exv10w4





Exhibit 10.4




COMPOSITE VERSION

Reflects all Amendments through April 29, 2009




      




U.S. $90,000,000




SALE AND SERVICING AGREEMENT




by and among




CAPITALSOURCE FUNDING III LLC,

as the Seller




CAPITALSOURCE FINANCE LLC,

as the Originator and as the Servicer




EACH OF THE CONDUIT PURCHASERS AND THE INSTITUTIONAL

PURCHASERS FROM TIME TO TIME PARTY HERETO,

as Purchasers




EACH OF THE PURCHASER AGENTS

FROM TIME TO TIME PARTY HERETO,

as the Purchaser Agents




WACHOVIA CAPITAL MARKETS, LLC,

as the Administrative Agent and as the WBNA Agent




and




WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Backup Servicer and as the Collateral Custodian




Dated as of April 20, 2004

Conformed as of April 29, 2009




 





 









 





	 	 	 	 	 
	ARTICLE I DEFINITION
	 	 	2	 
	Section 1.1 Certain Defined Terms
	 	 	2	 
	Section 1.2 Other Terms
	 	 	51	 
	Section 1.3 Computation of Time Periods
	 	 	51	 
	Section 1.4 Interpretation
	 	 	51	 
	 
	 	 	 	 
	ARTICLE II PURCHASE OF THE VARIABLE FUNDING NOTES
	 	 	52	 
	Section 2.1 The Variable Funding Notes
	 	 	52	 
	Section 2.2 [Reserved]
	 	 	53	 
	Section 2.3 Procedures for Advances by Purchasers
	 	 	53	 
	Section 2.4 Reduction of the Facility Amount; Mandatory and Optional Repayments
	 	 	53	 
	Section 2.5 Determination of Interest
	 	 	55	 
	Section 2.6 [Reserved]
	 	 	55	 
	Section 2.7 [Reserved]
	 	 	55	 
	Section 2.8 Notations on Variable Funding Notes
	 	 	55	 
	Section 2.9 Settlement Procedures During the Revolving Period
	 	 	55	 
	Section 2.10 Settlement Procedures During the Amortization Period
	 	 	57	 
	Section 2.11 Collections and Allocations
	 	 	58	 
	Section 2.12 Payments, Computations, Etc
	 	 	59	 
	Section 2.13 Optional Repurchase
	 	 	60	 
	Section 2.14 Fees
	 	 	60	 
	Section 2.15 Increased Costs; Capital Adequacy; Illegality
	 	 	61	 
	Section 2.16 Taxes
	 	 	62	 
	Section 2.17 Assignment of the Sale Agreement
	 	 	64	 
	Section 2.18 Substitution of Assets
	 	 	64	 
	Section 2.19 Optional Sales
	 	 	65	 
	Section 2.20 Discretionary Sales
	 	 	67	 
	Section 2.21 Loans Originated by Affiliates of CapitalSource Inc. Other than the Originator
	 	 	68	 
	 
	 	 	 	 
	ARTICLE III CONDITIONS TO ADVANCES
	 	 	68	 
	Section 3.1 Conditions to Closing and Initial Advance
	 	 	68	 
	Section 3.2 Conditions Precedent to All Advances
	 	 	69	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	71	 






 









 






	 	 	 	 	 
	Section 4.1 Representations and Warranties of the Seller
	 	 	71	 
	Section 4.2 Representations and Warranties of the Seller Relating to the Agreement and the Collateral
	 	 	81	 
	Section 4.3 Representations and Warranties of the Servicer
	 	 	82	 
	Section 4.4 Representations and Warranties of the Backup Servicer
	 	 	85	 
	Section 4.5 Representations and Warranties of the Collateral Custodian
	 	 	85	 
	Section 4.6 Breach of Certain Representations and Warranties
	 	 	86	 
	 
	 	 	 	 
	ARTICLE V GENERAL COVENANTS
	 	 	87	 
	Section 5.1 Affirmative Covenants of the Seller
	 	 	87	 
	Section 5.2 Negative Covenants of the Seller
	 	 	90	 
	Section 5.3 Covenants of the Seller Relating to the Hedging of Assets
	 	 	92	 
	Section 5.4 Affirmative Covenants of the Servicer
	 	 	93	 
	Section 5.5 Negative Covenants of the Servicer
	 	 	96	 
	Section 5.6 Affirmative Covenants of the Backup Servicer
	 	 	97	 
	Section 5.7 Negative Covenants of the Backup Servicer
	 	 	98	 
	Section 5.8 Affirmative Covenants of the Collateral Custodian
	 	 	98	 
	Section 5.9 Negative Covenants of the Collateral Custodian
	 	 	98	 
	 
	 	 	 	 
	ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS
	 	 	98	 
	Section 6.1 Designation of the Servicer
	 	 	98	 
	Section 6.2 Duties of the Servicer
	 	 	99	 
	Section 6.3 Authorization of the Servicer
	 	 	101	 
	Section 6.4 Collection of Payments
	 	 	101	 
	Section 6.5 Servicer Advances
	 	 	103	 
	Section 6.6 Realization Upon Charged-Off Assets
	 	 	103	 
	Section 6.7 Maintenance of Insurance Policies
	 	 	104	 
	Section 6.8 Servicing Compensation
	 	 	104	 
	Section 6.9 Payment of Certain Expenses by Servicer
	 	 	104	 
	Section 6.10 Reports
	 	 	105	 
	Section 6.11 Annual Statement as to Compliance
	 	 	105	 
	Section 6.12 Annual Independent Public Accountant’s Servicing Reports
	 	 	106	 
	Section 6.13 Limitation on Liability of the Servicer and Others
	 	 	106	 
	Section 6.14 The Servicer Not to Resign
	 	 	106	 
	Section 6.15 Servicer Defaults
	 	 	107	 






 









 






	 	 	 	 	 
	Section 6.16 Appointment of Successor Servicer
	 	 	108	 
	 
	 	 	 	 
	ARTICLE VII THE BACKUP SERVICER
	 	 	110	 
	Section 7.1 Designation of the Backup Servicer
	 	 	110	 
	Section 7.2 Duties of the Backup Servicer
	 	 	111	 
	Section 7.3 Merger or Consolidation
	 	 	112	 
	Section 7.4 Backup Servicing Compensation
	 	 	112	 
	Section 7.5 Backup Servicer Removal
	 	 	112	 
	Section 7.6 Limitation on Liability
	 	 	113	 
	Section 7.7 The Backup Servicer Not to Resign
	 	 	113	 
	 
	 	 	 	 
	ARTICLE VIII THE COLLATERAL CUSTODIAN
	 	 	114	 
	Section 8.1 Designation of Collateral Custodian
	 	 	114	 
	Section 8.2 Duties of Collateral Custodian
	 	 	114	 
	Section 8.3 Merger or Consolidation
	 	 	116	 
	Section 8.4 Collateral Custodian Compensation
	 	 	116	 
	Section 8.5 Collateral Custodian Removal
	 	 	116	 
	Section 8.6 Limitation on Liability
	 	 	116	 
	Section 8.7 The Collateral Custodian Not to Resign
	 	 	117	 
	Section 8.8 Release of Documents
	 	 	117	 
	Section 8.9 Return of Required Asset Documents
	 	 	118	 
	Section 8.10 Access to Certain Documentation and Information Regarding the Collateral; Audits
	 	 	119	 
	 
	 	 	 	 
	ARTICLE IX SECURITY INTEREST
	 	 	119	 
	Section 9.1 Grant of Security Interest
	 	 	119	 
	Section 9.2 Release of Lien on Collateral
	 	 	120	 
	Section 9.3 Further Assurances
	 	 	120	 
	Section 9.4 Remedies
	 	 	120	 
	Section 9.5 Waiver of Certain Laws
	 	 	120	 
	Section 9.6 Power of Attorney
	 	 	121	 
	 
	 	 	 	 
	ARTICLE X TERMINATION EVENTS
	 	 	121	 
	Section 10.1 Termination Events
	 	 	121	 
	Section 10.2 Remedies
	 	 	124	 
	 
	 	 	 	 
	ARTICLE XI INDEMNIFICATION
	 	 	125	 
	Section 11.1 Indemnities by the Seller
	 	 	125	 






 









 






	 	 	 	 	 
	Section 11.2 Indemnities by the Servicer
	 	 	128	 
	Section 11.3 After-Tax Basis
	 	 	128	 
	 
	 	 	 	 
	ARTICLE XII THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS
	 	 	129	 
	Section 12.1 The Administrative Agent
	 	 	129	 
	Section 12.2 The Purchaser Agents
	 	 	131	 
	Section 12.3 Additional Agent
	 	 	133	 
	 
	 	 	 	 
	ARTICLE XIII MISCELLANEOUS
	 	 	136	 
	Section 13.1 Amendments and Waivers
	 	 	136	 
	Section 13.2 Notices, Etc
	 	 	136	 
	Section 13.3 Ratable Payments
	 	 	136	 
	Section 13.4 No Waiver; Remedies
	 	 	136	 
	Section 13.5 Binding Effect; Benefit of Agreement
	 	 	137	 
	Section 13.6 Term of this Agreement
	 	 	137	 
	Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue
	 	 	137	 
	Section 13.8 Waiver of Jury Trial
	 	 	137	 
	Section 13.9 Costs, Expenses and Taxes
	 	 	138	 
	Section 13.10 No Proceedings
	 	 	138	 
	Section 13.11 Recourse Against Certain Parties
	 	 	139	 
	Section 13.12 Protection of Right, Title and Interest in the Collateral; Further Action Evidencing Advances
	 	 	140	 
	Section 13.13 Confidentiality
	 	 	141	 
	Section 13.14 Execution in Counterparts; Severability; Integration
	 	 	143	 
	Section 13.15 Waiver of Setoff
	 	 	143	 
	Section 13.16 Assignments
	 	 	143	 
	Section 13.17 Heading and Exhibits
	 	 	144	 
	Section 13.18 Loans Subject to Retained Interest Provisions
	 	 	144	 
	Section 13.19 Tax Treatment of Advances
	 	 	144	 






 









 






SALE AND SERVICING AGREEMENT




     THIS SALE AND SERVICING AGREEMENT (such agreement as amended, modified, waived, supplemented,
restated or replaced from time to time, the “Agreement”) is made as of this April 20, 2004,
by and among:



     (1) CAPITALSOURCE FUNDING III LLC, a Delaware limited liability company (as
successor-in-interest to CapitalSource Funding III Inc.), as the seller (together with its
successors and assigns in such capacity, the “Seller”);



     (2) CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (“CapitalSource
Finance”), as the originator (together with its successors and assigns in such capacity, the
“Originator”), and as the servicer (together with its successors and assigns in such
capacity, the “Servicer”);



     (3) EACH OF THE CONDUIT PURCHASERS FROM TIME TO TIME PARTY HERETO (together with their
successors and assigns in such capacity, each a “Conduit Purchaser”);



     (4) EACH OF THE INSTITUTIONAL PURCHASERS FROM TIME TO TIME PARTY HERETO (together with their
respective successors and assigns in such capacities, each an “Institutional Purchaser”,
and together with Conduit Purchasers, the “Purchasers”); and



     (5) EACH OF THE PURCHASER AGENTS FROM TIME TO TIME PARTY HERETO (together with its successors
and assigns in such capacity, each a “Purchaser Agent”);



     (6) WACHOVIA CAPITAL MARKETS, LLC, a Delaware limited liability company (together with its
successors and assigns, “WCM”), as the administrative agent for the Purchaser Agents
hereunder (together with its successors and assigns in such capacity, the “Administrative
Agent”), and as the Purchaser Agent for Wachovia Bank, National Association (“WBNA”),
as an Institutional Purchaser (together with its successors and assigns in such capacity, the
“WBNA Agent”); and



     (7) WELLS FARGO BANK, NATIONAL ASSOCIATION (“Wells Fargo”), not in its individual
capacity but as the backup servicer (together with its successors and assigns in such capacity, the
“Backup Servicer”), and not in its individual capacity but as the collateral custodian
(together with its successors and assigns in such capacity, the “Collateral Custodian”).



 









 









R
E C I T A L S




     WHEREAS, the Seller has acquired, and may from time to time continue to acquire, certain
Assets from the Originator pursuant to the Sale Agreement;



     WHEREAS, the Seller is prepared to grant security interests in, certain Assets and other
proceeds with respect thereto to the Purchasers from time to time;



     WHEREAS, the Purchasers may, in accordance with the terms of this Agreement, purchase such
Assets;



     WHEREAS, it is the intention of the parties hereto that (i) in connection with each Advance
hereunder, the Seller hereby grants a security interest to the Administrative Agent, for the
benefit of the Secured Parties, in all of the Seller’s right, title and interest in and to the
Assets and proceeds with respect thereto, and (ii) this Agreement shall constitute a security
agreement under Applicable Law, in respect of the grant described in the second Recital above, and
all other security interests granted hereunder; and



     WHEREAS, all other conditions precedent to the execution of this Agreement have been complied
with.



     NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises and agreements
contained herein, and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:



ARTICLE I




DEFINITION




     Section 1.1 Certain Defined Terms.



     (a) Certain capitalized terms used throughout this Agreement are defined above or in this
Section 1.1. As used in this Agreement and its schedules, exhibits and other attachments,
unless the context requires a different meaning, the following terms shall have the following
meanings:



     “40 Act”: Defined in Section 10.1(i).



     “Accrual Period”: With respect to each Advance (or portion thereof), (i) with respect
to the first Payment Date, the period from and including the Closing Date to and including the last
day of the calendar month in which the Closing Date occurs and (ii) with respect to any subsequent
Payment Date, the period ending on the last day of the calendar month immediately preceding the
month in which the Payment Date occurs and commencing on the first (1st) day of such immediately
preceding calendar month.



     “Addition Date”: With respect to any Additional Assets, the date on which such
Additional Assets become part of the Collateral.



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     “Additional Agent”: Each Person (together with its successors and assigns) that
becomes a party to this Agreement as an Additional Agent, on behalf of any Additional Purchaser,
pursuant to an Additional Purchaser Agreement.



     “Additional Agent Fee Letter”: Each Additional Agent Fee Letter Agreement that shall
be entered into by and among the Seller, the Servicer and such Additional Agent in connection with
the transactions contemplated by this Agreement, as amended, modified, waived, supplemented,
restated or replaced from time to time.



     “Additional Agent’s Account”: A special account, designated by the Additional Agent
in an Additional Purchaser Agreement, in the name of an Additional Agent maintained with the
related Additional Purchaser.



     “Additional Assets”: All Assets that become part of the Collateral after the Closing
Date.



     “Additional Purchaser”: Each Person (together with its successors and assigns) that
becomes a party to this Agreement as an Additional Purchaser pursuant to an Additional Purchaser
Agreement.



     “Additional Purchaser Agreement”: With respect to each Additional Purchaser, the
Transferee Letter or Assumption Agreement relating to such Additional Purchaser.



     “Adjusted Eurodollar Rate”: For any Accrual Period, an interest rate per annum equal
to a fraction, expressed as a percentage and rounded upwards (if necessary) to the nearest 1/100 of
1%, (i) the numerator of which is equal to the LIBOR Market Index Rate for such Accrual Period and
(ii) the denominator of which is equal to 100% minus the Eurodollar Reserve Percentage for
such Accrual Period.



     “Administrative Agent”: WCM, in its capacity as administrative agent for the
Purchaser Agents, together with its successors and assigns, including any successor appointed
pursuant to ARTICLE XII.



     “Advance”: Defined in Section 2.1(b).



     “Advance Rate”: With respect to any type of Asset on any date of determination, the
corresponding percentage set forth below:



	 	 	 	 	 
	Type of Asset	 	Advance Rate
	Senior Secured ABL Loans
	 	 	77.5	%
	Senior Secured Loans
	 	 	72.5	%
	Stretch Senior Secured Loans
	 	 	67.5	%
	Senior B-Note Loans
	 	 	60.0	%
	Subordinated Loans
	 	 	40.0	%






-3-









 






     provided, however, with respect to any Assigned Loans, Agented Loans,
Participation Loans and DIP Loans, the applicable Advance Rate will be determined by reference to
the type of underlying Loan being acquired, assigned, agented or participated in, as the case may
be.



     “Advances Outstanding”: On any day, the aggregate principal amount of all Advances
outstanding on such day, after giving effect to all repayments of Advances and the making of new
Advances on such day.



     “Affected Party”: The Administrative Agent, the Purchaser Agents, the Purchasers,
each Liquidity Bank, all assignees and participants of the Purchasers and each Liquidity Bank, any
successor to WCM as Administrative Agent and any sub-agent of the Administrative Agent and any
successor to a Purchaser Agent.



     “Affiliate”: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or under common control with such Person, or is a director
or officer of such Person. For purposes of this definition, “control” (including the terms
“controlling,” “controlled by” and “under common control with”) when used with respect to any
specified Person means the possession, direct or indirect, of the power to vote 20% or more of the
voting securities of such Person or to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by contract or otherwise.



     “Agent’s Account”: The WBNA Agent’s Account or any Additional Agent’s Account, as
applicable.



     “Agented Loans”: With respect to any Loan, one or more loans to an Eligible Obligor
wherein (a) the loan(s) are originated by the Originator in accordance with the Credit and
Collection Policy as a part of a loan transaction that has been fully consummated between the
Originator and the related Obligor (without regard to any subsequent syndication of such Loan)
prior to such Agented Loans becoming part of the Collateral hereunder, (b) upon an assignment of
the loan under the Sale Agreement to the Seller, any related original note will be endorsed to the
Administrative Agent and held by the Collateral Custodian, on behalf of the Secured Parties and any
Loan Register will be revised to reflect the transfer of the loan to the Seller, (c) the Seller, as
assignee of the loan, will have all of the rights but none of the obligations of the Originator
with respect to such loan and the Originator’s right, title and interest in and to the Related
Property including the right to receive and collect payments directly in its own name and to
enforce its rights directly against the Obligor thereof to the extent the Originator has such
rights, (d) the loan, if secured, is secured by an undivided interest in the Related Property that
also secures and is shared by, on a pro-rata basis, all other holders of such Obligor’s loans of
equal priority and (e) the Originator (or a wholly-owned subsidiary of CapitalSource Inc.) is the
collateral agent and payment agent for all holders of such Loan.



     “Aggregate Outstanding Asset Balance”: On any date of determination, the sum of the
Outstanding Asset Balances of all Eligible Assets included as part of the Collateral on such date,
minus the Outstanding Asset Balances of any Delinquent Assets. Notwithstanding anything to
the contrary contained herein, for purposes of determining the Aggregate Outstanding Asset Balance,
if any portion of an Asset is deemed to be “charged-off” in accordance with the provisions of the
definition of Charged-Off Asset, then the entire Asset shall be deemed to have



-4-









 







a zero Outstanding Asset Balance, except for purposes of calculating Average Pool Charged-Off
Ratio.



     “Aggregate Unpaids”: At any time, an amount equal to the sum of all unpaid Advances
Outstanding, Interest, Breakage Costs, Hedge Breakage Costs and all other amounts owed by the
Seller to the Purchasers, the Purchaser Agents, the Administrative Agent, the Backup Servicer, each
Hedge Counterparty and the Collateral Custodian hereunder (including, without limitation, all
Indemnified Amounts, other amounts payable under Article XI and amounts required under
Section 2.9, Section 2.10, Section 2.14, Section 2.15 and
Section 2.16 to the Affected Parties or Indemnified Parties) or under any Hedging Agreement
(including, without limitation, payments in respect of the termination of any such Hedging
Agreement) or by the Seller or any other Person under any fee letter (including, without
limitation, the Purchaser Fee Letter, any Additional Agent Fee Letter, the Backup Servicer Fee
Letter and the Collateral Custodian Fee Letter) delivered in connection with the transactions
contemplated by this Agreement (whether due or accrued).



     “Alarm Service Agreement”: An agreement between a Dealer and its customer pursuant to
which the Dealer is obligated to service and monitor the customer’s alarm system in consideration
for monthly payments by the customer.



     “Allocation Adjustment Event”: With respect to each Loan included in the Collateral
subject to the Retained Interest provisions of this Agreement, the occurrence of any one or more of
the following under and as defined in any Permitted Securitization Transaction rated by the Rating
Agencies, as applicable: (i) a “servicer default”, (ii) an “event of default”, (iii) an
“accelerated amortization event”, (iv) a “collateral manager default”, (v) a “termination event”,
(vi) a “servicer termination event” or (vii) any event with substantially similar results to the
foregoing.



     “Alternative Rate”: An interest rate per annum equal to the Adjusted Eurodollar Rate;
provided, however, that the Alternative Rate shall be the Base Rate if a Eurodollar Disruption
Event occurs.



     “Amortization Period”: The period beginning on the Termination Date and ending on the
Collection Date.



     “Applicable Law”: For any Person or property of such Person, all existing and future
applicable laws, rules, regulations (including proposed, temporary and final income tax
regulations), statutes, treaties, codes, ordinances, permits, certificates, orders and licenses of
and interpretations by any Governmental Authority (including, without limitation, usury laws, the
Federal Truth in Lending Act, and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System), and applicable judgments, decrees, injunctions, writs, awards or orders of
any court, arbitrator or other administrative, judicial, or quasi-judicial tribunal or agency of
competent jurisdiction.



     “Asset Checklist”: An electronic list of loan documents delivered by or on behalf of
the Seller to the Collateral Custodian that identifies each of the items contained in the related
Asset File, as amended from time to time.



-5-









 





     “Asset Files”: With respect to any Asset and Related Security, copies of each of the
Required Asset Documents and duly executed originals (to the extent required by the Credit and
Collection Policy) and copies of any other Records relating to such Asset and Related Security.



     “Asset List”: The Asset List provided by the Seller to the Administrative Agent and
the Collateral Custodian, in the form of Schedule IV hereto, as such list may be amended,
supplemented or modified from time to time in accordance with this Agreement.



     “Assets”: Loans, individually or collectively, as the context requires.



     “Assigned Loan”: A Loan originated by a Person other than the Originator or any other
Subsidiary of CapitalSource Inc. in compliance with Section 2.21 in which a constant
percentage interest has been assigned to the Originator by such Person in accordance with the
Credit and Collection Policy and (i) such transaction has been fully consummated prior to such Loan
becoming part of the Collateral hereunder, (ii) the Originator is a party to a credit agreement
and/or an assignment agreement and a promissory note or loan register, as applicable, with the
Obligor with respect to such Loan and (iii) the agent receives payment directly from the Obligor
thereof on behalf of each lender that has been assigned a percentage interest in such Loan.



     “Assignment of Mortgage”: As to each Loan secured by an interest in real property,
one or more assignments, notices of transfer or equivalent instruments, each in recordable form and
sufficient under the laws of the relevant jurisdiction to reflect the transfer of the related
mortgage, deed of trust, security deed or similar security instrument and all other documents
related to such Loan and to the Seller and to grant a perfected lien thereon by the Seller in favor
of the Administrative Agent, on behalf of the Secured Parties, each such Assignment of Mortgage to
be substantially in the form of Exhibit I hereto.



     “Assumption Agreement”: Defined in Section 13.16(b).



     “Availability”: At any time, an amount equal to the excess, if any, of (i) the lesser
of (a) the Facility Amount and (b) the Maximum Availability minus (ii) the Advances
Outstanding on such day; provided that during the Amortization Period, the Availability shall be
zero.



     “Available Funds”: With respect to any Payment Date, all amounts received in the
Collection Account (including, without limitation, any Collections on Assets included in the
Collateral and earnings from Permitted Investments in the Collection Account) during the Collection
Period that ended on the last day of the calendar month immediately preceding the calendar month in
which such Payment Date occurs.



     “Average Pool Charged-Off Ratio”: As of any Determination Date, the percentage
equivalent of a fraction (i) the numerator of which is equal to the sum of the Outstanding Asset
Balance of all Assets that became Charged-Off Assets (net of Recoveries during such Collection
Period) during the Collection Period related to such Determination Date and each of the 11
preceding Determination Dates (or such lesser number as shall have elapsed as of such Determination
Date), and (ii) the denominator of which is equal to a fraction the numerator of which is the sum
of the Aggregate Outstanding Asset Balance as of the first day of the Collection Period related to
such Determination Date and each of the 11 preceding Determination Dates (or such lesser number as
shall have elapsed as of such Determination Date)



-6-









 







and the denominator of which is twelve (or the corresponding lesser number of Determination
Dates included in the calculations described herein).



