof). In connection with enforcing a Charged-Off Contract, the Servicer shall prepare, the related Obligor shall (and, to the extent necessary, shall cause the Transferor to) execute and deliver to the Servicer, and the Servicer shall file any necessary UCC financing statements and/or amendments naming the Trustee as secured party with respect to the related Equipment. Section 6.05. Servicing Compensation; Payment of Certain Expenses by Servicer. (a) As compensation for its activities, the Servicer shall be entitled to receive the Servicer Fee in accordance with this Section 6.05 and the Series Supplements. The monthly Servicer Fee shall be payable to the Servicer, in arrears for each Collection Period, on the Settlement Date in respect of such Collection Period. The Servicer Fees shall be payable to the Servicer solely to the extent amounts are available for distribution pursuant to Section 7.02 hereof and the Series Supplements; provided, that in accordance with such provisions, any such Servicer Fees not paid when due as a result of there not being sufficient available funds therefor shall be payable on any future Settlement Dates to the extent amounts are then available for the payment thereof. (b) The Servicer shall be required to pay all expenses incurred by the Servicer in connection with its activities hereunder, including, without limitation, fees and disbursements of the Independent Accountants, taxes imposed on the Servicer (but excluding any sales taxes or other taxes imposed on any User, any Broker, the Obligors, the Transferor, the Trustee, any Noteholder, or any other Person), expenses incurred in connection with distributions and reports to Noteholders and all other fees and expenses not expressly stated hereunder to be for the account of the Obligors. (c) In connection with any transfer of the servicing obligations to a successor Servicer in accordance with Section 9.02 hereof, the Back-up Servicer shall be entitled to reimbursement of Transition Costs as provided in each Series Supplement. Section 6.06. Servicer's Certificate. Not later than the time specified in the related Series Supplement, the Servicer shall deliver to the Obligors' Agent, the Trustee and any Series Support Provider a Servicer's Certificate containing the information required by the related Series Supplement, with respect to the related Series Trust Estate, Collection Period and Settlement Date. Two Business Days prior to each Determination Date, the Servicer shall deliver to the Back-up Servicer and any Series Support Provider a Computer Tape in a format acceptable to the Back-up Servicer and any Series Support Provider containing the information from which the Servicer prepared the Servicer's Certificate, as well as any additional information reasonably requested by the Back-up Servicer prior to such Determination Date. Section 6.07. Annual Statement as to Compliance. The Servicer will deliver to the Obligors' Agent, the Trustee and each Series Support Provider, not later than 90 days after the end of each fiscal year, an 46 Officer's Certificate signed by a Servicing Officer, dated as of the last day of such fiscal year, stating that (a) a review of the activities of the Servicer during the preceding 12-month period and of the Servicer's performance under this Master Agreement has been made under such Servicing Officer's supervision and (b) nothing has come to such Servicing Officer's attention to indicate that an Event of Servicer Termination (or an event which with the giving of notice (other than pursuant to Section 9.01(a)(iv)) or passage of time, or both, would constitute an Event of Servicer Termination) hereunder has occurred and is continuing on such last day of such fiscal year or, if an Event of Servicer Termination or such other event has so occurred and is continuing, specifying each such Event of Servicer Termination or such other event known to such Servicing Officer and the nature and status thereof, and the steps, if any, necessary to remedy such Event of Servicer Termination or such other event. Section 6.08. Financial Statements and Independent Accountant's Servicing Certificate Review. (a) The Servicer shall, not later than 90 days after the end of each fiscal year, deliver to the Trustee, the Obligors' Agent and each Series Support Provider, a copy of the Servicer's annual audited financial statements for such fiscal year, audited by a firm of nationally recognized independent certified public accountants (within the meaning of the Securities Act) (which, in the case of Marlin, shall be the Independent Accountant). (b) The Servicer shall, within 45 days after the end of each of the first three calendar quarters of the Servicer's fiscal year, deliver to the Obligors' Agent, the Trustee and each Series Support Provider, quarterly, unaudited financial statements of the Servicer for such calendar quarter. (c) The Servicer shall inform the Obligors' Agent, the Trustee and each Series Support Provider in writing of the Servicer's fiscal year and any change in such fiscal year. (d) On or before March 31 of each calendar year, beginning with March 31, 2002, the Servicer shall cause a firm of nationally recognized independent certified public accountants (who may also render other services to the Servicer) to furnish a report (addressed to the Trustee) to the Trustee, the Servicer and each Series Support Provider to the effect that they have, for the one-year period ending on the preceding December 31, applied certain procedures agreed upon with the Servicer to compare the mathematical calculations of certain amounts set forth in the Servicer's Certificates delivered pursuant to Section 6.06 hereof during the period covered by such report with the Servicer's computer reports which were the source of such amounts and that on the basis of such agreed-upon procedures and comparison, such accountants are of the opinion that such amounts are in agreement, except for such exceptions as they believe to be immaterial and such other exceptions as shall be set forth in such statement. In the event such independent certified public accountants require the Trustee to agree to the procedures to be performed by such firm in any of the reports required to be prepared 47 pursuant to this Section 6.08, the Servicer shall direct the Trustee in writing to so agree; it being understood and agreed that the Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Servicer, and the Trustee has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Section 6.09. Access to Certain Documentation and Information Regarding the Pledged Property. (a) The Servicer and the Obligors shall each provide the Trustee, and/or any of the Trustee's duly authorized representatives, attorneys or accountants access to any and all documentation regarding each Series Trust Estate (including the List of Contracts) that the Servicer or the Obligors, as the case may be, may possess, such access being afforded without charge but only upon reasonable request and during normal business hours, so as not to interfere unreasonably with the Servicer's or any Obligor's, as the case may be, normal operations or customer or employee relations, at such offices of the Servicer or such Obligor, as the case may be, designated by the Servicer or an Obligor, respectively. (b) The Servicer shall at all times during the term hereof either (x) keep available in physical form for inspection by the Trustee, or any of the Trustee's duly authorized representatives, attorneys or accountants a list of all Contracts then held as a part of each Series Trust Estate, together with a reconciliation of such list to the List of Contracts and each of the Servicer's Certificates, indicating the cumulative removals and additions of Contracts from such Series Trust Estate or (y) maintain electronic facilities which allow such a list of leases and reconciliation to be generated. (c) The Servicer will maintain accounts and records as to each respective Contract serviced by the Servicer that are accurate and sufficiently detailed so as to permit (i) the reader thereof to know as of the most recent Calculation Date the status of such Contract, including payments and recoveries made and payments owing (and the nature of each), and (ii) reconciliation between payments or recoveries on (or with respect to) each Contract and the amounts from time to time deposited in the applicable Facility Account in respect of such Contract. (d) The Servicer will maintain its computerized accounts and records so that (i) from and after the time of Pledge hereunder of each Contract to the Trustee, the Servicer's accounts and records (including any backup computer archives) that refer to any Contract indicate clearly that the Contract is part of a separate and distinct Series Trust Estate and (ii) the information relating to such Contracts can be recreated in the event of the destruction of the originals. Indication of a Contract being part of a Series Trust Estate will be deleted from or modified on the Servicer's accounts and records when, and only when, a Release Event has occurred with respect to such Contract. (e) Nothing in this Section 6.09 shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Brokers or Users, and the failure, as a result of such obligation of the 48 Servicer, to provide access as provided in this Section 6.09 shall not constitute a breach of this Section 6.09. (f) No person entitled to receive copies of such reports or tapes shall disclose the information therein to any Person, except such disclosures as are required upon appointment of a successor Servicer or by law and except that the Servicer consents to the disclosure of any material nonpublic information with respect to it (i) to any other such party, (ii) to any prospective or actual assignee or participant of any of them, (iii) by the Trustee to any Rating Agency, commercial paper dealer or Series Support Provider, or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Noteholders' Agent provides managerial services or acts as the administrative agent and (iv) to any officers, directors, employees, outside accountants and attorneys of any of the foregoing. Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known, other than as the result of a disclosure by a party hereto in violation of the foregoing, or information obtained by the Trustee from sources other than the Servicer or an Obligor provided that the source of such information was not bound hereunder or by a confidentiality agreement or other contractual, legal or fiduciary obligation with respect to such information, (ii) disclosure of any and all information after prompt written notice to the Servicer (A) if, in the written opinion of counsel, required to do so by any applicable statute, law, rule or regulation, (B) to any government agency or regulatory body having authority to regulate or oversee any respects of the Trustee's business or that of its affiliates, (C) if, in the written opinion of counsel, required pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which the Trustee or an affiliate or an officer, director, employer or shareholder thereof is a party, (D) in any preliminary or final offering circular, registration statement or contract or other document pertaining to the transactions contemplated herein approved in advance by the Servicer or an Obligor or (E) to any affiliate, independent or internal auditor, agent, employee or attorney of Trustee having a need to know the same, provided that the Trustee advises such recipient of the confidential nature of the information being disclosed and such recipient agrees to comply with the terms of the foregoing, or (iii) any other disclosure authorized in writing by the Servicer or any Obligor. Section 6.10. Other Necessary Data. The Servicer shall, on request of the Trustee, furnish the Trustee such data necessary for the Trustee to discharge its obligations with respect to each Series Trust Estate and the related Notes as can be generated by the Servicer's existing data processing systems; provided, that to the extent that the Servicer's existing data processing systems cannot generate such data, the Servicer will cooperate with the Trustee in finding a method of furnishing such data. The Servicer will cooperate in generating additional data reasonably requested by the Trustee. 49 Section 6.11. Release of Contracts. (a) Upon (i) payment in full of any Contract by the User or by any Person on behalf of such User, (ii) any removal of a Contract by the Transferor pursuant to Section 6.15 hereof, (iii) the Servicer's reasonable determination that all Residual Receipts with respect to any Charged-Off Contract have been received, (iv) any removal of a Contract by the Servicer pursuant to Section 6.12(b) hereof, (v) any removal of a Contract by the Obligors pursuant to Section 6.12(a) hereof or (vi) any removal of a Contract by the Transferor or the Obligors pursuant to Section 6.16 hereof (the events described in clauses (i) through (vi) being "Release Events"), the Servicer will so notify the Trustee of the occurrence thereof on the next succeeding Determination Date by certification (in the form set forth in the Series Related Documents for each Series) to the Trustee from a Servicing Officer, which certification shall include a statement to the effect that all amounts received in connection with such Release Event have been remitted to the applicable Facility Account and may request delivery of the Contract to the Servicer or other Person designated by the Servicer. Upon the Trustee's receipt of such certification and request (subject to its confirmation of the receipt of the required funds in the applicable Facility Account), such Contract and the related Pledged Property appurtenant thereto shall be deemed to be released from the related Series Trust Estate. Upon release of such Contract, the Servicer is authorized to execute an instrument in satisfaction of such Contract and to do such other acts and execute such other documents as it deems necessary to discharge the User thereunder and release the related Equipment: (u) to the related User in the event of a Release Event described in clause (i) of the immediately preceding paragraph; (v) to the Transferor in the event of a Release Event described in clause (ii) of the immediately preceding paragraph; (w) to the Person, if any, purchasing the related Equipment in the event of a Release Event described in clause (iii) of the immediately preceding paragraph, or, if no person is purchasing such Equipment, to the related Obligor; (x) to itself in the event of a Release Event described in clause (iv) of the immediately preceding paragraph; (y) to the related Obligor in the event of a Release Event described in clause (v) of the immediately preceding paragraph or (z) to the related Obligor or the Transferor, as applicable, in the event of Release Event described in clause (vi) of the immediately preceding paragraph. (b) With respect to all Contracts so released from any Series Trust Estate, the Trustee shall assign, without recourse, representation or warranty, to the appropriate Person as directed by the Servicer, all of the Trustee's right, title and interest in and to such Contract and Pledged Property appurtenant thereto, such assignment being an assignment outright and not for security. Such Person will thereupon own such Contract and related Pledged Property appurtenant thereto free of any further obligation to the Trustee or the Noteholders with respect thereto. The Trustee shall also execute and deliver all such other instruments or documents as shall be reasonably requested by any such Person to be required or appropriate to effect a valid transfer of title to a Contract and the Pledged Property appurtenant thereto. Any instrument or documents required to be executed by the Trustee pursuant to this Section 6.11(b) shall be prepared by the Servicer (or such Person) at the Servicer's (or such Person's) expense; provided, that if the 50 Servicer is not Marlin or any of its Affiliates, then any such expenses to be paid by the Servicer pursuant to this Section 6.11(b) shall be paid by the Obligors. Section 6.12. Removal Related to Upgrades or Trade-ins and Delinquent Contracts. (a) In the event that a User requests (i) a termination of such User's Contract prior to the end of the scheduled original term of such Contract or (ii) an upgrade or trade-in of Equipment relating to such User's Contract (either of events (i) or (ii), a "User Termination Event"), then the related Obligor may remove the Contract and the related Equipment from the related Series Trust Estate during any Collection Period by remitting to the Trustee the applicable Prepayment Amount in the applicable Facility Account on or prior to the Determination Date relating to such Collection Period. (b) The Servicer may during any Collection Period remove any Delinquent Contract and the Related Security from the related Series Trust Estate with respect to which Contract the User is in default or such default is, in the Servicer's judgment, imminent, by deposit by the Servicer of the applicable Prepayment Amount in the applicable Facility Account on or prior to the Determination Date relating to such Collection Period. (c) Notwithstanding the foregoing provisions of Sections 6.12(a) and (b), no such removal of a Contract and Related Security shall be permitted if the Contract Balance Remaining for (i) such Contract and all other removed Contracts, plus (ii) all Substitute Contracts, plus (iii) Replaced Contracts, exceeds, or would, upon such removal, exceed ten percent (10%) of the Maximum Series Limit for such Series. Section 6.13. Notification to Noteholders of Defaults and Events of Default. The Servicer shall promptly notify the Trustee of any Default or any Event of Default upon the receipt of actual knowledge thereof by a Servicing Officer, and the Trustee shall promptly thereupon give written notice thereof to each of the Series Controlling Parties and each of the Series Support Providers. Section 6.14. Security Deposits. The Servicer acknowledges that the Security Deposits are held by the Transferor on behalf of the Users and the Trustee. In the event that (i) any User requests that a Security Deposit be applied as an offset against such User's payment obligations or Booked Residual under a Contract or (ii) any Contract becomes a Charged-Off Contract, the Servicer shall deliver to the Transferor written demand that the Transferor remit to the Servicer, on the next Business Day, out of the applicable User's Security Deposit an amount (the "Offset Amount") equal to the lesser of (a) the amount of such Security Deposit and (b) the amount of all unpaid and remaining Scheduled Payments and Booked Residuals as payment in respect of, first, any unpaid Scheduled Payments under the related Contract, and second, any unpaid Booked Residual under the related Contract. 51 The Servicer shall deposit any Offset Amount so delivered to it into the applicable Facility Account within two Business Days after its receipt thereof. The Servicer shall notify the Transferor in writing of any demand it receives from a User for refund of such User's Security Deposit at the end of the term of the related Contract. In no event shall the Trustee, the Obligors, any Noteholder or any Series Support Provider be liable to any User with respect to the Security Deposits. The Servicer shall indemnify and hold harmless the Trustee, the Noteholders and the Series Support Providers for any loss, cost and expense (including legal fees and expenses incurred by such parties in connection with the prosecution of claims made in connection therewith) suffered as a result of the Servicer's misappropriation or misapplication of any Security Deposit. This right of indemnification shall survive the termination of this Master Agreement. Section 6.15. Removal of Nonconforming Pledged Property. Upon discovery by an Obligor, the Trustee, the Servicer or any Series Support Provider of a breach of any of the representations or warranties of the Transferor set forth in the related Transfer Agreement Supplement with respect to any Contract (such breach, a "Transferor Breach"), the related Equipment or the related Contract File, as the case may be, the party discovering such breach shall give prompt written notice to the other parties. Except as specifically provided herein, the Trustee has no obligation to review or monitor the Pledged Property for compliance with such representations and warranties. As of the last day of the calendar month in which such breach was discovered or, if later, the last day of the calendar month in which the Servicer received the notice thereof (or, at the Servicer's and such Obligor's election, any earlier date), the Servicer, unless such breach shall have been waived or cured in all material respects prior to such time, shall cause the Transferor to remove such Contract and the related Pledged Property from the related Series Trust Estate. In consideration for the removal of such Pledged Property, the Transferor shall, no later than the Determination Date prior to the Settlement Date next following such date, pay the Prepayment Amount to the Servicer for deposit into the applicable Facility Account. Without limiting the foregoing in any way, in the event of a breach of any representation or warranty of the Transferor contained in any Transfer Agreement Supplement that materially and adversely affects any Contract or the related Contract File, unless the breach shall have been cured on or before the last day of the calendar month in which such breach was discovered or, if later, the last day of the calendar month in which the Servicer received the notice thereof, the Servicer shall enforce the obligation of the Transferor under the Master Transfer Agreement to repurchase such Contract. Section 6.16. Substitution of Contracts. (a) In lieu of removing a Contract as required under the provisions of Section 6.12(a), 6.12(b) or 6.15 hereof and subject to the provisions of Sections 6.16(b) and 6.16(c) below, either of the Obligors or the Transferor, as applicable, in their sole 52 discretion, may substitute one or more Contracts (each a "Substitute Contract") and the related Equipment for and replace Contracts (each, a "Replaced Contract") and the related Equipment of a Series Trust Estate that (i) have become Charged-Off Contracts, (ii) are subject to a User Termination Event or (iii) were subject to a Transferor Breach. (b) Each Substitute Contract must be an Eligible Contract as of the applicable Transfer Date. (c) No such substitution under this Section 6.16 shall be permitted on any Transfer Date if: (i) the cumulative aggregate balance of the Contract Balance Remaining for all Substitute Contracts outstanding at the Transfer Date that were substituted in the applicable Series Trust Estate exceeds, or would upon such substitution exceed, ten percent (10%) of the Maximum Series Limit for such Series; or (ii) such substitution results in a reduction of the aggregate Borrowing Base for the relevant Series Trust Estate. Article VII ACCOUNTS AND ALLOCATIONS Section 7.01. Establishment of Facility Accounts; Establishment of Advance Payment Accounts. (a) With respect to each Series of Notes, on or prior to the related Closing Date, the Servicer, for the benefit of the Trustee, shall establish and maintain or cause to be established and maintained in the name of the Trustee, a segregated trust account in the Trustee's corporate trust department for the related Series, identified as the "Facility Account for Marlin Leasing Lease Receivables Facility, in trust for the Registered Holders of Series [Applicable Series] Notes and other Series [Applicable Series] Secured Parties" (each such account, a " Facility Account"). The Trustee shall make or permit withdrawals from each Facility Account only as provided in this Master Agreement and in the relevant Series Supplement. The Trustee shall possess all right, title and interest in and to all funds from time to time on deposit in each Facility Account and in all proceeds thereof. (b) The Servicer, the Trustee, each Obligor, and the Transferor shall deposit to the applicable Facility Account any Collections received directly (rather than through any lockbox account) by any of them as soon as practicable (and, in any event, within two Business Days) after their respective receipt thereof. (c) With respect to each Series of Notes, the Trustee, for the benefit of the related Noteholders, shall establish and maintain an account (each such account, an "Advance Payment Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Advance Payment Account for the Marlin Leasing 53 Lease Receivables Facility, in trust for the Registered Holders of the Series [Applicable Series] Notes and other Series [Applicable Series] Secured Parties." The Trustee shall make or permit withdrawals from the applicable Advance Payment Account only as provided in this Master Agreement and in the relevant Series Supplement. The Trustee shall possess all right, title and interest in and to all funds from time to time on deposit in each Advance Payment Account and in all proceeds thereof. (d) All Advance Payments received by the Servicer, the Trustee, any Obligor, or the Transferor shall be deposited to the applicable Advance Payment Account in the same manner as Collections are deposited to the related Facility Account. (e) Notwithstanding the foregoing, the Trustee and/or the Servicer may deduct from amounts otherwise specified for deposit to each Facility Account or Advance Payment Account, as applicable, any amounts previously deposited by the Trustee or the Servicer into such Facility Account or Advance Payment Account, as the case may be, but which are (i) subsequently uncollectible as a result of dishonor of the instrument of payment for or on behalf of the User or (ii) later determined to have resulted from mistaken deposits. (f) Each Facility Account and Advance Payment Account shall be under the sole dominion and control of the Trustee for the benefit of the related Series Secured Parties; provided, however, that the Trustee may rely on the information and instructions provided by the Servicer in determining the amount of any withdrawals or payments to be made from either such account for the purposes of carrying out the Trustee's or the Servicer's duties hereunder or under any Series Supplement. Neither the Trustee nor the Servicer shall have any right of setoff or banker's lien against, and no right to otherwise deduct from, any funds held in any Facility Account or Advance Payment Account for any amount owed to it by the Servicer, any Obligor, the Transferor, the Trustee, any Noteholder or any Series Support Provider. Section 7.02. Collections and Allocations. On each Settlement Date, and as further set forth in the related Series Supplement, the Trustee shall distribute amounts on deposit in the related Series Accounts as described in the Servicer's Certificates relating to such Settlement Date. Section 7.03. Investment of Funds in each Facility Account and the Advance Payment Account. The Trustee, at the Obligors' Agent's written instruction, shall invest the amounts from time to time on deposit in each Facility Account and Advance Payment Account in Eligible Investments. In the absence of such a written instruction, the Trustee shall invest funds in each Facility Account and Advance Payment Account in Eligible Investments described in clause (f) of the definition thereof. Any funds in the Advance Payment Accounts and Facility Accounts which are not so invested must be insured by the Federal Deposit Insurance Corporation to the limits established by such corporation. 54 Article VIII THE SERVICER AND THE OBLIGORS Section 8.01. Liability of Servicer; Indemnities. (a) The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer herein and in the Series Supplements. (b) Without in any way limiting the foregoing, the Servicer shall indemnify and hold harmless the Trustee, the Back-up Servicer, the Obligors, the Noteholders, any Series Support Provider (including their respective officers, directors, employees and agents) and any permitted assignee of any of the foregoing (each an "Indemnified Party" and collectively, the "Indemnified Parties") from and against any claims, expenses, losses, damages or liabilities (including, without limitation, attorneys' fees and expenses and court costs) suffered or incurred by any Indemnified Party (collectively, "Indemnified Amounts") arising out of or resulting in connection with (i) any breach by the Servicer of its representations and warranties or of its obligations under this Master Agreement or under any Series Supplement or (ii) from the use, repossession or operation of the Equipment by the Servicer or any of its Affiliates; provided, however, that the foregoing indemnity described in the immediately preceding clause (ii) shall not include any Indemnified Amounts to the extent resulting from willful misconduct or gross negligence of such Indemnified Party in the performance of any of his, her or its obligations and duties. Indemnification pursuant to this Section shall not be payable from any Series Trust Estate. (c) The Servicer shall pay any amounts owing pursuant to Section 8.01(b) hereof directly to the applicable Indemnified Parties entitled to the receipt thereof, and such amounts shall not be deposited in the applicable Facility Account, Advance Payment Account or the Series Accounts. Any request by any Indemnified Party for indemnity pursuant to this Section 8.01 shall be made in writing delivered to the Servicer and the Trustee describing in reasonable detail the amount thereof and the circumstances giving rise thereto. The Servicer shall pay any such Indemnified Amounts within 30 days after its receipt of any such request therefor, it being understood and agreed, however, that payment of such amount shall not constitute a waiver of the Servicer's right to contest the basis for such indemnity so long as the Servicer provides written notice to the applicable Indemnified Party at the time of the Servicer's payment of the respective Indemnified Amounts, which written notice shall state the basis, in reasonable detail, for the Servicer's dispute of the requested Indemnified Amount. (d) Indemnification under this Section 8.01 shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation reasonably incurred. If the Servicer has made any indemnity payments to any of the Indemnified Parties pursuant to this Section 8.01 and such party thereafter collects any of such amounts from others, such party will promptly repay such amounts collected to the Servicer, without interest. 55 (e) Notwithstanding anything contained herein to the contrary, if and to the extent that the Servicer is the Trustee or any successor Servicer appointed by the Trustee then such Servicer shall only be responsible pursuant to this Section 8.01 for any such amounts suffered or incurred by any such indemnified party hereunder as a result of the Trustee's or such other successor Servicer's gross negligence or willful misconduct. (f) The agreements contained in this Section 8.01 shall survive the Final Date of the last Outstanding Series and the termination of this Master Agreement and any applicable Series Supplement. Section 8.02. Merger, Consolidation, or Assumption of the Obligations of Servicer. Any corporation (i) into which the Servicer may be merged or consolidated, (ii) resulting from any merger or consolidation to which the Servicer shall be a party or (iii) succeeding to the business of the Servicer, shall be the successor to the Servicer hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided that, such corporation in any of the foregoing cases shall execute an agreement of assumption, in a form reasonably satisfactory to the Trustee, agreeing to perform every obligation of the Servicer hereunder and under each Series Supplement and shall notify the Rating Agencies prior to such succession. Any corporation succeeding to the business of the Servicer by merger, consolidation or otherwise shall be a corporation organized and existing under the laws of the United States or any State and have a tangible net worth of at least $40,000,000. The Servicer shall provide prompt written notice of the effectiveness of any such event to the Obligors' Agent, the Trustee, each Series Controlling Party and each Series Support Provider. Section 8.03. Limitation on Liability of Servicer and Others. No directors, officers, employees or agents of the Servicer shall be under any personal liability to the Trustee, the Obligors or any of the Noteholders, for any action taken or for refraining from the taking of any action pursuant to this Master Agreement or for errors in judgment. The Servicer and any director or officer or employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. Except as provided herein, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties to service each Series Trust Estate in accordance with this Master Agreement and each Series Supplement and that in its opinion may involve it in any expense or liability; provided, however, that the Servicer may take any such action that is reasonable and that may be necessary or desirable in respect of this Master Agreement and each Series Supplement and the rights and duties of the parties hereto and thereto and the interests of the Trustee hereunder and thereunder. In the event the Servicer takes such action, the reasonably incurred legal expenses and costs of such action and any liabilities resulting therefrom shall be expenses, costs and liabilities of the related Series Trust Estate, and the Servicer shall be entitled to be reimbursed therefor in accordance with the terms hereof. 56 Section 8.04. Servicer Not to Resign. Subject to the provisions of Section 8.02 hereof, the Servicer shall not resign from the obligations and duties hereby imposed on it as Servicer except upon determination that the performance of its duties hereunder is no longer permissible under applicable law. No such resignation shall become effective until a successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 9.02 hereof. Section 8.05. Reserved. Section 8.06. Indemnities of the Obligors. (a) Without limiting any other rights which any of the Indemnified Parties may have hereunder, under any Series Supplement or under applicable law, each Obligor hereby agrees to indemnify each Indemnified Party from and against any and all Indemnified Amounts arising out of (i) reliance on any representation or warranty or statement of such Obligor made or deemed made by such Obligor under or in connection with this Master Agreement or in any of the other Series Related Documents to which such Person is a party or in any certificate or report delivered in connection with any of the foregoing which shall have been incorrect in any material respect when made; (ii) the failure by such Obligor to comply with this Master Agreement or any of the other Series Related Documents to which any such Person is a party, or the failure by such Obligor or the Transferor, to comply with any applicable law, rule or regulation with respect to any Contract, or the nonconformity of any Contract with any such applicable law, rule or regulation; (iii) the failure to vest in the Trustee a first priority perfected security interest in the property pledged by such Obligor with respect to the related Series Trust Estate, free and clear of any Lien; (iv) the failure of such Obligor to pay when due any taxes, including without limitation, sales, excise or personal property taxes payable in connection with any of the Contracts or any of the Equipment, to the extent required by Section 14.08 hereof. (b) Any request by any Indemnified Party for indemnity pursuant to this Section 8.06 shall be made in writing delivered to the Obligors' Agent describing in reasonable detail the amount thereof and the circumstances giving rise thereto. The Obligors' Agent on behalf of the related Obligor(s) shall pay any such Indemnified Amounts within 30 days after its receipt of any such request therefor; it being understood and agreed, however, that payment of such amount shall not constitute a waiver of the Obligors' Agent right to contest the basis for such indemnity so long as the Obligors' Agent provides written notice to the applicable Indemnified Party at the time of the Obligors' Agent payment of the respective Indemnified Amounts, which written notice 57 shall state the basis, in reasonable detail, for the Obligors' Agent's dispute of the requested Indemnified Amount. (c) The agreement contained in this Section 8.06 shall survive the Final Date of the last Outstanding Series and the termination of this Master Agreement and each Series Supplement. Section 8.07. Limitation on Liability of the Obligors. The directors, officers, employees or agents of any Obligor shall not be under any liability to the Trustee, the Noteholders, the Transferor, the Servicer, any Series Support Provider or any other Person hereunder or pursuant to any document delivered hereunder, it being expressly understood that all such liability is expressly waived and released as a condition of, and as consideration for, the Obligors' execution and delivery of this Master Agreement and the issuance of the Notes. The Obligors may rely in good faith on any document of any kind prima facie properly executed and submitted by any other Person respecting any matters arising hereunder. Article IX SERVICER TERMINATION Section 9.01. Events of Servicer Termination. (a) If any of the following events (each an "Event of Servicer Termination") shall occur and be continuing: (i) any failure by the Servicer to make any payment, transfer or deposit, or, if applicable, to give instructions or notice to the Trustee to make such payment, transfer or deposit, relating to the payment of the interest or principal balance of any Note or the payment of any amount payable to a Series Support Provider, in either case, on or before the first Business Day following the date such payment, transfer or deposit or such instruction or notice is required to be made or given, as the case may be, under the terms of this Master Agreement or any applicable Series Supplement; or (ii) the Servicer shall fail to perform or observe any other material term, covenant or agreement hereunder or in any Series Related Document (other than as described in clause (i) above), and such failure shall remain unremedied for 30 calendar days after the receipt by the Servicer of written notice of such failure from the Trustee; (iii) any representation, warranty, certification or statement made by the Servicer in this Master Agreement, in any Series Related Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made (or deemed made), and such situation, if susceptible to cure, is not remedied within 30 calendar days after receipt by the Servicer of written notice of such situation from the Trustee; 58 (iv) an Insolvency Event shall occur with respect to the Servicer; or (v) a Series Event of Default shall occur. then, and in each and every case, so long as an Event of Servicer Termination shall be continuing, the Trustee may, and, at the direction of the Majority Control Parties, shall, by notice (the "Servicer Termination Notice") then given in writing to the Servicer, terminate all, but not less than all, of the rights and obligations of the Servicer under this Master Agreement and each Series Related Document. (b) On and after the time the Servicer receives a Servicer Termination Notice pursuant to this Section 9.01, all authority and power of the Servicer under this Master Agreement and each Series Related Document, whether with respect to the Notes or each Series Trust Estate or otherwise, shall pass to and be vested in the successor Servicer appointed pursuant to Section 9.02 hereof and, without limitation, such successor Servicer is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Servicer Termination Notice, whether to complete the transfer of each Series Trust Estate and related documents or otherwise. The Servicer agrees to cooperate with the Trustee and the successor Servicer in effecting the termination of the responsibilities and rights of the Servicer hereunder, including, without limitation, the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the Servicer for deposit, or have been deposited by the Servicer, in any Advance Payment Account or Facility Account or thereafter received with respect to the related Series Trust Estate. To assist the successor Servicer in enforcing all rights with respect to any Related Security or under Broker Agreements and Insurance Policies to the extent that they relate to the Contracts, the Servicer, at its own expense, shall transfer its electronic records relating to such Contracts to the successor Servicer in such electronic form as the successor Servicer may reasonably request and shall transfer the related Contract Files and all other records, correspondence and documents relating to the Contracts that it may possess to the successor Servicer in the manner and at such times as the successor Servicer shall reasonably request. In addition to any other amounts that are then payable to the Servicer under this Master Agreement or any Series Related Document, the Servicer shall be entitled to receive reimbursement for any unreimbursed Servicer Advances made during the period prior to the delivery of a Servicer Termination Notice pursuant to this Section 9.01. Section 9.02. Back-up Servicer to Act; Taking of Bids; Appointment of Successor Servicer. (a) (i) Except as provided in Section 9.01(b) hereof, on and after the time the Servicer delivers its notice of resignation to the Trustee pursuant to Section 8.04 hereof or receives a Servicer Termination Notice pursuant to Section 9.01(a) hereof, the Back-up Servicer shall, unless prevented by law, automatically 59 and without further action be the successor Servicer. If the Back-up Servicer cannot serve as successor Servicer, the Trustee shall appoint as successor Servicer another firm acceptable to it, each Series Support Provider, the Majority Control Parties and the Obligors' Agent. (ii) The successor Servicer shall be the successor in all respects to the Servicer in its capacity as Servicer under this Master Agreement and the transactions set forth or provided for herein, and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof; provided, however, that the successor Servicer (x) shall not be required to make any Servicer Advance and (y) shall not be liable for any acts or omissions of the outgoing Servicer or for any breach by the outgoing Servicer of any of its representations and warranties contained herein or in any related document or agreement. With the prior written consent of each Series Support Provider (which consent shall not be unreasonably withheld), the successor Servicer may subcontract with another firm to act as subservicer so long as the successor Servicer remains fully responsible and accountable for performance of all obligations of the Servicer on and after the time the Servicer receives the Servicer Termination Notice. The successor Servicer shall be entitled to the Servicer Fee and any Increased Servicer Fee, subject to the taking of bids as described in subsection (b) below. (b) Solely for purposes of establishing the fee to be paid to the successor Servicer upon receipt of a Servicer Termination Notice, the Back-up Servicer shall solicit written bids, with a copy to each Series Support Provider and the Trustee, if the Back-up Servicer is not also acting in the capacity of Trustee (such bids to include a proposed servicer fee and servicing transfer costs) from not less than three entities experienced in the servicing of contracts similar to the Contracts and that are not Affiliates of the Trustee, the Back-up Servicer, the Servicer or the Transferor and are reasonably acceptable to each Series Controlling Party. Any such written solicitation shall prominently indicate that bids should specify any applicable subservicing fees required to be paid from the Servicer Fee and that any fees and transfer costs in excess of the Servicer Fee shall be paid only in accordance with the relevant Series Supplement, as the Increased Servicer Fee. The successor Servicer shall act as Servicer hereunder and shall, subject to the availability of sufficient funds in the applicable Facility Account, receive as compensation therefor a fee equal to the fee proposed in the bids so solicited which provides for the lowest combination of servicer fee and transition costs, as reasonably determined by the Series Controlling Parties. (c) The Servicer, the Back-up Servicer, the Transferor, the Trustee and such successor Servicer shall take such action, consistent with this Master Agreement, as shall be necessary to effectuate any such succession. The Back-up Servicer (or the Trustee, any Series Support Provider or the Noteholders if such Series Support Provider or such Noteholders have previously reimbursed the Back-up Servicer and the Trustee therefor) shall be reimbursed for Transition Costs, if any, incurred in connection with the assumption of responsibilities of the successor Servicer, upon receipt of documentation of such costs and expenses. The Back-up Servicer shall have no claim against the Servicer, 60 Transferor, any Noteholder, any Series Support Provider, the Trust Estate or any other Party to the Series Related Documents for any costs and expenses incurred in effecting such succession in excess of the amount specified in the definition of "Transition Costs." Section 9.03. Notification of Event of Servicer Termination. The Servicer shall promptly (and in no event more than two Business Days later) notify the Trustee and the Obligors' Agent in writing of any Event of Servicer Termination upon actual knowledge thereof by a Servicing Officer and the Trustee shall promptly (and in no event more than two Business Days later) thereupon give written notice thereof to each of the Series Controlling Parties and each of the Series Support Providers. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article IX, the Trustee shall give prompt written notice thereof to each of the Noteholders, each of the Series Support Providers and the Transferor. Section 9.04. Waiver of Past Defaults. The Majority Control Parties, on behalf of all Noteholders, may waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Any such waiver must be in writing and be signed by the Majority Control Parties or the Trustee acting on behalf (and at the direction) of the Majority Control Parties. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Servicer Termination arising therefrom shall be deemed to have been remedied for every purpose of this Master Agreement, any Series Related Document or otherwise. No such waiver shall extend to any subsequent similar or dissimilar default or impair any right consequent thereon except to the extent expressly waived in accordance with this Section 9.04. Section 9.05. Effects of Servicer Termination. (a) Upon the appointment of the successor Servicer, the terminated Servicer shall hold in trust for the Trustee and immediately remit any Scheduled Payments, Residual Receipts, Overdue Payments, Security Deposit, Insurance Proceeds, Advance Payments, Prepayments, and proceeds of any Related Security that it may receive pursuant to any Contract, any Broker Agreement, Insurance Policy or otherwise to the successor Servicer for the benefit of the Trustee; provided, that amounts representing Security Deposits shall be remitted as required by paragraph (b) below. (b) After the delivery of a Servicer Termination Notice, the terminated Servicer shall have no further obligations with respect to the management, administration or servicing of any Series Trust Estate or the enforcement, custody or collection of the Contracts, and the successor Servicer shall have all of such obligations, except that the terminated Servicer will transmit or cause to be transmitted directly to the successor Servicer for the benefit of the Trustee (i) promptly upon receipt and in the same form in which received, any amounts held or received by the former Servicer (properly endorsed where required for the successor Servicer to collect them) as payments upon or otherwise in connection with Contracts or any Series Trust Estate and (ii) when and as required by 61 Section 6.14 hereof, amounts representing Security Deposits. The terminated Servicer's indemnification obligations pursuant to Section 8.01 hereof will survive its termination as the Servicer hereunder but will not extend to any acts or omissions of any successor Servicer. (c) Notwithstanding Section 9.05(b) hereof, it is hereby agreed by the parties hereto that in the event that Marlin or any of its Affiliates no longer continues to perform as Servicer hereunder, the Obligors, upon the request of the Trustee, shall instruct the Transferor pursuant to the Master Transfer Agreement to exercise any rights under any Contract, any guaranty thereof, or Insurance Policy for the benefit of the Trustee and the related Series Secured Parties. (d) An Event of Servicer Termination shall not affect the rights and duties of the parties hereunder other than those relating to the management, administration, servicing, custody or collection of the Contracts or the payment of certain expenses by the successor Servicer, in each case, as expressly set forth herein. (e) The parties expressly acknowledge and consent to Wells Fargo Bank Minnesota, National Association acting in the possible dual capacity of Back-up Servicer or successor Servicer and in the capacity as Trustee. Wells Fargo Bank Minnesota, National Association may, in such dual capacity, discharge its separate functions fully, without hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wells Fargo Bank Minnesota, National Association of express duties set forth in this Master Agreement in any of such capacities, all of which defenses, claims or assertions are hereby expressly waived by the other parties hereto except in the case of negligence (other than errors in judgment) and willful misconduct by Wells Fargo Bank Minnesota, National Association. Section 9.06. Responsibilities of Back-up Servicer. (a) On or before the first Original Issue Date until the receipt by the Servicer of a Servicer Termination Notice from the Trustee in accordance with Section 9.02 hereof, the Back-up Servicer shall perform, on behalf of the Series Secured Parties of each Series and the Trustee, the following duties and obligations: (i) On or before the Original Issue Date, the Back-up Servicer shall accept from the Servicer delivery of the information required to be set forth in the Servicer's Certificate in hard copy and on tape (including, without limitation, the Computer Tape); provided, however, the computer tape is in a format to be agreed upon by the Back-up Servicer and the Servicer. (ii) The Servicer will provide the Servicer's Certificate signed by a Servicing Officer, setting forth the information as of the last day of the Collection Period immediately preceding the related Settlement Date and after giving effect to any withdrawals, deposits and transfers to occur on or before the related Settlement Date, to the Back-up Servicer by 12:00 noon New York time two (2) 62 Business Days prior to the Determination Date preceding each Settlement Date, and the Trustee will furnish or cause to be furnished such Servicer's Certificate to the Noteholders on or immediately following receipt thereof. In addition, the Servicer shall provide to the Back-up Servicer simultaneously with the delivery of such Servicer's Certificate a tape or other electronic media (in a format acceptable to the Back-up Servicer) containing the detailed account and payment information utilized to prepare such Servicer's Certificate. To enable the Servicer to prepare the Servicer's Certificate, the Trustee shall provide to the Servicer, on or before the fifth (5th) Business Day following the last day of each Collection Period, a statement as to the balances and total amount of investment income earned on funds on deposit in each Facility Account during the preceding Collection Period if held by the Trustee. The Trustee shall not have any duty or obligation to recalculate, recompute or verify the information contained on the Servicer's Certificate. (b) During the period from the Original Issue Date until the Series Termination Date for the related Series Supplement or until the receipt by the Servicer of a Servicer Termination Notice, the Back-up Servicer shall perform, on behalf of the Series Secured Parties of each Series and the Trustee, the following duties and obligations: (i) Prior to the related Settlement Date, the Back-up Servicer shall review the Servicer's Certificate to ensure that it is complete on its face. (ii) Prior to becoming the successor Servicer, the Back-up Servicer shall be responsible for reviewing the Servicer's Certificate each month no later than the end of the month in which such Servicer's Certificate was delivered (assuming such Servicer's Certificate is delivered in accordance with the requirements of this Master Agreement). In performing such review of the Servicer's Certificate, the Back-up Servicer shall recalculate and verify the following information, based solely on information provided by the Servicer, with any discrepancies reported to the Series Controlling Parties and the Series Support Providers: (i) aggregate Contract Balance Remaining, (ii) aggregate Contract Principal Balance, (iii) note outstanding for each series, (iv) Servicing Fee for related Collection Period, (v) confirm number of Contracts, Delinquency Rate and Delinquency Ratio for 31-60, 61-90, 90+ day delinquent Contracts, (vi) confirm annualized Charged-Off Ratio, (vii) confirm concentrations by Broker, Vendor, Equipment, State, Government, Quarterly Payment and User. After performing its review, the Back-up Servicer will provide to the Trustee, the Obligors' Agent, the Servicer and the Series Support Providers by the last day of the calendar month in which the Servicer's Certificate is received a verification certificate, a form of which is attached hereto as Exhibit A. Except as otherwise expressly provided herein, the Back-up Servicer shall have no obligation to supervise, verify, monitor or administer the performance of the Servicer and shall have no liability for any action taken or omitted by the Servicer. The Back-up Servicer shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder, or in exercise of any of 63 its rights or powers, if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Neither the Back-up Servicer nor any of its directors, officers, employees or agents shall be under any liability to any of the parties of this Master Agreement or the Noteholders, for any action taken or for refraining from the taking of any action pursuant to this Master Agreement; provided, however, that this provision shall not protect the Back-up Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of its duties. The Back-up Servicer and any such person may rely in good faith on the written advice of counsel or on any documents or any kind prima facie properly executed and submitted by any person respecting any matters arising under this Master Agreement. (d) After the receipt of an effective Servicer Termination Notice by the Servicer in accordance with this Master Agreement or any Series Supplement, all authority, power, rights and responsibilities of the Servicer, under this Master Agreement and each Series Supplement, whether with respect to the Contracts or otherwise shall pass to and be vested in the Back-up Servicer as long as the Back-up Servicer is not prohibited by an applicable provision of law from fulfilling the same, as evidenced by an Opinion of Counsel. The successor Servicer, if Wells Fargo Bank Minnesota, National Association, its successors or assigns, shall have (i) no liability with respect to any obligation which was required to be performed by the terminated Servicer prior to the date that the successor Servicer becomes the Servicer or any claim of a third party based on any alleged action or inaction of the terminated Servicer, (ii) no obligation to perform any repurchase or advancing obligations, if any, of the Servicer, (iii) no obligation to pay any taxes required to be paid by the Servicer, (iv) no obligation to pay any of the fees and expenses of any other party involved in this transaction and (v) no liability or obligation with respect to any Servicer indemnification obligations of any prior Servicer including the original Servicer other than those due to the gross negligence, willful misfeasance or bad faith of the successor Servicer in the performance of its duties under this Master Agreement. Section 9.07. Back-up Servicer Compensation. (a) As compensation for its performance under Section 9.06(a) and Section 9.06(b) the Back-up Servicer shall be paid the Back-up Servicer Fee and any amount set forth in the related Series Supplement. (b) As compensation for its performance under Section 9.02 above, the Back-up Servicer shall be entitled to such Servicer Fee and any Increased Servicer Fee pursuant to Section 9.02 hereof and other amounts (whether payable out of the applicable Facility Account or otherwise). 64 Section 9.08. Merger or Consolidation of, or Assumption of the Obligation of Back-up Servicer. (a) Any Person (i) into which the Back-up Servicer may be merged or consolidated, (ii) which may result from any merger or consolidation to which the Back-up Servicer shall be a party, or (iii) which may succeed to the properties and assets of the Back-up Servicer substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Back-up Servicer hereunder, shall be the successor to the Back-up Servicer under this Master Agreement or any Series Supplement without further act on the party of any of the parties this Master Agreement or any Series Supplement. (b) The Back-up Servicer, solely in its capacity as Back-up Servicer hereunder, hereby irrevocably and unconditionally waives all right of set-off that it may have under contract (including this Master Agreement or any Series Supplement), applicable law or otherwise with respect to any funds or monies of Marlin or any Obligor, at any time held by or in the possession of the Back-up Servicer. (c) Upon the Back-up Servicer's resignation or termination pursuant to Section 9.09 hereof, the Back-up Servicer shall comply with the provisions of this Master Agreement and any Series Supplement until the acceptance of appointment by a successor Back-up Servicer. Any such successor Back-up Servicer shall be appointed by the Trustee subject to the approval of the Majority Control Parties. Section 9.09. Back-up Servicer Termination or Resignation. (a) The Trustee shall, at the direction of the Majority Control Parties, on behalf of all Noteholders, by notice in their sole discretion (the "Back-up Servicer Termination Notice") then given in writing to the Back-up Servicer, terminate all, but not less than all, of the rights and obligations of the Back-up Servicer under this Master Agreement and all Series Supplements with respect to the Series Trust Estate. Such notice shall state the effective date of the termination, which shall not be prior to the acceptance of the appointment by the successor Back-up Servicer which is reasonably acceptable to the Majority Control Parties. (b) Provided that an Event of Servicer Termination has not occurred and is continuing, the Back-up Servicer may by notice in its sole discretion (the "Back-up Servicer Resignation Notice") then given in writing to the Trustee resign as the Back-up Servicer under this Master Agreement and all Series Supplements with respect to the Series Trust Estate and the Trustee shall promptly (and in any event within 2 Business Days) give notice thereof to each Series Controlling Party. Such notice shall state the effective date of the resignation, which shall not be prior to the acceptance of the appointment by the successor Back-up Servicer which is reasonably acceptable to the Majority Control Parties. (c) If a Back-up Servicer Termination Notice is received by the Back-up Servicer or a Back-up Servicer Resignation Notice is given while it is performing 65 under Sections 9.06(a) and 9.06(b) above, the Back-up Servicer agrees to cooperate with the Trustee, the Series Controlling Parties, the successor Servicer and the successor Back-up Servicer in effecting the termination of the Back-up Servicer's responsibilities and rights hereunder, including, without limitation, the transfer to the successor Servicer or the successor Back-up Servicer of all data then in the possession of the Back-up Servicer. (d) If a Back-up Servicer Termination Notice is received by the Back-up Servicer or a Back-up Servicer Resignation Notice is given while it is performing under Section 9.02(a) above, the Back-up Servicer agrees to perform the obligations of the outgoing Servicer in accordance with this Master Agreement and each Series Supplement. Section 9.10. Limitation on Liability of Back-up Servicer and Others. (a) Neither the Back-up Servicer nor any of the directors, officers or employees or agents of the Back-up Servicer shall be under any liability to the Servicer, the Trustee, or the related Noteholders except as provided herein, for any action taken or for refraining from the taking of any action in good faith pursuant to this Master Agreement and any Series Supplement or for errors in judgment not involving willful misconduct, bad faith or negligence; provided, however, that this provision shall not protect the Back-up Servicer against any liability resulting from its breach of any representation or warranty made herein, nor shall this provision protect the Back-up Servicer against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or gross negligence in the performance of its duties hereunder. Neither the Back-up Servicer nor any of its directors, officers or employees or agents shall be under any liability of any kind or type to any Person arising from the incomplete or inaccurate contents of any Computer Tape provided by the Servicer. The Back-up Servicer and any director, officer, employee or agent of the Back-up Servicer may conclusively rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder or in connection with the transactions contemplated herein. (b) The Servicer shall indemnify the Back-up Servicer, its officers, directors, employees and agents for, and to hold it harmless against, any loss, liability or expense incurred, except to the extent that such loss, liability or expense was incurred through gross negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the Series Estate Trust and the performance of its duties hereunder, including the costs and expenses of defending against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. (c) The Back-up Servicer shall perform such duties and only such duties as are specifically set forth in this Master Agreement, and no implied covenants or obligations shall be read into this Master Agreement against the Back-up Servicer. (d) The Back-up Servicer shall be entitled to the benefits and immunities afforded the Trustee pursuant to the provisions of Sections 11.01, 11.03 and 11.04 of this Master Agreement. 66 Section 9.11. Representations and Warranties of the Back-up Servicer. The Back-up Servicer hereby makes the following representations and warranties for the benefit of the Trustee, the Series Support Providers and the related Noteholders: (a) The Back-up Servicer is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America; (b) The Back-up Servicer has the power, authority and legal right to execute, deliver and perform this Master Agreement and any Series Supplement, and the execution, delivery and performance of this Master Agreement and any Series Supplement has been duly authorized by the Back-up Servicer by all necessary corporate action; (c) The execution, delivery and performance by the Back-up Servicer of this Master Agreement and the other Series Related Documents (a) does not violate any provision of any law or any order, writ, judgment, or decree of any court, arbitrator, or governmental authority applicable to the Back-up Servicer or any of its assets, (b) does not violate any provision of the corporate charter or by-laws of the Back-up Servicer, (c) does not result in the creation or imposition of any Lien on any properties included in the Series Trust Estate and (d) does not violate any provision of, or constitute, with or without notice or lapse of time, a default under, the provisions of any mortgage, indenture, contract, agreement, or other undertaking to which the Back-up Servicer is a party, which violation or default could reasonably be expected to materially and adversely affect the Back-up Servicer 's performance or ability to perform its duties under this Master Agreement the other Series Related Documents or the transactions contemplated in this Master Agreement or the other Series Related Documents; (d) The execution, delivery and performance by the Back-up Servicer of this Master Agreement and the other Series Related Documents does not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency regulating the banking and corporate trust activities of the Back-up Servicer; and (e) This Master Agreement and the other Series Related Documents have been duly executed and delivered by the Back-up Servicer and constitutes the legal, valid, and binding agreement of the Back-up Servicer, enforceable in accordance with its and their respective terms. 67 Article X EVENTS OF DEFAULT AND REMEDIES Section 10.01. Events of Default. The "Events of Default," with respect to a Series, shall be set forth in the related Series Supplement. Section 10.02. Collection of Indebtedness and Suits for Enforcement by Trustee; Authority of Series Controlling Party. (a) Subject to the provisions of the related Series Supplement, if the Notes of any Series are accelerated following the occurrence of an Event of Default with respect to such Series, there shall be due and payable (but only from the funds available from the related Series Trust Estate), the whole amount then due and payable on such Notes for principal and interest, with interest upon the overdue principal, and, to the extent payment of such interest shall be legally enforceable, upon overdue installments of interest, at the interest rate applicable to the Notes of such Series and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel and in addition thereto, all other indebtedness or other liabilities of the Transferor and the related Obligor to the Series Secured Parties of such Series arising from such Series. (b) If an Event of Default occurs and is continuing with respect to a Series, the Trustee shall at the direction of the related Series Controlling Party, proceed to protect and enforce its rights and the rights of the related Series Secured Parties by such appropriate Proceedings as such Series Controlling Party shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Master Agreement or the related Series Supplement or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Master Agreement, the related Series Supplement, or by law. (c) In case there shall be pending, relative to any Obligor or any other obligor upon the Notes of the related Series or any Person having or claiming an ownership interest in the related Series Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of any related Obligor or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to such Obligor or other obligor upon the Notes of such Series, or to the creditors or property of such Obligor or such other obligor, the Trustee, irrespective of whether the principal of any Notes of such Series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the 68 provisions of this Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise: (i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of such Notes or for other obligations owing and unpaid to the related Series Secured Parties and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee against the related Series Trust Estate (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of gross negligence or bad faith) and of the Noteholders of such Series and the other related Series Secured Parties allowed in such Proceedings; (ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Notes of such Series in any election of a trustee, a standby trustee or person performing similar functions in any such Proceedings; (iii) to collect and receive any moneys or other property payable or deliverable on such claims and received with respect to the related Series Trust Estate and to distribute all amounts received with respect to the claims of the Noteholders of such Series and the other related Series Secured Parties on their behalf; and (iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee or the Holders of Notes of such Series and the other related Series Secured Parties, in each case against the related Series Trust Estate, allowed in any judicial proceedings relative to the Obligors, its creditors and its property; and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to such Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of gross negligence or bad faith. (d) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder or other related Series Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or other related Series Secured Party or to authorize the Trustee to vote in respect of the claim of any Noteholder or other Series Secured Party in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. 69 (e) All rights of action and of asserting claims under this Master Agreement, the related Series Supplement, any other Series Related Document or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the related Notes and the other Series Secured Parties in accordance with the related Series Supplement. (f) In any Proceedings brought by the Trustee (including any Proceedings involving the interpretation of any provision of this Master Agreement or the related Series Supplement), the Trustee shall be held to represent all the Holders of the related Notes, and it shall not be necessary to make any Noteholder a party to any such Proceedings. Section 10.03. Limitation on Suits. No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Master Agreement or the related Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Notes of the related Series; (ii) the Holders of not less than 50% of the Maximum Series Limit of the Notes of the related Series shall have made written request to the Trustee to institute such Proceeding in respect of such Event of Default in its own name as Trustee hereunder; (iii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such Proceeding; (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority of the Maximum Series Amount of the Notes of the related Series; and (vi) if any Series Support secures such Series, a Series Support Provider Default shall have occurred and be continuing. It is understood and intended that no one or more of the Holders shall have any right in any manner whatever hereunder or under the Notes to (i) affect, disturb or 70 prejudice the rights of the Holders of any other Notes, (ii) obtain or seek to obtain priority or preference over any other such Holder or (iii) enforce any right under this Master Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all such Holders. Section 10.04. Unconditional Right of Holders to Receive Principal and Interest. Subject to the provisions of Section 3.06 hereof, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on or after the respective due dates thereof expressed in such Note, in this Master Agreement or the related Series Supplement and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder; provided, however, that (x) if such Series is secured by any Series Support, then, so long as no Series Support Provider Default shall have occurred and be continuing, no such suit shall be instituted and (y) in no event shall such right entitle any Holder to a payment from a source of funds other than the related Series Trust Estate. Section 10.05. Restoration of Rights and Remedies. If any of the Trustee, the related Series Support Provider or any Holder has instituted any Proceeding to enforce any right or remedy under this Master Agreement (or the related Series Supplement) and such Proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, the related Series Support Provider or to such Holder, then and in every such case, subject to any determination in such Proceeding, the Obligors, the Trustee, the related Series Support Provider and the related Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee, the related Series Support Provider and the related Holders shall continue as though no such Proceeding had been instituted. Section 10.06. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of section 5.05, no right or remedy herein conferred upon or reserved to any of the Trustee, the related Series Controlling Party, the related Series Support Provider or to the related Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 10.07. Delay or Omission Not Waiver. No delay or omission of any of the Trustee, the related Series Controlling Party, any Series Support Provider or any Holder of any related Note to exercise any right 71 or remedy accruing upon any related Default or related Event of Default shall impair any such right or remedy or constitute a waiver of any such related Default or related Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee, any Series Support Provider or to the related Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, any Series Support Provider or by the related Holders, as the case may be. Section 10.08. Control by Holders. If the Trustee is the Series Controlling Party with respect to a Series, the Holders of a majority of the Maximum Series Limit of the Notes with respect to such Series shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes; provided, that (i) such direction shall not be in conflict with any rule of law, with this Master Agreement or with the related Series Supplement, and (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 10.09. Waiver of Past Defaults. The Series Controlling Party with respect to a Series may, on behalf of the Holders of all the Notes of the related Series waive any past Default relating to such Series or Event of Default relating to such Series hereunder and its consequences, except a Default relating to such Series: (i) in the payment of the principal of or interest, if any, on any Note of the related Series, or (ii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Outstanding Note of the related Series affected. If the Trustee is the Series Controlling Party with respect to a Series the Trustee may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to waive any past Default or Event of Default of the related Series. If a record date is fixed, the Holders of the related Series on such record date, or their duly designated proxies, and only such Persons, shall be entitled to waive any such Default or Event of Default, whether or not such Holders remain Holders after such record date; and unless such majority in principal amount shall have been obtained prior to the date which is 90 days after such record date, any such waiver previously given shall automatically and without further action by any Holder be cancelled and of no further effect. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this 72 Master Agreement and each applicable Series Supplement; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 10.10. Undertaking for Costs. All parties to this Master Agreement and each Series Supplement agree, and each Holder of any Note by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Master Agreement or the related Series Supplement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Obligors, to any suit instituted by the Trustee or any Series Support Provider, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Maximum Series Limit of the Notes of the related Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Note on or after the respective due dates expressed in such Note and the related Series Supplement. Section 10.11. Action on Notes. The Trustee's right to seek and recover judgment on the Notes or under this Master Agreement or any Series Supplement shall not be affected by the seeking, obtaining or application for any other relief under or with respect to this Master Agreement or such Series Supplement. Neither the lien hereof, the related Series Supplement nor any rights or remedies of the Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Trustee against the Obligors or by the levy of any execution under such judgment upon any portion of the related Series Trust Estate or upon any of the assets of the Obligors. Article XI THE TRUSTEE Section 11.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default with respect to a Series: (i) the Trustee undertakes to perform with respect to such Series such duties and only such duties as are specifically set forth in this Master Agreement and/or the related Series Supplement, and no implied covenants or obligations shall be read into this Master Agreement or the related Series Supplement against the Trustee; and 73 (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Master Agreement and/or the related Series Supplement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Master Agreement and/or the related Series Supplement. (b) If an Event of Default with respect to a Series has occurred and is continuing, the Trustee shall exercise such of the rights and powers with respect to such Series vested in it by this Master Agreement and/or the related Series Supplement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Master Agreement or any Series Supplement shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct; provided, that (i) this subsection shall not be construed to limit the effect of subsection (a) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the related Series Support Provider or, if the related Series Support Provider is not a Series Controlling Party or if there is no Series Support Provider for such Series, the Holders of a majority of the Maximum Series Limit of the Notes of the related Series, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Master Agreement, the related Series Supplement or the related Series Support with respect to the Notes of the related Series; and (iv) no provision of this Master Agreement or the related Series Supplement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not herein or therein expressly so provided, every provision of this Master Agreement and the related Series Supplement relating to the 74 conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law or the terms of this Master Agreement or the related Series Supplement. (g) The Trustee shall, upon one Business Day's prior notice received by the Trustee, permit any representative of the related Series Controlling Party or any representative of the related Series Support Provider, if any, during the Trustee's normal business hours, to examine all books of account, records, reports and other papers of the Trustee relating to the Notes of the related Series, to make copies and extracts therefrom and to discuss the Trustee's affairs and actions, as such affairs and actions relate to the Trustee's duties with respect to such Notes, with the Trustee's officers and employees responsible for carrying out the Trustee's duties with respect to such Notes. (h) In no event shall the Trustee be required to perform, or be responsible for the manner of performance of, any of the obligations of any Servicer, with respect to any Series except during such time, if any, as the Trustee, in its capacity as successor Servicer for such Series shall be the successor to, and be vested with the rights, powers, duties and privileges of the Servicer in accordance with the provisions of Section 9.02 hereof. (i) The Trustee shall maintain or cause to be maintained, in the Borough of Manhattan in the City of New York, an office or agency where Notes may be surrendered for registration of transfer or exchange (except that Bearer Notes may not be surrendered for exchange at any such office or agency in the United States) and where notices and demands to or upon the Obligors in respect of the Notes, this Master Agreement and the related Series Supplement may be served. Section 11.02. Notice of Defaults. If a Default or Event of Default occurs and is continuing with respect to a Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Noteholder of the related Series notice of such Default or Event of Default promptly after it occurs and shall notify the Obligors, the Obligors' Agent, the Transferor, the Servicer, the Agent and the related Series Support Provider, if any, of any such Default or Event of Default promptly after it occurs. Except in the case of a Default in payment of principal of or interest on any Note, the Trustee may withhold the notice (but not to the related Series Support Provider, if any, or the Obligors) if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interest of the Noteholders of the related Series. 75 Section 11.03. Certain Rights of Trustee. Subject to the provisions of Section 11.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Obligors mentioned herein shall be sufficiently evidenced by an Obligors' Order; (c) whenever in the administration of this Master Agreement and/or any Series Supplement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer's Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Master Agreement and/or any Series Supplement at the request or direction of any of the related Series Support Provider, if any, or the Holders of the related Series pursuant to this Master Agreement, unless such Series Support Provider or such Holders shall have offered to the Trustee reasonable security or indemnity to its satisfaction against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the related Obligors, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 76 (h) The protective provisions and remedial provisions set forth in this Master Agreement benefiting the Trustee shall also benefit the Note Registrar, Paying Agent and Authenticating Agent to the extent the Trustee is also performing such roles. Section 11.04. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein, in any Series Supplement and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Obligors, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Master Agreement, any Series Supplement or of the Notes, or any Series Trust Estate. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Obligors of Notes or the proceeds thereof. Section 11.05. May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar or any other agent of the Obligors, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 11.07 and 11.12, may otherwise deal with the Obligors with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent. Section 11.06. Compensation and Indemnity. (a) As provided in each Series Supplement, the Trustee will be paid, and the Trustee shall be entitled to, certain annual fees with respect to its administration of the related Notes and the related Series Trust Estate, which shall not be limited by any law on compensation of a Trustee of an express trust, and certain reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services as more further set forth in the related Series Supplement. The Obligors' Agent agrees to cause to be provided to the Trustee indemnity against any and all loss, liability or expense (including reasonable attorneys' fees and expenses) incurred by it in connection with the administration of this trust and the performance of their duties hereunder. (b) When the Trustee incurs expenses after the occurrence of an Insolvency Event with respect to any Obligor, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or similar law. Section 11.07. Disqualification; Conflicting Interests. If this Master Agreement is qualified under the Trust Indenture Act and if the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Master Agreement. 77 Section 11.08. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder, which shall (a) be a commercial bank or trust company organized and doing business under the laws of the United States of America or any State thereof, (b) have a combined capital and surplus of at least $50,000,000, (c) have a long-term deposit rating of at least A3 from Moody's or otherwise be acceptable to Moody's and a long-term deposit rating of at least A- from S&P or otherwise be acceptable to S&P and (d) be authorized to exercise corporate trust powers and be subject to supervision or examination by Federal or State authority. If such commercial bank or trust company publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such commercial bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 11.09. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 11.10. (b) The Trustee may resign at any time with respect to the Notes by giving written notice thereof to the Obligors' Agent. If the instrument of acceptance by a successor Trustee required by Section 11.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes. (c) The Trustee may be removed at any time with respect to the Notes by Act of the Majority Control Parties, delivered to the Trustee and to the Obligors' Agent. (d) If at any time: (1) The Trustee shall fail to comply with Section 11.07 after written request therefor by the Obligors, by any Holder or by any Series Support Provider, or (2) the Trustee shall cease to be eligible under Section 11.08 and shall fail to resign after written request therefor by the Obligors, by any such Holder or by any Series Support Provider, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the 78 Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Obligors' Agent (with the consent of each Series Support Provider as to which a Series Support Provider Default has not occurred and is continuing) may remove the Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Notes, the Obligors' Agent (with the consent of each Series Support Provider as to which a Series Support Provider Default has not occurred and is continuing) shall promptly appoint a successor Trustee and shall comply with the applicable requirements of Section 11.10. (f) The Obligors' Agent shall give notice of each resignation and each removal of the Trustee with respect to the Notes and each appointment of a successor Trustee with respect to the Notes by mailing written notice of such event by first-class mail, postage prepaid, to all holders of Notes as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee with respect to the Notes and the address of its Corporate Trust Office. Section 11.10. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to the Notes, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Obligors' Agent, each Series Support Provider, if any and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Obligors' Agent, the related Series Support Provider, if any, or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor Trustee, the Obligors' Agent and each Obligor shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) of this Section. Section 11.11. Merger, Conversion, Consolidation or Succession to Business. Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity 79 resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation or other entity shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. The Trustee shall provide the Obligors' Agent and each Series Support Provider prompt notice of any such transaction after the completion thereof. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 11.12. Preferential Collection of Claims Against Obligors. If this Master Agreement is ever qualified under the Trust Indenture Act, then the provisions of Section 311 of the Trust Indenture Act shall govern. Section 11.13. Appointment of Authenticating Agent. As of the date of the Master Agreement and at any time when any of the Notes remain Outstanding the Trustee may appoint an Authenticating Agent or agents with respect to one or more Series, Classes or Tranches of Notes which shall be authorized to act on behalf of the Trustee to authenticate Notes of such Series, Class or Tranche issued upon exchange, registration of transfer or partial prepayment thereof, or pursuant to Section 5.05, and Notes so authenticated shall be entitled to the benefits of this Master Agreement and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Master Agreement or any Series Supplement to the authentication and delivery of Notes by the Trustee upon exchange, registration of transfer or partial prepayment thereof or the Trustee's certificate of authentication in connection therewith, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Obligors' Agent, shall be authorized under law and shall meet the eligibility criteria established for the Trustee, as set forth in Section 11.08 hereof. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an 80 Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Obligors' Agent. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Obligors' Agent. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be reasonably acceptable to the Obligors' Agent and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of the related Notes, as their names and addresses appear in the Note Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. No resignation or termination of an Authenticating Agent shall become effective until a successor Authenticating Agent shall be appointed and qualified hereunder or the Trustee assumes the duties of Authenticating Agent hereunder. The Obligors' Agent agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. In the event an Authenticating Agent is appointed under this Master Agreement, the Trustee shall incur no liability for such appointment or for any misconduct or negligence of such Authenticating Agent, including without limitation, its authentication of the Notes upon original issuance or pursuant to Sections 5.03, 5.04 or 5.05. In the event the Trustee does incur liability for any such misconduct or negligence of the Authenticating Agent, the Obligors' Agent agrees to indemnify the Trustee for, and hold it harmless against, any such liability, including the costs and expenses of defending itself against any liability in connection with such misconduct or negligence of the Authenticating Agent. If an appointment with respect to one or more Series, Classes or Tranches is made pursuant to this Section, the Notes of such Series, Classes or Tranches may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Notes referred to in the within-mentioned Master Agreement and the within-mentioned Supplement thereto. 81 Wells Fargo Bank Minnesota, National Association, As Trustee By:________________________________________________ As Authenticating Agent By:________________________________________________ Authorized Officer The provisions of Sections 11.01, 11.03 and 11.04 shall apply to the Trustee also in its role as Authenticating Agent for so long as the Trustee shall act as Authenticating Agent. Section 11.14. Paying Agent. (a) The payment responsibilities for the Notes shall be performed by a Paying Agent, appointed by the Obligors' Agent which shall be authorized to exercise corporate trust powers and shall meet the eligibility criteria established for the Trustee, as set forth in Section 11.08 hereof. The Trustee is hereby initially appointed Paying Agent for the purpose of making payments on the Notes as herein provided. (b) Each Paying Agent shall be reasonably acceptable to the Obligors' Agent, shall be authorized under law and shall meet the eligibility criteria established for the Trustee, as set forth in Section 11.08 hereof. If such Paying Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Paying Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time a Paying Agent shall cease to be eligible in accordance with the provisions of this Section, such Paying Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which a Paying Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Paying Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of a Paying Agent, shall continue to be a Paying Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Paying Agent. 82 A Paying Agent may resign at any time by giving written notice thereof to the Trustee and to the Obligors' Agent. The Trustee may at any time terminate the agency of a Paying Agent by giving written notice thereof to such Paying Agent and to the Obligors' Agent. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Paying Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Paying Agent which shall be reasonably acceptable to the Obligors' Agent and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of the related Notes, as their names and addresses appear in the Note Register. Any successor Paying Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as a Paying Agent. No successor Paying Agent shall be appointed unless eligible under the provisions of this Section. No resignation or termination of a Paying Agent shall become effective until a successor Paying Agent shall be appointed and qualified hereunder or the Trustee assumes the duties of Paying Agent hereunder. The Obligors' Agent agrees to pay to each Paying Agent from time to time reasonable compensation for its services under this Section. In the event a Paying Agent is appointed under this Master Agreement, the Trustee shall incur no liability for such appointment or for any misconduct or negligence of such Paying Agent. In the event the Trustee does incur liability for any such misconduct or negligence of the Paying Agent, the Obligors' Agent agrees to indemnify the Trustee for, and hold it harmless against, any such liability, including the costs and expenses of defending itself against any liability in connection with such misconduct or negligence of the Paying Agent. The provisions of Sections 11.01, 11.03 and 11.04 shall apply to the Trustee also in its role as Paying Agent for so long as the Trustee shall act as Paying Agent. Section 11.15. Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Master Agreement, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Series Trust Estate may at the time be located, the Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the related Series Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the related Noteholders and other Series Secured Parties, such title to the related Series Trust Estate, or any part thereof, and subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor Trustee under Section 11.08 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 11.09 hereof. 83 (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, and (iii) the Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Each instrument appointing any separate trustee or co-trustee shall refer to this Master Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Master Agreement and the related Series Supplement(s), specifically including every provision of this Master Agreement and the related Series Supplement(s) relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee. (d) If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new successor trustee. Article XII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS' AGENT Section 12.01. Obligors' Agent to Furnish Trustee Names and Addresses of Holders. The Obligors' Agent will furnish or cause to be furnished to the Trustee with respect to each Series of Notes (a) not more than five days after the earlier of (i) each Record Date with respect to such Series and (ii) three months after the last Record 84 Date with respect to such Series, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Notes of such Series as of such Record Date, (b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Obligors' Agent of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the Note Registrar, no such list shall be required to be furnished. The Trustee or, if the Trustee is not the Note Registrar, the Obligors' Agent, shall furnish or cause to be furnished to the related Series Support Provider, if any, in writing on an annual basis and at such other times as such Series Support Provider may request in writing a copy of such list with respect to the related Series. Section 12.02. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 12.01 and the names and addresses of Holders received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 12.01 upon receipt of a new list so furnished. (b) If three or more Holders of Notes of any particular Series (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Note for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Notes of such Series with respect to their rights under this Master Agreement, the related Series Supplement or under such Notes and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 12.02(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 12.02(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. Every Holder of Notes, by receiving and holding the same, agrees with the Obligors and the Trustee that neither the Obligors nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 12.01 or 12.02(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 12.01 or 12.02(b). 85 Section 12.03. Reports by Trustee. If this Master Agreement is ever qualified under the Trust Indenture Act, then the Trustee shall comply with the provisions of Section 313 of the Trust Indenture Act. Section 12.04. Reports by Obligors' Agent. If this Master Agreement is qualified under the Trust Indenture Act, the Obligors' Agent on behalf of the Obligors shall: (1) file or cause to be filed with the Trustee, within 15 days after the Obligors are required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Obligors may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Obligors are not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file or cause to be filed with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Obligors with the conditions and covenants of this Master Agreement as may be required from time to time by such rules and regulations; (3) transmit or cause to be transmitted by mail to all Holders, as their names and addresses appear in the Note Register, and to each Series Support Provider within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Obligors pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (4) furnish any other periodic reports as required by the Trust Indenture Act. Section 12.05. Trustee Internet Website. The Trustee may make available to the related Series Controlling Party, the related Series Support Provider and the related Noteholders, via the Trustee's Internet Website, all reports or notices required to be provided by the Trustee with respect to a Series of Notes under the terms of this Master Agreement (including, but not limited to Sections 6.07 and 6.08) and the related Series Supplement available and, with the consent 86 or at the direction of the Servicer and the Obligor's Agent, such other information regarding the Notes and/or the Contracts as the Trustee may have in its possession, but only with the use of a password provided by the Trustee or its agent to such Person upon receipt by the Trustee from such Person of a certification in the form of Exhibit B hereto; provided, however, that the Trustee or its agent shall provide such password to the parties to this Agreement and the designee of such parties (the parties to each Series Supplement and the related Series Controlling Party and related Series Support Provider shall be deemed to be designees) without requiring such certification. The Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor. The Trustee's Internet Website shall be initially located at "www.ABSNet.net" or at such other address as shall be specified by the Trustee from time to time in writing to each Series Controlling Party. In connection with providing access to the Trustee's Internet Website, the Trustee may require registration and the acceptance of a disclaimer. The Trustee shall not be liable for the dissemination of information in accordance with this Master Agreement. Article XIII MASTER AGREEMENT SUPPLEMENTS Section 13.01. Supplements Affecting All Series, or the Master Agreement Generally. (a) Without the consent of any Holders, the Obligors, the Trustee when authorized by an Obligors' Order, the Servicer and each Series Support Provider, at any time and from time to time, may enter into one or more written supplements to this Master Agreement (the "Master Agreement Supplements"), in form satisfactory to the Trustee, for any of the following purposes: (i) to authorize the issuance of one or more series of Notes; provided, that the consent of each Series Controlling Party is obtained in advance of such issuance and confirmation is obtained from the Rating Agencies that the issuance of such notes will not result in a change in any Facility Shadow Rating; or (ii) to evidence the succession, in compliance with the applicable provisions hereof, of another corporation to any Obligor or to the Obligors' Agent and the assumption by any such successor of the covenants of the Obligors or the Obligors' Agent herein, in any Series Supplement and in the Notes; or (iii) to add to the covenants of the Obligors or the Obligors' Agent for the benefit the Holders of the Notes or to surrender any right or power herein conferred upon the Obligors or the Obligors' Agent; or (iv) to add to or change any of the provisions of this Master Agreement to such extent as shall be necessary to permit or facilitate the issuance of Notes in bearer form, registrable or not registrable as to principal, and with or without 87 interest coupons, or to permit or facilitate the issuance of Notes in uncertificated form, or to facilitate the issuance of Notes in global form through the facilities of a Depository; or (v) to modify the restrictions on and procedures for resale and other transfers of the Notes to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or transfer of restricted securities generally; or (vi) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Notes and to add to or change any of the provisions of this Master Agreement as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 11.15; or (vii) to modify, eliminate or add to the provisions of this Master Agreement to such extent as shall be necessary to qualify, requalify or continue the qualification of this Master Agreement (including any supplement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Master Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereinafter enacted; or (viii) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Master Agreement, as long as such action shall not adversely affect the interests of the Holders of Notes of any Series affected thereby in any material respect. (b) Subject to the provisions of paragraph (c) below, the Obligors' Agent on behalf of the Obligors, the Servicer, each Series Support Provider and the Trustee, when authorized by an Obligors' Order, may, also without the consent of any of the Holders of the Notes, enter into a Master Agreement Supplement or Supplements for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Master Agreement or of modifying in any manner the rights of the Holders of the Notes under this Master Agreement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Noteholder, and prior notification of such action shall be provided to the Rating Agencies. (c) The Obligors' Agent on behalf of the Obligors, the Servicer, each Series Support Provider and the Trustee, when authorized by an Obligors' Order and upon prior notification of the Rating Agencies, also may, with the consent of the Holders of not less than a majority of the Maximum Series Limit of the Notes of each affected Series, by Act of said Holders delivered to the Obligors' Agent and the Trustee, enter into 88 a Master Agreement Supplement or Supplements hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Master Agreement or of modifying in any manner the rights of the Holders of Notes under this Master Agreement; provided, that, subject to the express rights of the related Series Support Provider under the related Series Related Documents, no such Master Agreement Supplement shall, without the consent of the Holder of each Outstanding Note of each affected Series affected thereby, (i) change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof or the rate of, or method of computation of the rate of, interest thereon or any prepayment or redemption price with respect thereto, change the provision of this Master Agreement relating to the application or collections on, or the proceeds of the sale of, the related Series Trust Estate to payment of principal of or interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the respective due dates thereof, or (ii) reduce the percentage of the Maximum Series Limit of the Notes, the consent of whose Holders is required for any such Master Agreement Supplement, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Master Agreement or certain defaults hereunder and their consequences) provided for in this Master Agreement, or (iii) permit the creation of any lien prior to the lien created by the related Series Supplement with respect to any part of the related Series Trust Estate, or terminate the lien created by the related Series Supplement on any Pledged Property subject hereto or deprive any related Holder of the security afforded by the lien of the related Series Supplement, except to the extent expressly permitted by this Master Agreement, the related Series Supplement or any other related Series Related Document, or (iv) modify any of the provisions of this Section except to increase any such percentage or to provide that certain other provisions of this Master Agreement, the related Series Supplement or the related Series Related Documents cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby, or (v) modify or alter the provisions of the second proviso to the definition of the term "Outstanding." The Trustee may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any Master Agreement Supplement described in this Section 13.01. If a record date is fixed, the applicable Holders on such record date or their duly designated proxies, and only such Persons, shall be entitled to consent to such Master Agreement Supplement, whether or not such 89 Holders remain Holders after such record date; provided, that, unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed Master Agreement Supplement, but it shall be sufficient if such Act shall approve the substance thereof. The Obligors' Agent shall in its discretion (which may be based on an Opinion of Counsel) determine whether or not any Notes would be affected by any Master Agreement Supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereunder. The Trustee shall not be liable for any such determination made in good faith. Promptly after the execution by the parties hereto of any Master Agreement Supplement pursuant to this Section, the Trustee shall mail to the Holders of the Notes of the affected Series a notice setting forth in general terms the substance of such Master Agreement Supplement. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Master Agreement Supplement. Section 13.02. Supplements Authorizing a Series of Notes. (a) Each Series of Notes issued hereunder shall be issued pursuant to a Series Supplement, which shall set forth the terms and provisions of such Series. (b) Amendments to Series Supplements shall be governed by the provisions of Section 13.01 hereof, which for such purpose shall be deemed to refer only to the related Series Supplement and to the related Series Support Provider. The Trustee may conclusively rely on an Opinion of Counsel as to which Series Supplements relate to which Series, or to this Master Agreement (and thus all Series) as a whole. Section 13.03. Execution of Master Agreement Supplements. In executing, or accepting the additional trusts created by, any Master Agreement Supplement permitted by this Article or the modifications thereby of the trusts created by this Master Agreement, the Trustee shall receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such Master Agreement Supplement is authorized or permitted by this Master Agreement. The Trustee may, but shall not be obligated to, enter into any such Master Agreement Supplement which affects the Trustee's own rights, duties or immunities under this Master Agreement or otherwise. 90 Section 13.04. Effect of Master Agreement Supplements. Upon the execution of any Master Agreement Supplement under this Article, this Master Agreement shall be modified in accordance therewith, and such Master Agreement Supplement shall form a part of this Master Agreement for all purposes, and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 13.05. Reference in Notes to Master Agreement Supplements. Notes authenticated and delivered after the execution of any Master Agreement Supplement pursuant to this Article may, and shall if required by the Obligors, bear a notation as to any matter provided for in such Master Agreement Supplement. If the Obligors' Agent shall so determine, new Notes so modified as to conform, in the opinion of the Obligors' Agent, to any such Master Agreement Supplement may be prepared and executed by the Obligors' Agent and authenticated and delivered by the Trustee in exchange for Outstanding Notes. Article XIV COVENANTS The Obligors hereby covenant and agree that so long as this Master Agreement is in effect and (i) any Notes remain Outstanding or (ii) any obligation owed to a Series Support Provider or Series Secured Party remains unpaid or unperformed: Section 14.01. Payment of Principal and Interest. The related Obligors will duly and punctually pay or cause to be paid, on a nonrecourse basis and solely from the funds available from the related Series Trust Estate, the principal of and interest on the Notes of the related Series in accordance with the terms of such Notes, this Master Agreement and the related Series Supplement. Amounts on deposit in the related Series Account (other than amounts representing payments under any related Series Support) in respect of principal and interest on a Settlement Date shall constitute full satisfaction of the related Obligors' obligation with respect to the payment of such principal and interest on the related Notes. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest or principal shall be considered as having been paid by the related Obligors to such Noteholder for all purposes of this Master Agreement. Section 14.02. Maintenance of Non-U.S. Office or Agency. The Obligors will maintain or cause to be maintained (a) if and so long as any Series or Class is listed on the Luxembourg Stock Exchange, in Luxembourg, and (b) in London, in the case of Bearer Notes and Holders thereof, if any for so long as any Bearer Notes are outstanding, an office or agency where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Obligors in respect of the Notes, this Master Agreement and the related Series 91 Supplement may be served. The Obligors will give or cause to be given prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Obligors shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Obligors hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. Section 14.03. Consolidation, Merger, Sale of Assets. (a) No Obligor shall consolidate or merge with or into any other Person, unless (i) the Person (if other than such Obligor) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State and shall expressly assume, by a Master Agreement Supplement, executed and delivered to the Trustee, the Obligors' Agent, the Servicer, each Series Controlling Party and each Series Support Provider, the due and punctual payment of the principal of and interest on all Notes previously issued and having such Obligor as an Obligor with respect thereto and the performance or observance of every agreement and covenant of this Master Agreement and the related Series Supplement and each other related Series Related Document on the part of such Obligor to be performed or observed, all as provided herein and therein; (ii) immediately after giving effect to such transaction, no Default with respect to any Series or Event of Default with respect to any Series previously issued and having such Obligor as a Series Obligor with respect thereto shall have occurred and be continuing; (iii) each Series Support Provider and each Series Controlling Party relating to each Series previously issued and having such Obligor as a Series Obligor with respect thereto, if any, shall have consented in writing to such transaction; (iv) any action as is necessary to maintain the validity and first priority, perfected nature of the lien and security interest created in favor of the Trustee by each related Series Supplement shall have been taken; and (v) prior notification shall have been provided to the Rating Agencies. (b) No Obligor shall convey or transfer all or substantially all of its properties or assets or any Series Trust Estate to any Person (except as expressly permitted by this Master Agreement, the related Series Supplement or the related Series Related Documents), unless (i) the Person that acquires by conveyance or transfer such Series Trust Estate shall (A) be a United States citizen or a Person organized and 92 existing under the laws of the United States of America or any State, (B) expressly assume, by a Master Agreement Supplement, executed and delivered to the Trustee and each Series Support Provider, the due and punctual payment of the principal of and interest on all Notes previously issued and having such Obligor as a Series Obligor with respect thereto and the performance or observance of every agreement and covenant of this Master Agreement, the related Series Supplement or the related Series Related Documents on the part of such Obligor to be performed or observed, all as provided herein and therein, (C) expressly agree by means of such Master Agreement Supplement that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of Holders of the related Notes, (D) unless otherwise provided in such Master Agreement Supplement, expressly agree to indemnify, defend and hold harmless such Obligor against and from any loss, liability or expense arising under or related to this Master Agreement, the related Series Supplement and the Notes previously issued and having such Obligor as a Series Obligor with respect thereto and (E) expressly agree by means of such Master Agreement Supplement that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Commission (and any other appropriate Person) required by the Exchange Act in connection with the related Notes; (ii) immediately after giving effect to such transaction, no Default with respect to the affected Series or Event of Default with respect to any Series previously issued and having such Obligor as a Series Obligor with respect thereto shall have occurred and be continuing; (iii) each Series Support Provider and each Series Controlling Party relating to each Series previously issued and having such Obligor as a Series Obligor with respect thereto, if any, shall have consented in writing to such transaction; and (iv) any action as is necessary to maintain the validity and first priority, perfected nature of the lien and security interest created in favor of the Trustee by each related Series Supplement(s) shall have been taken. Section 14.04. Negative Covenants. The Obligors hereby covenant and agree that so long as this Master Agreement is in effect and (i) any Notes remain Outstanding or (ii) any obligation (other than any contingent liability or indemnity) owed to a Series Support Provider, a Series Secured Party or any Noteholder remains unpaid or unperformed: (i) except as expressly permitted by this Master Agreement, each related Series Supplement and each related Series Related Document, sell, transfer, exchange or otherwise dispose of any of the properties or assets constituting any Series Trust Estate, unless directed to do so by the related Series Controlling Party; 93 (ii) claim any credit on, or make any deduction from the principal or interest in respect of, the Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Noteholder or any Series Support Provider by reason of the payment of the taxes levied or assessed upon any part of any Series Trust Estate; or (iii) (A) except as permitted by this Master Agreement, any related Series Supplement or any related Series Related Documents, permit the validity or effectiveness of the related Series Supplement to be impaired, or permit the lien in favor of the Trustee created by the related Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to any Notes under this Master Agreement or any Series Supplement except as may be expressly permitted hereby, (B) permit any Lien (other than the Lien in favor of the Trustee created by the related Series Supplement) to be created on or extend to or otherwise arise upon or burden any Series Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics' liens, storage liens and other liens that arise by operation of law, in each case on any Pledged Property and arising solely as a result of an action or omission of the related Users), (C) permit the lien in favor of the Trustee created by the related Series Supplement not to constitute a valid first priority (other than with respect to any such tax, mechanics', storage or other lien) and perfected security interest in the related Series Trust Estate, or (D) amend, modify or fail to comply with the provisions of the related Series Related Documents without the prior written consent of the related Series Controlling Party; or (iv) contribute or incur any obligation to contribute to, or incur any liability in respect of, any Plan or Multiemployer Plan. Section 14.05. Performance of Obligations; Servicing of Each Series Trust Estate. (a) No Obligor will take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations under any instrument or agreement included in any Series Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Master Agreement, the related Series Supplement or related Series Related Document or such other instrument or agreement. (b) Any Obligor may contract with other Persons (including the Obligors' Agent) to assist it in performing its duties under this Master Agreement, and any performance of such duties by a Person identified to the Trustee and each related Series Support Provider in an Officer's Certificate of such Obligor shall be deemed to be action taken by such Obligor. 94 (c) Each Obligor will punctually perform and observe or cause to be performed and observed all of its obligations and agreements contained in this Master Agreement, each related Series Supplement, its Organizational Documents and each related Series Related Document and in the instruments and agreements included in each Series Trust Estate, including but not limited to filing or causing to be filed all UCC financing statements and continuation statements required to be filed by the terms of this Master Agreement, each related Series Supplement and each related Series Related Document in accordance with and within the time periods provided for herein and therein. (d) If any Obligor or the Obligors' Agent shall have knowledge of the occurrence of an Event of Servicer Termination under any Series Related Document, the Obligors shall promptly notify the Trustee, the related Series Controlling Party and the related Series Support Provider, if any, and shall specify in such notice the action, if any, such Obligor and the Obligors' Agent is taking with respect of such default. If such Servicer Termination Event shall arise from the failure of the Servicer to perform any of its duties or obligations hereunder with respect to the related Series Trust Estate, the Obligors and the Obligors' Agent shall take all reasonable steps available to it to remedy such failure. (e) Upon any termination of any Servicer's rights and powers pursuant to this Master Agreement or any Series Related Document, the Obligors' Agent shall promptly notify the Trustee in writing. Section 14.06. Money for Note Payments to Be Held in Trust. All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the related Series Account shall be made on behalf of the related Obligors by the Trustee or by another Paying Agent, and no amounts so withdrawn from any Series Account for payments of Notes shall be paid over to any Obligor, except as provided in the related Series Supplement. The related Obligors will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will, with respect to each related Series of Notes: (i) hold all sums held by it for the payment of the principal of or interest on the related Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the related Obligors in the making of any payment of principal or interest on such Notes; (iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; 95 (iv) immediately resign as a Paying Agent and forthwith pay to the Trustee all sums held by it in trust for the payment of the related Notes if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and (v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. The related Obligors may at any time, for the purpose of obtaining the satisfaction and discharge of any Series Supplement or for any other purpose, pay, or by Obligors' Order direct any Paying Agent to pay, to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, in trust for the payment of the principal of or interest on any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Obligors' Agent, as specified in an Obligors' Order; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Obligors' Agent for payment thereof, and all liability of the Trustee, such Paying Agent or any Series Support Provider with respect to such trust money, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Obligors' Agent cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Obligors' Agent. Section 14.07. Corporate Existence. Except as provided in Section 14.03, each Obligor will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and material rights (charter and statutory) and material franchises of such Obligor; provided, however, that the Obligors, with the prior written consent of each Series Support Provider and each Series Controlling Party, shall not be required to preserve any such right or franchise if such Obligor shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Obligor, and that the loss thereof is not disadvantageous in any material respect to the Holders of the related Notes. 96 Section 14.08. Payment of Taxes and Other Claims. Each Obligor will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon such Obligor on any portion of any Series Trust Estate, or upon the income, profits or property of such Obligor, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the Property of such Obligor or on any portion of any Series Trust Estate; provided, however, that such Obligor shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and such Obligor shall have set aside on its books adequate reserves with respect thereto. Section 14.09. Amendment of Organizational Documents. (a) No Obligor will amend its Organizational Documents without the prior written consent of the related Series Controlling Parties and the prior notification of the Rating Agencies, and shall not amend its Organizational Documents in any manner that materially and adversely affects the Holders of the Notes or any Series Support Provider. (b) No Obligor shall take any action which would adversely impact the corporate separateness of such Obligor with Marlin, or which would adversely impact its status as a "bankruptcy remote" entity. Each Obligor shall strictly abide by the restrictive provisions of its Organizational Documents in furtherance of the foregoing. Section 14.10. Rule 144A Information. With respect to the Holder of any Unregistered Note, the Obligors shall promptly furnish or cause to be furnished to such Holder or to a prospective purchaser of such an Unregistered Note designated by such Holder, as the case may be, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act ("Rule 144A Information") in order to permit compliance by such Holder with Rule 144A in connection with the resale of such Unregistered Note by such Holder; provided, however, that the Obligors shall not be required to furnish Rule 144A Information in connection with any request made on or after the date which is three years from the later of (i) the date such Note (or any predecessor Note) was acquired from the Obligors or (ii) the date such Note (or any predecessor Note) was last acquired from an "affiliate" of the Obligors within the meaning of Rule 144 under the Securities Act; and provided, further, that the Obligors shall not be required to furnish such information at any time to a prospective purchaser located outside the United States who is not a "United States Person" within the meaning of Regulation S under the Securities Act if such Note may then be sold to such prospective purchaser in accordance with Rule 904 under the Securities Act (or any successor provision thereto). 97 Section 14.11. Further Instruments and Acts. Upon request of the Trustee, any Series Support Provider or any Series Controlling Party, each Obligor and the Obligors' Agent will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Master Agreement, any related Series Supplement and any related Series Related Document. Section 14.12. Compliance with Laws. Each Obligor shall comply with all applicable Requirements of Law, the noncompliance with which would, individually or in the aggregate, materially and adversely affect any portion of any Series Trust Estate or the ability of such Obligor to perform its obligations under the related Notes, this Master Agreement, the related Series Supplements or the related Series Related Document. Section 14.13. Income Tax Characterization. For purposes of Federal income, state and local income and franchise and any other income taxes, each Obligor will treat the related Notes as debt of such Obligor. Article XV MISCELLANEOUS PROVISIONS Section 15.01. Counterparts. For the purpose of facilitating the execution of this Master Agreement and for other purposes, this Master Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 15.02. Governing Law. This Master Agreement, each Series Supplement and each Note shall be governed by, and construed in accordance with, the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws, including Section 5-1401 of the General Obligation Laws of New York, but otherwise without regard to the conflicts of law provisions of any State. Section 15.03. Notices. All demands, notices and communications (other than periodic communications of a routine nature made in connection with the dissemination of information regarding the Pledged Property and the Servicer required to be delivered hereunder, which shall be delivered or mailed by first class mail) hereunder shall be in writing, personally delivered or mailed by overnight courier, and shall be deemed to have been duly given upon receipt (a) in the case of Transferor and the Servicer, at the 98 following address: Marlin Leasing Corp., 124 Gaither Drive, Suite 170, Mt. Laurel, New Jersey 08054, Attention: Treasurer, (b) in the case of the Trustee, at the following address: MAC N9311-161 Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services - Asset Backed Administration, (c) in the case of the Obligors' Agent, at the following address: Marlin Leasing Receivables Corp. IV, 639 Isbell Road, Suite 390, Reno, Nevada 89509, Attention: Treasurer, and (d) in the case of any Series Support Party, at the address specified for such notice in the applicable Series Supplement, or, in each of the foregoing cases (a) through (d), at such other address as shall be designated by such party in a written notice to the other parties. Any notice required or permitted to be mailed to a Noteholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Note Register or the related Series Supplement. Any notice to a Noteholder which is so mailed within the time prescribed in this Master Agreement shall be conclusively presumed to have been duly given on the fifth Business Day following mailing, whether or not the Noteholder receives such notice. Section 15.04. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Master Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Master Agreement and shall in no way affect the validity or enforceability of the other provisions of this Master Agreement or of the Notes or the rights of the Holders thereof or of any Series Support Provider. Section 15.05. Binding Effect. This Master Agreement shall inure to the benefit of, and shall be binding upon, (i) the Servicer, (ii) the Obligors' Agent and each Obligor, (iii) the Trustee, (iv) the Noteholders, (v) the Series Support Providers, if any, (vi) to the extent expressly provided hereunder, the Affiliates of the Trustee, the Noteholders and the Series Support Providers, if any, and (vii) the respective successors and permitted assigns of each of the foregoing, subject, in each of the foregoing cases, to the limitations contained in this Master Agreement. Section 15.06. Exhibits. The exhibits to this Master Agreement are hereby incorporated herein and made a part hereof and are an integral part of this Master Agreement. Section 15.07. Calculations. All interest rate calculations under this Master Agreement will be carried out to at least seven decimal places. All payments on the Contracts shall be calculated on the Actuarial Method. 99 Section 15.08. Further Assurances. The Obligors, the Obligors' Agent and the Servicer agree to do and perform, from time to time, any and all acts and to execute any and all further instruments and documents required or reasonably requested by the Trustee to effect more fully the purposes of this Master Agreement, including, without limitation, the execution of any financing statements or continuation statements relating to any Series Trust Estate for filing under the provisions of the UCC of any applicable jurisdiction. Section 15.09. Nonpetition Covenant. Notwithstanding any prior termination of this Master Agreement, none of the parties hereto, any Noteholder, any Series Support Provider, the Transferor, the Obligors' Agent nor any Obligor shall, prior to the date which is one year and one day after the payment in full of the Notes of all Series, acquiesce, petition or otherwise invoke or cause any Obligor to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against any Obligor under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of or for any Obligor or any substantial part of its property or ordering the winding up or liquidation of the affairs of any Obligor. Section 15.10. Special Supplement Agreement. If any party to this Agreement is unable to sign any amendment or supplement due to its dissolution, winding up or comparable circumstances, then the consent of the Majority Control Parties shall be sufficient to amend this Agreement without such party's signature. 100 IN WITNESS WHEREOF, the Servicer, the Obligors' Agent and the Trustee have caused this Master Agreement to be duly executed by their respective officers, all as of the day and year first above written. MARLIN LEASING CORP., as Servicer By:______________________________ Name: Title: MARLIN LEASING RECEIVABLES CORP. IV, Obligors' Agent By:______________________________ Name: Title: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee and Back-up Servicer By:______________________________ Name: Title: [Signature Page to Master Facility Agreement] EXHIBIT A FORM OF BACK-UP SERVICER VERIFICATION CERTIFICATE [DATE] A-1 EXHIBIT B FORM OF TRUSTEE WEBSITE INVESTOR CERTIFICATION Date: Wells Fargo Bank Minnesota, National Association Sixth Street and Marquette Avenue MAC N9311-161 Minneapolis, MN 55479 Attention: Corporate Trust Services -- Asset-Backed Administration Marlin Notes In accordance with Section 12.05 of the Master Lease Receivables Asset-Backed Financing Facility Agreement dated as of December 1, 2000 by and among Marlin Leasing Corp., Marlin Leasing Receivables Corp. IV and Wells Fargo Bank Minnesota, National Association (the "Agreement"), with respect to Series _____ Notes (the "Notes"), the undersigned hereby certifies and agrees as follows: 1. The undersigned is a beneficial owner of $__________ in principal balance of the Notes. 2. The undersigned is requesting a password pursuant to Section 12.05 of the Agreement for access to certain information (the "Information") on the Trustee's website. 3. In consideration of the Trustee's disclosure to the undersigned of the Information, or the password in connection therewith, the undersigned will keep the Information confidential (except from such outside persons as are assisting it in connection with the related Notes, from its accountants and attorneys, and otherwise from such governmental or banking authorities or agencies to which the undersigned is subject), and such Information will not, without the prior written consent of the Trustee, be otherwise disclosed by the undersigned or by its officers, directors, partners, employees, agents or representatives (collectively, the "Representatives") in any manner whatsoever, in whole or in part. 4. The undersigned will not use or disclose the Information in any manner which could result in a violation of any provision of the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended, or would require registration of any Certificate pursuant to Section 5 of the Securities Act. 5. The undersigned shall be fully liable for any breach of this agreement by itself or any of its Representative and shall indemnify the Servicer B-1 and the Trustee for any loss, liability or expense incurred thereby with respect to any such breach by the undersigned or any of its Representatives. 6. Capitalized terms used but not defined herein shall have the respective meanings assigned thereto in the Agreement. IN WITNESS WHEREOF, the undersigned has caused its name to be signed hereby by its duly authorized officer, as of the day and year written above. _______________________________________ Beneficial Owner By:____________________________________ Title:_________________________________ Company:_______________________________ Phone:_________________________________ B-2 SCHEDULE I 1. Lease ID or Contract # 2. Obligor ID or Obligor # 3. Equipment Type 4. Type of Loan Origination a. Government b. Broker c. Vendor 5. Status of Lease (Active or Inactive) 6. Delinquency Status a. Current b. 31-60 days delinquent c. 61-90 days delinquent d. 91-120 days delinquent e. 120+ days delinquent 7. Original Balance of Lease 8. Remaining Balance of Lease 9. Amount which is delinquent 10. # of times delinquent in past 12 months 11. First Payment date 12. Amount of Payment 13. Maturity Date 14. Original term to maturity in months 15. Remaining term to maturity in months 16. State code 17. Assumed Interest Rate? 18. UCC Filing (Y or N) 19. Type of lease a. $1.00 out b. 10.0% purchase option c. FMV 20. Original Equipment cost 21. Recoveries from equipment sale 22. Booking date 23. Security deposit 24. Residual 25. Net Investment EX-10.7 4 w89427exv10w7.txt AMENDED AND RESTATED SERIES 2000-A SUPPLEMENT EXHIBIT 10.7 Execution Copy ================================================================================ MARLIN LEASING CORP., Individually, and as the Servicer, MARLIN LEASING RECEIVABLES CORP. IV, as the Obligors' Agent, MARLIN LEASING RECEIVABLES IV LLC, as the Obligor, DEUTSCHE BANK AG, NEW YORK BRANCH, as Agent XL CAPITAL ASSURANCE, INC. as the Series Support Provider and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee ================================================================================ AMENDED AND RESTATED SERIES 2000-A SUPPLEMENT Dated as of August 7, 2001 to the MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT Dated as of December 1, 2000 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I CREATION OF THE SERIES 2000-A NOTES........................................................... 1 Section 1.01 Designation....................................................................... 1 Section 1.02 Pledge of Series 2000-A Trust Estate.............................................. 1 Section 1.03 Payments.......................................................................... 2 Section 1.04 Assignment to a Group; Crossover Amounts.......................................... 2 ARTICLE II DEFINITIONS.................................................................................. 2 Section 2.01 Definitions....................................................................... 2 ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 2000-A NOTEHOLDER; SERIES SPECIFIC COVENANTS......... 26 Section 3.01 Series 2000-A Accounts............................................................ 26 Section 3.02 Agent to Send Notice of Amounts Due............................................... 27 Section 3.03 Distributions from Series 2000-A Facility Account................................. 27 Section 3.04 Reporting and Review Requirements................................................. 33 Section 3.05 Compliance With Withholding Requirements.......................................... 36 Section 3.06 Servicer Advances................................................................. 36 Section 3.07 Special Representations, Covenants and Acknowledgements........................... 36 Section 3.08 Hedging Arrangements.............................................................. 41 Section 3.09 Lockbox Account................................................................... 43 Section 3.10 The Policy; Accrued Liabilities................................................... 43 Section 3.11 Option to Purchase in Lieu of Draw................................................ 44 Section 3.12 Insurer Advances.................................................................. 45 Section 3.13 Replacement of Series Support Provider............................................ 45 ARTICLE IV SERIES PRINCIPAL AMOUNT FOR SERIES 2000-A.................................................... 46 Section 4.01 Advances.......................................................................... 46 ARTICLE V SERIES EVENTS OF DEFAULT...................................................................... 48 Section 5.01 Series Events of Default.......................................................... 48 Section 5.02 Direction by the Series Support Provider.......................................... 52 ARTICLE VI PREPAYMENT AND REDEMPTION.................................................................... 52 Section 6.01 Mandatory Prepayment.............................................................. 52 Section 6.02 Optional Redemption............................................................... 53 Section 6.03 Tender of Series 2000-A Note...................................................... 53
ARTICLE VII MISCELLANEOUS............................................................................... 54 Section 7.01 Agent Authorized to Act for the Purchasers; Notices............................... 54 Section 7.02 Ratification of Master Agreement.................................................. 54 Section 7.03 Counterparts...................................................................... 54 Section 7.04 GOVERNING LAW..................................................................... 55 Section 7.05 Amendments and Waivers............................................................ 55 Section 7.06 Non-petition Clause............................................................... 55 Section 7.07 Certain Information............................................................... 55 Section 7.08 Reserved.......................................................................... 55 Section 7.09 Termination....................................................................... 55 Section 7.10 Series Support Provider........................................................... 55 Section 7.11 Issuance of Additional Series of Notes............................................ 56

