Exhibit 10.1
COMPOSITE VERSION:
REFLECTS ALL AMENDMENTS THROUGH JUNE 30, 2009
 
U.S. $106,518,000
SALE AND SERVICING AGREEMENT
by and among
CSE QRS FUNDING I LLC,
as a Seller
CAPITALSOURCE FUNDING III LLC,
as a Seller
CSE MORTGAGE LLC,
as the QRS Originator
CAPITALSOURCE FINANCE LLC,
as the CSIII Originator and as the Servicer
CS EUROPE FINANCE LIMITED,
as a Guarantor
CS UK FINANCE LIMITED,
as a Guarantor
EACH OF THE CONDUIT PURCHASERS AND THE INSTITUTIONAL
PURCHASERS FROM TIME TO TIME PARTY HERETO,
as Purchasers
EACH OF THE PURCHASER AGENTS
FROM TIME TO TIME PARTY HERETO,
as the Purchaser Agents
WACHOVIA CAPITAL MARKETS, LLC,
as the Administrative Agent and as the WBNA Agent
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Backup Servicer and as the Collateral Custodian
Dated as of May 29, 2009
 

 

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              ARTICLE I DEFINITION     2        Section 1.1  
Certain Defined Terms
    2        Section 1.2  
Other Terms
    48        Section 1.3  
Computation of Time Periods
    48        Section 1.4  
Interpretation
    48      
 
        ARTICLE II PURCHASE OF THE VARIABLE FUNDING NOTES     49        Section
2.1  
The Variable Funding Notes
    49        Section 2.2  
Release of any Purchaser and the Related Purchaser Agent
    50        Section 2.3  
[Reserved]
    50        Section 2.4  
Reduction of the Facility Amount; Mandatory and Optional Repayments
    50        Section 2.5  
Determination of Interest
    51        Section 2.6  
[Reserved]
    51        Section 2.7  
[Reserved]
    51        Section 2.8  
Notations on Variable Funding Notes
    51        Section 2.9  
[Reserved]
    52        Section 2.10  
Settlement Procedures
    52        Section 2.11  
Collections and Allocations
    53        Section 2.12  
Payments, Computations, Etc
    53        Section 2.13  
[Reserved]
    54        Section 2.14  
Fees
    54        Section 2.15  
Increased Costs; Capital Adequacy; Illegality
    55        Section 2.16  
Taxes
    56        Section 2.17  
Assignment of the Sale Agreements
    58        Section 2.18  
[Reserved]
    58        Section 2.19  
Optional Sales
    58        Section 2.20  
Discretionary Sales
    60        Section 2.21  
Loans Originated by Affiliates of CapitalSource Inc. Other than the Originator
    62      
 
        ARTICLE III CONDITIONS TO ADVANCES     62        Section 3.1  
Conditions to Closing and the Advance
    62        Section 3.2  
Condition Precedent to Repayments
    63  

 

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              ARTICLE IV REPRESENTATIONS AND WARRANTIES     64        Section
4.1  
Representations and Warranties of the Sellers
    64        Section 4.2  
Representations and Warranties of the Sellers Relating to the Agreement and the
Collateral
    73        Section 4.3  
Representations and Warranties of the Servicer
    74        Section 4.4  
Representations and Warranties of the Backup Servicer
    77        Section 4.5  
Representations and Warranties of the Collateral Custodian
    77        Section 4.6  
Breach of Certain Representations and Warranties
    78        Section 4.7  
Representations and Warranties of the Guarantors
    79      
 
        ARTICLE V GENERAL COVENANTS     80        Section 5.1  
Affirmative Covenants of the Sellers
    80        Section 5.2  
Negative Covenants of the Sellers
    84        Section 5.3  
[Reserved]
    86        Section 5.4  
Affirmative Covenants of the Servicer
    86        Section 5.5  
Negative Covenants of the Servicer
    89        Section 5.6  
Affirmative Covenants of the Backup Servicer
    90        Section 5.7  
Negative Covenants of the Backup Servicer
    91        Section 5.8  
Affirmative Covenants of the Collateral Custodian
    91        Section 5.9  
Negative Covenants of the Collateral Custodian
    91      
 
        ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS     92  
     Section 6.1  
Designation of the Servicer
    92        Section 6.2  
Duties of the Servicer
    92        Section 6.3  
Authorization of the Servicer
    94        Section 6.4  
Collection of Payments
    95        Section 6.5  
Servicer Advances
    96        Section 6.6  
Realization Upon Defaulted Loans
    96        Section 6.7  
Maintenance of Insurance Policies
    97        Section 6.8  
Servicing Compensation
    98        Section 6.9  
Payment of Certain Expenses by Servicer
    98        Section 6.10  
Reports
    98        Section 6.11  
Annual Statement as to Compliance
    99        Section 6.12  
Annual Independent Public Accountant’s Servicing Reports
    99        Section 6.13  
Limitation on Liability of the Servicer and Others
    100        Section 6.14  
The Servicer Not to Resign
    100  

 

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                   Section 6.15  
Servicer Defaults
    100        Section 6.16  
Appointment of Successor Servicer
    102        Section 6.17  
Servicing of REO Assets
    104      
 
        ARTICLE VII THE BACKUP SERVICER     106        Section 7.1  
Designation of the Backup Servicer
    106        Section 7.2  
Duties of the Backup Servicer
    106        Section 7.3  
Merger or Consolidation
    107        Section 7.4  
Backup Servicing Compensation
    108        Section 7.5  
Backup Servicer Removal
    108        Section 7.6  
Limitation on Liability
    108        Section 7.7  
The Backup Servicer Not to Resign
    109      
 
        ARTICLE VIII THE COLLATERAL CUSTODIAN     109        Section 8.1  
Designation of Collateral Custodian
    109        Section 8.2  
Duties of Collateral Custodian
    110        Section 8.3  
Merger or Consolidation
    111        Section 8.4  
Collateral Custodian Compensation
    111        Section 8.5  
Collateral Custodian Removal
    112        Section 8.6  
Limitation on Liability
    112        Section 8.7  
The Collateral Custodian Not to Resign
    113        Section 8.8  
Release of Documents
    113        Section 8.9  
Return of Required Loan Documents
    114        Section 8.10  
Access to Certain Documentation and Information Regarding the Collateral; Audits
    114      
 
        ARTICLE IX SECURITY INTEREST     115        Section 9.1  
Grant of Security Interest
    115        Section 9.2  
Release of Lien on Collateral
    115        Section 9.3  
Further Assurances
    116        Section 9.4  
[Reserved]
    116        Section 9.5  
Waiver of Certain Laws
    116        Section 9.6  
Power of Attorney
    116      
 
        ARTICLE X TERMINATION EVENTS     117        Section 10.1  
Termination Events
    117        Section 10.2  
Remedies
    119  

 

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              ARTICLE XI INDEMNIFICATION   120        Section 11.1  
Indemnities by the Sellers
    120        Section 11.2  
Indemnities by the Servicer
    122        Section 11.3  
After-Tax Basis
    123      
 
        ARTICLE XII THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS     123  
     Section 12.1  
The Administrative Agent
    123        Section 12.2  
The Purchaser Agents
    126        Section 12.3  
Additional Agent
    128      
 
        ARTICLE XIII MISCELLANEOUS     130        Section 13.1  
Amendments and Waivers
    130        Section 13.2  
Notices, Etc
    130        Section 13.3  
Ratable Payments
    131        Section 13.4  
No Waiver; Remedies
    131        Section 13.5  
Binding Effect; Benefit of Agreement
    131        Section 13.6  
Term of this Agreement
    131        Section 13.7  
Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue
    132        Section 13.8  
Waiver of Jury Trial
    132        Section 13.9  
Costs, Expenses and Taxes
    132        Section 13.10  
No Proceedings
    133        Section 13.11  
Recourse Against Certain Parties
    133        Section 13.12  
Protection of Right, Title and Interest in the Collateral; Further Action
Evidencing the Advance
    135        Section 13.13  
Confidentiality
    136        Section 13.14  
Execution in Counterparts; Severability; Integration
    137        Section 13.15  
Waiver of Setoff
    137        Section 13.16  
Assignments
    138        Section 13.17  
Heading and Exhibits
    138        Section 13.18  
Loans Subject to Retained Interest Provisions
    138        Section 13.19  
Tax Treatment of the Advance
    139      
 
        ARTICLE XIV GUARANTY     139        Section 14.1  
The Guaranty
    139        Section 14.2  
Bankruptcy
    140  

 

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                   Section 14.3  
Nature of Liability
    140        Section 14.4  
Independent Obligation
    140        Section 14.5  
Authorization
    141        Section 14.6  
Reliance
    141        Section 14.7  
Waiver
    141        Section 14.8  
Limitation on Enforcement
    142        Section 14.9  
Limitations on Payment
    142        Section 14.10  
Limited Recourse and No Proceedings
    143  

 

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SALE AND SERVICING AGREEMENT
     THIS SALE AND SERVICING AGREEMENT (such agreement as amended, modified,
supplemented, restated or replaced from time to time, the “Agreement”) is made
as of this May 29, 2009, by and among:
     (1) CSE QRS FUNDING I LLC, a Delaware limited liability company, as a
seller (together with its successors and assigns in such capacity, the “QRS
Seller”);
     (2) CAPITALSOURCE FUNDING III LLC, a Delaware limited liability company (as
successor-in-interest to CapitalSource Funding III Inc.), as a seller (together
with its successors and assigns in such capacity, the “CSIII Seller”, together
with the QRS Seller, the “Sellers” and each individually, a “Seller”);
     (3) CSE MORTGAGE LLC, a Delaware limited liability company (“CSE
Mortgage”), as the originator for the QRS Seller (together with its successors
and assigns in such capacity, the “QRS Originator”);
     (4) CAPITALSOURCE FINANCE LLC, a Delaware limited liability company
(“CapitalSource Finance”), as the originator for the CSIII Seller (together with
its successors and assigns in such capacity, the “CSIII Originator”, together
with the QRS Originator, the “Originators” and each individually, an
“Originator”), and as the servicer (together with its successors and assigns in
such capacity, the “Servicer”);
     (5) CS EUROPE FINANCE LIMITED, a wholly-owned subsidiary of CapitalSource
Europe Limited, incorporated in England and Wales under registered number
6340019, as a guarantor (together with its successors and assigns in such
capacity, the “Europe Guarantor”);
     (6) CS UK FINANCE LIMITED, a wholly-owned subsidiary of CapitalSource UK
Limited, incorporated in England and Wales under registered number 6340034, as a
guarantor (together with its successors and assigns in such capacity, the “UK
Guarantor”, together with the Europe Guarantor, the “Guarantors” and each
individually, a “Guarantor”);
     (7) EACH OF THE CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO (together
with their successors and assigns in such capacity, each a “Conduit Purchaser”);
     (8) EACH OF THE INSTITUTIONAL PURCHASERS FROM TIME TO TIME PARTY HERETO
(together with their respective successors and assigns in such capacities, each
an “Institutional Purchaser”, and together with Conduit Purchasers, the
“Purchasers”); and
     (9) EACH OF THE PURCHASER AGENTS FROM TIME TO TIME PARTY HERETO (together
with its successors and assigns in such capacity, each a “Purchaser Agent”);
     (10) WACHOVIA CAPITAL MARKETS, LLC, a Delaware limited liability company
(together with its successors and assigns, “WCM”), as the administrative agent
for the

 

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Purchaser Agents hereunder (together with its successors and assigns in such
capacity, the “Administrative Agent”), and as the Purchaser Agent for Wachovia
Bank, National Association (“WBNA”), as an Institutional Purchaser (together
with its successors and assigns in such capacity, the “WBNA Agent”); and
     (11) WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), not in its
individual capacity but as the backup servicer (together with its successors and
assigns in such capacity, the “Backup Servicer”), and not in its individual
capacity but as the collateral custodian (together with its successors and
assigns in such capacity, the “Collateral Custodian”).
R E C I T A L S
     WHEREAS, the QRS Seller has acquired certain Loans from the QRS Originator
pursuant to the QRS Sale Agreement;
     WHEREAS, the CSIII Seller has acquired certain Loans from the CSIII
Originator pursuant to the CSIII Sale Agreement;
     WHEREAS, each Seller is prepared to grant security interests in, certain
Loans and other proceeds with respect thereto to the Purchasers from time to
time;
     WHEREAS, the Purchasers may, in accordance with the terms of this
Agreement, purchase such Loans;
     WHEREAS, it is the intention of the parties hereto that (i) in connection
with the Advance hereunder, each Seller hereby grants a security interest to the
Administrative Agent, for the benefit of the Secured Parties, in all of such
Seller’s right, title and interest in and to the Loans and proceeds with respect
thereto, and (ii) this Agreement shall constitute a security agreement under
Applicable Law, in respect of the grant described in the third Recital above,
and all other security interests granted hereunder; and
     WHEREAS, all other conditions precedent to the execution of this Agreement
have been complied with.
     NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITION
     Section 1.1 Certain Defined Terms.
     (a) Certain capitalized terms used throughout this Agreement are defined
above or in this Section 1.1. As used in this Agreement and its schedules,
exhibits and other attachments,

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unless the context requires a different meaning, the following terms shall have
the following meanings:
     “40 Act”: Defined in Section 10.1(d).
     “Accrual Period”: With respect to the Advance (or portion thereof),
(i) with respect to the first Payment Date, the period from and including the
Closing Date to and including the last day of the calendar month in which the
Closing Date occurs and (ii) with respect to any subsequent Payment Date, the
period ending on the last day of the calendar month immediately preceding the
month in which the Payment Date occurs and commencing on the first (1st) day of
such immediately preceding calendar month.
     “Acquired Loan”: A Loan that is originated by a Person other than the
applicable Originator, CapitalSource Finance LLC or any of their respective
Subsidiaries and acquired by such Originator in a “true sale” transaction
pursuant to an acquisition agreement; provided that the foregoing shall exclude
any Assigned Loan.
     “Additional Agent”: Each Person (together with its successors and assigns)
that becomes a party to this Agreement as an Additional Agent, on behalf of any
Additional Purchaser, pursuant to an Additional Purchaser Agreement.
     “Additional Agent Fee Letter”: Each Additional Agent Fee Letter Agreement
that shall be entered into by and among the Sellers, the Servicer and such
Additional Agent in connection with the transactions contemplated by this
Agreement, as amended, modified, waived, supplemented, restated or replaced from
time to time.
     “Additional Agent’s Account”: A special account, designated by the
Additional Agent in an Additional Purchaser Agreement, in the name of an
Additional Agent maintained with the related Additional Purchaser.
     “Additional Purchaser”: Each Person (together with its successors and
assigns) that becomes a party to this Agreement as an Additional Purchaser
pursuant to an Additional Purchaser Agreement.
     “Additional Purchaser Agreement”: With respect to each Additional
Purchaser, the Transferee Letter relating to such Additional Purchaser.
     “Adjusted Balance”: As of any date of determination, the outstanding asset
balance calculated as follows:
     (a) With respect to any Defaulted Loan, the Outstanding Loan Balance of
such Loan multiplied by the lesser of (i) the Recovery Rate or (ii) 100% minus
the percentage equivalent of specific reserves taken by the Servicer for such
Loan per the Credit and Collection Policy; provided that after such Loan is and
continues to be a Defaulted Loan for one year from such date, the Adjusted
Balance will be zero; and
     (b) With respect to any Loan that as of such date does not have an Eligible
Risk Rating, (i) the Outstanding Loan Balance of such Loan multiplied by (ii)(1)
100% minus (2) the

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percentage equivalent of specific reserves taken by the Servicer for such Loan
in accordance with the Credit and Collection Policy; provided, however, that
this clause (b) shall not apply to any Loan that did not have an Eligible Risk
Rating on the Closing Date.
     “Adjusted Eurodollar Rate”: For any Accrual Period, an interest rate per
annum equal to a fraction, expressed as a percentage and rounded upwards (if
necessary) to the nearest 1/100 of 1%, (i) the numerator of which is equal to
the LIBOR Market Index Rate for such Accrual Period and (ii) the denominator of
which is equal to 100% minus the Eurodollar Reserve Percentage for such Accrual
Period.
     “Administrative Agent”: WCM, in its capacity as administrative agent for
the Purchaser Agents, together with its successors and assigns, including any
successor appointed pursuant to ARTICLE XII.
     “Advance”: Defined in Section 2.1(b).
     “Advances Outstanding”: On any day, the aggregate principal amount of the
Advance outstanding on such day, after giving effect to all repayments of the
Advance.
     “Affected Party”: The Administrative Agent, the Purchaser Agents, the
Purchasers, each Liquidity Bank, all assignees and participants of the
Purchasers and each Liquidity Bank, any successor to WCM as Administrative Agent
and any sub-agent of the Administrative Agent and any successor to a Purchaser
Agent.
     “Affiliate”: With respect to a Person, means any other Person that,
directly or indirectly, controls, is controlled by or under common control with
such Person, or is a director or officer of such Person. For purposes of this
definition, “control” (including the terms “controlling,” “controlled by” and
“under common control with”) when used with respect to any specified Person
means the possession, direct or indirect, of the power to vote 20% or more of
the voting securities of such Person or to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
     “Agent’s Account”: The WBNA Agent’s Account or any Additional Agent’s
Account, as applicable.
     “Agented Loans”: With respect to any Loan, one or more loans to an Eligible
Obligor wherein (a) the loan(s) are originated by the applicable Originator in
accordance with the Credit and Collection Policy as a part of a loan transaction
that has been fully consummated between the applicable Originator and the
related Obligor (without regard to any subsequent syndication of such Loan)
prior to such Agented Loans becoming part of the Collateral hereunder, (b) upon
an assignment of the loan under the applicable Sale Agreement to the applicable
Seller, any related original note will be endorsed to the Administrative Agent
and held by the Collateral Custodian, on behalf of the Secured Parties, and any
Loan Register will reflect the transfer of the loan to the applicable Seller,
(c) the applicable Seller, as assignee of the loan, will have all of the rights
but none of the obligations of the applicable Originator with respect to such
loan and the applicable Originator’s right, title and interest in and to the
Related Property including the right to receive and collect payments directly in
its own name and to enforce its rights directly against the Obligor thereof to
the extent the applicable Originator has such rights, (d) the loan, if

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secured, is secured by an undivided interest in the Related Property that also
secures and is shared by, on a pro rata basis, all other holders of such
Obligor’s loans of equal priority and (e) the applicable Originator (or a
wholly-owned subsidiary of CapitalSource Inc.) is the collateral agent and
payment agent for all holders of such Loan.
     “Aggregate Outstanding Loan Balance”: On any date of determination, the sum
of (i) the Outstanding Loan Balances of all Eligible Loans included as part of
the Collateral on such date, minus (ii) the Outstanding Loan Balances of any
Defaulted Loans, minus (iii) the Outstanding Loan Balances of any Loans that do
not have an Eligible Risk Rating (to the extent such Loans are not included in
clause (ii) above), plus (iv) the aggregate Adjusted Balances of all Defaulted
Loans, plus (v) the aggregate Adjusted Balances of all Loans that do not have an
Eligible Risk Rating (to the extent such Loans are not included in clause (iv)
above).
     “Aggregate Unpaids”: At any time, an amount equal to the sum of (i) all
unpaid “Obligations” (as defined in the CS Europe Financing) owed by the
relevant “Borrower” (as defined in the CS Europe Financing) to the “Secured
Parties” (as defined in the CS Europe Financing), the “Servicer” (as defined in
the CS Europe Financing), any “Successor Servicer” (as defined in the CS Europe
Financing) and the “Account Bank” (as defined in the CS Europe Financing) or any
of their assigns, and (ii) all unpaid Advances Outstanding, Interest, Breakage
Costs and all other amounts owed by the Sellers to the Purchasers, the Purchaser
Agents, the Administrative Agent, the Backup Servicer and the Collateral
Custodian hereunder (including, without limitation, all Indemnified Amounts,
other amounts payable under Article XI and amounts required under Section 2.10,
Section 2.14, Section 2.15 and Section 2.16 to the Affected Parties or
Indemnified Parties) or by the Sellers or any other Person under any fee letter
(including, without limitation, the Purchaser Fee Letter, any Additional Agent
Fee Letter, the Backup Servicer Fee Letter and the Collateral Custodian Fee
Letter) or the Sellers Guaranty delivered in connection with the transactions
contemplated by this Agreement (whether due or accrued).
     “Alarm Service Agreement”: An agreement between a dealer and its customer
pursuant to which the dealer is obligated to service and monitor the customer’s
alarm system in consideration for monthly payments by the customer.
     “Alternative Rate”: An interest rate per annum equal to the Adjusted
Eurodollar Rate; provided, however, that the Alternative Rate shall be the Base
Rate if a Eurodollar Disruption Event occurs.
     “Applicable Law”: For any Person or property of such Person, all existing
and future applicable laws, rules, regulations (including proposed, temporary
and final income tax regulations), statutes, treaties, codes, ordinances,
permits, certificates, orders and licenses of and interpretations by any
Governmental Authority (including, without limitation, usury laws, the Federal
Truth in Lending Act, and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System), and applicable judgments, decrees,
injunctions, writs, awards or orders of any court, arbitrator or other
administrative, judicial, or quasi-judicial tribunal or agency of competent
jurisdiction.

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     “Appraisal”: With respect to any Mortgaged Property as to which an
appraisal is required or permitted to be performed pursuant to the terms of this
Agreement, an appraisal performed in conformance with the guidelines of the
Appraisal Institute.
     “Appraisal Institute”: The international membership association of
professional real estate appraisers.
     “Assigned Loan”: A Loan originated by a Person other than the applicable
Originator or any other Subsidiary of CapitalSource Inc. in compliance with
Section 2.21 in which a constant percentage interest has been assigned to such
Originator by such Person in accordance with the Credit and Collection Policy
and (i) such transaction has been fully consummated prior to such Loan becoming
part of the Collateral hereunder, (ii) no later than 30 days after the Closing
Date, the applicable Originator is a party to a credit agreement and/or an
assignment agreement and a promissory note or loan register, as applicable, with
the Obligor with respect to such Loan and (iii) the agent receives payment
directly from the Obligor thereof on behalf of each lender that has been
assigned a percentage interest in such Loan.
     “Assignment of Leases and Rents”: With respect to any Mortgaged Property,
any assignment of leases, rents and profits or similar instrument executed by
the Obligor, assigning to the mortgagee all of the income, rents and profits
derived from the ownership, operation, leasing or disposition of all or a
portion of such Mortgaged Property, whether contained in the Mortgage or in a
document separate from the Mortgage, in the form that was duly executed,
acknowledged and delivered, as amended, modified, renewed or extended through
the date hereof and from time to time hereafter in accordance with the Credit
and Collection Policy.
     “Assignment of Mortgage”: As to each Loan secured by an Interest in Real
Property, one or more assignments, notices of transfer or equivalent
instruments, each in recordable form and sufficient under the laws of the
relevant jurisdiction to reflect the transfer of the related Mortgage or similar
security instrument and all other documents related to such Loan to the
applicable Seller and to grant a perfected lien thereon by the applicable Seller
in favor of the Administrative Agent, on behalf of the Secured Parties, each
such Assignment of Mortgage to be substantially in the form of Exhibit I hereto.
     “Available Funds”: With respect to any Payment Date, all amounts received
in the Collection Account (including, without limitation, any Collections on
Loans or REO Assets included in the Collateral and earnings from Permitted
Investments in the Collection Account), together with collections on Loans or
REO Assets received in the Lock-Box Account, in each case during the Collection
Period that ended on the last day of the calendar month immediately preceding
the calendar month in which such Payment Date occurs.
     “B-Note Loan”: Any Term Loan that (i) is secured by a valid and perfected
first priority Lien on all of the Obligor’s assets constituting Related Property
for the Loan, (ii) has a “first dollar” at risk not to exceed 65% of the
Loan-to-Value and a “last dollar” at risk not to exceed 85% of the Loan-to-Value
and (iii) contains terms which, upon the occurrence of an event of default under
the Loan Documents or in the case of any liquidation or foreclosure on the
Related Property, provide that the principal of the applicable Seller’s portion
of such Loan would be paid only after the other lenders party to such Loan
(including any lender party making any Senior

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Secured Loan or Senior Secured Whole Loan whose right to payment is
contractually senior to such Seller) is paid in full.
     “Backup Servicer”: Wells Fargo Bank, National Association, not in its
individual capacity, but solely as Backup Servicer, its successor in interest
pursuant to Section 7.3 or such Person as shall have been appointed as Backup
Servicer pursuant to Section 7.5.
     “Backup Servicer Fee Letter”: The Backup Servicer Fee Letter, dated as of
the date hereof, by and among the Servicer, the Administrative Agent, and the
Backup Servicer, as such letter may be amended, modified, supplemented, restated
or replaced from time to time.
     “Backup Servicer Fee Rate”: The rate per annum set forth in the Backup
Servicer Fee Letter as the “Backup Servicer Fee Rate.”
     “Backup Servicer Termination Notice”: Defined in Section 7.5.
     “Backup Servicing Fee”: Defined in the Backup Servicer Fee Letter.
     “Bank Subsidiary”: CapitalSource Bank, an industrial bank incorporated
under the laws of the State of California.
     “Bankruptcy Code”: The United States Bankruptcy Reform Act of 1978 (11
U.S.C. § 101, et seq.), as amended from time to time.
     “Base Rate”: On any date, a fluctuating interest rate per annum equal to
the higher of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.5%.
     “Benefit Plan”: Any employee benefit plan as defined in Section 3(3) of
ERISA in respect of which the applicable Seller or any ERISA Affiliate of such
Seller is, or at any time during the immediately preceding six years was, an
“employer” as defined in Section 3(5) of ERISA.
     “Borrowing Notice”: The notice (in the form of Exhibit A-1) required to be
delivered by each Seller on the Closing Date in respect of the Advance.
     “Breakage Costs”: Any amount or amounts as shall compensate a Purchaser for
any loss, cost or expense incurred by such Purchaser (as determined by such
Purchaser’s Purchaser Agent in such Purchaser Agent’s sole discretion) as a
result of (i) a prepayment by the applicable Seller of Advances Outstanding or
Interest or (ii) any difference between the CP Rate and the Adjusted Eurodollar
Rate. All Breakage Costs shall be due and payable hereunder upon demand.
     “Business Day”: Any day other than a Saturday or a Sunday on which
(a) banks are not required or authorized to be closed in Minneapolis, Minnesota,
New York City, New York, Charlotte, North Carolina, and (b) if the term
“Business Day” is used in connection with the determination of the LIBOR Market
Index Rate, dealings in United States dollar deposits are carried on in the
London interbank market.

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     “CapitalSource Bank Acquisition Agreement” The Purchase and Assumption
Agreement dated as of April 13, 2008, by and among CapitalSource Inc.,
CapitalSource TRS Inc., Fremont General Corporation, Fremont General Credit
Corporation and Fremont Investment & Loan.
     “CapitalSource Bank Entities”: Collectively, (i) the Wholly Owned
Subsidiary formed by CapitalSource Inc. or one of its Wholly Owned Subsidiaries
for the purpose of holding the assets acquired in the CapitalSource Bank
Transaction and (ii) any Subsidiaries thereof.
     “CapitalSource Bank Transaction”: The acquisition by CapitalSource Inc. of
the assets of Fremont Investment & Loan pursuant to the terms of the
CapitalSource Bank Acquisition Agreement.
     “CapitalSource LIBOR Rate”: The London interbank offered rate for deposits
in Dollars for the applicable maturity, as and when determined in accordance
with the applicable Required Loan Documents.
     “CapitalSource Prime Rate”: The rate designated by CapitalSource Finance
(or the originator of, or applicable agent with respect to, an Assigned Loan)
from time to time and/or pursuant to the related loan documents as its prime
rate in the United States, such rate to change as and when the designated rate
changes; provided, however, the CapitalSource Prime Rate is not intended to be
the lowest rate of interest charged by CapitalSource (or such originator) in
connection with extensions of credit to debtors.
     “Capital Stock”: With respect to any Person, shares of capital stock of (or
other ownership or profit interests in) such Person, warrants, options or other
rights for the purchase or other acquisition from such Person of shares of
capital stock of (or other ownership or profit interests in) such Person,
securities convertible into or exchangeable for shares of capital stock of (or
other ownership or profit interests in) such Person or warrants, rights or
options for the purchase or other acquisition from such Person of such shares
(or such other interests), and other ownership or profit interests in such
Person (including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any
date of determination.
     “Change-in-Control”:
     (a) any Person or two or more Persons acting in concert shall have acquired
“beneficial ownership,” directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of, or control
over, Voting Stock of CapitalSource Inc. (or other securities convertible into
such Voting Stock) representing 33-1/3% or more of the combined voting power of
all Voting Stock of CapitalSource Inc.;
     (b) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of CapitalSource Inc. and its
Subsidiaries taken as a whole to any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act);

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     (c) the replacement of more than a majority of the board of directors of
any Originator, the Servicer, CapitalSource Inc or any other Credit Party over a
two year period from the directors who constituted such board of directors at
the beginning of such period, and such replacements shall not have been approved
by a vote of at least a majority of the board of directors of such Originator,
the Servicer, CapitalSource Inc. or such other Credit Party, as applicable, then
still in office who were either members of the applicable board of directors as
of the beginning of such period or whose election as a member of such board of
directors was previously approved;
     (d) the failure of CapitalSource Inc. to own (directly or through wholly
owned subsidiaries) 99.9% of the outstanding Voting Stock of CapitalSource TRS
LLC (f/k/a CapitalSource TRS Inc.) or any Servicing Guarantor;
     (e) the failure of CapitalSource TRS LLC (f/k/a CapitalSource TRS Inc.) to
own (directly or through wholly owned subsidiaries) 99.9% of the outstanding
Voting Stock of each of the Originators or any Servicing Guarantor;
     (f) the creation or imposition of any Lien on any limited liability company
membership interests in the applicable Seller; provided, however, that it shall
not be a Change-in-Control if a Lien on such limited liability membership
interests of the applicable Seller shall be created or imposed in favor of WBNA,
as agent, or its successors, assigns or subsequent transferees in such capacity,
in connection with (i) that certain Credit Agreement, dated as of March 14,
2006, by and among CapitalSource Inc., the guarantors listed therein, the
lenders listed therein, WBNA and Bank of America, N.A., and all Credit Documents
(as defined therein) thereunder, (ii) that certain Pledge Agreement, dated as of
December 23, 2008, by and among CapitalSource Inc., its direct and indirect
subsidiaries listed therein, WBNA, the Collateral Custodian and the Servicer,
and (iii) that certain Security Agreement, dated as of December 23, 2008, by and
among CapitalSource Inc., its direct and indirect subsidiaries listed therein
and WBNA;
     (g) the failure by the CSIII Originator to own all of the limited liability
company membership interests in the CSIII Seller; provided, however, that it
shall not be a Change-in-Control if WBNA, or its successors, assigns or
subsequent transferees, shall own such limited liability membership interests of
the CSIII Seller; or
     (h) the failure by the QRS Originator to own all of the limited liability
company membership interests in the QRS Seller; provided, however, that it shall
not be a Change-in-Control if WBNA, or its successors, assigns or subsequent
transferees, shall own such limited liability membership interests of the QRS
Seller.
     Notwithstanding the foregoing, solely for the purpose of determining
whether there has been a Change-in-Control pursuant to clause (a) above, any
purchase by one or more Excluded Persons which increases any of such Excluded
Persons’ direct or indirect ownership interest (whether individually or in the
aggregate) in the Voting Stock of CapitalSource Inc. shall not constitute a
Change-in-Control even if the amount of Voting Stock acquired or controlled by
such Excluded Person(s) exceeds (whether individually or in the aggregate)
33-1/3% of the combined voting power of all Voting Stock of any Originator, any
Servicing Guarantor or

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CapitalSource Inc., as applicable; provided that for so long as any of such
Excluded Persons’ direct or indirect ownership interest in the Voting Stock of
any Originator, any Servicing Guarantor or CapitalSource Inc. exceeds
(individually or in the aggregate) 33-1/3% of the combined voting power of all
Voting Stock of such Originator, any Servicing Guarantor or CapitalSource Inc.,
as applicable, the initiation by such Originator, any Servicing Guarantor or
CapitalSource Inc. of any action intended to terminate or having the effect of
terminating the registration of its securities under Section 12(g) of the
Exchange Act or intended to suspend or having the effect of suspending its
obligation to file reports with the U.S. Securities and Exchange Commission
under Sections 13 and 15(d) of the Exchange Act, shall constitute a
Change-in-Control. “Excluded Person” shall mean each of John Delaney, Farallon
Capital Management, LLC and Madison Dearborn Partners, LLC and their Affiliates.
As used herein, “beneficial ownership” shall have the meaning provided in
Rule 13d-3 of the Securities and Exchange Commission under the Exchange Act.
     “Citibank Facilities”: The securitization/warehouse facilities provided
under (i) that certain Amended and Restated Sale and Servicing Agreement, dated
as of April 20, 2009, among CS Funding VII Depositor LLC, CapitalSource Finance
LLC, each of the Issuers and Liquidity Banks from time to time party thereto,
Citicorp North America, Inc., as Administrative Agent and Wells Fargo Bank,
National Association, as the Backup Servicer and as the Collateral Custodian,
and the related documentation with respect thereto, as such agreement and
documentation have been and may in the future be amended, modified or
supplemented from time to time (including any replacement facility thereto or
entered into in connection therewith), and (ii) the Third Amended and Restated
Sale and Servicing Agreement, dated as of April 20, 2009 by and among
CapitalSource Real Estate Loan LLC, 2007-A, CSE Mortgage LLC, each of the
Issuers and Liquidity Banks from time to time party thereto, Citicorp North
America, Inc., as the Administrative Agent and Wells Fargo Bank, National
Association, as the Backup Servicer and as the Collateral Custodian, and the
related documentation with respect thereto, as such agreement and documentation
have been and may in the future be amended, modified or supplemented from time
to time (including any replacement facility thereto or entered into in
connection therewith).
     “Clearing Agency”: An organization registered as a “clearing agency”
pursuant to Section 17A of the Exchange Act.
     “Closing Date”: May 29, 2009.
     “Code”: The Internal Revenue Code of 1986, as amended from time to time.
     “Collateral”: All right, title, and interest (whether now owned or
hereafter acquired or arising, and wherever located) of the Sellers in all
accounts, cash and currency, chattel paper, tangible chattel paper, electronic
chattel paper, copyrights, copyright licenses, equipment, fixtures, general
intangibles, instruments, commercial tort claims, deposit accounts, inventory,
investment property, letter-of-credit rights, software, supporting obligations,
accessions, and other property consisting of, arising out of, or related to any
of the following (in each case excluding the Retained Interest and the Excluded
Amounts): (i) the Loans and all monies due or to become due in payment under
such Loans on and after the Closing Date, including but not limited to all
Collections, but excluding any Excluded Amounts; (ii) all Related Security with

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respect to the Loans referred to in clause (i); (iii) Seller’s membership
interests or other equity interests in any REO Asset Owner; and (iv) all income
and Proceeds of the foregoing.
     “Collateral Custodian”: Wells Fargo Bank, National Association, not in its
individual capacity, but solely as Collateral Custodian, its successor in
interest pursuant to Section 8.3 or such Person as shall have been appointed
Collateral Custodian pursuant to Section 8.5.
     “Collateral Custodian Fee”: Defined in the Collateral Custodian Fee Letter.
     “Collateral Custodian Fee Letter”: The Collateral Custodian Fee Letter,
dated as of the date hereof, by and among the Originators, the Administrative
Agent and the Collateral Custodian, as such letter may be amended, modified,
supplemented, restated or replaced from time to time.
     “Collateral Custodian Termination Notice”: Defined in Section 8.5.
     “Collection Account”: Defined in Section 6.4(f).
     “Collection Date”: The date on which the Aggregate Unpaids have been
reduced to zero and indefeasibly paid in full.
     “Collection Period”: Each calendar month.
     “Collections”: (a) All cash collections and other cash proceeds of any
Loan, including, without limitation, Scheduled Payments, Finance Charges,
Prepayments, Insurance Proceeds, Distributions, all Recoveries or other amounts
received in respect thereof but excluding any Excluded Amounts, (b) any cash
proceeds or other funds received by the Sellers or the Servicer with respect to
any Related Security, (c) all cash collections and other cash proceeds received
by the Sellers or the Servicer (i) pursuant to the priority of payments and the
payment mechanics set forth in the CS Europe Financing and (ii) under the
Guaranty, (d) all cash collections and cash proceeds of any REO Asset and
(e) all Deemed Collections.
     “Commercial Paper Notes”: On any day, any short-term promissory notes of
any Purchaser (or its related commercial paper issuer) issued in the commercial
paper market.
     “Commitment”: With respect to each Purchaser, the commitment of such
Purchaser to make the Advance in accordance herewith in an amount not to exceed
the amount set forth next to such Purchaser name on the signature pages hereto.
     “Condominium Conversions”: Includes properties that have been, or are
expected to be, converted to condominium for ownership. For the avoidance of
doubt, Condominium Conversions shall also be considered Development Properties.
     “Conduit Purchasers”: Defined in the Preamble of this Agreement.
     “Consolidated Subsidiary”: With respect to any Person, at any date, any
Subsidiary the accounts of which, in accordance with GAAP, would be consolidated
with those of such Person in its consolidated and consolidating financial
statements as of such date.

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     “Consolidated Tangible Net Worth”: As of any date of determination, with
respect to CapitalSource Inc., (A) to the extent the Credit Agreement is in
effect, the definition of “Consolidated Tangible Net Worth” as set forth in such
Credit Agreement, and (B) in all other cases, the assets less the liabilities of
CapitalSource Inc., its Consolidated Subsidiaries, the CapitalSource Bank
Entities and each Healthcare REIT Consolidated Subsidiary, less intangible
assets (including goodwill), less loans or advances to stockholders, directors,
officers or employees, all determined in accordance with GAAP; provided,
however, that if CapitalSource Inc.’s financial statements as of such date
include goodwill created as a result of the CapitalSource Bank Transaction, then
all such goodwill in an amount not to exceed $200,000,000 shall be treated as a
tangible asset for the purpose of this definition; provided, further, however,
that with respect to any Consolidated Subsidiary, CapitalSource Bank Entity or
Healthcare REIT Consolidated Subsidiary, if all of the shares of Capital Stock
are not, directly or indirectly, owned by CapitalSource Inc., then, with respect
to any such Person, the Consolidated Tangible Net Worth of such Person shall be
calculated by multiplying the Consolidated Tangible Net Worth of such Person by
the percentage of the aggregate proceeds that would be distributed to
CapitalSource Inc., directly or indirectly, upon the dissolution of such Person.
     “Construction Properties”: Any property that (a) is subject to ground up
construction of new improvements, involving, without limitation, new
foundations, new structural steel or wood frame, and (b) secures a future
advance loan or revolving loan, and which either (x) the related future funding
obligation represented more than 30% of the total committed amount of the
underlying loan as of the date the Seller acquired such future advance loan or
revolving loan or (y) the related future funding obligation represented more
than 30% of the total committed amount of the underlying loan as of the date of
origination of such future advance loan or revolving loan.
     “Contractual Obligation”: With respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or is subject.
     “Core Transaction Terms”: The terms of any transaction (including covenants
with respect to tangible net worth, tenor, and economic terms, including,
without limitation, interest rate margins, whether calculated as a spread, a fee
or otherwise, in the aggregate), unused facility fees, renewal and exit fees,
advance rate calculations, minimum equity or overcollateralization requirements,
principal reduction terms (other than through the liquidation of a unique
collateral specified to such transaction) and events of default.
     “CP Rate”: For any day during any Accrual Period, the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by a
Conduit Purchaser from time to time as interest on or otherwise (by means of
interest rate hedges or otherwise taking into consideration any incremental
carrying costs associated with short-term promissory notes issued by such
Conduit Purchaser (or its related commercial paper issuer) maturing on dates
other than those certain dates on which such Conduit Purchaser is to receive
funds) in respect of the promissory notes issued by such Conduit Purchaser (or
its related commercial paper issuer) that are allocated, in whole or in part, by
such Conduit Purchaser’s Purchaser Agent (on its behalf) to fund or maintain the
Advances Outstanding funded by such Conduit Purchaser during such

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period, as determined by such Conduit Purchaser’s Purchaser Agent (on its
behalf) and reported to the applicable Seller and the Servicer, which rates
shall reflect and give effect to (i) the commissions of placement agents and
dealers in respect of such promissory notes, to the extent such commissions are
allocated, in whole or in part, to such promissory notes by such Conduit
Purchaser’s Purchaser Agent (on its behalf) and (ii) other borrowings by such
Conduit Purchaser, including, without limitation, borrowings to fund small or
odd dollar amounts that are not easily accommodated in the commercial paper
market; provided that if any component of such rate is a discount rate, in
calculating the CP Rate, such Conduit Purchaser’s Purchaser Agent shall for such
component use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum.
     “Credit Agreement”: That certain Credit Agreement, dated as of March 14,
2006, among CapitalSource Inc., the guarantors listed therein, the lenders
listed therein, Wachovia Bank, National Association, as administrative agent,
swingline lender and issuing lender, Bank of America, N.A., as issuing lender,
Wachovia Capital Markets, LLC, as sole bookrunner and lead arranger, and Bank of
Montreal, Barclays Bank PLC and SunTrust Bank, as co-documentation agents, as
such agreement has been and may in the future be amended, modified or
supplemented from time to time.
     “Credit and Collection Policy”: The written credit policies and procedures
manual of each Originator and the Servicer (which policies shall include without
limitation policies on a risk rating system, due diligence format, underwriting
parameters and credit approval procedures) in the form provided to the
Administrative Agent prior to the Closing Date, as it may be as amended or
supplemented from time to time in accordance with Section 5.1(h) and Section
5.4(f).
     “Credit Party”: Shall have the meaning given to such term in the Credit
Agreement.
     “CSIII Criteria”: The eligibility criteria for the CSIII Loans as set forth
on Schedule V attached hereto.
     “CSIII Loan”: The loans originated by the CSIII Originator that are
identified on a Loan List and have been sold or contributed to the CSIII Seller
and included as part of the Collateral, which loan includes, without limitation,
(i) the Required Loan Documents and Loan File, and (ii) all right, title and
interest of the CSIII Originator in and to the loan and any Related Property.
     “CSIII Originator”: Defined in the Preamble of this Agreement.
     “CSIII Sale Agreement”: The Amended and Restated Sale and Contribution
Agreement, dated as of May 29, 2009, between the CSIII Originator and the CSIII
Seller, as amended, modified, waived, supplemented, restated or replaced from
time to time.
     “CSIII Seller”: Defined in the Preamble of this Agreement.
     “CS Europe Financing”: The financing transaction between CS Europe Finance
Limited, CS UK Finance Limited, Wachovia Bank, National Association and the
other parties thereto, entered into on or about October 3, 2007, as amended,
modified, waived, supplemented, restated or replaced from time to time.