     “Average Portfolio Charged-Off Ratio”: As of any Determination Date, the percentage
equivalent of a fraction (i) the numerator of which is equal to the sum of the Portfolio
Outstanding Asset Balance of all Portfolio Assets (excluding equity investments) that became
Charged-Off Portfolio Assets (net of Recoveries during such Collection Period) during the
Collection Period related to such Determination Date and each of the 11 preceding Determination
Dates (or such lesser number as shall have elapsed as of such Determination Date), and (ii) the
denominator of which is equal to a fraction the numerator of which is the sum of the Portfolio
Outstanding Asset Balance (excluding equity investments) as of the first day of the Collection
Period related to such Determination Date and each of the 11 preceding Determination Dates (or such
lesser number as shall have elapsed as of such Determination Date) and the denominator of which is
twelve (or the corresponding lesser number of Determination Dates included in the calculations
described herein).



     “Average Portfolio Delinquency Ratio”: As of any Determination Date, the percentage
equivalent of a fraction the numerator of which is equal to the sum of the Portfolio Delinquency
Ratio on such Determination Date and each of the two preceding Determination Dates (or such lesser
number as shall have elapsed as of such Determination Date) and the denominator of which is equal
to three (or the corresponding lesser number of Determination Dates included in the calculations
described herein).



     “Backup Servicer”: Wells Fargo Bank, National Association, not in its individual
capacity, but solely as Backup Servicer, its successor in interest pursuant to Section 7.3
or such Person as shall have been appointed as Backup Servicer pursuant to Section 7.5.



     “Backup Servicer Fee Letter”: The Backup Servicer Fee Letter, dated as of the date
hereof, by and among the Servicer, the Administrative Agent, and the Backup Servicer, as such
letter may be amended, modified, supplemented, restated or replaced from time to time.



     “Backup Servicer Fee Rate”: The rate per annum set forth in the Backup Servicer Fee
Letter as the “Backup Servicer Fee Rate.”



     “Backup Servicer Termination Notice”: Defined in Section 7.5.



     “Backup Servicing Fee”: Defined in the Backup Servicer Fee Letter.



     “Banded Floating Rate Asset”: An Asset where the interest rate payable by the Obligor
thereof fluctuates between a minimum interest rate and a maximum interest rate allowable under its
Required Asset Documents.



     “Bank Subsidiary”: CapitalSource Bank, an industrial bank incorporated under the laws
of the State of California.



     “Bankruptcy Code”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101,
et seq.), as amended from time to time.



-7-









 





     “Base Rate”: On any date, a fluctuating interest rate per annum equal to the higher
of (a) the Prime Rate or (b) the Federal Funds Rate plus 1.5%.



     “Benefit Plan”: Any employee benefit plan as defined in Section 3(3) of ERISA
in respect of which the Seller or any ERISA Affiliate of the Seller is, or at any time during the
immediately preceding six years was, an “employer” as defined in Section 3(5) of ERISA.



     “Borrowing Base”: On any date of determination, the sum of (i) the Aggregate
Outstanding Asset Balance and (ii) (a) the Outstanding Asset Balances of all Additional Assets that
are Eligible Assets to be included as part of the Collateral on such date minus (b) the
amount (calculated without duplication) by which such Eligible Assets exceed any applicable Pool
Concentration Criteria.



     “Borrowing Base Certificate”: Each certificate, in the form of Exhibit A-3,
required to be delivered by the Seller along with each Borrowing Notice.



     “Borrowing Notice”: Each notice, in the form of Exhibit A-1 or A-2
(as applicable), required to be delivered by the Seller (i) in respect of (a) the Initial Advance,
each incremental Advance (as applicable), (b) any reduction of the Facility Amount or repayment of
Advances Outstanding, or (c) any reinvestment of Principal Collections under Section
2.9(b); and (ii) on each Determination Date.



     “Breakage Costs”: Any amount or amounts as shall compensate a Purchaser for any loss,
cost or expense incurred by such Purchaser (as determined by such Purchaser’s Purchaser Agent in
such Purchaser Agent’s sole discretion) as a result of (i) a prepayment by the Seller of Advances
Outstanding or Interest or (ii) any difference between the CP Rate and the Adjusted Eurodollar
Rate. All Breakage Costs shall be due and payable hereunder upon demand.



     “Business Day”: Any day other than a Saturday or a Sunday on which (a) banks are not
required or authorized to be closed in Minneapolis, Minnesota, New York City, New York, Charlotte,
North Carolina, and (b) if the term “Business Day” is used in connection with the determination of
the LIBOR Market Index Rate, dealings in United States dollar deposits are carried on in the London
interbank market.



     “CapitalSource Bank Transaction”: The acquisition by CapitalSource Inc. of the assets
of Fremont Investment & Loan that occurred on July 25, 2008.



     “CapitalSource LIBOR Rate”: The London interbank offered rate for deposits in Dollars
for the applicable maturity, as and when determined in accordance with the applicable Required
Asset Documents.



     “CapitalSource Prime Rate”: The rate designated by CapitalSource Finance (or the
originator of, or applicable agent with respect to, an Assigned Loan) from time to time and/or
pursuant to the related loan documents as its prime rate in the United States, such rate to change
as and when the designated rate changes; provided, however, the CapitalSource Prime Rate is not
intended to be the lowest rate of interest charged by CapitalSource (or such originator) in
connection with extensions of credit to debtors.



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     “Capital Stock”: With respect to any Person, shares of capital stock of (or other
ownership or profit interests in) such Person, warrants, options or other rights for the purchase
or other acquisition from such Person of shares of capital stock of (or other ownership or profit
interests in) such Person, securities convertible into or exchangeable for shares of capital stock
of (or other ownership or profit interests in) such Person or warrants, rights or options for the
purchase or other acquisition from such Person of such shares (or such other interests), and other
ownership or profit interests in such Person (including, without limitation, partnership, member or
trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are authorized or otherwise existing on any date of
determination.



     “Change-in-Control”: Means (a) any Person or two or more Persons acting in concert
shall have acquired “beneficial ownership,” directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, or control over, Voting Stock of
CapitalSource Inc. (or other securities convertible into such Voting Stock) representing 33-1/3% or
more of the combined voting power of all Voting Stock of CapitalSource Inc., (b) the sale, lease,
transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or
a series of related transactions, of all or substantially all of the assets of CapitalSource Inc.
and its Subsidiaries taken as a whole to any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), (c) the failure of CapitalSource Inc. to own
(directly or through wholly owned subsidiaries) 99.9% of the outstanding Voting Stock of
CapitalSource TRS LLC (f/k/a CapitalSource TRS Inc.) or any Servicing Guarantor, (d) the failure of
CapitalSource TRS LLC (f/k/a CapitalSource TRS Inc.) to own (directly or through wholly owned
subsidiaries) 99.9% of the outstanding Voting Stock of the Originator or any Servicing Guarantor,
(e) the creation or imposition of any Lien on any limited liability company membership interests in
the Seller; provided, however, that it shall not be a Change-in-Control if a Lien on such limited
liability membership interests of the Seller shall be created or imposed in favor of WBNA, as
agent, or its successors, assigns or subsequent transferees in such capacity, in connection with
(i) that certain Credit Agreement, dated as of March 14, 2006, by and among CapitalSource Inc., the
guarantors listed therein, the lenders listed therein, WBNA and Bank of America, N.A., and all
Credit Documents (as defined therein) thereunder, (ii) that certain Pledge Agreement, dated as of
December 23, 2008, by and among CapitalSource Inc., its direct and indirect subsidiaries listed
therein, WBNA, the Collateral Custodian and the Servicer, and (iii) that certain Security
Agreement, dated as of December 23, 2008, by and among CapitalSource Inc., its direct and indirect
subsidiaries listed therein and WBNA or (f) the failure by the Originator to own all of the limited
liability company membership interests in the Seller; provided, however, that it shall not be a
Change-in-Control if WBNA, or its successors, assigns or subsequent transferees, shall own such
limited liability membership interests of the Seller. Notwithstanding the foregoing, solely for
the purpose of determining whether there has been a Change-in-Control pursuant to clause
(a) above, any purchase by one or more Excluded Persons which increases any of such Excluded
Persons’ direct or indirect ownership interest (whether individually or in the aggregate) in the
Voting Stock of CapitalSource Inc. shall not constitute a Change-in-Control even if the amount of
Voting Stock acquired or controlled by such Excluded Person(s) exceeds (whether individually or in
the aggregate) 33-1/3% of the combined voting power of all Voting Stock of the Originator, any
Servicing Guarantor or CapitalSource Inc., as applicable; provided that for so long as any of such
Excluded Persons’ direct or indirect ownership interest in the Voting Stock



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of the Originator, any Servicing Guarantor or CapitalSource Inc. exceeds (individually or in
the aggregate) 33-1/3% of the combined voting power of all Voting Stock of the Originator, any
Servicing Guarantor or CapitalSource Inc., as applicable, the initiation by the Originator, any
Servicing Guarantor or CapitalSource Inc. of any action intended to terminate or having the effect
of terminating the registration of its securities under Section 12(g) of the Exchange Act
or intended to suspend or having the effect of suspending its obligation to file reports with the
U.S. Securities and Exchange Commission under Sections 13 and 15(d) of the Exchange
Act, shall constitute a Change-in-Control. “Excluded Person” shall mean each of John Delaney,
Farallon Capital Management, LLC and Madison Dearborn Partners, LLC and their Affiliates. As used
herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act.



     “Charged-Off Asset”: An Asset (or portion thereof deemed to be “charged-off”) as to
which any of the following first occurs: (i) the Servicer has determined or should have reasonably
determined in accordance with the Credit and Collection Policy that such Asset is not collectible,
(ii) (a) all or any portion of one or more principal or interest payments (other than in respect of
default rate interest) remain unpaid for at least ninety (90) days from the original due date for
such payment (without giving effect to any Servicer Advance thereon), in which case not less than
fifty percent (50%) of the Outstanding Asset Balance shall be deemed to be “charged-off” for
purposes of this Agreement (and for the avoidance of doubt, the remaining fifty percent (50%) of
such Outstanding Asset Balance shall be deemed to be “delinquent” for purposes of this Agreement),
and (b) all or any portion of one or more principal or interest payments (other than in respect of
default rate interest) remain unpaid for at least one hundred and eighty (180) days from the
original due date for such payment (without giving effect to any Servicer Advance thereon), in
which case not less than one hundred percent (100%) of the Outstanding Asset Balance of an Asset
shall be deemed to be “charged-off” for purposes of this Agreement, or (iii) (a) the Obligor
thereof or any Person obligated thereon is subject to an Insolvency Event, in which case not less
than fifty percent (50%) of the Outstanding Asset Balance of an Asset shall be deemed to be
“charged-off” as of the date of the occurrence of such Insolvency Event for purposes of this
Agreement, (b) the Obligor thereof or any Person obligated thereunder has suffered a material
adverse change which materially affects its viability as a going concern as reasonably determined
by the Servicer, or (c) adequate collateral or other source of payment does not exist to repay the
full amount due to the Seller under the Asset as determined by the Servicer.



     “Charged-Off Portfolio Asset”: A Portfolio Asset (or portion thereof deemed to be
“charged-off”) (excluding equity investments) as to which any of the following first occurs: (i)
the Servicer has determined or should have reasonably determined in accordance with the Credit and
Collection Policy (or such similar policies and procedures utilized by the Servicer in servicing
such Portfolio Asset) that such Portfolio Asset is not collectible, (ii) (a) all or any portion of
one or more principal or interest payments (other than in respect of default rate interest) remain
unpaid for at least ninety (90) days from the original due date for such payment (without giving
effect to any Servicer Advance thereon), in which case not less than fifty percent (50%) of the
Portfolio Outstanding Asset Balance of such Portfolio Asset shall be deemed to be “charged-off” for
purposes of this Agreement (and for the avoidance of doubt, the remaining fifty percent (50%) of
such Outstanding Asset Balance shall be deemed to be “delinquent” for purposes of this Agreement),
and (b) all or any portion of one or more principal or interest payments (other than in respect of
default rate interest) remain unpaid for at least one hundred



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and eighty (180) days from the original due date for such payment (without giving effect to
any Servicer Advance thereon), in which case not less than one hundred percent (100%) of the
Portfolio Outstanding Asset Balance of such Portfolio Asset shall be deemed to be “charged-off” for
purposes of this Agreement, or (iii) (a) the Obligor thereof or any Person obligated thereon is
subject to an Insolvency Event, in which case not less than fifty percent (50%) of the Portfolio
Outstanding Asset Balance of such Portfolio Asset shall be deemed to be “charged-off” as of the
date of the occurrence of such Insolvency Event for purposes of this Agreement, (b) the Obligor or
any Person obligated thereon has suffered a material adverse change which materially affects its
viability as an ongoing concern as reasonably determined by the Servicer, or (c) adequate
collateral or other source of payment does not exist to repay the principal due under the Portfolio
Asset as determined by the Servicer.



     “Clearing Agency”: An organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act.



     “Closing Date”: April 20, 2004.



     “Code”: The Internal Revenue Code of 1986, as amended from time to time.



     “Collateral”: All right, title, and interest (whether now owned or hereafter acquired
or arising, and wherever located) of the Seller in all accounts, cash and currency, chattel paper,
tangible chattel paper, electronic chattel paper, copyrights, copyright licenses, equipment,
fixtures, general intangibles, instruments, commercial tort claims, deposit accounts, inventory,
investment property, letter-of-credit rights, software, supporting obligations, accessions, and
other property consisting of, arising out of, or related to any of the following (in each case
excluding the Retained Interest and the Excluded Amounts): (i) the Existing Assets and Additional
Assets, and all monies due or to become due in payment under such Existing Assets and Additional
Assets on and after the related Cut-Off Date, including but not limited to all Collections, but
excluding any Excluded Amounts; (ii) all Related Security with respect to the Assets referred to in
clause (i) and (iii) all income and Proceeds of the foregoing.



     “Collateral Custodian”: Wells Fargo Bank, National Association, not in its individual
capacity, but solely as Collateral Custodian, its successor in interest pursuant to Section
8.3 or such Person as shall have been appointed Collateral Custodian pursuant to Section
8.5.



     “Collateral Custodian Fee”: Defined in the Collateral Custodian Fee Letter.



     “Collateral Custodian Fee Letter”: The Collateral Custodian Fee Letter, dated as of
the date hereof, by and among the Originator, the Administrative Agent and the Collateral
Custodian, as such letter may be amended, modified, supplemented, restated or replaced from time to
time.



     “Collateral Custodian Termination Notice”: Defined in Section 8.5.



     “Collection Account”: Defined in Section 6.4(f).



     “Collection Date”: The date following the Termination Date on which the Aggregate
Unpaids have been reduced to zero and indefeasibly paid in full.



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     “Collection Period”: Each calendar month.



     “Collections”: (a) All cash collections and other cash proceeds of any Asset,
including, without limitation, Scheduled Payments, Finance Charges, Prepayments, Insurance
Proceeds, Distributions, all Recoveries or other amounts received in respect thereof but excluding
any Excluded Amounts, (b) any cash proceeds or other funds received by the Seller or the Servicer
with respect to any Related Security, (c) all payments received pursuant to any Hedging Agreement
or Hedge Transaction and (d) all Deemed Collections.



     “Commercial Paper Notes”: On any day, any short-term promissory notes of any
Purchaser (or its related commercial paper issuer) issued in the commercial paper market.



     “Commitment”: With respect to each Purchaser, the commitment of such Purchaser to
make Advances in accordance herewith in an amount not to exceed (i) (a) prior to the Termination
Date, the dollar amount set forth opposite such Purchaser’s signature on the signature pages hereto
or the signature pages of the Additional Purchaser Agreement relating to such Purchaser, as
applicable, under the heading “Commitment” and (b) on or after the Termination Date, such Conduit
Purchaser’s Pro Rata Share of the aggregate Advances Outstanding or (ii) as to Conduit Purchasers
only, with respect to each Advance, the Pro-Rata Share.



     “Commitment Fee”: (a) With respect to any Purchaser, as defined in such Purchaser’s
Purchaser Fee Letter and (b) with respect to any Additional Purchaser, as defined in such
Additional Purchaser’s Additional Agent Fee Letter.



     “Conduit Purchasers”: Defined in the Preamble of this Agreement.



     “Consolidated Funded Indebtedness”: As of any date of determination, all outstanding
Indebtedness of the Originator and its Subsidiaries determined on a consolidated basis in
accordance with GAAP.



     “Consolidated Subsidiary”: With respect to any Person, at any date, any Subsidiary
the accounts of which, in accordance with GAAP, would be consolidated with those of such Person in
its consolidated and consolidating financial statements as of such date.



     “Consolidated Tangible Net Worth”: As of any date of determination, (i) with respect
to CapitalSource Inc., the assets less the liabilities of CapitalSource Inc. and its Consolidated
Subsidiaries, less intangible assets (including goodwill), less loans or advances to stockholders,
directors, officers or employees, all determined in accordance with GAAP; provided, however, that
if CapitalSource Inc.’s financial statements as of such date include goodwill created as a result
of the CapitalSource Bank Transaction, then all such goodwill in an amount not to exceed
$200,000,000 shall be treated as a tangible asset for the purpose of this definition; provided,
further, however, that with respect to any Consolidated Subsidiary, if all of the shares of Capital
Stock are not, directly or indirectly, owned by CapitalSource Inc., then, with respect to any such
Person, the Consolidated Tangible Net Worth of such Person shall be calculated by multiplying the
Consolidated Tangible Net Worth of such Person by the percentage of the aggregate proceeds that
would be distributed to CapitalSource Inc., directly or indirectly, upon the dissolution of such
Person, and (ii) with respect to any other Person, the assets less the liabilities of such Person



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and its Subsidiaries on a consolidated basis, less intangible assets (including goodwill), all
determined in accordance with GAAP.



     “Contractual Obligation”: With respect to any Person, any provision of any securities
issued by such Person or any indenture, mortgage, deed of trust, contract, undertaking, agreement,
instrument or other document to which such Person is a party or by which it or any of its property
is bound or is subject.



     “CP Rate”: For any day during any Accrual Period, the per annum rate equivalent to
the weighted average of the per annum rates paid or payable by a Conduit Purchaser from time to
time as interest on or otherwise (by means of interest rate hedges or otherwise taking into
consideration any incremental carrying costs associated with short-term promissory notes issued by
such Conduit Purchaser (or its related commercial paper issuer) maturing on dates other than those
certain dates on which such Conduit Purchaser is to receive funds) in respect of the promissory
notes issued by such Conduit Purchaser (or its related commercial paper issuer) that are allocated,
in whole or in part, by such Conduit Purchaser’s Purchaser Agent (on its behalf) to fund or
maintain the Advances Outstanding funded by such Conduit Purchaser during such period, as
determined by such Conduit Purchaser’s Purchaser Agent (on its behalf) and reported to the Seller
and the Servicer, which rates shall reflect and give effect to (i) the commissions of placement
agents and dealers in respect of such promissory notes, to the extent such commissions are
allocated, in whole or in part, to such promissory notes by such Conduit Purchaser’s Purchaser
Agent (on its behalf) and (ii) other borrowings by such Conduit Purchaser, including, without
limitation, borrowings to fund small or odd dollar amounts that are not easily accommodated in the
commercial paper market; provided that if any component of such rate is a discount rate, in
calculating the CP Rate, such Conduit Purchaser’s Purchaser Agent shall for such component use the
rate resulting from converting such discount rate to an interest bearing equivalent rate per annum.



     “Credit and Collection Policy”: The written credit policies and procedures manual of
the Originator and the Servicer (which policies shall include without limitation policies on a risk
rating system, due diligence format, underwriting parameters and credit approval procedures) in the
form provided to the Administrative Agent prior to the Closing Date, as it may be as amended or
supplemented from time to time in accordance with Section 5.1(h) and Section
5.4(f).



     “Cut-Off Date”: With respect to each Asset and Additional Asset, the related Funding
Date therefor.



     “Deemed Collection”: Defined in Section 2.4(c).



     “Delinquent Asset”: An Asset (that is not a Charged-Off Asset) as to which either of
the following first occurs: (a) all or any portion of one or more principal or interest payments
(other than in respect of default rate interest) remain unpaid for (i) at least thirty (30) days
but less than sixty (60) days from the original due date for such payment (without giving effect to
any Servicer Advance thereon), in which case not less than fifty percent (50%) of the Outstanding
Asset Balance of such Asset shall be deemed to be “delinquent” for purposes of this Agreement, (ii)
at least sixty (60) days from the original due date for such payment (without giving effect to



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any Servicer Advance thereon), in which case, for the avoidance of doubt, one hundred percent
(100%) of the Outstanding Asset Balance of such Asset shall be deemed to be “delinquent” for
purposes of this Agreement, or (b) consistent with the Credit and Collection Policy such Asset
would be classified as delinquent by the Servicer.



     “Delinquent Portfolio Asset”: A Portfolio Asset (that is not a Charged-Off Portfolio
Asset) (excluding equity investments) as to which either of the following first occurs: (a) all or
any portion of one or more principal or interest payments (other than in respect of default rate
interest) remain unpaid for at least sixty (60) days from the original due date for such payment
(without giving effect to any Servicer Advance thereon) or (b) consistent with the Credit and
Collection Policy (or such similar policies and procedures utilized by the Servicer in servicing
such Portfolio Asset) such Portfolio Asset would be classified as delinquent by the Servicer.



     “Derivatives”: Any exchange-traded or over-the-counter (i) forward, future, option,
swap, cap, collar, floor or foreign exchange contract or any combination thereof, whether for
physical delivery or cash settlement, relating to any interest rate, interest rate index, currency,
currency exchange rate, currency exchange rate index, debt instrument, debt price, debt index,
depository instrument, depository price, depository index, equity instrument, equity price, equity
index, commodity, commodity price or commodity index, (ii) any similar transaction, contract,
instrument, undertaking or security, or (iii) any transaction, contract, instrument, undertaking or
security containing any of the foregoing.



     “Determination Date”: The last day of each Collection Period.



     “DIP Loan”: Any Loan to an Obligor that is a Chapter 11 debtor under the Bankruptcy
Code which is permitted by the Credit and Collection Policy and also satisfies the following
criteria: (a) the Loan is duly authorized by a final order of the applicable bankruptcy or federal
district court under the provisions of subsection (b), (c) or (d) of 11
U.S.C. § 364, (b) the Obligor’s bankruptcy case is still pending as a case under the provisions of
Chapter 11 of Title 11 of the Bankruptcy Code and has not been dismissed or converted to a case
under the provisions of Chapter 7 of Title 11 of the Bankruptcy Code, (c) the Obligor’s obligations
under such Loan have not been (i) disallowed, in whole or in part, or (ii) subordinated, in whole
or in part, to the claims or interests of any other Person under the provisions of 11 U.S.C. § 510,
(d) the Loan is secured and the liens and security interests granted by the applicable federal
bankruptcy or district court in relation to the Loan have not been subordinated, in whole or in
part, to the liens or interests of any other lender under the provisions of 11 U.S.C. § 364(d) or
otherwise, (e) the Obligor is not in default on its payment obligations under the Loan, (f) neither
the Obligor nor any party in interest has filed a Chapter 11 plan with the applicable federal
bankruptcy or district court that, upon confirmation, would (i) disallow or subordinate the Loan,
in whole or in part, (ii) subordinate, in whole or in part, any lien or security interest granted
in connection with such Loan, (iii) fail to provide for the repayment, in full and in cash, of the
Loan upon the effective date of such plan or (iv) otherwise impair, in any manner, the claim
evidenced by the Loan and (g) the Loan is substantially in a form previously delivered by the
Originator to the Administrative Agent in connection with this transaction or in such other form as
shall be adopted by the Originator and approved in writing by the Administrative Agent at least ten
days prior to such Loan becoming part of the Collateral hereunder. For the purposes of this
definition, an order is a “final order” if the applicable period for filing a motion to reconsider
or notice of



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appeal in respect of a permanent order authorizing the Obligor to obtain credit has lapsed and
no such motion or notice has been filed with the applicable federal bankruptcy or district court or
the clerk thereof.



     “Discretionary Sale”: Defined in Section 2.20.