ii EXHIBITS Schedule 1 Interest Coverage Ratio Schedule 2 Hedge Counterparties Exhibit A Form of Series 2000-A Note Exhibit B Form of Agent's Monthly Statement of Amounts Due Exhibit C Wire Instructions for Agent Exhibit D Form of Servicer's Certificate Exhibit E Forms of Contracts Exhibit F Certain Information Exhibit G Form of Pledge Notice Exhibit H Form of Non-Appropriation Rider Exhibit I Form of Cap Agreement iii This Amended and Restated Series 2000-A Supplement, (the "Series 2000-A Supplement") dated as of August 7, 2001, is by and among Marlin Leasing Corp., a Delaware corporation, individually (in such capacity "Marlin"), and as initial servicer (in such capacity, the "Servicer"), Marlin Leasing Receivables Corp. IV, a Nevada corporation ("MLR IV"), as the Obligors' Agent, Marlin Leasing Receivables IV LLC, a Nevada limited liability company ("MLR IV LLC"), as the Obligor, Deutsche Bank AG, New York Branch, as Agent (the "Agent"), Wells Fargo Bank Minnesota, National Association, a national banking association (the "Trustee") and XL Capital Assurance Inc. ("XLCA") as the Series Support Provider. RECITALS Reference is hereby made to the Series 2000-A Supplement, dated as of December 1, 2000, as amended by Amendment No. 1, dated as of May 13, 2001 and as amended, restated, supplemented or otherwise modified from time to time in accordance with the provisions thereof (the "Original Series 2000-A Supplement"), among Marlin, MLR IV, MLR IV LLC, the Agent and the Trustee. The Original Series 2000-A Supplement was executed and delivered pursuant to Section 13.02 of the Master Lease Receivables Financing Facility Agreement dated as of December 1, 2000 (as it may be amended, supplemented and otherwise modified from time to time, the "Master Agreement") among the Servicer, the Obligors' Agent and the Trustee. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Master Agreement, the terms and provisions of this Series 2000-A Supplement shall govern with respect to the Series 2000-A Notes. The parties hereto desire to amend and restate the Original Series 2000-A Supplement upon the terms and conditions set forth in this Series 2000-A Supplement and the Master Agreement. The parties hereto hereby agree to amend and restate the Original Series 2000-A Supplement as follows: ARTICLE I CREATION OF THE SERIES 2000-A NOTES Section 1.01 Designation. There is hereby created a Series of Notes to be issued pursuant to the Master Agreement and this Series 2000-A Supplement to be known as "Marlin Lease Receivables Master Asset-Backed Financing Facility, Series 2000-A Notes." The Obligor with respect to the Series 2000-A Notes is MLR IV LLC. The Notes shall be issued as Definitive Notes in accordance with Sections 5.11 of the Master Agreement. Section 1.02 Pledge of Series 2000-A Trust Estate. The Obligor hereby pledges to the Trustee for the benefit of the Series 2000-A Secured Parties, and the Trustee hereby accepts the pledge of, all right, title and interest of such Obligor whether now owned and existing or hereafter acquired or arising in and to (1) each and every Contract now or hereafter listed as a Series 2000-A Contract on a Pledge Notice delivered to the Trustee, (2) all Collections, Security Deposits (in accordance with Section 6.14 of the Master Agreement) and Related Security associated therewith, (3) all Servicing Charges with respect thereto, (4) all balances, instruments, monies, investment property and other securities and investments from time to time in or acquired with amounts at any time on deposit in each Series 2000-A Account, and in the Lockbox Account to the extent such amounts in the Lockbox Account represent Collections or proceeds of Series 2000-A Contracts or earnings with respect thereto, (5) each Series 2000-A Transfer Agreement Supplement and all of the Obligor's rights (directly or through the Obligors' Agent) to enforce the provisions of, and to benefit from the representations, warranties and covenants made therein and in the Master Transfer Agreement, but only insofar as such rights relate to the Series 2000-A Trust Estate, (6) all security interests in the Equipment not owned by the Obligor, and all Equipment owned by the Obligor, in each case associated with the Series 2000-A Contracts, (7) any Crossover Amounts allocated to the Series 2000-A Trust Estate from another Series, (8) all of the Obligor's right, title and interest, if any, in and to each Hedge Agreement and (9) all proceeds of each of the foregoing, but excluding the following: any obligations of the Obligor, if any, under a Series 2000-A Transfer Agreement Supplement and Initial Unpaid Amounts (such non-excluded property, the "Series 2000-A Trust Estate"). Section 1.03 Payments. All amounts to be paid or deposited by any Person hereunder shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, or by prior day ACH debit (so long as such funds represent immediately available funds), and if such amounts are payable to the Series 2000-A Noteholder, they shall be paid as specified in the Note Purchase Agreement (as defined below), or, if the Series Support Provider is entitled to such payments, as directed by the Series Support Provider. Section 1.04 Assignment to a Group; Crossover Amounts. There is hereby established a Group for purposes of the Master Agreement, which shall be known as "Group B"; the Series 2000-A Notes are hereby assigned to Group B. The amounts described in clause eighteenth of Section 3.03(a)(i) and in clause eighteenth of Section 3.03(a)(ii) are hereby designated as the "Crossover Amounts" for the Series 2000-A Notes for purposes of the Master Agreement. No other Series of Notes shall be assigned to Group B without the prior written consent of the Series Support Provider. ARTICLE II DEFINITIONS Section 2.01 Definitions. Whenever used in this Series 2000-A Supplement and when used in the Master Agreement with respect to the Series 2000-A Notes, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Unless otherwise defined in this Series 2000-A Supplement, terms defined in the Master Agreement are used herein as therein defined. For purposes of the Master Agreement, certain definitions are set forth in Section 3.07(b) hereof. 2 "31 to 60 Day Delinquency Ratio" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all Series 2000-A Contracts as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 31 or more days, but no Scheduled Payment (nor part thereof in excess of 10% of such Scheduled Payment) is delinquent more than 60 days and which is not a Charged-Off Contract as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all Series 2000-A Contracts as of the end of the Collection Period immediately preceding such Collection Period. "61 to 90 Day Delinquency Ratio" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the sum of (x) the aggregate Contract Balance Remaining of all Series 2000-A Contracts as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 61 or more days, but no Scheduled Payment (nor part thereof in excess of 10% of such Scheduled Payment) is delinquent more than 90 days, and which is not a Charged-Off Contract as of the end of such Collection Period plus (y) the aggregate Contract Balance Remaining of all Series 2000-A Contracts which were Restructured during such Collection Period and the two preceding Collection Periods, and the denominator of which is the aggregate Contract Balance Remaining of all Series 2000-A Contracts as of the end of the second preceding Collection Period. "91 Plus Day Delinquency Ratio" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all Series 2000-A Contracts as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 91 or more days, and which is not a Charged-Off Contract as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all Series 2000-A Contracts as of the end of the third preceding Collection Period. "31 to 60 Day Portfolio Delinquency Rate" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 31 or more days, but no Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is more than 60 days delinquent (and which would not be "Charged-Off Contracts" if treated as "Contracts") as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as of the end of such Collection Period. "61 to 90 Day Portfolio Delinquency Rate" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining on all leases included in the Servicer's servicing portfolio as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 61 or more days, but no Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is more than 90 days delinquent (and which would not be Charged-Off Contracts if treated as "Contracts") as of the end of such Collection Period, and the denominator 3 of which is the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as of the end of such Collection Period. "91 Plus Day Portfolio Delinquency Rate" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is 91 or more days delinquent (and which would not be "Charged-Off Contracts" if treated as "Contracts"), as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as of the end of such Collection Period. "Accrued Liabilities" means with respect to any Settlement Date, the sum of (i) all amounts paid by the Series Support Provider under the Policy or for Insurer Advances, for the benefit of the Owners, and not yet reimbursed to the Series Support Provider, (ii) all amounts owing under the Insurance and Indemnity Agreement (excluding the Insurer Fee, Unused Fee and Default Fee) as most recently certified to the Trustee by the Series Support Provider, pursuant to Section 3.04(l) hereof, and not yet reimbursed to the Series Support Provider, and (iii) interest on the foregoing amounts from the date incurred to the date of payment to or reimbursement of the Series Support Provider at the per annum rate set forth in the Insurance and Indemnity Agreement (as most recently certified to the Trustee by the Series Support Provider pursuant to Section 3.04(l) hereof), and not yet reimbursed to the Series Support Provider. "Advance Amount" means, as of any Pledge Date: (a) with respect to any Pledge of any Series 2000-A Contracts under Section 4.01 (b) hereof, the excess, if any, of (x) the Pro Forma Borrowing Base over (y) the Net Investment immediately prior to such Pledge; (b) with respect to any Pledge of any Series 2000-A Contracts under Section 4.01(e) hereof, the excess, if any, of (x) the Pro Forma Borrowing Base over (y) the Borrowing Base as of the immediately preceding Calculation Date; and (c) with respect to any Pledge under Section 4.01(f) hereof, $0. "Agent" means Deutsche Bank AG, New York Branch, in its capacity as agent for the Purchasers pursuant to Article VIII of the Note Purchase Agreement and any successor Agent appointed pursuant thereto. "Amortization Period" means the period commencing on the Termination Date, and ending on the earlier to occur of (i) the final disposition of, and application of the proceeds of, the Series 2000-A Trust Estate and (ii) the payment in full of all Series Trustee Secured Obligations. "Applicable Discount Rate" means with respect to any Series 2000-A Contract, the sum of: (i) the Fee Rate; and 4 (ii) the Hedge Rate under the Hedge Agreement to which applies to such Series 2000-A Contract, determined as of the related Pledge Date. "Applicable Hedge Agreement" means, with respect to any Interest Period, any Hedge Agreement under which payment is scheduled to be made (in the absence of any "netting") on the Settlement Date relating to such Interest Period. "Applicable Trigger Charged-Off Ratio" means, as of any date of determination: (x) if the Net Investment as of such date of determination is less than $25,000,000, 5.0%; (y) if the Net Investment as of such date of determination is $25,000,000 or more but less than $50,000,000, 3.5%; and (z) if the Net Investment as of such date of determination is $50,000,000 or more, 2.75%. "Average Charged-Off Ratio" means, as of any day of determination, the arithmetic average of the Charged-Off Ratio as of the last day of each of the three preceding Collection Periods (or such lesser number of Collection Periods as shall have occurred since the Series Closing Date). "Back-Up Servicer Fee" means the monthly fee payable to the Back-Up Servicer on each Settlement Date, which shall be the greater of (a) one-twelfth of four basis points per annum times the aggregate Contract Principal Balance of the Series 2000-A Contracts as of the end of the preceding Collection Period and (b) $1,500. This fee is only to be paid to the Back-up Servicer for so long as it is acting as such and is not payable during such time as the Back-up Servicer acts as the successor Servicer. "Base LIBO Rate" for any Interest Period (or portion thereof for which an Owner initially funds an investment in the Series 2000-A Notes other than by issuing Commercial Paper) with respect to the Series 2000-A Notes, shall mean an interest rate per annum equal to the rate of interest equal to either (as determined by the Agent) (i) the arithmetic mean of the offered rates for deposits in U.S. Dollars for a period of one month (or such lesser period of time as determined by the Agent to be appropriate in the event that the LIBO Rate is to be determined for a portion of an Interest Period) (the "Period"), commencing on the second London Banking Day immediately preceding the first day of such Period, which appear on the Reuters Screen LIBO Page as of approximately 11:00 a.m., London time, if at least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (ii) the rate for deposits in U.S. dollars having, the Period designated commencing on the second London Banking Day immediately preceding the first day of such Period which appears on the Telerate Page 3750 as of 11:00 a.m., London time ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rate Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks), and "Telerate Page 3750" means the display designated as page "3750" on the Telerate Service (or such page as may replace the 3750 page on that 5 service or such other service or services as may be nominated by the British Bankers' Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits. If fewer than two offered rates appear on the Reuters Screen LIBO Page, or if no rate appears on the Telerate Page 3750, as applicable, the Base LIBO Rate in respect of that LIBOR Determination Date will be determined as if the parties had specified the rate described in the following paragraph (b) below. "LIBOR Determination Date" means the second London Banking Day immediately preceding the first day of the related Period. With respect to a day on which fewer than two offered rates appear on the Reuters Screen LIBO Page, as specified in (i) above, or if no rate appears on Telerate Page 3750 as specified in (ii) above, as applicable, the Base LIBO Rate will be determined at approximately 11:00 a.m., London time, on such day on the basis of the rates at which deposits in United States dollars having the Period specified are offered to prime banks in the London interbank market by four major banks in the London interbank market selected by the Agent commencing on the second London Banking Day immediately preceding the first day of such Period and in a principal amount equal to an amount of not less than $1,000,000 that is representative for a single transaction in such market at such time. The Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, the Base LIBO Rate for such day will be the arithmetic mean of such quotations. If fewer than two quotations are provided, the Base LIBO Rate for such day will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., New York City time, on such day by three major banks in New York, New York selected by the Agent, for loans in United States dollars to leading European banks, having the specified Period, commencing on the second London Banking Day immediately preceding the first day of such Period and in a principal amount equal to an amount of not less than $1,000,000 that is representative for a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the Agent are not quoting as described above, the Base LIBO Rate in effect for the applicable period will be the Base LIBO Rate in effect on such day. "Borrowing Base" means, as of any date of determination, the sum of: (x) the lesser of: (i) the product of (a) the sum of (i) the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts and which are not Charged-Off Contracts as of such date plus (ii) on any date of determination other than on any Settlement Date, the principal portion of Series 2000-A Available Funds then on deposit in the Series 2000-A Facility Account which represents the excess of (x) the Contract Principal Balance of Eligible Contracts at the beginning of the related Collection Period over (y) the Contract Principal Balance of Eligible Contracts which have not been subject to Prepayment as of the related date of determination, minus (iii) the Overconcentration Amount as of such date times (b) the Purchase Price Percentage as of such date of determination; and 6 (ii) the sum of (a) the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts and which are not Charged-Off Contracts as of such date plus (b) on any date of determination other than on any Settlement Date, the principal portion of Series 2000-A Available Funds then on deposit in the Series 2000-A Facility Account which represents the excess of (x) the Contract Principal Balance of Eligible Contracts at the beginning of the related Collection Period over (y) the Contract Principal Balance of Eligible Contracts which have not been subject to Prepayment as of the related date of determination, minus (c) the Overconcentration Amount as of such date minus (d) the Credit Support Floor Amount; and (y) the aggregate Residual Advance Amount, if any, with respect to such date of determination. "Breakage Costs" means, for each Owner for each funding period, to the extent that an Owner is funding the maintenance of its investment in the Series 2000-A Notes during such funding period through the issuance of Commercial Paper or at the LIBO Rate, during which such investment is reduced (in whole or in part) prior to the end of the period for which it was originally scheduled to remain outstanding (the amount of such reduction in such investment being referred to as the "Allocated Amount"), the excess of (a) the discount or interest that would have accrued on the Allocated Amount during the remainder of such funding period if such reduction had not occurred over (b) the income, if any, scheduled to be received by such Owner from investing the Allocated Amount for the remainder of such funding period in a commercially reasonable manner. "Broker Concentration Amount" means, as of any date of determination, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts originated by, or purchased from brokers over (y) twenty-five percent (25%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time. "Broker/Vendor Concentration Amount" means, as of any date of determination, for each broker or vendor that has originated or sold any Series 2000-A Contracts for or to the Transferor, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts originated by, or purchased from such broker or vendor over (y) five percent (5%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time. "Business Day" shall mean any day that is a Business Day under the Master Agreement which is also a day on which banks are not authorized or required to close in New York, New York or in Minneapolis, Minnesota and on which The Depository Trust Company of New York is open for business. 7 "Cap Agreement" means a Hedge Agreement under which the Hedge Counterparty will only make payments when and if the Base LIBO Rate exceeds a specified level, and which provides for no payment by the Trustee at any time, substantially in the form of Exhibit I hereto. "Capped Monthly Interest" means, with respect to any Settlement Date, an amount equal to the interest accrued on either (i) if the Pool Balance is hedged only with a Cap Agreement, the Series 2000-A Note Balance outstanding from time to time during the preceding Interest Period or (ii) if any portion of the Pool Balance is hedged with a Swap Agreement, the notional balance outstanding with respect to such Swap Agreement from time to time during the preceding Interest Period, calculated at a rate equal to the Base LIBO Rate (determined as of 11:00 a.m. (London time) on the second London Banking Day prior to the commencement of such Interest Period) (whether or not any Owner funded its investment in the Series 2000-A Note other than by issuing Commercial Paper), plus 1.25%. "Charged-Off Ratio" means, as of the end of any Collection Period, twelve (12) times the percentage equivalent of a fraction the numerator of which is equal to the excess of (x) the aggregate Contract Principal Balance as of the end of such Collection Period of, plus any related Servicer Advances made with respect to, all Series 2000-A Contracts which became Charged-Off Contracts during such Collection Period, plus the aggregate Contract Principal Balance of any Delinquent Contracts which were removed from the Series 2000-A Trust Estate in exchange for Substitute Contracts during such Collection Period, over (y) the sum of all Recoveries received during such Collection Period with respect to the Series 2000-A Contracts, and the denominator of which is equal to the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such date as of (i) during the Revolving Period, the end of the third preceding Collection Period and (ii) during the Amortization Period, the beginning of such Collection Period. "Collateral Administration Agreement" shall mean the Collateral Administration Agreement, dated as of December 1, 2000, among the Obligor, the Obligors' Agent, the Transferor, the Servicer, the Trustee and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter. "Commercial Paper" means any note, draft, bill of exchange, or bankers' acceptance which has a maturity at the time of issuance not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited. "CP Margin" has the meaning ascribed thereto in the Fee Letter. "Credit Support Amount" means, as of any date of determination, the excess of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such date and which are not Charged-Off Contracts as of such date of determination, minus the Overconcentration Amount as of such date over (y) the Net Investment as of such date. "Credit Support Floor Amount" means, as of any date of determination, the greater of (x) $2,500,000 and (y) 25% of the Maximum Applicable Credit Support. 8 "Crossover Amounts" has the meaning set forth in Section 1.04 hereof. "Debt-to-Equity Ratio" means, as of any date of determination, and with respect to Marlin and its consolidated subsidiaries, Total Debt as a multiple of Tangible Net Worth; "Total Debt" shall reflect all liabilities (excluding deferred taxes) under GAAP, provided that "Total Debt" shall include all liabilities (other than deferred taxes), whether "on-balance sheet" or "off-balance sheet" for GAAP, as well as subordinated debt any portion of the principal of which is payable in less than five years from the date of its issuance. "Default Fee" means, as of any Settlement Date, the fee due to the Series Support Provider for such Settlement Date, as calculated pursuant to the Premium Letter. "Deficiency Amount" means with respect to the Series 2000-A Notes (i) with respect to the third succeeding Settlement Date after any Settlement Date, the amount, if any, by which the Capped Monthly Interest for such third preceding Settlement Date related to such Settlement Date exceeded the aggregate amount of funds available and actually paid in respect of such Capped Monthly Interest on such Settlement Date, and which remains unpaid on such third succeeding Settlement Date after the related Settlement Date plus, (b) interest on each such amount accruing from the date of non-receipt of such amount to the date of payment by the Series Support Provider at the Series 2000-A Note Interest Rate and (ii) with respect to the Termination Date, an amount, if any, in U.S. Dollars, equal to the outstanding amount of the Series 2000-A Note Balance, in no event exceeding $125,000,000, as of such date, that remains unpaid. "Eligible Bank Account" means a segregated account, which may be an account maintained with the Trustee, which is either (a) maintained with a depository institution or trust company whose long-term unsecured debt obligations are rated at least BBB+ by S&P and Baa1 by Moody's and whose short-term unsecured obligations are rated at least A-1 by S&P and P-1 by Moody's; or (b) a trust account or similar account maintained with a federally or state chartered depository institution subject to regulations regarding fiduciary funds on deposit substantially similar to 12 C.F.R. 9.10(b). "Eligible Contract" means a Series 2000-A Contract which: (a) (i) is with a User whose billing address is in the United States or its territories and possessions and requires (A) all payments under such Contract to be made in United States dollars and (B) all Equipment relating to such Contract be held in the United States and (ii) is with a User who, if a natural person, is a resident of the United States with legal capacity to contract or, if a corporation or other business organization, is organized under the laws of the United States, or any political subdivision thereof and has its chief executive office in the United States; (b) has not had any of its terms, conditions or provisions amended, modified or waived other than in compliance with the Credit and Collection Policy and has not been Restructured at any time; (c) constitutes "tangible chattel paper" within the meaning of Sections 9-102(11) and (78) of the UCC of all applicable jurisdictions and there is only one original (bearing 9 the original signature of an employee of Marlin, together with the facsimile copy of the signature of the User or the original signature of the User) of such Contract that constitutes "chattel paper" for purposes of the Delaware, New York, New Jersey and Nevada UCC; (d) was originated in accordance with, and does not contravene, any applicable federal, state and local laws, and regulations thereunder (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of such Contract is in violation of any applicable law, rule or regulation; (e) was originated or purchased without recourse (other than with respect to an obligation to repurchase in the event of breach of a representation or warranty by the related Vendor or Broker) in compliance with, and satisfies in all material respects all applicable requirements of the Credit and Collection Policy; (f) is not a Contract which has the United States or any of its agencies or instrumentalities as the User; (g) as of the related Pledge Date, is not a Delinquent Contract; (h) (i) contains "hell or high water" provisions requiring the related User to assume all risk of loss or malfunction of the related Equipment, (ii) requires the related User to pay all expenses in connection with the maintenance, repair, insurance and taxes, together with all other ancillary costs with respect to the related Equipment and (iii) makes the related User absolutely and unconditionally liable for all payments required to be made thereunder, without any right of set-off, counterclaim, or other defense (other than the discharge in bankruptcy of such related User) and without any right to prepay the Contract or any contingencies tied to the Obligor; (i) is payable in level monthly or quarterly rental payments calculated at a fixed yield; (j) creates a valid and enforceable security interest (or, in the case of a "true lease", a valid ownership interest) in favor of the Transferor in the related Equipment, and such Equipment has not been the subject of loss or damage; (k) together with the Equipment relating thereto, was the subject of a valid sale and assignment from the Transferor with good title transferred to the Obligor thereby and is free and clear of any Liens, other than the claims arising pursuant to this Series 2000-A Supplement and Master Agreement and the other documents relating to this transaction; provided, however, that nothing in this paragraph (k) shall prevent or be deemed to prohibit the Transferor from suffering to exist upon such Contract any Lien for federal, state, municipal or other local taxes if such taxes shall not at the time be due and payable or if the Transferor shall concurrently be contesting the validity thereof in good faith by appropriate proceedings that have stayed enforcement thereof and shall have set aside on its books adequate reserves with respect thereto, 10 (l) is in full force and effect in accordance with its terms and contains enforceable provisions such that the right and remedies of the holder thereof shall be adequate for realization against the Equipment, if any, thereunder and of the benefits of any security granted thereunder; (m) does not provide for the substitution, exchange, or addition of any other items of Equipment pursuant to such Contract which would result in any reduction or extension of payments due thereunder; (n) by its terms is due and payable in full on or within 72 months of the applicable Pledge Date; (o) arises under a Contract in substantially the form of one of the form contracts set forth in Exhibit E hereto or otherwise promptly approved by the Agent and the Series Support Provider in writing, which is in full force and effect and constitutes the legal, valid and binding obligation of the related User enforceable against such User in accordance with its terms subject to no offset, counterclaim or other defense (other than the discharge in bankruptcy of such User); (p) (i) does not preclude the pledge, transfer or assignment thereof, (ii) does not require the consent of the User to the pledge, assignment or transfer thereof, and (iii) does not contain a confidentiality provision that purports to restrict the ability of the Trustee to exercise its rights under the Series 2000-A Related Documents with respect thereto, including, without limitation, its right to review the Contract; (q) was (i) originated or purchased by the Transferor in the ordinary course of its business, (ii) approved and purchased or funded in the ordinary course of the Transferor's business, (iii) originated by an Originator eligible under the Credit and Collection Policy and (iv) originated with respect to a transaction in which the related Equipment is not used for personal, family, or household purposes by the related User; (r) is with a User that, as of the Contract's Pledge Date, is not the User with respect to any Charged-Off Contract, and is not and has never been a Charged-Off Contract; (s) the inclusion of which in the Series 2000-A Trust Estate would not require the registration of the Obligor or of the Series 2000-A Trust Estate as an "investment company" under the Investment Company Act of 1940, as amended; (t) the addition of which to the Series 2000-A Trust Estate would not result in the Weighted Average Life to exceed 2.5 years; (u) if the Original Equipment Cost of the Equipment related to such Contract is valued at greater than $25,000, is secured by a first priority perfected security interest in such Equipment; 11 (v) relates to Equipment which (i) is not a vehicle or other type of equipment which is subject to a certificate of title or other similar titling statute and (ii) to the best of the Servicer's knowledge, has not suffered any damage or loss; (w) had a Contract Principal Balance upon origination which was less than or equal to $200,000; (x) was not selected by the Transferor from the Transferor's pool of leases in a manner adverse to the Series 2000-A Noteholders or the Series Support Provider; (y) arises under a lease or financing contract, is not currently under any sub-lease agreement, and does not permit any sub-leasing of the related Equipment; (z) is one as to which all parties to the Contract have satisfied all obligations to be required to be fulfilled by such parties as of the related Pledge Date; (aa) is, and has been, at all times, a legal, valid and binding payment obligation of the User, enforceable in accordance with its terms; (bb) the User of which is not an Affiliate of the Transferor, the Servicer or any Obligor; (cc) has been accounted for on the Transferor's books as sold to the Obligor; (dd) is not subject to, nor with respect to which has there been asserted, any litigation or any right to rescission, set off, counterclaim or other defense of the User; (ee) as to which the related User has been directed to make payment only to the Lockbox Account at the Lockbox Bank; (ff) as to which the related Equipment has been delivered to, and accepted by, the related User; (gg) if such Contract is a "true lease", the Equipment is owned by the Obligor free and clear of all other liens; (hh) if such Contract was originated by a third party and acquired by the Transferor, and if the Original Equipment cost related thereto exceeded $25,000, a UCC-1 financing statement was filed against the related User in the appropriate jurisdiction by the originator thereof and a UCC-3 assignment was filed assigning the original UCC-1 to the Transferor; and (ii) if such Contract is a tax exempt lease, satisfactory evidence of the User's tax exempt status was presented to Marlin at the time of origination and included in the Contract File. "Equipment Concentration Amount" means, as of any date of determination, the sum of: 12 (i) for the Equipment Type "Computers and Peripherals", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type over (y) twenty-five percent (25%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; (ii) for the Equipment Type "Software", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type over (y) ten percent (10%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; (iii) for the Equipment Type "Surveillance Systems", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type over (y) ten percent (10%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; (iv) for the Equipment Type "Telecommunications Equipment", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type over (y) twenty percent (20%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; (v) for the Equipment Type "Copiers", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type over (y) twenty percent (20%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; (vi) for the Equipment Type "Veriphone Equipment," or other equipment that utilizes a similar underwriting criteria, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type over (y) two (2.0%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; and (vii) for each other Equipment Type, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which the related Equipment is such Equipment Type, over (y) fifteen percent (15%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time. 13 "Equipment Type" means, with respect to each Series 2000-A Contract, the related Equipment "type", as indicated on the Servicer's servicing system with respect to such Series 2000-A Contract. "Facility Fee" has the meaning ascribed thereto in the Fee Letter. "Fee Letter" means that certain letter agreement dated as of August 7, 2001 by and among the Obligor, the Obligors' Agent and the Agent, as it may be amended or modified and in effect from time to time. "Fee Rate" means the aggregate of the rates at which fees are payable in connection with Series 2000-A (i.e., LIBO Margin (as set forth in the Fee Letter), the Servicing Fee of 1.00%, the Trustee's Fee of 0.02%, the Back-Up Servicer's Fee of 0.04%, the Increased Servicer Fee of 0.25%) and the rate at which the Insurer Fee due to the Series Support Provider are calculated, as set forth in the Premium Letter. "Government Concentration Amount" means, as of any date of determination, the excess of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Government Contracts having a state, municipality or agency or instrumental of a state or a municipality as the User over (y) four percent (4.0%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time. "Government Contract" means, with respect to this Series 2000-A Supplement, a Contract of Equipment under which the User is a state or local government or government agency (or any agency or instrumentality thereof) and, if the Contract Principal Balance of such Contract is greater than $10,000, such entity has executed and delivered a form of non-appropriation rider substantially in the form of Exhibit H attached hereto. "Hedge Agreement" means an interest rate cap or swap agreement between the Trustee and a Hedge Counterparty satisfying the conditions specified in Section 3.08 hereof. "Hedge Counterparty" means a Person having long term unsecured debt obligations rated at least AA- by S&P and Aa3 by Moody's and who is either (i) listed on Schedule 2 hereto or (ii) reasonably acceptable to the Agent and the Series Support Provider. "Hedge Rate" means, with respect to any Hedge Agreement and the Series 2000-A Contracts assigned thereto, (a) if such Hedge Agreement is a Cap Agreement, the fixed rate per annum which the Base LIBO Rate must exceed to result in payments made thereunder by the Hedge Counterparty to the Series 2000-A Facility Account, and (b) if such Hedge Agreement is an interest rate swap agreement, the fixed rate per annum which is applied to the notional amount of such Hedge Agreement to calculate the payments to be made by the Trustee thereunder to the Hedge Counterparty. "Increased Servicer Fee" means as of any Settlement Date, an amount not to exceed 0.25% of the aggregate Contract Principal Balance of the Series 2000-A Contracts as of the first day of the prior Collection Period, payable on each Settlement Date to any successor Servicer in accordance with Section 9.02(b) of the Master Agreement as additional compensation 14 in excess of the Servicing Fee for the performance of its duties hereunder and under the Master Agreement. "Independent Public Accountants" shall mean, with respect to Marlin, any "Big 4" accounting firm, or other accounting firm reasonably acceptable to the Series Controlling Party. "Insurance and Indemnity Agreement" means the Insurance and Indemnity Agreement dated August 7, 2001 among the Series Support Provider, Marlin, MLR IV, MLR IV LLC and the Trustee. "Insured Amounts" means with respect to the Policy, the sum of (i) with respect to any Settlement Date, the Monthly Interest due on such Settlement Date up to the amount of the Capped Monthly Interest due on such Settlement Date and (ii) with respect to the Policy Termination Date, the Series 2000-A Note Balance, not to exceed $125,000,000. "Insurer Advance" means any advance of funds by the Series Support Provider in respect of a Deficiency Amount other than pursuant to the Policy pursuant to Section 3.12 hereof. "Insurer Fee" means, as of any Settlement Date, the premiums due to the Series Support Provider, as calculated pursuant to the Premium Letter. "Interest Coverage Ratio" has the meaning set forth in Schedule 1 hereto. "Interest Period" means, with respect to any Settlement Date, the period from and including the prior Settlement Date (or, in the case of the first Settlement Date, from and including the Series Closing Date) to but excluding such Settlement Date. "LIBO Margin" has the meaning ascribed thereto in the Fee Letter. "LIBO Rate" for any Interest Period (or portion thereof for which an Owner initially funds an investment in the Series 2000-A Notes other than by issuing Commercial Paper) with respect to the Series 2000-A Notes shall mean the applicable Base LIBO Rate divided by the percentage equal to the difference of one minus the LIBOR Reserve Percentage applicable during such Interest Period (or portion thereof), if any. "LIBO Rate Disruption Event" shall mean, for any Owner with respect to any Series 2000-A Note, for any Interest Period or portion thereof, any of the following: (a) a determination by such Owner that it would be contrary to law or to the directive of any central bank or other governmental authority to obtain United States dollars in the London interbank market to fund its investment in such Series 2000-A Note for such Interest Period or portion thereof, (b) prime banks in the London interbank market are not then generally quoting a Base LIBO Rate or not then quoting a Base LIBO Rate to Persons such as such Owner, or (c) the inability of such Owner by reason of circumstances affecting the London interbank market generally, to obtain U.S. Dollars in such market to fund its investment in such Series 2000-A Note for such Interest Period or portion thereof. 15 "LIBOR Reserve Percentage" shall mean, relative to each Interest Period or portion thereof, a percentage (expressed as a decimal) equal to the daily average during such Interest Period or portion thereof of the percentages in effect on each day of such Interest Period or portion thereof, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirements applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other applicable regulation of the Board of Governors of the Federal Reserve System which prescribes reserve requirements applicable to "Eurocurrency liabilities" as currently defined in Regulation D. "Liquidity Provider" shall mean a financial institution to whom the Obligors' Agent shall have consented (which consent shall not be unreasonably withheld) providing liquidity support to or for the account of any Purchaser, whether by an extension of credit, the acquisition of an interest in the Series 2000-A Notes, or otherwise, or having a commitment to provide such support under a liquidity agreement which relates to this Supplement. "Lockbox Account" means the account no. 2000006320698 established and maintained by the Lockbox Bank for the purpose of receiving payments on the Series 2000-A Contracts. "Lockbox Bank" means First Union National Bank or any other commercial bank acceptable to the Series Support Provider. "London Banking Day" means a day on which commercial banks are open for business (including dealers in foreign exchange and foreign currency deposits) in London, England. "Make-Whole Amount" has the meaning set forth in the Premium Letter. "Marlin" means Marlin Leasing Corp., a Delaware corporation. "Master Agreement" has the meaning set forth in the Recitals hereto. "Master Transfer Agreement" means that certain Master Lease Acquisition and Sale Agreement dated as of December 1, 2000 among Marlin, the Obligors' Agent and the Obligors set forth therein as parties thereto from time to time, as such agreement may be amended, supplemented or modified from time to time. "Maximum Applicable Credit Support" means: (i) prior to the date of the first Take-Out, the largest Credit Support Amount on any day occurring since the Series Closing Date; and (ii) on and after the date of the first Take-Out, the largest Credit Support Amount on any day occurring since the most recent Take-Out. "Maximum Series Limit" means $125,000,000. 16 "Monthly Interest" means, with respect to any Settlement Date, interest due in respect of the Series 2000-A Notes calculated at the Series 2000-A Note Interest Rate for the preceding Interest Period (which amount shall include, in the event the aggregate principal portion of the respective investments of each Purchaser exceeded the Series 2000-A Note Balance after giving effect to all distributions on the prior Settlement Date, an amount equal to interest accrued on such excess at the rate described in paragraph (a) of the definition of Series 2000-A Note Interest Rate). "Net Investment" means as of any date of determination the sum of (i) the Series 2000-A Note Balance as of such date plus (ii) accrued and unpaid interest at the Series 2000-A Note Interest Rate through such date plus (iii) any Noteholder's Carryover Interest as of such date. "Non-Draw Option" has the meaning set forth in Section 3.11 hereof. "Non-Draw Option Price" has the meaning set forth in Section 3.11 hereof. "Note Purchase Agreement" shall mean the Note Purchase Agreement dated as of December 1, 2000, among the Obligor, the Obligors' Agent, the Purchasers and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter. "Noteholder's Carryover Interest" means, as of any date of determination, the amount of Monthly Interest due on any prior Settlement Date but not paid, plus interest thereon through such date from such prior Settlement Date, calculated using the Series 2000-A Note Interest Rate applicable for the next Settlement Date, all as determined by the Agent. "Notice for Payment" has the meaning set forth in Section 3.10(a) hereof. "Obligor" means MLR IV LLC. "Original Issue Date" has the meaning specified in Section 3.07(b)(x) hereof. "Original Servicer Fee Rate" has the meaning specified in Section 3.07(b)(ix) hereof. "Overconcentration Amount" means an amount, at any time, equal to the sum of (i) the aggregate User Concentration Amount for all Users, (ii) the aggregate State Concentration Amount for all States, (iii) the Equipment Concentration Amount, (iv) the aggregate Broker/Vendor Concentration Amounts for all brokers and vendors, (v) the Government Concentration Amount, (vi) the Broker Concentration Amount and (vii) the Quarterly Payment Concentration Amount. "Owner" means each Purchaser, each Liquidity Provider and each other Person that has purchased, or has entered into a commitment to purchase, a Series 2000-A Note, or an interest therein. 17 "Pledge" means the pledge by the Obligor hereunder of its right, title and interest in and to specified Pledged Property related thereto to the Trustee for the benefit of the Series 2000-A Noteholders in accordance with Section 1.02 hereof. "Pledge Date" has the meaning set forth in Section 4.01(b) hereof. "Pledge Notice" has the meaning specified in Section 4.01(b) hereof. "Pledged Property" means, with respect to the Series 2000-A Trust Estate, each Series 2000-A Contract, together with all associated property and rights with respect thereto described in clauses (2) through (7) of Section 1.02 hereof. "Policy" means the Financial Guaranty Insurance Policy, number CA00046A, issued by the Series Support Provider in favor of the Trustee for the benefit of the Owners pursuant to the Insurance and Indemnity Agreement in the form of Annex I thereto. "Policy Termination Date" means the earliest of (i) the sixth Settlement Date following the day payment is due on the latest maturing Series 2000-A Contract, or (ii) such date when all Accrued Liabilities have been paid in full, or (iii) the date designated by the Series Support Provider upon the exercise of the Non-Draw Option. "Portfolio Charged-Off Ratio" means, as of the last day of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the product of (i) 12 and (ii) the excess of (x) the sum of the aggregate of Marlin's net investment (calculated in accordance with GAAP) in all leases included in the Servicer's servicing portfolio which would have first satisfied the definition of Charged-Off Contracts (were such leases "Contracts") during such Collection Period, over (y) the sum of all recoveries during such Collection Period for leases included in the Servicer's servicing portfolio, and the denominator of which is equal to the sum of the aggregate of Marlin's net investment (calculated in accordance with GAAP) in all leases included in the Servicer's servicing portfolio as of the beginning of the related Collection Period. "Premium Letter" means the Premium Letter dated August 7, 2001 among the Series Support Provider, Marlin, MLR IV and MLR IV LLC, pursuant to which the Insurer Fee, Default Fee and Unused Fee are to be paid to the Series Support Provider. "Pro Forma Borrowing Base" means, (x) as of any Pledge Date, the Borrowing Base (including the various components thereof) as calculated assuming that all Series 2000-A Contracts to be Pledged on such Pledge Date have in fact been so Pledged and (y) as of any day which is not a Pledge Date, the Borrowing Base as of such day. "Principal Distribution Amount" means with respect to any Settlement Date (i) the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts and which are not Charged-Off Contracts as of the end of the second preceding Collection Period minus (ii) the aggregate Contract Principal Balance of all Series 2000-A Contracts, which are Eligible Contracts and which are not Charged-Off Contracts as of the end of the immediately preceding Collection Period. 18 "Purchase Price Percentage" means as of any date of determination the lesser of (i) .885 and (ii) 1 minus the product of a times b times c, where: a = the Average Charged-Off Ratio as of such date of determination; b = the Weighted Average Life, rounded to the second decimal place; and c = 2.25 "Purchaser" has the meaning specified in the Note Purchase Agreement. "Quarterly Payment Concentration Amount" means, as of any date of determination, the excess of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts which are payable on a quarterly basis over (y) two percent (2%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time. "Record Date" means, with respect to any Settlement Date, the close of business on the Business Day preceding such Settlement Date. "Redemption Price" has the meaning specified in Section 6.02 hereof. "Refinance Proceeds" means with respect to any Collection Period, proceeds of the issuance of a new series of notes or the issuance of certificates in connection with a Take-Out of Series 2000-A Contracts, which proceeds shall be remitted to the Trustee immediately upon receipt for deposit into the Series 2000-A Facility Account for application in accordance with Section 3.03 hereof. "Replacement Policy" has the meaning set forth in Section 3.13 hereof. "Replacement Series Support Provider" has the meaning set forth in Section 3.13 hereof. "Residual Advance Amount" shall have the meaning set forth in any notice delivered to the Trustee by the Obligors' Agent, countersigned and approved by the Agent and the Series Support Provider. Prior to the delivery of such notice and confirmation by Standard & Poor's that its Facility Shadow Rating will not be affected, the Residual Advance Amount shall be considered to be zero. "Restructured" means, with respect to any Series 2000-A Contract, any deferral of Scheduled Payments, reduction of the Scheduled Payments, or extension of the term of such Series 2000-A Contract, in each case by the Servicer for credit reasons. "Revolving Period" means the period from and including January 2, 2001 to but excluding the Termination Date. "Series Closing Date" means, with respect to the Series 2000-A Notes, December 21, 2000. 19 "Series Controlling Party" has the meaning specified in Section 3.07(b)(vi) hereof. "Series Event of Default" has the meaning specified in Section 5.01 hereof. "Series Related Documents" means, with respect to the Series 2000-A Notes, the Series 2000-A Related Documents. "Series Secured Obligations" has the meaning specified in 3.07(b)(vii) hereof. "Series Secured Parties" has the meaning specified in Section 3.07(b)(viii) hereof. "Series Support" means, for purposes of this Series 2000-A Supplement, the Policy. "Series Support Provider" means, for purposes of this Series 2000-A Supplement, XL Capital Assurance Inc. "Series Support Provider Default" means the existence and continuance of any of the following: (a) a failure by the Series Support Provider to make a payment when or as required under the Insurance and Indemnity Agreement in accordance with its terms or under the Policy in accordance with its terms; or (b)(i) the Series Support Provider (A) files any petition or commences any case or proceeding under any provision or chapter of the United States Bankruptcy Code, the New York State Insurance Law, or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a general assignment for the benefit of its creditors, or (C) has an order for relief entered against it under the United States Bankruptcy Code, the New York State Insurance Law, or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is final and nonappealable; or (ii) a court of competent jurisdiction, the New York Department of Insurance or other competent regulatory authority enters a final and nonappealable order, judgment or decree (A) appointing a custodian, trustee, agent or receiver for the Series Support Provider or for all or any material portion of its property or (B) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Series Support Provider (or the taking of possession of all or any material portion of the property of the Series Support Provider); or (c) a court of competent jurisdiction shall have determined in a final, nonappealable order that the Policy is not longer in full force and effect. "Series Termination Date" means, with respect to the Series 2000-A Notes, the date on which all Series Secured Obligations have been paid in full. 20 "Series Trust Estate" means, with respect to the Series 2000-A Notes, the Series 2000-A Trust Estate. "Series Trustee Secured Obligations" has the meaning set forth in Section 3.07(b)(vii). "Series 2000-A Account" means each of the Series 2000-A Facility Account, the Series 2000-A Insurance Account and the Lockbox Account. "Series 2000-A Alternative Rate" means, for any Interest Period (or portion thereof) for which a Purchaser initially funds an investment in the Series 2000-A Notes other than by issuing Commercial Paper, an interest rate per annum equal to the LIBO Rate for such Interest Period (or such portion thereof); provided, however, that: (a) if a Purchaser shall notify the Agent that a LIBO Rate Disruption Event has occurred and is continuing, then, in any such case, the "Series 2000-A Alternative Rate" for the Series 2000-A Notes for such Interest Period or portion thereof shall be an interest rate per annum equal to the Series 2000-A Base Rate from time to time in effect unless the Agent, the Series Support Provider and the Obligors' Agent agree in writing to a different rate; and (b) without limiting the foregoing, if with respect to any Interest Period or portion thereof any Purchaser shall have notified the Agent that the rate at which deposits of the United States dollars are being offered to such Purchaser in the London interbank market does not accurately reflect the cost to such Purchaser of funding its investment in the Series 2000-A Notes for such Interest Period or portion thereof, the Obligors' Agent, the Series Support Provider and the Agent shall negotiate in good faith to determine a mutually agreeable different rate as the Series 2000-A Alternative Rate sufficient to meet such Purchaser's costs and, pending the conclusion of those negotiations, the Series 2000-A Alternative Rate for each Interest Period shall be the LIBO Rate; provided, however, that if the Obligors' Agent, the Series Support Provider and the Agent have not agreed upon a rate before the end of the second full Interest Period following the date of such Purchaser's notice to the Agent, the Series 2000-A Alternative Rate for each successive Interest Period for so long as the condition giving rise to such notice shall be continuing shall be the Series 2000-A Base Rate. "Series 2000-A Available Funds" means, with respect to any Settlement Date, the aggregate amount of Collections received by the Servicer during the prior Collection Period with respect to the Series 2000-A Trust Estate (other than Collections representing Advance Payments until such Advance Payments are applied as Collections in accordance with Section 7.01 of the Master Agreement), plus any net payments under a Hedge Agreement received since the previous Settlement Date (or the Series 2000-A Series Closing Date in the case of the first Settlement Date), plus any Prepayment Amounts deposited in the Series 2000-A Facility Account pursuant to Section 6.01 hereof plus any Crossover Amounts received from a Series in Group B since the previous Settlement Date. 21 "Series 2000-A Base Rate" means, on any date, a fluctuating rate of interest per annum equal to the higher of (a) the rate of interest most recently announced by the Agent in New York, New York as its base commercial lending rate (not necessarily intended to be the lowest rate of interest charged by the Agent in connection with the extensions of credit) and (b) .50% above the rate per annum at which the Agent, as a branch of a foreign bank, in its sole discretion, can acquire federal funds in the interbank overnight federal funds market, including through brokers of recognized standing. "Series 2000-A Contract" means each Contract listed on a List of Contracts attached to a Pledge Notice which is delivered in connection with a Pledge of Pledged Property with respect to the Series 2000-A Trust Estate, and which Contract has not been released from the Series 2000-A Trust Estate as provided herein or in the Master Agreement. "Series 2000-A Advance Payment Account" has the meaning set forth in Section 3.01(b) hereof. "Series 2000-A Facility Account" has the meaning set forth in Section 3.01(a) hereof. "Series 2000-A Insurance Account" means the account or accounts created and maintained pursuant to Section 3.10(b). "Series 2000-A Note" means any one of the Series 2000-A Notes executed by the Obligor in favor of the Agent and authenticated by or on behalf of the Trustee, substantially in the form of Exhibit A hereto, and any replacement therefor. "Series 2000-A Note Balance" means, as of any time of determination, the aggregate, cumulative amount of the Advance Amounts funded pursuant to Section 4.01(b) hereof since the Series Closing Date, reduced by the aggregate, cumulative amounts described in Sections 3.03(a)(i) eleventh, 3.03(a)(ii) eleventh and 3.03(a)(ii) fifteenth and actually paid to the Series 2000-A Noteholders on all prior Settlement Dates. "Series 2000-A Noteholder" shall mean any Owner, as defined in the Note Purchase Agreement. "Series 2000-A Note Interest Rate" means for any Interest Period for the Series 2000-A Notes, the weighted average of the following rates determined for each Purchaser (based on the respective investments of each Purchaser in the Series 2000-A Notes and the time period for which applicable rates are in effect): (a) to the extent that a Purchaser funds its investments in the Series 2000-A Notes for such Interest Period or portion thereof by issuing Commercial Paper, the sum of (i) the CP Margin and (ii) the weighted average of the rates at which Commercial Paper issued by such Purchaser to fund the purchase or maintenance of their investments in the Series 2000-A Notes during such Interest Period or portion thereof has been sold by any placement agent or commercial paper dealer selected by such Purchaser; provided, that, for purposes of calculating such weighted average, if any such rate is a discount rate, such 22 discount rate shall be converted to an interest-bearing equivalent rate per annum for a 360-day year and (b) to the extent that a Purchaser funds its investments in the Series 2000-A Notes for such Interest Period or portion thereof other than by issuing Commercial Paper, a rate equal to the sum of (i) the applicable LIBO Margin and (ii) the Series 2000-A Alternative Rate for such Interest Period or portion thereof or such other rate as the Agent and the Obligors' Agent shall agree to in writing. The Series 2000-A Note Interest Rate for any Interest Period shall be adjusted to yield, when applied to the outstanding principal balance of the Series 2000-A Notes, an amount sufficient to pay interest on the incremental effective principal balance of any funding resulting from the capitalization of interest, if any, during such Interest Period. As used in paragraph (a) of this definition, each Purchaser's weighted average of the Commercial Paper rates shall include (x) any incremental carrying costs incurred with respect to Commercial Paper maturing on dates other than those on which corresponding funds are received by such Purchaser, and (y) other borrowings by such Purchaser to fund the Net Investment (other than under any liquidity agreement or other program support agreement), including borrowings to fund small or odd dollar amounts that are not easily accommodated in the commercial paper market. "Series 2000-A Related Documents" means, collectively, this Series 2000-A Supplement, the Fee Letter, the Premium Letter, the Hedge Agreement(s), the Master Agreement, the Master Transfer Agreement, the Insurance and Indemnity Agreement, the Collateral Administration Agreement, the Note Purchase Agreement, the Policy, the Series 2000-A Notes and all other instruments, documents, financing statements and agreements executed and delivered by the Obligor, the Obligors' Agent or the Servicer in connection herewith or therewith and each Series 2000-A Transfer Agreement Supplement executed pursuant thereto with respect to the Series 2000-A Trust Estate. "Series 2000-A Secured Parties" shall have the meaning set forth in Section 3.07(b)(viii) hereof. "Series 2000-A Transfer Agreement Supplement" means each Transfer Agreement Supplement entered into pursuant to the Master Transfer Agreement which transfers Series 2000-A Contracts to the Obligor for inclusion in the Series 2000-A Trust Estate. "Series 2000-A Trust Estate" shall have the meaning set forth in Section 1.02 hereof. "Servicer's Certificate" means a report with respect to Series 2000-A, in substantially the form of Exhibit D hereto (appropriately completed), furnished by the Servicer to the Obligors' Agent, the Trustee, the Series Support Provider and the Agent pursuant to Section 6.06 of the Master Agreement. "Servicing Fee" means as of any Settlement Date, an amount equal to one-twelfth of 1.00% of the aggregate Contract Principal Balance of the Series 2000-A Contracts as of the 23 first day of the prior Collection Period, payable on each Settlement Date to the Servicer pursuant to Section 3.03 hereof as compensation for the performance of its duties hereunder and under the Master Agreement. "Settlement Date" means the 15th of each month (or if the 15th of any month is not a Business Day, then on the next succeeding Business Day) commencing with January 16, 2001. "State Concentration Amount" means: (i) for any State other than New Jersey, Florida, Texas or California, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which any User is domiciled in such State, over (y) ten percent (10%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time; plus (ii) for each of New Jersey, Florida, Texas and California, individually, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which any User is domiciled in such State over fifteen percent (15%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time. "Support Interest Funding" means any drawing under the Policy or any Insurer Advance or other payment by the Series Support Provider or in lieu of funding a drawing under the Policy, in either case made with respect to interest as calculated pursuant to clause (i) of the defined term "Insured Amounts". "Support Principal Funding" means any drawing under the Policy or any Insurer Advance or other payment by the Series Support Provider or in lieu of funding a drawing under the Policy, in either case made with respect to principal as calculated pursuant to clause (ii) of the defined term "Insured Amounts". "Swap Agreement" means a Hedging Agreement other than a Cap Agreement, substantially in the form of Exhibit J hereto. "Take Out" means the refinancing of all of the Series 2000-A Contracts (whether through the issuance of asset-backed securities, funding through other Committed Financing Facilities, whole loan sales or otherwise). "Tangible Net Worth" means, with respect to Marlin, its shareholders' equity, less any intangible assets, all determined in accordance with GAAP, provided that subordinated debt, none of the principal of which is payable less than five years from the date of its issuance shall be considered equity. "Termination Date" means the earliest to occur of: (i) the two (2) year anniversary of the Series Closing Date, or such later date as the parties (with the express written 24 consent of the Agent and Series Support Provider) may hereafter agree in accordance with Section 4.01(i), (ii) the day designated as the Termination Date by the Obligor on sixty (60) days' prior written notice to the Agent and the Series Support Provider, (iii) the day on which the Series Controlling Party declares the occurrence of the Termination Date or on which the Termination Date automatically occurs pursuant to Section 5.01, (iv) the date on which the financial strength rating of XL Capital Assurance Inc. is withdrawn, suspended or rated below "A" by Standard & Poor's, (v) the 90th day following the date on which the Series Support Provider has delivered a written notice to the Transferor and the Agent to the effect that the most recent audit completed by the Series Support Provider or its designee of the Transferor's origination, servicing and documentation procedures has revealed to the Series Support Provider deficiencies which it reasonably believes creates a material adverse effect on the facility and (vi) a Hedge Counterparty fails to satisfy the definition thereof and is not replaced within fifteen (15) Business Days by a Person satisfying the definition thereof. "Three-Month Rolling Average" means, with respect to any pool performance ratio, the sum of the applicable ratio for the most recently ended Collection Period and two immediately preceding Collection Periods (or such fewer Collection Periods as have previously occurred) divided by three (or such smaller number). "Trustee Fee" means the monthly fee payable to the Trustee on each Settlement Date, which shall be the greater of (x) one-twelfth of two basis points (0.02%) per annum times the aggregate Contract Principal Balance of the Series 2000-A Contracts as of the end of the preceding Collection Period and (y) $1,000. "Unused Fee" has the meaning ascribed thereto in the Premium Letter. "User Concentration Amount" means, for any User, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2000-A Contracts with respect to which such User or any Affiliate of such User is the User, over the lesser of (a) three quarters of one percent (0.75%) of the aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at such time and (b) $300,000. "Weighted Average Hedge Rate" means, with respect to any Interest Period, the weighted average (weighted based on the related notional balances, as well as the number of days during such Interest Period for which the related Hedge Agreement was in effect) of Hedge Rates applicable to all Hedge Agreements under which payment will be received on the Settlement Date relating to such Interest Period. "Weighted Average Life" means, as of any date of determination, a term in years equal to the sum of: [sigma] (Pn X Tn) --------- PB 25 where: [sigma] = The mathematical symbol for summation. The summation is computed from 1 to n, where n is the number of months from the date of determination until the date of the last Scheduled Payment under the last Series 2000-A Contract scheduled to be outstanding; Pn = The sum of the principal portions of the Scheduled Payments for all Series 2000-A Contracts which are Eligible Contracts in the nth month after the date of determination; Tn = The remaining period, in months, from the time of calculation until such nth month; and PB = The aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts at the time of calculation, divided by 12 and rounded to the second decimal place. ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 2000-A NOTEHOLDER; SERIES SPECIFIC COVENANTS Section 3.01 Series 2000-A Accounts. (a) The Trustee, for the benefit of the Series 2000-A Secured Parties, shall establish and maintain an account (the "Series 2000-A Facility Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Facility Account for Marlin Master Financing Facility Agreement, in trust for the Series 2000-A Secured Parties." The Trustee shall make or permit withdrawals from the Series 2000-A Facility Account only as provided in this Series 2000-A Supplement; (b) The Trustee, for the benefit of the Series 2000-A Secured Parties, shall establish and maintain an account (the "Series 2000-A Advance Payment Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Advance Payment Account for Marlin Master Financing Facility Agreement, in trust for the Series 2000-A Secured Parties." The Trustee shall make or permit withdrawals from the Series 2000-A Advance Payment Account only as provided in this Series 2000-A Supplement and in the Master Agreement; (c) The Trustee shall deposit to the Series 2000-A Facility Account all Refinance Proceeds remitted to it by the Obligor immediately upon the Trustee's receipt thereof; (d) The Trustee shall deposit to the Series 2000-A Facility Account any Crossover Amounts remitted to it from other Series assigned to Group B, as provided in the Series Supplement(s) relating to such other Series; and 26 (e) Notwithstanding the foregoing or anything in the Master Agreement to the contrary, upon written instruction from the Servicer, the Trustee may deduct from amounts otherwise specified for deposit to the Series 2000-A Facility Account any amounts previously deposited by the Trustee into the Series 2000-A Facility Account but which (i) are subsequently uncollectible as a result of dishonor of the instrument of payment for or on behalf of the User, (ii) are later determined to have resulted from mistaken deposits or (iii) constitute Servicing Charges. Section 3.02 Agent to Send Notice of Amounts Due. On each Determination Date, the Agent shall send to the Servicer (with a copy to the Trustee and the Series Support Provider), a notice in the form of Exhibit C to the Note Purchase Agreement. Section 3.03 Distributions from Series 2000-A Facility Account. (a) On each Settlement Date, the Trustee (based solely on the information set forth in the related Servicer's Certificate) shall allocate and distribute funds on deposit in the Series 2000-A Facility Account in the following order of priority, without duplication: (i) if such Settlement Date occurs during the Revolving Period: first, from Series 2000-A Available Funds, to pay to the Servicer any amounts referred to in Section 3.01(e) and to pay to any other Persons that mistakenly deposited funds into the Series 2000-A Facility Account, such mistakenly deposited funds; second, from the remaining Series 2000-A Available Funds, to the Servicer, an amount necessary to reimburse the Servicer for any unreimbursed Servicer Advances with respect to Series 2000-A Contracts; third, from the remaining Series 2000-A Available Funds, to the Trustee for payment to Hedge Counterparties, amounts due under the related Hedge Agreements, limited to the net fixed amount due applied against the outstanding Net Investment, except amounts due as fees, expenses or as the consequence of the occurrence of an event of default or termination event under such Hedge Agreement or otherwise due upon the termination of such Hedge Agreement, which amounts shall be paid as provided in clause sixteenth below; fourth, from the remaining Series 2000-A Available Funds to the Servicer, if the Servicer is not the Obligor or an Affiliate of the Obligor, in payment of any Servicing Fee then due; fifth, from the remaining Series 2000-A Available Funds, to the Trustee, the Trustee Fee, and to the Back-up Servicer, the Back-Up Servicing Fee, any out-of-pocket expenses of the Trustee and the Back-up Servicer or successor Servicer reasonably incurred in connection with the Series 2000-A transaction and, subject to an aggregate, cumulative maximum (including amounts paid under paragraph (a)(ii) fifth below) of $50,000 27 (with respect to the above described expenses) during the term of this facility, any expenses in excess of such cumulative maximum amount if such expenses are approved in writing by the Series Support Provider and any servicing Transition Cost due such Persons under this Series Supplement; sixth, from the remaining Series 2000-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider (x) the Insurer Fee due to the Series Support Provider on such Settlement Date in connection with the Series Support and (y) any unpaid Insurer Fee due on prior Settlement Dates, together with (in the case of any such unpaid Insurer Fee) interest thereon at the rate specified in the Premium Letter; seventh, from the remaining Series 2000-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Interest Fundings, together with interest thereon, calculated at the rate set forth in the Insurance and Indemnity Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; eighth, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholders, the following amounts in the following order: (a) any Monthly Interest with respect to any prior Settlement Date due but not paid pursuant to this clause eighth (or pursuant to a Support Interest Funding made pursuant hereto) on a prior Settlement Date; provided, however, that no such amount of Monthly Interest carried forward with respect to a prior Settlement Date shall include any amount of Monthly Interest for a prior Settlement Date that was in excess of the Capped Monthly Interest for such prior Settlement Date, and (b) Monthly Interest for such Settlement Date but not in an amount in excess of the Capped Monthly Interest for such Settlement Date; ninth, from the remaining Series 2000-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amounts described in clauses sixth and seventh above; tenth, from the remaining Series 2000-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Principal Fundings, together with interest thereon, calculated at the rate set forth in the Insurance and Indemnity Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; 28 eleventh, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholders in reduction of the Series 2000-A Note Balance, the lesser of: (x) such remaining Series 2000-A Available Funds and (y) the excess of (i) the Net Investment, after taking into account any reduction thereof on such Settlement Date pursuant to the preceding clauses of this subsection (a)(i), over (2) the Pro Forma Borrowing Base; twelfth, from the remaining Series 2000-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amounts described in clause tenth above; thirteenth, from the remaining Series 2000-A Available Funds, ratably to the Series 2000-A Noteholder, the following amounts in the following order: (a) any Noteholder's Carryover Interest for such Settlement Date; and (b) any Monthly Interest for such Settlement Date, in each case to the extent not paid pursuant to clause eighth above; fourteenth, from the remaining Series 2000-A Available Funds, to the Obligor, the lesser of: (i) the Advance Amount for all Series 2000-A Contracts being Pledged on such Settlement Date in accordance with Section 4.01(e) hereof; and (ii) such remaining Series 2000-A Available Funds; fifteenth, from the remaining Series 2000-A Available Funds, ratably to the Series 2000-A Noteholder, for the benefit of the applicable Owners or to the Agent or the Series Support Provider, as applicable, the Facility Fee, the Unused Fee, Breakage Costs, any Default Fee, any Make-Whole Amounts, any outstanding and unpaid Accrued Liabilities and any other amounts owing to the Series 2000-A Noteholders, the Series Support Provider or the Agent under the Series 2000-A Related Documents, as certified by the Agent or the Series Support Provider, as applicable, to the Trustee, and the Obligors' Agent; sixteenth, from the remaining Series 2000-A Available Funds, ratably, to each Hedge Counterparty (and based upon the amounts owed to each) any amounts due to it as fees, expenses or as the consequence of an event of default or termination event under the related Hedge Agreement or otherwise due upon the termination of the related Hedge Agreement; 29 seventeenth, from the remaining Series 2000-A Available Funds, (i) to the Servicer, if the Servicer is the Obligor or an Affiliate of the Obligor, in payment of any accrued and unpaid Servicing Fee then due and (ii) to any successor Servicer in payment of any accrued and unpaid Increased Servicer Fees then due; and eighteenth, from the remaining Series 2000-A Available Funds, the balance, if any, to other Series in Group B, if any, and thereafter to the Obligors' Agent for the benefit of the Obligor, or as otherwise directed by it in writing. (ii) if such Settlement Date occurs during the Amortization Period: first, from Series 2000-A Available Funds to pay to the Servicer any amounts referred to in Section 3.01(e) and to pay to any other Persons that mistakenly deposited funds into the Series 2000-A Facility Account, such mistakenly deposited funds; second, from the remaining Series 2000-A Available Funds, to the Servicer, an amount necessary to reimburse the Servicer for any unreimbursed Servicer Advances with respect to the Series 2000-A Contracts; third, from the remaining Series 2000-A Available Funds, to the Trustee for payment to Hedge Counterparties, amounts due under the related Hedge Agreements limited to the net fixed amount due applied against the outstanding Net Investment, except amounts due as fees, expenses or as the consequence of the occurrence of an event of default or termination event under such Hedge Agreement or otherwise due upon the termination of such Hedge Agreement, which amounts shall be paid as provided in clause seventeenth below; fourth, from the remaining Series 2000-A Available Funds, to the Servicer, if the Servicer is not the Obligor or an Affiliate of the Obligor, in payment of any Servicing Fee then due; fifth, from the remaining Series 2000-A Available Funds, to the Trustee, the Trustee Fee, and to the Back-up Servicer, the Back-Up Servicing Fee, any out-of-pocket expenses of the Trustee and the Back-up Servicer or successor Servicer reasonably incurred in connection with the Series 2000-A transaction and, subject to an aggregate, cumulative maximum (including amounts paid under paragraph (a)(i) fifth above) of $50,000 (with respect to the above described expenses) during the term of this facility, any expenses in excess of such cumulative maximum amount if such expenses are approved in writing by the Series Support Provider and any servicing Transition Cost due such Persons under this Series Supplement; 30 sixth, from the remaining Series 2000-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider (x) the Insurer Fee due to the Series Support Provider on such Settlement Date in connection with the Series Support and (y) any unpaid Insurer Fee due on prior Settlement Dates, together with (in the case of any such unpaid Insurer Fee) interest thereon at the rate specified in the Premium Letter; seventh, from the remaining Series 2000-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Interest Fundings, together with interest thereon, calculated at the rate set forth in the Insurance and Indemnity Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; eighth, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholders, the following amounts in the following order: (a) any Monthly Interest with respect to any prior Settlement Date due but not paid pursuant to this clause eighth (or pursuant to a Support Interest Funding made pursuant hereto) on a prior Settlement Date; provided, however, that no such amount of Monthly Interest carried forward with respect to a prior Settlement Date shall include any amount of Monthly Interest for a prior Settlement Date that was in excess of the Capped Monthly Interest for such prior Settlement Date, and (b) Monthly Interest for such Settlement Date but not in an amount in excess of the Capped Monthly Interest for such Settlement Date; ninth, from the remaining Series 2000-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amounts described in clauses sixth and seventh above; tenth, from the remaining Series 2000-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Principal Fundings, together with interest thereon, calculated at the rate set forth in the Insurance and Indemnity Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; eleventh, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholders, in reduction of the Series 2000-A Note Balance, the product of (x) the Principal Distribution Amount and (y) 88.5%; 31 twelfth, from the remaining Series 2000-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amounts described in clause tenth above; thirteenth, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholder, the following amounts in the following order: (a) any Noteholder's Carryover Interest for such Settlement Date; and (b) any Monthly Interest for such Settlement Date, in each case to the extent not paid pursuant to clause eighth above; fourteenth, from the remaining Series 2000-A Available Funds, (i) to the Servicer, if the Servicer is the Obligor or an Affiliate of the Obligor, in payment of any accrued and unpaid Servicing Fee then due and (ii) to any successor Servicer in payment of any accrued and unpaid Increased Servicer Fees then due; fifteenth, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholders in reduction of the Series 2000-A Note Balance, the lesser of (i) 100% of such amount and (ii) the then-outstanding Series 2000-A Note Balance (calculated after taking into account any reduction therein under clause eleventh above); sixteenth, from the remaining Series 2000-A Available Funds, ratably to the Series 2000-A Noteholder, for the benefit of the applicable Owners or to the Agent or the Series Support Provider, as applicable, of the Facility Fee, the Unused Fee, Breakage Costs, any Default Fee, any Make-Whole Amounts, any outstanding and unpaid Accrued Liabilities and any other amounts owing to the Series 2000-A Noteholders or the Agent under the Series 2000-A Related Documents, as certified by the Agent or the Series Support Provider, as applicable, to the Trustee, and the Obligors' Agent; seventeenth, from the remaining Series 2000-A Available Funds, ratably, to each Hedge Counterparty (and based upon the amounts owed to each) any amounts due as fees, expenses or as the consequence of an event of default or termination event under the related Hedge Agreement or otherwise due upon the termination of the related Hedge Agreement; and eighteenth, from the remaining Series 2000-A Available Funds the balance, if any, to other Series in Group B, if any, and thereafter to the Obligors' Agent for the benefit of the Obligor, or as otherwise directed by it in writing. (b) All payments of interest, principal, fees, and other amounts payable to the Series 2000-A Noteholders hereunder shall be made on each Settlement Date to the Agent for the benefit of the applicable Purchaser(s) and all payments of amounts payable to the Series Support Provider shall be made on each Settlement Date by wire transfer of immediately available funds to an account designated in writing by the Agent or the Series Support Provider, as applicable, in 32 the form of Exhibit C hereto delivered to the Trustee on or prior to the related Determination Date without in the case of the Agent or the Series Support Provider presentation or surrender of the Series 2000-A Note or the making of any notation thereon. (c) Any designation by the Agent or the Series Support Provider, as applicable, of an account for receipt of wire transfers pursuant to the preceding clause (b) shall be a standing instruction, effective with respect to the applicable Settlement Date and all subsequent Settlement Dates thereafter until revoked. In the absence of such timely wire transfer instructions, payment will be made by cashiers check sent by overnight courier to the Agent or the Series Support Provider, as applicable, at the address designated pursuant to Section 7.01. All reasonable costs and expenses incurred by the Trustee in connection with the distribution of the payments to the Series 2000-A Noteholders or the Series Support Provider as set forth in this Section 3.03(c) shall be paid by the Servicer. (d) The Trustee shall not have any duty or obligation to recalculate, recompute or verify the information contained in the Servicer's Certificate. Section 3.04 Reporting and Review Requirements. (a) The Servicer shall send to the Agent, the Series Support Provider and the Trustee a Servicer's Certificate with respect to each Collection Period, such Servicer's Certificate to be in the form of that attached hereto as Exhibit D, not later than three (3) Business Days prior to the immediately succeeding Settlement Date. (b) By January 31 of each calendar year, commencing January 31, 2002, the Servicer shall prepare and distribute to the Trustee and to the Agent a statement containing such information as is required to be provided by an issuer of indebtedness under the Code and such other customary information as is necessary or may reasonably be requested by the Agent to enable the Purchasers to prepare their tax returns. (c) The Series Support Provider or its designee shall, at Marlin's expense (not to exceed $30,000 per annum plus out-of-pocket costs and expenses) be permitted to conduct such audits of Marlin's origination, servicing and documentation procedures as the Series Support Provider shall deem necessary, once, following the first Collection Period and thereafter, not more frequently than quarterly (provided such audits shall commence no sooner than January 1, 2001). In addition, the Series Support Provider or its designee shall have the right (1) as long as a Series Event of Default has not occurred and is not continuing, to conduct additional audits at the Series Support Provider's (or its designee's) expense, upon at least two Business Day's prior notice and (2) following the occurrence of and during the continuance of a Series Event of Default, to conduct audits as frequently as it deems necessary, at any time without prior notice and at Marlin's expense. (d) Marlin shall provide the Agent and the Series Support Provider with a covenant compliance certificate (as part of the Servicer's Certificate), to the effect that, as of the end of each calendar quarter, Marlin and each Obligor is in compliance with its respective covenants hereunder (listing any exceptions) signed by the Servicing Officer of Marlin and delivered within 45 days of the end of such calendar quarter. 33 (e) Marlin shall provide the Agent and the Series Support Provider with consolidated and consolidating financial statements (consolidating financial statements to include, in columnar format, all wholly-owned subsidiaries of Marlin, with the exception of subsidiaries that are special-purpose entities), in each case prepared in accordance with GAAP (i) unaudited, on a quarterly basis, within 45 days of the end of each calendar quarter, certified by the Chief Financial Officer of Marlin and (ii) audited, on an annual basis, within 120 days of the end of each fiscal year, audited by Marlin's Independent Public Accountants. (f) Marlin shall provide the Agent and the Series Support Provider with a copy of its "monthly business review" within 30 days of the end of each month. (g) Marlin shall provide the Agent and the Series Support Provider with a copy of its annual management/internal control report prepared by Marlin's Independent Public Accountants, promptly following Marlin's receipt thereof and in no event later than 120 days following the end of each fiscal year. (h) Marlin shall provide the Agent and the Series Support Provider with a copy of its annual budget for each upcoming fiscal year, including statements of income and cash flows, and balance sheets, not later than 30 days after the beginning of such fiscal year. (i) The Servicer and the Trustee shall furnish to the Agent and the Series Support Provider during the term of this Series 2000-A Supplement, such periodic, special or other reports or information not specifically provided for herein, as shall be necessary, reasonable and appropriate as shall be requested by the Agent or the Series Support Provider, all such reports or information to be provided by and in accordance with reasonable instructions and directions as the Agent or the Series Support Provider may reasonably require and as the Servicer and the Trustee may reasonably be able to produce. In furtherance of, and not in limitation of the foregoing, there shall be delivered to the Agent and the Series Support Provider by the Trustee, promptly following the Trustee's receipt thereof, copies of (i) each Servicer's annual compliance statement delivered to the Trustee pursuant to Section 6.07 of the Master Agreement, and (ii) each financial statement and report delivered to the Trustee pursuant to Section 6.08 of the Master Agreement. The Trustee's obligation under this Section 3.04(c) shall only pertain to information provided by the Servicer to the Trustee or otherwise in the Trustee's possession. (j) The Trustee shall promptly, after any Responsible Officer's receipt of copies thereof, or any Responsible Officer acquiring actual knowledge thereof, send to the Agent and the Series Support Provider (at the Servicer's expense): (i) written notice of any breach by the Transferor, the Obligor, the Obligors' Agent or the Servicer of any of their respective representations, warranties or covenants made in any of the Series 2000-A Related Documents to which it is a party; (ii) a copy of each Servicer compliance statement delivered to the Trustee pursuant to Section 6.07 of the Master Agreement; 34 (iii) a copy of each financial statement, Independent Accountant's review, notice and report delivered to the Trustee pursuant to Sections 6.08 and 12.04 of the Master Agreement; (iv) written notice of the occurrence of any Series Event of Default or Event of Servicer Termination; (v) written notice of any failure of the Trustee to conform to the eligibility requirements for the Trustee pursuant to Section 11.08 of the Master Agreement; (vi) written notice of the appointment of any co-trustee or separate trustee by the Trustee pursuant to Section 11.15 of the Master Agreement; and (vii) copies of all other financial statements, reports, information and/or notices as may be reasonably requested by the Agent or the Series Support Provider and, in each case, which has been received by or is otherwise in the possession of the Trustee or to which the Trustee would have access or would be entitled to receive or request in accordance with the terms of the Master Agreement; provided, however, that in each case the Trustee shall only be required to send such notices and other items to the Agent and the Series Support Provider to the extent that the Trustee has itself received or has knowledge of the related information. Except as may be specifically provided herein, the Trustee shall have no obligation to seek to obtain any such information. (k) The Trustee shall promptly, after any Responsible Officer's receipt of copies thereof, or any Responsible Officer acquiring actual knowledge thereof, send to the Rating Agency (at the Servicer's expense): (i) written notice of the waiver of any of the events set forth in Sections 5.01(o), (p) or (q), which events would otherwise constitute Series Events of Default; and (ii) written notice of any approval by the Series Support Provider of expenses for payment pursuant to clause fifth of Sections 3.03(a)(i) and 3.03(a)(ii) hereof; provided, however, that in each case the Trustee shall only be required to send such notices and other items to the Rating Agencies to the extent that the Trustee has itself received or has knowledge of the related information. Except as may be specifically provided herein, the Trustee shall have no obligation to seek to obtain any such information. (l) At least three Business Days prior to the date on which the Servicer is required to deliver the Servicer Certificate referred to in Section 3.04(a) above, the Series Support Provider shall report to the Servicer, the Agent and the Trustee (in writing) the amount of all Accrued Liabilities outstanding and unpaid as of such date (including a breakdown as to the amounts outstanding and unpaid under each of clauses (i) and (ii) of the definition of 35 "Accrued Liabilities"), together with the amount of any additional interest accruing thereon under the Insurance and Indemnity Agreement through the next Settlement Date. The Trustee shall be entitled to rely conclusively upon each such certification in preparing any reports or accountings under Section 3.04 hereof and in making distributions pursuant to Section 3.03 hereof on such Settlement Date. In the absence of its receipt of any such certification prior to any Settlement Date, the Trustee shall be entitled to conclude that no amounts other than amounts drawn under the Policy or advanced pursuant to an Insurer Advance (and remaining unreimbursed to the Series Support Provider) of which it has knowledge are then outstanding and owing as Accrued Liabilities as of such Settlement Date. Section 3.05 Compliance With Withholding Requirements. Notwithstanding any other provisions of this Series 2000-A Supplement or the Master Agreement to the contrary, the Trustee, for and on behalf of, and at the direction of the Servicer, shall comply with all federal withholding requirements respecting payments (or advances thereof) to the Agent on behalf of the Purchasers as may be applicable to instruments constituting indebtedness for federal income tax purposes. Except as otherwise provided in the Note Purchase Agreement, any amounts so withheld shall be treated as having been paid to the Agent on behalf of the applicable Purchasers for all purposes of this Series 2000-A Supplement. In no event shall the consent of the Agent or any Purchasers be required for any such withholding. The Series Support Provider shall not be obligated to pay any additional amounts to the Owners in the event that any taxes or related amounts are withheld or assessed from or with respect to payments on the Series 2000-A Notes. Section 3.06 Servicer Advances. No later than one Business Day preceding each Settlement Date, if the Servicer determines that any Scheduled Payment (or portion thereof), which was due and payable pursuant to a Series 2000-A Contract during the related Collection Period was not received by such date, the Servicer may make a Servicer Advance in an amount up to the amount of such delinquent Scheduled Payment (or portion thereof), to the extent that in its sole discretion it determines it can recoup such amount from subsequent Collections under the related Series 2000-A Contract. The Servicer shall remit any Servicer Advances to the Series 2000-A Facility Account for application in accordance with the terms of Section 3.03. Section 3.07 Special Representations, Covenants and Acknowledgements. (a) With respect to the Series 2000-A Notes, the Obligor and the Obligors' Agent does hereby represent and warrant, as of each Pledge Date: (i) Insolvency. Each of the Obligor and the Obligors' Agent is Solvent and will remain Solvent after giving effect to the issuance of the Series 2000-A Notes and the transactions contemplated by this Series 2000-A Supplement, the Master Facility Agreement and each Series 2000-A Related Document to which it is a party. (ii) Principal Place of Business. Exhibit F hereto sets forth the principal place of business, state of incorporation or organization, and chief executive 36 office and the location of the Contract Files for the Obligor and the Obligors' Agent. (iii) Valid Pledge. Each Pledge constitutes the grant of a perfected, first priority security interest in all Pledged Property (other than any Equipment having a value of $25,000 or less, with respect to which such security interest is validly granted, but may not be perfected or of first priority) to the Trustee. (iv) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Obligor and the Obligors' Agent of this Agreement, the Master Facility Agreement and each Series 2000-A Related Document to which it is a party except for such authorizations, approvals, actions, notices and filings as have already been obtained, taken or made. (v) Accuracy of Information. All information heretofore furnished in writing by the Obligor or the Obligors' Agent to the Trustee, the Series Support Provider or to the Agent for purposes of or in connection with this Agreement, the Master Facility Agreement and each Series 2000-A Related Document to which it is a party or any Pledge is true, accurate and complete in every material respect on the date such information is stated or certified. (vi) Names. In the past two years, none of the Obligor nor the Obligors' Agent has used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement. (vii) No Adverse Selection. The Series 2000-A Contracts have been, and will be, selected by the Obligors' Agent in a manner that is not adverse to the interests of the Trustee, the Series 2000-A Noteholders or the Series Support Provider. (viii) Eligibility. Each Series 2000-A Contract being Pledged on such Pledge Date is an Eligible Contract. (ix) No Event of Default. No Series Event of Default has occurred and is continuing, nor does any situation exist which, with the giving of notice and/or the passage of time, would result in the occurrence of a Series Event of Default. (b) The Obligor, the Obligors' Agent, Marlin and the Servicer do hereby covenant, acknowledge and agree that: (i) Access to Documentation. The Agent, the Series Support Provider and any of their duly authorized representatives, attorneys or accountants shall 37 have the same access to the documentation relating to the Series 2000-A Trust Estate as the Trustee is provided pursuant to Section 6.09 of the Master Agreement. (ii) Servicer to Indemnify. The Servicer shall indemnify the Agent, the Series Support Provider and the Noteholders to the same extent and on the same terms as the Trustee, pursuant to Section 8.01 of the Master Agreement. (iii) Certain Consents Required. The prior written consent of the Series Support Provider and the Agent shall be required for the Obligor to take any action described in Section 14.03(a) or 14.03(b) of the Master Agreement; provided, however, that in no event shall this Section 3.7(b)(iii) require the consent of the Series Support Provider or the Agent for any Take Out. (iv) Notice of Return of Final Payment. The Servicer shall give the Agent and the Series Support Provider notice of any return of final payment given to the Trustee pursuant to Section 5.06 of the Master Agreement, at the same time such notice is given to the Trustee. (v) Acknowledgement of Obligor. The Obligor hereby confirms and acknowledges that, by its execution hereof, (a) it shall be deemed to be a party to the Master Agreement and to the Master Transfer Agreement for the purpose of making all representations, warranties and covenants, and being bound by all obligations, applicable to the Obligor thereunder, to the extent (and only to the extent) such representations, warranties, covenants and obligations relate to the Series 2000-A Note and/or the Series 2000-A Trust Estate and (b) it confirms the right and ability of the Obligors' Agent to execute any and all Series 2000-A Documents on behalf of such Obligor, and that the Obligors' Agent's signature thereon shall have the same force and effect as if the Obligor was a direct signatory thereto. (vi) Series Controlling Party. The parties hereto acknowledge that so long as no Series Support Provider Default shall have occurred and be continuing, the Series Support Provider shall be the "Series Controlling Party" with respect to the Series 2000-A Notes for purposes of the Master Agreement and this Series 2000-A Supplement and that if a Series Support Provider Default shall have occurred and be continuing, the Agent shall be the "Series Controlling Party" for purposes of the Master Agreement and this Series 2000-A Supplement so long as such Series Support Provider Default shall continue. (vii) Series Trustee Secured Obligations. The "Series Trustee Secured Obligations" and the "Series Secured Obligations" with respect to the Series 2000-A Notes shall mean, collectively (a) all amounts due to the Series 2000-A Noteholders for principal and interest and under the Note Purchase Agreement, (b) any amounts due to the Agent hereunder and 38 under the Note Purchase Agreement, either in its individual capacity or on behalf of the Purchasers, (c) any fees and expenses due to the Trustee or the Back-up Servicer with respect to the Series 2000-A Notes, (d) amounts due to the Series Support Provider hereunder and under the Insurance and Indemnity Agreement including all Accrued Liabilities and (e) any payments due to any Hedge Counterparty with respect to the Series 2000-A Note. (viii) Series Secured Parties. The "Series Secured Parties" with respect to the Series 2000-A Note are the Trustee, the Back-up Servicer, the Series Support Provider, the Agent, the Series 2000-A Noteholders, and each Hedge Counterparty (the "Series 2000-A Secured Parties"). (ix) Original Servicer Fee Rate. The "Original Servicer Fee Rate" with respect to the Series 2000-A Note is the percentage set forth in the definition of "Servicing Fee" herein. (x) Original Issue Date. The "Original Issue Date" with respect to the Series 2000-A Note is the Series Closing Date. (xi) Limitation of Allowable Prepayments. The Servicer shall not accept any Prepayment unless the amount received in connection therewith is at least equal to the related Prepayment Amount as of such date, or, if less, unless the Servicer makes a non-recoverable deposit to the Master Facility Account in the amount of any shortfall (which non-recoverable deposit shall be a "Collection" with respect to the Series 2000-A Trust Estate). (xii) Limitation on Removals. Notwithstanding Sections 6.12(a) and (b) of the Master Agreement, the Servicer may not remove any Contract pursuant to such Sections 6.12(a) and (b) if the aggregate of the Contract Principal Balances removed pursuant to such Section exceeds ten percent (10%) of the then aggregate Contract Principal Balance of all Series 2000-A Contracts which are Eligible Contracts on such date. (xiii) Series Controlling Party to Appoint Successor Servicer with Respect to this Series. The Series Controlling Party shall have the right to appoint a successor Servicer with respect to the Series 2000-A Contracts in the event of an Event of Servicer Termination. (xiv) Terms of Take-Out. Immediately following each Take-Out, the Net Investment shall be reduced to zero. (xv) Equipment Type. The Servicer will not change the Equipment Type classifications on its servicing system without the prior written consent of the Series Controlling Party. (xvi) Change in Credit and Collection Policy. There has been no, nor shall there be any, material change in the Credit and Collection Policy since 39 March 31, 2000 without the prior written consent of the Agent and the Series Support Provider, the determination as to whether such consent shall be given shall be made promptly upon request therefor. (xvii) Reserved. (xviii) Reserved. (xix) ERISA. Except as may otherwise be imposed by law, Marlin has no obligation to provide, and will not have any obligation to provide, post-retirement medical or life insurance or other death benefits to any person other than pursuant to the "Marlin Leasing Corp. 401(k) Profit Sharing Plan" (the "401 (k) Plan"). Except with respect to the 401(k) Plan, Marlin, does not currently maintain, have an obligation to contribute to or pay withdrawal liability to, or have any other obligation with respect to, any "pension plan" (within the meaning of section 3(2) of ERISA) or any multiemployer plan (within the meaning of section 3(37) of ERISA). For purposes hereof, all references to "ERISA" shall be deemed to refer to the Employee Retirement Income Security Act of 1974 (and any sections of the Code), as now in effect and as it may hereafter be amended or modified, and all regulations promulgated thereunder and all references to "Marlin" in this paragraph (xix) shall be deemed to refer to Marlin and all other entities with which Marlin is affiliated within the meaning of Section 414(b) and 415(h) of the Code, as amended by ERISA, and Sections 210(c) and 4001(a)(2) of ERISA. (xx) Substitute Contracts. Any Substitute Contract delivered to the Series 2000-A Trust Estate shall, if delivered during the Amortization Period, in addition to being an Eligible Contract, have substantially similar characteristics as the Replaced Contract. (xxi) Equipment Filings. If, at any time during the term of this facility, Marlin or any Obligor or the Obligors' Agent becomes aware that the aggregate Contract Principal Balance for all Series 2000-A Contracts having Users located in any one state exceeds 3% of the then aggregate Contract Principal Balance for all Series 2000-A Contracts, the Obligor shall, if appropriate Equipment Filings have not been made in such state and/or the state of incorporation of such Obligor if required by the UCC, within ten Business Days of so becoming aware, cause UCC-1 financing statements naming Marlin as debtor/seller and MLR IV LLC as secured party/buyer and naming MLR IV LLC as debtor and the Trustee as secured party to be filed with the appropriate registry, sufficient in form to perfect the Trustee's security interest in the Equipment located in such state (the filing of any such UCC-1 financing statement being an "Equipment Filing"). At the time of any such Equipment Filing the Obligor shall also cause to be delivered to the Trustee, the Agent, the Series Support Provider and each Rating Agency an opinion of counsel to the effect that such Equipment 40 Filing is in form sufficient to perfect such security interest in the related Equipment. (xxii) Amendment to Master Transfer Agreement. For so long as any Series Secured Obligations remain outstanding with respect to this Series 2000-A Supplement, the Obligor, the Obligors' Agent and Marlin hereby agree that they will not consent to any agreement pursuant to Section 7.05 of the Master Transfer Agreement or consent to any amendment to the Master Transfer Agreement pursuant to Section 7.01 of the Master Transfer Agreement without the prior written consent of the Agent and the Series Support Provider, such consent not to be unreasonably withheld, the determination as to whether such consent shall be given shall be made promptly upon request therefor. (c) The Obligor hereby makes each of the representations, warranties and covenants set forth in Section 2.01(a) of the Master Agreement to the Trustee, the Series 2000-A Noteholders, the Series Support Provider and the Agent on which representations, warranties and covenants the Trustee relies in accepting the Series 2000-A Trust Estate in trust, and on which the Series 2000-A Noteholders have relied in agreeing to purchase the Series 2000-A Notes. Such representations, warranties and covenants are deemed to be made and affirmed on the Series Closing Date, and shall survive the date of the making or remaking of such representations and warranties. Section 3.08 Hedging Arrangements. (a) Marlin shall provide for one or more Hedge Agreement(s) with respect to the Series 2000-A Trust Estate with an aggregate notional balance at least $2,000,000 greater than the Outstanding Net Investment and a future aggregate notional balance at least equal to the future principal portion of the Net Investment (calculated at a zero loss and zero prepayment assumption). Each Hedge Agreement shall: (i) provide for payments on each Settlement Date (x) which, in the case of a Cap Agreement, are made only by the Hedge Counterparty to the Trustee, in an amount equal to the current notional amount of the Hedge Agreement applied to the excess, if any, of the Base LIBO Rate over the Hedge Rate with respect thereto, and (y) in the case of a Swap Agreement, are to be made (1) by the Hedge Counterparty to the Trustee in an amount equal to the current notional amount of the Swap Agreement applied to the Base LIBO Rate, and (2) by the Trustee to the Hedge Counterparty in an amount equal to such notional amount applied to the Hedge Rate with respect thereto (which amounts may be netted, with the net amount paid by one party to the other); (ii) be satisfactory in form and substance to the Series Support Provider and the Agent; 41 (iii) provide that all payments made by the Hedge Counterparty thereunder shall be made directly into the Series 2000-A Facility Account; (iv) provide for termination at the option of the Trustee upon release of the related Series 2000-A Contracts from the Lien of the Indenture; (v) require the Hedge Counterparty to find a replacement Hedge Counterparty to execute a new Hedge Agreement satisfactory to the Series Support Provider and the Agent within 10 Business Days of any downgrade of the ratings of the Hedge Counterparty below the levels set forth in the definition of "Hedge Counterparty", which replacement must meet the qualifications set forth in the definition of "Hedge Counterparty"; (vi) be between the related Hedge Counterparty and the Trustee; (vii) if such Hedge Agreement is a Cap Agreement, be substantially in the form of Exhibit I hereto; and (viii) if such Hedge Agreement is a Swap Agreement, be substantially in the form of Exhibit J hereto. (b) In the event that a Hedge Counterparty no longer satisfies the ratings requirement specified in the definition thereof and does not itself find a replacement which has executed a Hedge Agreement as required under clause (v) of Section 3.08(a), Marlin shall be required, within 15 Business Days following the failure of such Hedge Counterparty to satisfy such ratings requirement, to provide a substitute Person satisfying the requirements of the definition of Hedge Counterparty to be substituted as the Hedge Counterparty under the applicable Hedge Agreement(s) or to enter into a new Hedge Agreement satisfactory to the Series Support Provider and the Agent. (c) The Trustee shall not designate an "Early Termination Date" under any Hedge Agreement following any "Event of Default" or "Termination Event" thereunder without the prior written consent of the Series Controlling Party, and must designate such an "Early Termination Event" at the Series Controlling Party direction if the circumstances would permit the Trustee to then make such a designation. (d) The Trustee shall promptly forward to the Series Controlling Party a copy of any notice received from a Hedge Counterparty relating to any downgrade, withdrawal or suspension of such Hedge Counterparty's (or such Hedge Counterparty's guarantor's) ratings. (e) The Trustee shall not execute any assignment, assumption, credit support annex, extension, amendment, modification, waiver, confirmation, designation of "Reference Market Makers," schedule or other agreement in connection with any Hedge Agreement without first obtaining the prior written consent of the Series Controlling Party. A copy of any such item received by the Trustee, together with a copy of any other notice or communication received by the Trustee in connection with any Hedge Agreement shall be forwarded to the Series Controlling Party promptly on receipt. Notice of (i) any assignment or transfer by a Hedge Counterparty of any of its rights or obligations under any Hedge Agreement (ii) any assumption, 42 amendment, extension, modification, waiver or event of default under any Hedge Agreement, and (iii) the Hedge Counterparties entering into any new Hedge Agreement shall be given by the Trustee to each Rating Agency. Section 3.09 Lockbox Account. (a) The Servicer shall establish a Lockbox Account identified as "the Lockbox Account for Marlin Master Facility Agreement, in trust for the Series 2000-A Secured Parties" on behalf of, and in the name of, MLR IV LLC, which shall be an Eligible Bank Account. The Servicer shall direct each User to make all payments with respect to the Series 2000-A Contracts which are due after the related Pledge Date directly to the Lockbox Account. Any notice delivered pursuant to the preceding sentence of this Section 3.09 after the date hereof shall provide that (i) it is irrevocable except by, or a notice accompanied by written consent of, the Series Controlling Party and (ii) the User will only be discharged from its obligations under the Series 2000-A Contract to the extent payments are sent to the Lockbox Account. (b) The Servicer shall issue and maintain a standing instruction to the Lockbox Bank under the Lockbox Agreement to the effect that (x) on each Business Day the Lockbox Bank shall (i) cause all items received in the post-office box related to the Lockbox Account since the preceding Business Day relating to the Series 2000-A Contracts to be deposited into the Lockbox Account, and (ii) remit by electronic funds transfer, into the Series 2000-A Facility Account all available funds on deposit in the Lockbox Account and (y) if the Lockbox Bank receives a written notice from the Series Controlling Party stating that a Series Event of Default has occurred hereunder, the Lockbox Bank shall thereafter follow such directions as it may thereafter receive from the Series Controlling Party with respect to Collections on the Series 2000-A Contracts, and shall not thereafter follow any directions of the Servicer (unless otherwise directed by the Series Controlling Party). Such standing instruction shall be evidenced by an agreement with the Lockbox Bank in form and substance acceptable to the Series Controlling Party. The Servicer will transfer any payments it receives directly rather than by payment to the Lockbox Account by or on behalf of the Users pursuant to the Contracts and all Recoveries in respect thereof to the Series 2000-A Facility Account immediately upon receipt thereof. (c) Neither the Servicer, any Obligor nor any Affiliate thereof shall direct or shall have directed any payments to be remitted to the Lockbox Account unless such payments relate to the Series 2000-A Contracts, or to Contracts relating to other Series of Notes assigned to Group B. Section 3.10 The Policy; Accrued Liabilities. (a) If, on any Determination Date, the Trustee determines (based solely on information set forth in the related Servicer's Certificate) that a Deficiency Amount exists in an amount greater than zero, the Trustee shall promptly (and, in any event, not later than the date that is two (2) Business Days prior to the related Settlement Date) notify the Series Support Provider in writing of such Deficiency Amount. Unless the Trustee shall have received written notice from the Series Support Provider to the effect that the Series Support Provider intends to make an Insurer Advance in respect of such Deficiency Amount on the related Settlement Date, 43 the Trustee shall deliver to the Series Support Party a notice substantially in the form of Exhibit A to the Policy (the "Notice for Payment") as a claim for an Insured Amount in an amount equal to such Deficiency Amount. Such Notice for Payment shall be delivered in accordance with the terms of the Policy no later than 10:00 a.m., New York City time, on the second (2nd) Business Day immediately preceding such Settlement Date. (b) The Trustee, for the benefit of the Series 2000-A Secured Parties, shall establish and maintain an account (the "Series 2000-A Insurance Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Insurance Account for Marlin Master Financing Facility Agreement, in trust for the Series 2000-A Secured Parties." The Trustee shall make or permit withdrawals from the Series 2000-A Facility Account only as provided in this Series 2000-A Supplement. Upon receipt of an Insured Amount or Insurer Advance from the Series Support Provider on behalf of the Owners, the Trustee shall deposit such amounts into the Series 2000-A Insurance Account. On each Settlement Date, the Trustee shall distribute the Deficiency Amount, if any, from amounts on deposit in the Series 2000-A Insurance Account to the Owners on a pro rata basis in payment of such Deficiency Amount. (c) The Trustee (i) shall be deemed to receive any Insured Amount or Insurer Advance from the Series Support Provider as attorney-in-fact on behalf of each Owner and (ii) shall distribute such Insured Amount or Insurer Advance to such Owner as set forth in subsection (b) above. Insured Amounts from proceeds of the Policy and Insurer Advances disbursed by the Trustee shall not be considered payment by MLR IV LLC with respect to the Owners, nor shall such disbursement of such Insured Amounts or Insurer Advances discharge the obligations of MLR IV LLC with respect to the amounts thereof. The Series Support Provider shall become subrogee and the deemed assignee of such Owners, of an amount of Series 2000-A Notes equal to the amount of Insured Amounts paid or Insurer Advances made by the Series Support Provider. The Trustee hereby agrees, and each Owner, by its acceptance of its Series 2000-A Note, hereby agrees, for the benefit of the Series Support Provider that the Trustee shall recognize that to the extent the Series Support Provider makes payments of Insured Amounts or Insurer Advances, either directly or indirectly (as by paying through the Trustee), to the Owners, the Series Support Provider will be subrogated to the rights of the Owners to the extent of such payments. (d) Any payment of Accrued Liabilities to the Series Support Provider pursuant to Section 3.03 (b) shall be deemed to be applied first to amounts owing under clause (iii), if any, second under clause (ii), if any, and then under clause (i), of the definition of Accrued Liabilities. Section 3.11 Option to Purchase in Lieu of Draw. (a) The Owners hereby grant to the Series Support Provider (or its designee, and each reference in this Section 3.11(a) to the Series Support Provider shall also be deemed to be a reference to such designee, as the context may require) the option (the "Non-Draw Option"), in lieu of making a payment under the Policy on the presentation of the Notice for Payment under the Policy pursuant to section 3.10(a), to purchase all (but not less than all) of the Owners' rights and title to, and interest in, such Series 2000-A Notes, at a price (the "Non-Draw Option Price") equal to the greater of (i) amount which would have been payable by the Series Support 44 Provider in connection with a draw under the Policy in respect of such Series 2000-A Notes and (ii) the Series 2000-A Note Balance, all accrued interest thereon, but only to the extent of Capped Monthly Interest. Payment made by the Series Support Provider of the Non-Draw Option Price shall be made in immediately available funds by 12:00 p.m. New York City time on the later of (a) the third Business Day following receipt by the Series Support Provider, at its designated offices, of a Notice for Payment pursuant to Section 3.10(a), and (b) the date on which payment under the Policy pursuant to such Notice for Payment would have been due in respect of the Series 2000-A Notes. All calculations required to determine the Non-Draw Option Price, shall be made by the Trustee as of the draw date specified in the relevant Notice for Payment under the Policy delivered pursuant to Section 3.10(a). The Series Support Provider may exercise the Non-Draw Option by telephone notice confirmed in writing by the Series Support Provider to the Owner immediately thereafter. (i) Simultaneously with the payment of the Non-Draw Option Price, the Owners shall deliver to the Series Support Provider such transfer documents as shall be necessary pursuant to the terms hereof to assign to the Series Support Provider the Series 2000-A Notes purchases pursuant to the Non-Draw Option and take any and all other actions as may be required by the terms of this 2000-A Series Supplement (including but not limited to causing to be provided any legal opinion that may be required by the Trustee in connection with such transfer), or otherwise, to cause a transfer of such Series 2000-A Notes to the Series Support Provider. Section 3.12 Insurer Advances. The Series Support Provider shall have the right to make Insurer Advances with respect to any Deficiency Amount or potential Deficiency Amount hereunder. Any payment of such Insurer Advances may be made by the Series Support Provider in its sole discretion at any time before such Deficiency Amount is due hereunder. Any amounts paid by the Series Support Provider as Insurance Advances shall be deposited into the Series 2000-A Insurance Account for distribution pursuant to Section 3.10(b) hereof. Section 3.13 Replacement of Series Support Provider. At any time following a reduction or withdrawal of the claims-paying or financial strength ratings of the Series Support Provider below "AA-" by S & P (or the equivalent financial strength rating by any nationally recognized statistical rating agency then rating the Series Support Provider), the Obligor shall upon the direction of the Agent terminate the Insurance Agreement and the Policy upon ten days' prior written notice to the Trustee and the Series Support Provider; provided, however, that on or prior to the date such termination shall take place (i) the Obligor has entered into a new Insurance Agreement with a replacement insurer (a "Replacement Series Support Provider") providing for the issuance of a replacement policy (a "Replacement Policy") on substantially similar terms as the Policy being replaced, (ii) each Rating Agency has confirmed in writing that such termination will not result in a reduction or withdrawal of its rating of the Series 2000-A Notes, (iii) all Accrued Liabilities owing to the Series Support Provider have been paid in full and (iv) such Replacement Policy is delivered to the Trustee. 45 ARTICLE IV SERIES PRINCIPAL AMOUNT FOR SERIES 2000-A Section 4.01 Advances. (a) The Trustee shall deliver the Series 2000-A Note when authenticated as directed in writing by the Obligor, and in accordance with Section 5.01 of the Master Agreement. (b) The Agent on behalf of the Series 2000-A Noteholders agrees, by its acceptance of the Series 2000-A Note, that the Obligors' Agent may, during the Revolving Period, on any Business Day, but not more frequently than weekly (a "Pledge Date"), request upon not less than three (3) Business Days' prior written notice (to be delivered not later than 4:00 p.m. New York time) in the form set forth in Exhibit G hereto (a "Pledge Notice") delivered to the Agent, the Series Support Provider, the Servicer and the Trustee, and upon satisfaction of the conditions set forth in the Note Purchase Agreement and in this Section 4.01, that the Agent remit to the Obligors' Agent an amount, to the extent received by the Agent from Purchasers under the Note Purchase Agreement, representing an increase in the Series 2000-A Noteholders' investment in the Series 2000-A Notes (each such increase in investment, an "Advance") in an amount equal to the related Advance Amount. (c) The Obligor shall Pledge the Pledged Property to the Trustee to be held in trust as part of the Series 2000-A Trust Estate in connection with the delivery of each Pledge Notice. Each Pledge Notice shall specify: (i) the proposed Pledge Date, (ii) the related List of Contracts, which shall also include for each Series 2000-A Contract and the related discounted Booked Residual; (iii) the amount of the related Advance Amount, which shall not be less than $1,000,000 except as provided in paragraph (e) below; (iv) the Purchase Price Percentage for such Pledge; (v) the Hedge Rate applicable to such Series 2000-A Contracts; (vi) the aggregate Contract Principal Balance of all Series 2000-A Contracts being Pledged; and (vii) the Borrowing Base immediately prior to such Pledge and the Pro Forma Borrowing Base. (d) No Advance will be funded with respect to any Series 2000-A Contract unless: (i) the Trustee has previously delivered its Certification (as defined in the Collateral Administration Agreement) with respect thereto, which 46 Certification shall indicate that (1) the Trustee is holding the related Series 2000-A Contracts pursuant to the Collateral Administration Agreement and (2) there is no Deficiency (as defined in the Collateral Administration Agreement) with respect to such Series 2000-A Contract; (ii) no Series Event of Default or event which, with the giving of notice and/or the passage of time, would constitute a Series Event of Default, shall have occurred and be continuing; (iii) after giving effect to the proposed Advance, the Net Investment shall not exceed the lesser of (x) the Borrowing Base and (y) the Maximum Series Limit as of such date; (iv) the representations and warranties of the Obligor under the Series 2000-A Related Documents are true and correct in all material respects as of the related Pledge Date, unless such representation and warranty speaks only as of a particular date; (v) the Termination Date has not occurred; and (vi) the Agent and the Series Support Provider shall have received all such other documents, opinions and other information as it shall have reasonably requested not fewer than ten Business Days in advance. (e) In addition to the provisions of paragraph (b) above, in which a pledge of additional Series 2000-A Contracts results in an increase in the Series 2000-A Note Balance, during the Revolving Period, a Pledge of additional Series 2000-A Contracts may also be funded from the monthly cash flow, as set forth in clause fourteenth of Section 3.03(a)(i). In connection with such a Pledge, the Obligor, upon satisfaction of the applicable conditions set forth in paragraphs (b), (c) and (d) above, may Pledge such additional Series 2000-A Contracts to the Trustee to hold in trust as part of the Series 2000-A Trust Estate without receiving any additional Advance Amount from the Purchasers, but in consideration of receiving the Advance Amount paid under clause fourteenth of Section 3.03(a)(i) hereof, by delivering a Pledge Notice to the Trustee, the Series Support Provider and the Agent, not less than three (3) Business Days prior to the proposed Pledge Date (which shall be a Settlement Date). (f) In addition to the provisions of paragraphs (b) and (e) above, in which a Pledge of additional Series 2000-A Contracts is funded by the Purchasers, or is made to sustain the revolving nature of the facility, the Obligor, upon satisfaction of the applicable conditions set forth in paragraphs (c) and (d) above, may Pledge Pledged Property to the Trustee to be held in trust as part of the Series 2000-A Trust Estate without receiving any additional Advance Amount, by delivering a Pledge Notice to the Trustee not less than three (3) Business Days prior to the proposed Pledge Date (which shall be a Business Day, but need not be a Settlement Date). (g) If a Purchaser makes an Advance in accordance with paragraph (b) above, the Agent shall remit the related Advance Amount to the Series 2000-A Facility Account or to such other account as the Obligors' Agent may specify in writing, in immediately available funds, no later than 12:00 noon (New York City time). The Servicer shall notify the Trustee and 47 the Agent and the Series Support Provider of the amount of such Advance Amount and shall appropriately note such Advance Amount (and the increased Series 2000-A Note Balance) on the next succeeding monthly Servicer's Certificate. (h) The Agent shall and is hereby authorized to record on the grid attached to the Series 2000-A Note (or at the Agent's option, in its internal books and records) the date and amount of any Advance Amount paid by it on behalf of a Purchaser, and each repayment thereof; provided, that failure to make any such recordation on such grid or any error in such grid shall not adversely affect the Agent's rights with respect to the full Series 2000-A Note Balance and its right to receive interest payments in respect of the Series 2000-A Note Balance. (i) The Obligor or the Obligors' Agent may, within 180 days, but no later than 45 days, prior to the then existing Termination Date, by written notice to the Agent and the Series Support Provider, make written request to extend the Termination Date for an additional period of 364 days. The Agent and the Series Support Provider shall independently make a determination, in their sole discretion and after a full credit review, not more than 30 days after such party receives the written notice from the Obligor or the Obligors' Agent requesting the extension of the Termination Date prior to the then applicable Termination Date as to whether or not such party will agree to extend the Termination Date; provided, however, that the failure to make a timely response to the Obligor's or the Obligors' Agent's request for extension of the Termination Date shall be deemed to constitute a refusal to extend the Commitment Termination Date. ARTICLE V SERIES EVENTS OF DEFAULT Section 5.01 Series Events of Default. If any one of the following shall occur: (a) the Obligor or the Servicer shall fail to make when due and payable any payment or deposit required hereunder or under any other Series 2000-A Related Document, in any case on or before the date occurring one (1) Business Day after the date such payment or deposit shall become due; or (b) the Obligor or the Transferor shall fail to perform or observe any covenant with respect to such Person set forth in any Series 2000-A Related Document, and such failure shall remain unremedied for ten (10) Business Days after receipt by the Obligors' Agent of written notice thereof by the Trustee, the Series Support Provider or the Agent; or (c) any representation or warranty made by the Obligor, the Servicer or the Transferor in any Series 2000-A Related Document or in any other document delivered pursuant thereto shall prove to have been incorrect when made or deemed made and continues to be incorrect for a period of ten (10) Business Days after the earlier to occur of (1) the discovery thereof by the Obligor or (2) the receipt by the Obligors' Agent of written notice thereof from the Trustee, the Series Support Provider or the Agent; or 48 (d) an Insolvency Event shall occur with respect to the Transferor, the Obligor, the Obligors' Agent, or the Servicer; or (e) the Net Investment exceeds the lesser of the Maximum Series Limit and the Borrowing Base (x) for three consecutive Business Days or (y) as of the close of business on any Settlement Date; or (f) the Trustee on behalf of the Series 2000-A Secured Parties shall fail to have a valid and perfected first priority security interest in either (x) the Series 2000-A Contracts or (y) items of Equipment having an Original Equipment cost in excess of $25,000 and, in the case of this clause (y), relating to a material portion of the Equipment in the Series 2000-A Trust Estate; (g) (x) the Obligor shall fail to pay any principal of or premium or interest on any indebtedness when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) or (y) the Servicer or the Transferor shall fail to pay any principal of or premium or interest on any indebtedness having a principal amount of $1,000,000 or greater when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and, with respect to both clauses (x) and (y), any such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness; or any other default under any agreement or instrument relating to any such indebtedness of any Obligor, the Servicer or the Transferor or any other event shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such indebtedness; or any such indebtedness shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; or (h) an Event of Servicer Termination shall have occurred and be continuing; or (i) a material adverse change shall occur in the operations or financial condition of Marlin, the Servicer, the Obligor or the Obligors' Agent or any other event shall occur the effect of which is to materially and adversely affect the collectibility of the Contracts generally or the ability of Marlin, the Servicer, the Obligor or the Obligors' Agent to perform its respective duties under the Series 2000-A Related Documents; or (j) Marlin shall (i) default on a payment obligation (and such default is not cured within any applicable cure period and which default is not waived) or a termination event shall occur, in either case, with respect to any on or off-balance sheet financing or (ii) default (in a manner other than a payment default) on any debt obligation with an outstanding balance in excess of $1,000,000; or (k) Marlin ceases to own (directly or indirectly) one hundred percent of the capital stock or membership interests of the Obligor; or 49 (l) the financial strength rating of the Series Support Provider is withdrawn, suspended or reduced below BBB- by S&P (or the equivalent financial strength rating by any nationally recognized statistical rating agency then rating the Series Support Provider); (m) a Series Support Provider Default shall have occurred and the Series Support Provider is not replaced within forty-five (45) calendar days with a surety provider, the financial strength of which is rated "AAA" by S&P (or the equivalent financial strength rating by any nationally recognized statistical rating agency then rating the Series Support Provider), and provides surety bond substantially identical in all respects (including the level of premiums with respect thereto); (n) Marlin, the Transferor, the Obligors' Agent, the Servicer or the Obligor shall enter into any transaction or merger in which it is not the surviving entity without the consent of the Series Support Provider (which consent shall not be unreasonably withheld); (o) at any time, the Three-Month Rolling Average 31 to 60 Day Portfolio Delinquency Ratio exceeds 8.0%, or the Three-Month Rolling Average 61 to 90 Day Portfolio Delinquency Ratio exceeds 2.0%, or the Three-Month Rolling Average 91 Plus Day Portfolio Delinquency Ratio exceeds 1.0% or the Three-Month Rolling Average Portfolio Charged-Off Ratio is in excess of 2.50%; (p) The Three-Month Rolling Average 31 to 60 Day Delinquency Ratio exceeds 8.0%, or the Three-Month Rolling Average 61 to 90 Day Delinquency Ratio exceeds 2.0%, or the Three-Month Rolling Average 91 Plus Day Delinquency Ratio exceeds 1.0%, in each case which is calculated for the first time in the fourth month after the Series Closing Date or after a Take-Out, as applicable; (q) at any time, the Three-Month Rolling Average Charged-Off Ratio exceeds the Applicable Trigger Charged-Off Ratio; (r) Marlin's Tangible Net Worth as of the end of any calendar quarter is less than the sum of (x) $19,900,000 plus (y) 75% of all of Marlin's positive net income (less dividends accrued on preferred stock) earned since September 30, 2000; (s) Marlin's Debt-to-Equity Ratio as of the end of any calendar quarter exceeds 12.0; (t) Marlin records a financial loss on any quarterly or annual financial statements in excess of $100,000; (u) Marlin's annual audited financial statements are qualified in any manner; (v) a Hedge Counterparty fails to satisfy the definition thereof and is not replaced within fifteen (15) Business Days with a Person satisfying the definition thereof; (w) two out of three of Daniel P. Dyer, Gary Shivers or Gary Kester are no longer officers of Marlin, are no longer involved in the day to day operations of Marlin, or are 50 unable to work for six consecutive months and are not replaced by new personnel reasonably acceptable to the Series Support Provider within 90 days of the occurrence of such event; (x) as of any Settlement Date, the aggregate notional balances applicable to all Hedging Agreements: (i) if all such Hedging Agreements are Cap Agreements, are less than the Net Investment as of such Settlement Date; and (ii) if not all such Hedging Agreements are Cap Agreements: (a) during the Revolving Period, are less than or greater than the Net Investment as of such Settlement Date by an amount (y) in excess of five percent of the Net Investment as of such Settlement Date or (z) in excess of one percent of the Net Investment as of the end of any calendar quarter; (b) during the Amortization Period, are less than or greater than the Net Investment as of such Settlement Date by an amount in excess of five percent of the Net Investment as of such Settlement Date; (y) any Series 2000-A Note or any other Note shall cease to constitute debt of the Obligor for federal income tax purposes; (z) the Termination Date shall have occurred; (aa) At any time, Marlin fails to maintain unused commitment availability under credit facilities for the warehousing or financing of collateral or for general corporate purposes at a minimum level of thirty (30%) percent of Marlin's cumulative originations for the immediately preceding three month period; provided, however, that such minimum level shall be exclusive of the credit facility contemplated herein; (bb) the Interest Coverage Ratio is no less than 3:1, measured quarterly on a rolling four quarter basis; (cc) an "Event of Default" (as defined in the Insurance and Indemnity Agreement) shall have occurred; or (dd) a draw under the Policy is made pursuant to the terms thereof and pursuant to Section 3.10 hereunder; then, and in any such event, a "Series Event of Default" shall be deemed to have occurred. At any time following the occurrence and during the continuance of any Series Event of Default, the Series Controlling Party (or, in the case of subparagraph (l) above, the Agent) may, by notice to the Obligors' Agent, declare the occurrence of the Termination Date, 51 except that, in the case of any event described in subparagraph (d) above, the Termination Date shall be deemed to have occurred automatically upon the occurrence of such event. Upon the declaration or automatic occurrence of the Termination Date, the Series 2000-A Note and all other indebtedness and liabilities of the Obligor and the Transferor to the Series 2000-A Secured Parties shall become immediately due and payable, without any further act or notice by any Person. Upon any occurrence of a Series Event of Default, the Trustee and the Series 2000-A Secured Parties shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and other applicable laws, which rights shall be cumulative; provided, however, that in the absence of material fraud on the part of the Transferor, the Obligor or the Servicer, and so long as no Series Event of Default shall have occurred under clause (d) above, the Series Controlling Party shall not direct the Trustee to liquidate the Series 2000-A Trust Estate during the ninety (90) day period immediately following the occurrence of such Series Event of Default. Any Series Event of Default, once declared, or any declaration of the Termination Date, may be rescinded by the Series Controlling Party, on such terms and conditions as may be stipulated by the Series Controlling Party at such time. The Trustee shall promptly send a written notice to Moody's and to Standard & Poor's of the occurrence of, and the waiver of, any Series Event of Default, to the extent that the Trustee has actual knowledge of, or has received notice of, any such occurrence or waiver. Section 5.02 Direction by the Series Support Provider. Notwithstanding anything contained herein to the contrary, if a Series Event of Default has occurred and is continuing, so long as there has been no Series Support Provider Default, the Series Support Provider shall have the sole right (to the exclusion of the Owners) to direct the Trustee as to any and all remedies to be sought or taken under this Series 2000-A Supplement and the Trustee shall not exercise any such remedies unless directed by the Series Support Provider; provided, however, that, upon the occurrence of the event set forth in Section 5.01(l), the Agent shall have the right to so direct the Trustee. Each Owner, by its purchase of a Series 2000-A Note, shall be deemed to have consented to the Series Support Provider rights hereunder with respect to a Series Event of Default. At such time as there exists and is continuing a Series Support Provider Default the Trustee shall not be bound to continue to comply with any term or condition of this Series 2000-A Supplement that requires the consent of or approval or direction from the Series Support Provider. ARTICLE VI PREPAYMENT AND REDEMPTION Section 6.01 Mandatory Prepayment. Notwithstanding any limitation on recourse contained in this Series 2000-A Supplement or the Master Agreement, if on any day, any Series 2000-A Contract is discovered not to have been an Eligible Contract on its applicable Pledge Date, then the Obligor shall, on or prior to the Business Day preceding the next following 52 Settlement Date, deliver to the Servicer for deposit in the Series 2000-A Facility Account, the related Prepayment Amount. Upon payment in full by the Obligors' Agent to the Servicer of the Prepayment Amount, the security interest of the Trustee in the related Series 2000-A Contract and the Related Security shall be deemed released, and the Trustee shall, upon written request, promptly deliver to the Obligor any documents in the Trustee's possession evidencing the Series 2000-A Contract and its interest in such Equipment related thereto and such Related Security. The Trustee shall take all actions at the expense of and at the request of the Servicer to ensure that such security interest is released, including, at the Obligor's expense, execute such UCC-3 assignments, termination statements and other documents as may reasonably be requested and prepared by the Obligors' Agent. Section 6.02 Optional Redemption. (a) "Clean-Up Call" Redemption. On any Settlement Date occurring on or after the date upon which the Series 2000-A Note Balance shall have been reduced to an amount which is less than or equal to 15% of the Maximum Series Limit, the Obligor shall have the option to redeem the outstanding Series 2000-A Note at a redemption price (the "Redemption Price") equal to the outstanding Series 2000-A Note Balance of the Series 2000-A Notes, plus all accrued and unpaid interest thereon and all fees and other amounts owing to the Agent on behalf of the Purchasers in connection therewith, together with any amounts then due the Series Support Provider with respect to unreimbursed drawings under the Policy, together with interest thereon, calculated at the rate set forth in the Insurance and Indemnity Agreement, plus any amounts owing to the Series Support Provider under this Series 2000-A Supplement, the Insurance and Indemnity Agreement and the Premium Letter, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligor's Agent. The Obligors' Agent shall give the Servicer, the Trustee, the Series Support Provider and the Agent at least 30 days' irrevocable prior written notice of the date on which the Obligor intends to exercise such option to purchase. Not later than 12:00 P.M., New York City time, on such Settlement Date the Obligor shall remit such amount to the Agent and the Series Support Provider (by wire transfer to an account to be designated by the Agent and the Series Support Provider, as applicable, which designation may be a standing wire direction) in immediately available funds. Such purchase option is subject to payment in full of the Redemption Price. The Agent shall promptly thereafter distribute the applicable amounts to each of the applicable Purchasers in accordance with their respective interests therein. Section 6.03 Tender of Series 2000-A Note. The Obligors' Agent may request the Agent to tender to the Trustee all or a portion of the Series 2000-A Note that it then holds, provided that such tender shall only take place if: (a) (i) the Agent, the Series Support Provider and the Trustee have received written and irrevocable notice on or before the last day of the Collection Period most recently ended prior to, and in any event at least 10 days prior to any date set for such tender and the Agent has consented to such tender (which consent shall not be unreasonably withheld) and (ii) the Trustee shall have received written and irrevocable notice of the election described in subsection (b)(i) and (b)(ii) below, and in the event such election is that described in (b)(ii) such payment will be deposited with the Trustee with instructions to pay the Agent; 53 (b) upon the date set for tender, the Agent shall receive either (i) if it so elects, in lieu of payment, a new Series of Notes or (ii) payment in an amount equal to the then Series 2000-A Note Balance being tendered, plus interest accrued but unpaid on such Series 2000-A Note to, but not including, the date of tender, together with all other fees and amounts then due and payable or relating to the Series 2000-A Note Balance being tendered, or to the related Series 2000-A Noteholders pursuant to the terms hereof, or of the Note Purchase Agreement; (c) the purchaser of any Series 2000-A Notes so tendered shall not be the Obligor or any Affiliate of the Obligor; (d) in the event that the Series 2000-A Note is being tendered in full on the Termination Date, all Accrued Liabilities and Insurer Fees, Unused Fees and any Default Fees owed to the Insurer pursuant to the terms of this Agreement, the Policy, the Premium Letter and the Insurance and Indemnity Agreement have to be paid in full; and The provisions of this Section 6.03 shall apply whether or not a Series Event of Default shall have occurred and then be in effect. ARTICLE VII MISCELLANEOUS Section 7.01 Agent Authorized to Act for the Purchasers; Notices. The parties hereto acknowledge that the Agent is authorized, pursuant to the terms of the Note Purchase Agreement, to act for the Purchasers, including, without limitation, for purposes of receiving distributions as described in this Series 2000-A Supplement on behalf of such Purchasers. Notwithstanding anything to the contrary in the Master Agreement or this Series 2000-A Supplement, the Trustee and the Servicer shall deliver all notices and distributions to be made to the Agent as the registered owner of a Series 2000-A Note and such delivery shall be deemed to comply with all requirements of the Master Agreement. All notices, demands and requests to the Agent pursuant to the Master Agreement or this Series 2000-A Supplement, in each case, be in writing and shall be deemed duly given if personally delivered at, mailed by overnight courier to, or sent by facsimile transmission to Deutsche Bank AG, New York Branch, 31 West 52nd Street, New York, N.Y. 10019, Fax (212) 469-7210, Attention: Asset Finance Department or at such other address or facsimile number as shall be designated by the Agent in a written notice to each party hereto. Section 7.02 Ratification of Master Agreement. As supplemented by this Series 2000-A Supplement, the Master Agreement is in all respects ratified and confirmed and the Master Agreement, as so supplemented by this Series 2000-A Supplement shall be read, taken and construed as one and the same instrument. Section 7.03 Counterparts. This Series 2000-A Supplement may be executed in one or more counterparts, each of which so executed shall be deemed to be an original, but all of which shall together constitute but one and the same instrument. 54 Section 7.04 GOVERNING LAW. THIS SERIES 2000-A SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT TAKING INTO ACCOUNT THE CONFLICT OF LAWS PRINCIPLES OF ANY JURISDICTION. Section 7.05 Amendments and Waivers. (a) Notwithstanding anything contained in the Master Agreement to the contrary, no term or condition of this Series 2000-A Supplement shall be amended, modified, waived or terminated without the prior written consent of the Obligors' Agent, the Servicer, the Trustee, the Series Support Provider and the Agent. (b) No waiver with respect to any term or condition of the Master Agreement or this Series 2000-A Supplement shall extend to any subsequent or other event, circumstance or default or impair any right consequent thereon except to the extent expressly so waived. (c) Notice of any amendment of this Series 2000-A Supplement or of the Master Agreement shall be forwarded to Standard & Poor's by the Servicer. Section 7.06 Non-petition Clause. By its acceptance of the Series 2000-A Note on behalf of the Purchasers, the Agent on behalf of itself and the Purchasers shall be deemed to have agreed that prior to the date which is one year and one day after the termination of the Master Agreement, such Person shall not acquiesce, petition or otherwise invoke or cause the Obligor or the Obligors' Agent to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Obligor under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of or for the Obligor or the Obligors' Agent or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Obligor or the Obligors' Agent. Section 7.07 Certain Information. Certain information concerning the Obligor or the Obligors' Agent and the Servicer is set forth in Exhibit F hereto, which the Obligor or the Obligors' Agent and the Servicer hereby represent and warrant to the Trustee, the Series Support Provider and the Agent as being accurate. Section 7.08 Reserved. Section 7.09 Termination. The obligations of the parties hereto shall continue until all obligations owing to the Series 2000-A Noteholders, the Series Support Provider and the Series 2000-A Secured Parties herein and under the other Series 2000-A Related Documents have been indefeasibly paid in full. Section 7.10 Series Support Provider. (a) The Series Support Provider is an express third-party beneficiary of all Series 2000-A Related Documents. 55 (b) Upon the specific request of the Series Support Provider, the Trustee shall, in each instance, provide to the Series Support Provider copies of any report, notice, Opinion of Counsel, Officer's Certificate, request for consent or request for amendment to any document related hereto promptly upon the Trustee's production or receipt thereof. (c) So long as there does not exist a failure by the Series Support Provider to make a required payment under the Policy or other Series Support Provider Default, except as specifically set forth herein, the Series Support Provider shall have the right to exercise all rights of the Owners under this Series 2000-A Supplement without any consent of such Owners. Section 7.11 Issuance of Additional Series of Notes. (a) So long as the Series 2000-A Notes are outstanding no additional Series of Notes may be issued pursuant to the Master Agreement and no debt may be issued by the Obligor and/or the Obligors' Agent without the prior written consent of the Series Support Provider. 56 IN WITNESS WHEREOF, the Obligor, the Obligors' Agent, and Marlin, in its individual capacity and as the Servicer, the Agent and the Trustee have caused this Series 2000-A Supplement to be fully executed by their respective officers as of the day and year first above written. MARLIN LEASING CORP., in its individual capacity and as Servicer By:______________________________________________ Name: George D. Pelose Title: Vice President MARLIN LEASING RECEIVABLES CORP. IV, as the Obligors' Agent By:______________________________________________ Name: George D. Pelose Title: Vice President MARLIN LEASING RECEIVABLES IV LLC, as the Obligor By: MARLIN LEASING RECEIVABLES CORP. IV, as Managing Member By:______________________________________________ Name: George D. Pelose Title: Vice President DEUTSCHE BANK AG, NEW YORK BRANCH, as Agent By:______________________________________________ Name:_________________________________________ Title:________________________________________ By:______________________________________________ Name:_________________________________________ Title:________________________________________ WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By:______________________________________________ Name:_________________________________________ Title:________________________________________ XL CAPITAL ASSURANCE, INC. By:______________________________________________ Name:_________________________________________ Title:________________________________________ Schedule 1 "Interest Coverage Ratio" means, as of the date of determination, the ratio of (a)(i) EBITDA for the period of four consecutive fiscal quarters ending on, or most recently ended prior to, such date less (ii) Charge Offs for such period to (b) Interest Expense for such period. For the purposes of this Schedule 1 only, the following terms shall have the following meanings: "EBITDA" means, for any period, the sum, for Marlin and its Affiliates (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) net operating income (calculated before taxes, Interest Expense, securitization income, extraordinary and unusual items and income or loss attributable to equity in Affiliates) for such period plus (b) (i) Net Margin on Managed Assets, (ii) depreciation and amortization (to the extent deducted in determining net operating income) and (iii) provision for loan losses (to the extent deducted in determining net operating income) for such period. "Charge Offs" means, for any period, the sum of any payments due and payable to Marlin or its Affiliates (determined on a consolidated basis without duplication in accordance with GAAP) under any contract, lease or other agreement all or a portion of which (i) has been, or should have been, in accordance with the Credit and Collection Policy, written off the books of Marlin or any Affiliate, as applicable, as uncollectible or (ii) has remained unpaid for a period of 121 days or more from the original due date for such payment. "Interest Expense" shall mean, for any period, the sum, for Marlin and its Affiliates (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) all interest in respect of Indebtedness (including, without limitation, the interest component of any payments in respect of capital lease liabilities) accrued or capitalized during such period (whether or not actually paid during such period); excluding, however, all such interest in respect of Indebtedness incurred for the sole purpose of, or in connection with, the financing of lease receivables, plus (b) the net amount payable (or minus the net amount receivable) under Hedging Liabilities during such period (whether or not actually paid or received during such period). "Hedging Liability" means, relative to any Person, all liabilities of such Person under interest rate and currency swap, cap and collar agreements and all other writings designed to protect such Person against fluctuations in interest or currency exchange rates. "Indebtedness" means, relative to any Person, without duplication: (a) all obligations of such Person for borrowed money (including all notes payable and drafts accepted representing extensions of credit) and all obligations evidenced by bonds, debentures, notes or other similar instruments on which interest charges are customarily paid; (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and bankers' acceptances issued for the account of such Person; (c) all capitalized leases of such Person; (d) net monetary liabilities of such Person under all Hedging Liabilities (calculated, at any time, as the aggregate amount (giving effect to any netting agreement) that such Person would be required to pay if the agreements giving rise to such Hedging Liabilities were terminated at such time); (e) all obligations of such Person to pay the deferred purchase price of property services that, in accordance with GAAP, would be included on the liability side of the balance sheet of such Person as of the date at which Indebtedness is to be determined; (f) all indebtedness referred to in clause (a), (b), (c), (d) or (e) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; provided, however, that in the case of any such Indebtedness which is by its terms non-recourse to such Person, the amount of such Indebtedness shall, for the purpose of this clause, be deemed to be the lesser of (x) the aggregate unpaid principal amount of such Indebtedness and (y) the fair market value of the property subject to such Lien, as determined by such Person in good faith; and (g) all contingent liabilities of such Person in respect of any Indebtedness of any other Person. "Net Margin on Managed Assets" means accrued interest income for any period on lease receivables serviced by Marlin less accrued interest expense in respect of Indebtedness incurred for the sole purpose of, or in connection with, the financing of lease receivables serviced by Marlin. Schedule 2 HEDGE COUNTERPARTIES Barclays Bank PLC. Deutsche Bank AG New York Branch ABN AMRO Bank N.V. EXHIBIT A FORM OF SERIES 2000-A NOTE THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE OBLIGORS AND THEIR AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION AND (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED PURCHASER WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE MASTER FACILITY AGREEMENT AND THE SERIES SUPPLEMENT REFERRED TO HEREIN. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED TO AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED, EXCEPT IN ACCORDANCE WITH THE MASTER FACILITY AGREEMENT AND SERIES SUPPLEMENT REFERRED TO HEREIN. No. 1 $125,000,000 MARLIN LEASING RECEIVABLES MASTER ASSET-BACKED FINANCING FACILITY, SERIES 2000-A NOTE A-1 MARLIN LEASING CORP., as the Servicer, and MARLIN LEASING RECEIVABLES IV LLC, as the Obligor (Not an interest in or obligation of Marlin Leasing Corp., or its affiliates, other than Marlin Leasing Receivables IV LLC) This certifies that DEUTSCHE BANK AG, NEW YORK BRANCH (the "Series 2000-A Noteholder") is the registered owner of this Series 2000-A Note (the "Series Note") issued by Marlin Leasing Receivables IV LLC ("MLR IV LLC"), (the "Obligor"), created pursuant to that certain Master Lease Receivables Asset-Backed Financing Facility Agreement, dated as of December 1, 2000 (as the same may be further amended, restated, supplemented or otherwise modified from time to time, the "Master Facility Agreement"), by and among Marlin Leasing Corp. (the "Servicer"), Marlin Leasing Receivables Corp. IV ("MLR IV"), as Obligors' Agent (in such capacity, the "Obligors' Agent"), and Wells Fargo Bank Minnesota, National Association, as trustee and back-up servicer (the "Trustee") To the extent not otherwise defined herein, capitalized terms used herein have the meanings assigned in the Master Facility Agreement or the Series Supplement (as hereinafter defined), as applicable. This Series Note is issued under and is subject to the terms, provisions and conditions of the Series 2000-A Supplement to the Master Facility Agreement, dated as of December 1, 2000 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Series Supplement") among the Servicer, the Series Obligor, the Obligors' Agent, the Trustee and Deutsche Bank AG, New York Branch, as Agent (the "Agent"), to which the Series 2000-A Noteholder, by virtue of its acceptance hereof, assents and by which the Series 2000-A Noteholder is bound. The Series Obligor has pledged to the Trustee for the benefit of the Series 2000-A Secured Parties, and the Trustee has accepted the pledge of, all of the Series Obligor's now owned and existing and hereafter acquired or arising right, title and interest in and to the Series 2000-A Trust Estate described in the Series 2000-A Supplement. It is the intent of the Obligor and the Series 2000-A Noteholder that, for federal, state and local income and franchise tax purposes, the Series Note will be evidence of indebtedness of the Series Obligor. The Series Obligor and the Series 2000-A Noteholder, by the acceptance of this Series Note, agree to treat this Series Note for federal, state and local income and franchise tax purposes as indebtedness of the Series Obligor secured by the Series 2000-A Trust Estate. Subject to, and in accordance with, the terms and conditions of the Series Note and the Series Supplement, the Series 2000-A Note Balance (the "Series Note Balance") may from time to time be increased; provided that the outstanding principal balance of this Series Note shall not exceed the dollar amount first above written. The Agent, on behalf of the Purchasers, is authorized to record, on the schedule annexed thereto and made a part hereof or on other appropriate records of the Agent, the date and A-2 amount of each Advance made by the Purchasers, each continuation thereof, the interest rate from time to time on each Advance and the date and amount of each payment or repayment of principal thereof. Any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure of the Agent to make any such recordation (or any error in such recordation) shall not affect the obligations of the Series Obligor hereunder or under the Series Supplement and Master Facility Agreement in respect of this Series Note. The Master Facility Agreement and the Series Supplement permit, with certain exceptions, the amendment thereof and the modification of the rights and obligations of the Series Obligor, the Servicer and the Trustee and the rights of the Series 2000-A Noteholder under the Master Facility Agreement or the Series Supplement at any time by the Servicer, the Series Obligor and the Trustee without, in certain cases, the consent of the Series 2000-A Noteholder, as more particularly described in the Master Facility Agreement and the Series Supplement. The transfer of this Series Note is subject to certain restrictions set forth in the Master Facility Agreement, the Series Supplement and the Note Purchase Agreement. The Servicer, the Trustee and any agent of the foregoing may treat the person in whose name this Series Note is registered as the owner for all purposes, and none of the foregoing shall be affected by any notice to the contrary. Unless the certificate of authentication attached hereto has been executed by or on behalf of the Trustee, by manual or facsimile signature, this Series Note shall not be entitled to any benefit under the Master Facility Agreement or the Series Supplement or be valid for any purpose. A-3 IN WITNESS WHEREOF, the Series Obligor has caused this Series Note to be duly executed and authenticated. Dated as of [_________] MARLIN LEASING RECEIVABLES IV LLC By: MARLIN LEASING RECEIVABLES CORP. IV, as Managing Member By:______________________________________________ Title: Attested: By:____________________________ Title:_________________________ A-4 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Series Notes designated herein referred to in the within-mentioned Master Facility Agreement and the within-mentioned Series Supplement thereto. [______________________________] as Trustee By:_______________________________ Authorized Signatory A-5 SCHEDULE TO SERIES 2000-A NOTE
Amount Amount of Principal Date of Advance Repaid Total Principal Outstanding - ------------------ -------------------- ------------------- --------------------------- - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------ - ------------------ $------------------- ------------------- ------------------
A-6 EXHIBIT B [RESERVED] B-1 EXHIBIT C Instructions for sending wires to the Agent on behalf of the Noteholders and the Series Support Provider pursuant to Section 3.03(b): In the case of the Agent: Deutsche Bank ABA # 026-003-780 A/C 104363460008 A/C Name: TTI Ref: Marlin In the case of the Series Support Provider: Receiving Bank: Fleet Bank NA 777 Main Street Hartford, CT 06115-2001 ABA - 011900571 Beneficiary: XL Capital Assurance Inc. 250 Park Avenue, 19th Floor New York, NY 10177-1999 Account Number 94278-35841 Reference: Policy number: CA00046A Marlin Leasing Receivables IV LLC, Series 2000-A Notes C-1 EXHIBIT D FORM OF SERVICER'S CERTIFICATE D-1 EXHIBIT E FORM OF CONTRACTS E-1 EXHIBIT F PLACES OF BUSINESS OF THE OBLIGOR AND THE SERVICER; LOCATIONS OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS A. Obligor 1. Marlin Leasing Receivables IV LLC a. Chief Executive Office and Principal Place of Business 639 Isbell Road, Suite 390 Reno, Nevada 89509 b. Other Locations of Records 124 Gaither Drive, Suite 170 Mt. Laurel, New Jersey 08054 c. FEIN: 52-2282213 d. State of Organization: Nevada B. Servicer 1. Marlin Leasing Corporation Chief Executive Office and Principal Place of Business 124 Gaither Drive, Suite 170 Mt. Laurel, New Jersey 08054 2. Other Locations of Records None 3. Servicer's FEIN: 22-3520555 4. State of Incorporation: Delaware F-1 EXHIBIT G FORM OF PLEDGE NOTICE [DATE] TO: Deutsche Bank AG, New York Branch XL Capital Assurance, Inc. 31 East 53rd Street 230 Park Avenue, 10th Floor New York, New York 10019 New York, New York 10177 Attention: Asset Finance Department Wells Fargo Bank Minnesota, N.A. Marlin Leasing Corp. MAC N9311-161 124 Gaither Drive, Suite 170 Sixth Street and Marquette Avenue Mt. Laurel, New Jersey 08054 Minneapolis, Minnesota 55479 Attention: Dan Dyer Attention: Corporate Trust Services - Asset Backed Administration Re: Marlin Lease Receivables Master Facility, Series 2000-A Note Ladies and Gentlemen: Reference is made to that certain Amended and Restated Series 2000-A Supplement, dated as of August 7, 2001 (the "Series Supplement"), among Marlin Leasing Corp. (the "Servicer"), Marlin Leasing Receivables IV LLC ("MLR IV LLC" or the "Series Obligor"), Deutsche Bank AG, New York Branch, as agent, XL Capital Assurance, Inc., as the Series Support Provider and Wells Fargo Bank Minnesota, National Association ("Wells Fargo"), as trustee, and to that certain Master Lease Receivables Asset-Backed Financing Facility Agreement, dated as of December 1, 2000 (the "Master Facility Agreement"), among the Servicer, MLR IV and Norwest, as trustee and back-up servicer. Capitalized terms used herein shall have the meanings assigned to such terms in the Series Supplement and Master Facility Agreement. Pursuant to Section 4.01(b) of the Series Supplement, the undersigned, a duly authorized representative of the Series Obligors, hereby provide notice of an increase in the Series 2000-A Note Balance (each amount, an "Advance Amount"), and in that connection sets forth below the information relating to such proposed increase, as required by Section 4.01(c) of the Series Supplement: (i) The aggregate amount of the related Advance Amount is $____________. (ii) The date on which such Advance Amount shall occur is _______________. G-1 (iii) Attached hereto as Exhibit A is the related List of Contracts. (iv) The Purchase Price Percentage applicable to the Pledge is ___%. (v) The Hedge Rate applicable to such Series 2000-A Contracts being Pledged is ____%. (vi) The aggregate Contract Principal Balance of all Series 2000-A Contracts being Pledged is $_______________. (vii) The Borrowing Base immediately prior to such pledge is $__________, and the Pro Forma Borrowing Base is $__________. The undersigned certifies that as of the date hereof and on the date of the proposed Advance Amount, all of the conditions precedent to the proposed Advance Amount set forth in Section 4.01 of the Series Supplement have been satisfied. Very truly yours, MARLIN LEASING RECEIVABLES CORP. IV, as the Obligors' Agent By:___________________________________ Name: Title: MARLIN LEASING RECEIVABLES IV LLC By: MARLIN LEASING RECEIVABLES CORP. IV, as Managing Member By:_______________________________ Name: Title: G-2 EXHIBIT H FORM OF NON-APPROPRIATION RIDER H-1 EXHIBIT I FORM OF CAP AGREEMENT EX-10.8 5 w89427exv10w8.txt THIRD AMENDMENT TO SERIES 2000-A SUPPLEMENT EXHIBIT 10.8 THIRD AMENDMENT TO THE AMENDED AND RESTATED SERIES 2000-A SUPPLEMENT TO THE MASTER FACILITY AGREEMENT THIRD AMENDMENT, dated as of September 25, 2002 ("Third Amendment"), among MARLIN LEASING CORPORATION, individually, and as the Servicer (in such capacity, the "Servicer"), MARLIN LEASING RECEIVABLES CORP. IV, as the Obligors' Agent ("MLR IV"), MARLIN LEASING RECEIVABLES IV LLC, as the Obligor ("MLR IV LLC"), DEUTSCHE BANK AG, NEW YORK BRANCH (in such capacity, the "Agent"), XL CAPITAL ASSURANCE INC. (in such capacity, the "Series Support Provider") and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (the "Trustee") to AMENDED AND RESTATED SERIES 2000-A SUPPLEMENT (as amended) to the MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT. PRELIMINARY STATEMENT. Reference is made to the Amended and Restated Series 2000-A Supplement, dated as of August 7, 2001 (as amended, the "Series Supplement"), among the Servicer, MLR IV, MLR IV LLC, the Agent, the Series Support Provider and the Trustee to the Master Lease Receivables Asset-Backed Financing Facility Agreement, dated as of December 1, 2000 (the "Master Agreement"), among the Servicer, MLR IV and the Trustee. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Series Supplement. Each of the parties hereto has agreed to amend the Series Supplement as hereinafter set forth. Section 1. Amendment to the Series Supplement. The Series Supplement is, effective as of the date hereof, hereby amended as follows: (a) The defined term "Termination Date" in Section 2.01 is hereby amended and restated in its entirety as follows: " "Termination Date" means the earliest to occur of: (i) December 21, 2004, or such later date as the parties (with the express written consent of the Agent and Series Support Provider) may hereafter agree in accordance with Section 4.01(i), (ii) the day designated as the Termination Date by the Obligor on sixty (60) days' prior written notice to the Agent and the Series Support Provider, (iii) the day on which the Series Controlling Party declares the occurrence of the Termination Date or on which the Termination Date automatically occurs pursuant to Section 5.01, (iv) the date on which the financial strength rating of XL Capital Assurance Inc. is withdrawn, suspended or rated below "A" by Standard & Poor's or withdrawn, suspended or rated below "A2" by Moody's, (v) the 90th day following the date on which the Series Support Provider has delivered a written notice to the Transferor and the Agent to the effect that the most recent audit completed by the Series Support Provider or its designee of the Transferor's origination, servicing and documentation procedures has revealed to the Series Support Provider deficiencies which it reasonably believes creates a material adverse effect on the facility and (vi) a Hedge Counterparty fails to satisfy the definition thereof and is not replaced within fifteen (15) Business Days by a Person satisfying the definition thereof. " (b) The defined term "Premium Letter" in Section 2.01 is hereby amended and restated in its entirety as follows: " "Premium Letter" means the Amended and Restated Premium Letter dated September 25, 2002 among the Series Support Provider, Marlin, MLR IV and MLR IV LLC, pursuant to which the Insurer Fee, Default Fee, Unused Fee and certain other amounts are to be paid to the Series Support Provider, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter. " (c) The defined term "Insurance and Indemnity Agreement" in Section 2.01 is hereby amended and restated in its entirety as follows: " "Insurance and Indemnity Agreement" means the Insurance and Indemnity Agreement dated August 7, 2001 among the Series Support Provider, Marlin, MLR IV, MLR IV LLC and the Trustee, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter. " (d) The defined term "Fee Letter" in Section 2.01 is hereby amended and restated in its entirety as follows: " "Fee Letter" means that certain Amended and Restated Fee Letter dated as of September 25, 2002 by and among the Servicer, the Obligor, the Obligor's Agent and the Agent, as it may be amended, restated, supplemented or otherwise modified from time to time hereafter. " (e) The defined term "Series 2000-A Note Interest Rate" in Section 2.01 is hereby amended by adding at the end thereof the following: "Notwithstanding the foregoing, the Series 2000-A Note Interest Rate shall mean the sum of (i) the Series 2000-A Base Rate plus (ii) 2.00% per annum at any time that (x) a Series Event of Default arising under Sections 5.01 (a), (b), (c), (d), (e), (g), (h), (i), (j), (o), (p), (q), (r), (s), (t), (u) or (bb) hereof has occurred and is continuing and (y) the financial strength rating of the Series Support Provider is withdrawn, suspended or rated below "A" by Standard & Poor's or is withdrawn, suspended or rated below "A2" by Moody's. " (f) The following defined terms are hereby added to Section 2.01 in the appropriate alphabetical place: "One Year Deficiency" has the meaning set forth in the Premium Letter. "Two Year Deficiency" has the meaning set forth in the Premium Letter. (g) Clause fifteenth of Section 3.03(a)(i) is hereby amended and restated in its entirety as follows: " fifteenth, from the remaining Series 2000-A Available Funds, ratably to the Series 2000-A Noteholder, for the benefit of the applicable Owners or to the Agent or the Series Support Provider, as applicable, the Facility Fee, the Unused Fee, Breakage Costs, any Default Fee, any Make-Whole Amounts, any One Year Deficiency, any Two Year Deficiency, any outstanding and unpaid Accrued Liabilities and any other amounts owing to the Series 2000-A Noteholders, the Series Support Provider or the Agent under the Series 2000-A Related Documents, as certified by the Agent or the Series Support Provider, as applicable, to the Trustee, and the Obligors' Agent; " (h) Clause thirteenth of Section 3.03(a)(ii) is hereby amended and restated in its entirety as follows: " thirteenth, from the remaining Series 2000-A Available Funds, to the Series 2000-A Noteholder, any Noteholder's Carryover Interest on such Settlement Date, but not to include any Noteholder's Carryover Interest with respect to a prior Settlement Date to the extent in excess of the Capped Monthly Interest for such prior Settlement Date; " (i) Clause sixteenth of Section 3.03(a)(ii) is hereby amended and restated in its entirety as follows: " sixteenth, from the remaining Series 2000-A Available Funds, ratably to the Series 2000-A Noteholder, for the benefit of the applicable Owners or to the Agent or the Series Support Provider, as applicable, the Facility Fee, the Unused Fee, Breakage Costs, any Default Fee, any Make-Whole Amounts, any One Year Deficiency, any Two Year Deficiency, any outstanding and unpaid Accrued Liabilities, any Noteholder's Carryover Interest for such Settlement Date to the extent not paid pursuant to clauses eighth or thirteenth above, any Monthly Interest for such Settlement Date to the extent not paid pursuant to clause eighth above, and any other amounts owing to the Series 2000-A Noteholders or the Agent under the Series 2000-A Related Documents, as certified by the Agent or the Series Support Provider, as applicable, to the Trustee, and the Obligors' Agent; " (j) Section 4.01(d) is hereby amended by deleting the word "and" after clause (v) thereof, replacing the period after clause (vi) thereof with "; and", and adding the following clause at the end thereof: " (vii) the financial strength rating of the Series Support Provider is at or above "AA-" by S&P and "Aa3" by Moody's. " (k) Section 5.01(r) is hereby amended and restated in its entirety as follows: " (r) Marlin's Tangible Net Worth as of the end of any calendar quarter is less than the sum of (x) $28,500,000 plus (y) 75% of all of Marlin's positive net income (less dividends accrued on preferred stock) earned since December 31, 2001;" (l) Except as amended by items (a), (b), (c), (d), (e), (f), (g), (h), (i), (j) and (k) above, all provisions of the Series Supplement shall remain in full force and effect and are reconfirmed and ratified as of the date hereof. Section 2. Conditions Precedent. This Third Amendment shall not become effective unless the following conditions have been met or waived: (i) The First Amendment to the First Amended and Restated Note Purchase Agreement shall have been duly executed by the parties thereto; (ii) The Series Support Provider and the Agent shall have received such other instruments, agreements, documents, certificates and bring down opinions as it shall reasonably require in connection with this Third Amendment; (iii) The Series Support Provider and the Agent shall have received confirmation from Standard and Poor's that the Series 2000-A program is still rated at least "BBB-" prior to giving consideration to the credit enhancement resulting from the Policy; (iv) MLR IV LLC shall have paid all fees and costs required to be paid as set forth in the Proposal Letter dated August 22, 2002 from the Series Support Provider to the Servicer (as accepted by the Servicer on August 23, 2002); and (v) No event has occurred and is continuing which constitutes a Series Event of Default or Event of Servicer Termination or would constitute a Series Event of Default or Event of Servicer Termination but for the requirement that notice be given or time elapse. Section 3. Governing Law. This Third Amendment shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the choice of law provisions thereof. Section 4. Headings. Section headings in this Third Amendment are included herein for convenience of reference only and shall not constitute a part of this Third Amendment for any purpose. Section 5. Counterparts. This Third Amendment may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Third Amendment by signing any such counterpart. Delivery of an executed counterpart of a signature page to this Third Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Third Amendment. Section 6. Representations and Warranties. Each of the Servicer, MLR IV and MLR IV LLC reaffirms and restates the representations and warranties set forth in the Series Supplement and any agreement, document or instrument related thereto, and certifies that such representations and warranties are true and correct on the date hereof with the same force and effect as if made on such date, except as they may specifically refer to an earlier date, in which case they were true and correct as of such date. In addition, the Servicer, MLR IV and MLR IV LLC each represents and warrants (which representations and warranties shall survive the execution and delivery hereof) that (a) no Series Event of Default or Event of Servicer Termination (nor any event that but for notice or lapse of time or both would constitute an Series Event of Default or Event of Servicer Termination) shall have occurred and be continuing as of the date hereof nor shall any Series Event of Default or Event of Servicer Termination (nor any event that but for notice or lapse of time or both would constitute a Series Event of Default or Event of Servicer Termination) occur due to this Third Amendment becoming effective, (b) the Servicer, MLR IV and MLR IV LLC each has the corporate or other power and authority to execute and deliver this Third Amendment and has taken or caused to be taken all necessary corporate actions to authorize the execution and delivery of this Third Amendment, and (c) no consent of any other person (including, without limitation, shareholders, members or creditors of the Servicer, MLR IV or MLR IV LLC), 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 Third Amendment other than such that have been obtained. [Signature Pages Follow] IN WITNESS WHEREOF, the parties have caused this Third Amendment to the Amended and Restated Series 2000-A Supplement to be fully executed by their respective officers as of the day and year first above written. MARLIN LEASING CORPORATION, in its individual capacity and as Servicer By: ____________________________________________ Name: Title: MARLIN LEASING RECEIVABLES CORP. IV, as the Obligors' Agent By: ____________________________________________ Name: Title: MARLIN LEASING RECEIVABLES IV LLC, as the Obligor By: MARLIN LEASING RECEIVABLES CORP. IV, as Managing Member By: ____________________________________________ Name: Title: DEUTSCHE BANK AG, NEW YORK BRANCH, as Agent By: ____________________________________________ Name: Title: By: ____________________________________________ Name: Title: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By: ____________________________________________ Name: Title: XL CAPITAL ASSURANCE INC., as Series Support Provider By: ____________________________________________ Name: Title: EX-10.9 6 w89427exv10w9.txt SECOND WAREHOUSE REVOLVING CREDIT FACILITY AGRMT EXHIBIT 10.9 $32,500,000 SECOND AMENDED AND RESTATED WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT AMONG THE BORROWER MARLIN LEASING CORPORATION, THE LENDERS, AND NATIONAL CITY BANK, AS AGENT August 31, 2001 TABLE OF CONTENTS
Page ---- ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.......................................................... 1 Section 1.01 Certain Defined Terms................................................................ 1 Section 1.02 Accounting Terms..................................................................... 18 Section 1.03 Other Definitional Provisions........................................................ 18 ARTICLE 2. COMMITMENT, LOANS AND COLLATERAL.......................................................... 19 Section 2.01 Revolving Loans; Commitment.......................................................... 19 Section 2.02 Notices.............................................................................. 20 Section 2.03 Borrowing of Loans................................................................... 20 Section 2.04 Extension of Commitment Termination Date............................................. 20 Section 2.05 Fees................................................................................. 21 Section 2.06 Conversion of Loans.................................................................. 21 Section 2.07 Borrowing Base; Prepayments.......................................................... 22 Section 2.08 Use of Proceeds of Loans............................................................. 22 Section 2.09 Payment of Loans..................................................................... 22 Section 2.10 Interest............................................................................. 23 Section 2.11 Notes................................................................................ 23 Section 2.12 Payments............................................................................. 24 Section 2.13 Computations......................................................................... 24 Section 2.14 Minimum Amounts of Borrowings and Prepayments........................................ 24 Section 2.15 Additional Costs..................................................................... 24 Section 2.16 Limitation on Types of Loans......................................................... 25 Section 2.17 Illegality........................................................................... 25 Section 2.18 Certain Conversions Pursuant to Sections 2.16 and 2.17............................... 25 Section 2.19 Indemnification...................................................................... 26 Section 2.20 Proportionate Treatment.............................................................. 26 Section 2.21 Proportionate Sharing................................................................ 26 Section 2.22 Agent's Obligation to Expend Funds; Non-Receipt of Funds by Agent.................... 27 Section 2.23 Change of Lending Office............................................................. 27 Section 2.24 Replacement of Lenders under Certain Circumstances................................... 28 Section 2.25 Security............................................................................. 28 ARTICLE 3. REPRESENTATIONS AND WARRANTIES............................................................ 29 Section 3.01 Organization......................................................................... 29 Section 3.02 Power, Authority, Consents........................................................... 29
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Page ---- Section 3.03 No Violation of Law or Agreements.................................................... 30 Section 3.04 Due Execution, Validity, Enforceability.............................................. 30 Section 3.05 Basic Business....................................................................... 30 Section 3.06 Properties, Priority of Liens........................................................ 30 Section 3.07 Judgments, Actions, Proceedings...................................................... 30 Section 3.08 No Defaults, Compliance With Laws.................................................... 31 Section 3.09 Intentionally Omitted................................................................ 31 Section 3.10 Financial Statements................................................................. 31 Section 3.11 Tax Returns.......................................................................... 31 Section 3.12 Intellectual Property................................................................ 31 Section 3.13 Use of Proceeds...................................................................... 31 Section 3.14 Name Changes......................................................................... 31 Section 3.15 Condition of Assets; Permits, etc.................................................... 32 Section 3.16 ERISA................................................................................ 32 Section 3.17 True and Complete Copies............................................................. 32 Section 3.18 Principal Place of Business.......................................................... 33 Section 3.19 Corporate Structure.................................................................. 33 Section 3.20 Regulated Company.................................................................... 33 Section 3.21 Indebtedness......................................................................... 33 Section 3.22 Solvency............................................................................. 33 Section 3.23 Intentionally Omitted................................................................ 33 Section 3.24 Full Disclosure...................................................................... 33 ARTICLE 4. THE CLOSING; CONDITIONS TO THE LOANS...................................................... 34 Section 4.01 Conditions to Amendment and Restatement.............................................. 34 Section 4.02 Conditions to Each Loan.............................................................. 35 ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION............................ 36 Section 5.01 Annual Financial Statements.......................................................... 36 Section 5.02 Quarterly Financial Statements....................................................... 37 Section 5.03 No Default/Compliance Certificate.................................................... 37 Section 5.04 Monthly Reports...................................................................... 37 Section 5.05 Intentionally Omitted................................................................ 37 Section 5.06 Other Information.................................................................... 37 Section 5.07 Copies of Documents.................................................................. 37 Section 5.08 Preferred Stock...................................................................... 38
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Page ---- Section 5.09 Notices Under Material Contracts..................................................... 38 Section 5.10 Notice of Litigation; Cancellation of Insurance; Other Notices....................... 38 Section 5.11 Notices in Regard to Borrowing Base Assets........................................... 38 Section 5.12 ERISA................................................................................ 38 Section 5.13 Notices of Defaults.................................................................. 38 Section 5.14 UCC Acknowledgements................................................................. 38 Section 5.15 Intentionally Omitted................................................................ 38 Section 5.16 Budget; Business Plans............................................................... 38 ARTICLE 6. AFFIRMATIVE COVENANTS..................................................................... 39 Section 6.01 Books and Records.................................................................... 39 Section 6.02 Chattel Paper........................................................................ 39 Section 6.03 Inspections and Audits............................................................... 39 Section 6.04 Maintenance of Collateral............................................................ 39 Section 6.05 Continuance of Business.............................................................. 39 Section 6.06 Perform Obligations.................................................................. 40 Section 6.07 Insurance............................................................................ 40 Section 6.08 Compliance With Laws, etc............................................................ 40 Section 6.09 Borrowing Base....................................................................... 40 Section 6.10 Financial Covenants.................................................................. 40 Section 6.11 Trade Accounts Payable............................................................... 41 Section 6.12 Liens Against Users.................................................................. 41 Section 6.13 Liens................................................................................ 41 Section 6.14 Key Man Life Insurance............................................................... 41 ARTICLE 7. NEGATIVE COVENANTS........................................................................ 42 Section 7.01 Indebtedness......................................................................... 42 Section 7.02 Liens................................................................................ 43 Section 7.03 Guaranties........................................................................... 43 Section 7.04 Advances............................................................................. 43 Section 7.05 Mergers, Acquisitions................................................................ 44 Section 7.06 Changes in Business; Sale of Assets.................................................. 44 Section 7.07 Redemptions; Dividends............................................................... 45 Section 7.08 Stock Issuance....................................................................... 45 Section 7.09 Prepayments.......................................................................... 45 Section 7.10 Investments.......................................................................... 45
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Page ---- Section 7.11 Fiscal Year; Accounting Changes...................................................... 46 Section 7.12 ERISA Obligations.................................................................... 46 Section 7.13 Transactions With Affiliates......................................................... 47 Section 7.14 Capital Expenditures................................................................. 47 Section 7.15 Amendments........................................................................... 47 Section 7.16 Copies of Corporate Documents........................................................ 47 Section 7.17 Principal Place of Business.......................................................... 48 ARTICLE 8. EVENTS OF DEFAULT......................................................................... 48 Section 8.01 Events of Default.................................................................... 48 Section 8.02 Effect; Remedies..................................................................... 49 ARTICLE 9. CONCERNING THE AGENT...................................................................... 49 Section 9.01 Appointment and Authority of the Agent............................................... 49 Section 9.02 Delegation of Duties................................................................. 50 Section 9.03 Independent Credit Evaluations....................................................... 50 Section 9.04 Limited Scope of Duties.............................................................. 50 Section 9.05 Reliance by the Agent................................................................ 51 Section 9.06 Exculpatory Provisions............................................................... 51 Section 9.07 Indemnification of the Agent......................................................... 52 Section 9.08 National City Bank Individually...................................................... 52 Section 9.09 Dealing With the Lenders............................................................. 52 Section 9.10 Duties Not to be Increased........................................................... 53 Section 9.11 Successor Agent...................................................................... 53 ARTICLE 10. ADDITIONAL LENDERS, ASSIGNMENTS AND PARTICIPATIONS........................................ 53 Section 10.01 Additional Lenders................................................................... 53 Section 10.02 Assignments.......................................................................... 54 Section 10.03 Participations....................................................................... 54 Section 10.04 Information.......................................................................... 55 ARTICLE 11. MISCELLANEOUS PROVISIONS.................................................................. 55 Section 11.01 Fees and Expenses; Indemnity......................................................... 55 Section 11.02 Taxes................................................................................ 56 Section 11.03 Payments............................................................................. 57 Section 11.04 Survival of Agreements and Representations; Reaffirmation of Security Interest; Waiver of Trial by Jury........................................... 57 Section 11.05 Lien on and Set-off of Deposits...................................................... 57 Section 11.06 Modifications, Consents and Waivers; Entire Agreement................................ 58
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Page ---- Section 11.07 Remedies Cumulative.................................................................. 58 Section 11.08 Further Assurances................................................................... 58 Section 11.09 Notices.............................................................................. 58 Section 11.10 Construction; Governing Law; Consent to Jurisdiction................................. 59 Section 11.11 Severability......................................................................... 60 Section 11.12 Binding Effect; No Assignment or Delegation.......................................... 60 Section 11.13 Counterparts; Facsimile Execution.................................................... 60
LIST OF SCHEDULES AND EXHIBITS Schedule 1.01 -- Commitments Percentages and Loan Commitments Schedule 3.01(a) -- Capitalization Schedule 3.01(b) -- Jurisdiction Schedule 3.07 -- Litigation Schedule 3.16 -- ERISA Plans Schedule 3.17 -- Material Contracts Schedule 3.19 -- Officers and Directors Schedule 3.21 -- Indebtedness; Bank Accounts Schedule 7.02 -- Liens Schedule 7.03 -- Guaranties Exhibit A-1 -- Form of Monthly Borrowing Base Report Exhibit A-2 -- Form of Summary Borrowing Base Report Exhibit A-3 -- Form of Monthly Business Review Exhibit B -- Form of Notice Exhibit C -- Form of Promissory Note Exhibit D -- Form of Security Agreement Exhibit E -- Intentionally Omitted Exhibit F -- Form of Joinder Agreement Exhibit G -- Form of Leases v An extra section break has been inserted above this paragraph. Do not delete this section break if you plan to add text after the Table of Contents/Authorities. Deleting this break will cause Table of Contents/Authorities headers and footers to appear on any pages following the Table of Contents/Authorities. SECOND AMENDED AND RESTATED WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT, dated as of September 3, 1998, as amended and restated as of June 30, 1999 and as further amended and restated as of August 31, 2001 (this "Agreement"), among MARLIN LEASING CORPORATION, a Delaware corporation (the "Borrower"); each of the financial institutions that is or pursuant to the terms hereof, may become a party hereto as a lender (individually, a "Lender", and collectively, the "Lenders"); and NATIONAL CITY BANK, as agent for the Lenders (in such capacity, together with its successors in such capacity, the "Agent"); W I T N E S S E T H: WHEREAS, European American Bank (as the original agent under the Original Agreement), the Borrower and certain Lenders were parties to that certain Warehouse Revolving Credit Facility Agreement dated as of September 3, 1998 (as amended, the "Original Agreement"); and WHEREAS, the Original Agreement was amended and restated as of June 30, 1999 (as amended, the "First Amended and Restated Agreement"); WHEREAS, on November 14, 2000, the Lenders removed European American Bank as the agent under the Original Agreement and replaced it with National City Bank; and WHEREAS, the parties hereto wish to amend and restate the First Amended and Restated Agreement in its entirety, as hereinafter set forth; NOW, THEREFORE, the parties hereto agree that the First Amended and Restated Agreement is hereby amended and restated to read in its entirety as follows: ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS Section 1.01 Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (all terms defined in this Section 1.01 or in other provisions of this Agreement in the singular to have the same meanings when used in the plural and vice versa): "Additional Costs" - as defined in Section 2.15. "Additional Lender" - as defined in Section 10.01. "Adjusted LIBOR" means, for each Interest Period in respect of LIBOR Loans, an interest rate per annum (rounded upward to the nearest 1/16th of one percent (0.0625%)) determined pursuant to the following formula: Adjusted LIBOR = LIBOR -------------------------------------------------- 1.00 - Eurodollar Reserve Percentage The Adjusted LIBOR shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage. "Affiliate" - as to any Person, any other Person which directly or indirectly Controls, or is under common Control with, or is controlled by, such Person; provided that (i) any Person which owns directly or indirectly 5% or more (on a fully diluted basis) of the Voting Securities or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person), in each case with respect to any corporation or other Person with a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or 20% or more of such securities or partnership or other ownership interests, with respect to any corporation or other Person which does not have a class of securities registered under the Exchange Act, will be deemed to Control such corporation or other Person and (ii) and each stockholder, director and officer of the Borrower shall be deemed to be an Affiliate of the Borrower. "Agreement" - this Agreement, as the same may, from time to time, be amended, supplemented or modified. "Amended Articles" - the Certificate of Incorporation of the Borrower filed on June 16, 1997, as amended by Certificates of Amendment filed on July 15, 1997, February 20, 1998, June 1, 1998, March 30, 1999, June 25, 1999, April 11, 2000 and July 24, 2001, as the same may be amended from time to time, true and complete copies of which have been delivered to the Agent pursuant to this Agreement. "Applicable Margin" - with respect to all Loans, the percentage set forth below:
Applicable Margin for Revolving Loans ~~Base Rate Loans .25% LIBOR Rate Loans 2.125%~~
