NOTE 10 – BORROWINGS

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

	As of June 30,				September 30,
	2011				2010
	Amount of Facility		Borrowings Outstanding		Borrowings Outstanding
Commercial finance:
Guggenheim Securities, LLC – secured revolving facility (1)	$	110,000	$	69,586	$	−
Guggenheim Securities, LLC – bridge financing		−		−		20,750
LEAF Funding 3 Series 2010-2 – term securitization (2)		−		80,377		−
Total commercial finance borrowings				149,963		20,750

Corporate:
TD Bank, N.A. – secured revolving credit facility (3)		8,997		7,493		14,127
TD Bank, N.A. – term loan		−		1,400		−
Republic First Bank – secured revolving credit facility		3,500		−		−
Total corporate borrowings				8,893		14,127
Senior Notes, net (4)				15,726		14,317

Note payable to RCC				1,705		2,000
Other debt				13,546		14,916
Total borrowings outstanding			$	189,833	$	66,110

(1)	Reflected net of unamortized discount of $414,000 related to the fair value of LEAF detachable warrants issued to Guggenheim.

(2)	Face amount of the notes of $84.8 million is reflected net of unamortized discount of $4.5 million.

(3)	The amount of the facility as shown has been reduced for outstanding letters of credit of $503,000 at June 30, 2011.

(4)	The outstanding Senior Notes are reflected net of an unamortized discount of $3.1 million and $4.5 million at June 30, 2011 and September 30, 2010, respectively, related to the fair value of detachable warrants issued to the note holders.

Commercial Finance - Guggenheim secured revolving credit facility

Guggenheim. On January 4, 2011, Guggenheim provided LEAF with a revolving warehouse credit facility with an initial availability of $50.0 million. The facility was increased to $110.0 million on April 27, 2011 with a commitment 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 Dominion Bond Rating Service-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. If the maturity is not extended, the notes would amortize over the remaining term of the underlying collateral. Principal payments on the notes are required to begin when the revolving period ends. The Company is not an obligor or a guarantor of these securities and the facility is non-recourse to the Company. The weighted average borrowings for the three and nine months ended June 30, 2011 were $58.2 million and $26.0 million, respectively, at a weighted average interest rate of 5.0% and 5.1%, respectively.

Commercial Finance – Series 2010-2 term securitization

In May 2010, LEAF Receivables Funding 3, LLC (“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. Neither the Company or LEAF is an obligor or a guarantor of these securities and the facility is non-recourse to the Company and LEAF.

The notes were originally issued in the following classes: (i) $95.5 million of class A notes; (ii) $7.0 million of class B notes; (iii) $6.4 million of class C notes; (iv) $6.4 million of class D notes; and (v) $4.7 million of class E notes. All of the notes issued bear interest at a fixed rate of 5.0%. The class A notes mature in May 2016 and the class B through E notes mature in December 2017. The weighted average borrowings for the three and nine months ended June 30, 2011 were $84.6 million and $57.8 million, respectively, at a weighted average interest rate of 8.5% and 8.6%, respectively. The notes were recorded at their fair value and are being accreted to their face value using the effective interest method.

Commercial Finance – Bridge Financing

LEAF had a short-term bridge loan with Guggenheim for borrowings up to $21.8 million. The bridge facility was repaid with proceeds from the new revolving warehouse credit facility and terminated on February 28, 2011. The loan was in the form of a series of notes. The weighted average borrowings for the nine months ended June 30, 2011 were $11.7 million at a weighted average interest rate 9.1%.

Corporate – TD Bank

TD Bank, N.A. (“TD Bank”). On March 10, 2011, the Company amended its revolving credit facility with TD Bank to extend the maturity date to August 31, 2012 from October 15, 2011 and increase the maximum facility amount to $14.5 million, consisting of a $5.0 million term loan and a $9.5 million revolving line of credit. Additionally, the interest rate on borrowings decreased to either (a) the prime rate of interest plus 2.25% or (b) LIBOR plus 3%, both with a floor of 6%. The interest rate on borrowings until March 10, 2011 was either (a) the prime rate of interest plus 3% with a floor of 7% or (b) LIBOR plus 4.5% with a floor of 7.5%. The Company is charged a fee of 0.5% on the unused facility amount as well as a 5.25% fee on the outstanding balance of a $503,000 letter of credit.

