NOTE 11 – BORROWINGS

The credit facilities and other debt of the Company and related borrowings outstanding are as follows (in thousands):

	As of December 31,				September 30,
	2011				2011
	Amount of Facility		Borrowings Outstanding		Borrowings Outstanding
Corporate and Real estate debt:
TD Bank, N.A. – secured revolving credit facility (1)	$	6,997	$	5,303	$	7,493
TD Bank, N.A. – term loan		−		−		1,250
Republic Bank – secured revolving credit facility		3,500		−		−
Total corporate borrowings				5,303		8,743
Senior Notes (2)				10,000		16,263
Mortgage debt				10,660		10,700
Note payable to RCC				1,677		1,705
Other debt				831		548
Total corporate and real estate borrowings				28,471		37,959
Commercial finance debt				−		184,700
Total borrowings outstanding			$	28,471	$	222,659

(1)	The amount of the facility as shown has been reduced for outstanding letters of credit totaling $503,000 at December 31, 2011.

(2)	At September 30, 2011, the outstanding Senior Notes were reflected net of an unamortized discount of $2.6 million related to the fair value of detachable warrants issued to the note holders.

Corporate and Real Estate Debt

TD Bank, N.A. (“TD Bank”). In November 2011, the Company amended its agreement to extend the maturity of the TD Bank facility from August 31, 2012 to August 31, 2013 and repaid the outstanding term loan in the amount of $1.3 million. The interest rate on borrowings is either (a) the prime rate of interest plus 2.25% or (b) LIBOR plus 3%, with a floor of 6%. The Company is also charged a fee of 0.5% on the unused facility amount as well as a 5.25% fee on the $503,000 of outstanding letters of credit.

The facility requires that the Company repay the facility in an amount equal to 30% of the aggregate net proceeds (gross sales proceeds less reasonable and customary costs and expenses related to the sale) for certain asset sales. Borrowings are secured by a first priority security interest in certain of the Company's assets and the guarantees of certain subsidiaries, including (i) the present and future fees and investment income earned in connection with the management of, and investments in, sponsored CDO issuers, (ii) a pledge of 18,972 shares of TBBK common stock, and (iii) the pledge of 1,823,309 shares of RCC common stock. Availability under the facility is limited to the lesser of (a) 75% of the net present value of future management fees to be earned or (b) the maximum revolving credit facility amount.

The December 31, 2011 principal balance on the secured credit facility was $5.3 million and the availability on the line was $1.7 million, as reduced for outstanding letters of credit. Weighted average borrowings for the three months ended December 31, 2011 and 2010 were $5.4 million and $13.8 million, at a weighted average borrowing rate of 6.0% and 7.0% and an effective interest rate (inclusive of the amortization of deferred finance costs) of 10.6% and 10.9%, respectively. Weighted average borrowings for the term note for the three months ended December 31, 2011 were $771,000 at a weighted average borrowing rate of 6% and an effective interest rate (inclusive of the accelerated amortization of deferred finance costs) of 38.2%.

Republic First Bank (“Republic Bank”). In February 2011, the Company entered into a $3.5 million revolving credit facility with Republic Bank. The facility bears interest at the prime rate of interest plus 1%, with a floor of 4.5%. The loan is secured by a pledge of 700,000 shares of RCC stock and a first priority security interest in an office building located in Philadelphia, Pennsylvania. Availability under this facility is limited to the lesser of (a) the sum of (i) 25% of the appraised value of the real estate, based upon the most recent appraisal delivered to the bank and (ii) 100% of the cash and 75% of the market value of the pledged RCC shares held in the pledged account; and (b) 100% of the cash and 100% of the market value of the pledged RCC shares held in the pledged account. There were no borrowings under this facility for the three months ended December 31, 2011. In January 2012, the Company amended this facility to extend the maturity date from December 28, 2012 to December 1, 2013 and to add an unused facility fee equal to 0.25% per year.

Senior Notes

In November 2011, the Company redeemed $8.8 million of the existing notes for cash and modified the remaining $10.0 million of notes to a reduced interest rate of 9% and extended the maturity to October 2013. The detachable 5-year warrants to purchase 3,690,195 shares of common stock issued with the original notes remain outstanding. The Company accounted for the warrants as a discount to the original Senior Notes. Upon the modification and partial repayment of the Senior Notes, the Company expensed the remaining $2.2 million of unamortized discount. The effective interest rate (inclusive of the amortization of the warrant discount prior to the refinancing) was 20.6% and 21.1% for the three months ended December 31, 2011 and 2010, respectively.

Other Debt –Corporate

Capital leases. In December 2011, the Company entered into a capital lease for the purchase of equipment at an interest rate of 7.2%. The two-year lease requires monthly payments of $22,697. The principal balance of the lease at December 31, 2011 was $487,000.