"Authorized Officer" - Any (i) Chief Executive Officer, President or Vice President of the Borrower or (ii) any other officer or officers of the Borrower designated in writing by the Borrower to the Agent provided that the Borrower shall have furnished the Agent with an incumbency certificate and certified resolutions, in form satisfactory to the Agent, confirming the authority of such officer to act as an Authorized Officer hereunder. "Base Rate" - the greater of (i) the Prime Rate or (ii) one-half percent over the Federal Funds Rate. "Base Rate Loan" - a Loan which bears interest at a rate based upon the Base Rate. "Basic Business" - as defined in Section 3.05. "Benefit Plan" - any employee benefit plan (as defined in Section 3(3) of ERISA) or other employee benefit plan which is (a) maintained by the Borrower or any Subsidiary, (b) a plan to which the Borrower or any Subsidiary contributes or is required to contribute, (c) a plan to which the Borrower or any Subsidiary was required to make contributions at any time during the five (5) calendar 2 years preceding the date of this Agreement or (d) any other plan with respect to which the Borrower or any Subsidiary has incurred liability. "Booked Residual" - with respect to any Contract, on any date of determination, the residual value of the Equipment subject to such Contract, as reflected in the Borrower's servicing system. "Borrowing Base" - as to any Eligible Contract as at the date of any determination thereof, but subject to paragraphs (a) through (c) of this definition below, the lesser of (i) 88.5% of the then Net Present Value of such Eligible Contract or (ii) 100% of the Net Investment pertaining to the Eligible Equipment subject to such Eligible Contract, less, all security deposits and advance lease payments and other sums received by the Borrower relating to any Eligible Contract (solely as they relate to assets included in the Borrowing Base). Notwithstanding the foregoing: (a) the aggregate amount includible in the Borrowing Base of Net Present Value of Eligible Contracts with any one User (including Affiliates of such User) shall not exceed $200,000; (b) the aggregate amount includible in the Borrowing Base of Net Present Value of Eligible Contracts which have initial lease terms in excess of 60 months from the commencement date of such Contracts shall not exceed 10% of the aggregate Commitment for all Lenders; and (c) no Contract may be included in the Borrowing Base for a period of in excess of 360 days. "Borrowing Base Report" - a Monthly Borrowing Base Report or a Summary Borrowing Base Report. "Borrowing Date" - the Business Day specified in a Notice delivered pursuant to Section 2.02 hereof as the date on which the Borrower requests the Lenders to make a Loan. "Business Day" - any day on which commercial banks are not authorized or required to close in Philadelphia, Pennsylvania and, with respect to a borrowing of, a payment or prepayment of principal of or interest on, or a conversion of or into, or an Interest Period for, a LIBOR Loan, or a Notice by the Borrower with respect to any of the foregoing, which is also a day on which dealings in Dollar deposits are carried out in the London interbank market. "Capital Expenditures" - for any period, the aggregate amount of all payments made by any Person directly or indirectly for the purpose of acquiring, constructing or maintaining fixed assets, real property or equipment which, in accordance with GAAP, would be added as a debit to the fixed asset account of such Person (but excluding assets acquired for lease in the ordinary course of business). "Capital Leases" - as defined under Statement 13 of the Financial Accounting Standards Board or as that term may be defined hereafter in accordance with GAAP. "Capitalized Lease Obligations" - as to any Person, the obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) real and/or personal property which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP. 3 "Cash" - lawful currency of the United States in Dollars. "Change of Control" means (a) the termination of employment with the Borrower for any reason or the failure to devote full time and attention to the business and affairs of the Borrower by any two of the Principals; (b) the sale, lease or transfer of all or substantially all of the assets of the Borrower to any Person or group (as such term is defined in Section 13(d)(3) of the Exchange Act) other than the shareholders listed on Schedule 3.01(a); (c) the liquidation or dissolution of (or the adoption of a plan of liquidation by the board of directors) of the Borrower; (d) the acquisition by any Person or group (as so defined) (other than the shareholders listed on Schedule 3.01(a)) of a direct or indirect majority in interest (more than 50%) of the issued and outstanding Voting Securities of the Borrower by way of merger or consolidation or otherwise; or (e) the occurrence of any event that constitutes an "Organic Change" as such term is defined in the Amended Articles. "Change of Control Date" - the date on which a Change of Control shall occur. "Charge Offs" - for any period, the sum of any payments due and payable to the Borrower or its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) under any contract, lease or other agreement all or a portion of which (i) has been, or should have been, in accordance with the Credit and Collection Policy, written off the books of the Borrower or any Subsidiary, as applicable, as uncollectible or (ii) has remained unpaid for a period of 121 days (as of the 20th calendar day of the month) or more from the original due date for such payment. "Closing Date" - August 31, 2001. "Code" - the Internal Revenue Code of 1986, as it may be amended from time to time, and the rules and regulations thereunder. "Collateral" - as defined in the Security Agreement. "Commitment" - with respect to all of the Lenders, the sum of the Commitments of each Lender hereunder and, with respect to each Lender, the amount set forth opposite such Lender's name on Schedule 1.01 hereto (as such Schedule may be amended from time to time, including pursuant to Sections 10.01 and 10.02) or in the Joinder Agreement pursuant to which such Lender becomes a party hereto, as the case may be. "Commitment Fee" - shall have the meaning given thereto in Section 2.05. "Commitment Percentage" - the percentage of each Lender's Commitment to the aggregate Commitment of all the Lenders, as set forth on Schedule 1.01 hereto (as such Schedule may be amended from time to time, including pursuant to Sections 10.01 and 10.02) or in the Joinder Agreement pursuant to which such Lender becomes a party hereto, as the case may be. 4 "Commitment Termination Date" - the earlier of (x) August 31, 2003 or such later date as shall be applicable pursuant to Section 2.04 or (y) such other date as the Commitment shall terminate in accordance with this Agreement. "Conditional Sale Agreement" - any contract for the sale of Equipment in the ordinary course of the Borrower's business or lease intended as security under Section 1-201(37) of the UCC. "Consolidated Net Income" - the net income (but not loss or deficit) of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided, however, that Consolidated Net Income shall not include amounts added to such net income (or deficit) in respect of the write-up of any asset. "Consolidated Net Loss" - the net loss or deficit of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided, however, that Consolidated Net Loss shall not include amounts added to such net loss or deficit in respect of the write-up of any asset. "Consolidated Tangible Net Worth" - as at the date of determination, the consolidated shareholders' equity of the Borrower and its Subsidiaries plus the portion of Subordinated Debt which is due and payable more than five years from its date of issuance, less (i) goodwill and other intangibles determined in accordance with GAAP and (ii) advances to shareholders, directors, officers, employees and Affiliates. "Continue," "Continuation" and "Continued" - the continuation of a LIBOR Loan as a LIBOR Loan from one Interest Period to the next Interest Period. "Contract" - any Lease or Conditional Sale Agreement entered into or otherwise acquired by the Borrower, in which the Borrower is lessor, sublessor or seller, as the case may be. "Contract Balance Remaining" - with respect to any Contract, as of any date, the aggregate (un-discounted) amount of all unpaid Eligible Contract Payments due under such Contract. "Control" - as to any Person, the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Securities, by contract or otherwise. "Convert," "Conversion" and "Converted" shall refer to a conversion of Loans of one type into Loans of the other type, which may be accompanied by the transfer by a Lender (in its sole discretion) of the booking location of a Loan from one lending office to another. "Credit and Collection Policy" - the credit and collection practices and policies of the Borrower as in effect on the Closing Date, subject to such modifications permitted herein. "Custodian" - Wells Fargo Bank Minnesota, National Association, in its capacity as custodian under the Custodian Agreement, or such other financial institution as may be selected by the Borrower (provided that such financial institution is reasonably acceptable to the Agent). "Custodian Agreement" - as defined in Section 2.25(b). "Debt Instrument" - as defined in Section 8.01. 5 "Debt Service" - for any period, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following (a) all payments of Indebtedness (including, without limitation, the principal component of any payments in respect of Capitalized Lease Obligations, excluding, however, all such principal in respect of Indebtedness incurred for the sole purpose of, or in connection with, the financing of lease receivables under revolving warehouse facilities) scheduled to be made during such period, net of any refinance proceeds plus (b) all Interest Expense for such period. "Default" - an event which with notice or lapse of time or both would constitute an Event of Default. "Dollars" - and "$" - lawful money of the United States of America. "EBITDA - for any period, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following: (a) net operating income (calculated before taxes, Interest Expense, securitization income, extraordinary and unusual items and income or loss attributable to equity in Affiliates) for such period plus (b) (i) Net Margin on Managed Assets, (ii) depreciation and amortization (to the extent deducted in determining net operating income) and (iii) provision for loan losses (to the extent deducted in determining net operating income) for such period. "Eligible Equipment" - Equipment: (a) (x) to which the Borrower has good and marketable title or (y) with respect to which the Borrower has a fully assignable security interest therein and which interest, as to all Equipment other than Low Value Equipment, shall constitute a valid first priority perfected security interest; (b) that is subject to an Eligible Contract; (c) that is used in the normal course of business of the User under such Eligible Contract and is consistent with the Basic Business of the Borrower; (d) except with respect to any item of Equipment subject to a Contract which (x) has a Net Present Value of less than $25,000 and (y) covers Equipment with an aggregate Original Cost of less than $25,000, shall be insured against loss by either the Borrower or the User in accordance with industry practice; (e) which is not subject to any Lien other than the Lien in favor of the Agent on behalf of the Lenders, and in which the Agent, as to all Equipment other than Low Value Equipment, has a duly perfected first priority security interest under the UCC; (f) that is in good working condition; and (g) that is located within the United States. 6 "Eligible Contract" - a lease or Conditional Sale Agreement entered into by the Borrower as lessor or seller, as the case may be: (a) of Eligible Equipment; (b) with respect to which the Borrower has all of the right, title and interest of the lessor thereunder; (c) which is fully assignable and transferable to the Agent; (d) which is non-cancelable and provides that the User's obligations thereunder are absolute and unconditional (subject only to the User's right, if any, of "quiet enjoyment" (being a covenant of the lessor not to repossess or to disturb the User's possession or use of the leased asset if the User is in full compliance with all of its obligations to the lessor)), which obligations are not, either pursuant to the terms of such contract or otherwise, subject to contingencies (other than the passage of time), defense, deduction, set-off or claim, and as to which no defenses, set-offs, claims or counterclaims exist or have been asserted by the User or anyone on its behalf; (e) which is a net lease and the User thereunder is responsible for all payments in connection therewith, including, but not limited to, payment of all taxes, insurance and maintenance expenses; (f) which is payable in Dollars; (g) which is substantially in the form of one of the form contracts set forth in Exhibit G hereto or otherwise in a form approved by the Agent and which has not been amended, modified or supplemented except for immaterial changes set forth in writing prior to the inclusion of such Contract in the Borrowing Base and which in any event do not reduce or limit the rights of the Borrower thereunder and are not due to the User's failure to satisfy the requirements of the Credit and Collection Policy or the User's default or delinquency, nor have any rights of the lessor thereunder been waived; (h) which has been entered into in accordance and consistent with the credit standards and requirements of the Borrower's Credit and Collection Policy as in effect on the Closing Date, as amended, modified or supplemented after the Closing Date provided that the Agent has consented to any material amendment, modification or supplement; (i) which has an initial maturity of no less than one year and no greater than six years unless expressly agreed to by the Agent; (j) which is in full force and effect (all equipment leased thereunder has been accepted by the User); (k) which does not (as of the date such Contract is first included in the Borrowing Base) have any payments more than 60 days past due from the Contract due date thereof (without giving effect to any waiver) and which does not have any other default and which has not been rewritten or amended because of payment or delinquency issues; (l) is not a Government Contract which has the United States or any of its agencies or instrumentalities as the User; 7 (m) which is not subject to any Lien other than the Lien in favor of the Agent on behalf of the Lenders, and in which the Agent has a duly perfected first priority security interest under the UCC; (n) the User under which is located in the United States; (o) with respect to which the Agent maintains at its principal place of business, or the Custodian maintains at its place of business in the United States permitted under the Custodian Agreement in accordance with the terms of the Custodian Agreement, the documentation with respect to such Contract required to be maintained by the Custodian pursuant to Section 4.02(c) hereof and, with respect to the Custodian, any other documentation required to be maintained with the Custodian pursuant to the Custodian Agreement, and the Borrower, with respect to such Contract, has complied with any covenants set forth in the Loan Documents pertaining to Eligible Contracts; (p) that is eligible for financing under one or more of the Borrower's Securitization Programs (including, without limitation, that available commitment then exists under such Securitization Program(s) to fund such lease or Conditional Sale Agreement); and (q) which has not been charged off in accordance with the Credit and Collection Policy. "Eligible Contract Payments" - all fixed, periodic basic rental payments (excluding any residual payments) which are due and payable or to become due under an Eligible Contract during the original term thereof (excluding any renewal term except to the extent the User under such Contract shall have become contractually obligated to make rental payments during such renewal term). "Environmental Laws" - any statute, law, rule, code, ordinance, regulation, permit, certificate or order of any Governmental Authority relating to injury to, or the protection of, human health or the environment, including, without limitation, all legal requirements pertaining to the use, storage, handling, treatment, transport, disposal, reporting, licensing, permitting, investigation, remediation and removal of Hazardous Substances. "Equipment" - computer, networking, telecommunications equipment and inventory, related peripherals, photocopiers or security systems, whether constituting equipment or inventory, and other categories of equipment and inventory customary in small-ticket equipment leasing and consistent with the Borrower's Credit Policy Manual, or such other assets as shall be acceptable to the Agent in its sole discretion. "ERISA" - the Employee Retirement Income Security Act of 1974, as it may be amended from time to time, and the regulations thereunder. "ERISA Affiliate" - all members of a controlled group of corporations and all trades and businesses (whether or not incorporated) under common control and all other entities which, together with any Borrower, are treated as a single employer under any or all of Sections 414(b), (c) or (m) of the Code or Section 4001 of ERISA. "Eurodollar Reserve Percentage" - the reserve percentage, if any, (expressed as a decimal, rounded upward to the nearest 1/100th of one percent (0.01%)) in effect on the date LIBOR for such 8 Interest Period is determined (whether or not applicable to any Lender) under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities") having a term comparable to such Interest Period. "Events of Default" - as defined in Section 8.01. "Fair Market Value" for the purposes of Section 7.06 shall mean such purchase price in Cash as shall be agreed to in a bona fide arms'-length negotiation between an unaffiliated, informed and willing purchaser and seller, neither of whom is under any compulsion to purchase or sell, respectively. "Federal Funds Rate" - for any day, the weighted average of the rates on overnight federal funds transactions with member banks of the Federal Reserve System arranged by federal funds brokers as published by the Federal Reserve Bank of Cleveland for such day, or if such day is not a Business Day, for the immediately preceding Business Day (or, if such rate is not so published for any such day, the average rate charged to the Agent on such day on such transactions as reasonably determined by the Agent). "Financial Statements" - collectively, the latest of (a) the audited consolidated balance sheet and statements of income and of cash flows of the Borrower and its Subsidiaries, as at and for the year ended December 31, 2000 and the unaudited consolidated balance sheet and statements of income and of cash flows of the Borrower and its Subsidiaries for the six (6) month period ended June 30, 2001 and (b) the most recent consolidating balance sheet and statement of income of the Borrower and consolidated balance sheet and statements of income and of cash flows of the Borrower and its Subsidiaries delivered by the Borrower to the Agent and each of the Lenders pursuant to Section 5.01 or 5.02 hereof. "First Amended and Restated Agreement" - as defined in the Recitals. "Fiscal Quarter" or "FQ" - any period of three consecutive calendar months comprising a quarter of a Fiscal Year; references to a Fiscal Quarter with numbers corresponding to a calendar year and a number corresponding to a Fiscal Quarter (e.g., "2001 FQ1") refer to such Fiscal Quarter (i.e., the first) of such Fiscal Year. "Fiscal Year" or "FY" - a period of 12 consecutive calendar months ending on each December 31st; references to a Fiscal Year with a number corresponding to any calendar year (e.g., "the 2001 Fiscal Year" or "2001 FY") refer to the Fiscal Year ending on December 31st of such calendar year. "Fixed Charge Coverage Ratio" - as at the date of determination, the ratio of (a) (i) EBITDA for the period of four consecutive Fiscal Quarters ending on, or most recently ended prior to, such date plus principal collections on managed assets, excluding, however, all such principal in respect of the financing of lease receivables under revolving warehouse facilities, less (ii) Charge Offs for such period to (b) Debt Service. "Foreign Exchange Contract" - any foreign exchange contract, currency exchange contract or other contractual arrangement protecting a Person against fluctuations in the exchange rate of different currencies. "GAAP" - generally accepted accounting principles, in effect from time to time in the United States, consistently applied, subject to Section 1.02. 9 "Government Contract" means a Contract under which the User is a federal, state or local government or government agency (or any agency or instrumentality thereof). "Governmental Authority" - any federal, state or local governmental authority or regulatory body, any subdivision, agency, commission or authority thereof (including, without limitation, any environmental protection authority or body) or any quasi-governmental body exercising any regulatory authority thereunder. "Hazardous Substances" - any substance: (a) the presence of which requires or may hereafter require notification, investigation or remediation under any Environmental Law; (b) which is or becomes defined as a "hazardous substance," "hazardous waste," "pollutant" or "contaminant" under any present or future Environmental Law or amendments thereto, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), and applicable state and local statutes and regulations; (c) which is toxic, explosive, corrosive, flammable, carcinogenic or otherwise hazardous; (d) without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or (e) without limitation, which contains polychlorinated biphenyls or asbestos. "Hedging Liability" - relative to any Person, all liabilities of such Person under interest rate and currency swap, cap and collar agreements and all other Writings designed to protect such Person against fluctuations in interest or currency exchange rates. "Indebtedness" - with respect to any Person, all (i) indebtedness of such person for borrowed money, including by way of overdraft privileges, (ii) obligations of such Person for the deferred purchase price of property or services (other than deferred taxes, current trade payables and accrued expenses incurred in the ordinary course of such Person's business), (iii) Capitalized Lease Obligations; (iv) obligations of such Person evidenced by notes, bonds, debentures or similar instruments, (v) indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person, (vi) liabilities and obligations of others for which such Person is directly or indirectly liable, by way of guaranty (whether by direct guaranty, suretyship, discount, endorsement, take-or-pay agreement, agreement to purchase or advance or keep in funds or other agreement having the effect of a guaranty) or otherwise; (vii) liabilities and obligations of others than such Person secured by liens on any assets of such Person, whether or not such liabilities and obligations shall have been assumed by it; (viii) liabilities and obligations of such Person, direct or contingent, with respect to bankers acceptances credited for such Person, letters of credit for the account of such Person or similar facilities; (ix) the net liabilities or obligations (as determined below) of such Person under any Interest Rate Contract or Foreign Exchange Contract; (x) liabilities and obligations of such Person, direct or contingent, including as servicer, with respect to receivables financing facilities; and (xi) all obligations of the kind referred to in preceding parts (i) through (x) secured by (or for which the holder of such obligation has an existing right, contingent or otherwise to be secured by) any Lien on property (including accounts or contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation. For the purposes of this definition, the amount of the liabilities and obligations under any Foreign Exchange Contract or Interest Rate Contract shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person based on the assumption that such agreement had terminated at the end of such fiscal quarter and, in making such determination, if any agreement relating to such contracts provides for the netting of amounts payable by and to such Person thereunder or for the simultaneous payment of amounts by and to such Person, then, in each such case, the amount of such liabilities and obligations shall be the net amount so determined. The amount of liabilities and obligations in the case of any guaranty, suretyship or other similar agreement shall equal the unpaid portion of the stated or determinable amount of the primary 10 obligation in respect of which such guaranty, surety or similar agreement is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof as determined by the Agent. "ING" - ING (U.S.) Capital LLC. "ING Debt" - Indebtedness of the Borrower for borrowed money to ING arising under the ING Purchase Agreement. "ING Purchase Agreement" - that certain Purchase Agreement dated as of March 30, 1999 (as amended) between ING and the Borrower, as may be further amended from time to time as permitted by this Agreement. "Insurance Subsidiary"- any Subsidiary organized under Bermuda law for the purpose of establishing and operating a captive property insurance program. "Interest Coverage Ratio" - means, as at the date of determination, the ratio of (a) (i) EBITDA for the period of four consecutive Fiscal Quarters ending on, or most recently ended prior to, such date less (ii) Charge Offs for such period to (b) Interest Expense for such period. "Interest Expense" - for any period, the sum, for the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following (a) all interest in respect of Indebtedness (including, without limitation, the interest component of any payments in respect of Capitalized Lease Obligations accrued or capitalized during such period (whether or not actually paid during such period)), excluding, however, all such interest in respect of Indebtedness incurred for the sole purpose of, or in connection with, the financing of lease receivables, plus, (b) the net amount payable (or minus the net amount receivable) under Hedging Liabilities during such period (whether or not actually paid or received during such period). "Interest Period" - with respect to any LIBOR Loan, each period commencing on the date such Loan is made, or Converted from a Loan or Loans of another type or the last day of the next preceding Interest Period with respect to such Loan, and ending one month, two months, or three months thereafter, as the Borrower may select as provided in Section 2.02. Notwithstanding the foregoing, (i) each Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day (or, if such next Business Day falls in the next succeeding calendar month, on the immediately preceding Business Day); (ii) no more than ten (10) Interest Periods for LIBOR Loans shall be in effect at the same time; (iii) notwithstanding clause (i) above, no Interest Period shall have a duration of less than one month; and (iv) no Interest Period may end later than the Commitment Termination Date. In the event that the Borrower fails to select the duration of any Interest Period for any LIBOR Loan within the time period and otherwise as provided in Section 2.02, the Interest Period with respect to such Loan will be one month. "Interest Rate Contract" - any interest rate swap, interest rate cap or other contractual arrangement protecting a Person against increases in variable interest rates on Indebtedness. "Investment" - any investment in any Person by means of purchase of shares of stock or Indebtedness, capital contribution, loan, advance or guarantee, or any acquisition of all or the part of the business or assets of any Person, or any commitment or option to make any Investment. "IRS" - Internal Revenue Service. 11 "Joinder Agreement" - as defined in Section 10.01. "Key Man Insurance" as defined in Section 6.14. "Lease" - any lease rental schedules, master lease agreements as they relate to such rental schedules, agreements for use and chattel paper (including any and all supplements and amendments thereon and modifications thereof but excluding any Conditional Sale Agreements). "Leverage Ratio" - ratio of (i) Total Recourse Liabilities to (ii) Consolidated Tangible Net Worth. "LIBOR" - for any Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted by the Agent as determined on the basis of the offered rates which appear on the Telerate page 3750 as of 11:00 a.m., London time, two Business Days prior to the first day of such Interest Period for deposits in Dollars for a period of time comparable to such Interest Period and in an amount comparable to the aggregate principal amount of the LIBOR Loans made or to be made by the Lenders to which such Interest Period relates or, if such rate shall then be unavailable, the rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) quoted by the Agent at approximately 10:00 a.m., Philadelphia time (or as soon thereafter as practical) two Business Days prior to the first day of such Interest Period for the offering by the Agent to prime lending banks in the London interbank market of Dollar deposits having a term comparable to such Interest Period and in an amount comparable to the aggregate principal amount of the LIBOR Loans made or to be made by the Lenders to which such Interest Period relates. "LIBOR Loan" - a Loan the interest on which is determined on the basis of Adjusted LIBOR plus the Applicable Margin. "Lien" - any mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature of a grant of a security interest or lien), and the filing of or agreement to give any financing statement under the UCC or similar law of any jurisdiction. "Loan(s)" - individually, a Revolving Loan and, collectively, the Revolving Loan(s). "Loan Documents" - this Agreement, the Notes, the Security Documents and all other documents executed and delivered in connection herewith or therewith, including all amendments, modifications and supplements thereto. "Lockbox Agreement" - as defined in Section 6(1) of the Security Agreement. "Low Value Equipment" - any item of Equipment subject to a Conditional Sale Agreement which (x) has a Net Present Value of less than $25,000 and (y) covers Equipment with an aggregate Original Cost of less than $25,000. "Majority Lenders" - those Lenders whose pro rata share of the aggregate Loans outstanding (or, if no Loans are outstanding, those whose pro rata share of the Commitment) constitutes more than 55% of the aggregate Loans (or the Commitment). "Master Asset-Backed Facility" - that certain Master Lease Receivables Asset-Backed Financing Facility Agreement, dated as of December 1, 2000 among the Borrower, Marlin Leasing Receivables Corp. IV and Wells Fargo Bank Minnesota, National Association. 12 "Material Adverse Effect" - (x) as to a Person, a material adverse effect on the business, operations, financial condition or properties of such Person or on the ability of such Person to perform its obligations hereunder or under the other Loan Documents or (y) a material adverse effect on the Agent's Lien on the Collateral or on the collectibility of any material portion of the Collateral or on the rights and remedies of the Lenders and the Agent under the Loan Documents. "Material Contracts" - collectively, (i) the Primus Purchase Agreements; (ii) the ING Purchase Agreement, (iii) the Wachovia Purchase Agreement, (iv) the Wachovia II Purchase Agreement, (v) the Securitization Agreements; (vi) the Third Amended and Restated Stockholders Agreement (as amended), (vii) the agreements, instruments and other documents executed and delivered pursuant to or in connection with any of the foregoing, and (viii) any other agreements, understandings or contracts the loss of which, or the breach or default under which, would have a Material Adverse Effect on the Borrower. "Monthly Borrowing Base Report" - a borrowing base report in the form of Exhibit A-1 annexed hereto, which borrowing base report is required to be given pursuant to Section 5.04. "Monthly Business Review" - management's discussion and analysis of the Borrower's prior month's operations, including but not limited to the most recent month-end balance sheet, income statement, portfolio agings, and write-off/reserve information, in the form of Exhibit A-3 hereto. "Moody's" - Moody's Investors Service. "Net Investment" - with respect to any item of Equipment, means the Original Cost to the Borrower, adjusted to reflect the cost of related additions, modifications, refurbishments, or replacements that are properly capitalized less, as of the date of determination, (i) for direct finance leases as determined in accordance with GAAP, the portion of lease payments received attributable to the repayment of the Original Cost, and (ii) for operating leases determined in accordance with GAAP, depreciation, in either case based on the books and records of the Borrower maintained in accordance with GAAP. "Net Margin on Managed Assets" - accrued interest income for any period on lease receivables serviced by the Borrower less accrued interest expense in respect of Indebtedness incurred for the sole purpose of, or in connection with, the financing of lease receivables serviced by the Borrower. "Net Present Value" - an amount discounted monthly to present value by a percentage per annum equal to the Base Rate plus the Applicable Margin. Net Present Value of Eligible Contracts shall refer to the Net Present Value of the Eligible Contract Payments thereunder. All present value calculations shall be made using a 30-day month and a 360-day year and actual days elapsed. "Non-Recourse Indebtedness" - Indebtedness of the Borrower for which the remedy for nonpayment or non-performance of any obligation or any default (other than for breach of standard representations and warranties or misapplication of funds) in respect thereof is strictly and absolutely limited to any collateral securing such Indebtedness and in respect of which the Borrower is not subject to any personal liability. "Non-Recourse Lender(s)" - any creditors of the Borrower which shall have provided financing in the form of Non-Recourse Indebtedness. "Notes" - as defined on Section 2.11. 13 "Notice" - as defined in Section 2.02. "Obligations" - as defined in Section 2.25. "Original Agreement" - as defined in the Recitals. "Original Cost" - the purchase price to the Borrower for any Equipment or other assets as invoiced by the supplier thereof, excluding sales taxes, shipping, handling and customary brokerage fees and commissions and other related costs. "Participant" - as defined in Section 10.03. "Participation" - as defined in Section 10.03. "Permitted Financing Security Interest" - as defined in Section 7.02. "Permitted Liens" - (i) Liens in favor of the lessor on equipment leased by the Borrower pursuant to Capital Leases to the extent such leases are permitted under this Agreement; (ii) Liens consisting of precautionary UCC filings in favor of the lessor on equipment leased by the Borrower pursuant to leases other than Capital Leases to the extent permitted under this Agreement; (iii) Liens consisting of precautionary UCC filings made against assets transferred by the Borrower to the Securitization Subsidiaries pursuant to the Securitization Programs or to third parties pursuant to whole loan sales; (iv) liens in favor of lenders to the Securitization Subsidiaries (or trustees thereof) on notes and/or stock issued to the Borrower by such Securitization Subsidiaries in partial consideration for assets sold by the Borrower to such Securitization Subsidiaries; (v) liens on assets of Securitization Subsidiaries in favor of lenders to such Securitization Subsidiaries (or trustees thereof) pursuant to one or more Securitization Programs; (vi) liens or charges for current taxes, assessments or other governmental charges other than those arising from income taxes (A) which are not yet due and payable or (B) the validity of which is being contested in good faith by appropriate proceedings upon stay of execution of the enforcement thereof and which are in respect of claims for current taxes, assessments, or other governmental charges not exceeding an aggregate amount of $25,000 and for which adequate reserves have been set aside on the books of the Borrower and its Subsidiaries in accordance with GAAP; (vii) Liens or charges not exceeding an aggregate amount of $25,000, incurred in the ordinary course of business of the Borrower and its Subsidiaries in connection with workers' compensation, unemployment insurance or other forms of governmental insurance or benefits; (viii) deposits in the ordinary course of business required to secure performance bids, trade contracts, surety and appeal bonds, performance bonds and similar instruments; (ix) mechanics', materialmen's, warehousemen's or other similar liens arising in the ordinary course of the Borrower's and its Subsidiaries' business which either (A) are inchoate and relate to an obligation which is not yet due and payable, or (B) are being contested in good faith and which are in respect of mechanics', materialmen's, or other similar charges not exceeding an aggregate of $25,000 and for which adequate reserves have been set aside on the books of the Borrower and its Subsidiaries in accordance with GAAP; and (x) Liens on assets of the Insurance Subsidiary securing permitted Indebtedness of the Insurance Subsidiary. "Person" - an individual, a corporation, a partnership, a joint venture, a limited liability company or partnership, a trust or unincorporated organization, a joint stock company or other similar organization, a government or any political subdivision thereof, a court, or any other legal entity, whether acting in an individual, fiduciary or other capacity. "Plan" - an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by 14 any Borrower or any ERISA Affiliate or (ii) maintained or contributed to pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which the Borrower or any ERISA Affiliate is then making or accruing obligations to make contributions or has within the preceding five plan years (with respect to both clauses (i) and (ii)) made contributions or had an obligation to do so. "Portfolio Delinquency Ratio" - at the end of any Collection Period (as such term is defined in the Master Asset-Backed Facility), the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining (as such term is defined in the Master Asset-Backed Facility), on all leases included in the Borrower's servicing portfolio as to which any Scheduled Payment (as such term is defined in the Master Asset-Backed Facility), (or part thereof in excess of 10% of such Scheduled Payment) is delinquent sixty-one or more days, as of the end of the Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all leases included in the Borrower's servicing portfolio as of the end of the Collection Period. "Post-Default Rate" - a rate of interest per annum equal to (a) in respect of the principal amount of Base Rate Loans, 2% in excess of the Base Rate plus the Applicable Margin as in effect from time to time, and (b) in respect of the principal amount of LIBOR Loans, 2% in excess of the Adjusted LIBOR plus the Applicable Margin in effect thereon at the time of such default until the end of the then current Interest Period therefor and, thereafter, 2% in excess of the Base Rate plus the Applicable Margin as in effect from time to time; and (c) in respect of other amounts payable by the Borrower hereunder (including interest) not paid when due (whether at stated maturity, by acceleration or otherwise), a rate per annum equal to 2% in excess of the Base Rate plus the Applicable Margin as in effect from time to time. "Preferred Stock" - the Class A Convertible Preferred Stock, par value $.01 per share, the Class C Convertible Preferred Stock, par value $.01 per share, and the Class D Convertible Preferred Stock, par value $.01 per share, issued by the Borrower, in each case on the terms and conditions described in the Amended Articles, as terms such may be amended, modified or supplemented from time to time to the extent permitted in accordance with the terms of this Agreement. "Prime Rate" - the interest rate which the Agent announces from time to time at the Principal Office as its prime commercial lending rate. Each change in any interest rate provided for herein based upon the Prime Rate resulting from a change in the Prime Rate shall take effect at the time of such change in the Prime Rate. The Prime Rate is established from time to time by the Agent as an index or base rate and at any time may or may not be the best or lowest rate charged by the Agent on any Loan. "Primus Entities" - Primus Capital Fund IV Limited Partnership and Primus Executive Fund Limited Partnership. "Primus Purchase Agreements" - (i) that certain Purchase Agreement dated as of February 25, 1998 (as amended) among the Borrower and the Primus Entities, as may be further amended from time to time as permitted by this Agreement and (ii) that certain Purchase Agreement dated as of March 30, 1999 (as amended) among the Borrower, ING and the Primus Entities, as may be further amended from time to time as permitted by this Agreement. "Principal Office" - the principal office of the Agent, which is currently located at One South Broad Street, Philadelphia, Pennsylvania. "Principals" - Daniel P. Dyer, Gary R. Shivers and Gary W. Kester. 15 "Regulation D" - Regulation D of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time. "Regulation T" - Regulation T of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time. "Regulation U" - Regulation U of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time. "Regulation X" - Regulation X of the Board of Governors of the Federal Reserve System, as the same may be amended or supplemented from time to time. "Regulatory Change" - any change after the date of this Agreement in foreign or United States federal, state or local laws or regulations (including Regulation D) or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks including the Lenders of or under any foreign or United States federal, state, or local laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Residual Receipts" - all Booked Residuals received by the Borrower, proceeds from the sale of Equipment subject to Eligible Contracts received by the Borrower in the event the User does not purchase the Equipment at the end of the term of such Contract, any amounts collected by the Borrower as judgments against a User or others related to the failure of such User to pay any required amounts under the related Eligible Contract or to return the Equipment, including any amounts retained by the Borrower relating to a security deposit or other similar payment in advance as security, plus any amounts not otherwise described above which are received by the Borrower and applied against the Booked Residual of such Contract in accordance with the Borrower's servicing standards, in each case as reduced by any reasonably incurred out-of-pocket expenses incurred by the Borrower in enforcing such Contract or in liquidating such Equipment. "Revolver Period" - as defined in Section 2.01. "Revolving Loans" - revolving credit loans made by the Lenders pursuant to Section 2.01. "S&P" - Standard & Poor's, a division of the McGraw-Hill Companies. "Securitization Agreements" - all agreements, contracts and understandings entered into in connection with the Securitization Programs. "Securitization Programs" -any financings pursuant to which Securitization Subsidiaries created or acquired by the Borrower acquire assets from the Borrower for which the Borrower acts as a servicer or manager of such assets, which financings are Non-Recourse to the Borrower (other than in its capacity as servicer of the leases owned by such Securitization Subsidiaries). "Securitization Subsidiary" - any bankruptcy-remote Subsidiary existing, created or acquired by the Borrower for the limited purpose of securitizing or otherwise pledging or borrowing against lease receivables in the ordinary course of business. "Security Agreement" - as defined in Section 2.25. 16 "Security Documents" - as defined in Section 2.25. "Solvent" - with respect to any Person, means that (i) the fair value of all of such Person's properties and assets is in excess of the total amount of its Indebtedness; (ii) it is able to pay its debts as they mature; (iii) it does not have unreasonably small capital for the business in which it is engaged or for any business or transaction in which it is about to engage; and (iv) it is not "insolvent" as such term is defined in Section 101(31) of Title 11 of the United States Code, 11 U.S.C. Section 101, et seq. "Subordinated Debt" - The ING Debt, the Wachovia Debt, and other Indebtedness of the Borrower subordinated to the Obligations, the terms and conditions of which Indebtedness and subordination are satisfactory to the Majority Lenders, as evidenced by the written consent of the Majority Lenders thereto. "Subsidiary" - with respect to any Person, any corporation, partnership, joint venture or other Person whether now existing or hereafter organized or acquired: (i) in the case of a corporation, of which a majority of the securities having ordinary voting power for the election of directors (other than securities having such power only by reason of the happening of a contingency) are at the time owned by such Person and/or one or more Subsidiaries of such Person or (ii) in the case of a partnership, joint venture or other Person, of which a majority of the partnership or other ownership interests are at the time owned by such Person and/or one or more of its Subsidiaries. "Summary Borrowing Base Report" - a borrowing base report in the form of Exhibit A-2 annexed hereto, which borrowing base report is required to be given in connection with a Notice with respect to a borrowing or any action taken pursuant to Section 2.07(a) hereof. "Total Debt" - means Total Recourse Liabilities (other than any portion of Subordinated Debt which is due and payable more than five (5) years from the date of its issuance) related to the financing of Contracts and/or Equipment, plus Non-Recourse Indebtedness, plus all Indebtedness of the Borrower and its Subsidiaries under Securitization Programs. "Total Recourse Liabilities" - all Indebtedness of a Person, other than Non-Recourse Indebtedness, and other liabilities which, in accordance with GAAP, would be included on the liabilities side of a balance sheet of such Person. "UCC" - the Uniform Commercial Code of the Commonwealth of Pennsylvania as in effect from time to time, without reference to its conflict of laws provisions and except as to the perfection or effect of non-perfection of Liens on Collateral which are governed by the laws of the jurisdiction in which the Collateral is located. "Unused Commitment" - as to each Lender, as of any date, the difference, if any, between (i) the amount of its Commitment in effect on such date, and (ii) the then aggregate outstanding principal amount of all Loans made by such Lender hereunder. "User" - the lessee or other user of Equipment pursuant to an Eligible Contract. "Voting Securities" - with respect to any Person, any ownership interests in or shares of such Person of a class having general voting power under ordinary circumstances to elect a majority of the directors or other persons performing similar functions of such Person (irrespective of whether at the time ownership interests in or shares of any other class or classes shall or might have voting power by reason of the happening of any event or contingency). 17 "Wachovia" - Wachovia Capital Investments, Inc. "Wachovia Debt" - Indebtedness of the Borrower for borrowed money to Wachovia arising under the Wachovia Purchase Agreement. "Wachovia Purchase Agreement" - that certain Purchase Agreement dated as of April 7, 2000 (as amended) between Wachovia and the Borrower, as may be further amended from time to time as permitted by this Agreement. "Wachovia II Purchase Agreement" - that certain Purchase Agreement dated as of July 26, 2001 between Wachovia and the Borrower, as amended from time to time as permitted by this Agreement. "Welfare Plan" - an employee welfare benefit Plan, as defined in Section 3(l) of ERISA. "Writing" - means any contract, agreement, indenture, mortgage, document or other writing (whether by formal agreement, letter or otherwise) under which any obligation is evidenced, assumed or undertaken or any Lien (or right or interest therein) is granted or perfected. Section 1.02 Accounting Terms. Any accounting terms used in this Agreement which are not specifically defined herein shall have the meanings customarily given thereto in accordance with GAAP, consistently applied. All accounting determinations for purposes of determining compliance with Section 6.10 hereof shall be made in accordance with GAAP as in effect on the Closing Date and applied on a basis consistent in all material respects with the audited Financial Statements delivered to the Agent on or before such date. The Financial Statements required to be delivered hereunder from and after the Closing Date, and all financial records, shall be maintained in accordance with GAAP. If GAAP shall change from the basis used in preparing the audited Financial Statements delivered to the Agent on or before the Closing Date, the certificates required to be delivered pursuant to Section 5.03 demonstrating compliance with the covenants contained herein shall include calculations setting forth the adjustments necessary to demonstrate how the Borrower is in compliance with the financial covenants based upon GAAP as in effect on the Closing Date. Section 1.03 Other Definitional Provisions. (i) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto. (ii) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, subsection, schedule and exhibit references are to this Agreement unless otherwise specified. References in this Agreement to "the date hereof" shall be deemed to refer to the date of this Second Amended and Restated Warehouse Revolving Credit Facility Agreement, unless expressly provided otherwise. (iii) The word "type", when used in relation to a Loan, shall mean either a Base Rate Loan or a LIBOR Loan. 18 (iv) Defined terms in the Agreement shall include in the singular number the plural and in the plural number the singular. (v) References in this Agreement to any other agreement, document or instrument shall, unless the context otherwise requires, include such other agreement, document or instrument as the same may be from time to time amended, modified or supplemented. ARTICLE 2. COMMITMENT, LOANS AND COLLATERAL Section 2.01 Revolving Loans; Commitment. (a) Subject to the terms and conditions hereof, including, without limitation, satisfaction of the conditions set forth in Article 4 hereof, each Lender severally but not jointly agrees to make revolving loans (each, a "Revolving Loan" and collectively, the "Revolving Loans") to the Borrower from time to time on any Business Day during the period (the "Revolver Period") from the date of this Agreement up to, but not including, the Commitment Termination Date, in an aggregate principal amount at any one time outstanding up to but not exceeding such Lender's Commitment. The Revolving Loans shall be made by the Lenders on a pro rata basis, calculated for each Lender based on its Commitment Percentage; provided, however, that no Revolving Loan shall be made to the Borrower hereunder if, after giving effect thereto and to all other Revolving Loans being made concurrently therewith, the aggregate outstanding principal amount of all Revolving Loans to the Borrower would exceed the lesser of (x) the aggregate amount of the Commitments or (y) the amount of the Borrower's Borrowing Base. (b) Subject to the terms of this Agreement, the Borrower may borrow, repay and reborrow amounts in respect of Revolving Loans available under the Commitment during the Revolver Period. (c) The Revolving Loans made on each Borrowing Date pursuant to this Section 2.01 may, on and subject to the terms and conditions of this Agreement, be Base Rate Loans or LIBOR Loans (each being referred to in this Agreement as a "type" of Loan) as specified in the relevant Notice referred to in Section 2.02 hereof; provided, however, that, subject to the provisions of this Agreement, the Borrower may Convert Revolving Loans of one type into Revolving Loans of the other type or Continue Revolving Loans, all as hereinafter provided. (d) The principal amount of any repayment during the Revolver Period shall be deemed available for borrowing hereunder during the Revolver Period, subject to the limitations set forth in subsection (a) of this Section 2.01, and shall otherwise be governed in all respects by the other terms and conditions of this Agreement. (e) Each Revolving Loan shall be paid in full on the Commitment Termination Date. Revolving Loans may, in addition, be prepaid from time to time in accordance with Section 2.07. (f) The Borrower shall not be entitled to terminate or reduce the Commitment prior to the Commitment Termination Date; provided, however, that in the event that the aggregate amount of the Commitments shall be less than $30,000,000 after giving effect to any extension pursuant to Section 2.04(a), the Borrower shall have the right to terminate the Commitment upon five (5) Business Days' prior written notice to the Agent and the Lenders. 19 Section 2.02 Notices. The Borrower shall give the Agent written notice in substantially the form of Exhibit B hereto (a "Notice") of each borrowing of a Loan (or Continuation with respect to a LIBOR Loan), each Conversion and prepayment of a Loan and, in the case of the borrowing or prepayment of, or Conversion of a Loan into, a LIBOR Loan of the duration of each Interest Period applicable thereto. The Notice shall be accompanied by a Summary Borrowing Base Report. Each Notice shall be irrevocable and shall be effective only if received by the Agent no later than 12:00 P.M., Philadelphia time, on the date which is, for a Base Rate Loan, at least one Business Day, or, for a LIBOR Loan, at least three Business Days prior to the date of the borrowing (or Continuation), prepayment or Conversion of the Loan designated in the Notice. Each such Notice of a borrowing (or Continuation), Conversion or prepayment shall specify the amount and type of Loan to be borrowed (or Continued), Converted or prepaid and the date of such borrowing (or Continuation), Conversion or prepayment (which shall be a Business Day). Each such Notice of the duration of an Interest Period shall specify the LIBOR Loans to which such Interest Period is to relate. If the Borrower fails to give a Notice of borrowing to continue its LIBOR Loan as a LIBOR Loan at least three Business Days prior to the end of the then current Interest Period, such Loan shall automatically be Converted into a Base Rate Loan on the last day of the then current Interest Period. Section 2.03 Borrowing of Loans. (a) Upon the satisfaction by the Borrower of the applicable conditions set forth in Article 4 hereof, the Lenders shall make the Loans requested by the Borrower on the applicable Borrowing Date in accordance with subsection (b) of this Section 2.03. (b) By no later than 2:00 P.M. on each Borrowing Date, each Lender shall make available the respective amount of the Loan to be made by it on such date by depositing the proceeds thereof, in immediately available funds, with the Agent at its Principal Office and the Agent shall pay over such funds, upon the Agent's receipt of the documents required under Article 4 with respect to such Loans, (i) to an account of the Borrower to whom such Loan is requested to be made and maintained with the Agent at its Principal Office or (ii) on instructions from the Borrower to the Agent in the Notice related to such Loan, by transmitting such amount to such other account entity as the Borrower requesting such Loan shall have designated in such Notice. Section 2.04 Extension of Commitment Termination Date (a) Subject to the satisfaction of the conditions set forth in Section 4.02, the Commitment Termination Date (and the Revolver Period) shall be extended annually on August 31, 2003 and on each day which is one year thereafter (each such date, an "Anniversary Date"); provided that (i) the Borrower shall have requested such extension by giving irrevocable written notice to the Agent (which shall promptly notify the Lenders) no earlier than 180 days and no later than 90 days prior to the Anniversary Date and (ii) the Majority Lenders shall have consented in writing to such extension and delivered such irrevocable consent to the Agent at least 60 days prior to the Anniversary Date (such 60th day being referred to as the "Extension Notification Date"). Any determination by the Lenders to consent to an extension of the Commitment Termination Date shall be in their sole and absolute discretion and, subject to such consent, there shall be no obligation on the part of any Lender hereunder, whether express or implied, to extend the Commitment Termination Date. Any Lender which shall have failed to notify the Agent of its consent or non-consent by the Extension Notification Date shall be deemed to have withheld its consent to such extension (each such Lender, together with each Lender that has provided notice of its non-consent, being referred to as a "Non-Consenting Lender"). If, as of the close of business on the Extension Notification Date, the Majority Lenders shall have consented in writing to such extension (as contemplated in part (ii) of the first sentence of this paragraph (a)) and there shall be any Non-Consenting Lender(s), the Agent shall so notify the Borrower. During the period beginning on the first day following 20 the Extension Notification Date until the date to which the Commitment Termination Date has been extended, the Borrower shall have the option to require each Non-Consenting Lender, upon written notice from the Borrower, to assign its Commitment and all of its rights and obligations under this Agreement (i) first, to the Lenders who shall not be Non-Consenting Lenders and are willing to accept such assignment, subject to ratable allocation by the Agent among such Lenders, and (ii) second, to the extent such Non-Consenting Lender's rights and obligations hereunder have not been assigned to an existing Lender as contemplated in the foregoing part (i), to one or more other financial institutions acceptable to the Borrower and the Agent that are willing to become Lenders hereunder through the Commitment Termination Date as so extended. The obligation of a Non-Consenting Lender to assign its rights and obligations under this Agreement as contemplated by this Section 2.04 is subject to the requirements that (x) all amounts owing to such Non-Consenting Lender under the Loan Documents through the effective date of such assignment shall have been paid in full and (y) any assignment is effected in accordance with the terms of Section 10.02 (provided that the replacement Lender shall be responsible to pay the fee required to be paid to the Agent pursuant to Section 10.02(a)). In the event that no such assignment occurs then the Borrower shall pay all Obligations owing to the Non-Consenting Lender on the Commitment Termination Date. (b) In the event that the Majority Lenders shall consent to the extension of the Commitment Termination Date pursuant to subsection (a) of this Section 2.04, and provided (i) no Default or Event of Default shall have occurred and be continuing, and (ii) any Non-Consenting Lender which shall not have assigned its Commitments and Loans pursuant to subsection (a) of this Section 2.04 shall have received payment of all amounts owing to such Non-Consenting Lender pursuant to the Loan Documents then, subject to the Borrower's right to terminate the remaining Commitments pursuant to Section 2.01(f), (x) the Commitment Termination Date shall be extended for an additional year from the date on which, but for such extension, the Commitment would otherwise have terminated, and (y) the Commitment shall be reduced by the amount of the Commitment of any Non-Consenting Lender which shall not have assigned its Commitment and Loans pursuant to subsection (a) of this Section 2.04. Section 2.05 Fees. (a) Whether or not any Loans are made, the Borrower shall pay to the Agent for the account of each Lender an annual commitment fee (the "Commitment Fee") on the average daily amount of the Unused Commitment of each Lender, for the period from the Closing Date to and including the Commitment Termination Date, at the rate of (i) thirty-seven and one-half hundredths of one percent (.375%) per annum (computed on the basis of a 360-day year and 30 day month and actual days elapsed) if the average daily amount of the Unused Commitment for the respective quarterly period is greater than 50% of the Commitment, or (ii) twenty-seven and one-half hundredths of one percent (.275%) per annum (computed on the basis of a 360-day year and 30 day month and actual days elapsed) if the average daily amount of the Unused Commitment for the respective quarterly period is less than or equal to 50% of the Commitment. The Commitment Fee shall be payable quarterly in arrears on the last Business Day of each January, April, July and October following the date of this Agreement and on the Commitment Termination Date. (b) Whether or not any Loans are made hereunder, the Borrower shall pay the Agent, for its own account, in addition to all other amounts payable by the Borrower hereunder, the agency fees set forth in the letter agreement between the Borrower and the Agent. Section 2.06 Conversion of Loans. Subject to Sections 2.16, 2.17, 2.18 and 2.19, and, with respect to Conversion into or Continuation of LIBOR Loans, provided no Default or Event of Default shall have occurred and be continuing, the Borrower shall have the right to Convert Base Rate Loans into LIBOR Loans and Continue LIBOR Loans and Convert LIBOR Loans into Base Rate Loans from time to 21 time, provided that (a) the Borrower shall give to the Agent notice of each such Conversion as provided in Section 2.02, (b) LIBOR Loans may be Converted only on the last day of an Interest Period for such Loans and (c) each Conversion or Continuation shall be effected by each Lender applying the proceeds of the new Loan to the Loan being Converted or Continued. Section 2.07 Borrowing Base; Prepayments. (a) The Borrower agrees that at no time shall the aggregate principal amount of the Loans outstanding exceed the amount of the Borrowing Base. In the event that the aggregate outstanding principal amount of all Loans to the Borrower exceeds the Borrowing Base, the Borrower shall immediately prepay the Loans in an amount sufficient to reduce the sum of the aggregate principal amount of the Loans to an amount not greater than the Borrowing Base. The Borrower shall use the insurance proceeds received with respect to assets subject to Eligible Contracts to prepay principal and accrued interest thereon if as a result of such Eligible Contracts becoming ineligible a prepayment is required pursuant to this Section 2.07(a). (b) In the event that at any time either the Agent or the Majority Lenders in the exercise of its or their reasonable discretion deem that any part of the Borrowing Base no longer meets the eligibility requirements set forth herein, then the Borrower shall, within five (5) days of the giving of notice of such determination, take any of the actions provided in Section 2.07(a) such that the aggregate principal amount of the Loans outstanding does not exceed the Borrowing Base. The Borrower shall deliver a Summary Borrowing Base Report to the Agent in connection with any action taken pursuant to subsection (a) of this Section 2.07. (c) The Borrower shall have the right to prepay the Loans from time to time in whole or in part, without premium or penalty, provided that: (i) the Borrower shall give the Agent notice of each such prepayment as provided in Section 2.02 hereof; (ii) partial prepayments shall be made in such amounts as provided in Section 2.14 hereof; and (iii) the Borrower shall have paid all compensation, if any owed to any Lender pursuant to Section 2.19 hereof. (d) In the event that any payment shall be made in satisfaction of a claim under the Key Man Insurance policy, one hundred percent (100%) of the proceeds of such payment shall be applied by the Agent to prepay the outstanding Loans and the Commitment shall be permanently reduced by the amount of such prepayment. (e) All prepayments of Loans pursuant to this Section 2.07 shall be without premium or penalty, except as provided in Section 2.19 hereof, and such prepayment shall be accompanied by interest accrued on the principal amount so prepaid. (f) All prepayments, other than optional prepayments pursuant to Section 2.07(c) hereof, shall be applied first to Base Rate Loans and then to LIBOR Loans. Section 2.08 Use of Proceeds of Loans. The proceeds of each Loan hereunder shall be used by the Borrower solely for the purposes of financing or refinancing all or a portion of Equipment subject to Eligible Contracts. Section 2.09 Payment of Loans. On the Commitment Termination Date, the Borrower shall be obligated to pay to the Agent for the accounts of each of the Lenders the full outstanding principal amount of all of its Loans together with accrued interest thereon and all other amounts due with respect thereto or otherwise under this Agreement, the Notes and the other Loan Documents, subject to any required prepayment to be made prior thereto under this Agreement. 22 Section 2.10 Interest. (a) Interest shall accrue on the unpaid principal amount of each Loan, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the following rates per annum: (i) during such periods such Loan is a LIBOR Loan, for each Interest Period relating thereto, the Adjusted LIBOR for such period plus the Applicable Margin; and (ii) during such periods such Loan is a Base Rate Loan, the Base Rate as in effect from time to time plus the Applicable Margin. (b) Notwithstanding the foregoing, from and after the occurrence and during the continuance of an Event of Default or if the Borrower shall fail to pay any amount on the due date therefore (without giving effect to any period of grace), the Borrower shall pay interest at the applicable Post-Default Rate on the Loan or any installment of principal thereof, and on any other amount payable by the Borrower hereunder (including interest to the extent permitted by law). (c) Accrued interest on each Loan shall be payable in arrears (i) in the case of a Base Rate Loan, on the last day of each month for which interest is due, (ii) in the case of a LIBOR Loan, on the last day of the Interest Period therefor, (iii) in the case of all Loans, on the date on which the same may become payable in full (whether at stated maturity, by acceleration or otherwise) and (iv) in the case of any Loan, upon the payment, prepayment or Conversion thereof (but only on the principal amount so paid, prepaid or Converted); provided, however, that interest payable at the Post-Default Rate shall be payable from time to time on demand of the Agent. (d) Anything in this Agreement or the Notes to the contrary notwithstanding, the obligation of the Borrower to make payments of interest shall be subject to the limitation that payments of interest shall not be required to be made to the Agent for the account of any Lender to the extent that the Lender's receipt thereof would not be permissible under the law or laws applicable to such Lender limiting rates of interest which may be charged or collected by such Lender. Any such payments of interest which are not made as a result of the limitation referred to in the preceding sentence shall be made by the Borrower to the Agent for the account of such Lender, if at all, on the earliest interest payment date or dates on which the receipt thereof would be permissible under the laws applicable to such Lender limiting rates of interest which may be charged or collected by such Lender. Any such payments of interest which are made and should not have been made as a result of the limitation referred to herein shall be applied to the principal outstanding on the Borrower's Base Rate Loans and LIBOR Loans. Section 2.11 Notes. (a) The Loans made by each Lender shall be evidenced by a promissory note made by the Borrower and payable to the order of each Lender (the "Notes") in substantially the form of Exhibit C hereto, in a principal amount equal to such Lender's Commitment and otherwise duly completed. (b) The Borrower hereby authorizes the Lenders to make notations of all payments and prepayments made on account of the principal of the Loans and interest thereon shall be recorded by each Lender on the schedule attached to each Note or on its regularly maintained ledger records and all such notations shall, in the absence of manifest error, be conclusive as to the date and principal amount of such Loan, the amount of each principal payment thereon, the outstanding balance thereunder and the interest accrued and paid thereon; provided, however, that any failure by such Lender to make any such notation 23 shall not limit or otherwise affect the obligations of the Borrower hereunder or under the Notes in respect of the Loans. Section 2.12 Payments. (a) All payments of principal, interest, fees and other amounts payable by the Borrower hereunder shall be made in Dollars, in immediately available funds, to the Agent for the account of the Lenders, pro rata at the Principal Office of the Agent no later than 1:00, P.M., Philadelphia time, on the dates on which such payments shall become due. Except as provided in clause (ii) to the definition of "Interest Period" set forth in Section 1.01 hereof, payments which are due on a day which is not a Business Day shall be payable on the first Business Day thereafter and interest shall continue to accrue, or shall be payable for any principal so extended, in each case for the period of such extension. Each such payment made after such time on such dates shall be deemed to have been made on the next succeeding Business Day and interest shall accrue thereon accordingly. All payments received by the Agent for the account of the Lenders hereunder shall be applied first, to pay all fees, expenses and other amounts then due and payable hereunder, second, to pay accrued and unpaid interest on the Loans and third, to repay the outstanding principal balance of the Loans. The Agent shall promptly remit in immediately available funds to each Lender its pro rata share of all such payments received by the Agent hereunder for the account of such Lender. (b) The Borrower hereby authorizes the Agent to charge any account at the Agent which is maintained by the Borrower with the amount of all payments to be made hereunder and under the other Loan Documents, including all fees and expenses, as and when such payments are due. Section 2.13 Computations. Interest on all Loans, the Commitment Fee and any other amounts payable hereunder or under the Notes or in connection herewith or therewith shall be computed on the basis of a 360-day year, 30-day month and actual days elapsed. Section 2.14 Minimum Amounts of Borrowings and Prepayments. Except for borrowings which exhaust the remaining amount of the Commitment, each borrowing of a Loan and each Conversion or Continuation of a Loan shall be in an amount at least equal to $1,000,000 (with respect to LIBOR Loans) and $100,000 (with respect to Base Rate Loans). Each voluntary prepayment of a Loan shall be in an amount of at least $250,000. There shall be no minimum amount required for mandatory prepayment of a Loan. Section 2.15 Additional Costs. (a) In the event that any future law or regulation or guideline or interpretation thereof by any court or administrative or governmental authority charged with the administration thereof, or compliance by any Lender with any request or directive (whether or not having the force of law) of any such authority or any Regulatory Change (including for the purposes of this Section 2.15, any law, rule, regulation or guidelines adopted at any time, whether or not such law, rule, regulation or guidelines was in effect on or prior to the Closing Date, pursuant to or arising out of the July 1988 Report of the Basle Committee on Bank Regulations and Supervisory Practices entitled "International Convergence of Capital Measurement and Capital Standard") shall (i) change the basis of taxation of any amounts payable to such Lender under this Agreement or the Notes in respect of any Loans (other than taxes imposed on the overall net income of such Lender for any such Loans by the United States or the jurisdiction in which such Lender has its principal office); or (ii) impose or modify any reserve, Federal Deposit Insurance Corporation premium or assessment, special deposit or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, such Lender; or (iii) impose any other conditions affecting this Agreement or the Notes in respect of Loans (or any of such extensions of credit, assets, deposits or liabilities); and the result of any event referred to in clause (i), (ii) or (iii) above shall be to increase such Lender's costs of making or maintaining any Loans or its Commitment, or to reduce any 24 amount receivable by such Lender hereunder in respect of any Loans or its Commitment (such increases in costs and reductions in amounts receivable are hereinafter referred to as "Additional Costs"), then, upon demand made by such Lender the Borrower shall pay to such Lender from time to time as specified by such Lender, additional commitment fees or other amounts which shall be sufficient to compensate such Lender for such Additional Cost, together with interest on each such amount which is not paid when demanded by such Lender, payable at the Post-Default Rate. (b) Determinations by any Lender for purposes of this Section 2.15 of its costs of making or maintaining the Loans or on amounts receivable by it in respect of the Loans, and of the additional amounts required to compensate such Lender in respect of any Additional Costs, shall be set forth in writing delivered by the Agent or the affected Lender to the Borrower showing the calculation thereof in reasonable detail and shall be conclusive, absent manifest error. Section 2.16 Limitation on Types of Loans. Anything herein contained to the contrary notwithstanding, if, on or prior to the determination of an interest rate for any LIBOR Loans for any Interest Period therefor: (a) the Agent determines (which determination shall be conclusive) that, by reason of any event affecting the money markets in the United States of America or the London interbank market, quotations of interest rates for the relevant deposits are not being provided in such markets in the relevant amounts or for the relevant maturities for purposes of determining the rate of interest for such Loans under this Agreement; or (b) the Agent determines (which determination shall be conclusive) that by reason of any event affecting money or financial markets in the United States of America or the London interbank market, rates of interest or the cost of making or maintaining loans, the rate of interest referred to in the definition of "Adjusted LIBOR" in Article 1 hereof upon the basis of which the rate of interest of any LIBOR Loans for such period is determined does not accurately reflect the cost to the Lenders of making or maintaining such Loans for such period; then the Agent shall give the Borrower prompt written notice thereof, and so long as such condition remains in effect, the Lenders shall be under no obligation to make LIBOR Loans and the Borrower shall, on the last day(s) of the then current Interest Period(s) for the outstanding LIBOR Loans, either prepay such LIBOR Loans in accordance with Section 2.07 hereof or Convert such LIBOR Loans into Base Rate Loans in accordance with Section 2.06 hereof. Section 2.17 Illegality. Notwithstanding any other provision in this Agreement, in the event that it becomes unlawful for any Lender to (i) honor its obligations to make LIBOR Loans hereunder or (ii) maintain LIBOR Loans hereunder, then such Lender shall promptly notify the Agent and the Borrower thereof in writing, and such Lender's obligation to make or maintain LIBOR Loans hereunder shall be suspended until such time as such affected Lender(s) may again make and maintain LIBOR Loans and such Lenders' outstanding LIBOR Loans shall be Converted into Base Rate Loans in accordance with Sections 2.06 and 2.19 hereof; provided, however, that this Section 2.17 shall not apply to those other Lenders for whom it does not become unlawful to honor or maintain LIBOR Loans hereunder. Section 2.18 Certain Conversions Pursuant to Sections 2.16 and 2.17. If the LIBOR Loans are to be Converted pursuant to Section 2.16 or 2.17 hereof, such LIBOR Loans shall be Converted into Base Rate Loans on the last day(s) of the then current Interest Period(s) for such LIBOR Loans (or on such earlier date as the Agent may specify to the Borrower) and, until the Agent gives notice as provided 25 below that the circumstances specified in Section 2.16 or 2.17 hereof which gave rise to such Conversion no longer exist: (a) to the extent that such LIBOR Loans have been so Converted, all payments and prepayments of principal which would otherwise be applied to such LIBOR Loans shall be applied instead to Base Rate Loans; and (b) all Loans which would otherwise be made as LIBOR Loans shall be made instead as Base Rate Loans and all Base Rate Loans which would otherwise be Converted into LIBOR Loans shall remain as Base Rate Loans or be prepaid by the Borrower. Section 2.19 Indemnification. The Borrower shall pay to any Lender, upon the written request of such Lender, such amount or amounts as shall compensate such Lender for any loss, cost or expense incurred by such Lender (as determined by such Lender) as a result of: (a) any payment or prepayment or Conversion of a LIBOR Loan held by such Lender on a date other than the last day of an Interest Period for such LIBOR Loan; or (b) any failure by the Borrower to borrow a LIBOR Loan on the date for such borrowing specified in the relevant Notice under Section 2.02 hereof; (c) the receipt or recovery by any Lender of all or any part of a LIBOR Loan (whether by voluntary prepayment, acceleration or otherwise) other than on the last day of an Interest Period, such compensation to include, without limitation, an amount equal to (i) any loss or expense suffered by such Lender during the period from the date of receipt of such early payment or prepayment or the date of such conversion to the last day of such Interest Period if the rate of interest obtainable by such Lender upon the redeployment of an amount of funds equal to such payment, prepayment or conversion or failure to borrow or Convert is less than the rate of interest applicable to such Loan for such Interest Period or (ii) any loss or expense suffered by such Lender in liquidating deposits prior to maturity which correspond to such payment, prepayment, conversion, failure to borrow or failure to Convert. The determination by such Lender of the amount of any such loss or expense, when set forth in a written notice to the Borrower, containing such Lender's calculation thereof in reasonable detail, shall be conclusive absent manifest error. Section 2.20 Proportionate Treatment. (a) Each borrowing hereunder shall be made from the Lenders and each payment of fees under Sections 2.05(a) hereof shall be made for account of the Lenders, in each case in proportion to their respective Commitment Percentages. (b) Each payment and prepayment by the Borrower of principal of or interest on the Loans shall be made to the Agent for the account of the Lenders in proportion to the respective unpaid principal amounts thereof. (c) The Commitment and other obligations of the Lenders under this Agreement are several and not joint and several. Section 2.21 Proportionate Sharing. If any Lender shall obtain payment of any principal of or interest on any Loan by any means (including through the exercise of any right of set-off, banker's lien or counterclaim or similar right or otherwise or through the exercise of any right under any Loan 26 Document), and, as a result of such payment, such Lender shall have received a greater percentage of the principal or interest then due hereunder by the Borrower to such Lender than its proportionate share thereof, it shall promptly purchase participations from such other Lenders (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such excess payment) in proportion to the principal and/or interest on the Loans held by each of the Lenders. To such end, all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. The Borrower agrees that any Lender so purchasing a participation (or direct interest) in the Loans made by other Lenders (or in interest due thereon, as the case may be) may exercise any and all rights of set-off, banker's lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans in the amount of such participation. Nothing in this Agreement shall require any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of the Borrower. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a set-off to which this Section 2.21 applies, such Lender shall, to the extent practicable exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section 2.21 to share in the benefits of any recovery on such secured claim. Section 2.22 Agent's Obligation to Expend Funds; Non-Receipt of Funds by Agent. The Agent shall not be required to expend any of its own money to make up the full amount of any Loan requested by the Borrower hereunder, or otherwise incur any expense as a consequence of the failure of any Lender to make available to the Agent its Commitment which the Lenders have become obliged to make hereunder. Should such a failure occur and the Agent shall nevertheless have advanced money of its own or incurred expense in order to make up the full amount of any such Loan, it shall be deemed to have done so at the request of any Lender which has so failed to provide its portion of such Loan, unless such Lender shall have previously notified the Agent that it should not make such an advance or incur such an expense to make good such failure, and in the absence of such prior notice, such Lender shall be obligated to pay to the Agent on demand the amount expended by the Agent out of its own funds plus any costs incurred by the Agent to carry such funds while such Lender has not provided to the Agent its portion of such Loan, all of which shall constitute a loan by the Agent to such Lender which shall bear interest from the date of the advance by the Agent at the "Federal Funds" rate from day to day on the Loan with respect to which the advance or expenditure was made. During the continuance of any such default as between the Agent and such Lender, and notwithstanding anything elsewhere herein to the contrary expressed or implied, the principal amount of Indebtedness in respect of Loans made by such Lender in default shall be deemed to be reduced, so long as the default continues by the amount not remitted by it to the Agent as described in the preceding sentence and such principal amount and interest thereon shall be deemed assigned to and collectible by the Agent for its own account for application against the amount of its claim under the preceding sentence. Notwithstanding the foregoing, in the event the Agent shall have made an advance on behalf of a Lender without prior notice not to do so, the Borrower shall, on written demand from the Agent, repay to the Agent the amount so made available with interest thereon, in respect of each day during the period commencing on and including the date such advance was so made by the Agent until the date the Agent recovers such amount at a rate per annum equal to the Base Rate plus the Applicable Margin. Section 2.23 Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.15, 2.17 or 11.02 with respect to such Lender, it shall, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event, provided that such designation is made on terms that, in the sole judgment of such Lender, shall not result in any economic, legal or regulatory disadvantage to such 27 Lender or its lending office and provided, further, that nothing in this Section 2.23 shall affect or postpone any of the obligations of the Borrower or the right of any Lender pursuant to Section 2.15, 2.17 or 11.02. Section 2.24 Replacement of Lenders under Certain Circumstances. Upon the occurrence of any event giving rise to the operations of Section 2.15, 2.17 or 11.02 with respect to any Lender which results in such Lender charging to the Borrower increased costs in excess of those being generally charged by the other Lenders, the Borrower shall have the right to replace such Lender (the "Replaced Lender") with one or more financial institutions acceptable to the Borrower and the Agent (such consent not to be unreasonably withheld or delayed) that are willing to become Lenders hereunder (a "Replacement Lender") provided that (i) such replacement does not conflict with the requirements of any Governmental Authority, (ii) no Event of Default or Default shall exist at the date of such replacement, (iii) prior to any such replacement, the Replaced Lender shall not have taken any action under Section 2.23 so as to eliminate the continued need for payment of amounts owing pursuant to Section 2.15, 2.17 or 11.02, as the case may be, (iv) the Replacement Lender shall have entered into one or more assignment and assumption agreements with the Replaced Lender as contemplated in, and shall otherwise assign its Commitment and outstanding Loans to the Replaced Lender in accordance with, Section 10.02 and, in connection therewith, shall pay to the Replaced Lender as of the date of such replacement in respect thereof, all Loans (purchased at par) of such Lender and all other amounts (including accrued interest and fees) owing to the Replaced Lender on or prior to the date of such replacement, (v) if any LIBOR Loan owing to the Replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, the Borrower shall, concurrently with such replacement, pay any amounts payable in respect thereof under Section 2.19; and (vi) until such replacement shall be consummated, the Borrower shall pay all amounts (if any) required pursuant to Section 2.15, 2.17 and 11.02, as the case may be. Section 2.25 Security. In order to secure the due payment and performance by the Borrower of all of the Indebtedness, liabilities and obligations of the Borrower to the Agent and the Lenders under this Agreement, the Notes or any of the other Loan Documents, whether now existing or hereafter arising, including, without limitation, the due and punctual payment of the principal of and the interest on the Notes according to their terms and effect and all fees, costs and expenses from time to time payable to the Agent or the Lenders under the Loan Documents, and under any Interest Rate Contracts (all such Indebtedness, liabilities and obligations are hereinafter referred to, collectively, as the "Obligations"), the Borrower shall: (a) grant to the Agent, as secured party and collateral agent for itself and the Lenders, a Lien on all of the Borrower's Contracts included from time to time in the Borrowing Base and all assets subject to, or relating to, such Contracts, including all security therefor and all books and records relating thereto, whether now owned or hereafter acquired, by the execution and delivery to the Agent of a security agreement in the form of Exhibit D hereto (as amended, modified or supplemented from time to time, the "Security Agreement"); (b) enter into a collateral administration agreement with the Agent and the Custodian, in form and substance reasonably satisfactory to the Agent (as amended, modified or supplemented from time to time, the "Custodian Agreement") pursuant to which the Custodian agrees to hold Contract documentation on behalf of and for the benefit of the Agent; (c) pursuant to Article 4, file UCC-1 financing statements with respect to all Collateral under the Security Agreement, including, without limitation, all UCC financing statements required to assign to the Agent any Liens filed by the Borrower against lessees under Contracts; (d) execute and deliver or cause to be executed and delivered such other agreements, instruments and documents (including, but not limited to, except with respect to Low Value Equipment, 28 assignments to the Agent of UCC-1 Financing Statements filed by the Borrower against lessees or sublessees under Contracts) as the Agent may reasonably require in order to effect the purposes of the Security Agreement, and this Agreement (the Security Agreement, the Custodian Agreement, UCC Financing Statements, and such other agreements, instruments and documents are referred to collectively as the "Security Documents"). ARTICLE 3. REPRESENTATIONS AND WARRANTIES The Borrower hereby represents and warrants to each Lender and the Agent (which representations and warranties shall be deemed restated at and as of the date of the making of any Loans) that as of the date hereof: Section 3.01 Organization. (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has the power to own its assets and to transact the business in which it is currently engaged and in which it proposes to be engaged. Schedule 3.01(a) annexed hereto (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation)) accurately and completely lists (i) the authorized and outstanding shares of capital stock of the Borrower and the ownership of such stock and (ii) each Subsidiary of the Borrower and the outstanding shares of capital stock of such Subsidiary and the ownership of such stock. All of the shares of the Borrower are validly issued and fully paid and nonassessable, and are owned free and clear of any Lien (other than Liens in favor of the Borrower attaching to certain shares of capital stock purchased by employees pursuant to the Borrower's employee stock purchase loan program). Except as set forth on Schedule 3.01(a), there are not outstanding any warrants, options, contracts or commitments of any kind entitling any Person to purchase or otherwise acquire any shares of capital stock of the Borrower nor are there outstanding any securities which are convertible into or exchangeable for any shares of capital stock of the Borrower. (b) The Borrower is in good standing in each state in which it is qualified to do business, which jurisdictions are listed on Schedule 3.01(b) hereto (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation)). Other than as set forth on Schedule 3.01(b), there are no jurisdictions in which the character of the properties owned or proposed to be owned by the Borrower or in which the transaction of the business of the Borrower as now conducted or as proposed to be conducted requires or will require the Borrower to qualify to do business and as to which failure to so qualify could have a Material Adverse Effect. Section 3.02 Power, Authority, Consents. The Borrower has the power to execute, deliver and perform the Loan Documents to which it is a party. The Borrower has taken all necessary action (corporate or otherwise) to authorize the borrowing hereunder on the terms and conditions of this Agreement. The Borrower has taken all necessary action (corporate or otherwise) to authorize the execution, delivery and performance of the Loan Documents to which it is a party. No consent or approval of any Person (including, without limitation, any stockholder of the Borrower), other than any such consent or approval a copy of which has been delivered in form and substance satisfactory to the Agent, no filing with, action by, consent or approval of any landlord or mortgagee, no waiver of any Lien or right of distraint or other similar right and no filing with, action by, consent, license, approval, authorization or declaration of any governmental authority, bureau or agency, is or will be required in connection with the execution, delivery or performance by the Borrower or the validity, enforcement or 29 priority, of the Loan Documents (or any Lien created and granted thereunder), except such filings and assignments as are required by this Agreement. Section 3.03 No Violation of Law or Agreements. The execution, delivery and performance by the Borrower of each Loan Document to which it is a party will not (i) violate or conflict with any provision of law or any rule or regulation, (ii) violate or conflict with any provision of the Amended Articles or by-laws of the Borrower, (iii) violate or conflict with or result in a breach of any order, writ, injunction, ordinance, resolution, decree, or other similar document or instrument of any court or governmental authority, bureau or agency, domestic or foreign, or create (with or without the giving of notice or lapse of time, or both) a default under or breach of any agreement, bond, note or indenture to which the Borrower is a party, or by which it is bound or any of its properties or assets are affected or (iv) result in the imposition of any Lien of any nature whatsoever upon any of its properties or assets owned by or used in connection with the business of the Borrower, except for the Liens created and granted pursuant to the Security Documents. Section 3.04 Due Execution, Validity, Enforceability. This Agreement and each other Loan Document executed and delivered by the Borrower has been duly executed and delivered by the Borrower, and each constitutes the valid and legally binding obligation of the Borrower, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by the availability of equitable remedies. Section 3.05 Basic Business. The basic business of the Borrower is the small ticket finance leasing of equipment to commercial users, such equipment consisting of, but not limited to, computers, copiers, surveillance systems, telecommunications equipment and related peripherals (the "Basic Business"). Section 3.06 Properties, Priority of Liens. The Borrower has good and marketable title to all of its properties and assets, free and clear of any Lien of any nature whatsoever, except the Liens permitted by Section 7.02. The Borrower has granted duly perfected first priority Liens in favor of the Agent on behalf of the Lenders on the Collateral covered under the Security Documents. Section 3.07 Judgments, Actions, Proceedings. Except to the extent disclosed on Schedule 3.07 (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation)), there are no outstanding judgments, actions or proceedings pending before any court or governmental authority, bureau or agency, with respect to, or, to the best of the Borrower's knowledge, threatened against or affecting, the Borrower or any of its Subsidiaries, nor are there any such actions or proceedings in which the Borrower is a plaintiff or complainant, in any instance involving (i) any single judgment in excess of $100,000, (ii) all judgments then outstanding in excess of $250,000 or (iii) actions or proceedings which would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Borrower (excluding, with respect to actions or proceedings in which the Borrower is a plaintiff or complainant, collection actions in the ordinary course of business). Without limiting the foregoing, there are no pending or, to the best of the Borrower's knowledge, threatened claims, actions or proceedings, and the Borrower has not received or given within the last three years, any written communication from or to any Governmental Authority or any other Person concerning any pending or threatened investigation, claim, environmental proceeding, cleanup order, citizen suit or other action instituted by any private party or Governmental Authority in connection with any Environmental Law or the presence or possible presence of any Hazardous Substances. 30 Section 3.08 No Defaults, Compliance With Laws. Neither the Borrower nor any of its Subsidiaries is in default under any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or by which any of the properties or assets owned by it or used in the conduct of its business is affected, and the Borrower and its Subsidiaries have complied and are in compliance in all applicable laws, ordinances and regulations, including, without limitation, Environmental Laws, in either case which default, or non-compliance with which laws, could have a Material Adverse Effect on the Borrower. Section 3.09 Intentionally Omitted. Section 3.10 Financial Statements. The Financial Statements present fairly in all material respects the financial position and results of operations of the Borrower and its Subsidiaries on a consolidated basis as of and at the date thereof and for the period then ended, and have been prepared in accordance with GAAP. The Borrower has no material obligations, liabilities or commitments, direct or contingent, which are not reflected in the Financial Statements. There has been no material adverse change in the business, operations, property, assets, financial or other condition of the Borrower since December 31, 2000. The fiscal year of the Borrower is the twelve-month period ending on December 31 of each year. Section 3.11 Tax Returns. The Borrower has filed on a timely basis all federal, state and local tax returns required to be filed by it and has not failed to pay any taxes, or interest or penalties relating thereto, on or before the due dates thereof (as may have been extended by valid extensions obtained by the Borrower) and there are no waivers in effect of agreements by the Borrower for the extension of time for the assessment of any tax. Except to the extent that they are being contested in good faith by appropriate proceedings for which a bond, or other security satisfactory to the Agent, has been posted and for which adequate reserves have been set aside on the books of the Borrower in accordance with GAAP, (a) there are no federal, state or local tax liabilities of the Borrower due or to become due for any tax year ended on or prior to the date of the Financial Statements, whether incurred in respect of or measured by income, which are not properly reflected in the Financial Statements, and (b) there are no claims pending or, to the best of the Borrower's knowledge, proposed or threatened against the Borrower for past federal, state or local taxes, except those, if any, as to which proper reserves are reflected in the Financial Statements. Section 3.12 Intellectual Property. The Borrower possesses all necessary patents, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, and copyrights to conduct its business as now conducted and as proposed to be conducted, without any conflict with the patents, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights and copyrights of others, the failure which to possess could have a Material Adverse Effect. Section 3.13 Use of Proceeds. The Borrower's uses of the proceeds of any Loans made by the Lenders to the Borrower pursuant to this Agreement are, and will continue to be, legal and proper corporate uses and such uses are and will be consistent with all applicable laws, statutes and regulations, including, without limitation, Regulations T, U and X. No part of the proceeds received from the Borrower from the Loans will be used directly or indirectly for the purpose of purchasing or carrying, or for the payment in whole or in part of Indebtedness which was incurred for the purpose of purchasing or carrying, any margin stock as such term is defined in Regulation U. Section 3.14 Name Changes. The Borrower has not, within the six-year period immediately preceding the Closing Date, changed its name, been the surviving entity of a merger or consolidation, or acquired all or substantially all of the assets of any Person. 31 Section 3.15 Condition of Assets; Permits, etc. All of the assets and properties of the Borrower which are reasonably necessary for the operation of its business are in good working order and condition, ordinary wear and tear excepted, and are able to perform the function for which they are currently being used. Each item included in the Borrowing Base satisfied the applicable conditions to eligibility with respect to such item set forth in the definitions in Section 1.01. The Borrower possesses all permits, licenses, consents and approvals of governmental and regulatory authorities and other Persons necessary to conduct its business. Section 3.16 ERISA. (a) Neither the Borrower nor any Subsidiary of the Borrower maintains or contributes to any Benefit Plan other than those listed on Schedule 3.16. (b) Each Benefit Plan is in substantial compliance with the applicable provisions of ERISA and the Code, and neither the Borrower nor any Subsidiary of the Borrower has received any notice asserting that any Benefit Plan is not in compliance with ERISA or such provisions of the Code. (c) Each Benefit Plan which is intended to be tax-qualified has been determined by the IRS to be qualified under Section 401(a) of the Code and the regulations promulgated thereunder and neither the Borrower nor any Subsidiary of the Borrower knows or has reason to know why each such Benefit Plan should not at all times continue to be so qualified, and each trust related to such Benefit Plan has been determined to be exempt from Federal income tax under Section 501(a) of the Code. (d) Neither the Borrower nor any Subsidiary of the Borrower has engaged in any prohibited transaction for which an exemption is not available or has not been previously obtained from the Department of Labor in connection with which the Borrower or any Subsidiary of the Borrower could be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or tax imposed by Section 4975 of the Code. (e) Neither the Borrower nor any ERISA Affiliate maintains, sponsors, contributes or is otherwise obligated to contribute to, or has ever maintained, sponsored, contributed to or was obligated to contribute to, any Plan. (f) No Welfare Plan which the Borrower maintains, sponsors, contributes to or is obligated to contribute to provides or will provide post-retirement benefits, including, without limitation, death or medical benefits other than (i) coverage mandated by applicable law, (ii) retirement or death benefits under any Plan or (iii) disability benefits under any Welfare Plan provided for by paid-up insurance or otherwise. (g) Neither the Borrower nor the assets of the Borrower are or are deemed to be "plan assets" whether by operation of law or under regulations promulgated under ERISA. (h) No condition exists and no event has occurred which would cause the Borrower to have any liability under Title IV of ERISA for the termination of or withdrawal from a Plan. Section 3.17 True and Complete Copies. The Borrower has provided the Agent with a true and complete copy of its Credit and Collection Policy in effect on the Closing Date. Schedule 3.17 hereto (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation)) contains a true, correct and complete list of all of the Material Contracts, and the Borrower has made all such Material Contracts available for inspection by the Agent. Except as set forth on Schedule 3.17, there have been no material amendments, modifications or 32 supplements to the Material Contracts, there exists no default or event of default thereunder and the Material Contracts are in full force and effect. Section 3.18 Principal Place of Business. The principal place of business of the Borrower and the records relating to the invoices, claims, accounts receivable and contract rights of the Borrower are located at the address indicated for the Borrower in Section 11.09 or such other location as to which the Borrower has provided notice pursuant to, and otherwise complied with the provisions of, Section 7.18. Section 3.19 Corporate Structure. (a) Except as set forth on Schedule 3.01(a) hereto (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation)), the Borrower has no Subsidiaries or other equity interest in any Person. The Borrower has made available for inspection by the Agent a true and complete copy of each agreement governing the terms of the Securitization Programs. (b) Schedule 3.19 hereto (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation))sets forth a true and complete list of the officers and directors of the Borrower, each of whom is the duly elected, acting and qualified officer in the position so indicated. Section 3.20 Regulated Company. Neither the Borrower nor any of its Subsidiaries is (i) an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended, or (iii) subject to any other law which purports to regulate or restrict its ability to borrow money or to consummate the transactions contemplated by this Agreement or the other Loan Documents or to perform its obligations hereunder or thereunder. Section 3.21 Indebtedness. Schedule 3.21 hereto (which shall be updated from time to time in writing by the Borrower, as necessary (but which update shall not cure any prior misrepresentation)) sets forth a true and complete list of all existing Indebtedness for borrowed money of the Borrower and of the bank or other depositary accounts of the Borrower. Section 3.22 Solvency. The Borrower is Solvent prior to, and will be Solvent after giving effect to, the transactions contemplated by this Agreement and the other Loan Documents and the making of the Loans to be made hereunder. Section 3.23 Intentionally Omitted. Section 3.24 Full Disclosure. Neither the Financial Statements nor any certificate, opinion, or any other statement made or furnished in writing to the Agent or the Lenders by or on behalf of the Borrower in connection with this Agreement or the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state a material fact necessary in order to make the statements contained therein or herein not misleading. There is no fact known to the Borrower which has, or could in the now foreseeable future have, a Material Adverse Effect on the Borrower, which fact has not been set forth herein, in the Financial Statements, or any certificate, opinion, or other written statement so made or furnished to the Agent or the Lenders. 33 ARTICLE 4. THE CLOSING; CONDITIONS TO THE LOANS Section 4.01 Conditions to Amendment and Restatement. This amendment and restatement of the First Amended and Restated Agreement is subject to the fulfillment (to the satisfaction of the Agent and the Lenders) of the following conditions precedent: (a) The Borrower shall have executed and delivered to the Agent, with sufficient original counterpart copies for each Lender, this Agreement and the Notes; (b) The Borrower shall have delivered to the Agent the following, each of which shall be in form and substance satisfactory to the Agent: (i) copies of the certificate of incorporation of the Borrower and all amendments thereto, certified as of a date not more than forty-five days prior to the date hereof by the Secretary of State of Delaware; (ii) a Certificate of the Secretary or Assistant Secretary of the Borrower certifying to its certificate of incorporation and continued existence, the by-laws of the Borrower, the taking of all corporate action by the Borrower necessary to authorize the execution, delivery and performance of each of the Loan Documents to which it is a party and that such action has not been rescinded, limited or modified and the incumbency (with specimen signatures) of the Authorized Officers of the Borrower; (iii) good standing certificates as of a date not more than twenty days prior to the date hereof with respect to the Borrower from the Secretary of State of the state of New Jersey and the state of organization of the Borrower; (c) The Agent shall have received an opinion of George D. Pelose, general counsel to the Borrower, with respect to certain matters as required by the Agent, addressed to the Agent and the Lenders (and their respective participants and assigns), in form and substance satisfactory to the Agent and special counsel to the Agent. (d) The Agent shall have received copies of all consents and authorizations of, permits from or filings with, any Governmental Authority or other Person required in connection with the execution, delivery, performance on enforceability of this Agreement or the other Loan Documents or any provision thereof. (e) The Borrower shall have delivered to the Agent results of lien searches, satisfactory to the Agent, against the Borrower in the State of New Jersey and such other jurisdictions as the Agent shall determine. (f) The Borrower shall have made available for inspection by each Lender true, correct and complete copies of all Material Contracts as executed by the parties thereto, including all schedules thereto appropriately completed. The Material Contracts, including the schedules thereto, shall be in form and substance acceptable to the Lenders and the Agent. (g) There shall be no pending or threatened suit, action, investigation or other proceeding which, in the judgment of the Agent, could have a Material Adverse Effect on the Borrower. 34 (h) The Agent shall have received for itself and for the accounts of the Agent and each of the Lenders, all fees, costs and expenses payable by the Borrower, to the extent payable on or prior to the closing contemplated hereby and under the other Loan Documents and letter agreements with respect to fees payable to the Agent, duly executed by the Borrower. (i) All matters related to the financial condition, assets, liabilities and creditworthiness of the Borrower shall be satisfactory to the Agent and the Lenders, in their sole discretion. (j) All legal matters relating to the execution and delivery of this Agreement and the other Loan Documents shall be satisfactory to special counsel for the Agent. (k) The Agent and the Borrower shall have executed and delivered a letter agreement with respect to payment of certain facility fees to the Lenders. Section 4.02 Conditions to Each Loan. The obligation of the Lenders to make Loans hereunder shall be subject to the fulfillment (to the satisfaction of the Agent) of the following conditions precedent in addition, in the case of the initial Loans, to the conditions set forth in Section 4.01: (a) The Agent shall have received (i) a Notice relating to such Loan and (ii) a Summary Borrowing Base Report which shall establish to the satisfaction of the Agent that the Borrowing Base for the Borrower is equal to or greater than the outstanding principal amount of its Loans after giving effect to the Loan proposed to be made. (b) The Borrower shall be in full compliance with the terms and conditions of the Loan Documents, each of the representations and warranties set forth in this Agreement (subject to updated information to the Schedules delivered by the Borrower to the Agent from time to time) and the other Loan Documents shall be true and correct in all material respects as if made on and as of the date of such Loan, the certificate of incorporation and by-laws delivered to the Agent pursuant to Section 4.01 shall have not been materially amended or rescinded and shall remain in full force and effect, and, as of the date of such Loan and after giving effect thereto and to the consummation of the transactions contemplated hereby, no Default or Event of Default shall have occurred and be continuing. The issuance by the Borrower of a Notice of Borrowing shall be deemed a representation and warranty by the Borrower as to the matters referred to in the preceding sentence. (c) (i) The Agent shall have received with respect to all items included in the Borrowing Base or being acquired with the proceeds of such Loan (A) a photostatic copy of the master lease agreement for each Eligible Contract, with a certificate annexed thereto of the Borrower, certifying such photostatic copy to be a true and complete copy of the original executed agreement and certifying that copies of all invoices, bills of sales and other documents relating to the assets included in the Borrowing Base (other than the documents delivered to the Agent or the Custodian pursuant to this subsection (c)) are held at the offices of the Borrower or, if there shall be a Custodian, written confirmation from the Custodian addressed to the Agent that it shall have within its possession such copy of the master lease agreement and certificate; provided, that if there shall be only one or no lease schedule to such Eligible Contract, then the original executed Contract (including any master lease agreement) shall be delivered to the Agent, or, if there shall be a Custodian, the Custodian pursuant to the Custodian Agreement and (B) with respect to each Eligible Contract included in the Borrowing Base, the original executed Contract, the original executed delivery and acceptance certificate with respect to the Equipment or other assets leased pursuant to such Eligible Contract and the original of any note, guaranty, letter of credit or other credit enhancement provided in connection with such Contract (in each case, the original shall bear the original 35 signature of an employee of the Borrower (if required) together with a facsimile copy of the signature of the User or the original signature of the User), or, if there shall be a Custodian, written confirmation from the Custodian that it shall have in its possession the documents described in this subpart (i)(B) and any other Contract documentation required to be delivered to the Custodian pursuant to the Custodian Agreement; and (ii) if the Agent shall determine that such filing is required in order to ensure that the Borrower shall have a duly perfected Lien on all Collateral, other than Low Value Equipment, UCC-1 financing statements naming the Borrower as secured party and the User under any Eligible Contracts included in the Borrowing Base, as debtor, and other any documentation which may be required by the Agent in order to ensure that the Agent shall have a duly perfected Lien on the Collateral; provided, however, Borrower shall not be required to file UCC financing statements against any Low Value Equipment. (d) The Agent and the Borrower shall have duly executed a Supplement to the Security Agreement which shall include the Collateral to be included in the Borrowing Base or to be acquired with the proceeds of such Loan and all requisite filings of UCC financing statements shall have been made, and all other required filings and actions shall have been made and taken, in order to fully perfect the Lien of the Agent on behalf of the Lenders on any of the Collateral. (e) There shall not have occurred a material adverse change in the business, operations, financial condition or properties of the Borrower since December 31, 2000 or in the ability of the Borrower to perform its obligations hereunder or under the other Loan Documents. (f) All legal matters incident to the Loan shall be reasonably satisfactory to special counsel for the Agent. (g) The Agent shall have received any and all further information and documents which the Agent or its special counsel may reasonably request in connection with making such Loan. ARTICLE 5. DELIVERY OF FINANCIAL REPORTS, DOCUMENTS AND OTHER INFORMATION While the Commitment is outstanding and until payment in full of the Notes and full and complete performance of all of its other obligations arising hereunder, the Borrower agrees to deliver to each of the Lenders: Section 5.01 Annual Financial Statements. Annually, as soon as available, but in any event within 90 days after the last day of the fiscal year of the Borrower and its Subsidiaries, a consolidated balance sheet, consolidated statements of stockholders' equity, income, retained earnings and cash flows of the Borrower and its Subsidiaries as at and for such fiscal year, each as prepared in the normal course of the Borrower's business in accordance with GAAP, in reasonable detail, and certified without qualification by a recognized firm of independent certified public accountants acceptable to the Agent as fairly presenting the financial position and the results of operations of the Borrower and its Subsidiaries as at and for the year ending on its date and as having been prepared in accordance with GAAP, and an unaudited balance sheet and statement of stockholders' equity, income, retained earnings and cash flows of the Borrower (not including its Subsidiaries) as of the last day of such fiscal year, such balance sheet to be certified by the President or Chief Financial Officer of the Borrower as fairly presenting in all material 36 respects the financial position of the Borrower as at its date and as having been prepared in accordance with GAAP. Section 5.02 Quarterly Financial Statements. As soon as available, but in any event within 45 days after the end of each calendar quarter, unaudited consolidated balance sheets, statements of operations, statements of stockholders' equity, retained earnings and cash flows of the Borrower and its Subsidiaries as at and for the period ended at such quarter, each certified by the President or Chief Financial Officer of the Borrower as fairly presenting in all material respects the financial position and the results of operations of the Borrower and its Subsidiaries, as at its date and for such period and as having been prepared in accordance with GAAP (subject to normal year-end audit adjustments). Section 5.03 No Default/Compliance Certificate. At the same time as it delivers the financial statements required under the provisions of Section 5.01 and 5.02, a certificate of the President or Chief Financial Officer of the Borrower certifying that (a) no Event of Default or Default has occurred hereunder or under the other Loan Documents and (b) the Borrower has complied with and is then in compliance with all the terms, covenants and conditions of this Agreement and the other Loan Documents, or, if such cannot be so certified, specifying in reasonable detail the exceptions, if any, to such statement, which certificate shall be accompanied by a detailed calculation in form and substance satisfactory to the Agent evidencing compliance with Section 6.10 as at the date of such financial statements. Section 5.04 Monthly Reports. The Borrower will furnish or will cause to be furnished, to the Agent and each other Lender copies of the following financial statements reports and information: (a) as soon as available, but in any event within 30 days after the end of the immediately preceding calendar month, in each case certified by the President or Chief Financial Officer of the Borrower, (i) the Monthly Borrowing Base Report showing detailed values of assets in the Borrowing Base, and a reconciliation of Loans outstanding and related borrowing availability as of the end of the preceding calendar month, (ii) a detailed aged accounts receivable trial balance (including remaining Contract Balances) showing accounts receivable of the Borrower and including all Contracts sold or otherwise transferred to Securitization Programs or any financial institutions as of the last day of the immediately preceding calendar month, in the following categories: 0-30 days; 31-60 days; 61-90 days and 91 days and over, and (iii) the Monthly Business Review of the Borrower. Section 5.05 Intentionally Omitted. Section 5.06 Other Information. Promptly after a written request therefor, such other information as to the business, affairs, financial condition or information evidencing compliance with the requirements of this Agreement, the Notes and the other Loan Documents, and such other data and information of any nature, as either Agent or the Majority Lenders may reasonably request from time to time. Section 5.07 Copies of Documents. Promptly upon their becoming available, copies of any (a) correspondence or notices received by the Borrower from any Governmental Authority which regulates the operations of the Borrower, including as to environmental matters and Hazardous Substances, relating to an actual or threatened change or development which could have a Material Adverse Effect with respect to the Borrower; (b) written reports submitted to the Borrower by its independent accountants in connection with any annual or interim audit of the books of the Borrower made by such accountants; and (c) any appraisals received by the Borrower with respect to its material properties or fixed assets. Borrower shall make available for inspection by the Agent or the Lenders any agreements with Securitization Programs and any reports or certificates from any Securitization Programs. 37 Section 5.08 Preferred Stock. Promptly upon receipt thereof, a copy of any mandatory redemption, repurchase or put notice from any holder of Preferred Stock or from any other equityholder of the Borrower with respect to any capital stock of the Borrower, and promptly and in any event within two Business Days of such declaration, detailed notice of the declaration of any dividend on any shares of capital stock. Section 5.09 Notices Under Material Contracts. Promptly upon receipt thereof by the Borrower, copies of any notice of the occurrence of any non-compliance event or notices of any default or event of default and any mandatory redemption, repayment or default notice received or sent by Borrower under any Material Contract. Section 5.10 Notice of Litigation; Cancellation of Insurance; Other Notices. Promptly, notice in writing of (i) any litigation, legal proceeding or dispute which if determined or resolved against the Borrower could have a Material Adverse Effect on the Borrower, (ii) any cancellation or threatened cancellation by any insurance carrier of any insurance policy or policies carried by the Borrower or by any of its Subsidiaries on the assets and properties of the Borrower (except that no notice shall be required to the extent acceptable replacement policies are in place at the time of such cancellation or threatened cancellation); (iii) any removal or resignation of any director or officer of the Borrower, (iv) any material change in bank or other depositary accounts of the Borrower and (v) concurrently with being made generally available to the public by the Borrower, all press releases and statements delivered to its shareholders concerning adverse developments that are material. Section 5.11 Notices in Regard to Borrowing Base Assets. Promptly, and in any event (a) within one Business Day, notice in writing in the event that at any time the outstanding principal amount of the Loans shall exceed the amount of the Borrowing Base and (b) promptly, and in any event within five (5) Business Days, notify in writing the Agent of any material damage to or other loss or casualty with respect to Eligible Equipment in Inventory or assets subject to an Eligible Contract or any notice of cancellation or termination of any Eligible Contract. Section 5.12 ERISA. Promptly, notice in writing (a) upon the Borrower's receipt of any notice from the PBGC or from any other party that (i) the PBGC has instituted proceedings to terminate (or appoint a trustee to administer) any Plan, or (ii) the Borrower has or could have liability with respect to a Plan. Section 5.13 Notices of Defaults. Promptly, notify the Agent in writing of the occurrence of any Default or Event of Default hereunder, or any event which has a Material Adverse Effect on the Borrower. Section 5.14 UCC Acknowledgements. Promptly upon receipt thereof by the Borrower, copies of stamped acknowledgments of all UCC-1 financing statements filed which name the Agent as secured party and the Borrower as debtor evidencing the filing thereof and evidence of the payment of all applicable recordation taxes. Section 5.15 Intentionally Omitted. Section 5.16 Budget; Business Plans. (a) By no later than January 31 of each Fiscal Year, the Borrower's budget as in effect for such Fiscal Year; and (b) promptly after the same is approved by the Borrower's Board of Directors, a copy of any long-range plans of the Borrower and its Subsidiaries that may be prepared for or at the direction of the Board of Directors, and all amendments thereto which may be in effect from time to time. 38 ARTICLE 6. AFFIRMATIVE COVENANTS While the Commitment is outstanding, and until payment in full of the Notes and full and complete payment and performance of all of their other obligations arising hereunder, the Borrower, agrees that the Borrower shall, and shall cause its Subsidiaries to: Section 6.01 Books and Records. Keep proper books of record and account in which full, true and correct entries in all material respects shall be made of all dealings or transactions in relation to its business and activities and maintain accounts and reserves in accordance with GAAP, for all taxes (including income taxes), all depreciation, depletion, obsolescence and amortization of its properties, all contingencies, and all other reserves Section 6.02 Chattel Paper Cause each originally executed lease agreement or lease or rental schedule to any master lease agreement (with any such original bearing the original signature of an employee of the Borrower together with a facsimile copy of the signature of the User or the original signature of the User) to be maintained with the Agent or, if there shall be a Custodian, with the Custodian in accordance with the terms of the Custodian Agreement. Section 6.03 Inspections and Audits. Permit the Agent and the Lenders and their respective representatives (including, without limitation, an independent audit firm acceptable to the Agent and the Majority Lenders), upon reasonable notice, free access during normal business hours to and right of inspection and examination of the Collateral (subject, with respect to inspection of Collateral located on a User's premises, to any restrictions on such inspection rights under the terms of the Contract relating thereto) and the Borrower's books, records and papers and the right to make excerpts therefrom and copies and transcripts thereof, to discuss, the affairs, finances and accounts of the Borrower with the officers of the Borrower and to conduct any audit or similar examination of any other documents assigned to the Agent deemed to be reasonably necessary or appropriate by the Agent, provided that not more than one such inspection and examination per annum shall be at the Borrower's expense, which shall be conducted by an independent audit firm selected by Agent and the Majority Lenders; provided, however, (x) that in no event shall the cost to the Borrower for each such exam exceed $5,000; (y) that the Agent agrees to consult with the Borrower within a reasonable time prior to each such exam conducted by an independent audit firm regarding the expenses associated therewith; and (z) that upon the occurrence and during the continuance of a Default or an Event of Default all inspections and examinations under this Section 6.03 shall be at the Borrower's expense without any obligation on the part of the Agent with respect to the expense thereof. The report of any independent audit firm described above shall be reasonably satisfactory to the Agent and the Majority Lenders. Section 6.04 Maintenance of Collateral. Maintain, or, with respect to properties and assets subject to lease, require the Users to maintain, in good working order and condition, subject to normal wear and tear, all of the assets and properties from time to time owned by the Borrower and, in the ordinary course of business, make all needful and proper repairs, replacements, additions and improvements thereto as are necessary for the conduct of its business. Section 6.05 Continuance of Business. Do or cause to be done, all things reasonably necessary to preserve and keep in full force and effect the Borrower's corporate existence and all permits, rights and privileges necessary for the proper conduct of its business and continue to engage in the Basic Business as its primary line of business and to enter into Contracts solely in accordance with the Credit and Collection Policy. 39 Section 6.06 Perform Obligations. (a) Pay and discharge all of its obligations and liabilities, including, without limitation, all taxes, assessments and governmental charges upon its income and properties, when due, unless and to the extent only that such obligations, liabilities, taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings and that, to the extent required by GAAP, proper and adequate book reserves relating thereto are established by the Borrower, and then only to the extent that a bond is filed in cases where the filing of a bond is necessary to avoid the creation of a Lien other than Permitted Liens against any of its properties. (b) Perform all of its obligations (if any) under each of the Eligible Contracts and do, or cause to be done, all things necessary in order to keep each such Eligible Contract in full force and effect. Section 6.07 Insurance. (a) Maintain with responsible insurance companies such insurance on its properties against such risks, including public liability, property damage and worker's compensation insurance as are usually insured against by persons engaged in the business of leasing equipment in the same location in at least such amounts as such insurance is usually carried by persons engaged in the business of leasing equipment in such state or states or country or countries as the business of the Borrower may be conducted. Such policies owned by the Borrower shall contain additional insured and loss payable provisions in favor of the Agent for the benefit of the Lenders and each of such policies shall contain a provision precluding cancellation without a minimum of thirty (30) days' prior written notice to the Agent or, if less, the maximum period provided for the giving of such notice by the insurance carrier. (b) File with the Agent upon the request of the Agent a detailed list of the insurance then in effect, stating, as applicable, the names of the insurance companies, the amounts and costs of the insurance, dates of expiration thereof and the properties and risks covered thereby. Section 6.08 Compliance With Laws, etc. Comply with all statutes, laws, ordinances, codes, regulations, permits, orders, approvals, licenses, judgments, restrictions or rules of any Governmental Authority having jurisdiction over the Borrower or its business or operations, including, without limitation, all Environmental Laws and ERISA, to the extent that non-compliance with the same could have a Material Adverse Effect on the Borrower. Section 6.09 Borrowing Base. Make such prepayments, from time to time, as required by Section 2.07 hereof so that the outstanding principal amount of all Loans to the Borrower hereunder shall at no time exceed the Borrowing Base. Section 6.10 Financial Covenants. (a) Cause the Borrower to maintain at all times with respect to the Borrower and its Subsidiaries on a consolidated basis: (i) a Leverage Ratio of not more than 5 to 1; (ii) a ratio of Total Debt to Consolidated Tangible Net Worth, as of the end of each calendar quarter of not more than 12:1. (iii) a Consolidated Tangible Net Worth of not less than the sum of (A) $23,600,000 plus (B) commencing with Consolidated Net Income for the quarter ending September 30, 2001, 75% of cumulative Consolidated Net Income (but not loss or deficit), less any dividends accrued on its Preferred Stock permitted by Section 7.07(b); 40 (iv) a Fixed Charge Coverage Ratio as at the last day of any Fiscal Quarter of not less than 1.15:1; (v) an Interest Coverage Ratio as at the last day of any Fiscal Quarter of not less than 3.25:1; (vi) a charge-off policy and procedure to identify and charge-off on a monthly basis all accounts receivable that are more than 120 days delinquent as of the twentieth day of each calendar month; (vii) a lease loss reserve policy in the form of Exhibit A-3 hereto, which policy shall not be materially amended, modified or otherwise altered without the prior written consent of the Agent, which consent shall not be unreasonably withheld. (b) not permit the Borrower and its Subsidiaries to incur a Consolidated Net Loss of (i) greater than $100,000 in any calendar quarter; (ii) greater than $100,000 in the aggregate as of the end of any two consecutive calendar quarter period or (iii) greater than $100,000 in the aggregate as of the end of any four consecutive calendar quarter period; and (c) not permit the three-month rolling average of the Portfolio Delinquency Ratio to exceed 3.50%. Section 6.11 Trade Accounts Payable. Promptly pay when due, or in conformity with customary trade terms, all of its trade accounts payable, except for late payments in the ordinary course of business with respect to non-material contracts of the Borrower, the lateness of which payments, singly or in the aggregate, could have a Material Adverse Effect on the Borrower. Section 6.12 Liens Against Users. With respect to all Equipment subject to a Conditional Sale Agreement, other than Low Value Equipment, upon the earlier of execution of an Eligible Contract or purchase by the Borrower of the inventory subject thereto from a manufacturer, promptly file all UCC financing statements (or assignments thereof) necessary to grant the Borrower, as secured party, a duly perfected Lien against the User, as debtor. Section 6.13 Liens. Cause the Liens granted to the Agent pursuant to the Security Documents to at all times be first priority perfected Liens subject to no additional Liens. Section 6.14 Key Man Life Insurance. Maintain, key man life insurance on the life of Daniel P. Dyer providing for coverage in an amount of not less than $2,000,000 issued by an insurance underwriter reasonably acceptable to the Agent ("Key Man Insurance"). The Borrower shall deliver to the Agent the original or certified duplicate policy of such insurance. Such insurance shall contain endorsements, in form satisfactory to the Agent, providing that the insurance shall not be cancelable, except upon ten (10) (in the case of nonpayment of premium) or forty-five (45) (for all other purposes) days' prior written notice from the insurer to the Agent and showing the Agent as sole loss payee with secured party endorsement in the Agent's standard form. All premiums on such insurance policy shall be paid by the Borrower and, if the Borrower fails to do so, the Agent may (but shall not be required to) procure such insurance and charge the cost thereof to the Borrower's loan account as part of the Obligations payable on demand and secured by the Collateral. Any insurance proceeds received at any time pursuant to a claim under such insurance policy shall be applied by the Agent as a mandatory prepayment and the Commitment shall be reduced in accordance with Section 2.07(d). 41 ARTICLE 7. NEGATIVE COVENANTS While the Commitment is outstanding and until payment in full of the Notes and full and complete payment and performance of all of its other obligations arising hereunder, the Borrower shall not do, or permit to be done in respect of itself or (except with respect to Section 7.07) any Subsidiary, any of the following: Section 7.01 Indebtedness. Create, incur, permit to exist or have outstanding any Indebtedness, except Indebtedness of the following type: (a) Indebtedness of the Borrower to the Lenders under this Agreement and the Notes; (b) subject to Section 7.03, Indebtedness of the Borrower for borrowed money (which shall include the amount of any guarantee(s) and the Indebtedness under any Securitization Program, valued as provided in the definition of Indebtedness) which is (x) Non-Recourse Indebtedness or (y) other Indebtedness provided that (i) such other Indebtedness is not used to finance Contracts and/or Equipment of the Borrower, (ii) the principal amount of such other Indebtedness plus all Capitalized Lease Obligations plus the amount of all stand-by letters of credit and cash collateral referred to in subsection 7.01(i)(x) and guarantees referred to in subsection 7.01(i)(y) shall not exceed $7,500,000 and (iii) the covenants governing such other Indebtedness shall not have covenants which are more restrictive than the covenants under this Agreement and the other Loan Documents and, provided, further, that any Indebtedness for borrowed money, if secured, shall be secured solely by the assets financed thereunder (which shall not in any event include Contracts and/or Equipment of the Borrower); (c) Subordinated Debt; (d) Capitalized Lease Obligations, provided that the aggregate amount thereof (being the amount which is required to be capitalized in accordance with GAAP), combined with the then outstanding principal amount of Indebtedness for borrowed money permitted under subsection (b)(y) above, shall not at any time exceed $7,500,000; (e) Indebtedness of its Subsidiaries to the Borrower to the extent permitted under Section 7.04 of this Agreement; (f) Indebtedness existing on the date hereof and set forth on Schedule 3.21 hereof; (g) Indebtedness incurred by a Securitization Subsidiary in connection with a Securitization Program; (h) Indebtedness solely of the Insurance Subsidiary which consists of the obligations of the Insurance Subsidiary under policies of property insurance issued by the Insurance Subsidiary in the ordinary course of business (it being understood and agreed that the Borrower shall have no liabilities or obligations with respect to such insurance policies); and (i) One or more stand-by letters of credit obtained by: (x) the Borrower in an aggregate amount not to exceed $500,000 (or cash collateral placed with an obligee of the Insurance Subsidiary in an aggregate amount not to exceed $500,000) to support the Insurance Subsidiary; or (y) the Insurance Subsidiary (or cash collateral) to support the Insurance Subsidiary and guaranteed by the Borrower 42 (provided that the Borrower's guaranty of stand-by letters of credit or cash collateral obligations obtained by the Insurance Subsidiary shall not exceed $500,000 in the aggregate). Section 7.02 Liens. Create, or assume or permit to exist, any Lien on any of the properties or assets of the Borrower or any Subsidiary, whether now owned or hereafter acquired, except: (a) Liens created and granted by the Security Documents; (b) Permitted Liens; (c) purchase money security interests, conditional sale arrangements and other security interests to finance Equipment acquired by the Borrower (hereinafter referred to individually as a "Permitted Financing Security Interest"); provided, however, that: (i) The transaction in which any Permitted Financing Security Interest is proposed to be created (including the Indebtedness with respect thereto) is not then prohibited by this Agreement; (ii) Any Permitted Financing Security Interest now owned or hereafter acquired by any Person shall attach only to the Equipment and related Contract acquired in such transaction and shall not extend to or cover any assets or properties included in the Borrowing Base or any other assets or properties of the Borrower; and (d) Liens existing on the date hereof on Collateral other than Borrowing Base assets which Liens are set forth on Schedule 7.02 hereto. Section 7.03 Guaranties. Except as disclosed on Schedule 7.03 and except to the extent the same shall constitute Indebtedness permitted under Section 7.01, assume, endorse, be or become liable for, or guarantee, the obligations of any Person other than the endorsement of negotiable instruments for deposit or collection in the ordinary course of business; provided that the aggregate maximum Indebtedness of the Borrower (valued as provided in the definition of Indebtedness) under guarantees of obligations of Persons which are not Subsidiaries of the Borrower shall not at any time exceed $1,000,000. For the purposes hereof, the term "guarantee" shall include any agreement, whether such agreement is on a contingency or otherwise, to purchase, repurchase or otherwise acquire Indebtedness of any other person, or to purchase, sell or lease, as lessee or lessor, property or services primarily for the purpose of enabling another person to make payment of Indebtedness, or to make any payment (whether as an advance, capital contribution, purchase of any equity interest or otherwise) to assure a minimum equity asset base, working capital or other balance sheet or financial condition, in connection with the Indebtedness of another person or to supply funds to or in any manner invest in another person in connection with such person's Indebtedness. Section 7.04 Advances. Make, or suffer to exist, any loan or advance or extend any credit to, or make, or suffer to exist, any investment in (whether by loan, advance, capital contribution, purchase of stock, or otherwise) or acquire any stock, bond or any other equity or debt security of, any Person, including, without limitation, any Affiliate of the Borrower other than: (a) advances or loans to employees not to exceed $350,000 in the aggregate outstanding at any time; (b) trade credit advanced in the ordinary course of business; (c) Investments permitted by Section 7.10 (other than 7.10(c)). 43 Section 7.05 Mergers, Acquisitions. Merge or consolidate with any Person or acquire all or substantially all of the assets or any of the equity interest in any Person or sell all or any substantial part of its assets without the Agent's written consent or create any Subsidiaries whether wholly or partially owned, except (a) in the case of a merger, if the Borrower is the surviving entity or (b) otherwise, subject to the prior written consent of the Agent, provided that in the case of a merger, consolidation or other acquisition of assets, the Majority Lenders shall not unreasonably withhold their consent thereto if (x) the assets or business acquired shall be consistent with the Basic Business and (y) there shall not, either before or after giving effect thereto, be any Default or Event of Default or (c) the aggregate amount of cash capital of the Insurance Subsidiary contributed by the Borrower shall not exceed $300,000. Upon request of the Agent, and in any event promptly upon any material change in such information, the Borrower shall furnish the Lenders with a list of each of its Subsidiaries, indicating their respective capitalizations and ownership and such financial and other information as may be requested by any Lender. Provided that no Default or Event of Default has occurred and is continuing, or shall occur after giving effect thereto, nothing in this Section 7.05 shall prohibit the creation or acquisition of Subsidiaries by the Borrower in connection with Securitization Programs. Section 7.06 Changes in Business; Sale of Assets. Conduct any business other than the Basic Business and the business of the Insurance Subsidiary or make any material change in the nature of its operation, or liquidate or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of any of its property, assets or business except, with respect to assets other than the assets included in the Borrowing Base, in the ordinary course of business (it being understood that sales of individual or groups of leases and related equipment from time to time by the Borrower to third parties pursuant to whole loan sales or to its Securitization Subsidiaries pursuant to Securitization Programs shall be deemed to be in the ordinary course of the business of the Borrower and its Subsidiaries) and for fair consideration and, in the case of a disposition of assets included in the Borrowing Base, subject to payment, concurrently with and as a condition to any such disposition, of the amounts required to be paid pursuant to Section 2.07, or dispose of any material assets in the form of shares of stock of any other Person or indebtedness, whether now owned or hereafter acquired, or discount, sell, pledge, hypothecate or otherwise dispose of accounts receivable other than in the ordinary course of business; provided that, notwithstanding the foregoing or any other provision of the Loan Documents to the contrary, from and after the occurrence and during the continuance of a Default or an Event of Default, but without limiting any rights or remedies of the Agent and the Lenders under this Agreement, the other Loan Documents and at law or equity: (a) no conveyance, sale, assignment, transfer or other disposition of assets of the Borrower included in the Borrowing Base shall be permitted; (b) a sale, assignment, transfer or other disposition of assets not included in the Borrowing Base shall be permitted subject to satisfaction of each of the following conditions: (i) the Borrower shall have provided to the Agent and each of the Lenders, prior to such disposition, a notice (the "Notice") which refers expressly to this Section 7.06 and specifies, in reasonable detail, the assets to be disposed of, the purchaser and proposed date thereof (which shall be more than seven (7) Business Days after the date of actual receipt by the Agent and the Lenders of such Notice), the purchase price therefor, and the Default or Event of Default which then exists; and (ii) (x) if such disposition is to a Person other than a Securitization Program, the purchase price to the Borrower for such assets shall be paid entirely in cash in an amount equal to the higher of Net Investment or Fair Market Value; or 44 (y) if such disposition is to a Securitization Program (it being understood and agreed that Securitization Subsidiaries shall solely conduct the businesses related to the limited purposes for which they were created), (1) the purchase price to the Borrower for such assets shall be the higher of Net Investment or Fair Market Value; (2) the Borrower shall have provided the Agent with a written confirmation from the lenders or trustee or other representative of the lenders providing the financing for such disposition that the same shall have been advised of the existence of such Default or Event of Default; (3) the economic terms of such transaction shall not have been modified in any material respect from the economic terms in effect prior to such Default or Event of Default; and (4) the Borrower shall not have received written objection to such disposition from the Agent on behalf of the Lenders (which objection the Agent may give, and, upon instruction of the Majority Lenders, shall give) within seven (7) Business Days of actual receipt by the Agent and the Lenders of the Notice, it being understood and agreed that the Agent and Lenders may object to any such disposition in their sole discretion. Any failure by the Agent on behalf of the Lenders to object to any disposition pursuant to this Section 7.06(b)(ii)(y) shall not bind the Agent and the Lenders with respect to any other or subsequent disposition of assets and the Agent may at any time provide a notice to the Borrower prohibiting all future dispositions of assets pursuant to this subsection. Section 7.07 Redemptions; Dividends (a) Purchase, redeem, retire or otherwise acquire, directly or indirectly, or make any sinking fund payments with respect to, any shares of its capital stock now or hereafter outstanding or set apart any sum for any such purpose; or (b) Declare or pay any cash dividends or make any distribution of cash or other property of any kind on its outstanding stock or other equity interests, or set aside any sum for any such purpose, including, without limitation, on any shares of Preferred Stock (provided that the Borrower may accrue but not declare or pay dividends under Section 1A of the Amended Articles). Section 7.08 Stock Issuance. Issue any additional shares or any right or option to acquire any shares, or any security convertible into any shares, of the capital stock of the Borrower except that such issuance or acquisition shall be permitted if and to the extent that, after giving effect thereto, there shall not have occurred a Change of Control. Section 7.09 Prepayments. Make any prepayment, whether voluntary or mandatory, of any Indebtedness for borrowed money (other than Indebtedness evidenced by the Notes) incurred or permitted to exist under the terms of this Agreement, without the prior written consent of the Agent, provided that if no Default or Event of Default exists or would exist after giving effect thereto, the Borrower may prepay (a) Non-Recourse Indebtedness (provided the terms thereof are not more onerous to the Borrower than the terms of this Agreement) and (b) Subordinated Debt (other than Subordinated Debt issued to holders of Preferred Stock). Section 7.10 Investments. Make, or suffer to exist, any Investment in any Person, except Investments in: (a) (i) obligations issued or guaranteed by the United States of America; (ii) certificates of deposit, overnight time deposits, bankers acceptances and other "money market instruments" issued by any bank or trust company organized under the laws of the United States of America or any State thereof and (x) whose deposits are insured by the Federal Deposit 45 Insurance Corporation or (y) having capital and surplus in an aggregate amount of not less than $100,000,000; (iii) open market commercial paper rated at least A-1 by S&P or P-1 by Moody's or the equivalent rating from another nationally recognized credit rating firm; (iv) repurchase agreements entered into with any bank or trust company organized under the laws of the United States of America or any State thereof and having capital and surplus in an aggregate amount of not less than $100,000,000 relating to United States of America government obligations; (v) shares of "money market funds", each having net assets of not less than $100,000,000; in each case maturing or being due or payable in full not more than 180 days after the Borrower's acquisition thereof; (b) Subsidiaries of the Borrower and Securitization Programs, provided that the amount of such Investment of the Borrower therein shall not at any time exceed fifty percent (50%) of Consolidated Tangible Net Worth; (c) Advances permitted pursuant to Section 7.04; (d) Interest Rate Contracts and Foreign Exchange Contracts provided that the same are entered into in the ordinary course of business and not for speculative purposes and are with a counterparty rated A+ or higher by S&P or the equivalent by Moody's or another nationally recognized credit rating firm; and (e) Investments in Persons to the extent permitted by Section 7.05. Section 7.11 Fiscal Year; Accounting Changes. Change its fiscal year or make a material change to its accounting policies or practices. Section 7.12 ERISA Obligations. (a) Except as disclosed on Schedule 3.16, maintain, sponsor, contribute to or become obligated to contribute to, any Plan. (b) Permit any Welfare Plan which the Borrower maintains, sponsors, contributes to or is obligated to contribute to, to provide post-retirement benefits other than (i) coverage mandated by applicable law, (ii) retirement or death benefits under any Benefit Plan or (iii) disability or other benefits under any Welfare Plan that have been fully provided for by paid-up insurance or otherwise. (c) Permit the Borrower or the assets of the Borrower to become assets of any employee benefit plan, whether by operation of law or under regulations promulgated under ERISA. (d) Be or become obligated to the PBGC for any amount. (e) Be, or engage in any prohibited transaction which could result in the Borrower becoming, or become obligated to the IRS or the U.S. Department of Labor with respect to excise or other 46 penalty taxes provided for in those provisions of Section 4975 the Code or ERISA, as in effect or hereafter amended or supplemented, in excess of $25,000. (f) Incur any liability or obligation for, under, with respect to, or otherwise in connection with, any Plan, which liability or obligation arises under ERISA or the Code, by virtue of the Borrower or Subsidiary having an ERISA Affiliate, or any other event or condition not in the ordinary course of business shall occur or exist with respect to a Benefit Plan, provided that such event or condition, together with all other such events or conditions, if any, could have a Material Adverse Effect. Section 7.13 Transactions With Affiliates. Except as expressly permitted by this Agreement, directly or indirectly: (a) make any Investment in an Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any assets to an Affiliate for less than book value; or (c) merge into or consolidate with or purchase or acquire assets from an Affiliate for more than book value; or (d) enter into any other transaction directly or indirectly with or for the benefit of any Affiliate (including, without limitation, guarantees and assumptions of obligations of an Affiliate), except to the extent any of the foregoing transactions shall be entered into in the ordinary course of business (it being understood that sales of individual or groups of leases and related equipment from time to time by the Borrower to its Securitization Subsidiaries pursuant to Securitization Programs shall be deemed to be in the ordinary course of the business of the Borrower and its Subsidiaries), on terms no less favorable to the Borrower than the Borrower could obtain in a comparable arms'-length transaction with a Person not an Affiliate and for fair consideration; provided, however, that (i) any Affiliate who is an individual may serve as an employee or director of the Borrower and receive reasonable compensation for his or her services in such capacity (including pursuant to any employment agreement approved by the Board of Directors of the Borrower); and (ii) the Borrower may make or have loans or advances to employees not in excess of $350,000 in aggregate principal amount at any time outstanding. Section 7.14 Capital Expenditures. Make or be or become obligated to make Capital Expenditures in excess of $1,000,000 in the aggregate in any fiscal year without the prior written consent of the Agent. Section 7.15 Amendments. (i) (x) Except as shall otherwise be consented to in writing by the Agent, amend, supplement or terminate, or agree to modify, amend or supplement any Material Contract or the terms or provisions of the Preferred Stock; provided however, that (A) such consent shall be deemed to have been given if the Agent shall not have objected thereto within thirty (30) days after actual receipt by the Agent and each of the Lenders of a written request for such consent from the Borrower which references this Section 7.15 and expressly states it shall be deemed approved within thirty (30) days of receipt if not objected to by the Agent, accompanied by a copy of the proposed amendment, supplement or modification, and (B) changes, amendments or terminations that would not have a Material Adverse Effect on the Borrower may be made without the prior written consent of the Agent or (y) materially modify, alter, amend or otherwise materially change its Credit and Collection Policy without the prior written consent of the Agent, which consent shall be granted in the Agent's sole discretion or (ii) except as shall otherwise be consented to by the Agent, in its sole discretion, enter into or be a party to any agreement (other than Subordinated Debt Agreements) which restricts or limits the ability of the Borrower to amend, modify or supplement this Agreement or any of the Loan Documents. Section 7.16 Copies of Corporate Documents. Materially modify, amend, supplement or terminate, or agree to materially modify, amend or supplement, the Borrower's certificate of incorporation (including the Amended Articles) or by-laws, without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed. 47 Section 7.17 Principal Place of Business. Change the principal place of business of the Borrower or the location of the Borrower's books and records or open any new place of business except in each case 30 days prior written notice to the Agent and provided that the Borrower shall have taken all such actions as the Agent shall have required in order to maintain the priority and perfection of the Lien in favor of the Agent on the assets of the Borrower. ARTICLE 8. EVENTS OF DEFAULT Section 8.01 Events of Default. The occurrence of any one or more of the following events (each, an "Event of Default") shall constitute a default under this Agreement: (a) Failure to make any payment or mandatory prepayment of principal when due or, within three (3) Business Days of the due date thereof, interest upon any Note, or payment of any fee or any other amount payable hereunder. (b) Failure to perform or observe any of the agreements of the Borrower contained in Article 7 (except with respect to any non-material breach of any provision in Article 7, which shall be subject to Section 8.01(c) below) or Section 5.13, 6.05, 6.09 or 6.10 hereof. (c) Failure by the Borrower to perform or observe in any material respect any other term, condition or covenant of this Agreement or of any of the other Loan Documents, which failure shall remain unremedied for a period of twenty (20) days after the earlier of the date on which the Agent gives written notice thereof to the Borrower or on which the Borrower became aware or should, in the exercise of reasonable due diligence, have become aware of such failure. (d) The occurrence of any default or event of default under any term, condition or covenant of any bond, note, debenture, guaranty, trust agreement, mortgage or similar instrument to which the Borrower or any Subsidiary is a party or by which such Person is bound, or by which any of such Person's properties or assets may be affected, including, without limitation, under any agreement relating to any Securitization Program (a "Debt Instrument") if the outstanding indebtedness or obligations of the Borrower or such Subsidiary under such Debt Instrument exceeds $500,000 in aggregate principal amount and (x) may be declared to be due and payable by reason of such default or event of default prior to the date on which such indebtedness or obligations would otherwise become due and payable or (y) is due and payable and unpaid. (e) Any representation or warranty made in writing to any Agent or to any Lender in any of the Loan Documents or in connection with the making of the Loans, or any certificate, statement or report made or delivered in compliance with this Agreement or any of the other Loan Documents, shall have been false or misleading in any material respect when made or delivered. (f) The Borrower shall fail to comply in any material respect with its obligations under any Material Contract or there shall occur any default or event of default thereunder which is not cured within any applicable cure period provided therein, if any. (g) The Borrower or any of its Subsidiaries shall (i) make an assignment for the benefit of creditors, file a petition in bankruptcy, be adjudicated insolvent, petition or apply to any tribunal for the appointment of a receiver, custodian, or any trustee for it or a substantial part of its assets, or shall commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdictions whether now or hereafter in effect, or the 48 Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the foregoing actions; or there shall have been filed any such petition or application, or any such proceeding shall have been commenced against it, which shall not be controverted within ten days or which remains undismissed for a period of thirty days or more; or any order for relief shall be entered in any such proceeding; or the Borrower or any of its Subsidiaries by any act or omission shall indicate its consent to, approval of or acquiescence in any such petition, application or proceeding or the appointment of a custodian, receiver or any trustee for it or any substantial part of any of its properties, or shall suffer any custodianship, receivership or trusteeship to continue which shall not be controverted within ten days or which remains undischarged for a period of thirty days or more; (ii) generally not pay its debts as such debts become due; or (iii) have concealed, removed, or permitted to be concealed or removed, any part of its property, with intent to hinder, delay or defraud its creditors or any of them or made or suffered a transfer of any of its property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law; or shall have made any transfer of its property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid; or shall have suffered or permitted, while insolvent, any creditor to obtain a Lien upon any of its property through legal proceedings or distraint which is not controverted within ten days or vacated within thirty days from the date thereof. (h) Any judgment against the Borrower or any attachment, levy of execution against any of its properties for any amount in excess of $500,000 which is not controverted within ten days and which shall remain unpaid, unstayed on appeal, undischarged, unbonded or undismissed for a period of thirty days or more. (i) The Liens created and granted to the Agent under the Security Documents shall fail to be valid, first, perfected Liens subject to no prior or equal Lien. (j) A Change of Control shall occur. (k) There shall have occurred a material adverse change in the business, operations, financial condition or properties of the Borrower and its Subsidiaries taken as a whole or on the ability of the Borrower to perform its obligations hereunder or under the other Loan Documents. Section 8.02 Effect; Remedies. Upon the occurrence and during the continuance of an Event of Default, the Borrower shall not be entitled to exercise any rights to obtain Loans under this Agreement. Upon the occurrence of any Event of Default (i) (x) described in Section 8.01(g) hereof, the Commitment shall terminate and the Loans and any other outstanding Obligations shall immediately and automatically become due and payable in full, without requirement of any action whatsoever by the Agent or the Lenders, or (y) upon the occurrence of any other Event of Default, the Agent, upon request of Majority Lenders, shall terminate the Commitment and the Loans and any other then outstanding Obligations may, without demand or notice of any kind, be declared due and payable by the Majority Lenders through the Agent, and thereupon shall immediately become due and payable, in each case without presentment or demand for payment, notice of nonpayment, protest or further notice or demand of any kind all of which are expressly waived by the Borrower, and (ii) the Agent, on behalf of and at the request of the Majority Lenders, shall be entitled to exercise all of the rights and remedies available under the Security Agreement, the other Loan Documents and at law or in equity. ARTICLE 9. CONCERNING THE AGENT Section 9.01 Appointment and Authority of the Agent. Each Lender hereby appoints National City Bank to serve as the Agent for such Person under this Agreement and the other Loan Documents, 49 and hereby irrevocably authorizes such Person, as the Agent, to take such actions on its behalf under this Agreement and the other Loan Documents and to exercise such powers and to perform such duties hereunder and thereunder as are expressly delegated to the Agent by the terms hereof or thereof, together with such other powers as are reasonably incidental thereto. The Lenders hereby authorize the Agent to execute and deliver the Security Agreement, the Custodian Agreement and the Lockbox Agreement as Agent and agree to be bound by the terms and conditions thereof. Section 9.02 Delegation of Duties. The Agent may exercise its powers and execute its duties by or through employees or agents. Section 9.03 Independent Credit Evaluations. (a) Each Lender expressly acknowledges to the Agent that the Agent has not made any representations or warranties to it regarding this Agreement, the other Loan Documents, any of the other documents mentioned herein or therein or the transactions contemplated hereby and thereby or regarding the Borrower or its business or financial condition. (b) Each Lender acknowledges to the Agent and to each other Person that it has independently and without reliance on the Agent or any other Person, and based upon such documents and inquiries as it has deemed appropriate, made its own credit analyses of the Borrower and its own decision to enter into this Agreement and the other Loan Documents. (c) Each Lender agrees that it will, independently and without reliance on the Agent or any other Person, and based upon such documents and inquiries as it shall deem appropriate at the time, continue to make its own credit analyses and decisions in taking or not taking actions under this Agreement and the other Loan Documents and to make such investigations as it deems necessary to keep current its information relating to the affairs, financial position and creditworthiness of the Borrower. Section 9.04 Limited Scope of Duties. (a) Nothing in this Agreement is intended to, or shall be construed as to, impose upon the Agent any duties or responsibility in respect of this Agreement except as expressly set forth in this Agreement. The relationship between the Agent and each of the Lenders is that of agent and principal only and the respective duties and obligations of the Agent are of an administrative and mechanical nature only. Nothing in this Agreement shall be construed so as to constitute the Agent as a trustee or fiduciary for any Lender or to impose upon an Agent any duties or responsibilities other than those for which express provision is made herein. (b) Except for notices, financial statements and other documents, if any, expressly required to be furnished to the Lenders by the Agent pursuant to the provisions of this Agreement, or the other Loan Documents, the Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information concerning the business or financial condition of the Borrower which may come into the possession of the Agent or any of its Affiliates, whether before or after the making of any Loan hereunder, nor shall the Agent have any duty to inspect the properties or books of the Borrower. (c) The Agent shall be entitled to assume that no Event of Default or Default has occurred and is continuing, unless the Agent has actual knowledge of such fact or has received notice from a Lender or the Borrower, as the case may be, that such Lender or Borrower, as the case may be, considers that an Event of Default or Default has occurred and is continuing and specifying the nature thereof. 50 (d) So long as the Agent shall be entitled, pursuant to Section 9.04(c), to assume that no Event of Default or Default has occurred and is continuing, the Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights which may be vested in it by, or with respect to taking or refraining from taking any action or actions which it may be able to take under or in respect of, this Agreement and the other Loan Documents, except that (i) subject to subparagraph (e) of this Section 9.04, the Agent shall not exercise any rights under Article 8 hereof except upon the written consent or written instructions of the Majority Lenders and (ii) the Agent shall be required to act or not act upon the written instructions of the Majority Lenders (or the Lenders comprising such other percentage in interest of the Lenders as provided herein) and such exercise of discretion shall be binding on all the Lenders. Any such instructions shall be binding upon the Agent and the Lenders (including, but not limited to, any Lender which has not signed such instructions or which has dissented from the actions or inactions specified in such instructions); provided, however, that the Agent shall not be required to act or not to act if to do so, in its sole judgment, would expose the Agent to liability (which liability would not be covered by the provisions of Section 9.07) or would be contrary to this Agreement, the Notes, the other Loan Documents or to applicable law, except that the Agent shall so act or not act if doing so would expose it to liability if and only if it shall have received from the Lenders such confirmation of indemnities against all such liabilities and any and all expenses, including fees and expenses of its counsel satisfactory to it in its sole judgment. (e) In the event that the Agent shall have acquired actual knowledge of a Default or Event of Default, the Agent shall promptly give notice thereof to the Lenders and shall take such action and assert such rights under this Agreement, and/or under the other Loan Documents as the Majority Lenders shall direct, provided that the Agent shall not be required to act or not to act if to do so would expose the Agent to liability or would be contrary to this Agreement, the other Loan Documents or applicable law, and provided further, that if the Majority Lenders entitled so to direct the Agent shall fail, for ten days after the giving of any such notice, so to direct the Agent, the Agent may take such action and assert such rights as it deems to be advisable, in its discretion, for the protection of the interests of the Lenders and the Agent. Section 9.05 Reliance by the Agent. (a) The Agent shall be entitled to rely on any notice, consent, certificate, affidavit, letter, telegram, teletype message, statement, order or other document received by it and believed by it to be genuine and correct and to have been signed and sent or delivered by a proper Person or Persons and, in respect of legal matters, upon the advice and statements of lawyers, independent accountants and other experts selected by the Agent. The Agent and each Lender may rely conclusively on each incumbency certificate furnished to it pursuant to Article 4 until it subsequently receives a certificate amending or rescinding the prior certificate. (b) As to any matter not expressly provided for in this Agreement, the Agent shall be fully protected in acting in accordance with instructions signed by the Majority Lenders and such instructions of the Majority Lenders and action taken or inaction pursuant thereto shall be binding on all the Lenders, including, but not limited to, any Lender which has not signed such instructions or which has dissented from the actions or inactions specified in such instructions, provided that the Agent shall not be required to act or not to act if to do so, in its sole judgment, would expose the Agent to liability which liability would not be covered by the indemnity provisions of Section 9.07 or would be contrary to this Agreement, the other Loan Documents or applicable law. Section 9.06 Exculpatory Provisions. 51 (a) Neither the Agent nor any of their respective shareholders, directors, officers, employees or agents shall be liable in any manner to any of the Lenders for any action taken, or omitted to be taken, in good faith by it or them hereunder or in connection herewith, or be responsible for the consequences of any oversight or error of judgment, except for losses which are finally adjudicated to be the direct result of its gross negligence or willful misconduct. (b) The Agent shall not be responsible in any manner to any of the Lenders for the due execution, effectiveness, genuineness, validity or enforceability of any of this Agreement, the Notes, the other Loan Documents or the Loans or for the truth, accuracy or completeness of any recital, statement or warranty contained herein or in any other Loan Document or in any certificate, report or other document furnished to it by or on behalf of any Person in connection with this Agreement or any other Loan Document; nor shall the Agent be under any obligation to any of the Lenders to ascertain or inquire as to the performance or observance by the Borrower or any other Person of any of the agreements or conditions set forth herein or in any other Loan Document or as to the use of any moneys loaned hereunder. Section 9.07 Indemnification of the Agent. (a) The Lenders, severally, agree to indemnify Agent (to the extent not promptly reimbursed by the Borrower or from the income or proceeds of the sale of any of the Collateral), ratably according to the respective unpaid principal amounts of the Obligations at the time owing to each of them, from and against any and all liabilities, obligations, losses, damages, penalties, actions, suits, judgments, court costs and other out-of-pocket costs and expenses of any kind or nature whatsoever (hereinafter called, collectively, "Expenses") which may be imposed on, incurred by or asserted against the Agent, as such, in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Agent under this Agreement or any other Loan Document, provided that no Lender shall be liable for any portion of such Expenses which, based on a final adjudication, are determined to be the direct result of the gross negligence or willful misconduct of the Agent hereunder. (b) In the event that the Agent does not receive from any Lender a payment which such Lender is required by the terms hereof to make to the Agent and the Agent has made the amount thereof available to the Borrower, as the intended recipient thereof, if the Borrower repays the Agent the amount made available to it, the Borrower shall be subrogated to the Agent's right to recover such amount from any Lender which failed to make such required payment. Section 9.08 National City Bank Individually. With respect to its obligation as a Lender to lend under this Agreement and the advances made by it pursuant hereto, National City Bank shall have the same obligations and the same rights, powers and privileges as it would have were it not an Agent. National City Bank may accept deposits from, lend money to and, generally, engage in any kind of banking, trust or other business with the Borrower or any of their respective Subsidiaries or Affiliates in all respects as if such Person were not acting as an Agent hereunder. Section 9.09 Dealing With the Lenders. The Agent may at all times deal solely with the several Lenders for all purposes of this Agreement and the protection, enforcement and collection of the Obligations, including the acceptance and reliance upon any certificate, consent or other document of such Lenders and the division of payments pursuant to Section 2.12, notwithstanding possession by the Agent of actual knowledge that any Lender has sold a participation in Loans made or to be made by it hereunder to another Person. The Agent may deem and treat the payees of the Notes as the owners thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof has been filed with the Agent. Any request, authority or consent of any holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note. 52 Section 9.10 Duties Not to be Increased. The respective duties and liabilities of the Agent shall not be increased without the written consent of the Agent. Section 9.11 Successor Agent. (a) The Agent may resign at any time by giving written notice to the Lenders and the Borrower, and the Agent may be removed at any time with or without cause by notice from the Majority Lenders (excluding the Agent), such resignation or removal to become effective only upon the appointment of a successor Agent as hereinafter provided. (b) Upon any such resignation or removal, the Majority Lenders (excluding the Agent) shall have the right to appoint from among the Lenders a successor Agent, subject to the written consent of the Borrower (which consent shall not be unreasonably withheld or delayed and which shall not be required if a Default or Event of Default shall then exist), unless none of the Lenders is willing to act as successor Agent hereunder, in which event the Majority Lenders (excluding the Agent) shall appoint as successor Agent, subject to the written consent of the Borrower (which consent shall not be unreasonably withheld or delayed and which shall not be required if a Default or Event of Default shall then exist), any financial institution of international standing having an office in the United States of America, chartered by the State of New York or another of the States of the United States of America or authorized as a national banking association organized under the laws of the United States of America, and who is willing to act in that capacity. If no successor Agent shall have been appointed by the Majority Lenders, then the retiring Agent may on behalf of the Lenders appoint a successor Agent, subject to the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed and which shall not be required if a Default or Event of Default shall then exist), which shall be a financial institution of international standing having an office in the United States of America. (c) Upon the acceptance of its appointment as Agent hereunder by any such successor Agent, the latter shall thereupon succeed to and become vested with the duties, rights, powers and privileges of the retiring Agent and the retiring Agent shall be discharged from all duties and liabilities under this Agreement. (d) After the resignation or removal of any Agent hereunder, the provisions of this Article 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent hereunder and it shall also continue to be entitled to the indemnities provided hereunder insofar as they relate to events which occurred while it was Agent hereunder. ARTICLE 10. ADDITIONAL LENDERS, ASSIGNMENTS AND PARTICIPATIONS Section 10.01 Additional Lenders. Any commercial lender, other financial institution or other entity (an "Additional Lender") may join this Agreement with the consent of the Borrower and the Agent (acting in their sole discretion) and without the necessity of obtaining the consent of any of the Lenders then a party hereto, by executing and delivering to the Borrower and the Agent an agreement in substantially the form of Exhibit F hereto (a "Joinder Agreement"), duly completed, accepting all the terms and conditions of this Agreement. Upon execution and delivery of such Joinder Agreement, and subject to such consent, such Additional Lender shall be a "Lender" for all purposes of this Agreement, the Security Agreement and the other Loan Documents. Upon such Additional Lender becoming a Lender hereunder, (i) the Agent and the Borrower shall make appropriate arrangements so that a Note is issued by the Borrower to such Additional Lender, payable to its order, with appropriate insertions and 53 replacement notes, if applicable, be issued to the other Lenders and (ii) this Agreement and the Schedules hereto shall be deemed modified to reflect such Additional Lender. Section 10.02 Assignments. (a) Each Lender may, with the prior written consent of the Agent (which consent shall not be unreasonably withheld or delayed) and of the Borrower (which consent shall not be unreasonably withheld or delayed and which shall not be required if a Default or Event of Default shall then exist), assign to one or more banks or other financial institutions all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of its Commitment, the Loans owing to it and the Note or Notes held by it) provided that (i) for each such assignment, the parties thereto shall execute and deliver to the Agent, for its acceptance, an assignment and assumption agreement in form reasonably satisfactory to it, together with any Note or Notes being assigned and a processing and recordation fee in the amount of $2,500, (ii) unless such assignment is an assignment of the assignor's entire remaining Commitment, no assignment may be made hereunder unless each Lender shall have a Commitment of at least seven million five hundred thousand Dollars ($7,500,000) immediately after giving effect to such assignment and (iii) no Lender may transfer its proportionate share of Loans without transferring its same proportionate share of Commitment. Upon execution and delivery of such assignment agreement and payment of the processing and recordation fee to the Agent, from and after the effective date of such assignment as specified in such assignment agreement, (x) the assignee of such Lender shall be a party hereto and, to the extent of the rights and obligations so assigned to it, shall have the rights and obligations of a Lender hereunder, (y) the assigning Lender shall, to the extent of the rights and obligations so assigned by it, have relinquished its rights (other than any rights under Section 11.01 of this Agreement, which rights will survive such assignment) and be released from its obligations under this Agreement (and, in the case of an assignment covering all or the remaining portion of such Lender's rights and obligations under this Agreement and the other Loan Documents, the Lender shall cease to be a "Lender" hereunder) and (z) Schedule 1.01 to this Agreement shall be deemed modified to reflect any such assignment. (b) Within five (5) Business Days after receipt by the Borrower of an assignment executed by a Lender as described in subsection (a) above, the Borrower, at its own expense, shall execute and deliver to such assignee in exchange for the Note or Notes surrendered upon such assignment, a new Note to the order of such assignee in an amount equal to the Commitment assumed by such assignee and, if the assigning Lender has retained a portion of the Commitment, a new Note to the order of such Lender in an amount equal to the Commitment retained by it. Such new Note or Notes shall re-evidence the indebtedness outstanding under the old Note or Notes, shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes and shall otherwise be in substantially the form of the Notes subject to such assignment, with such additions as the Agent shall require in order to reflect the issuance of such new Notes as substitute Notes. Section 10.03 Participations. (a) Each Lender shall have the right, subject to the further provisions of this Article 10, to grant or sell a participation in all or any part of its Loans, Notes, and Commitment (a "Participation") to any commercial lender, other financial institution or other entity (a "Participant") without the consent of the Borrower (except if the proposed participant is a competitor of the Borrower in which case the participation shall be subject to the prior written consent of the Borrower), the Agent or any other party hereto, although notice thereof shall be given to the Borrower and the Agent by each selling Lender promptly after any Participation if, after giving effect thereto, the interests hereunder in which it shall not have granted a Participation shall be not less than a majority of both its Commitment and its interest in the Loans outstanding. 54 (b) Notwithstanding anything in the foregoing to the contrary, (i) no Participant shall have any direct rights hereunder, (ii) the Borrower, the Agent and the Lenders other than the selling Lender shall deal solely with the selling Lender and shall not be obligated to extend any rights or make any payment to, or seek any consent of, the Participant, and (iii) no Participation shall relieve the selling Lender from its Commitment to make Loans hereunder or any of its other obligations hereunder and such Lender shall remain solely responsible for the performance thereof. Section 10.04 Information. A Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Article 10, disclose to the assignee or participant (or proposed assignee or participant) any information concerning the Borrower, their respective officers, directors and Affiliates, including, without limitation, any information in regard to the creditworthiness of the Borrower, obtained by the Lender pursuant to this Agreement and the other Loan Documents, provided, that prior to receiving any information concerning the Borrower, such assignee or participant (or proposed assignee or participant) executes and delivers to Lender a confidentiality agreement in form and substance reasonably acceptable to Borrower, and provided further that nothing in this Section 10.04 shall limit the ability of any Lender to disclose to any Person any information concerning the Borrower, their respective officers, directors and Affiliates: (a) to its attorneys, auditors, agents, professional advisors, trustees or affiliates with a need to know (who are advised of the confidential nature of such information and agree to be bound by the provisions of the confidentiality agreement), (b) to the extent such information presently is or hereafter becomes available to such Lender on a non-confidential basis from a source owing no duties of confidentiality to Borrower or such information is in the public domain at the time of disclosure, (c) to the extent required by law (including applicable securities law), regulation, requirement, ruling, or legal or judicial order or process or required to be disclosed in any report, statement or testimony submitted to any regulatory authority, (d) to any rating agency to the extent required in connection with any rating to be assigned to such Lender (provided that any such rating agency is advised of the confidential nature of such information and agrees to be bound by the provisions of the confidentiality agreement) or (e) to the extent required in connection with any litigation between the Borrower and any Lender with respect to the Loans or this Agreement and the other Loan Documents. ARTICLE 11. MISCELLANEOUS PROVISIONS Section 11.01 Fees and Expenses; Indemnity. (a) The Borrower agrees to promptly pay on demand (i) all reasonable costs and reasonable expenses of the Agent in preparing the Loan Documents and all reasonable costs and reasonable expenses of the issue of the Notes including, but not limited to, the reasonable fees, expenses and disbursements of special counsel to the Agent, but excluding internal overhead administrative costs and expenses in connection with the preparation, execution and delivery of this Agreement, the Notes, the Security Documents and the other Loan Documents and the consummation of the transactions contemplated by all such documents; and (ii) all reasonable costs and expenses of the Agent's and the Lenders' enforcement of their rights and remedies hereunder, performance of and compliance with all agreements and conditions contained herein on the part of the Borrower to be performed or complied with (including, without limitation, all costs of filing or recording any assignments, mortgages, financing statements and other documents) and the negotiation, preparation and execution and delivery of any amendment, modification or supplement of or to any Loan Document, or any consent or waiver under any such document (or any such instrument which is proposed but not executed and delivered) and with any claim or action threatened, made or brought against the Agent or the Lenders arising out of or relating to any extent to this Agreement, the Security Documents, the other Loan Documents or the transactions 55 contemplated hereby or thereby. In addition, the Borrower agrees to promptly (and in any event within 30 days after its receipt of an invoice or statement therefor) pay all costs and expenses (including, without limitation, fees and disbursements of counsel) suffered or incurred by the Agent and the Lenders in connection with its enforcement of the payment of the Notes or any other sum due to it under this Agreement or any of the other Loan Documents or any of its other rights hereunder or thereunder. (b) The Borrower shall indemnify the Agent and the Lenders against, and hold each of them harmless from, any loss, liabilities, damages, claims, reasonable costs and reasonable expenses (including attorneys' fees and disbursements) suffered or incurred by it arising out of, resulting from or in any manner connected with, the execution, delivery and performance of each of the Loan Documents, the Loans and any and all transactions related to or consummated in connection with the Loans (other than as a result of an act or omission of the Agent or any Lender which a court of competent jurisdiction finally determines has been committed with gross negligence, willful misconduct or in bad faith), including, without limitation, losses, liabilities, damages, claims, reasonable costs and reasonable expenses suffered or incurred by the Agent or the Lenders in investigating, preparing for, defending against, or providing evidence, producing documents or taking any other action in respect of any commenced or threatened litigation, administrative proceeding or investigation under any federal securities law or any other statute of any jurisdiction, or any regulation, or at common law or otherwise, which is alleged to arise out of or is based upon (i) the ownership or use of any of the Collateral or the Lien of the Agent or the Lenders in the Collateral, (ii) the failure on the part of the Borrower to comply in all respects with the laws of the United States of America and other jurisdictions in which the Collateral or any part thereof my be operated and with all lawful acts, rules, regulations and orders of any commissions, boards or other legislative, executive, administrative or judicial bodies or officers having power to regulate or supervise any of the Collateral, and (iii) the execution, delivery, consummation, waiver, consent, amendment, enforcement, performance and administration (except for internal overhead administrative costs and expenses) of this Agreement, the Loan Agreement, the Security Documents and the other Loan Documents, or the use by the Borrower of the proceeds of each extension of credit under the Loan Agreement; (iv) any untrue statement of any material fact of the Borrower in any document or schedule filed with any governmental body; (v) any omission or alleged omission to state any material fact required to be stated in such document or schedule, or necessary to make the statements made therein, in light of the circumstances under which made, not materially misleading; (vi) any acts, practices or omissions of the Borrower or its agents or representatives related to the making of any acquisition, purchase of shares or assets pursuant thereto, financing of such purchases or the consummation of any other transactions contemplated by any such acquisitions which are in violation of any federal securities law or of any other statute, regulation or other law of any jurisdiction applicable to the making of any such acquisition, the purchase of shares or assets pursuant thereto, the financing of such purchases or the consummation of the other transactions contemplated by any such acquisition; or (vii) any withdrawals, termination or cancellation of any such acquisition for any reason whatsoever. The indemnity set forth herein shall be in addition to any other obligations or liabilities of the Borrower to the Agent and the Lenders hereunder or at common law or otherwise. The provisions of this Section 11.01 shall survive the payment of the Notes and the termination of this Agreement. Section 11.02 Taxes. If, under any law in effect on the date of the closing of any Loan hereunder, or under any retroactive provision of any law subsequently enacted, it shall be determined that any federal, state or local tax is payable in respect of the issuance of any Note, or in connection with the filing or recording of any assignments, mortgages, financing statements, or other documents (whether measured by the amount of indebtedness secured or otherwise) as contemplated by this Agreement (other than in respect of tax penalties imposed solely by reason of any act or omission of the Agent or any of the Lenders committed in bad faith or with gross negligence), then the Borrower agrees to pay any such tax and all interest and penalties, if any, and will indemnify the Agent and the Lenders against and hold each of them harmless from any loss or damage resulting from or arising out of the nonpayment or delay in 56 payment of any such tax. If any such tax or taxes shall be assessed or levied against any Lender or any other holder of a Note, such Lender, or such other holder, as the case may be, may notify the Borrower and make immediate payment thereof, together with interest or penalties in connection therewith, and shall thereupon be entitled to and shall receive immediate reimbursement therefor from the Borrower. Notwithstanding any other provision contained in this Agreement, the covenants and agreements of the Borrower in this Section 11.02 shall survive payment of the Notes and the termination of this Agreement. Section 11.03 Payments. All payments by the Borrower hereunder shall be made to the Agent as provided in Section 2.12 hereof. All payments hereunder and under the Notes shall be made without set-off or counterclaim and in such amounts as may be necessary in order that all such payments shall not be less than the amounts otherwise specified to be paid under this Agreement and the Notes (after withholding for or on account of (i) any present or future taxes, levies, imposts, duties or other similar charges of whatever nature imposed by any government or any political subdivision or taxing authority thereof, other than any tax (except those referred to in clause (ii) below) on or measured by the net income of the Lenders pursuant to applicable federal, state and local income tax laws, and (ii) deduction of amounts equal to the taxes on or measured by the net income of the Lenders payable by the Lenders with respect to the amount by which the payments required to be made under this sentence exceed the amounts otherwise specified to be paid in this Agreement and the Notes). Upon payment in full of each Note, the Agent shall mark such Note "Paid" and return it to the Borrower. The Borrower shall be liable for all Obligations under this Agreement and the other Loan Documents. Section 11.04 Survival of Agreements and Representations; Reaffirmation of Security Interest; Waiver of Trial by Jury. (a) All agreements, representations and warranties made herein shall survive the delivery of this Agreement and the Notes. (b) The Borrower hereby reaffirms as of the date hereof each and every security interest and lien granted in favor of the Agent and the Lenders under the Loan Documents, and agrees and acknowledges that such security interests and liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Original Agreement as amended by the First Amended and Restated Agreement and as further amended by this Agreement, and the obligations secured thereby and thereunder shall include the Borrower's obligations under the Original Agreement as amended by the First Amended and Restated Agreement and as further amended by this Agreement. Each such reaffirmed security interest and lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed and all references in the Security Documents to the Original Agreement shall refer to the Original Agreement as amended by the First Amended and Restated Agreement and as further amended and modified by this Agreement. (c) THE BORROWER, THE AGENT AND EACH LENDER WAIVES TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF, THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF. Section 11.05 Lien on and Set-off of Deposits. As security for the due payment and performance of all the Obligations, the Borrower hereby grants to the Agent for the ratable benefit of the Lenders a Lien on any and all deposits or other sums at any time credited by or due from any Lender to the Borrower, whether in regular or special depository accounts or otherwise, and any and all monies, securities and other property of the Borrower, and the proceeds thereof, now or hereinafter held or 57 received by or in transit to any Lender from or for the Borrower, whether for safekeeping, custody, pledge, transmission, collection or otherwise, and any such deposits, sums, monies, securities and other property may, at any time after the occurrence and during the continuance of any Event of Default, be set-off, appropriated and applied by such Lender against any of the Obligations, whether or not any of such Obligations is then due or is secured by any Collateral, or, if it is so secured, whether or not the Collateral held by the Agent is considered to be adequate. Section 11.06 Modifications, Consents and Waivers; Entire Agreement. (a) No modification, amendment or waiver of or with respect to any provision of this Agreement, the Notes, the Security Documents or any of the other Loan Documents nor consent to any departure by the Borrower from any of the terms or conditions hereof or thereof, shall in any event be effective unless it shall be in writing and signed by the Borrower and the Majority Lenders; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by the affected Lenders, increase the amounts or extend the term of the Commitment of such Lender or subject such Lender to any additional obligations, or, unless signed by all of the Lenders do any of the following:(i) reduce the principal of, or interest on, the Notes or any fees hereunder, (ii) postpone any scheduled date for any payment of principal of, or interest on, the Notes or any fees hereunder, (iii) change the percentage in interest of the Lenders which shall be required to take action hereunder, (iv) other than as permitted by the Loan Documents, release all or a substantial portion of the Collateral if the effect thereof is to cause the outstanding principal amount of the Loans to exceed the amount of the Borrowing Base, (v) change the definitions of "Eligible Equipment", "Eligible Contracts", and/or "Borrowing Base" or (vi) change any provision of this Section 11.06; provided further, however, that no amendment, waiver or consent with respect to any provision of Article 9 shall be effective unless signed by the Agent affected by such amendment. No consent to or demand on the Borrower in any case shall, of itself, entitle it to any other or further notice or demand in similar or other circumstances. (b) This Agreement embodies the entire agreement and understanding among the Agent, the Lenders and the Borrower and supersedes all prior agreements and understandings relating to the subject matter hereof. Section 11.07 Remedies Cumulative. Each and every right granted to the Agent and the Lenders hereunder or under any other document delivered here under or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of the Agent or the Lenders to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or future exercise thereof or the exercise of any other right. Section 11.08 Further Assurances. At any time and from time to time, upon the reasonable request of the Agent, the Borrower shall, at its expense, execute, deliver and acknowledge or cause to be executed, delivered and acknowledged, such further documents and instruments, including, without limitation, collateral assignments of software rights and Lien searches required from time to time to confirm the Agent's Lien on the Collateral, and do such other acts and things as the Agent may reasonably request in order to fully effect the purposes of this Agreement, the Notes, the Security Documents and the other Loan Documents. Section 11.09 Notices. Except as otherwise provided for herein, all notices, requests, reports and other communications pursuant to this Agreement shall be in writing, and shall be delivered personally, or registered mail, postage prepaid, by hand or commercial messenger service, or sent by certified mail or registered mail, postage prepaid, return receipt requested, except for routine reports 58 delivered in compliance with Article 5 hereof which may be sent by ordinary first-class mail, facsimile (followed by a hard copy), with electronic confirmation of receipt, addressed as follows: If to the Borrower: Marlin Leasing Corporation 124 Gaither Drive Suite 170 Mount Laurel, NJ 08054 Attention: Mr. Daniel Dyer, Chief Executive Officer With a Copy to: Mr. George Pelose, General Counsel Tel: (609) 359-9111 Facsimile: (888) 479-1100 If to the Agent: National City Bank One South Broad Street, 18th Floor Philadelphia, PA 19107 Attention: Mr. Michael Labrum Tel: (267) 256-4081 Facsimile: (267) 256-4001 with a copy (other than in the case of Notices and reports and other documents delivered in compliance with Article 5 hereof) to: Klehr, Harrison, Harvey, Branzburg & Ellers, LLP 260 South Broad Street Philadelphia, PA 19102 Attention: Jeffrey O. Greenfield Tel: 215-569-3009 Facsimile: 215-568-6603 If to the Lenders, at the addresses set forth on the signature pages hereto or in the Joinder Agreement pursuant to which a Lender becomes a party hereto, as the case may be. Any notice, request or communication hereunder shall be deemed to have been given on the day on which it is delivered by hand or commercial messenger service to such party at its address specified above, or, if sent by mail, on the fifth Business Day after the day deposited, with a United States Postal Depositary postage prepaid, or, if sent by facsimile, when electronically confirmed. Any facsimile transmission will be confirmed by hard copy sent one (1) Business Day after transmission by first class or registered or certified mail. Any party may change the person or address to whom or which notices are to be given hereunder; provided, however, that any such notice shall be deemed to have been given hereunder only when actually received by the party to which it is addressed. Section 11.10 Construction; Governing Law; Consent to Jurisdiction. (a) The headings used in this Agreement are for convenience of reference only and shall not in any way be deemed to limit, define or describe the scope and intent of this Agreement or any provision hereof. 59 (b) This Agreement, the Notes, the Security Documents and the other Loan Documents shall be governed by, and construed and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania without reference to its principles of conflict of laws. (c) The Borrower irrevocably consents that any legal action or proceeding against it under, arising out of or in any manner relating to this Agreement, the Notes, or any other Loan Document may be subject to the jurisdiction of any court of the Commonwealth of Pennsylvania sitting in the County of Philadelphia or the United States District Court for the Eastern District of Pennsylvania. The Borrower, by the execution and delivery of this Agreement, expressly and irrevocably assents and submits to the personal jurisdiction of any of such courts in any such action or proceeding. The Borrower further irrevocably consents to the service of any complaint, summons, notice or other process relating to any such action or proceeding by delivery thereof to it by hand or by mail in the manner provided for in Section 11.09 hereof. The Borrower hereby expressly and irrevocably waives any claim or defense in any such action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis. Nothing in this Section 11.10 shall affect, or impair in any manner or to any extent the right of the Agent or the Lenders to commence legal proceedings or otherwise proceed against the Borrower in any jurisdiction or to serve process in any manner permitted by law. Section 11.11 Severability. The provisions of this Agreement are severable, and if any clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this Agreement in any jurisdiction. Each of the covenants, agreements and conditions contained in this Agreement is independent and compliance by the Borrower with any of them shall not excuse noncompliance by the Borrower with any other. The Borrower is liable for the performance and compliance with this Agreement. The Borrower shall take any action the effect of which shall constitute a breach or violation of any provision of this Agreement. Section 11.12 Binding Effect; No Assignment or Delegation. This Agreement shall be binding upon and inure to the benefit of the Borrower and its successors and to the benefit of Lenders and the Agent and their respective successors and assigns. The rights and obligations of the Borrower under this Agreement shall not be assigned or delegated without the prior written consent of the Majority Lenders, and any purported assignment or delegation without such consent shall be void. Section 11.13 Counterparts; Facsimile Execution. This Agreement may be executed in as many counterparts as may be deemed necessary or convenient, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same instrument. Execution and delivery of this Agreement by facsimile transmission shall constitute execution and delivery for all purposes. [Remainder of page intentionally left blank; Signatures to follow] 60 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. BORROWER: MARLIN LEASING CORPORATION By:____________________________ Name: Title: AGENT: NATIONAL CITY BANK as Agent By:____________________________ Name: Title: LENDERS: NATIONAL CITY BANK FIRSTRUST SAVINGS BANK One South Broad Street, 18th Floor 15 East Ridge Pike Philadelphia, PA 19107 Conshohocken, PA 19428 Attention: Specialized Lending Group Attention: John Hollingsworth Facsimile: (267) 256-4001 Facsimile: (610) 238-5066 By:_____________________________ By:____________________________ Name: Name: Title: Title: SOVEREIGN BANK Three Radnor Corporate Center Suite 210 100 Matsonford Road Radnor, PA 19087 Attention: Michael Hassett Facsimile: (610) 526-6214 By:_________________________________ Name: Title: SCHEDULE 1.01 COMMITMENT PERCENTAGES AND LOAN COMMITMENTS
Lender Name Loan Commitment Commitment Percentage(1) - ---------------------- --------------- ------------------------ National City Bank $ 15,000,000 46.15% Sovereign Bank $ 10,000,000 30.77% Firstrust Savings Bank $ 7,500,000 23.08% - ---------------------- ------------ ----- Total $ 32,500,000 100%
- --------------------------------- (1) Figure represents the actual percentage rounded to the nearest one-hundredth of one percent. EX-10.10 7 w89427exv10w10.txt FIRST AMENDMENT TO SECOND WAREHOUSE REVOLVING ... EXHIBIT 10.10 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT THIS FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED WAREHOUSE REVOLVING CREDIT FACILITY AGREEMENT (this "Amendment") is entered into as of July 28, 2003 and amends in certain respects the Second Amended and Restated Warehouse Revolving Credit Facility Agreement dated as of August 31, 2001 (as amended, the "Credit Agreement"), among MARLIN LEASING CORPORATION (the "Borrower"), each of the financial institutions that is or pursuant to the terms thereof may become a party thereto as lender (individually, a "Lender", and collectively, the "Lenders") and NATIONAL CITY BANK, as Agent for the Lenders (the "Agent"). W I T N E S S E T H: WHEREAS, the Borrower, Lenders and the Agent wish to extend the Commitment Termination Date of the Credit Agreement for an additional two years; WHEREAS, given the Borrower's intention to pursue an initial public offering of its stock, the parties recognize the need to amend certain provisions of the Credit Agreement to make them applicable to a public reporting company; and WHEREAS, the parties hereto desire to effect such consent and amendments on the terms and subject to the conditions herein set forth; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Agent, the Borrower and the Lenders hereby agree as follows: SECTION 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed to them in the Credit Agreement. SECTION 2. Credit Agreement Amendments. (a) Section 1.01 of the Credit Agreement is hereby amended as follows: (i) the definition of "Change of Control" is hereby amended by (A) amending sub-paragraph (a) thereof by adding the following at the end thereof: "and such Principals are not replaced by new personnel reasonably acceptable to the Majority Lenders within 90 days thereafter;"; and (B) amending sub-paragraph (e) thereof by adding the following at the end thereof: "(provided, however, that a Public Offering (as such term is defined in the Amended Articles) by the Borrower and transactions directly related thereto shall not constitute an Organic Change)". (b) The definition of "Commitment Termination Date" in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: "Commitment Termination Date" - the earlier of (x) August 31, 2005 or such later date as shall be applicable pursuant to Section 2.04 or (y) such other date as the Commitment shall terminate in accordance with this Agreement. (c) Section 2.04(a) of the Credit Agreement is hereby amended by deleting the reference to "August 31, 2003" in the second line thereof and replacing it with "August 31, 2005". (d) Section 4.02(e) of the Credit Agreement is hereby amended by deleting the reference to "December 31, 2000" in the second line thereof and replacing it with "December 31, 2002". (e) Section 5.15 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: "Section 5.15. Reporting Obligations as a Public Company. Notwithstanding anything in this Agreement to the contrary, Section 5.04(iii) of this Agreement shall cease to be effective so long as the Borrower: (a) is subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and continues to comply with such requirements, and (b) promptly provides to each Person otherwise entitled to receive information pursuant to Section 5.04(iii) of this Agreement all reports and other materials as and when filed by the Borrower with the Securities and Exchange Commission pursuant to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended." (f) The Credit Agreement is hereby amended by adding the following as a new Section 5.17 (immediately after Section 5.16): "Section 5.17. Confidentiality. The Agent and Lenders shall (i) use all documents and information received in connection with this Agreement solely in their capacity as a Lender under this Agreement, (ii) treat such documents and information as highly confidential and (iii) shall not disclose such documents or information to any other person or entity (other than employees of the Agent or Lenders who need to know such information in connection with the Loans and who are apprised of and bound by Agent's and Lender's duty of confidentiality and non-disclosure hereunder)." (g) Section 6.10(a)(iii) of the Credit Agreement is hereby amended and restated to read in its entirety as follows: "(iii) a Consolidated Tangible Net Worth of not less than the sum of (A) $30,000,000 plus (B) commencing with Consolidated Net Income for the quarter ending March 31, 2003, 75% of cumulative Consolidated Net Income (but not loss or deficit), less any dividends accrued on its Preferred Stock permitted by Section 7.07(b);" (h) Schedule 3.01(a) to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 3.01(a) attached hereto. (i) Schedule 3.01(b) to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 3.01(b) attached hereto. (j) Schedule 3.16 to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 3.16 attached hereto. (k) Schedule 3.17 to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 3.17 attached hereto. Borrower represents and warrants to Lender that the documents and transactions listed in items 13, 14, and 15 of Schedule 3.17 attached hereto constitute Indebtedness incurred by a Securitization Subsidiary in connection with a Securitization Program as permitted by Section 7.01(g) of the Credit Agreement, and all Liens granted thereby or pursuant thereto constitute Permitted Financing Security Interests permitted by Section 7.02(c)(ii) of the Credit Agreement. 2 (l) Schedule 3.19 to the Credit Agreement is hereby deleted in its entirety and replaced with schedule 3.19 attached hereto. (m) Schedule 3.21 to the Credit Agreement is hereby deleted in its entirety and replaced with Schedule 3.21 attached hereto. (n) Exhibit B to the Credit Agreement is hereby deleted in its entirety and replaced with Exhibit B attached hereto. (o) Except as specifically amended or modified above, all of the terms of the Credit Agreement shall remain unchanged and in full force and effect. SECTION 3. Effectiveness. The amendments and consents set forth in Section 2 of this Amendment shall be conditioned upon (a) receipt by the Agent of counterparts of this Amendment executed by the Borrower and the Lenders and (b) the fulfillment to the satisfaction of the Agent of each of the following conditions: (i) The Borrower shall have delivered to the Agent in form and substance satisfactory to the Agent a Certificate of the Secretary or Assistant Secretary of the Borrower certifying (1) that all corporate action by the Borrower necessary to authorize the execution, delivery and performance of each of the Amendment Documents (as hereunder defined) to which it is a party and the transactions contemplated thereby has been taken and that such authorization has not been rescinded, limited or modified, (2) the incumbency (with specimen signatures) of the Authorized Officers of the Borrower, and (3) that all representations and warranties set forth in this Amendment are true and correct at and as of the date of the effectiveness of this Amendment. (ii) The Agent shall have received such other instruments, agreements and documents as it shall reasonably require in connection with this Amendment and the matters referred to above. (iii) All matters related to the financial condition, assets, liabilities and creditworthiness of the Borrower shall be satisfactory to the Agent and the Lenders, in their sole discretion. SECTION 4. Representations and Warranties. In order to induce the Lenders to execute this Amendment, the Borrower hereby represents and warrants to the Agent and Lenders as follows, which representations and warranties shall survive the execution and delivery of this Amendment and the other Amendment Documents (hereinafter defined): (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware and has the power to own its assets and to transact the business in which it is currently engaged and in which it proposes to be engaged. (b) The Borrower is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which its failure to qualify could have a Material Adverse Effect. (c) The Borrower has the power to execute, deliver and perform this Amendment, any other agreements or documents being or to be executed and delivered in connection herewith (collectively the "Amendment Documents"). The Borrower has taken all necessary action (corporate or otherwise) to authorize the execution, delivery and performance of the Amendment Documents. No consent or approval of any Person (including, without limitation, any stockholder of the Borrower), other than any such consent or approval a copy of which has been delivered to the Agent in form and substance satisfactory to the Agent, no filing with, action by, consent or approval of any landlord or mortgagee, no waiver of any Lien or right of distraint or other similar right and no filing with, action by, consent, 3 license, approval, authorization or declaration of any governmental authority, bureau or agency, is or will be required in connection with the execution, delivery or performance by the Borrower or the validity, enforcement or priority, of the Amendment Documents. (d) The execution, delivery and performance by the Borrower of each of the Amendment Documents to which it is a party will not (i) violate or conflict with any provision of law or any rule or regulation, (ii) violate or conflict with any provision of the Amended Articles or by-laws of the Borrower, (iii) violate or conflict with or result in a breach of any order, writ, injunction, ordinance, resolution, decree, or other similar document or instrument of any court or governmental authority, bureau or agency, domestic or foreign, or create (with or without the giving of notice or lapse of time, or both) a default under or breach of any agreement, bond, note or indenture to which the Borrower is a party, or by which it is bound or any of its properties or assets are affected, or (iv) result in the imposition of any Lien of any nature whatsoever upon any of its properties or assets owned by or used in connection with the business of the Borrower, except for the Liens created and granted pursuant to the Security Documents. (e) This Amendment and each of the other Amendment Documents has been or will be duly executed and delivered by the Borrower, and when executed and delivered each will constitute the valid and legally binding obligation of the Borrower, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by the availability of equitable remedies. (f) Neither the Borrower nor any of its Subsidiaries is in default under any agreement, ordinance, resolution, decree, bond, note, indenture, order or judgment to which it is a party or by which it is bound, or by which any of the properties or assets owned by it or used in the conduct of its business is affected, and the Borrower and its Subsidiaries have complied and are in compliance with all applicable laws, ordinances and regulations, including, without limitation, Environmental Laws, in either case which default, or non-compliance with which laws, could have a Material Adverse Effect on the Borrower. (g) The Indebtedness under the Credit Agreement constitutes Senior Indebtedness under the ING Purchase Agreement, the Wachovia Purchase Agreement and the Wachovia II Purchase Agreement. (h) The Borrower is in full compliance with the terms and conditions of the Loan Documents, each of the representations and warranties set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects as if made on and as of the date of effectiveness of this Amendment, and, as of the date of effectiveness of this Amendment and after giving effect thereto and to the consummation of the transactions contemplated hereby, no Default or Event of Default has occurred and is continuing. (i) Neither the Financial Statements nor any certificate, opinion, or any other statement made or furnished in writing to the Agent or the Lenders by or on behalf of the Borrower in connection with this Amendment or the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state a material fact necessary in order to make the statements contained therein or herein not misleading. (j) Any failure of any of the representations and warranties made by Borrower in this Amendment to be true and correct in all respects when made shall constitute an Event of Default under the Credit Agreement. SECTION 5. Outstanding Indebtedness. Borrower hereby acknowledges unconditionally that, as of the close of business on July 28, 2003, the outstanding principal balance of all Revolving Loans is $3,456,345.61. Borrower acknowledges and agrees that the foregoing balance of the Revolving Loans, together with accrued and unpaid interest thereon, is owing to Lender without claim, counterclaim, recoupment, defense or setoff of any kind. 4 SECTION 6. Reference to and Effect on Loan Documents. (a) On and after the date hereof, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import, and each reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby. (b) Except as otherwise expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Lender, or the Agent under the Credit Agreement or any of the other Loan Documents, shall not constitute a waiver of any provision of the Credit Agreement or any of the other Loan Documents, nor shall it affect or diminish any Lender's or the Agent's rights to hereafter require strict performance of any provision of the Credit Agreement or any of the other Loan Documents. SECTION 7. Reaffirmation of Security Interest. The Borrower hereby reaffirms as of the date hereof each and every security interest and lien granted in favor of the Agent and the Lenders under the Loan Documents, and agrees and acknowledges that such security interests and liens shall continue from and after the date hereof and shall remain in full force and effect from and after the date hereof, in each case after giving effect to the Credit Agreement as amended by this Amendment, and the obligations secured thereby and thereunder shall include Borrower's obligations under the Credit Agreement as amended by this Amendment. Each such reaffirmed security interest and lien remains and shall continue to remain in full force and effect and is hereby in all respects ratified and confirmed. SECTION 8. Further Assurances. Each of the parties hereto hereby agrees to do such further acts and things and to execute, deliver and acknowledge such additional agreements, powers and instruments as any other party hereto may reasonably require to carry into effect the purposes of this Amendment. SECTION 9. Governing Law. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. SECTION 10. Counterparts. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. Execution and delivery of this Amendment by facsimile transmission shall constitute execution and delivery of this Amendment for all purposes, with the same force and effect as execution and delivery of an originally manually signed copy hereof. SECTION 11. Headings; Binding Effect. The headings of the several sections of this Amendment are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Amendment. The provisions of this Amendment shall inure to the benefit of and be binding upon the parties hereto and their respective permitted successors and assigns. [BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES TO FOLLOW] 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their proper and duly authorized officers as of the date set forth above. BORROWER MARLIN LEASING CORPORATION By:____________________________________ Name: Daniel P. Dyer Title: Chief Executive Officer LENDERS: NATIONAL CITY BANK By:____________________________________ Name: Title: FIRSTRUST SAVINGS BANK By:____________________________________ Name: Title: SOVEREIGN BANK By:____________________________________ Name: Title: AGENT: NATIONAL CITY BANK, As Agent By:____________________________________ Name: Title: EX-10.11 8 w89427exv10w11.txt MASTER FACILITY AGREEMENT EXHIBIT 10.11 Execution Copy ================================================================================ MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT by and among MARLIN LEASING CORPORATION as the Servicer, MARLIN LEASING RECEIVABLES CORP. II as the Obligors' Agent, and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee and Back-up Servicer, Dated as of April 1, 2002 ================================================================================ Execution Copy TABLE OF CONTENTS
Page Article I DEFINITIONS................................................................................... 1 Section 1.01. Definitions....................................................................... 1 Section 1.02. Acts of Holders................................................................... 20 Section 1.03. Notice to Holders; Waiver......................................................... 21 Section 1.04. Alternate Payment and Notice Provisions........................................... 22 Section 1.05. Conflict with Trust Indenture Act................................................. 22 Section 1.06. Effect of Headings and Table of Contents.......................................... 22 Section 1.07. Successors and Assigns............................................................ 22 Section 1.08. Benefits of Agreement............................................................. 22 Section 1.09. Allocation of Series to Groups.................................................... 23 Section 1.10. Status of Obligors' Agent......................................................... 23 Article II REPRESENTATIONS, WARRANTIES AND COVENANTS.................................................... 23 Section 2.01. Representations, Warranties and Covenants of Obligors............................. 23 Section 2.02. Representations, Warranties and Covenants of Servicer............................. 27 Section 2.03. Representations and Warranties of Trustee......................................... 30 Article III PLEDGING THE TRUST ESTATE................................................................... 31 Section 3.01. Series Trust Estates.............................................................. 31 Section 3.02. Preservation of Series Collateral................................................. 31 Section 3.03. Waiver of Stay or Extension Laws; Marshalling of Assets........................... 32 Section 3.04. Noninterference, Etc.............................................................. 32 Section 3.05. Obligor Changes................................................................... 32 Section 3.06. Limited Recourse to Obligors...................................................... 33 Section 3.07. Authorization of Actions to Be Taken by the Trustee............................... 33 Section 3.08. Termination of Security Interests................................................. 34 Section 3.09. Filing; Maintenance of Contract Files............................................. 34 Section 3.10. Costs and Expenses................................................................ 34 Article IV NOTE FORMS................................................................................... 34 Section 4.01. Forms Generally................................................................... 34 Section 4.02. Form of Trustee's Certificate of Authentication................................... 35 Section 4.03. Securities Legend................................................................. 35 Article V THE NOTES..................................................................................... 36 Section 5.01. Amount Limited; Issuable in Series................................................ 36 Section 5.02. Execution, Authentication, Delivery and Dating.................................... 37 Section 5.03. Temporary Notes................................................................... 37 Section 5.04. Registration, Registration of Transfer and Exchange, Transfer Restrictions........ 38 Section 5.05. Mutilated, Destroyed, Lost and Stolen Notes....................................... 40
i Section 5.06. Final Distribution................................................................ 40 Section 5.07. Persons Deemed Owners............................................................. 42 Section 5.08. Cancellation...................................................................... 42 Section 5.09. Book-Entry Notes.................................................................. 42 Section 5.10. Notices to Clearing Agency........................................................ 43 Section 5.11. Definitive Notes.................................................................. 43 Article VI ADMINISTRATION AND SERVICING OF THE TRUST ESTATE............................................. 44 Section 6.01. Retention of Servicer; Responsibilities of Servicer............................... 44 Section 6.02. Standard of Care.................................................................. 46 Section 6.03. Credit and Collection Policy...................................................... 46 Section 6.04. Maintenance of Interest in the Trust Estate....................................... 46 Section 6.05. Servicing Compensation; Payment of Certain Expenses by Servicer................... 47 Section 6.06. Servicer's Certificate............................................................ 47 Section 6.07. Annual Statement as to Compliance................................................. 47 Section 6.08. Financial Statements and Independent Accountant's Servicing Certificate Review.... 48 Section 6.09. Access to Certain Documentation and Information Regarding the Pledged Property.... 49 Section 6.10. Other Necessary Data.............................................................. 50 Section 6.11. Release of Contracts.............................................................. 51 Section 6.12. Removal Related to Upgrades or Trade-ins and Delinquent Contracts................. 52 Section 6.13. Notification to Noteholders of Defaults and Events of Default..................... 52 Section 6.14. Security Deposits................................................................. 52 Section 6.15. Removal of Nonconforming Pledged Property......................................... 53 Section 6.16. Substitution of Contracts......................................................... 53 Article VII ACCOUNTS AND ALLOCATIONS.................................................................... 54 Section 7.01. Establishment of Facility Accounts; Establishment of Advance Payment Accounts..... 54 Section 7.02. Collections and Allocations....................................................... 55 Section 7.03. Investment of Funds in each Facility Account and the Advance Payment Account...... 55 Article VIII THE SERVICER AND THE OBLIGORS.............................................................. 56 Section 8.01. Liability of Servicer; Indemnities................................................ 56 Section 8.02. Merger, Consolidation, or Assumption of the Obligations of Servicer............... 57 Section 8.03. Limitation on Liability of Servicer and Others.................................... 57 Section 8.04. Servicer Not to Resign............................................................ 58 Section 8.05. Reserved.......................................................................... 58 Section 8.06. Indemnities of the Obligors....................................................... 58 Section 8.07. Limitation on Liability of the Obligors........................................... 59