     “Discretionary Sale Date”: The Business Day identified by the Seller to the
Administrative Agent in a Discretionary Sale Notice as the proposed date of a Discretionary Sale.



     “Discretionary Sale Notice”: Defined in Section 2.20.



     “Distributions”: All dividends, payments, deferred payments, money and other
distributions (whether in cash or in kind) on and all interest on and in respect of, and all
proceeds of the Collateral, of whatever kind or description, real or personal, whether in the
ordinary course or in partial or total liquidation or dissolution, or any recapitalization,
reclassification of capital, or reorganization or reduction of capital, or otherwise.



     “Dollars”: Means, and the conventional “$” signifies, the lawful currency of
the United States.



     “Eligible Asset”: On any date of determination, each Asset (A) for which the
Administrative Agent, Collateral Custodian and Backup Servicer have received the following no later
than 2:00 p.m. (Charlotte, North Carolina time) on the day prior to the related Funding Date: (1)
a faxed copy of the duly executed original promissory note, master purchase agreement and purchase
statements, Loan Register and Asset Checklist in a form and substance satisfactory to the
Administrative Agent and, with respect to any Loans closed in escrow, a certificate (in the form of
Exhibit L) from the counsel to the Originator or the Obligor of such Loans certifying the
possession of the Required Asset Documents; provided that, notwithstanding the foregoing, the
Required Asset Documents (including any UCCs included in the Required Asset Documents) shall be in
the possession of the Collateral Custodian within two Business Days of any related Funding Date as
to any Additional Assets; (2) a Borrowing Notice delivered by the Seller to the Collateral
Custodian and the Administrative Agent as part of the Borrowing Notice or Monthly Report delivered
by the Servicer, (3) a Borrowing Base Certificate, and (4) a Certificate of Assignment (Exhibit
A to the Sale Agreement, including Schedule I thereto); provided, further, that if such
Asset is part of a capital contribution to the Seller the Collateral Custodian shall have received
the Required Asset Documents within three Business Days of receipt of the Certificate of Assignment
and (B) that satisfies each of the following eligibility requirements, as applicable:


(1) With respect to any Asset:




     (a) the Asset, together with the Related Security, has been originated or acquired by the
Originator, sold to the Seller pursuant to (and in accordance with) the Sale Agreement and the
Seller has good title, free and clear of all Liens (other than Permitted Liens), on such Asset and
Related Security;



-15-









 





     (b) the Asset (together with the Collections and Related Security related thereto) has been
the subject of a grant by the Seller in favor of the Administrative Agent, on behalf of the Secured
Parties, of a first priority perfected security interest;



     (c) at the time such Asset is included in the Collateral, the Asset (i) is not (and since its
origination by the Originator) a Charged-Off Asset (either in whole or in part), (ii) is not more
than ten days past due with respect to payments of principal or interest, and (iii) has never been
more than thirty days past due (after giving effect to a five day grace period in determining the
number of days past due) with respect to payments of principal or interest;



     (d) the Asset is an “eligible asset” as defined in Rule 3a-7 under the 40 Act;



     (e) the Asset is a contract the purchase of which with the proceeds of Commercial Paper Notes
would constitute a “current transaction” within the meaning of Section 3(a)(3) of the
Securities Act of 1933, as amended;



     (f) the Asset is an “account”, “chattel paper”, “instrument” or a “general intangible” within
the meaning of Article 9 of the UCC of all applicable jurisdictions;



     (g) the Obligor with respect to such Asset is an Eligible Obligor and such Asset is payable
only in United States Dollars and the Related Property with respect to which the Asset is
principally underwritten is located in the United States;



     (h) the Asset is evidenced by (1) a promissory note or Loan Register and (2) a credit
agreement, security agreement, loan or note purchase agreement or other Underlying Instruments, in
each case, that have been duly authorized and executed, are in full force and effect and constitute
the legal, valid, binding and absolute and unconditional payment obligation of the related Obligor,
enforceable against such Obligor in accordance with their terms (subject to applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of creditors generally and to
general principles of equity, whether considered in a suit at law or in equity), and there are no
conditions precedent to the enforceability or validity of the Asset that have not been satisfied or
validly waived; provided that, in the case of clause (2) above, in the absence of a separate
security agreement, the related credit agreement, loan or note purchase agreement or other
Underlying Instruments shall provide for the grant of a security interest in the Related Property
by the Obligor;



     (i) the Asset does not contravene in any material respect any Applicable Laws (including,
without limitation all applicable predatory and abusive lending laws and all laws, rules and
regulations relating to usury, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices, licensing and privacy) and with respect to
which no part thereof is in violation of any Applicable Law in any material respect;



     (j) neither the assignment of the Asset under the Sale Agreement by the Originator nor the
granting of a security interest hereunder by the Seller violates, conflicts with or contravenes any
Applicable Laws or any contractual or other restriction, limitation or encumbrance;



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     (k) on or before the applicable Cut-Off Date, the Obligor of such Asset or agent for such
Asset, as applicable, shall have been directed to make all payments to the Lock-Box or directly to
the Lock-Box Account;



     (l) the Asset requires the Obligor thereof to maintain reasonable and customary property
damage and loss insurance with respect to the real or personal property constituting the Related
Property (if any) if such Related Property is of a type customarily so insured;



     (m) the Related Property (if any) (i) has not been foreclosed on or repossessed from the
current Obligor by the Servicer, and (ii) has not suffered any material loss or damage that has not
been repaired or restored or for which insurance proceeds are not available;



     (n) the Asset provides by its terms that the Obligor’s payment obligations are absolute and
unconditional without any right of rescission, setoff, counterclaim or defense for any reason
against the Originator and the Asset contains a clause that has the effect of unconditionally and
irrevocably obligating the Obligor to make periodic payments (including taxes) notwithstanding any
damage to, defects in, or destruction of the Related Property (if any) or any other event,
including obsolescence of any property or improvements;



     (o) the Asset is not subject to any litigation, dispute, refund, claims of rescission, setoff,
netting, counterclaim or defense whatsoever, including but not limited to, claims by or against the
Obligor thereof or a payor to or account debtor of such Obligor;



     (p) the Asset requires the Obligor to maintain the Related Property in good condition and to
bear all the costs of operating and maintaining same, including taxes and insurance relating
thereto;



     (q) the Asset shall not have been originated in, nor shall it be subject to the laws of, any
jurisdiction under which the sale, transfer and assignment of such Asset under the Transaction
Documents would be unlawful, void or voidable;



     (r) the Asset, together with the Required Asset Documents and Asset File related thereto, is
assignable and does not require the consent of or notice to the Obligor to consummate the
transactions contemplated by the Transaction Documents or contain any other restriction on the
transfer or the assignment of the Asset for the purpose of consummating the transactions
contemplated by the Transaction Documents other than a consent or waiver of such restriction that
has been obtained prior to the date on which the Asset was sold to the Seller;



     (s) the Obligor of such Asset is legally responsible for all taxes relating to the Related
Security or other security relating to such Asset, and all payments in respect of the Asset are
required to be made free and clear of, and without deduction or withholding for or on account of,
any taxes, unless such withholding or deduction is required by Applicable Law in which case the
Obligor thereof is required to make “gross-up” payments that cover the full amount of any such
withholding taxes on an after-tax basis;



     (t) the Asset complies with the representations and warranties made by the Seller and Servicer
hereunder and all information provided by the Seller or the Servicer with respect to the Asset is
true and correct in all material respects;



-17-









 





     (u) the Asset and the Related Security have not been sold, transferred, assigned or pledged by
the Seller to any Person;



     (v) no selection procedure adverse to the interests of the Administrative Agent, the Purchaser
Agents or the Secured Parties was utilized by the Seller or Originator in the selection of Asset
for inclusion in the Collateral; it being understood that selection procedures used by the Seller
or Originator for the inclusion of Assets in one or more of its various securitizations or other
financing facilities and which are solely intended to obtain the most beneficial advance rates
thereunder and/or otherwise maximize the efficiency of such facilities, shall not be deemed to be
adverse procedures for purposes of this paragraph;



     (w) the Asset has not been compromised, adjusted, extended, satisfied, rescinded, set-off or
modified by the Seller, the Originator or the Obligor with respect thereto, and no Asset is subject
to compromise, adjustment, extension, satisfaction, rescission, set-off, counterclaim, defense,
abatement, suspension, deferment, deductible, reduction, termination or modification, whether
arising out of transactions concerning the Asset, or otherwise, by the Seller, the Originator or
the Obligor with respect thereto except for amendments to such Asset otherwise permitted under
Section 7.4(a) of this Agreement and in accordance with the Credit and Collection Policy;



     (x) the particular Asset is not one as to which the Seller has knowledge which should lead it
to expect such Asset will not be paid in full;



     (y) except with respect to DIP Loans, the Obligor of such Asset is not and has not been the
subject of an Insolvency Event or Insolvency Proceeding in the past three years;



     (z) the Asset is secured by a valid, perfected, first priority (other than with respect to
Subordinated Loans) security interest in all assets that constitute the collateral for the Asset
(subject to Liens expressly permitted by the Underlying Instruments; provided that such Liens are
not material in relation to the value of the Related Property and are customary for transactions of
such nature), and, other than the loan types listed above, such collateral shall include but not be
limited to the material intellectual property of the Obligor (if any);



     (aa) all material consents, licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority required to be obtained, effected or given in
connection with the making or performance of the Asset have been duly obtained, effected or given
and are in full force and effect;



     (bb) [Reserved];



     (cc) the Asset satisfies all applicable requirements of and was originated or acquired,
underwritten and closed in accordance with the Credit and Collection Policy (including without
limitation the execution by the Obligor of all documentation required by the Credit and Collection
Policy);



     (dd) the Asset was generated in the ordinary course of the Originator’s business;



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     (ee) the Asset arises pursuant to documentation with respect to which the Originator has
performed all obligations required to be performed by it thereunder;



     (ff) the Asset is not Margin Stock;



     (gg) the acquisition of the Asset by the Seller will not cause the Seller or the pool of
Collateral to be required to be registered as an investment company under the 40 Act;



     (hh) the Asset was purchased, acquired or originated by the Originator (or an Affiliate
thereof) at not less than 85% of its par value as of the date of its purchase, acquisition or
origination;



     (ii) from and after the date on which the Asset was first added to the Collateral, the Asset
has not been, and is not, a Materially Modified Asset; and



     (jj) the Asset is not subject to a guaranty by the Originator or any Affiliate thereof.


(2) With respect to any Loan:




     (a) the Loan provides (i) for periodic payments of interest and/or principal in cash, which
are due and payable on a monthly, quarterly or semi-annual basis unless otherwise consented to in
writing by the Administrative Agent, and (ii) that the Servicer (or, with respect to Agented Loans
and Assigned Loans, that the agent or a majority of the related lenders) may accelerate all
payments on the Loan, if the Obligor is in default under the Loan and any applicable grace period
has expired (in the case of any Subordinated Loan, subject to any applicable intercreditor or
subordination agreement);



     (b) unless such Loan is a Security System Loan, the Loan provides for cash payments that fully
amortize the Outstanding Asset Balance of such Loan on or by its maturity and does not provide for
such Outstanding Asset Balance to be discounted pursuant to a prepayment in full;



     (c) the Loan does not permit the Obligor to defer all or any portion of the current cash
interest due thereunder;



     (d) the Loan does not permit the payment obligation of the Obligor thereunder to be converted
or exchanged for equity capital of such Obligor;



     (e) other than Participation Loans, Agented Loans and Assigned Loans, with respect to the
Originator’s obligation to fund and the actual funding of the Loan by the Originator, the
Originator has not assigned or granted participations to, in whole or in part, any Person;



     (f) with respect to any DIP Loan, the Originator or its assignee has been granted a first
priority lien status in respect of all or certain of the Obligor’s assets by final order of the
applicable federal bankruptcy or district court;



     (g) if the Obligor of such Loan is the Obligor of more than one Loan, all such Loans are
cross-collateralized and cross-defaulted;



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     (h) the Loan does not represent capitalized interest or payment obligations relating to “put”
rights;



     (i) [Reserved];



     (j) the Originator (i) has completed to its satisfaction, in accordance with the Credit and
Collection Policy, a due diligence audit and collateral assessment with respect to such Loan and
(ii) has done nothing to impair the rights of the Administrative Agent, the Purchaser Agents or the
Secured Parties with respect to the Loan, the Related Security, the Scheduled Payments or any
income or Proceeds therefrom;



     (k) the Loan (or the underlying Loan in the case of any Agented Loan, Assigned Loan or
Participation Loan) is a Senior Secured ABL Loan, Senior Secured Loan, Stretch Senior Secured Loan,
Senior B-Note Loan or Subordinated Loan;



     (l) except with respect to Subordinated Loans and, to the extent set forth in the definition
thereof, Senior B-Note Loans, the Loan is not subordinated to any other loan or financing to the
related Obligor;



     (m) if the Loan is a Revolving Loan, either it provides by its terms that any future funding
thereunder is in the Originator’s sole and absolute discretion or it is subject to the Retained
Interest provision of this Agreement;



     (n) the Face Amount of the Loan is the dollar amount thereof shown on the books and records of
the Originator and Seller;



     (o) with respect to Senior B-Note Loans or Subordinated Loans, the Originator has entered into
an intercreditor agreement or subordination agreement (or such provisions are contained in the
principal loan documents) with, or provisions for the benefit of, the senior lender, which
agreement or provisions are assignable to and have been assigned to the Seller, and which provide
that any standstill of remedies by the Originator or its assignee is limited (A) such that there
shall be no standstill of remedies (x) until after a payment default with respect to the senior
obligation or the Originator’s or assignee’s receipt from the senior lender or Obligor of a notice
of default by the Obligor under the senior debt and (y) unless a covenant or payment default is
also in effect, and (B) to no longer than one hundred eighty (180) days in duration in the
aggregate in any given year;



     (p) with respect to any Assigned Loan, such Loan has been re-underwritten by the Originator
and satisfies all of the Originator’s underwriting criteria;



     (q) such Loan is not a Real Estate Loan (other than a Senior Secured ABL Loan that is secured
by timeshare receivables);



     (r) [Reserved];



     (s) with respect to Agented Loans, the related underlying loan documents (i) shall include a
credit agreement, note purchase agreement or similar agreement containing provisions relating to
the appointment and duties of a payment agent and a collateral agent and intercreditor



-20-









 







and (if applicable) subordination provisions substantially similar to the forms previously
delivered by the Originator to the Administrative Agent in connection with this transaction, (ii)
are duly authorized, fully and properly executed and are the valid, binding and unconditional
payment obligation of the Obligor thereof and (iii) are consistent with the documentation and
perfection standards of transactions of such nature;



     (t) with respect to Agented Loans, the Originator (or a wholly owned subsidiary of
CapitalSource Inc.) has been appointed the collateral agent of the security and the payment agent
for all such loans prior to such Agented Loan becoming a part of the Collateral;



     (u) with respect to Agented Loans, (i) if the entity serving as the collateral agent of the
security of the lenders to such Obligor with respect to such loan has or will change from the time
of the origination of the notes, all appropriate assignments of the collateral agent’s rights in
and to the collateral on behalf of the noteholders have been executed and filed or recorded as
appropriate prior to such Agented Loan becoming a part of the Collateral and (ii) if the entity
serving as the collateral agent of the security of the lenders to such Obligor with respect to such
loan has or will change after such Agented Loan becomes part of the Collateral, all appropriate
assignments of the collateral agent’s rights in and to the collateral on behalf of the noteholders
have been executed and filed or recorded as appropriate prior to such entity being the collateral
agent of the security of the lenders to such Obligor;



     (v) with respect to any Agented Loan, all required notifications, if any, have been given to
the collateral agent, the payment agent and any other parties required by the Required Asset
Documents of, and all required consents, if any, have been obtained with respect to, the
Originator’s assignment of such Agented Loan and the Originator’s right, title and interest in the
Related Property to the Seller and the Administrative Agent’s security interest therein on behalf
of the secured parties;



     (w) with respect to Agented Loans, the right to control the actions of and replace the
collateral agent and/or the paying agent of the syndicated loans is to be exercised by at least a
majority in interest of all holders of such Agented Loans;



     (x) with respect to Agented Loans, all syndicated loans of the Obligor of the same priority
are cross-defaulted, the Related Property securing such loans is held by the collateral agent for
the benefit of all holders of the syndicated loans and all holders of such loans (a) have an
undivided interest in the collateral securing such loans, (b) share in the proceeds of the sale or
other disposition of such collateral on a pro-rata basis and (c) may transfer or assign their
right, title and interest in the Related Property;



     (y) no portion of the proceeds used to make payments of principal or interest on such Loan
have come from a new loan by the Originator, CapitalSource Inc. or an Affiliate of CapitalSource
Inc.;



     (z) does not contain a confidentiality provision that restricts or purports to restrict the
ability of the Administrative Agent or any Secured Party to exercise their rights under this
Agreement, including, without limitation, their rights to review the Loan, the Required Asset
Documents and Asset File;



-21-









 





     (aa) has an original term to maturity (A) in the case of Senior Secured ABL Loans, Senior
Secured Loans, Stretch Senior Secured Loans and Senior B-Note Loans of not greater than 84 months,
or (B) in the case of Subordinated Loans of not greater than 120 months;



     (bb) is not a consumer loan;



     (cc) none of the Loans secured by a mortgage are high-cost loans as defined by applicable
predatory- and abusive-lending laws; and



     (dd) the proceeds of the Loan will not be used to finance activities of the type engaged in by
businesses classified under NAICS Codes 2361 (Residential Building Construction), 2362
(Nonresidential Building Construction), 2371 (Utility System Construction), 2372 (Land
Subdivision); provided, that the foregoing shall not be deemed to render inventory loans to
timeshare operators ineligible.



     “Eligible Obligor”: On any date of determination, any Obligor that (i) is a business
organization (and not a natural person) duly organized and validly existing under the laws of its
jurisdiction of organization and has a billing address within the United States, (ii) has not
entered into the related asset agreement primarily for personal, family or household purposes,
(iii) is not a Governmental Authority, (iv) is not an Affiliate of the Originator or the Seller,
(v) is not in the gaming (other than Obligors in the business of providing services to the gaming
industry), real estate construction or development (other than Obligors in the business of
providing services to the real estate construction or development industries), nuclear waste or
natural resource exploration/production and oil field service industries, (vi) is not engaged in
the business of conducting proprietary research on new drug development, (vii) is not and has not
been the subject of an Insolvency Proceeding (except with respect to a DIP Loan) in the past three
years, (viii) as of the applicable Cut-Off Date, has an Eligible Risk Rating, and (ix) is not an
Obligor of a Charged-Off Asset or Delinquent Asset.



     “Eligible Repurchase Obligations”: Repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United States or any agency or
instrumentality thereof the obligations of which are backed by the full faith and credit of the
United States, in either case entered into with a depository institution or trust company (acting
as principal) described in clauses (c)(ii) and (c)(iv) of the definition of
Permitted Investments.



     “Eligible Risk Rating”: With respect to a designated Obligor, a “Risk Rating 1,”
“Risk Rating 2” or “Risk Rating 3,” each as determined in accordance with the Credit and Collection
Policy.



     “Environmental Laws”: Any and all foreign, federal, state and local laws, statutes,
ordinances, rules, regulations, permits, licenses, approvals, interpretations and orders of courts
or Governmental Authorities, relating to the protection of human health or the environment,
including, but not limited to, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of hazardous materials. Environmental Laws include,
without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. § 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C. § 331 et




-22-









 




seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42
U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et
seq.), the Safe Drinking Water Act (42 U.S.C. § 300, et seq.), the Environmental
Protection Agency’s regulations relating to underground storage tanks (40 C.F.R. Parts 280 and
281), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the rules
and regulations thereunder, each as amended or supplemented from time to time.




     “Equipment”: Healthcare related equipment or such other equipment types as are
approved for inclusion in the Collateral by the Administrative Agent (in its sole discretion).



     “Equity Contribution”: On any date of determination, an amount equal to the excess,
if any, of (a) the sum of (i) the Borrowing Base on such date plus (ii) all Principal Collections
on deposit in the Principal Collections Account on such date, minus (b) the Advances Outstanding on
such date.



     “ERISA”: The United States Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued thereunder.



     “ERISA Affiliate”: (a) Any corporation that is a member of the same controlled group
of corporations (within the meaning of Section 414(b) of the Code) as the Seller, (b) a
trade or business (whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with the Seller, or (c) a member of the same affiliated service
group (within the meaning of Section 414(m) of the Code) as the Seller, any corporation
described in clause (a) above or any trade or business described in clause (b)
above.



     “Eurocurrency Liabilities”: Defined in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.



     “Eurodollar Disruption Event”: The occurrence of any of the following: (a) any
Liquidity Bank or any Institutional Purchaser shall have notified the Administrative Agent of a
determination by such Liquidity Bank or any of its assignees or participants or such Institutional
Purchaser that it would be contrary to law or to the directive of any central bank or other
governmental authority (whether or not having the force of law) to obtain Dollars in the London
interbank market to fund any Advance, (b) any Liquidity Bank or any Institutional Purchaser shall
have notified the Administrative Agent of the inability, for any reason, of such Liquidity Bank or
any of its assignees or participants or such Institutional Purchaser, as applicable, to determine
the Adjusted Eurodollar Rate, (c) any Liquidity Bank or any Institutional Purchaser shall have
notified the Administrative Agent of a determination by such Liquidity Bank or any of its assignees
or participants or such Institutional Purchaser, as applicable, that the rate at which deposits of
Dollars are being offered to such Liquidity Bank or any of its assignees or participants or such
Institutional Purchaser in the London interbank market does not accurately reflect the cost to such
Liquidity Bank, such assignee or such participant or such Institutional Purchaser of making,
funding or maintaining any Advance or (d) any Liquidity Bank any Institutional Purchaser shall have
notified the Administrative Agent of the inability of such Liquidity Bank or any of its assignees
or participants or such Institutional Purchaser, as



-23-









 







applicable, to obtain Dollars in the London interbank market to make, fund or maintain any
Advance.



     “Eurodollar Reserve Percentage”: For any period means the percentage, if any,
applicable during such period (or, if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such period during which any such percentage
shall be so applicable) under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum reserve requirement
(including, without limitation, any basic, emergency, supplemental, marginal or other reserve
requirements) with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term of one month.



     “Exchange Act”: The United States Securities Exchange Act of 1934, as amended.



     “Excluded Amounts”: (a) Any amount received in the Lock-Box by, on or with respect to
any Asset included as part of the Collateral, which amount is attributable to the payment of any
tax, fee or other charge imposed by any Governmental Authority on such Asset, (b) any amount
representing a reimbursement of insurance premiums and (c) any amount with respect to any Asset
retransferred or substituted for upon the occurrence of a Warranty Event (if the Seller has decided
that such Asset is no longer to be included in the Collateral) or that is otherwise replaced by a
Substitute Asset (if the Seller has decided that such Asset is no longer to be included in the
Collateral), to the extent such amount is attributable to a time after the effective date of such
replacement.



     “Existing Assets”: Each Asset purchased by the Seller under the Sale Agreement and
owned by the Seller on the Closing Date.



     “Face Amount”: With respect to any Asset, the Outstanding Asset Balance thereof shown
on the applicable Asset List.



     “Facility Amount”: $90,000,000, as such amount may vary from time to time upon the
written agreement of the parties hereto; provided, that such amount may not at any time exceed the
aggregate Commitments then in effect; provided, further, that on or after the Termination Date, the
Facility Amount shall mean the Advances Outstanding.



     “FDIC”: The Federal Deposit Insurance Corporation, and any successor thereto.



     “Federal Funds Rate”: For any period, a fluctuating interest rate per annum equal for
each day during such period to the weighted average of the overnight federal funds rates as in
Federal Reserve Board Statistical Release H.15(519) or any successor or substitute publication
selected by the Administrative Agent (or, if such day is not a Business Day, for the next preceding
Business Day), or, if, for any reason, such rate is not available on any day, the rate determined,
in the sole opinion of the Administrative Agent, to be the rate at which overnight federal funds
are being offered in the national federal funds market at 9:00 a.m. (Charlotte, North Carolina
time).



     “Finance Charges”: With respect to any Asset, any interest or finance charges owing
by an Obligor pursuant to or with respect to such Asset.



