Exhibit 10.51
EXECUTION COPY
 
SALE AND CONTRIBUTION AGREEMENT
by and between
CSE QRS FUNDING I LLC,
as the Buyer
and
CSE MORTGAGE LLC,
as the Seller
Dated as of December 28, 2005
 

 

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TABLE OF CONTENTS

                Page
ARTICLE I. GENERAL
    1  
 
       
Section 1.1. Defined Terms
    1  
Section 1.2. Other Terms
    2  
Section 1.3. Computation of Time Periods
    2  
Section 1.4. Interpretation
    2  
 
       
ARTICLE II. SALE, TRANSFER AND ASSIGNMENT
    3  
 
       
Section 2.1. Sale, Transfer and Assignment
    3  
Section 2.2. Purchase Price
    5  
Section 2.3. Payment of Purchase Price
    5  
 
       
ARTICLE III. CONDITIONS PRECEDENT
    6  
 
       
Section 3.1. Conditions Precedent to Closing and Initial Purchase
    6  
Section 3.2. Conditions Precedent to all Purchases
    6  
 
       
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
    8  
 
       
Section 4.1. Seller’s Representations and Warranties
    8  
Section 4.2. Representations and Warranties of the Seller Relating to the
Agreement and the Purchased Collateral
    15  
Section 4.3. Representations and Warranties of the Buyer
    16  
 
       
ARTICLE V. COVENANTS
    17  
 
       
Section 5.1. Affirmative Covenants of the Seller
    17  
Section 5.2. Negative Covenants of Seller
    22  
 
       
ARTICLE VI. REPURCHASE OBLIGATION
    24  
 
       
Section 6.1. Retransfer of Purchased Collateral
    24  
Section 6.2. Substitution of Assets
    25  
Section 6.3. Deemed Collections
    26  
 
       
ARTICLE VII. ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE PURCHASED
COLLATERAL
    26  
 
       
Section 7.1. Rights of the Buyer
    26  
Section 7.2. Responsibilities of Seller
    27  
Section 7.3. Rights With Respect to Loan Files
    27  
Section 7.4. Notice to Administrative Agent and each Purchaser Agent
    27  
 
       
ARTICLE VIII. TERM AND TERMINATION
    28  
 
       
Section 8.1. Purchase Termination Events
    28  
Section 8.2. Remedies
    30  
Section 8.3. Survival of Certain Provisions
    30  
 
       
ARTICLE IX. INDEMNIFICATION
    31  
 
       
Section 9.1. Indemnification by the Seller
    31  
Section 9.2. Assignment of Indemnities
    33  

 

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TABLE OF CONTENTS (con’t)

                Page
ARTICLE X. MISCELLANEOUS
    34  
 
       
Section 10.1. Amendments and Waivers
    34  
Section 10.2. Notices, Etc
    34  
Section 10.3. Limitation of Liability
    34  
Section 10.4. Binding Effect; Benefit of Agreement
    34  
Section 10.5. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO
VENUE
    34  
Section 10.6. WAIVER OF JURY TRIAL
    35  
Section 10.7. Costs, Expenses and Taxes
    35  
Section 10.8. No Proceedings
    35  
Section 10.9. Recourse Against Certain Parties
    36  
Section 10.10. Protection of Right, Title and Interest in the Purchased
Collateral; Further Action Evidencing Purchases
    37  
Section 10.11. Execution in Counterparts; Severability; Integration
    38  
Section 10.12. Waiver of Setoff
    38  
Section 10.13. Heading and Exhibits
    39  
Section 10.14. Rights of Inspection
    39  
Section 10.15. Assignment
    39  
Section 10.16. No Waiver; Cumulative Remedies
    40  
Section 10.17. Subordination
    40  
Section 10.18. Revolving Loan Payments
    40  

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TABLE OF CONTENTS (con’t)

                  Page
SCHEDULES
       
SCHEDULE I
  Purchased Collateral List    
SCHEDULE II
  [Reserved]    
SCHEDULE III
  Lock-Box Banks and Lock-Box Accounts    
EXHIBITS
       
EXHIBIT A
  Form of Sale Assignment    
EXHIBIT B
  Form of Officer’s Certificate    
APPENDICES
       
APPENDIX A
  Condition Precedent Documents    

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SALE AND CONTRIBUTION AGREEMENT
     THIS SALE AND CONTRIBUTION AGREEMENT (such agreement as amended, modified,
supplemented or restated from time to time, the “Agreement”) is dated as of
December 28, 2005, by and between CSE MORTGAGE LLC, a Delaware limited liability
company, as the seller (in such capacity, the “Seller”) and CSE QRS FUNDING I
LLC, a Delaware limited liability company, as the buyer (in such capacity, the
“Buyer”).
W I T N E S S E T H:
     WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer certain loans originated by the Seller in its
normal course of business, together with, among other things, certain related
security and rights of payment thereunder.
     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I.
GENERAL
     Section 1.1. Defined Terms.
     Capitalized terms used but not defined herein have the meanings provided in
the Sale and Servicing Agreement (as defined below).
Applicable Insolvency Laws: Defined in Section 8.1.
Agreement: Defined in the Preamble.
Assets: The Assets listed on Schedule I hereto, as such Schedule I may be
amended, supplemented, restated or replaced from time to time.
Buyer: Defined in the Preamble.
Early Termination: Defined in Section 8.1.
Faxed Documents: Defined in Section 2.1(f).
Purchase: A purchase by the Buyer of Purchased Collateral from the Seller
pursuant to Section 2.1.
Purchase Date: The Business Day immediately following the Closing Date and any
subsequent day on which any Purchased Collateral is acquired by the Buyer
pursuant to the terms of this Agreement including any Substitution Date, as set
forth in the related Sale Assignment.
Purchase Price: Defined in Section 2.2.

 

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Purchase Termination Events: Defined in Section 8.1.
Purchased Collateral: Defined in Section 2.1(a).
Sale Assignment: Defined in Section 2.1(b).
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated as of
December 28, 2005, among CSE QRS Funding I LLC, as the seller, CSE Mortgage LLC,
as the originator and as the servicer, Variable Funding Capital Company LLC, as
a conduit purchaser, each other commercial paper conduit from time to time party
thereto, as a conduit purchaser, Wachovia Bank, National Association, as the
swingline purchaser, Wachovia Capital Markets, LLC, as the VFCC agent and as the
administrative agent, each other purchaser agent from time to time party
thereto, as an additional agent, and Wells Fargo Bank, National Association, as
the backup servicer and as the collateral custodian, as the same may be amended,
supplemented, restated or replaced from time to time.
Schedule I: The schedule of all Purchased Collateral that is sold, transferred
and assigned by the Seller to the Buyer on a Purchase Date, which schedule as to
the Purchased Collateral identified as of the initial Purchase Date is attached
hereto and as to any Purchased Collateral identified on any subsequent Purchase
Date is supplemented by the “Schedule I” attached to the applicable Sale
Assignment, and incorporated herein by reference, as such schedule may be
supplemented and amended from time to time pursuant to the terms hereof.
Seller: Defined in the Preamble.
Substitution Date: Any date on which the Seller transfers a Substitute Asset to
the Buyer.
     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;

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     (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 agreement (including any Transaction Document),
document or instrument means such agreement, document or instrument as amended,
supplemented or modified 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
     (vi) 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.
SALE, TRANSFER AND ASSIGNMENT
     Section 2.1. Sale, Transfer and Assignment.
     (a) On the terms and subject to the conditions set forth in this Agreement
(including the conditions to Purchase set forth in Article III), on each
Purchase Date, the Seller hereby sells, transfers, assigns, sets over and
otherwise conveys to the Buyer, and the Buyer hereby Purchases and takes from
the Seller all right, title and interest (whether now owned or hereafter
acquired or arising and wherever located) of the Seller in, to and under all
accounts, general intangibles, instruments, chattel paper, documents, money,
letters of credit, advices of credit, deposit accounts, certificates of deposit,
investment property, goods and other property consisting of, arising from or
related to any of the following property (collectively, the “Purchased
Collateral”):
     (i) the Assets identified by the Seller as of the initial Cut–Off Date
which are listed on Schedule I hereto, and the Assets identified by the Seller
as of any additional Cut–Off Date which are listed on Schedule I to the Sale
Assignment, together with all monies due in payment of such Assets on and after
the related Cut–Off Date, but excluding any Excluded Amounts and any Retained
Interest;
     (ii) all Related Security with respect to the Loans referred to in clause
(i) above; and
     (iii) all income and Proceeds of the foregoing.
     (b) The Seller shall on or prior to any Purchase Date after the Closing
Date execute and deliver to the Buyer a certificate of assignment (the “Sale
Assignment”) from the Seller to

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the Buyer in the form of Exhibit A hereto. From and after such Purchase Date,
the Purchased Collateral listed on such assignment shall be deemed to be
Purchased Collateral hereunder.
     (c) On or before any Purchase Date with respect to the Purchased Collateral
to be acquired by the Buyer on that date, the Seller shall provide the Buyer
with an Officer’s Certificate, in the form of Exhibit B hereto, signed by a duly
authorized Responsible Officer certifying, as of such Purchase Date, to each of
the items in Section 4.2, in the form of Exhibit B hereto.
     (d) Except as specifically provided in this Agreement, the sale and
purchase of Purchased Collateral under this Agreement shall be without recourse
to the Seller; it being understood that Seller shall be liable to the Buyer for
all representations, warranties, covenants and indemnities made by Seller
pursuant to the terms of this Agreement, all of which obligations are limited so
as not to constitute recourse to the Seller for the credit risk of the Obligors.
     (e) The Buyer, the VFCC Agent and Administrative Agent, each Purchaser
Agent, each Purchaser, the other Secured Parties, the Backup Servicer and the
Collateral Custodian shall not have any obligation or liability to any Obligor
or client of Seller (including any obligation to perform any of the obligations
of Seller (including any obligation with respect to any other related
agreements)). No such obligation or liability is intended to be assumed by the
Buyer, the Administrative Agent, any Purchaser Agent, the Purchasers, the
Secured Parties, the Backup Servicer, or the Collateral Custodian, and any such
assumption is expressly disclaimed.
     (f) In connection with each Purchase of Purchased Collateral hereunder, the
Seller shall deliver to the Collateral Custodian (A) the Required Asset
Documents with respect thereto on or prior to the Closing Date (except for any
UCCs, which shall be in the possession of the Collateral Custodian within two
Business Days of the Closing Date) as to any Existing Assets, and (B) the duly
executed original promissory note and the duly executed faxed copies of the
other documents included in the Required Asset Documents (the “Faxed Documents”)
on or prior to the related Purchase Date (and if prior to the related Purchase
Date, such promissory note and Faxed Documents shall be held by the Collateral
Custodian on behalf of the Purchasers in escrow until such Purchase shall occur
on the related Purchase Date), and the duly executed original copies of the
Faxed Documents (including any UCCs) within two Business Days of the related
Purchase Date as to any Additional Assets. In connection with such transfer, the
Seller hereby grants to each of the Buyer, the Administrative Agent, each
Purchaser Agent and the Servicer an irrevocable, non–exclusive license to use,
without royalty or payment of any kind, all software used by the Seller to
account for the Purchased Collateral, to the extent necessary to administer the
Purchased Collateral, whether such software is owned by the Seller or is owned
by others and used by the Seller under license agreements with respect thereto;
provided that should the consent of any licensor of such software be required
for the grant of the license described herein, to be effective, the Seller
hereby agrees that upon the request of the Buyer or the Administrative Agent and
each Purchaser Agent, the Seller will use its reasonable efforts to obtain the
consent of such third–party licensor. The license granted hereby shall be
irrevocable until the Collection Date and shall terminate on the date this
Agreement terminates in accordance with its terms. The Seller (i) shall take
such action requested by the Buyer, the Administrative Agent and each Purchaser
Agent, from time to time hereafter, that may be necessary or appropriate to
ensure that the Buyer and its assigns under the Sale and Servicing Agreement
have