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     “Deemed Collection”: Defined in Section 2.4(b).
     “Defaulted Loan”: A Loan as to which any of the following first occurs:
(i) the Servicer has determined or should have reasonably determined in
accordance with the Credit and Collection Policy that such Loan is not
collectible, (ii) all or any portion of one or more principal or interest
payments (other than in respect of default rate interest) remain unpaid for at
least ninety (90) days from the original due date for such payment (without
giving effect to any Servicer Advance thereon), (iii) such Loan has been subject
to a Material Modification, (iv) such Loan has a Related Loan (other than with
respect to Next Generation Vending and Food Services, Inc. or Classic Party
Rentals, Inc.) that would be a Defaulted Loan pursuant to clause (ii) of this
definition if such Related Loan was a Loan, or (v) any Related Property of such
Loan becomes an REO Asset; provided that such Loan will cease to be a Defaulted
Loan under clauses (ii) and (iv) above to the extent that such Obligor pays all
such arrears in respect of such Loans or Related Loans, as applicable, in full
and remains current on all such Loans and Related Loans for a period of at least
90 days.
     “Derivatives”: Any exchange-traded or over-the-counter (i) forward, future,
option, swap, cap, collar, floor or foreign exchange contract or any combination
thereof, whether for physical delivery or cash settlement, relating to any
interest rate, interest rate index, currency, currency exchange rate, currency
exchange rate index, debt instrument, debt price, debt index, depository
instrument, depository price, depository index, equity instrument, equity price,
equity index, commodity, commodity price or commodity index, (ii) any similar
transaction, contract, instrument, undertaking or security, or (iii) any
transaction, contract, instrument, undertaking or security containing any of the
foregoing.
     “Determination Date”: The last day of each Collection Period.
     “Development Properties”: An existing property that is undergoing
renovation or redevelopment that either (i) disrupts at least 30% of the
occupancy of the property, or (ii) temporarily reduces the NOI of the property
by more than 30%; provided that, a property will not be considered a Development
Property after it has an occupancy rate of at least 80%.
     “DIP Loan”: Any Loan to an Obligor that is a Chapter 11 debtor under the
Bankruptcy Code which is permitted by the Credit and Collection Policy and also
satisfies the following criteria: (a) the Loan is duly authorized by a final
order of the applicable bankruptcy or federal district court under the
provisions of subsection (b), (c) or (d) of 11 U.S.C. § 364, (b) the Obligor’s
bankruptcy case is still pending as a case under the provisions of Chapter 11 of
Title 11 of the Bankruptcy Code and has not been dismissed or converted to a
case under the provisions of Chapter 7 of Title 11 of the Bankruptcy Code,
(c) the Obligor’s obligations under such Loan have not been (i) disallowed, in
whole or in part, or (ii) subordinated, in whole or in part, to the claims or
interests of any other Person under the provisions of 11 U.S.C. § 510, (d) the
Loan is secured and the liens and security interests granted by the applicable
federal bankruptcy or district court in relation to the Loan have not been
subordinated, in whole or in part, to the liens or interests of any other lender
under the provisions of 11 U.S.C. § 364(d) or otherwise, (e) the Obligor is not
in default on its payment obligations under the Loan, (f) neither the Obligor
nor any party in interest has filed a Chapter 11 plan with the applicable
federal bankruptcy or district court that, upon confirmation, would (i) disallow
or subordinate the Loan,

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in whole or in part, (ii) subordinate, in whole or in part, any lien or security
interest granted in connection with such Loan, (iii) fail to provide for the
repayment, in full and in cash, of the Loan upon the effective date of such plan
or (iv) otherwise impair, in any manner, the claim evidenced by the Loan and
(g) the Loan is substantially in a form previously delivered by the applicable
Originator to the Administrative Agent in connection with this transaction or in
such other form as shall be adopted by the applicable Originator and approved in
writing by the Administrative Agent at least ten days prior to such Loan
becoming part of the Collateral hereunder. For the purposes of this definition,
an order is a “final order” if the applicable period for filing a motion to
reconsider or notice of appeal in respect of a permanent order authorizing the
Obligor to obtain credit has lapsed and no such motion or notice has been filed
with the applicable federal bankruptcy or district court or the clerk thereof.
     “Discretionary Sale”: Defined in Section 2.20(a).
     “Discretionary Sale Date”: The Business Day identified by the applicable
Seller to the Administrative Agent in a Discretionary Sale Notice as the
proposed date of a Discretionary Sale.
     “Discretionary Sale Notice”: Defined in Section 2.20(a)(i).
     “Distributions”: All dividends, payments, deferred payments, money and
other distributions (whether in cash or in kind) on and all interest on and in
respect of, and all proceeds of the Collateral, of whatever kind or description,
real or personal, whether in the ordinary course or in partial or total
liquidation or dissolution, or any recapitalization, reclassification of
capital, or reorganization or reduction of capital, or otherwise.
     “Dollars”: Means, and the conventional “$” signifies, the lawful currency
of the United States.
     “Eligible Loan”: On the Closing Date, each Loan (i) that, if a QRS Loan,
satisfies the QRS Criteria, or if a CSIII Loan, satisfies the CSIII Criteria and
(ii) that, for any Loan other than a QRS Loan or a CSIII Loan (A) for which the
Administrative Agent, Collateral Custodian and Backup Servicer have received the
following on or prior to the Closing Date: (1) a faxed copy of the duly executed
original promissory note (if any), master purchase agreement and purchase
statements, Loan Register and Loan Checklist in a form and substance
satisfactory to the Administrative Agent and (2) a Borrowing Notice; provided
that if such Loan is part of a capital contribution to the applicable Seller the
Collateral Custodian shall have received the Required Loan Documents within
three Business Days of receipt of the Certificate of Assignment, and (B)
otherwise satisfies each of the following eligibility requirements, as
applicable; provided, however, that the eligibility requirements set forth in
clauses (a), (b), (j), (q), (r), (z) and (ee) shall be waived for a period of
30 days after the Closing Date with respect to any such Loan but solely to the
extent that such eligibility requirements are not satisfied as a result of the
failure of the Seller to obtain any required assignment and acceptance agreement
or other comparable assignment or notice required by the Required Loan
Documents, after which any such Loan that does not satisfy each of the following
eligibility requirements shall be a Warranty Loan (without regard to any other
cure period or grace period that might otherwise be applicable to a failure of
such eligibility requirements set forth above):

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(1) With respect to any such Loan:
     (a) the Loan, together with the Related Security, has been originated or
acquired by the applicable Originator, sold to the applicable Seller pursuant to
(and in accordance with) the applicable Sale Agreement and the applicable Seller
has good title, free and clear of all Liens (other than Permitted Liens), on
such Loan and Related Security;
     (b) the Loan (together with the Collections and Related Security related
thereto) has been the subject of a grant by the applicable Seller in favor of
the Administrative Agent, on behalf of the Secured Parties, of a first priority
perfected security interest;
     (c) at the time such Loan is included in the Collateral, the Loan (i) is
not (and since its origination by the applicable Originator or, in the case of
Acquired Loans and Assigned Loans, acquisition by the applicable Originator has
never been) a Defaulted Loan, (ii) is not more than ten days past due with
respect to payments of principal or interest, and (iii) has never been more than
thirty days past due (after giving effect to a five day grace period in
determining the number of days past due) with respect to payments of principal
or interest or, in the case of Acquired Loans and Assigned Loans, to the best of
the applicable Originator’s knowledge after due inquiry, has never been more
than thirty days past due in the twelve months prior to acquisition;
     (d) the Loan is an “eligible asset” as defined in Rule 3a-7 under the 40
Act;
     (e) the Loan is a contract the purchase of which with the proceeds of
Commercial Paper Notes would constitute a “current transaction” within the
meaning of Section 3(a)(3) of the Securities Act of 1933, as amended;
     (f) the Loan is an “account”, “chattel paper”, “instrument” or a “general
intangible” within the meaning of Article 9 of the UCC of all applicable
jurisdictions;
     (g) the Obligor with respect to such Loan is an Eligible Obligor and such
Loan is payable only in United States Dollars and the Related Property with
respect to which the Loan is principally underwritten is located in the United
States;
     (h) the Loan is evidenced by (1) a promissory note or Loan Register and
(2) a credit agreement, security agreement, loan or note purchase agreement or
other related underlying loan documents, in each case, that have been duly
authorized and executed, are in full force and effect and constitute the legal,
valid, binding and absolute and unconditional payment obligation of the related
Obligor, enforceable against such Obligor in accordance with their terms
(subject to applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and to general principles of equity,
whether considered in a suit at law or in equity), and there are no conditions
precedent to the enforceability or validity of the Loan that have not been
satisfied or validly waived; provided that, in the case of clause (2) above, in
the absence of a separate security agreement, the related credit agreement, loan
or note purchase agreement or other related underlying loan documents shall
provide for the grant of a security interest in the Related Property by the
Obligor;

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     (i) the Loan does not contravene in any material respect any Applicable
Laws (including, without limitation all applicable predatory and abusive lending
laws and all laws, rules and regulations relating to usury, truth in lending,
fair credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices, licensing and privacy) and with respect to which no part
thereof is in violation of any Applicable Law in any material respect;
     (j) neither the assignment of the Loan under the applicable Sale Agreement
by the applicable Originator nor the granting of a security interest hereunder
by the applicable Seller violates, conflicts with or contravenes any Applicable
Laws or any contractual or other restriction, limitation or encumbrance;
     (k) on or before the Closing Date, the Obligor of such Loan or agent for
such Loan, as applicable, shall have been directed to make all payments to the
Lock-Box or directly to the Lock-Box Account;
     (l) the Loan requires the Obligor thereof to maintain reasonable and
customary property damage and loss insurance with respect to the real or
personal property constituting the Related Property (if any) if such Related
Property is of a type customarily so insured;
     (m) the Related Property (if any) (i) has not been foreclosed on or
repossessed from the current Obligor by the Servicer, and (ii) has not suffered
any material loss or damage that has not been repaired or restored or for which
insurance proceeds are not available;
     (n) the Loan provides by its terms that the Obligor’s payment obligations
are absolute and unconditional without any right of rescission, setoff,
counterclaim or defense for any reason against the applicable Originator and the
Loan contains a clause that has the effect of unconditionally and irrevocably
obligating the Obligor to make periodic payments (including taxes)
notwithstanding any damage to, defects in, or destruction of the Related
Property (if any) or any other event, including obsolescence of any property or
improvements;
     (o) the Loan is not subject to any litigation, dispute, refund, claims of
rescission, setoff, netting, counterclaim or defense whatsoever, including but
not limited to, claims by or against the Obligor thereof or a payor to or
account debtor of such Obligor;
     (p) the Loan requires the Obligor to maintain the Related Property in good
condition and to bear all the costs of operating and maintaining same, including
taxes and insurance relating thereto;
     (q) the Loan shall not have been originated in, nor shall it be subject to
the laws of, any jurisdiction under which the sale, transfer and assignment of
such Loan under the Transaction Documents would be unlawful, void or voidable;
     (r) the Loan, together with the Required Loan Documents and Loan File
related thereto, is assignable and does not require the consent of or notice to
the Obligor to consummate the transactions contemplated by the Transaction
Documents or contain any other restriction on the transfer or the assignment of
the Loan for the purpose of consummating the transactions contemplated by the
Transaction Documents other than a consent or waiver of such restriction that
has been obtained prior to the date on which the Loan was sold to the applicable
Seller;

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     (s) other than with respect to the Loan made to Reston Square Hotels, LLC,
the Obligor of such Loan is legally responsible for all taxes relating to the
Related Security or other security relating to such Loan, and all payments in
respect of the Loan are required to be made free and clear of, and without
deduction or withholding for or on account of, any taxes, unless such
withholding or deduction is required by Applicable Law in which case the Obligor
thereof is required to make “gross-up” payments that cover the full amount of
any such withholding taxes on an after-tax basis;
     (t) the Loan complies with the representations and warranties made by the
applicable Seller and Servicer hereunder and all information provided by such
Seller or the Servicer with respect to the Loan is true and correct in all
material respects;
     (u) the Loan and the Related Security have not been sold, transferred,
assigned or pledged by the applicable Seller to any Person;
     (v) no selection procedure adverse to the interests of the Administrative
Agent, the Purchaser Agents or the Secured Parties was utilized by the
applicable Seller or the applicable Originator in the selection of Loan for
inclusion in the Collateral; it being understood that selection procedures used
by such Seller or such Originator for the inclusion of Loans in one or more of
its various securitizations or other financing facilities and which are solely
intended to obtain the most beneficial advance rates thereunder and/or otherwise
maximize the efficiency of such facilities, shall not be deemed to be adverse
procedures for purposes of this paragraph;
     (w) the Loan has not been compromised, adjusted, extended, satisfied,
rescinded, set-off or modified by the applicable Seller, the applicable
Originator or the Obligor with respect thereto, and no Loan is subject to
compromise, adjustment, extension, satisfaction, rescission, set-off,
counterclaim, defense, abatement, suspension, deferment, deductible, reduction,
termination or modification, whether arising out of transactions concerning the
Loan, or otherwise, by the applicable Seller, the applicable Originator or the
Obligor with respect thereto except for amendments to such Loan otherwise
permitted under Section 7.4(a) of this Agreement and in accordance with the
Credit and Collection Policy;
     (x) the particular Loan is not one as to which the applicable Seller has
knowledge which should lead it to expect such Loan will not be paid in full;
     (y) the Obligor of such Loan is not and has not been the subject of an
Insolvency Event or Insolvency Proceeding in the past three years;
     (z) the Loan is secured by a valid, perfected, first priority (other than
with respect to Subordinated Loans) security interest in all assets that
constitute the collateral for the Loan (subject to Liens expressly permitted by
the related underlying loan documents; provided that such Liens are not material
in relation to the value of the Related Property and are customary for
transactions of such nature), and, other than the loan types listed above, such
collateral shall include but not be limited to the material intellectual
property of the Obligor (if any);
     (aa) all material consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority required to be
obtained, effected or given in

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connection with the making or performance of the Loan have been duly obtained,
effected or given and are in full force and effect;
     (bb) the Loan is not a Fixed Rate Loan;
     (cc) the Loan satisfies all applicable requirements of and was originated
or acquired, underwritten and closed in accordance with the Credit and
Collection Policy (including without limitation the execution by the Obligor of
all documentation required by the Credit and Collection Policy);
     (dd) the Loan was generated in the ordinary course of the applicable
Originator’s business;
     (ee) the Loan arises pursuant to documentation with respect to which the
applicable Originator has performed all obligations required to be performed by
it thereunder;
     (ff) the Loan is not Margin Stock;
     (gg) the acquisition of the Loan by the applicable Seller will not cause
such Seller or the pool of Collateral to be required to be registered as an
investment company under the 40 Act;
     (hh) the Loan was purchased, acquired or originated by the applicable
Originator (or an Affiliate thereof) at not less than 85% of its par value as of
the date of its purchase, acquisition or origination;
     (ii) [Reserved];
     (jj) the Loan is not subject to a guaranty by the applicable Originator or
any Affiliate thereof;
     (kk) [Reserved];
     (ll) [Reserved];
     (mm) the Loan provides (i) for periodic payments of interest and/or
principal in cash, which are due and payable on a monthly, quarterly or
semi-annual basis unless otherwise consented to in writing by the Administrative
Agent, and (ii) that the Servicer (or, with respect to Agented Loans and
Assigned Loans, that the agent or a majority of the related lenders) may
accelerate all payments on the Loan, if the Obligor is in default under the Loan
and any applicable grace period has expired (in the case of any Subordinated
Loan, subject to any applicable intercreditor or subordination agreement);
     (nn) the Loan provides for cash payments that fully amortize the
Outstanding Loan Balance of such Loan on or by its maturity and does not provide
for such Outstanding Loan Balance to be discounted pursuant to a prepayment in
full;
     (oo) the Loan does not permit the Obligor to defer all or any portion of
the current cash interest due thereunder;

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     (pp) the Loan does not permit the payment obligation of the Obligor
thereunder to be converted or exchanged for equity capital of such Obligor;
     (qq) other than Participation Loans, Agented Loans and Assigned Loans, with
respect to the applicable Originator’s obligation to fund and the actual funding
of the Loan by such Originator, the applicable Originator has not assigned or
granted participations to, in whole or in part, any Person;
     (rr) [Reserved];
     (ss) if the Obligor of such Loan is the Obligor of more than one Loan, all
such Loans are cross-collateralized and cross-defaulted;
     (tt) the Loan does not represent capitalized interest or payment
obligations relating to “put” rights;
     (uu) the applicable Originator (i) has completed to its satisfaction, in
accordance with its Credit and Collection Policy, a due diligence audit and
collateral assessment with respect to such Loan and (ii) has done nothing to
impair the rights of the Administrative Agent, the Purchaser Agents or the
Secured Parties with respect to the Loan, the Related Security, the Scheduled
Payments or any income or Proceeds therefrom;
     (vv) the Loan (or the underlying Loan in the case of any Agented Loan,
Assigned Loan or Participation Loan) is a Middle Market ABL Loan, Senior Secured
Loan, Second Lien Loan or Subordinated Loan;
     (ww) except with respect to Subordinated Loans, the Loan is not
subordinated to any other loan or financing to the related Obligor;
     (xx) if the Loan is a Revolving Loan, either it provides by its terms that
any future funding thereunder is in the applicable Originator’s sole and
absolute discretion or it is subject to the Retained Interest provision of this
Agreement;
     (yy) the Face Amount of the Loan is the dollar amount thereof shown on the
books and records of the applicable Originator and applicable Seller;
     (zz) with respect to Subordinated Loans, the applicable Originator has
entered into an intercreditor agreement or subordination agreement (or such
provisions are contained in the principal loan documents) with, or provisions
for the benefit of, the senior lender, which agreement or provisions are
assignable to and have been assigned to the applicable Seller, and which provide
that any standstill of remedies by the applicable Originator or its assignee is
limited (A) such that there shall be no standstill of remedies (x) until after a
payment default with respect to the senior obligation or the applicable
Originator’s or assignee’s receipt from the senior lender or Obligor of a notice
of default by the Obligor under the senior debt and (y) unless a covenant or
payment default is also in effect, and (B) to no longer than one hundred eighty
(180) days in duration in the aggregate in any given year;

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     (aaa) with respect to any Acquired Loan or Assigned Loan, such Loan has
been re-underwritten by the applicable Originator and satisfies all of such
Originator’s underwriting criteria;
     (bbb) with respect to any Acquired Loan acquired from an Affiliate of the
applicable Originator, the Administrative Agent has received a satisfactory
legal opinion concerning the acquisition of such Loan by such Originator in a
true sale transaction;
     (ccc) with respect to any Acquired Loan that was acquired in a pool by the
applicable Originator along with one or more other Acquired Loans, the
Administrative Agent has approved in writing such Loan for inclusion in the
Collateral and has completed its own due diligence with respect to such Loan;
     (ddd) with respect to Agented Loans, the related underlying loan documents
(i) shall include a credit agreement, note purchase agreement or similar
agreement containing provisions relating to the appointment and duties of a
payment agent and a collateral agent and intercreditor and (if applicable)
subordination provisions substantially similar to the forms previously delivered
by the applicable Originator to the Administrative Agent in connection with this
transaction, (ii) are duly authorized, fully and properly executed and are the
valid, binding and unconditional payment obligation of the Obligor thereof and
(iii) are consistent with the documentation and perfection standards of
transactions of such nature;
     (eee) with respect to Agented Loans, the applicable Originator (or a wholly
owned subsidiary of CapitalSource Inc.) has been appointed the collateral agent
of the security and the payment agent for all such loans prior to such Agented
Loan becoming a part of the Collateral;
     (fff) with respect to Agented Loans, (i) if the entity serving as the
collateral agent of the security of the lenders to such Obligor with respect to
such loan has or will change from the time of the origination of the notes, all
appropriate assignments of the collateral agent’s rights in and to the
collateral on behalf of the noteholders have been executed and filed or recorded
as appropriate prior to such Agented Loan becoming a part of the Collateral and
(ii) if the entity serving as the collateral agent of the security of the
lenders to such Obligor with respect to such loan has or will change after such
Agented Loan becomes part of the Collateral, all appropriate assignments of the
collateral agent’s rights in and to the collateral on behalf of the noteholders
have been executed and filed or recorded as appropriate prior to such entity
being the collateral agent of the security of the lenders to such Obligor;
     (ggg) with respect to any Agented Loan, all required notifications, if any,
have been given to the collateral agent, the payment agent and any other parties
required by the Required Loan Documents of, and all required consents, if any,
have been obtained with respect to, the applicable Originator’s assignment of
such Agented Loan and the applicable Originator’s right, title and interest in
the Related Property to the applicable Seller and the Administrative Agent’s
security interest therein on behalf of the secured parties;
     (hhh) with respect to Agented Loans, the right to control the actions of
and replace the collateral agent and/or the paying agent of the syndicated loans
is to be exercised by at least a majority in interest of all holders of such
Agented Loans;

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     (iii) with respect to Agented Loans, all syndicated loans of the Obligor of
the same priority are cross-defaulted, the Related Property securing such loans
is held by the collateral agent for the benefit of all holders of the syndicated
loans and all holders of such loans (a) have an undivided interest in the
collateral securing such loans, (b) share in the proceeds of the sale or other
disposition of such collateral on a pro rata basis and (c) may transfer or
assign their right, title and interest in the Related Property;
     (jjj) no portion of the proceeds used to make payments of principal or
interest on such Loan have come from a new loan by the applicable Originator,
CapitalSource Inc. or an Affiliate of CapitalSource Inc.;
     (kkk) does not contain a confidentiality provision that restricts or
purports to restrict the ability of the Administrative Agent or any Secured
Party to exercise their rights under this Agreement, including, without
limitation, their rights to review the Loan, the Required Loan Documents and
Loan File;
     (lll) has a remaining term to maturity of not greater than 72 months; and
     (mmm) is not a consumer loan.
     “Eligible Obligor”: On any date of determination, any Obligor that (i) is a
business organization (and not a natural person) duly organized and validly
existing under the laws of its jurisdiction of organization and has a billing
address within the United States, (ii) has not entered into the related asset
agreement primarily for personal, family or household purposes, (iii) is not a
Governmental Authority, (iv) is not an Affiliate of any of the Originators or
either Seller, (v) is not in the gaming (other than Obligors in the business of
providing services to the gaming industry), real estate construction or
development (other than Obligors in the business of providing services to the
real estate construction or development industries), nuclear waste or natural
resource exploration/production and oil field service industries, (vi) is not
engaged in the business of conducting proprietary research on new drug
development, (vii) is not and has not been the subject of an Insolvency
Proceeding in the past three years, and (viii) as of the Closing Date, has an
Eligible Risk Rating.
     “Eligible Repurchase Obligations”: Repurchase obligations with respect to
any security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clauses (c)(2) and (c)(4) of the definition of Permitted
Investments.
     “Eligible Risk Rating”: With respect to a designated Obligor, a “Risk
Rating 1,” “Risk Rating 2,” “Risk Rating 3,” or “Risk Rating 4,” each as
determined in accordance with the Credit and Collection Policy.
     “Environmental Laws”: Any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,

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permitting, investigation or remediation of hazardous materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous
Material Transportation Act (49 U.S.C. § 331 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. § 6901 et seq.), the Federal Water Pollution Control
Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.),
the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Safe Drinking
Water Act (42 U.S.C. § 300, et seq.), the Environmental Protection Agency’s
regulations relating to underground storage tanks (40 C.F.R. Parts 280 and 281),
and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the
rules and regulations thereunder, each as amended or supplemented from time to
time.
     “Equipment”: Healthcare related equipment or such other equipment types as
are approved for inclusion in the Collateral by the Administrative Agent (in its
sole discretion).
     “ERISA”: The United States Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.
     “ERISA Affiliate”: (a) Any corporation that is a member of the same
controlled group of corporations (within the meaning of
Section 414(b) of the Code) as a Seller, (b) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with a Seller, or (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as a Seller, any corporation
described in clause (a) above or any trade or business described in clause (b)
above.
     “Eurocurrency Liabilities”: Defined in Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
     “Eurodollar Disruption Event”: The occurrence of any of the following:
(a) any Liquidity Bank or any Institutional Purchaser shall have notified the
Administrative Agent of a determination by such Liquidity Bank or any of its
assignees or participants or such Institutional Purchaser that it would be
contrary to law or to the directive of any central bank or other governmental
authority (whether or not having the force of law) to obtain Dollars in the
London interbank market to fund the Advance, (b) any Liquidity Bank or any
Institutional Purchaser shall have notified the Administrative Agent of the
inability, for any reason, of such Liquidity Bank or any of its assignees or
participants or such Institutional Purchaser, as applicable, to determine the
Adjusted Eurodollar Rate, (c) any Liquidity Bank or any Institutional Purchaser
shall have notified the Administrative Agent of a determination by such
Liquidity Bank or any of its assignees or participants or such Institutional
Purchaser, as applicable, that the rate at which deposits of Dollars are being
offered to such Liquidity Bank or any of its assignees or participants or such
Institutional Purchaser in the London interbank market does not accurately
reflect the cost to such Liquidity Bank, such assignee or such participant or
such Institutional Purchaser of making, funding or maintaining the Advance or
(d) any Liquidity Bank any Institutional Purchaser shall have notified the
Administrative Agent of the inability of such Liquidity Bank or any of its
assignees or participants or such Institutional Purchaser, as applicable, to
obtain Dollars in the London interbank market to make, fund or maintain the
Advance.

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     “Eurodollar Reserve Percentage”: For any period means the percentage, if
any, applicable during such period (or, if more than one such percentage shall
be so applicable, the daily average of such percentages for those days in such
period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any basic, emergency, supplemental,
marginal or other reserve requirements) with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term of one month.
     “Exchange Act”: The United States Securities Exchange Act of 1934, as
amended.
     “Excluded Amounts”: (a) Any amount received in the Lock-Box by, on or with
respect to any Loan included as part of the Collateral, which amount is
attributable to the payment of any tax, fee or other charge imposed by any
Governmental Authority on such Loan, (b) any amount representing a reimbursement
of insurance premiums and (c) any amount with respect to any loan retransferred
upon such loan becoming a Warranty Loan (if the applicable Seller has decided
that such loan is no longer to be included in the Collateral).
     “Face Amount”: With respect to any Loan, the Outstanding Loan Balance
thereof shown on the applicable Loan List.
     “Facility Amount”: $106,518,000, as such amount may be paid down by the
Sellers from time to time.
     “FDIC”: The Federal Deposit Insurance Corporation, and any successor
thereto.
     “Federal Funds Rate”: 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 in Federal Reserve Board Statistical Release H.15(519) or
any successor or substitute publication selected by the Administrative Agent
(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 the Administrative Agent, to be the rate at
which overnight federal funds are being offered in the national federal funds
market at 9:00 a.m. (Charlotte, North Carolina time).
     “Finance Charges”: With respect to any Loan, any interest or finance
charges paid by or on behalf of an Obligor pursuant to or with respect to such
Loan.
     “Fitch”: Fitch, Inc. or any successor thereto.
     “Fixed Rate Loan”: A Loan that is an Eligible Loan other than a Floating
Rate Loan.
     “Floating Rate Loan”: A Loan that is an Eligible Loan where the interest
rate payable by the Obligor thereof is based on the CapitalSource Prime Rate or
CapitalSource LIBOR Rate, plus some specified interest percentage in addition
thereto, and the Loan provides that such interest rate will reset immediately
upon any change in the related CapitalSource Prime Rate or CapitalSource LIBOR
Rate.

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     “GAAP”: Generally accepted accounting principles as in effect from time to
time in the United States.
     “Governmental Authority”: With respect to any Person, any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any body or entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person.
     “Guaranteed Obligations”: Defined in Section 14.1.
     “Guarantors”: Defined in Preamble of this Agreement.
     “Guaranty”: The guaranty of the Guarantors set forth in Article XIV.
     “H.15”: Federal Reserve Statistical Release H.15.
     “Healthcare Properties”: Includes hospitals, clinics, nursing homes, sports
clubs, spas and other healthcare facilities and other similar Interests in Real
Property used in one or more similar businesses (but excluding medical offices).
     “Healthcare REIT”: The REIT resulting from the consummation of a spin-off
or initial public offering of the healthcare net-lease business of CapitalSource
Inc. and its Subsidiaries after which the shares of such REIT are listed on a
U.S. national securities exchange or the NASDAQ Stock Market.
     “Healthcare REIT Consolidated Subsidiary”: At any date, any Healthcare REIT
Entity, if such Healthcare REIT Entity’s accounts, in accordance with GAAP,
would be consolidated with those of CapitalSource Inc. in its consolidated and
consolidating financial statements as of such date.
     “Healthcare REIT Entities”: The Healthcare REIT and its Subsidiaries, as
well as any direct or indirect Subsidiaries of CapitalSource Inc. that are
formed for the sole purpose of establishing, structuring or capitalizing the
Healthcare REIT.
     “Highest Required Investment Category”: (i)  With respect to ratings
assigned by Moody’s, “Aa2” or “P-1” for one month instruments, “Aa2” and “P-1”
for three month instruments, “Aa3” and “P-1” for six month instruments and “Aa2”
and “P-1” for instruments with a term in excess of six months, (ii) with respect
to rating assigned by S&P, “A-1” for short-term instruments and “A” for
long-term instruments, and (iii) with respect to rating assigned by Fitch (if
such investment is rated by Fitch), “F-1+” for short-term instruments and “AAA”
for long-term instruments.
     “Hospitality Properties”: Includes hotels, motels, resorts, youth hostels,
bed and breakfasts and other similar Interests in Real Property used in one or
more similar businesses. For the avoidance of doubt, Hospitality Properties
shall include Resort Finance Properties.

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     “Increased Costs”: Any amounts required to be paid by the Sellers to an
Affected Party pursuant to Section 2.15.
     “Indebtedness”: With respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or that is evidenced by a note, bond, debenture or similar instrument
or other evidence of indebtedness customary for indebtedness of that type,
(b) all obligations of such Person under leases that shall have been or should
be, in accordance with generally accepted accounting principles, recorded as
capital leases, (c) all obligations of such Person in respect of acceptances
issued or created for the account of such Person, (d) all liabilities secured by
any Lien on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof, (e) all
indebtedness, obligations or liabilities of that Person in respect of
Derivatives, (f) all obligations of such Person to redeem preferred stock of
such Person (in the event such Person is a corporation), (g) all obligations
(absolute or contingent) of such Person to reimburse any bank or other Person in
respect of amounts which are available to be drawn or have been drawn under a
letter of credit or similar instrument, (h) the principal portion of all
obligations of such Person under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet financing product
where such transaction in each case (I) is considered borrowed money
indebtedness for tax purposes, and (II) is classified as an operating lease
under GAAP and (i) obligations under direct or indirect guaranties in respect of
obligations (contingent or otherwise) to purchase or otherwise acquire, or to
otherwise assure a creditor against loss in respect of, indebtedness or
obligations of others of the kind referred to in clauses (a) through (h) above.
     “Indemnified Amounts”: Defined in Section 11.1.
     “Indemnified Parties”: Defined in Section 11.1.
     “Industrial Properties”: Includes factories, refinery plants, warehouses,
breweries and other similar Interests in Real Property used in one or more
similar businesses.
     “Industry”: The industry of an Obligor as determined by reference to the
two digit standard industry classification or North American Industry
Classification System codes.
     “Insolvency Event”: With respect to a specified Person, (a) the filing of a
decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Insolvency Law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person’s affairs, and such decree
or order shall remain unstayed and in effect for a period of sixty
(60) consecutive days; or (b) the commencement by such Person of a voluntary
case under any applicable Insolvency Law now or hereafter in effect, 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 of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the making by such Person

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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.
     “Insolvency Laws”: The Bankruptcy Code and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
     “Insolvency Proceeding”: Any case, action or proceeding before any court or
other Governmental Authority relating to any Insolvency Event.
     “Institutional Purchaser”: Defined in the Preamble of this Agreement.
     “Instrument”: Any “instrument” (as defined in Article 9 of the UCC), other
than an instrument that constitutes part of chattel paper.
     “Insurance Policy”: With respect to any Loan, an insurance policy covering
liability and physical damage to or loss of the Related Property.
     “Insurance Proceeds”: Any amounts payable or any payments made on or with
respect to a Loan under any Insurance Policy.
     “Intercreditor Agreement”: The Fourth Amended and Restated Intercreditor
and Lockbox Administration Agreement, dated as of June 30, 2005, by and among
each of the financing agents from time to time party thereto, Bank of America,
N.A., as the lockbox bank, CapitalSource Finance LLC, as the originator, as the
original servicer and as the lockbox servicer, and CapitalSource Funding Inc.,
as the owner of the account and as the owner of the lockbox, as amended,
modified, waived, supplemented, restated or replaced from time to time.
     “Interest”: For each Accrual Period and the Advance still outstanding, the
sum of the products (for each day during such Accrual Period) of:

         
 
  IR x P x   1
 
      D

     where:

             
 
  IR   =   the Interest Rate applicable on such day;  
 
  P   =   the principal amount of such Advance on such day; and  
 
  D   =   360 or, to the extent the Interest Rate is based on the Base Rate, 365
or 366 days, as applicable.

provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of Interest in excess of the maximum permitted
by Applicable Law and (ii) Interest

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shall not be considered paid by any distribution if at any time such
distribution is rescinded or must otherwise be returned for any reason.
     “Interest Collections”: Any and all amounts received in respect of any
interest, amendment, waiver, late or prepayment fees (but excluding any other
fees provided that such other fees are not structured in a manner to
intentionally reduce the amount of Interest Collections) or other similar
charges (including any Finance Charges) on or with respect to a Loan from or on
behalf of any Obligor that are deposited into the Collection Account, or
received by or on behalf of the Sellers by the Servicer or Originator in respect
of a Loan, in the form of cash, checks, wire transfers, electronic transfers or
any other form of cash payment.
     “Interest Rate”: For any Accrual Period and for the Advance still
outstanding for each day during such Accrual Period:
     (i) to the extent the applicable Conduit Purchaser has funded the Advance
through the issuance of commercial paper, a rate equal to the applicable CP
Rate; or
     (ii) to the extent the applicable Conduit Purchaser or Institutional
Purchaser did not fund the Advance through the issuance of commercial paper, a
rate equal to the Alternative Rate;
provided, however, the Interest Rate shall be the Base Rate for any Accrual
Period for the Advance as to which a Conduit Purchaser has funded the making or
maintenance thereof by a sale of an interest therein to any Liquidity Bank under
the applicable Liquidity Agreement on any day other than the first day of such
Accrual Period without giving such Liquidity Bank(s) at least two Business Days’
prior notice of such assignment.
     “Interests in Real Property”: A fee simple interest, a financeable estate
for years or a leasehold interest in each case in real property.
     “Investment”: Any investment in any Person, whether by means of purchase or
acquisition of obligations or securities of such Person, capital contribution to
such Person, loan or advance to such Person, making of a time deposit with such
Person, guarantee or assumption of any obligation of such Person or otherwise.
     “Investment Loan”: Any senior or subordinated loan (including letters of
credit issued under such loan) or lease (a) arising from the extension of credit
to an Obligor by CapitalSource Inc. or its Consolidated Subsidiaries (excluding
the Bank Subsidiary and the Healthcare REIT Consolidated Subsidiaries) in the
ordinary course of business, (b) originated in accordance with the policies and
procedures set forth in the Credit and Collection Policy, and (c) good and
marketable title to which is owned by CapitalSource Inc. or a Consolidated
Subsidiary
     “Investment Loan Subsidiary”: Any Person that becomes a Subsidiary as a
result of the exercise of remedies by CapitalSource Inc. or any Consolidated
Subsidiary under any Investment Loan.

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     “Investment in Equity Instruments”: Each Investment, that is made in
accordance with the policies and procedures set forth in the Credit and
Collection Policy, owned by CapitalSource Inc. or its Consolidated Subsidiaries
(excluding the Bank Subsidiary and the Healthcare REIT Consolidated
Subsidiaries) in (a) common stock, partnership interests or membership interests
of any Person and that is classified as “Common Stock,” “Partnership Units” or
“Membership Units” on the consolidated schedule of investments of CapitalSource
Inc. for the then most recently ended fiscal quarter, (b) preferred stock (other
than redeemable preferred stock) of any Person and that is classified as
“Preferred Stock” on the consolidated schedule of investments of CapitalSource
Inc. for the then most recently ended fiscal quarter, (c) redeemable preferred
stock of any Person and that is classified as “Redeemable Preferred Stock” on
the consolidated schedule of investments of CapitalSource Inc. for the then most
recently ended fiscal quarter, and (d) warrants to purchase common stock,
partnership interests or membership interests of any Person and that is
classified as “Common Stock Warrants,” “Partnership Unit Warrants” or
“Membership Unit Warrants” on the consolidated schedule of investments of
CapitalSource Inc. for the then most recently ended fiscal quarter.
     “Issuer”: Any Conduit Purchaser whose principal business consists of
issuing commercial paper or other securities to fund its acquisition or
maintenance of receivables, accounts, instruments, chattel paper, general
intangibles and other similar assets.
     “Land Development”: Financing to an entity engaged in the business of
purchasing land for the purposes of resale to a developer.
     “LIBOR Market Index Rate”: For any day, with respect to the Advance (a) the
rate per annum appearing on Page 3750 of the Bridge Telerate Service (formerly
Dow Jones Market Service) (or on any successor or substitute page of such
service, or any successor to or substitute for such service, providing rate
quotations comparable to those currently provided on such page of such service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time for such day,
provided, if such day is not a Business Day, the immediately preceding Business
Day, as the rate for dollar deposits with a one-month maturity; (b) if for any
reason the rate specified in clause (a) of this definition does not so appear on
Page 3750 of the Bridge Telerate Service (or any successor or substitute page or
any such successor to or substitute for such service), the rate per annum
appearing on Reuters Screen LIBO page (or any successor or substitute page) as
the London interbank offered rate for deposits in dollars at approximately
11:00 a.m., London time, for such day, provided, if such day is not a Business
Day, the immediately preceding Business Day, for a one-month maturity; and
(c) if the rate specified in clause (a) of this definition does not so appear on
Page 3750 of the Bridge Telerate Service (or any successor or substitute page or
any such successor to or substitute for such service) and if no rate specified
in clause (b) of this definition so appears on Reuters Screen LIBO page (or any
successor or substitute page), the interest rate per annum at which dollar
deposits of $5,000,000 and for a one-month maturity are offered by the principal
London office of WBNA in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, for such day.
     “Lien”: Any mortgage, lien, pledge, charge, right, claim, security interest
or encumbrance of any kind of or on any Person’s assets or properties in favor
of any other Person

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(including any UCC financing statement or any similar instrument filed against
such Person’s assets or properties).
     “Liquidation Expenses”: With respect to any Loan, the aggregate amount of
all out-of-pocket expenses reasonably incurred by the Servicer (including
amounts paid to any subservicer) and any reasonably allocated costs of counsel
(if any), in each case in accordance with the Servicer’s customary procedures in
connection with the repossession, refurbishing and disposition of any related
assets securing such Loan upon or after the expiration or earlier termination of
such Loan and other out-of-pocket costs related to the liquidation of any such
assets, including the attempted collection of any amount owing pursuant to such
Loan if it is a Defaulted Loan, and if requested by the Administrative Agent,
the Servicer and Originator must provide to the Administrative Agent a breakdown
of the Liquidation Expenses for any Loan along with any supporting documentation
therefor.
     “Liquidity Agreement”: (a) with respect to each Conduit Purchaser, the
Liquidity Purchase Agreement or liquidity loan agreement by and among such
Conduit Purchaser, the Liquidity Banks named therein, and the related Purchaser
Agent, as such agreement may be amended, modified, waived, supplemented,
restated or replaced from time to time, and (b) with respect to each Additional
Purchaser that is also a Conduit Purchaser, the liquidity purchase agreement or
liquidity loan agreement by and among such Additional Purchaser, the Liquidity
Banks named therein and the related Additional Agent, as such agreement may be
amended, modified, waived, supplemented, restated or replaced from time to time.
     “Liquidity Bank”: The Person or Persons who provide liquidity support to
any Conduit Purchaser or Additional Purchaser that is also a Conduit Purchaser
pursuant to a Liquidity Agreement in connection with the issuance by such
Purchaser of Commercial Paper Notes.
     “Loan”: (i) The CSIII Loans; (ii) the QRS Loans; and (iii) any other loan
originated by the applicable Originator or, in the case of an Assigned Loan,
otherwise acquired by the applicable Originator, that is identified on a Loan
List and sold or contributed to the applicable Seller and included as part of
the Collateral, which loan includes, without limitation, (i) the Required Loan
Documents and Loan File, and (ii) all right, title and interest of the
applicable Originator in and to the loan and any Related Property.
     “Loan Checklist”: An electronic list of loan documents delivered by or on
behalf of the applicable Seller to the Collateral Custodian that identifies each
of the items contained in the related Loan File, as amended from time to time.
     “Loan Files”: With respect to any Loan and Related Security, copies of each
of the Required Loan Documents and duly executed originals (to the extent
required by the Credit and Collection Policy) and copies of any other Records
relating to such Loan and Related Security.
     “Loan List”: The Loan List provided by the applicable Seller to the
Administrative Agent and the Collateral Custodian, in the form of Schedule IV
hereto, as such list may be amended, supplemented or modified from time to time
in accordance with this Agreement.
     “Loan Register”: Defined in Section 5.4(n).

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     “Loan-to-Liquidation Value”: With respect to any Loan included in the
Collateral as of the Closing Date, the Loan-to-Liquidation Value set forth on
Schedule IV with respect to such Loan, otherwise, with respect to any other
Loan, as of the date of origination of such Loan, the percentage equivalent of a
fraction (i) the numerator of which is equal to the maximum availability (as
provided in the applicable underlying loan documents) of such Loan as of the
date of its origination and (ii) the denominator of which is equal to the
liquidation value of the Related Property securing such Loan that is subject to
a first priority lien in favor of the applicable Originator (as determined by
the Servicer in accordance with the Credit and Collection Policy and in a
commercially reasonable manner).
     “Loan-to-Value Ratio”: With respect to any Loan (other than a Real Estate
Loan) included in the Collateral as of the Closing Date, the Loan-to-Value Ratio
set forth on Schedule IV with respect to such Loan, otherwise, with respect to
any other Loan (other than a Real Estate Loan), as of the date of origination of
such Loan, the percentage equivalent of a fraction (a) the numerator of which is
equal to the total commitment amount of such Loan as of the date of its
origination (as provided in the related loan documents) plus the total
commitment amount or principal amount, as the case may be, as of the applicable
date of origination or incurrence, of all other Indebtedness of the related
Obligor (including, in the case of revolving loans and delayed draw loans, the
Outstanding Loan Balance thereof as determined on the last day of each calendar
month) which is senior to or pari passu with such Loan, and (b) the denominator
of which is equal to the enterprise value of the Related Property securing such
Loan (as determined by the Originator in accordance with the Credit and
Collection Policy).
     With respect to any Real Estate Loan included in the Collateral as of the
Closing Date, the Loan-to-Value Ratio set forth on Schedule IV with respect to
such Real Estate Loan, otherwise, with respect to any other Real Estate Loan, as
of the date of origination of such Real Estate Loan, the percentage equivalent
of a fraction (a) the numerator of which is equal to the total commitment amount
of such Real Estate Loan as of the date of origination (as provided in the
related loan documents) plus the total commitment amount or principal amount, as
the case may be, as of the applicable date of origination or incurrence, of all
other Indebtedness of the related Obligor (including, in the case of revolving
loans and delayed draw loans, the Outstanding Loan Balance thereof as determined
on the last day of each calendar month) which is senior to or pari passu with
such Real Estate Loan, and (b) the denominator of which is equal to the lower of
the Obligor’s cost to acquire the Related Property or the value of such date
(determined by means of an Appraisal) of the Related Property, in either case,
excluding the cost or value of any Construction Properties.
     “Lock-Box”: The post office box to which Collections are remitted for
retrieval by a Lock-Box Bank and deposited by such Lock-Box Bank into a Lock-Box
Account, the details of which are contained in Schedule II.
     “Lock-Box Account”: The account maintained at the Lock-Box Bank for the
purpose of receiving Collections, the details of which are contained in
Schedule II, as such schedule may be amended from time to time.
     “Lock-Box Agreement”: The Fifth Amended and Restated Three Party Agreement
Relating to Lockbox Services and Control (with Activation Upon Notice), dated as
of June 30,

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2005, by and among Wells Fargo, as the indenture trustee and as the Citi
indenture trustee (as defined therein), Bank of America, N.A., as the lockbox
bank, WCM, as the conduit administrative agent and as the acquisition
administrative agent, CapitalSource Finance, as the originator, as the original
servicer and as the lockbox servicer, and CapitalSource Funding LLC, as the
owner of the account and as the owner of the lockbox, as amended, modified,
waived, supplemented, restated or replaced from time to time.
     “Lock-Box Bank”: Bank of America, N.A., or any of the banks or other
financial institutions holding one or more Lock-Box Accounts.
     “Margin Stock”: Margin Stock as defined under Regulation U.
     “Material Adverse Effect”: With respect to any event or circumstance, means
a material adverse effect on (a) the business, condition (financial or
otherwise), operations, performance, properties or prospects of any of the
Originators, the Servicer or either Seller, (b) the validity, enforceability or
collectibility of this Agreement or any other Transaction Document or the
validity, enforceability or collectibility of the Loans generally or any
material portion of the Loans, (c) the rights and remedies of the Administrative
Agent, the Purchasers, the Purchaser Agents and the Secured Parties arising from
the Transaction Documents, (d) the ability of either Seller, any of the
Originators, the Servicer, the Backup Servicer or the Collateral Custodian to
perform its obligations under this Agreement or any other Transaction Document,
or (e) the status, existence, perfection, priority or enforceability of the
Administrative Agent’s, the Purchaser Agents’, or the Secured Parties’ interest
in the Collateral.
     “Material Modification”: (1) Any amendment or waiver of, or modification or
supplement to, any related underlying loan document governing a Loan that
(a) reduces the principal amount of such Loan, (b) waives one or more interest
payments, or reduces the spread over the applicable reference rate comprising
the interest rate on such Loan if such Loan is a Floating Rate Loan or reduces
the coupon comprising the interest rate on such Loan if such Loan is a Fixed
Rate Loan; provided that the foregoing shall not apply to waivers or reductions
related to the operation of default or penalty interest clauses and, in
addition, the spread or coupon, as applicable, may be reduced by not more than
1.5% applicable to the spread or coupon of such Loan, so long as the interest
coverage ratio (howsoever defined in the related underlying loan documents) is
greater than 2.0:1 at the time of such reduction, (c) contractually or
structurally subordinates such Loan by operation of a priority of payments,
turnover provisions, the transfer of assets in order to limit recourse to the
related Obligor or the granting of security (other than permitted security) on
any of the Related Property securing such Loan, (d) postpones the due date of
any Scheduled Payment in respect of such Loan, (e) terminates or releases any
material lien or security interest securing such Loan (other than the release of
such lien or security interest (i) as required by the related underlying loan
documents so long as it does not involve a material portion of the Collateral or
(ii) in conjunction with the sale or disposition of the assets subject to such
lien or security interest so long as 100% of the cash proceeds from such sale or
disposition (minus any taxes and expenses incurred in connection with such sale
or disposition) are applied to prepay the applicable Loan and the gross cash
proceeds from such sale or disposition are at least equal to 100% of the value
of the property being released from such lien or security interest) or
(f) alters the status of such Loan as a Defaulted Loan and (2) any loan or
extension of credit by the applicable Originator (or any other lender) to the
Obligor for the purpose of (a)

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making any past due principal, interest or other payments due on such Loan,
(b) preventing such Loan or any other loan to the related Obligor from becoming
past due or (c) causing a Defaulted Loan to cease to be so classified; provided
that a loan or extension of credit provided for refinancing purposes at or
around such Loan’s then schedule maturity date shall not be deemed to be a
Material Modification.
     “Materially Modified Loan”: Any Loan subject to a Material Modification.
     “Materials of Environmental Concern”: Any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Laws, including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.
     “Middle Market ABL Loan”: Any Revolving Loan that (i) is secured by a valid
and perfected first priority Lien on all of the Obligor’s assets constituting
Related Property for such Loan, (ii) provides the related Obligor with the
option to receive additional borrowings thereunder based on the value of its
eligible accounts receivables, inventory or equipment, (iii) has a
Loan-to-Liquidation Value of less than or equal to (a) 85% with respect to the
Related Property which constitutes accounts receivables, (b) 50% with respect to
the Related Property which constitutes inventory, and (c) 80% with respect to
the Related Property which constitutes Equipment, (iii) provides that the
payment obligation of the Obligor on such Loan is either senior to, or pari
passu with, all other loans or financings to such Obligor, (iv) has an
availability mechanism that is governed by a dynamic borrowing base formula that
specifies eligible collateral and advance rates, and where the borrowing base
and availability are calculated at least monthly, and (v) employs lock-boxes for
cash control; provided, however, any such Loan shall exclude any Retained
Interest.
     “Middle Market Loan”: Any Loan that is a Middle Market ABL Loan, Senior
Secured Loan, Second Lien Loan or Subordinated Loan.
     “Minimum Overcollateralization Ratio”: An Overcollateralization Ratio equal
to 160%.
     “Mixed Use Properties”: Includes any property in which not more than 50% of
the rentable area of such property can be classified into a single
classification of Mortgaged Property.
     “Monthly Report”: Defined in Section 6.10(b).
     “Moody’s”: Moody’s Investors Service, Inc., and any successor thereto.
     “Mortgage”: The mortgage, deed of trust or other instrument creating a
first or second Lien on an Interest in Real Property securing a Loan subject to
this Agreement, including any Assignment of Leases and Rents related thereto.
     “Mortgaged Property”: The underlying Interests in Real Property which are
subject to the Lien of a Mortgage that secures a Loan, consisting of Interests
in Real Property in a parcel or parcels of land, at least one of which parcels
is improved by a commercial building or facility, together with Interests in
Real Property in such commercial building or facility and any personal

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property, fixtures, leases and other property or rights pertaining to such land,
commercial building or facility which are subject to the related Mortgage. For
the avoidance of doubt, the applicable classification of Mortgaged Property
includes Healthcare Properties, Hospitality Properties, Industrial Properties,
Multifamily Properties, Office Properties, Retail Properties, Resort Finance
Properties, Other Property and Land Development. Each Eligible Loan shall be
classified into one of the applicable classifications of Mortgaged Property
identified herein or as a Mixed Use Property, including Eligible Loans that are
also classified as Development Properties.
     “Multiemployer Plan”: A “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA that is or was at any time during the current year
or the immediately preceding five years contributed to by either Seller or any
ERISA Affiliate on behalf of its employees.
     “Multifamily Properties”: Includes multifamily dwellings such as apartment
blocks, condominiums and cooperative owned buildings.
     “NAICS Code” means the North American Industry Classification System Codes
by two digits.
     “Net Proceeds of Capital Stock/Conversion of Debt”: (i) To the extent the
Credit Agreement is in effect, the definition of “Net Proceeds of Capital
Stock/Conversion of Debt” as set forth in such Credit Agreement, and (ii) in all
other cases, any and all proceeds (whether cash or non-cash) or other
consideration received by CapitalSource Inc., its Consolidated Subsidiaries or
the CapitalSource Bank Entities, on a consolidated basis, in respect of the
issuance of Capital Stock to a Person other than CapitalSource Inc. or its
Consolidated Subsidiaries (including, without limitation, the aggregate amount
of any and all Indebtedness converted into Capital Stock), after deducting
therefrom all reasonable and customary costs and expenses incurred by
CapitalSource Inc., such Consolidated Subsidiary and CapitalSource Bank Entity
in connection with the issuance of such Capital Stock in each case to the extent
classified as equity on the consolidated balance sheet of CapitalSource Inc.,
its Consolidated Subsidiaries and the CapitalSource Bank Entities; provided,
however, that such proceeds shall exclude any consideration received in
connection with an initial public offering of the Healthcare REIT.
     “NOI”: With respect to any Mortgaged Property, as of the last day of any
fiscal quarter, the amount determined for the period consisting of such fiscal
quarter and each of the three immediately preceding fiscal quarters of the sum
of all rents and other revenues received in the ordinary course from such
Mortgaged Property minus all expenses paid related to the ownership, operation
and maintenance of such Mortgaged Property.
     “Noteless Loan”: A Loan with respect to which the underlying loan documents
do not require the Obligor to execute and deliver a promissory note to evidence
the indebtedness created under such Loan.
     “Obligor”: With respect to any Loan, any Person or Persons obligated to
make payments pursuant to or with respect to such Loan, including any guarantor
thereof.
     “Office Properties”: Includes office buildings (including medical offices),
conference facilities and other similar Interests in Real Property used in the
commercial real estate business.