ii Article IX SERVICER TERMINATION......................................................................... 59 Section 9.01. Events of Servicer Termination.................................................... 59 Section 9.02. Back-up Servicer to Act; Taking of Bids; Appointment of Successor Servicer........ 60 Section 9.03. Notification of Event of Servicer Termination..................................... 62 Section 9.04. Waiver of Past Defaults........................................................... 62 Section 9.05. Effects of Servicer Termination................................................... 62 Section 9.06. Responsibilities of Back-up Servicer.............................................. 63 Section 9.07. Back-up Servicer Compensation..................................................... 65 Section 9.08. Merger or Consolidation of, or Assumption of the Obligation of Back-up Servicer... 66 Section 9.09. Back-up Servicer Termination or Resignation....................................... 66 Section 9.10. Limitation on Liability of Back-up Servicer and Others............................ 67 Section 9.11. Representations and Warranties of the Back-up Servicer............................ 68 Article X EVENTS OF DEFAULT AND REMEDIES................................................................ 69 Section 10.01. Events of Default................................................................. 69 Section 10.02. Collection of Indebtedness and Suits for Enforcement by Trustee; Authority of Series Controlling Party.................................... 69 Section 10.03. Limitation on Suits............................................................... 71 Section 10.04. Unconditional Right of Holders to Receive Principal and Interest.................. 72 Section 10.05. Restoration of Rights and Remedies................................................ 72 Section 10.06. Rights and Remedies Cumulative.................................................... 72 Section 10.07. Delay or Omission Not Waiver...................................................... 72 Section 10.08. Control by Holders................................................................ 73 Section 10.09. Waiver of Past Defaults........................................................... 73 Section 10.10. Undertaking for Costs............................................................. 74 Section 10.11. Action on Notes................................................................... 74 Article XI THE TRUSTEE.................................................................................. 74 Section 11.01. Certain Duties and Responsibilities............................................... 74 Section 11.02. Notice of Defaults................................................................ 76 Section 11.03. Certain Rights of Trustee......................................................... 77 Section 11.04. Not Responsible for Recitals or Issuance of Notes................................. 78 Section 11.05. May Hold Notes.................................................................... 78 Section 11.06. Compensation and Indemnity........................................................ 78 Section 11.07. Disqualification; Conflicting Interests........................................... 78 Section 11.08. Corporate Trustee Required; Eligibility........................................... 79 Section 11.09. Resignation and Removal; Appointment of Successor................................. 79 Section 11.10. Acceptance of Appointment by Successor............................................ 80 Section 11.11. Merger, Conversion, Consolidation or Succession to Business....................... 80 Section 11.12. Preferential Collection of Claims Against Obligors................................ 81 Section 11.13. Appointment of Authenticating Agent............................................... 81