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an enforceable ownership interest in the Asset Files purchased from the Seller
hereunder, and (ii) shall use its reasonable efforts to ensure that each of the
Buyer, the Administrative Agent, the Purchaser Agents, and the Servicer has an
enforceable right (whether by license or sublicense or otherwise) to use all of
the computer software used to account for the Purchased Collateral and/or to
recreate such Asset Files.
     (g) In connection with the sale of the Purchased Collateral, the Seller
further agrees that it will, at its own expense, indicate clearly and
unambiguously in its computer files and its financial statements, on or prior to
each Purchase Date, that such Purchased Collateral has been sold to the Buyer
pursuant to this Agreement.
     (h) The Seller further agrees to deliver to the Buyer on or before each
Purchase Date a computer file containing a true, complete and correct list of
all Assets, identified by account number and Outstanding Asset Balance as of the
related Cut–Off Date. Such file or list shall be marked as Schedule I to this
Agreement, shall be delivered to the Buyer as confidential and proprietary, and
is hereby incorporated into and made a part of this Agreement as such Schedule I
may be supplemented and amended from time to time.
     (i) IT IS THE INTENTION OF THE PARTIES HERETO THAT THE CONVEYANCE OF THE
SELLER’S RIGHT, TITLE AND INTEREST IN AND TO THE PURCHASED COLLATERAL BY THE
SELLER TO THE BUYER AS PROVIDED IN Section 2.1 shall constitute an absolute
transfer conveying good title, free and clear of any Lien (other than Permitted
Liens) and that the Purchased Collateral shall not be part of the Seller’s
bankruptcy estate in the event of an Insolvency Event with respect to the
Seller. Furthermore, it is not intended that such conveyance be deemed a pledge
of the Assets and the other Purchased Collateral by the Seller to the Buyer to
secure a debt or other obligation of the Seller. If, however, notwithstanding
the intention of the parties, the conveyance provided for in this Section 2.1 is
determined to be a transfer for security, then this Agreement shall also be
deemed to be, and hereby is, a “security agreement” within the meaning of
Article 9 of the UCC and the Seller hereby grants to the Buyer a duly perfected,
first priority “security interest” within the meaning of Article 9 of the UCC in
all of the Seller’s right, title and interest in and to the Purchased
Collateral, now existing and hereafter created, to secure the prompt and
complete payment of a loan deemed to have been made in an amount equal to the
aggregate Purchase Price of the Purchased Collateral together with all of the
other obligations of the Seller hereunder. The Buyer shall have, in addition to
the rights and remedies which it may have under this Agreement, all other rights
and remedies provided to a secured creditor under the UCC and other Applicable
Law, which rights and remedies shall be cumulative.
     Section 2.2. Purchase Price.
     The purchase price for each item of Purchased Collateral sold to the Buyer
by the Seller under this Agreement (the “Purchase Price”) shall be a dollar
amount equal to the Outstanding Asset Balance thereof determined as of the
related Cut–Off Date.

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     Section 2.3. Payment of Purchase Price.
     (a) The Purchase Price for any Purchased Collateral sold by the Seller to
the Buyer on any Purchase Date shall be paid in a combination of (i) immediately
available funds and (ii) if the Buyer does not have sufficient funds to pay the
full amount of the Purchase Price, by means of a capital contribution by the
Seller to the Buyer.
     (b) Notwithstanding any provision herein to the contrary, the Seller may on
any Purchase Date elect to designate all or a portion of the Purchased
Collateral proposed to be transferred to the Buyer on such date as a capital
contribution to the Buyer. In such event, the Purchase Price payable with
respect to such transfer shall be reduced by the Outstanding Asset Balance of
the Purchased Collateral or portions thereof that were so contributed; provided
that Purchased Collateral contributed to the Buyer as capital shall constitute
Purchased Collateral for all purposes of this Agreement.
     (c) Seller, by accepting the Purchase Price paid for each purchase of
Purchased Collateral, shall be deemed to have certified, with respect to the
Purchased Collateral to be sold by it on such day, that its representations and
warranties contained in Article IV are true and correct on and as of such day,
with the same effect as though made on and as of such day and that no
Termination Event or Unmatured Termination Event has occurred.
     (d) Upon the payment of the Purchase Price for any Purchase, title to the
Purchased Collateral included in such Purchase shall rest in Buyer, whether or
not the conditions precedent to such Purchase and the other covenants and
agreements contained herein were in fact satisfied; provided that Buyer shall
not be deemed to have waived any claim it may have under this Agreement for the
failure by the Seller in fact to satisfy any such condition precedent, covenant
or agreement.
ARTICLE III.
CONDITIONS PRECEDENT
     Section 3.1. Conditions Precedent to Closing and Initial Purchase.
     The closing and initial Purchase hereunder are subject to the conditions
precedent that (i) each of the conditions precedent to the execution, delivery
and effectiveness of each other Transaction Document (other than a condition
precedent in any such other Transaction Document relating to the effectiveness
of this Agreement) shall have been fulfilled, and (ii) on or prior to the
Closing Date, the Seller shall have delivered to the Buyer each of the items
specified on Appendix A hereto in form and substance satisfactory to the Buyer.
     Section 3.2. Conditions Precedent to all Purchases.
     The obligations of the Buyer to Purchase the Purchased Collateral from the
Seller on any Purchase Date (including the initial Purchase Date) shall be
subject to the satisfaction of the following conditions precedent that:
     (a) all representations and warranties of the Seller contained in
Sections 4.1 and 4.2 shall be true and correct on and as of such date as though
made on and as of such date and shall be deemed to have been made on and as of
such day;

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     (b) (i) in the case of the initial Purchase Date, the Seller shall have
delivered to the Buyer, prior to the Closing Date, a Schedule I that is true,
accurate and complete in all respects as of the initial Cut–Off Date, and
(ii) in the case of any subsequent Purchase Date, the Seller shall have
delivered to the Buyer, prior to the applicable subsequent Purchase Date, a duly
executed and completed Sale Assignment along with a Schedule I that is true,
accurate and complete in all respects as of the related Cut–Off Date;
     (c) on and as of such Purchase Date, the Seller shall have performed all of
the covenants and agreements required to be performed by it on or prior to such
date pursuant to the provisions of this Agreement;
     (d) no event has occurred and is continuing, or would result from such
Purchase, that constitutes a Termination Event or Unmatured Termination Event;
     (e) the Termination Date shall not have occurred;
     (f) the Facility Termination Date shall not have occurred;
     (g) no Applicable Law shall prohibit or enjoin, and no order, judgment or
decree of any federal, state or local court or governmental body, agency or
instrumentality shall prohibit or enjoin, the making of any such Purchase by the
Buyer in accordance with the provisions hereof;
     (h) the Buyer, the Administrative Agent and the Purchaser Agents shall be
in receipt of UCC, tax and judgment lien searches of Seller;
     (i) the Buyer, the Administrative Agent and the Purchaser Agents shall be
in receipt of UCC financing statements per paragraph (iv) of Appendix A;
     (j) the Buyer, the Administrative Agent and the Purchaser Agents shall be
in receipt of opinions of counsel satisfactory to such Persons;
     (k) all corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Buyer, and the Buyer shall have received from the
Seller copies of all documents (including, without limitation, records of
corporate proceedings, approvals and opinions) relevant to the transactions
herein contemplated as the Buyer may reasonably have requested;
     (l) the Seller shall have paid all fees required to be paid by it on the
Closing Date, and shall have reimbursed the Buyer and its assignees for all
fees, costs and expenses of closing the transactions contemplated hereunder and
under the other Transaction Documents;
     (m) prior to the Closing Date, the Buyer, the Administrative Agent and each
Purchaser Agent shall have received satisfactory evidence that the Seller’s
total initial capital commitment is in place; and
     (n) with respect to an Acquired Asset intended to be included as a part of
the Purchased Collateral, the Buyer, the Administrative Agent and each Purchaser
Agent shall have received a satisfactory opinion of counsel.

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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
     Section 4.1. Seller’s Representations and Warranties.
     As of each Purchase Date, the Seller represents and warrants to the Buyer
for the benefit of the Buyer and each of its successors and assigns that:
     (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 and sell the Purchased
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, and (c) sell and assign an ownership interest in the Purchased 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
sale and assignment of an ownership interest in the Purchased 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 principals 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, proceedings or investigations
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.
     (j) Selection Procedures. No procedures believed by the Seller to be
adverse to the interests of the Buyers were utilized by the Seller in
identifying and/or selecting the Assets included in the Purchased Collateral. In
addition, each Asset shall have been underwritten in accordance with and satisfy
the standards of any Credit and Collection Policy that has been established by
the Seller 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
properties (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 by an applicable Governmental Authority, 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 (including, without limitation, the use of the
proceeds from the sale of the Purchased Collateral) 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
sale of the Purchased Collateral 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) [Reserved].
     (n) Security Interest.

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     (i) This Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in the Purchased Collateral in favor of the Buyer
and the Administrative Agent as assignee 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 Assets, along with the related Asset Files, constitute a “general
intangible,” an “instrument,” an “account,” or “chattel paper,” within the
meaning of Article 9 of the UCC of all applicable jurisdictions;
     (iii) the Seller owns and has good and marketable title to the Purchased
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 Asset to the sale and granting of a security interest in the Assets
hereunder to the Buyer and the Administrative Agent as assignee 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 Purchased
Collateral granted hereunder to the Buyer and the Administrative Agent as
assignee on behalf of the Secured Parties;
     (vi) other than the security interest granted to the Buyer and the
Administrative Agent as assignee on behalf of the Secured Parties, the Seller
has not pledged, assigned, sold, granted a security interest in or otherwise
conveyed any of the Purchased 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 Purchased Collateral other than
any financing statement (A) relating to the security interest granted to the
Purchasers under the Sale and Servicing 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 that
constitute or evidence each Asset 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) and the copies of the Loan Registers that constitute
or evidence the Assets solely on behalf of and for the benefit of the Secured
Parties provided that notwithstanding the foregoing, with respect to any Asset
to be funded with the proceeds of a Swingline Advance, the Seller shall have
received a written acknowledgment from the Collateral Custodian (A) that the
Collateral Custodian has received a faxed copy of the applicable underlying
promissory note or Loan Register, as applicable, and (B) within two Business
Days after such Funding Date, that the Collateral Custodian or its bailee is
holding the applicable underlying promissory note or Loan Register, as
applicable, that