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     “Officer’s Certificate”: A certificate signed by a Responsible Officer of
the applicable Seller or the Servicer, as the case may be, and delivered to the
Collateral Custodian.
     “Opinion of Counsel”: A written opinion of counsel, which opinion and
counsel are acceptable to the Administrative Agent in its sole discretion.
     “Optional Sale”: Defined in Section 2.19(a).
     “Optional Sale Date”: Any Business Day, provided three (3) Business Days’
prior written notice is given in accordance with
Section 2.19(a).
     “Originators”: Defined in the Preamble of this Agreement.
     “Other Costs”: Defined in Section 13.9(c).
     “Other Property”: Includes any property that is not Healthcare Property,
Hospitality Property, Industrial Property, Multifamily Property, Office
Property, Retail Property, Mixed Use Property or Land Development.
     “Outstanding Loan Balance”: With respect to (i) any Loan purchased at less
than 95% of its par value, the purchase price of such Loan (excluding any PIK
component or accrued interest payable) minus the sum of principal payments
received in respect of such Loan on or before the date of determination and
(ii) any Loan purchased at no less than 95% of par or originated directly by the
applicable Originator or an Affiliate, the sum of (a) the portion of all future
Scheduled Payments becoming due under or with respect to such Loan plus (b) any
past due Scheduled Payments with respect to such Loan (other than with respect
to those payments to the extent a Servicer Advance is outstanding with respect
thereto).
     “Overcollateralization Ratio”: As of any date of determination, an amount
expressed as a percentage equal to (i)(a) the Aggregate Outstanding Loan Balance
as of such date plus (b) all amounts on deposit in the Principal Collections
Account as of such date divided by (ii) Advances Outstanding as of such date.
     “Participation Loan”: A Loan to an Obligor, originated by the applicable
Originator and serviced by the Servicer in the ordinary course of its business,
in which a participation interest has been granted to another Person in
accordance with the Credit and Collection Policy and (i) such transaction has
been fully consummated, pursuant to a participation agreement in a form
previously delivered by the applicable Originator to the Administrative Agent in
connection with this transaction or in such other form as shall be adopted by
the applicable Originator and approved in writing by the Administrative Agent at
least five days prior to such Loan becoming part of the Collateral hereunder,
(ii) such Loan (other than in the case of a Noteless Loan) is represented by a
separate promissory note, and (iii) the applicable Originator has the right to
receive and collect payments directly in its own name, and to enforce its rights
directly against the Obligor thereof including the right to proceed against
collateral; provided, however, any such Loan shall exclude any Retained
Interest.
     “Payment Date”: The fifteenth (15th) day of each calendar month or, if such
day is not a Business Day, the next succeeding Business Day, commencing in July,
2009.

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     “Permitted Investments”: With respect to any Payment Date means negotiable
instruments or securities or other investments maturing on or before such
Payment Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) that,
as of any date of determination, mature by their terms on or prior to the
Business Day immediately preceding the next Payment Date immediately following
such date of determination, and (c) that evidence:
     (1) direct obligations of, and obligations fully guaranteed as to full and
timely payment by, the United States (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States);
     (2) demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies incorporated under the laws of the United States
or any state thereof and subject to supervision and examination by federal or
state banking or depository institution authorities; provided, however, that at
the time of a Seller’s investment or contractual commitment to invest therein,
the commercial paper, if any, and short-term unsecured debt obligations (other
than such obligation whose rating is based on the credit of a Person other than
such institution or trust company) of such depository institution or trust
company shall have a credit rating from Fitch and each Rating Agency in the
Highest Required Investment Category granted by Fitch and such Rating Agency,
which in the case of Fitch, shall be “F-1+”;
     (3) commercial paper, or other short term obligations, having, at the time
of the applicable Seller’s investment or contractual commitment to invest
therein, a rating in the Highest Required Investment Category granted by each
Rating Agency, which in the case of Fitch, shall be “F-1+”;
     (4) demand deposits, time deposits or certificates of deposit that are
fully insured by the FDIC and either have a rating on their certificates of
deposit or short-term deposits from Moody’s and S&P of “P-1” and “A-1”,
respectively, and if rated by Fitch, from Fitch of “F-1+”;
     (5) notes that are payable on demand or bankers’ acceptances issued by any
depository institution or trust company referred to in
clause (2) above;
     (6) investments in taxable money market funds or other regulated investment
companies having, at the time of a Seller’s investment or contractual commitment
to invest therein, a rating of the Highest Required Investment Category from
Moody’s, S&P and Fitch (if rated by Fitch);
     (7) time deposits (having maturities of not more than ninety (90) days) by
an entity the commercial paper of which has, at the time of a Seller’s
investment or contractual commitment to invest therein, a rating of the Highest
Required Investment Category granted by Fitch and each Rating Agency; or

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     (8) Eligible Repurchase Obligations with a rating acceptable to the Rating
Agencies, which in the case of Fitch, shall be “F-1+” and in the case of S&P
shall be “A-1”.
The Collateral Custodian may pursuant to the direction of the Servicer or
Administrative Agent, as applicable, purchase or sell to itself or an Affiliate,
as principal or agent, the Permitted Investments described above.
     “Permitted Liens”: Any of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced
(a) Liens for state, municipal or other local taxes if such taxes shall not at
the time be due and payable, (b) Liens imposed by law, such as materialmen’s,
mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens,
arising in the ordinary course of business securing obligations that are not
overdue for a period of more than thirty (30) days, and (c) Liens granted
pursuant to or by the Transaction Documents.
     “Permitted Securitization Transaction”: Any financing transaction
undertaken by a Seller or an Affiliate of such Seller that is secured, directly
or indirectly, by the Collateral or any portion thereof or any interest therein,
including any sale, lease, whole loan sale, asset securitization, secured loan
or other transfer.
     “Person”: An individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, sole proprietorship, joint venture, government (or any agency or
political subdivision thereof) or other entity.
     “Prepayments”: Any and all (i) partial or full prepayments on or with
respect to a Loan (including, with respect to any Loan and any Collection
Period, any Scheduled Payment, Finance Charge or portion thereof that is due in
a subsequent Collection Period that the Servicer has received, and pursuant to
the terms of Section 6.4(b) expressly permitted the related Obligor to make, in
advance of its scheduled due date, and that will be applied to such Scheduled
Payment on such due date), (ii) Recoveries, and (iii) Insurance Proceeds.
     “Prime Rate”: (a) The rate announced by WBNA from time to time as its prime
rate in the United States, such rate to change as and when such designated rate
changes, or (b) with respect to any Additional Purchaser, as otherwise specified
by or on behalf of such Additional Purchaser in the applicable Additional
Purchaser Agreement. The Prime Rate is not intended to be the lowest rate of
interest charged by WBNA or any other specified financial institution in
connection with extensions of credit to debtors.
     “Principal Collections”: Any and all amounts received in respect of any
principal due and payable under the Loans from or on behalf of Obligors that are
deposited into the Principal Collections Account, or received by or on behalf of
the applicable Seller by the Servicer or applicable Originator in respect of
Loans, in the form of cash, checks, wire transfers, electronic transfers or any
other form of cash payment.
     “Principal Collections Account”: Defined in Section 6.4(f).

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     “Proceeds”: With respect to any Collateral, whatever is receivable or
received when such Collateral is sold, liquidated, foreclosed, exchanged, or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes all rights to payment with respect to any insurance relating to such
Collateral.
     “Program Fee”: (a) With respect to any Purchaser, as defined in the
applicable Purchaser Fee Letter and (b) with respect to any Additional
Purchaser, as specified in the applicable Additional Agent Fee Letter.
     “Program Fee Rate”: (a) With respect to any Purchaser, the rate set forth
in the applicable Purchaser Fee Letter and (b) with respect to any Additional
Purchaser, the rate set forth in the applicable Additional Agent Fee Letter as
the “Program Fee Rate.”
     “Pro-Rata Share”: With respect to a Purchaser, the percentage set forth
next to such Purchaser’s name on Annex A hereto, which schedule may be updated
by the Administrative Agent (with notice to the Sellers) from time to time.
     “Purchaser”: (i) WBNA, (ii) any Additional Purchaser, as the context
requires, and “Purchasers” means collectively (a) WBNA and (b) the Additional
Purchasers.
     “Purchaser Agent”: With respect to (i) WBNA, the WBNA Agent, (ii) any
Additional Purchasers, the related Additional Agent and (iii) each Institutional
Purchaser which may from time to time become a party hereto, each shall be
deemed to be its own Purchaser Agent.
     “Purchaser Fee Letter”: Each Fee Letter Agreement, dated as of the date
hereof, by and among the Sellers, the Servicer, and the applicable Purchaser
Agent, as amended, modified, waived, supplemented, restated or replaced from
time to time.
     “QRS Criteria”: The eligibility criteria for the QRS Loans as set forth on
Schedule VI attached hereto.
     “QRS Loan”: The loans originated by the QRS Originator that are identified
on a Loan List and have been sold or contributed to the QRS Seller and included
as part of the Collateral, which loan includes, without limitation, (i) the
Required Loan Documents and Loan File, and (ii) all right, title and interest of
the QRS Originator in and to the loan and any Related Property.
     “QRS Originator”: Defined in the Preamble of this Agreement.
     “QRS Sale Agreement”: The Second Amended and Restated Sale and Contribution
Agreement, dated as of May 29, 2009, between the QRS Originator and the QRS
Seller, as amended, modified, waived, supplemented, restated or replaced from
time to time.
     “QRS Seller”: Defined in the Preamble of this Agreement.
     “Qualified Institution”: Defined in Section 6.4(f).
     “Qualified Transferee”:

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     (a) Each Seller, each Purchaser Agent and any Affiliate thereof, or the
Administrative Agent or any Affiliate of the Administrative Agent; or
     (b) any other Person which:
     (i) has at least $50,000,000 in capital/statutory surplus or shareholders’
equity (except with respect to a pension advisory firm or similar fiduciary);
and
     (ii) is regularly engaged in the business of making or owning commercial
real estate loans or operating commercial real estate properties; and
     (iii) is one of the following:
     (A) an insurance company, bank, savings and loan association, investment
bank, trust company, commercial credit corporation, pension plan, pension fund,
pension fund advisory firm, mutual fund, real estate investment trust,
governmental entity or plan, or
     (B) an investment company, money management firm or a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of
1933, as amended, or an “institutional accredited investor” within the meaning
of Regulation D under the Securities Act of 1933, as amended; or
     (C) the trustee, collateral agent or administrative agent in connection
with (x) a securitization of the subject Loan through the creation of
collateralized debt or loan obligations or (y) an asset-backed commercial paper
transaction funded by a commercial paper conduit whose commercial paper notes
are rated at least “A-1” by S&P or at least “P-1” by Moody’s, or (z) a
repurchase transaction funded by an entity which would otherwise be a Qualified
Transferee so long as the “equity interest” (other than any nominal or de
minimis equity interest) in the special purpose entity that issues notes or
certificates in connection with any such collateralized debt or loan obligation,
asset-backed commercial paper funded transaction or repurchase transaction is
owned by one or more entities that are Qualified Transferees under subclauses
(A) or (B) above; or
     (D) any entity Controlled (as defined below) by any of the entities
described in subclauses (i), (ii) or (iii) above.
For purposes of this definition only, “Control” means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interests of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise, and “Controlled” has the meaning correlative thereto.
     “Rating Agency”: Each of S&P, Moody’s and any other rating agency that has
been requested to issue a rating with respect to a Permitted Securitization
Transaction.

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     “Real Estate ABL Loan”: Any Revolving Loan that (i) secured by a valid and
perfected first priority Lien on all the Obligor’s assets constituting Related
Property for such Loan (such related property may not consist of residential
mortgage receivables or pools of residential mortgages but may consist of
timeshare receivables), (ii) provides the related Obligor with the option to
receive additional borrowings thereunder based on the value of its eligible
accounts receivable, commercial mortgage receivables, inventory (other than real
estate property or land) or equipment, (iii) has a Loan-to-Liquidation Value of
less than or equal to (a) 85% with respect to the Related Property which
constitutes eligible accounts receivables, (b) 90% with respect to the Related
Property which constitutes commercial mortgage receivables, (c) 50% with respect
to the Related Property which constitutes inventory, and (d) 80% with respect to
the Related Property which constitutes Equipment; provided that the average and
largest balances of eligible accounts receivable, commercial mortgage
receivables, inventory or equipment shall not exceed 10% and 30%, respectively,
of such Loan’s Loan-to-Liquidation Value, (iv) provides that the payment
obligation of the Obligor on such Loan is either senior to, or pari passu with,
all other loans or financings to such Obligor, (v) has an availability mechanism
that is governed by a dynamic borrowing base formula that specifies eligible
collateral and advance rates, and where the borrowing base and availability are
calculated at least monthly and (vi) employs lock-boxes for cash control;
provided, however, any such Loan shall exclude any Retained Interest. For the
avoidance of doubt, any rediscount loan shall be classified as a Real Estate ABL
if it meets the above requirements; otherwise, rediscount loans that do not meet
the definition of Real Estate ABL shall be ineligible.
     “Real Estate Loan”: Any Real Estate ABL Loan, Senior Secured Whole Loan or
B-Note Loan (including any lease financing) (i) for which the underlying Related
Property consists primarily of real property, (ii) the proceeds of which are
primarily used to finance the acquisition, construction or development of real
property or (iii) the primary source of repayment from which is from the sale or
liquidation of, or income from, real property; provided, however, that any loan
intended to finance Construction Properties, Land Development, Condominium
Conversions and Development Properties shall not constitute a Real Estate Loan.
     “Records”: All documents relating to the Loans, including books, records
and other information (including without limitation, computer programs, tapes,
disks, punch cards, data processing software and related property and rights)
executed in connection with the origination or acquisition of the Collateral or
maintained with respect to the Collateral and the related Obligors that the
applicable Seller, the applicable Originator or the Servicer have generated, in
which the applicable Seller, the applicable Originator or the Servicer have
acquired an interest pursuant to the applicable Sale Agreement or in which the
applicable Seller, the applicable Originator or the Servicer have otherwise
obtained an interest.

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     “Recovery Rate”: With respect to any Loan as of any date of determination,
the recovery rate determined in accordance with the following chart:
Middle Market Loans

         
Middle Market ABL
    50 %
Senior Secured Loan
    50 %
Second Lien Loan
    30 %
Subordinated Loan
    15 %

Real Estate Loans

         
Real Estate ABL
    50 %
Senior Secured Whole Loans
    50 %
B-Note Loans
    15 %

     “Recoveries”: As of the time any Related Property is sold, discarded (after
a determination by the Servicer that such Related Property has little or no
remaining value) or otherwise determined to be fully liquidated by the Servicer
in accordance with the Credit and Collection Policy with respect to any
Defaulted Loan, the proceeds from the sale of the Related Property, the proceeds
of any related Insurance Policy, any distribution from an REO Asset Owner, any
other recoveries with respect to such Defaulted Loan, the Related Property, and
amounts representing late fees and penalties, net of Liquidation Expenses and
amounts, if any, received that are required under such Loan to be refunded to
the related Obligor.
     “Regulation U”: Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R. §221, or any successor regulation.
     “REIT”: A “real estate investment trust” as defined in Section 856(c)(5)(B)
of the Code.
     “Related Loan”: With respect to any Loan, (i) in any transaction of any
Affiliate of CapitalSource Inc., any other loan or other debt for borrowed money
extended to the same Obligor and (ii) in all other cases, any other loan or
other debt for borrowed money extended to the same Obligor of which the Servicer
has (or reasonably should have) knowledge and is senior to or pari passu with
such Loan.
     “Related Property”: With respect to any Loan, any property or other assets
designated and pledged as collateral to the applicable Originator to secure
repayment of such Loan, including, without limitation, Mortgaged Property and/or
a pledge of the stock, membership or other ownership interests in the related
Obligor and all Proceeds from any sale or other disposition of such property or
other assets; provided that Related Property may not include residential
mortgage receivables or one or more residential mortgages but may include
timeshare receivables.
     “Related Security”: All of the applicable Seller’s right, title and
interest in and to:
     (a) any Related Property securing a Loan and all Recoveries related
thereto;

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     (b) all Required Loan Documents, Loan Files related to any Loan, Records,
and the documents, agreements, and instruments included in the Loan File or
Records, including without limitation, rights of recovery of the applicable
Seller against the applicable Originator;
     (c) all Insurance Policies with respect to any Loan;
     (d) all security interests, liens, guaranties, warranties, letters of
credit, accounts, bank accounts, mortgages or other encumbrances and property
subject thereto from time to time purporting to secure or support payment of any
Loan, together with all UCC financing statements or similar filings signed by an
Obligor relating thereto;
     (e) the Collection Account, each Lock Box and all Lock Box Accounts,
together with all cash and investments in each of the foregoing other than
amounts earned on investments therein;
     (f) the applicable Sale Agreement and the assignment to the Administrative
Agent of all UCC financing statements filed by the applicable Seller against the
applicable Originator under or in connection with the applicable Sale Agreement;
and
     (g) the proceeds of each of the foregoing.
     “REO Asset”: With respect to any Loan, any Related Property that has been
foreclosed on or repossessed from the current Obligor by the Servicer, and is
being managed by the Servicer on behalf of, and in the name of, any REO Asset
Owner, for the benefit of the Secured Parties and any other equity holder of
such REO Asset Owner.
     “REO Asset Owner”: Defined in Section 6.17.
     “Repayment Notice”: Each written notice required to be delivered by each
Seller (i) in respect of any reduction of the Advances Outstanding pursuant to
Section 2.4(a), in the form of Exhibit A-2, and (ii) on each Determination Date.
     “Reporting Date”: The date that is two Business Days prior to each Payment
Date or, if such day is not a Business Day, the next succeeding Business Day.
     “Required Loan Documents”: With respect to (i) any Noteless Loan identified
as a Noteless Loan on the Loan Checklist, a copy of the related Loan Register
(together with a certificate of a Responsible Officer of the Servicer certifying
to the accuracy of such Loan Register as of the date such Loan is included as a
part of the Collateral), (ii) all Loans other than Noteless Loans, the duly
executed original of the promissory note and an assignment (which may be by
endorsement or allonge) of each such promissory note to the applicable Seller
and then the Administrative Agent, signed by an officer of the applicable
Originator and the applicable Seller, respectively, (iii) any Loan, any related
loan agreement and the Loan Checklist together with, to the extent set forth on
the Loan Checklist, duly executed (if applicable) originals or copies of each of
any related participation agreement, acquisition agreement, subordination
agreement, intercreditor agreement, security agreements or similar instruments,
UCC financing statements, guarantee, or Insurance Policy, (iv) each Loan secured
by real property, an Assignment of Mortgage and (v) any Loan identified as an
Assigned Loan on the Loan Checklist, the duly

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executed original assignment agreement; provided that with respect to any
Assigned Loan, any of the foregoing documents, other than any related promissory
notes, may be copies. For the avoidance of doubt, with respect to any Loan
originated by an Affiliate of CapitalSource Inc. and acquired by CapitalSource
Finance or its successors and assigns from such Affiliate in compliance with
Section 2.21, Required Loan Documents shall include duly executed originals or
copies, as applicable, of each of the foregoing categories of documents with
respect to the sale or transfer of each such Loan from such Affiliate to
CapitalSource Finance.
     “Required Reports”: Collectively, the Monthly Report, the Servicer’s
Certificate required pursuant to Section 6.10(c), the financial statements of
the Servicer required pursuant to Section 6.10(d), the annual statements as to
compliance required pursuant to Section 6.11, and the annual independent public
accountant’s report required pursuant to Section 6.12.
     “Residential Mortgage Policies and Procedures”: The written residential
mortgage policies and procedures manual of CapitalSource Inc. in the form
attached hereto as Schedule VII as it may be amended or supplemented from time
to time.
     “Resort Finance Properties”: Includes resorts, timeshare estates, vacation
clubs and other similar Interests in Real Property used in one or more similar
businesses.
     “Responsible Officer”: With respect to any Person, any duly authorized
officer of such Person with direct responsibility for the administration of this
Agreement and also, with respect to a particular matter, any other duly
authorized officer to whom such matter is referred because of such officer’s
knowledge of and familiarity with the particular subject.
     “Restricted Junior Payment”: (i) any dividend or other distribution, direct
or indirect, on account of any class of membership interests of a Seller now or
hereafter outstanding, except a dividend payment solely in interests of that
class of membership interests or in any junior class of membership interests of
such Seller; (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any class of
membership interest of a Seller now or hereafter outstanding, (iii) any payment
made to redeem, purchase, repurchase or retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire membership
interests of a Seller now or hereafter outstanding, and (iv) any payment of
management fees by a Seller (except for reasonable management fees to the
applicable Originator or its Affiliates in reimbursement of actual management
services performed).
     “Retail Properties”: Includes retail stores, restaurants, bookstores,
clothing stores and other similar Interests in Real Property used in one or more
similar businesses.
     “Retained Interest”: (A) With respect to any Revolving Loan or any Loan
with an unfunded commitment on the part of the applicable Originator that does
not provide by its terms that funding thereunder is in such Originator’s sole
and absolute discretion and that is transferred by the applicable Originator to
the applicable Seller, all of the obligations, if any, to provide additional
funding with respect to such Revolving Loan, and (B) with respect to any
Assigned Loan, any Participation Loan or any Agented Loan that is transferred by
the applicable Originator to the applicable Seller, (i) all of the obligations,
if any, of the agent(s) under the

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documentation evidencing such Assigned Loan, Participation Loan, or Agented Loan
and (ii) the applicable portion of the interests, rights and obligations under
the documentation evidencing such Assigned Loan, Participation Loan, or Agented
Loan that relate to such portion(s) of the indebtedness that is owned by another
lender or is being retained by the applicable Originator pursuant to clause (A)
of this definition.
     “Revolving Loan”: A Loan that is a line of credit or contains an unfunded
commitment arising from an extension of credit by the applicable Originator to
an Obligor, pursuant to the terms of which amounts borrowed may be repaid and
subsequently reborrowed; provided, however, any such Loan shall exclude any
Retained Interest.
     “Retransfer Date”: Defined in Section 4.6.
     “Retransfer Price”: Defined in Section 4.6.
     “Review Criteria”: Defined in Section 8.2(b).
     “S&P”: Standard & Poor’s, a division of The McGraw Hill Companies, Inc.,
and any successor thereto.
     “Sale Agreements”: The CSIII Sale Agreement and the QRS Sale Agreement.
     “Scheduled Payments”: With respect to any Loan, each monthly, quarterly, or
annual payment of principal required to be made by the Obligor thereof under the
terms of such Loan; in all cases, excluding any payment in the nature of, or
constituting, interest.
     “Second Lien Loan”: Any Term Loan that (i) is secured by a valid and
perfected first priority security interest on all of the Obligor’s assets
constituting Related Property for the Loan (whether or not there is also a
security interest of a higher or lower priority in additional collateral),
(ii) with respect to priority of payment obligations is pari passu with the
indebtedness of the holder with the first priority security interest except
after an event of default thereunder, (iii) pursuant to an intercreditor
agreement between the applicable Seller and the holder of such first priority
security interest, the amount of the indebtedness covered by such first priority
security interest is limited (in terms of aggregate dollar amount or percent of
outstanding principal or both), and (iv) has a “first dollar” at risk not to
exceed 60% of the Loan-to-Value and a “last dollar” at risk not to exceed 70% of
the Loan-to-Value.
     “Secured Party”: (i) each Purchaser, (ii) the Administrative Agent and each
Purchaser Agent, and (iii) Wachovia Bank, National Association, as the “Security
Trustee” (for itself and for the other “Secured Parties” as defined in the CS
Europe Financing) in accordance with Clause 23 of the CS Europe Financing, to
the extent any payments are owed thereto in connection with the Sellers
Guaranty.
     “Security System Loan”: A Loan with respect to which the related Obligor is
in the business classified under 2002 NAICS Code 56162 (Security Systems
Services) and which is secured by Alarm Service Agreements.

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     “Securities Account Control Agreement”: The Securities Account Control
Agreement, dated as of May 29, 2009, among the CSIII Seller, the QRS Seller, the
Servicer, the Administrative Agent and the Collateral Custodian, as amended,
modified, waived, supplemented, restated or replaced from time to time.
     “Sellers”: Defined in the Preamble of this Agreement.
     “Sellers Guaranty”: The guaranty executed by each of the Sellers in favor
of Wachovia Bank, National Association on behalf of the “Secured Parties” (as
defined in the CS Europe Financing) in connection with the CS Europe Financing.
     “Senior Secured Loan”: Any Term Loan that (i) is secured by a valid and
perfected first priority Lien on all of the Obligor’s assets constituting
Related Property for the Loan, (ii) has a Loan-to-Value of not greater than 60%
and (iii) provides that the payment obligation of the Obligor on such Loan is
either senior to, or pari passu with, all other loans or financings to such
Obligor.
     “Senior Secured Whole Loan”: Any Term Loan that (i) is secured by a valid
and perfected first priority Lien on all of the Obligor’s assets constituting
Mortgaged Property for the Loan, (ii) has a Loan-to-Value of not greater than
85% and (iii) provides that the payment obligation of the Obligor on such Loan
is either senior to, or pari passu with, all other loans or financings to such
Obligor.
     “Servicer”: CapitalSource Finance LLC, and each successor (in the same
capacity) appointed as Successor Servicer pursuant to
Section 6.16(a).
     “Servicer Advance”: An advance of Scheduled Payments made by the Servicer
pursuant to Section 6.5.
     “Servicer Default”: Defined in Section 6.15.
     “Servicer Termination Notice”: Defined in Section 6.15.
     “Servicer’s Certificate”: Defined in Section 6.10(c).
     “Servicing Fee”: Defined in Section 2.14(b).
     “Servicing Fee Rate”: 0.75% per annum.
     “Servicing Guarantor”: An Affiliate of CapitalSource Inc. that executes a
Servicing Guaranty.
     “Servicing Guaranty”: Each Servicing Guaranty by an Affiliate of
CapitalSource Inc. in favor of the Administrative Agent, as agent for the
Secured Parties, pursuant to Section 2.21 in form and substance satisfactory to
the Administrative Agent in its sole discretion.
     “Solvent”: As to any Person at any time, having a state of affairs such
that all of the following conditions are met: (a) the fair value of the property
of such Person is greater than the

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amount of such Person’s liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities evaluated
for purposes of Section 101(32) of the Bankruptcy Code; (b) the present fair
salable value of the property of such Person in an orderly liquidation 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 is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) 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 (e) such
Person is not engaged in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person’s property would
constitute unreasonably small capital.
     “Subordinated Loan”: Any Term Loan that (i) may be unsecured or may be
secured by a combination of senior and/or junior Liens on substantially all of
the Obligor’s assets constituting Related Property for the Loan, (ii) has a
Loan-to-Value of less than 85% and (iii) contains terms which, upon the
occurrence of certain events of default under the senior loan documents between
another lender and the Obligor or in the case of any liquidation or foreclosure
on any Related Property, provide that the applicable Seller’s portion of such
Loan would be paid only after the other lender party to such related senior loan
documents (including any lender party making any Middle Market ABL Loan, Real
Estate ABL Loan, Senior Secured Loan, Senior Secured Whole Loan, Second Lien
Loan or B-Note Loan whose right to payment is contractually senior to such
Seller) is paid in full.
     “Subsidiary”: As to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly, through one
or more intermediaries, or both, by such Person; provided, however that for
purposes of Section 6.15(k), “Subsidiary” shall not include any joint ventures
in which each party to the joint venture possesses 50% of the Voting Stock of
such entity; provided further, however, that, solely for the purpose of
calculating the Consolidated Tangible Net Worth, the term “Subsidiary” shall
(i) to the extent the Credit Agreement is in effect, mean a “Subsidiary” as
defined in such Credit Agreement and (ii) in all other cases, not include
(A) any Person that constitutes an Investment in Equity Instruments or an
Investment Loan Subsidiary or (B) any Subsidiary designated as an “unrestricted
subsidiary” in writing by the Servicer from time to time and consented to by the
Administrative Agent in its sole discretion.
     “Successor Servicer”: Defined in Section 6.16(a).
     “Tape”: Defined in Section 7.2(b)(ii).
     “Taxes”: Any present or future taxes, levies, imposts, duties, charges,
assessments or fees of any nature (including interest, penalties, and additions
thereto) that are imposed by any Governmental Authority.

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     “Termination Date”: May 29, 2012 or such later date as is agreed to in
writing by the Sellers, the Servicer, the Administrative Agent and the Purchaser
Agents pursuant to Section 2.1(c).
     “Termination Event”: Defined in Section 10.1.
     “Term Loan”: A Loan that is a term loan that has been fully funded and does
not contain any unfunded commitment on the part of the applicable Originator
arising from an extension of credit by such Originator to an Obligor.
     “Transaction”: Defined in Section 3.2.
     “Transaction Documents”: The Agreement, the Sale Agreements, the Securities
Account Control Agreement, the Lock-Box Agreement, the Intercreditor Agreement,
each Variable Funding Note, each Servicing Guaranty, each Purchaser Fee Letter,
any Additional Agent Fee Letters, any Additional Purchaser Agreements, the
Backup Servicer Fee Letter, the Collateral Custodian Fee Letter, any UCC
financing statements filed pursuant to the terms of this Agreement, and any
additional document the execution of which is necessary or incidental to
carrying out the terms of the foregoing documents.
     “Transferee Letter”: Defined in Section 13.16.
     “Transition Expenses”: The reasonable costs (including reasonable
attorneys’ fees) of the Backup Servicer incurred in connection with the
transferring the servicing obligations under this Agreement and amending this
Agreement to reflect such transfer in an amount not to exceed $100,000.
     “UCC”: The Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.
     “United States”: The United States of America.
     “Unmatured Termination Event”: Any event that, with the giving of notice or
the lapse of time, or both, would become a Termination Event.
     “Variable Funding Note” or “VFN”: Defined in Section 2.1(a).
     “Voting Stock”: With respect to any Person, capital stock or membership
interests (in the case of a limited liability company) issued by such Person the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar functions) of
such Person, even though the right so to vote has been suspended by the
happening of such contingency.
     “Wachovia”: Wachovia Bank, National Association, a national banking
association in its individual capacity, and its successors and assigns.
     “Warranty Loan”: Any Loan that fails to satisfy any criteria of the
definition of Eligible Loan as of the Closing Date and the same continues
unremedied for a period of thirty (30) days

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(or such shorter time as determined by the Servicer in its sole discretion)
after the date on which the applicable Seller and/or the Servicer becomes aware
or reasonably should have become aware thereof.
     “WBNA”: Defined in the Preamble of this Agreement.
     “WBNA Agent”: Defined in the Preamble of this Agreement.
     “WBNA Agent’s Account”: A special account (account number 1459160000192) in
the name of the WBNA Agent maintained at WBNA.
     “Wholly Owned Subsidiary”: Any Subsidiary all of the shares of Capital
Stock or other ownership interests of which (except directors’ qualifying
shares) are at the time directly or indirectly owned by CapitalSource Inc.
     Section 1.2 Other Terms.
     All accounting terms used but not specifically defined herein shall be
construed in accordance with GAAP. All terms used in Article 9 of the UCC in the
State of New York, and used but not specifically defined herein, are used herein
as defined in such Article 9.
     Section 1.3 Computation of Time Periods.
     Unless otherwise stated in this Agreement, in the computation of a period
of time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding.”
     Section 1.4 Interpretation.
     In each Transaction Document, unless a contrary intention appears:
     (i) the singular number includes the plural number and vice versa;
     (ii) reference to any Person includes such Person’s successors and assigns
but, if applicable, only if such successors and assigns are permitted by the
Transaction Documents;
     (iii) reference to any gender includes each other gender;
     (iv) reference to day or days without further qualification means calendar
days;
     (v) reference to any time means Charlotte, North Carolina time;
     (vi) reference to any agreement (including any Transaction Document),
document or instrument means such agreement, document or instrument as amended,
modified, waived, supplemented, restated or replaced and in effect from time to
time in accordance with the terms thereof and, if applicable, the terms of the
other Transaction Documents, and reference to any promissory note includes any
promissory note that is an extension or renewal thereof or a substitute or
replacement therefor; and

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     (vii) reference to any Applicable Law means such Applicable Law as amended,
modified, codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated thereunder and
reference to any Section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such Section or other provision.
ARTICLE II
PURCHASE OF THE VARIABLE FUNDING NOTES
     Section 2.1 The Variable Funding Notes.
     (a) On the terms and conditions hereinafter set forth, the Sellers shall
deliver a duly executed variable funding note (each such note, a “Variable
Funding Note” or “VFN”), in substantially the form of Exhibit B-1 or B-2, as
applicable, (i) on the Closing Date, to each Purchaser Agent at their respective
addresses set forth on the signature pages of this Agreement, and (ii) on each
date on which an Additional Purchaser purchases a Variable Funding Note, to the
related Additional Agent at the address designated by such Additional Agent.
Each Variable Funding Note shall evidence each Purchaser’s ratable share of the
security interest in the Collateral granted pursuant to Section 9.1. Interest
shall accrue, and each VFN shall be payable, as described herein. The VFN
purchased by (1) WBNA shall be in the name of “Wachovia Capital Markets, LLC, as
the WBNA Agent” and shall be in the face amount equal to $106,518,000 and
otherwise duly completed, and (2) an Additional Purchaser shall be in the name
of such Additional Purchaser and shall be in a face amount to be determined;
provided, that the aggregate amount outstanding under all VFNs at any one time
shall not exceed the Facility Amount.
     (b) Subject to the terms and conditions hereof and in reliance upon the
representations and warranties set forth herein, the Purchasers severally, but
not jointly, agree to make one advance of funds to the Sellers (the “Advance”)
on the Closing Date, in an amount equal to their Pro-Rata Share, under the VFNs,
of the aggregate principal amount of up to (but not in excess of) $106,518,000.
Upon receipt by the Administrative Agent of the proceeds of the Advance, such
proceeds will then be made available to the Sellers by the Administrative Agent
by crediting the account of the applicable Seller, with the aggregate of such
proceeds made available to the Administrative Agent by the Purchasers and in
like funds as received by the Administrative Agent (or by crediting such other
account(s) as directed by the applicable Seller). Notwithstanding anything
contained in this Section 2.1 or elsewhere in this Agreement to the contrary, no
Purchaser shall be obligated to provide its Purchaser Agent or the Sellers with
aggregate funds in connection with the Advance that would exceed the
availability of funds then in effect under this Agreement on the Closing Date.
The obligation of each Purchaser to remit its Pro-Rata Share of the Advance
shall be several from that of each other Purchaser and the failure of any
Purchaser to so make such amount available to the applicable Seller shall not
relieve any other Purchaser of its obligation hereunder.

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     (c) The Sellers may, within sixty (60) days but not less than forty-five
(45) days prior to the Termination Date, by written notice to each Purchaser
Agent, make a request for each Purchaser to extend the Termination Date for up
to two additional periods, in each case up to 364 days. Each Purchaser Agent
will give prompt notice to the applicable Purchaser of its receipt of such
request, and each Purchaser shall make a determination, in their sole
discretion, not less than fifteen (15) days prior to the Termination Date as to
whether or not it will agree to the extension requested. If each Purchaser so
accepts the extension requested or if each Purchaser and the Sellers agree to an
extension of some other length (not to exceed 363 days in any event) then the
Termination Date shall be so extended. The failure of a Purchaser Agent to
provide timely notice of its decision to the Sellers shall be deemed to
constitute a refusal by such Purchaser to extend the Termination Date. The
Sellers confirm that each Purchaser, in their sole and absolute discretion,
without regard to the value or performance of the Collateral or any other
factor, may elect not to extend the Termination Date (as applicable).
     Section 2.2 Release of any Purchaser and the Related Purchaser Agent.
     Upon the prepayment to any Purchaser or its related Purchaser Agent of any
amount necessary to reduce the Advances Outstanding and Aggregate Unpaids owed
to such Purchaser to zero, from and after the date thereof, such Purchaser and
its related Purchaser Agent shall no longer be a Purchaser or Purchaser Agent,
as applicable, under this Agreement and shall have no further rights and
obligations under this Agreement; provided, however, that any provision in this
Agreement that by its terms is expressly stated to survive the removal or
termination of a Purchaser or a Purchaser Agent shall so survive.
     Section 2.3 [Reserved].
     Section 2.4 Reduction of the Facility Amount; Mandatory and Optional
Repayments.
     (a) The Sellers may, upon one Business Day’s prior written notice (such
notice to be received by the Administrative Agent and each Purchaser Agent no
later than 2:00 p.m. (Charlotte, North Carolina time) on such day) to the
Administrative Agent and each Purchaser Agent, reduce the Advances Outstanding;
provided that any reduction of the Advances Outstanding shall be in a minimum
amount of $500,000 and in integral multiples of $100,000 in excess thereof. In
connection with any such reduction of Advances Outstanding, the Sellers shall
deliver to each Purchaser Agent (i) in accordance with their Pro-Rata Share, for
payment to the respective Purchasers, funds sufficient to repay such Advances
Outstanding, together with all accrued Interest and Breakage Costs, and (ii)
instructions to reduce such Advances Outstanding, related accrued Interest and
Breakage Costs; provided, that no such reduction shall be given effect unless
sufficient funds have been remitted to pay all such amounts in the succeeding
sentence in full. Upon receipt of such amounts, the Purchaser Agents shall apply
such amounts first to the pro rata reduction of the Advances Outstanding, second
to the payment of related accrued Interest on the amount of the Advances
Outstanding to be repaid by paying such amounts to the respective Purchasers,
and third to the payment of any Breakage Costs. Any notice relating to any
prepayment pursuant to this Section 2.4(a) shall be irrevocable.

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     (b) If on any day the Administrative Agent, as agent for the Secured
Parties, does not own or have a valid and perfected first priority security
interest in any of the Collateral, upon the earlier of such Seller’s receipt of
notice from the Administrative Agent or such Seller becoming aware thereof and
such Seller’s failure to cure such breach within thirty (30) days, such Seller
shall be deemed to have received on such day a collection (a “Deemed
Collection”) of such Loan in full and shall on such day pay to the
Administrative Agent, on behalf of the Purchasers, an amount equal to (x) the
Outstanding Loan Balance of the Loan to be applied to the pro rata reduction of
the principal of each VFN plus (y) any Breakage Costs required as a result of
the Deemed Collection and release of the related Loan contemplated by this
Section 2.4(b). In connection with any such Deemed Collection, the
Administrative Agent, as agent for the Secured Parties, shall automatically and
without further action be deemed to release to the applicable Seller, free and
clear of any Lien created by the Administrative Agent, all of the right, title
and interest of the Administrative Agent, as agent for the Secured Parties, in,
to, and under the Loan with respect to which the Administrative Agent has
received such Deemed Collection, but without any other representation and
warranty of any kind, express or implied.
     Section 2.5 Determination of Interest.
     (a) Each Purchaser Agent shall determine such Purchaser’s Interest Rate and
the Interest (including unpaid Interest, if any, due and payable on a prior
Payment Date) to be paid by the Sellers with respect to the Advance outstanding
on each Payment Date for the related Accrual Period and shall advise the
Servicer thereof on or before the fifth (5th) Business Day after the related
Determination Date.
     (b) Each Additional Agent shall determine such Additional Purchaser’s
Interest Rate and Interest (including unpaid Interest related to such Interest
Rate, if any, due and payable to a prior Payment Date) to be paid by the Sellers
with respect to the Advance outstanding on each Payment Date for the related
Accrual Period and shall advise the Servicer thereof on or before the third
(3rd) Business Day prior to such Payment Date.
     Section 2.6 [Reserved].
     Section 2.7 [Reserved].
     Section 2.8 Notations on Variable Funding Notes.
     Each Purchaser Agent is hereby authorized to enter on a schedule attached
to the VFN a notation (which may be computer generated) with respect to the
Advance under the VFN made by the related Purchaser of: (a) the date and
principal amount thereof, and (b) each repayment of principal thereof, and any
such recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. The failure of any Purchaser Agent to make any such
notation on the schedule attached to the VFN shall not limit or otherwise affect
the obligation of the Sellers to repay the Advance in accordance with their
respective terms as set forth herein.