The facility requires that the Company repay the facility in an amount equal to 30% of the aggregate net proceeds (i.e., gross sales proceeds less reasonable and customary costs and expenses related to the sale) for certain asset sales. Included in restricted cash at June 30, 2011 is $2.4 million of proceeds from the sale of the Company's management contract for Resource Europe CLO I (“REM I”). TD Bank allowed the Company to defer the repayment of the facility with these funds until October 2011, at which time the revolver portion of line of credit maximum facility amount will be reduced to $7.5 million.

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 1,747,563 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 June 30, 2011 principal balance on the secured credit facility was $7.5 million and the availability on the line was $1.5 million, as reduced for letters of credit. Weighted average borrowings for three and nine months ended June 30, 2011 were $7.5 million and $10.9 million, respectively, at an effective interest rate of 9.8% and 10.7%, respectively. Weighted average borrowings for three and nine months ended June 30, 2010 were $17.1 million and $19.0 million, respectively, at an effective interest rate of 10.2% and 10.5%, respectively.

The term note required monthly principal payments of $150,000 until June 2011. In June 2011, the Company completed the sale of a real estate asset, as specified in the loan agreement, and applied a $3.0 million principal payment to the term note from the proceeds of this sale as required under the agreement. As a result of this paydown, the required monthly principal payments will be reduced to $50,000 beginning in July 2011. The outstanding principal balance on the term note at June 30, 2011 was $1.4 million. Weighted average borrowings for the three and nine months ended June 30, 2011 were $4.4 million and $1.9 million, respectively, at an effective interest rate of 14.2% and 12.8%, respectively.

Corporate – Republic First Bank

In February 2011, the Company entered into a new $3.5 million revolving credit facility with Republic First Bank. The facility bears interest at the prime rate of interest plus 1% with a floor of 4.5% and matures on September 28, 2012. The loan is secured by a pledge of 700,000 shares of RCC stock and a first priority security interest in certain real estate collateral located in Philadelphia, PA. 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 and nine months ended June 30, 2011.

Corporate – Senior Notes

In September and October 2009, the Company completed a private offering to certain senior executives and shareholders of $18.8 million of 12% senior notes due 2012 (the “Senior Notes”) with 5-year detachable warrants to purchase 3,690,195 shares of the Company's common stock (at a weighted average exercise price of approximately $5.11 per share). The Senior Notes require quarterly payments of interest in arrears. The notes are unsecured, senior obligations and are junior to the Company's existing and future secured indebtedness. In recording the Senior Notes, the Company allocated the proceeds from the Senior Notes to the notes and the warrants based on their relative fair values. The weighted average interest rate (inclusive of the amortization of the warrant discount) was 22.6% and 21.9% for the three and nine months ended June 30, 2011, respectively, and 20.0% and 19.3% for the three and nine months ended June 30, 2010, respectively.

Other Debt

In June 2006, the Company obtained a $12.5 million 7.1% mortgage for its hotel property in Savannah, Georgia. The mortgage, which had an original maturity date of July 6, 2011 and was extended to August 6, 2011, and required monthly payments of principal and interest of $84,200. The principal balance as of June 30, 2011 and September 30, 2010 was $11.9 million and $12.0 million, respectively. On August 5, 2011, the Company refinanced the mortgage for $10.7 million at a rate of approximately 5.9%, which matures in August 2021.

On July 20, 2011, RCC entered into a new agreement with LEAF pursuant to which RCC will provide a $10.0 million loan to LEAF, of which $2.5 million was funded as of July 20, 2011. The loan matures on January 20, 2013 and bears interest at a fixed rate of 8.0% per annum on the unpaid principal balance, payable quarterly. In the event of default, interest will accrue and be payable at a rate of 5.0% in excess of the fixed rate. The loan is secured by the commercial finance assets of LEAF and LEAF's interest in LRF3.

Debt repayments

Annual principal payments on the Company's aggregate borrowings (excluding discounts of $3.1 million on the Senior Notes, $4.5 million on the Series 2010-2 notes and $414,000 on the Guggenheim secured revolving facility) over the next five years ending June 30, and thereafter, are as follows (in thousands):

2012	$	26,993
2013		53,823
2014		26,657
2015		26,868
2016		11,501
Thereafter		51,949
	$	197,791

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 hotel mortgage, which is guaranteed by the Company, contains financial covenants related to the net worth and liquid assets of the Company.

The Guggenheim secured revolving credit facility is subject to certain financial covenants including average cumulative net loss percentage as well as delinquency and default, senior leverage, and interest coverage ratios.

The Company was in compliance with all of its debt covenants as of June 30, 2011.