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constitute or evidence the Assets included in the Collateral solely on behalf
of, and for the benefit of, the Secured Parties;
     (ix) none of the underlying promissory notes or Loan Registers, as
applicable, that constitute or evidence the Assets 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;
and
     (x) the Collateral has not been pledged or otherwise made subject to a lien
in favor of Bear, Stearns & Co. Inc., Bear, Stearns Securities Corp. or any of
their now or hereafter existing affiliates, except for such pledge or lien as
shall have been previously released or terminated
     (o) Reports Accurate. All Monthly Reports (if prepared by the Seller in its
capacity as Servicer or otherwise, or to the extent that information contained
therein is supplied by the Seller), information, exhibits, schedules, financial
statements, documents, books, records or reports furnished or to be furnished by
the Seller to the Buyer in connection with this Agreement are true, complete and
correct.
     (p) Location of Offices. The principal place of business and chief
executive office of the Seller and the office where the Seller keeps all the
Records are located at the address of the Seller referred to in Section 9.2
hereof (or at such other locations as to which the notice and other requirements
specified in Section 5.2(f) shall have been satisfied).
     (q) Lock–Boxes. The names and addresses of all the Lock–Box Banks, together
with the account numbers of the Lock–Box Accounts of the Seller at such Lock–Box
Banks and the names, addresses and account numbers of all accounts to which
Collections on the Purchased Collateral outstanding before the initial Purchase
hereunder have been sent, are specified in Schedule III (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(j)). The Seller has not granted any Person other than the Buyer
and Collateral Custodian an interest in any Lock–Box Account at a future time or
upon the occurrence of a future event.
     (r) 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.
     (s) Sale Agreement. This Agreement is the only agreement or arrangement
pursuant to which the Seller sells the Purchased Collateral that is the subject
of this Agreement.
     (t) Value Given. The Buyer has given reasonably equivalent value to the
Seller in consideration for the transfer to the Buyer of the Purchased
Collateral, no such transfer shall have been made for or on account of an
antecedent debt owed by the Seller to the Buyer, and no such transfer is or may
be voidable or subject to avoidance under any section of the Bankruptcy Code.
     (u) Accounting. The Seller accounts for the transfers from it to the Buyer
of interests in Purchased Collateral as financings of such Purchased Collateral
for tax and consolidated

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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).
     (v) Special Purpose Entity. The Buyer is an entity with assets and
liabilities separate and distinct from those of the Seller and any Affiliates
thereof, and the Seller hereby acknowledges that the Administrative Agent, each
Purchaser Agent, the Purchasers and the other Secured Parties are entering into
the transactions contemplated by the Sale and Servicing Agreement in reliance
upon the Buyer’s identity as a separate legal entity separate from the Seller
and from each Affiliate of the Seller. Therefore, from and after the date of
execution and delivery of this Agreement, the Seller shall take all reasonable
steps, including, without limitation, all steps that the Administrative Agent,
each Purchaser Agent, any Purchaser, or any other Secured Party may from time to
time reasonably request, to maintain the Buyer’s identity as a separate legal
entity and to make it manifest to third parties that the Buyer is an entity with
assets and liabilities distinct from those of the Seller and any Affiliate
thereof and not just a division of the Seller or any such Affiliate. Without
limiting the generality of the foregoing and in addition to the other covenants
set forth herein, Seller shall take all reasonable steps to ensure that the
Buyer has not and will not take, refrain from taking, or fail to take (as
applicable) any action described in Section 4.1(u) of the Sale and Servicing
Agreement.
     (w) Confirmation from the Seller. The Seller has provided written
confirmation to the Buyer that the Seller will not cause the Buyer to file a
voluntary petition under the Bankruptcy Code or Insolvency Laws. Each of the
Buyer and the Seller is aware that in light of the circumstances described in
the preceding sentence and other relevant facts, the filing of a voluntary
petition under the Bankruptcy Code for the purpose of making any Purchased
Collateral or any other assets of the Buyer available to satisfy claims of the
creditors of the Seller would not result in making such assets available to
satisfy such creditors under the Bankruptcy Code.
     (x) Investment Company Act. The Seller is not, and is not controlled by, an
“investment company” within the meaning of, or is exempt from the provisions of,
the Investment Company Act of 1940, as amended.
     (y) 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). 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.

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     (z) PUHCA. The Seller is not a “holding company” or a “subsidiary holding
company” of a “holding company” within the meaning of the Public Utility Holding
Company Act of 1935, as amended, or any successor statute.
     (aa) Compliance with Law. The Seller has complied in all respects with all
Applicable Laws to which it may be subject, and no Purchased 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).
     (bb) Credit and Collection Policy. The Seller has complied in all material
respects with the Credit and Collection Policy with respect to all of the
Purchased Collateral.
     (cc) Collections. The Seller acknowledges that all Collections received by
it or its Affiliates with respect to the Purchased Collateral sold hereunder are
held and shall be held in trust for the benefit of the Buyer (or its assignees)
until deposited into the Lock–Box Account as required by the Sale and Servicing
Agreement.
     (dd) Covenants. All covenants, agreements and undertakings of the Seller
hereunder have been fully performed.
     (ee) Set–Off, etc. Other than Senior Subordinated Loans and Junior
Subordinated Loans, no Purchased Collateral has been compromised, adjusted,
extended, satisfied, subordinated, rescinded, set–off or modified by the Seller
or the Obligor thereof, and no Purchased Collateral is subject to compromise,
adjustment, extension, satisfaction, subordination, rescission, set–off,
counterclaim, defense, abatement, suspension, deferment, deduction, reduction,
termination or modification, whether arising out of transactions concerning the
Purchased Collateral or otherwise, by the Seller or the Obligor with respect
thereto, except for amendments to such Purchased Collateral otherwise permitted
under the Transaction Documents and in accordance with the Credit and Collection
Policy.
     (ff) Full Payment. The Seller has no knowledge of any fact which should
lead it to expect that any Purchased Collateral will not be paid in full.
     (gg) 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.
     (hh) Representations and Warranties for Benefit of Buyer’s Assignees: Each
of the representations and warranties of the Seller contained in this Agreement
and the other Transaction Documents to which it is a party and that have been
executed and delivered on or prior to such Purchase Date is true and correct in
all material respects on the date it was made, and the Seller hereby makes each
such representation and warranty to, and for the benefit of the Administrative
Agent, each Purchaser Agent, the Purchasers and the other Secured Parties as if
the same were set forth in full herein.
     (ii) Ownership of Buyer. The Seller owns, directly or indirectly, 100% of
the membership interests of the Buyer, free and clear of any Lien. Such
membership interests are

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validly issued, fully paid and non–assessable, and there are no options,
warrants or other rights to acquire membership interests of the Buyer.
     (jj) Participation, Acquired and Assigned Loans. The participations created
with respect to the Participation Loans and the sale to the Buyer with respect
to the Acquired and Assigned Loans do not violate any provisions of the
underlying Required Asset Documents and such documents do not contain any
express or implied prohibitions on participations or sales of such Loans.
     (kk) 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) The Seller has not 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 Seller 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 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, threatened, under any
Environmental Law to which any of the Seller 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 the Seller 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 to the operations (including, without limitation, disposal) of the
Seller 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.

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     (ll) 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.
     It is understood and agreed that the representations and warranties
provided in this Section 4.1 shall survive (x) the sale and assignment or
contribution of the Purchased Collateral to the Buyer and (y) any subsequent
transfer of the Purchased Collateral by the Buyer (including its grant of a
first priority perfected security interest in, to and under the Purchased
Collateral pursuant to the Sale and Servicing Agreement). Upon discovery by the
Seller or the Buyer of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
thereof to the other and to the Administrative Agent and each Purchaser Agent
immediately upon obtaining knowledge of such breach.
     Section 4.2. Representations and Warranties of the Seller Relating to the
Agreement and the Purchased Collateral.
     The Seller hereby represents and warrants to the Buyer, as of the Closing
Date and as of each Purchase Date:
     (a) Binding Obligation, Valid Transfer and Security Interest.
     (i) This Agreement and each other Transaction Document to which the Seller
is a party each constitutes a legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its 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 valid transfer to the Buyer of all right,
title and interest of the Seller in, to and under all Purchased Collateral, free
and clear of any Lien of any Person claiming through or under the Seller or its
Affiliates, except for Permitted Liens. If the conveyances contemplated by this
Agreement are determined to be a transfer for security, then this Agreement
constitutes a grant of a security interest in all Purchased Collateral to the
Buyer which upon the delivery of the Required Asset Documents to the Collateral
Custodian and the filing of the financing statements described in Section 4.1(n)
and, in the case of Additional Assets on the applicable Purchase Date, shall be
a first priority perfected security interest in all Purchased 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 and,

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if this Agreement constitutes the grant of a security interest in such property,
except for the interest of Seller in such property as a debtor for purposes of
the UCC.
     (b) Eligibility of Purchased Collateral. As of the Closing Date and each
Purchase Date, (i) the Schedule I (the Purchased Collateral List) is an accurate
and complete listing in all material respects of all the Purchased Collateral as
of the Cut–Off Date and the information contained therein with respect to the
identity of such Purchased Collateral and the amounts owing thereunder is true
and correct in all material respects as of the related Cut–Off Date, (ii) each
item of Purchased Collateral included in the Borrowing Base is an Eligible Asset
as of such date, (iii) each item of Purchased Collateral is free and clear of
any Lien of any Person (other than Permitted Liens) and in compliance with all
Applicable Laws, (iv) with respect to each item of Purchased 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 transfer of an ownership interest in
item of Purchased Collateral to the Buyer have been duly obtained, effected or
given and are in full force and effect, and (v) the representations and
warranties set forth in Section 4.2(a) are true and correct with respect to each
item of Purchased Collateral.
     It is understood and agreed that the representations and warranties
provided in this Section 4.2 shall survive (x) the sale and assignment or
contribution of the Purchased Collateral to the Buyer, (y) any subsequent
transfer of the Purchased Collateral by the Buyer (including its grant of a
perfected security interest in, to and under the Purchased Collateral pursuant
to the Sale and Servicing Agreement which, shall be of first priority security
interest) and (z) the termination of this Agreement and the Sale and Servicing
Agreement. Upon discovery by the Seller or the Buyer of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice thereof to the other and to the Administrative
Agent and each Purchaser Agent immediately upon obtaining knowledge of such
breach.
     Section 4.3. Representations and Warranties of the Buyer.
     The Buyer hereby represents and warrants to the Seller, as of the Closing
Date and each Purchase Date, that:
     (a) Organization and Good Standing. The Buyer 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 and own the Purchased Collateral.
     (b) Due Qualification. The Buyer 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.

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     (c) Power and Authority; Due Authorization; Execution and Delivery. The
Buyer (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 and the purchase of the Purchased Collateral on
the terms and conditions herein provided. This Agreement and each other
Transaction Document to which the Buyer is a party have been duly executed and
delivered by the Buyer.
     (d) Binding Obligation. This Agreement and each other Transaction Document
to which the Buyer is a party constitutes a legal, valid and binding obligation
of the Buyer enforceable against the Buyer 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 Buyer’s
certificate of formation, operating agreement or any Contractual Obligation of
the Buyer, (ii) result in the creation or imposition of any Lien (other than
Permitted Liens) upon any of the Buyer’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 Buyer, threatened against the Buyer,
before any Governmental Authority (i) asserting the invalidity of this Agreement
or any other Transaction Document to which the Buyer 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 Buyer 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 Buyer of
this Agreement and any other Transaction Document to which the Buyer is a party
have been obtained.
ARTICLE V.
COVENANTS
     Section 5.1. Affirmative Covenants of the Seller.
     From the date hereof until the Collection Date:
     (a) Compliance with Laws. The Seller will comply in all material respects
with all Applicable Laws, including those with respect to the Purchased
Collateral or any part thereof.