-24-









 





     “Financial Sponsor”: Any Person, including any Subsidiary of another Person, whose
principal business activity is acquiring, holding, and selling investments (including controlling
interests) in otherwise unrelated companies that each are distinct legal entities with separate
management, books and records and bank accounts, whose operations are not integrated one with
another and whose financial condition and creditworthiness are independent of the other companies
so owned by such Person.



     “Fitch”: Fitch, Inc. or any successor thereto.



     “Fixed Rate Asset”: A Loan that is an Eligible Asset other than a Floating Rate
Asset.



     “Fixed Rate Asset Percentage”: As of any date of determination, with respect to
Loans, the percentage equivalent of a fraction (i) the numerator of which is equal to the sum of
the Outstanding Asset Balances of all Fixed Rate Assets and Banded Floating Rate Assets that are
within 0.50% of the maximum interest rate allowable under their Required Asset Documents as of such
date, and (ii) the denominator of which is equal to the Aggregate Outstanding Asset Balance as of
such date.



     “Floating Rate Asset”: A Loan that is an Eligible Asset where the interest rate
payable by the Obligor thereof is based on the CapitalSource Prime Rate or CapitalSource LIBOR
Rate, plus some specified interest percentage in addition thereto, and the Loan provides that such
interest rate will reset immediately upon any change in the related CapitalSource Prime Rate or
CapitalSource LIBOR Rate.



     “Funding Date”: The third Business Day following the Closing Date, and (i) as to any
incremental Advance funded on a same-day basis pursuant to Section 2.3(a), the Business Day
of, and (ii) as to any other incremental Advance, any Business Day that is one Business Day
immediately following, the receipt by the Administrative Agent and each Purchaser Agent of a
Borrowing Notice (along with a Borrowing Base Certificate) in accordance with Section 2.3.



     “GAAP”: Generally accepted accounting principles as in effect from time to time in
the United States.



     “Governmental Authority”: With respect to any Person, any nation or government, any
state or other political subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any body or entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any court or arbitrator having
jurisdiction over such Person.



     “H.15”: Federal Reserve Statistical Release H.15.



     “Healthcare REIT”: The REIT resulting from the consummation of a spin-off or initial
public offering of the healthcare net-lease business of CapitalSource Inc. and its Subsidiaries
after which the shares of such REIT are listed on a U.S. national securities exchange or the NASDAQ
Stock Market.



     “Healthcare REIT Consolidated Subsidiary”: At any date, any Healthcare REIT Entity, if
such Healthcare REIT Entity’s accounts, in accordance with GAAP, would be consolidated with



-25-









 







those of CapitalSource Inc. in its consolidated and consolidating financial statements as of
such date.



     “Healthcare REIT Entities”: The Healthcare REIT and its Subsidiaries, as well as any
direct or indirect Subsidiaries of CapitalSource Inc. that are formed for the sole purpose of
establishing, structuring or capitalizing the Healthcare REIT.



     “Hedge Amount”: On any day, an amount equal to the product of (i) the product of (x)
the Borrowing Base and (y) the Fixed Rate Asset Percentage with respect to Loans on such day and
(ii) one minus the Overcollateralization Percentage on such day.



     “Hedge Collateral”: Defined in Section 5.3(b).



     “Hedge Breakage Costs”: For any Hedge Transaction, any amount payable by the Seller
for the early termination of that Hedge Transaction or any portion thereof.



     “Hedge Counterparty”: Means (a) Wachovia Bank, National Association and its
successors and assigns, and (b) any entity that (i) on the date of entering into a Hedging
Agreement (x) is an interest rate swap dealer that has been approved in writing by the
Administrative Agent (which approval shall not be unreasonably withheld), and (y) has a long-term
unsecured debt rating of not less than “A” by S&P, not less than “A2” by Moody’s and not less than
“A” by Fitch (if such entity is rated by Fitch) (“Long-term Rating Requirement”) and a short-term
unsecured debt rating of not less than “A-1” by S&P, not less than “P-1” by Moody’s and not less
than “F-1” by Fitch (if such entity is rated by Fitch) (“Short-term Rating Requirement”), and (ii)
in a Hedging Agreement (x) consents to the assignment of the Seller’s rights under each Hedging
Agreement to the Administrative Agent for the benefit of the Secured Parties pursuant to
Section 5.3(b) and (y) agrees that in the event that Moody’s, S&P or Fitch reduces its
long-term unsecured debt rating below the Long-term Rating Requirement, or reduces its short-term
unsecured debt rating below the Short-term Rating Requirement, it shall transfer its rights and
obligations under each Hedge Transaction to another entity that meets the requirements of
clauses (i) and (ii) hereof and has entered into a Hedging Agreement with the
Seller on or prior to the date of such transfer.



     “Hedge Guaranty”: The Guaranty, dated as of the date hereof, by and between
CapitalSource Finance in favor of WBNA, as Hedge Counterparty, as amended, modified, waived,
supplemented, restated or replaced from time to time.



     “Hedge Notional Amount”: For any Advance, the aggregate notional amount in effect on
any day under all Hedge Transactions entered into pursuant to Section 5.3(a) for that
Advance.



     “Hedge Percentage”: With respect to:



     (a) Fixed Rate Assets that are Loans, on any day that (i) the Aggregate Outstanding Asset
Balance exceeds $150,000,000, an amount equal to 100% if the sum of the Outstanding Asset Balances
of all Fixed Rate Assets that are Loans exceeds $35,000,000 or (ii) the Aggregate Outstanding Asset
Balance is less than or equal to $150,000,000, an amount equal to 100% if the sum of the
Outstanding Asset Balances of all Fixed Rate Assets that are Loans exceeds $20,000,000;



-26-









 





     (b) Floating Rate Assets is 0%; and



     (c) Banded Floating Rate Assets, on any day, is an amount equal to 100% if the interest rate
on any such Loan is within 0.50% of the maximum interest rate allowable under its Required Asset
Documents.



     “Hedge Transaction”: Each interest rate or index rate swap transaction between the
Seller and a Hedge Counterparty that is entered into pursuant to Section 5.3(a) and is
governed by a Hedging Agreement.



     “Hedged Rate”: For any Advance, the interest rate payable to a Hedge Counterparty
under the Hedge Transaction related to such Advance computed as of the Cut-Off Date under or with
respect to the Asset to which that Advance relates.



     “Hedging Agreement”: Each agreement between the Seller and a Hedge Counterparty that
governs one or more Hedge Transactions entered into pursuant to Section 5.3(a), which
agreement shall consist of a “Master Agreement” in a form published by the International Swaps and
Derivatives Association, Inc., together with a “Schedule” thereto substantially in the form of
Exhibit D hereto or such other form as the Administrative Agent shall approve in writing,
and each “Confirmation” thereunder confirming the specific terms of each such Hedge Transaction.



     “Highest Required Investment Category”: (i)  With respect to ratings assigned by
Moody’s, “Aa2” or “P-1” for one month instruments, “Aa2” and “P-1” for three month instruments,
“Aa3” and “P-1” for six month instruments and “Aa2” and “P-1” for instruments with a term in excess
of six months, (ii) with respect to rating assigned by S&P, “A-1” for short-term instruments and
“A” for long-term instruments, and (iii) with respect to rating assigned by Fitch (if such
investment is rated by Fitch), “F-1+” for short-term instruments and “AAA” for long-term
instruments.



     “Increased Costs”: Any amounts required to be paid by the Seller to an Affected Party
pursuant to Section 2.15.



     “Indebtedness”: With respect to any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or services (other than
current liabilities incurred in the ordinary course of business and payable in accordance with
customary trade practices) or that is evidenced by a note, bond, debenture or similar instrument or
other evidence of indebtedness customary for indebtedness of that type, (b) all obligations of such
Person under leases that shall have been or should be, in accordance with generally accepted
accounting principles, recorded as capital leases, (c) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (d) all liabilities secured by any
Lien on any property owned by such Person even though such Person has not assumed or otherwise
become liable for the payment thereof, (e) all indebtedness, obligations or liabilities of that
Person in respect of Derivatives, (f) all obligations of such Person to redeem preferred stock of
such Person (in the event such Person is a corporation), (g) all obligations (absolute or
contingent) of such Person to reimburse any bank or other Person in respect of amounts which are
available to be drawn or have been drawn under a letter of credit or similar instrument, (h) the
principal portion of all obligations of such Person under any synthetic lease, tax retention



-27-









 







operating lease, off-balance sheet loan or similar off-balance sheet financing product where
such transaction in each case (I) is considered borrowed money indebtedness for tax purposes, and
(II) is classified as an operating lease under GAAP and (i) obligations under direct or indirect
guaranties in respect of obligations (contingent or otherwise) to purchase or otherwise acquire, or
to otherwise assure a creditor against loss in respect of, indebtedness or obligations of others of
the kind referred to in clauses (a) through (h) above.



     “Indemnified Amounts”: Defined in Section 11.1.



     “Indemnified Parties”: Defined in Section 11.1.



     “Industry”: The industry of an Obligor as determined by reference to the two digit
standard industry classification or North American Industry Classification System codes.



     “Initial Advance”: The first Advance.



     “Insolvency Event”: With respect to a specified Person, (a) the filing of a decree or
order for relief by a court having jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any applicable Insolvency Law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall
remain unstayed and in effect for a period of sixty (60) consecutive days; or (b) the commencement
by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for
any substantial part of its property, or the making by such Person of any general assignment for
the benefit of creditors, or the failure by such Person generally to pay its debts as such debts
become due, or the taking of action by such Person in furtherance of any of the foregoing.



     “Insolvency Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, or similar debtor relief laws from time to time in effect affecting the
rights of creditors generally.



     “Insolvency Proceeding”: Any case, action or proceeding before any court or other
Governmental Authority relating to any Insolvency Event.



     “Institutional Purchaser”: Defined in the Preamble of this Agreement.



     “Instrument”: Any “instrument” (as defined in Article 9 of the UCC), other than an
instrument that constitutes part of chattel paper.



     “Insurance Policy”: With respect to any Asset, an insurance policy covering liability
and physical damage to or loss of the Related Property.



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     “Insurance Proceeds”: Any amounts payable or any payments made on or with respect to
an Asset under any Insurance Policy.



     “Intercreditor Agreement”: The Fourth Amended and Restated Intercreditor and Lockbox
Administration Agreement, dated as of June 30, 2005, by and among each of the financing agents from
time to time party thereto, Bank of America, N.A., as the lockbox bank, CapitalSource Finance LLC,
as the originator, as the original servicer and as the lockbox servicer, and CapitalSource Funding
Inc., as the owner of the account and as the owner of the lockbox, as amended, modified, waived,
supplemented, restated or replaced from time to time.



     “Interest”: For each Accrual Period and each Advance outstanding, the sum of the
products (for each day during such Accrual Period) of:



IR x P x    1

                  D




     where:



	 	 	 	 	 	 	 
	 

	 	IR
	 	=
	 	the Interest Rate applicable on such day;
	 
	 	 	 	 	 	 
	 

	 	P
	 	=
	 	the principal amount of such Advance on such day; and
	 
	 	 	 	 	 	 
	 

	 	D
	 	=
	 	360 or, to the extent the Interest Rate is based on the Base Rate,
365 or 366 days, as applicable.





provided, however, that (i) no provision of this Agreement shall require the payment or permit the
collection of Interest in excess of the maximum permitted by Applicable Law and (ii) Interest shall
not be considered paid by any distribution if at any time such distribution is rescinded or must
otherwise be returned for any reason.




     “Interest Collections”: Any and all amounts received in respect of any interest, fees
or other similar charges (including any Finance Charges) on or with respect to a Loan from or on
behalf of any Obligor that are deposited into the Collection Account, or received by or on behalf
of the Seller by the Servicer or Originator in respect of an Asset, in the form of cash, checks,
wire transfers, electronic transfers or any other form of cash payment (net of any payment owed by
the Seller to, and including any receipts from, any Hedge Counterparties).



     “Interest Rate”: For any Accrual Period and for each Advance outstanding for each day
during such Accrual Period:




     (i) to the extent the applicable Conduit Purchaser has funded the applicable Advance
through the issuance of commercial paper, a rate equal to the applicable CP Rate; or




     (ii) to the extent the applicable Conduit Purchaser or Institutional Purchaser did not
fund the applicable Advance through the issuance of commercial paper, a rate equal to the
Alternative Rate;



-29-









 




provided, however, the Interest Rate shall be the Base Rate for any Accrual Period for any Advance
as to which a Conduit Purchaser has funded the making or maintenance thereof by a sale of an
interest therein to any Liquidity Bank under the applicable Liquidity Agreement on any day other
than the first day of such Accrual Period without giving such Liquidity Bank(s) at least two
Business Days’ prior notice of such assignment.




     “Investment”: Any investment in any Person, whether by means of purchase or
acquisition of obligations or securities of such Person, capital contribution to such Person, loan
or advance to such Person, making of a time deposit with such Person, guarantee or assumption of
any obligation of such Person or otherwise.



     “Investment Loan”: Any senior or subordinated loan (including letters of credit issued
under such loan) or lease (a) arising from the extension of credit to an Obligor by CapitalSource
Inc. or its Consolidated Subsidiaries (excluding the Bank Subsidiary and the Healthcare REIT
Consolidated Subsidiaries) in the ordinary course of business, (b) originated in accordance with
the policies and procedures set forth in the Credit and Collection Policy, and (c) good and
marketable title to which is owned by CapitalSource Inc. or a Consolidated Subsidiary



     “Investment Loan Subsidiary”: Any Person that becomes a Subsidiary as a result of the
exercise of remedies by CapitalSource Inc. or any Consolidated Subsidiary under any Investment
Loan.



     “Investment in Equity Instruments”: Each Investment, that is made in accordance with
the policies and procedures set forth in the Credit and Collection Policy, owned by CapitalSource
Inc. or its Consolidated Subsidiaries (excluding the Bank Subsidiary and the Healthcare REIT
Consolidated Subsidiaries) in (a) common stock, partnership interests or membership interests of
any Person and that is classified as “Common Stock,” “Partnership Units” or “Membership Units” on
the consolidated schedule of investments of CapitalSource Inc. for the then most recently ended
fiscal quarter, (b) preferred stock (other than redeemable preferred stock) of any Person and that
is classified as “Preferred Stock” on the consolidated schedule of investments of CapitalSource
Inc. for the then most recently ended fiscal quarter, (c) redeemable preferred stock of any Person
and that is classified as “Redeemable Preferred Stock” on the consolidated schedule of investments
of CapitalSource Inc. for the then most recently ended fiscal quarter, and (d) warrants to purchase
common stock, partnership interests or membership interests of any Person and that is classified as
“Common Stock Warrants,” “Partnership Unit Warrants” or “Membership Unit Warrants” on the
consolidated schedule of investments of CapitalSource Inc. for the then most recently ended fiscal
quarter.



     “ISDA Definitions”: The 2000 ISDA Definitions as published by the International Swaps
and Derivatives Association, Inc.



     “Issuer”: Any Conduit Purchaser whose principal business consists of issuing
commercial paper or other securities to fund its acquisition or maintenance of receivables,
accounts, instruments, chattel paper, general intangibles and other similar assets.



     “LIBOR Market Index Rate”: For any day, with respect to any Advance (a) the rate per
annum appearing on Page 3750 of the Bridge Telerate Service (formerly Dow Jones Market



-30-









 







Service) (or on any successor or substitute page of such service, or any successor to or
substitute for such service, providing rate quotations comparable to those currently provided on
such page of such service, as determined by the Administrative Agent from time to time for purposes
of providing quotations of interest rates applicable to dollar deposits in the London interbank
market) at approximately 11:00 a.m., London time for such day, provided, if such day is not a
Business Day, the immediately preceding Business Day, as the rate for dollar deposits with a
one-month maturity; (b) if for any reason the rate specified in clause (a) of this definition does
not so appear on Page 3750 of the Bridge Telerate Service (or any successor or substitute page or
any such successor to or substitute for such service), the rate per annum appearing on Reuters
Screen LIBO page (or any successor or substitute page) as the London interbank offered rate for
deposits in dollars at approximately 11:00 a.m., London time, for such day, provided, if such day
is not a Business Day, the immediately preceding Business Day, for a one-month maturity; and (c) if
the rate specified in clause (a) of this definition does not so appear on Page 3750 of the Bridge
Telerate Service (or any successor or substitute page or any such successor to or substitute for
such service) and if no rate specified in clause (b) of this definition so appears on Reuters
Screen LIBO page (or any successor or substitute page), the interest rate per annum at which dollar
deposits of $5,000,000 and for a one-month maturity are offered by the principal London office of
WBNA in immediately available funds in the London interbank market at approximately 11:00 a.m.,
London time, for such day.



     “Lien”: Any mortgage, lien, pledge, charge, right, claim, security interest or
encumbrance of any kind of or on any Person’s assets or properties in favor of any other Person
(including any UCC financing statement or any similar instrument filed against such Person’s assets
or properties).



     “Liquid Real Estate Assets”: (a) Residential mortgage-backed securities that (i) have
a rating of not less than “AA” by S&P/Fitch and “Aa2” by Moody’s, (ii) are purchased by
CapitalSource Inc. or its Consolidated Subsidiaries solely to meet REIT asset and income tests, and
(iii) are leveraged through debt facilities utilizing leverage greater than 12 times the amount of
equity investment in such Liquid Real Estate Assets and (b) residential mortgage whole loan
purchases made by CapitalSource Inc. or its Consolidated Subsidiaries solely to meet REIT asset and
income tests, all in accordance with the Residential Mortgage Policies and Procedures.



     “Liquidation Expenses”: With respect to (a) any Asset, the aggregate amount of all
out-of-pocket expenses reasonably incurred by the Servicer (including amounts paid to any
subservicer) and any reasonably allocated costs of counsel (if any), in each case in accordance
with the Servicer’s customary procedures in connection with the repossession, refurbishing and
disposition of any related assets securing such Asset upon or after the expiration or earlier
termination of such Asset and other out-of-pocket costs related to the liquidation of any such
assets, including the attempted collection of any amount owing pursuant to such Asset if it is a
Charged-Off Asset, and if requested by the Administrative Agent, the Servicer and Originator must
provide to the Administrative Agent a breakdown of the Liquidation Expenses for any Asset along
with any supporting documentation therefor, and (b) any Portfolio Asset, the aggregate amount of
all out-of-pocket expenses reasonably incurred by the Servicer (including amounts paid to any
subservicer) and any reasonably allocated costs of counsel (if any), in each case in accordance
with the Servicer’s customary procedures in connection with the repossession, refurbishing and
disposition of any related assets securing such Portfolio Asset



-31-









 







upon or after the expiration or earlier termination of such Portfolio Asset and other
out-of-pocket costs related to the liquidation of any such assets, including the attempted
collection of any amount owing pursuant to such Portfolio Asset if it is a Charged-Off Portfolio
Asset, and if requested by the Administrative Agent, the Servicer and Originator must provide to
the Administrative Agent a breakdown of the Liquidation Expenses for any Portfolio Asset along with
any supporting documentation therefor.



     “Liquidity Agreement”: (a) with respect to each Conduit Purchaser, the Liquidity
Purchase Agreement or liquidity loan agreement by and among such Conduit Purchaser, the Liquidity
Banks named therein, and the related Purchaser Agent, as such agreement may be amended, modified,
waived, supplemented, restated or replaced from time to time, and (b) with respect to each
Additional Purchaser that is also a Conduit Purchaser, the liquidity purchase agreement or
liquidity loan agreement by and among such Additional Purchaser, the Liquidity Banks named therein
and the related Additional Agent, as such agreement may be amended, modified, waived, supplemented,
restated or replaced from time to time.



     “Liquidity Bank”: The Person or Persons who provide liquidity support to any Conduit
Purchaser or Additional Purchaser that is also a Conduit Purchaser pursuant to a Liquidity
Agreement in connection with the issuance by such Purchaser of Commercial Paper Notes.



     “Liquidity Factor Reduction Event”: With respect to each Asset included as part of
the Collateral subject to the Retained Interest provisions of this Agreement, a “Liquidity Factor
Reduction Event” under and as defined in any Permitted Securitization Transaction rated by the
Rating Agencies.



     “Loan”: Any loan originated by the Originator or, in the case of an Assigned Loan,
otherwise acquired by the Originator, that is identified on an Asset List and sold or contributed
to the Seller hereunder and included as part of the Collateral, which loan includes, without
limitation, (i) the Required Asset Documents and Asset File, and (ii) all right, title and interest
of the Originator in and to the loan and any Related Property.



     “Loan Register”: Defined in Section 5.4(n).



     “Loan-to-Liquidation Value or LLV”: With respect to any Loan, as of the date
of origination, the percentage equivalent of a fraction (i) the numerator of which is equal to the
maximum availability (as provided in the applicable underlying loan documents) of such Loan as of
the date of its origination and (ii) the denominator of which is equal to the liquidation value of
the Related Property securing such Loan that is subject to a first priority lien in favor of the
Originator (as determined by the Servicer in accordance with the Credit and Collection Policy and
in a commercially reasonable manner).



     “Loan-to-Value Ratio or LTV”: With respect to any Loan, as of any date of
determination, the percentage equivalent of a fraction (a) the numerator of which is equal to the
total commitment amount of such Loan as of the date of its origination (as provided in the related
loan documents) plus the total commitment amount or principal amount, as the case may be, as of the
applicable date of origination or incurrence, of all loans and other indebtedness which is senior
to such Loan in the “capital structure” of the related Obligor (as defined in, and as



-32-









 







determined by the Servicer in accordance with, the Credit and Collection Policy and in a
commercially reasonable manner), and (b) the denominator of which is equal to the “capital
structure” of the related Obligor. With respect to any Security System Loan, as of any date of
determination, the percentage equivalent of a fraction (a) the numerator of which is equal to the
related Security System Loan Advance Multiple and (b) the denominator of which is equal to the
related Security System Loan Average Contract Term.



     “Lock-Box”: The post office box to which Collections are remitted for retrieval by a
Lock-Box Bank and deposited by such Lock-Box Bank into a Lock-Box Account, the details of which are
contained in Schedule II.



     “Lock-Box Account”: The account maintained at the Lock-Box Bank for the purpose of
receiving Collections, the details of which are contained in Schedule II, as such schedule
may be amended from time to time.



     “Lock-Box Agreement”: The Fifth Amended and Restated Three Party Agreement Relating
to Lockbox Services and Control (with Activation Upon Notice), dated as of June 30, 2005, by and
among Wells Fargo, as the indenture trustee and as the Citi indenture trustee (as defined therein),
Bank of America, N.A., as the lockbox bank, WCM, as the conduit administrative agent and as the
acquisition administrative agent, CapitalSource Finance, as the originator, as the original
servicer and as the lockbox servicer, and CapitalSource Funding LLC, as the owner of the account
and as the owner of the lockbox, as amended, modified, waived, supplemented, restated or replaced
from time to time.



     “Lock-Box Bank”: Bank of America, N.A., or any of the banks or other financial
institutions holding one or more Lock-Box Accounts.



     “Margin Stock”: Margin Stock as defined under Regulation U.



     “Material Adverse Effect”: With respect to any event or circumstance, means a
material adverse effect on (a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Originator, the Servicer or the Seller, (b) the
validity, enforceability or collectibility of this Agreement or any other Transaction Document or
the validity, enforceability or collectibility of the Assets generally or any material portion of
the Assets, (c) the rights and remedies of the Administrative Agent, the Purchasers, the Purchaser
Agents and the Secured Parties, (d) the ability of the Seller, the Servicer, the Backup Servicer or
the Collateral Custodian to perform its obligations under this Agreement or any Transaction
Document, or (e) the status, existence, perfection, priority or enforceability of the
Administrative Agent’s, the Purchaser Agents’, or the Secured Parties’ interest in the Collateral.