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     Section 2.9 [Reserved].
     Section 2.10 Settlement Procedures.
     (a) On each Payment Date, the Servicer shall direct the Collateral
Custodian to pay pursuant to the Monthly Report to the following Persons, from
(i) the Collection Account, to the extent of Available Funds, and (ii) Servicer
Advances received with respect to the immediately preceding Collection Period,
the following amounts in the following order of priority:
     (i) FIRST, to the Servicer, in an amount equal to any unreimbursed Servicer
Advances, for the payment thereof;
     (ii) SECOND, to the Servicer, in an amount equal to any accrued and unpaid
Servicing Fee, to the end of the preceding Collection Period, for the payment
thereof;
     (iii) THIRD, to the extent not paid for by the Originators, pro rata to the
Backup Servicer and the Collateral Custodian, in an amount equal to any accrued
and unpaid Backup Servicing Fee, Collateral Custodian Fee and Transition
Expenses, for the payment thereof;
     (iv) FOURTH, pro rata in accordance with the amounts due under subclauses
(a) and (b) of this clause, to each Purchaser Agent, pro rata in accordance with
the amount of Advances Outstanding hereunder for the account of the applicable
Purchaser, (a) an amount equal to any accrued and unpaid Program Fee and
Breakage Costs for the payment thereof and (b) an amount equal to any accrued
and unpaid Interest, for the payment thereof but only to the extent such accrued
and unpaid Interest does not exceed the LIBOR Market Index Rate applicable for
such Accrual Period;
     (v) FIFTH, to each Purchaser Agent, pro rata in accordance with the amount
of Advances Outstanding hereunder for the account of the applicable Purchaser,
in an amount necessary to reduce the Advances Outstanding and Aggregate Unpaids
to zero, for the payment thereof;
     (vi) SIXTH, to each Purchaser Agent, pro rata in accordance with the
Pro-Rata Share for the account of the applicable Purchaser, in an amount equal
to any accrued and unpaid Interest to the extent not paid in accordance with
clause FOURTH above;
     (vii) SEVENTH, to the Administrative Agent, each Purchaser Agent, the
applicable Purchaser, the Backup Servicer, the Collateral Custodian, the
Affected Parties, the Indemnified Parties or the Secured Parties, pro rata in
accordance with the amount owed to such Person under this SEVENTH clause, all
other amounts, including Increased Costs but other than Advances Outstanding,
then due under this Agreement, for the payment thereof;
     (viii) EIGHTH, to Wachovia Bank, National Association, on account of any
due and payable “Obligations” under and as defined in the CS Europe Financing;
and
     (ix) NINTH, any remaining amount shall be distributed to the Sellers.

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     (b) Upon payment in full through the SEVENTH clause set forth above, the
provisions set forth in (i) Sections 2.11(b), 2.12(c), 2.15, 2.17, 5.1(k),
5.1(q), 5.4(o), 6.10(a), 6.12, 10.1(f), 10.1(k), 10.1(n) and 10.1(o) and (ii)
Articles III, IV and XIV shall no longer apply to the Sellers or the Servicer,
as applicable.
     Section 2.11 Collections and Allocations.
     (a) Collections. The Servicer shall promptly identify any collections
received as being on account of Interest Collections, Principal Collections or
other Collections and shall transfer, or cause to be transferred, all
Collections received directly by it or on deposit in the form of available funds
in the Lock-Box Accounts to the Collection Account by the close of business on
the second (2nd) Business Day after such Collections are received. In
transferring Collections to the Collection Account, the Servicer shall segregate
Principal Collections and transfer the same to the corresponding Principal
Collections Account. The Servicer shall make such deposits or payments on the
date indicated therein by wire transfer, in immediately available funds. The
Servicer shall further include a statement as to the amount of Principal
Collections and Interest Collections on deposit in the Collection Account on
each Reporting Date in the Monthly Report delivered pursuant to Section 6.10(b).
     (b) Initial Deposits. On the Closing Date, the Servicer will deposit (in
immediately available funds) into the Collection Account all purchased accrued
interest (if any), in respect of Eligible Loans being transferred to and
included as part of the Collateral on such date.
     (c) Excluded Amounts. With the prior written consent of the Administrative
Agent and each Purchaser Agent, which consent shall not be unreasonably withheld
(a copy of which will be provided by the Servicer to the Backup Servicer), the
Servicer may withdraw from the Collection Account any deposits thereto
constituting Excluded Amounts if the Servicer has, prior to such withdrawal and
consent, delivered to the Administrative Agent and each Purchaser Agent a report
setting forth the calculation of such Excluded Amounts in a format satisfactory
to the Administrative Agent and each Purchaser Agent in their sole discretion.
     (d) Investment of Funds. Until the occurrence of a Termination Event, to
the extent there are uninvested amounts deposited in the Collection Account, all
amounts shall be invested in Permitted Investments selected by the Servicer that
mature no later than the Business Day immediately preceding the next Payment
Date; from and after the occurrence of a Termination Event, to the extent there
are uninvested amounts in the Collection Account (net of losses and investment
expenses), all amounts may be invested in Permitted Investments selected by the
Administrative Agent that mature no later than the Business Day immediately
preceding the next Payment Date. All earnings (net of losses and investment
expenses) thereon shall be retained or deposited into the Collection Account and
shall be applied pursuant to the provisions of Section 2.10.
     Section 2.12 Payments, Computations, Etc.
     (a) Unless otherwise expressly provided herein, all amounts to be paid or
deposited by the Sellers or the Servicer hereunder shall be paid or deposited in
accordance with the terms hereof no later than 2:00 p.m. (Charlotte, North
Carolina time) on the day when due in lawful

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money of the United States in immediately available funds to the applicable
Purchaser Agent’s Account and if not received before such time shall be deemed
received on the next Business Day. The Sellers shall, to the extent permitted by
law, pay to the Secured Parties interest on all amounts not paid or deposited
when due hereunder at 2% per annum above the Base Rate, payable on demand;
provided, however, that such interest rate shall not at any time exceed the
maximum rate permitted by Applicable Law. Such interest shall be for the account
of, and distributed to, each applicable Purchaser. All computations of interest
and all computations of Interest and other fees hereunder shall be made on the
basis of a year consisting of 360 days (other than calculations with respect to
the Base Rate which shall be based on a year consisting of 365 or 366 days, as
applicable) for the actual number of days (including the first but excluding the
last day) elapsed.
     (b) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of the payment of Interest or any fee payable hereunder, as the case
may be. For avoidance of doubt, to the extent that Available Funds are
insufficient on any Payment Date to satisfy the full amount of any Increased
Costs pursuant to clause SEVENTH of Section 2.10, such unpaid amounts shall
remain due and owing and shall accrue Interest until repaid in full.
     (c) If the Advance requested by a Seller on the Closing Date and approved
by the applicable Purchaser and the Purchaser Agents is not, for any reason made
or effectuated, as the case may be, on the Closing Date, the Sellers shall
jointly and severally indemnify the applicable Purchaser against any reasonable
loss, cost or expense incurred by the applicable Purchaser including, without
limitation, any loss (including loss of anticipated profits, net of anticipated
profits in the reemployment of such funds in the manner determined by each
Purchaser), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the applicable Purchaser to
fund or maintain such Advance.
     Section 2.13 [Reserved].
     Section 2.14 Fees.
     (a) The Servicer on behalf of the applicable Seller shall pay in accordance
with Section 2.10(a)(iv), as applicable, to the applicable Purchaser Agent from
the Collection Account to the extent funds are available on each Payment Date,
monthly in arrears, the applicable Program Fee agreed to between the Sellers and
such Purchaser Agent in the applicable Purchaser Fee Letter and the relevant
Additional Agent Fee Letter, as applicable.
     (b) The Servicer shall be entitled to receive a fee (the “Servicing Fee”),
monthly in arrears in accordance with Section 2.10(a)(ii), as applicable, which
fee shall be equal to the product of (i) the Servicing Fee Rate, (ii) the
Aggregate Outstanding Loan Balance as of the first day of the immediately
preceding Collection Period and (iii) the actual number of days in such
Collection Period divided by 360. Notwithstanding anything to the contrary
herein, in the event that a Successor Servicer is appointed, the Servicing Fee
shall equal the market rate for comparable servicing duties to be fixed upon the
date of such appointment of such Successor Servicer with the consent of the
Administrative Agent; provided, however, that in the event that

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the Backup Servicer becomes the Successor Servicer, the Backup Servicer shall
solicit three bids, with a copy to the Sellers and the Administrative Agent,
from not less than three entities experienced in the servicing of loans similar
to the Loans and that are not Affiliates of the Backup Servicer, the Servicer or
the Sellers, and the Servicing Fee shall be equal to the average of the fees
proposed as determined by the Backup Servicer with the consent of the
Administrative Agent.
     (c) The Backup Servicer shall be entitled to receive the Backup Servicing
Fee in accordance with Section 2.10(a)(iii), as applicable.
     (d) The Collateral Custodian shall be entitled to receive the Collateral
Custodian Fee in accordance with Section 2.10(a)(iii), as applicable.
     (e) The Sellers shall pay to Dechert LLP, as counsel to the Administrative
Agent, on the Closing Date, its reasonable estimated fees and out-of-pocket
expenses in immediately available funds and shall pay all additional reasonable
fees and out-of-pocket expenses of such counsel within thirty (30) Business Days
after receiving an invoice for such amounts.
     Section 2.15 Increased Costs; Capital Adequacy; Illegality.
     (a) If either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law or regulation or (ii) the compliance by
an Affected Party with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), shall (a)
subject an Affected Party to any Tax (except for Taxes on the overall net income
of such Affected Party), duty or other charge with respect to its interest in
the Collateral, or any right to make the Advance hereunder, or on any payment
made hereunder, (b) impose, modify or deem applicable any reserve requirement
(including, without limitation, any reserve requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve requirement,
if any, included in the determination of Interest), special deposit or similar
requirement against assets of, deposits with or for the amount of, or credit
extended by, any Affected Party or (c) impose any other condition affecting the
security interest in the Collateral granted to the Purchasers hereunder or the
Purchasers’ rights hereunder, the result of which is to increase the cost to any
Affected Party or to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement, then within ten days after demand by such
Affected Party (which demand shall be accompanied by a statement setting forth
the basis for such demand), the Servicer shall pay (and to the extent the
Servicer does not make such payment the Sellers, jointly and severally, shall
pay) directly to such Affected Party such additional amount or amounts as will
compensate such Affected Party for such additional or increased cost incurred or
such reduction suffered.
     (b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule, regulation,
directive or request from any central bank or other governmental authority or
agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital
adequacy, has or would have the effect of reducing the rate of return on the
capital of any Affected Party as a

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consequence of its obligations hereunder or arising in connection herewith to a
level below that which any such Affected Party could have achieved but for such
introduction, change or compliance (taking into consideration the policies of
such Affected Party with respect to capital adequacy) by an amount deemed by
such Affected Party to be material, then from time to time, within ten days
after demand by such Affected Party (which demand shall be accompanied by a
statement setting forth the basis for such demand), the Servicer shall pay (and
to the extent the Servicer does not make such payment the Sellers, jointly and
severally, shall pay) directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such reduction. For the
avoidance of doubt, if the issuance of Interpretation No. 46 by the Financial
Accounting Standards Board or any other change in accounting standards or the
issuance of any other pronouncement, release or interpretation, causes or
requires the consolidation of all or a portion of the assets and liabilities of
the Originators or Sellers with the assets and liabilities of the Administrative
Agent, any Purchaser Agent, any Purchaser or any Liquidity Bank, such event
shall constitute a circumstance on which such Affected Party may base a claim
for reimbursement under this Section 2.15.
     (c) If as a result of any event or circumstance similar to those described
in clauses (a) or (b) of this Section 2.15, any Affected Party is required to
compensate a bank or other financial institution providing liquidity support,
credit enhancement or other similar support to such Affected Party in connection
with this Agreement or the funding or maintenance of the Advance hereunder, then
within ten days after demand by such Affected Party, the Servicer shall pay (and
to the extent the Servicer does not make such payment the Sellers, jointly and
severally, shall pay) to such Affected Party such additional amount or amounts
as may be necessary to reimburse such Affected Party for any amounts payable or
paid by it.
     (d) In determining any amount provided for in this Section 2.15, the
Affected Party may use any reasonable averaging and attribution methods. Any
Affected Party making a claim under this Section 2.15 shall submit to the
Servicer a written description as to such additional or increased cost or
reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.
     (e) If the applicable Purchaser shall notify their respective Purchaser
Agent that a Eurodollar Disruption Event as described in clause (a) of the
definition of “Eurodollar Disruption Event” has occurred, the applicable
Purchaser Agent or the Administrative Agent shall in turn so notify the Sellers,
whereupon all Advances Outstanding of the affected Liquidity Bank or
Institutional Purchaser in respect of which Interest accrues at the Adjusted
Eurodollar Rate shall immediately be converted into Advances Outstanding in
respect of which Interest accrues at the Base Rate.
     (f) Failure or delay on the part of any Affected Party to demand
compensation pursuant to this Section 2.15 shall not constitute a waiver of such
Affected Party’s right to demand or receive such compensation.
     Section 2.16 Taxes.
     (a) All payments made by an Obligor in respect of a Loan and all payments
made by the Sellers or the Servicer under this Agreement will be made free and
clear of and without

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deduction or withholding for or on account of any Taxes. If any Taxes are
required to be withheld from any amounts payable to the Administrative Agent,
the Purchaser Agents, any Affected Party or any Secured Party, then the amount
payable to such Person will be increased (such increase, the “Additional
Amount”) such that every net payment made under this Agreement after withholding
for or on account of any Taxes (including, without limitation, any Taxes on such
increase) is not less than the amount that would have been paid had no such
deduction or withholding been deducted or withheld. The foregoing obligation to
pay Additional Amounts, however, will not apply with respect to net income or
franchise taxes imposed on the Purchasers, any Affected Party, the
Administrative Agent or the Purchaser Agents, respectively, with respect to
payments required to be made by a Seller or the Servicer under this Agreement,
by a taxing jurisdiction in which the Purchasers, any Affected Party, the
Administrative Agent or the Purchaser Agents, are organized, conducts business
or is paying taxes (as the case may be).
     (b) The Servicer will indemnify (and to the extent the indemnification
provided by the Servicer is insufficient the Sellers, jointly and severally,
will indemnify) each Affected Party for the full amount of Taxes payable by such
Person in respect of Additional Amounts and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. All payments
in respect of this indemnification shall be made within ten days from the date a
written invoice therefor is delivered to the Sellers.
     (c) Within thirty (30) days after the date of any payment by the Sellers
and the Servicer of any Taxes, the Sellers and the Servicer will furnish to the
Administrative Agent and each of the Purchaser Agents at its address set forth
under its name on the signature pages hereof, appropriate evidence of payment
thereof.
     (d) If a Purchaser is not created or organized under the laws of the United
States or a political subdivision thereof, such Purchaser shall deliver to the
Sellers, with a copy to the Administrative Agent, (i) within fifteen (15) days
after the date hereof, two (or such other number as may from time to time be
prescribed by Applicable Laws) duly completed copies of IRS Form W-8BEN or Form
W-8ECI (or any successor forms or other certificates or statements that may be
required from time to time by the relevant United States taxing authorities or
Applicable Laws), as appropriate, to permit the Sellers to make payments
hereunder for the account of such Purchaser without deduction or withholding of
United States federal income or similar Taxes and (ii) upon the obsolescence of
or after the occurrence of any event requiring a change in, any form or
certificate previously delivered pursuant to this Section 2.16(d), copies (in
such numbers as may from time to time be prescribed by Applicable Laws or
regulations) of such additional, amended or successor forms, certificates or
statements as may be required under Applicable Laws or regulations to permit the
Sellers and the Servicer to make payments hereunder for the account of such
Purchaser without deduction or withholding of United States federal income or
similar Taxes.
     (e) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the Purchasers
in connection with this Agreement or the funding or maintenance of the Advance
hereunder, the Purchasers are required to compensate a bank or other financial
institution in respect of Taxes under circumstances similar to those described
in this Section 2.16, then, within ten days after demand by the Purchasers, the
Servicer shall pay (and to the extent the Servicer does not make such payment

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the Sellers, jointly and severally, shall pay) to the Purchasers such additional
amount or amounts as may be necessary to reimburse the Purchasers for any
amounts paid by them.
     (f) The Servicer will indemnify (and to the extent the indemnification
provided by the Servicer is insufficient, the Sellers jointly and severally will
indemnify) each Affected Party to the extent of any amounts that are required to
be deposited into the Collection Account pursuant to the terms of this Agreement
and are not so deposited by virtue of any Tax imposed as a result of either
Seller or both Sellers being treated as a “taxable mortgage pool” within the
meaning of Section 7701(i) of the Code.
     (g) Without prejudice to the survival of any other agreement of the Sellers
and the Servicer hereunder, the agreements and obligations of the Sellers and
the Servicer contained in this Section 2.16 shall survive the termination of
this Agreement.
     Section 2.17 Assignment of the Sale Agreements.
     The Sellers hereby assign to the Administrative Agent, for the ratable
benefit of the Secured Parties hereunder, all of each Seller’s right, title and
interest in and to, but none of its obligations under, the applicable Sale
Agreement and any UCC financing statements filed under or in connection
therewith. In furtherance and not in limitation of the foregoing, the Sellers
hereby assign to the Administrative Agent for the benefit of the Secured Parties
its right to indemnification under Article VIII of the applicable Sale
Agreement. The Sellers confirm that the Administrative Agent on behalf of the
Secured Parties shall have the sole right to enforce each Seller’s rights and
remedies under the applicable Sale Agreement and any UCC financing statements
filed under or in connection therewith for the benefit of the Secured Parties.
     Section 2.18 [Reserved].
     Section 2.19 Optional Sales.
     (a) Prior to the occurrence of an Unmatured Termination Event or a
Termination Event, on any Optional Sale Date, either Seller shall have the right
to prepay all or a portion of the Advances Outstanding in connection with the
sale and assignment of all or a portion of the Loans, as the case may be in
connection with a Permitted Securitization Transaction (each, an “Optional
Sale”), subject to the following terms and conditions:
     (i) The applicable Seller shall have given the Administrative Agent at
least three (3) Business Days’ prior written notice of its intent to effect an
Optional Sale in connection with a Permitted Securitization Transaction, and the
Administrative Agent shall have delivered to such Seller its prior written
consent (in its sole discretion) to such Optional Sale, unless such notice
and/or consent requirement, as applicable, is waived or reduced by the
Administrative Agent;
     (ii) Any Optional Sale shall be in connection with a Permitted
Securitization Transaction;
     (iii) Unless an Optional Sale is to be effected on a Payment Date (in which
case the relevant calculations with respect to such Optional Sale shall be
reflected on the

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applicable Monthly Report), the Servicer shall deliver to the Administrative
Agent a certificate and evidence to the reasonable satisfaction of the
Administrative Agent (which evidence may consist solely of a certificate from
the Servicer) that the applicable Seller shall have sufficient funds on the
related Optional Sale Date to effect the contemplated Optional Sale in
accordance with this Agreement. In effecting an Optional Sale, the applicable
Seller may use the Proceeds of sales of the Collateral;
     (iv) After giving effect to the Optional Sale on any Optional Sale Date,
(a) the representations and warranties contained in Section 4.1 hereof shall
continue to be correct in all material respects, except to the extent relating
to an earlier date and (b) neither an Unmatured Termination Event nor a
Termination Event shall have resulted;
     (v) On the related Optional Sale Date, the Administrative Agent, each
Purchaser Agent, on behalf of the applicable Purchaser, shall have received, as
applicable, in immediately available funds, an amount equal to the sum of
(a) the portion of the Advances Outstanding to be prepaid plus (b) an amount
equal to all unpaid Interest to the extent reasonably determined by the
Administrative Agent and the Purchaser Agents to be attributable to that portion
of the Advances Outstanding to be paid in connection with the Optional Sale plus
(c) an aggregate amount equal to the sum of all other amounts due and owing to
the Administrative Agent, the Collateral Custodian, the Backup Servicer, the
Purchaser Agents, the applicable Purchaser and the Affected Parties, as
applicable, under this Agreement and the other Transaction Documents, to the
extent accrued to such date and to accrue thereafter (including, without
limitation, Breakage Costs); provided, that the Administrative Agent and each
Purchaser Agent shall have the right to determine whether the amount paid (or
proposed to be paid) by the applicable Seller on the Optional Sale Date is
sufficient to satisfy the requirements of clauses (iii), (iv) and (v) of this
Section 2.19(a) and is sufficient to reduce the Advances Outstanding to the
extent requested by the applicable Seller in connection with the Optional Sale;
     (vi) On or prior to each Optional Sale Date, the applicable Seller shall
have delivered to the Administrative Agent a list specifying all Loans to be
sold and assigned pursuant to such Optional Sale; and
     (vii) No selection procedure adverse to the interests of the Administrative
Agent, the Purchaser Agents or the Secured Parties was utilized by the
applicable Seller or Originator in the selection of Loans for inclusion in any
Optional Sale.
     (b) In connection with any Optional Sale, following receipt by the
Purchaser Agents of the amounts referred to in clause (a)(v) above, the portion
of the Collateral subject to the Optional Sale shall be released from the Lien
of this Agreement (subject to the requirements of
clause (a)(iv) above).
     (c) The applicable Seller hereby agrees to pay the reasonable legal fees
and expenses of the Administrative Agent, each Purchaser Agent and the Secured
Parties in connection with any Optional Sale (including, but not limited to,
expenses incurred in connection with the release

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of the Lien of the Administrative Agent, the Secured Parties and any other party
having an interest in the Collateral in connection with such Optional Sale).
     (d) In connection with any Optional Sale, on the related Optional Sale
Date, the Administrative Agent, on behalf of the Secured Parties, shall, at the
expense of the applicable Seller (i) execute such instruments of release with
respect to the portion of the Collateral subject to the Optional Sale, in
recordable form if necessary, in favor of the applicable Seller as such Seller
may reasonably request, (ii) deliver any portion of the Collateral subject to
the Optional Sale to the applicable Seller in its possession to such Seller and
(iii) otherwise take such actions, and cause or permit the Collateral Custodian
to take such actions, as are necessary and appropriate to release the Lien of
the Administrative Agent and the Secured Parties on the portion of the
Collateral subject to the Optional Sale to the applicable Seller and release and
deliver to such Seller such portion of the Collateral subject to the Optional
Sale.
     (e) Upon the payment in full of Aggregate Unpaids (other than with respect
to clause (i) of the definition thereof), the provisions set forth in this
Section 2.19 (other than with respect to Section 2.19(a)(i)) shall no longer
apply to any Optional Sale effected by either Seller, and either Seller shall be
permitted to make any such Optional Sales.
     Section 2.20 Discretionary Sales.
     (a) Prior to the occurrence of an Unmatured Termination Event or a
Termination Event, on any Discretionary Sale Date, either Seller shall have the
right to prepay all or a portion of the Advances Outstanding in connection with
the transfer and assignment of one or more Loans, of the specified portion of
Collateral (each, a “Discretionary Sale”), subject to the following terms and
conditions:
     (i) At least one Business Day prior to each Discretionary Sale Date, the
Servicer, on behalf of the applicable Seller, shall have given the
Administrative Agent written notice of its intent to effect a Discretionary Sale
(each such notice a “Discretionary Sale Notice”), specifying the Discretionary
Sale Date and including (A) a list of all Loans to be sold and assigned pursuant
to such Discretionary Sale and (B) a certification of the sale price (as a
percentage of par) of every Loan subject to such Discretionary Sales (net of the
expenses incurred in connection with the Discretionary Sale, which expenses
shall be listed in the Discretionary Sale Notice), and the Administrative Agent
shall have delivered to the applicable Seller its prior written consent (in its
sole discretion) to such Discretionary Sale and to all or a portion of such
expenses incurred; provided that (i) no such consent will be required for any
Discretionary Sale of any Loan at a sale price greater than 90% of the par value
of such Loan (net of the expenses incurred in connection with such Discretionary
Sale) as of the date of the Discretionary Sale and (ii) no consent will be
required for the first $25,000,000 (of Outstanding Loan Balance) worth of Loans
sold after the Closing Date pursuant to a Discretionary Sale at a purchase price
equal to or less than 90% of the par value thereof (net of expenses up to five
(5) percent of the gross purchase price, or such higher level of expenses as
approved in writing by the Administrative Agent in its sole discretion);

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     (ii) Any Discretionary Sale shall be made by the Servicer, on behalf of the
applicable Seller, to an unaffiliated third party purchaser in a transaction
(i) reflecting arms-length market terms and (ii) in which such Seller makes no
representations, warranties or covenants and provides no indemnification for the
benefit of any other party to the Discretionary Sale; provided, however, that
the Servicer may make representations, warranties or covenants and provide
indemnification for the benefit of such other party;
     (iii) After giving effect to the Discretionary Sale on any Discretionary
Sale Date, (a) the representations and warranties contained in Section 4.1
hereof shall continue to be correct in all material respects, except to the
extent relating to an earlier date and (b) neither an Unmatured Termination
Event nor a Termination Event shall have resulted; and
     (iv) On the related Discretionary Sale Date, each Purchaser Agent, on
behalf of the applicable Purchaser, shall have received in immediately available
funds an amount equal to the sum of the Purchaser’s Pro-Rata Share of all of the
net proceeds from such Discretionary Sale; provided that in the event that such
Discretionary Sale results in the sale of all (or substantially all) remaining
Loans included in the Collateral, then on the related Discretionary Sale Date,
the Administrative Agent, each Purchaser Agent, on behalf of the applicable
Purchaser, the Collateral Custodian and the Backup Servicer, the Affected
Parties and the Indemnified Parties, as applicable, shall have received in
immediately available funds an aggregate amount equal to the sum of all
Aggregate Unpaids due and owing to the Administrative Agent, the Purchaser
Agents, each applicable Purchaser, the Affected Parties and the Indemnified
Parties, as applicable, under this Agreement and the other Transaction
Documents.
     (b) Notwithstanding anything to the contrary in Section 2.20(a), on or
prior to August 28, 2009, either Seller shall have the right to transfer and
assign Loan No. 1923 made to FC-THC Acquisition LLC (and the related release of
security interest by the Administrative Agent) (the “Tandem Discretionary
Sale”), subject to the following terms and conditions:
     (i) At least one Business Day prior to the Tandem Discretionary Sale Date,
the Servicer, on behalf of the applicable Seller, shall have given the
Administrative Agent written notice of its intent to effect the
Tandem Discretionary Sale (the “Tandem Discretionary Sale Notice”), specifying
the Tandem Discretionary Sale Date;
     (ii) The Tandem Discretionary Sale shall be made by the Servicer, on behalf
of the applicable Seller, to an unaffiliated third party purchaser in a
transaction (i) reflecting arms-length market terms and (ii) in which such
Seller makes no representations, warranties or covenants and provides no
indemnification for the benefit of any other party to the Discretionary Sale;
provided, however, that the Servicer may make representations, warranties or
covenants and provide indemnification for the benefit of such other party;
     (iii) After giving effect to the Tandem Discretionary Sale on the Tandem
Discretionary Sale Date, (a) the representations and warranties contained in
Section 4.1

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hereof shall continue to be correct in all material respects, except to the
extent relating to an earlier date and (b) neither an Unmatured Termination
Event nor a Termination Event shall have resulted; and
     (iv) On the Tandem Discretionary Sale Date each Purchaser Agent, on behalf
of the applicable Purchaser, shall have received in immediately available funds,
an amount equal to such Purchaser’s Pro-Rata Share of not less than $24,000,000
to be applied as a prepayment of Advances Outstanding and any proceeds of the
Tandem Discretionary Sale in excess of such amount shall be retained by the
applicable Seller or its designee.
     Section 2.21 Loans Originated by Affiliates of CapitalSource Inc. Other
than the Originator.
     On or prior to the Closing Date, with respect to any Loan originated by an
Affiliate of CapitalSource Inc. (other than CapitalSource Finance) and acquired
by CapitalSource Finance from such Affiliate, the Servicer shall deliver to the
Administrative Agent (1) a form of assignment approved in writing by the
Administrative Agent, (2) a Servicing Guaranty executed by such Affiliate in
form and substance satisfactory to the Administrative Agent and (3) a legal
opinion concerning Loans originated by such Affiliate and acquired from time to
time by CapitalSource Finance from such Affiliate pursuant to an assignment in
such form.
ARTICLE III
CONDITIONS TO ADVANCES
     Section 3.1 Conditions to Closing and the Advance.
     The Purchasers shall not be obligated to make the Advance hereunder, nor
shall any Purchaser, the Administrative Agent, the Purchaser Agents, the Backup
Servicer and the Collateral Custodian be obligated to take, fulfill or perform
any other action hereunder, until the following conditions have been satisfied,
in the sole discretion of, or waived in writing by, the Administrative Agent and
each Purchaser Agent:
     (a) Each Transaction Document shall have been duly executed by, and
delivered to, the parties thereto, and the Administrative Agent and each
Purchaser Agent shall have received such other documents, instruments,
agreements and legal opinions as the Administrative Agent and each Purchaser
Agent shall reasonably request in connection with the transactions contemplated
by this Agreement, including, without limitation, all those specified in the
Schedule of Documents attached hereto as Schedule I, each in form and substance
satisfactory to the Administrative Agent and each Purchaser Agent;
     (b) The Administrative Agent and each Purchaser Agent shall have received
(i) satisfactory evidence that the Sellers and the Servicer have obtained all
required consents and approvals of all Persons, including all requisite
Governmental Authorities, to the execution, delivery and performance of this
Agreement and the other Transaction Documents to which each is a party and the
consummation of the transactions contemplated hereby or thereby or (ii) an
Officer’s Certificate from each of the Sellers and the Servicer in form and
substance reasonably

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satisfactory to the Administrative Agent and each Purchaser Agent affirming that
no such consents or approvals are required; it being understood that the
acceptance of such evidence or officer’s certificate shall in no way limit the
recourse of the Administrative Agent, each Purchaser Agent or any Secured Party
against the applicable Originator or the applicable Seller for a breach of such
Originator’s and such Seller’s representation or warranty that all such consents
and approvals have, in fact, been obtained;
     (c) Each of the Sellers shall have delivered to the Administrative Agent
and each Purchaser Agent a Borrowing Notice in the form of Exhibit A-1;
     (d) Each of the Sellers and the Servicer shall each have delivered to the
Administrative Agent and each Purchaser Agent a certificate as to Solvency in
the form of Exhibits E-1-1 or E-1-2, as applicable, and Exhibit E-2 and a
perfection certificate in form reasonably acceptable to the Administrative
Agent;
     (e) Each of the Sellers, the Servicer and the Originators shall each be in
compliance in all material respects with all Applicable Laws and shall have
delivered to the Administrative Agent and each Purchaser Agent as to this and
other closing matters certification in the form of Exhibits F-1-1 or F-1-2, as
applicable, and Exhibits F-2-1, F-2-2 or F-2-3, as applicable;
     (f) Each of the Sellers and the Servicer shall each have delivered to the
Administrative Agent and each Purchaser Agent duly executed Powers of Attorney
in the form of Exhibits G-1-1 or G-1-2, as applicable, and Exhibit G-2; and
     (g) Each Purchaser Agent shall have received a duly executed copy of its
VFN, in a principal amount equal to its Pro-Rata Share.
     The failure of the applicable Seller to satisfy any of the foregoing
conditions precedent in respect of the Advance shall give rise to a right of the
Administrative Agent and the applicable Purchaser Agent, which right may be
exercised at any time on the demand of the applicable Purchaser Agent, to
rescind the Advance and direct the applicable Seller to pay to the
Administrative Agent for the benefit of the applicable Purchaser an amount equal
to the Advance.
     Section 3.2 Condition Precedent to Repayments.
     Each reduction in Advances Outstanding pursuant to Section 2.4(a) (a
“Transaction”) shall be subject to the condition precedent that the Servicer
shall have delivered to the Administrative Agent and each Purchaser Agent (with
a copy to the Collateral Custodian) at least one Business Day prior to any
reduction of Advances Outstanding a Repayment Notice in the form of Exhibit A-2,

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
     Section 4.1 Representations and Warranties of the Sellers.
     Each Seller represents and warrants as to itself and the Collateral in
which it has an interest, for the benefit of the Secured Parties, as follows as
of the Closing Date:
     (a) Organization and Good Standing. The Seller has been duly organized, and
is validly existing as a limited liability company in good standing, under the
laws of the State of Delaware, with all requisite company power and authority to
own or lease its properties and conduct its business as such business is
presently conducted, and had at all relevant times, and now has all necessary
power, authority and legal right to acquire, own, pledge and sell the
Collateral.
     (b) Due Qualification. The Seller is duly qualified to do business and is
in good standing as a limited liability company, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualification, licenses or
approvals.
     (c) Power and Authority; Due Authorization; Execution and Delivery. The
Seller (i) has all necessary power, authority and legal right to (a) execute and
deliver this Agreement and the other Transaction Documents to which it is a
party, (b) carry out the terms of the Transaction Documents to which it is a
party, (c) grant a security interest in the Collateral, and (d) receive the
Advance and grant a security interest in the Collateral on the terms and
conditions provided herein and (ii) has duly authorized by all necessary company
action the execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party and the grant and assignment of a
security interest in the Collateral on the terms and conditions herein provided.
This Agreement and each other Transaction Document to which the Seller is a
party have been duly executed and delivered by the Seller.
     (d) Binding Obligation. This Agreement and each other Transaction Document
to which the Seller is a party constitutes a legal, valid and binding obligation
of the Seller enforceable against the Seller in accordance with its respective
terms, except as such enforceability may be limited by Insolvency Laws and by
general principles of equity (whether considered in a suit at law or in equity).
     (e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party and the
fulfillment of the terms hereof and thereof will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the Seller’s
certificate of formation, operating agreement or any Contractual Obligation of
the Seller, (ii) result in the creation or imposition of any Lien (other than
Permitted Liens) upon any of the Seller’s properties pursuant to the terms of
any such Contractual Obligation, other than this Agreement, or (iii) violate any
Applicable Law.

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     (f) No Proceedings. There is no litigation, proceeding or investigation
pending or, to the best knowledge of the Seller, threatened against the Seller,
before any Governmental Authority (i) asserting the invalidity of this Agreement
or any other Transaction Document to which the Seller is a party, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement or any other Transaction Document to which the Seller is a party or
(iii) seeking any determination or ruling that could reasonably be expected to
have Material Adverse Effect.
     (g) All Consents Required. All approvals, authorizations, consents, orders
or other actions of any Person or of any Governmental Authority (if any)
required for the due execution, delivery and performance by the Seller of this
Agreement and any other Transaction Document to which the Seller is a party have
been obtained.
     (h) Bulk Sales. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby do not require compliance with any
“bulk sales” act or similar law by Seller.
     (i) Solvency. The Seller is not the subject of any Insolvency Proceedings
or Insolvency Event. The transactions under this Agreement and any other
Transaction Document to which the Seller is a party do not and will not render
the Seller not Solvent and the Seller shall deliver to the Administrative Agent
and each Purchaser Agent on the Closing Date a certification in the form of
Exhibit E-1-1 or Exhibit E-1-2, as applicable.
     (j) Selection Procedures. No procedures believed by the Seller to be
adverse to the interests of the Purchaser were utilized by the Seller in
identifying and/or selecting the Loans in the Collateral. In addition, each Loan
shall have been underwritten in accordance with and satisfy the standards of any
Credit and Collection Policy that has been established by the Seller or the
applicable Originator and is then in effect.
     (k) Taxes. The Seller has filed or caused to be filed all tax returns that
are required to be filed by it. The Seller has paid or made adequate provisions
for the payment of all Taxes and all assessments made against it or any of its
property (other than any amount of Tax the validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in accordance with GAAP have been provided on the books of the Seller),
and no tax lien has been filed and, to the Seller’s knowledge, no claim is being
asserted, with respect to any such Tax, fee or other charge.
     (l) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein will violate or result in a violation of
Section 7 of the Securities Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Seller does
not own or intend to carry or purchase, and no proceeds from the Advance will be
used to carry or purchase, any “margin stock” within the meaning of Regulation U
or to extend “purpose credit” within the meaning of Regulation U.
     (m) Security Interest.

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     (i) This Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Collateral in favor of the Administrative
Agent, on behalf of the Secured Parties, which security interest is prior to all
other Liens (except for Permitted Liens), and is enforceable as such against
creditors of and purchasers from the Seller;
     (ii) the Loan, along with the related Loan Files, constitute a “general
intangible,” an “instrument,” an “account,” or “chattel paper” within the
meaning of the applicable UCC;
     (iii) the Seller owns and has good and marketable title to the Collateral
free and clear of any Lien (other than Permitted Liens), claim or encumbrance of
any Person;
     (iv) the Seller has received all consents and approvals required by the
terms of any Loan to the sale and granting of a security interest in the Loans
hereunder to the Administrative Agent, on behalf of the Secured Parties;
     (v) the Seller has caused 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 in the Collateral
granted to the Administrative Agent, on behalf of the Secured Parties, under
this Agreement;
     (vi) other than the security interest granted to the Administrative Agent,
on behalf of the Secured Parties, pursuant to this Agreement, the Seller has not
pledged, assigned, sold, granted a security interest in or otherwise conveyed
any of the Collateral. The Seller has not authorized the filing of and is not
aware of any financing statements against the Seller that include a description
of collateral covering the Collateral other than any financing statement
(A) relating to the security interest granted to the Seller under the applicable
Sale Agreement, or (B) that has been terminated. The Seller is not aware of the
filing of any judgment or tax lien filings against the Seller;
     (vii) all original executed copies of each underlying promissory note or
copies of each Loan Register, as applicable, that constitute or evidence each
Loan has been, or subject to the delivery requirements contained herein, will be
delivered to the Collateral Custodian;
     (viii) the Seller has received a written acknowledgment from the Collateral
Custodian that the Collateral Custodian or its bailee is holding the underlying
promissory notes (if any), the copies of the Loan Registers that constitute or
evidence the Loans solely on behalf of and for the benefit of the Secured
Parties; and
     (ix) none of the underlying promissory notes or Loan Registers, as
applicable, that constitute or evidence the Loans has any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed to any
Person other than the Administrative Agent, on behalf of the Secured Parties.
     (n) Reports Accurate. All Monthly Reports (if prepared by the Seller, or to
the extent that information contained therein is supplied by the Seller),
information, exhibits, financial

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statements, documents, books, records or reports furnished or to be furnished by
the Seller to the Administrative Agent, each Purchaser Agent or any Purchaser in
connection with this Agreement are true, complete and correct, and no Monthly
Report contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein not
misleading.
     (o) Location of Offices. The Seller’s location (within the meaning of
Article 9 of the UCC) is Delaware. The office where the Seller keeps all the
Records is at the address of the Seller referred to in Section 13.2 hereof (or
at such other locations as to which the notice and other requirements specified
in Section 5.2(g) shall have been satisfied). The QRS Seller’s Federal Employee
Identification Number is 30-3991722. The CSIII Seller’s Federal Employee
Identification Number is 20-0878666. The Seller has not changed its name,
whether by amendment of its certificate of formation, by reorganization or
otherwise, and has not changed its location within the four months preceding the
Closing Date.
     (p) Lock-Boxes. The names and addresses of all the Lock-Box Banks, together
with the account numbers of the Lock-Box Accounts of each of the Sellers at such
Lock-Box Banks and the names, addresses and account numbers of all accounts to
which Collections of the Collateral outstanding before the Advance hereunder
have been sent, are specified in Schedule II (which shall be deemed to be
amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in
Section 5.2(k)). The Seller has not granted any Person other than the
Administrative Agent and Collateral Custodian an interest in any Lock-Box
Account at a future time or upon the occurrence of a future event.
     (q) Tradenames. The Seller has no trade names, fictitious names, assumed
names or “doing business as” names or other names under which it has done or is
doing business.
     (r) Sale Agreement. The applicable Sale Agreement is the only agreement
pursuant to which the Seller acquires Collateral from the applicable Originator.
     (s) Value Given. The Seller shall have given reasonably equivalent value to
the applicable Originator in consideration for the transfer to the Seller of the
Collateral under the applicable Sale Agreement, no such transfer shall have been
made for or on account of an antecedent debt owed by the applicable Originator
to the Seller, and no such transfer is or may be voidable or subject to
avoidance under any section of the Bankruptcy Code.
     (t) Accounting. The Seller accounts for the transfers to it from the
applicable Originator of interests in Collateral under the applicable Sale
Agreement as financings of such Collateral for tax and consolidated accounting
purposes (with a notation that it is treating the transfers as a sale for legal
and all other purposes on its books, records and financial statements, in each
case consistent with GAAP and with the requirements set forth herein).
     (u) Special Purpose Entity. The Seller has not and shall not (other than in
connection with the transactions contemplated by the CSIII Sale Agreement and
the QRS Sale Agreement, as applicable):

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     (i) engage in any business or activity other than the purchase and receipt
of Collateral and related assets from the applicable Originator under the
applicable Sale Agreement, the sale of Collateral under the Transaction
Documents, the execution of the Sellers Guaranty and such other activities as
are incidental thereto;
     (ii) acquire or own any material assets other than (a) the Collateral and
related assets from the applicable Originator under the applicable Sale
Agreement and (b) incidental property as may be necessary for the operation of
the Seller;
     (iii) merge into or consolidate with any Person or dissolve, terminate or
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or change its legal structure, without in each
case first obtaining the consent of the Administrative Agent and each Purchaser
Agent;
     (iv) fail to preserve its existence as an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization or formation, or without the prior written consent of the
Administrative Agent and each Purchaser Agent, amend, modify, terminate or fail
to comply with the provisions of its operating agreement, or fail to observe
limited liability company formalities;
     (v) own any Subsidiary (other than a Subsidiary that solely owns and
operates REO Assets) or make any investment in any Person without the consent of
the Administrative Agent and each Purchaser Agent;
     (vi) except as permitted by this Agreement and the Lock-Box Agreement,
commingle its assets with the assets of any of its Affiliates, or of any other
Person;
     (vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation (other than with respect to the Sellers Guaranty)),
other than indebtedness to the Secured Parties hereunder or in conjunction with
a repayment of the Advance owed to the Purchasers, except for trade payables in
the ordinary course of its business; provided, that such debt is not evidenced
by a note and is paid when due;
     (viii) become insolvent or fail to pay its debts and liabilities from its
assets as the same shall become due;
     (ix) fail to maintain its records, books of account and bank accounts
separate and apart from those of any other Person;
     (x) enter into any contract or agreement with any Person (other than with
respect to the Sellers Guaranty), except upon terms and conditions that are
commercially reasonable and intrinsically fair and substantially similar to
those that would be available on an arms-length basis with third parties other
than such Person;
     (xi) seek its dissolution or winding up in whole or in part;

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     (xii) fail to correct any known misunderstandings regarding the separate
identity of the Seller and the applicable Originator or any principal or
Affiliate thereof or any other Person;
     (xiii) guarantee, become obligated for, or hold itself out to be
responsible for the debt of another Person (other than with respect to the
Sellers Guaranty);
     (xiv) make any loan or advances to any third party, including any principal
or Affiliate, or hold evidence of indebtedness issued by any other Person (other
than cash and investment-grade securities);
     (xv) fail to file its own separate tax return, or file a consolidated
federal income tax return with any other Person, except as may be required by
the Internal Revenue Code and regulations;
     (xvi) fail either to hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business solely in
its own name in order not (a) to mislead others as to the identity with which
such other party is transacting business, or (b) to suggest that it is
responsible for the debts of any third party (including any of its principals or
Affiliates);
     (xvii) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
     (xviii) file or consent to the filing of any petition, either voluntary or
involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the benefit of
creditors;
     (xix) except as may be required by the Internal Revenue Code and
regulations, share any common logo with or hold itself out as or be considered
as a department or division of (a) any of its principals or affiliates, (b) any
Affiliate of a principal or (c) any other Person;
     (xx) permit any transfer (whether in one or more transactions) of any
direct or indirect ownership interest in the Seller to the extent it has the
ability to control the same, unless the Seller delivers to the Administrative
Agent and each Purchaser Agent an acceptable non-consolidation opinion and the
Administrative Agent consents to such transfer;
     (xxi) fail to maintain separate financial statements, showing its assets
and liabilities separate and apart from those of any other Person;
     (xxii) fail to pay its own liabilities and expenses only out of its own
funds;
     (xxiii) fail to pay the salaries of its own employees in light of its
contemplated business operations;

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     (xxiv) acquire the obligations or securities of its Affiliates (other than
an Affiliate that solely owns and operates REO Assets) or stockholders;
     (xxv) fail to allocate fairly and reasonably any overhead expenses that are
shared with an Affiliate, including paying for office space and services
performed by any employee of an Affiliate;
     (xxvi) fail to use separate invoices and bank accounts;
     (xxvii) pledge its assets for the benefit of any other Person, other than
with respect to payment of the indebtedness to the Secured Parties hereunder;
     (xxviii) fail at any time to have at least one independent director (an
“Independent Director”) who is not and has not been for at least five years a
director, officer, employee, trade credit or shareholder (or spouse, parent,
sibling or child of the foregoing) of (a) the Servicer, (b) the Seller, (c) any
principal of the Servicer, (d) any Affiliate of the Servicer, or (e) any
Affiliate of any principal of the Servicer; provided, however, such Independent
Director may be an independent director of another special purpose entity
affiliated with the Servicer or fail to ensure that all limited liability
company action relating to the selection, maintenance or replacement of the
Independent Director are duly authorized by the unanimous vote of the board of
directors (including the Independent Director);
     (xxix) fail to ensure that the unanimous consent of all directors
(including the consent of the Independent Director) is received for the Seller
to (a) dissolve or liquidate, in whole or part, or institute proceedings to be
adjudicated bankrupt or insolvent, (b) institute or consent to the institution
of bankruptcy or insolvency proceedings against it, (c) file a petition seeking
or consent to reorganization or relief under any applicable federal or state law
relating to bankruptcy or insolvency, (d) seek or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for the Seller, (e) make any assignment for the benefit of the
Seller’s creditors, (f) admit in writing its inability to pay its debts
generally as they become due, or (g) take any action in furtherance of any of
the foregoing; and
     (xxx) take or refrain from taking, as applicable, each of the activities
specified in the non-consolidation opinion of Patton Boggs LLP, dated as of the
date hereof, upon which the conclusions expressed therein are based.
     (v) [Reserved].
     (w) Investment Company Act. The Seller is not, and is not controlled by, an
“investment company” within the meaning of the 40 Act, as amended, or is exempt
from the provisions of the 40 Act.
     (x) ERISA. The present value of all benefits vested under all “employee
pension benefit plans,” as such term is defined in Section 3 of ERISA,
maintained by the Seller, or in which employees of the Seller are entitled to
participate, as from time to time in effect (herein called the “Pension Plans”),
does not exceed the value of the assets of the Pension Plan allocable to such
vested benefits (based on the value of such assets as of the last annual
valuation date).