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     (b) Preservation of Corporate Existence. The Seller will preserve and
maintain its limited liability company existence, rights, franchises and
privileges in the jurisdiction of its formation, and qualify and remain
qualified in good standing as a foreign 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) Performance and Compliance with Assets. The Seller will, at its
expense, timely and fully perform and comply with all provisions, covenants and
other promises required to be observed by it under the Purchased Collateral and
all other agreements related to such Purchased 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 Purchased 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 Purchased Collateral.
     (e) Buyer’s Assets. With respect to the Purchased Collateral sold to the
Buyer, the Seller will (i) sell such Purchased Collateral pursuant to and in
accordance with the terms of this Agreement, (ii) (at the Seller’s expense) take
all action necessary to perfect, protect and more fully evidence the Buyer’s or
its assignee’s ownership or security interest in such Purchased 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 Seller’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, (iii) permit the Buyer, the Administrative Agent and 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
Purchased 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 Buyer, the Administrative Agent and
each Purchaser Agent may reasonably request to perfect, protect and more fully
evidence the respective interests of the parties to this Agreement in the
Purchased Collateral.
     (f) Delivery of Collections. The Seller will cause (1) all proceeds from
all Lock–Boxes to be directly deposited by a Lock–Box Bank into a Lock–Box
Account and (2) each Lock–Box and Lock–Box Account to be subject at all times to
a Lock–Box Agreement that is in full force and effect. In the event any payments
relating to any Purchased Collateral are remitted directly to the Seller or any
Affiliate of the Seller, the Seller will remit (or will cause all such payments
to be remitted) directly to a Lock–Box Bank and deposited into a Lock–Box
Account within two (2) Business Days following receipt thereof, and, at all
times prior to such remittance, the Seller will itself hold or, if applicable,
will cause such payments to be held in trust for the exclusive benefit of the
Buyer, the Administrative Agent, each Purchaser Agent and the Purchasers. The
Seller will maintain exclusive ownership, dominion and control (subject to the

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terms of this Agreement) of each Lock–Box and Lock–Box Account and shall not
grant the right to take dominion and control of any Lock–Box or Lock–Box Account
at a future time or upon the occurrence of a future event to any Person, except
to the Administrative Agent and each Purchaser Agent as contemplated by the Sale
and Servicing Agreement. Until so deposited, all such Collections shall be held
in trust for the Buyer or its assignees by the Seller.
     (g) Credit and Collection Policy. The Seller will (a) comply in all
material respects with the Credit and Collection Policy in regard to the
Purchased Collateral, and (b) furnish to the Buyer, the Administrative Agent and
each Purchaser Agent, prior to its effective date, prompt notice of any material
changes in the Credit and Collection Policy, which change would impair the
collectibility of the Purchased Collateral or otherwise adversely affect the
interests or remedies of the Buyer, the Administrative Agent, each Purchaser
Agent or the Secured Parties under this Agreement or any Transaction Document.
The Seller will not agree to or otherwise permit to occur any material change in
the Credit and Collection Policy without the prior consent of the Buyer, the
Administrative Agent and each Purchaser Agent.
     (h) Termination Events. The Seller will provide the Buyer, the
Administrative Agent and each Purchaser Agent with immediate written notice 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 (2) 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 Buyer, 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.
     (i) Taxes. The Seller will file and pay any and all Taxes required to meet
the obligations of the Transaction Documents.
     (j) Obligor Notification Forms. The Seller shall furnish the Buyer, the
Administrative Agent or any Purchaser Agent with an appropriate power of
attorney to send (at the Buyer’s, the Administrative Agent’s or any Purchaser
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 Purchased Collateral and the obligation to
make payments as directed by the Buyer, the Administrative Agent or any
Purchaser Agent.
     (k) 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 Buyer, the Administrative Agent and each
Purchaser Agent and existing as of the date of this Agreement.
     (l) Notices. The Seller will furnish to the Buyer, the Administrative Agent
and each Purchaser Agent:
     (i) Income Tax Liability. Within ten (10) Business Days after the receipt
of revenue agent reports or other written proposals, determinations or
assessments of the Internal Revenue Service or any other taxing authority which
propose, determine or

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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 or facsimile notice (confirmed in writing within five
(5) 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 that are received by the Seller or by its
accountants;
     (iii) Representations. Forthwith upon receiving knowledge of same, the
Seller shall notify the Buyer, 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 Buyer, the Administrative Agent and each Purchaser Agent a written notice
setting forth in reasonable detail the nature of such facts and circumstances.
In particular, but without limiting the foregoing, the Seller shall notify the
Buyer, the Administrative Agent and each Purchaser Agent in the manner set forth
in the preceding sentence before any Purchase Date of any facts or circumstances
within the knowledge of the Seller which would render any of the said
representations and warranties untrue at the date when such representations and
warranties were made or deemed to have been made;
     (iv) ERISA. Promptly after receiving notice of any “reportable event” (as
defined in Title IV of ERISA) with respect to the Seller (or any Affiliate
thereof), a copy of such notice;
     (v) Proceedings. As soon as possible and in any event within three (3)
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 labor controversy (of a material nature), litigation,
action, suit or proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Purchased Collateral, the Transaction Documents, the Buyer’s or
the Secured Parties’ interest in the Purchased Collateral, or the Seller, or any
of its Affiliates; 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.
     (m) Other. The Seller will furnish to the Buyer, the Administrative Agent
and each Purchaser Agent promptly, from time to time, such other information,
documents, records or reports respecting the Purchased Collateral or the
condition or operations, financial or otherwise, of Seller as the Buyer, the
Administrative Agent and each Purchaser Agent may from time to time reasonably
request in order to protect the interests of the Buyer, the Administrative
Agent, each Purchaser Agent and the Secured Parties under or as contemplated by
this Agreement and the Sale and Servicing Agreement.

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     (n) Separate Identity. The Seller acknowledges that the Administrative
Agent, each Purchaser Agent, the Purchasers and the other Secured Parties are
entering into the transactions contemplated by the Sale and Servicing Agreement
in reliance upon the Buyer’s identity as a legal entity that is separate from
the Seller and any Affiliates thereof. Therefore, from and after the date of
execution and delivery of this Agreement, the Seller will take all reasonable
steps including, without limitation, all steps that the Administrative Agent,
each Purchaser Agent, the Purchasers and the other Secured Parties may from time
to time reasonably request to maintain the Buyer’s identity as a separate legal
entity and to make it manifest to third parties that the Buyer is an entity with
assets and liabilities distinct from those of the Seller and any Affiliates
thereof and not just a division of the Seller or any such Affiliate. Without
limiting the generality of the foregoing and in addition to the other covenants
set forth herein, the Seller agrees that:
     (i) the Seller will take all other actions necessary on its part to ensure
that the Buyer is at all times in compliance with Section 4.1(u) of the Sale and
Servicing Agreement;
     (ii) the Seller shall maintain corporate records and books of account
separate from those of the Buyer;
     (iii) the annual financial statements of the Seller shall disclose the
effects of the Seller’s transactions in accordance with GAAP and the annual
financial statements of the Seller shall not reflect in any way that the assets
of the Buyer, including, without limitation, the Purchased Collateral, could be
available to pay creditors of the Seller or any other Affiliate of the Seller;
     (iv) the resolutions, agreements and other instruments underlying the
transactions described in this Agreement shall be continuously maintained by the
Seller as official records;
     (v) the Seller shall maintain an arm’s–length relationship with the Buyer
and will not hold itself out as being liable for the debts of the Buyer;
     (vi) the Seller shall keep its assets and its liabilities wholly separate
from those of the Buyer;
     (vii) the Seller will avoid the appearance, and promptly correct any known
misperception of any of the Seller’s creditors, that the assets of the Buyer are
available to pay the obligations and debts of the Seller; and
     (viii) to the extent that the Seller services the Assets and performs other
services on the Buyer’s behalf, the Seller will clearly identify itself as an
agent for the Buyer in the performance of such duties; provided that the Seller
will not be required to so identify itself when communicating with the Obligors.
     (o) Cooperation with Requests for Information or Documents. The Seller will
cooperate fully with all reasonable requests of the Buyer regarding the
provision of any information or documents, necessary or desirable, including the
provision of such information or

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documents in electronic or machine–readable format, to allow each of the Buyer
and its assignees to carry out their responsibilities under the Transaction
Documents.
     (p) Payment Performance and Discharge of Obligations. The Seller will pay,
perform and discharge all of its obligations and liabilities, including, without
limitation, all taxes, assessments and governmental charges upon its income and
properties, when due, the non–payment, performance or discharge of which would
reasonably be expected to have a Material Adverse Effect, unless and only to the
extent that such obligations, liabilities, taxes, assessments and governmental
charges shall be contested in good faith and by appropriate proceedings and
that, to the extent required by GAAP, proper and adequate book reserves relating
thereto are established by the Seller and then only to the extent that a bond is
filed in cases where the filing of a bond is necessary to avoid the creation of
a Lien against any of its properties.
     (q) Copies of Other Information. The Seller will deliver to the Buyer, the
Administrative Agent and each Purchaser Agent:
     (i) promptly, but in any event within ten (10) Business Days after the
filing thereof, a copy of (a) each report or other filing made by the Seller or
any of its Affiliates with the Securities and Exchange Commission (the “SEC”)
and required by the SEC to be delivered to the shareholders of the Seller or any
such Affiliate, and (b) each report and final registration statement of the
Seller or any Affiliate filed with the SEC; and
     (ii) promptly, from time to time, such other information, documents,
records or reports respecting the Purchased Collateral or the conditions or
operations, financial or otherwise, of the Seller (including, without
limitation, reports and notices relating to the Seller’s actions under and
compliance with ERISA and the Investment Company Act of 1940, as amended) as the
Buyer, the Administrative Agent or any Purchaser Agent may from time to time
request in order to perform their obligations hereunder or under any other
Transaction Document or to protect the interests of the Buyer under or as
contemplated by this Agreement and the other Transaction Documents.
     (r) Required Equity Contribution. The Seller shall maintain in the Buyer
the Required Equity Contribution.
     Section 5.2. Negative Covenants of Seller.
     From the date hereof until the Collection Date:
     (a) Purchased Collateral Not to be Evidenced by Instruments. The Seller
will take no action to cause any Purchased Collateral that is not, as of the
Closing Date or the related Addition Date, as the case may be, evidenced by an
instrument, to be so evidenced except in connection with the enforcement or
collection of such Purchased Collateral.
     (b) 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 Purchased Collateral, whether now existing or
hereafter transferred hereunder, or any interest, therein, and the Seller will
not sell, pledge, assign or suffer to exist any Lien on its interest, if any,
hereunder.