     “Material Modification”: (1) Any amendment or waiver of, or modification or
supplement to, an Underlying Instrument governing an Asset that (a) reduces the principal amount of
such Asset, (b) waives one or more interest payments, or reduces the spread over the applicable
reference rate comprising the interest rate on such Asset if such Asset is a Floating Rate Asset or
reduces the coupon comprising the interest rate on such Asset if such Asset is a Fixed Rate Asset;
provided that the foregoing shall not apply to waivers or reductions related to the operation of
default or penalty interest clauses and, in addition, the spread or coupon, as



-33-









 







applicable, may be reduced by not more than 1.5% applicable to the spread or coupon of such
Asset, so long as the interest coverage ratio (howsoever defined in the related Underlying
Instruments) is greater than 2.0:1 at the time of such reduction, (c) contractually or structurally
subordinates such Asset by operation of a priority of payments, turnover provisions, the transfer
of assets in order to limit recourse to the related Obligor or the granting of security (other than
permitted security) on any of the Related Property securing such Asset, (d) postpones the due date
of any Scheduled Payment in respect of such Asset, (e) terminates or releases any material lien or
security interest securing such Asset (other than the release of such lien or security interest (i)
as required by the Underlying Instruments so long as it does not involve a material portion of the
Collateral or (ii) in conjunction with the sale or disposition of the assets subject to such lien
or security interest so long as 100% of the cash proceeds from such sale or disposition
(minus any taxes and expenses incurred in connection with such sale or disposition) are
applied to prepay the applicable Asset and the gross cash proceeds from such sale or disposition
are at least equal to 100% of the value of the property being released from such lien or security
interest) or (f) alters the status of such Loan as a Delinquent Loan or Charged-Off Loan and (2)
any loan or extension of credit by the Originator (or any other lender) to the Obligor for the
purpose of (a) making any past due principal, interest or other payments due on such Asset, (b)
preventing such Asset or any other loan to the related Obligor from becoming past due or (c)
causing a Delinquent Loan or a Charged-Off Loan to cease to be so classified; provided that a loan
or extension of credit provided for refinancing purposes at or around such Asset’s then schedule
maturity date shall not be deemed to be a Material Modification.



     “Materially Modified Asset”: Any Asset subject to a Material Modification.



     “Materials of Environmental Concern”: Any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or
wastes, defined or regulated as such in or under any Environmental Laws, including, without
limitation, asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.



     “Maximum Availability”: An amount equal to the least of:



     (a) the Facility Amount;



     (b) the sum of (i) the product of the Borrowing Base and the Weighted Average Advance Rate
plus (ii) the amount on deposit in the Principal Collections Account received in reduction of the
Outstanding Asset Balance of any Asset that is an Eligible Asset; or



     (c) an amount equal to (i) the Borrowing Base minus (ii) the Minimum Overcollateralization
Amount plus (iii) the amount on deposit in the Principal Collections Account received in reduction
of the Outstanding Asset Balance of any Asset that is an Eligible Asset.



     “Minimum Overcollateralization Amount”: As of any date of determination, an amount
equal to the sum of the Outstanding Asset Balances of all Eligible Assets attributable to the three
Obligors having the largest aggregate Outstanding Asset Balance of Eligible Assets included as part
of the Collateral (excluding the amount, calculated without duplication, by which such



-34-









 







Eligible Assets exceed any applicable Pool Concentration Criteria), calculated for the
Borrowing Base on such date.



     “Minimum Pool Yield”: A Pool Yield equal to 2.15%.



     “Monthly Report”: Defined in Section 6.10(b).



     “Moody’s”: Moody’s Investors Service, Inc., and any successor thereto.



     “Multiemployer Plan”: A “multiemployer plan” as defined in Section 4001(a)(3)
of ERISA that is or was at any time during the current year or the immediately preceding five years
contributed to by the Seller or any ERISA Affiliate on behalf of its employees.



     “NAICS Code” means the North American Industry Classification System Codes by two
digits.



     “Net Proceeds of Capital Stock/Conversion of Debt”: Any and all proceeds (whether
cash or non-cash) or other consideration received by CapitalSource Inc., its Consolidated
Subsidiaries (excluding the Healthcare REIT Consolidated Subsidiaries), on a consolidated basis,
in respect of the issuance of Capital Stock to a Person other than CapitalSource Inc. or its
Consolidated Subsidiaries (including, without limitation, the aggregate amount of any and all
Indebtedness converted into Capital Stock), after deducting therefrom all reasonable and customary
costs and expenses incurred by CapitalSource Inc. and such Consolidated Subsidiary in connection
with the issuance of such Capital Stock in each case to the extent classified as equity on the
consolidated balance sheet of CapitalSource Inc. and its Consolidated Subsidiaries; provided,
however, that such proceeds shall exclude any consideration received in connection with an initial
public offering of the Healthcare REIT.



     “Noteless Loan”: A Loan with respect to which the underlying loan documents do not
require the Obligor to execute and deliver a promissory note to evidence the indebtedness created
under such Loan.



     “Obligor”: With respect to any Asset, any Person or Persons obligated to make
payments pursuant to or with respect to such Asset, including any guarantor thereof. For purposes
of calculating any of the Pool Concentration Criteria only, all Assets included as part of the
Collateral or to be transferred to the Collateral the Obligor of which is an Affiliate of another
Obligor (excluding any Financial Sponsor or Obligors that are Affiliates solely because of common
ownership or control by a Financial Sponsor) shall be aggregated with all Assets of such other
Obligor; for example, if Corporation A is an Affiliate (other than because of a
common Financial Sponsor) of Corporation B, and the sum of the Outstanding Asset Balances of all of
Corporation A’s Loans included as part of the Collateral constitutes 10% of the Aggregate
Outstanding Asset Balance and the sum of the Outstanding Asset Balances all of Corporation B’s
Loans included as part of the Collateral constitutes 10% of the Aggregate Outstanding Asset
Balance, the combined Obligor concentration for Corporation A and Corporation B would be 20%.



     “Officer’s Certificate”: A certificate signed by a Responsible Officer of the Seller
or the Servicer, as the case may be, and delivered to the Collateral Custodian.



-35-









 





     “Opinion of Counsel”: A written opinion of counsel, which opinion and counsel are
acceptable to the Administrative Agent in its sole discretion.



     “Optional Sale”: Defined in Section 2.19(a).



     “Optional Sale Date”: Any Business Day during the Revolving Period, provided ten (10)
Business Days’ prior written notice is given in accordance with Section 2.19(a).



     “Originator”: CapitalSource Finance, together with its successors and assigns in such
capacity; all Assets originated by Affiliates of CapitalSource Inc. (other than CapitalSource
Finance) and acquired by CapitalSource Finance or its successors and assigns from such Affiliates
in compliance with Section 2.21 shall be deemed to have been originated by CapitalSource
Finance or its successors and assigns; provided that such acquisition shall be reflected on the
Borrowing Base Certificate.



     “Other Costs”: Defined in Section 13.9(c).



     “Outstanding Asset Balance”: With respect to (i) any Asset purchased at less than 95%
of its par value, the purchase price of such Asset (excluding any PIK component or accrued interest
payable) minus the sum of principal payments received in respect of such Asset on or before the
date of determination and (ii) any Asset purchased at no less than 95% of par or originated
directly by the Originator or an Affiliate, the sum of (a) the portion of all future Scheduled
Payments becoming due under or with respect to such Asset plus (b) any past due Scheduled
Payments with respect to such Asset (other than with respect to those payments to the extent a
Servicer Advance is outstanding with respect thereto), provided that notwithstanding anything to
the contrary contained herein, for purposes of determining the Aggregate Outstanding Asset Balance,
if any portion of an Asset is deemed to be “charged-off” in accordance with the provisions of the
definition of Charged-Off Asset, then the entire Asset shall be deemed to have an Outstanding Asset
Balance of zero, except for purposes of (i) calculating the Average Pool Charged-Off Ratio and (ii)
Section 2.20(a)(vii).



     “Overcollateralization Percentage”: As of any date of determination, the percentage
equivalent of (a) one minus (b) a fraction (i) the numerator of which is equal to the
Advances Outstanding on such date and (ii) the denominator of which is equal to the Aggregate
Outstanding Asset Balance as of such date.



     “Participation Loan”: A Loan to an Obligor, originated by the Originator and serviced
by the Servicer in the ordinary course of its business, in which a participation interest has been
granted to another Person in accordance with the Credit and Collection Policy and (i) such
transaction has been fully consummated, pursuant to a participation agreement in a form previously
delivered by the Originator to the Administrative Agent in connection with this transaction or in
such other form as shall be adopted by the Originator and approved in writing by the Administrative
Agent at least five days prior to such Loan becoming part of the Collateral hereunder, (ii) such
Loan (other than in the case of a Noteless Loan) is represented by a separate promissory note, and
(iii) the Originator has the right to receive and collect payments directly in its own name, and to
enforce its rights directly against the Obligor thereof including the right to



-36-









 







proceed against collateral; provided, however, any such Loan shall exclude any Retained
Interest.



     “Payment Date”: The fifteenth (15th) day of each calendar month or, if such day is
not a Business Day, the next succeeding Business Day.



     “Permitted Investments”: With respect to any Payment Date means negotiable
instruments or securities or other investments maturing on or before such Payment Date (a) which,
except in the case of demand or time deposits, investments in money market funds and Eligible
Repurchase Obligations, are represented by instruments in bearer or registered form or ownership of
which is represented by book entries by a Clearing Agency or by a Federal Reserve Bank in favor of
depository institutions eligible to have an account with such Federal Reserve Bank who hold such
investments on behalf of their customers, (b) that, as of any date of determination, mature by
their terms on or prior to the Business Day immediately preceding the next Payment Date immediately
following such date of determination, and (c) that evidence:




     (1) direct obligations of, and obligations fully guaranteed as to full and timely
payment by, the United States (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States);




     (2) demand deposits, time deposits or certificates of deposit of depository
institutions or trust companies incorporated under the laws of the United States or any
state thereof and subject to supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at the time of the Seller’s
investment or contractual commitment to invest therein, the commercial paper, if any, and
short-term unsecured debt obligations (other than such obligation whose rating is based on
the credit of a Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from Fitch and each Rating Agency in
the Highest Required Investment Category granted by Fitch and such Rating Agency, which in
the case of Fitch, shall be “F-1+”;




     (3) commercial paper, or other short term obligations, having, at the time of the
Seller’s investment or contractual commitment to invest therein, a rating in the Highest
Required Investment Category granted by each Rating Agency, which in the case of Fitch,
shall be “F-1+”;




     (4) demand deposits, time deposits or certificates of deposit that are fully insured by
the FDIC and either have a rating on their certificates of deposit or short-term deposits
from Moody’s and S&P of “P-1” and “A-1”, respectively, and if rated by Fitch, from Fitch of
“F-1+”;




     (5) notes that are payable on demand or bankers’ acceptances issued by any depository
institution or trust company referred to in clause (2) above;




     (6) investments in taxable money market funds or other regulated investment companies
having, at the time of the Seller’s investment or contractual commitment to invest therein,
a rating of the Highest Required Investment Category from Moody’s, S&P and Fitch (if rated
by Fitch);



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     (7) time deposits (having maturities of not more than ninety (90) days) by an entity
the commercial paper of which has, at the time of the Seller’s investment or contractual
commitment to invest therein, a rating of the Highest Required Investment Category granted
by Fitch and each Rating Agency; or




     (8) Eligible Repurchase Obligations with a rating acceptable to the Rating Agencies,
which in the case of Fitch, shall be “F-1+” and in the case of S&P shall be “A-1”.


The Collateral Custodian may pursuant to the direction of the Servicer or Administrative Agent, as
applicable, purchase or sell to itself or an Affiliate, as principal or agent, the Permitted
Investments described above.




     “Permitted Liens”: Any of the following as to which no enforcement, collection,
execution, levy or foreclosure proceeding shall have been commenced (a) Liens for state, municipal
or other local taxes if such taxes shall not at the time be due and payable, (b) Liens imposed by
law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other
similar Liens, arising in the ordinary course of business securing obligations that are not overdue
for a period of more than thirty (30) days, and (c) Liens granted pursuant to or by the Transaction
Documents.



     “Permitted Securitization Transaction”: Any financing transaction undertaken by the
Seller or an Affiliate of the Seller that is secured, directly or indirectly, by the Collateral or
any portion thereof or any interest therein, including any sale, lease, whole loan sale, asset
securitization, secured loan or other transfer.



     “Person”: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated association, sole
proprietorship, joint venture, government (or any agency or political subdivision thereof) or other
entity.



     “Pool Charged-Off Ratio”: As of any Determination Date, the product of (i) twelve
(12) and (ii) the percentage equivalent of a fraction, (a) the numerator of which is equal to the
sum of the Outstanding Asset Balances of all Eligible Assets that became Charged-Off Assets (net of
Recoveries during such Collection Period) during the Collection Period related to such
Determination Date, and (b) the denominator of which is equal to the Aggregate Outstanding Asset
Balance as of the first (1st) day of the Collection Period related to such Determination Date.



     “Pool Concentration Criteria”: On any day, each of the concentration limitations as
set forth below, which concentration limitations (unless otherwise indicated) shall be measured on
the basis of a percentage of the Aggregate Outstanding Asset Balance:




     (1) the sum of the Outstanding Asset Balance of all Eligible Assets the Obligors of
which are resident of the same state shall not exceed 20%;




     (2) the sum of the Outstanding Asset Balances of all Eligible Assets the Obligors of
which are in the same Industry (as defined by 2-digit NAICS Codes) shall not exceed 20%;



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     (3) the sum of the Outstanding Asset Balances of all Eligible Assets with a “Risk
Rating 4,” Risk Rating 5” and a “Risk Rating 6” shall not exceed 20%, 5% and 0%,
respectively;




     (4) the sum of the Outstanding Asset Balances of all Eligible Assets that are DIP Loans
shall not exceed 10%;




     (5) the sum of the Outstanding Asset Balances of all Eligible Assets to a single
Obligor shall not exceed $20,000,000;




     (6) the Aggregate Outstanding Asset Balance divided by the number of Obligors
(including any Affiliates thereof) shall not exceed the greater of (a) 2% or (b) $5,000,000;




     (7) the sum of the Outstanding Asset Balances of all Eligible Assets that are Senior
Secured ABL Loans or Revolving Loans shall not exceed 65%;




     (8) the sum of the Outstanding Asset Balances of all Eligible Assets that are
Subordinated Loans shall not exceed 5%;




     (9) the sum of the Outstanding Asset Balances of all Eligible Assets that are
Subordinated Loans and Senior B-Note Loans shall not exceed 10%;




     (10) (a) up to and including April 28, 2009, the sum of the Outstanding Asset Balances
of all Eligible Assets which have ever been included as part of the Collateral for eighteen
(18) months or more shall not exceed 50%; and (b) from and after April 29, 2009, the sum of
the Outstanding Asset Balances of all Eligible Assets which have ever been included as part
of the Collateral for eighteen (18) months or more shall not exceed 20%;




     (11) the sum of the Outstanding Asset Balances of all Loans which provide for payments
of interest on a semi-annual basis shall not exceed the lesser of (a) 5% and (b)
$10,000,000;




     (12) the sum of the Outstanding Asset Balances of all Loans that are Security System
Loans shall not exceed 10%;




     (13) the sum of the Outstanding Asset Balances of all Loans that were first purchased
by the Originator or any affiliate thereof at a purchase price of less than 95% of their par
value shall not exceed 10%; and




     (14) the sum of the Outstanding Asset Balances of all Loans that are Senior Secured ABL
Loans secured by timeshare receivables shall not exceed 10%.



     “Pool Rate”: As of any Determination Date, the annualized percentage equivalent of a
fraction, (a) the numerator of which is equal to all Interest Collections on Assets included in the
Aggregate Outstanding Asset Balance as of the first (1st) day of the Collection Period related to
such Determination Date that are deposited into the Collection Account during such Collection



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Period, and (b) the denominator of which is equal to the Aggregate Outstanding Asset Balance
as of the first (1st) day of such Collection Period.



     “Pool Weighted Average Life”: At any point in time, the number obtained by (i) for
each Asset included in the Borrowing Base as of such point in time, multiplying each Scheduled
Payment by the number of months from such point in time until such Scheduled Payment is due; (ii)
summing all of the products calculated pursuant to clause (i); (iii) dividing the sum
calculated pursuant to clause (ii) by the sum of all successive Scheduled Payments due on
all Assets included in the Borrowing Base as of such point in time; and (iv) dividing the amount
calculated pursuant to clause (iii) by 12.



     “Pool Yield”: On any day, the excess, if any, of (a) the Pool Rate on such day
minus (b) the sum of (i) the Interest Rate multiplied by the Weighted Average Advance Rate,
(ii) the Program Fee Rate multiplied by the Weighted Average Advance Rate and (iii) the Servicing
Fee Rate, in each case as of such day.



     “Portfolio Aggregate Outstanding Asset Balance”: With respect to all Portfolio
Assets, on any day, the sum of the Portfolio Outstanding Asset Balances of such Portfolio Assets on
such date. Notwithstanding anything to the contrary contained herein, for purposes of determining
the Portfolio Aggregate Outstanding Asset Balance, if any portion of a Portfolio Asset is deemed to
be “charged-off” in accordance with the provisions of the definition of Charged-Off Portfolio
Asset, then the entire Portfolio Asset shall have a zero (0) Outstanding Asset Balance, except for
purposes of calculating the Average Portfolio Charged-Off Ratio.



     “Portfolio Asset”: Any asset owned or serviced by the Originator (including each
Asset). For the avoidance of doubt, the term Portfolio Asset shall not include any asset owned
and/or serviced solely by one or more Affiliates of the Originator (but not by the Originator);
provided, that (i) such asset shall not have been originated or acquired by the Originator and (ii)
such asset shall not be included in the consolidated financial statements of the Originator.



     “Portfolio Charged-Off Ratio”: As of any Determination Date, the product of (i)
twelve (12) and (ii) the percentage equivalent of a fraction, (a) the numerator of which is equal
to the sum of the Portfolio Outstanding Asset Balances of all Portfolio Assets (excluding equity
and preferred stock investments) that became Charged-Off Portfolio Asset (net of Recoveries during
such Collection Period) during the Collection Period related to such Determination Date and (b) the
denominator of which is equal to the Portfolio Aggregate Outstanding Asset Balance (excluding
equity and preferred stock investments) as of the first (1st) day of the Collection Period related
to such Determination Date; provided that, such calculation shall exclude the effects of any Liquid
Real Estate Assets that are acquired and levered by the Originator solely to satisfy REIT asset and
income tests.



     “Portfolio Delinquency Ratio”: As of any Determination Date, the percentage
equivalent of a fraction, (i) the numerator of which is equal to the sum of the Portfolio
Outstanding Asset Balances of all Delinquent Portfolio Assets on such date and (ii) the denominator
of which is equal to the Portfolio Aggregate Outstanding Asset Balance on such date; provided that,
such calculation shall exclude the effects of any Liquid Real Estate Assets that are acquired and
levered by the Originator solely to satisfy REIT asset and income tests.



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     “Portfolio Outstanding Asset Balance”: With respect to any Portfolio Asset, the sum
of (i) the portion of all future Scheduled Payments becoming due under or with respect to such
Portfolio Asset plus (ii) any past due Scheduled Payments with respect to such Portfolio
Asset.



     “Prepaid Asset”: Any Asset (other than a Charged-Off Asset) that was terminated or
has been prepaid in full or in part prior to its scheduled expiration date.



     “Prepayment Amount”: Defined in Section 6.4(b).



     “Prepayments”: Any and all (i) partial or full prepayments on or with respect to an
Asset (including, with respect to any Asset and any Collection Period, any Scheduled Payment,
Finance Charge or portion thereof that is due in a subsequent Collection Period that the Servicer
has received, and pursuant to the terms of Section 6.4(b) expressly permitted the related
Obligor to make, in advance of its scheduled due date, and that will be applied to such Scheduled
Payment on such due date), (ii) Recoveries, and (iii) Insurance Proceeds.



     “Prime Rate”: (a) The rate announced by WBNA from time to time as its prime rate in
the United States, such rate to change as and when such designated rate changes, or (b) with
respect to any Additional Purchaser, as otherwise specified by or on behalf of such Additional
Purchaser in the applicable Additional Purchaser Agreement. The Prime Rate is not intended to be
the lowest rate of interest charged by WBNA or any other specified financial institution in
connection with extensions of credit to debtors.



     “Principal Collections”: Any and all amounts received in respect of any principal due
and payable under the Loans from or on behalf of Obligors that are deposited into the Principal
Collections Account, or received by or on behalf of the Seller by the Servicer or Originator in
respect of Assets, in the form of cash, checks, wire transfers, electronic transfers or any other
form of cash payment.



     “Principal Collections Account”: Defined in Section 6.4(f).



     “Proceeds”: With respect to any Collateral, whatever is receivable or received when
such Collateral is sold, liquidated, foreclosed, exchanged, or otherwise disposed of, whether such
disposition is voluntary or involuntary, and includes all rights to payment with respect to any
insurance relating to such Collateral.



     “Program Fee”: (a) With respect to any Purchaser, as defined in the applicable
Purchaser Fee Letter and (b) with respect to any Additional Purchaser, as specified in the
applicable Additional Agent Fee Letter.



     “Program Fee Rate”: (a) With respect to any Purchaser, the rate set forth in the
applicable Purchaser Fee Letter and (b) with respect to any Additional Purchaser, the rate set
forth in the applicable Additional Agent Fee Letter as the “Program Fee Rate.”



     “Pro-Rata Share”: (i) the percentage obtained by dividing each Conduit Purchaser’s,
as applicable, Commitment (as determined under subsection (i)(a) of the definition of
Commitment) by the aggregate Commitments of all the Conduit Purchasers (as determined under
subsection (i)(a) of the definition of Commitment).



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     “Purchaser”: (i) WBNA, (ii) any Additional Purchaser, as the context requires, and
“Purchasers” means collectively (a) WBNA and (b) the Additional Purchasers.



     “Purchaser Agent”: With respect to (i) WBNA, the WBNA Agent, (ii) any Additional
Purchasers, the related Additional Agent and (iii) each Institutional Purchaser which may from
time to time become a party hereto, each shall be deemed to be its own Purchaser Agent.



     “Purchaser Fee Letter”: Each Fee Letter Agreement, dated as of the date hereof, by
and among the Seller, the Servicer, and the applicable Purchaser Agent, as amended, modified,
waived, supplemented, restated or replaced from time to time.



     “Qualified Institution”: Defined in Section 6.4(f).



     “Qualified Transferee”:



     (a) The Seller, each Purchaser Agent and any Affiliate thereof, or the Administrative Agent or
any Affiliate of the Administrative Agent; or



     (b) any other Person which:




     (i) has at least $50,000,000 in capital/statutory surplus or shareholders’ equity
(except with respect to a pension advisory firm or similar fiduciary); and




     (ii) is regularly engaged in the business of making or owning commercial real estate
loans or operating commercial real estate properties; and




     (iii) is one of the following:




     (A) an insurance company, bank, savings and loan association, investment bank,
trust company, commercial credit corporation, pension plan, pension fund, pension
fund advisory firm, mutual fund, real estate investment trust, governmental entity
or plan, or




     (B) an investment company, money management firm or a “qualified institutional
buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended,
or an “institutional accredited investor” within the meaning of Regulation D under
the Securities Act of 1933, as amended; or




     (C) the trustee, collateral agent or administrative agent in connection with
(x) a securitization of the subject Asset through the creation of collateralized
debt or loan obligations or (y) an asset-backed commercial paper transaction funded
by a commercial paper conduit whose commercial paper notes are rated at least “A-1”
by S&P or at least “P-1” by Moody’s, or (z) a repurchase transaction funded by an
entity which would otherwise be a Qualified Transferee so long as the “equity
interest” (other than any nominal or de minimis equity interest) in the special
purpose entity that issues notes or certificates in connection with any such
collateralized debt or loan obligation, asset-backed commercial paper funded



-42-









 







transaction or repurchase transaction is owned by one or more entities that are
Qualified Transferees under subclauses (A) or (B) above; or




     (D) any entity Controlled (as defined below) by any of the entities described
in subclauses (i), (ii) or (iii) above.


For purposes of this definition only, “Control” means the ownership, directly or indirectly, in the
aggregate of more than fifty percent (50%) of the beneficial ownership interests of an entity and
the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of an entity, whether through the ability to exercise voting power, by
contract or otherwise, and “Controlled” has the meaning correlative thereto.




     “Quarterly Determination Date”: March 31, June 30, September 30 and December 31 of
each calendar year.



     “Rating Agency”: Each of S&P, Moody’s and any other rating agency that has been
requested to issue a rating with respect to a Permitted Securitization Transaction.