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No prohibited transactions, accumulated funding deficiencies, withdrawals or
reportable events have occurred with respect to any Pension Plans that, in the
aggregate, could subject the Seller to any material tax, penalty or other
liability. No notice of intent to terminate a Pension Plan has been billed, nor
has any Pension Plan been terminated under Section 4041(f) of ERISA, nor has the
Pension Benefit Guaranty Corporation instituted proceedings to terminate, or
appoint a trustee to administer a Pension Plan and no event has occurred or
condition exists that might constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Pension
Plan.
     (y) [Reserved].
     (z) Compliance with Law. The Seller has complied in all respects with all
Applicable Laws to which it may be subject, and no item of Collateral
contravenes any Applicable Laws (including, without limitation, all applicable
predatory and abusive lending laws and all laws, rules and regulations relating
to licensing, truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices, and privacy).
     (aa) Credit and Collection Policy. The Seller has complied in all material
respects with the Credit and Collection Policy with respect to all of the
Collateral.
     (bb) Collections. The Seller acknowledges that all Collections received by
it or its Affiliates with respect to the Collateral are held and shall be held
in trust for the benefit of the Secured Parties until deposited into the
Collection Account within two Business Days from receipt as required herein.
     (cc) Set-Off, etc. No Collateral has been compromised, adjusted, extended,
satisfied, subordinated (other than Subordinated Loans), rescinded, set-off or
modified by the Seller, the applicable Originator or the Obligor thereof, and no
Collateral is subject to compromise, adjustment, extension, satisfaction,
subordination (other than Subordinated Loans), rescission, set-off,
counterclaim, defense, abatement, suspension, deferment, deduction, reduction,
termination or modification, whether arising out of transactions concerning the
Collateral or otherwise, by the Seller, the applicable Originator or the Obligor
with respect thereto, except for amendments to such Collateral otherwise
permitted under Section 6.4(a) of this Agreement and in accordance with the
Credit and Collection Policy.
     (dd) Full Payment. The Seller has no knowledge of any fact which should
lead it to expect that any Collateral will not be paid in full.
     (ee) Accuracy of Representations and Warranties. Each representation or
warranty by the Seller contained herein or in any certificate or other document
furnished by the Seller pursuant hereto or in connection herewith is true and
correct in all material respects.
     (ff) Representations and Warranties in the applicable Sale Agreement. The
representations and warranties made by the applicable Originator to the Seller
in the applicable Sale Agreement are hereby remade by the Seller on each date to
which they speak in the applicable Sale Agreement as if such representations and
warranties were set forth herein. For purposes of this Section 4.1(ff), such
representations and warranties are incorporated herein by

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reference as if made by the Seller to the Administrative Agent, each Purchaser
Agent and each of the Secured Parties under the terms hereof mutatis mutandis.
     (gg) [Reserved].
     (hh) Participation, Acquired and Assigned Loans. The participations created
with respect to the Participation Loans and the sale to the applicable
Originator with respect to the Assigned Loans do not violate any provisions of
the underlying Required Loan Documents and such documents do not contain any
express or implied prohibitions on participations or sales of such Loans.
     (ii) Environmental.
     (i) Each item of the Related Property is in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to such Related Property and there are no conditions relating to such
Related Property that could give rise to liability under any applicable
Environmental Laws.
     (ii) None of the Related Property contains, or has previously contained,
any Materials of Environmental Concern at, on or under the Related Property in
amounts or concentrations that constitute or constituted a violation of, or
could give rise to liability under, Environmental Laws.
     (iii) None of the Seller, the applicable Originator nor the Servicer has
received any written or verbal notice of, or inquiry from any Governmental
Authority regarding, any violation, alleged violation, non-compliance, liability
or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Related Property, nor does any such
Person have knowledge or reason to believe that any such notice will be received
or is being threatened.
     (iv) Materials of Environmental Concern have not been transported or
disposed of from the Related Property, or generated, treated, stored or disposed
of at, on or under any of the Related Property or any other location, in each
case by or on behalf of the Seller, the applicable Originator and/or the
Servicer in violation of, or in a manner that would be reasonably likely to give
rise to liability under, any applicable Environmental Law.
     (v) No judicial proceeding or governmental or administrative action is
pending or, to the best knowledge of the Seller, the applicable Originator
and/or the Servicer, threatened, under any Environmental Law to which any of the
Seller, the applicable Originator and/or the Servicer is or will be named as a
party, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements, outstanding under any Environmental Law with respect to any of the
Seller, the applicable Originator, the Servicer or the Related Property.
     (vi) There has been no release or threat of release of Materials of
Environmental Concern at or from any of the Related Property, or arising from or
related

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to the operations (including, without limitation, disposal) of any of the
Seller, the applicable Originator and/or the Servicer in connection with the
Related Property in violation of or in amounts or in a manner that could give
rise to liability under Environmental Laws.
     (jj) USA PATRIOT Act. Neither the Seller nor any Affiliate of the Seller is
(i) a country, territory, organization, person or entity named on an Office of
Foreign Asset Control (OFAC) list, (ii) a Person that resides or has a place of
business in a country or territory named on such lists or which is designated as
a “Non-Cooperative Jurisdiction” by the Financial Action Task Force on Money
Laundering, or whose subscription funds are transferred from or through such a
jurisdiction; (iii) a “Foreign Shell Bank” within the meaning of the USA PATRIOT
Act, i.e., a foreign bank that does not have a physical presence in any country
and that is not affiliated with a bank that has a physical presence and an
acceptable level of regulation and supervision; or (iv) a person or entity that
resides in or is organized under the laws of a jurisdiction designated by the
United States Secretary of the Treasury under Sections 311 or 312 of the USA
PATRIOT Act as warranting special measures due to money laundering concerns.
     Section 4.2 Representations and Warranties of the Sellers Relating to the
Agreement and the Collateral.
     Each Seller represents and warrants as to itself and the Collateral in
which it has an interest, for the benefit of the Secured Parties, as follows as
of the Closing Date:
     (a) Binding Obligation, Valid Security Interest.
     (i) This Agreement and each other Transaction Document to which the Seller
is a party each constitute a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its respective terms, except
as such enforceability may be limited by Insolvency Laws and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity).
     (ii) This Agreement constitutes a grant of a security interest in all of
the Collateral to the Administrative Agent, as agent for the Secured Parties,
which upon the delivery of the Required Loan Documents to the Collateral
Custodian and the filing of the financing statements described in
Section 4.1(m), shall be a first priority perfected security interest in all
Collateral, subject only to Permitted Liens. Neither the Seller nor any Person
claiming through or under Seller shall have any claim to or interest in the
Collection Account, except for the interest of Seller in such property as a
debtor for purposes of the UCC.
     (b) Eligibility of Collateral. As of the Closing Date, (i) the Loan List
and the information contained in the borrowing notice delivered in connection
with the acquisition of such Collateral is an accurate and complete listing in
all material respects of all Collateral and the information contained therein
with respect to the identity of such Collateral and the amounts owing thereunder
is true and correct in all material respects as of the Closing Date, (ii) each
such Loan is an Eligible Loan as of such date, (iii) each such item of
Collateral is free and clear of any Lien of any Person (other than Permitted
Liens) and in compliance with all Applicable Laws, and

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(iv) with respect to each such item of Collateral, all consents, licenses,
approvals or authorizations of or registrations or declarations of any
Governmental Authority required to be obtained, effected or given by the Seller
in connection with the grant of a security interest in such Collateral to the
Administrative Agent as agent for the Secured Parties have been duly obtained,
effected or given and are in full force and effect.
     (c) No Fraud. Each Loan was originated without any fraud or material
misrepresentation by any of the Originators or, to the best of the Seller’s
knowledge, on the part of the Obligor.
     (d) Loans Secured by Real Property. Less than 45% of the Aggregate
Outstanding Loan Balance of the Collateral as of the Closing Date consists of
Loans principally secured by real property.
     Section 4.3 Representations and Warranties of the Servicer.
     The Servicer represents and warrants, for the benefit of the Secured
Parties, as follows as of the Closing Date:
     (a) Organization and Good Standing. The Servicer has been duly organized
and is validly existing as a limited liability company in good standing under
the laws of the State of Delaware, with all requisite company power and
authority to own or lease its properties and to conduct its business as such
business is presently conducted and to enter into and perform its obligations
pursuant to this Agreement.
     (b) Due Qualification. The Servicer is duly qualified to do business as a
limited liability company and is in good standing as a limited liability
company, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property and or the conduct
of its business requires such qualification, licenses or approvals.
     (c) Power and Authority; Due Authorization; Execution and Delivery. The
Servicer (i) has all necessary power, authority and legal right to (a) execute
and deliver this Agreement and the other Transaction Documents to which it is a
party, (b) carry out the terms of the Transaction Documents to which it is a
party, and (ii) has duly authorized by all necessary company action the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which it is a party. This Agreement and each other Transaction
Document to which the Servicer is a party have been duly executed and delivered
by the Servicer.
     (d) Binding Obligation. This Agreement and each other Transaction Document
to which the Servicer is a party constitutes a legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its respective terms, except as such enforceability may be limited by Insolvency
Laws and general principles of equity (whether considered in a suit at law or in
equity).
     (e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party and the
fulfillment of the terms hereof and thereof will not (i) conflict with, result
in any breach of any of the terms and

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provisions of, or constitute (with or without notice or lapse of time or both) a
default under, the Servicer’s certificate of formation, operating agreement or
any Contractual Obligation of the Servicer, (ii) result in the creation or
imposition of any Lien upon any of the Servicer’s properties pursuant to the
terms of any such Contractual Obligation, other than this Agreement, or
(iii) violate any Applicable Law.
     (f) No Proceedings. There is no litigation, proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer, before any Governmental Authority (i) asserting the invalidity of this
Agreement or any other Transaction Document to which the Servicer is a party,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any other Transaction Document to which the Servicer is a
party or (iii) seeking any determination or ruling that could reasonably be
expected to have Material Adverse Effect.
     (g) All Consents Required. All approvals, authorizations, consents, orders,
licenses or other actions of any Person or of any Governmental Authority (if
any) required for the due execution, delivery and performance by the Servicer of
this Agreement and any other Transaction Document to which the Servicer is a
party have been obtained.
     (h) Reports Accurate. All Servicer Certificates and other written and
electronic information, exhibits, financial statements, documents, books,
records or reports furnished by the Servicer to the Administrative Agent, each
Purchaser Agent or any Purchaser in connection with this Agreement are accurate,
true and correct, and no Servicer’s Certificate contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading.
     (i) Credit and Collection Policy. The Servicer has complied in all material
respects with the Credit and Collection Policy with regard to the origination,
underwriting and servicing of the Loans.
     (j) Collections. The Servicer acknowledges that all Collections received by
it or its Affiliates with respect to the Collateral are held and shall be held
in trust for the benefit of the Secured Parties until deposited into the
Collection Account within two Business Days from receipt as required herein.
     (k) Bulk Sales. The execution, delivery and performance of this Agreement
do not require compliance with any “bulk sales” act or similar law by the
Servicer.
     (l) Solvency. The Servicer is not the subject of any Insolvency Proceedings
or Insolvency Event. The transactions under this Agreement and any other
Transaction Document to which the Servicer is a party do not and will not render
the Servicer not Solvent and the Servicer shall deliver to the Administrative
Agent and each Purchaser Agent on the Closing Date a certification in the form
of Exhibit E-2.
     (m) Taxes. The Servicer has filed or caused to be filed all tax returns
that are required to be filed by it. The Servicer has paid or made adequate
provisions for the payment of all Taxes and all assessments made against it or
any of its property (other than any amount of Tax the validity of which is
currently being contested in good faith by appropriate proceedings and with

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respect to which reserves in accordance with GAAP have been provided on the
books of the Servicer), and no tax lien has been filed and, to the Servicer’s
knowledge, no claim is being asserted, with respect to any such Tax, fee or
other charge.
     (n) Exchange Act Compliance; Regulations T, U and X. None of the
transactions contemplated herein will violate or result in a violation of
Section 7 of the Securities Exchange Act, or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Servicer
does not own or intend to carry or purchase, and no proceeds from the Advance
will be used to carry or purchase, any “margin stock” within the meaning of
Regulation U or to extend “purpose credit” within the meaning of Regulation U.
     (o) Security Interest. The Servicer will take all steps necessary to ensure
that the applicable Seller has granted a security interest (as defined in the
UCC) to the Administrative Agent, as agent for the Secured Parties, in the
Collateral, which is enforceable in accordance with Applicable Law upon
execution and delivery of this Agreement. Upon the filing of UCC-1 financing
statements naming the Administrative Agent as secured party and the applicable
Seller as debtor, the Administrative Agent, as agent for the Secured Parties,
shall have a first priority perfected security interest in the Collateral
(except for any Permitted Liens). All filings (including, without limitation,
such UCC filings) as are necessary for the perfection of the Secured Parties’
security interest in the Collateral have been (or prior to the Closing Date will
be) made.
     (p) ERISA. The present value of all benefits vested under all “employee
pension benefit plans,” as such term is defined in Section 3 of ERISA,
maintained by the Servicer, or in which employees of the Servicer are entitled
to participate, as from time to time in effect (herein called the “Pension
Plans”), does not exceed the value of the assets of the Pension Plan allocable
to such vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies,
withdrawals or reportable events have occurred with respect to any Pension Plans
that, in the aggregate, could subject the Servicer to any material tax, penalty
or other liability. No notice of intent to terminate a Pension Plan has been
billed, nor has any Pension Plan been terminated under Section 4041(f) of ERISA,
nor has the Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has
occurred or condition exists that might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan.
     (q) Investment Company Act. The Servicer is not, and is not controlled by,
an “investment company” within the meaning of the 40 Act, as amended, or is
exempt from the provisions of the 40 Act.
     (r) USA PATRIOT Act. Neither the Servicer nor any Affiliate of the Servicer
is: (i) a country, territory, organization, person or entity named on an OFAC
list; (ii) a Person that resides or has a place of business in a country or
territory named on such lists or which is designated as a “Non-Cooperative
Jurisdiction” by the Financial Action Task Force on Money Laundering, or whose
subscription funds are transferred from or through such a jurisdiction; (iii) a
“Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign
bank

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that does not have a physical presence in any country and that is not affiliated
with a bank that has a physical presence and an acceptable level of regulation
and supervision; or (iv) a person or entity that resides in or is organized
under the laws of a jurisdiction designated by the United States Secretary of
the Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting
special measures due to money laundering concerns.
     Section 4.4 Representations and Warranties of the Backup Servicer.
     The Backup Servicer in its individual capacity and as Backup Servicer
represents and warrants as follows as of the Closing Date:
     (a) Organization and Corporate Power. It is a duly organized and validly
existing national banking association in good standing under the laws of the
United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Backup Servicer under this
Agreement.
     (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized
by all necessary association action on its part, either in its individual
capacity or as Backup Servicer, as the case may be.
     (c) No Conflict. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Backup Servicer is a party or by which
it or any of its property is bound.
     (d) No Violation. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with or violate, in any material respect, any
Applicable Law.
     (e) All Consents Required. All approvals, authorizations, consents, orders
or other actions of any Person or Governmental Authority applicable to the
Backup Servicer, required in connection with the execution and delivery of this
Agreement, the performance by the Backup Servicer of the transactions
contemplated hereby and the fulfillment by the Backup Servicer of the terms
hereof have been obtained.
     (f) Validity, Etc. This Agreement constitutes the legal, valid and binding
obligation of the Backup Servicer, enforceable against the Backup Servicer in
accordance with its terms, except as such enforceability may be limited by
applicable Insolvency Laws or general principles of equity (whether considered
in a suit at law or in equity).
     Section 4.5 Representations and Warranties of the Collateral Custodian.
     The Collateral Custodian in its individual capacity and as Collateral
Custodian represents and warrants as follows as of the Closing Date:

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     (a) Organization and Corporate Power. It is a duly organized and validly
existing national banking association in good standing under the laws of the
United States. It has full corporate power, authority and legal right to
execute, deliver and perform its obligations as Collateral Custodian under this
Agreement.
     (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized
by all necessary association action on its part, either in its individual
capacity or as Collateral Custodian, as the case may be.
     (c) No Conflict. The execution and delivery of this Agreement, the
performance of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Collateral Custodian is a party or by
which it or any of its property is bound.
     (d) No Violation. The execution and delivery of this Agreement, the
performance of the Transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with or violate, in any material respect, any
Applicable Law.
     (e) All Consents Required. All approvals, authorizations, consents, orders
or other actions of any Person or Governmental Authority applicable to the
Collateral Custodian, required in connection with the execution and delivery of
this Agreement, the performance by the Collateral Custodian of the transactions
contemplated hereby and the fulfillment by the Collateral Custodian of the terms
hereof have been obtained.
     (f) Validity, Etc. The Agreement constitutes the legal, valid and binding
obligation of the Collateral Custodian, enforceable against the Collateral
Custodian in accordance with its terms, except as such enforceability may be
limited by applicable Insolvency Laws and general principles of equity (whether
considered in a suit at law or in equity).
     Section 4.6 Breach of Certain Representations and Warranties.
     If on any day a Loan is (or becomes) a Warranty Loan, no later than two
Business Days following the earlier of knowledge by the applicable Seller of
such Loan becoming a Warranty Loan or receipt by the applicable Seller from the
Administrative Agent or the Servicer of written notice thereof, the applicable
Seller shall make a deposit to the Collection Account (for allocation pursuant
to Section 2.10) in immediately available funds in an amount equal to the sum of
(i) the Outstanding Loan Balance of such Loan, (ii) any outstanding Servicer
Advances thereon, (iii) any accrued and unpaid interest and (iv) any costs and
damages incurred in connection with any violation by such Loan of any predatory-
or abusive-lending law (collectively, the “Retransfer Price”). Each such
Warranty Loan and any Related Security may be released from the Collateral (in
the applicable Seller’s discretion) and the Advances Outstanding shall be
reduced by the Outstanding Loan Balance of each such Warranty Loan. Upon
confirmation of the deposit of such Retransfer Price into the Collection Account
(the date of such confirmation, the “Retransfer Date”), such Warranty Loan shall
not be included in the

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Advances Outstanding (and, if and when the applicable Seller elects to accept
the retransfer of such Warranty Loan, the Collateral). Upon the Retransfer Date
of each Warranty Loan, the Administrative Agent, as agent for the Secured
Parties, shall (if and when the applicable Seller elects to accept the
retransfer of such Warranty Loan) automatically and without further action be
deemed to release to the applicable Seller, without recourse, representation or
warranty, the security interest of the Administrative Agent, as agent for the
Secured Parties in, to and under such Warranty Loan and all future monies due or
to become due with respect thereto, the Related Security, all Proceeds of such
Warranty Loan, Recoveries and Insurance Proceeds relating thereto, all rights to
security for any such Warranty Loan, and all Proceeds and products of the
foregoing. The Administrative Agent, as agent for the Secured Parties, shall (if
and when the applicable Seller elects to accept the release of such Warranty
Loan), at the sole expense of the Servicer, execute such documents and
instruments as may be prepared by the Servicer on behalf of the applicable
Seller and take other such actions as shall reasonably be requested by the
applicable Seller to effect the release of such Warranty Loan pursuant to this
Section 4.6.
     Section 4.7 Representations and Warranties of the Guarantors.
     Each Guarantor represents and warrants, for the benefit of the Secured
Parties, as follows as of the Closing Date:
     (a) Organization and Good Standing. The Guarantor has been duly organized,
validly existing and in good standing under the law of its jurisdiction of
formation, with all requisite corporate power and authority to own or lease its
properties and conduct its business as such business is presently conducted, and
had at all relevant times, and now has all necessary power, authority and legal
right to provide the Guaranty.
     (b) Due Qualification. The Guarantor is duly qualified to do business and
is in good standing under the law of its jurisdiction of formation, and has
obtained all necessary qualifications, licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the conduct of its
business requires such qualifications, licenses or approvals.
     (c) Power and Authority; Due Authorization; Execution and Delivery. The
Guarantor (i) has all necessary corporate power, authority and legal right to
(a) execute and deliver this Agreement and the other Transaction Documents to
which it is a party, and (b) carry out the terms of the Transaction Documents to
which it is a party, and (ii) has duly authorized by all necessary corporate
action, the execution, delivery and performance of this Agreement and the
Guaranty on the terms and conditions herein provided. This Agreement and each
other Transaction Document to which the Guarantor is a party have been duly
executed and delivered by the Guarantor.
     (d) Binding Obligation. This Agreement and each other Transaction Document
to which the Guarantor is a party constitutes a legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its respective terms, except as such enforceability may be limited by Insolvency
Laws and by general principles of equity (whether considered in a suit at law or
in equity).

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     (e) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party and the
fulfillment of the terms hereof and thereof will not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, the Guarantor’s
governing instruments or any Contractual Obligation of the Guarantor,
(ii) result in the creation or imposition of any Lien (other than Permitted
Liens) upon any of the Guarantor’s properties pursuant to the terms of any such
Contractual Obligation, other than this Agreement, or (iii) violate any
Applicable Law.
     (f) No Proceedings. There is no litigation, proceeding or investigation
pending or, to the best knowledge of the Guarantor, threatened against the
Guarantor, before any Governmental Authority (i) asserting the invalidity of
this Agreement or any other Transaction Document to which the Guarantor is a
party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Document to which the
Guarantor is a party or (iii) seeking any determination or ruling that could
reasonably be expected to have Material Adverse Effect.
     (g) All Consents Required. All approvals, authorizations, consents, orders,
licenses or other actions of any Person or of any Governmental Authority (if
any) required for the due execution, delivery and performance by the Guarantor
of this Agreement and any other Transaction Document to which the Guarantor is a
party have been obtained.
     (h) Bulk Sales. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby do not require compliance with any
“bulk sales” act or similar law by Guarantor.
     (i) Investment Company Act. The Guarantor is not required to register as an
investment company under the provisions of the 1940 Act.
     (j) Solvency. The Guarantor is not the subject of any Insolvency
Proceedings or Insolvency Event.
ARTICLE V
GENERAL COVENANTS
     Section 5.1 Affirmative Covenants of the Sellers.
     From the date hereof until the Collection Date, each Seller hereby
covenants and agrees as to itself and the Collateral in which it has an
interest, as follows:
     (a) Compliance with Laws. The Seller will comply in all material respects
with all Applicable Laws, including those with respect to the Collateral or any
part thereof.
     (b) Preservation of Company Existence. The Seller will preserve and
maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a limited liability company in each jurisdiction

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where the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification has had, or could reasonably be expected to have, a
Material Adverse Effect.
     (c) Performance and Compliance with Collateral. The Seller will, at its
expense, timely and fully perform and comply (or cause the applicable Originator
to perform and comply pursuant to the applicable Sale Agreement) with all
provisions, covenants and other promises required to be observed by it under the
Collateral and all other agreements related to such Collateral.
     (d) Keeping of Records and Books of Account. The Seller will maintain and
implement administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing the Collateral in the
event of the destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all or any portion of the Collateral.
     (e) Originator’s Collateral. With respect to the Collateral acquired by the
Seller, the Seller will (i) acquire such Collateral pursuant to and in
accordance with the terms of the applicable Sale Agreement, (ii) (at the
Servicer’s expense) take all action necessary to perfect, protect and more fully
evidence the Seller’s ownership of such Collateral free and clear of any Lien
other than the Lien created hereunder and Permitted Liens, including, without
limitation, (a) filing and maintaining (at the Servicer’s expense), effective
financing statements against the applicable Originator in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate, (iii) permit the Administrative Agent, each Purchaser Agent or
their respective agents or representatives to visit the offices of the Seller
during normal office hours and upon reasonable notice examine and make copies of
all documents, books, records and other information concerning the Collateral
and discuss matters related thereto with any of the officers or employees of the
Seller having knowledge of such matters, and (iv) take all additional action
that the Administrative Agent or any Purchaser Agent may reasonably request to
perfect, protect and more fully evidence the respective interests of the parties
to this Agreement in the Collateral.
     (f) Delivery of Collections. The Seller will pay to the Servicer promptly
(but in no event later than two Business Days after receipt) all Collections
received by Seller in respect of the Collateral and cause the same to be
promptly deposited into the Collection Account by the Servicer in accordance
with Section 5.4(k).
     (g) Separate Limited Liability Company Existence. The Seller shall be in
compliance with the Special Purpose Entity requirements set forth in
Section 4.1(u).
     (h) Credit and Collection Policy. The Seller will (a) comply in all
material respects with the Credit and Collection Policy in regard to the
Collateral, and (b) furnish to the Administrative Agent and each Purchaser
Agent, prior to its effective date, prompt notice of any material changes in the
Credit and Collection Policy. The Seller may agree to or otherwise permit to
occur changes in the Credit and Collection Policy which would not impair the
collectibility of any of the Collateral or otherwise adversely affect the
interests or remedies of the Administrative Agent or the Secured Parties under
this Agreement or any other Transaction

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Document. The Seller may not agree to or otherwise permit to occur changes in
the Credit and Collection Policy which would impair the collectibility of any of
the Collateral or otherwise adversely affect the interests or remedies of the
Administrative Agent or the Secured Parties under this Agreement or any other
Transaction Document, without the prior written consent of the Administrative
Agent and each Purchaser Agent; provided that the prior written consent will not
be required if any amendment, modification or change was mandated by any
regulatory authority having jurisdiction over any of the Originators and the
Servicer.
     (i) Termination Events. The Seller will provide the Administrative Agent
and each Purchaser Agent with written notice within three Business Days of the
occurrence of each Termination Event and each Unmatured Termination Event of
which the Seller has knowledge or has received notice. In addition, no later
than two Business Days following the Seller’s knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Seller
will provide to the Administrative Agent and each Purchaser Agent a written
statement of the chief financial officer or chief accounting officer of Seller
setting forth the details of such event and the action that the Seller proposes
to take with respect thereto.
     (j) Taxes. The Seller will file and pay any and all Taxes required to meet
the obligations of the Transaction Documents.
     (k) Use of Proceeds. The Seller will use the proceeds of the Advance only
to acquire Collateral.
     (l) Obligor Notification Forms. The Seller shall furnish the Administrative
Agent with an appropriate power of attorney to send (at the Administrative
Agent’s discretion after the occurrence of a Termination Event or an Unmatured
Termination Event) Obligor notification forms to give notice to the Obligors of
the Secured Parties’ interest in the Collateral and the obligation to make
payments as directed by the Administrative Agent.
     (m) Adverse Claims. The Seller will not create, or participate in the
creation of, or permit to exist, any Liens in relation to each Lock-Box Account
other than as disclosed to the Administrative Agent and each Purchaser Agent.
     (n) Seller’s Collateral. With respect to each item of Collateral, the
Seller will (i) take all action necessary to perfect, protect and more fully
evidence the Secured Parties’ security interest in such Collateral, including,
without limitation, (a) filing and maintaining (at the Servicer’s expense),
effective financing statements against the Seller in all necessary or
appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or
causing to be executed such other instruments or notices as may be necessary or
appropriate and (ii) take all additional action that the Administrative Agent
may reasonably request to perfect, protect and more fully evidence the
respective interests of the parties to this Agreement in such Collateral.
     (o) Notices. The Seller will furnish to the Administrative Agent and each
Purchaser Agent:
     (i) Income Tax Liability. Within ten Business Days after the receipt of
revenue agent reports or other written proposals, determinations or assessments
of the

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Internal Revenue Service or any other taxing authority which propose, determine
or otherwise set forth positive adjustments to the Tax liability of any
Affiliated group (within the meaning of Section 1504(a)(l) of the Internal
Revenue Code of 1986 (as amended from time to time)) which equal or exceed
$1,000,000 in the aggregate, telephonic, telex or telecopy notice (confirmed in
writing within five Business Days) specifying the nature of the items giving
rise to such adjustments and the amounts thereof;
     (ii) Auditors’ Management Letters. Promptly after the receipt thereof, any
auditors’ management letters received by the Seller or by its accountants;
     (iii) Representations. Forthwith upon receiving knowledge of same, the
Seller shall notify the Administrative Agent and each Purchaser Agent if any
representation or warranty set forth in Section 4.1 was incorrect at the time it
was given or deemed to have been given and at the same time deliver to the
Administrative Agent and each Purchaser Agent a written notice setting forth in
reasonable detail the nature of such facts and circumstances;
     (iv) ERISA. Promptly after receiving notice of any “reportable event” (as
defined in Title IV of ERISA) with respect to the Seller (or any ERISA Affiliate
thereof), a copy of such notice;
     (v) Proceedings. As soon as possible and in any event within three Business
Days after any executive officer of the Seller receives notice or obtains
knowledge thereof, of any settlement of, material judgment (including a material
judgment with respect to the liability phase of a bifurcated trial) in or
commencement of any material labor controversy, material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Collateral, the Transaction Documents, the Secured
Parties’ interest in the Collateral, or the Seller, the Servicer or the
applicable Originator or any of their Affiliates; provided, however,
notwithstanding the foregoing, any settlement, judgment, labor controversy,
litigation, action, suit or proceeding affecting the Collateral, the Transaction
Documents, the Secured Parties’ interest in the Collateral, or the Seller, the
Servicer or the applicable Originator or any of their Affiliates in excess of
$2,500,000 or more shall be deemed to be material for purposes of this Section
5.1(o); and
     (vi) Notice of Material Events. Promptly upon becoming aware thereof,
notice of any other event or circumstances that, in the reasonable judgment of
the Seller, is likely to have a Material Adverse Effect.
     (p) Other. The Seller will furnish to the Administrative Agent and each
Purchaser Agent promptly, from time to time, such other information, documents,
records or reports respecting the Collateral or the condition or operations,
financial or otherwise, of Seller or Originator as the Administrative Agent and
each Purchaser Agent may from time to time reasonably request in order to
protect the interests of the Administrative Agent, each Purchaser Agent or the
Secured Parties under or as contemplated by this Agreement.

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     (q) Notice of Modifications to the Citibank Facilities. The Seller will
provide the Administrative Agent with prompt written notice and furnish the
Administrative Agent with a copy (and in all events within two Business Days of
the execution thereof), of any amendment, modification, waiver, extension,
replacement or other modification to any Citibank Facility, together with a
written summary of all Core Transaction Terms, if any, in the amended, modified,
waived, extended, replaced or otherwise modified Citibank Facility which, in the
reasonable judgment of the Seller, are more favorable than a similar term under
this Agreement.
     Section 5.2 Negative Covenants of the Sellers.
     From the date hereof until the Collection Date, each Seller hereby
covenants and agrees as to itself and the Collateral in which it has an
interest, as follows:
     (a) Other Business. The Seller will not (i) engage in any business other
than the transactions contemplated by the Transaction Documents, (ii) incur any
Indebtedness, obligation, liability or contingent obligation of any kind other
than pursuant to this Agreement, or (iii) form any Subsidiary (other than a
Subsidiary that solely owns and operates REO Assets) or make any Investments in
any other Person.
     (b) Collateral Not to be Evidenced by Instruments. The Seller will take no
action to cause any Collateral that is not, as of the Closing Date, evidenced by
an Instrument (other than the Capital Stock in any REO Asset Owner, which shall
at all times be evidenced by a “certificated security” (as such term is defined
in Article 8 of the UCC)), to be so evidenced except in connection with the
enforcement or collection of such Collateral.
     (c) Security Interests. Except as otherwise permitted herein and in respect
of any Optional Sale and Permitted Securitization, the Seller will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Collateral, whether now existing or hereafter
transferred hereunder, or any interest therein, and (other than any transfer of
REO Assets to a REO Asset Owner pursuant to Section 6.17) the Seller will not
sell, pledge, assign or suffer to exist any Lien on its interest, if any,
hereunder. The Seller will promptly notify the Administrative Agent and each
Purchaser Agent of the existence of any Lien on any Collateral and the Seller
shall defend the right, title and interest of the Administrative Agent as agent
for the Secured Parties in, to and under the Collateral against all claims of
third parties; provided, however, that nothing in this Section 5.2(c) shall
prevent or be deemed to prohibit the Seller from suffering to exist Permitted
Liens upon any of the Collateral.
     (d) Mergers, Acquisitions, Sales, etc. The Seller will not be a party to
any merger or consolidation, or purchase or otherwise acquire any of the assets
or any stock of any class of, or any partnership or joint venture interest in,
any other Person, or sell, transfer, convey or lease any of its assets, or sell
or assign with or without recourse any Collateral or any interest therein (other
than pursuant hereto or to the applicable Sale Agreement, and other than with
respect to any REO Asset).
     (e) Deposits to Special Accounts. Except as otherwise provided in the
Lock-Box Agreement, the Seller will not deposit or otherwise credit, or cause or
permit to be so deposited

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or credited, to any Lock-Box Account cash or cash proceeds other than
Collections in respect of the Collateral.
     (f) Restricted Payments. The Seller shall not make any Restricted Junior
Payment, except that, so long as no Termination Event or Unmatured Termination
Event has occurred and is continuing or would result therefrom, the Seller may
declare and make distributions to its members on their membership interests.
     (g) Change of Name or Location of Loan Files. The Seller shall not
(x) change its name, move the location of its principal place of business and
chief executive office, change the offices where it keeps the records from the
location referred to in Section 13.2, or change the jurisdiction of its
formation, or (y) move, or consent to the Collateral Custodian or Servicer
moving, the Required Loan Documents and the Loan Files from the location thereof
on the Closing Date, unless the Seller has given at least thirty (30) days’
written notice to the Administrative Agent and has taken all actions required
under the UCC of each relevant jurisdiction in order to continue the first
priority perfected security interest of the Administrative Agent, as agent for
the Secured Parties, in the Collateral.
     (h) Accounting of Purchases. Other than for tax and consolidated accounting
purposes, the Seller will not account for or treat (whether in financial
statements or otherwise) the transactions contemplated by the applicable Sale
Agreement in any manner other than as a sale of the Collateral by the applicable
Originator to the Seller.
     (i) ERISA Matters. The Seller will not (a) engage or permit any ERISA
Affiliate to engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the United States Department
of Labor, (b) permit to exist any accumulated funding deficiency, as defined in
Section 302(a) of ERISA and Section 412(a) of the Code, or funding deficiency
with respect to any Benefit Plan other than a Multiemployer Plan, (c) fail to
make any payments to a Multiemployer Plan that the Seller or any ERISA Affiliate
may be required to make under the agreement relating to such Multiemployer Plan
or any law pertaining thereto, (d) terminate any Benefit Plan so as to result in
any liability, or (e) permit to exist any occurrence of any reportable event
described in Title IV of ERISA.
     (j) Operating Agreement; Sale Agreement. The Seller will not amend, modify,
waive or terminate any provision of its operating agreement or the applicable
Sale Agreement without the prior written consent of the Administrative Agent and
each Purchaser Agent.
     (k) Changes in Payment Instructions to Obligors. The Seller will not add or
terminate any bank as a Lock-Box Bank or any Lock-Box Account from those listed
in Schedule II or make any change, or permit Servicer to make any change, in its
instructions to Obligors regarding payments representing Collections to be made
to Seller or Servicer or payments representing Collections to be made to any
Lock-Box Bank, unless the Administrative Agent has consented to such addition,
termination or change (which consent shall not be unreasonably withheld) and has
received duly executed copies of Lock-Box Agreements with each new Lock-Box Bank
or with respect to each new Lock-Box Account, as the case may be.

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     (l) Extension or Amendment of Collateral. The Seller will not, except as
otherwise permitted in Section 6.4(a), waive, extend, amend or otherwise modify,
or permit the Servicer to extend, amend or otherwise modify, the terms of any
Collateral (including the Related Security) provided, however, that no waiver,
extension, modification or alteration otherwise permitted under Section 6.4(a)
shall (i) have the effect of altering the status of any Loan as a Defaulted
Loan, (ii) have the effect of, in the reasonable judgment of the Administrative
Agent, preventing or delaying any Loan from becoming a Defaulted Loan, or
(iii) limit and/or impair the rights of the Administrative Agent or the Secured
Parties under this Agreement.
     (m) Credit and Collection Policy. The Seller will not agree to or otherwise
permit to occur changes in the Credit and Collection Policy which would impair
the collectibility of any of the Collateral or otherwise adversely affect the
interests or remedies of the Administrative Agent or the Secured Parties under
this Agreement or any other Transaction Document, without the prior written
consent of the Administrative Agent and each Purchaser Agent; provided that the
prior written consent will not be required if any amendment, modification or
change was mandated by any regulatory authority having jurisdiction over any of
the Originators and the Servicer.
     (n) Tax. The Seller will be a partnership or a disregarded entity for U.S.
federal income tax purposes, and the Seller will not elect to be treated as an
association taxable as a corporation pursuant to Treasury
Regulation Section 301.7701-3(c). The Seller shall not take any action that
would cause the Seller to be a “taxable mortgage pool” as such term is defined
in Section 7701(i) of the Code and the underlying regulations; provided that a
breach of this covenant shall be deemed cured if and to the extent the Servicer
makes an indemnification payment in cash to each Affected Party to the extent of
the amounts, if any, required pursuant to Section 2.16(f).
     Section 5.3 [Reserved].
     Section 5.4 Affirmative Covenants of the Servicer.
     From the date hereof until the Collection Date, the Servicer hereby
covenants and agrees as follows:
     (a) Compliance with Law. The Servicer will comply in all material respects
with all Applicable Laws, including those with respect to the Collateral or any
part thereof.
     (b) Preservation of Company Existence. The Servicer will preserve and
maintain its company existence, rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a limited liability company in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material
Adverse Effect.
     (c) Obligations and Compliance with Collateral. The Servicer will duly
fulfill and comply with all obligations on the part of the applicable Seller to
be fulfilled or complied with under or in connection with each Collateral and
will do nothing to impair the rights of the Administrative Agent, as agent for
the Secured Parties, or of the Secured Parties in, to and under the Collateral.