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The Seller will promptly notify the Buyer, the Administrative Agent and each
Purchaser Agent of the existence of any Lien on any Purchased Collateral and the
Seller shall defend the right, title and interest of the Buyer, the
Administrative Agent and each Purchaser Agent in, to and under the Purchased
Collateral against all claims of third parties; provided that nothing in this
Section 5.2(b) shall prevent or be deemed to prohibit the Seller from suffering
to exist Permitted Liens upon any of the Purchased Collateral.
     (c) 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 Purchased Collateral or any interest
therein (other than pursuant hereto or to the Sale and Servicing Agreement).
     (d) 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 or credited, to any Lock–Box Account cash or cash
proceeds other than Collections in respect of Purchased Collateral.
     (e) 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.
     (f) 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, or change the offices where it keeps the records from
the location referred to in Section 10.2 or (y) move, or consent to the
Collateral Custodian or Servicer moving, the Required Asset Documents and Asset
Files from the location thereof on the Closing Date, unless the Seller has given
at least thirty (30) days’ written notice to the Buyer, the Administrative Agent
and each Purchaser 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 Buyer, the Administrative Agent and each Purchaser
Agent in the Purchased Collateral.
     (g) Accounting of Purchases. Other than for federal, state and local income
tax purposes, the Seller will not account for or treat (whether in financial
statements or otherwise) the transactions contemplated hereby in any manner
other than as a sale of the Purchased Collateral by the Seller to the Buyer.
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 this Agreement in any manner other than as a sale
of the Purchased Collateral by the Seller to the Buyer.
     (h) 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

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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.
     (i) Organizational Documents. The Seller will not amend, modify, waive or
terminate any provision of its certificate of formation or operating agreement
without the prior written consent of the Buyer, the Administrative Agent and
each Purchaser Agent.
     (j) 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 the Servicer to make any change, in
its instructions to Obligors regarding payments to be made to Seller or Servicer
or payments to be made to any Lock–Box Bank, unless the Buyer, the
Administrative Agent and each Purchaser Agent have 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.
     (k) Extension or Amendment of Assets. The Seller will not, except as
otherwise permitted herein or in the other Transaction Documents, extend, amend
or otherwise modify, or permit the Servicer to extend, amend or otherwise
modify, the terms of any Purchased Collateral (including the Related Security).
     (l) Credit and Collection Policy. The Seller will not materially amend,
modify, restate or replace, in whole or in part, the Credit and Collection
Policy which amendment, modification, restatement or replacement would impair
the collectibility of any of the Purchased Collateral or otherwise adversely
affect the interests or remedies of the Buyer, the Administrative Agent, each
Purchaser Agent or the Secured Parties under this Agreement or any Transaction
Document without the prior written consent of the Buyer, the Administrative
Agent and each Purchaser Agent (which consent will not be unreasonably
withheld).
ARTICLE VI.
REPURCHASE OBLIGATION
     Section 6.1. Retransfer of Purchased Collateral.
     If on any day an Asset is a Warranty Asset, no later than the earlier of
knowledge by the Seller that such Loan is a Warranty Asset or receipt by the
Seller from the Buyer of written notice thereof, the Seller shall within two
(2) Business Days either: (a) make a deposit to the Collection Account (for
application pursuant to Section 2.9 or 2.10, as applicable, of the Sale and
Servicing Agreement) in immediately available funds in an amount equal to the
sum of (i) the amount which, if deposited to the Collection Account on such
date, would cause the Availability as of such date (after giving effect to such
Warranty Asset) to be greater than or equal to zero, (ii) any outstanding
Servicer Advances thereon, (iii) any accrued and unpaid interest, (iv) all Hedge
Breakage Costs owed to the relevant Hedge Counterparty for any termination of
one or more Hedge Transactions, in whole or in part, as required by the terms of
any Hedging Agreement and (v) in the case of a Loan, any costs and damages
incurred in connection with any

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violation by such Loan of any predatory- or abusive-lending law; or (b) subject
to the satisfaction of the conditions in Section 6.2, substitute for such
Warranty Asset, a Substitute Asset. In either of the foregoing instances, the
Seller may (in its discretion) accept retransfer of each such Warranty Asset and
any Related Security. Upon confirmation of the deposit of such Retransfer Price
into the Collection Account or the delivery by the Seller of a Substitute Asset
(the “Retransfer Date”) for each Warranty Asset the Buyer shall (if and when the
Seller elects to accept the retransfer of such Warranty Asset) automatically and
without further action be deemed to transfer, assign and set–over to the Seller,
without recourse, representation or warranty, all the right, title and interest
of the Buyer in, to and under such Warranty Asset and all future monies due or
to become due with respect thereto, the Related Security, all Proceeds of such
Warranty Asset and Recoveries and Insurance Proceeds relating thereto, all
rights to security for any such Warranty Asset and all Proceeds and products of
the foregoing. The Buyer shall (if and when the Seller elects to accept the
retransfer of such Warranty Asset), at the sole expense of the Seller, execute
such documents and instruments of transfer as may be prepared by the Seller and
take other such actions as shall reasonably be requested by the Seller to effect
the transfer of such Warranty Asset pursuant to this Section 6.1.
     Section 6.2. Substitution of Assets.
     On any day prior to the occurrence of a Termination Event (and after the
Termination Date at the discretion of the Buyer), the Seller may, subject to the
conditions set forth in this Section 6.2 and subject to the other restrictions
contained herein, replace any Loan with one or more Eligible Assets (each, a
“Substitute Asset”); provided that no such replacement shall occur unless each
of the following conditions is satisfied as of the date of such replacement and
substitution:
     (a) the Seller has recommended to the Buyer (with a copy to the Collateral
Custodian) in writing that the Asset to be replaced should be replaced (each a
“Replaced Asset”);
     (b) each Substitute Asset is an Eligible Asset on the date of substitution;
     (c) after giving effect to any such substitution, the Advances Outstanding
do not exceed the lesser of (i) the Facility Amount and (ii) the Maximum
Availability;
     (d) for purposes only of substitutions pursuant to Section 4.7 undertaken
because an Asset has become a Warranty Asset, the aggregate Outstanding Asset
Balance of such Substitute Assets shall be equal to or greater than the
aggregate Outstanding Asset Balance of the Replaced Asset;
     (e) for purposes only of substitutions pursuant to Section 4.7 undertaken
because an Asset has become a Warranty Asset, such Substitute Assets, at the
time of substitution by the Seller, shall have no greater weighted average life
than the Replaced Assets;
     (f) all representations and warranties of the Seller contained in
Sections 4.1 and 4.2 shall be true and correct as of the date of substitution of
any such Substitute Asset;
     (g) the substitution of any Substitute Asset does not cause a Termination
Event or Unmatured Termination Event to occur;

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     (h) the sum of the Outstanding Asset Balance of all Substitute Assets does
not exceed 20% of the Facility Amount, calculated on an annualized basis
commencing on the Closing Date;
     (i) the sum of the Outstanding Asset Balance of all Substitute Assets
substituted for Delinquent Assets, Charged–Off Asset and Warranty Assets does
not exceed 10% of the Facility Amount, calculated on an annualized basis
commencing on the Closing Date;
     (j) the Seller shall deliver to the Buyer on the date of such substitution
a certificate of a Responsible Officer certifying that each of the foregoing is
true and correct as of such date; and
     (k) each Asset that is replaced pursuant to the terms of this Section 6.2
shall be substituted only with another Asset that meets the foregoing
conditions.
     In addition, the Seller shall in connection with such substitution deliver
to the Collateral Custodian the related Required Asset Documents. In connection
with any such substitution, the Buyer shall, automatically and without further
action, be deemed to transfer to the Seller, free and clear of any Lien created
pursuant to this Agreement, all of the right, title and interest of the Buyer
in, to and under such Replaced Asset, and the Buyer shall be deemed to represent
and warrant that it has the company authority and has taken all necessary
company action to accomplish such transfer, but without any other representation
and warranty, express or implied.
     Section 6.3. Deemed Collections.
     If on any day (i) the Buyer does not own or alternatively have a valid and
perfected first priority security interest in each item of Purchased Collateral
or (ii) any Loan which has been represented by the Seller to be an Eligible
Asset is later determined not to have been an Eligible Asset as of the related
Cut-Off Date, upon the earlier of the Seller’s receipt of notice from the Buyer
or the Seller becoming aware thereof and the Seller’s failure to cure such
breach within thirty (30) days, the Seller shall be deemed to have received on
such day a collection (a “Deemed Collection”) of such Asset in full and shall on
such day pay to the Buyer an amount equal to the Outstanding Asset Balance of
such Asset. In connection with any such Deemed Collection, the Buyer shall
automatically and without further action, be deemed to transfer to the Seller,
free and clear of any Lien created pursuant to this Agreement, all of the right,
title and interest of the Buyer in, to, and under the Asset with respect to
which the Buyer has received such Deemed Collection, but without any
representation and warranty of any kind, express or implied.
ARTICLE VII.
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE PURCHASED COLLATERAL
     Section 7.1. Rights of the Buyer.
     (a) Seller hereby authorizes the Buyer, the Administrative Agent and each
Purchaser Agent and/or their respective designees or assignees to take any and
all steps in Seller’s name and on behalf of Seller that the Buyer, the
Administrative Agent and each Purchaser Agent and/or their respective designees
or assignees determine are reasonably necessary or appropriate to collect all
amounts due under any and all Purchased Collateral and enforcing or protecting

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their rights under this Agreement, including endorsing the name of Seller on
checks and other instruments representing Collections and enforcing such
Purchased Collateral.
     (b) Except as set forth in Sections 6.1, 6.2 and 6.3 with respect the
retransfer, substitution or the deemed collection of certain Assets, the Buyer
shall have no obligation to account for, replace, substitute or return any
Purchased Collateral to Seller. The Buyer shall have no obligation to account
for or to return Collections, or any interest or other finance charge collected
pursuant thereto, to Seller, irrespective of whether such Collections and
charges are in excess of the Purchase Price for such Purchased Collateral.
     (c) The Buyer shall have the unrestricted right to further assign,
transfer, deliver, hypothecate, subdivide or otherwise deal with the Purchased
Collateral and all of the Buyer’s right, title and interest in, to and under
this Agreement, on whatever terms the Buyer shall determine, pursuant to Sale
and Servicing Agreement or otherwise.
     (d) The Buyer shall have the sole right to retain any gains or profits
created by buying, selling or holding the Purchased Collateral and shall have
the sole risk of and responsibility for losses or damages created by such
buying, selling or holding.
     Section 7.2. Responsibilities of Seller.
     Notwithstanding anything to the contrary contained herein:
     (a) Seller agrees to deliver directly to the Administrative Agent and each
Purchaser Agent (for the Buyer’s account), within two (2) Business Days after
receipt thereof, any Collections that it receives, in the form so received, and
agrees that all such Collections shall be deemed to be received in trust for the
Buyer and shall be maintained and segregated separate and apart from all other
funds and moneys of Seller until delivery of such Collections to the Collection
Account.
     (b) Seller shall perform all of its obligations hereunder and under the
Purchased Collateral to the same extent as if such Purchased Collateral had not
been sold hereunder, and the exercise by the Buyer or its designee or assignee
of the Buyer’s rights hereunder or in connection herewith shall not relieve
Seller from any of its obligations under the Purchased Collateral.
     Section 7.3. Rights With Respect to Loan Files.
     At any time when a Servicer other than CSE Mortgage LLC has been designated
pursuant to Section 6.16 of the Sale and Servicing Agreement, the Seller shall,
at the Buyer’s, the Administrative Agent’s or any Purchaser Agent’s request,
assemble all of the Asset Files which evidence the Purchased Collateral
originated by the Seller, or which are otherwise necessary or desirable to
collect such Purchased Collateral, and make the same available to the Buyer, the
Administrative Agent or any Purchaser Agent at a place selected by the
Administrative Agent or any Purchaser Agent or their designee.