     “Real Estate Loan”: Any Loan (including any lease financing) (i) for which the
underlying Related Property consists primarily of real property or (ii) the proceeds of which are
primarily used to finance the acquisition, construction or development of real property or (iii)
the primary source of repayment from which is from the sale or liquidation of real property.



     “Records”: All documents relating to the Assets, including books, records and other
information (including without limitation, computer programs, tapes, disks, punch cards, data
processing software and related property and rights) executed in connection with the origination or
acquisition of the Collateral or maintained with respect to the Collateral and the related Obligors
that the Seller, the Originator or the Servicer have generated, in which the Seller, the Originator
or the Servicer have acquired an interest pursuant to the Sale Agreement or in which the Seller,
the Originator or the Servicer have otherwise obtained an interest.



     “Recoveries”: As of the time any Related Property or any other related property is
sold, discarded (after a determination by the Servicer that such Related Property or any other
related property has little or no remaining value) or otherwise determined to be fully liquidated
by the Servicer in accordance with the Credit and Collection Policy (or such similar policies and
procedures utilized by the Servicer in servicing the Portfolio Assets) with respect to any
Charged-Off Asset or Charged-Off Portfolio Asset, the proceeds from the sale of the Related
Property or any other related property, the proceeds of any related Insurance Policy, any other
recoveries with respect to such Charged-Off Asset or Charged-Off Portfolio Asset, the Related
Property, any other related property, and amounts representing late fees and penalties, net of
Liquidation Expenses and amounts, if any, received that are required under such Asset or Portfolio
Asset, as applicable, to be refunded to the related Obligor.



     “Regulation U”: Regulation U of the Board of Governors of the Federal Reserve System,
12 C.F.R. §221, or any successor regulation.



     “REIT”: A “real estate investment trust” as defined in Section 856(c)(5)(B) of the
Code.



-43-









 





     “REIT Requirements”: The requirements (including, without limitation, the
requirements relating to assets and income) CapitalSource Inc. must satisfy to qualify as a REIT
under the Code and applicable regulations of the Department of the Treasury promulgated thereunder.



     “Related Property”: With respect to an Asset, any property or other assets pledged as
collateral to the Originator to secure repayment of such Asset, including all Proceeds from any
sale or other disposition of such property or other assets.



     “Related Security”: All of the Seller’s right, title and interest in and to:



     (a) any Related Property securing an Asset and all Recoveries related thereto;



     (b) all Required Asset Documents, Asset Files related to any Asset, Records, and the
documents, agreements, and instruments included in the Asset File or Records, including without
limitation, rights of recovery of the Seller against the Originator;



     (c) all Insurance Policies with respect to any Asset;



     (d) all security interests, liens, guaranties, warranties, letters of credit, accounts, bank
accounts, mortgages or other encumbrances and property subject thereto from time to time purporting
to secure or support payment of any Asset, together with all UCC financing statements or similar
filings signed by an Obligor relating thereto;



     (e) the Collection Account, each Lock Box and all Lock Box Accounts, together with all cash
and investments in each of the foregoing other than amounts earned on investments therein;



     (f) any Hedging Agreement and any payment from time to time due thereunder;



     (g) the Sale Agreement and the assignment to the Administrative Agent of all UCC financing
statements filed by the Seller against the Originator under or in connection with the Sale
Agreement; and



     (h) the proceeds of each of the foregoing.



     “Replaced Asset”: Defined in Section 2.18(a).



     “Reporting Date”: The date that is two Business Days prior to each Payment Date.



     “Required Advance Reduction Amount”: On any day, an amount equal to the positive
difference, if any, of (a) Advances Outstanding on such day minus (b) the Maximum
Availability on such day.



     “Required Asset Documents”: With respect to (i) any Noteless Loan identified as a
Noteless Loan on the Asset Checklist, a copy of the related Loan Register (together with a
certificate of a Responsible Officer of the Servicer certifying to the accuracy of such Loan
Register as of the date such Loan is included as a part of the Collateral), (ii) all Loans other
than Noteless Loans, the duly executed original of the promissory note and an assignment (which may



-44-









 







be by endorsement or allonge) of each such promissory note to the Seller and then the
Administrative Agent, signed by an officer of the Originator and the Seller, respectively, (iii)
any Loan, any related loan agreement and the Asset Checklist together with, to the extent set forth
on the Asset Checklist, duly executed (if applicable) originals or copies of each of any related
participation agreement, acquisition agreement, subordination agreement, intercreditor agreement,
security agreements or similar instruments, UCC financing statements, guarantee, or Insurance
Policy, (iv) each Loan secured by real property, an Assignment of Mortgage and (v) any Loan
identified as an Assigned Loan on the Asset Checklist, the duly executed original assignment
agreement; provided, that with respect to any Assigned Loan, any of the foregoing documents, other
than any related promissory notes in the case of Assigned Loans only, may be copies. For the
avoidance of doubt, with respect to any Loan originated by an Affiliate of CapitalSource Inc. and
acquired by CapitalSource Finance or its successors and assigns from such Affiliate in compliance
with Section 2.21, Required Asset Documents shall include duly executed originals or
copies, as applicable, of each of the foregoing categories of documents with respect to the sale or
transfer of each such Loan from such Affiliate to CapitalSource Finance.



     “Required Reports”: Collectively, the Monthly Report, the Servicer’s Certificate
required pursuant to Section 6.10(c), the financial statements of the Servicer required
pursuant to Section 6.10(d), the annual statements as to compliance required pursuant to
Section 6.11, and the annual independent public accountant’s report required pursuant to
Section 6.12.



     “Residential Mortgage Policies and Procedures”: The written residential mortgage
policies and procedures manual of CapitalSource Inc. in the form attached hereto as Schedule
X as it may be amended or supplemented from time to time.



     “Responsible Officer”: With respect to any Person, any duly authorized officer of
such Person with direct responsibility for the administration of this Agreement and also, with
respect to a particular matter, any other duly authorized officer to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular subject.



     “Restricted Junior Payment”: (i) any dividend or other distribution, direct or
indirect, on account of any class of membership interests of the Seller now or hereafter
outstanding, except a dividend payment solely in interests of that class of membership interests or
in any junior class of membership interests of the Seller; (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or indirect, of any class
of membership interest of the Seller now or hereafter outstanding, (iii) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire membership interests of Seller now or hereafter outstanding, and
(iv) any payment of management fees by the Seller (except for reasonable management fees to the
Originator or its Affiliates in reimbursement of actual management services performed).



     “Retained Interest”: (A) With respect to any Revolving Loan or any Loan with an
unfunded commitment on the part of the Originator that does not provide by its terms that funding
thereunder is in Originator’s sole and absolute discretion and that is transferred by the
Originator to the Seller, all of the obligations, if any, to provide additional funding with
respect to such Revolving Loan, and (B) with respect to any Assigned Loan, any Participation Loan
or any Agented Loan that is transferred by the Originator to the Seller, (i) all of the
obligations, if



-45-









 







any, of the agent(s) under the documentation evidencing such Assigned Loan, Participation
Loan, or Agented Loan and (ii) the applicable portion of the interests, rights and obligations
under the documentation evidencing such Assigned Loan, Participation Loan, or Agented Loan that
relate to such portion(s) of the indebtedness that is owned by another lender or is being retained
by the Originator pursuant to clause (A) of this definition.



     “Revolving Loan”: A Loan that is a line of credit or contains an unfunded commitment
arising from an extension of credit by the Originator to an Obligor, pursuant to the terms of which
amounts borrowed may be repaid and subsequently reborrowed; provided, however, any such Loan shall
exclude any Retained Interest.



     “Revolving Period”: The period commencing on the Closing Date and ending on the day
immediately preceding the Termination Date.



     “S&P”: Standard & Poor’s, a division of The McGraw Hill Companies, Inc., and any
successor thereto.



     “Sale Agreement”: The Sale and Contribution Agreement, dated as of the date hereof,
between the Originator and the Seller, as amended, modified, waived, supplemented, restated or
replaced from time to time.



     “Scheduled Payments”: With respect to any Loan, each monthly, quarterly, or annual
payment of principal required to be made by the Obligor thereof under the terms of such Loan; in
all cases, excluding any payment in the nature of, or constituting, interest.



     “Secured Party”: (i) each Purchaser, (ii) the Administrative Agent and each Purchaser
Agent, and (iii) each Hedge Counterparty that is either a Purchaser or an Affiliate of the WBNA
Agent if that Affiliate is a Hedge Counterparty that executes a counterpart of this Agreement
agreeing to be bound by the terms of this Agreement applicable to a Secured Party.



     “Security System Loan”: A Loan with respect to which the related Obligor is in the
business classified under 2002 NAICS Code 56162 (Security Systems Services) and which is secured by
Alarm Service Agreements.



     “Security System Loan Advance Multiple”: With respect to any Security System Loan,
the amount funded under such Security System Loan divided by the related RMR.



     “Security System Loan Average Contract Term”: With respect to any Security System
Loan, the weighted average of the non-cancellable terms measured in months of the Alarm Service
Agreements securing such Security System Loan.



     “Seller”: Defined in the Preamble of this Agreement.



     “Senior B-Note Loan”: Any Term Loan that (i) is secured by a first priority Lien on
all of the Obligor’s assets constituting Related Property for the Loan, (ii) has a “first dollar”
at risk not to exceed 60% of the Loan-to-Value and a “last dollar” at risk not to exceed 70% of the
Loan-to-Value, (iii) contains terms which, upon the occurrence of an event of default under the
Loan Documents or in the case of any liquidation or foreclosure on the Related Property, provide



-46-









 







that the principal of the Seller’s portion of such Loan would be paid only after the other
lenders party to such Loan (including any lender party making any Senior Secured Loan or Stretch
Senior Secured Loan whose right to payment is contractually senior to the Seller) is paid in full,
and (iv) is substantially in a form of “Senior B-Note Loan” previously delivered by the Originator
to the Administrative Agent in connection with this transaction or such other form as shall be
adopted by the Originator and approved in writing by the Administrative Agent at least five days
prior to such Loan becoming part of the Collateral hereunder.



     “Senior Secured ABL Loan”: Any Revolving Loan that (i) is secured by a first priority
Lien on all of the Obligor’s assets constituting Related Property for the Loan, (ii) provides the
related Obligor with the option to receive additional borrowings thereunder based on the value of
its eligible accounts receivable, inventory or equipment, (iii) has a Loan-to-Liquidation Value of
less than or equal to (a) 85% with respect to the Related Property which constitutes accounts
receivable, (b) 50% with respect to the Related Property which constitutes inventory, and (c) 80%
with respect to the Related Property which constitutes Equipment, (iii) provides that the payment
obligation of the Obligor on such Loan is either senior to, or pari passu with, all other loans or
financings to such Obligor, (iv) has an availability mechanism that is governed by a dynamic
borrowing base formula that specifies eligible collateral and advance rates, and where the
borrowing base and availability are calculated at least monthly, (v) employs lock-boxes for cash
control and (vi) is substantially in the form of a “Senior Secured ABL Loan” previously delivered
by the Originator to the Administrative Agent in connection with this transaction or such other
form as shall be adopted by the Originator and approved in writing by the Administrative Agent at
least five days prior to such Loan becoming part of the Collateral hereunder; provided, however,
any such Loan shall exclude any Retained Interest.



     “Senior Secured Loan”: Any Loan that (i) is secured by a first priority Lien on all
of the Obligor’s assets constituting Related Property for the Loan, (ii) has a Loan-to-Value of
less than 60%, (iii) provides that the payment obligation of the Obligor on such Loan is either
senior to, or pari passu with, all other loans or financings to such Obligor, and (iv) is
substantially in the form of a “Senior Secured Loan” previously delivered by the Originator to the
Administrative Agent in connection with this transaction or such other form as shall be adopted by
the Originator and approved in writing by the Administrative Agent at least five days prior to such
Loan becoming part of the Collateral hereunder.



     “Servicer”: CapitalSource Finance LLC, and each successor (in the same capacity)
appointed as Successor Servicer pursuant to 
Section 6.16(a).



     “Servicer Advance”: An advance of Scheduled Payments made by the Servicer pursuant to
Section 6.5.



     “Servicer Default”: Defined in Section 6.15.



     “Servicer Termination Notice”: Defined in Section 6.15.



     “Servicer’s Certificate”: Defined in Section 6.10(c).



     “Servicing Fee”: Defined in Section 2.14(b).



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     “Servicing Fee Rate”: 0.50% per annum.



     “Servicing Guarantor”: An Affiliate of CapitalSource Inc. that executes a Servicing
Guaranty.



     “Servicing Guaranty”: Each Servicing Guaranty by an Affiliate of CapitalSource Inc.
in favor of the Administrative Agent, as agent for the Secured Parties, pursuant to Section
2.21 in form and substance satisfactory to the Administrative Agent in its sole discretion.



     “Solvent”: As to any Person at any time, having a state of affairs such that all of
the following conditions are met: (a) the fair value of the property of such Person is greater
than the amount of such Person’s liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (b) the present fair salable value of the property of such
Person in an orderly liquidation of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become absolute and matured; (c)
such Person is able to realize upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay as such debts and liabilities mature; and (e) such Person is
not engaged in a business or a transaction, and is not about to engage in a business or a
transaction, for which such Person’s property would constitute unreasonably small capital.



     “Stretch Senior Secured Loan”: Any Term Loan other than a Senior Secured Loan that
(i) is secured by a first priority Lien on all of the Obligor’s assets constituting Related
Property for the Loan (which may include a pledge of common equity), (ii) has a Loan-to-Value of
greater than 60% and less than 70%, (iii) provides that the payment obligation of the Obligor on
such Loan is either senior to, or pari passu with, all other loans or financings to such Obligor,
and (iv) is substantially in a form of “Stretch Senior Secured Loan” previously delivered by the
Originator to the Administrative Agent in connection with this transaction or such other form as
shall be adopted by the Originator and approved in writing by the Administrative Agent at least
five days prior to such Loan becoming part of the Collateral hereunder.



     “Subordinated Loan”: Any Term Loan that (i) may be secured by a combination of senior
and/or junior Liens on substantially all of the Obligor’s assets constituting Related Property for
the Loan, (ii) has a Loan-to-Value of less than 85%, (iii) contains terms which, upon the
occurrence of certain events of default under the senior loan documents between another lender and
the Obligor or in the case of any liquidation or foreclosure on any Related Property, provide that
the Seller’s portion of such Loan would be paid only after the other lender party to such related
senior loan documents (including any lender party making any Senior Secured ABL Loan, Senior
Secured Loan, Stretch Senior Secured Loan or Senior B-Note Loan whose right to payment is
contractually senior to the Seller) is paid in full, and (iv) is substantially in the form of a
“Subordinated Loan” previously delivered by the Originator to the Administrative Agent in
connection with this transaction or such other form as shall be adopted by the Originator and
approved in writing by the Administrative Agent at least five days prior to such Loan becoming part
of the Collateral hereunder.



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     “Subordinated Servicing Fee Rate”: 0.50% per annum.



     “Subsidiary”: As to any Person, a corporation, partnership or other entity of which
shares of stock or other ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such Person; provided, however, that,
solely for the purpose of calculating the Consolidated Tangible Net Worth, the term “Subsidiary”
shall not include any Person that constitutes an Investment in Equity Instruments or an Investment
Loan Subsidiary.



     “Substitute Asset”: On any day, an Eligible Asset that meets each of the conditions
for substitution set forth in Section 2.18.



     “Successor Servicer”: Defined in Section 6.16(a).



     “Tape”: Defined in Section 7.2(b)(ii).



     “Taxes”: Any present or future taxes, levies, imposts, duties, charges, assessments
or fees of any nature (including interest, penalties, and additions thereto) that are imposed by
any Governmental Authority.



     “Termination Date”: The earliest of (a) the date of the termination of the Facility
Amount pursuant to Section 2.4, (b) the Business Day designated by the Seller to the
Administrative Agent and each Purchaser Agent as the Termination Date at any time following two
Business Days’ prior written notice thereof to the Administrative Agent and each Purchaser Agent,
(c) May 29, 2009, (d) the date any Liquidity Agreement shall cease to be in full force and effect,
and (d) the date of the declaration of the Termination Date pursuant to Section 10.2(a) or
the date of the automatic occurrence of the Termination Date pursuant to Section 10.2(b).



     “Termination Event”: Defined in Section 10.1.



     “Term Loan”: A Loan that is a term loan that has been fully funded and does not
contain any unfunded commitment on the part of the Originator arising from an extension of credit
by the Originator to an Obligor.



     “Transaction”: Defined in Section 3.2.



     “Transaction Documents”: The Agreement, the Sale Agreement, each Hedging Agreement,
the Hedge Guaranty, the Lock-Box Agreement, the Intercreditor Agreement, each Variable Funding
Note, each Servicing Guaranty, each Purchaser Fee Letter, any Additional Agent Fee Letters, any
Additional Purchaser Agreements, the Backup Servicer Fee Letter, the Collateral Custodian Fee
Letter, any UCC financing statements filed pursuant to the terms of this Agreement, and any
additional document the execution of which is necessary or incidental to carrying out the terms of
the foregoing documents.



     “Transferee Letter”: Defined in Section 13.16(a).



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     “Transition Expenses”: The reasonable costs (including reasonable attorneys’ fees) of
the Backup Servicer incurred in connection with the transferring the servicing obligations under
this Agreement and amending this Agreement to reflect such transfer in an amount not to exceed
$100,000.



     “UCC”: The Uniform Commercial Code as from time to time in effect in the applicable
jurisdiction or jurisdictions.



     “United States”: The United States of America.



     “Unmatured Termination Event”: Any event that, with the giving of notice or the lapse
of time, or both, would become a Termination Event.



     “Variable Funding Note” or “VFN”: Defined in Section 2.1(a).



     “VFCC”: Variable Funding Capital Company LLC, a Delaware limited liability company.



     “Voting Stock”: With respect to any Person, capital stock or membership interests (in
the case of a limited liability company) issued by such Person the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right so to vote has been suspended
by the happening of such contingency.



     “Wachovia”: Wachovia Bank, National Association, a national banking association in
its individual capacity, and its successors and assigns.



     “Warranty Asset”: Any Asset that fails to satisfy any criteria of the definition of
Eligible Asset; provided, however, that notwithstanding the foregoing, for purposes of determining
what is a Warranty Asset, the criteria set forth in clauses (1)(c), (1)(d),
1(m)(i), 1(t) (but solely to the extent the criteria in such clause 1(t)
relates to any express representation and warranty that an Asset is an Eligible Asset),
1(w), 1(x), (1)(y) and clauses (2)(c) and 2(d) (but solely
to the extent that the criteria in such clauses 2(c) and 2(d) would not be
satisfied as a result of the operation of law or an effective court order in connection with an
Insolvency Event) of the definition of Eligible Asset and clauses (vi), (viii) and
(ix) in the definition of Eligible Obligor shall apply only as of the applicable Cut-Off
Date of such Asset.



     “Warranty Event”: As to any Asset, the discovery that as of the related Cut-Off Date
or Funding Date there had existed a breach of any representation or warranty relating to such Asset
and the continuance of such breach through any applicable determination date or beyond any
applicable cure period.



     “WBNA”: Defined in the Preamble of this Agreement.



     “WBNA Agent”: Defined in the Preamble of this Agreement.



     “WBNA Agent’s Account”: A special account (account number 1459160000192) in the name
of the WBNA Agent maintained at WBNA.



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     “Weighted Average Advance Rate”: For any Advances Outstanding on any day, the
weighted average of the Advance Rates applicable to the Eligible Assets backing such Advances on
such day, weighted according to the proportion of the Aggregate Outstanding Asset Balance each type
of Asset represents.



     Section 1.2 Other Terms.



     All accounting terms used but not specifically defined herein shall be construed in accordance
with GAAP. All terms used in Article 9 of the UCC in the State of New York, and used but not
specifically defined herein, are used herein as defined in such Article 9.



     Section 1.3 Computation of Time Periods.



     Unless otherwise stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and including” and the words
“to” and “until” each mean “to but excluding.”



     Section 1.4 Interpretation.



     In each Transaction Document, unless a contrary intention appears:




     (i) the singular number includes the plural number and vice versa;




     (ii) reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by the Transaction Documents;




     (iii) reference to any gender includes each other gender;




     (iv) reference to day or days without further qualification means calendar days;




     (v) reference to any time means Charlotte, North Carolina time;




     (vi) reference to any agreement (including any Transaction Document), document or
instrument means such agreement, document or instrument as amended, modified, waived,
supplemented, restated or replaced and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms of the other Transaction Documents, and
reference to any promissory note includes any promissory note that is an extension or
renewal thereof or a substitute or replacement therefor; and




     (vii) reference to any Applicable Law means such Applicable Law as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder and reference to any Section or other
provision of any Applicable Law means that provision of such Applicable Law from time to
time in effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such Section or other provision.



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ARTICLE II




PURCHASE OF THE VARIABLE FUNDING NOTES




     Section 2.1 The Variable Funding Notes.



     (a) On the terms and conditions hereinafter set forth, Seller shall deliver a duly executed
variable funding note (each such note, a “Variable Funding Note” or “VFN”), in
substantially the form of Exhibit B-1 or B-2, as applicable, (i) on the Closing
Date, to each Purchaser Agent at their respective addresses set forth on the signature pages of
this Agreement, and (ii) on each date on which an Additional Purchaser purchases a Variable Funding
Note, to the related Additional Agent at the address designated by such Additional Agent. Each
Variable Funding Note shall evidence each Purchaser’s ratable share of the security interest in the
Collateral granted pursuant to Section 9.1. Interest shall accrue, and each VFN shall be
payable, as described herein. The VFN purchased by (1) WBNA shall be in the name of “Wachovia
Capital Markets, LLC, as the WBNA Agent” and shall be in the face amount equal to $90,000,000 and
otherwise duly completed, and (2) an Additional Purchaser shall be in the name of such Additional
Purchaser and shall be in a face amount to be determined; provided, that the aggregate amount
outstanding under all VFNs at any one time shall not exceed the Facility Amount.



     (b) On the terms and conditions hereinafter set forth, from the Closing Date to, but excluding
the Termination Date, the Seller may, at its option, request the Purchasers to make advances of
funds under the VFNs (each, an “Advance”) and the Purchasers shall make such Advance in an
amount equal to their Pro-Rata Share of such requested Advance; provided, that in no event shall
the Purchasers make any Advance if, after giving effect to such Advance the aggregate Advances
Outstanding hereunder would exceed the lesser of (i) the Facility Amount or (ii) the Maximum
Availability. Notwithstanding anything contained in this Section 2.1 or elsewhere in this
Agreement to the contrary, no Purchaser shall be obligated to provide its Purchaser Agent or the
Seller with aggregate funds in connection with an Advance that would exceed such Purchaser’s unused
Commitment then in effect. Each Advance made by the Purchasers hereunder is subject to the
interests of the Hedge Counterparties under Section 2.9(a)(i) and Section
2.10(a)(i) of this Agreement.



     (c) [Reserved].



     (d) The Seller may, within sixty (60) days but not less than forty-five (45) days prior to the
expiration of any Liquidity Agreement in the case of an extension of any Liquidity Agreement or the
date set forth in clause (c) of the definition of Termination Date in the case of an extension of
this Agreement, by written notice to each Purchaser Agent, make a request (i) for each applicable
Liquidity Bank to extend the term of such Liquidity Agreement for an additional period of 364 days
and (ii) for each Purchaser to extend the date set forth in clause (c) of the definition of
Termination Date. Each Purchaser Agent will give prompt notice to the applicable Purchaser and
each applicable Liquidity Bank of its receipt of such request, and each Purchaser and each
Liquidity Bank shall make a determination, in their sole discretion, not less than fifteen (15)
days prior to the date set forth in clause (c) of the definition of Termination Date or the
expiration of any Liquidity Agreement (as applicable) as to whether or not it will agree to the



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extension requested. The failure of a Purchaser Agent or a Liquidity Bank to provide timely
notice of its decision to the Seller shall be deemed to constitute a refusal by such Purchaser or
such Liquidity Bank (as applicable) to extend the date set forth in clause (c) of the definition of
Termination Date or the term of the Liquidity Agreement, respectively. The Seller confirms that
each Liquidity Bank and each Purchaser, in their sole and absolute discretion, without regard to
the value or performance of the Collateral or any other factor, may elect not to extend any
Liquidity Agreement or the date set forth in clause (c) of the definition of Termination Date (as
applicable).