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     (d) Keeping of Records and Books of Account.
     (i) The Servicer will maintain and implement administrative and operating
procedures (including without limitation, an ability to recreate records
evidencing Collateral in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, records and other information
reasonably necessary or advisable for the collection of all Collateral and the
identification of the Collateral.
     (ii) The Servicer shall permit the Administrative Agent, each Purchaser
Agent or their respective agents or representatives, to visit the offices of the
Servicer during normal office hours and upon reasonable notice and examine and
make copies of all documents, books, records and other information concerning
the Collateral and discuss matters related thereto with any of the officers or
employees of the Servicer having knowledge of such matters.
     (iii) The Servicer will on or prior to the date hereof, mark its master
data processing records and other books and records relating to the Collateral
with a legend, acceptable to the Administrative Agent and each Purchaser Agent,
describing the sale of the Collateral from the applicable Originator to the
applicable Seller.
     (e) Preservation of Security Interest. The Servicer (at its own expense)
will execute and file such financing and continuation statements and any other
documents that may be required by any law or regulation of any Governmental
Authority to preserve and protect fully the security interest of the
Administrative Agent as agent for the Secured Parties in, to and under the
Collateral.
     (f) Credit and Collection Policy. The Servicer will (a) comply in all
material respects with the Credit and Collection Policy in regard to the
Collateral, and (b) furnish to the Administrative Agent and each Purchaser
Agent, prior to its effective date, prompt notice of any material changes in the
Credit and Collection Policy. The Servicer may agree to or otherwise permit to
occur changes in the Credit and Collection Policy which would not impair the
collectibility of any of the Collateral or otherwise adversely affect the
interests or remedies of the Administrative Agent or the Secured Parties under
this Agreement or any other Transaction Document. The Servicer may not agree to
or otherwise permit to occur changes in the Credit and Collection Policy which
would impair the collectibility of any of the Collateral or otherwise adversely
affect the interests or remedies of the Administrative Agent or the Secured
Parties under this Agreement or any other Transaction Document, without the
prior written consent of the Administrative Agent and each Purchaser Agent;
provided that the prior written consent will not be required if any amendment,
modification or change was mandated by any regulatory authority having
jurisdiction over any of the Originators and the Servicer.
     (g) Termination Events. The Servicer will provide the Administrative Agent
and each Purchaser Agent with written notice within three Business Days of the
occurrence of each Termination Event and each Unmatured Termination Event of
which the Servicer has knowledge or has received notice. In addition, no later
than two Business Days following the Servicer’s knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Servicer
will provide to the Administrative Agent and each Purchaser Agent a written

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statement of the chief financial officer or chief accounting officer of the
Servicer setting forth the details of such event and the action that the
Servicer proposes to take with respect thereto.
     (h) Taxes. The Servicer will file and pay any and all Taxes required to
meet the obligations of each Seller and the Servicer under the Transaction
Documents.
     (i) Other. The Servicer will promptly furnish to the Administrative Agent
and each Purchaser Agent such other information, documents, records or reports
respecting the Collateral or the condition or operations, financial or
otherwise, of the applicable Seller or the Servicer as the Administrative Agent
and each Purchaser Agent may from time to time reasonably request in order to
protect the interests of the Administrative Agent, each Purchaser Agent or
Secured Parties under or as contemplated by this Agreement.
     (j) Proceedings. As soon as possible and in any event within three Business
Days after any executive officer of the Servicer receives notice or obtains
knowledge thereof, of any settlement of, material judgment (including a material
judgment with respect to the liability phase of a bifurcated trial) in or
commencement of any material labor controversy material litigation, material
action, material suit or material proceeding before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Collateral, the Transaction Documents, the Secured
Parties’ interest in the Collateral, or the applicable Seller, the Servicer or
the applicable Originator or any of their Affiliates; provided, however,
notwithstanding the foregoing, any settlement, judgment, labor controversy,
litigation, action, suit or proceeding affecting the Collateral, the Transaction
Documents, the Secured Parties’ interest in the Collateral, or the applicable
Seller, the Servicer or the applicable Originator or any of their Affiliates in
excess of $2,500,000 or more shall be deemed to be material for purposes of this
Section 5.4(j).
     (k) Deposit of Collections. The Servicer shall promptly (but in no event
later than two Business Days after receipt) deposit into the Collection Account
any and all Collections received by the applicable Seller, the Servicer or any
of their Affiliates.
     (l) Servicing of Participation, Acquired and Assigned Loans. With respect
to Participation Loans and Assigned Loans, the Servicer shall: (i) segregate all
Loan Files with respect to such Loans; (ii) keep separate records with respect
to such Loans; and (iii) identify each such Type of Loan on the Servicing
Reports required hereunder with respect to such Loans.
     (m) Change-in-Control. Upon the occurrence of a Change-in-Control
(including any merger or consolidation of the Originators or transfer of
substantially all of its assets and its business), the Servicer shall provide
the Administrative Agent and each Purchaser Agent with notice of such
Change-in-Control within thirty (30) days after completion of the same.
     (n) Loan Register.
     (i) The Servicer shall maintain with respect to each Noteless Loan a
register (each, a “Loan Register”) in which it will record (v) the amount of
such Loan, (w) the amount of any principal or interest due and payable or to
become due and payable from the Obligor thereunder, (x) the amount of any sum in
respect of such Loan received from the Obligor and each Purchaser’s share
thereof, (y) the date of origination of such Loan

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and (z) the maturity date of such Loan. The entries made in each Loan Register
maintained pursuant to this Section 5.04(n) shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; provided, however,
that the failure of the Servicer to maintain any such Loan Register or any error
therein shall not in any manner affect the obligations of the Obligor to repay
the related Loans in accordance with their terms or any Purchaser’s interest
therein.
     (ii) At any time a Noteless Loan is included as part of the Collateral
pursuant to this Agreement, the Servicer shall deliver to the Collateral
Custodian a copy of the related Loan Register, together with a certificate of a
Responsible Officer of the Servicer certifying to the accuracy of such Loan
Register as of the date such Loan is included as part of the Collateral.
     (o) Modifications to the Citibank Facilities. The Servicer will provide the
Administrative Agent with prompt written notice and furnish the Administrative
Agent with a copy (and in all events within two Business Days of the execution
thereof), of any amendment, modification, waiver, extension, replacement or
other modification to any Citibank Facility, together with a written summary of
all Core Transaction Terms, if any, in the amended, modified, waived, extended,
replaced or otherwise modified Citibank Facility which, in the reasonable
judgment of the Seller, are more favorable than a similar term under this
Agreement.
     Section 5.5 Negative Covenants of the Servicer.
     From the date hereof until the Collection Date, the Servicer hereby
covenants and agrees as follows:
     (a) Deposits to Special Accounts. Except as otherwise provided in the
Lock-Box Agreement, the Servicer will not deposit or otherwise credit, or cause
or permit to be so deposited or credited, to any Lock-Box Account cash or cash
proceeds other than Collections in respect of the Collateral.
     (b) Mergers, Acquisition, Sales, etc. The Servicer will not consolidate
with or merge into any other Person or convey or transfer its properties and
assets substantially as an entirety to any Person, unless the Servicer is the
surviving entity and unless:
     (i) the Servicer has delivered to the Administrative Agent and each
Purchaser Agent an Officer’s Certificate and an Opinion of Counsel each stating
that any consolidation, merger, conveyance or transfer and such supplemental
agreement comply with this Section 5.5 and that all conditions precedent herein
provided for relating to such transaction have been complied with and, in the
case of the Opinion of Counsel, that such supplemental agreement is legal, valid
and binding with respect to the Servicer and such other matters as the
Administrative Agent may reasonably request;
     (ii) the Servicer shall have delivered notice of such consolidation,
merger, conveyance or transfer to the Administrative Agent and each Purchaser
Agent;

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     (iii) after giving effect thereto, no Termination Event or Servicer Default
or event that with notice or lapse of time would constitute either a Termination
Event or a Servicer Default shall have occurred; and
     (iv) the Administrative Agent and each Purchaser Agent have consented in
writing to such consolidation, merger, conveyance or transfer.
     (c) Change of Name or Location of Loan Files. The Servicer shall not
(x) change its name, move the location of its principal place of business and
chief executive office, change the offices where it keeps records concerning the
Collateral from the location referred to in Section 13.2, or change the
jurisdiction of its formation, or (y) move, or consent to the Collateral
Custodian moving, the Required Loan Documents and Loan Files from the location
thereof on the Closing Date, unless the Servicer has given at least thirty
(30) days’ written notice to the Administrative Agent and has taken all actions
required under the UCC of each relevant jurisdiction in order to continue the
first priority perfected security interest of the Administrative Agent as agent
for the Secured Parties in the Collateral.
     (d) Change in Payment Instructions to Obligors. The Servicer will not add
or terminate any bank as a Lock-Box Bank or any Lock-Box Account from those
listed in Schedule II or make any change in its instructions to Obligors
regarding payments to be made to the applicable Seller or the Servicer or
payments to be made to any Lock-Box Bank, unless the Administrative Agent has
consented to such addition, termination or change (which consent shall not be
unreasonably withheld) and has received duly executed copies of Lock-Box
Agreements with each new Lock-Box Bank or with respect to each new Lock-Box
Account, as the case may be.
     (e) Extension or Amendment of Loans. The Servicer will not, except as
otherwise permitted in Section 6.4(a), extend, amend or otherwise modify the
terms of any Loans; provided, however, that no waiver, extension, modification
or alteration otherwise permitted under Section 6.4(a) shall (i) have the effect
of altering the status of any Loan as a Defaulted Loan, (ii) have the effect of,
in the reasonable judgment of the Administrative Agent, preventing or delaying
any Loan from becoming a Defaulted Loan, or (iii) limit and/or impair the rights
of the Administrative Agent or the Secured Parties under this Agreement.
     (f) Tax. The Servicer will not take any action, including making any
election, that would cause either Seller (i) to be treated as an association
taxable as a corporation pursuant to Treasury Regulation Section 301.7701-3(c)
or (ii) to be a “taxable mortgage pool” as such term is defined in Section
7701(i) of the Code and the underlying regulations; provided that a breach of
this covenant shall be deemed cured if and to the extent the Servicer makes an
indemnification payment in cash to each Affected Party to the extent of the
amounts, if any, required pursuant to Section 2.16(f).
     Section 5.6 Affirmative Covenants of the Backup Servicer.
     From the date hereof until the Collection Date, the Backup Servicer hereby
covenants and agrees as follows:

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     (a) Compliance with Law. The Backup Servicer will comply in all material
respects with all Applicable Laws.
     (b) Preservation of Existence. The Backup Servicer will preserve and
maintain its existence, rights, franchises and privileges in the jurisdiction of
its formation, and qualify and remain qualified in good standing in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.
     Section 5.7 Negative Covenants of the Backup Servicer.
     From the date hereof until the Collection Date, the Backup Servicer hereby
covenants and agrees as follows:
     (a) No Changes in Backup Servicer Fee. The Backup Servicer will not make
any changes to the Backup Servicer Fee set forth in the Backup Servicer Fee
Letter without the prior written approval of the Administrative Agent and each
Purchaser Agent.
     Section 5.8 Affirmative Covenants of the Collateral Custodian.
     From the date hereof until the Collection Date, the Collateral Custodian
hereby covenants and agrees as follows:
     (a) Compliance with Law. The Collateral Custodian will comply in all
material respects with all Applicable Laws.
     (b) Preservation of Existence. The Collateral Custodian will preserve and
maintain its existence, rights, franchises and privileges in the jurisdiction of
its formation and qualify and remain qualified in good standing in each
jurisdiction where failure to preserve and maintain such existence, rights,
franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.
     (c) Location of Required Loan Documents. The Required Loan Documents shall
remain at all times in the possession of the Collateral Custodian at the address
set forth herein unless notice of a different address is given in accordance
with the terms hereof or unless the Administrative Agent agrees to allow certain
Required Loan Documents to be released to the Servicer on a temporary basis in
accordance with the terms hereof.
     Section 5.9 Negative Covenants of the Collateral Custodian.
     From the date hereof until the Collection Date, the Collateral Custodian
hereby covenants and agrees as follows:
     (a) Required Loan Documents. The Collateral Custodian will not dispose of
any documents constituting the Required Loan Documents in any manner that is
inconsistent with the performance of its obligations as the Collateral Custodian
pursuant to this Agreement and will not dispose of any Collateral except as
contemplated by this Agreement.

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     (b) No Changes in Collateral Custodian Fee. The Collateral Custodian will
not make any changes to the Collateral Custodian Fee set forth in the Collateral
Custodian Fee Letter without the prior written approval of the Administrative
Agent and each Purchaser Agent.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
     Section 6.1 Designation of the Servicer.
     (a) Initial Servicer. The servicing, administering and collection of the
Collateral shall be conducted by the Person designated as the Servicer hereunder
from time to time in accordance with this Section 6.1. Until the Administrative
Agent gives to any of the Originators a Servicer Termination Notice, such
Originator is hereby designated as, and hereby agrees to perform the duties and
responsibilities of, the Servicer pursuant to the terms hereof.
     (b) Successor Servicer. Upon the Servicer’s receipt of a Servicer
Termination Notice (with a copy to the Backup Servicer) from the Administrative
Agent pursuant to the terms of Section 6.15, the Servicer agrees that it will
terminate its activities as Servicer hereunder in a manner that the
Administrative Agent reasonably believes will facilitate the transition of the
performance of such activities to a successor Servicer, and the successor
Servicer shall assume each and all of the Servicer’s obligations to service and
administer the Collateral, on the terms and subject to the conditions herein set
forth, and the Servicer shall use its best reasonable efforts to assist the
successor Servicer in assuming such obligations.
     (c) Subcontracts. The Servicer may, with the prior consent of the
Administrative Agent, subcontract with any other Person for servicing,
administering or collecting the Collateral; provided, however, that the Servicer
shall remain liable for the performance of the duties and obligations of the
Servicer pursuant to the terms hereof and that any such subcontract may be
terminated upon the occurrence of a Servicer Default.
     (d) Servicing Programs. In the event that the Servicer uses any software
program in servicing the Collateral that it licenses from a third party, the
Servicer shall use its best reasonable efforts to obtain, either before the
Closing Date or as soon as possible thereafter, whatever licenses or approvals
are necessary to allow the Administrative Agent or the Servicer to use such
program.
     Section 6.2 Duties of the Servicer.
     (a) Appointment. Each Seller hereby appoints the Servicer as its agent, as
from time to time designated pursuant to Section 6.1, to service the Collateral
and enforce its respective rights in and under such Collateral. The Servicer
hereby accepts such appointment and agrees to perform the duties and obligations
with respect thereto as set forth herein. The Servicer and each Seller hereby
acknowledge that the Administrative Agent, each Purchaser Agent and the Secured
Parties are third party beneficiaries of the obligations undertaken by the
Servicer hereunder.
     (b) Duties. The Servicer shall take or cause to be taken all such actions
as may be necessary or advisable to collect on the Collateral from time to time,
all in accordance with

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Applicable Laws, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. Without limiting the foregoing, the duties of the
Servicer shall include the following:
     (i) preparing and submitting of claims to, and post-billing liaison with,
Obligors on each Loan;
     (ii) maintaining all necessary servicing records with respect to the
Collateral and providing such reports to the Administrative Agent and each
Purchaser Agent in respect of the servicing of the Collateral (including
information relating to its performance under this Agreement) as may be required
hereunder or as the Administrative Agent and each Purchaser Agent may reasonably
request;
     (iii) maintaining and implementing administrative and operating procedures
(including, without limitation, an ability to recreate servicing records
evidencing the Collateral in the event of the destruction of the originals
thereof) and keeping and maintaining all documents, books, records and other
information reasonably necessary or advisable for the collection of the
Collateral;
     (iv) promptly delivering to the Administrative Agent, each Purchaser Agent
or the Collateral Custodian, from time to time, such information and servicing
records (including information relating to its performance under this Agreement)
as the Administrative Agent, each Purchaser Agent or the Collateral Custodian
may from time to time reasonably request;
     (v) identifying each Loan clearly and unambiguously in its servicing
records to reflect that such Loan is owned by the applicable Seller and pledged
to the Secured Parties pursuant to this Agreement;
     (vi) notifying the Administrative Agent and each Purchaser Agent of any
material action, suit, proceeding, dispute, offset, deduction, defense or
counterclaim (1) that is or is threatened to be asserted by an Obligor with
respect to any Loan (or portion thereof) of which it has knowledge or has
received notice; or (2) that is reasonably expected to have a Material Adverse
Effect;
     (vii) notifying the Administrative Agent and each Purchaser Agent of any
proposed change in the Credit and Collection Policy that could have an adverse
effect on the collectibility of the Collateral, on the applicable Seller or on
the interests of the Administrative Agent, each Purchaser Agent or any Secured
Party;
     (viii) using its reasonable best efforts to maintain the perfected security
interest of the Administrative Agent, as agent for the Secured Parties, in the
Collateral;
     (ix) maintaining in the same manner as the Collateral Custodian holds the
Required Loan Documents, the Loan File (other than Required Loan Documents) with
respect to each Loan included as part of the Collateral; and

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     (x) the Servicer shall make payments pursuant to the terms of the Monthly
Report in accordance with Section 2.10.
     (c) Notwithstanding anything to the contrary contained herein, the exercise
by the Administrative Agent, each Purchaser Agent and the Secured Parties of
their rights hereunder shall not release the Servicer, the applicable Originator
or the applicable Seller from any of their duties or responsibilities with
respect to the Collateral. The Secured Parties, the Administrative Agent, each
Purchaser Agent and the Collateral Custodian (except in the role of Backup
Servicer) shall not have any obligation or liability with respect to any
Collateral, nor shall any of them be obligated to perform any of the obligations
of the Servicer hereunder.
     (d) Any payment by an Obligor in respect of any Indebtedness owed by it to
the applicable Originator or the applicable Seller shall, except as otherwise
specified by such Obligor or otherwise required by contract or law and unless
otherwise instructed by the Administrative Agent, be applied as a Collection of
an item of Collateral of such Obligor (starting with the oldest such Collateral)
to the extent of any amounts then due and payable thereunder before being
applied to any other receivable or other obligation of such Obligor.
     Section 6.3 Authorization of the Servicer.
     (a) Each of the Sellers, the Administrative Agent, each Purchaser Agent and
each Purchaser hereby authorizes the Servicer (including any successor thereto)
to take any and all reasonable steps in its name (or in the name of a REO Asset
Owner with respect to any REO Asset) and on its behalf necessary or desirable,
in the determination of the Servicer, to collect all amounts due under any and
all Collateral, including, without limitation, endorsing any of their names on
checks and other instruments representing Collections, executing and delivering
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Collateral and, after the delinquency of any Collateral and to the extent
permitted under and in compliance with Applicable Law, to commence proceedings
with respect to enforcing payment thereof, to the same extent as the applicable
Originator could have done if it had continued to own such Collateral. The
applicable Originator, the applicable Seller and the Administrative Agent on
behalf of the Secured Parties shall furnish the Servicer (and any successors
thereto) with any powers of attorney and other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder, and shall cooperate with the Servicer to the fullest extent in
order to ensure the collectibility of the Collateral. In no event shall the
Servicer be entitled to make the Secured Parties, the Collateral Custodian, the
Administrative Agent or the Purchaser Agents a party to any litigation without
such party’s express prior written consent, or to make either Seller a party to
any litigation (other than any routine foreclosure or similar collection
procedure) without the Administrative Agent’s and each Purchaser Agent’s
consent.
     (b) After a Termination Event has occurred and is continuing, at the
direction the Administrative Agent, the Servicer shall take such action as the
Administrative Agent may deem necessary or advisable to enforce collection of
the Collateral; provided, however, that the Administrative Agent may, at any
time that a Termination Event or Unmatured Termination Event has occurred and is
continuing, notify any Obligor with respect to any Collateral of the assignment
of such Collateral to the Administrative Agent and direct that payments of all

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amounts due or to become due be made directly to the Administrative Agent and
each Purchaser Agent or any servicer, collection agent or lock-box or other
account designated by the Administrative Agent and each Purchaser Agent and,
upon such notification and at the joint and several expense of the Sellers, the
Administrative Agent may enforce collection of any such Collateral, and adjust,
settle or compromise the amount or payment thereof.
     Section 6.4 Collection of Payments.
     (a) Collection Efforts, Modification of Collateral. The Servicer will use
its reasonable best efforts to collect all payments called for under the terms
and provisions of the Loans included in the Collateral as and when the same
become due in accordance with the Credit and Collection Policy, and will follow
those collection procedures that it follows with respect to all comparable
Collateral that it services for itself or others. The Servicer may not waive,
modify or otherwise vary any provision of an item of Collateral in a manner
that, in its reasonable judgment, would impair the collectibility of the
Collateral or in any manner contrary to the Credit and Collection Policy.
     (b) [Reserved].
     (c) [Reserved].
     (d) Taxes and other Amounts. To the extent provided for in any Loan, the
Servicer will use its reasonable best efforts to collect all payments with
respect to amounts due for taxes, assessments and insurance premiums relating to
such Loan and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
     (e) Payments to Lock-Box Account. Subject to Section 5.1(p), on or before
the Closing Date, the Servicer shall have instructed all Obligors (or, with
respect to Assigned Loans, the applicable agent) to make all payments in respect
of the Collateral to the Lock-Box or directly to the Lock-Box Account.
     (f) Establishment of the Collection Account. The Servicer shall cause to be
established, on or before the Closing Date, with the Collateral Custodian, and
maintained in the name of the Administrative Agent as agent for the Secured
Parties, with an office or branch of a depository institution or trust company a
segregated corporate trust account entitled Collection Account for Wachovia
Capital Markets, LLC, as Administrative Agent for the Secured Parties (the
“Collection Account”), and the Servicer shall further maintain a subaccount
within the Collection Account for the purpose of segregating, within two
Business Days of the receipt of any Collections, Principal Collections (the
“Principal Collections Account”), over which the Collateral Custodian as agent
for the Secured Parties shall have control and from which none of the
Originators, the Servicer or the Sellers shall have any right of withdrawal
other than, at any time upon one Business Day’s notice to the Administrative
Agent and the Collateral Custodian, prior to (A) a payment default on the
related Loan (such payment default shall mean any failure to make a payment on
the date such payment is due and such failure continues for more than one
calendar day), (B) a Servicer Default, (C) a Termination Event or (D) an
Unmatured Termination Event, in each case to advance to an Obligor of any
Revolving Loan in a given Collection Period prior to the last day of such
Collection Period an amount not to exceed the Principal Collections

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received from such Obligor related to such Revolving Loan during that Collection
Period; provided, however, that at all times such depository institution or
trust company shall be Wells Fargo or another depository institution or trust
company acceptable to the Administrative Agent and a depository institution
organized under the laws of the United States of America or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank), (i) (a) that has either (1) a long-term unsecured debt rating of “A” or
better by S&P and “A2” or better by Moody’s or (2) a short-term unsecured debt
rating or certificate of deposit rating of “A-1” or better by S&P or “P-1” or
better by Moody’s, (b) the parent corporation of which has either (1) a
long-term unsecured debt rating of “A” or better by S&P and “A2” or better by
Moody’s or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P and “P-1” or better by Moody’s or (c) is
otherwise acceptable to the Administrative Agent and (ii) whose deposits are
insured by the Federal Deposit Insurance Corporation (any such depository
institution or trust company, a “Qualified Institution”).
     (g) Adjustments. If (i) the Servicer makes a deposit into the Collection
Account in respect of a Collection of an item of Collateral and such Collection
was received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Scheduled Payment in respect of which a dishonored check
is received shall be deemed not to have been paid.
     Section 6.5 Servicer Advances.
     For each Collection Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) that was due and payable pursuant to a Loan during
such Collection Period was not received prior to the last day of such Collection
Period, the Servicer may (in its sole and absolute discretion) make an advance
in an amount up to the amount of such delinquent Scheduled Payment (or portion
thereof). The Servicer will deposit any Servicer Advances into the Collection
Account on or prior to 9:00 a.m. (Charlotte, North Carolina time) on the
Business Day prior to the related Payment Date, in immediately available funds.
Notwithstanding anything to the contrary contained herein, no Successor Servicer
shall have any responsibility to make Servicer Advances.
     Section 6.6 Realization Upon Defaulted Loans.
     The Servicer will use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property relating to a Defaulted
Loan and will act as sales and processing agent for Related Property that it
repossesses. The Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in its servicing of
contracts and other actions by the Servicer in order to realize upon such
Related Property, which practices and procedures may include reasonable efforts
to enforce all obligations of Obligors and repossessing and selling such Related
Property at public or private sale in circumstances other than those described
in the preceding sentence. Without limiting the generality of the foregoing,
unless the Administrative Agent has specifically given instruction to the
contrary, the Servicer may sell any such Related Property to the Servicer or its
Affiliates for a

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purchase price equal to the then fair market value thereof, any such sale to be
evidenced by a certificate of a Responsible Officer of the Servicer delivered to
the Administrative Agent setting forth the Loan, the Related Property, the sale
price of the Related Property and certifying that such sale price is the fair
market value of such Related Property. In any case in which any such Related
Property has suffered damage, the Servicer will not expend funds in connection
with any repair or toward the repossession of such Related Property unless it
reasonably determines that such repair and/or repossession will increase the
Recoveries by an amount greater than the amount of such expenses. The Servicer
will remit to the Collection Account the Recoveries received in connection with
the sale or disposition of Related Property relating to a Defaulted Loan.
     Section 6.7 Maintenance of Insurance Policies.
     The Servicer will use its reasonable best efforts to ensure that each
Obligor (or, in the case of any REO Asset, each REO Asset Owner) maintains an
Insurance Policy with respect to any Related Property (other than accounts
receivable) or REO Asset, as applicable, in an amount at least equal to the
Servicer’s good faith and commercially reasonable estimate of the value of the
real property, inventory, and/or equipment constituting such Related Property or
REO Asset, as applicable, and shall ensure that each such Insurance Policy names
the Servicer as loss payee and as an insured thereunder and all of the
applicable Seller’s right, title and interest therein is fully assigned to the
Administrative Agent, as agent for the Secured Parties. Additionally, the
Servicer shall require that each Obligor (or, in the case of any REO Asset, each
REO Asset Owner) maintain property damage liability insurance during the term of
each Loan (or, in the case of a REO Asset, during such period of time as the
related REO Asset Owner owns and operates such REO Asset) in amounts and against
risks customarily insured against by the Obligor or the REO Asset Owner, as
applicable, on property owned by it. If an Obligor or REO Asset Owner, as
applicable, fails to maintain property damage insurance, the Servicer may in its
discretion purchase and maintain such insurance on behalf of, and at the expense
of, the Obligor or REO Asset Owner, as applicable. In connection with its
activities as Servicer, the Servicer agrees to present, on behalf of the
Administrative Agent, claims to the insurer under each Insurance Policy and any
such liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Loan. The Servicer’s Insurance Policies
with respect to the Related Property or REO Asset, as applicable, will insure
against liability for physical damage relating to such Related Property or REO
Asset, as applicable, in accordance with the requirements of the Credit and
Collection Policy. The Servicer hereby disclaims any and all right, title and
interest in and to any Insurance Policy and Insurance Proceeds with respect to
any Related Property or REO Asset, as applicable, including any Insurance Policy
with respect to which it is named as loss payee and as an insured, and agrees
that it has no equitable, beneficial or other interest in the Insurance Polices
and Insurance Proceeds other than being named as loss payee and as an insured.
The Servicer acknowledges that with respect to the Insurance Policies and
Insurance Proceeds thereof that it is acting solely in the capacity as agent for
the Administrative Agent, as agent for the Secured Parties.

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     Section 6.8 Servicing Compensation.
     As compensation for its servicing activities hereunder and reimbursement
for its expenses, the Servicer shall be entitled to receive the Servicing Fee to
the extent of funds available therefor pursuant to the provisions of
Section 2.10(a)(ii), as applicable.
     Section 6.9 Payment of Certain Expenses by Servicer.
     The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, Taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Sellers, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 6.6; provided,
however, for avoidance of doubt, to the extent Liquidation Expenses relate to a
Loan and one or more Related Loans, such Liquidation Expenses shall be allocated
pro rata among such Loans and such Related Loans. The Servicer will be required
to pay all reasonable fees and expenses owing to any bank or trust company in
connection with the maintenance of the Collection Account and the Lock-Box
Account. The Servicer shall be required to pay such expenses for its own account
and shall not be entitled to any payment therefor other than the Servicing Fee.
     Section 6.10 Reports.
     (a) Repayment Notice. On each reduction of Advances Outstanding pursuant to
Section 2.4(a), each Seller (and the Servicer on its behalf) will provide a
Repayment Notice, updated as of such date, to the Administrative Agent and each
Purchaser Agent (with a copy to the Collateral Custodian).
     (b) Monthly Report. On each Reporting Date, the Servicer will provide to
the Sellers, the Administrative Agent, each Purchaser Agent, the Backup Servicer
and any Liquidity Bank, a monthly statement including the Advances Outstanding
calculated as of the most recent Determination Date (a “Monthly Report”), with
respect to the related Collection Period, signed by a Responsible Officer of the
Servicer and each Seller and substantially in the form of Exhibit C.
     (c) Servicer’s Certificate. Together with each Monthly Report, the Servicer
shall submit to the Administrative Agent, each Purchaser Agent and any Liquidity
Bank a certificate (a “Servicer’s Certificate”), signed by a Responsible Officer
of the Servicer and substantially in the form of Exhibit J.
     (d) Financial Statements. The Servicer will submit to the Administrative
Agent, each Purchaser Agent, each Purchaser, the Backup Servicer and any
Liquidity Bank, (i) within forty-five (45) days after the end of each of its
first three fiscal quarters of each fiscal year, a copy of the quarterly report
on Form 10-Q of CapitalSource Inc. for the most recent fiscal quarter in the
form as filed with the Securities and Exchange Commission and unaudited
consolidating statements, and (ii) on or before March 31 following the end of
each fiscal year, a copy of the annual report on Form 10-K of CapitalSource Inc.
in the form as filed with the Securities and Exchange Commission and unaudited
consolidating statements.

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     (e) Tax Returns. Upon demand by the Administrative Agent, each Purchaser
Agent and any Liquidity Bank, copies of all federal, state and local Tax returns
and reports filed by each Seller and the Servicer, or in which such Seller or
the Servicer was included on a consolidated or combined basis (excluding sales,
use and like taxes).
     (f) Obligor Financial Statements; Valuation Reports; Other Reports. The
initial Servicer will provide access to the Administrative Agent with respect to
each Loan: (i) to the extent received by the applicable Seller and/or the
initial Servicer, the financial reporting package required to be delivered under
the Loan documents (including any officer’s certificates); (ii) the initial
Servicer’s most recent internal rating reports and any Loan modification memos;
or (iii) any recurring audit memos to the extent undertaken by the initial
Servicer, in each case which access shall be provided, for a period of 10
Business Days or such longer period as reasonably requested by the
Administrative Agent and agreed upon by the initial Servicer, (a) within 60 days
after the end of each of the initial Servicer’s fiscal quarters (excluding the
last fiscal quarter) and (b) within 90 days after the end of the initial
Servicer’s fiscal year. The initial Servicer will, following provision of
reasonable notice and to the extent received by the applicable Seller and/or the
initial Servicer, promptly deliver to the Administrative Agent any other
documents and information required to be delivered under the Loan documents to
the applicable Seller and/or the initial Servicer with respect to any Loan.
     Section 6.11 Annual Statement as to Compliance.
     The Servicer will provide to the Administrative Agent and each Purchaser
Agent, within ninety (90) days following the end of each fiscal year of the
Servicer, a fiscal report signed by a Responsible Officer of the Servicer
certifying that (a) a review of the activities of the Servicer, and the
Servicer’s performance pursuant to this Agreement, for the fiscal period ending
on the last day of such fiscal year has been made under such Person’s
supervision and (b) the Servicer has performed or has caused to be performed in
all material respects all of its obligations under this Agreement throughout
such year and no Servicer Default has occurred and is continuing.
     Section 6.12 Annual Independent Public Accountant’s Servicing Reports.
     The Servicer will cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish to
the Administrative Agent, each Purchaser Agent, the Collateral Custodian and the
Backup Servicer, within ninety (90) days following the end of each fiscal year
of the Servicer: (i) a report relating to such fiscal year to the effect that
(a) such firm has reviewed certain documents and records relating to the
servicing of the Collateral, and (b) based on such examination, such firm is of
the opinion that the Monthly Reports for such year were prepared in compliance
with this Agreement, except for such exceptions as it believes to be immaterial
and such other exceptions as will be set forth in such firm’s report and (ii) a
report covering such fiscal year to the effect that such accountants have
applied certain agreed-upon procedures (which procedures shall have been
approved by the Administrative Agent and each Purchaser Agent) to certain
documents and records relating to the Collateral under any Transaction Document,
compared the information contained in the Monthly Reports and the Servicer’s
Certificates delivered during the period covered by such report with such
documents and records and that no matters came to the attention of such
accountants that caused them to believe that such servicing was not conducted in
compliance with this Article VI

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of this Agreement, except for such exceptions as such accountants shall believe
to be immaterial and such other exception as shall be set forth in such
statement.
     Section 6.13 Limitation on Liability of the Servicer and Others
     Except as provided herein, the Servicer shall not be under any liability to
the Administrative Agent, each Purchaser Agent, the Secured Parties or any other
Person for any action taken or for refraining from the taking of any action
pursuant to this Agreement whether arising from express or implied duties under
this Agreement; provided, however, notwithstanding anything to the contrary
contained herein nothing shall protect the Servicer against any liability that
would otherwise be imposed by reason of its willful misfeasance, bad faith or
negligence in the performance of duties or by reason of its willful misconduct
hereunder.
     Section 6.14 The Servicer Not to Resign.
     The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the Servicer’s determination that (i) the performance
of its duties hereunder is or becomes impermissible under Applicable Law and
(ii) there is no reasonable action that the Servicer could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent, each Purchaser Agent and the Backup Servicer. No such
resignation shall become effective until a Successor Servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with
Section 6.2.
     Section 6.15 Servicer Defaults.
     If any one of the following events (a “Servicer Default”) shall occur and
be continuing:
     (a) any failure by the Servicer to make any payment, transfer or deposit
(including without limitation with respect to Collections) as required by this
Agreement which continues unremedied for a period of three Business Days;
     (b) any failure by the Servicer to give instructions or notice to the
Administrative Agent and each Purchaser Agent as required by this Agreement, or
to deliver any required Monthly Report or other Required Reports hereunder on or
before the date occurring two Business Days after the date such instruction,
notice or report is required to be made or given, as the case may be, under the
terms of this Agreement;
     (c) any failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement or the other Transaction Documents to which the Servicer is a
party and the same continues unremedied for a period of fifteen (15) days after
the earlier to occur of (i) the date on which written notice of such failure
requiring the same to be remedied shall have been given to the Servicer by the
Administrative Agent and each Purchaser Agent and (ii) the date on which the
Servicer becomes aware thereof;

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     (d) any representation, warranty or certification made by the Servicer in
any Transaction Document or in any certificate delivered pursuant to any
Transaction Document shall prove to have been incorrect when made, which has a
Material Adverse Effect on the Administrative Agent, any Purchaser Agent or the
Secured Parties and which continues to be unremedied for a period of fifteen
(15) days after the earlier to occur of (i) the date on which written notice of
such incorrectness requiring the same to be remedied shall have been given to
the Servicer by the Administrative Agent or any Purchaser Agent and (ii) the
date on which the Servicer becomes aware thereof;
     (e) an Insolvency Event shall occur with respect to the Servicer;
     (f) any material delegation of the Servicer’s duties that is not permitted
by Section 6.1;
     (g) any financial or other information reasonably requested by the
Administrative Agent, any Purchaser Agent or any Purchaser is not provided as
requested within a reasonable amount of time following such request;
     (h) the rendering against the Servicer of one or more final judgments,
decrees or orders for the payment of money in excess of $10,000,000,
individually or in the aggregate, and the continuance of such judgment, decree
or order unsatisfied and in effect for any period of more than sixty
(60) consecutive days without a stay of execution;
     (i) the failure of the Servicer to make any payment due with respect to any
recourse debt or other obligations, which debt or other obligations are in
excess of $10,000,000, individually or in the aggregate, or the occurrence of
any event or condition that would at such time permit acceleration of such
recourse debt or other obligations;
     (j) CapitalSource Inc.’s Consolidated Tangible Net Worth is less than (i)
$1,015,000,000, plus (ii) 70% of the cumulative Net Proceeds of Capital
Stock/Conversion of Debt received at any time after December 31, 2005 (other
than the period commencing on January 1, 2008 and ending on September 30, 2008),
plus (iii) 30% of the cumulative Net Proceeds of Capital Stock/Conversion of
Debt received at any time during the period commencing on January 1, 2008 and
ending on September 30, 2008;
     (k) a payment default or other default, termination event or other similar
event has occurred and is continuing (beyond any applicable grace period) under
the Credit Agreement, any Citibank Facilities, the CS Europe Financing or under
or with respect to any repurchase agreement, securitization or any other
facility providing indebtedness for borrowed money, in each case, in an amount
greater than $10,000,000 to or for the benefit of CapitalSource Inc. or any of
its Subsidiaries (except for those securitizations or other facilities listed on
Schedule VIII, as the same may be updated from time to time as mutually agreed
by the Servicer and the Administrative Agent), and at such time such event
permits the lender or holder of rights thereunder to terminate commitments,
accelerate the obligations owing thereunder or otherwise exercise remedies
thereunder; provided, that a Servicer Default arising as a result of a default,
termination event, margin call or other similar event with respect to a
repurchase agreement or series of repurchase agreements shall be deemed to be
cured with the effect of being considered

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not to have occurred, to the extent that either (i) the surrender of the related
collateral in whole to (or liquidation of the related collateral in whole by)
the repo counterparty under such repurchase agreement (by itself or together
with any payments made, or additional collateral provided to, the repo
counterparty) constitutes satisfaction in full of the obligations of
CapitalSource Inc. and its Subsidiaries thereunder, or (ii) the deficiency
amount under such repurchase agreement or series of repurchase agreements after
application of collateral proceeds with respect to the sale or liquidation of
the related collateral is less than $10,000,000;
     (l) the Servicer fails in any material respect to comply with the Credit
and Collection Policy regarding the servicing of the Collateral;
     (m) the Servicer consents or agrees to, or otherwise permits to occur, any
amendment, modification, change, supplement or rescission of or to the Credit
and Collection Policy (after the adoption of same) in whole or in part that
could be reasonably expected to have a Material Adverse Effect upon the
Collateral, the Administrative Agent, any Purchaser Agent or the Secured
Parties, without the prior written consent of the Administrative Agent and each
Purchaser Agent;
     (n) CapitalSource Finance ceases to be the Servicer; or
     (o) the Servicer fails (or fails to cause the related REO Asset Owner) in
any material respect to comply with the provisions herein relating to the
servicing and administering of any REO Asset;
then notwithstanding anything herein to the contrary, so long as any such
Servicer Default shall not have been remedied within any applicable cure period
prior to the date of the Servicer Termination Notice (defined below), the
Administrative Agent, by written notice to the Servicer (with a copy to the
Backup Servicer) (a “Servicer Termination Notice”), may terminate all of the
rights and obligations of the Servicer as Servicer under this Agreement.
     Section 6.16 Appointment of Successor Servicer.
     (a) On and after the receipt by the Servicer of a Servicer Termination
Notice pursuant to Section 6.15, the Servicer shall continue to perform all
servicing functions under this Agreement until the date specified in the
Servicer Termination Notice or otherwise specified by the Administrative Agent
in writing or, if no such date is specified in such Servicer Termination Notice
or otherwise specified by the Administrative Agent, until a date mutually agreed
upon by the Servicer and the Administrative Agent. The Administrative Agent may
at the time described in the immediately preceding sentence in its sole
discretion, appoint the Backup Servicer as the Servicer hereunder, and the
Backup Servicer shall on such date assume all obligations of the Servicer
hereunder, and all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Backup Servicer. As compensation therefor,
the Backup Servicer shall be entitled to the Servicing Fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided herein; including, without limitation, Transition
Expenses. In the event that the Administrative Agent does not so appoint the
Backup Servicer, there is no Backup Servicer or the Backup Servicer is unable to
assume such obligations on such date, the Administrative Agent shall as promptly
as possible appoint a

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successor servicer (the “Successor Servicer”), and such Successor Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Administrative Agent and each Purchaser Agent. In the event that a Successor
Servicer has not accepted its appointment at the time when the Servicer ceases
to act as Servicer, the Administrative Agent shall petition a court of competent
jurisdiction to appoint any established financial institution, having a net
worth of not less than $50,000,000 and whose regular business includes the
servicing of Collateral, as the Successor Servicer hereunder.
     (b) Upon its appointment, the Backup Servicer (subject to Section 6.16(a))
or the Successor Servicer, as applicable, shall be the successor in all respects
to the Servicer with respect to servicing functions under this Agreement and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and all
references in this Agreement to the Servicer shall be deemed to refer to the
Backup Servicer or the Successor Servicer, as applicable; provided, however,
that the Backup Servicer or Successor Servicer, as applicable, shall have (i) no
liability with respect to any action performed by the terminated Servicer prior
to the date that the Backup Servicer or Successor Servicer, as applicable,
becomes the successor to 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 advancing obligations, if any, of the Servicer unless it elects to
in its sole discretion, (iii) no obligation to pay any taxes required to be paid
by the Servicer (provided, that the Backup Servicer or Successor Servicer, as
applicable, shall pay any income taxes for which it is liable), (iv) no
obligation to pay any of the fees and expenses of any other party to the
transactions contemplated hereby, and (v) no liability or obligation with
respect to any Servicer indemnification obligations of any prior Servicer,
including the original Servicer. The indemnification obligations of the Backup
Servicer or the Successor Servicer, as applicable, upon becoming a Successor
Servicer, are expressly limited to those arising on account of its failure to
act in good faith and with reasonable care under the circumstances. In addition,
the Backup Servicer or Successor Servicer, as applicable, shall have no
liability relating to the representations and warranties of the Servicer
contained in Article IV. Further, for so long as the Backup Servicer shall be
the Successor Servicer, the provisions of Section 2.15, Section 2.16(b) and
Section 2.16(e) of this Agreement shall not apply to it in its capacity as
Servicer.
     (c) All authority and power granted to the Servicer under this Agreement
shall automatically cease and terminate upon termination of this Agreement and
shall pass to and be vested in the applicable Seller and, without limitation,
such Seller is hereby authorized and empowered to execute and deliver, on behalf
of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with the applicable Seller and the Administrative
Agent in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing of the Collateral.
     (d) Upon the Backup Servicer receiving notice that it is required to serve
as the Servicer hereunder pursuant to the foregoing provisions of this
Section 6.16, the Backup Servicer will promptly begin the transition to its role
as the Servicer. Notwithstanding the foregoing, the Backup Servicer may, in its
discretion, appoint, or petition a court of competent jurisdiction to appoint,
any established servicing institution as the successor to the Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Servicer hereunder.

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As compensation, any Successor Servicer (including, without limitation, the
Administrative Agent) so appointed shall be entitled to receive the Servicing
Fee, together with any other servicing compensation in the form of assumption
fees, late payment charges or otherwise as provided herein that accrued prior
thereto, including, without limitation, Transition Expenses. In the event the
Backup Servicer is required to solicit bids as provided herein, the Backup
Servicer shall solicit, by public announcement, bids from banks and mortgage
servicing institutions meeting the qualifications set forth in Section 6.16(a)
above. Such public announcement shall specify that the Successor Servicer shall
be entitled to the full amount of the Servicing Fee as servicing compensation,
together with the other servicing compensation in the form of assumption fees,
late payment charges or otherwise that accrued prior thereto. Within thirty
(30) days after any such public announcement, the Backup Servicer shall
negotiate and effect the sale, transfer and assignment of the servicing rights
and responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Backup Servicer shall deduct from any sum received by the
Backup Servicer from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder and the amount of any unreimbursed Servicing Advances. After such
deductions, the remainder of such sum shall be paid by the Backup Servicer to
the Servicer at the time of such sale, transfer and assignment to the Servicer’s
successor. The Backup Servicer and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. No appointment of a successor to the Servicer hereunder shall be
effective until written notice of such proposed appointment shall have been
provided by the Backup Servicer to the Administrative Agent and each Purchaser
Agent and the Backup Servicer shall have consented thereto. The Backup Servicer
shall not resign as servicer until a Successor Servicer has been appointed and
accepted such appointment. Notwithstanding anything to the contrary contained
herein, in no event shall Wells Fargo, in any capacity, be liable for any
Servicing Fee or for any differential in the amount of the Servicing Fee paid
hereunder and the amount necessary to induce any Successor Servicer under this
Agreement and the transactions set forth or provided for by this Agreement.
     Section 6.17 Servicing of REO Assets.
     (a) If, in the reasonable business judgment of the Servicer, it becomes
necessary to convert any Loan that is secured by a Mortgage or real property and
included in the Collateral into an REO Asset in accordance with Section 6.6, the
Servicer shall first cause the applicable Seller to transfer and assign such
Real Estate Loan (or the portion thereof owned by such Seller) to a special
purpose vehicle (the “REO Asset Owner”) using a contribution agreement
substantially in the form of Exhibit L. All membership interests and any other
equity of the REO Asset Owner acquired by the applicable Seller shall
immediately become a part of the Collateral and be subject to the grant of a
security interest under Section 9.1 and shall be promptly delivered to the
Collateral Custodian, each undated and duly indorsed in blank. The REO Asset
Owner shall be formed and operated pursuant to a limited liability company
operating agreement substantially in the form as Exhibit M, with any alterations
thereto as reasonably agreed to by the Servicer and the Administrative Agent.
After execution thereof, the Servicer shall prevent the REO Asset Owner from
agreeing to any amendment or other modification of the REO Asset Owner’s limited
liability company operating agreement without first obtaining the written
consent of the Administrative Agent. The Servicer shall cause each REO Asset to
be serviced (i)

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in accordance with Applicable Laws, (ii) with reasonable care and diligence,
(iii) in accordance with the applicable REO Asset Owner’s limited liability
company operating agreement, (iv) in accordance with the Credit and Collection
Policy and (v) with a view toward maximizing Recoveries on such REO Asset
(collectively, the “REO Servicing Standard”). The Servicer will cause all
“Distributable Cash” (as defined in the respective REO Asset Owner’s limited
liability company operating agreement) to be deposited into the Collection
Account within two Business Days of receipt thereof. At all times prior to the
“Threshold Date” (as defined in the applicable REO Asset Owner limited liability
company operating agreement), the Servicer shall not permit the REO Asset Owner
to undertake any of the activities set forth in Section 9.4(c) (or comparable
section) of such REO Asset Owner’s limited liability company operating
agreement.
     (b) In the event that title to any Related Property is acquired on behalf
of the REO Asset Owner for the benefit of its members in foreclosure, by deed in
lieu of foreclosure or upon abandonment or reclamation from bankruptcy, the deed
or certificate of sale shall be taken in the name of a REO Asset Owner. The
Servicer shall cause the REO Asset Owner to manage, conserve, protect and
operate each REO Asset for its members solely for the purpose of its prompt
disposition and sale.
     (c) Notwithstanding any provision to the contrary contained in this
Agreement, the Servicer shall not (and shall not permit the REO Asset Owner to)
obtain title to any Related Property as a result of or in lieu of foreclosure or
otherwise, obtain title to any direct or indirect partnership interest in any
Obligor pledged pursuant to a pledge agreement and thereby be the beneficial
owner of Related Property, have a receiver of rents appointed with respect to,
and shall not otherwise acquire possession of, or take any other action with
respect to, any Related Property if, as a result of any such action, the REO
Asset Owner would be considered to hold title to, to be a
“mortgagee-in-possession” of, or to be an “owner” or “operator” of, such Related
Property within the Meaning of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, or any
comparable state or local environmental law, unless the Servicer has previously
determined in accordance with the REO Servicing Standard, based on an updated
Phase I environmental assessment report generally prepared in accordance with
the ASTM Phase I Environmental Site Assessment Standard E 1527-05, as may be
amended or, with respect to residential property, a property inspection and
title report, that:
     (i) such Related Property is in compliance in all material respects with
applicable environmental laws or, if not, after consultation with an
environmental consultant, that it would be in the best economic interest of the
Sellers and the REO Asset Owner to take such actions as are necessary to bring
such Related Property in compliance therewith, and
     (ii) there are no circumstances present at such Related Property relating
to the use, management or disposal of any hazardous materials for which
investigation, testing, monitoring, containment, clean-up or remediation would
reasonably be expected to be required by the owner, occupier or operator of the
Related Property under applicable federal, state or local law or regulation, or
that, if any such hazardous materials are present for which such action would
reasonably be expected to be required, after consultation with an environmental
consultant, it would be in the best economic interest

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of the Sellers and the REO Asset Owner to take such actions with respect to the
affected Related Property.
In the event that the Phase I or other environmental assessment first obtained
by the Servicer with respect to Related Property indicates that such Related
Property may not be in compliance with applicable environmental laws or that
hazardous materials may be present but does not definitively establish such
fact, the Servicer shall cause such further environmental assessment activities
to be conducted by an independent third-party who regularly conducts such
assessments as the Servicer shall deem prudent to protect the interests of the
Sellers and the REO Asset Owner. Any such assessments shall be deemed part of
the environmental assessment obtained by the Servicer for purposes of this
Section 6.17(c).
ARTICLE VII
THE BACKUP SERVICER
     Section 7.1 Designation of the Backup Servicer.
     (a) Initial Backup Servicer. The backup servicing role with respect to the
Collateral shall be conducted by the Person designated as Backup Servicer
hereunder from time to time in accordance with this Section 7.1. Until the
Administrative Agent shall give to Wells Fargo a Backup Servicer Termination
Notice, Wells Fargo is hereby designated as, and hereby agrees to perform the
duties and obligations of, a Backup Servicer pursuant to the terms hereof.
     (b) Successor Backup Servicer. Upon the Backup Servicer’s receipt of Backup
Servicer Termination Notice from the Administrative Agent of the designation of
a replacement Backup Servicer pursuant to the provisions of Section 7.5, the
Backup Servicer agrees that it will terminate its activities as Backup Servicer
hereunder.
     Section 7.2 Duties of the Backup Servicer.
     (a) Appointment. The Sellers and the Administrative Agent, as agent for the
Secured Parties, each hereby appoints Wells Fargo to act as Backup Servicer, for
the benefit of the Administrative Agent, each Purchaser Agent and the Secured
Parties, as from time to time designated pursuant to Section 7.1. The Backup
Servicer hereby accepts such appointment and agrees to perform the duties and
obligations with respect thereto set forth herein.
     (b) Duties. On or before the Closing Date, and until its removal pursuant
to Section 7.5, the Backup Servicer shall perform, on behalf of the
Administrative Agent and the Secured Parties, the following duties and
obligations:
     (i) On or before the Closing Date, the Backup Servicer shall accept from
the Servicer delivery of the information required to be set forth in the Monthly
Reports (if any) in hard copy and on computer tape; provided, however, the
computer tape is in a commonly used format or other format to be agreed upon by
the Backup Servicer and the Servicer on or prior to closing.