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     Section 7.4. Notice to Administrative Agent and each Purchaser Agent.
     Seller agrees that, concurrently with its delivery to the Buyer, copies of
all notices, reports, documents and other information shall be delivered by the
Seller to the Administrative Agent and each Purchaser Agent.
ARTICLE VIII.
TERM AND TERMINATION
     Section 8.1. Purchase Termination Events.
     (a) If any of the following events (each a “Purchase Termination Event”)
shall have occurred and be continuing:
     (i) the Seller shall fail (i) to pay any amount due pursuant to Section 6.1
or 6.3 in accordance with the provisions thereof and such failure shall continue
unremedied for a period of five (5) Business Days from the earlier of (A) the
date any Responsible Officer of the Seller obtains knowledge of such failure and
(B) the date the Seller receives notice of such failure from the Buyer, the
Servicer, the Administrative Agent or any Purchaser Agent or (ii) to pay any
other amount required to be paid by the Seller hereunder within two (2) Business
Days of the date when due; or
     (ii) the Seller shall fail to observe or perform any covenant or agreement
applicable to it contained herein (other than as specified in paragraph (i) of
this Section 8.1); provided that no such failure shall constitute a Purchase
Termination Event under this paragraph (ii) unless such failure shall continue
unremedied for a period of thirty (30) consecutive days from the date the Seller
receives notice of such failure from the Buyer, the Servicer, the Administrative
Agent or any Purchaser Agent; or
     (iii) any representation, warranty, certification or statement made or
deemed made by the Seller in this Agreement or in any statement, record,
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect when made or deemed made, provided
that a Purchase Termination Event shall not be deemed to have occurred under
this paragraph (iii) based upon a breach of any representation or warranty set
forth in Section 6.1 or 6.3 if the Seller shall have complied with the
provisions of Section 6.1 or 6.3, as applicable, in respect thereof; or
     (iv) (A) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Seller in an involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect (the Bankruptcy Code and all other such applicable
laws being collectively, “Applicable Insolvency Laws”), which decree or order is
not stayed or any other similar relief shall be granted under any applicable
federal or state law no now or hereafter in effect and shall not be stayed; (B)
(I) any involuntary case is commenced against the Seller under any Applicable
Insolvency Law now or hereafter in effect, a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over the
Seller, or over all or a substantial part of the property of the Seller, shall
have been entered, an interim receiver,

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trustee or other custodian of the Seller for all or a substantial part of the
property of the Seller is involuntarily appointed, a warrant of attachment,
execution or similar process is issued against any substantial part of the
property of the Seller, and (II) any event referred to in clause (B)(I) above
continues for sixty (60) days unless dismissed, bonded or disclosed; (C) the
Seller shall at its request have a decree or an order for relief entered with
respect to it or commence a voluntary case under any Applicable Insolvency Law
now or hereafter in effect, or shall consent to the entry of a decree or an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such Applicable Insolvency Law, consent to
the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; (D) the making by the
Seller of any general assignment for the benefit of creditors; (E) the inability
or failure of the Seller generally to pay its debts as such debts become due; or
(F) the Board of Directors of the Seller authorizes action to approve any of the
foregoing; or
     (v) there shall have occurred (A) a Termination Event set forth in
Section 10.1 of the Sale and Servicing Agreement or (B) the Amortization Period
shall have commenced and be continuing; or
     (vi) the Seller has been terminated as Servicer following a Servicer
Termination Event with respect to such Seller under the Sale and Servicing
Agreement; or
     (vii) a notice of Lien shall have been filed by the Pension Benefit
Guaranty Corporation against the Seller under Section 412(n) of the Code or
Section 302(f) of ERISA for a failure to make a required installment or other
payment to a plan to which Section 412(n) of the Code or Section 302(f) of ERISA
applies unless there shall have been delivered to the Administrative Agent and
each Purchaser Agent proof of release of such Lien; or
     (viii) any Lien in an amount equal to or greater than $1,000,000 has been
asserted against or imposed on, any real or personal property of the Seller
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. § 9607(1), or any equivalent or comparable state law,
relating to or arising from the costs of, response to, or investigation,
remediation or monitoring of, any environmental contamination resulting from the
current or past operations of the Seller; or
     (ix) a Federal tax notice of Lien, in an amount equal to or greater than
$1,000,000, shall have been filed against the Seller unless there shall have
been delivered to the Administrative Agent and each Purchaser Agent proof of
release of such Lien
then, (A) in the case of any Purchase Termination Event described in paragraph
(iv), (v)(A), (vii), (viii) or (ix) above the obligation of the Buyer to
purchase Purchased Collateral from the Seller shall thereupon automatically
terminate without further notice of any kind, which is hereby waived by such
Seller, (B) in the case of any Purchase Termination Event described in paragraph
(v)(B) above, the obligation of the Buyer to purchase Purchased Collateral from
the Seller shall thereupon terminate without notice of any kind, which is hereby
waived by the Seller

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unless both the Buyer and the Seller agree in writing that such event shall not
trigger an Early Termination hereunder and (C) in the case of any other Purchase
Termination Event, so long as such Purchase Termination Event shall be
continuing, the Buyer, the Administrative Agent or any Purchaser Agent may
terminate its obligation to purchase Purchased Collateral from the Seller by
written notice to the Seller (any termination pursuant to clause (A), (B) or (C)
of this Article VIII is herein called an “Early Termination”); provided that in
the event of any involuntary petition or proceeding as described in paragraphs
(iv)(A) and (iv)(B) above, the Buyer shall not purchase Purchased Collateral
from the Seller unless such involuntary petition or proceeding is dismissed,
bonded or discharged within sixty (60) days of the filing of such petition or
the commencement of such proceeding.
     Section 8.2. Remedies.
     (a) If a Purchase Termination Event has occurred and is continuing, the
Buyer (and its assignee) shall have all of the rights and remedies provided to a
secured creditor under the UCC of each applicable jurisdiction and other
Applicable Laws in respect thereto, which rights shall be cumulative.
     (b) The Seller agrees that, upon the occurrence and during the continuation
of a Purchased Termination Event under Section 8.1(a)(iv) or
Section 8.1(a)(v)(A) the Buyer, the Administrative Agent or any Purchaser Agent
shall have the right to:
     (i) require the Seller to, and the Seller hereby agrees that it will at the
Seller’s expense and upon request of the Buyer, the Administrative Agent or any
Purchaser Agent forthwith, assemble all or any part of the Purchased Collateral
as directed by the Buyer, the Administrative Agent or any Purchaser Agent and
make the same available at a place to be designated by the Buyer, the
Administrative Agent or any Purchaser Agent; and
     (ii) without notice except as specified below, sell the Purchased
Collateral or any part thereof in one or more parcels at a public or private
sale, at any of the Buyer’s, the Administrative Agent’s or any Purchaser Agent’s
offices or elsewhere, for cash, or credit or for future delivery, and upon such
other terms as the Buyer, the Administrative Agent or any Purchaser Agent may
deem commercially reasonable. The Seller agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days’ notice to the 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 Buyer, the
Administrative Agent or any Purchaser Agent shall not be obligated to make any
sale of Purchased Collateral regardless of notice of sale having been given. The
Buyer, the Administrative Agent or any Purchaser 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.
     Section 8.3. Survival of Certain Provisions.
     Notwithstanding any provision contained herein to the contrary, the
Seller’s representations, covenants and obligations set forth in Articles IV, V,
VI, and VII create and constitute the continuing obligation of the parties
hereto in accordance with its terms, and shall

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remain in full force and effect until the Collection Date; provided that the
rights and remedies with respect to any breach of any representation and
warranty made or deemed made by the Seller pursuant to Articles III and IV and
the provisions of Sections 6.1, 6.2 and 6.3, the rights and obligations under
Article VII, the indemnification provisions of Article IX and the provisions of
Sections 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.12, 10.15 and 10.17
shall be continuing and shall survive any termination of this Agreement.
ARTICLE IX.
INDEMNIFICATION
     Section 9.1. Indemnification by the Seller.
     Without limiting any other rights that the Buyer, any assignee of the Buyer
or any of such Persons’ respective shareholders, officers, employees, agents, or
Affiliates (each an “Indemnified Party”) may have hereunder or under Applicable
Law, the Seller hereby agrees to indemnify each Indemnified Party 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 “Indemnified Amounts”), awarded against or
incurred by such Indemnified Party or other non–monetary damages of any such
Indemnified Party or any of them arising out of or as a result of this Agreement
or the ownership of an interest in the Purchased Collateral or in respect of any
Purchased Collateral excluding, however, (a) Indemnified Amounts to the extent
resulting from the gross negligence or willful misconduct on the part of the
applicable Indemnified Party, and (b) Indemnified Amounts that have the effect
of recourse for non–payment of the Purchased Collateral due to credit problems
of the Obligors. Without limiting the foregoing, the Seller shall indemnify each
Indemnified Party for Indemnified Amounts relating to or resulting from:
     (i) any representation or warranty made or deemed made by the Seller, or
any of its 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 the Seller 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 Purchased
Collateral or the nonconformity of any Purchased Collateral with any such
Applicable Law;
     (iii) the failure to vest and maintain vested in the Buyer, an undivided
ownership interest in the Purchased Collateral, together with all Collections,
free and clear of any Lien (other than Permitted Liens) whether existing at the
time of any Purchase or at any time thereafter;
     (iv) 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
Purchased Collateral, whether at the time of any Purchase or at any subsequent
time;

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     (v) 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
Purchased Collateral (including, without limitation, a defense based on the
Purchased 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 Purchased
Collateral or the furnishing or failure to furnish such merchandise or services;
     (vi) any failure of the Seller 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 the Seller or any Affiliate
thereof to perform its respective duties under any Purchased Collateral;
     (vii) the failure of any Lock–Box Bank to remit any amounts held in a
Lock–Box Account pursuant to the instructions of the Collateral Custodian, the
Administrative Agent or any Purchaser Agent (to the extent such Person is
entitled to give such instructions in accordance with the terms hereof, the Sale
and Servicing Agreement and of any applicable Lock–Box Agreement) whether by
reason of the exercise of set–off rights or otherwise;
     (viii) 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 the Seller to qualify to do business or file any notice
or business activity report or any similar report;
     (ix) any action taken by the Seller in the enforcement or collection of any
Purchased Collateral;
     (x) 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 any Related Property or services that are the subject of any
Purchased Collateral;
     (xi) any claim, suit or action of any kind arising out of or in connection
with Environmental Laws including any vicarious liability;
     (xii) the failure by Seller to pay when due any Taxes for which the Seller
is liable, including without limitation, sales, excise or personal property
taxes payable in connection with the Purchased Collateral;
     (xiii) any repayment by the Indemnified Party of any amount previously
distributed hereunder or under any Transaction Document to the Seller, in each
case which amount the Indemnified Party believes in good faith is required to be
repaid;
     (xiv) the commingling of Collections on the Purchased Collateral at any
time with other funds of the Seller;