     Section 2.2 [Reserved].



     Section 2.3 Procedures for Advances by Purchasers.



     (a) Each Advance from a Purchaser hereunder shall be effected by the Seller (or the Servicer
on its behalf) delivering to the Administrative Agent and each Purchaser Agent (with a copy to the
Collateral Custodian and the Backup Servicer) a duly completed Borrowing Notice (along with a
Borrowing Base Certificate) no later than 2:00 p.m. (Charlotte, North Carolina time) at least one
Business Day prior to the proposed Funding Date; provided, however, that Advances in an aggregate
amount not to exceed $15,000,000 may be requested no later than 2:00 p.m. on the Business Day of
the proposed Funding Date. Each Borrowing Notice (along with a Borrowing Base Certificate) shall
(i) specify the desired amount of such Advance, which amount must be at least equal to $250,000 per
Purchaser, (ii) specify the date of such Advance, (iii) specify the Assets to be financed on such
Funding Date (including the appropriate file number, Outstanding Asset Balance for each Asset and
identifying each Loan by type and whether such Loan is a Senior Secured ABL Loan, Senior Secured
Loan, Stretch Senior Secured Loan, Senior B-Note Loan, Subordinated Loan, Assigned Loan, or
Participation Loan) and (iv) include a representation that all conditions precedent for an Advance
described in Article III hereof have been met. Each Borrowing Notice shall be irrevocable.



     (b) On the date of each Advance, each Purchaser shall, upon satisfaction of the applicable
conditions set forth in Article III, make available to the Seller in same day funds, at
such bank or other location reasonably designated by Seller in its Borrowing Notice given pursuant
to this Section 2.3, an amount equal to its Pro-Rata Share of the lesser of (i) the amount
requested by the Seller for such Advance, (ii) an amount equal to the Availability on such Funding
Date or (iii) the Facility Amount.



     (c) On each Funding Date, the obligation of each Purchaser to remit its Pro-Rata Share of any
such Advance shall be several from that of each other Purchaser and the failure of any Purchaser to
so make such amount available to the Seller shall not relieve any other Purchaser of its obligation
hereunder.



     Section 2.4 Reduction of the Facility Amount; Mandatory and Optional Repayments.



     (a) The Seller may, upon at least twenty (20) Business Days’ prior written notice (such notice
to be received by the Administrative Agent and each Purchaser Agent no later than 5:00 p.m.
(Charlotte, North Carolina time) on such day) to the Administrative Agent and each



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Purchaser Agent, terminate in whole or reduce in part the portion of the Facility Amount that
exceeds the sum of the Advances Outstanding, accrued Interest, Breakage Costs and Hedge Breakage
Costs; provided, however, that each partial reduction of the Facility Amount shall be in an
aggregate amount equal to at least $1,000,000. Each notice of reduction or termination pursuant to
this Section 2.4(a) shall be irrevocable. The Commitment of each Conduit Purchaser and each
Institutional Purchaser shall be reduced by an amount equal to its Pro Rata Share (prior to giving
effect to any reduction of Commitments hereunder) of the aggregate amount of any reduction under
this Section 2.4(a).



     (b) The Seller may, upon one Business Days’ prior written notice (such notice to be received
by the Administrative Agent, each Hedge Counterparty and each Purchaser Agent no later than 2:00
p.m. (Charlotte, North Carolina time) on such day) to the Administrative Agent and each Purchaser
Agent, reduce the Advances Outstanding by remitting, in accordance with their Pro-Rata Share, to
each Purchaser Agent, for payment to the respective Purchasers, (i) cash and (ii) instructions to
reduce such Advances Outstanding, related accrued Interest, Breakage Costs and Hedge Breakage
Costs; provided, that no such reduction shall be given effect (1) unless the Seller has complied
with the terms of any Hedging Agreement requiring that one or more Hedge Transactions be terminated
in whole or in part as the result of any such reduction of the Advances Outstanding, and Seller has
paid all Hedge Breakage Costs and any payments owing to the relevant Hedge Counterparty for any
such termination (2) if a Termination Event or Unmatured Termination Event has occurred, is
continuing or would result from such reduction. Any reduction of the Advances Outstanding shall be
in a minimum amount of $500,000. Any such reduction will occur only if sufficient funds have been
remitted to pay all such amounts in the succeeding sentence in full. Upon receipt of such amounts,
the Purchaser Agents shall apply such amounts first to the pro-rata reduction of the
Advances Outstanding, second to the payment of related accrued Interest on the amount of
the Advances Outstanding to be repaid by paying such amounts to the respective Purchasers, and
third to the payment of any Breakage Costs and Hedge Breakage Costs and any other payments
owing to the applicable Hedge Counterparty in respect of the termination of any Hedge Transaction.
Any notice relating to any prepayment pursuant to this Section 2.4(b) shall be irrevocable.



     (c) If on any day (i) the Administrative Agent, as agent for the Secured Parties, does not own
or have a valid and perfected first priority security interest in any of the Collateral or (ii) any
Asset 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 Administrative Agent 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 Administrative Agent, on behalf of the Purchasers and each Hedge
Counterparty, an amount equal to (x) the Outstanding Asset Balance of the Asset to be applied to
the pro-rata reduction of the principal of each VFN plus (y) any Breakage Costs and Hedge Breakage
Costs and any other payments owing to the applicable Hedge Counterparty in respect of the
termination of any Hedge Transaction required as a result of the Deemed Collection and release of
the related Asset contemplated by this Section 2.4(c). In connection with any such Deemed
Collection, the Administrative Agent, as agent for the Secured Parties, shall automatically and
without further action, be deemed to release to the Seller, free and clear of any Lien created by
the Administrative Agent, all of the right, title and interest of the Administrative



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Agent, as agent for the Secured Parties, in, to, and under the Asset with respect to which the
Administrative Agent has received such Deemed Collection, but without any other representation and
warranty of any kind, express or implied.



     Section 2.5 Determination of Interest.



     (a) Each Purchaser Agent shall determine such Purchaser’s Interest Rate and the Interest
(including unpaid Interest, if any, due and payable on a prior Payment Date) to be paid by the
Seller with respect to each Advance on each Payment Date for the related Accrual Period and shall
advise the Servicer thereof on or before the third (3rd) Business Day prior to such Payment Date.



     (b) Each Additional Agent shall determine such Additional Purchaser’s Interest Rate and
Interest (including unpaid Interest related to such Interest Rate, if any, due and payable to a
prior Payment Date) to be paid by the Seller with respect to each Advance on each Payment Date for
the related Accrual Period and shall advise the Servicer thereof on or before the third (3rd)
Business Day prior to such Payment Date.



     Section 2.6 [Reserved].



     Section 2.7 [Reserved].



     Section 2.8 Notations on Variable Funding Notes.



     Each Purchaser Agent is hereby authorized to enter on a schedule attached to the VFN a
notation (which may be computer generated) with respect to each Advance under the VFN made by the
related Purchaser of: (a) the date and principal amount thereof, and (b) each repayment of
principal thereof, and any such recordation shall constitute prima facie evidence of the accuracy
of the information so recorded. The failure of any Purchaser Agent to make any such notation on
the schedule attached to the VFN shall not limit or otherwise affect the obligation of the Seller
to repay the Advances in accordance with their respective terms as set forth herein.



     Section 2.9 Settlement Procedures During the Revolving Period.



     (a) On each Payment Date during the Revolving Period, the Servicer shall direct the Collateral
Custodian to pay pursuant to the Monthly Report to the following Persons, from (1) the Collection
Account, to the extent of Available Funds, and (2) Servicer Advances received with respect to the
immediately preceding Collection Period that ended on the last day of the calendar month
immediately preceding the calendar month in which such Payment Date occurs, the following amounts
in the following order of priority:




     (i) FIRST, pro rata to each Hedge Counterparty, any amounts, (other than any
Hedge Breakage Costs and any payments due in respect of the termination of any Hedging
Transaction), owing to that Hedge Counterparty under its respective Hedging Agreement in
respect of any Hedge Transaction(s), for the payment thereof;




     (ii) SECOND, to the Servicer, in an amount equal to any unreimbursed Servicer
Advances, for the payment thereof;



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     (iii) THIRD, to the Servicer, in an amount equal to any accrued and unpaid
Servicing Fees and, if the Servicer is not CapitalSource Finance, CapitalSource, Inc. or an
Affiliate of CapitalSource, Inc., Subordinated Servicing Fees, to the end of the preceding
Collection Period, for the payment thereof;




     (iv) FOURTH, to the extent not paid for by the Originator, pro rata to the
Backup Servicer and the Collateral Custodian, in an amount equal to any accrued and unpaid
Backup Servicing Fee, Collateral Custodian Fee and Transition Expenses, for the payment
thereof;




     (v) FIFTH, to each Purchaser Agent, pro rata in accordance with the amount of
Advances Outstanding hereunder for the account of the applicable Purchaser, in an amount
equal to any accrued and unpaid Interest, Program Fee, Commitment Fee and Breakage Costs,
for the payment thereof;




     (vi) SIXTH, (i) prior to the occurrence of a Termination Event, pro rata in
accordance with the amounts due under subclauses (a) and (b) of this clause,
(a) to each Purchaser Agent, if the Required Advance Reduction Amount is greater than zero,
an amount necessary to reduce the Required Advance Reduction Amount to zero, pro rata in
accordance with the amount of Advances Outstanding hereunder for the account of the
applicable Purchaser, for the payment thereof and (b) pro rata in accordance with the
amounts due under this subclause (b), to each Hedge Counterparty, any Hedge Breakage
Costs and payments due in termination of any Hedge Transaction, owing to that Hedge
Counterparty under its respective Hedging Agreement, for the payment thereof; or (ii)
following the occurrence of a Termination Event, pro rata in accordance with the amounts due
under subclauses (1) and (2) of this clause, (1) to each Purchaser Agent,
pro rata in accordance with the amount of Advances Outstanding hereunder for the account of
the applicable Purchaser, in an amount necessary to reduce the Advances Outstanding and
Aggregate Unpaids to zero, for the payment thereof and (2) pro rata in accordance with the
amounts due under this subclause (2), to each Hedge Counterparty, any Hedge Breakage
Costs and payments due in termination of any Hedge Transaction, owing to that Hedge
Counterparty under its respective Hedging Agreement, for the payment thereof;




     (vii) SEVENTH, to the Servicer, if the Servicer is CapitalSource Finance,
CapitalSource, Inc. or an Affiliate of CapitalSource, Inc., in an amount equal to any
accrued and unpaid Subordinated Servicing Fee to the end of the preceding Collection Period,
for the payment thereof;




     (viii) EIGHTH, to the Administrative Agent, each Purchaser Agent, the
applicable Purchaser, the Backup Servicer, the Collateral Custodian, the Affected Parties,
the Indemnified Parties or the Secured Parties, pro rata in accordance with the amount owed
to such Person under this EIGHTH clause, all other amounts, including Increased
Costs but other than Advances Outstanding, then due under this Agreement, for the payment
thereof; and




     (ix) NINTH, any remaining amount shall be distributed to the Seller.



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     (b) On the terms and conditions hereinafter set forth, from time to time during the Revolving
Period, the Servicer may, to the extent of any Principal Collections on deposit in the Principal
Collections Account, withdraw such funds for the purpose of reinvesting in additional Eligible
Assets, provided the following conditions are satisfied:




     (i) all conditions precedent set forth in Section 3.2(b) have been satisfied;




     (ii) the Servicer provides same day written notice to the Administrative Agent and
Collateral Custodian by facsimile (to be received no later than 2:00 p.m. (Charlotte, North
Carolina time) on such day) of the request to withdraw Principal Collections and the amount
thereof;




     (iii) the notice required in clause (ii) above shall be accompanied by a
Borrowing Notice in the form of Exhibit A-2 and a Borrowing Base Certificate and the
same are executed by the Seller and at least one Responsible Officer of the Servicer;




     (iv) the Collateral Custodian provides to the Administrative Agent by facsimile (to be
received no later than 2:00 p.m. (Charlotte, North Carolina time) on that same date) a
statement reflecting the total amount on deposit on such day in the Principal Collections
Account; and




     (v) upon the satisfaction of the conditions set forth in clauses (i) through
(iv) above, and the Administrative Agent’s confirmation of available funds, the
Administrative Agent will instruct the Collateral Custodian by facsimile on such day to
release funds from the Principal Collections Account to the Servicer in an amount not to
exceed the lesser of (A) the amount requested by the Servicer and (B) the amount on deposit
in the Principal Collections Account on such day.



     Section 2.10 Settlement Procedures During the Amortization Period.



     (a) On each Payment Date during the Amortization Period, the Servicer shall direct the
Collateral Custodian to pay pursuant to the Monthly Report to the following Persons, from (i) the
Collection Account, to the extent of Available Funds, and (ii) Servicer Advances received with
respect to the immediately preceding Collection Period, the following amounts in the following
order of priority:




     (i) FIRST, pro rata to each Hedge Counterparty, any amounts, (including any
Hedge Breakage Costs and any payments due in respect of the termination of any Hedge
Transaction in an amount not to exceed $250,000 in the aggregate for all Hedging
Agreements), owing to that Hedge Counterparty under its respective Hedging Agreement in
respect of any Hedge Transaction(s), for the payment thereof;




     (ii) SECOND, to the Servicer, in an amount equal to any unreimbursed Servicer
Advances, for the payment thereof;




     (iii) THIRD, to the Servicer, in an amount equal to any accrued and unpaid
Servicing Fee and, if the Servicer is not CapitalSource Finance, CapitalSource, Inc. or an



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Affiliate of CapitalSource, Inc., Subordinated Servicing Fee, to the end of the
preceding Collection Period, for the payment thereof;




     (iv) FOURTH, to the extent not paid for by the Originator, pro rata to the
Backup Servicer and the Collateral Custodian, in an amount equal to any accrued and unpaid
Backup Servicing Fee, Collateral Custodian Fee and Transition Expenses, for the payment
thereof;




     (v) FIFTH, to each Purchaser Agent, pro rata in accordance with the amount of
Advances Outstanding hereunder for the account of the applicable Purchaser, in an amount
equal to any accrued and unpaid Interest, Program Fee, Commitment Fee and Breakage Costs,
for the payment thereof;




     (vi) SIXTH, pro rata in accordance with the amounts due under subclauses
(a) and (b) of this clause, (a) to each Purchaser Agent, pro rata in accordance
with the amount of Advances Outstanding hereunder for the account of the applicable
Purchaser, in an amount necessary to reduce the Advances Outstanding and Aggregate Unpaids
to zero, for the payment thereof and (b) pro rata to each Hedge Counterparty, any Hedge
Breakage Costs and payments due in termination of any Hedge Transaction, owing to that Hedge
Counterparty under its respective Hedging Agreement to the extent not reimbursed pursuant to
clause FIRST above, for the payment thereof;




     (vii) SEVENTH, to each Purchaser Agent, if the Required Advance Reduction
Amount is greater than zero, an amount necessary to reduce the Required Advance Reduction
Amount to zero, pro rata in accordance with the amount of Advances Outstanding hereunder for
the account of the applicable Purchaser, for the payment thereof;




     (viii) EIGHTH, to the Servicer, if the Servicer is CapitalSource Finance,
CapitalSource, Inc. or an Affiliate of CapitalSource, Inc., in an amount equal to any
accrued and unpaid Subordinated Servicing Fee to the end of the preceding Collection Period,
for the payment thereof;




     (ix) NINTH, to the Administrative Agent, each Purchaser Agent, the applicable
Purchaser, the Backup Servicer, the Collateral Custodian, the Affected Parties, the
Indemnified Parties or the Secured Parties, pro rata in accordance with the amount owed to
such Person under this NINTH clause, all other amounts, including Increased Costs
but other than Advances Outstanding, then due under this Agreement, for the payment thereof;
and




     (x) TENTH, any remaining amount shall be distributed to the Seller.



     Section 2.11 Collections and Allocations.



     (a) Collections. The Servicer shall promptly identify any collections received as
being on account of Interest Collections, Principal Collections or other Collections and shall
transfer, or cause to be transferred, all Collections received directly by it or on deposit in the
form of available funds in the Lock-Box Accounts to the Collection Account by the close of



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business on the second (2nd) Business Day after such Collections are received. In
transferring Collections to the Collection Account, the Servicer shall segregate Principal
Collections and transfer the same to the corresponding Principal Collections Account. The Servicer
shall make such deposits or payments on the date indicated therein by wire transfer, in immediately
available funds. The Servicer shall further include a statement as to the amount of Principal
Collections and Interest Collections on deposit in the Collection Account on each Reporting Date in
the Monthly Report delivered pursuant to Section 6.10(b).



     (b) Initial Deposits. On the Closing Date and on each Addition Date thereafter, the
Servicer will deposit (in immediately available funds) into the Collection Account all Collections
received after the applicable Cut-Off Date and through and including the Closing Date or Addition
Date, as the case may be, in respect of Eligible Assets being transferred to and included as part
of the Collateral on such date.



     (c) Excluded Amounts. With the prior written consent of the Administrative Agent and
each Purchaser Agent, which consent shall not be unreasonably withheld (a copy of which will be
provided by the Servicer to the Backup Servicer), the Servicer may withdraw from the Collection
Account any deposits thereto constituting Excluded Amounts if the Servicer has, prior to such
withdrawal and consent, delivered to the Administrative Agent and each Purchaser Agent a report
setting forth the calculation of such Excluded Amounts in a format satisfactory to the
Administrative Agent and each Purchaser Agent in their sole discretion.



     (d) Investment of Funds. Until the occurrence of a Termination Event, to the extent
there are uninvested amounts deposited in the Collection Account, all amounts shall be invested in
Permitted Investments selected by the Servicer that mature no later than the Business Day
immediately preceding the next Payment Date; from and after the occurrence of a Termination Event,
to the extent there are uninvested amounts in the Collection Account (net of losses and investment
expenses), all amounts may be invested in Permitted Investments selected by the Administrative
Agent that mature no later than the Business Day immediately preceding the next Payment Date. All
earnings (net of losses and investment expenses) thereon shall be retained or deposited into the
Collection Account and shall be applied pursuant to the provisions of Section 2.9 and
Section 2.10.



     Section 2.12 Payments, Computations, Etc.



     (a) Unless otherwise expressly provided herein, all amounts to be paid or deposited by the
Seller or the Servicer hereunder shall be paid or deposited in accordance with the terms hereof no
later than 2:00 p.m. (Charlotte, North Carolina time) on the day when due in lawful money of the
United States in immediately available funds to the applicable Purchaser Agent’s Account and if not
received before such time shall be deemed received on the next Business Day. The Seller shall, to
the extent permitted by law, pay to the Secured Parties interest on all amounts not paid or
deposited when due hereunder at 2% per annum above the Base Rate, payable on demand; provided,
however, that such interest rate shall not at any time exceed the maximum rate permitted by
Applicable Law. Such interest shall be for the account of, and distributed to, each applicable
Purchaser. All computations of interest and all computations of Interest and other fees hereunder
shall be made on the basis of a year consisting of 360 days (other than calculations with respect
to the Base Rate which shall be based on a year consisting



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of 365 or 366 days, as applicable) for the actual number of days (including the first but
excluding the last day) elapsed.



     (b) Whenever any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of the payment of Interest or any fee payable
hereunder, as the case may be. For avoidance of doubt, to the extent that Available Funds are
insufficient on any Payment Date to satisfy the full amount of any Increased Costs pursuant to
clause EIGHTH of Section 2.9(a) or clause NINTH of Section 2.10,
such unpaid amounts shall remain due and owing and shall accrue Interest until repaid in full.



     (c) If any Advance requested by the Seller and approved by the applicable Purchaser and the
Purchaser Agents pursuant to Section 2.3 is not, for any reason made or effectuated, as the
case may be, on the date specified therefor, the Seller shall indemnify the applicable Purchaser
against any reasonable loss, cost or expense incurred by the applicable Purchaser including,
without limitation, any loss (including loss of anticipated profits, net of anticipated profits in
the reemployment of such funds in the manner determined by each Purchaser), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds acquired by the
applicable Purchaser to fund or maintain such Advance.



     Section 2.13 Optional Repurchase.



     At any time following the Termination Date when the Borrowing Base is less than fifteen (15%)
percent of the Borrowing Base as of the Termination Date, the Seller may notify the Administrative
Agent and each Purchaser Agent in writing of its intention to secure the release of all remaining
Collateral; provided, that all Hedge Transactions have been terminated in accordance with their
terms. On the Payment Date next succeeding any such notice, the Seller shall secure the release of
all such Collateral for a price equal to the Aggregate Unpaids and the proceeds of such transaction
will be deposited into the Collection Account and paid in accordance with Section 2.10.



     Section 2.14 Fees.



     (a) The Servicer on behalf of the Seller shall pay in accordance with Section
2.9(a)(v) and Section 2.10(a)(v), as applicable, to the applicable Purchaser Agent from
the Collection Account to the extent funds are available on each Payment Date, monthly in arrears,
the applicable Program Fee and the applicable Commitment Fee agreed to between the Seller and such
Purchaser Agent in the applicable Purchaser Fee Letter and the relevant Additional Agent Fee
Letter, as applicable.



     (b) The Servicer shall be entitled to receive a fee (the “Servicing Fee”), monthly in
arrears in accordance with Section 2.9(a)(iii) and Section 2.10(a)(iii), as
applicable, which fee shall be equal to the product of (i) the Servicing Fee Rate, (ii) the
Aggregate Outstanding Asset Balance as of the first day of the immediately preceding Collection
Period and (iii) the actual number of days in such Collection Period divided by 360.



     (c) The Servicer shall be entitled to receive a fee (the “Subordinated Servicing
Fee”), monthly in arrears in accordance with Section 2.9(a)(iii) and Section
2.10(a)(iii) or Section 



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2.9(a)(vii) and Section 2.10(a)(viii), as applicable, which fee shall be equal
to the product of (i) the Subordinated Servicing Fee Rate, (ii) the aggregate Outstanding Asset
Balance as of the first day of the immediately preceding Collection Period and (iii) the actual
number of days in such Collection Period divided by 360.




     (d) The Backup Servicer shall be entitled to receive the Backup Servicing Fee in accordance
with Section 2.9(a)(iv) and Section 2.10(a)(iv), as applicable.



     (e) The Collateral Custodian shall be entitled to receive the Collateral Custodian Fee in
accordance with Section 2.9(a)(iv) and Section 2.10(a)(iv), as applicable.



     (f) The Seller shall pay to counsel to the Administrative Agent, on the Closing Date, its
reasonable estimated fees and out-of-pocket expenses in immediately available funds and shall pay
all additional reasonable fees and out-of-pocket expenses of such counsel within thirty (30)
Business Days after receiving an invoice for such amounts.



     Section 2.15 Increased Costs; Capital Adequacy; Illegality.



     (a) If either (i) the introduction of or any change (including, without limitation, any change
by way of imposition or increase of reserve requirements) in or in the interpretation of any law or
regulation or (ii) the compliance by an Affected Party with any guideline or request from any
central bank or other Governmental Authority (whether or not having the force of law), shall (a)
subject an Affected Party to any Tax (except for Taxes on the overall net income of such Affected
Party), duty or other charge with respect to its interest in the Collateral, or any right to make
Advances hereunder, or on any payment made hereunder, (b) impose, modify or deem applicable any
reserve requirement (including, without limitation, any reserve requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve requirement, if any, included in
the determination of Interest), special deposit or similar requirement against assets of, deposits
with or for the amount of, or credit extended by, any Affected Party or (c) impose any other
condition affecting the security interest in the Collateral granted to the Purchasers hereunder or
the Purchasers’ rights hereunder, the result of which is to increase the cost to any Affected Party
or to reduce the amount of any sum received or receivable by an Affected Party under this
Agreement, then within ten days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the Servicer shall pay (and to
the extent the Servicer does not make such payment the Seller shall pay) directly to such Affected
Party such additional amount or amounts as will compensate such Affected Party for such additional
or increased cost incurred or such reduction suffered.