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     (ii) Not later than 12:00 noon Charlotte, North Carolina time on each
Reporting Date, the Servicer shall deliver to the Backup Servicer the asset
tape, which shall include but not be limited to the following information:
(x) for each Loan, the name and number of the related Obligor, the collection
status, the loan or lease status, the date of each Scheduled Payment and the
Outstanding Loan Balance, (y) the Advances Outstanding and (z) the Aggregate
Outstanding Loan Balance (the “Tape”). The Backup Servicer shall accept delivery
of the Tape.
     (iii) Prior to the related Payment Date, the Backup Servicer shall review
the Monthly Report to ensure that it is complete on its face and that the
following items in such Monthly Report have been accurately calculated, if
applicable, and reported: (A) the Advances Outstanding, (B) the Backup Servicing
Fee, (C) the Loans that are current and not past due, (D) the Loans that are 1 –
30 days past due, (E) the Loans that are 31 – 60 days past due, (F) the Loans
that are 61 – 90 days past due, (G) the Loans that are 90+ days past due,
(H) the Loans that are Defaulted Loans, (I) the Aggregate Outstanding Loan
Balance and (J) the Minimum Overcollateralization Ratio. The Backup Servicer by
a separate written report shall notify the Administrative Agent and the Servicer
of any disagreements with the Monthly Report based on such review not later than
the Business Day preceding such Payment Date to such Persons.
     (iv) If the Servicer disagrees with the report provided under clause (iii)
above by the Backup Servicer or if the Servicer or any subservicer has not
reconciled such discrepancy, the Backup Servicer agrees to confer with the
Servicer to resolve such disagreement on or prior to the next succeeding
Determination Date and shall settle such discrepancy with the Servicer if
possible, and notify the Administrative Agent of the resolution thereof. The
Servicer hereby agrees to cooperate at its own expense with the Backup Servicer
in reconciling any discrepancies herein. If within twenty (20) days after the
delivery of the report provided under clause (iii) above by the Backup Servicer,
such discrepancy is not resolved, the Backup Servicer shall promptly notify the
Administrative Agent of the continued existence of such discrepancy. Following
receipt of such notice by the Administrative Agent, the Servicer shall deliver
to the Administrative Agent, the Secured Parties and the Backup Servicer no
later than the related Payment Date a certificate describing the nature and
amount of such discrepancies and the actions the Servicer proposes to take with
respect thereto.
     (c) Reliance on Tape. With respect to the duties described in
Section 7.2(b), the Backup Servicer, is entitled to rely conclusively, and shall
be fully protected in so relying, on the contents of each Tape, including, but
not limited to, the completeness and accuracy thereof, provided by the Servicer.
     Section 7.3 Merger or Consolidation.
     Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup

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Servicer under this Agreement without further act on the part of any of the
parties to this Agreement provided such Person is organized under the laws of
the United States of America or any one of the States thereof or the District of
Columbia (or any domestic branch of a foreign bank), (i) (a) that has either
(1) a long-term unsecured debt rating of “A” or better by S&P and “A2” or better
by Moody’s or (2) a short-term unsecured debt rating or certificate of deposit
rating of “A-1” or better by S&P or “P-1” or better by Moody’s, (b) the parent
corporation which has either (1) a long-term unsecured debt rating of “A” or
better by S&P and “A2” or better by Moody’s or (2) a short-term unsecured debt
rating or certificate of deposit rating of “A-1” or better by S&P and “P-1” or
better by Moody’s or (c) is otherwise acceptable to the Administrative Agent.
     Section 7.4 Backup Servicing Compensation.
     As compensation for its back-up servicing activities hereunder, the Backup
Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer. To the extent that such Backup Servicing Fee is not paid by the
Servicer, the Backup Servicer shall be entitled to receive the unpaid balance of
its Backup Servicing Fee to the extent of funds available therefor pursuant to
Section 2.10(a)(iii), as applicable. The Backup Servicer’s entitlement to
receive the Backup Servicing Fee shall cease (excluding any unpaid outstanding
amounts as of that date) on the earliest to occur of: (i) it becoming the
Successor Servicer, (ii) its removal as Backup Servicer pursuant to Section 7.5,
or (iii) the termination of this Agreement. Upon becoming Successor Servicer
pursuant to Section 6.16, the Backup Servicer shall be entitled to the Servicing
Fee.
     Section 7.5 Backup Servicer Removal.
     The Backup Servicer may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Backup Servicer (the
“Backup Servicer Termination Notice”). In the event of any such removal, a
replacement Backup Servicer may be appointed by the Administrative Agent.
     Section 7.6 Limitation on Liability.
     (a) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, nominees, attorneys
and custodians in performing any of its duties and obligations under this
Agreement, it being understood by the parties hereto that the Backup Servicer
will be responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations
for and on behalf of the Backup Servicer. Neither the Backup Servicer nor any of
its officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses that result from the gross
negligence or willful misconduct of it or them or the failure to perform
materially in accordance with this Agreement.

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     (b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer contained
in any computer tape, certificate or other data or document delivered to the
Backup Servicer hereunder or on which the Backup Servicer must rely in order to
perform its obligations hereunder, and the Secured Parties, the Administrative
Agent and the Collateral Custodian each agree to look only to the Servicer to
perform such obligations. The Backup Servicer shall have no responsibility and
shall not be in default hereunder or incur any liability for any failure, error,
malfunction or any delay in carrying out any of its duties under this Agreement
if such failure or delay results from the Backup Servicer acting in accordance
with information prepared or supplied by a Person other than the Backup Servicer
or the failure of any such other Person to prepare or provide such information.
The Backup Servicer shall have no responsibility, shall not be in default and
shall incur no liability for (i) any act or failure to act of any third party,
including the Servicer, (ii) any inaccuracy or omission in a notice or
communication received by the Backup Servicer from any third party, (iii) the
invalidity or unenforceability of any Collateral under Applicable Law, (iv) the
breach or inaccuracy of any representation or warranty made with respect to any
Collateral, or (v) the acts or omissions of any successor Backup Servicer.
     Section 7.7 The Backup Servicer Not to Resign.
     The Backup Servicer shall not resign (except with prior consent of the
Administrative Agent which consent shall not be unreasonably withheld) from the
obligations and duties hereby imposed on it except upon the Backup Servicer’s
determination that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action that
the Backup Servicer could take to make the performance of its duties hereunder
permissible under Applicable Law. Any such determination permitting the
resignation of the Backup Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Administrative Agent and
each Purchaser Agent. No such resignation shall become effective until a
successor Backup Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder.
ARTICLE VIII
THE COLLATERAL CUSTODIAN
     Section 8.1 Designation of Collateral Custodian.
     (a) Initial Collateral Custodian. The role of collateral custodian with
respect to the Required Loan Documents shall be conducted by the Person
designated as Collateral Custodian hereunder from time to time in accordance
with this Section 8.1. Until the Administrative Agent shall give to Wells Fargo
a Collateral Custodian Termination Notice, Wells Fargo is hereby designated as,
and hereby agrees to perform the duties and obligations of, Collateral Custodian
pursuant to the terms hereof.
     (b) Successor Collateral Custodian. Upon the Collateral Custodian’s receipt
of a Collateral Custodian Termination Notice from the Administrative Agent of
the designation of a successor Collateral Custodian pursuant to the provisions
of Section 8.5, the Collateral Custodian agrees that it will terminate its
activities as Collateral Custodian hereunder.

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     Section 8.2 Duties of Collateral Custodian.
     (a) Appointment. The Sellers and the Administrative Agent each hereby
appoints Wells Fargo to act as Collateral Custodian, for the benefit of the
Administrative Agent, as agent for the Secured Parties. The Collateral Custodian
hereby accepts such appointment and agrees to perform the duties and obligation
with respect thereto set forth herein.
     (b) Duties. On or before the Closing Date, and until its removal pursuant
to Section 8.5, the Collateral Custodian shall perform on behalf of the
Administrative Agent and the Secured Parties, the following duties and
obligations:
     (i) The Collateral Custodian shall take and retain custody of the Required
Loan Documents delivered by the Sellers pursuant to Section 3.2 hereof in
accordance with the terms and conditions of this Agreement, all for the benefit
of the Secured Parties and subject to the Lien thereon in favor of the
Administrative Agent as agent for the Secured Parties. Within five Business Days
of its receipt of any Required Loan Documents, the Collateral Custodian shall
review the related Collateral and Required Loan Documents to confirm that
(A) such Collateral has been properly executed and has no missing or mutilated
pages, (B) any UCC and other filings (as set forth on the Loan Checklists) have
been made, (C) an Insurance Policy exists with respect to any real or personal
property constituting the Related Property, and (D) confirming the related
Outstanding Loan Balance, Loan number and Obligor name with respect to such Loan
is referenced on the related Loan List and is not a duplicate Loan
(collectively, the “Review Criteria”). In order to facilitate the foregoing
review by the Collateral Custodian, in connection with each delivery of Required
Loan Documents hereunder to the Collateral Custodian, the Servicer shall provide
to the Collateral Custodian an electronic file (in EXCEL or a comparable format)
that contains the related Loan List or that otherwise contains the Loan
identification number and the name of the Obligor with respect to each related
Loan. If, at the conclusion of such review, the Collateral Custodian shall
determine that (i) the Outstanding Loan Balances of the Collateral it has
received Required Loan Documents with respect to is less than as set forth on
the electronic file, the Collateral Custodian shall immediately notify the
Administrative Agent of such discrepancy, and (ii) any Review Criteria is not
satisfied, the Collateral Custodian shall within one Business Day notify the
Servicer of such determination and provide the Servicer with a list of the
non-complying Loans and the applicable Review Criteria that they fail to
satisfy. The Servicer shall have five Business Days to correct any
non-compliance with a Review Criteria. If after the conclusion of such time
period the Servicer has still not cured any non-compliance by a Loan with a
Review Criteria, the Collateral Custodian shall promptly notify the applicable
Seller and the Administrative Agent of such determination by providing a written
report to such persons identifying, with particularity, each Loan and each of
the applicable Review Criteria that such Loan fails to satisfy. In addition, if
requested in writing by the Servicer and approved by the Administrative Agent
within ten Business Days of the Collateral Custodian’s delivery of such report,
the Collateral Custodian shall return any Loan which fails to satisfy a Review
Criteria to the applicable Seller. Other than the foregoing, the Collateral
Custodian shall not have any responsibility for reviewing any Required Loan
Documents.

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     (ii) In taking and retaining custody of the Required Loan Documents, the
Collateral Custodian shall be deemed to be acting as the agent of the
Administrative Agent and the Secured Parties; provided, however that the
Collateral Custodian makes no representations as to the existence, perfection or
priority of any Lien on the Required Loan Documents or the instruments therein;
and provided, further, that the Collateral Custodian’s duties as agent shall be
limited to those expressly contemplated herein.
     (iii) All Required Loan Document shall be kept in fire resistant vaults,
rooms or cabinets at the locations specified on Schedule III attached hereto, or
at such other office as shall be specified to the Administrative Agent by the
Collateral Custodian in a written notice delivered at least forty-five (45) days
prior to such change. All Required Loan Documents shall be placed together with
an appropriate identifying label and maintained in such a manner so as to permit
retrieval and access. All Required Loan Documents shall be clearly segregated
from any other documents or instruments maintained by the Collateral Custodian.
     (iv) The Collateral Custodian shall make payments pursuant to the terms of
the Monthly Report in accordance with Section 2.10 (the “Payment Duties”).
     (v) On each Reporting Date, the Collateral Custodian shall provide a
written report to the Administrative Agent and the Servicer (in a form
acceptable to the Administrative Agent) identifying each Loan for which it holds
Required Loan Documents, the non-complying Loans and the applicable Review
Criteria that any non-complying Loan fails to satisfy.
     (vi) In performing its duties, the Collateral Custodian shall use the same
degree of care and attention as it employs with respect to similar Collateral
that it holds as Collateral Custodian.
     Section 8.3 Merger or Consolidation.
     Any Person (i) into which the Collateral Custodian may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Collateral Custodian shall be a party, or (iii) that may succeed to the
properties and assets of the Collateral Custodian substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Collateral Custodian hereunder, shall be the
successor to the Collateral Custodian under this Agreement without further act
of any of the parties to this Agreement.
     Section 8.4 Collateral Custodian Compensation.
     As compensation for its collateral custodian activities hereunder, the
Collateral Custodian shall be entitled to a Collateral Custodian Fee (the
“Collateral Custodian Fee”) from the Servicer. To the extent that such
Collateral Custodian Fee is not paid by the Servicer, the Collateral Custodian
shall be entitled to receive the unpaid balance of its Collateral Custodian Fee
to the extent of funds available therefor pursuant to the provision of Section
2.10(a)(iii). The Collateral Custodian’s entitlement to receive the Collateral
Custodian Fee shall cease on the earlier to occur

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of: (i) its removal as Collateral Custodian pursuant to Section 8.5 or (ii) the
termination of this Agreement.
     Section 8.5 Collateral Custodian Removal.
     The Collateral Custodian may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Collateral Custodian (the
“Collateral Custodian Termination Notice”); provided, however, notwithstanding
its receipt of a Collateral Custodian Termination Notice, the Collateral
Custodian shall continue to act in such capacity until a successor Collateral
Custodian has been appointed, has agreed to act as Collateral Custodian
hereunder, and has received all Required Loan Documents held by the previous
Collateral Custodian.
     Section 8.6 Limitation on Liability.
     (a) The Collateral Custodian may conclusively rely on and shall be fully
protected in acting upon any certificate, instrument, opinion, notice, letter,
telegram or other document delivered to it and that in good faith it reasonably
believes to be genuine and that has been signed by the proper party or parties.
The Collateral Custodian may rely conclusively on and shall be fully protected
in acting upon (1) the written instructions of any designated officer of the
Administrative Agent or (2) the verbal instructions of the Administrative Agent.
     (b) The Collateral Custodian may consult counsel satisfactory to it and the
advice or opinion of such 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 accordance with the advice or opinion of such counsel.
     (c) The Collateral Custodian shall not be liable for any error of judgment,
or for any act done or step taken or omitted by it, in good faith, or for any
mistakes of fact or law, or for anything that it may do or refrain from doing in
connection herewith except in the case of its willful misconduct or grossly
negligent performance or omission of its duties and in the case of the negligent
performance of its Payment Duties and in the case of its negligent performance
of its duties in taking and retaining custody of the Required Loan Documents.
     (d) The Collateral Custodian makes no warranty or representation and shall
have no responsibility (except as expressly set forth in this Agreement) as to
the content, enforceability, completeness, validity, sufficiency, value,
genuineness, ownership or transferability of the Collateral, and will not be
required to and will not make any representations as to the validity or value
(except as expressly set forth in this Agreement) of any of the Collateral. The
Collateral Custodian shall not be obligated to take any legal action hereunder
that might in its judgment involve any expense or liability unless it has been
furnished with an indemnity reasonably satisfactory to it.
     (e) The Collateral Custodian shall have no duties or responsibilities
except such duties and responsibilities as are specifically set forth in this
Agreement and no covenants or obligations shall be implied in this Agreement
against the Collateral Custodian.

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     (f) The Collateral Custodian shall not be required to expend or risk its
own funds in the performance of its duties hereunder.
     (g) It is expressly agreed and acknowledged that the Collateral Custodian
is not guaranteeing performance of or assuming any liability for the obligations
of the other parties hereto or any parties to the Collateral.
     Section 8.7 The Collateral Custodian Not to Resign.
     The Collateral Custodian shall not resign from the obligations and duties
hereby imposed on it except upon the Collateral Custodian’s determination that
(i) the performance of its duties hereunder is or becomes impermissible under
Applicable Law and (ii) there is no reasonable action that the Collateral
Custodian could take to make the performance of its duties hereunder permissible
under Applicable Law. Any such determination permitting the resignation of the
Collateral Custodian shall be evidenced as to clause (i) above by an Opinion of
Counsel to such effect delivered to the Administrative Agent and each Purchaser
Agent. No such resignation shall become effective until a successor Collateral
Custodian shall have assumed the responsibilities and obligations of the
Collateral Custodian hereunder.
     Section 8.8 Release of Documents.
     (a) Release for Servicing. From time to time and as appropriate for the
enforcement or servicing any of the Collateral, the Collateral Custodian is
hereby authorized (unless and until such authorization is revoked by the
Administrative Agent), upon written receipt from the Servicer of a request for
release of documents and receipt in the form annexed hereto as Exhibit H, to
release to the Servicer the related Required Loan Documents or the documents set
forth in such request and receipt to the Servicer. All documents so released to
the Servicer shall be held by the Servicer in trust for the benefit of the
Administrative Agent in accordance with the terms of this Agreement. The
Servicer shall return to the Collateral Custodian the Required Loan Documents or
other such documents (i) immediately upon the request of the Administrative
Agent, or (ii) when the Servicer’s need therefor in connection with such
foreclosure or servicing no longer exists, unless the Loan shall be liquidated,
in which case, upon receipt of an additional request for release of documents
and receipt certifying such liquidation from the Servicer to the Collateral
Custodian in the form annexed hereto as Exhibit H, the Servicer’s request and
receipt submitted pursuant to the first sentence of this subsection shall be
released by the Collateral Custodian to the Servicer.
     (b) Limitation on Release. The foregoing provision respecting release to
the Servicer of the Required Loan Documents and documents by the Collateral
Custodian upon request by the Servicer shall be operative only to the extent
that at any time the Collateral Custodian shall not have released to the
Servicer active Required Loan Documents (including those requested) pertaining
to more than fifteen (15) Loans at the time being serviced by the Servicer under
this Agreement. Any additional Required Loan Documents or documents requested to
be released by the Servicer may be released only upon written authorization of
the Administrative Agent. The limitations of this paragraph shall not apply to
the release of Required Loan Documents to the Servicer pursuant to the
immediately succeeding subsection.

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     (c) Release for Payment. Upon receipt by the Collateral Custodian of the
Servicer’s request for release of documents and receipt in the form annexed
hereto as Exhibit H (which certification shall include a statement to the effect
that all amounts received in connection with such payment or repurchase have
been credited to the Collection Account as provided in this Agreement), the
Collateral Custodian shall promptly release the related Required Loan Documents
to the Servicer; provided that the Collateral Custodian shall release the
Required Loan Documents related to any REO Asset to the Servicer in connection
with the Servicer’s exercise of remedies thereon promptly upon the Servicer’s
request.
     Section 8.9 Return of Required Loan Documents.
     The Sellers may, with the prior written consent of the Administrative Agent
(such consent not to be unreasonably withheld), require that the Collateral
Custodian return each Required Loan Document (a) delivered to the Collateral
Custodian in error, (b) as to which the lien on the Related Property has been so
released pursuant to Section 9.2, (c) that has been repaid by a Seller pursuant
to Section 4.6 or (d) that is required to be redelivered to the Sellers in
connection with the termination of this Agreement, in each case by submitting to
the Collateral Custodian and the Administrative Agent a written request in the
form of Exhibit H hereto (signed by both the applicable Seller and the
Administrative Agent) specifying the Collateral to be so returned and reciting
that the conditions to such release have been met (and specifying the Section or
Sections of this Agreement being relied upon for such release). The Collateral
Custodian shall upon its receipt of each such request for return executed by a
Seller and the Administrative Agent promptly, but in any event within five
Business Days, return the Required Loan Documents so requested to the applicable
Seller.
     Section 8.10 Access to Certain Documentation and Information Regarding the
Collateral; Audits.
     The Collateral Custodian shall provide to the Administrative Agent and each
Purchaser Agent access to the Required Loan Documents and all other
documentation regarding the Collateral including in such cases where the
Administrative Agent and each Purchaser Agent is required in connection with the
enforcement of the rights or interests of the Secured Parties, or by applicable
statutes or regulations, to review such documentation, such access being
afforded without charge but only (i) upon two Business Days prior written
request, (ii) during normal business hours and (iii) subject to the Servicer’s
and Collateral Custodian’s normal security and confidentiality procedures. Prior
to the Closing Date and periodically thereafter at the discretion of the
Administrative Agent and each Purchaser Agent, the Administrative Agent and each
Purchaser Agent may review the Servicer’s collection and administration of the
Collateral in order to assess compliance by the Servicer with the Credit and
Collection Policy, as well as with this Agreement and may conduct an audit of
the Collateral, Required Loan Documents in conjunction with such a review. Such
review shall be reasonable in scope and shall be completed in a reasonable
period of time. Without limiting the foregoing provisions of this Section 8.10,
from time to time on request of the Administrative Agent, the Collateral
Custodian shall permit certified public accountants or other auditors acceptable
to the Administrative Agent to conduct, at the Servicer’s expense, a review of
the Required Loan Documents and all other documentation regarding the
Collateral.

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ARTICLE IX
SECURITY INTEREST
     Section 9.1 Grant of Security Interest.
     The parties hereto intend that this Agreement constitute a security
agreement and the transactions effected hereby constitute secured loans by the
Purchasers to the Sellers under Applicable Law. For such purpose, each Seller
hereby transfers, conveys, assigns and grants as of the Closing Date to the
Administrative Agent, as agent for the Secured Parties, a lien and continuing
security interest in all of such Seller’s right, title and interest in, to and
under (but none of the obligations under) all Collateral, whether now existing
or hereafter arising or acquired by such Seller, and wherever the same may be
located, to secure the prompt, complete and indefeasible payment and performance
in full when due, whether by lapse of time, acceleration or otherwise, of the
Aggregate Unpaids of such Seller arising in connection with this Agreement, the
Sellers Guaranty and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, all Aggregate Unpaids. The assignment under this
Section 9.1 does not constitute and is not intended to result in a creation or
an assumption by the Administrative Agent, the Purchaser Agents, the Liquidity
Banks or any of the Secured Parties of any obligation of the Sellers or any
other Person in connection with any or all of the Collateral or under any
agreement or instrument relating thereto. Anything herein to the contrary
notwithstanding, (a) the Sellers shall remain liable under the Collateral to the
extent set forth therein to perform all of its duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by the Administrative Agent, as agent for the Secured Parties, of any of its
rights in the Collateral shall not release the Sellers from any of its duties or
obligations under the Collateral, and (c) none of the Administrative Agent, the
Purchaser Agents, the Liquidity Banks or any Secured Party shall have any
obligations or liability under the Collateral by reason of this Agreement, nor
shall the Administrative Agent, the Purchaser Agents, the Liquidity Banks or any
Secured Party be obligated to perform any of the obligations or duties of the
Sellers thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
     Section 9.2 Release of Lien on Collateral.
     At the same time as (i) any Collateral expires by its terms and all amounts
in respect thereof have been paid in full by the related Obligor and deposited
in the Collection Account, (ii) this agreement terminates in accordance with
Section 13.6 or (iii) such Loan is assigned, sold, transferred or re-transferred
and removed in accordance with Section 2.19, Section 2.20 or Section 4.6, the
Administrative Agent as agent for the Secured Parties will, to the extent
requested by the Servicer, release its interest in such Collateral. In
connection with any sale of such Related Property, the Administrative Agent as
agent for the Secured Parties will after the deposit by the Servicer of the
Proceeds of such sale into the Collection Account, at the sole expense of the
Servicer, execute and deliver to the Servicer any assignments, bills of sale,
termination statements and any other releases and instruments as the Servicer
may reasonably request in order to effect the release and transfer of such
Related Property; provided, that the Administrative Agent as agent for the
Secured Parties will make no representation or warranty,

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express or implied, with respect to any such Related Property in connection with
such sale or transfer and assignment. Nothing in this section shall diminish the
Servicer’s obligations pursuant to Section 6.6 with respect to the Proceeds of
any such sale.
     Section 9.3 Further Assurances.
     The provisions of Section 13.12 shall apply to the security interest
granted under Section 9.1 as well as to the Advance hereunder.
     Section 9.4 [Reserved].
     Section 9.5 Waiver of Certain Laws.
     Each of the Sellers and the Servicer agrees, to the full extent that it may
lawfully so agree, that neither it nor anyone claiming through or under it will
set up, claim or seek to take advantage of any appraisement, valuation, stay,
extension or redemption law now or hereafter in force in any locality where any
Collateral may be situated in order to prevent, hinder or delay the enforcement
or foreclosure of this Agreement, or the absolute sale of any of the Collateral
or any part thereof, or the final and absolute putting into possession thereof,
immediately after such sale, of the Purchasers thereof, and each of the Sellers
and the Servicer, for itself and all who may at any time claim through or under
it, hereby waives, to the full extent that it may be lawful so to do, the
benefit of all such laws, and any and all right to have any of the properties or
assets constituting the Collateral marshaled upon any such sale, and agrees that
the Administrative Agent or any court having jurisdiction to foreclose the
security interests granted in this Agreement may sell the Collateral as an
entirety or in such parcels as the Administrative Agent or such court may
determine.
     Section 9.6 Power of Attorney.
     Each of the Sellers and the Servicer hereby irrevocably appoints the
Administrative Agent its true and lawful attorney (with full power of
substitution) in its name, place and stead and at is expense, in connection with
the enforcement of the rights and remedies provided for in this Agreement,
including without limitation the following powers: (a) to give any necessary
receipts or acquittance for amounts collected or received hereunder, (b) to make
all necessary transfers of the Collateral in connection with any such sale or
other disposition made pursuant hereto, (c) to execute and deliver for value all
necessary or appropriate bills of sale, assignments and other instruments in
connection with any such sale or other disposition, the Sellers and the Servicer
hereby ratifying and confirming all that such attorney (or any substitute) shall
lawfully do hereunder and pursuant hereto, and (d) to sign any agreements,
orders or other documents in connection with or pursuant to any Transaction
Document. Nevertheless, if so requested by the Administrative Agent or a
Purchaser Agent, the Sellers shall ratify and confirm any such sale or other
disposition by executing and delivering to the Administrative Agent or such
Purchaser all proper bills of sale, assignments, releases and other instruments
as may be designated in any such request.

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ARTICLE X
TERMINATION EVENTS
     Section 10.1 Termination Events.
     The following events shall be Termination Events (“Termination Events”)
hereunder:
     (a) a Servicer Default occurs and is continuing; or
     (b) failure on the part of either Seller or any of the Originators to make
any payment or deposit (including without limitation with respect to
Collections) required by the terms of any Transaction Document on the day such
payment or deposit is required to be made and the same continues unremedied for
two Business Days; or
     (c) the occurrence of an Insolvency Event relating to any of the
Originators, either Seller, the Servicer or any Affiliate of any of the
Originators which is a party to a Permitted Securitization Transaction; or
     (d) either Seller shall become required to register as an “investment
company” within the meaning of the Investment Company Act of 1940, as amended
(the “40 Act”) or the arrangements contemplated by the Transaction Documents
shall require registration as an “investment company” within the meaning of the
40 Act; or
     (e) a regulatory, tax or accounting body has ordered that the activities of
either Seller or any Affiliate of either Seller contemplated hereby be
terminated or, as a result of any other event or circumstance, the activities of
either Seller contemplated hereby may reasonably be expected to cause such
Seller or any of its respective Affiliates to suffer materially adverse
regulatory, accounting or tax consequences; or
     (f) there shall exist any event or occurrence that has caused a Material
Adverse Effect; or
     (g) the Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Code with regard to any assets of either Seller or any of
the Originators and such lien shall not have been released within five Business
Days, or the Pension Benefit Guaranty Corporation shall file notice of a lien
pursuant to Section 4068 of ERISA with regard to any of the assets of either
Seller or any of the Originators and such lien shall not have been released
within five Business Days; or
     (h) any Change-in-Control shall occur; or
     (i) (i) unless otherwise cured pursuant to Section 2.4(b), any Transaction
Document, or any lien or security interest granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of either Seller, any of the Originators or the Servicer,

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     (ii) either Seller, any of the Originators, the Servicer or any other party
shall, directly or indirectly, contest in any manner the effectiveness,
validity, binding nature or enforceability of any Transaction Document or any
lien or security interest thereunder, or
     (iii) any security interest securing any obligation under any Transaction
Document shall, in whole or in part, cease to be a perfected first priority
security interest; or
     (j) any failure on the part of either Seller or any of the Originators duly
to observe or perform in any material respect any other covenants or agreements
of such Seller or such Originator set forth in this Agreement or the other
Transaction Documents to which such Seller or such Originator is a party and the
same continues unremedied for a period of fifteen (15) days after the earlier to
occur of (i) the date on which written notice of such failure requiring the same
to be remedied shall have been given to such Seller or such Originator by the
Administrative Agent and (ii) the date on which such Seller or such Originator
becomes aware thereof; or
     (k) any representation, warranty or certification made by either Seller,
any of the Originators or either Guarantor in any Transaction Document or in any
certificate delivered pursuant to any Transaction Document shall prove to have
been incorrect when made, which has a Material Adverse Effect on the Secured
Parties and which continues to be unremedied for a period of fifteen (15) days
after the earlier to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to such
Seller, such Originator or such Guarantor by the Administrative Agent and
(ii) the date on which such Seller, such Originator or such Guarantor becomes
aware thereof; or
     (l) any failure by either Seller to give instructions or notice to the
Administrative Agent as required by this Agreement, or to deliver any required
Monthly Report or other Required Reports hereunder on or before the date
occurring two Business Days after the date such instruction, notice or report is
required to be made or given, as the case may be, under the terms of this
Agreement; or
     (m) the failure of either Seller, the Servicer or any of the Originators to
make any payment due with respect to recourse debt or other obligations
(including with respect to the Sellers Guaranty), in the case of the Servicer or
any of the Originators, in excess of $10,000,000, or the occurrence of any event
or condition that would at such time permit acceleration of such recourse debt
or other obligations; or
     (n) (1) the rendering of one or more final judgments, decrees or orders by
a court or arbitrator of competent jurisdiction for the payment of money in
excess of $10,000,000, individually or in the aggregate, against any of the
Originators, or $500,000, individually or in the aggregate, against either
Seller, individually or in the aggregate, and any of the Originators shall not
have either (i) discharged or provided for the discharge of any such judgment,
decree or order in accordance with its terms or (ii) perfected a timely appeal
of such judgment, decree or order and caused the execution of same to be stayed
during the pendency of the appeal or (2) any of the Originators or either Seller
shall have made payments of amounts in excess of $10,000,000, individually or in
the aggregate, by any of the Originators, or $500,000, individually or in the
aggregate, by either Seller, individually or in the aggregate, in the

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settlement of any litigation, claim or dispute (excluding payments made from
insurance proceeds);
     (o) any deficiency exists in the Minimum Overcollateralization Ratio on any
day and the same continues unremedied for two Business Days; or
     (p) the occurrence of the Termination Date prior to the payment in full of
all amounts owed through the SEVENTH clause of Section 2.10.
     Section 10.2 Remedies.
     Upon the occurrence of a Termination Event, the Administrative Agent may
or, at the request of any of the Purchasers, shall, by notice to each of the
Sellers, declare that all Aggregate Unpaids shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are expressly waived by the Sellers; provided, however, that upon the
occurrence of a Termination Event described in Section 10.1(c), all Aggregate
Unpaids shall automatically become immediately due and payable without any
notice or action whatsoever by the Administrative Agent or any Purchaser. In
each case, the Administrative Agent and the Secured Parties shall have, with
respect to the Collateral granted pursuant to Section 9.1, the right to exercise
any and all of its other rights and remedies under the UCC of each applicable
jurisdiction and other Applicable Laws, hereunder and under the other
Transaction Documents, which rights and remedies shall be cumulative, and
include the right to require the applicable Seller and the Servicer (and the
applicable Seller and the Servicer hereby agree that they will at the Servicer’s
expense and upon request of the Administrative Agent forthwith) to (1) assemble
all or any part of the Collateral as directed by the Administrative Agent and
make the same available to the Administrative Agent at a place to be designated
by the Administrative Agent and (2) without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at a public or
private sale, at any of the Administrative Agent’s offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable. The applicable Seller
agrees that, to the extent notice of sale shall be required by law, at least ten
days’ notice to such Seller of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. All cash Proceeds
received by the Administrative Agent in respect of any sale of, collection from,
or other realization upon, all or any part of the Collateral (after payment of
any amounts incurred in connection with such sale) shall be deposited into the
Collection Account and to be applied against all or any part of the Aggregate
Unpaids pursuant to Section 2.10 or otherwise in such order as the
Administrative Agent shall elect in its discretion.

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ARTICLE XI
INDEMNIFICATION
     Section 11.1 Indemnities by the Sellers.
     (a) Without limiting any other rights that any such Person may have
hereunder or under Applicable Law, the Sellers hereby jointly and severally
agree to indemnify the Administrative Agent, the Purchaser Agents, the Backup
Servicer, the Collateral Custodian, the Secured Parties, the Affected Parties
and each of their respective assigns and officers, directors, employees and
agents thereof (collectively, the “Indemnified Parties”), forthwith on demand,
from and against any and all damages, losses, claims, liabilities and related
costs and expenses, including attorneys’ fees and disbursements (all of the
foregoing being collectively referred to as the “Indemnified Amounts”) awarded
against or incurred by such Indemnified Party and other non-monetary damages of
any such Indemnified Party or any of them arising out of or as a result of this
Agreement or having an interest in the Collateral or in respect of any Loan
included in the Collateral, excluding, however, (a) Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part of such
Indemnified Party or (b) Indemnified Amounts that have the effect of recourse
for non-payment of the Loans included in the Collateral due to credit problems
of the Obligors (except as otherwise specifically provided in this Agreement).
If one or both of the Sellers have made any indemnity payment pursuant to this
Section 11.1 and such payment fully indemnified the recipient thereof and the
recipient thereafter collects any payments from others in respect of such
Indemnified Amounts then, the recipient shall repay to such Seller(s), ratably
in accordance with the indemnity payment(s) actually made by such Seller(s), an
amount equal to the amount it has collected from others in respect of such
indemnified amounts. Without limiting the foregoing, the Sellers jointly and
severally shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from:
     (i) any representation or warranty made or deemed made by either Seller,
the Servicer (if the applicable Originator or one of its Affiliates is the
Servicer) or any of their respective officers under or in connection with this
Agreement or any other Transaction Document, which shall have been false or
incorrect in any material respect when made or deemed made or delivered;
     (ii) the failure by either Seller or the Servicer (if the applicable
Originator or one of its Affiliates is the Servicer) to comply with any term,
provision or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any Applicable Law, with respect to any
Collateral or the nonconformity of any Collateral with any such Applicable Law;
     (iii) the failure to vest and maintain vested in the Administrative Agent,
as agent for the Secured Parties, a first priority security interest in the
Collateral, together with all Collections, free and clear of any Lien (other
than Permitted Liens) whether existing at the time of the Advance or at any time
thereafter;
     (iv) [Reserved];

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     (v) the failure to file, or any delay in filing, financing statements,
continuation statements or other similar instruments or documents under the UCC
of any applicable jurisdiction or other Applicable Laws with respect to any
Collateral, whether at the time of the Advance or at any subsequent time;
     (vi) any dispute, claim, offset or defense (other than the discharge in
bankruptcy of the Obligor) of the Obligor to the payment with respect to any
Collateral (including, without limitation, a defense based on the Collateral not
being a legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim resulting from the sale of
the merchandise or services related to such Collateral or the furnishing or
failure to furnish such merchandise or services;
     (vii) any failure of either Seller or the Servicer (if the applicable
Originator or one of its Affiliates is the Servicer) to perform its duties or
obligations in accordance with the provisions of this Agreement or any of the
other Transaction Documents to which it is a party or any failure by any of the
Originators, either Seller or any Affiliate thereof to perform its respective
duties under any Collateral;
     (viii) the failure of any Lock-Box Bank to remit any amounts held in a
Lock-Box Account pursuant to the instructions of the Servicer or the
Administrative Agent (to the extent such Person is entitled to give such
instructions in accordance with the terms hereof and of any applicable Lock-Box
Agreement) whether by reason of the exercise of set-off rights or otherwise;
     (ix) any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a result
of the failure of either Seller or any of the Originators to qualify to do
business or file any notice or business activity report or any similar report;
     (x) any action taken by either Seller or any of the Originators (in its
capacity as the Servicer) in the enforcement or collection of any Collateral;
     (xi) any products liability claim or personal injury or property damage
suit or other similar or related claim or action of whatever sort arising out of
or in connection with the Related Property or services that are the subject of
any Collateral;
     (xii) any claim, suit or action of any kind arising out of or in connection
with Environmental Laws (including, but not limited to, with respect to any REO
Asset) including any vicarious liability;
     (xiii) the failure by either Seller to pay when due any Taxes for which
such Seller is liable, including without limitation, sales, excise or personal
property taxes payable in connection with the Collateral;
     (xiv) any repayment by the Administrative Agent, the Purchaser Agents or a
Secured Party of any amount previously distributed in reduction of Advances
Outstanding or payment of Interest or any other amount due hereunder, which
amount the

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Administrative Agent, the Purchaser Agents or a Secured Party believes in good
faith is required to be repaid;
     (xv) the commingling of Collections on the Collateral at any time with
other funds;
     (xvi) any investigation, litigation or proceeding related to this Agreement
or the use of proceeds of the Advance or the security interest in the
Collateral;
     (xvii) any failure by either Seller to give reasonably equivalent value to
the applicable Originator in consideration for the transfer by the applicable
Originator to such Seller of any item of Collateral or any attempt by any Person
to void or otherwise avoid any such transfer under any statutory provision or
common law or equitable action, including, without limitation, any provision of
the Bankruptcy Code;
     (xviii) the use of the proceeds of the Advance in a manner other than as
provided in this Agreement and the Sale Agreements; or
     (xix) the failure of either Seller, any of the Originators or any of their
respective agents or representatives to remit to the Servicer or the
Administrative Agent or the Purchaser Agents, Collections on the Collateral
remitted to such Seller, such Originator, the Servicer or any such agent or
representative.
     (b) Any amounts subject to the indemnification provisions of this
Section 11.1 shall be paid by the Sellers to the Indemnified Party within five
Business Days following such Person’s demand therefor.
     (c) If for any reason the indemnification provided above in this
Section 11.1 is unavailable to the Indemnified Party or is insufficient to hold
an Indemnified Party harmless, then the Sellers or the Servicer, as the case may
be, shall contribute to the amount paid or payable by such Indemnified Party as
a result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and the Sellers or the Servicer, as the case
may be, on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.
     (d) The obligations of the Sellers under this Section 11.1 shall survive
the resignation or removal of the Administrative Agent, the Purchaser Agents,
the Servicer, the Backup Servicer or the Collateral Custodian and the
termination of this Agreement.
     Section 11.2 Indemnities by the Servicer.
     (a) Without limiting any other rights that any such Person may have
hereunder or under Applicable Law, the Servicer hereby agrees to indemnify each
Indemnified Party, forthwith on demand, from and against any and all Indemnified
Amounts awarded against or incurred by any such Indemnified Party by reason of
any acts, omissions or alleged acts or omissions of (1) the Servicer, including,
but not limited to (i) any representation or warranty made by the Servicer under
or in connection with any Transaction Document, any Monthly

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Report, Servicer’s Certificate or any other information or report delivered by
or on behalf of the Servicer pursuant hereto, which shall have been false,
incorrect or misleading in any material respect when made or deemed made,
(ii) the failure by the Servicer to comply with any Applicable Law, (iii) the
failure of the Servicer to comply with its duties or obligations in accordance
with the Agreement, or (iv) any litigation, proceedings or investigation against
the Servicer and (2) any Affiliate of CapitalSource Inc., including but not
limited to in connection with (i) its actions as collateral agent of the
security and payment agent for holders of Agented Loans and (ii) its origination
of Loans and the subsequent transfer of such Loans to CapitalSource Finance. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
     (b) Any amounts subject to the indemnification provisions of this
Section 11.2 shall be paid by the Servicer to the Indemnified Party within five
Business Days following such Person’s demand therefor.
     (c) The Servicer shall have no liability for making indemnification
hereunder to the extent any such indemnification constitutes recourse for
uncollectible or uncollected Loans.
     (d) The obligations of the Servicer under this Section 11.2 shall survive
the resignation or removal of the Administrative Agent, the Purchaser Agents,
the Backup Servicer or the Collateral Custodian and the termination of this
Agreement.
     (e) Any indemnification pursuant to this Section 11.2 shall not be payable
from the Collateral.
     Section 11.3 After-Tax Basis.
     Indemnification under Section 11.1 and Section 11.2 shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the receipt of the indemnity provided
hereunder, including the effect of such tax or refund on the amount of tax
measured by net income or profits that is or was payable by the Indemnified
Party.
ARTICLE XII
THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS
     Section 12.1 The Administrative Agent.
     (a) Each Purchaser Agent and each Secured Party hereby appoints and
authorizes the Administrative Agent as its agent and bailee for purposes of
perfection pursuant to the applicable UCC or other Applicable Law and hereby
further authorizes the Administrative Agent to appoint additional agents and
bailees to act on its behalf and for the benefit of each of the Purchaser Agents
and each Secured Party. Each of the Purchaser Agents and each Secured Party
further authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other
Transaction Documents as are delegated to the Administrative Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. In furtherance, and without limiting the generality, of the

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foregoing, each Secured Party hereby appoints the Administrative Agent as its
agent to execute and deliver all further instruments and documents, and take all
further action that the Administrative Agent may deem necessary or appropriate
or that a Secured Party may reasonably request in order to perfect, protect or
more fully evidence the security interests granted by the Sellers hereunder, or
to enable any of them to exercise or enforce any of their respective rights
hereunder, including, without limitation, the execution by the Administrative
Agent as secured party/assignee of such financing or continuation statements, or
amendments thereto or assignments thereof, relative to all or any of the
Collateral now existing or hereafter arising, and such other instruments or
notices, as may be necessary or appropriate for the purposes stated hereinabove.
The Purchaser Agents and the Purchasers may direct the Administrative Agent to
take any such incidental action hereunder. With respect to other actions which
are incidental to the actions specifically delegated to the Administrative Agent
hereunder, the Administrative Agent shall not be required to take any such
incidental action hereunder, but shall be required to act or to refrain from
acting (and shall be fully protected in acting or refraining from acting) upon
the direction of the Purchaser Agents and the Purchasers; provided, however,
that the Administrative Agent shall not be required to take any action hereunder
if the taking of such action, in the reasonable determination of the
Administrative Agent, shall be in violation of any Applicable Law or contrary to
any provision of this Agreement or shall expose the Administrative Agent to
liability hereunder or otherwise. In the event the Administrative Agent requests
the consent of a Purchaser Agent or a Purchaser pursuant to the foregoing
provisions and the Administrative Agent does not receive a consent (either
positive or negative) from such Person within ten Business Days of such Person’s
receipt of such request, then such Purchaser Agent or Purchaser shall be deemed
to have declined to consent to the relevant amendments.
     (b) The Administrative Agent shall exercise such rights and powers vested
in it by this Agreement and the other Transaction Documents, 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 such person’s own affairs.
     (c) Administrative Agent’s Reliance, Etc. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them as Administrative Agent under
or in connection with this Agreement or any of the other Transaction Documents,
except for its or their own gross negligence or willful misconduct. Without
limiting the foregoing, the Administrative Agent: (i) may consult with legal
counsel (including counsel for the Sellers or the Originators), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (ii) makes no warranty or
representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement; (iii) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or any of the other
Transaction Documents on the part of the Sellers, the Originators, or the
Servicer or to inspect the property (including the books and records) of the
Sellers, the Originators, or the Servicer; (iv) shall not be responsible for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any of the other Transaction Documents or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this