iii Section 11.14. Paying Agent...................................................................... 83 Section 11.15. Appointment of Co-Trustee or Separate Trustee..................................... 84 Article XII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS' AGENT................................... 85 Section 12.01. Obligors' Agent to Furnish Trustee Names and Addresses of Holders................. 85 Section 12.02. Preservation of Information; Communications to Holders............................ 86 Section 12.03. Reports by Trustee................................................................ 87 Section 12.04. Reports by Obligors' Agent........................................................ 87 Section 12.05. Trustee Internet Website.......................................................... 87 Article XIII MASTER AGREEMENT SUPPLEMENTS............................................................... 88 Section 13.01. Supplements Affecting All Series, or the Master Agreement Generally............... 88 Section 13.02. Supplements Authorizing a Series of Notes......................................... 91 Section 13.03. Execution of Master Agreement Supplements......................................... 91 Section 13.04. Effect of Master Agreement Supplements............................................ 92 Section 13.05. Reference in Notes to Master Agreement Supplements................................ 92 Article XIV COVENANTS................................................................................... 92 Section 14.01. Payment of Principal and Interest................................................. 92 Section 14.02. Maintenance of Non-U.S. Office or Agency.......................................... 92 Section 14.03. Consolidation, Merger, Sale of Assets............................................. 93 Section 14.04. Negative Covenants................................................................ 94 Section 14.05. Performance of Obligations; Servicing of Each Series Trust Estate................. 95 Section 14.06. Money for Note Payments to Be Held in Trust....................................... 96 Section 14.07. Corporate Existence............................................................... 97 Section 14.08. Payment of Taxes and Other Claims................................................. 98 Section 14.09. Amendment of Organizational Documents............................................. 98 Section 14.10. Rule 144A Information............................................................. 98 Section 14.11. Further Instruments and Acts...................................................... 99 Section 14.12. Compliance with Laws.............................................................. 99 Section 14.13. Income Tax Characterization....................................................... 99 Article XV MISCELLANEOUS PROVISIONS..................................................................... 99 Section 15.01. Counterparts...................................................................... 99 Section 15.02. Governing Law..................................................................... 99 Section 15.03. Notices........................................................................... 99 Section 15.04. Severability of Provisions........................................................ 100 Section 15.05. Binding Effect.................................................................... 100 Section 15.06. Exhibits.......................................................................... 100 Section 15.07. Calculations...................................................................... 100 Section 15.08. Further Assurances................................................................ 101