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     (xv) any investigation, litigation or proceeding related to this Agreement
or the use of proceeds of Purchases by the Seller or the security interest in
the Purchased Collateral;
     (xvi) any failure by the Buyer to give reasonably equivalent value to the
Seller in consideration for the transfer by the Seller to the Buyer of any item
of the Purchased 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;
     (xvii) the failure of the Seller or any of its agents or representatives to
remit to the Buyer Collections on the Purchased Collateral remitted to the
Seller or any such agent or representative; or
     (xviii) the failure of any of the hedge requirements to be properly
performed in connection with the Transaction Documents.
     (a) Any amounts subject to the indemnification provisions of this
Section 9.1 shall be paid by the Seller to the Indemnified Party within five
(5) Business Days following such Person’s demand therefor.
     (b) If for any reason the indemnification provided above in this
Section 9.1 is unavailable to the Indemnified Party or is insufficient to hold
an Indemnified Party harmless, then the Seller 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
Seller, on the other hand, but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.
     (c) The obligations of the Seller under this Section 9.1 shall survive the
termination of this Agreement.
     (d) Indemnification under Section 9.1 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.
     Section 9.2. Assignment of Indemnities.
     The Seller acknowledges that, pursuant to the Sale and Servicing Agreement,
the Buyer shall assign its rights of indemnity granted hereunder to the
Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured
Parties, the Backup Servicer and the Collateral Custodian. Upon such assignment,
(i) the Administrative Agent, each Purchaser Agent, the Purchasers, the other
Secured Parties, the Backup Servicer and the Collateral Custodian as applicable,
shall have all rights of the Buyer hereunder and may in turn assign such rights,
and (ii) the obligations of the Seller under this Article IX shall inure to the
Administrative Agent, each Purchaser Agent, the Backup Servicer or the
Collateral Custodian. The Seller

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agrees that, upon such assignment, the Administrative Agent, each Purchaser
Agent, the Purchasers, the other Secured Parties, the Backup Servicer and the
Collateral Custodian or the assignee of any such Person, as applicable, may
enforce directly, without joinder of the Buyer, the indemnities set forth in
this Article IX.
ARTICLE X.
MISCELLANEOUS
     Section 10.1. Amendments and Waivers.
     Except as provided in this Section 10.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective unless signed
by the Buyer and Seller and consented to in writing by the Administrative Agent
and each Purchaser Agent. The Buyer shall provide not less than ten
(10) Business Days’ prior written notice of any such amendment to the
Administrative Agent and each Purchaser Agent.
     Section 10.2. Notices, Etc.
     All notices 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 designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall be effective, upon receipt, or in the case of (a) notice by
mail, five (5) 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 10.3. Limitation of Liability.
     Except with respect to any claim arising out of the willful misconduct or
gross negligence of the Purchasers, the Administrative Agent, each Purchaser
Agent or any other Secured Party, no claim may be made by the Seller or any
other Person against the Purchasers, the Administrative Agent, each Purchaser
Agent or any other Secured Party or their respective Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of 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 the Seller 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 to exist in its favor.
     Section 10.4. Binding Effect; Benefit of Agreement.
     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured
Parties, the Collateral Custodian and the Backup Servicer shall be third–party
beneficiaries of this Agreement.

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     Section 10.5. 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 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 10.6. 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 10.7. Costs, Expenses and Taxes.
     (a) In addition to the rights of indemnification granted to the Buyer and
its Affiliates and officers, directors, employees and agents thereof under
Article IX hereof, the Seller agrees to pay on demand all reasonable costs and
expenses of the Buyer or its assignees incurred in connection with the
preparation, execution, delivery, administration (including periodic auditing),
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 with respect thereto and
with respect to advising the Buyer or its assignees as to its 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 Buyer or its assignees in
connection with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.
     (b) The Seller 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 and the other
documents to be delivered hereunder.
     (c) The Seller shall pay on demand all other reasonable costs, expenses and
Taxes (excluding income taxes) incurred by the Buyer or its assignees in
connection with the execution, delivery, filing and recording of this Agreement
and the other documents to be delivered

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hereunder (“Other Costs”), including, without limitation, all costs and expenses
incurred by the Buyer or its assignees in connection with periodic audits of the
Seller’s books and records.
     Section 10.8. No Proceedings.
     (a) Each of the parties hereto hereby agrees that it will not institute
against, or join any other Person in instituting against, VFCC or any other
Conduit Purchaser any Insolvency Proceeding so long as any commercial paper
issued by VFCC or any other 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) The Seller hereby agrees that it will not institute against, or join
any other Person in instituting against, the Buyer any Insolvency Proceeding so
long as there shall not have elapsed one year and one day since the Collection
Date.
     Section 10.9. 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 Seller 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 Seller or any
incorporator, officer, employee or director of the Seller 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 Seller 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 Seller, and that no personal liability
whatsoever shall attach to or be incurred by any administrator of the Seller or
any incorporator, officer, employee or director of the Seller or of any such
administrator, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of the Seller contained in this Agreement
or in any other such instruments, documents or agreements, or which are implied
therefrom, and that any and all personal liability of every such administrator
of the Seller and each incorporator, officer, employee or director of the Seller
or of any such administrator, or any of them, for breaches by the Seller 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 10.9(a) shall survive the
termination of this Agreement.
     (b) 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 Buyer 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 Buyer or any
incorporator, officer, employee or director of the Buyer 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 Buyer 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

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obligations of the Buyer, and that no personal liability whatsoever shall attach
to or be incurred by any administrator of the Buyer or any incorporator,
officer, employee or director of the Buyer or of any such administrator, as
such, or any of them, under or by reason of any of the obligations, covenants or
agreements of the Buyer contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that
any and all personal liability of every such administrator of the Buyer and each
incorporator, officer, employee or director of the Buyer or of any such
administrator, or any of them, for breaches by the Buyer 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 10.9 (b) shall survive the termination
of this Agreement.
     Section 10.10. Protection of Right, Title and Interest in the Purchased
Collateral; Further Action Evidencing Purchases.
     (a) The Seller shall cause this Agreement, all amendments hereto and/or all
financing statements and continuation statements and any other necessary
documents covering the Buyer’s right, title and interest to the Purchased
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 Buyer hereunder to all property comprising the Purchased
Collateral. The Seller shall deliver to the Buyer the 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 Seller shall cooperate fully with the Buyer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 10.10(a).
     (b) The 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 Buyer, the Administrative Agent or any Purchaser Agent may
reasonably request in order to perfect, protect or more fully evidence the
Purchases hereunder and the security and/or interest granted in the Purchased
Collateral, or to enable the Buyer, the Administrative Agent or any Purchaser
Agent to exercise and enforce its rights and remedies hereunder or under any
Transaction Document. At any time the Buyer, the Administrative Agent or any
Purchaser Agent may direct the Seller or any Servicer to notify the Obligors, at
Seller’s expense, of the Buyer’s, the Administrative Agent’s or any Purchaser
Agent’s interest in the Purchased Collateral under this Agreement and may direct
that payments of all amounts due or that become due under any or all of the
Purchased Collateral be made directly to the Buyer, the Administrative Agent or
any Purchaser Agent.
     (c) If the Seller fails to perform any of its obligations hereunder, the
Buyer, the Administrative Agent or any Purchaser Agent may (but shall not be
required to) perform, or cause performance of, such obligation; and the Buyer’s,
the Administrative Agent’s or any Purchaser Agent’s costs and expenses incurred
in connection therewith shall be payable by the Seller as provided in
Article IX, as applicable. The Seller irrevocably authorizes the Buyer, the
Administrative Agent or any Purchaser Agent at any time and from time to time at
the Buyer’s, the Administrative Agent or any Purchaser Agent’s sole discretion
and appoints the Buyer, the

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Administrative Agent and any Purchaser Agent as its attorney–in–fact to act on
behalf of the Seller (i) to execute on behalf of the Seller as debtor and to
file financing statements necessary or desirable in the Buyer’s, the
Administrative Agent’s or any Purchaser Agent’s sole discretion to perfect and
to maintain the perfection and priority of the interest of the Buyer, the
Administrative Agent or any Purchaser Agent in the Purchased Collateral and
(ii) to file a carbon, photographic or other reproduction of this Agreement or
any financing statement with respect to the Purchased Collateral as a financing
statement in such offices as the Buyer, the Administrative Agent or any
Purchaser Agent in their sole discretion deem necessary or desirable to perfect
and to maintain the perfection and priority of the interests of the Buyer, the
Administrative Agent or any Purchaser Agent in the Purchased Collateral. This
appointment is coupled with an interest and is irrevocable.
     (d) Without limiting the generality of the foregoing, Seller will, not
earlier than six (6) months and not later than three (3) months prior to the
fifth anniversary of the date of filing of the financing statement referred to
in Section 3.1 or 3.2 or any other financing statement filed pursuant to this
Agreement or in connection with any Purchase hereunder, unless the Collection
Date shall have occurred:
     (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 Buyer, the Administrative
Agent and each Purchaser Agent an opinion of the counsel for Seller, in form and
substance reasonably satisfactory to the Buyer, the Administrative Agent and
each Purchaser Agent, confirming and updating the opinion delivered pursuant to
Section 3.1 or 3.2 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 10.11. 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.

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     Section 10.12. Waiver of Setoff.
     (a) The Seller’s obligations under this Agreement shall not be affected by
any right of setoff, counterclaim, recoupment, defense or other right the Seller
might have against the Buyer, the Administrative Agent, each Purchaser Agent,
the Purchasers, the other Secured Parties, the Backup Servicer, the Collateral
Custodian or any assignee of such Persons, all of which rights are hereby waived
by the Seller.
     (b) The Buyer shall have the right to set–off against the Seller any
amounts to which the Seller may be entitled and to apply such amounts to any
claims the Buyer may have against the Seller from time to time under this
Agreement. Upon any such set–off, the Buyer shall give notice of the amount
thereof and the reasons therefor to the Seller.
     Section 10.13. 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 10.14. Rights of Inspection.
     The Buyer and its representatives and assigns may conduct at any reasonable
time, with reasonable notice, and from time to time, and the Seller will fully
cooperate with, a reasonable number of field examinations and audits of the
inventory, the Loans and business affairs of the Seller each calendar year. Each
such inspection shall be at the sole expense of the Seller. The Buyer and its
representatives and successors and assigns acknowledge that in exercising the
rights and privileges conferred in this Section 10.14, it or its representatives
or assigns may, from time to time, obtain knowledge of information, practices,
books, correspondence and records of a confidential nature and in which the
Seller has a proprietary interest. The Buyer and its representatives and
successors and assigns agree that (i) they shall retain in strict confidence and
shall use their best efforts to ensure that their representatives retain in
strict confidence and will not disclose without the prior written consent of the
Seller any or all of such information, practices, books, correspondence and
records furnished to them and (ii) that they will not, and will use their best
efforts to ensure that their representatives and assigns will not, make any use
whatsoever (other than for the purposes contemplated by this Agreement) of any
of such information, practices, books, correspondence and records without the
prior written consent of the Seller, unless such information is generally
available to the public or is required by law to be disclosed.
     Section 10.15. Assignment.
     Notwithstanding anything to the contrary contained herein, this Agreement
may not be assigned by the Buyer or the Seller except as permitted by this
Section 10.15 or by the Sale and Servicing Agreement. Simultaneously with the
execution and delivery of this Agreement, the Buyer shall assign all of its
right, title and interest herein to the Administrative Agent as agent for the
Secured Parties and each Purchaser Agent as agent for the respective Purchaser
under the Sale and Servicing Agreement, to which assignment the Seller hereby
expressly consents. Upon assignment, the Seller agrees to perform its
obligations hereunder for the benefit of the