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Agreement or any of the other Transaction Documents by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by telex) believed by it to be genuine and signed or sent
by the proper party or parties.
     (d) Credit Decision with Respect to the Administrative Agent. Each
Purchaser Agent and Secured Party acknowledges that it has, independently and
without reliance upon the Administrative Agent, or any of the Administrative
Agent’s Affiliates, and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and the other Transaction Documents to which it is a party. Each
Purchaser Agent and Secured Party also acknowledges that it will, independently
and without reliance upon the Administrative Agent, or any of the Administrative
Agent’s Affiliates, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under this Agreement and the other Transaction Documents to which
it is a party.
     (e) Indemnification of the Administrative Agent. Each Purchaser Agent and
Purchaser agrees to indemnify the Administrative Agent (to the extent not
reimbursed by the Sellers or the Servicer), ratably in accordance with its
Pro-Rata Share from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any of the other Transaction Documents, or any action taken
or omitted by the Administrative Agent hereunder or thereunder; provided, that
none of the Purchaser Agents or Purchasers shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative
Agent’s gross negligence or willful misconduct. Without limitation of the
foregoing, each Purchaser Agent and Purchaser agrees to reimburse the
Administrative Agent, ratably in accordance with its Pro-Rata Share promptly
upon demand for any out-of-pocket expenses (including counsel fees) incurred by
the Administrative Agent in connection with the administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and the other Transaction Documents, to the extent that such
expenses are incurred in the interests of or otherwise in respect of the
Purchaser Agents, or the Purchasers hereunder and/or thereunder and to the
extent that the Administrative Agent is not reimbursed for such expenses by the
Sellers or the Servicer.
     (f) Successor Administrative Agent. The Administrative Agent may resign at
any time, effective upon the appointment and acceptance of a successor
Administrative Agent as provided below, by giving at least five days’ written
notice thereof to each Purchaser Agent and the Sellers and may be removed at any
time with cause by the Purchaser Agents acting jointly. Upon any such
resignation or removal, the Purchaser Agents acting jointly shall appoint a
successor Administrative Agent. Each of the Purchaser Agents agrees that it
shall not unreasonably withhold or delay its approval of the appointment of a
successor Administrative Agent. If no such successor Administrative Agent shall
have been so appointed, and shall have accepted such appointment, within thirty
(30) days after the retiring Administrative Agent’s giving of notice of
resignation or the removal of the retiring Administrative Agent, then the
retiring Administrative Agent may, on behalf of the Secured Parties, appoint a
successor

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Administrative Agent which successor Administrative Agent shall be either (i) a
commercial bank organized under the laws of the United States or of any state
thereof and have a combined capital and surplus of at least $50,000,000 or
(ii) an Affiliate of such a bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of this
Article XII shall continue to inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
     (g) Payments by the Administrative Agent. Unless specifically allocated to
a specific Purchaser Agent pursuant to the terms of this Agreement, all amounts
received by the Administrative Agent on behalf of the Purchaser Agents shall be
paid by the Administrative Agent to the Purchaser Agents in accordance with
their respective Pro-Rata Shares in the applicable Advances Outstanding on the
Business Day received by the Administrative Agent, unless such amounts are
received after 12:00 noon on such Business Day, in which case the Administrative
Agent shall use its reasonable efforts to pay such amounts to each Purchaser
Agent on such Business Day, but, in any event, shall pay such amounts to such
Purchaser Agent not later than the following Business Day.
     Section 12.2 The Purchaser Agents.
     (a) Authorization and Action. Each Purchaser hereby designates and appoints
its applicable Purchaser Agent to act as its agent hereunder and under each
other Transaction Document, and authorizes such Purchaser Agent to take such
actions as agent on its behalf and to exercise such powers as are delegated to
such Purchaser Agent by the terms of this Agreement together and the other
Transaction Documents with such powers as are reasonably incidental thereto.
Such Purchaser Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with its related
Purchaser, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities on the part of such Purchaser Agent shall be read
into this Agreement or any other Transaction Document or otherwise exist for
such Purchaser Agent. In performing its functions and duties hereunder and under
the other Transaction Documents, such Purchaser Agent shall act solely as agent
for its related Purchaser and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for the
Sellers or any of their respective successors or assigns. Such Purchaser Agent
shall not be required to take any action that exposes such Purchaser Agent to
personal liability or that is contrary to this Agreement, or any other
Transaction Document or Applicable Law. The appointment and authority of such
Purchaser Agent hereunder shall terminate at the indefeasible payment in full of
the Aggregate Unpaids. Each Purchaser Agent, respectively, hereby authorizes the
Administrative Agent to execute each of the UCC Financing Statements on behalf
of such Purchaser (the terms of which shall be binding on such Purchaser).
     (b) Delegation of Duties. Each applicable Purchaser Agent may execute any
of its duties under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. Such Purchaser Agent shall

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not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
     (c) Exculpatory Provisions. Neither any applicable Purchaser Agent nor any
of its directors, officers, agents or employees shall be (i) liable for any
action lawfully taken or omitted to be taken by it or them under or in
connection with this Agreement or any other Transaction Document (except for
its, their or such Person’s own gross negligence or willful misconduct or, in
the case of such Purchaser Agent, the breach of its obligations expressly set
forth in this Agreement or any other Transaction Document), or (ii) responsible
in any manner to its related Purchaser for any recitals, statements,
representations or warranties made by the Sellers contained in this Agreement or
any other Transaction Document, for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any other
Transaction Document or any other document furnished in connection herewith, for
any failure of the Sellers to perform its obligations hereunder, or for the
satisfaction of any condition specified in Article III. Such Purchaser Agent
shall not be under any obligation to its related Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, this Agreement or any other
Transaction Document, or to inspect the properties, books or records of either
Seller. Such Purchaser Agent shall not be deemed to have knowledge of any
Unmatured Termination Event, Termination Event or Servicer Default unless such
Purchaser Agent has received notice from the Sellers or a Secured Party.
     (d) Reliance. Such Purchaser Agent shall in all cases be entitled to rely,
and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to either Seller), independent
accountants and other experts selected by such Purchaser Agent. Such Purchaser
Agent shall in all cases be fully justified in failing or refusing to take any
action under this Agreement, any other Transaction Document or any other
document furnished in connection herewith unless it shall first receive such
advice or concurrence of its related Purchaser, as it deems appropriate, or it
shall first be indemnified to its satisfaction by its related Purchaser;
provided that unless and until such Purchaser Agent shall have received such
advice, such Purchaser Agent may take or refrain from taking any action as such
Purchaser Agent shall deem advisable and in the best interests of its related
Purchaser. Such Purchaser Agent shall in all cases be fully protected in acting,
or in refraining from acting, in accordance with a request of its related
Purchaser, and such request and any action taken or failure to act pursuant
thereto shall be binding upon its related Purchaser.
     (e) Non-Reliance on the Purchaser Agent and Other Purchasers. Each
applicable Purchaser, respectively, expressly acknowledges that neither its
related Purchaser Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or warranties to it
and that no act by such Purchaser Agent hereafter taken, including, without
limitation, any review of the affairs of the Sellers, shall be deemed to
constitute any representation or warranty by the such Purchaser Agent. Each
applicable Purchaser, respectively, represents and warrants to its related
Purchaser Agent that it has and will, independently and without reliance upon
such Purchaser Agent, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other conditions

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and creditworthiness of the Sellers and made its own decision to enter into this
Agreement, the other Transaction Documents.
     (f) Purchaser Agents in their Respective Capacities. Each applicable
Purchaser Agent, respectively, and any of its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with either
Seller or any Affiliate of either Seller as though such Purchaser Agent were not
a Purchaser Agent hereunder. With respect to the Advance made pursuant to this
Agreement, such Purchaser Agent and each of its Affiliates shall have the same
rights and powers under this Agreement as any Purchaser and may exercise the
same as though it were not a Purchaser Agent and the terms “Purchaser” and
“Purchasers” shall include such Purchaser Agent in its individual capacity.
     (g) Successor Purchaser Agent. Each applicable Purchaser Agent,
respectively, may, upon five days’ notice to the Sellers and its related
Purchaser, and such Purchaser Agent will, upon the direction of its related
Purchaser, resign as Purchaser Agent for such Purchaser. If such Purchaser Agent
shall resign, then its related Purchaser, during such five day period, shall
appoint a successor agent. If for any reason no successor Agent is appointed by
such Purchaser during such five day period, then effective upon the expiration
of such five day period, the Sellers shall make all payments in respect of the
Aggregate Unpaids directly to such Purchaser and for all purposes shall deal
directly with such Purchaser. After any retiring Purchaser Agent’s resignation
hereunder as Purchaser Agent, the provisions of Articles XI and XII shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
a Purchaser Agent under this Agreement.
     Section 12.3 Additional Agent.
     (a) Authorization and Action. Each Additional Purchaser hereby designates
and appoints the relevant Additional Agent designated in the related Additional
Purchaser Agreement to act as its agent hereunder and under each other
Transaction Document, and authorizes such Additional Agent to take such actions
as agent on its behalf and to exercise such powers as are delegated to the
Additional Agent by the terms of this Agreement and the other Transaction
Documents together with such powers as are reasonably incidental thereto. No
Additional Agent shall have any duties or responsibilities, except those
expressly set forth herein or in any other Transaction Document, or any
fiduciary relationship with such related Additional Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of such Additional Agent shall be read into this Agreement or any other
Transaction Document or otherwise exist for such Additional Agent. In performing
its functions and duties hereunder and under the other Transaction Documents,
each Additional Agent shall act solely as agent for the related Additional
Purchaser and does not assume nor shall be deemed to have assumed any obligation
or relationship of trust or agency with or for the Sellers or the Servicer or
any of the Sellers’ or the Servicer’s successors or assigns. No Additional Agent
shall be required to take any action that exposes the Additional Agent to
personal liability or that is contrary to this Agreement, any other Transaction
Document or Applicable Law. The appointment and authority of each Additional
Agent hereunder shall terminate upon the indefeasible payment in full of all
Aggregate Unpaids. Each Additional Agent hereby authorizes the Administrative
Agent to execute each of the UCC financing statements on behalf of such
Additional Agent (the terms of which shall be binding on such Additional Agent).

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     (b) Delegation of Duties. Any of the Additional Agents may execute any of
its duties under this Agreement and each other Transaction Document by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. No Additional Agent shall be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
     (c) Exculpatory Provisions. Neither any Additional Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action
lawfully taken or omitted to be taken by it or them under or in connection with
this Agreement or any other Transaction Document (except for its, their or such
Person’s own gross negligence or willful misconduct), or (ii) responsible in any
manner to any Additional Purchaser for any recitals, statements, representations
or warranties made by the Sellers or the Servicer contained in Article IV, any
other Transaction Document or any certificate, report, statement or other
document referred to or provided for in, or received under or in connection
with, this Agreement or any other Transaction Document, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any other Transaction Document or any other document furnished in
connection herewith or therewith, or for any failure of the Sellers or the
Servicer to perform its obligations hereunder or thereunder, or for the
satisfaction of any condition specified in this Agreement, or for the
perfection, priority, condition, value or sufficiency of any collateral pledged
in connection herewith. No Additional Agent shall be under any obligation to any
Additional Purchaser to ascertain or to inquire as to the observance or
performance of any of the agreements or covenants contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of either Seller or the Servicer. No Additional
Agent shall be deemed to have knowledge of any Termination Event or Unmatured
Termination Event unless such Additional Agent has received notice from the
Sellers or the related Additional Purchaser.
     (d) Reliance by Additional Agent. Each Additional Agent shall in all cases
be entitled to rely, and shall be fully protected in relying, upon any document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to either
Seller), independent accountants and other experts selected by such Additional
Agent. Each Additional Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other Transaction
Document unless it shall first receive such advice or concurrence of the related
Additional Purchaser as it deems appropriate and it shall first be indemnified
to its satisfaction by such Additional Purchaser; provided, that unless and
until such Additional Agent shall have received such advice, the Additional
Agent may take or refrain from taking any action, as the Additional Agent shall
deem advisable and in the best interests of the related Additional Purchaser.
Each Additional Agent shall in all cases be fully protected in acting, or in
refraining from acting, in accordance with a request of the related Additional
Purchaser, and such request and any action taken or failure to act pursuant
thereto shall be binding upon such Additional Purchaser.
     (e) Non-Reliance on Additional Agent. Each Additional Purchaser expressly
acknowledges that neither any Additional Agent, nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by such Additional Agent
hereafter taken, including, without limitation, any review of the affairs of the
Sellers or the Servicer, shall be deemed to constitute any representation or
warranty

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by such Additional Agent. Each Additional Purchaser represents and warrants to
the related Additional Agent that it has and will, independently and without
reliance upon such Additional Agent, such Additional Purchaser and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, prospects,
financial and other conditions and creditworthiness of the Sellers and made its
own decision to enter into this Agreement, the other Transaction Documents and
all other documents related hereto or thereto.
     (f) Additional Agent in its Individual Capacity. Each Additional Agent and
its Affiliates may make loans to, accept deposits from and generally engage in
any kind of business with either Seller or any Affiliate of either Seller as
though such Additional Agent were not an Additional Agent hereunder. With
respect to Advance pursuant to this Agreement, each Additional Agent shall have
the same rights and powers under this Agreement in its individual capacity as
any Purchaser and may exercise the same as though it were not an Additional
Agent, and the terms “Purchaser,” and “Purchasers,” shall include the Additional
Agent in its individual capacity.
     (g) Successor Additional Agent. Each Additional Agent may, upon five days’
notice to the Sellers, and the related Additional Purchaser, and such Additional
Agent will, upon the direction of such Additional Purchaser (other than such
Additional Agent, in its individual capacity) resign as Additional Agent. If any
Additional Agent shall resign, then the related Additional Purchaser during such
five day period shall appoint a successor agent. If for any reason no successor
Additional Agent is appointed by the related Additional Purchaser during such
five day period, then effective upon the termination of such five day period,
and the Sellers shall make all payments in respect of the Aggregate Unpaids
directly to such Additional Purchaser, and for all purposes shall deal directly
with such Additional Purchaser. After any retiring Additional Agent’s
resignation hereunder as an Additional Agent, the provisions of Articles XI and
XII shall inure to its benefit with respect to any actions taken or omitted to
be taken by it while it was an Additional Agent under this Agreement.
ARTICLE XIII
MISCELLANEOUS
     Section 13.1 Amendments and Waivers.
     Except as provided in this Section 13.1, no amendment, waiver or other
modification of any provision of this Agreement (other than Appendix B) shall be
effective without the written agreement of the Sellers, the Originators, the
Servicer, the Backup Servicer, the Collateral Custodian, the Administrative
Agent and the Secured Parties.
     Section 13.2 Notices, Etc.
     All notices, reports and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or at such other address as shall be

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designated by such party in a written notice to the other parties hereto
(provided, however, for avoidance of doubt, Lord Securities Corp. shall not
receive notices, reports and other communications provided pursuant to
Article II, and Section 6.10, Section 6.11 and Section 6.12 hereof). All such
notices and communications shall be effective, upon receipt, or in the case of
(a) notice by mail, five days after being deposited in the United States mail,
first class postage prepaid, (b) notice by telex, when telexed against receipt
of answer back, or (c) notice by facsimile copy, when verbal communication of
receipt is obtained.
     Section 13.3 Ratable Payments.
     If any Secured Party, whether by setoff or otherwise, has payment made to
it with respect to any portion of the Aggregate Unpaids owing to such Secured
Party (other than payments received pursuant to Section 11.1) in a greater
proportion than that received by any other Secured Party, such Secured Party
agrees, promptly upon demand, to purchase for cash without recourse or warranty
a portion of the Aggregate Unpaids held by the other Secured Parties so that
after such purchase each Secured Party will hold its ratable proportion of the
Aggregate Unpaids; provided, however, that if all or any portion of such excess
amount is thereafter recovered from such Secured Party, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
     Section 13.4 No Waiver; Remedies.
     No failure on the part of the Administrative Agent, the Purchaser Agents,
the Collateral Custodian, the Backup Servicer or a Secured Party to exercise,
and no delay in exercising, any right or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The rights and remedies herein provided are cumulative and not
exclusive of any rights and remedies provided by law.
     Section 13.5 Binding Effect; Benefit of Agreement.
     This Agreement shall be binding upon and inure to the benefit of the
Sellers, the Originators, the Servicer, the Administrative Agent, the Purchaser
Agents, the Backup Servicer, the Collateral Custodian, the Secured Parties and
their respective successors and permitted assigns. Accordingly to the extent
that Wachovia Bank, National Association as the “Security Trustee” in accordance
with Clause 23 of the CS Europe Financing is holding security granted by either
Guarantor as security for its obligations under the Guaranty, the Secured
Parties shall be bound by the terms of Clause 23 of the CS Europe Financing in
their relationship with the Security Trustee.
     Section 13.6 Term of this Agreement.
     This Agreement, including, without limitation, the Sellers’ representations
and covenants set forth in Articles IV and V, and the Servicer’s
representations, covenants and duties set forth in Articles VI, VII and VIII,
create and constitute the continuing obligation of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Collection Date; provided, however, that the rights and remedies with respect to
any breach of any representation and warranty made or deemed made by either
Seller pursuant to Articles III and IV the

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indemnification and payment provisions of Article XI and the provisions of
Section 13.9, Section 13.10 and Section 13.11, shall be continuing and shall
survive any termination of this Agreement.
     Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to
Venue.
     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY AGREES TO THE
NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK. EACH OF THE PARTIES HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO
THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.
     Section 13.8 Waiver of Jury Trial.
     TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO
HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE PARTIES HERETO
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE
RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
     Section 13.9 Costs, Expenses and Taxes.
     (a) In addition to the rights of indemnification granted to the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian, the Secured Parties and its or their Affiliates and officers,
directors, employees and agents thereof under Article XI hereof, the Sellers,
jointly and severally, and the Originators, jointly and severally, each agree to
pay on demand all reasonable costs and expenses of the Administrative Agent, the
Purchaser Agents, the Backup Servicer, the Collateral Custodian and the Secured
Parties incurred in connection with the preparation, execution, delivery,
administration (including periodic auditing, which shall be limited to two
audits per year prior to the occurrence of a Termination Event), renewal,
amendment or modification of, or any waiver or consent issued in connection
with, this Agreement and the other documents to be delivered hereunder or in
connection herewith, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent, the Purchaser
Agents, the Backup Servicer, the Collateral Custodian and the Secured Parties
with respect thereto and with respect to advising the Administrative Agent, the
Purchaser Agents, the Backup Servicer, the Collateral Custodian and the Secured
Parties as to their respective rights and remedies under this Agreement and the
other documents to be delivered hereunder or in connection herewith, and all
costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Administrative Agent, the Purchaser

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Agents, the Backup Servicer, the Collateral Custodian or the Secured Parties in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.
     (b) The Sellers and the Originators shall pay on demand any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
the other documents to be delivered hereunder or any agreement or other document
providing liquidity support, credit enhancement or other similar support to the
Purchasers in connection with this Agreement or the funding or maintenance of
the Advance hereunder.
     (c) The Sellers and the Originators shall pay on demand all other
reasonable costs, expenses and Taxes (excluding income taxes) incurred by the
Administrative Agent, the Purchaser Agents, the Secured Parties (“Other Costs”),
including, without limitation, all costs and expenses incurred by the
Administrative Agent and the Purchaser Agents in connection with periodic audits
of the Sellers’ or the Servicer’s books and records.
     Section 13.10 No Proceedings.
     (a) Each of the parties hereto (other than a particular Conduit Purchaser)
hereby agrees that it will not institute against, or join any other Person in
instituting against, any Conduit Purchaser, the Administrative Agent, the
related Purchaser Agent or any Liquidity Banks any Insolvency Proceeding so long
as any commercial paper issued by the applicable Conduit Purchaser shall be
outstanding and there shall not have elapsed one year and one day since the last
day on which any such commercial paper shall have been outstanding.
     (b) Each of the parties hereto (other than a particular Additional
Purchaser) hereby agrees that it will not institute against, or join any other
Person in instituting against such Additional Purchaser, the related Additional
Agent or any of its Liquidity Banks any Insolvency Proceeding so long as any
commercial paper issued by such Additional Purchaser shall be outstanding and
there shall not have elapsed one year and one day since the last day on which
any such commercial paper shall have been outstanding.
     (c) Each of the parties hereto (other than the Administrative Agent without
the consent of the Purchaser Agents) hereby agrees that it will not institute
against, or join any other Person in instituting against, either Seller any
Insolvency Proceeding so long as there shall not have elapsed one year and one
day since the Collection Date; provided, that nothing in this Section 13.10
shall limit any party’s right to file any claim in or otherwise take any action
with respect to any insolvency proceeding that was instituted by any other
Person.
     Section 13.11 Recourse Against Certain Parties.
     (a) No recourse under or with respect to any obligation, covenant or
agreement (including, without limitation, the payment of any fees or any other
obligations) of the Administrative Agent, the Purchaser Agents, or any Secured
Party as contained in this Agreement or any other agreement, instrument or
document entered into by it pursuant hereto or in connection herewith shall be
had against any administrator of the Administrative Agent, the Purchaser Agents,
or any Secured Party, or any incorporator, affiliate, stockholder, officer,

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employee or director of the Administrative Agent, the Purchaser Agents, or any
Secured Party, or of any such administrator, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that the agreements of the
Administrative Agent, the Purchaser Agents, or any Secured Party contained in
this Agreement and all of the other agreements, instruments and documents
entered into by it pursuant hereto or in connection herewith are, in each case,
solely the corporate obligations of the Administrative Agent, the Purchaser
Agents, or any Secured Party, and that no personal liability whatsoever shall
attach to or be incurred by any administrator of the Administrative Agent, the
Purchaser Agents, or any Secured Party or any incorporator, stockholder,
affiliate, officer, employee or director of the Administrative Agent, the
Purchaser Agents, or any Secured Party or of any such administrator, as such, or
any other of them, under or by reason of any of the obligations, covenants or
agreements of the Administrative Agent, the Purchaser Agents, or any Secured
Party contained in this Agreement or in any other such instruments, documents or
agreements, or that are implied therefrom, and that any and all personal
liability of every such administrator of the Administrative Agent, the Purchaser
Agents, or any Secured Party and each incorporator, stockholder, affiliate,
officer, employee or director of the Administrative Agent, the Purchaser Agents,
or any Secured Party or of any such administrator, or any of them, for breaches
by the Administrative Agent, the Purchaser Agents, or any Secured Party of any
such obligations, covenants or agreements, which liability may arise either at
common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of
this Agreement. The provisions of this Section 13.11 shall survive the
termination of this Agreement.
     (b) Notwithstanding anything in this Agreement to the contrary, no Conduit
Purchaser shall have any obligation to pay any amount required to be paid by it
hereunder in excess of any amount available to such Purchaser or such Additional
Purchaser, as applicable, after paying or making provision for the payment of
its Commercial Paper Notes. All payment obligations of each Conduit Purchaser
hereunder are contingent on the availability of funds in excess of the amounts
necessary to pay its Commercial Paper Notes; and each of the other parties
hereto agrees that it will not have a claim under Section 101(5) of the
Bankruptcy Code if and to the extent that any such payment obligation owed to it
by a Conduit Purchaser exceeds the amount available to such Conduit Purchaser to
pay such amount after paying or making provision for the payment of its
Commercial Paper Notes.
     (c) Notwithstanding any contrary provision set forth herein, no claim may
be made by either Seller, any of the Originators or the Servicer or any other
Person against the Administrative Agent and the Secured Parties or their
respective Affiliates, directors, officers, employees, attorneys or agents for
any special, indirect, consequential or punitive damages in respect to any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and each of the Sellers, each of the
Originators and the Servicer each hereby waives, releases, and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected.

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     (d) No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Administrative Agent and the Secured Parties under
or as a result of this Agreement and the transactions contemplated hereby
     Section 13.12 Protection of Right, Title and Interest in the Collateral;
Further Action Evidencing the Advance.
     (a) The Servicer shall cause this Agreement, all amendments hereto and/or
all financing statements and continuation statements and any other necessary
documents covering the right, title and interest of the Administrative Agent as
agent for the Secured Parties and of the Secured Parties to the Collateral to be
promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Administrative Agent as agent for the Secured Parties hereunder to all property
comprising the Collateral. The Servicer shall deliver to the Administrative
Agent file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Sellers shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute any
and all documents reasonably required to fulfill the intent of this
Section 13.12(a).
     (b) Each Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the Advance hereunder and the security
interest granted in the Collateral, or to enable the Administrative Agent or the
Secured Parties to exercise and enforce their rights and remedies hereunder or
under any Transaction Document.
     (c) If either Seller or the Servicer fails to perform any of its
obligations hereunder, the Administrative Agent or any Secured Party may (but
shall not be required to) perform, or cause performance of, such obligation; and
the Administrative Agent’s or such Secured Party’s costs and expenses incurred
in connection therewith shall be payable by such Seller as provided in
Article XI. Each Seller irrevocably authorizes the Administrative Agent and
appoints the Administrative Agent as its attorney-in-fact to act on behalf of
such Seller (i) to execute on behalf of such Seller as debtor and to file
financing statements necessary or desirable in the Administrative Agent’s sole
discretion to perfect and to maintain the perfection and priority of the
interest of the Secured Parties in the Collateral and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Collateral as a financing statement in such offices as the
Administrative Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the
Secured Parties in the Collateral. This appointment is coupled with an interest
and is irrevocable.
     (d) Without limiting the generality of the foregoing, each Seller will, not
earlier than six months and not later than three months prior to the fifth
anniversary of the date of filing of the financing statement referred to in
Section 3.1 or any other financing statement filed pursuant to this Agreement,
unless the Collection Date shall have occurred:

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     (i) execute and deliver and file or cause to be filed an appropriate
continuation statement with respect to such financing statement; and
     (ii) deliver or cause to be delivered to the Administrative Agent an
opinion of the counsel for such Seller, in form and substance reasonably
satisfactory to the Administrative Agent, confirming and updating the opinion
delivered pursuant to Section 3.1 with respect to perfection and otherwise to
the effect that the security interest hereunder continues to be an enforceable
and perfected security interest, subject to no other Liens of record except as
provided herein or otherwise permitted hereunder, which opinion may contain
usual and customary assumptions, limitations and exceptions.
     Section 13.13 Confidentiality.
     (a) Each of the Administrative Agent, the Purchaser Agents, the Secured
Parties, the Servicer, the Collateral Custodian, the Backup Servicer and each
Seller shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and all information with respect
to the other parties, including all information regarding the business of the
Sellers and the Servicer hereto and their respective businesses obtained by it
or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein or related to any of the underlying Obligors,
except that each such party and its officers and employees may (i) disclose such
information to its external accountants, attorneys, rating agencies, investors,
potential investors, parties that provide or may in the future provide first
loss or credit enhancement to such Person and the agents of such Persons
(“Excepted Persons”), (ii) disclose the existence of the Agreement, but not the
financial terms thereof, (iii) disclose such information as is required by
Applicable Law and (iv) disclose the Agreement and such information in any suit,
action, proceeding or investigation (whether in law or in equity or pursuant to
arbitration) involving any of the Transaction Documents for the purpose of
defending itself, reducing its liability, or protecting or exercising any of its
claims, rights, remedies, or interests under or in connection with any of the
Transaction Documents. It is understood that the financial terms that may not be
disclosed except in compliance with this Section 13.13(a) include, without
limitation, all fees and other pricing terms, and all Termination Events,
Servicer Defaults, and priority of payment provisions. Each of the
Administrative Agent, the Purchaser Agents, the Secured Parties, the Collateral
Custodian and the Backup Servicer will not use any such information referenced
in this clause (a) regarding the business of either Seller and the Servicer
hereto and their respective businesses related to any of the underlying Obligors
for the purpose of their own (or their Affiliates) business development with
such underlying Obligor without the prior written consent of such Seller and the
Servicer (provided that such consent shall not be unreasonably withheld).
     (b) Anything herein to the contrary notwithstanding, the Sellers and the
Servicer each hereby consents to the disclosure of any nonpublic information
with respect to it (i) to the Administrative Agent, the Purchaser Agents, the
Collateral Custodian, the Backup Servicer or the Secured Parties by each other,
(ii) by the Administrative Agent, the Purchaser Agents, the Collateral
Custodian, the Backup Servicer and the Secured Parties to any prospective or
actual assignee or participant of any of them provided such Person agrees to
hold such information confidential, or (iii) by the Administrative Agent, the
Purchaser Agents, and the Secured Parties to any commercial paper dealer or
provider of a surety, guaranty or credit or liquidity

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enhancement to any Purchaser, as applicable, and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, provided
each such Person is informed of the confidential nature of such information. In
addition, the Secured Parties, the Administrative Agent and the Purchaser
Agents, may disclose any such nonpublic information as required pursuant to any
law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law).
     (c) 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; (ii) disclosure of any and all information (a) if
required to do so by any applicable statute, law, rule or regulation, (b) to any
government agency or regulatory body having or claiming authority to regulate or
oversee any respects of the Administrative Agents’, the Purchaser Agents’, the
Secured Parties’, the Collateral Custodian’s or the Backup Servicer’s business
or that of their affiliates, (c) pursuant to any subpoena, civil investigative
demand or similar demand or request of any court, regulatory authority,
arbitrator or arbitration to which the Administrative Agent, the Purchaser
Agents, the Secured Parties, the Collateral Custodian or the Backup Servicer or
an officer, director, employer, shareholder or affiliate of any of the foregoing
is a party, (d) in any preliminary or final offering circular, registration
statement or contract or other document approved in advance by either Seller,
the Servicer or any of the Originators or (e) to any affiliate, independent or
internal auditor, agent, employee or attorney of the Collateral Custodian or
Backup Servicer having a need to know the same, provided, that the Collateral
Custodian or Backup Servicer advises such recipient of the confidential nature
of the information being disclosed; or (iii) any other disclosure authorized by
either Seller, the Servicer or any of the Originators.
     Section 13.14 Execution in Counterparts; Severability; Integration.
     This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts (including by facsimile), each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. In case any
provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
This Agreement and any agreements or letters (including fee letters) executed in
connection herewith contains the final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all prior oral or written understandings
other than any fee letter delivered by the Originators to the Administrative
Agent, the Purchaser Agents, and the Secured Parties.
     Section 13.15 Waiver of Setoff.
     (a) Each of the parties hereto (other than any one of the Purchasers)
hereby waives any right of setoff it may have or to which it may be entitled
under this Agreement from time to time against such Purchaser or its assets.

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     (b) Each of the parties hereto (other than any one of the Additional
Purchasers) hereby waives any right of setoff it may have or to which it may be
entitled under this Agreement from time to time against such Additional
Purchaser or its assets.
     Section 13.16 Assignments.
     Each Purchaser may at any time assign, or grant a security interest or sell
a participation interest in, the Advance (or portion thereof) to any Person;
provided, that in the case of an assignment of a Variable Funding Note or
Additional Purchaser Variable Funding Note, the assignee (other than any
assignee that is a Liquidity Bank) shall execute and deliver to the Servicer and
the Administrative Agent a Transferee Letter substantially in the form of
Exhibit K hereto (the “Transferee Letter”). The parties to any such assignment,
grant or sale of participation interest shall execute and deliver to the
Purchaser Agent or the related Additional Agent, as applicable, for its
acceptance and recording in its books and records, such agreement or document as
may be satisfactory to such parties and the Purchaser Agent or such Additional
Agent, as applicable. Neither Seller may assign or delegate, or grant any
interest in, or permit any Lien to exist upon, any of such Seller’s rights,
obligations or duties under this Agreement without the prior written consent of
the Administrative Agent.
     Section 13.17 Heading and Exhibits.
     The headings herein are for purposes of references only and shall not
otherwise affect the meaning or interpretation of any provision hereof. The
schedules and exhibits attached hereto and referred to herein shall constitute a
part of this Agreement and are incorporated into this Agreement for all
purposes.
     Section 13.18 Loans Subject to Retained Interest Provisions.
     (a) With respect to any Loan included in the Collateral subject to the
Retained Interest provisions of this Agreement, the applicable Seller will own
only the principal portion of such Loans outstanding as of the Closing Date.
Principal Collections received by the applicable Seller or the Servicer on any
Revolving Loans will be allocated between the portion owned by the applicable
Seller and the portion not owned by such Seller (if any) on a pro rata basis
according to the outstanding principal amount of such portion; provided,
however, that upon the earlier to occur of any Termination Event or the
Termination Date, Principal Collections received by the applicable Seller or the
Servicer on any Revolving Loans will be allocated first to the portion of such
Revolving Loan owned by the applicable Seller, until the principal amount of
such portion is reduced to zero, and then to the portion not owned by such
Seller except in the case where any portion of such Revolving Loan not owned by
such Seller is required, pursuant to any financing document, to be paid on a pro
rata basis under such financing document, in which case such portion of the
Revolving Loan will have Principal Collections allocated to it on a pro rata
basis according to the outstanding principal amount of such portion.
     (b) With respect to any Term Loans included in the Collateral subject to
the Retained Interest provisions of this Agreement, Principal Collections and
Interest Collections received by the Servicer will be allocated between the
portion owned by the applicable Seller and the portion

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not owned by such Seller (if any) on a pro rata basis according to the
outstanding principal amount of such portion.
     Section 13.19 Tax Treatment of the Advance.
     It is the intention of the Sellers and the Purchasers that, for U.S.
federal, state and local income and franchise tax purposes only, the Advance
made hereunder will be treated as indebtedness secured by the Collateral. The
Sellers, by entering into this Agreement, and the Purchasers, by making the
Advance described herein, agree to treat the Advance for U.S. federal, state and
local income and franchise tax purposes as indebtedness. The provisions of this
Agreement and all related Transaction Documents shall be construed to further
these intentions of the parties.
ARTICLE XIV
GUARANTY
     Section 14.1 The Guaranty.
     (a) In order to induce the Administrative Agent, the Purchasers and the
Purchaser Agents to enter into this Agreement and in recognition of the direct
benefits to be received by the Guarantors from the Sellers Guaranty, each of the
Guarantors hereby agrees with the Administrative Agent, on behalf of the Secured
Parties as follows: the Guarantor hereby unconditionally and irrevocably jointly
and severally guarantees as primary obligor and not merely as surety the full
and prompt payment when due, whether upon maturity, by acceleration or
otherwise, of any and all Aggregate Unpaids, subject to Section 14.9 and
Section 14.10 (the “Guaranteed Obligations”). If any or all of such indebtedness
becomes due and payable hereunder, each Guarantor unconditionally promises to
deposit (or cause to be deposited) on demand into the Collections Account
sufficient funds to pay such Guaranteed Obligations together with any and all
reasonable expenses which may be incurred by the Administrative Agent or any
other Secured Party in collecting any of the Guaranteed Obligations, subject to
Section 14.9 and
Section 14.10. The Guaranty set forth in this Article XIV is a guaranty of
timely payment and not of collection. The word “indebtedness” is used in this
Article XIV in its most comprehensive sense and includes any and all advances,
debts, obligations and liabilities of the Sellers, including specifically all
Guaranteed Obligations, arising in connection with this Agreement or any other
Transaction Document, in each case, heretofore, now, or hereafter made, incurred
or created, whether voluntarily or involuntarily, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether or not such
indebtedness is from time to time reduced, or extinguished and thereafter
increased or incurred, whether the Sellers may be liable individually or jointly
with others, whether or not recovery upon such indebtedness may be or hereafter
become barred by any statute of limitations, and whether or not such
indebtedness may be or hereafter become otherwise unenforceable; provided,
however, that the word “indebtedness” as used in this Article XIV shall not
include any amounts owed under clause (i) of the definition of Aggregate
Unpaids.
     (b) Notwithstanding any provision to the contrary contained herein or in
any other of the Transaction Documents, to the extent the obligations of a
Guarantor shall be adjudicated

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to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of each such Guarantor hereunder
shall be limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the Bankruptcy
Code).
     Section 14.2 Bankruptcy.
     Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all Guaranteed
Obligations of the Sellers to any of the Secured Parties whether or not due or
payable by the Sellers upon the occurrence of any Insolvency Event relating to
the Sellers, and unconditionally promises to pay such Guaranteed Obligations,
subject to Section 14.9 and Section 14.10, to the Administrative Agent for the
account of the Secured Parties, or order, on demand, in lawful money of the
United States. Each of the Guarantors further agrees that to the extent that a
Seller shall make a payment or a transfer of an interest in any property to the
Administrative Agent or any other Secured Party, which payment or transfer or
any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, or otherwise is avoided, and/or required to be repaid to such
Seller, the estate of such Seller, a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such avoidance or repayment, the obligation or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if said payment had not been made.
     Section 14.3 Nature of Liability.
     The liability of each Guarantor hereunder is exclusive and independent of
any security for or other guaranty of the Guaranteed Obligations of the Sellers
whether executed by such Guarantor, any other guarantor or by any other party,
and no Guarantor’s liability hereunder shall be affected or impaired by (a) any
direction as to application of payment by a Seller or by any other party, or
(b) any other continuing or other guaranty, undertaking or maximum liability of
a guarantor or of any other party as to the Guaranteed Obligations of a Seller,
or (c) any payment on or in reduction of any such other guaranty or undertaking,
or (d) any dissolution, termination or increase, decrease or change in personnel
by the Servicer or any of the Originators, or (e) any payment made to the
Administrative Agent or any other Secured Party on the Guaranteed Obligations
that the Administrative Agent or such Secured Party repays to a Seller pursuant
to court order in any bankruptcy, reorganization, arrangement, moratorium or
other debtor relief proceeding, and each of the Guarantors waives any right to
the deferral or modification of its obligations hereunder by reason of any such
proceeding.
     Section 14.4 Independent Obligation.
     The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor or the Sellers, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other Guarantor or either Seller and whether or
not any other Guarantor or such Seller is joined in any such action or actions.

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     Section 14.5 Authorization.
     Each of the Guarantors expressly authorizes the Administrative Agent, each
Purchaser, each Purchaser Agent and the Collateral Custodian without notice or
demand (except as shall be required by applicable statute and cannot be waived),
and without affecting or impairing its liability hereunder, from time to time to
(a) renew, compromise, extend, increase, accelerate or otherwise change the time
for payment of, or otherwise change the terms of the Guaranteed Obligations or
any part thereof in accordance with this Agreement including any increase or
decrease of the rate of interest thereon, (b) take and hold security from any
Guarantor or any other party for the payment of the Guaranty or the Guaranteed
Obligations and exchange, enforce, waive and release any such security,
(c) apply such security and direct the order or manner of sale thereof as the
Administrative Agent in its sole reasonable discretion may determine and
(d) release or substitute any one or more endorsers, the Guarantors, the Sellers
or other obligors.
     Section 14.6 Reliance.
     It is not necessary for the Administrative Agent or any other Secured Party
to inquire into the capacity or powers of either Seller or the officers,
directors, members, partners or agents acting or purporting to act on its
behalf, and any Guaranteed Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
     Section 14.7 Waiver.
     (a) Each of the Guarantors hereby waives any right (except as shall be
required by applicable statute and cannot be waived) to require the
Administrative Agent or any other Secured Party to (i) proceed against the
Sellers, any other guarantor or any other party, (ii) proceed against or exhaust
any security held from the Sellers, any other guarantor or any other party, or
(iii) pursue any other remedy in the Administrative Agent’s or any Secured
Party’s power whatsoever. Each of the Guarantors hereby waives any defense based
on or arising out of any defense of the Sellers, any other guarantor or any
other party other than payment in full of the Guaranteed Obligations (other than
contingent indemnity obligations), including without limitation any defense
based on or arising out of the disability of either Seller, the Servicer, any of
the Originators, any other guarantor or any other party, or the unenforceability
of the Guaranteed Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Sellers other than payment in
full of the Guaranteed Obligations. The Administrative Agent may, as set forth
in Section 10.2, foreclose on any security or exercise any other right or remedy
the Administrative Agent or any other Secured Party may have against the Sellers
or any other party, or any security, without affecting or impairing in any way
the liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been paid in full. Each of the Guarantors hereby waives any
defense arising out of any such election by the Administrative Agent or any
other Secured Party, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of the
Guarantors against the Sellers or any other party or any security.
     (b) Each of the Guarantors hereby waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance,

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notice of protest, notices of dishonor, notices of acceptance of the Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Sellers’, Servicer’s and Originators’ financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which such Guarantor assumes and incurs hereunder, and agrees that neither
the Administrative Agent nor any other Secured Party shall have any duty to
advise such Guarantor of information known to it regarding such circumstances or
risks.
     (c) Each of the Guarantors hereby agrees it will not exercise any rights of
subrogation which it may at any time otherwise have as a result of the Guaranty
(whether contractual, under Section 509 of the U.S. Bankruptcy Code, or
otherwise) to the claims of the Secured Parties against either Seller or any
other guarantor of the Guaranteed Obligations of such Seller owing to the
Secured Parties (collectively, the “Other Parties”) and all contractual,
statutory or common law rights of reimbursement, contribution or indemnity from
any Other Party which it may at any time otherwise have as a result of the
Guaranty until such time as the Guaranteed Obligations shall have been paid in
full. Each of the Guarantors hereby further agrees not to exercise any right to
enforce any other remedy that the Administrative Agent, the other Secured
Parties or the Backup Servicer now have or may hereafter have against any Other
Party, any endorser or any other guarantor of all or any part of the Guaranteed
Obligations of the Sellers and any benefit of, and any right to participate in,
any security or collateral given to or for the benefit of the Secured Parties to
secure payment of the Guaranteed Obligations of the Sellers until such time as
the Guaranteed Obligations shall have been paid in full (other than contingent
indemnity obligations).
     Section 14.8 Limitation on Enforcement.
     The Secured Parties agree that the Guaranty may be enforced only by the
action of the Administrative Agent acting in its sole discretion and that no
Purchaser or Purchaser Agent shall have any right individually to seek to
enforce or to enforce the Guaranty, it being understood and agreed that such
rights and remedies may be exercised by the Administrative Agent for the benefit
of the Secured Parties under the terms of this Agreement.
     Section 14.9 Limitations on Payment.
     Notwithstanding any other provision of this Article XIV, it is agreed that
the obligations of each Guarantor to make payment of the Guaranteed Obligations
at any time shall be limited to the extent that such Guarantor has funds
available to it on any given “Payment Date” (as defined in the CS Europe
Financing) to make payment thereof under Clause 8.3.9 of the CS Europe Financing
or, as applicable, to the extent of funds available for distribution under
Clause 8.1.3 of the “Deed of Subordination” (as defined in the CS Europe
Financing). To the extent, in either case, that such funds are insufficient to
discharge in full each Guarantor’s liability under this Article XIV, then such
amount as may remain due from the Guarantor shall continue to be regarded as
outstanding for the purposes of making any demand under this Guaranty, subject
always to the provisions of Clauses 33.10 and 33.11 of the CS Europe Financing,
as they are incorporated by reference herein pursuant to Section 14.10.

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     Section 14.10 Limited Recourse and No Proceedings.
     In the event of enforcement of this Guaranty, the provisions of Clauses
33.10 and 33.11 of the CS Europe Financing shall apply as if set out in this
Section in full, mutatis mutandis.
[Remainder of Page Intentionally Left Blank.]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

          THE SELLERS:   CAPITALSOURCE FUNDING III LLC,
 
       
 
  By:   /s/ JEFFREY A. LIPSON
 
       
 
  Name:   Jeffrey A. Lipson
 
  Title:   Senior Vice President & Treasurer
 
            CSE QRS FUNDING I LLC  
 
  By:   /s/ JEFFREY A. LIPSON
 
       
 
  Name:   Jeffrey A. Lipson
 
  Title:   Senior Vice President & Treasurer

[Signatures Continued on the Following Page]

 

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          THE ORIGINATORS:   CAPITALSOURCE FINANCE LLC
 
       
 
  By:   /s/ JEFFREY A. LIPSON
 
       
 
  Name:   Jeffrey A. Lipson
 
  Title:   Senior Vice President & Treasurer
 
            CSE MORTGAGE LLC
 
       
 
  By:   /s/ JEFFREY A. LIPSON
 
       
 
  Name:   Jeffrey A. Lipson
 
  Title:   Senior Vice President & Treasurer

[Signatures Continued on the Following Page]

 

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          THE SERVICER:   CAPITALSOURCE FINANCE LLC
 
       
 
  By:   /s/ JEFFREY A. LIPSON
 
       
 
  Name:   Jeffrey A. Lipson
 
  Title:   Senior Vice President & Treasurer

[Signatures Continued on the Following Page]

 

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          PURCHASER   WACHOVIA BANK, NATIONAL ASSOCIATION
 
       
 
  By:   /s/ RAJ SHAH
 
       
 
  Name:   Raj Shah
 
  Title:   Managing Director
 
        THE ADMINISTRATIVE AGENT
AND THE WBNA AGENT   WACHOVIA CAPITAL MARKETS, LLC
 
       
 
  By:   /s/ MARY KATHERINE DUBOSE
 
       
 
  Name:   Mary Katherine DuBose
 
  Title:   Managing Director

[Signatures Continued on the Following Page]

 

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          THE BACKUP SERVICER:
AND THE COLLATERAL
CUSTODIAN:   WELLS FARGO BANK, NATIONAL ASSOCIATION, not in its individual
capacity but solely as the Backup Servicer and as the Collateral Custodian
 
       
 
  By:   /s/ JEANINE C. CASEY
 
       
 
  Name:   Jeanine C. Casey
 
  Title:   Vice President