iv ~~Section 15.09. Nonpetition Covenant.............................................................. 101~~

Exhibit A Form of Back-up Servicer Verification Certificate Exhibit B Form of Trustee Website Investor Certification Schedule 1 Required Fields for List of Contracts v Execution Copy This MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT, dated as of April 1, 2002, with respect to the Marlin Leasing Receivables Master Facility, by and among Marlin Leasing Corporation, a Delaware corporation, as Servicer, Marlin Leasing Receivables Corp. II, a Nevada corporation, as the Obligors' Agent and Wells Fargo Bank Minnesota, National Association, a national banking association, as Trustee. WITNESSETH: In consideration of the mutual agreements herein contained, and of other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: Article I DEFINITIONS Section 1.01. Definitions. Whenever used in this Master Agreement, the following words and phrases shall have the following meanings: (i) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (ii) all other terms used herein which are defined in the Trust Indenture Act (as hereinafter defined), either directly or by reference therein, have the meanings assigned to them therein; (iii) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of such computation; (iv) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Master Agreement as a whole and not to any particular Article, Section or other subdivision, "or" is not exclusive and "including" means including without limitation; and (v) any references contained herein to agreements, documents and instruments are to the same as they may be amended or modified from time to time. Act. When used with respect to any Holder, has the meaning specified in Section 1.02 hereof. Actuarial Method. The method of allocating a Scheduled Payment with respect to any Contract between principal and interest, pursuant to which (i) the portion of such payment that is allocated to interest is the product of (a) one-twelfth of the Applicable Discount Rate with respect to such Contract multiplied by (b) the applicable Contract Principal Balance (before giving effect to such principal payment) and (ii) the remainder of such payment is allocated to principal. Advance Payment. Means, with respect to any Contract, any Scheduled Payment or a portion thereof made by or on behalf of a User which does not become due until a subsequent Collection Period. Advance Payments shall be applied as "Collections" with respect to the Collection Period(s) in which such Scheduled Payments are due. Advance Payment Account. Has the meaning ascribed in Section 7.01(c) hereof. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Agreement or Master Agreement. This Master Lease Receivables Asset-Backed Financing Facility Agreement, as the same may be amended, restated or otherwise modified from time to time. Applicable Discount Rate. With respect to any Contract shall have the meaning set forth in the Series Supplement under which such Contract is pledged to the Trustee. Authenticating Agent. Means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Notes. Authorized Officer. Means, with respect to any Obligor or the Obligors' Agent, any President, Vice President or Director of Securitization of such Obligor or of the Obligors' Agent. Back-up Servicer. Means Wells Fargo Bank Minnesota, National Association and any successor thereto. Back-up Servicer Fee: With respect to a Series, has the meaning specified in the related Series Supplement. Back-up Servicer Resignation Notice. Has the meaning specified in Section 9.09(b) hereof. 2 Back-up Servicer Termination Notice. Has the meaning specified in Section 9.09(a) hereof. Bearer Notes. Shall have the meaning specified in Section 4.01 hereof. Book-Entry Notes. Shall mean Notes registered in the name of a Clearing Agency or its nominee as described in Section 5.09 hereof. Booked Residual. Means, with respect to any Contract on any date of determination, the residual value of the Equipment subject to such Contract, as reflected in Marlin's servicing system. Borrowing Base. Has the meaning specified therefor in the related Series Supplement. Broker. The Person (including any broker, vendor or other Person, but excluding the Transferor that arranges for the lease of an item of Equipment to a User pursuant to a Contract between the Transferor and the User of such Equipment, or any Person from whom the Transferor purchased a Contract in respect of which the Transferor is not an original party. Broker Agreement. Any agreement between the Transferor and a Broker pursuant to which the Transferor has acquired Contracts. Business Day. Any day other than a Saturday, a Sunday or a day on which banking institutions in New York, New York, Mt. Laurel, New Jersey, Minneapolis, Minnesota or Reno, Nevada are authorized or obligated by law, executive order or governmental decree to be closed. Calculation Date. The last day of a Collection Period. Amounts calculated from Calculation Date balances shall be calculated from such balances as of the close of business on the Calculation Date. Charged-Off Contract. Means a Contract (i) as to which a notice of acceleration has been sent to the relevant User, (ii) as to which an Insolvency Event has occurred with respect to the User, (iii) all or any portion of which has been or should have been, in accordance with the Credit and Collection Policy, written off the related Obligor's books as uncollectible, (iv) with respect to which the Servicer has elected not to make a Servicer Advance, or (v) as to which any Scheduled Payment, or part thereof, remains unpaid for 121 days (as of the 20th calendar day of the month) or more from the original due date for such payment. Class. With respect to any Series, all the Notes of such Series having the same specified payment terms and priorities in payment. Clearing Agency. Shall mean The Depository Trust Company, or any other organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. 3 Clearing Agency Participant. Shall mean a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book entry transfers and pledges of securities deposited with the Clearing Agency. Clearstream Bank. Shall mean Centrale de Livraison de Valeurs Mobilieres S.A. Closing Date. With respect to a Series, has the meaning specified therefor in the relevant Series Supplement. Code. Means the Internal Revenue Code of 1986, as amended from time to time, and Treasury Regulations promulgated thereunder. Collection Period. With respect to any Settlement Date, the immediately preceding calendar month; provided, that if, with respect to any Contract, the Cut-Off Date applicable thereto is a day other than the first day of a calendar month, then the initial Collection Period with respect to such Contract shall be the period commencing on such Cut-Off Date and ending at the end of the calendar month in which such Cut-Off Date occurs. Collections. With respect to a Series Trust Estate and any Collection Period, all cash collections and other cash proceeds of the Contracts and the Related Security, including without limitation, Scheduled Payments, Prepayments, Residual Receipts, Recoveries, Investment Earnings and Insurance Proceeds received from such Series Trust Estate by the Servicer, the Trustee, the Transferor or the Obligors and Servicer Advances made in respect thereof, in each case, during such Collection Period (or, if the related Cut-Off Date is later than the first day of such Collection Period, from such Cut-Off Date through the end of such Collection Period); provided, that "Collections" shall not include (i) Advance Payments until (and only to the extent that) such amounts are deposited in the applicable Series Account for distribution to the related Noteholders in accordance with Section 7.02, and (ii) Servicing Charges and provided, further, that any amounts paid under any Series Support in reduction of the principal amount of any Note, any interest thereon or any other amount in connection therewith shall not constitute Collections. Commission. Means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at anytime after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. Commonly Controlled Entity. Means each Obligor and each entity, whether or not incorporated, which is affiliated with any of the foregoing pursuant to Section 414(b), (c), (m) or (o) of the Code. Companion Series. Shall mean (i) each Series which has been paired with one or more other Series (which Series may be prefunded or partially prefunded), such that the reduction of the Outstanding Amount of such Series results in the increase of the 4 Outstanding Amount of such other Series, as described in the related Series Supplements, and (ii) such other Series. Computer Tape. Collectively, the computer tapes generated by the Transferor which provide information relating to the Contracts and which were, or will be, used by the Transferor in selecting the Contracts sold or contributed to the Obligors pursuant to a Transfer Agreement Supplement. Contract. Each of the agreements conveyed by the Transferor to an Obligor pursuant to the Master Transfer Agreement and subsequently pledged by such Obligor to the Trustee pursuant hereto and any Series Supplement, including, as applicable, schedules, supplements and amendments thereto, pursuant to which specified Equipment is leased to, or loans are made to, a User or which are identified on the List of Contracts delivered on the related Pledge Date. Contract Balance Remaining. Means, with respect to any Contract (or other lease in the Servicer's servicing portfolio), as of any date, the aggregate (undiscounted) amount of all unpaid Scheduled Payments due under such Contract (or other lease). Contract File. With respect to each Contract, the following documents: (i) The executed original counterparts of the Contract that constitutes "chattel paper" for purposes of Sections 9-102(11) and 9-102 (78) of the UCC (bearing the original signature of an employee of Marlin, together with the facsimile copy of the signature of the User or the original signature of the User) or an "instrument" for purposes of Section 9-102(47) of the UCC; (ii) A copy of any related Broker Agreement; (iii) Copies of all documents (which may be in microfiche or imaged form or on the Servicer's computerized information system), if any, that the Transferor or the Servicer keeps on file for benefit of the Transferor in accordance with the Transferor's or Servicer's customary procedures indicating that the Equipment is owned by the Transferor and copies of any and all other material documents (including, if any, delivery and acceptance notices, guaranties, and vendor recourse agreements) that the Transferor or the Servicer keeps on file for the benefit of the Transferor in accordance with the Transferor's or Servicer's customary procedures relating to any individual Contract, Broker, User or Equipment (including, without limitation, any documents providing or relating to any credit support of or for the User of such Contract); and (iv) Copies (together with all amendments, assignments, and continuations thereof and including evidence of filing with the appropriate office) of all UCC financing statements filed with respect to the Contracts, identifying the User as debtor and the Transferor as secured party, if any. 5 Contract Principal. With respect to any Contract for any Collection Period, an amount equal to the excess of (i) the Scheduled Payment due on such Contract during such Collection Period over (ii) the product of (x) the Contract Principal Balance as of the opening of business on the first day of such Collection Period and (y) one-twelfth of the Applicable Discount Rate for such Contract. Contract Principal Balance. As of any date in the case of a Contract, the present value of the Scheduled Payments to become due on and after the date of calculation (excluding all Scheduled Payments due on or prior to, but not received as of such date of calculation), discounted monthly in arrears at one-twelfth of the Applicable Discount Rate. Corporate Trust Office. The principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Master Agreement is specified in Section 15.03 hereof. Coupons. Any interest or other coupons attached to a Note. Credit and Collection Policy. The credit and collection policies and practices of the Transferor, as the same may be modified from time to time in accordance with the terms of this Master Agreement. Crossover Amounts. Any amounts designated as "Crossover Amounts" in a Series Supplement. Cut-Off Date. With respect to any Contract, the close of business on the day prior to the related Pledge Date or the related Transfer Date, as appropriate. Default. Means any occurrence that is, or with notice or the lapse of time or both would become, an Event of Default. Definitive Notes. Has the meaning specified in Section 5.09 hereof. Delinquent Contract. A Contract, other than a Charged-Off Contract, as to which any Scheduled Payment, or part thereof in excess of 10% of such Scheduled Payment, remains unpaid for more than 30 days from the original due date for such payment. Depositaries. Shall mean the Person(s), if any, specified in the applicable Supplement, in its capacity as depositary for the respective accounts of any Clearing Agency or any Foreign Clearing Agencies. Depository Agreement. Shall mean, if applicable with respect to any Series or Tranche, the agreement among the Obligors' Agent, the Trustee and a Clearing Agency, or as otherwise provided in the related Series Supplement. 6 Determination Date. With respect to a Collection Period, the date which is three Business Days prior to the earliest Settlement Date relating to such Collection Period. Dollars or $. The lawful money of the United States. Eligible Contract. With respect to any Series, as defined in the related Series Supplement. Eligible Investments. Any of the following: (b) marketable obligations of the United States of America which are backed by the full faith and credit of the United States of America; (c) marketable obligations directly and fully guaranteed by the full faith and credit of the United States of America; (d) bankers' acceptances and certificates of deposit and other interest bearing obligations denominated in Dollars and issued by any commercial bank with capital, surplus and undivided profits aggregating at least $100,000,000, the short term unsecured and unguaranteed securities of which are rated at least "A-1+" by S&P and "P-1" by Moody's; (e) repurchase obligations for underlying securities of the types described in clauses (a), (b) and (c) above entered into with any commercial bank of the type described in clause (c) above; (f) commercial paper rated at least "A-1+" by S&P and "P-1" by Moody's; (g) freely redeemable shares in money market funds (including funds for which the Trustee, any Noteholder or any affiliates of either of the foregoing may act as sponsor or advisor or for which any of the foregoing Persons may receive fee income) which invest solely in obligations, bankers' acceptances, certificates of deposit, repurchase agreements and commercial paper of the types described in clauses (a) through (e), which money market funds are rated at least "AAAm" or "AAAm-g" by S&P and "Aa1" by Moody's; and (h) demand deposits, time deposits or certificates of deposit (having original maturities of no more than 365 days) of depository institutions or trust companies incorporated under the laws of the United States of America or any state thereof (or domestic branches of any foreign bank) and subject to supervision and examination by federal or state banking or depository institution authorities; provided, that at the time such investment, or the commitment to make such investment, is entered into, the short-term unsecured and unguaranteed debt rating of such depository institution or trust company shall be at least "P-1" by Moody's and the long-term unsecured and unguaranteed debt rating of such depositary institution or trust company shall be at least "AA-" by S&P. 7 Each of the Eligible Investments may be purchased by the Trustee through an Affiliate of the Trustee. Notwithstanding anything set forth in clauses (a)-(g) above, any Eligible Investment purchased with funds on deposit in any Facility Account, Advance Payment Account or Series Account must mature no later than the Business Day prior to the next Settlement Date for the applicable Series. ERISA. Shall mean the Employee Retirement Income Security Act of 1974, including, unless the context otherwise requires, the rules and regulations thereunder, as amended from time to time. Equipment. The equipment leased to a User pursuant to any Contract. Euroclear Operator. Shall mean Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System. Event of Default. Has the meaning specified in Section 10.01 hereof. Event of Servicer Termination. An Event described in Section 9.01 hereof. Exchange Act. Means the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder. Facility Account. Shall have the meaning ascribed in Section 7.01(a) hereof. Facility Shadow Rating. Means the rating which would be assigned to the Outstanding Notes with respect to any Series, if such Outstanding Notes were not provided insurance or other credit support by any Series Support Provider. Final Date. With respect to any Series, the date on which all amounts due to the related Series Secured Parties have been indefeasibly paid in full. Foreign Clearing Agency. Shall mean Clearstream Bank and the Euroclear Operator. Government Contract. Means a Contract of Equipment under which the User is a federal, state or local government or government agency (or any agency or instrumentality thereof). Governmental Authority. The United States of America, any State or other political subdivision of either of the foregoing and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 8 Group. Shall mean, with respect to any Series, the group of Series, if any, in which the related Series Supplement specifies such Series is to be included. Holder or Noteholder. Shall mean, (i) with respect to a Book-Entry Note, the Person who is the owner of such Book-Entry Note, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules of such Clearing Agency) or (ii) with respect to a Definitive Note, the Person who is the owner of such Definitive Note, as reflected in the books of the Note Registrar. Increased Servicer Fee. With respect to any Series, the amount, if any, of the fee payable in accordance with Section 9.02(b) hereof to a successor Servicer appointed pursuant to Section 9.02(b) hereof and the related Series Supplement that is in excess of the Servicer Fee. Indebtedness. Means, with respect to any Person at any time, (a) indebtedness or liability of such Person for borrowed money whether or not evidenced by bonds, debentures, notes or other instruments, or for the deferred purchase price of property or services (excluding trade obligations and accrued expenses incurred in the ordinary course of business and not overdue); (b) obligations of such Person as lessee under leases which are, should have been or should be, in accordance with generally accepted accounting principles, recorded as capital leases; (c) current liabilities of such Person in respect of unfunded vested benefits under plans covered by Title IV of ERISA; (d) obligations issued for or liabilities incurred on the account of such Person; (e) obligations or liabilities of such Person arising under acceptance facilities; (f) reimbursement obligations with respect to letters of credit; (g) obligations of such Person under any guarantees, endorsements (other than for collection or deposit in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss; (h) obligations of such Person secured by any lien on property or assets of such Person, whether or not the obligations have been assumed by such Person; or (i) obligations of such Person under any interest rate or currency exchange agreement. Indemnified Amounts. Has the meaning set forth in Section 8.01(b) hereof. Indemnified Party. Has the meaning set forth in Section 8.01(b) hereof. Independent Accountant. A firm of nationally recognized independent certified public accountants appointed by Marlin and/or the Servicer (if other than Marlin), as applicable, within the meaning of the Securities Act. Initial Unpaid Amounts. Shall mean with respect to a Contract, the excess of the aggregate amount of all Scheduled Payments due prior to the related Cut-Off Date over the aggregate of all Scheduled Payments made prior to the related Cut-Off Date with respect to such Contract. 9 Insolvency Event. Means, with respect to a specified Person, either of the following events: (i) a case or proceeding shall have been commenced against such Person seeking a decree or order in respect of such Person (a) under Title 11 of the United States Code, as now constituted or hereafter amended or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law, (b) appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar official) for such Person or of any substantial part of such Person's assets, or (c) ordering the winding-up or liquidation of the affairs of such Person, and such case or proceeding shall remain undismissed or unstayed for sixty (60) days or more or such court shall enter a decree or order granting the relief sought in such case or proceeding; or (ii) the commencement by such Person of a voluntary case under Title 11 of the United States Code, as now constituted or hereafter amended, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person for any substantial part of such Person's assets, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. Insurance Policy. With respect to an item of Equipment and the related Contract, any insurance policy or similar agreement required to be maintained by the User pursuant to such Contract that covers physical damage to the Equipment and loss or theft of the Equipment (including policies procured by the Transferor or the Servicer (including those from an affiliate of the Transferor or Servicer) on behalf of the User) or covering any liabilities arising from such item of Equipment or the use thereof by the User. Insurance Proceeds. With respect to an item of Equipment and the related Contract, any amount received during a Collection Period pursuant to an Insurance Policy issued with respect to such item of Equipment and the related Contract. Investment Earnings. Any income earned from the investment of funds from time to time on deposit in any Facility Account, Advance Payment Account or Series Account in accordance with Section 7.03 hereof and the Series Supplements, net of any investment expenses and losses on any such investments. Lien. Any security interest, mortgage, deed of trust, lien (statutory or otherwise), charge, pledge, equity, hypothecation, assignment, deposit arrangement, encumbrance, preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever, including, without limitation, any conditional sale or 10 other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement under the UCC (other than any such financing statement filed for informational purposes only) or comparable law of any jurisdiction to evidence any of the foregoing. List of Contracts. With respect to any specified group of Contracts, a printed or electronic list of such Contracts, certified by an Authorized Officer of the Obligors' Agent. Each List of Contracts shall include for each Contract listed thereon (a) a number identifying such Contract, (b) the Contract Principal Balance, (c) the User, (d) the State in which the User's billing address is located, (e) the scheduled maturity date of the Contract, (f) the Scheduled Payment amount for such Contract, (g) the stated amount of the Booked Residual, if any, on such Contract, and (h) the Applicable Discount Rate for such Contract. Majority Control Parties. Shall mean those Series Controlling Parties for the outstanding Series, the Maximum Series Limit of which represent, in the aggregate, 66 2/3% or more of the aggregate Maximum Series Limit for all outstanding Series. Marlin. Shall mean Marlin Leasing Corporation, a Delaware corporation. Master Agreement Supplements. Shall have the meaning ascribed in Section 13.01(a) hereof. Master Transfer Agreement. That certain Master Lease Acquisition and Sale Agreement, dated as of April 1, 2002, by and between the Transferor and the Obligors' Agent. Maturity Date. When used with respect to any Note, means the date on which the principal of such Note becomes due and payable in full as therein or herein provided, whether on the final scheduled Settlement Date or by declaration of acceleration, prepayment or otherwise. Maximum Series Limit. Means, with respect to any Series, the aggregate principal amount of all Notes of such Series which have been committed to at the date of determination as set forth in the related Series Supplement. Moody's. Moody's Investors Service and its successors. Multiemployer Plan. Means a multiemployer plan (within the meaning of Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity makes contributions or has liability. Non-Monthly Payment Contracts. Means any Contract that does not require the User to make monthly payments. Note Register and Note Registrar. Have the respective meanings specified in Section 5.04 hereof. 11 Noteholders' Agent. Means any Person designated by one or more Noteholders to be their "agent". Notes. Any Note authenticated and delivered under this Master Agreement. Obligors. Means each Person designated as an "Obligor" in this Master Agreement or in a Series Supplement with respect to the related Series of Notes, or any successor thereto. Obligors' Agent. Marlin Leasing Receivables Corp. II, a Nevada corporation, and its successors and permitted assigns. Obligors' Order or Obligors' Request. Means a written request or order signed by an Authorized Officer of the Obligors' Agent and delivered to the Trustee. Officer's Certificate. Means a certificate signed by an Authorized Officer of an Obligor or the Obligors' Agent. Offset Amount. The meaning ascribed to such term in Section 6.14 hereof. Opinion of Counsel. A written opinion of counsel, who may be counsel employed by the Servicer or other counsel, in each case acceptable to the named recipients thereof. Organizational Documents. With respect to any Obligor, such Obligor's articles of incorporation and by-laws, partnership agreement, trust agreement, limited liability company agreement, or other charter-type governing instruments. Original Equipment Cost. With respect to any piece of Equipment, the cost thereof as set forth in the related purchase invoice. Original Issue Date. Means, for any Series, Class or Tranche of Notes, the date of original issue of such Series, Class or Tranche of Notes, as specified in the related Series Supplement. Original Servicer Fee Rate. With respect to any Series, the rate at which the Servicing Fee is calculated, as specified on the related Series Supplement. Outstanding. When used with respect to Notes, means, as of the date of determination, all Notes theretofore authenticated and delivered under this Master Agreement except, (i) Notes theretofore cancelled by the Note Registrar or delivered to the Note Registrar for cancellation; and 12 (ii) Notes for whose payment or prepayment money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent for the Holders of such Notes in connection with a proposed termination and for which termination notice has been provided; and (iii) Lost, destroyed or stolen Notes in lieu of which other Notes have been authenticated and delivered pursuant to Section 5.05 hereof, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Obligors; provided, however, that any Notes which have been paid with proceeds of the related Series Support shall continue to remain Outstanding for purposes of this Master Agreement until the related Series Support Provider has been paid as subrogee hereunder or reimbursed as evidenced by a written notice from the related Series Support Provider delivered to the Trustee, and the related Series Support Provider shall be deemed to be the Holder thereof to the extent of any payments thereon made by the related Series Support Provider; provided, further, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder or under any related document, Notes owned by the Obligors or any other obligor upon the Notes, the Transferor or any Affiliate of any of the foregoing shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes that a Responsible Officer of the Trustee knows to be so owned shall be so disregarded. Notes so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not an Obligor, any other obligor upon the Notes, the Transferor or any Affiliate of any of the foregoing Persons. Outstanding Amount. Means, with respect to any Series the aggregate principal amount of all Notes of such Series which are Outstanding at the date of determination after giving effect to all distributions of principal on such date of determination. Overdue Payment. Any Scheduled Payment due on a Contract and not received during the Collection Period in which such Scheduled Payment was due. Paying Agent. Means the Paying Agent appointed pursuant to Section 11.14 hereof. PBGC. Means the Pension Benefit Guaranty Corporation or any successor agency, corporation or instrumentality of the United States to which the duties and powers of the Pension Benefit Guaranty Corporation are transferred. 13 Person. Any legal person, including any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, Governmental Authority or any other entity. Plan. Means any pension plan (other than a Multiemployer Plan) covered by Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in respect of which a Commonly Controlled Entity has liability. Pledge. Means each pledge by the related Obligors of all or any portion of the related Series Trust Estate to the Trustee for the benefit of the related Noteholders in accordance with Section 3.01 hereof. Pledge Date. Shall have the meaning specified therefor in the related Series Supplement. Pledge Notice. A written notice pursuant to which the Obligors with respect to a Series pledge property to the Trustee as part of the related Series Trust Estate. Pledged Property. With respect to any Series Trust Estate, the property described as Pledged Property in the related Series Supplement. Predecessor Note. With respect to any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 5.05 hereof in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. Prepayment. With respect to a Collection Period and a Contract (except a Charged-Off Contract), the payment by the related User of all remaining Scheduled Payments due on such Contract, including, without limitation, by way of application of any Security Deposit for such Contract, so long as such amount is designated by the User as a prepayment and the Servicer has consented to such prepayment. Advance Payments and Residual Receipts are not "Prepayments." Prepayment Amount. Means, with respect to any Contract and without duplication: (a) the Contract Principal Balance of such Contract (without any deduction for any Security Deposit paid by the related User, unless such Security Deposit has been applied to the Contract Principal Balance pursuant to the Credit and Collection Policy and deposited into the applicable Facility Account as a Collection) as of the date of reconveyance of such Contract to the related Obligor by the Trustee, plus (b) the product of (i) the Contract Principal Balance as of the date of reconveyance, and (ii) one-twelfth of the Applicable Discount Rate, plus (c) the Booked Residual for such Contract, plus (d) the amount of all Scheduled Payments due and payable thereon and not made. Principal Terms. Shall mean, with respect to any Series, (i) the name or designation; (ii) the initial Outstanding Amount and the maximum Outstanding Amount (or method for calculating such amounts); (iii) the interest rate or rates (or method for the 14 determination thereof); (iv) the Settlement Date or dates and the date or dates from which interest shall accrue; (v) the method for allocating Collections to Noteholders of such Series; (vi) the designation of any Series Accounts and the terms governing the operation of any such Series Accounts; (vii) the method of calculating the Servicing Fee with respect thereto; (viii) the terms of any form of Series Support with respect thereto; (ix) the Series Termination Date; (x) the number of Classes of Notes of such Series and, if such Series consists of more than one Class, the rights and priorities of each such Class; (xi) whether the Notes of such Series may be issued as Bearer Notes and any limitations imposed thereon; (xii) the priority of such Series with respect to any other Series; (xiii) the Group, if any, to which such Series belongs; (xiv) whether such Series is a Companion Series to one or more other Series; and (xv) any other terms of such Series. Proceeding. Means any suit in equity, action at law or other judicial or administrative proceeding. Property. Shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Rating Agencies. S&P and Moody's or any other nationally recognized statistical rating agency then rating any Notes. Record Date. Means, with respect to any Series, as specified in the related Series Supplement. Records. Means, with respect to any Contract, such Contract, all contracts and other documents, books, records and other information (including, without limitation, Contract Files, computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Contract, any Related Security therefor and the related User. Recoveries. Means all amounts received in respect of a Charged-Off Contract, including, without limitation, amounts received in connection with the sale or other disposition of the related Equipment, Insurance Proceeds with respect to the related Equipment, or any other payments made by or on behalf of the related User, including any amounts paid by the Transferor relating to a Security Deposit, net of costs of collection, in connection with such Charged-Off Contract; provided, that in no event may Recoveries in respect of a Charged-Off Contract be less than zero. Refinance Proceeds. Shall mean with respect to any Collection Period, (i) any proceeds of the issuance of a new series of notes or the issuance of certificates in connection with a securitization of leases and loans, remitted by the Obligors to the Trustee on the Settlement Date following such Collection Period for deposit into the related Series Account and application in accordance with the related Series Supplement, and (ii) any amounts remitted to the Trustee by the Obligors in accordance with the related Series Supplement for deposit into the related Series Account and application in accordance with the related Series Supplement. 15 Registered Holder. Means the Person in whose name a Note is registered on the Note Register on the applicable Record Date. Registered Notes. Has the meaning set forth in Section 4.01 hereof. Related Security. With respect to any Contract: (i) the related Transfer Agreement Supplement (including, without limitation, all rights, remedies, powers and privileges thereunder), pursuant to which, among other things, the Contract, the Contract Files and the related Equipment have been contributed to the related Obligor or Obligors by the Transferor, and the Broker Agreements, if any, relating to such Contracts; (ii) such Obligor's or Obligors' interest in the related Equipment, together with all security interests and/or liens and all property subject thereto from time to time securing or purporting to secure payment of such Contract, whether pursuant to such Contract or otherwise, together with all UCC financing statements covering any such property filed by or otherwise filed in favor of the Transferor and/or such Obligors; (iii) all guarantees, letters of credit, indemnities, warranties, insurance policies (including, without limitation, the Insurance Policies), and proceeds and premium refunds thereof and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Contract whether pursuant to the Contract or otherwise (including, without limitation, the Security Deposits); (iv) the Residual Receipts and Recoveries related to such Contract; (v) the Contract Files and other instruments, documents, agreements, Computer Tapes, books and Records relating to such Contract; and (vi) all proceeds of the foregoing. Release Events. Has the meaning ascribed in Section 6.11 hereof. Replaced Contract. Has the meaning set forth in Section 6.16. Requirements of Law. Any law, treaty, rule or regulation, or final determination of an arbitrator or Governmental Authority, and, when used with respect to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person. Residual Receipts. All amounts in respect of Booked Residuals received by the Servicer, all proceeds of the sale of Equipment received by the Servicer in the event the related User does not purchase the Equipment at the end of the related Contract, any amounts collected by the Servicer as judgments against a User or others related to the failure of such User to pay any required amounts relating to the Booked Residual under 16 the related Contract or to return the Equipment, including any amounts paid by the Transferor relating to a Security Deposit, plus any amounts not otherwise described above which are received by the Servicer and applied against the Booked Residual of such Contract in accordance with the Servicer's servicing standards, in each case as reduced by any reasonably incurred out-of-pocket expenses incurred by the Servicer in enforcing such Contract or in liquidating such Equipment; provided, that in no event may Residual Receipts in respect of a Contract or any Equipment be less than zero. Responsible Officer. When used with respect to the Trustee, any officer assigned to its Corporate Trust Office (or any successor thereto), including any managing director, principal, vice president, assistant vice president, assistant treasurer, assistant secretary, trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and having direct responsibility for the administration of this Master Agreement, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. Rule 144A Information. Has the meaning specified in Section 14.10 hereof. S&P. Standard & Poor's Ratings Group and its successors. Scheduled Payments. With respect to a Settlement Date and a Contract, the stated contractually-required periodic rental payments or payments of principal and interest (exclusive of any amounts in respect of insurance or taxes but inclusive of any "balloon" payment due from such User) set forth in such Contract due from the User in the related Collection Period. Securities Act. The Securities Act of 1933, as amended, and the applicable published rules and regulations thereunder. Security Deposit. Any amount paid to the Transferor by a User as a security deposit or as a payment in advance of any amounts to become due on a Contract, which has not previously been refunded to such User or applied toward such User's obligations under such Contract. Series. With respect to any Notes means those Notes issued pursuant to the same Series Supplement. Series Accounts. Any deposit, trust, escrow, collateral, reserve or similar account established and maintained by the Trustee for the benefit of the Noteholders of any Series or Class as specified in any Series Supplement. Series Closing Date. With respect to any Series, the date designated in the related Series Supplement as the closing date for such Series. Series Controlling Party. With respect to any Series on any date the Person or Persons designated as such in the related Series Supplement. 17 Series Event of Default. Shall have the meaning specified therefor in the related Series Supplement. Series Related Documents. With respect to a Series, has the meaning specified therefor in the related Supplement. Series Secured Obligations. Has the meaning specified therefor in the related Series Supplement. Series Secured Parties. Has the meaning specified therefor in the related Series Supplement. Series Supplement. With respect to any Series, a supplement to this Master Agreement, executed and delivered in connection with the original issuance of the Notes of such Series, and all amendments thereof and supplements thereto. Series Support. The rights and benefits provided to the Trustee or the Noteholders of any Series or Class pursuant to any letter of credit, financial guaranty insurance policy, surety bond, cash collateral account, spread account, guaranteed rate agreement, maturity liquidity facility, interest rate swap agreement, tax protection agreement, derivative contract or other similar arrangement. The subordination of any Series or Class to another Series or Class shall be deemed to be a Series Support. Notwithstanding that such Series Support may be held by or in favor of the Trustee for the benefit of any Series or Class, only those Series or Classes to which such Series Support relates shall have any rights with respect thereto and all payments thereunder received by the Trustee shall be distributed exclusively as prescribed in the Series Supplement relating to such Series or Class. Series Support Provider. The Person providing any Series Support, other than the Noteholders of any Series or Class which is subordinated to another Class or Series. Series Support Provider Default. Has the meaning specified therefor in the relevant Series Supplement. Series Termination Date. Has the meaning ascribed in the relevant Series Supplement. Series Trust Estate. With respect to a Series, has the meaning specified therefor in the related Series Supplement. Series Trustee Secured Obligations. With respect to a Series, has the meaning specified therefor in the related Series Supplement. Servicer. The Person performing the duties of the Servicer hereunder, initially, Marlin. 18 Servicer Advance. With respect to any Series, any amount which the Servicer elects to advance with respect to Overdue Payments, in accordance with the related Series Supplement. Servicer Fee. With respect to each Series, the fee payable to the Servicer on each Settlement Date in consideration of the Servicer's performance of its duties pursuant to Article VI with respect to the Series Trust Estate related to such Series, payable as provided in the related Series Supplement. Servicer Termination Notice. The notice described in Section 9.01(a) hereof. Servicer's Certificate. With respect to each Series Trust Estate, a written informational statement, substantially in the form prescribed by the related Series Supplement, to be provided by the Servicer in accordance with the related Series Supplement and signed by a Servicing Officer and furnished to the Trustee by the Servicer. Servicing Charges. The sum of (i) any late payment charges paid by a User on a Delinquent Contract after application of any such charges to amounts then due under such Contract and (ii) any other incidental charges, security deposits or fees received from a User, including (x) insurance premium payments and tax payments, and (y) prepayment charges paid by a User in connection with a Prepayment. Servicing Officer. Those officers of the Servicer involved in, or responsible for, the administration and servicing of the Contracts, as identified on the list of Servicing Officers furnished by the Servicer to the Trustee, the Noteholders and each Series Support Provider from time to time. Settlement Date. With respect to a Series, has the meaning specified therefor in the related Series Supplement. Solvent. Means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person; (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities (such as litigation, guarantees and pension plan liabilities) at any time shall be computed as the amount which, in light of all the facts and circumstances existing at the time, represents the amount which can be reasonably expected to become an actual or matured liability. State. Any state of the United States of America and, in addition, its territories and possession and the District of Columbia. 19 Substitute Contract. Has the meaning set forth in Section 6.16 hereof. Tranche. All the Notes of a Series (or of a Class within a Series) having the same date of authentication. Transfer Agreement Supplement. Means each Supplement to the Master Lease Acquisition and Sale Agreement executed and delivered pursuant to the Master Transfer Agreement. Transfer Date. Means any date on which a Substitute Contract is pledged pursuant to Section 6.16 hereof. Transferor. Marlin in its capacity as the Transferor under the Master Transfer Agreement, and its successors and permitted assigns. Transferor Breach. Has the meaning set forth in Section 6.15 hereof. Transition Cost. Any documented expenses reasonably incurred by a successor Servicer or the Trustee in connection with a transfer of servicing from the Servicer to a successor Servicer as successor Servicer pursuant to Section 6.05 hereof, but not to exceed $50,000 per Series. Trust Indenture Act. Means the Trust Indenture Act of 1939, as amended from time to time. Trustee. Means the Person named as the "Trustee" in the first paragraph of this Master Agreement until a successor Trustee shall have become such pursuant to the applicable provisions of this Master Agreement, and thereafter "Trustee" shall mean or include the Person who is then the Trustee hereunder. UCC. The Uniform Commercial Code as in effect in the applicable jurisdiction. Unregistered Note. Any Note which is not a Bearer Note and which is part of a Series or Class of Notes which has been designated in the related Series Supplement as being a Series or Class of Unregistered Notes. User. Any obligor under any Contract, whose obligations thereunder constitute the principal source of payments under any Contract, including any guarantor (excluding the Servicer) of such obligations. User Termination Event. Has the meaning set forth in Section 6.12 hereof. Section 1.02. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Master Agreement to be given or taken by the 20 Holders of the related Notes may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Obligors' Agent. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Master Agreement and (subject to Section 11.01) conclusive in favor of the Trustee and the Obligors, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Obligors' Agent or the Obligors in reliance thereon, whether or not notation of such action is made upon such Note. Section 1.03. Notice to Holders; Waiver. Where this Master Agreement or any Series Supplement provides for notice to the Holders of the related Notes of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder affected by such event, at such Holder's address as it appears in the Note Register, or if in writing and by facsimile, to the facsimile number provided by a Holder to the Person giving such notice, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. Where this Master Agreement or any Series Supplement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 21 Where any Series Supplement provides for notice to the Rating Agencies, failure to give such notice shall not affect any rights or obligations created hereunder, and shall not under any circumstance constitute a Default or Event of Default. Section 1.04. Alternate Payment and Notice Provisions. Notwithstanding any provision of this Master Agreement, any Series Supplement or any of the Notes to the contrary, the Obligors' Agent may enter into any agreement with any Holder of a Note providing for a method of payment, or notice by the Trustee or any Paying Agent to such Holder, that is different from the methods provided for in this Master Agreement or the related Series Supplement for such payments or notices. The Obligors' Agent will furnish to the Trustee a copy of each such agreement and the Trustee will cause payments to be made and notices to be given in accordance with such agreements provided the Trustee is not adversely affected thereby. Section 1.05. Conflict with Trust Indenture Act. If this Master Agreement is qualified under the Trust Indenture Act and any provision hereof limits, qualifies or conflicts with another provision hereof that is deemed to be included in and to govern this Master Agreement by any of the provisions of the Trust Indenture Act, such provision deemed to be included herein shall control. Section 1.06. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. Section 1.07. Successors and Assigns. All covenants and agreements in this Master Agreement or any Series Supplement by the Obligors or by the Obligors' Agent, on behalf of the Obligors or in its or their individual capacity, shall bind its or their successors and assigns, whether so expressed or not. All agreements by the Trustee and the Servicer in this Master Agreement or any Series Supplement shall bind its successors and assigns. Section 1.08. Benefits of Agreement. To the extent specified in the related Series Supplement, each of the related Series Support Providers and their successors and assigns shall be a third-party beneficiary to the provisions of this Master Agreement and such Series Supplement, insofar as such provisions apply to the related Notes, and shall be entitled to rely upon and, so long as no Series Support Provider Default shall have occurred and be continuing with respect to such Series Support Provider, directly to enforce such provisions of this Master Agreement and such Series Supplement. Except as aforesaid, nothing in this Master Agreement or any Series Supplement or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the 22 Holders of the related Notes, and any other party secured hereunder, and any other Person with an ownership interest in any part of the related Series Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Master Agreement. The related Series Support Provider may disclaim any of its rights and powers under this Master Agreement (in which case the Trustee may exercise such right or power hereunder), but not its duties and obligations under the related Series Support, upon delivery of a written notice to the Trustee and to the Obligors' Agent. Section 1.09. Allocation of Series to Groups. To the extent so provided in the Series Supplement for any Series or in an amendment to this Master Agreement executed pursuant to subsection 13.01(a), specified Series may be allocated in whole or in part to one or more Groups as may be provided in such Series Supplement or amendment for the purpose of receiving Crossover Amounts with respect to the Series Trust Estate(s) of such other Series in such Group. Any such Series Supplement or amendment may provide that (i) such allocation to one or more particular Series or Groups may terminate upon the occurrence of certain events specified therein and (ii) that upon the occurrence of any such event, the related Crossover Amounts may be reallocated to other Series or Groups or to all Series, all as shall be provided in such Series Supplement or amendment. Section 1.10. Status of Obligors' Agent. By its execution and delivery of a Series Supplement, each Obligor shall be deemed to have designated and appointed Marlin Leasing Receivables Corp. II to act as its agent hereunder, under the Master Transfer Agreement and each Transfer Agreement Supplement and under each other related Series Related Document. The Obligors' Agent is responsible for executing and fulfilling all other duties expressly assigned to it in this Master Agreement, the Master Transfer Agreement and each Transfer Agreement Supplement and the Series Related Documents. The Obligors may, at any time in their discretion, remove the Obligors' Agent and appoint a new Obligors' Agent, which shall have duties described in this Section 1.10. Article II REPRESENTATIONS, WARRANTIES AND COVENANTS Section 2.01. Representations, Warranties and Covenants of Obligors. By its execution and delivery of a Series Supplement, each Obligor will be deemed to have made each of the following representations, warranties and covenants to the Trustee, the Noteholders of the related Series and any Series Support Provider for the related Series on which representations, warranties and covenants the Trustee relies in accepting the related Series Trust Estate in trust, on which the Noteholders of the related Series have relied in agreeing to purchase the related Notes and on which such Series Support Provider, if any, relies in agreeing to issue the related Series Support. Such representations, warranties and covenants are deemed to be made and affirmed on the 23 Series Closing Date for the related Series, and shall survive the date of the making or remaking of such representations and warranties. The covenants of each of the Obligors with respect to a Series shall continue until the Final Date of such Series. (a) Each Obligor represents and warrants, as to itself, that: (i) Existence and Power. Such Obligor is a legal entity duly organized, validly existing and in good standing under the laws of the State of its incorporation or formation (as set forth on Exhibit F to the related Series Supplement), and has all power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted. (ii) No Conflict. The execution, delivery and performance by such Obligor of this Master Agreement and the other Series Related Documents to which it is a party, are within its powers, have been duly authorized by all necessary action, do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Lien on assets of such Obligor or its Subsidiaries (except the interest conveyed to the Trustee); and no transaction contemplated hereby requires compliance with any bulk sales act or similar law. Each of the Series Related Documents to which such Obligor is a party has been duly executed and delivered by such Obligor. (iii) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by such Obligor of this Master Agreement and the other Series Related Documents to which such Obligor is a party, except for such authorizations, approvals, actions, notices and filings as have already been obtained, taken or made in connection with Government Contracts. (iv) Binding Effect. Each of this Master Agreement and the other Series Related Documents to which such Obligor is a party constitutes the legal, valid and binding obligation of such Obligor, enforceable against each Obligor, jointly and severally, in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors' rights generally or general equitable principles. (v) Compliance with Law. No practice, procedure or policy employed or proposed to be employed by such Obligor in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to 24 such Obligor which, if enforced, would have a material adverse effect on such Obligor, any Pledged Property or the collectibility or value thereof, or the ability of such Obligor to perform its obligations hereunder or under any Series Related Documents. (vi) Accuracy of Information. All information furnished in writing by such Obligor to the Trustee on or prior to the related Series Closing Date for purposes of or in connection with the Series Related Documents or any Pledge is true, accurate and complete in every material respect on the date such information is stated or certified, and all such information thereafter furnished by such Obligor to the Trustee will be, true, accurate and complete in every material respect, on the date such information is stated or certified. (vii) Creation of Security Interest. This Master Agreement and the Series Related Documents shall create a valid and continuing security interest (as defined in the applicable UCC) in the Series Trust Estate in favor of the Series Secured Parties, which security interest is prior to all other Liens (except as created by this Master Agreement and the other Series Related Documents), and is enforceable as such as against creditors of and purchasers from the Obligor. (viii) Good Title. Immediately prior to each Pledge hereunder, such Obligor shall own and shall have good and marketable title to the Series Trust Estate free and clear of any Lien, claim or encumbrance of any Person. (ix) Perfection of Security Interests. Such Obligor has caused or will have caused, within ten days, the filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect the security interest granted to the Series Secured Parties hereunder in the Series Trust Estate. (x) Goods. The Equipment constitutes "goods" within the meaning of the applicable UCC. (xi) General Intangibles. The Obligor has received all consents and approvals required by the terms of the Series Related Documents to the sale and/or pledge of the Series Trust Estate hereunder to the Series Secured Parties. (xii) Tangible Chattel Paper. The Contracts constitute "tangible chattel paper" within the meaning of the applicable UCC. (xiii) Perfection of Security Interests. Marlin has taken all steps necessary to perfect its security interest against the related Users in any related Equipment which acts as security for a Contract and has an Original Equipment cost of greater than $25,000. (xiv) Perfection by Filing. Such Obligor has in its possession all original copies of the leases that constitute or evidence the Contracts (each such original copy of the leases bears the original signature of an employee of Marlin, 25 together with the facsimile copy of the signature of the User or the original signature of the User). The leases that constitute or evidence the Contracts do not have any marks or notations indicating that they have been pledged, assigned or otherwise conveyed to any Person other than the Series Secured Parties. All financing statements filed or to be filed against such Obligor in favor of the Series Secured Parties in connection herewith describing the Contracts contain a statement to the following effect: "A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Series Secured Parties." (xv) Priority. Other than the security interest granted to the Series Secured Parties pursuant to this Master Agreement, such Obligor has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the assets comprising the Series Trust Estate. Such Obligor has not authorized the filing of and is not aware of any financing statements against such Obligor that include a description of collateral covering the Series Trust Estate other than any financing statement relating to the security interest granted to the Series Secured Parties hereunder or under the Series Related Documents or that has been terminated. Such Obligor is not aware of any judgment or tax lien filings against such Obligor. (xvi) Priority. No creditor of such Obligor other than the Series Secured Parties has in its possession any goods that constitute or evidence the Series Trust Estate. (xvii) Financing Statements. Such Obligor has not filed any financing statements with respect to the interests of the Obligors' Agent, Marlin Leasing Receivables II LLC ("MLR II LLC") or the Transferor in the Contracts under any names other than "Marlin Leasing Receivables Corp. II," "Marlin Leasing Receivables II LLC" or "Marlin Leasing Corporation" (xviii) No Proceedings. There are no proceedings or investigations pending or, to the best knowledge of such Obligor, threatened before any Governmental Authority (i) asserting the invalidity of the Series Related Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Series Related Documents, (iii) seeking any determination or ruling that, in the reasonable judgment of such Obligor, would materially and adversely affect the performance by such Obligor of its obligations under the Series Related Documents or (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of the Series Related Documents. (xix) Investment Company Act. Such Obligor is not an "investment company" or an "affiliated person" of, or a "promoter" or "principal underwriter" for, an "investment company," in each case within the meaning of the Investment Company Act of 1940, as amended. 26 (xx) Solvency. Such Obligor is Solvent and is not in default under any mortgage, borrowing agreement or other instrument or agreement pertaining to indebtedness for borrowed money. (xxi) Taxes. Such Obligor has filed all federal, state and local tax returns which are required to be filed by it and has paid all taxes and other governmental charges, including any assessments received by it, to the extent that such taxes have become due. (xxii) ERISA. Such Obligor is in compliance with ERISA and has not incurred and does not reasonably expect to incur any liabilities to the PBGC under ERISA in connection with any Plan or Multiemployer Plan or to contribute now or in the future in respect of any Plan or Multiemployer Plan. (b) Each Obligor covenants, as to itself, that: (i) Use of Proceeds. No proceeds of any sale of the Notes will be used (i) for a purpose which violates, or would be inconsistent with, Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 13 or Section 14 of the Securities Exchange Act of 1934, as amended. (ii) Places of Business; State of Incorporation. Except in accordance with Section 3.05(b), such Obligor will not (x) move its chief executive office from 639 Isbell Road, Suite 390, Reno, Nevada 89509 to another location and/or maintain any Records at any other locations and (y) change its state and jurisdiction of incorporation or formation from the jurisdiction set forth on Exhibit F to the related Series Supplement. (iii) ERISA. Such Obligor shall not, and shall not cause or permit any Commonly Controlled Entity to, cause or permit to occur an event that could result in the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA. (c) Each party hereto agrees that the representations and warranties contained in Section 2.01(a)(vii)-(xiii) may not be waived. Section 2.02. Representations, Warranties and Covenants of Servicer. The Servicer hereby makes the following representations, warranties and covenants to the Trustee, the Noteholders of the related Series and any Series Support Provider for the related Series on which representations, warranties and covenants the Trustee relies in accepting the related Series Trust Estate in trust and in authenticating the related Notes, on which the Noteholders of such Series have relied in purchasing their Notes and on which such Series Support Provider, if any, relies in agreeing to issue the related Series Support. Such representations, warranties and covenants shall be deemed to be made and affirmed on each Series Closing Date and shall survive the date of the 27 making or remaking of such representations and warranties. Each of the Servicer's covenants shall continue until the Final Date of the last Outstanding Series. (a) The Servicer represents and warrants, as to itself and its responsibilities, that: (i) Organization and Good Standing. The Servicer is a corporation duly organized, validly existing in good standing under the laws of the State of Delaware (or, if other than Marlin, in the applicable state of its incorporation), has the power to own its assets and to transact the business in which it is presently engaged, and had at all relevant times and now has the power, authority and legal right to service the related Series Trust Estate. (ii) Power and Authority. The Servicer has the power, authority and legal right to execute, deliver and perform this Master Agreement and the other Series Related Documents to which it is a party and the execution, delivery and performance of this Master Agreement and the other Series Related Documents to which it is a party have been duly authorized by the Servicer by all necessary corporate action. (iii) Binding Obligation. This Master Agreement and the other Series Related Documents to which the Servicer is a party (assuming due authorization, execution and delivery by each of the other parties hereto and thereto), constitute legal, valid and binding obligations of the Servicer, enforceable against the Servicer in accordance with their respective terms, except that (A) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws (whether statutory, regulatory or decisional) now or hereafter in effect relating to creditors' rights generally and (B) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought, whether in a proceeding at law or in equity. (iv) No Conflict. The execution, delivery and performance by the Servicer of this Master Agreement and the other Series Related Documents to which it is a party, are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any material agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Lien on any assets of the Servicer or its Subsidiaries, other than as contemplated by the Master Transfer Agreement (if Marlin is the Servicer making such representation and warranty) and this Master Agreement. 28 (v) No Proceedings. There are no proceedings or investigations to which the Servicer, or any of the Servicer's Affiliates, is a party pending or, to the best of the Servicer's knowledge, threatened before any court or other Governmental Authority (A) asserting the invalidity of this Master Agreement or any of the other Series Related Documents, (B) seeking to prevent the consummation of any of the transactions contemplated by this Master Agreement or any of the other Series Related Documents or (C) seeking any determination or ruling that might materially and adversely affect the performance by the Servicer of its obligations under, or the validity or enforceability of, this Master Agreement or any of the other Series Related Documents to which it is a party. (vi) Approvals. All approvals, authorizations, consents, orders or other actions of any Governmental Authority or any other Person required to be obtained or taken by, or on the part of, the Servicer in connection with the execution and delivery of this Master Agreement or any of the other Series Related Documents to which it is a party have been or will be taken or obtained on or prior to the date so required to be taken or obtained. (vii) Compliance with Law. No practice, procedure or policy employed or proposed to be employed by the Servicer in the conduct of its business violates any law, regulation, judgment, agreement, order or decree applicable to the Servicer which, if enforced, would have a material adverse effect on the Servicer or the ability of the Servicer to perform its obligations hereunder or under any Series Related Document. (viii) Information. Each certificate, information, exhibit, financial statement, document, book or record or report furnished by the Servicer to the Trustee, the Obligors, the Rating Agencies, any Noteholder or any Series Support Provider in connection with this Master Agreement, any Series Supplement, any Series Related Document or the transactions contemplated hereby is accurate in all material respects as of its date, when considered as a whole with other such documents, and no such document contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not materially misleading as of its date. (ix) Place of Business. The chief executive office of the Servicer is, as of the date hereof, and has been for the four months prior to the date hereof, at 124 Gaither Drive, Suite 170, Mount Laurel, NJ 08054. (x) Financing Statements. The Servicer has not filed any financing statements with respect to the interests of the Obligors' Agent, MLR II LLC or the Transferor in the Contracts under any names other than "Marlin Leasing Receivables Corp. II," "Marlin Leasing Receivables II LLC" or "Marlin Leasing Corporation" 29 (xi) Event of Servicer Termination. To the best knowledge of the Servicer, there has not been an Event of Servicer Termination. (b) The Servicer, for itself and on behalf of each related Series Obligor, covenants as to the Pledged Property comprising each Series Trust Estate: (i) Lien in Force. The Servicer shall not release or assign any Lien in favor of the Trustee on any Contract, item of Equipment or other Related Security related to any Contract in whole or in part, except as expressly permitted hereunder. (ii) Fulfill Obligation. The Servicer will duly fulfill and comply, in all material respects, with all obligations on the part of the "lessor" to be performed and fulfilled under or in connection with each Contract and all of the Servicer's other obligations to be fulfilled under or in connection with each Series Trust Estate. The Servicer will not amend, rescind, cancel or modify any Contract or any term or provision thereof, except as contemplated herein, and the Servicer will not do anything that would materially impair the rights of the Noteholders or any Series Support Provider with respect to any Series Trust Estate, except as contemplated herein. (iii) Books and Records. The Servicer (1) will (A) maintain its books and records separate from the books and records of any Obligor, (B) maintain bank accounts separate from those of any Obligor and (C) conduct its business in an office separate from that of any Obligor and (2) will not (X) take any action that would cause the dissolution or liquidation of any Obligor, (Y) guarantee (directly or indirectly), endorse or otherwise become contingently liable (directly or indirectly) for the obligations of any Obligor (except as expressly permitted hereunder) or (Z) institute against any Obligor, or join any other person in instituting against any Obligor, any case, proceeding or other action under any existing or future bankruptcy, insolvency or similar laws. Section 2.03. Representations and Warranties of Trustee. On the Closing Date, the Trustee represents and warrants to the Noteholders of the related Series, the Servicer, the Obligors and any Series Support Provider for the related Series as to itself and its responsibilities: (a) Organization and Good Standing. The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America; (b) Authorization. The Trustee has the power, authority and legal right to execute, deliver and perform this Master Agreement and the other Series Related Documents, and the execution, delivery and performance of this Master Agreement and the other Series Related Documents has been duly authorized by the Trustee by all necessary corporate action; 30 (c) No Violation. The execution, delivery and performance by the Trustee of this Master Agreement and the other Series Related Documents (a) does not violate any provision of any law or any order, writ, judgment, or decree of any court, arbitrator, or governmental authority applicable to the Trustee or any of its assets, (b) does not violate any provision of the corporate charter or by-laws of the Trustee, (c) does not result in the creation or imposition of any Lien on any properties included in the Series Trust Estate (other than the Lien created hereby) and (d) does not violate any provision of, or constitute, with or without notice or lapse of time, a default under, the provisions of any mortgage, indenture, contract, agreement, or other undertaking to which the Trustee is a party, which violation or default could reasonably be expected to materially and adversely affect the Trustee's performance or ability to perform its duties under this Master Agreement the other Series Related Documents or the transactions contemplated in this Master Agreement or the other Series Related Documents; (d) Governmental Authority. The execution, delivery and performance by the Trustee of this Master Agreement and the other Series Related Documents does not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency regulating the banking and corporate trust activities of the Trustee; and (e) Due Execution and Enforceability. This Master Agreement and the other Series Related Documents have been duly executed and delivered by the Trustee and constitutes the legal, valid, and binding agreement of the Trustee, enforceable in accordance with its and their respective terms, and the Trustee meets the requirements of Section 11.08 hereof. Article III PLEDGING THE TRUST ESTATE Section 3.01. Series Trust Estates. In order to secure the due and punctual payment of the principal of and interest on the Notes of the related Series and all other Series Secured Obligations of the related Series when and as the same shall become due and payable, whether as scheduled, by declaration of acceleration, prepayment or otherwise, according to the terms of this Master Agreement, the related Series Supplement and the related Notes, the related Series Obligors, pursuant to the related Series Supplement, shall pledge the related Series Trust Estate to the Trustee, all for the benefit of the Trustee for the benefit of the Holders of the Notes of the related Series and the other Series Secured Parties. Section 3.02. Preservation of Series Collateral. Subject to the rights, powers and authorities granted to the Trustee and the related Series Controlling Party herein and in the related Series Supplement, the related Series Obligors shall take all such action as is necessary and proper with respect to the 31 related Series Trust Estate in order to preserve and maintain such Series Trust Estate. The Obligors will do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such instruments of transfer or take such other steps or actions as may be necessary, or required by the Series Controlling Party, to perfect the security interests granted hereunder in the Series Trust Estate, to ensure that such security interests rank prior to all other Liens and to preserve the priority of such security interests and the validity and enforceability thereof. Upon any delivery of any portion of any Series Trust Estate to the Trustee, the Obligors shall be obligated to execute such documents and perform such actions as are necessary to create in the Trustee for the benefit of the related Series Secured Parties a valid first Lien on, and valid and perfected first priority security interest in, such Series Trust Estate so delivered, free and clear of any other Lien, together with satisfactory assurances thereof, and to pay any reasonable costs incurred by any of the Series Secured Parties or otherwise in connection with such delivery. Section 3.03. Waiver of Stay or Extension Laws; Marshalling of Assets. Each Obligor covenants, to the fullest extent permitted by applicable law, that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law wherever enacted, now or at any time hereafter in force, in order to prevent or hinder the enforcement of this Master Agreement, any Series Supplement or any part hereof or thereof, to the fullest extent permitted by applicable law, for itself and all who may claim under it, hereby waives the benefit of all such laws, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. Each Obligor, for itself and all who may claim under it, waives, to the fullest extent permitted by applicable law, all right to have any Series Trust Estate or any portion thereof marshaled upon any foreclosure or other disposition thereof. Section 3.04. Noninterference, Etc. No Obligor shall (i) waive or alter any of its rights under any portion of any Series Trust Estate (or any agreement or instrument relating thereto) without the prior written consent of the Series Controlling Party; or (ii) take any action, or fail to take any action, if such action or failure to take action will interfere with the enforcement of any rights under the Series Related Documents. Section 3.05. Obligor Changes. (a) Change in Name, Structure, Jurisdiction of Formation, Etc. No Obligor shall change its name, identity, jurisdiction of formation or incorporation or corporate structure unless it shall have given the Trustee at least 30 days' prior written notice thereof and shall have effected any necessary or appropriate filings of financing statements or amendments thereto in order to maintain the Trustee's first priority perfected security interest in each Series Trust Estate. 32 (b) Relocation of the Obligors. No Obligor shall change its principal executive office or its jurisdiction of formation or incorporation unless it gives the Trustee at least 30 days' prior written notice of any relocation of its principal executive office or its jurisdiction of formation or incorporation. If any Obligor so relocates its principal executive office or principal place of business, such Obligor shall give prior written notice thereof to the Trustee and shall effect whatever appropriate recordations and filings are necessary in order to maintain the Trustee's first priority, perfected security interest in each related Series Trust Estate. Section 3.06. Limited Recourse to Obligors. (a) Notwithstanding anything to the contrary contained herein, the Trustee and each Holder by such Holder's acceptance of a Note hereunder agree that the obligations of the related Obligors hereunder, including, without limitation, the obligations of the related Obligors in respect of the Notes shall be payable solely from the related Series Trust Estate (including any Crossover Amounts included in such Series Trust Estate), and that neither the Trustee nor any Holder shall look to any other Property or assets of such Obligors, or to the Property or assets of any other Obligor, including, specifically but without limitation, the Series Trust Estate with respect to any other Series. No recourse shall be had for the payment of any amount owing in respect of any Obligors' obligations hereunder or for any payment obligation or claim arising out of or based on this Master Agreement against any Affiliate, agent, stockholder, employee, officer, director or incorporator of such Obligor. (b) The Obligors' obligation to pay certain fees or expenses under, or claims arising out of, this Master Agreement shall be limited to moneys available to such Obligors from the related Series Trust Estate in accordance with the payment priority set forth in the related Series Supplement, and to the extent such funds are insufficient to pay such fees or expenses, it shall not constitute a claim against the Obligors. Section 3.07. Authorization of Actions to Be Taken by the Trustee. (a) The Trustee may take all actions it deems necessary or appropriate in order to enforce or exercise its rights under each Series Supplement in accordance with and subject to the provisions thereof. Subject to the provisions thereof, the Trustee shall have power to institute and to maintain suits and proceedings to prevent any impairment of the related Series Trust Estate by any acts which may be unlawful or in violation of the related Series Supplement or this Master Agreement, and suits and proceedings to preserve or protect its interests and the interests of the Holders of the related Notes and any Series Support Provider in the related Series Trust Estate (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security hereunder or be prejudicial to the interests of such Holders, any such Series Support Provider or the Trustee). 33 (b) The Trustee is authorized to receive any funds for the benefit of the Holders and any Series Support Provider distributed under the related Series Supplement and to make further distributions of such funds to the Holders of the related Notes and any Series Support Providers according to the provisions of such Series Supplement. Section 3.08. Termination of Security Interests. Upon the payment in full of all Series Secured Obligations, the Trustee shall, at the written request of the related Obligors and with the written consent of the Series Support Provider, if any, deliver such certificates, notices, and instruments stating that all Series Secured Obligations have been paid in full, and releasing the Trustee's Lien on the related Series Trust Estate with respect to such Series Secured Obligations. Section 3.09. Filing; Maintenance of Contract Files. On or prior to the initial Pledge Date with respect to a Series, the related Series Obligors shall, and shall cause the Transferor to, file blanket UCC-1 financing statements with respect to the related Series Trust Estate (which, in the case of any UCC-1 Financing Statement filed by such Obligors against the Transferor, shall be assigned by such Obligors to the Trustee). Notwithstanding the foregoing, it is expressly agreed that no such UCC-1 Financing Statement shall be filed with respect to any particular piece of Equipment, except to the extent then required by the Credit and Collection Policy, or as may otherwise be required in the related Transfer Agreement Supplement or any applicable Series Supplement. On or prior to each Pledge Date the related Obligors shall, and shall cause the Transferor to, mark their respective internal records (including, in the case of the Contractor, its electronic ledger) to reflect (x) the sale and conveyance of the related Pledged Property from the Transferor to the related Obligors and (y) the Pledge of the related Pledged Property to the Trustee. Section 3.10. Costs and Expenses. The related Obligors agree to pay all reasonable costs and disbursements (and in the event the related Obligors are unable to pay such costs and disbursements, the Servicer shall pay such amounts) in connection with the perfection and the maintenance of perfection and priority, as against all third parties, of the Trustee's rights, title and interests in and to each Series Trust Estate (other than the Equipment, except as otherwise expressly agreed to herein). Article IV NOTE FORMS Section 4.01. Forms Generally. The Notes of each Series shall be in substantially the form set forth in the related Series Supplement, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Master Agreement or the related Series Supplement, and may have such letters, numbers or other marks of identification 34 and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of the Notes. The Notes of any Series or Class may be issued in bearer form ("Bearer Notes") with attached interest coupons and any other applicable coupon (collectively, the "Coupons") or in fully registered form (but which may be uncertificated) ("Registered Notes") and shall, to the extent represented by physical certificates, be substantially in the form of the exhibits with respect thereto attached to the applicable Series Supplement. The Trustee's certificate of authentication shall be in substantially the form set forth in this Article. The Notes shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner (provided that if any Notes are to be listed on any securities exchange, then in any such manner as may be permitted by the rules of any such securities exchange, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes). Section 4.02. Form of Trustee's Certificate of Authentication. Except as provided in Section 11.13, the Trustee shall authenticate each Note with a certificate of authentication in substantially the following form: "This is one of the Notes designated herein referred to in the within-mentioned Master Agreement and the within-mentioned Series Supplement thereto. WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By_________________________ Authorized Signatory" Section 4.03. Securities Legend. Each Unregistered Note issued hereunder will contain the following legend limiting sales to "Qualified Institutional Buyers" within the meaning of Rule 144A under the Securities Act and to "Qualified Purchasers" as defined in Section 3(c)(7) of the Investment Company Act of 1940: THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR REGULATORY 35 AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE OBLIGORS AND THEIR AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS (A)(1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION AND (B) A QUALIFIED PURCHASER WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. Article V THE NOTES Section 5.01. Amount Limited; Issuable in Series. The aggregate principal amount of Notes which may be authenticated and delivered and Outstanding at any time under this Master Agreement is not limited; provided that any Series Supplement may so limit the aggregate principal amount of Notes of the related Series. The Notes shall be issued in one or more Series, and may be issued in Classes and/or Tranches within a Series (and Tranches within a Class). No Series of Notes shall be issued under this Master Agreement unless (i) such Notes have been authorized pursuant to a Series Supplement, (ii) all conditions precedent to the issuance thereof, as specified in the related Series Supplement, shall have been satisfied and (iii) confirmation is obtained from the Rating Agencies that such issuance will not result in a change in any Facility Shadow Rating. All Notes of each Series issued under this Master Agreement shall be in all respects equally and ratably entitled to the benefits hereof and secured by the related Series Trust Estate without preference, priority or distinction on account of the actual time or times of authentication and delivery, all in accordance with the terms and provisions of this Master Agreement and the related Series Supplement. 36 Section 5.02. Execution, Authentication, Delivery and Dating. The Notes shall be executed on behalf of the related Obligors or the Obligors' Agent by any of its Authorized Officers. The signature of any of these officers on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signatures of individuals who were at the time of execution of such Notes the proper officers of the Obligors or the Obligors' Agent shall bind the related Obligors, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes. At any time and from time to time after the execution and delivery of this Master Agreement and the related Series Supplement, and upon satisfaction of all the conditions set forth in the related Series Supplement, the Obligors' Agent may deliver Notes of the related Series (including Notes of any Class or Tranche within such Series) executed by the Obligors' Agent to the Trustee or Authenticating Agent for authentication, together with an Obligors' Order for the authentication and delivery of such Notes and an Officer's Certificate that all conditions precedent for such issuance have been satisfied, and the Trustee in accordance with the Obligors' Order shall authenticate and make available for delivery such Notes. Each Note shall be dated the date of its authentication. No Note shall be entitled to any benefit under this Master Agreement or any Series Supplement or be valid or obligatory for any purpose unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Trustee or the Authenticating Agent by manual signature, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder and is entitled to the benefits of this Master Agreement and the related Series Supplement. Notwithstanding the foregoing, if any Note shall have been authenticated and delivered hereunder but never issued and sold by the Obligors' Agent, and the Obligors' Agent shall deliver such Note to the Trustee or the Authenticating Agent for cancellation as provided in Section 5.08 together with a written statement (which need not comply with Section 1.02 and need not be accompanied by an Opinion of Counsel) stating that such Note has never been issued and sold by the Obligors' Agent, for all purposes of this Master Agreement such Note shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Master Agreement. Section 5.03. Temporary Notes. Pending the preparation of definitive Notes of any Series (or of any Class or Tranche within a Series), the Obligors' Agent may execute, and upon receipt of an Obligors' Order the Trustee or the Authenticating Agent shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, reproduced or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive 37 Notes in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Notes may determine, as evidenced by their execution of such Notes. If temporary Notes of any Series (or of any Class or Tranche within a Series) are issued, the Obligors' Agent will cause definitive Notes of that Series (or Class or Tranche) to be prepared without unreasonable delay. After the preparation of definitive Notes of such Series (or Class or Tranche), such temporary Notes shall be exchangeable for definitive Notes of such Series (or Class or Tranche) upon surrender of the temporary Notes at the office or agency of the Obligors. Upon surrender for cancellation of any one or more temporary Notes the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery, in exchange therefor a like principal amount of definitive Notes of the same Series (or Class or Tranche) and tenor of authorized denominations. Until so exchanged, the temporary Notes of any Series (or Class or Tranche) shall in all respects be entitled to the same benefits under this Master Agreement and the related Series Supplement as definitive Notes of such Series (or Class or Tranche). Section 5.04. Registration, Registration of Transfer and Exchange, Transfer Restrictions. The Obligors' Agent shall cause to be kept a register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Obligors' Agent shall provide for the registration of Notes and of transfers of the Notes. The Trustee is hereby initially appointed "Note Registrar" for the purpose of registering Notes and transfers of the Notes as herein provided. Upon any resignation of any Note Registrar, the Obligors' Agent shall promptly appoint a successor or, if it elects not to make such an appointment, assume the duties of the Note Registrar. If a Person other than the Trustee is appointed by the Obligors' Agent as Note Registrar, the Obligors' Agent will give the Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Registrar, and the Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Trustee shall have the right to conclusively rely upon a certificate executed on behalf of the Note Registrar by an executive officer thereof as to the names and addresses of the Holders of the Notes and the principal amounts and number of such Notes. Upon surrender for registration of transfer of any Note at the office or agency of the Obligors, the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery, in the name of the designated transferee or transferees, one or more new Notes of any authorized denominations and of a like tenor and aggregate principal amount. At the option of a Registered Noteholder, Registered Notes (of the same Series and Class) may be exchanged for other Registered Notes of authorized denominations upon surrender of the Registered Notes to be exchanged at any such office or agency; Registered Notes, including Registered Notes received in exchange for Bearer Notes, may not be exchanged 38 for Bearer Notes. At the option of the Holder of a Bearer Note, subject to applicable laws and regulations, Bearer Notes may be exchanged for other Bearer Notes or Registered Notes (of the same Series and Class) of authorized denominations upon surrender of the Bearer Notes to be exchanged at an office or agency of the Note Registrar located outside the United States. Each Bearer Note surrendered pursuant to this Section shall have attached thereto all unmatured Coupons; provided that any Bearer Note so surrendered after the close of business on the Record Date preceding the relevant payment date after the expected final payment date need not have attached the Coupon relating to such payment date (in each case, as specified in the applicable Series Supplement). Whenever any Notes are so surrendered for exchange, the Obligors' Agent shall execute, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery, the Notes which the Holder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the related Obligors, evidencing the same debt, and entitled to the same benefits under this Master Agreement and the related Series Supplement, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or for exchange shall (if so required by the Obligors' Agent or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Obligors' Agent, the Trustee and the Note Registrar duly executed by the Holder thereof or his attorney duly authorized in writing with such signature guaranteed by a commercial bank or trust company located, or having a correspondent located, in the City of New York or the city in which the Corporate Trust Office is located, or by a member firm of a national securities exchange, and such other documents as the Trustee may require. No service charge shall be made for any registration of transfer or exchange of Notes, but the Obligors' Agent or the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 5.03 or 5.05 not involving any transfer. No Holder of an Unregistered Note shall transfer its Note, unless such transfer is made (x) (i) in accordance with Rule 144A of the Securities Act or (ii) pursuant to an exemption from registration provided by Rule 144 under the Securities Act (if available) and the registration and qualification requirements under applicable state securities laws and (y) to a qualified purchaser within the meaning of to Section 3(c)(7) of the Investment Company Act of 1940. The preceding provisions of this Section 5.04 notwithstanding, the Obligors' Agent shall not be required to make, and the Note Registrar need not register transfers or exchanges of Notes selected for redemption or of any Note for a period of 15 days preceding the due date for any payment with respect to such Note. 39 Section 5.05. Mutilated, Destroyed, Lost and Stolen Notes. If any mutilated Note (together, in the case of Bearer Notes, with all unmatured Coupons (if any) appertaining thereto) is surrendered to the Trustee, the Obligors' Agent shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of the same Series and Tranche, of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Obligors' Agent and the Trustee and the related Series Support Provider, if any (unless a Series Support Provider Default shall have occurred and be continuing) (i) evidence to their satisfaction of the destruction, loss or theft of any Note and (ii) such security or indemnity as may be required by them to hold each of them and any agent of any of them harmless, then, in the absence of notice to the Obligors' Agent, the Trustee or the related Series Support Provider that such Note has been acquired by a bona fide purchaser, the Obligors' Agent shall execute and upon its request the Trustee shall authenticate and make available for delivery (in the case of Bearer Notes, outside the United States), in exchange for or in lieu of any such destroyed, lost or stolen Note, a new Note (of the same Series and Class) of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable in full, the Obligors' Agent in its discretion may, instead of issuing a new Note, cause the related Obligors to pay such Note. Upon the issuance of any new Note under this Section, the Obligors' Agent or the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the reasonable fees and expenses of the Trustee and its counsel) connected therewith. Every new Note of any Series issued pursuant to this Section in lieu of any destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the related Obligors, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Master Agreement and the related Series Supplement equally and proportionately with any and all other Notes of the same Series duly issued hereunder and under the related Series Supplement. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. Section 5.06. Final Distribution. (a) The Servicer shall give the Trustee and the Series Support Provider, if any, at least 30 days prior notice of the Settlement Date on which the Noteholders of any Series or Class may surrender their Notes for payment of the final distribution on and cancellation of such Notes. Not later than the fifth Business Day of 40 the month in which the final distribution in respect of such Series or Class is payable to Noteholders, the Trustee (based solely on the information provided to the Trustee by the Servicer) shall provide notice to the Noteholders of such Series or Class specifying (i) the date upon which final payment of such Series or Class will be made upon presentation and surrender of Notes of such Series or Class at the office or offices therein designated, (ii) the amount of any such final payment and (iii) that the Record Date otherwise applicable to such payment date is not applicable, payments being made only upon presentation and surrender of such Notes at the office or offices therein specified (which, in the case of Bearer Notes, shall be outside the United States). The Trustee shall give such notice to the Note Registrar and the Paying Agent (if it is not acting in either capacity) at the time such notice is given to Noteholders. (b) Notwithstanding a final distribution to the Noteholders of any Series or Class, except as otherwise provided in this paragraph, all funds then on deposit in the applicable Facility Account and any Series Account allocated to such Noteholders shall continue to be held in trust for the benefit of such Noteholders and the Paying Agent or the Trustee shall pay such funds to such Noteholders upon surrender of their Notes. In the event that all such Noteholders shall not surrender their Notes for cancellation within six months after the date specified in the notice from the Trustee described in paragraph (a), the Trustee shall give a second notice to the remaining such Noteholders to surrender their Notes for cancellation and receive the final distribution with respect thereto (which surrender and payment, in the case of Bearer Notes, shall be outside the United States). If within one year after the second notice all such Notes shall not have been surrendered for cancellation, the Trustee may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining such Noteholders concerning surrender of their Notes, and the cost thereof shall be paid out of the funds in the Series Account held for the benefit of the Noteholders. The Trustee and the Paying Agent shall upon written request pay to the related Obligors any moneys held by them for the payment of principal or interest that remains unclaimed for two years. After payment to the related Obligors, Noteholders entitled to the money must look to the related Obligors for payment as general creditors unless an applicable abandoned property law designates another Person. (c) Any notice required or permitted to be given to a Holder of Registered Notes shall be given by first-class mail, postage prepaid, at the address of such Holder as shown in the Note Register. No notice shall be required to be mailed to a Holder of Bearer Notes or Coupons but shall be given as provided below. Any notice so mailed within the time prescribed in this Master Agreement shall be conclusively presumed to have been duly given, whether or not the Noteholder receives such notice. In addition, (a) if and so long as any Series or Class is listed on the Luxembourg Stock Exchange and such Exchange shall so require, any notice to Noteholders shall be published in a newspaper of general circulation in Luxembourg within the time period prescribed in this Master Agreement and (b) in the case of any Series or Class with respect to which any Bearer Notes are outstanding, any notice required or permitted to be given to Noteholders of such Series or Class shall be published in an authorized newspaper within the time period prescribed in this Master Agreement. 41 Section 5.07. Persons Deemed Owners. Prior to due presentment of a Note for registration of transfer, the related Obligors, the Obligors' Agent, the related Series Support Provider, the Trustee and any agent of any of them may treat (a) the Person in whose name any Registered Note is registered as the owner of such Registered Note for the purpose of receiving distributions pursuant to the terms of the applicable Series Supplement and for all other purposes whatsoever, and (b) the bearer of a Bearer Note or Coupon as the owner of such Bearer Note or Coupon for the purpose of receiving distributions pursuant to the terms of the applicable Series Supplement and for all other purposes whatsoever; and none of the Obligors, the Obligors' Agent, the related Series Support Provider, the Trustee nor any agent of any of them, shall be affected by notice to the contrary. Section 5.08. Cancellation. All Notes surrendered for payment, prepayment in whole or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by the Trustee. The Obligors' Agent may at any time deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Obligors' Agent may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Notes previously authenticated hereunder which the Obligors' Agent has not issued and sold, and all Notes so delivered shall be promptly cancelled by the Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Master Agreement. All cancelled Notes held by the Trustee shall be held or destroyed by the Trustee in accordance with its standard retention or disposal policy as in effect at the time. Section 5.09. Book-Entry Notes. Unless otherwise specified in the related Series Supplement for any Series or Class, the Notes of each Series, upon original issuance, shall be issued in the form of one or more typewritten Notes representing the Book-Entry Notes, to be delivered to the Clearing Agency specified in the applicable Series Supplement, by, or on behalf of, the related Obligors. The Notes shall initially be registered on the Note Register in the name of the Clearing Agency or its nominee, and no Noteholder will receive a definitive certificate representing such Noteholder's interest in the Notes, except as provided in Section 5.11. Unless and until definitive, fully registered Notes ("Definitive Notes") have been issued to the applicable Noteholders pursuant to Section 5.11 or as otherwise specified in any such Series Supplement: (a) the provisions of this Section shall be in full force and effect; (b) the related Obligors, the Servicer and the Trustee may deal with the Clearing Agency and the Clearing Agency Participants for all purposes (including the making of distributions) as the authorized representatives of the respective Noteholders; 42 (c) to the extent that the provisions of this Section conflict with any other provisions of this Master Agreement, the provisions of this Section shall control; and (d) the rights of the respective Noteholders shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Noteholders and the Clearing Agency or the Clearing Agency Participants. Pursuant to the Depository Agreement, unless and until Definitive Notes are issued pursuant to Section 5.11, the Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the related Notes to such Clearing Agency Participants. For purposes of any provision of this Master Agreement requiring or permitting actions with the consent of, or at the direction of, Noteholders evidencing a specified percentage of the aggregate Maximum Series Limit of Notes, such direction or consent may be given by Noteholders (acting through the Clearing Agency and the Clearing Agency Participants) owning Notes evidencing the requisite percentage of the Maximum Series Limits. Section 5.10. Notices to Clearing Agency. Whenever any notice or other communication is required to be given to Noteholders of any Series or Class with respect to which Book-Entry Notes have been issued, unless and until Definitive Notes shall have been issued to the related Noteholders, the Trustee shall give all such notices and communications to the applicable Clearing Agency. Section 5.11. Definitive Notes. (a) If Book-Entry Notes have been issued with respect to any Series or Class and (i) the Obligors' Agent advises the Trustee that the Clearing Agency is no longer willing or able to discharge properly its responsibilities under the Depository Agreement with respect to such Series or Class and the Trustee or the Obligors' Agent is unable to locate a qualified successor or (ii) the Obligors' Agent, at its option, advises the Trustee that it elects to terminate the book-entry system with respect to such Series or Class through the Clearing Agency, then upon surrender to the Trustee of any such Notes by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration of Definitive Notes, the Obligors' Agent shall execute and the Trustee shall authenticate and the Note Registrar shall deliver such Definitive Notes. Neither the Obligors' Agent nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. The Trustee shall recognize the Holders of such Definitive Notes as Noteholders hereunder. (b) If a Series Supplement so provides, the Notes of such Series or any Class thereof will be evidenced by Definitive Notes. 43 (c) The holding of Bearer Notes shall be proved by the production of such Bearer Notes or by a certificate, satisfactory to the Obligors' Agent, executed by any bank, trust company or recognized securities dealer, wherever situated, satisfactory to the Obligors' Agent. Each such certificate shall be dated and shall state that on the date thereof a Bearer Note bearing a specified serial number was deposited with or exhibited to such bank, trust company or recognized securities dealer by the Person named in such certificate. Any such certificate may be issued in respect of one or more Bearer Notes specified therein. The holding by the Person named in any such certificate of any Bearer Note specified therein shall be presumed to continue for a period of one year from the date of such certificate unless at the time of any determination of such holding (i) another certificate bearing a later date issued in respect of the same Bearer Note shall be produced, (ii) the Bearer Note specified in such certificate shall be produced by some other Person or (iii) the Bearer Note specified in such certificate shall have ceased to be outstanding. The appointment of any proxy shall be proved by having the signature of the Person executing the proxy guaranteed by any bank, trust company or recognized securities dealer satisfactory to the Trustee. Article VI ADMINISTRATION AND SERVICING OF THE TRUST ESTATE Section 6.01. Retention of Servicer; Responsibilities of Servicer. (a) The Obligors hereby appoint the Servicer, and the Servicer hereby accepts such appointment, for the purpose of administering and servicing each Series Trust Estate; provided, however, that the Servicer shall administer and service each Series Trust Estate materially and only in conformance with the terms of this Master Agreement and shall take no action to affect adversely the interests of the Trustee, the Noteholders or any Series Support Provider in any Series Trust Estate. In consideration of such retention, the Obligors hereby agree to pay to the Servicer the Servicer Fee, such Servicer Fee to be paid as provided in each Series Supplement and none of the Trustee, any Noteholder or any Series Support Provider shall have any responsibility for the payment of such fee. (b) The Servicer, for the benefit of the Trustee, the Noteholders and any Series Support Provider, shall be responsible for managing, servicing and administering each Series Trust Estate, enforcing and making collections on the Contracts, any Insurance Policies and any Related Security and enforcing any security interest in each item of Equipment, each in accordance with the standards and procedures set forth in this Master Agreement. The Servicer's responsibilities shall include collecting and posting of all payments, responding to inquiries of Users, investigating delinquencies, applying the Security Deposits, accounting for collections and furnishing monthly and annual statements to the Trustee with respect to each Series Trust Estate and distributions to be made hereunder, making Servicer Advances to the extent required by a Series Supplement, providing appropriate Federal income tax information to the Trustee for use in providing information to the Noteholders, collecting and remitting sales and 44 property taxes on behalf of taxing authorities and maintaining the perfected first priority security interest of the Trustee in each Series Trust Estate. Subject to the terms of this Section 6.01 and Section 6.02 of this Master Agreement, the Servicer shall have full power and authority, acting at its sole discretion, to do any and all things in connection with such managing, servicing, administration, enforcement and collection of the Contracts and the other property comprising each Series Trust Estate that it may deem necessary or desirable, including the prudent delegation of such responsibilities. Without limiting the generality of the foregoing, the Servicer shall, and is hereby authorized and empowered by the Obligors and the Trustee, subject to Section 6.02 hereof, to execute and deliver (on behalf of itself, the Noteholders, the Trustee or any of them) any and all instruments of satisfaction or cancellation, or of release or discharge and all other comparable instruments, with respect to the Contracts and the other property comprising each Series Trust Estate in accordance with (and to the extent permitted pursuant to) Section 6.11. The Servicer may also, for itself and on behalf of the Obligors, in the Servicer's sole discretion, waive any prepayment charge, late payment charge or penalty, or any other Servicing Charges that may become due from any User in the ordinary course of servicing any Contract. The Trustee shall execute and deliver any powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder as may be prepared by the Servicer, at the Servicer's expense, and delivered to the Trustee for execution and delivery. The Trustee is not responsible for any legal insufficiencies in any such powers of attorney or other documents. (c) The Servicer shall conduct the management, servicing, administration, collection or enforcement actions of or in connection with each Series Trust Estate in the following manner: (i) The Servicer may sue to enforce or collect upon Contracts as agent for the Obligors and the Trustee. If the Servicer elects to commence a legal proceeding to enforce a Contract, the act of commencement shall be deemed to be an automatic assignment of the Contract to the Servicer for purposes of collection only. If, however, in any enforcement suit or legal proceeding, it is held that the Servicer may not enforce a Contract on the ground that it is not a real party in interest or a holder entitled to enforce the Contract, then the related Obligor(s) and/or the Trustee shall, at the Servicer's written request and upon receipt from the Servicer of satisfactory indemnity, take such steps as the Servicer deems necessary to enforce the Contract, including bringing suit in its name or the names of the related Obligor(s) and/or the Trustee and/or the related Noteholders; (ii) The Servicer shall exercise any rights of recourse against third parties that exist with respect to any Contract in accordance with the Servicer's usual practice. In exercising recourse rights, the Servicer is authorized on the Trustee's behalf to reassign the Contract to the person against whom recourse exists to the extent necessary, and at the price set forth in the document creating the recourse. The Servicer will not reduce or diminish such recourse rights, except to the extent that it exercises such rights; 45 (iii) The Servicer may grant to the User under any Contract any rebate, refund or adjustment that the Servicer in good faith believes is required because of the Prepayment in full of such Contract; provided, however, that the Servicer will not permit any rescission or cancellation of any Contract or take any action with respect to any Contract which would materially impair the rights of the Trustee in the Contract or the proceeds thereof; (iv) In the event that the Servicer acquires title to any item of Equipment in the enforcement of any Contract, the Servicer shall use its best efforts to sell or otherwise dispose promptly of such item of Equipment, consistent with the standard of care set forth in Section 6.02 hereof; and (v) The Servicer may not allow an offset of the amount of any Security Deposit against any Scheduled Payment or Booked Residual under such Contract, except as expressly permitted in Section 6.14 hereof. Section 6.02. Standard of Care. In managing, administering and servicing each Series Trust Estate and enforcing and making collections on the Contracts and any Related Security and Insurance Policies related to the Contracts pursuant to this Master Agreement, the Servicer will exercise that degree of skill and care consistent with that which the Servicer customarily exercises with respect to similar contracts owned or serviced by it. The Servicer shall comply with the Credit and Collection Policy and with all applicable Federal and State laws and regulations; shall maintain all State and Federal licenses and franchises necessary for it to perform its servicing responsibilities hereunder and thereunder; and shall not materially impair the rights of the Trustee, the Noteholders or any Series Support Provider in any Contracts or payments thereunder. The Servicer shall comply with all applicable Requirements of Law, the noncompliance with which would, individually or in the aggregate, materially and adversely affect the ability of the Servicer to perform its obligations under this Master Agreement, the related Series Supplements or the related Series Related Documents. Section 6.03. Credit and Collection Policy. The Servicer shall not amend or modify the provisions of the Credit and Collection Policy if such amendment or modification would, in the reasonable good faith business judgment of the Servicer, materially and adversely affect the interests of any Noteholder, the Trustee, or any Series Support Provider, without first obtaining the prior written consent of the Series Controlling Party of each affected Series. Section 6.04. Maintenance of Interest in the Trust Estate. The Servicer shall, in accordance with customary servicing procedures and at its own expense, use its best efforts to maintain perfection and priority of the Trustee's interest in each Series Trust Estate (other than with respect to the Equipment (unless otherwise required herein) and other than with respect to the Pledged Property removed 46 from the Trust Estate pursuant to Section 6.11, 6.12 or 6.15 hereof). In connection with enforcing a Charged-Off Contract, the Servicer shall prepare, the related Obligor shall (and, to the extent necessary, shall cause the Transferor to) execute and deliver to the Servicer, and the Servicer shall file any necessary UCC financing statements and/or amendments naming the Trustee as secured party with respect to the related Equipment. Section 6.05. Servicing Compensation; Payment of Certain Expenses by Servicer. (a) As compensation for its activities, the Servicer shall be entitled to receive the Servicer Fee in accordance with this Section 6.05 and the Series Supplements. The monthly Servicer Fee shall be payable to the Servicer, in arrears for each Collection Period, on the Settlement Date in respect of such Collection Period. The Servicer Fees shall be payable to the Servicer solely to the extent amounts are available for distribution pursuant to Section 7.02 hereof and the Series Supplements; provided, that in accordance with such provisions, any such Servicer Fees not paid when due as a result of there not being sufficient available funds therefor shall be payable on any future Settlement Dates to the extent amounts are then available for the payment thereof. (b) The Servicer shall be required to pay all expenses incurred by the Servicer in connection with its activities hereunder, including, without limitation, fees and disbursements of the Independent Accountants, taxes imposed on the Servicer (but excluding any sales taxes or other taxes imposed on any User, any Broker, the Obligors, the Transferor, the Trustee, any Noteholder, or any other Person), expenses incurred in connection with distributions and reports to Noteholders and all other fees and expenses not expressly stated hereunder to be for the account of the Obligors. (c) In connection with any transfer of the servicing obligations to a successor Servicer in accordance with Section 9.02 hereof, the Back-up Servicer shall be entitled to reimbursement of Transition Costs as provided in each Series Supplement. Section 6.06. Servicer's Certificate. Not later than the time specified in the related Series Supplement, the Servicer shall deliver to the Obligors' Agent, the Trustee and any Series Support Provider a Servicer's Certificate containing the information required by the related Series Supplement, with respect to the related Series Trust Estate, Collection Period and Settlement Date. Two Business Days prior to each Determination Date, the Servicer shall deliver to the Back-up Servicer and any Series Support Provider a Computer Tape in a format acceptable to the Back-up Servicer and any Series Support Provider containing the information from which the Servicer prepared the Servicer's Certificate, as well as any additional information reasonably requested by the Back-up Servicer prior to such Determination Date. Section 6.07. Annual Statement as to Compliance. The Servicer will deliver to the Obligors' Agent, the Trustee and each Series Support Provider, not later than 90 days after the end of each fiscal year, an 47 Officer's Certificate signed by a Servicing Officer, dated as of the last day of such fiscal year, stating that (a) a review of the activities of the Servicer during the preceding 12-month period and of the Servicer's performance under this Master Agreement has been made under such Servicing Officer's supervision and (b) nothing has come to such Servicing Officer's attention to indicate that an Event of Servicer Termination (or an event which with the giving of notice (other than pursuant to Section 9.01(a)(iv)) or passage of time, or both, would constitute an Event of Servicer Termination) hereunder has occurred and is continuing on such last day of such fiscal year or, if an Event of Servicer Termination or such other event has so occurred and is continuing, specifying each such Event of Servicer Termination or such other event known to such Servicing Officer and the nature and status thereof, and the steps, if any, necessary to remedy such Event of Servicer Termination or such other event. Section 6.08. Financial Statements and Independent Accountant's Servicing Certificate Review. (a) The Servicer shall, not later than 90 days after the end of each fiscal year, deliver to the Trustee, the Obligors' Agent and each Series Support Provider, a copy of the Servicer's annual audited financial statements for such fiscal year, audited by a firm of nationally recognized independent certified public accountants (within the meaning of the Securities Act) (which, in the case of Marlin, shall be the Independent Accountant). (b) The Servicer shall, within 45 days after the end of each of the first three calendar quarters of the Servicer's fiscal year, deliver to the Obligors' Agent, the Trustee and each Series Support Provider, quarterly, unaudited financial statements of the Servicer for such calendar quarter. (c) The Servicer shall inform the Obligors' Agent, the Trustee and each Series Support Provider in writing of the Servicer's fiscal year and any change in such fiscal year. (d) On or before March 31 of each calendar year, beginning with March 31, 2003, the Servicer shall cause a firm of nationally recognized independent certified public accountants (who may also render other services to the Servicer) to furnish a report (addressed to the Trustee) to the Trustee, the Servicer and each Series Support Provider to the effect that they have, for the one-year period ending on the preceding December 31, applied certain procedures agreed upon with the Servicer to compare the mathematical calculations of certain amounts set forth in the Servicer's Certificates delivered pursuant to Section 6.06 hereof during the period covered by such report with the Servicer's computer reports which were the source of such amounts and that on the basis of such agreed-upon procedures and comparison, such accountants are of the opinion that such amounts are in agreement, except for such exceptions as they believe to be immaterial and such other exceptions as shall be set forth in such statement. In the event such independent certified public accountants require the Trustee to agree to the procedures to be performed by such firm in any of the reports required to be prepared 48 pursuant to this Section 6.08, the Servicer shall direct the Trustee in writing to so agree; it being understood and agreed that the Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Servicer, and the Trustee has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures. Section 6.09. Access to Certain Documentation and Information Regarding the Pledged Property. (a) The Servicer and the Obligors shall each provide the Trustee, and/or any of the Trustee's duly authorized representatives, attorneys or accountants access to any and all documentation regarding each Series Trust Estate (including the List of Contracts) that the Servicer or the Obligors, as the case may be, may possess, such access being afforded without charge but only upon reasonable request and during normal business hours, so as not to interfere unreasonably with the Servicer's or any Obligor's, as the case may be, normal operations or customer or employee relations, at such offices of the Servicer or such Obligor, as the case may be, designated by the Servicer or an Obligor, respectively. (b) The Servicer shall at all times during the term hereof either (x) keep available in physical form for inspection by the Trustee, or any of the Trustee's duly authorized representatives, attorneys or accountants a list of all Contracts then held as a part of each Series Trust Estate, together with a reconciliation of such list to the List of Contracts and each of the Servicer's Certificates, indicating the cumulative removals and additions of Contracts from such Series Trust Estate or (y) maintain electronic facilities which allow such a list of leases and reconciliation to be generated. (c) The Servicer will maintain accounts and records as to each respective Contract serviced by the Servicer that are accurate and sufficiently detailed so as to permit (i) the reader thereof to know as of the most recent Calculation Date the status of such Contract, including payments and recoveries made and payments owing (and the nature of each), and (ii) reconciliation between payments or recoveries on (or with respect to) each Contract and the amounts from time to time deposited in the applicable Facility Account in respect of such Contract. (d) The Servicer will maintain its computerized accounts and records so that (i) from and after the time of Pledge hereunder of each Contract to the Trustee, the Servicer's accounts and records (including any backup computer archives) that refer to any Contract indicate clearly that the Contract is part of a separate and distinct Series Trust Estate and (ii) the information relating to such Contracts can be recreated in the event of the destruction of the originals. Indication of a Contract being part of a Series Trust Estate will be deleted from or modified on the Servicer's accounts and records when, and only when, a Release Event has occurred with respect to such Contract. (e) Nothing in this Section 6.09 shall derogate from the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Brokers or Users, and the failure, as a result of such obligation of the 49 Servicer, to provide access as provided in this Section 6.09 shall not constitute a breach of this Section 6.09. (f) No person entitled to receive copies of such reports or tapes shall disclose the information therein to any Person, except such disclosures as are required upon appointment of a successor Servicer or by law and except that the Servicer consents to the disclosure of any material nonpublic information with respect to it (i) to any other such party, (ii) to any prospective or actual assignee or participant of any of them, (iii) by the Trustee to any Rating Agency, commercial paper dealer or Series Support Provider, or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Noteholders' Agent provides managerial services or acts as the administrative agent and (iv) to any officers, directors, employees, outside accountants and attorneys of any of the foregoing. Notwithstanding anything herein to the contrary, the foregoing shall not be construed to prohibit (i) disclosure of any and all information that is or becomes publicly known, other than as the result of a disclosure by a party hereto in violation of the foregoing, or information obtained by the Trustee from sources other than the Servicer or an Obligor provided that the source of such information was not bound hereunder or by a confidentiality agreement or other contractual, legal or fiduciary obligation with respect to such information, (ii) disclosure of any and all information after prompt written notice to the Servicer (A) if, in the written opinion of counsel, required to do so by any applicable statute, law, rule or regulation, (B) to any government agency or regulatory body having authority to regulate or oversee any respects of the Trustee's business or that of its affiliates, (C) if, in the written opinion of counsel, required pursuant to any subpoena, civil investigative demand or similar demand or request of any court, regulatory authority, arbitrator or arbitration to which the Trustee or an affiliate or an officer, director, employer or shareholder thereof is a party, (D) in any preliminary or final offering circular, registration statement or contract or other document pertaining to the transactions contemplated herein approved in advance by the Servicer or an Obligor or (E) to any affiliate, independent or internal auditor, agent, employee or attorney of Trustee having a need to know the same, provided that the Trustee advises such recipient of the confidential nature of the information being disclosed and such recipient agrees to comply with the terms of the foregoing, or (iii) any other disclosure authorized in writing by the Servicer or any Obligor. Section 6.10. Other Necessary Data. The Servicer shall, on request of the Trustee, furnish the Trustee such data necessary for the Trustee to discharge its obligations with respect to each Series Trust Estate and the related Notes as can be generated by the Servicer's existing data processing systems; provided, that to the extent that the Servicer's existing data processing systems cannot generate such data, the Servicer will cooperate with the Trustee in finding a method of furnishing such data. The Servicer will cooperate in generating additional data reasonably requested by the Trustee. 50 Section 6.11. Release of Contracts. (a) Upon (i) payment in full of any Contract by the User or by any Person on behalf of such User, (ii) any removal of a Contract by the Transferor pursuant to Section 6.15 hereof, (iii) the Servicer's reasonable determination that all Residual Receipts with respect to any Charged-Off Contract have been received, (iv) any removal of a Contract by the Servicer pursuant to Section 6.12(b) hereof, (v) any removal of a Contract by the Obligors pursuant to Section 6.12(a) hereof or (vi) any removal of a Contract by the Transferor or the Obligors pursuant to Section 6.16 hereof (the events described in clauses (i) through (vi) being "Release Events"), the Servicer will so notify the Trustee of the occurrence thereof on the next succeeding Determination Date by certification (in the form set forth in the Series Related Documents for each Series) to the Trustee from a Servicing Officer, which certification shall include a statement to the effect that all amounts received in connection with such Release Event have been remitted to the applicable Facility Account and may request delivery of the Contract to the Servicer or other Person designated by the Servicer. Upon the Trustee's receipt of such certification and request (subject to its confirmation of the receipt of the required funds in the applicable Facility Account), such Contract and the related Pledged Property appurtenant thereto shall be deemed to be released from the related Series Trust Estate. Upon release of such Contract, the Servicer is authorized to execute an instrument in satisfaction of such Contract and to do such other acts and execute such other documents as it deems necessary to discharge the User thereunder and release the related Equipment: (u) to the related User in the event of a Release Event described in clause (i) of the immediately preceding paragraph; (v) to the Transferor in the event of a Release Event described in clause (ii) of the immediately preceding paragraph; (w) to the Person, if any, purchasing the related Equipment in the event of a Release Event described in clause (iii) of the immediately preceding paragraph, or, if no person is purchasing such Equipment, to the related Obligor; (x) to itself in the event of a Release Event described in clause (iv) of the immediately preceding paragraph; (y) to the related Obligor in the event of a Release Event described in clause (v) of the immediately preceding paragraph or (z) to the related Obligor or the Transferor, as applicable, in the event of Release Event described in clause (vi) of the immediately preceding paragraph. (b) With respect to all Contracts so released from any Series Trust Estate, the Trustee shall assign, without recourse, representation or warranty, to the appropriate Person as directed by the Servicer, all of the Trustee's right, title and interest in and to such Contract and Pledged Property appurtenant thereto, such assignment being an assignment outright and not for security. Such Person will thereupon own such Contract and related Pledged Property appurtenant thereto free of any further obligation to the Trustee or the Noteholders with respect thereto. The Trustee shall also execute and deliver all such other instruments or documents as shall be reasonably requested by any such Person to be required or appropriate to effect a valid transfer of title to a Contract and the Pledged Property appurtenant thereto. Any instrument or documents required to be executed by the Trustee pursuant to this Section 6.11(b) shall be prepared by the Servicer (or such Person) at the Servicer's (or such Person's) expense; provided, that if the 51 Servicer is not Marlin or any of its Affiliates, then any such expenses to be paid by the Servicer pursuant to this Section 6.11(b) shall be paid by the Obligors. Section 6.12. Removal Related to Upgrades or Trade-ins and Delinquent Contracts. (a) In the event that a User requests (i) a termination of such User's Contract prior to the end of the scheduled original term of such Contract or (ii) an upgrade or trade-in of Equipment relating to such User's Contract (either of events (i) or (ii), a "User Termination Event"), then the related Obligor may remove the Contract and the related Equipment from the related Series Trust Estate during any Collection Period by remitting to the Trustee the applicable Prepayment Amount in the applicable Facility Account on or prior to the Determination Date relating to such Collection Period. (b) The Servicer may during any Collection Period remove any Delinquent Contract and the Related Security from the related Series Trust Estate with respect to which Contract the User is in default or such default is, in the Servicer's judgment, imminent, by deposit by the Servicer of the applicable Prepayment Amount in the applicable Facility Account on or prior to the Determination Date relating to such Collection Period. (c) Notwithstanding the foregoing provisions of Sections 6.12(a) and (b), no such removal of a Contract and Related Security shall be permitted if the cumulative aggregate balance of the Contract Balance Remaining for (i) such Contract and all other removed Contracts, plus (ii) all Substitute Contracts, plus (iii) Replaced Contracts, exceeds, or would, upon such removal, exceed ten percent (10%) of the Maximum Series Limit for such Series. Section 6.13. Notification to Noteholders of Defaults and Events of Default. The Servicer shall promptly notify the Trustee of any Default or any Event of Default upon the receipt of actual knowledge thereof by a Servicing Officer, and the Trustee shall promptly thereupon give written notice thereof to each of the Series Controlling Parties and each of the Series Support Providers. Section 6.14. Security Deposits. The Servicer acknowledges that the Security Deposits are held by the Transferor on behalf of the Users and the Trustee. In the event that (i) any User requests that a Security Deposit be applied as an offset against such User's payment obligations or Booked Residual under a Contract or (ii) any Contract becomes a Charged-Off Contract, the Servicer shall deliver to the Transferor written demand that the Transferor remit to the Servicer, on the next Business Day, out of the applicable User's Security Deposit an amount (the "Offset Amount") equal to the lesser of (a) the amount of such Security Deposit and (b) the amount of all unpaid and remaining Scheduled Payments and Booked Residuals as payment in respect of, first, any unpaid Scheduled Payments under the related Contract, and second, any unpaid Booked Residual under the related Contract. 52 The Servicer shall deposit any Offset Amount so delivered to it into the applicable Facility Account within two Business Days after its receipt thereof. The Servicer shall notify the Transferor in writing of any demand it receives from a User for refund of such User's Security Deposit at the end of the term of the related Contract. In no event shall the Trustee, the Obligors, any Noteholder or any Series Support Provider be liable to any User with respect to the Security Deposits. The Servicer shall indemnify and hold harmless the Trustee, the Noteholders and the Series Support Providers for any loss, cost and expense (including legal fees and expenses incurred by such parties in connection with the prosecution of claims made in connection therewith) suffered as a result of the Servicer's misappropriation or misapplication of any Security Deposit. This right of indemnification shall survive the termination of this Master Agreement. Section 6.15. Removal of Nonconforming Pledged Property. Upon discovery by an Obligor, the Trustee, the Servicer or any Series Support Provider of a breach of any of the representations or warranties of the Transferor set forth in the related Transfer Agreement Supplement with respect to any Contract (such breach, a "Transferor Breach"), the related Equipment or the related Contract File, as the case may be, the party discovering such breach shall give prompt written notice to the other parties. Except as specifically provided herein, the Trustee has no obligation to review or monitor the Pledged Property for compliance with such representations and warranties. As of the last day of the calendar month in which such breach was discovered or, if later, the last day of the calendar month in which the Servicer received the notice thereof (or, at the Servicer's and such Obligor's election, any earlier date), the Servicer, unless such breach shall have been waived or cured in all material respects prior to such time, shall cause the Transferor to remove such Contract and the related Pledged Property from the related Series Trust Estate. In consideration for the removal of such Pledged Property, the Transferor shall, no later than the Determination Date prior to the Settlement Date next following such date, pay the Prepayment Amount to the Servicer for deposit into the applicable Facility Account. Without limiting the foregoing in any way, in the event of a breach of any representation or warranty of the Transferor contained in any Transfer Agreement Supplement that materially and adversely affects any Contract or the related Contract File, unless the breach shall have been cured on or before the last day of the calendar month in which such breach was discovered or, if later, the last day of the calendar month in which the Servicer received the notice thereof, the Servicer shall enforce the obligation of the Transferor under the Master Transfer Agreement to repurchase such Contract. Section 6.16. Substitution of Contracts. (a) In lieu of removing a Contract as required under the provisions of Section 6.12(a), 6.12(b) or 6.15 hereof and subject to the provisions of Sections 6.16(b) and 6.16(c) below, either of the Obligors or the Transferor, as applicable, in their sole 53 discretion, may substitute one or more Contracts (each a "Substitute Contract") and the related Equipment for and replace Contracts (each, a "Replaced Contract") and the related Equipment of a Series Trust Estate that (i) have become Charged-Off Contracts or Delinquent Contracts, (ii) are subject to a User Termination Event or (iii) were subject to a Transferor Breach. (b) Each Substitute Contract must be an Eligible Contract as of the applicable Transfer Date. (c) No such substitution under this Section 6.16 shall be permitted on any Transfer Date if: (i) the cumulative aggregate balance of the Contract Balance Remaining for all Substitute Contracts outstanding at the Transfer Date that were substituted in the applicable Series Trust Estate exceeds, or would upon such substitution cause the cumulative aggregate balances of the items described in clause (i), (ii) and (iii) of Section 6.12(c) hereof to exceed ten percent (10%); or (ii) such substitution results in a reduction of the aggregate Borrowing Base for the relevant Series Trust Estate. Article VII ACCOUNTS AND ALLOCATIONS Section 7.01. Establishment of Facility Accounts; Establishment of Advance Payment Accounts. (a) With respect to each Series of Notes, on or prior to the related Closing Date, the Servicer, for the benefit of the Trustee, shall establish and maintain or cause to be established and maintained in the name of the Trustee, a segregated trust account in the Trustee's corporate trust department for the related Series, identified as the "Facility Account for Marlin Leasing Lease Receivables Facility, in trust for the Registered Holders of Series [Applicable Series] Notes and other Series [Applicable Series] Secured Parties" (each such account, a " Facility Account"). The Trustee shall make or permit withdrawals from each Facility Account only as provided in this Master Agreement and in the relevant Series Supplement. The Trustee shall possess all right, title and interest in and to all funds from time to time on deposit in each Facility Account and in all proceeds thereof. (b) The Servicer, the Trustee, each Obligor, and the Transferor shall deposit to the applicable Facility Account any Collections received directly (rather than through any lockbox account) by any of them as soon as practicable (and, in any event, within two Business Days) after their respective receipt thereof. (c) With respect to each Series of Notes, the Trustee, for the benefit of the related Noteholders, shall establish and maintain an account (each such account, an "Advance Payment Account") as a segregated trust account in the Trustee's corporate 54 trust department, identified as the "Advance Payment Account for the Marlin Leasing Lease Receivables Facility, in trust for the Registered Holders of the Series [Applicable Series] Notes and other Series [Applicable Series] Secured Parties." The Trustee shall make or permit withdrawals from the applicable Advance Payment Account only as provided in this Master Agreement and in the relevant Series Supplement. The Trustee shall possess all right, title and interest in and to all funds from time to time on deposit in each Advance Payment Account and in all proceeds thereof. (d) All Advance Payments received by the Servicer, the Trustee, any Obligor, or the Transferor shall be deposited to the applicable Advance Payment Account in the same manner as Collections are deposited to the related Facility Account. (e) Notwithstanding the foregoing, the Trustee and/or the Servicer may deduct from amounts otherwise specified for deposit to each Facility Account or Advance Payment Account, as applicable, any amounts previously deposited by the Trustee or the Servicer into such Facility Account or Advance Payment Account, as the case may be, but which are (i) subsequently uncollectible as a result of dishonor of the instrument of payment for or on behalf of the User or (ii) later determined to have resulted from mistaken deposits. (f) Each Facility Account and Advance Payment Account shall be under the sole dominion and control of the Trustee for the benefit of the related Series Secured Parties; provided, however, that the Trustee may rely on the information and instructions provided by the Servicer in determining the amount of any withdrawals or payments to be made from either such account for the purposes of carrying out the Trustee's or the Servicer's duties hereunder or under any Series Supplement. Neither the Trustee nor the Servicer shall have any right of setoff or banker's lien against, and no right to otherwise deduct from, any funds held in any Facility Account or Advance Payment Account for any amount owed to it by the Servicer, any Obligor, the Transferor, the Trustee, any Noteholder or any Series Support Provider. Section 7.02. Collections and Allocations. On each Settlement Date, and as further set forth in the related Series Supplement, the Trustee shall distribute amounts on deposit in the related Series Accounts as described in the Servicer's Certificates relating to such Settlement Date. Section 7.03. Investment of Funds in each Facility Account and the Advance Payment Account. The Trustee, at the Obligors' Agent's written instruction, shall invest the amounts from time to time on deposit in each Facility Account and Advance Payment Account in Eligible Investments. In the absence of such a written instruction, the Trustee shall invest funds in each Facility Account and Advance Payment Account in Eligible Investments described in clause (f) of the definition thereof. Any funds in the Advance Payment Accounts and Facility Accounts which are not so invested must be insured by the Federal Deposit Insurance Corporation to the limits established by such corporation. 55 Article VIII THE SERVICER AND THE OBLIGORS Section 8.01. Liability of Servicer; Indemnities. (a) The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer herein and in the Series Supplements. (b) Without in any way limiting the foregoing, the Servicer shall indemnify and hold harmless the Trustee, the Back-up Servicer, the Obligors, the Noteholders, any Series Support Provider (including their respective officers, directors, employees and agents) and any permitted assignee of any of the foregoing (each an "Indemnified Party" and collectively, the "Indemnified Parties") from and against any claims, expenses, losses, damages or liabilities (including, without limitation, attorneys' fees and expenses and court costs) suffered or incurred by any Indemnified Party (collectively, "Indemnified Amounts") arising out of or resulting in connection with (i) any breach by the Servicer of its representations and warranties or of its obligations under this Master Agreement or under any Series Supplement or (ii) from the use, repossession or operation of the Equipment by the Servicer or any of its Affiliates; provided, however, that the foregoing indemnity described in the immediately preceding clause (ii) shall not include any Indemnified Amounts to the extent resulting from willful misconduct or gross negligence of such Indemnified Party in the performance of any of his, her or its obligations and duties. Indemnification pursuant to this Section shall not be payable from any Series Trust Estate. (c) The Servicer shall pay any amounts owing pursuant to Section 8.01(b) hereof directly to the applicable Indemnified Parties entitled to the receipt thereof, and such amounts shall not be deposited in the applicable Facility Account, Advance Payment Account or the Series Accounts. Any request by any Indemnified Party for indemnity pursuant to this Section 8.01 shall be made in writing delivered to the Servicer and the Trustee describing in reasonable detail the amount thereof and the circumstances giving rise thereto. The Servicer shall pay any such Indemnified Amounts within 30 days after its receipt of any such request therefor, it being understood and agreed, however, that payment of such amount shall not constitute a waiver of the Servicer's right to contest the basis for such indemnity so long as the Servicer provides written notice to the applicable Indemnified Party at the time of the Servicer's payment of the respective Indemnified Amounts, which written notice shall state the basis, in reasonable detail, for the Servicer's dispute of the requested Indemnified Amount. (d) Indemnification under this Section 8.01 shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation reasonably incurred. If the Servicer has made any indemnity payments to any of the Indemnified Parties pursuant to this Section 8.01 and such party thereafter collects any of such amounts from others, such party will promptly repay such amounts collected to the Servicer, without interest. 56 (e) Notwithstanding anything contained herein to the contrary, if and to the extent that the Servicer is the Trustee or any successor Servicer appointed by the Trustee then such Servicer shall only be responsible pursuant to this Section 8.01 for any such amounts suffered or incurred by any such indemnified party hereunder as a result of the Trustee's or such other successor Servicer's gross negligence or willful misconduct. (f) The agreements contained in this Section 8.01 shall survive the Final Date of the last Outstanding Series and the termination of this Master Agreement and any applicable Series Supplement. Section 8.02. Merger, Consolidation, or Assumption of the Obligations of Servicer. Any corporation (i) into which the Servicer may be merged or consolidated, (ii) resulting from any merger or consolidation to which the Servicer shall be a party or (iii) succeeding to the business of the Servicer, shall be the successor to the Servicer hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided that, such corporation in any of the foregoing cases shall execute an agreement of assumption, in a form reasonably satisfactory to the Trustee, agreeing to perform every obligation of the Servicer hereunder and under each Series Supplement and shall notify the Rating Agencies prior to such succession. Any corporation succeeding to the business of the Servicer by merger, consolidation or otherwise shall be a corporation organized and existing under the laws of the United States or any State and have a tangible net worth of at least $20,000,000. The Servicer shall provide prompt written notice of the effectiveness of any such event to the Obligors' Agent, the Trustee, each Series Controlling Party and each Series Support Provider. Section 8.03. Limitation on Liability of Servicer and Others. No directors, officers, employees or agents of the Servicer shall be under any personal liability to the Trustee, the Obligors or any of the Noteholders, for any action taken or for refraining from the taking of any action pursuant to this Master Agreement or for errors in judgment. The Servicer and any director or officer or employee or agent of the Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. Except as provided herein, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its duties to service each Series Trust Estate in accordance with this Master Agreement and each Series Supplement and that in its opinion may involve it in any expense or liability; provided, however, that the Servicer may take any such action that is reasonable and that may be necessary or desirable in respect of this Master Agreement and each Series Supplement and the rights and duties of the parties hereto and thereto and the interests of the Trustee hereunder and thereunder. In the event the Servicer takes such action, the reasonably incurred legal expenses and costs of such action and any liabilities resulting therefrom shall be expenses, costs and liabilities of the related Series Trust Estate, and the Servicer shall be entitled to be reimbursed therefor in accordance with the terms hereof. 57 Section 8.04. Servicer Not to Resign. Subject to the provisions of Section 8.02 hereof, the Servicer shall not resign from the obligations and duties hereby imposed on it as Servicer except upon determination that the performance of its duties hereunder is no longer permissible under applicable law. No such resignation shall become effective until a successor Servicer shall have assumed the responsibilities and obligations of the Servicer in accordance with Section 9.02 hereof. Section 8.05. Reserved. Section 8.06. Indemnities of the Obligors. (a) Without limiting any other rights which any of the Indemnified Parties may have hereunder, under any Series Supplement or under applicable law, each Obligor hereby agrees to indemnify each Indemnified Party from and against any and all Indemnified Amounts arising out of (i) reliance on any representation or warranty or statement of such Obligor made or deemed made by such Obligor under or in connection with this Master Agreement or in any of the other Series Related Documents to which such Person is a party or in any certificate or report delivered in connection with any of the foregoing which shall have been incorrect in any material respect when made; (ii) the failure by such Obligor to comply with this Master Agreement or any of the other Series Related Documents to which any such Person is a party, or the failure by such Obligor or the Transferor, to comply with any applicable law, rule or regulation with respect to any Contract, or the nonconformity of any Contract with any such applicable law, rule or regulation; (iii) the failure to vest in the Trustee a first priority perfected security interest in the property pledged by such Obligor with respect to the related Series Trust Estate, free and clear of any Lien; (iv) the failure of such Obligor to pay when due any taxes, including without limitation, sales, excise or personal property taxes payable in connection with any of the Contracts or any of the Equipment, to the extent required by Section 14.08 hereof. (b) Any request by any Indemnified Party for indemnity pursuant to this Section 8.06 shall be made in writing delivered to the Obligors' Agent describing in reasonable detail the amount thereof and the circumstances giving rise thereto. The Obligors' Agent on behalf of the related Obligor(s) shall pay any such Indemnified Amounts within 30 days after its receipt of any such request therefor; it being understood and agreed, however, that payment of such amount shall not constitute a waiver of the Obligors' Agent right to contest the basis for such indemnity so long as the Obligors' Agent provides written notice to the applicable Indemnified Party at the time of the Obligors' Agent payment of the respective Indemnified Amounts, which written notice 58 shall state the basis, in reasonable detail, for the Obligors' Agent's dispute of the requested Indemnified Amount. (c) The agreement contained in this Section 8.06 shall survive the Final Date of the last Outstanding Series and the termination of this Master Agreement and each Series Supplement. Section 8.07. Limitation on Liability of the Obligors. The directors, officers, employees or agents of any Obligor shall not be under any liability to the Trustee, the Noteholders, the Transferor, the Servicer, any Series Support Provider or any other Person hereunder or pursuant to any document delivered hereunder, it being expressly understood that all such liability is expressly waived and released as a condition of, and as consideration for, the Obligors' execution and delivery of this Master Agreement and the issuance of the Notes. The Obligors may rely in good faith on any document of any kind prima facie properly executed and submitted by any other Person respecting any matters arising hereunder. Article IX SERVICER TERMINATION Section 9.01. Events of Servicer Termination. (a) If any of the following events (each an "Event of Servicer Termination") shall occur and be continuing: (i) any failure by the Servicer to make any payment, transfer or deposit, or, if applicable, to give instructions or notice to the Trustee to make such payment, transfer or deposit, relating to the payment of the interest or principal balance of any Note or the payment of any amount payable to a Series Support Provider, in either case, on or before the first Business Day following the date such payment, transfer or deposit or such instruction or notice is required to be made or given, as the case may be, under the terms of this Master Agreement or any applicable Series Supplement; or (ii) the Servicer shall fail to perform or observe any other material term, covenant or agreement hereunder or in any Series Related Document (other than as described in clause (i) above), and such failure shall remain unremedied for 30 calendar days after the receipt by the Servicer of written notice of such failure from the Trustee; (iii) any representation, warranty, certification or statement made by the Servicer in this Master Agreement, in any Series Related Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made (or deemed made), and such situation, if susceptible to cure, is not remedied within 30 calendar days after receipt by the Servicer of written notice of such situation from the Trustee; 59 (iv) an Insolvency Event shall occur with respect to the Servicer; or (v) a Series Event of Default shall occur. then, and in each and every case, so long as an Event of Servicer Termination shall be continuing, the Trustee may, and, at the direction of the Majority Control Parties, shall, by notice (the "Servicer Termination Notice") then given in writing to the Servicer, terminate all, but not less than all, of the rights and obligations of the Servicer under this Master Agreement and each Series Related Document. (b) On and after the time the Servicer receives a Servicer Termination Notice pursuant to this Section 9.01, all authority and power of the Servicer under this Master Agreement and each Series Related Document, whether with respect to the Notes or each Series Trust Estate or otherwise, shall pass to and be vested in the successor Servicer appointed pursuant to Section 9.02 hereof and, without limitation, such successor Servicer is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Servicer Termination Notice, whether to complete the transfer of each Series Trust Estate and related documents or otherwise. The Servicer agrees to cooperate with the Trustee and the successor Servicer in effecting the termination of the responsibilities and rights of the Servicer hereunder, including, without limitation, the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the Servicer for deposit, or have been deposited by the Servicer, in any Advance Payment Account or Facility Account or thereafter received with respect to the related Series Trust Estate. To assist the successor Servicer in enforcing all rights with respect to any Related Security or under Broker Agreements and Insurance Policies to the extent that they relate to the Contracts, the Servicer, at its own expense, shall transfer its electronic records relating to such Contracts to the successor Servicer in such electronic form as the successor Servicer may reasonably request and shall transfer the related Contract Files and all other records, correspondence and documents relating to the Contracts that it may possess to the successor Servicer in the manner and at such times as the successor Servicer shall reasonably request. In addition to any other amounts that are then payable to the Servicer under this Master Agreement or any Series Related Document, the Servicer shall be entitled to receive reimbursement for any unreimbursed Servicer Advances made during the period prior to the delivery of a Servicer Termination Notice pursuant to this Section 9.01. Section 9.02. Back-up Servicer to Act; Taking of Bids; Appointment of Successor Servicer. (a) (i) Except as provided in Section 9.01(b) hereof, on and after the time the Servicer delivers its notice of resignation to the Trustee pursuant to Section 8.04 hereof or receives a Servicer Termination Notice pursuant to Section 9.01(a) hereof, the Back-up Servicer shall, unless prevented by law, automatically 60 and without further action be the successor Servicer. If the Back-up Servicer cannot serve as successor Servicer, the Trustee shall appoint as successor Servicer another firm acceptable to it, each Series Support Provider, the Majority Control Parties and the Obligors' Agent. (ii) The successor Servicer shall be the successor in all respects to the Servicer in its capacity as Servicer under this Master Agreement and the transactions set forth or provided for herein, and shall be subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and provisions hereof; provided, however, that the successor Servicer (x) shall not be required to make any Servicer Advance and (y) shall not be liable for any acts or omissions of the outgoing Servicer or for any breach by the outgoing Servicer of any of its representations and warranties contained herein or in any related document or agreement. With the prior written consent of each Series Support Provider (which consent shall not be unreasonably withheld), the successor Servicer may subcontract with another firm to act as subservicer so long as the successor Servicer remains fully responsible and accountable for performance of all obligations of the Servicer on and after the time the Servicer receives the Servicer Termination Notice. The successor Servicer shall be entitled to the Servicer Fee and any Increased Servicer Fee, subject to the taking of bids as described in subsection (b) below. (b) Solely for purposes of establishing the fee to be paid to the successor Servicer upon receipt of a Servicer Termination Notice, the Back-up Servicer shall solicit written bids, with a copy to each Series Support Provider and the Trustee, if the Back-up Servicer is not also acting in the capacity of Trustee (such bids to include a proposed servicer fee and servicing transfer costs) from not less than three entities experienced in the servicing of contracts similar to the Contracts and that are not Affiliates of the Trustee, the Back-up Servicer, the Servicer or the Transferor and are reasonably acceptable to each Series Controlling Party. Any such written solicitation shall prominently indicate that bids should specify any applicable subservicing fees required to be paid from the Servicer Fee and that any fees and transfer costs in excess of the Servicer Fee shall be paid only in accordance with the relevant Series Supplement, as the Increased Servicer Fee. The successor Servicer shall act as Servicer hereunder and shall, subject to the availability of sufficient funds in the applicable Facility Account, receive as compensation therefor a fee equal to the fee proposed in the bids so solicited which provides for the lowest combination of servicer fee and transition costs, as reasonably determined by the Series Controlling Parties. (c) The Servicer, the Back-up Servicer, the Transferor, the Trustee and such successor Servicer shall take such action, consistent with this Master Agreement, as shall be necessary to effectuate any such succession. The Back-up Servicer (or the Trustee, any Series Support Provider or the Noteholders if such Series Support Provider or such Noteholders have previously reimbursed the Back-up Servicer and the Trustee therefor) shall be reimbursed for Transition Costs, if any, incurred in connection with the assumption of responsibilities of the successor Servicer, upon receipt of documentation of such costs and expenses. The Back-up Servicer shall have no claim against the Servicer, 61 Transferor, any Noteholder, any Series Support Provider, the Trust Estate or any other Party to the Series Related Documents for any costs and expenses incurred in effecting such succession in excess of the amount specified in the definition of "Transition Costs." Section 9.03. Notification of Event of Servicer Termination. The Servicer shall promptly (and in no event more than two Business Days later) notify the Trustee and the Obligors' Agent in writing of any Event of Servicer Termination upon actual knowledge thereof by a Servicing Officer and the Trustee shall promptly (and in no event more than two Business Days later) thereupon give written notice thereof to each of the Series Controlling Parties and each of the Series Support Providers. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article IX, the Trustee shall give prompt written notice thereof to each of the Noteholders, each of the Series Support Providers and the Transferor. Section 9.04. Waiver of Past Defaults. The Majority Control Parties, on behalf of all Noteholders, may waive any default by the Servicer in the performance of its obligations hereunder and its consequences. Any such waiver must be in writing and be signed by the Majority Control Parties or the Trustee acting on behalf (and at the direction) of the Majority Control Parties. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Servicer Termination arising therefrom shall be deemed to have been remedied for every purpose of this Master Agreement, any Series Related Document or otherwise. No such waiver shall extend to any subsequent similar or dissimilar default or impair any right consequent thereon except to the extent expressly waived in accordance with this Section 9.04. Section 9.05. Effects of Servicer Termination. (a) Upon the appointment of the successor Servicer, the terminated Servicer shall hold in trust for the Trustee and immediately remit any Scheduled Payments, Residual Receipts, Overdue Payments, Security Deposit, Insurance Proceeds, Advance Payments, Prepayments, and proceeds of any Related Security that it may receive pursuant to any Contract, any Broker Agreement, Insurance Policy or otherwise to the successor Servicer for the benefit of the Trustee; provided, that amounts representing Security Deposits shall be remitted as required by paragraph (b) below. (b) After the delivery of a Servicer Termination Notice, the terminated Servicer shall have no further obligations with respect to the management, administration or servicing of any Series Trust Estate or the enforcement, custody or collection of the Contracts, and the successor Servicer shall have all of such obligations, except that the terminated Servicer will transmit or cause to be transmitted directly to the successor Servicer for the benefit of the Trustee (i) promptly upon receipt and in the same form in which received, any amounts held or received by the former Servicer (properly endorsed where required for the successor Servicer to collect them) as payments upon or otherwise in connection with Contracts or any Series Trust Estate and (ii) when and as required by 62 Section 6.14 hereof, amounts representing Security Deposits. The terminated Servicer's indemnification obligations pursuant to Section 8.01 hereof will survive its termination as the Servicer hereunder but will not extend to any acts or omissions of any successor Servicer. (c) Notwithstanding Section 9.05(b) hereof, it is hereby agreed by the parties hereto that in the event that Marlin or any of its Affiliates no longer continues to perform as Servicer hereunder, the Obligors, upon the request of the Trustee, shall instruct the Transferor pursuant to the Master Transfer Agreement to exercise any rights under any Contract, any guaranty thereof, or Insurance Policy for the benefit of the Trustee and the related Series Secured Parties. (d) An Event of Servicer Termination shall not affect the rights and duties of the parties hereunder other than those relating to the management, administration, servicing, custody or collection of the Contracts or the payment of certain expenses by the successor Servicer, in each case, as expressly set forth herein. (e) The parties expressly acknowledge and consent to Wells Fargo Bank Minnesota, National Association acting in the possible dual capacity of Back-up Servicer or successor Servicer and in the capacity as Trustee. Wells Fargo Bank Minnesota, National Association may, in such dual capacity, discharge its separate functions fully, without hindrance or regard to conflict of interest principles, duty of loyalty principles or other breach of fiduciary duties to the extent that any such conflict or breach arises from the performance by Wells Fargo Bank Minnesota, National Association of express duties set forth in this Master Agreement in any of such capacities, all of which defenses, claims or assertions are hereby expressly waived by the other parties hereto except in the case of negligence (other than errors in judgment) and willful misconduct by Wells Fargo Bank Minnesota, National Association. Section 9.06. Responsibilities of Back-up Servicer. (a) On or before the first Original Issue Date until the receipt by the Servicer of a Servicer Termination Notice from the Trustee in accordance with Section 9.02 hereof, the Back-up Servicer shall perform, on behalf of the Series Secured Parties of each Series and the Trustee, the following duties and obligations: (i) On or before the Original Issue Date, the Back-up Servicer shall accept from the Servicer delivery of the information required to be set forth in the Servicer's Certificate in hard copy and on tape (including, without limitation, the Computer Tape); provided, however, the computer tape is in a format to be agreed upon by the Back-up Servicer and the Servicer. (ii) The Servicer will provide the Servicer's Certificate signed by a Servicing Officer, setting forth the information as of the last day of the Collection Period immediately preceding the related Settlement Date and after giving effect to any withdrawals, deposits and transfers to occur on or before the related Settlement Date, to the Back-up Servicer by 12:00 noon New York time two (2) 63 Business Days prior to the Determination Date preceding each Settlement Date, and the Trustee will furnish or cause to be furnished such Servicer's Certificate to the Noteholders on or immediately following receipt thereof. In addition, the Servicer shall provide to the Back-up Servicer simultaneously with the delivery of such Servicer's Certificate a tape or other electronic media (in a format acceptable to the Back-up Servicer) containing the detailed account and payment information utilized to prepare such Servicer's Certificate. To enable the Servicer to prepare the Servicer's Certificate, the Trustee shall provide to the Servicer, on or before the fifth (5th) Business Day following the last day of each Collection Period, a statement as to the balances and total amount of investment income earned on funds on deposit in each Facility Account during the preceding Collection Period if held by the Trustee. The Trustee shall not have any duty or obligation to recalculate, recompute or verify the information contained on the Servicer's Certificate. (b) During the period from the Original Issue Date until the Series Termination Date for the related Series Supplement or until the receipt by the Servicer of a Servicer Termination Notice, the Back-up Servicer shall perform, on behalf of the Series Secured Parties of each Series and the Trustee, the following duties and obligations: (i) Prior to the related Settlement Date, the Back-up Servicer shall review the Servicer's Certificate to ensure that it is complete on its face. (ii) Prior to becoming the successor Servicer, the Back-up Servicer shall be responsible for reviewing the Servicer's Certificate each month no later than the end of the month in which such Servicer's Certificate was delivered (assuming such Servicer's Certificate is delivered in accordance with the requirements of this Master Agreement). In performing such review of the Servicer's Certificate, the Back-up Servicer shall recalculate and verify the following information, based solely on information provided by the Servicer, with any discrepancies reported to the Series Controlling Parties and the Series Support Providers: (i) aggregate Contract Balance Remaining, (ii) aggregate Contract Principal Balance, (iii) note outstanding for each series, (iv) Servicing Fee for related Collection Period, (v) confirm number of Contracts, Delinquency Rate and Delinquency Ratio for 31-60, 61-90, 90+ day delinquent Contracts, (vi) confirm annualized Charged-Off Ratio, (vii) confirm concentrations by Broker/Vendor, Equipment, State, and largest User. After performing its review, the Back-up Servicer will provide to the Trustee, the Obligors' Agent, the Servicer and the Series Support Providers by the last day of the calendar month in which the Servicer's Certificate is received a verification certificate, a form of which is attached hereto as Exhibit A. Except as otherwise expressly provided herein, the Back-up Servicer shall have no obligation to supervise, verify, monitor or administer the performance of the Servicer and shall have no liability for any action taken or omitted by the Servicer. The Back-up Servicer shall not be required to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder, or in exercise of any of its rights 64 or powers, if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (c) Neither the Back-up Servicer nor any of its directors, officers, employees or agents shall be under any liability to any of the parties of this Master Agreement or the Noteholders, for any action taken or for refraining from the taking of any action pursuant to this Master Agreement; provided, however, that this provision shall not protect the Back-up Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of its duties. The Back-up Servicer and any such person may rely in good faith on the written advice of counsel or on any documents or any kind prima facie properly executed and submitted by any person respecting any matters arising under this Master Agreement. (d) After the receipt of an effective Servicer Termination Notice by the Servicer in accordance with this Master Agreement or any Series Supplement, all authority, power, rights and responsibilities of the Servicer, under this Master Agreement and each Series Supplement, whether with respect to the Contracts or otherwise shall pass to and be vested in the Back-up Servicer as long as the Back-up Servicer is not prohibited by an applicable provision of law from fulfilling the same, as evidenced by an Opinion of Counsel. The successor Servicer, if Wells Fargo Bank Minnesota, National Association, its successors or assigns, shall have (i) no liability with respect to any obligation which was required to be performed by the terminated Servicer prior to the date that the successor Servicer becomes the Servicer or any claim of a third party based on any alleged action or inaction of the terminated Servicer, (ii) no obligation to perform any repurchase or advancing obligations, if any, of the Servicer, (iii) no obligation to pay any taxes required to be paid by the Servicer, (iv) no obligation to pay any of the fees and expenses of any other party involved in this transaction and (v) no liability or obligation with respect to any Servicer indemnification obligations of any prior Servicer including the original Servicer other than those due to the gross negligence, willful misfeasance or bad faith of the successor Servicer in the performance of its duties under this Master Agreement. Section 9.07. Back-up Servicer Compensation. (a) As compensation for its performance under Section 9.06(a) and Section 9.06(b) the Back-up Servicer shall be paid the Back-up Servicer Fee and any amount set forth in the related Series Supplement. (b) As compensation for its performance under Section 9.02 above, the Back-up Servicer shall be entitled to such Servicer Fee and any Increased Servicer Fee pursuant to Section 9.02 hereof and other amounts (whether payable out of the applicable Facility Account or otherwise). 65 Section 9.08. Merger or Consolidation of, or Assumption of the Obligation of Back-up Servicer. (a) Any Person (i) into which the Back-up Servicer may be merged or consolidated, (ii) which may result from any merger or consolidation to which the Back-up Servicer shall be a party, or (iii) which may succeed to the properties and assets of the Back-up Servicer substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Back-up Servicer hereunder, shall be the successor to the Back-up Servicer under this Master Agreement or any Series Supplement without further act on the party of any of the parties this Master Agreement or any Series Supplement. (b) The Back-up Servicer, solely in its capacity as Back-up Servicer hereunder, hereby irrevocably and unconditionally waives all right of set-off that it may have under contract (including this Master Agreement or any Series Supplement), applicable law or otherwise with respect to any funds or monies of Marlin or any Obligor, at any time held by or in the possession of the Back-up Servicer. (c) Upon the Back-up Servicer's resignation or termination pursuant to Section 9.09 hereof, the Back-up Servicer shall comply with the provisions of this Master Agreement and any Series Supplement until the acceptance of appointment by a successor Back-up Servicer. Any such successor Back-up Servicer shall be appointed by the Trustee subject to the approval of the Majority Control Parties. Section 9.09. Back-up Servicer Termination or Resignation. (a) The Trustee shall, at the direction of the Majority Control Parties, on behalf of all Noteholders, by notice in their sole discretion (the "Back-up Servicer Termination Notice") then given in writing to the Back-up Servicer, terminate all, but not less than all, of the rights and obligations of the Back-up Servicer under this Master Agreement and all Series Supplements with respect to the Series Trust Estate. Such notice shall state the effective date of the termination, which shall not be prior to the acceptance of the appointment by the successor Back-up Servicer which is reasonably acceptable to the Majority Control Parties. (b) Provided that an Event of Servicer Termination has not occurred and is continuing, the Back-up Servicer may by notice in its sole discretion (the "Back-up Servicer Resignation Notice") then given in writing to the Trustee resign as the Back-up Servicer under this Master Agreement and all Series Supplements with respect to the Series Trust Estate and the Trustee shall promptly (and in any event within 2 Business Days) give notice thereof to each Series Controlling Party. Such notice shall state the effective date of the resignation, which shall not be prior to the acceptance of the appointment by the successor Back-up Servicer which is reasonably acceptable to the Majority Control Parties. (c) If a Back-up Servicer Termination Notice is received by the Back-up Servicer or a Back-up Servicer Resignation Notice is given while it is performing 66 under Sections 9.06(a) and 9.06(b) above, the Back-up Servicer agrees to cooperate with the Trustee, the Series Controlling Parties, the successor Servicer and the successor Back-up Servicer in effecting the termination of the Back-up Servicer's responsibilities and rights hereunder, including, without limitation, the transfer to the successor Servicer or the successor Back-up Servicer of all data then in the possession of the Back-up Servicer. (d) If a Back-up Servicer Termination Notice is received by the Back-up Servicer or a Back-up Servicer Resignation Notice is given while it is performing under Section 9.02(a) above, the Back-up Servicer agrees to perform the obligations of the outgoing Servicer in accordance with this Master Agreement and each Series Supplement. Section 9.10. Limitation on Liability of Back-up Servicer and Others. (a) Neither the Back-up Servicer nor any of the directors, officers or employees or agents of the Back-up Servicer shall be under any liability to the Servicer, the Trustee, or the related Noteholders except as provided herein, for any action taken or for refraining from the taking of any action in good faith pursuant to this Master Agreement and any Series Supplement or for errors in judgment not involving willful misconduct, bad faith or negligence; provided, however, that this provision shall not protect the Back-up Servicer against any liability resulting from its breach of any representation or warranty made herein, nor shall this provision protect the Back-up Servicer against any liability that would otherwise be imposed by reason of willful misconduct, bad faith or gross negligence in the performance of its duties hereunder. Neither the Back-up Servicer nor any of its directors, officers or employees or agents shall be under any liability of any kind or type to any Person arising from the incomplete or inaccurate contents of any Computer Tape provided by the Servicer. The Back-up Servicer and any director, officer, employee or agent of the Back-up Servicer may conclusively rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder or in connection with the transactions contemplated herein. (b) The Servicer shall indemnify the Back-up Servicer, its officers, directors, employees and agents for, and to hold it harmless against, any loss, liability or expense incurred, except to the extent that such loss, liability or expense was incurred through gross negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the Series Estate Trust and the performance of its duties hereunder, including the costs and expenses of defending against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. (c) The Back-up Servicer shall perform such duties and only such duties as are specifically set forth in this Master Agreement, and no implied covenants or obligations shall be read into this Master Agreement against the Back-up Servicer. (d) The Back-up Servicer shall be entitled to the benefits and immunities afforded the Trustee pursuant to the provisions of Sections 11.01, 11.03 and 11.04 of this Master Agreement. 67 Section 9.11. Representations and Warranties of the Back-up Servicer. The Back-up Servicer hereby makes the following representations and warranties for the benefit of the Trustee, the Series Support Providers and the related Noteholders: (a) The Back-up Servicer is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America; (b) The Back-up Servicer has the power, authority and legal right to execute, deliver and perform this Master Agreement and any Series Supplement, and the execution, delivery and performance of this Master Agreement and any Series Supplement has been duly authorized by the Back-up Servicer by all necessary corporate action; (c) The execution, delivery and performance by the Back-up Servicer of this Master Agreement and the other Series Related Documents (a) does not violate any provision of any law or any order, writ, judgment, or decree of any court, arbitrator, or governmental authority applicable to the Back-up Servicer or any of its assets, (b) does not violate any provision of the corporate charter or by-laws of the Back-up Servicer, (c) does not result in the creation or imposition of any Lien on any properties included in the Series Trust Estate and (d) does not violate any provision of, or constitute, with or without notice or lapse of time, a default under, the provisions of any mortgage, indenture, contract, agreement, or other undertaking to which the Back-up Servicer is a party, which violation or default could reasonably be expected to materially and adversely affect the Back-up Servicer 's performance or ability to perform its duties under this Master Agreement the other Series Related Documents or the transactions contemplated in this Master Agreement or the other Series Related Documents; (d) The execution, delivery and performance by the Back-up Servicer of this Master Agreement and the other Series Related Documents does not require the authorization, consent, or approval of, the giving of notice to, the filing or registration with, or the taking of any other action in respect of, any governmental authority or agency regulating the banking and corporate trust activities of the Back-up Servicer; and (e) This Master Agreement and the other Series Related Documents have been duly executed and delivered by the Back-up Servicer and constitutes the legal, valid, and binding agreement of the Back-up Servicer, enforceable in accordance with its and their respective terms. 68 Article X EVENTS OF DEFAULT AND REMEDIES Section 10.01. Events of Default. The "Events of Default," with respect to a Series, shall be set forth in the related Series Supplement. Section 10.02. Collection of Indebtedness and Suits for Enforcement by Trustee; Authority of Series Controlling Party. (a) Subject to the provisions of the related Series Supplement, if the Notes of any Series are accelerated following the occurrence of an Event of Default with respect to such Series, there shall be due and payable (but only from the funds available from the related Series Trust Estate), the whole amount then due and payable on such Notes for principal and interest, with interest upon the overdue principal, and, to the extent payment of such interest shall be legally enforceable, upon overdue installments of interest, at the interest rate applicable to the Notes of such Series and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel. (b) If an Event of Default occurs and is continuing with respect to a Series, the Trustee shall at the direction of the related Series Controlling Party, proceed to protect and enforce its rights and the rights of the related Series Secured Parties by such appropriate Proceedings as such Series Controlling Party shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Master Agreement or the related Series Supplement or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy or legal or equitable right vested in the Trustee by this Master Agreement, the related Series Supplement, or by law. (c) In case there shall be pending, relative to any Obligor or any other obligor upon the Notes of the related Series or any Person having or claiming an ownership interest in the related Series Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of any related Obligor or its property or such other obligor or Person, or in case of any other comparable judicial Proceedings relative to such Obligor or other obligor upon the Notes of such Series, or to the creditors or property of such Obligor or such other obligor, the Trustee, irrespective of whether the principal of any Notes of such Series shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such Proceedings or otherwise: 69 (i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of such Notes or for other obligations owing and unpaid to the related Series Secured Parties and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee against the related Series Trust Estate (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee, except as a result of gross negligence or bad faith) and of the Noteholders of such Series and the other related Series Secured Parties allowed in such Proceedings; (ii) unless prohibited by applicable law and regulations, to vote on behalf of the Holders of Notes of such Series in any election of a trustee, a standby trustee or person performing similar functions in any such Proceedings; (iii) to collect and receive any moneys or other property payable or deliverable on such claims and received with respect to the related Series Trust Estate and to distribute all amounts received with respect to the claims of the Noteholders of such Series and the other related Series Secured Parties on their behalf; and (iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee or the Holders of Notes of such Series and the other related Series Secured Parties, in each case against the related Series Trust Estate, allowed in any judicial proceedings relative to the Obligors, its creditors and its property; and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Trustee, and, in the event that the Trustee shall consent to the making of payments directly to such Noteholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee and each predecessor Trustee except as a result of gross negligence or bad faith. (d) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder or other related Series Secured Party any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or other related Series Secured Party or to authorize the Trustee to vote in respect of the claim of any Noteholder or other Series Secured Party in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. (e) All rights of action and of asserting claims under this Master Agreement, the related Series Supplement, any other Series Related Document or under 70 any of the Notes, may be enforced by the Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the related Notes and the other Series Secured Parties in accordance with the related Series Supplement. (f) In any Proceedings brought by the Trustee (including any Proceedings involving the interpretation of any provision of this Master Agreement or the related Series Supplement), the Trustee shall be held to represent all the Holders of the related Notes, and it shall not be necessary to make any Noteholder a party to any such Proceedings. Section 10.03. Limitation on Suits. No Holder of any Note shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Master Agreement or the related Series Supplement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Notes of the related Series; (ii) the Holders of not less than 50% of the Maximum Series Limit of the Notes of the related Series shall have made written request to the Trustee to institute such Proceeding in respect of such Event of Default in its own name as Trustee hereunder; (iii) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such Proceeding; (v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority of the Maximum Series Amount of the Notes of the related Series; and (vi) if any Series Support secures such Series, a Series Support Provider Default shall have occurred and be continuing. It is understood and intended that no one or more of the Holders shall have any right in any manner whatever hereunder or under the Notes to (i) affect, disturb or prejudice the rights of the Holders of any other Notes, (ii) obtain or seek to obtain priority or preference over any other such Holder or (iii) enforce any right under this Master 71 Agreement, except in the manner herein provided and for the equal, ratable and common benefit of all such Holders. Section 10.04. Unconditional Right of Holders to Receive Principal and Interest. Subject to the provisions of Section 3.06 hereof, the Holder of any Note shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on or after the respective due dates thereof expressed in such Note, in this Master Agreement or the related Series Supplement and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder; provided, however, that (x) if such Series is secured by any Series Support, then, so long as no Series Support Provider Default shall have occurred and be continuing, no such suit shall be instituted and (y) in no event shall such right entitle any Holder to a payment from a source of funds other than the related Series Trust Estate. Section 10.05. Restoration of Rights and Remedies. If any of the Trustee, the related Series Support Provider or any Holder has instituted any Proceeding to enforce any right or remedy under this Master Agreement (or the related Series Supplement) and such Proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee, the related Series Support Provider or to such Holder, then and in every such case, subject to any determination in such Proceeding, the Obligors, the Trustee, the related Series Support Provider and the related Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee, the related Series Support Provider and the related Holders shall continue as though no such Proceeding had been instituted. Section 10.06. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of section 5.05, no right or remedy herein conferred upon or reserved to any of the Trustee, the related Series Controlling Party, the related Series Support Provider or to the related Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Section 10.07. Delay or Omission Not Waiver. No delay or omission of any of the Trustee, the related Series Controlling Party, any Series Support Provider or any Holder of any related Note to exercise any right or remedy accruing upon any related Default or related Event of Default shall impair any such right or remedy or constitute a waiver of any such related Default or related Event of 72 Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee, any Series Support Provider or to the related Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, any Series Support Provider or by the related Holders, as the case may be. Section 10.08. Control by Holders. If the Trustee is the Series Controlling Party with respect to a Series, the Holders of a majority of the Maximum Series Limit of the Notes with respect to such Series shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Notes; provided, that (i) such direction shall not be in conflict with any rule of law, with this Master Agreement or with the related Series Supplement, and (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. Section 10.09. Waiver of Past Defaults. The Series Controlling Party with respect to a Series may, on behalf of the Holders of all the Notes of the related Series waive any past Default relating to such Series or Event of Default relating to such Series hereunder and its consequences, except a Default relating to such Series: (i) in the payment of the principal of or interest, if any, on any Note of the related Series, or (ii) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of the Holder of each Outstanding Note of the related Series affected. If the Trustee is the Series Controlling Party with respect to a Series the Trustee may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to waive any past Default or Event of Default of the related Series. If a record date is fixed, the Holders of the related Series on such record date, or their duly designated proxies, and only such Persons, shall be entitled to waive any such Default or Event of Default, whether or not such Holders remain Holders after such record date; and unless such majority in principal amount shall have been obtained prior to the date which is 90 days after such record date, any such waiver previously given shall automatically and without further action by any Holder be cancelled and of no further effect. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Master Agreement and each applicable Series Supplement; but no such waiver shall 73 extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 10.10. Undertaking for Costs. All parties to this Master Agreement and each Series Supplement agree, and each Holder of any Note by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Master Agreement or the related Series Supplement, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Obligors, to any suit instituted by the Trustee or any Series Support Provider, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Maximum Series Limit of the Notes of the related Series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or interest on any Note on or after the respective due dates expressed in such Note and the related Series Supplement. Section 10.11. Action on Notes. The Trustee's right to seek and recover judgment on the Notes or under this Master Agreement or any Series Supplement shall not be affected by the seeking, obtaining or application for any other relief under or with respect to this Master Agreement or such Series Supplement. Neither the lien hereof, the related Series Supplement nor any rights or remedies of the Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Trustee against the Obligors or by the levy of any execution under such judgment upon any portion of the related Series Trust Estate or upon any of the assets of the Obligors. Article XI THE TRUSTEE Section 11.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default with respect to a Series: (i) the Trustee undertakes to perform with respect to such Series such duties and only such duties as are specifically set forth in this Master Agreement and/or the related Series Supplement, and no implied covenants or obligations shall be read into this Master Agreement or the related Series Supplement against the Trustee; and 74 (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Master Agreement and/or the related Series Supplement; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Master Agreement and/or the related Series Supplement. (b) If an Event of Default with respect to a Series has occurred and is continuing, the Trustee shall exercise such of the rights and powers with respect to such Series vested in it by this Master Agreement and/or the related Series Supplement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (c) No provision of this Master Agreement or any Series Supplement shall be construed to relieve the Trustee from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct; provided, that (i) this subsection shall not be construed to limit the effect of subsection (a) of this Section; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the related Series Support Provider or, if the related Series Support Provider is not a Series Controlling Party or if there is no Series Support Provider for such Series, the Holders of a majority of the Maximum Series Limit of the Notes of the related Series, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Master Agreement, the related Series Supplement or the related Series Support with respect to the Notes of the related Series; and (iv) no provision of this Master Agreement or the related Series Supplement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not herein or therein expressly so provided, every provision of this Master Agreement and the related Series Supplement relating to the 75 conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law or the terms of this Master Agreement or the related Series Supplement. (g) The Trustee shall, upon one Business Day's prior notice received by the Trustee, permit any representative of the related Series Controlling Party or any representative of the related Series Support Provider, if any, during the Trustee's normal business hours, to examine all books of account, records, reports and other papers of the Trustee relating to the Notes of the related Series, to make copies and extracts therefrom and to discuss the Trustee's affairs and actions, as such affairs and actions relate to the Trustee's duties with respect to such Notes, with the Trustee's officers and employees responsible for carrying out the Trustee's duties with respect to such Notes. (h) In no event shall the Trustee be required to perform, or be responsible for the manner of performance of, any of the obligations of any Servicer, with respect to any Series except during such time, if any, as the Trustee, in its capacity as successor Servicer for such Series shall be the successor to, and be vested with the rights, powers, duties and privileges of the Servicer in accordance with the provisions of Section 9.02 hereof. (i) The Trustee shall maintain or cause to be maintained, in the Borough of Manhattan in the City of New York, an office or agency where Notes may be surrendered for registration of transfer or exchange (except that Bearer Notes may not be surrendered for exchange at any such office or agency in the United States) and where notices and demands to or upon the Obligors in respect of the Notes, this Master Agreement and the related Series Supplement may be served. Section 11.02. Notice of Defaults. If a Default or Event of Default occurs and is continuing with respect to a Series and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Noteholder of the related Series notice of such Default or Event of Default promptly after it occurs and shall notify the Obligors, the Obligors' Agent, the Transferor, the Servicer, the Agent and the related Series Support Provider, if any, of any such Default or Event of Default promptly after it occurs. Except in the case of a Default in payment of principal of or interest on any Note, the Trustee may withhold the notice (but not to the related Series Support Provider, if any, or the Obligors) if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interest of the Noteholders of the related Series. 76 Section 11.03. Certain Rights of Trustee. Subject to the provisions of Section 11.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Obligors mentioned herein shall be sufficiently evidenced by an Obligors' Order; (c) whenever in the administration of this Master Agreement and/or any Series Supplement the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer's Certificate; (d) the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Master Agreement and/or any Series Supplement at the request or direction of any of the related Series Support Provider, if any, or the Holders of the related Series pursuant to this Master Agreement, unless such Series Support Provider or such Holders shall have offered to the Trustee reasonable security or indemnity to its satisfaction against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the related Obligors, personally or by agent or attorney; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. 77 (h) The protective provisions and remedial provisions set forth in this Master Agreement benefiting the Trustee shall also benefit the Note Registrar, Paying Agent and Authenticating Agent to the extent the Trustee is also performing such roles. Section 11.04. Not Responsible for Recitals or Issuance of Notes. The recitals contained herein, in any Series Supplement and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Obligors, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Master Agreement, any Series Supplement or of the Notes, or any Series Trust Estate. The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Obligors of Notes or the proceeds thereof. Section 11.05. May Hold Notes. The Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar or any other agent of the Obligors, in its individual or any other capacity, may become the owner or pledgee of Notes and, subject to Sections 11.07 and 11.12, may otherwise deal with the Obligors with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such other agent. Section 11.06. Compensation and Indemnity. (a) As provided in each Series Supplement, the Trustee will be paid, and the Trustee shall be entitled to, certain annual fees with respect to its administration of the related Notes and the related Series Trust Estate, which shall not be limited by any law on compensation of a Trustee of an express trust, and certain reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services as more further set forth in the related Series Supplement. The Obligors' Agent agrees to cause to be provided to the Trustee indemnity against any and all loss, liability or expense (including reasonable attorneys' fees and expenses) incurred by it in connection with the administration of this trust and the performance of their duties hereunder. (b) When the Trustee incurs expenses after the occurrence of an Insolvency Event with respect to any Obligor, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or similar law. Section 11.07. Disqualification; Conflicting Interests. If this Master Agreement is qualified under the Trust Indenture Act and if the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Master Agreement. 78 Section 11.08. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder, which shall (a) be a commercial bank or trust company organized and doing business under the laws of the United States of America or any State thereof, (b) have a combined capital and surplus of at least $50,000,000, (c) have a long-term deposit rating of at least A3 from Moody's or otherwise be acceptable to Moody's and a long-term deposit rating of at least A- from S&P or otherwise be acceptable to S&P and (d) be authorized to exercise corporate trust powers and be subject to supervision or examination by Federal or State authority. If such commercial bank or trust company publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such commercial bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Section 11.09. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 11.10. (b) The Trustee may resign at any time with respect to the Notes by giving written notice thereof to the Obligors' Agent. If the instrument of acceptance by a successor Trustee required by Section 11.10 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Notes. (c) The Trustee may be removed at any time with respect to the Notes by Act of the Majority Control Parties, delivered to the Trustee and to the Obligors' Agent. (d) If at any time: (1) The Trustee shall fail to comply with Section 11.07 after written request therefor by the Obligors, by any Holder or by any Series Support Provider, or (2) the Trustee shall cease to be eligible under Section 11.08 and shall fail to resign after written request therefor by the Obligors, by any such Holder or by any Series Support Provider, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the 79 Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Obligors' Agent (with the consent of each Series Support Provider as to which a Series Support Provider Default has not occurred and is continuing) may remove the Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Notes, the Obligors' Agent (with the consent of each Series Support Provider as to which a Series Support Provider Default has not occurred and is continuing) shall promptly appoint a successor Trustee and shall comply with the applicable requirements of Section 11.10. (f) The Obligors' Agent shall give notice of each resignation and each removal of the Trustee with respect to the Notes and each appointment of a successor Trustee with respect to the Notes by mailing written notice of such event by first-class mail, postage prepaid, to all holders of Notes as their names and addresses appear in the Note Register. Each notice shall include the name of the successor Trustee with respect to the Notes and the address of its Corporate Trust Office. Section 11.10. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor Trustee with respect to the Notes, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Obligors' Agent, each Series Support Provider, if any and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Obligors' Agent, the related Series Support Provider, if any, or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. (b) Upon request of any such successor Trustee, the Obligors' Agent and each Obligor shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) of this Section. Section 11.11. Merger, Conversion, Consolidation or Succession to Business. Any corporation or other entity into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or other entity 80 resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or other entity succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation or other entity shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. The Trustee shall provide the Obligors' Agent and each Series Support Provider prompt notice of any such transaction after the completion thereof. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. Section 11.12. Preferential Collection of Claims Against Obligors. If this Master Agreement is ever qualified under the Trust Indenture Act, then the provisions of Section 311 of the Trust Indenture Act shall govern. Section 11.13. Appointment of Authenticating Agent. As of the date of the Master Agreement and at any time when any of the Notes remain Outstanding the Trustee may appoint an Authenticating Agent or agents with respect to one or more Series, Classes or Tranches of Notes which shall be authorized to act on behalf of the Trustee to authenticate Notes of such Series, Class or Tranche issued upon exchange, registration of transfer or partial prepayment thereof, or pursuant to Section 5.05, and Notes so authenticated shall be entitled to the benefits of this Master Agreement and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Master Agreement or any Series Supplement to the authentication and delivery of Notes by the Trustee upon exchange, registration of transfer or partial prepayment thereof or the Trustee's certificate of authentication in connection therewith, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Obligors' Agent, shall be authorized under law and shall meet the eligibility criteria established for the Trustee, as set forth in Section 11.08 hereof. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an 81 Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Obligors' Agent. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Obligors' Agent. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be reasonably acceptable to the Obligors' Agent and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of the related Notes, as their names and addresses appear in the Note Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. No resignation or termination of an Authenticating Agent shall become effective until a successor Authenticating Agent shall be appointed and qualified hereunder or the Trustee assumes the duties of Authenticating Agent hereunder. The Obligors' Agent agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. In the event an Authenticating Agent is appointed under this Master Agreement, the Trustee shall incur no liability for such appointment or for any misconduct or negligence of such Authenticating Agent, including without limitation, its authentication of the Notes upon original issuance or pursuant to Sections 5.03, 5.04 or 5.05. In the event the Trustee does incur liability for any such misconduct or negligence of the Authenticating Agent, the Obligors' Agent agrees to indemnify the Trustee for, and hold it harmless against, any such liability, including the costs and expenses of defending itself against any liability in connection with such misconduct or negligence of the Authenticating Agent. If an appointment with respect to one or more Series, Classes or Tranches is made pursuant to this Section, the Notes of such Series, Classes or Tranches may have endorsed thereon, in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in the following form: This is one of the Notes referred to in the within-mentioned Master Agreement and the within-mentioned Supplement thereto. 82 Wells Fargo Bank Minnesota, National Association, As Trustee By:_________________________________________ As Authenticating Agent By:_________________________________________ Authorized Officer The provisions of Sections 11.01, 11.03 and 11.04 shall apply to the Trustee also in its role as Authenticating Agent for so long as the Trustee shall act as Authenticating Agent. Section 11.14. Paying Agent. (a) The payment responsibilities for the Notes shall be performed by a Paying Agent, appointed by the Obligors' Agent which shall be authorized to exercise corporate trust powers and shall meet the eligibility criteria established for the Trustee, as set forth in Section 11.08 hereof. The Trustee is hereby initially appointed Paying Agent for the purpose of making payments on the Notes as herein provided. (b) Each Paying Agent shall be reasonably acceptable to the Obligors' Agent, shall be authorized under law and shall meet the eligibility criteria established for the Trustee, as set forth in Section 11.08 hereof. If such Paying Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Paying Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time a Paying Agent shall cease to be eligible in accordance with the provisions of this Section, such Paying Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which a Paying Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Paying Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of a Paying Agent, shall continue to be a Paying Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Paying Agent. 83 A Paying Agent may resign at any time by giving written notice thereof to the Trustee and to the Obligors' Agent. The Trustee may at any time terminate the agency of a Paying Agent by giving written notice thereof to such Paying Agent and to the Obligors' Agent. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Paying Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Paying Agent which shall be reasonably acceptable to the Obligors' Agent and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of the related Notes, as their names and addresses appear in the Note Register. Any successor Paying Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as a Paying Agent. No successor Paying Agent shall be appointed unless eligible under the provisions of this Section. No resignation or termination of a Paying Agent shall become effective until a successor Paying Agent shall be appointed and qualified hereunder or the Trustee assumes the duties of Paying Agent hereunder. The Obligors' Agent agrees to pay to each Paying Agent from time to time reasonable compensation for its services under this Section. In the event a Paying Agent is appointed under this Master Agreement, the Trustee shall incur no liability for such appointment or for any misconduct or negligence of such Paying Agent. In the event the Trustee does incur liability for any such misconduct or negligence of the Paying Agent, the Obligors' Agent agrees to indemnify the Trustee for, and hold it harmless against, any such liability, including the costs and expenses of defending itself against any liability in connection with such misconduct or negligence of the Paying Agent. The provisions of Sections 11.01, 11.03 and 11.04 shall apply to the Trustee also in its role as Paying Agent for so long as the Trustee shall act as Paying Agent. Section 11.15. Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Master Agreement, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the Series Trust Estate may at the time be located, the Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the related Series Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the related Noteholders and other Series Secured Parties, such title to the related Series Trust Estate, or any part thereof, and subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor Trustee under Section 11.08 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 11.09 hereof. 84 (b) Every separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder, and (iii) the Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Each instrument appointing any separate trustee or co-trustee shall refer to this Master Agreement and the conditions of this Article. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Master Agreement and the related Series Supplement(s), specifically including every provision of this Master Agreement and the related Series Supplement(s) relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee. (d) If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new successor trustee. Article XII HOLDERS' LISTS AND REPORTS BY TRUSTEE AND OBLIGORS' AGENT Section 12.01. Obligors' Agent to Furnish Trustee Names and Addresses of Holders. The Obligors' Agent will furnish or cause to be furnished to the Trustee with respect to each Series of Notes (a) not more than five days after the earlier of (i) each Record Date with respect to such Series and (ii) three months after the last Record 85 Date with respect to such Series, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Notes of such Series as of such Record Date, (b) at such other times as the Trustee may request in writing, within 30 days after receipt by the Obligors' Agent of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the Note Registrar, no such list shall be required to be furnished. The Trustee or, if the Trustee is not the Note Registrar, the Obligors' Agent, shall furnish or cause to be furnished to the related Series Support Provider, if any, in writing on an annual basis and at such other times as such Series Support Provider may request in writing a copy of such list with respect to the related Series. Section 12.02. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 12.01 and the names and addresses of Holders received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided in Section 12.01 upon receipt of a new list so furnished. (b) If three or more Holders of Notes of any particular Series (herein referred to as "applicants") apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Note for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Notes of such Series with respect to their rights under this Master Agreement, the related Series Supplement or under such Notes and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five business days after the receipt of such application, at its election, either (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 12.02(a), or (ii) inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 12.02(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application. Every Holder of Notes, by receiving and holding the same, agrees with the Obligors and the Trustee that neither the Obligors nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 12.01 or 12.02(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 12.01 or 12.02(b). 86 Section 12.03. Reports by Trustee. If this Master Agreement is ever qualified under the Trust Indenture Act, then the Trustee shall comply with the provisions of Section 313 of the Trust Indenture Act. Section 12.04. Reports by Obligors' Agent. If this Master Agreement is qualified under the Trust Indenture Act, the Obligors' Agent on behalf of the Obligors shall: (1) file or cause to be filed with the Trustee, within 15 days after the Obligors are required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Obligors may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Obligors are not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file or cause to be filed with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Obligors with the conditions and covenants of this Master Agreement as may be required from time to time by such rules and regulations; (3) transmit or cause to be transmitted by mail to all Holders, as their names and addresses appear in the Note Register, and to each Series Support Provider within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Obligors pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission; and (4) furnish any other periodic reports as required by the Trust Indenture Act. Section 12.05. Trustee Internet Website. The Trustee may make available to the related Series Controlling Party, the related Series Support Provider and the related Noteholders, via the Trustee's Internet Website, all reports or notices required to be provided by the Trustee with respect to a Series of Notes under the terms of this Master Agreement (including, but not limited to Sections 6.07 and 6.08) and the related Series Supplement available and, with the consent 87 or at the direction of the Servicer and the Obligor's Agent, such other information regarding the Notes and/or the Contracts as the Trustee may have in its possession, but only with the use of a password provided by the Trustee or its agent to such Person upon receipt by the Trustee from such Person of a certification in the form of Exhibit B hereto; provided, however, that the Trustee or its agent shall provide such password to the parties to this Master Agreement and the designee of such parties (the parties to each Series Supplement and the related Series Controlling Party and related Series Support Provider shall be deemed to be designees) without requiring such certification. The Trustee will make no representation or warranties as to the accuracy or completeness of such documents and will assume no responsibility therefor. The Trustee's Internet Website shall be initially located at "www.ABSNet.net" or at such other address as shall be specified by the Trustee from time to time in writing to each Series Controlling Party. In connection with providing access to the Trustee's Internet Website, the Trustee may require registration and the acceptance of a disclaimer. The Trustee shall not be liable for the dissemination of information in accordance with this Master Agreement. Article XIII MASTER AGREEMENT SUPPLEMENTS Section 13.01. Supplements Affecting All Series, or the Master Agreement Generally. (a) Without the consent of any Holders, the Obligors, the Trustee when authorized by an Obligors' Order, the Servicer and each Series Support Provider, at any time and from time to time, may enter into one or more written supplements to this Master Agreement (the "Master Agreement Supplements"), in form satisfactory to the Trustee, for any of the following purposes: (i) to authorize the issuance of one or more series of Notes; provided, that the consent of each Series Controlling Party is obtained in advance of such issuance and confirmation is obtained from the Rating Agencies that the issuance of such notes will not result in a change in any Facility Shadow Rating; or (ii) to evidence the succession, in compliance with the applicable provisions hereof, of another corporation to any Obligor or to the Obligors' Agent and the assumption by any such successor of the covenants of the Obligors or the Obligors' Agent herein, in any Series Supplement and in the Notes; or (iii) to add to the covenants of the Obligors or the Obligors' Agent for the benefit the Holders of the Notes or to surrender any right or power herein conferred upon the Obligors or the Obligors' Agent; or (iv) to add to or change any of the provisions of this Master Agreement to such extent as shall be necessary to permit or facilitate the issuance of Notes in bearer form, registrable or not registrable as to principal, and with or without 88 interest coupons, or to permit or facilitate the issuance of Notes in uncertificated form, or to facilitate the issuance of Notes in global form through the facilities of a Depository; or (v) to modify the restrictions on and procedures for resale and other transfers of the Notes to reflect any change in applicable law or regulation (or the interpretation thereof) or in practices relating to the resale or transfer of restricted securities generally; or (vi) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Notes and to add to or change any of the provisions of this Master Agreement as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 11.15; or (vii) to modify, eliminate or add to the provisions of this Master Agreement to such extent as shall be necessary to qualify, requalify or continue the qualification of this Master Agreement (including any supplement) under the Trust Indenture Act, or under any similar Federal statute hereafter enacted, and to add to this Master Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, excluding, however, the provisions referred to in Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of which this instrument was executed or any corresponding provision in any similar Federal statute hereinafter enacted; or (viii) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Master Agreement, as long as such action shall not adversely affect the interests of the Holders of Notes of any Series affected thereby in any material respect. (b) Subject to the provisions of paragraph (c) below, the Obligors' Agent on behalf of the Obligors, the Servicer, each Series Support Provider and the Trustee, when authorized by an Obligors' Order, may, also without the consent of any of the Holders of the Notes, enter into a Master Agreement Supplement or Supplements for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Master Agreement or of modifying in any manner the rights of the Holders of the Notes under this Master Agreement; provided, however, that such action shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Noteholder, and prior notification of such action shall be provided to the Rating Agencies. (c) The Obligors' Agent on behalf of the Obligors, the Servicer, each Series Support Provider and the Trustee, when authorized by an Obligors' Order and upon prior notification of the Rating Agencies, also may, with the consent of the Holders of not less than a majority of the Maximum Series Limit of the Notes of each affected Series, by Act of said Holders delivered to the Obligors' Agent and the Trustee, enter into 89 a Master Agreement Supplement or Supplements hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Master Agreement or of modifying in any manner the rights of the Holders of Notes under this Master Agreement; provided, that, subject to the express rights of the related Series Support Provider under the related Series Related Documents, no such Master Agreement Supplement shall, without the consent of the Holder of each Outstanding Note of each affected Series affected thereby, (i) change the date of payment of any installment of principal of or interest on any Note, or reduce the principal amount thereof or the rate of, or method of computation of the rate of, interest thereon or any prepayment or redemption price with respect thereto, change the provision of this Master Agreement relating to the application or collections on, or the proceeds of the sale of, the related Series Trust Estate to payment of principal of or interest on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the respective due dates thereof, or (ii) reduce the percentage of the Maximum Series Limit of the Notes, the consent of whose Holders is required for any such Master Agreement Supplement, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Master Agreement or certain defaults hereunder and their consequences) provided for in this Master Agreement, or (iii) permit the creation of any lien prior to the lien created by the related Series Supplement with respect to any part of the related Series Trust Estate, or terminate the lien created by the related Series Supplement on any Pledged Property subject hereto or deprive any related Holder of the security afforded by the lien of the related Series Supplement, except to the extent expressly permitted by this Master Agreement, the related Series Supplement or any other related Series Related Document, or (iv) modify any of the provisions of this Section except to increase any such percentage or to provide that certain other provisions of this Master Agreement, the related Series Supplement or the related Series Related Documents cannot be modified or waived without the consent of the Holder of each Outstanding Note affected thereby, or (v) modify or alter the provisions of the second proviso to the definition of the term "Outstanding." The Trustee may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any Master Agreement Supplement described in this Section 13.01. If a record date is fixed, the applicable Holders on such record date or their duly designated proxies, and only such Persons, shall be entitled to consent to such Master Agreement Supplement, whether or not such 90 Holders remain Holders after such record date; provided, that, unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any Holder be cancelled and of no further effect. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed Master Agreement Supplement, but it shall be sufficient if such Act shall approve the substance thereof. The Obligors' Agent shall in its discretion (which may be based on an Opinion of Counsel) determine whether or not any Notes would be affected by any Master Agreement Supplement and any such determination shall be conclusive upon the Holders of all Notes, whether theretofore or thereafter authenticated and delivered hereunder. The Trustee shall not be liable for any such determination made in good faith. Promptly after the execution by the parties hereto of any Master Agreement Supplement pursuant to this Section, the Trustee shall mail to the Holders of the Notes of the affected Series a notice setting forth in general terms the substance of such Master Agreement Supplement. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Master Agreement Supplement. Section 13.02. Supplements Authorizing a Series of Notes. (a) Each Series of Notes issued hereunder shall be issued pursuant to a Series Supplement, which shall set forth the terms and provisions of such Series. (b) Amendments to Series Supplements shall be governed by the provisions of Section 13.01 hereof, which for such purpose shall be deemed to refer only to the related Series Supplement and to the related Series Support Provider. The Trustee may conclusively rely on an Opinion of Counsel as to which Series Supplements relate to which Series, or to this Master Agreement (and thus all Series) as a whole. Section 13.03. Execution of Master Agreement Supplements. In executing, or accepting the additional trusts created by, any Master Agreement Supplement permitted by this Article or the modifications thereby of the trusts created by this Master Agreement, the Trustee shall receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such Master Agreement Supplement is authorized or permitted by this Master Agreement. The Trustee may, but shall not be obligated to, enter into any such Master Agreement Supplement which affects the Trustee's own rights, duties or immunities under this Master Agreement or otherwise. 91 Section 13.04. Effect of Master Agreement Supplements. Upon the execution of any Master Agreement Supplement under this Article, this Master Agreement shall be modified in accordance therewith, and such Master Agreement Supplement shall form a part of this Master Agreement for all purposes, and every Holder of Notes theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. Section 13.05. Reference in Notes to Master Agreement Supplements. Notes authenticated and delivered after the execution of any Master Agreement Supplement pursuant to this Article may, and shall if required by the Obligors, bear a notation as to any matter provided for in such Master Agreement Supplement. If the Obligors' Agent shall so determine, new Notes so modified as to conform, in the opinion of the Obligors' Agent, to any such Master Agreement Supplement may be prepared and executed by the Obligors' Agent and authenticated and delivered by the Trustee in exchange for Outstanding Notes. Article XIV COVENANTS The Obligors hereby covenant and agree that so long as this Master Agreement is in effect and (i) any Notes remain Outstanding or (ii) any obligation owed to a Series Support Provider or Series Secured Party remains unpaid or unperformed: Section 14.01. Payment of Principal and Interest. The related Obligors will duly and punctually pay or cause to be paid, on a nonrecourse basis and solely from the funds available from the related Series Trust Estate, the principal of and interest on the Notes of the related Series in accordance with the terms of such Notes, this Master Agreement and the related Series Supplement. Amounts on deposit in the related Series Account (other than amounts representing payments under any related Series Support) in respect of principal and interest on a Settlement Date shall constitute full satisfaction of the related Obligors' obligation with respect to the payment of such principal and interest on the related Notes. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest or principal shall be considered as having been paid by the related Obligors to such Noteholder for all purposes of this Master Agreement. Section 14.02. Maintenance of Non-U.S. Office or Agency. The Obligors will maintain or cause to be maintained (a) if and so long as any Series or Class is listed on the Luxembourg Stock Exchange, in Luxembourg, and (b) in London, in the case of Bearer Notes and Holders thereof, if any for so long as any Bearer Notes are outstanding, an office or agency where Notes may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Obligors in respect of the Notes, this Master Agreement and the related Series 92 Supplement may be served. The Obligors will give or cause to be given prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Obligors shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Obligors hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. Section 14.03. Consolidation, Merger, Sale of Assets. (a) No Obligor shall consolidate or merge with or into any other Person, unless (i) the Person (if other than such Obligor) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State and shall expressly assume, by a Master Agreement Supplement, executed and delivered to the Trustee, the Obligors' Agent, the Servicer, each Series Controlling Party and each Series Support Provider, the due and punctual payment of the principal of and interest on all Notes previously issued and having such Obligor as an Obligor with respect thereto and the performance or observance of every agreement and covenant of this Master Agreement and the related Series Supplement and each other related Series Related Document on the part of such Obligor to be performed or observed, all as provided herein and therein; (ii) immediately after giving effect to such transaction, no Default with respect to any Series or Event of Default with respect to any Series previously issued and having such Obligor as a Series Obligor with respect thereto shall have occurred and be continuing; (iii) each Series Support Provider and each Series Controlling Party relating to each Series previously issued and having such Obligor as a Series Obligor with respect thereto, if any, shall have consented in writing to such transaction; (iv) any action as is necessary to maintain the validity and first priority, perfected nature of the lien and security interest created in favor of the Trustee by each related Series Supplement shall have been taken; and (v) prior notification shall have been provided to the Rating Agencies. (b) No Obligor shall convey or transfer all or substantially all of its properties or assets or any Series Trust Estate to any Person (except as expressly permitted by this Master Agreement, the related Series Supplement or the related Series Related Documents), unless (i) the Person that acquires by conveyance or transfer such Series Trust Estate shall (A) be a United States citizen or a Person organized and 93 existing under the laws of the United States of America or any State, (B) expressly assume, by a Master Agreement Supplement, executed and delivered to the Trustee and each Series Support Provider, the due and punctual payment of the principal of and interest on all Notes previously issued and having such Obligor as a Series Obligor with respect thereto and the performance or observance of every agreement and covenant of this Master Agreement, the related Series Supplement or the related Series Related Documents on the part of such Obligor to be performed or observed, all as provided herein and therein, (C) expressly agree by means of such Master Agreement Supplement that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of Holders of the related Notes, (D) unless otherwise provided in such Master Agreement Supplement, expressly agree to indemnify, defend and hold harmless such Obligor against and from any loss, liability or expense arising under or related to this Master Agreement, the related Series Supplement and the Notes previously issued and having such Obligor as a Series Obligor with respect thereto and (E) expressly agree by means of such Master Agreement Supplement that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Commission (and any other appropriate Person) required by the Exchange Act in connection with the related Notes; (ii) immediately after giving effect to such transaction, no Default with respect to the affected Series or Event of Default with respect to any Series previously issued and having such Obligor as a Series Obligor with respect thereto shall have occurred and be continuing; (iii) each Series Support Provider and each Series Controlling Party relating to each Series previously issued and having such Obligor as a Series Obligor with respect thereto, if any, shall have consented in writing to such transaction; and (iv) any action as is necessary to maintain the validity and first priority, perfected nature of the lien and security interest created in favor of the Trustee by each related Series Supplement(s) shall have been taken. Section 14.04. Negative Covenants. The Obligors hereby covenant and agree that so long as this Master Agreement is in effect and (i) any Notes remain Outstanding or (ii) any obligation (other than any contingent liability or indemnity) owed to a Series Support Provider, a Series Secured Party or any Noteholder remains unpaid or unperformed: (i) except as expressly permitted by this Master Agreement, each related Series Supplement and each related Series Related Document, sell, transfer, exchange or otherwise dispose of any of the properties or assets constituting any Series Trust Estate, unless directed to do so by the related Series Controlling Party; 94 (ii) claim any credit on, or make any deduction from the principal or interest in respect of, the Notes (other than amounts properly withheld from such payments under the Code) or assert any claim against any present or former Noteholder or any Series Support Provider by reason of the payment of the taxes levied or assessed upon any part of any Series Trust Estate; or (iii) (A) except as permitted by this Master Agreement, any related Series Supplement or any related Series Related Documents, permit the validity or effectiveness of the related Series Supplement to be impaired, or permit the lien in favor of the Trustee created by the related Series Supplement to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to any Notes under this Master Agreement or any Series Supplement except as may be expressly permitted hereby, (B) permit any Lien (other than the Lien in favor of the Trustee created by the related Series Supplement) to be created on or extend to or otherwise arise upon or burden any Series Trust Estate or any part thereof or any interest therein or the proceeds thereof (other than tax liens, mechanics' liens, storage liens and other liens that arise by operation of law, in each case on any Pledged Property and arising solely as a result of an action or omission of the related Users), (C) permit the lien in favor of the Trustee created by the related Series Supplement not to constitute a valid first priority (other than with respect to any such tax, mechanics', storage or other lien) and perfected security interest in the related Series Trust Estate, or (D) amend, modify or fail to comply with the provisions of the related Series Related Documents without the prior written consent of the related Series Controlling Party; or (iv) contribute or incur any obligation to contribute to, or incur any liability in respect of, any Plan or Multiemployer Plan. Section 14.05. Performance of Obligations; Servicing of Each Series Trust Estate. (a) No Obligor will take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of such Person's material covenants or obligations under any instrument or agreement included in any Series Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Master Agreement, the related Series Supplement or related Series Related Document or such other instrument or agreement. (b) Any Obligor may contract with other Persons (including the Obligors' Agent) to assist it in performing its duties under this Master Agreement, and any performance of such duties by a Person identified to the Trustee and each related Series Support Provider in an Officer's Certificate of such Obligor shall be deemed to be action taken by such Obligor. 95 (c) Each Obligor will punctually perform and observe or cause to be performed and observed all of its obligations and agreements contained in this Master Agreement, each related Series Supplement, its Organizational Documents and each related Series Related Document and in the instruments and agreements included in each Series Trust Estate, including but not limited to filing or causing to be filed all UCC financing statements and continuation statements required to be filed by the terms of this Master Agreement, each related Series Supplement and each related Series Related Document in accordance with and within the time periods provided for herein and therein. (d) If any Obligor or the Obligors' Agent shall have knowledge of the occurrence of an Event of Servicer Termination under any Series Related Document, the Obligors shall promptly notify the Trustee, the related Series Controlling Party and the related Series Support Provider, if any, and shall specify in such notice the action, if any, such Obligor and the Obligors' Agent is taking with respect of such default. If such Servicer Termination Event shall arise from the failure of the Servicer to perform any of its duties or obligations hereunder with respect to the related Series Trust Estate, the Obligors and the Obligors' Agent shall take all reasonable steps available to it to remedy such failure. (e) Upon any termination of any Servicer's rights and powers pursuant to this Master Agreement or any Series Related Document, the Obligors' Agent shall promptly notify the Trustee in writing. Section 14.06. Money for Note Payments to Be Held in Trust. All payments of amounts due and payable with respect to any Notes that are to be made from amounts withdrawn from the related Series Account shall be made on behalf of the related Obligors by the Trustee or by another Paying Agent, and no amounts so withdrawn from any Series Account for payments of Notes shall be paid over to any Obligor, except as provided in the related Series Supplement. The related Obligors will cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will, with respect to each related Series of Notes: (i) hold all sums held by it for the payment of the principal of or interest on the related Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (ii) give the Trustee notice of any default by the related Obligors in the making of any payment of principal or interest on such Notes; (iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent; 96 (iv) immediately resign as a Paying Agent and forthwith pay to the Trustee all sums held by it in trust for the payment of the related Notes if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and (v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. The related Obligors may at any time, for the purpose of obtaining the satisfaction and discharge of any Series Supplement or for any other purpose, pay, or by Obligors' Order direct any Paying Agent to pay, to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, in trust for the payment of the principal of or interest on any Note and remaining unclaimed for two years after such principal or interest has become due and payable shall be paid to the Obligors' Agent, as specified in an Obligors' Order; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Obligors' Agent for payment thereof, and all liability of the Trustee, such Paying Agent or any Series Support Provider with respect to such trust money, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Obligors' Agent cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Obligors' Agent. Section 14.07. Corporate Existence. Except as provided in Section 14.03, each Obligor will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and material rights (charter and statutory) and material franchises of such Obligor; provided, however, that the Obligors, with the prior written consent of each Series Support Provider and each Series Controlling Party, shall not be required to preserve any such right or franchise if such Obligor shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Obligor, and that the loss thereof is not disadvantageous in any material respect to the Holders of the related Notes. 97 Section 14.08. Payment of Taxes and Other Claims. Each Obligor will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon such Obligor on any portion of any Series Trust Estate, or upon the income, profits or property of such Obligor, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a Lien upon the Property of such Obligor or on any portion of any Series Trust Estate; provided, however, that such Obligor shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings and such Obligor shall have set aside on its books adequate reserves with respect thereto. Section 14.09. Amendment of Organizational Documents. (a) No Obligor will amend its Organizational Documents without the prior written consent of the related Series Controlling Parties and the prior notification of the Rating Agencies, and shall not amend its Organizational Documents in any manner that materially and adversely affects the Holders of the Notes or any Series Support Provider. (b) No Obligor shall take any action which would adversely impact the corporate separateness of such Obligor with Marlin, or which would adversely impact its status as a "bankruptcy remote" entity. Each Obligor shall strictly abide by the restrictive provisions of its Organizational Documents in furtherance of the foregoing. Section 14.10. Rule 144A Information. With respect to the Holder of any Unregistered Note, the Obligors shall promptly furnish or cause to be furnished to such Holder or to a prospective purchaser of such an Unregistered Note designated by such Holder, as the case may be, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act ("Rule 144A Information") in order to permit compliance by such Holder with Rule 144A in connection with the resale of such Unregistered Note by such Holder; provided, however, that the Obligors shall not be required to furnish Rule 144A Information in connection with any request made on or after the date which is three years from the later of (i) the date such Note (or any predecessor Note) was acquired from the Obligors or (ii) the date such Note (or any predecessor Note) was last acquired from an "affiliate" of the Obligors within the meaning of Rule 144 under the Securities Act; and provided, further, that the Obligors shall not be required to furnish such information at any time to a prospective purchaser located outside the United States who is not a "United States Person" within the meaning of Regulation S under the Securities Act if such Note may then be sold to such prospective purchaser in accordance with Rule 904 under the Securities Act (or any successor provision thereto). 98 Section 14.11. Further Instruments and Acts. Upon request of the Trustee, any Series Support Provider or any Series Controlling Party, each Obligor and the Obligors' Agent will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Master Agreement, any related Series Supplement and any related Series Related Document. Section 14.12. Compliance with Laws. Each Obligor shall comply with all applicable Requirements of Law, the noncompliance with which would, individually or in the aggregate, materially and adversely affect any portion of any Series Trust Estate or the ability of such Obligor to perform its obligations under the related Notes, this Master Agreement, the related Series Supplements or the related Series Related Document. Section 14.13. Income Tax Characterization. For purposes of Federal income, state and local income and franchise and any other income taxes, each Obligor will treat the related Notes as debt of such Obligor. Article XV MISCELLANEOUS PROVISIONS Section 15.01. Counterparts. For the purpose of facilitating the execution of this Master Agreement and for other purposes, this Master Agreement may be executed in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. Section 15.02. Governing Law. This Master Agreement, each Series Supplement and each Note shall be governed by, and construed in accordance with, the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws, including Section 5-1401 of the General Obligation Laws of New York, but otherwise without regard to the conflicts of law provisions of any State. Section 15.03. Notices. All demands, notices and communications (other than periodic communications of a routine nature made in connection with the dissemination of information regarding the Pledged Property and the Servicer required to be delivered hereunder, which shall be delivered or mailed by first class mail) hereunder shall be in writing, personally delivered or mailed by overnight courier, and shall be deemed to have been duly given upon receipt (a) in the case of Transferor and the Servicer, at the 99 following address: Marlin Leasing Corporation, 124 Gaither Drive, Suite 170, Mt. Laurel, New Jersey 08054, Attention: Treasurer, (b) in the case of the Trustee, at the following address: Sixth Street and Marquette Avenue, MAC N9311-161, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services - Asset Backed Administration, (c) in the case of the Obligors' Agent, at the following address: Marlin Leasing Receivables Corp. II, 639 Isbell Road, Suite 390, Reno, Nevada 89509, Attention: Treasurer, and (d) in the case of any Series Support Party, at the address specified for such notice in the applicable Series Supplement, or, in each of the foregoing cases (a) through (d), at such other address as shall be designated by such party in a written notice to the other parties. Any notice required or permitted to be mailed to a Noteholder shall be given by first class mail, postage prepaid, at the address of such Holder as shown in the Note Register or the related Series Supplement. Any notice to a Noteholder which is so mailed within the time prescribed in this Master Agreement shall be conclusively presumed to have been duly given on the fifth Business Day following mailing, whether or not the Noteholder receives such notice. Section 15.04. Severability of Provisions. If any one or more of the covenants, agreements, provisions, or terms of this Master Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Master Agreement and shall in no way affect the validity or enforceability of the other provisions of this Master Agreement or of the Notes or the rights of the Holders thereof or of any Series Support Provider. Section 15.05. Binding Effect. This Master Agreement shall inure to the benefit of, and shall be binding upon, (i) the Servicer, (ii) the Obligors' Agent and each Obligor, (iii) the Trustee, (iv) the Noteholders, (v) the Series Support Providers, if any, (vi) to the extent expressly provided hereunder, the Affiliates of the Trustee, the Noteholders and the Series Support Providers, if any, and (vii) the respective successors and permitted assigns of each of the foregoing, subject, in each of the foregoing cases, to the limitations contained in this Master Agreement. Section 15.06. Exhibits. The exhibits to this Master Agreement are hereby incorporated herein and made a part hereof and are an integral part of this Master Agreement. Section 15.07. Calculations. All interest rate calculations under this Master Agreement will be carried out to at least seven decimal places. All payments on the Contracts shall be calculated on the Actuarial Method. 100 Section 15.08. Further Assurances. The Obligors, the Obligors' Agent and the Servicer agree to do and perform, from time to time, any and all acts and to execute any and all further instruments and documents required or reasonably requested by the Trustee to effect more fully the purposes of this Master Agreement, including, without limitation, the execution of any financing statements or continuation statements relating to any Series Trust Estate for filing under the provisions of the UCC of any applicable jurisdiction. Section 15.09. Nonpetition Covenant. Notwithstanding any prior termination of this Master Agreement, none of the parties hereto, any Noteholder, any Series Support Provider, the Transferor, the Obligors' Agent nor any Obligor shall, prior to the date which is one year and one day after the payment in full of the Notes of all Series, acquiesce, petition or otherwise invoke or cause any Obligor to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against any Obligor under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of or for any Obligor or any substantial part of its property or ordering the winding up or liquidation of the affairs of any Obligor. 101 IN WITNESS WHEREOF, the Servicer, the Obligors' Agent and the Trustee have caused this Master Agreement to be duly executed by their respective officers, all as of the day and year first above written. MARLIN LEASING CORPORATION, as Servicer By:_________________________________________ Name: Title: MARLIN LEASING RECEIVABLES CORP. II, Obligors' Agent By:_________________________________________ Name: Title: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee and Back-up Servicer By:_________________________________________ Name: Title: [Signature Page to Master Facility Agreement] 102 Execution Copy EXHIBIT A FORM OF BACK-UP SERVICER VERIFICATION CERTIFICATE [DATE] Execution Copy EXHIBIT B FORM OF TRUSTEE WEBSITE INVESTOR CERTIFICATION Date: Wells Fargo Bank Minnesota, National Association Sixth Street and Marquette Avenue MAC N9311-161 Minneapolis, MN 55479 Attention: Corporate Trust Services -- Asset-Backed Administration Marlin Notes In accordance with Section 12.05 of the Master Lease Receivables Asset-Backed Financing Facility Agreement dated as of April 1, 2002 by and among Marlin Leasing Corporation, Marlin Leasing Receivables Corp. II and Wells Fargo Bank Minnesota, National Association (the "Agreement"), with respect to Series _____ Notes (the "Notes"), the undersigned hereby certifies and agrees as follows: 1. The undersigned is a beneficial owner of $__________ in principal balance of the Notes. 2. The undersigned is requesting a password pursuant to Section 12.05 of the Agreement for access to certain information (the "Information") on the Trustee's website. 3. In consideration of the Trustee's disclosure to the undersigned of the Information, or the password in connection therewith, the undersigned will keep the Information confidential (except from such outside persons as are assisting it in connection with the related Notes, from its accountants and attorneys, and otherwise from such governmental or banking authorities or agencies to which the undersigned is subject), and such Information will not, without the prior written consent of the Trustee, be otherwise disclosed by the undersigned or by its officers, directors, partners, employees, agents or representatives (collectively, the "Representatives") in any manner whatsoever, in whole or in part. 4. The undersigned will not use or disclose the Information in any manner which could result in a violation of any provision of the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended, or would require registration of any Certificate pursuant to Section 5 of the Securities Act. 5. The undersigned shall be fully liable for any breach of this agreement by itself or any of its Representative and shall indemnify the Servicer and the Trustee for any loss, liability or expense incurred thereby with respect to any such breach by the undersigned or any of its Representatives. 6. Capitalized terms used but not defined herein shall have the respective meanings assigned thereto in the Agreement. IN WITNESS WHEREOF, the undersigned has caused its name to be signed hereby by its duly authorized officer, as of the day and year written above. ____________________________________________ Beneficial Owner By:_________________________________________ Title:______________________________________ Company:____________________________________ Phone:______________________________________ B-2 EX-10.12 9 w89427exv10w12.txt SERIES 2002-A SUPPLEMENT TO MASTER FACILITY AGRMT EXHIBIT 10.12 Execution Copy ================================================================================ MARLIN LEASING CORPORATION, Individually, and as the Servicer, MARLIN LEASING RECEIVABLES CORP. II, as the Obligors' Agent, MARLIN LEASING RECEIVABLES II LLC, as the Obligor, NATIONAL CITY BANK, as the Agent and WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as the Trustee ================================================================================ SERIES 2002-A SUPPLEMENT Dated as of April 1, 2002 to the MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT Dated as of April 1, 2002 ================================================================================ 1 TABLE OF CONTENTS
Page ---- ARTICLE I CREATION OF THE SERIES 2002-A NOTES.................................................................... 1 Section 1.01 Designation................................................................................ 1 Section 1.02 Pledge of Series 2002-A Trust Estate....................................................... 1 Section 1.03 Payments................................................................................... 2 Section 1.04 Assignment to a Group; Crossover Amounts................................................... 2 Section 1.05 Authorizations to File Financing Statements................................................ 2 ARTICLE II DEFINITIONS........................................................................................... 2 Section 2.01 Definitions................................................................................ 2 ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 2002-A NOTEHOLDER; SERIES SPECIFIC COVENANTS.................. 26 Section 3.01 Series 2002-A Accounts..................................................................... 26 Section 3.02 Agent to Send Notice of Amounts Due........................................................ 27 Section 3.03 Distributions from Series 2002-A Facility Account.......................................... 27 Section 3.04 Reporting and Review Requirements.......................................................... 35 Section 3.05 Compliance With Withholding Requirements................................................... 37 Section 3.06 Servicer Advances.......................................................................... 38 Section 3.07 Special Representations, Covenants and Acknowledgements.................................... 38 Section 3.08 Hedging Arrangements....................................................................... 42 Section 3.09 Lockbox Account............................................................................ 43 ARTICLE IV SERIES PRINCIPAL AMOUNT FOR SERIES 2002-A............................................................. 44 Section 4.01 Advances................................................................................... 44 ARTICLE V SERIES EVENTS OF DEFAULT............................................................................... 47 Section 5.01 Series Events of Default................................................................... 47 Section 5.02 Events of Servicer Termination............................................................. 51 Section 5.03 Waiver of Past Defaults.................................................................... 52 Section 5.04 Effects of Servicer Termination............................................................ 52 Section 5.05 Back-up Servicer to Act; Representations and Warranties; Compensation of Back-up Servicer.. 52 Section 5.06 Additional Provisions with Respect to the Back-up Servicer................................. 53 Section 5.07 Certain Matters Relating to the Trustee.................................................... 54 Section 5.08 Resignation and Removal of Trustee......................................................... 54 Section 5.09 Control by Holders......................................................................... 55
i ARTICLE VI PREPAYMENT AND REDEMPTION............................................................................. 55 Section 6.01 Mandatory Prepayment....................................................................... 55 Section 6.02 Optional Redemption........................................................................ 56 Section 6.03 Tender of Series 2002-A Note............................................................... 56 ARTICLE VII MISCELLANEOUS........................................................................................ 57 Section 7.01 Agent Authorized to Act for the Purchasers; Notices........................................ 57 Section 7.02 Ratification of Master Agreement........................................................... 57 Section 7.03 Counterparts............................................................................... 57 Section 7.04 GOVERNING LAW.............................................................................. 57 Section 7.05 Amendments and Waivers..................................................................... 58 Section 7.06 Non-petition Clause........................................................................ 58 Section 7.07 Certain Information........................................................................ 58 Section 7.08 Series Support Provider as Third Party Beneficiary......................................... 58 Section 7.09 Termination................................................................................ 59