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Administrative Agent as agent for the Secured Parties and each Purchaser Agent
as agent for the respective Purchaser under the Sale and Servicing Agreement and
the Administrative Agent and each Purchaser Agent, in such capacity, shall be a
third party beneficiary hereof. The Administrative Agent as agent for the
Secured Parties and each Purchaser Agent as agent for the respective Purchaser
under the Sale and Servicing Agreement upon such assignment may enforce the
provisions of this Agreement, exercise the rights of the Buyer and enforce the
obligations of the Seller hereunder without joinder of the Buyer.
     Section 10.16. No Waiver; Cumulative Remedies.
     No failure to exercise and no delay in exercising, on the part of the Buyer
or the Seller, any right, remedy, power or privilege hereunder, shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
     Section 10.17. Subordination.
     The Seller shall have the right to receive, and the Buyer shall make, any
and all payments relating to any indebtedness, obligation or claim the Seller
may from time to time hold or otherwise have against the Buyer or any assets or
properties of the Buyer, whether arising hereunder or otherwise existing;
provided, that, after giving effect to any such payment, the Aggregate
Outstanding Asset Balance of the Purchased Collateral owned by the Buyer at such
time exceeds the Aggregate Unpaids under the Sale and Servicing Agreement. The
Seller hereby agrees that at any time during which the condition set forth in
the proviso of the immediately preceding sentence shall not be satisfied, the
Seller shall be subordinate in right of payment to the prior payment of any
indebtedness or obligation of the Buyer owing to the Purchasers, the
Administrative Agent, each Purchaser Agent or any other Secured Party under the
Sale and Servicing Agreement.
     Section 10.18. Revolving Loan Payments.
     (a) With respect to each Revolving Loan included as part of the Purchased
Collateral, as of any date of determination prior to the occurrence of a
Termination Event or Unmatured Termination Event, Collections from the Obligor
on such Revolving Loan shall be shared and applied proportionately as between
any balance outstanding in connection with the Retained Interest and the
Outstanding Asset Balance of such Revolving Loan purchased by the Buyer under
and in accordance with Section 2.1 hereof in accordance with the percentages
determined as follows: (a) in the case of the Seller, by dividing (i) the
outstanding principal amount of the advances made in connection with the
Retained Interest by (ii) the sum of all advances previously made in connection
with the Revolving Loan; and (b) in the case of the Buyer, by dividing (i) the
Outstanding Asset Balance of such Revolving Loan by (ii) the sum of all advances
previously made in connection with the Revolving Loan.

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     (b) Notwithstanding the foregoing or anything to the contrary contained
herein or any Transaction Document, any payments made by any Hedge Counterparty
pursuant to the terms of the Hedge Agreements shall be solely for the benefit of
the Deal Agent, and the Secured Parties, and shall not be subject to the pro
rata sharing provisions of this Section 10.18. In furtherance of the foregoing
clause of this paragraph, the Seller hereby releases any right, title, or
interest it may have in or to any payment made or to be made at any time by any
Hedge Counterparty pursuant to the terms of any Hedge Agreement.
[Remainder of Page Intentionally Left Blank.]

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     IN WITNESS WHEREOF, the Buyer and the Seller have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized, as of
the day and year first above written.

                  CSE QRS FUNDING I LLC    
 
           
 
  By:   /s/ Thomas A. Fink    
 
                Name: Thomas A. Fink
Title: Chief Financial Officer and Senior Vice President    
 
                CSE QRS Funding I LLC
4445 Willard Avenue
12th Floor
Chevy Chase, Maryland 20815
Attention: Treasurer
Facsimile No.: (301) 841–2375
Confirmation No.: (301) 841–2731    
 
                CSE MORTGAGE LLC    
 
           
 
  By:   /s/ Thomas A. Fink    
 
                Name: Thomas A. Fink
Title: Chief Financial Officer and Senior Vice President    
 
                CSE Mortgage LLC
4445 Willard Avenue
12th Floor
Chevy Chase, Maryland 20815
Attention: Treasurer
Facsimile No.: (301) 841–2371
Confirmation No.: (301) 841–2735    

 

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SCHEDULE I
PURCHASED COLLATERAL LIST
CSE QRS FUNDING I LLC
Purchased Collateral List
(See Attached)

 

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SCHEDULE II
[RESERVED]

 

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SCHEDULE III
LOCK–BOX BANKS AND LOCK–BOX ACCOUNTS

              Bank Name   Account Name   Account Number
Bank of America, NA
  CapitalSource Funding LLC – HFG     003930559738  
Bank of America, NA
  CapitalSource Funding LLC — SFG     003938703751  
Bank of America, NA
  CapitalSource Funding LLC — CFG     003939396662  
Bank of America, NA
  CapitalSource Funding LLC     003922575610  
US Bank National Association
  CapitalSource Acquisition Funding LLC     4346848296  

 

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EXHIBIT A
FORM OF SALE ASSIGNMENT
     SALE ASSIGNMENT NO. ___, dated as of ___, from CSE MORTGAGE LLC (the
“Seller”) to CSE QRS FUNDING I LLC (the “Buyer”).
     1. We refer to the Sale and Servicing Agreement, dated as of December 28,
2005 (the “Agreement”), by and between the Seller and the Buyer.
     2. Defined Terms. All capitalized terms used herein shall have the meanings
ascribed to them in the Agreement unless otherwise defined herein.
     “Addition Date” shall mean, with respect to the Additional Assets
designated hereby, ___, ___.
     “Cut–Off Date” shall mean, with respect to the Additional Assets designated
hereby, ___, ___.
     3. Designation of Additional Assets. Seller delivers herewith a computer
file or microfiche list containing a true and complete list of the Additional
Assets, identified by account number, Obligor and Outstanding Asset Balance as
of the Cut–Off Date. Such computer file, microfiche list or other documentation
shall be as of the date of this Sale Assignment incorporated into and made part
of this Sale Assignment and is marked as Schedule I hereto.
     4. The Seller does hereby sell, transfer, assign, set over and otherwise
convey to the Buyer, and the Buyer hereby purchases and takes from the Seller,
all right, title and interest of the Seller in, to and under all accounts,
general intangibles, instruments, chattel paper, documents, money, letters of
credit, advices of credit, deposit accounts, certificates of deposit, investment
property, goods and other property consisting of, arising from or related to any
of the following property, whether now owned or existing or hereafter created,
arising or acquired and wherever located (collectively, the “Purchased
Collateral”):
     (i) the Additional Assets that are identified by the Seller as of the
Cut–Off Date, which are listed on Schedule I, together with all monies due in
payment of such Assets on and after the Cut–Off Date, but excluding any Excluded
Amounts and any Retained Interest;
     (ii) all Related Security with respect to the Additional Assets referred to
in clause (i) above; and
     (iii) all income and Proceeds of the foregoing.
     5. This Sale Assignment is made without recourse but on the terms and
subject to the conditions set forth in the Transaction Documents to which the
Seller is a party. The Seller acknowledges and agrees that the Buyer is
accepting this Sale Assignment in reliance or the representations, warranties
and covenants of the Seller contained in the Transaction Documents to which the
Seller is a party.

 

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     6. Ratification of the Agreement. The Agreement is hereby ratified, and all
references to the “Sale and Servicing Agreement,” to “this Agreement” and
“herein” shall be deemed from and after the Addition Date to be a reference to
the Agreement as supplemented by this Sale Assignment. Except as expressly
amended hereby, all the representations, warranties, terms covenants and
conditions of the Agreement shall remain unamended and shall continue to be, and
shall, remain, in full force and effect in accordance with its terms and except
as expressly provided herein shall not constitute or be deemed to constitute a
waiver of compliance with or consent to non–compliance with any term or
provision of the Agreement.
     7. THIS SALE ASSIGNMENT NO. ___SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE
CHOICE OF LAW PROVISIONS.
[Remainder of Page Intentionally Left Blank]
     IN WITNESS WHEREOF, the Seller has caused this Sale Assignment to be
executed by its duly authorized officer as of the date first above written.

              CSE MORTGAGE LLC
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       
 
            CSE Mortgage LLC
4445 Willard Avenue
12th Floor
Chevy Chase, Maryland 20815
Attention: Treasurer
Facsimile No.: (301) 841–2375
Confirmation No.: (301) 841–2731

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EXHIBIT B
FORM OF OFFICER’S PURCHASE DATE CERTIFICATE
     This Officer’s Purchase Date Certificate is delivered pursuant to the
provisions of Section 2.1(c) of the Sale and Contribution Agreement (such
agreement as amended, supplemented, modified or restated from time to time, the
“Agreement”), dated as of December 28, 2005, between CSE Mortgage LLC, as the
Seller and CSE QRS Funding I LLC, as the Buyer. This Officer’s certificate
relates to the Purchase Date on ___, 20___.

  A.   Capitalized terms used and not otherwise defined herein have the meanings
assigned to them in the Agreement. References herein to certain sections are
referenced to the respective sections of the Agreement.     B.   The undersigned
is a Responsible Officer of the Seller.     C.   The undersigned hereby
certifies to the Administrative Agent, each Purchaser Agent and the Secured
Parties that all of the representations and warranties in Section 4.2 of the
Agreement are true, accurate and complete as of the Purchase Date referenced
above.

     IN WITNESS WHEREOF, the undersigned has executed this certificate this
___day of ___, 200[_].

         
 
  By:    
 
       
 
      Name:
 
      Title:

 

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APPENDIX A
CONDITION PRECEDENT DOCUMENTS
     (i) Copies of resolutions of the Board of Directors of the Seller approving
the execution, delivery and performance of the Agreement and the transactions
contemplated thereby, certified by the Secretary or an Assistant Secretary of
the Seller.
     (ii) A copy of an officially certified document dated reasonably close to
the Closing Date evidencing the due organization and good standing of the Seller
in each applicable jurisdiction.
     (iii) Copies of the Certificate or Articles of Incorporation and By–Laws of
the Seller certified by the Secretary or an Assistant Secretary of the Seller.
     (iv) Filed UCC–1 financing statement executed by the Seller as debtor,
naming the Buyer as secured party and the Administrative Agent as assignee,
describing the Purchased Collateral, meeting the requirements of the laws of
each jurisdiction in which it is necessary or reasonably desirable, or in which
the Seller is required by Applicable Law, and in such manner as is necessary or
reasonably desirable, to perfect the conveyance of the Purchased Collateral and
the Related Security to the Buyer.
     (v) Opinions of counsel to the Seller, dated the Closing Date, in form and
substance satisfactory to the Buyer.
     (vi) Executed counterparts of this Agreement executed on behalf of the
Seller.
     (vii) A duly completed, executed and delivered initial Purchased Collateral
List (Schedule I).
     (viii) UCC, tax and judgment lien searches of the Seller.
     (ix) UCC terminations.