Commercial Finance Debt – No Longer Consolidated with the Company

Due to the November 2011 LCC Transaction and resulting deconsolidation of LEAF, the Company's commercial finance facilities are no longer included in the Company's consolidated financial statements.

Securitization of leases and loans. On October 28, 2011, LEAF completed a $105.0 million securitization. A newly-formed subsidiary of LEAF issued eight classes of notes which are asset-backed debt, secured and payable by certain assets of LEAF. The notes included eight fixed rate classes of notes ranging from 0.4% to 5.5%, rated by both Dominion Bond Rating Service, Inc. (“DBRS”) and Moody's Investors Services, Inc., and mature from October 2012 to March 2019. The weighted average borrowings for the period from October 1 to November 16, 2011 were $42.7 million, at a weighted average borrowing rate of 2.6% and an effective interest rate (inclusive of amortization of deferred financing costs and interest rate swaps) of 5.6%.

Guggenheim Securities LLC (“Guggenheim”). At December 31, 2010, LEAF Financial had a short-term bridge loan with Guggenheim for borrowings up to $21.8 million. The bridge facility was repaid in January 4, 2011 and terminated on February 28, 2011. Beginning in January 2011, Guggenheim provided LEAF with a revolving warehouse credit facility with availability up to $110.0 million and committed to further expand the borrowing limit to $150.0 million. LEAF, through its wholly-owned subsidiary, issued to Guggenheim, as initial purchaser, six classes of DBRS-rated variable funding notes, with ratings ranging from “AAA” to “B”, for up to $110.0 million. The notes are secured and payable only from the underlying equipment leases and loans. Interest is calculated at a rate of 30-day London Interbank Offered Rate (“LIBOR”) plus a margin rate applicable to each class of notes. The revolving period of the facility ends on December 31, 2012 and the stated maturity of the notes is December 15, 2020, unless there is a mutual agreement to extend. Principal payments on the notes are required to begin when the revolving period ends. The Company was not an obligor or a guarantor of these securities and the facility was non-recourse to the Company. The weighted average borrowings for the period from October 1 to November 16, 2011 were $68.8 million, at a weighted average borrowing rate of 4.2% and an effective interest rate (inclusive of amortization of deferred financing costs and interest rate swaps) of 5.1%. The weighted average borrowings on the bridge loan for the three months ended December 31, 2010 were $20.9 million at a weighted average interest rate of 10.8%.

Series 2010-2 term securitization. In May 2010, LEAF Receivables Funding 3, LLC, a subsidiary of LEAF (“LRF3”), issued $120.0 million of equipment contract- backed notes (“Series 2010-2”) to provide financing for leases and loans. In the connection with the formation of LEAF in January 2011, RCC contributed these notes, along with the underlying lease portfolio to LEAF. LRF3 is the sole obligator of these notes. The weighted average borrowings for the period from October 1 to November 16, 2011 were $70.1 million, at a weighted average borrowing rate of 5.1% and an effective interest rate (inclusive of amortization of discount and deferred finance costs) of 8.5%.

Note payable to RCC − commercial finance. On July 20, 2011, RCC entered into an agreement with LEAF pursuant to which RCC agreed to provide a $10.0 million loan to LEAF, of which $6.9 million was funded as of September 30, 2011, with additional funding of $3.1 million prior to the November 16, 2011 deconsolidation. The loan bears interest at a fixed rate of 8.0% per annum on the unpaid principal balance, payable quarterly. The loan was secured by the commercial finance assets of LEAF and LEAF's interest in LRF3. In the November 2011 LCC Transaction, RCC received $8.5 million from LCC in payment of the $10.0 million outstanding balance and extinguished the loan.

Debt repayments

Annual principal payments on the Company's aggregate borrowings over the next five years ending December 31, and thereafter, are as follows (in thousands):

2013	$	761
2014		15,729
2015		197
2016		1,888
2017		222
Thereafter		9,674
	$	28,471

Covenants

The TD Bank credit facility is subject to certain financial covenants, which are customary for the type and size of the facility, including debt service coverage and debt to equity ratios. The debt to equity ratio restricts the amount of recourse debt the Company can incur based on a ratio of recourse debt to net worth.

The mortgage on the Company's hotel property contains financial covenants related to the net worth and liquid assets of the Company. Although non-recourse in nature, the loan is subject to limited standard exceptions (or “carveouts”) which the Company has guaranteed. These carveouts will expire as the loan is paid down over the next ten years. The Company has control over the operations of the underlying property, which mitigates the potential risk associated with these carveouts, and accordingly, no liabilities for these obligations have been recorded in the consolidated financial statements. To date, the Company has not been required to make any carveout payments.

The Company was in compliance with all of its debt covenants as of December 31, 2011.