ii
EXHIBITS Schedule 1 Hedge Counterparties Exhibit A Form of Series 2002-A Note Exhibit B [Reserved] Exhibit C Wire Instructions for Agent Exhibit D Form of Servicer's Certificate Exhibit E Forms of Contracts Exhibit F Certain Information Exhibit G Form of Pledge Notice
iii This Series 2002-A Supplement, (the "Series 2002-A Supplement") dated as of April 1, 2002, is by and among Marlin Leasing Corporation, a Delaware corporation, individually (in such capacity "Marlin"), and as initial servicer (in such capacity, the "Servicer"), Marlin Leasing Receivables Corp. II, a Nevada corporation ("MLR II"), as the Obligors' Agent, Marlin Leasing Receivables II LLC, a Nevada limited liability company ("MLR II LLC"), as the Obligor, National City Bank, a national banking association, as Agent ("National City", in such capacity, the "Agent"), and Wells Fargo Bank Minnesota, National Association, a national banking association (the "Trustee"). RECITALS This Series 2002-A is being executed and delivered pursuant to Section 13.02 of the Master Lease Receivables Financing Facility Agreement dated as of April 1, 2002 (as it may be amended, supplemented and otherwise modified from time to time, the "Master Agreement") among the Servicer, the Obligors' Agent and the Trustee. In the event that any term or provision contained herein shall conflict with or be inconsistent with any term or provision contained in the Master Agreement, the terms and provisions of this Series 2002-A Supplement shall govern with respect to the Series. ARTICLE I CREATION OF THE SERIES 2002-A NOTES Section 1.01 Designation. There is hereby created a Series of Notes to be issued pursuant to the Master Agreement and this Series 2002-A Supplement to be known as "Marlin Lease Receivables Master Asset-Backed Financing Facility, Series 2002-A Notes." The Obligor with respect to the Series 2002-A Notes is MLR II LLC. The Notes shall be issued as Definitive Notes in accordance with Sections 5.11 of the Master Agreement. Section 1.02 Pledge of Series 2002-A Trust Estate. The Obligor hereby pledges to the Trustee for the benefit of the Series 2002-A Secured Parties, and the Trustee hereby accepts the pledge of, all right, title and interest of such Obligor whether now owned and existing or hereafter acquired or arising in and to (1) each and every Contract now or hereafter listed as a Series 2002-A Contract on a Pledge Notice delivered to the Trustee, (2) all Collections, Security Deposits and Related Security associated therewith, (3) all Servicing Charges with respect thereto, (4) all balances, instruments, monies, investment property and other securities and investments from time to time in or acquired with amounts at any time on deposit in each Series 2002-A Account, and in the Lockbox Account to the extent such amounts in the Lockbox Account represent Collections or proceeds of Series 2002-A Contracts or earnings with respect thereto, (5) each Series 2002-A Transfer Agreement Supplement and all of the Obligor's rights (directly or through the Obligors' Agent) to enforce the provisions of, and to benefit from the representations, warranties and covenants made therein and in the Master Transfer Agreement, but only insofar as such rights relate to the Series 2002-A Trust Estate, (6) all security interests in the Equipment not owned by the Obligor, and all Equipment owned by the Obligor, in each case associated with the Series 2002-A Contracts, (7) any Crossover Amounts allocated to the Series 2002-A Trust Estate from another Series, (8) all of the Obligor's right, title and interest, if any, in and to each Hedge Agreement and (9) all proceeds of each of the foregoing, but excluding the 1 following: any obligations of the Obligor, if any, under a Series 2002-A Transfer Agreement Supplement and Initial Unpaid Amounts (such non-excluded property, the "Series 2002-A Trust Estate"). Section 1.03 Payments. All amounts to be paid or deposited by any Person hereunder shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, or by prior day ACH debit (so long as such funds represent immediately available funds), and if such amounts are payable to the Series 2002-A Noteholder, they shall be paid as specified in the Note Purchase Agreement (as defined below), or, if the Series Support Provider is entitled to such payments, as directed by the Series Support Provider. Section 1.04 Assignment to a Group; Crossover Amounts. There is hereby established a Group for purposes of the Master Agreement, which shall be known as "Group A"; the Series 2002-A Notes are hereby assigned to Group A. The amounts described in clause nineteenth of Section 3.03(a)(i) and in clause twentieth of Section 3.03(a)(ii) are hereby designated as the "Crossover Amounts" for the Series 2002-A Notes for purposes of the Master Agreement. Section 1.05 Authorizations to File Financing Statements. The Obligor hereby authorizes the filing of a UCC Financing Statement which identifies the Obligor as the debtor and the Agent as the Secured Party and which describes the collateral as "all assets" or "all personal property" of the Obligor, other than the following: (1) any obligations of the debtor, if any, under a Series 2002-A Transfer Agreement Supplement and (2) Initial Unpaid Amounts the Series 2002-A Notes are hereby ARTICLE II DEFINITIONS Section 2.01 Definitions. Whenever used in this Series 2002-A Supplement and when used in the Master Agreement with respect to the Series 2002-A Notes, the following words and phrases shall have the following meanings, and the definitions of such terms are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Unless otherwise defined in this Series 2002-A Supplement, terms defined in the Master Agreement are used herein as therein defined. For purposes of the Master Agreement, certain definitions are set forth in Section 3.07(b) hereof. "31 to 60 Day Delinquency Ratio" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all Series 2002-A Contracts as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 31 or more days, but no Scheduled Payment (nor part thereof in excess of 10% of such Scheduled Payment) is delinquent more than 60 days and which is not a Charged-Off Contract as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all Series 2002-A Contracts as of the end of the Collection Period immediately preceding such Collection Period. 2 "61 to 90 Day Delinquency Ratio" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the sum of (x) the aggregate Contract Balance Remaining of all Series 2002-A Contracts as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 61 or more days, but no Scheduled Payment (nor part thereof in excess of 10% of such Scheduled Payment) is delinquent more than 90 days, and which is not a Charged-Off Contract as of the end of such Collection Period plus (y) the aggregate Contract Balance Remaining of all Series 2002-A Contracts which were Restructured during such Collection Period and the two preceding Collection Periods, and the denominator of which is the aggregate Contract Balance Remaining of all Series 2002-A Contracts as of (i) during the Revolving Period, the end of the second preceding Collection Period and (ii) during the Amortization Period, the beginning of such Collection Period. "91 Plus Day Delinquency Ratio" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all Series 2002-A Contracts as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 91 or more days, and which is not a Charged-Off Contract as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all Series 2002-A Contracts (i) during the Revolving Period, as of the end of the third preceding Collection Period and (ii) during the Amortization Period, as of the beginning of such Collection Period. "31 to 60 Day Portfolio Delinquency Rate" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 31 or more days, but no Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is more than 60 days delinquent (and which would not be "Charged-Off Contracts" if treated as "Contracts") as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as of the end of such Collection Period. "61 to 90 Day Portfolio Delinquency Rate" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining on all leases included in the Servicer's servicing portfolio as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is delinquent 61 or more days, but no Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is more than 90 days delinquent (and which would not be Charged-Off Contracts if treated as "Contracts") as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as of the end of such Collection Period. "91 Plus Day Portfolio Delinquency Rate" means, as of the end of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as to which any Scheduled Payment (or part thereof in excess of 10% of such Scheduled Payment) is 91 or more days delinquent (and which would not be "Charged-Off Contracts" if treated as 3 "Contracts"), as of the end of such Collection Period, and the denominator of which is the aggregate Contract Balance Remaining of all leases included in the Servicer's servicing portfolio as of the end of such Collection Period. "Advance " has the meaning set forth in Section 4.01(b). "Advance Amount" means, as of any Pledge Date: (a) with respect to any Pledge of any Series 2002-A Contracts under Section 4.01(b) hereof, the excess, if any, of (x) the Pro Forma Borrowing Base over (y) the Net Investment immediately prior to such Pledge; (b) with respect to any Pledge of any Series 2002-A Contracts under Section 4.01(e) hereof, the excess, if any, of (x) the Pro Forma Borrowing Base over (y) the Borrowing Base as of the immediately preceding Calculation Date; and (c) with respect to any Pledge under Section 4.01(f) hereof, $0. "Agent" means National City, in its capacity as agent for the Purchasers pursuant to Article VIII of the Note Purchase Agreement and any successor Agent appointed pursuant thereto. "Amortization Period" means the period commencing on the Termination Date, and ending on the earlier to occur of (i) the final disposition of, and application of the proceeds of, the Series 2002-A Trust Estate and (ii) the payment in full of all Series Trustee Secured Obligations. "Applicable Discount Rate" means with respect to any Series 2002-A Contract, the sum of: (i) the Fee Rate; and (ii) the Weighted Average Hedge Rates under the Hedge Agreements which apply to such Series 2002-A Contract, determined as of the related Pledge Date. "Applicable Hedge Agreement" means, with respect to any Interest Period, any Hedge Agreement under which payment is scheduled to be made (in the absence of any "netting") on the Settlement Date relating to such Interest Period. "Applicable Hedge Rate" means, for any Applicable Hedge Agreement and Interest Period (i) if the Hedge Counterparty on such Applicable Hedge Agreement is a Person other than National City, the Series 2002-A Base Insured Note Interest Rate for the related Interest Period and (ii) if the Hedge Counterparty on such Applicable Hedge Agreement is National City, the sum of (x) Hedge Rate for such Applicable Hedge Agreement plus (y) the applicable LIBO Margin. 4 "Applicable Trigger Charged-Off Ratio" means, as of any date of determination: (x) if the Net Investment as of such date of determination is less than $25,000,000, 8.0%; (y) if the Net Investment as of such date of determination is $25,000,000 or more but less than $50,000,000, 6.0%; and (z) if the Net Investment as of such date of determination is $50,000,000 or more, 4.0%. "Average Charged-Off Ratio" means, as of any day of determination, the arithmetic average of the Charged-Off Ratio as of the last day of each of the three preceding Collection Periods (or such lesser number of Collection Periods as shall have occurred since the Series Closing Date). "Back-Up Servicer Fee" means the monthly fee payable to the Back-Up Servicer on each Settlement Date, which shall be the greater of (a) one-twelfth of four basis points per annum times the aggregate Contract Principal Balance of the Series 2002-A Contracts as of the end of the preceding Collection Period and (b) $1,500. This fee is only to be paid to the Back-up Servicer for so long as it is acting as such and is not payable during such time as the Back-up Servicer acts as the successor Servicer. "Base LIBO Rate" for any Interest Period (or portion thereof for which a Purchaser initially funds an investment in the Series 2002-A Notes other than by issuing Commercial Paper) with respect to the Series 2002-A Notes shall mean an interest rate per annum equal to: (i) the posted rate for 30-day deposits (or such lesser period of time as determined by the Agent to be appropriate, in the event that the LIBO Rate is to be determined for a portion of an Interest Period) in United States Dollars appearing on Telerate page 3750 as of 11:00 a.m. (London time) on the Business Day which is the second Business Day immediately preceding the first day of the applicable Interest Period (or the first day of such portion of an Interest Period); or (ii) if no such rate appears on Telerate page 3750 at such time and day, then the LIBO Rate shall be determined by National City at its office in Philadelphia, Pennsylvania as its rate (each such determination, absent manifest error, to be conclusive and binding on all parties hereto and their assignees) at which 30-day deposits (or such lessor period of time as determined by the Agent to be appropriate, in the event that the LIBO rate is to be determined for a portion of an Interest Period ) in United States Dollars are being, having been, or would be offered or quoted by National City to major banks in the applicable interbank market for Euordollar deposits at or about 11:00 a.m. (Philadelphia, Pennsylvania time) 5 on such day for a period equal to such Interest Period (or portion thereof). "Borrowing Base" means, as of any date of determination, the sum of: (x) the lesser of: (i) the product of (a) the sum of (i) the aggregate Contract Principal Balance of all Series 2002-A Contracts which are Eligible Contracts and which are not Charged-Off Contracts as of such date plus (ii) the portion of Series 2002-A Available Funds then on deposit in the Series 2002-A Facility Account which represents funds required to be applied to the amortization of the Series 2002-A Note Balance for the related Collection Period minus (iii) the Overconcentration Amount as of such date times (b) the Purchase Price Percentage as of such date of determination; and (ii) the sum of (a) the aggregate Contract Principal Balance of all Series 2002-A Contracts which are Eligible Contracts and which are not Charged-Off Contracts as of such date plus (b) the portion of Series 2002-A Available Funds then on deposit in the Series 2002-A Facility Account which represents funds required to be applied to the amortization of the Series 2002-A Note Balance for the related Collection Period, minus (c) the Overconcentration Amount as of such date minus (d) the Credit Support Floor Amount; and (y) the aggregate Residual Advance Amount, if any, with respect to such date of determination. "Breakage Costs" means, for each Owner for each funding period, to the extent that an Owner is funding the maintenance of its investment in the Series 2002-A Notes during such funding period through the issuance of Commercial Paper or at the LIBO Rate, during which such investment is reduced (in whole or in part) prior to the end of the period for which it was originally scheduled to remain outstanding (the amount of such reduction in such investment being referred to as the "Allocated Amount"), the excess of (a) the discount or interest that would have accrued on the Allocated Amount during the remainder of such funding period if such reduction had not occurred over (b) the income, if any, scheduled to be received by such Owner from investing the Allocated Amount for the remainder of such funding period in a commercially reasonable manner. "Broker" means (i) the Person (excluding the Transferor and any equipment vendor) that arranges for the lease of an item of Equipment to a User pursuant to a Contract between the Transferor and the User of such Equipment, or (ii) any Person from whom the Transferor purchased a Contract in respect of which the Transferor is not an original party (other than pursuant to a vendor program); provided, however, that the term "Broker" shall not include 6 any Person who serves as an intermediary between the Transferor and any vendor or manufacturer with whom the Transferor has a program agreement and Marlin has made the credit decision and is the initial lessor (except with respect to the Provident Capital Group programs, where Provident Capital Group or an Affiliate thereof may be the initial lessor). "Broker Concentration Amount" means, as of any date of determination, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts originated by, or purchased from Brokers over (y) thirty percent (30%) of the aggregate Contract Principal Balance of all Series 2002-A Contracts which are Eligible Contracts at such time. "Broker/Vendor Concentration Amount" means, as of any date of determination, for each Broker or vendor (including Provident Capital Group) that has originated or sold any Series 2002-A Contracts for or to the Transferor, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts originated by, or purchased from such Broker or vendor over (y) five percent (5%) of the Net Investment at such time. "Business Day" shall mean any day that is a Business Day under the Master Agreement which is also a day on which banks are not authorized or required to close in New York, New York, Philadelphia, Pennsylvania, Cleveland, Ohio or in Minneapolis, Minnesota and on which The Depository Trust Company of New York is open for business. "Cap Agreement" means a Hedge Agreement under which the Hedge Counterparty will only make payments when and if the Base LIBO Rate exceeds a specified level, and which provides for no payment by the Trustee other than a single upfront payment to be paid for by a party not to be the Trustee. "Charged-Off Ratio" means, as of the end of any Collection Period, twelve (12) times the percentage equivalent of a fraction the numerator of which is equal to the excess of (x) the aggregate Contract Principal Balance as of the end of such Collection Period of, plus any related Servicer Advances made with respect to, all Series 2002-A Contracts which became Charged-Off Contracts during such Collection Period, plus the aggregate Contract Principal Balance of any Delinquent Contracts which were removed from the Series 2002-A Trust Estate in exchange for Substitute Contracts during such Collection Period, over (y) the sum of all Recoveries received during such Collection Period with respect to the Series 2002-A Contracts, and the denominator of which is equal to the aggregate Contract Principal Balance of all Series 2002-A Contracts as of (i) during the Revolving Period, the end of the third preceding Collection Period and (ii) during the Amortization Period, the beginning of such Collection Period. "Collateral Administration Agreement" shall mean the Collateral Administration Agreement, dated as of April 1, 2002, among the Obligor, the Obligors' Agent, the Transferor, the Servicer, the Trustee and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter. "Commercial Paper" means any note, draft, bill of exchange, or bankers' acceptance which has a maturity at the time of issuance not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited. 7 "Committed Financing Facility" means any committed financing available to Marlin or its affiliates which may be drawn upon (subject to any conditions specified thereon) from time to time for the warehousing or financing of collateral or for general corporate purposes, but excluding any subordinated debt. "CP Margin" has the meaning ascribed thereto in the Fee Letter. "Credit Support Amount" means, as of any date of determination, the excess of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts which are not Charged-Off Contracts as of such date of determination, minus the Overconcentration Amount as of such date over (y) the Net Investment as of such date. "Credit Support Floor Amount" means, as of any date of determination, the greater of (x) $2,500,000 and (y) 25% of the Maximum Applicable Credit Support. "Crossover Amounts" has the meaning set forth in Section 1.04 hereof. "Debt-to-Equity Ratio" means, as of any date of determination, and with respect to Marlin and its consolidated subsidiaries, Total Debt as a multiple of Tangible Net Worth; "Total Debt" shall reflect all liabilities (excluding deferred taxes) under GAAP, provided that "Total Debt" shall include all liabilities (other than deferred taxes), whether "on-balance sheet" or "off-balance sheet" for GAAP, as well as (a) the principal portion of any subordinated debt which is payable within six months of such date of determination and (b) all preferred stock which has a put right or other similar right within six months of such date of determination. "EBITDA" means for any period, for Marlin and its consolidated subsidiaries, the sum of net income for such period plus (i) income taxes, (ii) Interest Expense and (iii) depreciation and amortization, all of which is to be computed over the previous twelve calendar months. "Eligible Bank Account" means a segregated account, which may be an account maintained with the Trustee, which is either (a) maintained with a depository institution or trust company whose long-term unsecured debt obligations are rated at least BBB+ by S&P and Baa1 by Moody's and whose short-term unsecured obligations are rated at least A-1 by S&P and P-1 by Moody's; or (b) a trust account or similar account maintained with a federally or state chartered depository institution subject to regulations regarding fiduciary funds on deposit substantially similar to 12 C.F.R. 9.10(b). "Eligible Contract" means a Series 2002-A Contract which: (a) (i) is with a User whose billing address is in the United States or its territories and possessions and requires (A) all payments under such Contract to be made in United States dollars and (B) all Equipment relating to such Contract be held in the United States and (ii) is with a User who, if a natural person, is a resident of the United States with legal capacity to contract or, if a corporation or other business organization, is organized under the laws of the United States, or any political subdivision thereof and has its chief executive office in the United States; 8 (b) has not had any of its terms, conditions or provisions amended, modified or waived other than in compliance with the Credit and Collection Policy and has not been Restructured at any time; (c) constitutes "chattel paper" within the meaning of Sections 9-102(11) and 9-102(78) of the UCC of all applicable jurisdictions and there is only one original of such Contract (bearing the original signature of an employee of Marlin, together with the facsimile copy of the signature of the User or the original signature of the User) that constitutes "chattel paper" for purposes of the Delaware, New York, New Jersey and Nevada UCC; (d) was originated in accordance with, and does not contravene, any applicable federal, state and local laws, and regulations thereunder (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of such Contract is in violation of any applicable law, rule or regulation; (e) was originated or purchased without recourse in compliance with, and satisfies in all material respects all applicable requirements of the Credit and Collection Policy; (f) is not a Government Contract which has the United States or any of its agencies or instrumentalities as the User; (g) as of the related Pledge Date, is not a Delinquent Contract; (h) (i) contains "hell or high water" provisions requiring the related User to assume all risk of loss or malfunction of the related Equipment, (ii) requires the related User to pay all expenses in connection with the maintenance, repair, insurance and taxes, together with all other ancillary costs with respect to the related Equipment and (iii) makes the related User absolutely and unconditionally liable for all payments required to be made thereunder, without any right of set-off, counterclaim, or other defense (other than the discharge in bankruptcy of such related User) and without any right to prepay the Contract or any contingencies tied to the Obligor; (i) is payable in substantially level monthly or quarterly rental payments calculated at a fixed yield; (j) creates a valid and enforceable security interest (or, in the case of a "true lease", a valid ownership interest) in favor of the Transferor in the related Equipment, and such Equipment has not been the subject of loss or damage; (k) together with the Equipment relating thereto, was the subject of a valid sale and assignment from the Transferor with good title transferred to the Obligor thereby and is free and clear of any Liens, other than the claims arising pursuant to this Series 2002-A Supplement and Master Agreement and the other documents relating to this transaction; provided, however, that nothing in this paragraph (k) shall prevent or be 9 deemed to prohibit the Transferor from suffering to exist upon such Contract any Lien for federal, state, municipal or other local taxes if such taxes shall not at the time be due and payable or if the Transferor shall concurrently be contesting the validity thereof in good faith by appropriate proceedings that have stayed enforcement thereof and shall have set aside on its books adequate reserves with respect thereto, (l) is in full force and effect in accordance with its terms and contains enforceable provisions such that the right and remedies of the holder thereof shall be adequate for realization against the Equipment, if any, thereunder and of the benefits of any security granted thereunder; (m) does not provide for the substitution, exchange, or addition of any other items of Equipment pursuant to such Contract which would result in any reduction or extension of payments due thereunder; (n) by its terms is due and payable in full on or within 72 months of the applicable Pledge Date; (o) arises under a Contract in substantially the form of one of the form contracts set forth in Exhibit E hereto or otherwise approved by the Agent and the Series Support Provider in writing, which is in full force and effect and constitutes the legal, valid and binding obligation of the related User enforceable against such User in accordance with its terms subject to no offset, counterclaim or other defense (other than the discharge in bankruptcy of such User); (p) (i) does not preclude the pledge, transfer or assignment thereof, (ii) does not require the consent of the User to the pledge, assignment or transfer thereof, and (iii) does not contain a confidentiality provision that purports to restrict the ability of the Trustee to exercise its rights under the Series 2002-A Related Documents with respect thereto, including, without limitation, its right to review the Contract; (q) was (i) originated or purchased by the Transferor in the ordinary course of its business, (ii) approved and purchased or funded in the ordinary course of the Transferor's business, and (iii) originated by an Originator eligible under the Credit and Collection Policy; (r) is with a User that, as of the Contract's Pledge Date, is not the User with respect to any Charged-Off Contract, and is not and has never been a Charged-Off Contract; (s) the inclusion of which in the Series 2002-A Trust Estate would not require the registration of the Obligor or of the Series 2002-A Trust Estate as an "investment company" under the Investment Company Act of 1940, as amended; (t) the addition of which to the Series 2002-A Trust Estate would not result in the Weighted Average Life to exceed 2.5 years; 10 (u) if the Original Equipment Cost of the Equipment related to such Contract is valued at greater than $25,000, is secured by a first priority perfected security interest in such Equipment in favor of Marlin; (v) relates to Equipment which (i) is not a vehicle or other type of equipment which is subject to a certificate of title or other similar titling statute and (ii) to the best of the Servicer's knowledge, has not suffered any damage or loss; (w) had a Contract Principal Balance upon origination which was less than or equal to $150,000; (x) was not selected by the Transferor from the Transferor's pool of leases in a manner adverse to the Series 2002-A Noteholders or the Series Support Provider; (y) arises under a lease or financing contract, is not currently under any sub-lease agreement, and does not permit any sub-leasing of the related Equipment; (z) is one as to which all parties to the Contract have satisfied all obligations to be required to be fulfilled by such parties as of the related Pledge Date; (aa) is, and has been, at all times, a legal, valid and binding payment obligation of the User, enforceable in accordance with its terms; (bb) the User of which is not an Affiliate of the Transferor, the Servicer or any Obligor; (cc) has been accounted for on the Transferor's books as sold to the Obligor; (dd) is not subject to, nor with respect to which has there been asserted, any litigation or any right to rescission, set off, counterclaim or other defense of the User; (ee) as to which the related User has been directed to make payment only to the Lockbox Account at the Lockbox Bank; (ff) as to which the related Equipment has been delivered to, and accepted by, the related User; (gg) if such Contract is a "true lease", the Equipment is owned by the Obligor free and clear of all other liens; and (hh) if such Contract was originated by a third party and acquired by the Transferor, and if the Original Equipment cost related thereto exceeded $25,000, a UCC-1 financing statement was filed against the related User in the appropriate jurisdiction by the originator thereof and a UCC-3 assignment was filed assigning the original UCC-1 to the Transferor. "Equipment Concentration Amount" means, as of any date of determination, the sum of: 11 (i) for the Equipment Type "Computers and Peripherals", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which the related Equipment is such Equipment Type over (y) twenty-five percent (25%) of the Net Investment at such time; (ii) for the Equipment Type "Software", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which the related Equipment is such Equipment Type over (y) ten percent (10%) of the Net Investment at such time; (iii) for the Equipment Type "Surveillance Systems", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which the related Equipment is such Equipment Type over (y) ten percent (10%) of the Net Investment at such time; (iv) for the Equipment Type "Telecommunications Equipment", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which the related Equipment is such Equipment Type over (y) twenty percent (20%) of the Net Investment at such time; (v) for the Equipment Type "Office Equipment", the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which the related Equipment is such Equipment Type over (y) thirty percent (30%) of the Net Investment at such time; and (vi) for each other Equipment Type, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which the related Equipment is such Equipment Type, over (y) fifteen percent (15%) of the Net Investment at such time. "Equipment Type" means, with respect to each Series 2002-A Contract, the related Equipment "type", as indicated on the Servicer's servicing system with respect to such Series 2002-A Contract. "Federal Funds Rate" means for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the overnight federal funds rates as quoted by National City and confirmed in Federal Reserve Board Statistical Release H.15(519) or any successor or substitute publication selected by National City (or, if such day is not a Business Day, for the next preceding Business Day), or, if, for any reason, such rate is not available on any day, the rate determined, in the sole opinion of National City, to be the rate at which federal funds are being offered for sale in the national federal funds market at 9:00 a.m. Philadelphia, Pennsylvania time. "Fee Letter" means that certain letter agreement dated as of April 1, 2002 by and among the Obligor, the Obligors' Agent and the Agent, as it may be amended or modified and in effect from time to time. 12 "Fee Rate" means the aggregate of the rates at which fees are payable in connection with Series 2002-A (i.e., LIBO Margin (as set forth in the Fee Letter), the Servicing Fee of 1.00%, the Trustee's Fee of 0.02%, the Back-Up Servicer's Fee of 0.04%, and the rate at which the premiums due to the Series Support Provider are calculated, as set forth in the Premium Letter). "Floor Shortfall Amount" means, as of any date of determination, the excess, if any, of (x) the Credit Support Floor Amount over (y) the Credit Support Amount, in each case as of such date. "Government Concentration Amount" means, as of any date of determination, the excess of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts which are Government Contracts having a state, municipality or agency or instrumental of a state or a municipality as the User over (y) two percent (2.0%) of the Net Investment at such time. "Hedge Agreement" means an interest rate cap or swap agreement between the Trustee and a Hedge Counterparty satisfying the conditions specified in Section 3.08 hereof. "Hedge Counterparty" means either (i) a Person reasonably acceptable to the Agent and the Series Support Provider (it being stipulated that each party listed on Schedule 1 hereto is acceptable) and having long term unsecured debt obligations rated at least AA- by S&P and Aa3 by Moody's, (ii) National City for so long as its long term unsecured debt obligations are rated at least A by S&P and A1 by Moody's. "Hedge Rate" means, with respect to any Hedge Agreement and the Series 2002-A Contracts assigned thereto, (a) if such Hedge Agreement is a Cap Agreement, the fixed rate per annum which the Base LIBO Rate must exceed to result in payments made thereunder by the Hedge Counterparty to the Series 2002-A Facility Account, and (b) if such Hedge Agreement is an interest rate swap agreement, the fixed rate per annum which is applied to the notional amount of such Hedge Agreement to calculate the payments to be made by the Trustee thereunder to the Hedge Counterparty. "Increased Servicer Fee" means as of any Settlement Date, an amount not to exceed 0.25% of the aggregate Contract Principal Balance of the Series 2002-A Contracts as of the first day of the prior Collection Period, payable on each Settlement Date to any successor Servicer in accordance with Section 9.02(b) of the Master Agreement as additional compensation in excess of the Servicing Fee for the performance of its duties hereunder and under the Master Agreement. "Independent Public Accountants" shall mean, with respect to Marlin, any "Big 4" accounting firm, or other accounting firm reasonably acceptable to the Series Controlling Party. "Insurance Agreement" means the Insurance and Indemnity Agreement dated April 1, 2002, among Marlin, the Obligor, the Obligors' Agent, the Agent, the Series Support Provider and the Trustee. 13 "Insured Monthly Interest" means, with respect to any Settlement Date, interest due in respect of the Series 2002-A Notes calculated at the Series 2002-A Insured Note Interest Rate for the preceding Interest Period. "Interest Coverage Ratio" means, as of any date of determination, and with respect to Marlin and its consolidated subsidiaries, EBITDA as a multiple of Interest Expense. "Interest Expense" means for any period, for Marlin and its consolidated subsidiaries, the sum (without duplication) of all interest in respect of Indebtedness (including interest on the Series 2002-A Notes and all similar transactions, and the interest component of any payments in respect of capitalized lease obligations) accrued or capitalized during such period (whether or not actually paid during such period); plus the net amount payable under Hedge Agreements (whether or not actually paid or received during such period, all of which is to be computed over the previous twelve months). "Interest Period" means, with respect to any Settlement Date, the period from and including the prior Settlement Date (or, in the case of the first Settlement Date, from and including the Series Closing Date) to but excluding such Settlement Date. "LIBO Margin" has the meaning ascribed thereto in the Fee Letter. "LIBO Rate" for any Interest Period (or portion thereof for which an Owner initially funds an investment in the Series 2002-A Notes other than by issuing Commercial Paper) with respect to the Series 2002-A Notes shall mean the applicable Base LIBO Rate divided by the percentage equal to the difference of one minus the LIBOR Reserve Percentage applicable during such Interest Period (or portion thereof), if any. "LIBO Rate Disruption Event" shall mean, for any Owner with respect to any Series 2002-A Note, for any Interest Period or portion thereof, any of the following: (a) a determination by such Owner that it would be contrary to law or to the directive of any central bank or other governmental authority to obtain United States dollars in the London interbank market to fund its investment in such Series 2002-A Note for such Interest Period or portion thereof, (b) prime banks in the London interbank market are not then generally quoting a Base LIBO Rate or not then quoting a Base LIBO Rate to Persons such as such Owner, or (c) the inability of such Owner by reason of circumstances affecting the London interbank market generally, to obtain U.S. Dollars in such market to fund its investment in such Series 2002-A Note for such Interest Period or portion thereof. "LIBOR Reserve Percentage" shall mean, relative to each Interest Period or portion thereof, a percentage (expressed as a decimal) equal to the daily average during such Interest Period or portion thereof of the percentages in effect on each day of such Interest Period or portion thereof, as prescribed by the Board of Governors of the Federal Reserve System (or any successor), for determining the maximum reserve requirements applicable to "Eurocurrency liabilities" pursuant to Regulation D or any other applicable regulation of the Board of Governors of the Federal Reserve System which prescribes reserve requirements applicable to "Eurocurrency liabilities" as currently defined in Regulation D. 14 "Liquidity Agreement" shall mean the liquidity agreement dated as of April 1, 2002 among North Coast Funding LLC, the liquidity banks named therein, and National City, as the liquidity agent, as amended from time to time. "Liquidity Provider" shall mean a financial institution to whom the Obligors' Agent shall have consented (which consent shall not be unreasonably withheld) providing liquidity support to or for the account of any Purchaser, whether by an extension of credit, the acquisition of an interest in the Series 2002-A Notes, or otherwise, or having a commitment to provide such support under a liquidity agreement which relates to this Supplement. "Lockbox Account" means the account no. 2000004737584 established and maintained by the Lockbox Bank for the purpose of receiving payments on the Series 2002-A Contracts. "Lockbox Bank" means First Union National Bank or any other commercial bank acceptable to the Series Support Provider. "London Banking Day" means a day on which commercial banks are open for business (including dealers in foreign exchange and foreign currency deposits) in London, England. "Market Disruption Event" means, with respect to any calendar month, an increase in the level of spreads to the applicable United States Treasury Obligation for "AAA"- rated small ticket lease asset-backed securities which are insured by the Series Support Provider by more than 75% over such spreads prevailing during the prior calendar month, as reasonably determined by the Series Support Provider at the request of Marlin. "Marlin" means Marlin Leasing Corporation, a Delaware corporation. "Master Agreement" has the meaning set forth in the Recitals hereto. "Master Transfer Agreement" means that certain Master Lease Acquisition and Sale Agreement dated as of April 1, 2002 among Marlin, the Obligors' Agent and the Obligors set forth therein as parties thereto from time to time, as such agreement may be amended, supplemented or modified from time to time. "Maximum Applicable Credit Support" means: (i) prior to the date of the first Take-Out, the largest Credit Support Amount on any day occurring since the Series Closing Date; and (ii) on and after the date of the first Take-Out, the largest Credit Support Amount on any day occurring since the most recent Take-Out. "Maximum Series Limit" means: 15 (i) during the period from the Series Closing Date to April 9, 2003, $75,000,000; and (ii) during the period from April 10, 2003 to April 9, 2004, upon the prior written consent of the Series Support Provider and the Agent, $100,000,000 (or, if such consent is not forthcoming, then $75,000,000). "Monthly Interest" means, with respect to any Settlement Date, interest due in respect of the Series 2002-A Notes calculated at the Series 2002-A Note Interest Rate for the preceding Interest Period (which amount shall include, in the event the aggregate principal portion of the respective investments of each Purchaser exceeded the Series 2002-A Note Balance after giving effect to all distributions on the prior Settlement Date, an amount equal to interest accrued on such excess at the rate described in paragraph (a) of the definition of Series 2002-A Note Interest Rate). "National City" means National City Bank, a national banking association. "Net Investment" means as of any date of determination the sum of (i) the Series 2002-A Note Balance as of such date plus (ii) accrued and unpaid interest at the Series 2002-A Note Interest Rate through such date plus (iii) any Noteholder's Carryover Interest as of such date. "Note Purchase Agreement" shall mean the Note Purchase Agreement dated as of April 1, 2002, among the Obligor, the Obligors' Agent, the Purchasers and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time hereafter. "Noteholder's Carryover Interest" means, as of any date of determination, the amount of Monthly Interest due on any prior Settlement Date but not paid, plus interest thereon through such date from such prior Settlement Date, calculated using the Series 2002-A Note Interest Rate applicable for the next Settlement Date, all as determined by the Agent. "Noteholder's Insured Carryover Interest" means, as of any date of determination, the amount of Insured Monthly Interest due on any prior Settlement Date but not paid, plus interest thereon through such date from such prior Settlement Date, calculated using the Series 2002-A Insured Note Interest Rate applicable for the next Settlement Date, all as determined by the Agent. "Obligor" means MLR II LLC. "Original Issue Date" has the meaning specified in Section 3.07(b)(x) hereof. "Original Servicer Fee Rate" has the meaning specified in Section 3.07(b)(ix) hereof. "Overconcentration Amount" means an amount, at any time, equal to the sum of (i) the aggregate User Concentration Amount for all Users, (ii) the aggregate State Concentration Amount for all States, (iii) the Equipment Concentration Amount, (iv) the aggregate 16 Broker/Vendor Concentration Amounts for all Brokers and vendors, (v) the Government Concentration Amount, (vi) the Quarterly Payment Concentration Amount and (vii) the Broker Concentration Amount. "Owner" means each Purchaser, each Liquidity Provider and each other Person that has purchased, or has entered into a commitment to purchase, a Series 2002-A Note, or an interest therein. "Pledge" means the pledge by the Obligor hereunder of its right, title and interest in and to specified Pledged Property related thereto to the Trustee for the benefit of the Series 2002-A Noteholders in accordance with Section 1.02 hereof. "Pledge Date" has the meaning set forth in Section 4.01(b) hereof. "Pledge Notice" has the meaning specified in Section 4.01(b) hereof. "Pledged Property" means, with respect to the Series 2002-A Trust Estate, each Series 2002-A Contract, together with all associated property and rights with respect thereto described in clauses (2) through (7) of Section 1.02 hereof. "Portfolio Charged-Off Ratio" means, as of the last day of any Collection Period, the percentage equivalent of a fraction, the numerator of which is equal to the product of (i) 12 and (ii) the excess of (x) the sum of the aggregate of Marlin's net investment (calculated in accordance with GAAP) in all leases included in the Servicer's servicing portfolio which would have first satisfied the definition of Charged-Off Contracts (assuming that such definition applied to such leases) during such Collection Period, over (y) the sum of all recoveries during such Collection Period for leases included in the Servicer's servicing portfolio, and the denominator of which is equal to the aggregate undiscounted scheduled periodic payments on all leases included in the Servicer's servicing portfolio as of the beginning of the related Collection Period. "Premium Amount" means, as of any Settlement Date, the premiums due to the Series Support Provider for such Settlement Date, as calculated pursuant to the Premium Letter. "Premium Letter" means that certain letter agreement dated as of April 1, 2002 by and among the Obligor, the Obligors' Agent, Marlin and the Series Support Provider, as it may be amended or modified and in effect from time to time. "Prime Rate" means the rate announced by National City from time to time as its prime rate in the United States, such rate to change as and when such designated rate changes. The Prime Rate is not intended to be the lowest rate of interest charged by National City in connection with extensions of credit to debtors. "Pro Forma Borrowing Base" means, (x) as of any Pledge Date, the Borrowing Base (including the various components thereof) as calculated assuming that all Series 2002-A Contracts to be Pledged on such Pledge Date have in fact been so Pledged and (y) as of any day which is not a Pledge Date, the Borrowing Base as of such day. 17 "Purchase Price Percentage" means as of any date of determination the lesser of (i) .87 and (ii) 1 minus the product of a times b times c, where: a = the Average Charged-Off Ratio as of such date of determination; b = the Weighted Average Life, rounded to the second decimal place; and c = 2.75 "Purchaser" has the meaning specified in the Note Purchase Agreement. "Quarterly Payment Concentration Amount" means, as of any date of determination, the excess of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts which are payable on a quarterly basis over (y) four percent (4%) of the aggregate Contract Principal Balance of all Series 2002-A Contracts which are Eligible Contracts at such time. "Record Date" means, with respect to any Settlement Date, the close of business on the Business Day preceding such Settlement Date. "Redemption Price" has the meaning specified in Section 6.02 hereof. "Refinance Proceeds" means with respect to any Collection Period, proceeds of the issuance of a new series of notes or the issuance of certificates in connection with a Take-Out of Series 2002-A Contracts, which proceeds shall be remitted to the Trustee immediately upon receipt for deposit into the Series 2002-A Facility Account for application in accordance with Section 3.03 hereof. "Required Reserve Amount" means, as to any Settlement Date, the Reserve Percentage times the Net Investment (after giving effect to distributions in reduction of the Net Investment on such Settlement Date). "Reserve Percentage" means zero, unless and until the Obligors' Agent notifies the Trustee in writing, countersigned by the Agent and by the Series Support Provider, of a different percentage. "Residual Advance Amount" shall have the meaning set forth in any notice delivered to the Trustee by the Obligors' Agent, countersigned by the Agent and the Series Support Provider. Prior to the delivery of such notice and confirmation by Standard & Poor's and Moody's that their respective facility shadow ratings will not be affected, the Residual Advance Amount shall be considered to be zero. "Restructured" means, with respect to any Series 2002-A Contract, any deferral of Scheduled Payments, reduction of the Scheduled Payments, or extension of the term of such Series 2002-A Contract, in each case by the Servicer for credit reasons. "Revolving Period" means the period from and including the Series Closing Date to but excluding the Termination Date. 18 "Series Closing Date" means, with respect to the Series 2002-A Notes, April 9, 2002. "Series Controlling Party" has the meaning specified in Section 3.07(b)(vi) hereof. "Series Event of Default" has the meaning specified in Section 5.01 hereof. "Series Support" means the financial guaranty insurance policy No. 37833 issued by the Series Support Provider. "Series Support Provider" means MBIA Insurance Corporation, a New York stock insurance company, or any successor thereto, as issuer of the Series Support. "Series Support Provider Default" means the occurrence and continuance of any of the following: (a) the Series Support Provider shall have failed to make a payment in the amount when or as required under the Series Support when due; or (b)(i) the Series Support Provider (A) files any petition or commences any case or proceeding under any provision or chapter of the United States Bankruptcy Code, the New York State Insurance Law, or any other similar federal or state law relating to its insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B) makes a general assignment for the benefit of its creditors, or (C) has an order for relief entered against it under the United States Bankruptcy Code, the New York State Insurance Law, or any other similar federal or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or reorganization which is final and nonappealable; or (ii) a court of competent jurisdiction, the New York Department of Insurance or other competent regulatory authority enters a final and nonappealable order, judgment or decree (A) appointing a custodian, trustee, agent or receiver for the Series Support Provider or for all or any material portion of its property or (B) authorizing the taking of possession by a custodian, trustee, agent or receiver of the Series Support Provider (or the taking of possession of all or any material portion of the property of the Series Support Provider); or (c) a court of competent jurisdiction shall have determined in a final, nonappealable order that the Series Support is no longer in full force and effect. "Series Trust Estate" means, with respect to the Series 2002-A Notes, the Series 2002-A Trust Estate. "Series Trustee Secured Obligations" has the meaning set forth in Section 3.07(b)(vii). "Series 2002-A Account" means each of the Series 2002-A Facility Account and the Series 2002-A Reserve Account. 19 "Series 2002-A Alternative Rate" means, for any Interest Period (or portion thereof) for which a Purchaser initially funds an investment in the Series 2002-A Notes other than by issuing Commercial Paper, an interest rate per annum equal to the LIBO Rate for such Interest Period (or such portion thereof); provided, however, that: (a) if a Purchaser shall notify the Agent that a LIBO Rate Disruption Event has occurred and is continuing, then, in any such case, the "Series 2002-A Alternative Rate" for the Series 2002-A Notes for such Interest Period or portion thereof shall be an interest rate per annum equal to the Series 2002-A Base Rate from time to time in effect unless the Agent, the Series Support Provider and the Obligors' Agent agree in writing to a different rate; and (b) without limiting the foregoing, if with respect to any Interest Period or portion thereof any Purchaser shall have notified the Agent that the rate at which deposits of the United States dollars are being offered to such Purchaser in the London interbank market does not accurately reflect the cost to such Purchaser of funding its investment in the Series 2002-A Notes for such Interest Period or portion thereof, the Obligors' Agent, the Series Support Provider and the Agent shall negotiate in good faith to determine a mutually agreeable different rate as the Series 2002-A Alternative Rate sufficient to meet such Purchaser's costs and, pending the conclusion of those negotiations, the Series 2002-A Alternative Rate for each Interest Period shall be the LIBO Rate; provided, however, that if the Obligors' Agent, the Series Support Provider and the Agent have not agreed upon a rate before the end of the second full Interest Period following the date of such Purchaser's notice to the Agent, the Series 2002-A Alternative Rate for each successive Interest Period for so long as the condition giving rise to such notice shall be continuing shall be the Series 2002-A Base Rate. "Series 2002-A Available Funds" means, with respect to any Settlement Date, the aggregate amount of Collections received by the Servicer during the prior Collection Period with respect to the Series 2002-A Trust Estate (other than Collections representing Advance Payments until such Advance Payments are applied as Collections in accordance with Section 7.01 of the Master Agreement), plus any net payments under a Hedge Agreement received since the previous Settlement Date (or the Series 2002-A Series Closing Date in the case of the first Settlement Date), plus any Prepayment Amounts deposited in the Series 2002-A Facility Account pursuant to Section 6.01 hereof. "Series 2002-A Available Funds" do not include any proceeds of the Series Support or other funds received from or on account of the Series Support Provider. "Series 2002-A Alternative Insured Note Interest Rate" means, with respect to any Interest Period, the weighted average (weighted based on the related notional balances, as well as the number of days during such Interest Period for which the related Applicable Hedge Agreement was in effect) of the Applicable Hedge Rates applicable to all Applicable Hedge Agreements during such interest period. "Series 2002-A Base Insured Note Interest Rate" means for any Interest Period for the Series 2002-A Notes, the weighted average of the following rates determined for each 20 Purchaser (based on the respective investments of each Purchaser in the Series 2002-A Notes and the time period for which applicable rates are in effect): (a) to the extent that a Purchaser funds its investments in the Series 2002-A Notes for such Interest Period or portion thereof by issuing Commercial Paper, the sum of (i) the CP Margin, (ii) the weighted average of the rates at which Commercial Paper issued by such Purchaser to fund the purchase or maintenance of its investments in the Series 2002-A Notes during such Interest Period or portion thereof has been sold by any placement agent or commercial paper dealer selected by such Purchaser; provided, that, for purposes of calculating such weighted average, if any such rate is a discount rate, such discount rate shall be converted to an interest-bearing equivalent rate per annum for a 360-day year and (iii) .05 percent per annum, and (b) to the extent that a Purchaser funds its investment in the Series 2002-A Notes for such Interest Period or portion thereof other than by issuing Commercial Paper, a rate equal to the sum of (i) the applicable LIBO Margin and (ii) the Base LIBO Rate for such Interest Period or portion thereof or such other rate as the Agent, the Series Support Provider and the Obligors' Agent shall agree to in writing. "Series 2002-A Base Rate" means, on any date, a fluctuating rate per annum equal to the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 0.5%. "Series 2002-A Contract" means each Contract listed on a List of Contracts attached to a Pledge Notice which is delivered in connection with a Pledge of Pledged Property with respect to the Series 2002-A Trust Estate, and which Contract has not been released from the Series 2002-A Trust Estate as provided herein or in the Master Agreement. "Series 2002-A Advance Payment Account" has the meaning set forth in Section 3.01(c) hereof. "Series 2002-A Facility Account" has the meaning set forth in Section 3.01(a) hereof. "Series 2002-A Insured Note Interest Rate" means for any Interest Period for the Series 2002-A Notes, the lesser of: (i) the Series 2002-A Base Insured Note Interest Rate for such Interest Period; and (ii) the Series 2002-A Alternative Insured Note Interest Rate for such Interest Period. "Series 2002-A Note" means any one of the Series 2002-A Notes executed by the Obligor in favor of the Agent and authenticated by or on behalf of the Trustee, substantially in the form of Exhibit A hereto, and any replacement therefor. "Series 2002-A Note Balance" means, as of any time of determination, the aggregate, cumulative amount of the Advance Amounts funded pursuant to Section 4.01(b) hereof since the Series Closing Date, reduced by the aggregate, cumulative amounts described in 21 Sections 3.03(a)(i) tenth, 3.03(a)(ii) eleventh and 3.03(a)(ii) sixteenth and actually paid to the Series 2002-A Noteholders on all prior Settlement Dates. "Series 2002-A Noteholder" shall mean any Owner, as defined herein. "Series 2002-A Note Interest Rate" means for any Interest Period for the Series 2002-A Notes, the weighted average of the following rates determined for each Purchaser (based on the respective investments of each Purchaser in the Series 2002-A Notes and the time period for which applicable rates are in effect): (a) to the extent that a Purchaser funds its investments in the Series 2002-A Notes for such Interest Period or portion thereof by issuing Commercial Paper, the sum of (i) the CP Margin, (ii) the weighted average of the rates at which Commercial Paper issued by such Purchaser to fund the purchase or maintenance of their investments in the Series 2002-A Notes during such Interest Period or portion thereof has been sold by any placement agent or commercial paper dealer selected by such Purchaser; provided, that, for purposes of calculating such weighted average, if any such rate is a discount rate, such discount rate shall be converted to an interest-bearing equivalent rate per annum for a 360-day year, and (iii) 0.05 percent per annum; and (b) to the extent that a Purchaser funds its investments in the Series 2002-A Notes for such Interest Period or portion thereof other than by issuing Commercial Paper, a rate equal to the sum of (i) the applicable LIBO Margin and (ii) the Series 2002-A Alternative Rate for such Interest Period or portion thereof or such other rate as the Agent, the Series Support Provider and the Obligors' Agent shall agree to in writing. The Series 2002-A Note Interest Rate for any Interest Period shall be adjusted to yield, when applied to the outstanding principal balance of the Series 2002-A Notes, an amount sufficient to pay interest on the incremental effective principal balance of any funding resulting from the capitalization of interest, if any, during such Interest Period. As used in paragraph (a) of this definition, each Purchaser's weighted average of the Commercial Paper rates shall include (x) any incremental carrying costs incurred with respect to Commercial Paper maturing on dates other than those on which corresponding funds are received by such Purchaser, and (y) other borrowings by such Purchaser to fund the Net Investment (other than under any liquidity agreement or other program support agreement), including borrowings to fund small or odd dollar amounts that are not easily accommodated in the commercial paper market. "Series 2002-A Related Documents" means, collectively, this Series 2002-A Supplement, the Fee Letter, the Premium Letter, the Hedge Agreement(s), the Master Agreement, the Master Transfer Agreement, the Insurance Agreement, the Collateral Administration Agreement, the Note Purchase Agreement, the Series Support, the Series 2002-A Notes and all other instruments, documents, financing statements and agreements executed and delivered by the Obligor, the Obligors' Agent or the Servicer in connection herewith or therewith 22 and each Series 2002-A Transfer Agreement Supplement executed pursuant thereto with respect to the Series 2002-A Trust Estate. "Series 2002-A Reserve Account" shall have the meaning set forth in Section 3.01(b) hereof. "Series 2002-A Secured Parties" shall have the meaning set forth in Section 3.07(b)(viii) hereof. "Series 2002-A Transfer Agreement Supplement" means each Transfer Agreement Supplement entered into pursuant to the Master Transfer Agreement which transfers Series 2002-A Contracts to the Obligor for inclusion in the Series 2002-A Trust Estate. "Series 2002-A Trust Estate" shall have the meaning set forth in Section 1.02 hereof. "Servicer's Certificate" means a report with respect to Series 2002-A, in substantially the form of Exhibit D hereto (appropriately completed), furnished by the Servicer to the Obligors' Agent, the Trustee, the Series Support Provider and the Agent pursuant to Section 6.06 of the Master Agreement. "Servicing Fee" means as of any Settlement Date, an amount equal to one-twelfth of 1.00% of the daily average Contract Principal Balance of the Series 2002-A Contracts during the prior Collection Period, payable on each Settlement Date to the Servicer pursuant to Section 3.03 hereof as compensation for the performance of its duties hereunder and under the Master Agreement. "Settlement Date" means the 15th of each month (or if the 15th of any month is not a Business Day, then on the next succeeding Business Day) commencing with May 15, 2002. "State Concentration Amount" means: (i) for any State other than New Jersey, Florida, Texas or California, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which any User is domiciled in such State, over (y) ten percent (10%) of the Net Investment at such time; plus (ii) for each of Florida, Texas and California, individually, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which any User is domiciled in such State over fifteen percent (15%) of the Net Investment at such time; plus (iii) for New Jersey, the excess, if any of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which any User is domiciled in such State over seventeen and one-half percent (17.50%) of the Net Investment at such time. 23 "Support Interest Funding" means any drawing under the Series Support, or any advance or other payment by the Series Support Provider in lieu of funding a drawing under the Series Support, in either case made with respect to (a) a shortfall in amounts available to pay the Noteholder's Insured Carryover Interest, as described in Section 3.03(e)(i) hereof or (b) the avoidance of any payment in respect of Insured Monthly Interest, as described in Section 3.03(e)(iii) hereof. "Support Principal Funding" means any drawing under the Series Support, or any advance or other payment by the Series Support Provider in lieu of funding a drawing under the Series Support, in either case made with respect to (a) a shortfall in amounts available to pay the Series 2002-A Note Balance to zero, as described in Section 3.03(e)(ii) hereof or (b) the avoidance of any payment in respect of the Series 2002-A Note Balance as a preference, as described in Section 3.03(e)(iii) hereof. "Swap Agreement" means a Hedging Agreement other than a Cap Agreement. "Take Out" means the refinancing of all of the Series 2002-A Contracts (whether through the issuance of asset-backed securities, funding through other Committed Financing Facilities, whole loan sales or otherwise). "Tangible Net Worth" means, as of any date of determination with respect to Marlin, its shareholders' equity, less any intangible assets, all determined in accordance with GAAP; provided that neither (a) the principal portion of any subordinated debt which is payable within six months of such date of determination nor (b) any preferred stock which has a put right or other similar right within six months of such date of determination shall be considered equity. "Termination Date" means the earliest to occur of: (i) the two (2) year anniversary of the Series Closing Date, or such later date as the parties (with the express written consent of the Agent and Series Support Provider) may hereafter agree in accordance with Section 4.01(i), (ii) the day designated as the Termination Date by the Obligor on sixty (60) days' prior written notice to the Agent and the Series Support Provider, (iii) the day on which the Series Controlling Party declares the occurrence of the Termination Date or on which the Termination Date automatically occurs pursuant to Section 5.01, (iv) the date on which the Series Support Provider's claims paying ability or financial strength rating is rated below "A" by Standard & Poor's or A2 by Moody's, (v) the 90th day following the date on which the Series Support Provider has delivered a written notice to the Transferor and the Agent to the effect that the most recent audit completed by the Series Support Provider or its designee of the Transferor's origination, servicing and documentation procedures has revealed to the Series Support Provider deficiencies which it reasonably believes creates a material adverse effect on the facility, (vi) a Hedge Counterparty fails to satisfy the definition thereof and is not replaced within fifteen (15) Business Days by a Person satisfying the definition thereof and (vii) the date on which the Liquidity Agreement is no longer in full force and effect. The Agent shall notify the Obligors' Agent and the Series Support Provider immediately upon receipt of notice of, but in any event at least 10 days prior to the date referenced in clause (vii), of the up-coming occurrence of such event described in clause (vii). In addition, no later than 45 days before the scheduled termination of the Liquidity Agreement, the Agent shall notify the Obligors' Agent and the Series 24 Support Provider as to whether the Company has submitted a renewal request under the Liquidity Agreement. "Three-Month Rolling Average" means, with respect to any pool performance ratio, the sum of the applicable ratio for the most recently ended Collection Period and two immediately preceding Collection Periods (or such fewer Collection Periods as have previously occurred) divided by three (or such smaller number). "Trustee Fee" means the monthly fee payable to the Trustee on each Settlement Date, which shall be the greater of (x) one-twelfth of two basis points (0.02%) per annum times the aggregate Contract Principal Balance of the Series 2002-A Contracts as of the end of the preceding Collection Period and (y) $1,000. "Unused Fee" shall have the meaning set forth in the Fee Letter. "User Concentration Amount" means, for any User, the excess, if any, of (x) the aggregate Contract Principal Balance of all Series 2002-A Contracts with respect to which such User or any Affiliate of such User is the User, over (y) one percent (1.0%) of the Net Investment at such time. "Weighted Average Hedge Rate" means, with respect to any Interest Period, the weighted average (weighted based on the related notional balances, as well as the number of days during such Interest Period for which the related Hedge Agreement was in effect) of Hedge Rates applicable to all Hedge Agreements under which payment will be received on the Settlement Date relating to such Interest Period. "Weighted Average Life" means, as of any date of determination, a term in years equal to the sum of: (summation) (Pn X Tn) --------- PB where: (summation) = The mathematical symbol for summation. The summation is computed from 1 to n, where n is the number of months from the date of determination until the date of the last Scheduled Payment under the last Series 2002-A Contract scheduled to be outstanding; Pn = The sum of the principal portions of the Scheduled Payments for all Series 2002-A Contracts in the nth month after the date of determination; Tn = The remaining period, in months, from the time of calculation until such nth month; and PB = The aggregate Contract Principal Balance of all Series 2002-A Contracts at the time of calculation, divided by 12 and rounded to the second decimal place. 25 ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 2002-A NOTEHOLDER; SERIES SPECIFIC COVENANTS Section 3.01 Series 2002-A Accounts. (a) The Trustee, for the benefit of the Series 2002-A Secured Parties, shall establish and maintain an account (the "Series 2002-A Facility Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Wells Fargo Bank Minnesota, National Association, as Trustee, Facility Account for Marlin Master Financing Facility Agreement, in trust for the Series 2002-A Secured Parties." The Trustee shall make or permit withdrawals from the Series 2002-A Facility Account only as provided in this Series 2002-A Supplement; (b) The Trustee, for the benefit of the Series 2002-A Secured Parties, shall establish and maintain an account (the "Series 2002-A Reserve Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Wells Fargo Bank Minnesota, National Association, as Trustee, Reserve Account for Marlin Master Financing Facility Agreement, in trust for the Series 2002-A Secured Parties." The Trustee shall make or permit withdrawals from the Series 2002-A Reserve Account only as provided in this Series 2002-A Supplement and in the Master Agreement; (c) The Trustee, for the benefit of the Series 2002-A Secured Parties, shall establish and maintain an account (the "Series 2002-A Advance Payment Account") as a segregated trust account in the Trustee's corporate trust department, identified as the "Wells Fargo Bank Minnesota, National Association, as Trustee, Advance Payment Account for Marlin Master Financing Facility Agreement, in trust for the Series 2002-A Secured Parties." The Trustee shall make or permit withdrawals from the Series 2002-A Advance Payment Account only as provided in this Series 2002-A Supplement and in the Master Agreement; (d) The Trustee shall deposit to the Series 2002-A Facility Account all Refinance Proceeds remitted to it by the Obligor immediately upon the Trustee's receipt thereof; (e) The Trustee shall deposit to the Series 2002-A Facility Account any Crossover Amounts remitted to it from other Series assigned to Group A, as provided in the Series Supplement(s) relating to such other Series; and (f) Notwithstanding the foregoing or anything in the Master Agreement to the contrary, upon written instruction from the Servicer, the Trustee may deduct from amounts otherwise specified for deposit to the Series 2002-A Facility Account any amounts previously deposited by the Trustee into the Series 2002-A Facility Account but which (i) are subsequently uncollectible as a result of dishonor of the instrument of payment for or on behalf of the User, (ii) are later determined to have resulted from mistaken deposits or (iii) constitute Servicing Charges. 26 Section 3.02 Agent to Send Notice of Amounts Due. On each Determination Date, the Agent shall send to the Servicer (with a copy to the Trustee and the Series Support Provider), a notice in the form of Exhibit C to the Note Purchase Agreement. Section 3.03 Distributions from Series 2002-A Facility Account. (a) On each Settlement Date, the Trustee (based solely on the information set forth in the related Servicer's Certificate) shall allocate and distribute funds on deposit in the Series 2002-A Facility Account in the following order of priority, without duplication: (i) if such Settlement Date occurs during the Revolving Period: first, from Series 2002-A Available Funds, to pay to the Servicer and the Trustee, as applicable, any amounts referred to in Section 3.01(f) and to pay to any other Persons that mistakenly deposited funds into the Series 2002-A Facility Account, such mistakenly deposited funds; second, from the remaining Series 2002-A Available Funds, to the Servicer, an amount necessary to reimburse the Servicer for any unreimbursed Servicer Advances with respect to Series 2002-A Contracts; third, from the remaining Series 2002-A Available Funds, to the Trustee for payment to Hedge Counterparties, amounts due under the related Hedge Agreements, except amounts due as fees, expenses or as the consequence of the occurrence of an event of default or termination event under such Hedge Agreement or otherwise due upon the termination of such Hedge Agreement, which amounts shall be paid as provided in clause sixteenth below; fourth, from the remaining Series 2002-A Available Funds to the Servicer, if the Servicer is not the Obligor or an Affiliate of the Obligor, in payment of any Servicing Fee then due; fifth, from the remaining Series 2002-A Available Funds, to the Trustee, the Trustee Fee, and to the Back-up Servicer, the Back-Up Servicing Fee, any out-of-pocket expenses of the Trustee and the Back-up Servicer or successor Servicer reasonably incurred in connection with the Series 2002-A transaction and, subject to an aggregate, cumulative maximum (including amounts paid under paragraph (a)(ii) fifth below) of $50,000 (with respect to the above described expenses) during the term of this facility, any expenses in excess of such cumulative maximum amount if such expenses are approved in writing by the Series Support Provider and any servicing Transition Cost due such Persons under this Series Supplement; sixth, from the remaining Series 2002-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider (x) the Premium Amount due to the Series Support 27 Provider on such Settlement Date in connection with the Series Support and (y) any unpaid Premium Amount due on prior Settlement Dates, together with (in the case of any such unpaid Premium Amount) interest thereon, calculated at the rate set forth in the Insurance Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; seventh, from the remaining Series 2002-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Interest Fundings, together with interest thereon, calculated at the rate set forth in the Insurance Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; eighth, from the remaining Series 2002-A Available Funds, and amounts provided pursuant to the Series Support, to the Series 2002-A Noteholders the following amounts in the following order, without duplication: (a) the Noteholder's Insured Carryover Interest, if any, minus the amount of any such Noteholder's Insured Carryover Interest arising as a result of any payment default by National City under any Hedge Agreement with respect to any prior Settlement Date and (b) the Insured Monthly Interest due on such Settlement Date minus the amount of any payment default by National City under any Hedge Agreement with respect to such Settlement Date; ninth, from the remaining Series 2002-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amounts described in clauses sixth and seventh above; tenth, from the remaining Series 2002-A Available Funds, to the Series 2002-A Noteholders in reduction of the Series 2002-A Note Balance, the lesser of: (x) such remaining Series 2002-A Available Funds and (y) the excess of (i) the Net Investment, after taking into account any reduction thereof on such Settlement Date pursuant to the preceding clauses of this subsection (a)(i), over (2) the Pro Forma Borrowing Base which, for purposes of this clause (y), shall not include the portion of the Series 2002-A Available Funds then on deposit in the Series 2002-A Facility Account which represents funds required to be applied to the amortization of the Series 2002-A Note Balance for the related Collection Period; 28 eleventh, from the remaining Series 2002-A Available Funds, to the Series 2002-A Noteholders, the following amounts in the following order: (a) the excess, if any, of the Noteholder's Carryover Interest over the Noteholder's Insured Carryover Interest and (b) the excess, if any, of the Monthly Interest over the Insured Monthly Interest, in each case due on such Settlement Date; twelfth, from the remaining Series 2002-A Available Funds, ratably (and based upon the amounts owed to each): (i) to the Series Support Provider, in payment of any other amounts owing to the Series Support Provider under the Series 2002-A Related Documents, as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; and (ii) to the Series 2002-A Noteholder, for the benefit of the applicable Owners, in payment of the Unused Fee, Breakage Costs and any other amounts owing to the Series 2002-A Noteholders or the Agent under the Series 2002-A Related Documents for the current Collection Period and any prior Collection Period, as certified by the Agent to the Trustee, the Series Support Provider and the Obligors' Agent; thirteenth, to the Servicer, if the Servicer is a person other than Marlin or any Affiliate thereof, by wire transfer of immediately available funds to the account designated by such Servicer, the Increased Servicer Fee, if any, then due, together with any unpaid Increased Servicer Fees from prior Collection Periods, if any; fourteenth, from the remaining Series 2002-A Available Funds, to the Series 2002-A Reserve Account, an amount up to the amount, if any, necessary to make the amounts on deposit in the Series 2002-A Reserve Account equal the Required Reserve Amount; fifteenth, from the remaining Series 2002-A Available Funds, to the Obligors, the lesser of: (i) the Advance Amount for all Series 2002-A Contracts being Pledged on such Settlement Date in accordance with Section 4.01(e) hereof; and (ii) such remaining Series 2002-A Available Funds; sixteenth, from the remaining Series 2002-A Available Funds, ratably, to each Hedge Counterparty (and based upon the amounts owed to each) any amounts due to it as fees, expenses or as the consequence of an event of default or termination event under the related Hedge Agreement or otherwise due upon the termination of the related Hedge Agreement; 29 seventeenth, from the remaining Series 2002-A Available Funds and from amounts, if any, on deposit in the Series 2002-A Reserve Account in excess of the Required Reserve Amount, to the Servicer, if the Servicer is an Obligor or an Affiliate of an Obligor, in payment of any accrued and unpaid Servicing Fee then due; eighteenth, from the remaining Series 2002-A Available Funds, to the Series 2002-A Noteholders the following amounts in the following order, without duplication: (a) the amount of any Noteholder's Insured Carryover Interest arising as a result of any payment default by National City under any Hedge Agreement with respect to any prior Settlement Date which remains unpaid pursuant to clause eighth above and (b) the amount of any Insured Monthly Interest due on such Settlement Date which remains unpaid as a result of payment default by National City under any Hedge Agreement with respect to such Settlement Date pursuant to clause eighth above; and nineteenth, from the remaining Series 2002-A Available Funds and from amounts, if any, on deposit in the Series 2002-A Reserve Account in excess of the Required Reserve Amount, the balance, if any, to other Series in Group A, if any, and thereafter to the Obligors' Agent for the benefit of the applicable Obligor(s), or as otherwise directed by it in writing. (ii) if such Settlement Date occurs during the Amortization Period: first, from Series 2002-A Available Funds to pay to the Servicer and the Trustee, as applicable, any amounts referred to in Section 3.01(f) and to pay to any other Persons that mistakenly deposited funds into the Series 2002-A Facility Account, such mistakenly deposited funds; second, from the remaining Series 2002-A Available Funds, to the Servicer, an amount necessary to reimburse the Servicer for any unreimbursed Servicer Advances with respect to the Series 2002-A Contracts; third, from the remaining Series 2002-A Available Funds, to the Trustee for payment to Hedge Counterparties, amounts due under the related Hedge Agreements, except amounts due as fees, expenses or as the consequence of the occurrence of an event of default or termination event under such Hedge Agreement or otherwise due upon the termination of such Hedge Agreement, which amounts shall be paid as provided in clause eighteenth below; fourth, from the remaining Series 2002-A Available Funds, to the Servicer, if the Servicer is not the Obligor or an Affiliate of the Obligor, in payment of any Servicing Fee then due; 30 fifth, from the remaining Series 2002-A Available Funds, to the Trustee, the Trustee Fee, and to the Back-up Servicer, the Back-Up Servicing Fee, any out-of-pocket expenses of the Trustee and the Back-up Servicer or successor Servicer reasonably incurred in connection with the Series 2002-A transaction and, subject to an aggregate, cumulative maximum (including amounts paid under paragraph (a)(i) fifth above) of $50,000 (with respect to the above described expenses) during the term of this facility, any expenses in excess of such cumulative maximum amount if such expenses are approved in writing by the Series Support Provider and any servicing Transition Cost due such Persons under this Series Supplement; sixth, from the remaining Series 2002-A Available Funds, if no Series Support Provider Default has occurred and is continuing, (x) the Premium Amount due the Series Support Provider on such Settlement Date in connection with the Series Support and (y) any unpaid Premium Amounts due on prior Settlement Dates, together with (in the case of any such unpaid Premium Amounts) interest thereon, calculated at the rate set forth in the Insurance Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; seventh, from the remaining Series 2002-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Interest Fundings, together with interest thereon, calculated at the rate set forth in the Insurance Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; eighth, from the remaining Series 2002-A Available Funds, if no Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the aggregate amount necessary to reimburse the Series Support Provider for prior unreimbursed Support Principal Fundings, together with interest thereon, calculated at the rate set forth in the Insurance Agreement, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; ninth, from the remaining Series 2002-A Available Funds, and amounts provided pursuant to the Series Support, to the Series 2002-A Noteholders the following amounts in the following order, without duplication: (a) the Noteholder's Insured Carryover Interest, if any, minus the amount of any such Noteholder's Insured Carryover Interest arising as a result of any payment default by National City under any Hedge Agreement with respect to any prior Settlement Date and (b) the Insured Monthly Interest due on such Settlement Date minus the amount of any payment default by National City under any Hedge Agreement with respect to such Settlement Date; 31 tenth, from the remaining Series 2002-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amounts described in clauses sixth and seventh above; eleventh, from the remaining Series 2002-A Available Funds (plus, on the first Settlement Date during the Amortization Period, the amount on deposit in the Series 2002-A Reserve Account), to the Series 2002-A Noteholders, in reduction of the Series 2002-A Note Balance, the sum of (1) the amount if any, by which (x) the Borrowing Base as of the end of the second preceding Collection Period exceeded (y) the Borrowing Base as of the end of the immediately preceding Collection Period plus (2) any unpaid amounts due under this clause eleventh on prior Settlement Dates; twelfth, from the remaining Series 2002-A Available Funds, if a Series Support Provider Default has occurred and is continuing, to the Series Support Provider, the amount described in clause eighth above; thirteenth, from the remaining Series 2002-A Available Funds, to the Series 2002-A Noteholders, the following amounts in the following order: (a) the excess, if any, of the Noteholder's Carryover Interest over the Noteholder's Insured Carryover Interest and (b) the excess, if any, of the Monthly Interest over the Insured Monthly Interest, in each case due on such Settlement Date; fourteenth, to the Servicer, if the Servicer is a person other than Marlin or any Affiliate thereof, by wire transfer of immediately available funds to the account designated by such Servicer, the Increased Servicer Fee, if any, then due, together with any unpaid Increased Servicer Fees from prior Collection Periods, if any; fifteenth, from the remaining Series 2002-A Available Funds, to the Servicer, if the Servicer is an Obligor or an Affiliate of an Obligor, in payment of any accrued and unpaid Servicing Fee then due; sixteenth, from the remaining Series 2002-A Available Funds (plus, on the first Settlement Date during the Amortization Period, the amount on deposit in the Reserve Account not applied under clause eleventh above) to the Series 2002-A Noteholders in reduction of the Series 2002-A Note Balance, the lesser of (i) 100% of such amount and (ii) the then-outstanding Series 2002-A Note Balance (calculated after taking into account any reduction therein under clause eleventh above); seventeenth, from the remaining Series 2002-A Available Funds, ratably (and based upon the amounts owed to each) (i) Series Support Provider, in payment of any other amounts owing to the Series Support Provider under the Series 32 2002-A Related Documents, as certified by the Series Support Provider to the Trustee, the Agent and the Obligors' Agent; and (ii) to the Series 2002-A Noteholder, for the benefit of the applicable Owners, in payment of the Unused Fee, Breakage Costs and any other amounts owing to the Series 2002-A Noteholders or the Agent under the Series 2002-A Related Documents for the current Collection Period and any prior Collection Period, as certified by the Agent to the Trustee, the Series Support Provider and the Obligors' Agent; eighteenth, from the remaining Series 2002-A Available Funds, ratably, to each Hedge Counterparty (and based upon the amounts owed to each) any amounts due as fees, expenses or as the consequence of an event of default or termination event under the related Hedge Agreement or otherwise due upon the termination of the related Hedge Agreement; nineteenth, from the remaining Series 2002-A Available Funds, to the Series 2002-A Noteholders the following amounts in the following order, without duplication: (a) the amount of any Noteholder's Insured Carryover Interest arising as a result of any payment default by National City under any Hedge Agreement with respect to any prior Settlement Date which remains unpaid pursuant to clause ninth above and (b) the amount of any Insured Monthly Interest due on such Settlement Date which remains unpaid as a result of payment default by National City under any Hedge Agreement with respect to such Settlement Date pursuant to clause ninth above; and twentieth, from the remaining Series 2002-A Available Funds the balance, if any, to other Series in Group A, if any, and thereafter to the Obligors' Agent for the benefit of the applicable Obligor(s), or as otherwise directed by it in writing. (b) All payments of interest, principal, fees, and other amounts payable to the Series 2002-A Noteholders hereunder shall be made on each Settlement Date to the Agent for the benefit of the applicable Purchaser(s) by wire transfer of immediately available funds to an account designated in writing, in the form of Exhibit C hereto delivered to the Trustee on or prior to the related Determination Date without presentation or surrender of the Series 2002-A Note or the making of any notation thereon. All computations of interest, including computations of Noteholder's Carryover Interest, Noteholder's Insured Carryover Interest, Monthly Interest, and Insured Monthly Interest, and any fees due to the Series 2002-A Noteholder hereunder shall be made on the basis of a year consisting of 360 days for the actual number of days elapsed. (c) Any designation by the Agent of an account for receipt of wire transfers pursuant to the preceding clause (b) shall be a standing instruction, effective with respect to the 33 applicable Settlement Date and all subsequent Settlement Dates thereafter until revoked. In the absence of such timely wire transfer instructions, payment will be made by cashiers check sent by overnight courier to the Agent at the address designated pursuant to Section 7.01. All reasonable costs and expenses incurred by the Trustee in connection with the distribution of the payments to the Series 2002-A Noteholders or the Series Support Provider as set forth in this Section 3.03(c) shall be paid by the Servicer. (d) (i) In the event that on any Determination Date occurring during the Revolving Period, the Servicer's Certificate indicates that Series 2002-A Available Funds will be insufficient to make the payments provided for in clauses first through thirteenth of Section 3.03(a)(i) on the related Settlement Date, the Trustee will on the related Settlement Date withdraw the amount of such insufficiency from the Series 2002-A Reserve Account to the extent of amounts available therein and apply the amount withdrawn in accordance with the priorities specified in Section 3.03(a)(i) through such clause thirteenth. (ii) On the first Settlement Date occurring during the Amortization Period all amounts then on deposit in the Series 2002-A Reserve Account shall be transferred to the Series 2002-A Facility Account for application in accordance with priorities eleventh and sixteenth only of Section 3.03(a)(ii) hereof on such Settlement Date. (e) (i) In the event that on any Determination Date, the Servicer's Certificate indicates that Series 2002-A Available Funds together with any amounts withdrawn from the Series 2002-A Reserve Account in accordance with Section 3.03(d) will be insufficient when applied in accordance with the priorities specified in Section 3.03(a)(i) eighth or Section 3.03(a)(ii) ninth on the related Settlement Date, to make the distribution of the Noteholder's Insured Carryover Interest described in such clauses and (ii) such Noteholder's Insured Carryover Interest will, on such related Settlement Date, relate to Insured Monthly Interest originally due on the second (or earlier) preceding Settlement Date, the Trustee will deliver a Notice for Payment in the form set forth as an exhibit to the Series Support in the amount of such shortfall to the Series Support Provider on the second Business Day prior to such Settlement Date. Upon receipt of funds from the Series Support Provider in respect of such Notice for Payment, the Trustee shall pay such amount to the Series 2002-A Noteholders in respect of the such Noteholder's Insured Carryover Interest payable under such clauses. (ii) In addition, in the event that on the date following the Termination Date that is 180 days after the last Scheduled Payment of the last outstanding Series 2002-A Contract, the Series 2002-A Note Balance has not been reduced to zero, the Trustee will deliver a Notice for Payment in the form set forth as an exhibit to the Series Support in the amount of the remaining Series 2002-A Note Balance to the Series Support Provider. Upon receipt of funds from the Series Support Provider in respect of such Notice for Payment, the Trustee will pay such amount to the Series 2002-A Noteholders in reduction of the Series 2002-A Note Balance. (iii) If the payment of any amount which is guaranteed pursuant to the Series Support is voided as a preference (an "Avoidance Event") under any applicable bankruptcy, insolvency, receivership or similar law in a bankruptcy, insolvency, readjustment of debt, reorganization or similar proceeding (an "Insolvency Proceeding") and, as a result of such an Avoidance Event, the Trustee or a Noteholder is required to return such payment, the Trustee 34 will, upon obtaining knowledge of such Avoidance Event, deliver a Notice of Payment in the form set forth as an Exhibit to the Series Support in the amount of such payment to the Series Support Provider. Upon receipt of funds from the Series Support Provider in respect of such Notice for Payment, the Trustee will pay such amount to the applicable Series 2002-A Noteholders. (f) Notwithstanding the priority of payments set forth in Section 3.03(a) above or any other term or provision of this Series 2002-A Supplement or the Master Agreement to the contrary, payments made by the Series Support Provider to the Trustee for the benefit of the Series 2002-A Noteholders shall be applied solely to the obligations in respect of which the related Notice for Payment was delivered. Amounts paid by the Series Support Provider to the Trustee and paid to the Series 2002-A Noteholders shall not be considered payment by the Obligors or otherwise with respect to the Series 2002-A Notes, nor shall such payments discharge any obligations of the Obligors with respect to the Series 2002-A Notes, and the Series Support Provider shall become the owner of the portion of Insured Monthly Interest, the Noteholder's Insured Carryover Interest and the Series 2002-A Note Balance, as the case may be, in respect of which such payments were made as assignee and subrogee of the Series 2002-A Noteholders and shall be entitled to receive reimbursement in respect thereof. The Trustee hereby agrees on behalf of each Series 2002-A Noteholder for the benefit of the Series Support Provider that it recognizes that to the extent the Series Support Provider makes payments to the Trustee for the benefit of the Series 2002-A Noteholders, the Series Support Provider shall become the owner of the applicable portion of the Series 2002-A Notes as assignee and subrogee of the Series 2002-A Noteholders and shall be entitled to receive the related reimbursement in accordance with the priority of distributions referenced in Section 3.03(a)(i) and Section 3.03(a)(ii) (as appropriate) above. (g) The Trustee shall not have any duty or obligation to recalculate, recompute or verify the information contained in the Servicer's Certificate. Section 3.04 Reporting and Review Requirements. (a) The Servicer shall send to the Agent, the Series Support Provider and the Trustee a Servicer's Certificate with respect to each Collection Period, such Servicer's Certificate to be in the form of that attached hereto as Exhibit D, not later than three (3) Business Days prior to the immediately succeeding Settlement Date. Such report shall also be sent to the Trustee in an electronic format acceptable to the Trustee. (b) By January 31 of each calendar year, commencing January 31, 2003, the Servicer shall prepare and distribute to the Agent a statement containing such information as is required to be provided by an issuer of indebtedness under the Code and such other customary information as is necessary or may reasonably be requested by the Agent to enable the Purchasers to prepare their tax returns. (c) The Series Support Provider or its designee shall, at Marlin's expense (not to exceed $52,500 per annum plus out-of-pocket costs and expenses) be permitted to conduct such audits of Marlin's origination, servicing and documentation procedures as the Series Support Provider shall deem necessary, but not more frequently than three times per year. In 35 addition, the Series Support Provider or its designee shall have the right (1) as long as a Series Event of Default has not occurred and is not continuing, to conduct additional audits at the Series Support Provider's (or its designee's) expense, upon at least two Business Day's prior notice and (2) following the occurrence of and during the continuance of a Series Event of Default, to conduct audits as frequently as it deems necessary, at any time without prior notice and at Marlin's expense. (d) Marlin shall provide the Agent and the Series Support Provider with a covenant compliance certificate (as part of the Servicer's Certificate), to the effect that, as of the end of each calendar quarter, Marlin and each Obligor is in compliance with its respective covenants hereunder (listing any exceptions) signed by the Servicing Officer of Marlin and delivered within 45 days of the end of such calendar quarter. (e) Marlin shall provide the Agent and the Series Support Provider with consolidated and consolidating financial statements (consolidating financial statements to include, in columnar format, all wholly-owned subsidiaries of Marlin, with the exception of subsidiaries that are special-purpose entities), in each case prepared in accordance with GAAP (i) unaudited, on a quarterly basis, within 45 days of the end of each calendar quarter, certified by the Chief Financial Officer of Marlin and (ii) audited, on an annual basis, within 120 days of the end of each fiscal year, audited by Marlin's Independent Public Accountants. (f) Marlin shall provide the Agent and the Series Support Provider with a copy of its "monthly business review" within 30 days of the end of each month. (g) Marlin shall provide the Agent and the Series Support Provider with a copy of its annual management/internal control report prepared by Marlin's Independent Public Accountants, promptly following Marlin's receipt thereof and in no event later than 120 days following the end of each fiscal year. (h) Marlin shall provide the Agent and the Series Support Provider with a copy of its annual budget for each upcoming fiscal year, including statements of income and cash flows, and balance sheets, not later than 30 days after the beginning of such fiscal year. (i) The Servicer and the Trustee shall furnish to the Agent and the Series Support Provider during the term of this Series 2002-A Supplement, such periodic, special or other reports or information not specifically provided for herein, as shall be necessary, reasonable and appropriate as shall be requested by the Agent or the Series Support Provider, all such reports or information to be provided by and in accordance with reasonable instructions and directions as the Agent or the Series Support Provider may reasonably require and as the Servicer and the Trustee may reasonably be able to produce. In furtherance of, and not in limitation of the foregoing, there shall be delivered to the Agent and the Series Support Provider by the Trustee, promptly following the Trustee's receipt thereof, copies of (i) each Servicer's annual compliance statement delivered to the Trustee pursuant to Section 6.07 of the Master Agreement, and (ii) each financial statement and report delivered to the Trustee pursuant to Section 6.08 of the Master Agreement. The Trustee's obligation under this Section 3.04(c) shall only pertain to information provided by the Servicer to the Trustee or otherwise in the Trustee's possession. 36 (j) The Trustee shall promptly, after any Responsible Officer's receipt of copies thereof, or any Responsible Officer acquiring actual knowledge thereof, send to the Agent and the Series Support Provider (at the Servicer's expense): (i) written notice of any breach by the Transferor, the Obligor, the Obligors' Agent or the Servicer of any of their respective representations, warranties or covenants made in any of the Series 2002-A Related Documents to which it is a party; (ii) a copy of each Servicer compliance statement delivered to the Trustee pursuant to Section 6.07 of the Master Agreement; (iii) a copy of each financial statement, Independent Accountant's review, notice and report delivered to the Trustee pursuant to Sections 6.08 and 12.04 of the Master Agreement; (iv) written notice of the occurrence of any Series Event of Default or Event of Servicer Termination; (v) written notice of any failure of the Trustee to conform to the eligibility requirements for the Trustee pursuant to Section 11.08 of the Master Agreement; (vi) written notice of the appointment of any co-trustee or separate trustee by the Trustee pursuant to Section 11.15 of the Master Agreement; and (vii) copies of all other financial statements, reports, information and/or notices as may be reasonably requested by the Agent or the Series Support Provider and, in each case, which has been received by or is otherwise in the possession of the Trustee or to which the Trustee would have access or would be entitled to receive or request in accordance with the terms of the Master Agreement; provided, however, that in each case the Trustee shall only be required to send such notices and other items to the Agent and the Series Support Provider to the extent that the Trustee has itself received or has knowledge of the related information. Except as may be specifically provided herein, the Trustee shall have no obligation to seek to obtain any such information. Section 3.05 Compliance With Withholding Requirements. Notwithstanding any other provisions of this Series 2002-A Supplement or the Master Agreement to the contrary, the Trustee, for and on behalf of, and at the direction of the Servicer, shall comply with all federal withholding requirements respecting payments (or advances thereof) to the Agent on behalf of the Purchasers as may be applicable to instruments constituting indebtedness for federal income tax purposes. Except as otherwise provided in the Note Purchase Agreement, any amounts so withheld shall be treated as having been paid to the Agent on behalf of the applicable Purchasers for all purposes of this Series 2002-A Supplement. In no event shall the consent of the Agent or any Purchasers be required for any such withholding. 37 Section 3.06 Servicer Advances. No later than one Business Day preceding each Settlement Date, if the Servicer determines that any Scheduled Payment (or portion thereof), which was due and payable pursuant to a Series 2002-A Contract during the related Collection Period was not received by such date, the Servicer may make a Servicer Advance in an amount up to the amount of such delinquent Scheduled Payment (or portion thereof), to the extent that in its sole discretion it determines it can recoup such amount from subsequent Collections under the related Series 2002-A Contract. The Servicer shall remit any Servicer Advances to the Series 2002-A Facility Account for application in accordance with the terms of Section 3.03. Section 3.07 Special Representations, Covenants and Acknowledgements. (a) With respect to the Series 2002-A Notes, the Obligor and the Obligors' Agent does hereby represent and warrant, as of each Pledge Date: (i) Insolvency. Each of the Obligor and the Obligors' Agent is Solvent and will remain Solvent after giving effect to the issuance of the Series 2002-A Notes and the transactions contemplated by this Series 2002-A Supplement, the Master Facility Agreement and each Series 2002-A Related Document to which it is a party. (ii) Principal Place of Business. Exhibit F hereto sets forth the principal place of business, state of incorporation or organization, and chief executive office and the location of the Contract Files for the Obligor and the Obligors' Agent. (iii) Valid Pledge. Each Pledge constitutes the grant of a perfected, first priority security interest in all Pledged Property (other than any Equipment having an Original Equipment Cost of $25,000 or less, with respect to which such security interest is validly granted, but may not be perfected or of first priority) to the Trustee. (iv) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Obligor and the Obligors' Agent of this Agreement, the Master Facility Agreement and each Series 2002-A Related Document to which it is a party except for such authorizations, approvals, actions, notices and filings as have already been obtained, taken or made. (v) Accuracy of Information. All information heretofore furnished in writing by the Obligor or the Obligors' Agent to the Trustee, the Series Support Provider or to the Agent for purposes of or in connection with this Agreement, the Master Facility Agreement and each Series 2002-A Related Document to which it is a party or any Pledge is true, accurate and 38 complete in every material respect on the date such information is stated or certified. (vi) Names. In the past two years, none of the Obligor nor the Obligors' Agent has used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement. (vii) No Adverse Selection. The Series 2002-A Contracts have been, and will be, selected by the Obligors' Agent in a manner that is not adverse to the interests of the Trustee, the Series 2002-A Noteholders or the Series Support Provider. (viii) Eligibility. Each Series 2002-A Contract being Pledged on such Pledge Date is an Eligible Contract. (ix) No Event of Default. No Series Event of Default has occurred and is continuing, nor does any situation exist which, with the giving of notice and/or the passage of time, would result in the occurrence of a Series Event of Default. (b) The Obligor, the Obligors' Agent, Marlin and the Servicer do hereby covenant, acknowledge and agree that: (i) Access to Documentation. The Agent, the Series Support Provider and any of their duly authorized representatives, attorneys or accountants shall have the same access to the documentation relating to the Series 2002-A Trust Estate as the Trustee is provided pursuant to Section 6.09 of the Master Agreement. (ii) Servicer to Indemnify. The Servicer shall indemnify the Agent, the Series Support Provider and the Series 2002-A Noteholders to the same extent and on the same terms as the Trustee, pursuant to Section 8.01 of the Master Agreement. (iii) Certain Consents Required. The prior written consent of the Series Support Provider and the Agent shall be required for the Obligor to take any action described in Section 14.03(a) or 14.03(b) of the Master Agreement. (iv) Notice of Return of Final Payment. The Servicer shall give the Agent and the Series Support Provider notice of any return of final payment given to the Trustee pursuant to Section 5.06 of the Master Agreement, at the same time such notice is given to the Trustee. (v) Acknowledgement of Obligor. The Obligor hereby confirms and acknowledges that, by its execution hereof, (a) it shall be deemed to be a party to the Master Agreement and to the Master Transfer Agreement for the purpose of making all representations, warranties and covenants, and 39 being bound by all obligations, applicable to the Obligor thereunder, to the extent (and only to the extent) such representations, warranties, covenants and obligations relate to the Series 2002-A Note and/or the Series 2002-A Trust Estate and (b) it confirms the right and ability of the Obligors' Agent to execute any and all Series 2002-A Documents on behalf of such Obligor, and that the Obligors' Agent's signature thereon shall have the same force and effect as if the Obligor were a direct signatory thereto. (vi) Series Controlling Party. The parties hereto acknowledge that so long as no Series Support Provider Default shall have occurred and be continuing, the Series Support Provider shall be the "Series Controlling Party" with respect to the Series 2002-A Notes for purposes of the Master Agreement and this Series 2002-A Supplement and that if a Series Support Provider Default shall have occurred and be continuing, the Agent shall be the "Series Controlling Party" for purposes of the Master Agreement and this Series 2002-A Supplement so long as such Series Support Provider Default shall continue. (vii) Series Trustee Secured Obligations. The "Series Trustee Secured Obligations" and the "Series Secured Obligations" with respect to the Series 2002-A Notes shall mean, collectively (a) all amounts due to the Series 2002-A Noteholders for principal and interest and under the Note Purchase Agreement and any amounts owing under the Series 2002-A Related Documents, (b) any amounts due to the Agent hereunder and under the Note Purchase Agreement, either in its individual capacity or on behalf of the Purchasers, (c) any fees and expenses due to the Trustee or the Back-up Servicer with respect to the Series 2002-A Notes, (d) amounts due to the Series Support Provider hereunder and under the Insurance Agreement and (e) any payments due to any Hedge Counterparty with respect to the Series 2002-A Note. (viii) Series Secured Parties. The "Series Secured Parties" with respect to the Series 2002-A Note are the Trustee, the Series Support Provider, the Agent, the Series 2002-A Noteholders, and each Hedge Counterparty (the "Series 2002-A Secured Parties"). (ix) Original Servicer Fee Rate. The "Original Servicer Fee Rate" with respect to the Series 2002-A Note is the percentage set forth in the definition of "Servicing Fee" herein. (x) Original Issue Date. The "Original Issue Date" with respect to the Series 2002-A Note is the Series Closing Date. (xi) Limitation of Allowable Prepayments. The Servicer shall not accept any Prepayment unless the amount received in connection therewith is at least equal to the related Prepayment Amount as of such date, or, if less, unless the Servicer makes a non-recoverable deposit to the Master Facility 40 Account in the amount of any shortfall (which non-recoverable deposit shall be a "Collection" with respect to the Series 2002-A Trust Estate). (xii) Limitation on Removals. Notwithstanding Section 6.12(b) of the Master Agreement, the Servicer may not remove any Contract pursuant to such Section 6.12(b) if the aggregate of the Contract Principal Balances removed pursuant to such Section exceeds ten percent (10%) of the Maximum Series Limit. (xiii) Series Controlling Party to Appoint Successor Servicer with Respect to this Series. The Series Controlling Party shall have the right to appoint a successor Servicer with respect to the Series 2002-A Contracts in the event of an Event of Servicer Termination. (xiv) Terms of Take-Out. Immediately following each Take-Out, the Net Investment shall be reduced to zero. (xv) Equipment Type. The Servicer will not change the Equipment Type classifications on its servicing system without the prior written consent of the Series Controlling Party. (xvi) Change in Credit and Collection Policy. There has been no, nor shall there be any, material change in the Credit and Collection Policy since April 9, 2002 without the prior written consent of the Agent and the Series Support Provider. (xvii) Alternative Committed Financing Facilities. Marlin shall at all times prior to the Termination Date maintain one or more Committed Financing Facilities in addition to this facility (none of which have any credit support provided by the Series Support Provider), providing for the committed financing, in the aggregate, of not less than $32,500,000; (xviii) ERISA. Except as may otherwise be imposed by law, Marlin has no obligation to provide, and will not have any obligation to provide, post-retirement medical or life insurance or other death benefits to any person other than pursuant to the "Marlin Leasing Corporation 401(k) Profit Sharing Plan" (the "401 (k) Plan"). Except with respect to the 401(k) Plan, Marlin, does not currently maintain, have an obligation to contribute to or pay withdrawal liability to, or have any other obligation with respect to, any "pension plan" (within the meaning of section 3(2) of ERISA) or any multiemployer plan (within the meaning of section 3(37) of ERISA). For purposes hereof, all references to "ERISA" shall be deemed to refer to the Employee Retirement Income Security Act of 1974 (and any sections of the Code), as now in effect and as it may hereafter be amended or modified, and all regulations promulgated thereunder and all references to "Marlin" in this paragraph (xix) shall be deemed to refer to Marlin and all other entities with which Marlin is affiliated within the meaning of Section 41 414(b) and 415(h) of the Code, as amended by ERISA, and Sections 210(c) and 4001(a)(2) of ERISA. (xix) Substitute Contracts. Any Substitute Contract delivered to the Series 2002-A Trust Estate shall, if delivered during the Amortization Period, in addition to being an Eligible Contract, have substantially similar characteristics as the Replaced Contract. Section 3.08 Hedging Arrangements. (a) Marlin shall provide for one or more Hedge Agreement(s) with respect to the Series 2002-A Trust Estate with an aggregate notional balance at least equal to the principal portion of the Net Investment. Each Hedge Agreement shall: (i) provide for payments on each Settlement Date (x) which, in the case of a Cap Agreement, are made only by the Hedge Counterparty to the Trustee, in an amount equal to the current notional amount of the Hedge Agreement applied to the excess, if any, of the Base LIBO Rate over the Hedge Rate with respect thereto, and (y) in the case of a Swap Agreement, are to be made (1) by the Hedge Counterparty to the Trustee in an amount equal to the current notional amount of the Swap Agreement applied to the Base LIBO Rate, and (2) by the Trustee to the Hedge Counterparty in an amount equal to such notional amount applied to the Hedge Rate with respect thereto (which amounts may be netted, with the net amount paid by one party to the other); (ii) be satisfactory in form and substance to the Series Support Provider and the Agent; (iii) provide that all payments made by the Hedge Counterparty thereunder shall be made directly into the Series 2002-A Facility Account; (iv) provide for termination at the option of the Trustee upon release of the related Series 2002-A Contracts from the Lien of the Indenture; (v) require the Hedge Counterparty to find a replacement Hedge Counterparty to execute a new Hedge Agreement satisfactory to the Series Support Provider and the Agent within 10 Business Days of any downgrade of the ratings of the Hedge Counterparty below the levels set forth in the definition of "Hedge Counterparty", which replacement must meet the qualifications set forth in the definition of "Hedge Counterparty"; and (vi) be between the related Hedge Counterparty and the Trustee; (b) In the event that a Hedge Counterparty no longer satisfies the ratings requirement specified in the definition thereof and does not itself find a replacement which has executed a Hedge Agreement as required under clause (v) of Section 3.08(a), Marlin shall be required, within 15 Business Days following the failure of such Hedge Counterparty to satisfy 42 such ratings requirement, to provide a substitute Person satisfying the requirements of the definition of Hedge Counterparty to be substituted as the Hedge Counterparty under the applicable Hedge Agreement(s) or to enter into a new Hedge Agreement satisfactory to the Series Support Provider and the Agent. (c) The Trustee shall not designate an "Early Termination Date" under any Hedge Agreement following any "Event of Default" or "Termination Event" thereunder without the prior written consent of the Series Controlling Party, and must designate such an "Early Termination Event" at the Series Controlling Party direction if the circumstances would permit the Trustee to then make such a designation. (d) The Trustee shall promptly forward to the Series Controlling Party a copy of any notice received from a Hedge Counterparty relating to any downgrade, withdrawal or suspension of such Hedge Counterparty's (or such Hedge Counterparty's guarantor's) ratings. (e) The Trustee shall not execute any assignment, assumption, credit support annex, extension, amendment, modification, waiver, confirmation, designation of "Reference Market Makers," schedule or other agreement in connection with any Hedge Agreement without first obtaining the prior written consent of the Series Controlling Party. A copy of any such item received by the Trustee, together with a copy of any other notice or communication received by the Trustee in connection with any Hedge Agreement shall be forwarded to the Series Controlling Party promptly on receipt. Notice of (i) any assignment or transfer by a Hedge Counterparty of any of its rights or obligations under any Hedge Agreement (ii) any assumption, amendment, extension, modification, waiver or event of default under any Hedge Agreement, and (iii) the Hedge Counterparties entering into any new Hedge Agreement shall be given by the Trustee to each Rating Agency. Section 3.09 Lockbox Account. (a) The Servicer shall establish a Lockbox Account identified as "the Lockbox Account for Marlin Master Facility Agreement, in trust for the Series 2002-A Secured Parties" on behalf of, and in the name of, MLR II LLC, which shall be an Eligible Bank Account. The Servicer shall direct each User to make all payments with respect to the Series 2002-A Contracts which are due after the related Pledge Date directly to the Lockbox Account. Any notice delivered pursuant to the preceding sentence of this Section 3.09 after the date hereof shall provide that (i) it is irrevocable except by, or a notice accompanied by written consent of, the Series Controlling Party and (ii) the User will only be discharged from its obligations under the Series 2002-A Contract to the extent payments are sent to the Lockbox Account. (b) The Servicer shall issue and maintain a standing instruction to the Lockbox Bank under the Lockbox Agreement to the effect that (x) on each Business Day the Lockbox Bank shall (i) cause all items received in the post-office box related to the Lockbox Account since the preceding Business Day relating to the Series 2002-A Contracts to be deposited into the Lockbox Account, and (ii) remit by electronic funds transfer, into the Series 2002-A Facility Account all available funds on deposit in the Lockbox Account and (y) if the Lockbox Bank receives a written notice from the Series Controlling Party stating that a Series Event of Default has occurred hereunder, the Lockbox Bank shall thereafter follow such 43 directions as it may thereafter receive from the Series Controlling Party with respect to Collections on the Series 2002-A Contracts, and shall not thereafter follow any directions of the Servicer (unless otherwise directed by the Series Controlling Party). Such standing instruction shall be evidenced by an agreement with the Lockbox Bank in form and substance acceptable to the Series Controlling Party. The Servicer will transfer any payments it receives directly rather than by payment to the Lockbox Account by or on behalf of the Users pursuant to the Contracts and all Recoveries in respect thereof to the Series 2002-A Facility Account immediately upon receipt thereof. (c) Neither the Servicer, any Obligor nor any Affiliate thereof shall direct or shall have directed any payments to be remitted to the Lockbox Account unless such payments relate to the Series 2002-A Contracts, or to Contracts relating to other Series of Notes assigned to Group A. ARTICLE IV SERIES PRINCIPAL AMOUNT FOR SERIES 2002-A Section 4.01 Advances. (a) The Trustee shall deliver the Series 2002-A Note when authenticated as directed in writing by the Obligor, and in accordance with Section 5.01 of the Master Agreement. (b) The Agent on behalf of the Series 2002-A Noteholders agrees, by its acceptance of the Series 2002-A Note, that the Obligors' Agent may, during the Revolving Period, on any Business Day, but not more frequently than weekly (a "Pledge Date"), request upon not less than three (3) Business Days' prior written notice (to be delivered not later than 4:00 p.m. New York time) in the form set forth in Exhibit G hereto (a "Pledge Notice") delivered to the Agent, the Series Support Provider, the Servicer and the Trustee, and upon satisfaction of the conditions set forth in the Note Purchase Agreement and in this Section 4.01, that the Agent remit to the Obligors' Agent an amount, to the extent received by the Agent from Purchasers under the Note Purchase Agreement, representing an increase in the Series 2002-A Noteholders' investment in the Series 2002-A Notes (each such increase in investment, an "Advance") in an amount equal to the related Advance Amount, provided, however, that the aggregate of the Advance Amounts which may be paid pursuant to this Section 4.01(b) and Section 4.01(e) shall not, in any calendar month, exceed a dollar amount equal to 175% of Marlin's average monthly production (expressed in terms of the aggregate Equipment cost relating to Marlin's lease originations and purchases) during the immediately preceding six months; provided, further, however, that if no amount is paid pursuant to this Section 4.01(b) in any calendar month, then the maximum amount which may be paid pursuant to this Section 4.01(b) during the immediately following calendar month shall be the sum of the maximum Advance Amount for such calendar month and the immediately preceding calendar month. (c) The Obligor shall Pledge the Pledged Property to the Trustee to be held in trust as part of the Series 2002-A Trust Estate in connection with the delivery of each Pledge Notice. Each Pledge Notice shall specify: 44 (i) the proposed Pledge Date, (ii) the related List of Contracts, which shall also include for each Series 2002-A Contract and the related discounted Booked Residual; (iii) the amount of the related Advance Amount, which shall not be less than $1,000,000 except as provided in paragraph (e) below; (iv) the Purchase Price Percentage for such Pledge; (v) the Hedge Rate applicable to such Series 2002-A Contracts; (vi) the aggregate Contract Principal Balance of all Series 2002-A Contracts being Pledged; and (vii) the Borrowing Base immediately prior to such Pledge and the Pro Forma Borrowing Base. (d) No Advance will be funded with respect to any Series 2002-A Contract unless: (i) the Trustee has previously delivered its Certification (as defined in the Collateral Administration Agreement) with respect thereto, which Certification shall indicate that (1) the Trustee is holding the related Series 2002-A Contracts pursuant to the Collateral Administration Agreement and (2) there is no Deficiency (as defined in the Collateral Administration Agreement) with respect to such Series 2002-A Contract; (ii) no Series Event of Default or event which, with the giving of notice and/or the passage of time, would constitute a Series Event of Default, shall have occurred and be continuing; (iii) after giving effect to the proposed Advance, the Net Investment shall not exceed the lesser of (x) the Borrowing Base and (y) the Maximum Series Limit as of such date; (iv) the representations and warranties of the Obligor under the Series 2002-A Related Documents are true and correct in all material respects as of the related Pledge Date, unless such representation and warranty speaks only as of a particular date; (v) the Termination Date has not occurred; and (vi) the Agent and the Series Support Provider shall have received all such other documents, opinions and other information as it shall have reasonably requested not fewer than ten Business Days in advance. 45 (e) In addition to the provisions of paragraph (b) above, in which a pledge of additional Series 2002-A Contracts results in an increase in the Series 2002-A Note Balance, during the Revolving Period, a Pledge of additional Series 2002-A Contracts may also be funded from the monthly cash flow, as set forth in clause fifteenth of Section 3.03(a)(i). In connection with such a Pledge, the Obligor, upon satisfaction of the applicable conditions set forth in paragraphs (b), (c) and (d) above, may Pledge such additional Series 2002-A Contracts to the Trustee to hold in trust as part of the Series 2002-A Trust Estate without receiving any additional Advance Amount from the Purchasers, but in consideration of receiving the Advance Amount paid under clause fifteenth of Section 3.03(a)(i) hereof, by delivering a Pledge Notice to the Trustee, the Series Support Provider and the Agent, not less than three (3) Business Days prior to the proposed Pledge Date (which shall be a Settlement Date). (f) In addition to the provisions of paragraphs (b) and (e) above, in which a Pledge of additional Series 2002-A Contracts is funded by the Purchasers, or is made to sustain the revolving nature of the facility, the Obligor, upon satisfaction of the applicable conditions set forth in paragraphs (c) and (d) above, may Pledge Pledged Property to the Trustee to be held in trust as part of the Series 2002-A Trust Estate without receiving any additional Advance Amount, by delivering a Pledge Notice to the Trustee not less than three (3) Business Days prior to the proposed Pledge Date (which shall be a Business Day, but need not be a Settlement Date). (g) If a Purchaser makes an Advance in accordance with paragraph (b) above, the Agent shall remit the related Advance Amount to the Series 2002-A Facility Account or to such other account as the Obligors' Agent may specify in writing, in same day funds, no later than 12:00 noon (New York City time). The Servicer shall notify the Trustee and the Agent and the Series Support Provider of the amount of such Advance Amount and shall appropriately note such Advance Amount (and the increased Series 2002-A Note Balance) on the next succeeding monthly Servicer's Certificate. (h) The Agent shall and is hereby authorized to record on the grid attached to the Series 2002-A Note (or at the Agent's option, in its internal books and records) the date and amount of any Advance Amount paid by it on behalf of a Purchaser, and each repayment thereof; provided, that failure to make any such recordation on such grid or any error in such grid shall not adversely affect the Agent's rights with respect to the full Series 2002-A Note Balance and its right to receive interest payments in respect of the Series 2002-A Note Balance. (i) The Obligors' Agent may, not earlier than one hundred eighty (180) days prior to the expiration of the Termination Date, by written notice to the Agent on behalf of the Purchasers and written notice to the Series Support Provider, make request for Purchasers and the Series Support Provider to extend the Termination Date for an additional period of two years. The Agent shall give prompt written notice to the Purchasers of the Obligors' Agent's request. Each Purchaser and the Series Support Provider shall make a determination, in its sole and absolute discretion, not less than sixty (60) days after receipt of such request as to whether or not it will agree to the extension requested. The failure of each Purchaser to provide timely notice of its decision to the Agent shall be deemed to constitute a refusal by such Purchaser to extend the Termination Date. The Termination Date may only be extended by 100% of the Purchasers and the Series Support Provider. 46 ARTICLE V SERIES EVENTS OF DEFAULT Section 5.01 Series Events of Default. If any one of the following shall occur: (a) the Obligor or the Servicer shall fail to make when due and payable any payment or deposit required hereunder or under any other Series 2002-A Related Document, in any case on or before the date occurring one (1) Business Day after the date such payment or deposit shall become due; or (b) the Obligor or the Transferor shall fail to perform or observe any covenant with respect to such Person set forth in any Series 2002-A Related Document, and such failure shall remain unremedied for ten (10) Business Days after receipt by the Obligors' Agent of written notice thereof by the Trustee, the Series Support Provider or the Agent; or (c) any representation or warranty made by the Obligor, the Servicer or the Transferor in any Series 2002-A Related Document or in any other document delivered pursuant thereto shall prove to have been incorrect when made or deemed made and continues to be incorrect for a period of ten (10) Business Days after the earlier to occur of (1) the discovery thereof by the Obligor or (2) the receipt by the Obligors' Agent of written notice thereof from the Trustee, the Series Support Provider or the Agent; or (d) an Insolvency Event shall occur with respect to the Transferor, the Obligor, the Obligors' Agent, or the Servicer; or (e) the Net Investment exceeds the lesser of the Maximum Series Limit and the Borrowing Base (x) for three consecutive Business Days or (y) as of the close of business on any Settlement Date; or (f) the Trustee on behalf of the Series 2002-A Secured Parties shall fail to have a valid and perfected first priority security interest in either (x) the Series 2002-A Contracts or (y) items of Equipment having an Original Equipment cost in excess of $25,000 and, in the case of this clause (y), relating to a material portion of the Equipment in the Series 2002-A Trust Estate; (g) (x) the Obligor shall fail to pay any principal of or premium or interest on any indebtedness when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) or (y) the Servicer or the Transferor shall fail to pay any principal of or premium or interest on any indebtedness having a principal amount of $1,000,000 or greater when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and, with respect to both clauses (x) and (y), any such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such indebtedness; or any other default under any agreement or instrument relating to any such indebtedness of any Obligor, the Servicer or the Transferor or any other event shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such indebtedness; or any such 47 indebtedness shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; or (h) the failure by Marlin to complete at least one Take-Out during any "Take-Out Period"; where "Take-Out Period" shall mean (i) for all such times that Marlin and its subsidiaries have in place an aggregate of at least $75 million in Committed Financing Facilities (exclusive of the credit facility contemplated herein and the current $32.5 million Marlin bank facility), the fifteen month period commencing on the date on which the initial Advance is funded under Section 4.01(b) hereof, and each fifteen month period thereafter, or (ii) for all such times that Marlin and its subsidiaries do not have in place an aggregate of at least $75 million in Committed Financing Facilities (exclusive of the credit facility contemplated herein and the current $32.5 million Marlin bank facility), the twelve month period commencing on the date on which the initial Advance is funded under Section 4.01(b) hereof, and each twelve month period thereafter; provided, that if a Market Disruption Event is determined by the Series Controlling Party to have occurred during the last calendar month of any Take-Out Period, such Take-Out Period shall be extended for a period of ninety (90) calendar days, and the following Take-Out Period shall commence at the end of such extended period; (i) an Event of Servicer Termination shall have occurred and be continuing; or (j) a material adverse change shall occur in the operations or financial condition of Marlin, the Servicer, the Obligor or the Obligors' Agent or any other event shall occur the effect of which is to materially and adversely affect the collectibility of the Contracts generally or the ability of Marlin, the Servicer, the Obligor or the Obligors' Agent to perform its respective duties under the Series 2002-A Related Documents; or (k) Marlin shall (i) default on a payment obligation (and such default is not cured within any applicable cure period and which default is not waived) or a termination event shall occur, in either case, with respect to any on or off-balance sheet financing or (ii) default (in a manner other than a payment default) on any debt obligation with an outstanding balance in excess of $1,000,000; or (l) Marlin ceases to own (directly or indirectly) one hundred percent of the capital stock or membership interests of the Obligor; or (m) the rating of the claims paying ability of the Series Support Provider is reduced to below BBB- by S&P or below Baa3 by Moody's; or (n) a Series Support Provider Default shall have occurred, and the Series Support Provider is not replaced within forty-five (45) calendar days with a surety provider, the financial strength of which is rated "AAA" by Standard & Poor's and "Aaa" by Moody's, and provides a surety bond substantially identical to the Series Support in all respects (including the level of the premiums with respect thereto); (o) Marlin, the Transferor, the Obligors' Agent, the Servicer or the Obligor shall enter into any transaction or merger in which it is not the surviving entity; 48 (p) at any time, the Three-Month Rolling Average 31 to 60 Day Portfolio Delinquency Ratio exceeds 8.0%, or the Three-Month Rolling Average 61 to 90 Day Portfolio Delinquency Ratio exceeds 2.0%, or the Three-Month Rolling Average 91 Plus Day Portfolio Delinquency Ratio exceeds 1.5% or the Three-Month Rolling Average Portfolio Charged-Off Ratio is in excess of 3.0%; (q) during the Revolving Period only, the Three-Month Rolling Average 31 to 60 Day Delinquency Ratio exceeds 8.0%, or the Three-Month Rolling Average 61 to 90 Day Delinquency Ratio exceeds 2.0%, or the Three-Month Rolling Average 91 Plus Day Delinquency Ratio exceeds 1.5%, in each case which is calculated for the first time in the fourth month after the Series Closing Date or after a Take-Out, as applicable; (r) during the Amortization Period only, the Three-Month Rolling Average 31 to 60 Day Delinquency Ratio exceeds 8.0%, or the Three-Month Rolling Average 61 to 90 Day Delinquency Ratio exceeds 2.0%, or the Three-Month Rolling Average 91 Plus Day Delinquency Ratio exceeds 1.5%; (s) at any time, the Three-Month Rolling Average Charged-Off Ratio exceeds 3.0%, or the Charged-Off Ratio exceeds the Applicable Trigger Charged-Off Ratio; (t) Marlin's Tangible Net Worth as of the end of any calendar quarter: (i) is less than the sum of (x) $29,100,000 plus (y) 50% of all of Marlin's positive net income earned since December 31, 2001; (u) Marlin's Debt-to-Equity Ratio as of the end of any calendar quarter exceeds 12.0; (v) Marlin's annual audited financial statements are qualified in any material manner; (w) a Hedge Counterparty fails to satisfy the definition thereof and is not replaced within forty-five (45) calendar days with a Person satisfying the definition thereof; (x) two out of three of Daniel P. Dyer, Gary Shivers or Gary Kester are no longer officers of Marlin, are no longer involved in the day to day operations of Marlin, or are unable to work for six consecutive months and are not replaced by new personnel reasonably acceptable to the Series Support Provider within 90 days of the occurrence of such event; (y) as of any Settlement Date, the aggregate notional balances applicable to all Hedging Agreements: (i) if all such Hedging Agreements are Cap Agreements, are less than the Net Investment as of such Settlement Date; and 49 (ii) if not all such Hedging Agreements are Cap Agreements: (a) during the Revolving Period, are less than or greater than the Net Investment as of such Settlement Date by an amount in excess of the lesser of (x) one percent of the Net Investment as of such Settlement Date and (y) $250,000; and; (b) during the Amortization Period, are less than or greater than the Net Investment as of such Settlement Date by an amount in excess of five percent of the Net Investment as of such Settlement Date; (z) any Series 2002-A Note or any other Note shall cease to constitute debt of the Obligor for federal income tax purposes; (aa) any "Insurance Default" (as defined in the Insurance Agreement) shall have occurred; or (bb) the Interest Coverage Ratio as at the end of any calendar quarter is less than 1.30:1 for the second fiscal quarter of 2002 and thereafter, measured quarterly on a rolling four quarter basis; (cc) the holders of a majority of Marlin's outstanding preferred stock exercise any put rights or other similar rights such holders may have in accordance with the terms and conditions of the Marlin Leasing Corporation Third Amended and Restated Stockholders Agreement dated as of July 26, 2001 (as may be amended); or then, and in any such event, a "Series Event of Default" shall be deemed to have occurred. At any time following the occurrence and during the continuance of any Series Event of Default, the Series Controlling Party may, by notice to the Obligors' Agent, declare the occurrence of the Termination Date, except that, in the case of any event described in subparagraph (d) above, the Termination Date shall be deemed to have occurred automatically upon the occurrence of such event. Upon the declaration or automatic occurrence of the Termination Date, the Series 2002-A Note and all other indebtedness and liabilities of the Obligor and the Transferor to the Series 2002-A Secured Parties shall become immediately due and payable, without any further act or notice by any Person. Upon any occurrence of a Series Event of Default, the Trustee and the Series 2002-A Secured Parties shall have, in addition to all other rights and remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of the applicable jurisdiction and other applicable laws, which rights shall be cumulative; provided, however, that in the absence of material fraud on the part of the Transferor, the Obligor or the Servicer, and so long as no Series Event of Default shall have occurred under clause (d) above, the Series Controlling Party shall not direct the Trustee to liquidate the Series 2002-A Trust Estate during the ninety (90) day period immediately following the occurrence of such Series Event of Default. 50 Any Series Event of Default, once declared, or any declaration of the Termination Date, may be rescinded by the Series Controlling Party, on such terms and conditions as may be stipulated by the Series Controlling Party at such time. The Trustee shall promptly send a written notice to Moody's and to Standard & Poor's of the occurrence of, and the waiver of, any Series Event of Default, to the extent that the Trustee has actual knowledge of, or has received notice of, any such occurrence or waiver. Section 5.02 Events of Servicer Termination. (a) Upon the occurrence and continuation of Event of Servicer Termination, the Trustee, at the direction of the Series Controlling Party, shall, by notice (the "Servicer Termination Notice") then given in writing to the Servicer, terminate all, but not less than all, of the rights of the Servicer under this Series 2002-A Supplement; provided, further, that notwithstanding Section 9.01 of the Master Agreement, in no event shall the Servicer be terminated with respect to this Series 2002-A Supplement without the prior consent of the Series Controlling Party. (b) On and after the time the Servicer receives a Servicer Termination Notice pursuant to this Section 5.02, all authority and power of the Servicer under this Series 2002-A Supplement, whether with respect to the Series 2002-A Notes or the Series 2002-A Trust Estate or otherwise, shall pass to and be vested in the successor Servicer appointed pursuant to Section 5.05(a) of this Series 2002-A Supplement and, without limitation, such successor Servicer is hereby authorized and empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such Servicer Termination Notice, whether to complete the transfer of Series 2002-A Trust Estate and related documents or otherwise. (c) The Servicer agrees to cooperate with the Trustee and the successor Servicer in effecting the termination of the responsibilities and rights of the Servicer hereunder, including, without limitation, the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the Servicer for deposit, or have been deposited by the Servicer, in the Series 2002-A Accounts or thereafter received with respect to the Series 2002-A Trust Estate. To assist the successor Servicer in enforcing all rights with respect to any Related Security or under Broker Agreements and Insurance Policies to the extent that they relate to the Contracts, the Servicer, at its own expense, shall transfer its electronic records relating to such Contracts to the successor Servicer in such electronic form as the successor Servicer may reasonably request and shall transfer the related Contract Files and all other records, correspondence and documents relating to the Contracts that it may possess to the successor Servicer in the manner and at such times as the successor Servicer shall reasonably request. In addition to any other amounts that are then payable to the Servicer under this Series 2002-A Supplement, the Servicer shall be entitled to receive reimbursement for any unreimbursed Servicer Advances made during the period prior to the delivery of a Servicer Termination Notice pursuant to this Section 5.02. 51 Section 5.03 Waiver of Past Defaults. (a) Notwithstanding Section 9.04 of the Master Agreement, the Series Controlling Party, on behalf of all Series 2002-A Noteholders, may waive any default by the Servicer in the performance of its obligations hereunder and its consequences in any Event of Servicer Termination as may be defined herein, in the Master Agreement or in any Series Supplement. Any such waiver must be in writing and be signed by the Series Controlling Party or the Trustee acting on behalf (and at the direction) of the Series Controlling Party. Upon any such waiver of a past default, such default shall cease to exist, and any Event of Servicer Termination arising therefrom shall be deemed to have been remedied for every purpose of this Series 2002-A Supplement or otherwise. No such waiver shall extend to any subsequent similar or dissimilar default or impair any right consequent thereon except to the extent expressly waived in accordance with this Section 5.03. (b) Notwithstanding Section 9.01 of the Master Agreement, the Servicer shall not be terminated with respect to this Series 2002-A Supplement and the Series 2002-A Trust Estate without the prior written consent of the Series Controlling Party. Section 5.04 Effects of Servicer Termination. (a) Upon the appointment of the successor Servicer, the terminated Servicer shall hold in trust for the Trustee and immediately remit any Scheduled Payments, Residual Receipts, Recoveries, Overdue Payments, Security Deposit, Insurance Proceeds, Advance Payments, Prepayments, and proceeds of any Related Security that it may receive pursuant to any Contract, any Broker Agreement, Insurance Policy or otherwise to the successor Servicer for the benefit of the Trustee. (b) After the delivery of a Servicer Termination Notice, the terminated Servicer shall have no further obligations with respect to the management, administration or servicing of the Series 2002-A Trust Estate or the enforcement, custody or collection of the Contracts, and the successor Servicer shall have all of such obligations, except (i) that the terminated Servicer will transmit or cause to be transmitted directly to the successor Servicer for the benefit of the Trustee promptly upon receipt and in the same form in which received, any amounts held or received by the former Servicer (properly endorsed where required for the successor Servicer to collect them) as payments upon or otherwise in connection with Contracts or the Series 2002-A Trust Estate and (ii) the terminated Servicer shall cooperate with the Trustee and the successor Servicer in effecting the termination of its rights and responsibilities hereunder and in assisting the successor Servicer in assuming the role of Servicer and the transfer of the responsibility of Servicer hereunder. The terminated Servicer's indemnification obligations pursuant to Section 8.01 of the Master Agreement will survive its termination as the Servicer hereunder but will not extend to any acts or omissions of any successor Servicer. Section 5.05 Back-up Servicer to Act; Representations and Warranties; Compensation of Back-up Servicer. (a) In the event the Servicer is terminated pursuant to Section 5.02 hereof, the Back-up Servicer shall, unless prevented by law, automatically and without further action, be the 52 successor Servicer with respect to this Series 2002-A Supplement and the Series 2002-A Trust Estate. If the Back-up Servicer cannot serve as successor Servicer, the Trustee shall appoint as successor Servicer with respect to this Series 2002-A Supplement and the Series 2002-A Trust Estate another firm acceptable to it and the Series Controlling Party. (b) The Back-up Servicer hereby confirms the accuracy, as of the Series 2002-A Closing Date, of and hereby restates as of the Series 2002-A Closing Date the representations and warranties of the Back-up Servicer set forth Section 9.11 of the Master Agreement. (c) As compensation for its performance under this Series 2002-A Supplement, the Back-up Servicer shall receive the Back-up Servicer Fee plus Transition Costs, if any. Section 5.06 Additional Provisions with Respect to the Back-up Servicer. (a) The rights and obligations of the Back-up Servicer under this Series 2002-A Supplement with respect to the Series 2002-A Trust Estate shall not be terminated except at the written direction of the Series Controlling Party and no Back-up Servicer Termination Notice may be delivered by the Trustee to terminate the Back-up Servicer with respect to the Series 2002-A Trust Estate without the prior written consent of the Series Controlling Party. (b) Notwithstanding Section 9.09 of the Master Agreement, any successor Back-up Servicer under this Series 2002-A Supplement with respect to the Series 2002-A Trust Estate must be approved by the Series Controlling Party, such approval not to be unreasonably withheld. (c) The Back-up Servicer shall deliver to the Series Support Provider a copy of any Back-up Servicer Resignation Notice delivered with respect to this Series 2002-A Supplement and the Series 2002-A Trust Estate pursuant to Section 9.09(b) of the Master Agreement. (d) Subject to Section 5.06(b) hereof, any Person (i) into which the Back-up Servicer may be merged or consolidated, (ii) which may result from any merger or consolidation to which the Back-up Servicer is a party, or (iii) which may succeed to the properties and assets of the Back-up Servicer substantially as a whole, which Person in any of the foregoing cases executes an agreement of assumption to perform every obligation of the Back-up Servicer hereunder, shall be the successor to the Back-up Servicer under this Series 2002-A Supplement without further act on the part of any of the parties to this Series 2002-A Supplement; provided, however, that any such Person who is the successor to the Back-up Servicer shall have a positive net worth following such succession. (e) The Back-up Servicer shall, upon reasonable prior notice received by the Back-up Servicer, permit any representative of the Series Support Provider, during the Back-up Servicer's normal business hours, to examine all books of account, records, reports and other papers of the Back-up Servicer relating to the Series 2002-A Notes, the Series 2002-A Trust Estate and the Series 2002-A Related Documents, to make copies and extracts therefrom and to discuss the Back-up Servicer's affairs and actions, as such affairs and actions relate to the Back-up Servicer's duties with respect to the Series 2002-A Notes, the Series 2002-A Trust Estate and 53 the Series 2002-A Related Documents, with the Back-up Servicer's officers and employees responsible for carrying out the Back-up Servicer's duties with respect to the Series 2002-A Notes, the Series 2002-A Trust Estate and the Series 2002-A Related Documents. All reasonable out-of-pocket expenses or costs incurred by the Back-up Servicer in complying with this Section 5.06(e) shall be borne by the party requesting such examination or discussion. Section 5.07 Certain Matters Relating to the Trustee. (a) Section 11.01(e) of the Master Agreement shall not apply to this Series 2002-A Supplement or the Series 2002-A Trust Estate. (b) The Trustee shall, upon reasonable prior notice received by the Trustee, permit any representative of the Series Support Provider, during the Trustee's normal business hours, to examine all books of account, records, reports and other papers of the Trustee relating to the Series 2002-A Notes, the Series 2002-A Trust Estate and the Series 2002-A Related Documents, to make copies and extracts therefrom and to discuss the Trustee's affairs and actions, as such affairs and actions relate to the Trustee's duties with respect to the Series 2002-A Notes, the Series 2002-A Trust Estate and the Series 2002-A Related Documents, with the Trustee's officers and employees responsible for carrying out the Trustee's duties with respect to the Series 2002-A Notes, the Series 2002-A Trust Estate and the Series 2002-A Related Documents. All reasonable out-of-pocket expenses or costs incurred by the Trustee in complying with this Section 5.07(b) shall be borne by the party requesting such examination or discussion. (c) If a Default or Event of Default occurs and is continuing with respect to this Series 2002-A Supplement and the Series 2002-A Notes and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each Series 2002-A Noteholder notice of such Default or Event of Default promptly after it occurs and shall notify the Obligor, the Obligor's Agent, the Transferors, the Series Support Provider and the Servicer of any such Default or Event of Default promptly after it occurs. Notwithstanding Section 11.02 of the Master Agreement, the Trustee may not withhold the notice for any reason, including, without limitation, if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interest of the Series 2002-A Noteholders. Section 5.08 Resignation and Removal of Trustee. The Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to the Obligor, the Servicer, the Rating Agencies, the Agent and the Series Support Provider. Upon receiving such notice of resignation, the Obligor shall promptly appoint a successor Trustee with the prior written consent of the Series Controlling Party, such consent not to be unreasonably withheld, by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee. If no successor trustee shall have been so appointed and have accepted appointment within 60 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which successor Trustee must be approved by the Series Controlling Party, such approval not to be unreasonably withheld. If at any time the Trustee shall cease to be eligible in accordance with the provisions of the Master Agreement or this Supplement and shall fail to resign after written 54 request therefor by the Obligor, the Servicer or the Series Controlling Party, or if at any time the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, or at any other time as the Series Controlling Party may determine, then the Obligor (with the consent of the Series Controlling Party) may, or the Series Controlling Party may, remove the Trustee and appoint a successor Trustee reasonably acceptable to the Series Controlling Party by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee pursuant hereto shall become effective upon acceptance of appointment by the successor Trustee as provided in Section 11.10 of the Master Agreement. Section 5.09 Control by Holders. The Series Controlling Party shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Series 2002-A Trust Estate; provided, that (i) such direction shall not be in conflict with any rule of law, with the Master Agreement, the Series 2002-A Supplement or the Series 2002-A Related Documents, and (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. ARTICLE VI PREPAYMENT AND REDEMPTION Section 6.01 Mandatory Prepayment. Notwithstanding any limitation on recourse contained in this Series 2002-A Supplement or the Master Agreement, if on any day, any Series 2002-A Contract is discovered not to have been an Eligible Contract on its applicable Pledge Date, then the Obligor shall, on or prior to the Business Day preceding the next following Settlement Date, deliver to the Servicer for deposit in the Series 2002-A Facility Account, the related Prepayment Amount. Upon payment in full by the Obligors' Agent to the Servicer of the Prepayment Amount, the security interest of the Trustee in the related Series 2002-A Contract and the Related Security shall be deemed released, and the Trustee shall, upon written request, promptly deliver to the Obligor any documents in the Trustee's possession evidencing the Series 2002-A Contract and its interest in such Equipment related thereto and such Related Security. The Trustee shall take all actions at the expense of and at the request of the Servicer to ensure that such security interest is released, including, at the Obligor's expense, execute such UCC-3 assignments, termination statements and other documents as may reasonably be requested and prepared by the Obligors' Agent. 55 Section 6.02 Optional Redemption. (a) "Clean-Up Call" Redemption. On any Settlement Date occurring on or after the date upon which the Series 2002-A Note Balance shall have been reduced to an amount which is less than or equal to 15% of the Maximum Series Limit, the Obligor shall have the option to redeem the outstanding Series 2002-A Note at a redemption price (the "Redemption Price") equal to the outstanding Series 2002-A Note Balance of the Series 2002-A Notes, plus all accrued and unpaid interest thereon and all fees and other amounts owing to the Agent on behalf of the Purchasers in connection therewith or under the Series 2002-A Related Documents, together with any amounts then due the Series Support Provider with respect to unreimbursed drawings under the Policy, together with interest thereon, calculated at the rate set forth in the Insurance Agreement, plus any amounts owing to the Series Support Provider under this Series 2002-A Supplement, the Insurance Agreement and the Premium Letter, all as certified by the Series Support Provider to the Trustee, the Agent and the Obligor's Agent. The Obligors' Agent shall give the Servicer, the Trustee, the Series Support Provider and the Agent at least 30 days' irrevocable prior written notice of the date on which the Obligor intends to exercise such option to purchase. Not later than 12:00 P.M., New York City time, on such Settlement Date the Obligor shall remit such amount to the Agent and the Series Support Provider (by wire transfer to an account to be designated by the Agent and the Series Support Provider, as applicable, which designation may be a standing wire direction) in immediately available funds. Such purchase option is subject to payment in full of the Redemption Price. The Agent shall promptly thereafter distribute the applicable amounts to each of the applicable Purchasers in accordance with their respective interests therein. Section 6.03 Tender of Series 2002-A Note. The Obligors' Agent may request the Agent to tender to the Trustee all or a portion of the Series 2002-A Note that it then holds, provided that such tender shall only take place if: (a) (i) the Agent, the Series Support Provider and the Trustee have received written and irrevocable notice on or before the last day of the Collection Period most recently ended prior to, and in any event at least 30 days but no more than 40 days prior to any date set for such tender and the Agent has consented to such tender (which consent shall not be unreasonably withheld) and (ii) the Trustee shall have received written and irrevocable notice of the election described in subsection (b)(i) and (b)(ii) below, and in the event such election is that described in (b)(ii) such payment will be deposited with the Trustee with instructions to pay the Agent; (b) upon the date set for tender, the Agent shall receive either (i) if it so elects, in lieu of payment, a new Series of Notes or (ii) payment in an amount equal to the then Series 2002-A Note Balance being tendered, plus interest accrued but unpaid on such Series 2002-A Note to, but not including, the date of tender, together with all other fees and amounts then due and payable or relating to the Series 2002-A Note Balance being tendered, or to the related Series 2002-A Noteholders pursuant to the terms hereof, or of the Note Purchase Agreement; (c) there are no unreimbursed drawings then outstanding under the Series Support nor are any amounts then due and payable to the Series Support Provider hereunder or 56 under or in connection with the Series Support or the Insurance Agreement (unless the Series Support Provider otherwise consents); and (d) the purchaser of any Series 2002-A Notes so tendered shall not be the Obligor or any Affiliate of the Obligor; The provisions of this Section 6.03 shall apply whether or not a Series Event of Default shall have occurred and then be in effect. ARTICLE VII MISCELLANEOUS Section 7.01 Agent Authorized to Act for the Purchasers; Notices. The parties hereto acknowledge that the Agent is authorized, pursuant to the terms of the Note Purchase Agreement, to act for the Purchasers, including, without limitation, for purposes of receiving distributions as described in this Series 2002-A Supplement on behalf of such Purchasers. Notwithstanding anything to the contrary in the Master Agreement or this Series 2002-A Supplement, the Trustee and the Servicer shall deliver all notices and distributions to be made to the Agent as the registered owner of a Series 2002-A Note and such delivery shall be deemed to comply with all requirements of the Master Agreement. All notices, demands and requests to the Agent pursuant to the Master Agreement or this Series 2002-A Supplement, in each case, be in writing and shall be deemed duly given if personally delivered at, mailed by overnight courier to, or sent by facsimile transmission to National City Bank, Asset Securitization Division, 1 South Broad Street, 13th Floor, Locator 01-5997, Philadelphia, Pennsylvania, 19107, Fax 267.256.4001, or at such other address or facsimile number as shall be designated by the Agent in a written notice to each party hereto. Section 7.02 Ratification of Master Agreement. As supplemented by this Series 2002-A Supplement, the Master Agreement is in all respects ratified and confirmed and the Master Agreement, as so supplemented by this Series 2002-A Supplement shall be read, taken and construed as one and the same instrument. Section 7.03 Counterparts. This Series 2002-A Supplement may be executed in one or more counterparts, each of which so executed shall be deemed to be an original, but all of which shall together constitute but one and the same instrument. Section 7.04 GOVERNING LAW. THIS SERIES 2002-A SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT TAKING INTO ACCOUNT THE CONFLICT OF LAWS PRINCIPLES OF ANY JURISDICTION. 57 Section 7.05 Amendments and Waivers. (a) Notwithstanding anything contained in the Master Agreement to the contrary, no term or condition of this Series 2002-A Supplement shall be amended, modified, waived or terminated without the prior written consent of the Obligor, the Obligor's Agent, the Agent, the Servicer, the Trustee and the Series Support Provider. (b) No waiver with respect to any term or condition of the Master Agreement or this Series 2002-A Supplement shall extend to any subsequent or other event, circumstance or default or impair any right consequent thereon except to the extent expressly so waived. (c) Notwithstanding anything contained in Section 13.01 of the Master Agreement, without the consent of the Agent and of the Series Support Provider, no Master Agreement Supplement or Supplements may be entered into for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, the Master Agreement or any of the Series 2002-A Related Documents which Master Agreement Supplement or Supplements would have the effect of modifying in any manner the rights of the Series Support Provider or the Series 2002-A Noteholders under the Master Agreement, the Series 2002-A Supplement or the Series 2002-A Related Documents. (d) Notice of any proposed amendment or waiver of this Series 2002-A Supplement or of the Master Agreement or any of the Series 2002-A Related Documents and a copy thereof shall be forwarded to the Series Support Provider and each Series 2002-A Noteholder by the Servicer and the Series Support Provider and each Series 2002-A Noteholder shall be provided with any final executed amendment or waiver. (e) Notice of any amendment of this Series 2002-A Supplement or of the Master Agreement shall be forwarded to Standard & Poor's and Moody's by the Servicer. Section 7.06 Non-petition Clause. By its acceptance of the Series 2002-A Note on behalf of the Purchasers, the Agent on behalf of itself and the Purchasers shall be deemed to have agreed that prior to the date which is one year and one day after the termination of the Master Agreement, such Person shall not acquiesce, petition or otherwise invoke or cause the Obligor or the Obligors' Agent to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a case against the Obligor under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of or for the Obligor or the Obligors' Agent or any substantial part of its property or ordering the winding-up or liquidation of the affairs of the Obligor or the Obligors' Agent. Section 7.07 Certain Information. Certain information concerning the Obligor or the Obligors' Agent and the Servicer is set forth in Exhibit F hereto, which the Obligor or the Obligors' Agent and the Servicer hereby represent and warrant to the Trustee, the Series Support Provider and the Agent as being accurate. Section 7.08 Series Support Provider as Third Party Beneficiary. Each of the terms of this Series 2002-A Supplement and the Master Agreement shall inure to the benefit of 58 the Series Support Provider, which shall be an express third party beneficiary hereof and thereof, entitled to rely upon and directly enforce each of its rights hereunder and thereunder. Section 7.09 Termination. The obligations of the parties hereto shall continue until all obligations owing to the Series 2002-A Noteholders, the Series Support Provider and the Series 2002-A Secured Parties herein and under the other Series 2002-A Related Documents have been indefeasibly paid in full. 59 IN WITNESS WHEREOF, the Obligor, the Obligors' Agent, and Marlin, in its individual capacity and as the Servicer, the Agent and the Trustee have caused this Series 2002-A Supplement to be fully executed by their respective officers as of the day and year first above written. MARLIN LEASING CORPORATION, in its individual capacity and as Servicer By:__________________________________________ Name: George D. Pelose Title: Vice President MARLIN LEASING RECEIVABLES CORP. II, as the Obligors' Agent By:__________________________________________ Name: George D. Pelose Title: Vice President MARLIN LEASING RECEIVABLES II LLC, as the Obligor By: MARLIN LEASING RECEIVABLES CORP. II, as Managing Member By:__________________________________________ Name: George D. Pelose Title: Vice President [Signature Page to Series 2002-A Supplement] NATIONAL CITY BANK, as Agent By:__________________________________________ Name:_____________________________________ Title:____________________________________ WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By:__________________________________________ Name:_____________________________________ Title:____________________________________ [Signature Page to Series 2002-A Supplement] SCHEDULE 1 HEDGE COUNTERPARTIES Barclays Bank PLC ABN AMRO Bank N.V. EXHIBIT A FORM OF SERIES 2002-A NOTE THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF ACKNOWLEDGES THAT THESE SECURITIES ARE "RESTRICTED SECURITIES" THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE OBLIGORS AND THEIR AFFILIATES THAT THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A (A)(1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A OR (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION AND (B) A QUALIFIED PURCHASER WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE MASTER FACILITY AGREEMENT AND THE SERIES SUPPLEMENT REFERRED TO HEREIN. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED TO AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF THE EMPLOYMENT RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, INCLUDING AN INDIVIDUAL RETIREMENT ACCOUNT. NEITHER THIS NOTE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED, EXCEPT IN ACCORDANCE WITH THE MASTER FACILITY AGREEMENT AND SERIES SUPPLEMENT REFERRED TO HEREIN. A-1 No. 1 $75,000,000 MARLIN LEASING RECEIVABLES MASTER ASSET-BACKED FINANCING FACILITY, SERIES 2002-A NOTE MARLIN LEASING CORPORATION, as the Servicer, and MARLIN LEASING RECEIVABLES II LLC, as the Obligor (Not an interest in or obligation of Marlin Leasing Corporation, or its affiliates, other than Marlin Leasing Receivables II LLC) This certifies that NATIONAL CITY BANK, as agent for NORTH COAST FUNDING LLC (the "Series 2002-A Noteholder") is the registered owner of this Series 2002-A Note (the "Series Note") issued by Marlin Leasing Receivables II LLC ("MLR II LLC"), (the "Obligor"), created pursuant to that certain Master Lease Receivables Asset-Backed Financing Facility Agreement, dated as of April 1, 2002 (as the same may be further amended, restated, supplemented or otherwise modified from time to time, the "Master Facility Agreement"), by and among Marlin Leasing Corporation (the "Servicer"), MLR II LLC, Marlin Leasing Receivables Corp. II ("MLR II"), as Obligors' Agent (in such capacity, the "Obligors' Agent"), and Wells Fargo Bank Minnesota, National Association, as trustee and back-up servicer (the "Trustee") To the extent not otherwise defined herein, capitalized terms used herein have the meanings assigned in the Master Facility Agreement or the Series Supplement (as hereinafter defined), as applicable. This Series Note is issued under and is subject to the terms, provisions and conditions of the Series 2002-A Supplement to the Master Facility Agreement, dated as of April 1, 2002 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Series Supplement") among the Servicer, the Obligor, the Obligors' Agent, the Trustee and National City Bank, as Agent (the "Agent"), to which the Series 2002-A Noteholder, by virtue of its acceptance hereof, assents and by which the Series 2002-A Noteholder is bound. The Obligor has pledged to the Trustee for the benefit of the Series 2002-A Secured Parties, and the Trustee has accepted the pledge of, all of the Obligor's now owned and existing and hereafter acquired or arising right, title and interest in and to the Series 2002-A Trust Estate described in the Series 2002-A Supplement. It is the intent of the Obligor and the Series 2002-A Noteholder that, for federal, state and local income and franchise tax purposes, the Series Note will be evidence of indebtedness of the Obligor. The Obligor and the Series 2002-A Noteholder, by the acceptance of this Series Note, agree to treat this Series Note for federal, state and local income and franchise tax purposes as indebtedness of the Obligor secured by the Series 2002-A Trust Estate. Subject to, and in accordance with, the terms and conditions of the Series Note and the Series Supplement, the Series 2002-A Note Balance (the "Series Note Balance") may A-2 from time to time be increased; provided that the outstanding principal balance of this Series Note shall not exceed the dollar amount first above written. The Agent, on behalf of the Purchasers, is authorized to record, on the schedule annexed thereto and made a part hereof or on other appropriate records of the Agent, the date and amount of each Advance made by the Purchasers, each continuation thereof, the interest rate from time to time on each Advance and the date and amount of each payment or repayment of principal thereof. Any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure of the Agent to make any such recordation (or any error in such recordation) shall not affect the obligations of the Obligor hereunder or under the Series Supplement and Master Facility Agreement in respect of this Series Note. The Master Facility Agreement and the Series Supplement permit, with certain exceptions, the amendment thereof and the modification of the rights and obligations of the Obligor, the Servicer and the Trustee and the rights of the Series 2002-A Noteholder under the Master Facility Agreement or the Series Supplement at any time by the Servicer, the Obligor and the Trustee without, in certain cases, the consent of the Series 2002-A Noteholder, as more particularly described in the Master Facility Agreement and the Series Supplement. The transfer of this Series Note is subject to certain restrictions set forth in the Master Facility Agreement, the Series Supplement and the Note Purchase Agreement. The Servicer, the Trustee and any agent of the foregoing may treat the person in whose name this Series Note is registered as the owner for all purposes, and none of the foregoing shall be affected by any notice to the contrary. Unless the certificate of authentication attached hereto has been executed by or on behalf of the Trustee, by manual or facsimile signature, this Series Note shall not be entitled to any benefit under the Master Facility Agreement or the Series Supplement or be valid for any purpose. A-3 IN WITNESS WHEREOF, the Obligor has caused this Series Note to be duly executed and authenticated. Dated as of [_________] MARLIN LEASING RECEIVABLES II LLC By: MARLIN LEASING RECEIVABLES CORP. II, as Managing Member By: _________________________________________ Title: Attested: By: _______________________________ Title:_____________________________ A-4 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Series Notes designated herein referred to in the within-mentioned Master Facility Agreement and the within-mentioned Series Supplement thereto. [______________________________] as Trustee By:______________________________________ Authorized Signatory A-5 SCHEDULE TO SERIES 2002-A NOTE
Amount Amount of Total Principal Date of Advance Principal Repaid Outstanding ---- ---------- ---------------- --------------- ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________ ________________ $________________ __________________ __________________
A-6 EXHIBIT B [RESERVED] B-1 EXHIBIT C Instructions for sending wires to the Agent on behalf of the Noteholders pursuant to Section 3.03(b): Bankers Trust Company in the name of National City Bank ABA: 021-001-0333 Acct No. 01419647 Ref: CTOL 033471 C-1 EXHIBIT D FORM OF SERVICER'S CERTIFICATE D-1 EXHIBIT E FORM OF CONTRACTS E-1 EXHIBIT F PLACES OF BUSINESS OF THE OBLIGOR AND THE SERVICER; LOCATIONS OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBERS A. Obligor 1. Marlin Leasing Receivables II LLC a. Chief Executive Office and Principal Place of Business 639 Isbell Road, Suite 390 Reno, Nevada 89509 b. Other Locations of Records 124 Gaither Drive, Suite 170 Mt. Laurel, New Jersey 08054 c. FEIN: 52-2282213 d. State of Organization: Nevada B. Servicer 1. Marlin Leasing Corporation Chief Executive Office and Principal Place of Business 124 Gaither Drive, Suite 170 Mt. Laurel, New Jersey 08054 2. Other Locations of Records None 3. Servicer's FEIN: 22-3520555 4. State of Incorporation: Delaware F-1 EXHIBIT G FORM OF PLEDGE NOTICE [DATE] TO: National City Bank MBIA Insurance Corporation 1 South Broad Street, 13th Floor 113 King Street Locator 01-5997 Armonk, New York 10504 Philadelphia, Pennsylvania 19107 Attention: Insured Portfolio Attention: Asset Securitization Division Management Structured Finance Marlin Leasing Marlin Leasing Corporation 124 Gaither Drive, Suite 170 Wells Fargo Bank Minnesota, N.A. Mt. Laurel, New Jersey 08054 Sixth Street and Marquette Avenue Attention: Dan Dyer MAC N9311-161 Minneapolis, Minnesota 55479 Attention: Corporate Trust Services - Asset Backed Administration Re: Marlin Lease Receivables Master Facility, Series 2002-A Note Ladies and Gentlemen: Reference is made to that certain Series 2002-A Supplement, dated as of April 1, 2002 (the "Series Supplement"), among Marlin Leasing Corporation II ("MLR II") and Marlin Leasing Corporation (the "Servicer"), Marlin Leasing Receivables II LLC ("MLR II LLC" or the "Series Obligor"), National City Bank, as agent, and Wells Fargo Bank Minnesota, National Association ("Wells Fargo"), as trustee, and to that certain Master Lease Receivables Asset-Backed Financing Facility Agreement, dated as of April 1, 2002 (the "Master Facility Agreement"), among the Servicer, MLR II and Wells Fargo, as trustee and back-up servicer. Capitalized terms used herein shall have the meanings assigned to such terms in the Series Supplement and Master Facility Agreement. Pursuant to Section 4.01(b) of the Series Supplement, the undersigned, a duly authorized representative of the Series Obligors, hereby provide notice of an increase in the Series 2002-A Note Balance (each amount, an "Advance Amount"), and in that connection sets forth below the information relating to such proposed increase, as required by Section 4.01(c) of the Series Supplement: (i) The aggregate amount of the related Advance Amount is $____________. G-1 (ii) The date on which such Advance Amount shall occur is _______________. (iii) Attached hereto as Exhibit A is the related List of Contracts. (iv) The Purchase Price Percentage applicable to the Pledge is ___%. (v) The Hedge Rate applicable to such Series 2002-A Contracts being Pledged is ____%. (vi) The aggregate Contract Principal Balance of all Series 2002-A Contracts being Pledged is $_____________. (vii) The Borrowing Base immediately prior to such pledge is $__________, and the Pro Forma Borrowing Base is $__________. The undersigned certifies that as of the date hereof and on the date of the proposed Advance Amount, all of the conditions precedent to the proposed Advance Amount set forth in Section 4.01 of the Series Supplement have been satisfied. Very truly yours, MARLIN LEASING RECEIVABLES CORP. II, as the Obligors' Agent By:_______________________________ Name: Title: MARLIN LEASING RECEIVABLES LLC II By: MARLIN LEASING RECEIVABLES CORP. II, as Managing Member By:___________________________ Name: Title: G-2 EX-10.13 10 w89427exv10w13.txt FIRST AMENDMENT TO SERIES 2002-A SUPPLEMENT EXHIBIT 10.13 EXECUTION COPY FIRST AMENDMENT TO SERIES 2002-A SUPPLEMENT TO THE MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT AND CONSENT TO ASSIGNMENT OF 2002-A NOTE FIRST AMENDMENT TO SERIES 2002-A SUPPLEMENT TO THE MASTER LEASE RECEIVABLES ASSET-BACKED FINANCING FACILITY AGREEMENT AND CONSENT TO ASSIGNMENT OF 2002-A NOTE (this "Amendment"), made as of July 10, 2003, is entered into by and among MARLIN LEASING CORPORATION ("MLC"), individually, and as the Servicer, MARLIN LEASING RECEIVABLES CORP. II ("MLRC"), as the Obligors' Agent, MARLIN LEASING RECEIVABLES II LLC, as the Obligor, ABN AMRO BANK N.V. ("ABN AMRO"), as the successor Agent, and WELLS FARGO BANK MINNESOTA, N.A. ("Wells Fargo"), as the Trustee, and is consented to and acknowledged by MBIA INSURANCE CORPORATION ("MBIA"), as Series Support Provider, and NATIONAL CITY BANK ("Nat City"), as the retiring Agent. Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Supplement (as defined below). R E C I T A L S WHEREAS, certain of the parties hereto and various financial institutions names therein, as the banks, have entered into that certain Note Purchase Agreement, dated as of April 1, 2002 (such agreement as amended, modified, restated, replaced, waived, substituted, supplemented or extended, the "Note Purchase Agreement"); and WHEREAS, MLC, in its capacity as the Servicer, MLRC, in its capacity as the Obligors' Agent, and Wells Fargo, in its capacities as Trustee and Back-Up Servicer, entered into that certain Master Lease Receivables Asset-Backed Facility Agreement, dated as of April 1, 2002 (such agreement as amended, modified, restated, replaced, waived, substituted, supplemented or extended, the "Master Agreement"), which Master Agreement was amended and supplemented by the Series 2002-A Supplement to the Master Agreement dated as of April 1, 2002 among certain of the parties hereto (such agreement as amended, modified, restated, replaced, waived, substituted, supplemented or extended, the "Supplement"); and WHEREAS, the parties hereto desire to amend the Supplement in certain respects as provided herein; NOW, THEREFORE, based upon the above Recitals, the mutual premises and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. AMENDMENTS. (a) The Supplement and the Series 2002-A Related Documents are hereby amended by (i) deleting all references therein to "North Coast Funding LLC" and replacing them with "Amsterdam Funding Corporation", (ii) deleting all references therein to "National City Bank" and replacing them with "ABN AMRO Bank N.V.", and (iii) deleting all references therein to "National City" and replacing them with "ABN AMRO". (b) Clause (ii) of the definition of "Base LIBO Rate" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: (ii) if no such rate appears on Telerate page 3750 at such time and day, then the LIBO Rate shall be determined by ABN AMRO at its office in Chicago, Illinois as its rate (each such determination, absent manifest error, to be conclusive and binding on all parties hereto and their assignees) at which 30-day deposits (or such lessor period of time as determined by the Agent to be appropriate, in the event that the LIBO rate is to be determined for a portion of an Interest Period ) in United States Dollars are being, having been, or would be offered or quoted by ABN AMRO to major banks in the applicable interbank market for Eurodollar deposits at or about 11:00 a.m. (Chicago, Illinois time) on such day for a period equal to such Interest Period (or portion thereof). (c) The definition of "Breakage Costs" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: "Breakage Costs " means, for each Owner for each funding period, to the extent that an Owner is funding the maintenance of its investment in Series 2002 - A Notes during such funding period through the issuance of Commercial Paper or at the LIBO Rate (or, in the case of a requested Advance not made by such Owner for any reason other than its default, scheduled to be funded), during which such investment is reduced (in whole or in part) prior to the end of the period for which it was originally scheduled to remain outstanding (the amount of such reduction in such investment or such funding being referred to as the "Allocated Amount"), the excess of (a) the discount or interest that would have accrued on the Allocated Amount during the remainder of such funding period if such reduction had not occurred over (b) the income, if any, scheduled to be received by such Owner from investing the Allocated Amount for the remainder of such funding period in a commercially reasonable manner. (d) The definition of "Business Day" in Section 2.01 of the Supplement is hereby amended by deleting the words "Cleveland, Ohio" therein and replacing them with "Chicago, Illinois". (e) The definition of "Federal Funds Rate" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: "Federal Funds Rate" means for any day the greater of (i) the average rate per annum as determined by ABN AMRO at which overnight Federal funds are offered to ABN AMRO for such day by major banks in the interbank market, and (ii) if ABN AMRO is borrowing overnight funds from a Federal Reserve Bank that day, the average rate per annum at which such overnight borrowings are made on that day. Each 2 determination of the Federal Funds Rate by ABN AMRO shall be conclusive and binding except in the case of manifest error. (f) The definition of "Fee Letter" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: "Fee Letter" means that certain letter agreement dated as of July 10, 2003 by and among the Obligor, the Obligors' Agent and the Agent, as it may be amended or modified and in effect from time to time. (g) The definition of "Liquidity Agreement" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: "Liquidity Agreement" shall mean the liquidity agreement dated as of July 10, 2003 among Amsterdam Funding Corporation, the liquidity banks named therein, and ABN AMRO, as the liquidity agent, as amended from time to time. (h) Section 2.01 of the Supplement is hereby amended to add the following defined term immediately after the defined term "Liquidity Agreement": "Liquidity Expiration Date" shall mean July 9, 2004. (i) The definition of "Maximum Series Limit" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: "Maximum Series Limit" means: (i) during the period from the Series Closing Date to July 9, 2004, $75,000,000; and (ii) during the period from July 10, 2004 to July 9, 2005, upon the prior written consent of the Series Support Provider and the Agent, $100,000,000 (or, if such consent is not forthcoming, then $75,000,000). (j) The definition of "Prime Rate" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: "Prime Rate" means, for any period, the daily average during such period of the floating commercial loan rate per annum of ABN AMRO (which rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer by ABN AMRO) announced from time to time as its prime rate or equivalent for Dollar loans in the USA, changing as and when said rate changes. (k) The definition of "Series 2002-A Base Rate" in Section 2.01 of the Supplement is hereby amended and restated in its entirety as follows: 3 "Series 2002-A Base Rate" means, on any date, a fluctuating rate per annum equal to the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 0.75%. (l) Clause (i) of the definition of "Termination Date" in Section 2.01 of the Supplement is hereby amended and restated as follows: (i) July 9, 2005, or such later date as the parties (with the express written consent of the Agent and Series Support Provider) may hereafter agree in accordance with Section 4.01(i), (m) Clause (vii) of the definition of "Termination Date" in Section 2.01 of the Supplement is hereby amended and restated as follows: (vii) the Liquidity Expiration Date. (n) Section 4.01 of the Supplement is hereby amended by adding the following as a new clause (j) thereunder: (j) The Obligors' Agent may, not earlier than one hundred twenty (120) days prior to the Liquidity Expiration Date, by written notice to the Agent and the Liquidity Provider, make request for the Liquidity Provider to extend the Liquidity Expiration Date for an additional period of no more than 364 days on terms reasonably acceptable to Obligor's Agent. The Liquidity Provider shall make a determination, in its sole and absolute discretion, not less than sixty (60) days after receipt of such request as to whether or not it will agree to the extension requested. The failure of the Liquidity Provider to provide timely notice of its decision to the Obligor's Agent shall be deemed to constitute a refusal by the Liquidity Provider to extend the Liquidity Expiration Date. (o) The definitions of "Broker/Vendor Concentration Amount", "Equipment Concentration Amount", "Government Concentration Amount", "State Concentration Amount" and "User Concentration Amount" in Section 2.01 are all hereby amended by deleting all references to "Net Investment" contained therein and replacing them with "aggregate Contract Principal Balance of all Series 2002-A Contracts which are Eligible Contracts". (p) Section 5.01(p) of the Supplement is hereby amended by deleting all references to "Ratio" contained therein and replacing them with "Rate". (q) Section 5.01(t) of the Supplement is hereby amended by deleting the colon after the word "quarter" and deleting "(i)" immediately preceding the word "is". (r) Section 5.01 of the Supplement is hereby amended by adding the following as a new clause (dd) thereunder (provided, however, that such amendment shall in no way amend or otherwise alter the definition of "Overconcentration Amount") : (dd) as of any date of determination, the Overconcentration Amount exceeds $50,000, and such amount is not reduced to below $50,000 within thirty (30) days of such date of determination; 4 (s) Section 5.02(a) of the Supplement is hereby amended by inserting the word "any" immediately preceding the word "Event" in the first line thereof. (t) Section 7.01 of the Supplement is hereby amended by deleting the last sentence thereof and replacing it with the following: All notices, demands and requests to the Agent pursuant to the Master Agreement or this Series 2002-A Supplement, in each case, be in writing and shall be deemed duly given if personally delivered at, mailed by overnight courier to, or sent by facsimile transmission to ABN AMRO Bank N.V., Global Financial Markets-Asset Securitization, 135 South LaSalle Street, Suite 725, Chicago, Illinois 60674, Fax 312.904.4028, or at such other address or facsimile number as shall be designated by the Agent in a written notice to each party hereto. (u) The following is hereby added to the Supplement immediately after Section 7.09 as a new Section 7.10: Section 7.10. Each party hereto agrees, for the benefit of the holders of the privately or publicly placed indebtedness for borrowed money for Amsterdam Funding Corporation, not, prior to the date which is one (1) year and one (1) day after the payment in full of all such indebtedness, to acquiesce, petition or otherwise, directly or indirectly, invoke, or cause Amsterdam Funding Corporation to invoke, the process of any Governmental Authority for the purpose of (a) commencing or sustaining a case against Amsterdam Funding Corporation under any federal or state bankruptcy, insolvency or similar law (including the Federal Bankruptcy Code), (b) appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official for Amsterdam Funding Corporation, or any substantial part of its property, or (c) ordering the winding up or liquidation of the affairs of Amsterdam Funding Corporation. SECTION 2. SUPPLEMENT IN FULL FORCE AND EFFECT AS AMENDED. Except as specifically amended hereby, all provisions of the Supplement shall remain in full force and effect. After this Amendment becomes effective, all references to "hereof," "herein," or words of similar effect referring to the Supplement shall be deemed to mean the Supplement as amended hereby. This Amendment shall not constitute a novation of the Supplement, but shall constitute an amendment thereof. This Amendment shall not be deemed to expressly or impliedly waive, amend or supplement any provision of the Supplement, the Master Agreement or the Note Purchase Agreement other than as set forth herein. SECTION 3. REPRESENTATIONS. Each of the parties hereto represent and warrant as of the date of this Amendment as follows: (a) the execution, delivery and performance by it of this Amendment are within its powers, have been duly authorized; (b) this Amendment has been duly executed and delivered by it; and (c) this Amendment constitutes its legal, valid and binding obligation enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally or by general principles of equity. SECTION 4. CONSENT TO ASSIGNMENT. Each party to this Amendment hereby consents to the assignment of the Series 2002-A Note by National City Bank to ABN AMRO Bank N.V., 5 as Agent for the Purchasers. Each party to this Amendment hereby agrees and acknowledges that, immediately upon the assignment of the Series 2002-A Note by National City to ABN AMRO Bank N.V. (as Agent for the Purchasers), the Amendment No. 1 to Series 2002-A Supplement to the Master Lease Receivables Asset-Backed Financing Facility Agreement and Consent to Assignment of 2002-A Note dated as of September 27, 2002 shall, by its terms (i.e., Section 6(a) thereof), automatically become null and void and shall no longer be in force or effect. SECTION 5. CONSENT TO SUCCESSOR AGENT. Pursuant to Section 8.07 of the Note Purchase Agreement (i) upon the direction of Amsterdam Funding Corporation as the Purchaser, Nat City has resigned as Agent and (ii) Amsterdam Funding Corporation has appointed ABN AMRO as Agent and ABN AMRO has accepted such appointment. Each party to this Amendment hereby consents to the appointment of ABN AMRO as the Agent. SECTION 6. WAIVER OF NOTICE. Each of the parties, by its execution of this Amendment, waives any prior notice pursuant to Section 7.05 of the Supplement, Section 9.01 of the Note Purchase Agreement and any and all other notice provisions contained within the documents executed in connection with the issuance of the Series 2002-A Note. SECTION 7. MISCELLANEOUS. (a) This Amendment may be executed in any number of counterparts (including by facsimile), and by the different parties hereto on the same or separate counterparts, each of which shall be deemed to be an original instrument but all of which together shall constitute one and the same agreement. (b) The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. (c) This Amendment may not be amended or otherwise modified except as provided in the Supplement. (d) The failure or unenforceability of any provision hereof shall not affect the other provisions of this Amendment. (e) Whenever the context and construction so require, all words used in the singular number herein shall be deemed to have been used in the plural, and vice versa, and the masculine gender shall include the feminine and neuter and the neuter shall include the masculine and feminine. (f) This Amendment represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the parties. There are no unwritten oral agreements between the parties. (g) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE 6 STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS. [The Remainder Of This Page Is Intentionally Left Blank] 7 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. MARLIN LEASING CORPORATION, in its individual capacity and as Servicer By:___________________________________ Name: George D. Pelose Title: Senior Vice President MARLIN LEASING RECEIVABLES CORP. II, as the Obligors' Agent By:___________________________________ Name: George D. Pelose Title: Vice President MARLIN LEASING RECEIVABLES II, LLC, as the Obligor By: MARLIN LEASING RECEIVABLES CORP II, as Managing Member By:_______________________________ Name: George D. Pelose Title: Vice President ABN AMRO BANK N.V., as Agent (and Liquidity Provider with respect to Section 4.01(j) only) By:___________________________________ Name: Title: By:___________________________________ Name: Title: Address: Structured Finance Asset Securitization 135 S. LaSalle Street, Suite 725 Chicago, IL 60603 8 Attention: Lender Agent-Amsterdam Telephone: (312) 904-6515 Fax: (312) 904-4350 WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By:___________________________________ Name: Title: CONSENTED TO AND ACKNOWLEDGED BY: MBIA INSURANCE CORPORATION By:___________________________________ Name: Title: CONSENTED TO AND ACKNOWLEDGED BY: NATIONAL CITY BANK By:___________________________________ Name: Title: 9 EX-23.1 11 w89427exv23w1.txt CONSENT OF KPMG LLP EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT The Board of Directors Marlin Leasing Corporation and Subsidiaries: We consent to the use of our report dated August 15, 2003, except as to note 3, which is as of August 22, 2003, included herein and to the references to our firm under the headings "Experts" and "Selected Financial Information" in this registration statement on Form S-1. 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Pennsylvania	6172	38-3686388
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code No.)	(IRS Employer Identification Number)






	Proposed Maximum	Amount of the
Title of Each Class of	Aggregate Offering	Registration
Securities to Be Registered	Price⁽¹⁾	Fee


Common Stock, $0.01 par value	$60,000,000	$4,854


	Per Share	Total

Public offering price	$		$
Underwriting discount	$		$
Proceeds to Marlin Business Services, Inc.	$		$
Proceeds to selling shareholders	$		$


	By Marlin Business Services, Inc			shares
	By selling shareholders			shares

		Total		shares
Common stock outstanding after the offering				shares
Offering price				$ per share
Use of proceeds			We intend to use the net proceeds from this offering: • to repay our outstanding subordinated debt totaling $10.0 million, plus accrued interest;
			• to pay approximately $6.3 million of accrued dividends owed on our preferred stock; and
			• for general corporate and working capital purposes. We will not receive any of the proceeds from the sale of shares of our common stock offered by the selling shareholders.
Proposed Nasdaq National Market symbol				MRLN



																Six Months Ended
		Year Ended December 31,														June 30,

		1998			1999			2000			2001			2002		2002		2003


		(dollars in thousands)
Statement of Operations Data:
Interest and fee income		$	615		$	7,332		$	22,648		$	36,404		$	46,664	$	21,936	$	26,828
Interest expense			436			2,622			11,607			16,881			17,899		8,199		8,459

	Net interest and fee income		179			4,710			11,041			19,523			28,765		13,737		18,369
Provision for credit losses			5			1,268			2,497			5,918			6,850		3,523		3,770

Net interest and fee income after provision for credit losses			174			3,442			8,544			13,605			21,915		10,214		14,599
Insurance and other income			1,802			489			1,823			2,086			2,725		1,271		1,628

			1,976			3,931			10,367			15,691			24,640		11,485		16,227
Salaries and benefits			1,200			2,058			3,660			5,306			8,109		3,671		4,851
General and administrative			831			3,450	⁽²⁾		3,419			4,610			5,744		2,638		3,505
Financing related costs			71			562			939			1,259			1,618		805		710

Change in fair value of warrants⁽¹⁾			—			21			(101	)		(208	)		908		482		779
Income (loss) before income taxes and cumulative effect of change in accounting principle			(126	)		(2,160	)		2,450			4,724			8,261		3,889		6,382
Income tax (benefit) provision			(47	)		(818	)		881			1,693			3,731		1,779		2,829

Income (loss) before cumulative effect of change in accounting principle			(79	)		(1,342	)		1,569			3,031			4,530		2,110		3,553
Cumulative effect of change in accounting principle, net of tax			—			—			—			(311	)		—		—		—

Net income (loss)		$	(79	)	$	(1,342	)	$	1,569		$	2,720		$	4,530	$	2,110	$	3,553

Income (loss) per common share before cumulative effect of change in accounting principle — basic

Net income (loss) per common share — basic

Weighted average shares — basic

Income (loss) per common share before cumulative effect of change in accounting principle — diluted

Net income (loss) per common share — diluted

Weighted average shares — diluted


James W. McKenzie, Jr. Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 (215) 963-5000		Brian J. Fahrney Sidley Austin Brown & Wood LLP Bank One Plaza 10 South Dearborn Street Chicago, IL 60603 (312) 853-7000



Shares MARLIN BUSINESS SERVICES, INC. Common Stock $ per share


	Page

Summary		1
Reorganization		8
Risk Factors		9
A Warning About Forward-Looking Statements		17
Use of Proceeds		18
Dividend Policy		18
Capitalization		19
Dilution		20
Selected Financial Information		21
Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Our Business		40
Management		55
Certain Relationships and Related Transactions		60
Principal and Selling Shareholders		61
Description of Capital Stock		62
Registration Rights and Lock-Up Agreements		66
Shares Eligible for Future Sale		68
Underwriting		70
Legal Matters		72
Experts		72
Where You Can Find Additional Information		72
Index to Consolidated Financial Statements		F-1


			Pro Forma⁽⁷⁾
	As of June 30,		As of June 30,
	2003		2003


	(dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents⁽⁵⁾	$	71,740
Net investment in direct financing leases⁽⁶⁾		372,913
Total assets		452,942
Revolving and term secured borrowings		392,956
Subordinated debt, net of discount		9,579
Warrant to purchase Class A common stock		2,201
Total liabilities		423,847
Redeemable convertible preferred stock, including accrued dividends		22,123
Total stockholders’ equity		6,972



			June 30, 2003

							Pro Forma
			Actual			Pro Forma	As Adjusted


			(dollars in thousands)
Revolving and term secured borrowings			$	392,956		$	$
Subordinated debt				9,579

		Total borrowings		402,535
Warrants to purchase Class A common stock				2,201
Redeemable convertible preferred stock, $0.01 par value:
	Class A, 50,000 shares authorized, issued and outstanding actual; none authorized, issued and outstanding pro forma and pro forma as adjusted			7,374
	Class C, 50,000 shares authorized, issued and outstanding actual; none authorized, issued and outstanding pro forma and pro forma as adjusted			6,803
	Class D, 101,500 shares authorized, 71,500 issued and outstanding actual; none authorized, issued and outstanding pro forma and pro forma as adjusted			7,946
Shareholders’ equity:
	Common stock, $0.01 par value: 75,000,000 shares authorized, none issued and outstanding actual; shares issued and outstanding pro forma, and shares issued and outstanding pro forma as adjusted⁽¹⁾			—
	Preferred stock, $0.01 par value: 5,000,000 shares authorized, none issued and outstanding actual, pro forma and pro forma as adjusted			—
	Class A common stock, $0.01 par value: 7,500,000 shares authorized, shares issued and outstanding actual; none authorized, issued and outstanding pro forma and pro forma as adjusted			12
	Class B common stock, $0.01 par value: 300,000 shares authorized, shares issued and outstanding actual; none authorized, issued and outstanding pro forma and pro forma as adjusted			—
	Additional paid-in capital			2,226
	Stock subscription receivable			(302	)
	Deferred compensation			(57	)
	Retained earnings			5,093

		Total shareholders’ equity		6,972
Total capitalization			$	433,831		$	$


Initial public offering price per share			$
	Pro forma net tangible book value per share	$
	Increase in pro forma net tangible book value per share attributable to this offering

Pro forma as adjusted net tangible book value per share after this offering

Dilution in net tangible book value per share to new investors
			$



																Six Months Ended
	December 31,															June 30,

	1998			1999			2000			2001			2002			2002			2003


	(dollars in thousands)
Operating Data:
Total new leases originated		3,746			11,154			20,010			23,207			25,368			12,387			14,390
Total equipment cost	$	28,160		$	81,257		$	141,711		$	171,378		$	203,458		$	98,590		$	110,294
Average net investment in direct financing leases⁽¹⁾		9,001			48,748			125,470			209,404			288,396			266,813			343,851
Weighted average interest rate (implicit) on new leases originated⁽²⁾		16.06	%		15.43	%		16.60	%		15.82	%		14.17	%		14.22	%		14.33	%
Interest income as a percent of the average net investment in direct financing leases		1.91			11.31			14.52			14.00			13.09			13.28			12.67
Interest expense as percent of average interest bearing liabilities, excluding subordinated debt⁽³⁾		12.40			6.84			8.17			7.41			5.76			5.79			4.66
Portfolio Asset Quality Data:
Minimum lease payments receivable	$	1,456		$	103,288		$	207,003		$	303,560		$	392,392		$	349,462		$	432,984
Delinquencies past due, greater than 60 days		0.68	%		0.71	%		1.31	%		1.94	%		0.86	%		0.65	%		0.64	%
Allowance for credit losses	$	4		$	866		$	1,720		$	3,059		$	3,965		$	3,608		$	4,451
Allowance for credit losses to total net investment in direct financing leases		0.02	%		1.06	%		1.04	%		1.23	%		1.21	%		1.25	%		1.22	%
Charge-offs, net	$	2		$	406		$	1,643		$	4,579		$	5,944		$	2,974		$	3,284
Ratio of net charge-offs to average net investment in direct financing leases		0.02	%		0.83	%		1.31	%		2.19	%		2.06	%		2.23	%		1.91	%
Operating Ratios:
Return on average total assets		(1.44	)%		(2.18	)%		1.04	%		1.18	%		1.42	%		1.32	%		1.85	%
Return on average stockholders’ equity (deficit)⁽⁴⁾		(1.99	)		(15.80	)		14.15			16.39			19.44			18.92			26.09


	Comparison of the Six Months Ended June 30, 2003 and 2002


	Comparison of the Years Ended December 31, 2002 and 2001



											As of or For The
	As of or For The										Six Months Ended
	Year Ended December 31,										June 30,

	1998		1999		2000		2001		2002		2002		2003

Number of sales account executives		21		32		41		50		67		56		69
Number of originating sources⁽¹⁾		140		366		631		815		929		906		1,101


U.S. Bancorp Piper Jaffray	William Blair & Company


	Maximum		Amounts		Unused
	Facility Amount		Outstanding		Capacity⁽¹⁾


	(dollars in thousands)
Revolving bank facility	$	32,500	$	12,423	$	20,077
CP conduit warehouse facilities		200,000		—		200,000
Term note securitizations⁽²⁾		—		380,533		—

	$	232,500	$	392,956	$	220,077


				Outstanding		Scheduled
		Notes Originally		Balance as of		Maturity		Original
		Issued		June 30, 2003		Date		Coupon Rate


		(dollars in thousands)
1999-2
	Class A	$	75,600		—		N/A		7.79	%
	Class B		7,200		—		N/A		9.24	%
	Class C		4,050		—		N/A		11.63	%

		$	86,850	$	0				8.09	%⁽¹⁾

2000-1
	Class A	$	86,500	$	15,660		February 2005		7.73	%
	Class B		6,600		1,840		May 2005		8.84	%
	Class C		3,800		1,060		August 2006		11.72	%

		$	96,900	$	18,560				7.96	%⁽¹⁾

2001-1
	Class A	$	103,300	$	36,943		June 2005		5.60	%
	Class B		7,900		2,825		March 2007		6.51	%
	Class C		4,560		1,631		May 2008		9.99	%

		$	115,760	$	41,399				5.84	%⁽¹⁾

2002-1
	Class A	$	166,280	$	108,793		May 2007		4.16	%
	Class B		12,720		8,320		February 2008		5.02	%
	Class C		5,380		3,520		May 2009		9.03	%

		$	184,380	$	120,633				4.36	%⁽¹⁾

2003-1
	Class A	$	197,290	$	192,523		May 2008		2.90	%
	Class B		2,000		1,951		February 2009		4.16	%
	Class C		5,600		5,467		April 2010		8.10	%

		$	204,890	$	199,941				3.05	%⁽¹⁾


			Operating		Leased		Capital
	Borrowings		Leases		Facilities		Leases		Total


	(dollars in thousands)
2003	$	179,201	$	97	$	499	$	350	$	180,147
2004		73,633		83		551		263		74,530
2005		40,532		51		125		81		40,789
2006		28,599		32		128		15		28,774
2007		3,382		7		130		2		3,521
Thereafter		14		—		66		—		80

Total	$	325,361	$	270	$	1,499	$	711	$	327,841



		Expected Maturity Date by Calendar Year

		2003			2004			2005			2006			2007			Thereafter			Total			Fair Value


		(dollars in thousands)
Debt:
	Fixed rate debt	$	79,730		$	136,439		$	91,684		$	47,884		$	21,627		$	3,169		$	380,533		$	397,004
	Average fixed rate		4.02	%		3.90	%		3.69	%		3.47	%		3.23	%		3.15	%		3.84	%
	Variable rate debt	$	12,423		$	—		$	—		$	—		$	—		$	—		$	12,423		$	12,423
	Average variable rate		3.97	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		3.97	%
Interest rate caps:
	Beginning notional balance	$	145,669		$	120,761		$	79,473		$	38,723		$	9,982		$	2,570		$	145,669		$	112
	Ending notional balance		120,761			79,473			38,723			9,982			2,570			—			—			—
	Average strike rate		6.01	%		5.99	%		5.96	%		5.96	%		5.75	%		5.75	%		5.98	%


Equipment Category	Percentage

Copiers		20	%
Water filtration systems		8	%
Telephone systems		8	%
Computers		7	%
Commercial & Industrial		7	%
Automotive (no titled vehicles)		6	%
Restaurant equipment		5	%
Security systems		5	%
Closed Circuit TV security systems		5	%
Cash registers		3	%
Medical		3	%
Computer software		3	%
All others (none more than 2%)		20	%


State	Percentage

California		12	%
Florida		9	%
Texas		9	%
New York		7	%
New Jersey		6	%
Pennsylvania		4	%
Georgia		4	%
North Carolina		4	%
Massachusetts		3	%
Illinois		3	%
Ohio		3	%
All others (none more than 2%)		36	%


Approving party		Authority based on total end user customer exposure

Senior Credit Committee		greater than $150,000

Vice President of Credit and one other member of Senior Credit Committee		$100,001 to $150,000

Vice President of Credit		$75,001 to $100,000

Credit Manager or Credit Analyst		up to $75,000, based on experience


Name	Age		Position

Daniel P. Dyer		45	Chairman of our Board of Directors, Chief Executive Officer and Treasurer
Gary R. Shivers		47	President and Director
George D. Pelose		39	Senior Vice President, General Counsel and Secretary
Lawrence J. DeAngelo		37	Director
Kevin J. McGinty		54	Director
James W. Wert		57	Director
Loyal W. Wilson		55	Director


						Long-Term
						Compensation

		Annual Compensation				Number of
						Securities
						Underlying		All other
Name and Principal Position		Salary		Bonus⁽¹⁾		Options		Compensation⁽²⁾

Daniel P. Dyer		$	210,577	$	118,000		10,000	$	7,118
	Chairman of the Board, Chief
	Executive Officer and Treasurer
Gary R. Shivers			185,577		103,500		10,000		5,990
	President and Director
George D. Pelose			168,192		81,500		20,000		5,989
	Senior Vice President, General
	Counsel and Secretary



	Individual Grants									Potential Realizable
										Value at Assumed
			Percentage of							Rates of Stock Price
	Number of		Total Options							Appreciation for
	Securities		Granted to			Exercise				Option Term
	Underlying Options		Employees in			Price		Expiration
Name	Granted in 2002		2002			(per share)		Date⁽¹⁾		5%		10%

Daniel P. Dyer		10,000		8.1	%	$	4.75		1/17/12	$	2,833	$	32,647
Gary R. Shivers		10,000		8.1			4.75		1/17/12		2,833		32,647
George D. Pelose		20,000		16.2			4.75		1/17/12		5,666		65,293



					Number of Securities				Value Of Unexercised
					Underlying Unexercised				In-the-Money
					Options at				Options at
					December 31, 2002				December 31, 2002⁽¹⁾
	Shares Acquired		Value
Name	On Exercise		Realized		Exercisable		Unexercisable		Exercisable		Unexercisable

Daniel P. Dyer		—		—		41,650		47,450	$	74,425	$	12,500
Gary R. Shivers		—		—		41,650		47,450		74,425		12,500
George D. Pelose		—		—		36,625		60,875		2,323		29,008


									Number of shares
		Shares beneficially owned							tendered to the		Shares beneficially
		prior to the offering							Company to pay		owned after the offering
							Number of shares		for warrant
Name of Beneficial Owner		Number		Percentage			offered⁽¹⁾		exercise⁽²⁾		Number		Percentage

Primus Venture Partners, Inc.⁽³⁾			1,996,829		35.4	%
	5900 Landerbrook Dr., Ste. 200
	Cleveland, OH 44124
Peachtree Equity Partners⁽⁴⁾			1,730,512		30.7
	1170 Peachtree St., Ste. 1610
	Atlanta, GA 30309
ING (U.S.) Capital LLC			495,875		8.8
	200 Galleria Pkwy., Ste. 950
	Atlanta, GA 30339
Loyal W. Wilson⁽³⁾			1,996,829		35.4
	c/o Primus Venture Partners, Inc.
	5900 Landerbrook Dr., Ste. 200
	Cleveland, OH 44124
Lawrence J. DeAngelo⁽⁴⁾			1,730,512		30.7
	c/o Peachtree Equity Partners
	1170 Peachtree St., Ste. 1610
	Atlanta, GA 30309
Daniel P. Dyer ⁽⁵⁾⁽⁶⁾			304,421		5.4			—		—		304,421
Gary R. Shivers⁽⁵⁾⁽⁶⁾			255,624		4.5			—		—		255,624
George D. Pelose ⁽⁵⁾⁽⁷⁾			69,130		1.2			—		—		69,130
James W. Wert⁽⁸⁾			16,529		*			—		—		16,529
Kevin J. McGinty ⁽⁹⁾			12,709		*			—		—		12,709
All executive officers and directors as a group (7 persons) ⁽¹⁰⁾			4,385,754		75.4


		Number
Underwriters		of Shares

U.S. Bancorp Piper Jaffray Inc.
William Blair & Company, L.L.C.

	Total


	No Exercise	Full Exercise

Per share	$	$
Underwriting discount paid by us	$	$
Underwriting discount paid by selling shareholders	$	$


	Page

Independent Auditors’ Report		F-2
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Stockholders’ Equity (Deficit)		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-8



			Year Ended December 31,								Six Months Ended June 30,

			2000			2001			2002		2002		2003


											(unaudited)
Interest and fee income			$	22,648		$	36,404		$	46,664	$	21,936	$	26,828
Interest expense				11,607			16,881			17,899		8,199		8,459

		Net interest and fee income		11,041			19,523			28,765		13,737		18,369
Provision for credit losses				2,497			5,918			6,850		3,523		3,770

		Net interest and fee income after provision for credit losses		8,544			13,605			21,915		10,214		14,599
Insurance and other income				1,823			2,086			2,725		1,271		1,628

				10,367			15,691			24,640		11,485		16,227
Salaries and benefits				3,660			5,306			8,109		3,671		4,851
General and administrative				3,419			4,610			5,744		2,638		3,505
Financing related costs				939			1,259			1,618		805		710
Change in fair value of warrants				(101	)		(208	)		908		482		779

		Income before income taxes and cumulative effect of change in accounting principle		2,450			4,724			8,261		3,889		6,382
Income taxes				881			1,693			3,731		1,779		2,829

		Income before cumulative effect of change in accounting principle		1,569			3,031			4,530		2,110		3,553
Cumulative effect of change in accounting principle, net of tax				—			(311	)		—		—		—

Net income				1,569			2,720			4,530		2,110		3,553
Preferred stock dividends				825			1,243			1,781		890		953

Net income attributable to common stockholders			$	744		$	1,477		$	2,749	$	1,220	$	2,600

Basic earnings per share:
	Income before cumulative effect of change in accounting principle		$	0.56		$	1.35		$	2.26	$	0.95	$	2.15
	Cumulative effect of change in accounting principle			—			(0.24	)		—		—		—

			$	0.56		$	1.11		$	2.26	$	0.95	$	2.15

Diluted earnings per share:
	Income before cumulative effect of change in accounting principle		$	0.42		$	0.68		$	0.89	$	0.41	$	0.69
	Cumulative effect of change in accounting principle			—			(0.07	)		—		—		—

			$	0.42		$	0.61		$	0.89	$	0.41	$	0.69

Weighted average shares used in computing basic earnings per share				1,323,493			1,327,756			1,217,014		1,280,131		1,208,919

Weighted average shares used in computing diluted earnings per share				3,698,623			4,453,170			5,098,737		5,140,398		5,120,989



		Class A Common															Retained
		Stock						Additional			Stock						Earnings			Total
								Paid-in			Subscription			Deferred			Accumulated			Stockholders’
		Shares			Amount			Capital			Receivable			Compensation			(Deficit)			Equity (Deficit)

Balance, December 31, 1999			1,284,652		$	13		$	1,951		$	(38	)	$	—		$	(2,477	)	$	(551	)
	Exercise of stock options		5,589			—			22			—			—			—			22
	Issuance of Common Stock		40,834			—			245			(119	)		—			—			126
	Payment of receivables		—			—			—			16			—			—			16
	Common Stock repurchases		(1,357	)		—			(5	)		—			—			—			(5	)
	Preferred Stock dividends		—			—			—			—			—			(825	)		(825	)
	Net income		—			—			—			—			—			1,569			1,569

Balance, December 31, 2000			1,329,718			13			2,213			(141	)		—			(1,733	)		352
	Payment of receivables		—			—			—			19			—			—			19
	Issuance of Common Stock		211			—			1			—			—			—			1
	Common Stock repurchases		(3,549	)		—			(19	)		17			—			—			(2	)
	Preferred Stock dividends		—			—			—			—			—			(1,243	)		(1,243	)
	Net income		—			—			—			—			—			2,720			2,720

Balance, December 31, 2001			1,326,380			13			2,195			(105	)		—			(256	)		1,847
	Issuance of Common Stock		26,697			—			127			(71	)		—			—			56
	Payment of receivables		—			—			—			23			—			—			23
	Common Stock repurchases		(193,477	)		(2	)		(544	)		6			—			—			(540	)
	Stock-based compensation related to stock option modification		—			—			69			—			—			—			69
	Preferred Stock dividends		—			—			—			—			—			1,781			1,781
	Net income		—			—			—			—			—			4,530			4,530

Balance, December 31, 2002			1,159,600			11			1,847			(147	)		—			2,493			4,204
	Issuance of Common Stock (unaudited)		65,759			1			315			(189	)		—			—			127
	Payment of receivables (unaudited)		—			—			—			34			—			—			34
	Deferred compensation related to stock options (unaudited)		—			—			64			—			(64	)		—			—
	Amortization of deferred compensation (unaudited)		—			—			—			—			7			—			7
	Preferred Stock dividends (unaudited)		—			—			—			—			—			(953	)		(953	)
	Net income (unaudited)		—			—			—			—			—			3,553			3,553

Balance, June 30, 2003 (unaudited)			1,225,359		$	12		$	2,226		$	(302	)	$	(57	)	$	5,093		$	6,972



	December 31,									June 30,

Weighted averages:	2000			2001			2002			2002			2003


										(unaudited)
Risk-free interest rate		6.269	%		4.516	%		4.766	%		4.790	%		3.600	%
Expected life of option grants		6 years			6 years			6 years			6 years			6 years
Expected dividends	$	—		$	—		$	—		$	—		$	—


	Minimum lease		Income
	payments receivable		amortization
Year Ending December 31:
2003	$	156,430	$	34,551
2004		116,683		19,820
2005		71,616		9,641
2006		35,306		3,902
2007		12,251		705
Thereafter		106		5

	$	392,392	$	68,624


	Shares		Shares Issued		Carrying		Liquidation
Class	Authorized		and Outstanding		Amount		Value

A		50,000		50,000	$	7,085	$	7,087
C		50,000		50,000		6,523		6,559
D		101,500		71,500		7,563		7,997

					$	21,171	$	21,641