     (b) If either (i) the introduction of or any change in or in the interpretation of any law,
guideline, rule, regulation, directive or request or (ii) compliance by any Affected Party with any
law, guideline, rule, regulation, directive or request from any central bank or other governmental
authority or agency (whether or not having the force of law), including, without limitation,
compliance by an Affected Party with any request or directive regarding capital adequacy, has or
would have the effect of reducing the rate of return on the capital of any Affected Party as a
consequence of its obligations hereunder or arising in connection herewith to a level below that
which any such Affected Party could have achieved but for such introduction, change or



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compliance (taking into consideration the policies of such Affected Party with respect to
capital adequacy) by an amount deemed by such Affected Party to be material, then from time to
time, within ten days after demand by such Affected Party (which demand shall be accompanied by a
statement setting forth the basis for such demand), the Servicer shall pay (and to the extent the
Servicer does not make such payment the Seller shall pay) directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such reduction. For the
avoidance of doubt, if the issuance of Interpretation No. 46 by the Financial Accounting Standards
Board or any other change in accounting standards or the issuance of any other pronouncement,
release or interpretation, causes or requires the consolidation of all or a portion of the assets
and liabilities of the Originator or Seller with the assets and liabilities of the Administrative
Agent, any Purchaser Agent, any Purchaser or any Liquidity Bank, such event shall constitute a
circumstance on which such Affected Party may base a claim for reimbursement under this Section
2.15.



     (c) If as a result of any event or circumstance similar to those described in clauses
(a) or (b) of this Section 2.15, any Affected Party is required to compensate a
bank or other financial institution providing liquidity support, credit enhancement or other
similar support to such Affected Party in connection with this Agreement or the funding or
maintenance of Advances hereunder, then within ten days after demand by such Affected Party, the
Servicer shall pay (or to the extent the Servicer does not make such payment the Seller shall pay)
to such Affected Party such additional amount or amounts as may be necessary to reimburse such
Affected Party for any amounts payable or paid by it.



     (d) In determining any amount provided for in this Section 2.15, the Affected Party
may use any reasonable averaging and attribution methods. Any Affected Party making a claim under
this Section 2.15 shall submit to the Servicer a written description as to such additional
or increased cost or reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.



     (e) If the applicable Purchaser shall notify their respective Purchaser Agent that a
Eurodollar Disruption Event as described in clause (a) of the definition of “Eurodollar
Disruption Event” has occurred, the applicable Purchaser Agent or the Administrative Agent shall in
turn so notify the Seller, whereupon all Advances Outstanding of the affected Liquidity Bank or
Institutional Purchaser in respect of which Interest accrues at the Adjusted Eurodollar Rate shall
immediately be converted into Advances Outstanding in respect of which Interest accrues at the Base
Rate.



     Section 2.16 Taxes.



     (a) All payments made by an Obligor in respect of an Asset and all payments made by the Seller
or the Servicer under this Agreement will be made free and clear of and without deduction or
withholding for or on account of any Taxes. If any Taxes are required to be withheld from any
amounts payable to the Administrative Agent, the Purchaser Agents, any Affected Party or any
Secured Party, then the amount payable to such Person will be increased (such increase, the
“Additional Amount”) such that every net payment made under this Agreement after
withholding for or on account of any Taxes (including, without limitation, any Taxes on such
increase) is not less than the amount that would have been paid had no such



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deduction or withholding been deducted or withheld. The foregoing obligation to pay
Additional Amounts, however, will not apply with respect to net income or franchise taxes imposed
on the Purchasers, any Affected Party, the Administrative Agent or the Purchaser Agents,
respectively, with respect to payments required to be made by the Seller or Servicer under this
Agreement, by a taxing jurisdiction in which the Purchasers, any Affected Party, the Administrative
Agent or the Purchaser Agents, are organized, conducts business or is paying taxes (as the case may
be).



     (b) The Servicer will indemnify (and to the extent the indemnification provided by the
Servicer is insufficient the Seller will indemnify) each Affected Party for the full amount of
Taxes payable by such Person in respect of Additional Amounts and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto. All payments in
respect of this indemnification shall be made within ten days from the date a written invoice
therefor is delivered to the Seller.



     (c) Within thirty (30) days after the date of any payment by the Seller and the Servicer of
any Taxes, the Seller and the Servicer will furnish to the Administrative Agent and each of the
Purchaser Agents at its address set forth under its name on the signature pages hereof, appropriate
evidence of payment thereof.



     (d) If a Purchaser is not created or organized under the laws of the United States or a
political subdivision thereof, such Purchaser shall deliver to the Seller, with a copy to the
Administrative Agent, (i) within fifteen (15) days after the date hereof, two (or such other number
as may from time to time be prescribed by Applicable Laws) duly completed copies of IRS Form W-8BEN
or Form W-8ECI (or any successor forms or other certificates or statements that may be required
from time to time by the relevant United States taxing authorities or Applicable Laws), as
appropriate, to permit the Seller to make payments hereunder for the account of such Purchaser
without deduction or withholding of United States federal income or similar Taxes and (ii) upon the
obsolescence of or after the occurrence of any event requiring a change in, any form or certificate
previously delivered pursuant to this Section 2.16(d), copies (in such numbers as may from
time to time be prescribed by Applicable Laws or regulations) of such additional, amended or
successor forms, certificates or statements as may be required under Applicable Laws or regulations
to permit the Seller and the Servicer to make payments hereunder for the account of such Purchaser
without deduction or withholding of United States federal income or similar Taxes.



     (e) If, in connection with an agreement or other document providing liquidity support, credit
enhancement or other similar support to the Purchasers in connection with this Agreement or the
funding or maintenance of Advances hereunder, the Purchasers are required to compensate a bank or
other financial institution in respect of Taxes under circumstances similar to those described in
this Section 2.16, then, within ten days after demand by the Purchasers, the Servicer shall
pay (or to the extent the Servicer does not make such payment the Seller shall pay) to the
Purchasers such additional amount or amounts as may be necessary to reimburse the Purchasers for
any amounts paid by them.



     (f) Without prejudice to the survival of any other agreement of the Seller and the Servicer
hereunder, the agreements and obligations of the Seller and the Servicer contained in this
Section 2.16 shall survive the termination of this Agreement.



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     Section 2.17 Assignment of the Sale Agreement.



     The Seller hereby assigns to the Administrative Agent, for the ratable benefit of the Secured
Parties hereunder, all of the Seller’s right, title and interest in and to, but none of its
obligations under, the Sale Agreement and any UCC financing statements filed under or in connection
therewith. In furtherance and not in limitation of the foregoing, the Seller hereby assigns to the
Administrative Agent for the benefit of the Secured Parties its right to indemnification under
Article VIII of the Sale Agreement. The Seller confirms that the Administrative Agent on
behalf of the Secured Parties shall have the sole right to enforce the Seller’s rights and remedies
under the Sale Agreement and any UCC financing statements filed under or in connection therewith
for the benefit of the Secured Parties.



     Section 2.18 Substitution of Assets.



     On any day prior to the occurrence of a Termination Event (and after the Termination Date at
the discretion of the Administrative Agent with the consent of the Purchaser Agents), the Seller
may, subject to the conditions set forth in this Section 2.18 and subject to the other
restrictions contained herein, replace any Asset 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 Administrative Agent (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 4.6 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 Balances of the Replaced
Assets;



     (e) [Reserved];



     (f) all representations and warranties of the Seller contained in Section 4.1 and
Section 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;



     (h) the sum of (1) the Outstanding Asset Balance of all Assets that are Substitute Assets does
not exceed 20% of the Facility Amount, calculated on an annualized basis commencing with the
Closing Date;



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     (i) the sum of the Outstanding Asset Balance of all Substitute Assets substituted for
Delinquent Assets, Charged-Off Assets and Warranty Assets shall not exceed 10% of the Facility
Amount, calculated on an annualized basis commencing with the Closing Date;



     (j) the Seller shall deliver to the Administrative Agent 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 2.18 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
Administrative Agent, as agent for the Secured Parties, 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 Administrative Agent, as agent for the
Secured Parties, in, to and under such Replaced Asset, but without any representation and warranty
of any kind, express or implied.



     Section 2.19 Optional Sales.



     (a) On any Optional Sale Date, the Seller shall have the right to sell and assign all or a
portion of the Collateral (each, an “Optional Sale”), subject to the following terms and
conditions:




     (i) The Seller shall have given the Administrative Agent at least ten (10) Business
Days’ prior written notice of its intent to effect an Optional Sale, unless such notice is
waived or reduced by the Administrative Agent;




     (ii) Any Optional Sale shall be in connection with a Permitted Securitization
Transaction;




     (iii) Unless an Optional Sale is to be effected on a Payment Date (in which case the
relevant calculations with respect to such Optional Sale shall be reflected on the
applicable Monthly Report), the Servicer shall deliver to the Administrative Agent a
certificate and evidence to the reasonable satisfaction of the Administrative Agent (which
evidence may consist solely of a certificate from the Servicer) that the Seller shall have
sufficient funds on the related Optional Sale Date to effect the contemplated Optional Sale
in accordance with this Agreement. In effecting an Optional Sale, the Seller may use the
Proceeds of sales of the Collateral;




     (iv) After giving effect to the Optional Sale on any Optional Sale Date, (a) the
remaining Advances Outstanding shall not exceed the lesser of the Facility Amount and the
Maximum Availability, (b) the representations and warranties contained in Section
4.1 hereof shall continue to be correct in all material respects, except to the extent
relating to an earlier date, (c) the eligibility of any Asset remaining as part of the
Collateral after the Optional Sale will be redetermined as of the Optional Sale Date, (d)



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the Pool Concentration Criteria will be redetermined as of the Optional Sale Date, and
(e) neither an Unmatured Termination Event nor a Termination Event shall have resulted;




     (v) On the related Optional Sale Date, the Administrative Agent, each Purchaser Agent,
on behalf of the applicable Purchaser and the Hedge Counterparties, shall have received, as
applicable, in immediately available funds, an amount equal to the sum of (a) the portion of
the Advances Outstanding to be prepaid plus (b) an amount equal to all unpaid
Interest to the extent reasonably determined by the Administrative Agent and the Purchaser
Agents to be attributable to that portion of the Advances Outstanding to be paid in
connection with the Optional Sale plus (c) an aggregate amount equal to the sum of
all other amounts due and owing to the Administrative Agent, the Collateral Custodian, the
Backup Servicer, the Purchaser Agents, the applicable Purchaser, the Affected Parties and
the Hedge Counterparties, as applicable, under this Agreement and the other Transaction
Documents, to the extent accrued to such date and to accrue thereafter (including, without
limitation, Breakage Costs, Hedge Breakage Costs and any other payments owing to the
applicable Hedge Counterparty in respect of the termination of any Hedge Transaction);
provided, that the Administrative Agent and each Purchaser Agent shall have the right to
determine whether the amount paid (or proposed to be paid) by the Seller on the Optional
Sale Date is sufficient to satisfy the requirements of clauses (iii), (iv)
and (v) of this Section 2.19(a) and is sufficient to reduce the Advances
Outstanding to the extent requested by the Seller in connection with the Optional Sale;




     (vi) On or prior to each Optional Sale Date, the Seller shall have delivered to the
Administrative Agent a list specifying all Assets to be sold and assigned pursuant to such
Optional Sale; and




     (vii) No selection procedure adverse to the interests of the Administrative Agent, the
Purchaser Agents or the Secured Parties was utilized by the Seller or Originator in the
selection of Assets for inclusion in any Optional Sale.



     (b) In connection with any Optional Sale, following receipt by the Purchaser Agents of the
amounts referred to in clause (a)(v) above, the portion of the Collateral subject to the
Optional Sale shall be released from the Lien of this Agreement (subject to the requirements of
clause (a)(iv) above).



     (c) The Seller hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent, each Purchaser Agent and the Secured Parties in connection with any Optional
Sale (including, but not limited to, expenses incurred in connection with the release of the Lien
of the Administrative Agent, the Secured Parties and any other party having an interest in the
Collateral in connection with such Optional Sale).



     (d) In connection with any Optional Sale, on the related Optional Sale Date, the
Administrative Agent, on behalf of the Secured Parties, shall, at the expense of the Seller (i)
execute such instruments of release with respect to the portion of the Collateral subject to the
Optional Sale, in recordable form if necessary, in favor of the Seller as the Seller may reasonably
request, (ii) deliver any portion of the Collateral subject to the Optional Sale to the Seller in
its



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possession to the Seller and (iii) otherwise take such actions, and cause or permit the
Collateral Custodian to take such actions, as are necessary and appropriate to release the Lien of
the Administrative Agent and the Secured Parties on the portion of the Collateral subject to the
Optional Sale to the Seller and release and deliver to the Seller such portion of the Collateral
subject to the Optional Sale.



     Section 2.20 Discretionary Sales.



     (a) Prior to the occurrence of an Unmatured Termination Event or a Termination Event, on any
Discretionary Sale Date, the Seller shall have the right to prepay all or a portion of the Advances
Outstanding in connection with the transfer and assignment by the Seller (and related release of
security interest by the Administrative Agent, on behalf of the Secured Parties), of the specified
portion of Collateral (each, a “Discretionary Sale”), subject to the following terms and
conditions:




     (i) At least one Business Day prior to each Discretionary Sale Date, the Servicer, on
behalf of the Seller, shall have given the Administrative Agent and each Hedge Counterparty
written notice of its intent to effect a Discretionary Sale (each such notice a
“Discretionary Sale Notice”), specifying the Discretionary Sale Date and including a list of
all Assets to be sold and assigned pursuant to such Discretionary Sale, and a revised
Borrowing Base Certificate;




     (ii) Any Discretionary Sale shall be made by the Servicer, on behalf of the Seller, to
an unaffiliated third party purchaser in a transaction (i) reflecting arms-length market
terms and (ii) in which the Seller makes no representations, warranties or covenants and
provides no indemnification for the benefit of any other party to the Discretionary Sale;




     (iii) After giving effect to the Discretionary Sale on any Discretionary Sale Date, (a)
the Availability is greater than or equal to zero, (b) the representations and warranties
contained in Section 4.1 hereof shall continue to be correct in all material
respects, except to the extent relating to an earlier date and (c) neither an Unmatured
Termination Event nor a Termination Event shall have resulted;




     (iv) On the related Discretionary Sale Date, the Administrative Agent, each Purchaser
Agent, on behalf of the applicable Purchaser, the Hedge Counterparties, the Collateral
Custodian and the Backup Servicer, as applicable, shall have received, as applicable, in
immediately available funds, an amount equal to the sum of (a) an amount sufficient to
reduce the Advances Outstanding such that, after giving effect to the transfer of the Assets
that are the subject of such Discretionary Sale, the Availability will be equal to or
greater than $0 plus (b) an amount equal to all unpaid Interest to the extent reasonably
determined by the Administrative Agent and the Purchaser Agents to be attributable to that
portion of the Advances Outstanding to be repaid in connection with the Discretionary Sale
plus (c) an aggregate amount equal to the sum of all other Aggregate Unpaids due and owing
to the Administrative Agent, the Purchaser Agents, each applicable Purchaser, the Affected
Parties, the Indemnified Parties and the Hedge Counterparties, as applicable, under this
Agreement and the other Transaction



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Documents, to the extent accrued to such date; provided that, the Administrative Agent
and each Purchaser Agent shall have the right to determine whether the amount paid (or
proposed to be paid) by the Seller on the Discretionary Sale Date is sufficient to satisfy
the requirements of clauses (a) through (c) of this clause (iv) and
is sufficient to reduce the Advances Outstanding to the extent requested by the Seller in
connection with the Discretionary Sale;




     (v) The Outstanding Asset Balance of the Asset(s) which are the subject of the proposed
Discretionary Sale, together with the Outstanding Asset Balance of the Asset(s) sold in all
other Discretionary Sales made in the preceding 12 month period, shall not exceed 20% of the
Facility Amount; and




     (vi) On the related Discretionary Sale Date, the proceeds from such Discretionary Sale
have been sent directly into the Collection Account.




     (vii) The consideration for any Discretionary Sale occurring during the Amortization
Period shall be no less than the sum of the Outstanding Asset Balances of the Assets subject
to such Discretionary Sale unless otherwise consented to in writing by the Administrative
Agent.



     Section 2.21 Loans Originated by Affiliates of CapitalSource Inc. Other than the
Originator.



     On or before the date of the initial sale or transfer of any Asset originated by an Affiliate
of CapitalSource Inc. (other than CapitalSource Finance) and acquired by CapitalSource Finance from
such Affiliate, the Servicer shall deliver to the Administrative Agent (1) a form of assignment
approved in writing by the Administrative Agent, (2) a Servicing Guaranty executed by such
Affiliate in form and substance satisfactory to the Administrative Agent and (3) a legal opinion
concerning Assets originated by such Affiliate and acquired from time to time by CapitalSource
Finance from such Affiliate pursuant to an assignment in such form.



ARTICLE III




CONDITIONS TO ADVANCES




     Section 3.1 Conditions to Closing and Initial Advance.



     The Purchasers shall not be obligated to make any Advance hereunder on the occasion of the
Initial Advance, nor shall any Purchaser, Administrative Agent, the Purchaser Agents, the Backup
Servicer and the Collateral Custodian be obligated to take, fulfill or perform any other action
hereunder, until the following conditions have been satisfied, in the sole discretion of, or waived
in writing by, the Administrative Agent and each Purchaser Agent:



     (a) Each Transaction Document shall have been duly executed by, and delivered to, the parties
thereto, and the Administrative Agent and each Purchaser Agent shall have received such other
documents, instruments, agreements and legal opinions as the Administrative Agent and each
Purchaser Agent shall reasonably request in connection with the transactions contemplated by this
Agreement, including, without limitation, all those specified in the



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Schedule of Documents attached hereto as Schedule I, each in form and substance
satisfactory to the Administrative Agent and each Purchaser Agent;



     (b) The Administrative Agent and each Purchaser Agent shall have received (i) satisfactory
evidence that the Seller and the Servicer have obtained all required consents and approvals of all
Persons, including all requisite Governmental Authorities, to the execution, delivery and
performance of this Agreement and the other Transaction Documents to which each is a party and the
consummation of the transactions contemplated hereby or thereby or (ii) an Officer’s Certificate
from each of the Seller and the Servicer in form and substance reasonably satisfactory to the
Administrative Agent and each Purchaser Agent affirming that no such consents or approvals are
required; it being understood that the acceptance of such evidence or officer’s certificate shall
in no way limit the recourse of the Administrative Agent, each Purchaser Agent or any Secured Party
against the Originator or the Seller for a breach of the Originator’s and the Seller’s
representation or warranty that all such consents and approvals have, in fact, been obtained;



     (c) The Seller, the Servicer and the Originator shall each be in compliance in all material
respects with all Applicable Laws and shall have delivered to the Administrative Agent and each
Purchaser Agent as to this and other closing matters certification in the form of
Exhibits F-1 and F-2;



     (d) The Seller and the Servicer shall have delivered to the Administrative Agent and each
Purchaser Agent duly executed Powers of Attorney in the form of Exhibits G-1 and
G-2; and



     (e) The Seller and the Servicer shall each have delivered to the Administrative Agent and each
Purchaser Agent a certificate as to Solvency in the form of Exhibits E-1 and E-2
and a perfection certificate in form reasonably acceptable to the Administrative Agent.



     Section 3.2 Conditions Precedent to All Advances.



     Each Advance to the Seller by the applicable Purchaser (each, a “Transaction”) shall
be subject to the further conditions precedent that:



     (a) (i) With respect to any Advance (including the Initial Advance), the Servicer shall have
delivered to the Administrative Agent and each Purchaser Agent (with a copy to the Collateral
Custodian and the Backup Servicer), in the case of an Advance, no later than 2:00 p.m. (Charlotte,
North Carolina time), one Business Day prior to the related Funding Date (or no later than 2:00
p.m. on the Business Day of the proposed Funding Date in the case of a same-day funding pursuant to
Section 2.3(a)), in a form and substance satisfactory to the Administrative Agent and each
Purchaser Agent, (1) a Borrowing Notice (Exhibit A-1), Borrowing Base Certificate
(Exhibit A-3), Asset List and Monthly Report, if applicable, and (2) a Certificate of
Assignment (Exhibit A to the Sale Agreement including Schedule I, thereto) and
containing such additional information as may be reasonably requested by the Administrative Agent
and each Purchaser Agent, and (ii) with respect to any reduction in Advances Outstanding pursuant
to Section 2.4(b) or any reinvestment of Principal Collections permitted by Section
2.9(b), the Servicer shall have delivered to the Administrative Agent and each Purchaser Agent
(with a copy



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to the Backup Servicer) at least one Business Day prior to any reduction of Advances
Outstanding or same day notice no later than 2:00 p.m. (Charlotte, North Carolina time) on such day
for any reinvestment of Principal Collections a Borrowing Notice (Exhibit A-2) and a
Borrowing Base Certificate (Exhibit A-3) executed by the Servicer and the Seller;



     (b) On the date of such Transaction the following statements shall be true, and the Seller
shall be deemed to have certified that:




     (i) The representations and warranties contained in Section 4.1, Section
4.2 and Section 4.3 are true and correct on and as of such day as though made on
and as of such day and shall be deemed to have been made on such day;




     (ii) No event has occurred and is continuing, or would result from such Transaction,
that constitutes a Termination Event or Unmatured Termination Event;




     (iii) On and as of such day, after giving effect to such Transaction, the Advances
Outstanding shall not exceed the lesser of (x) the Facility Amount and (y) the Maximum
Availability, and, if such Transaction involves an Advance funded on a same-day basis
pursuant to Section 2.3(a), the aggregate amount of such Advances outstanding funded on such
a basis does not exceed $15,000,000;




     (iv) After giving effect to such Advance, reduction of Advances Outstanding or
reinvestment of Principal Collections, there is not and will be no deficiency in the Minimum
Overcollateralization Amount;




     (v) On and as of such day, the Seller and the Servicer each has performed all of the
covenants and agreements contained in this Agreement to be performed by such person at or
prior to such day; and




     (vi) No law or regulation shall prohibit, 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 such Advance, or incremental Advance by the Purchaser in accordance
with the provisions hereof, the reduction of Advances Outstanding, the reinvestment of
Principal Collections or any other transaction contemplated herein;



     (c) The Seller shall have delivered to the Collateral Custodian (with a copy to the Backup
Servicer and the Administrative Agent) (i) in the case of an Advance to be funded on a same-day
basis pursuant to Section 2.3(a), no later than 2:00 p.m. (Charlotte, North Carolina time)
on the related Funding Date and (ii) in the case of all other Advances, no later than 2:00 p.m.
(Charlotte, North Carolina time) one Business Day prior to any Funding Date, a faxed copy of the
duly executed original promissory notes, master purchase agreement and purchase statements or a
copy of the Loan Register, as applicable, for the Loans and, if any Assets are closed in escrow, a
certificate (in the form of Exhibit L) from the counsel to the Originator or the Obligor of
such Assets certifying the possession of the Required Asset Documents, provided, however,
notwithstanding the foregoing, the Required Asset Documents (including any UCCs included in the
Required Asset Documents) shall be in the possession of the Collateral Custodian within two
Business Days of any related Funding Date as to any Additional Assets;



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     (d) The Termination Date shall not have occurred;



     (e) On the date of such Transaction, the Administrative Agent and each Purchaser Agent shall
have received such other approvals, opinions or documents as the Administrative Agent and each
Purchaser Agent may reasonably require;



     (f) The Administrative Agent shall have received from the Seller all hedging confirms related
to any Hedging Agreement required by this Agreement;



     (g) The Seller and Servicer shall have delivered to the Administrative Agent and each
Purchaser Agent all reports required to be delivered as of the date of such Transaction including,
without limitation, all deliveries required by Section 2.3, as applicable;



     (h) [Reserved];



     (i) The Seller shall have paid all fees required to be paid, including all fees required
hereunder and under the Purchaser Fee Letters and any Additional Agent Fee Letter and shall have
reimbursed the Purchasers, the Administrative Agent and each Purchaser Agent for all fees, costs
and expenses of closing the transactions contemplated hereunder and under the other Transaction
Documents, including the reasonable attorney fees and any other legal and document preparation
costs incurred by the Purchasers, the Administrative Agent and each Purchaser Agent;



     (j) [Reserved]; and



     (k) The Seller shall have delivered to the Administrative Agent and each Purchaser Agent an
Officer’s Certificate (which may be part of the Borrowing Notice) in form and substance reasonably
satisfactory to the Administrative Agent and each Purchaser Agent certifying that each of the
foregoing conditions precedent has been satisfied.



     The failure of the Seller to satisfy any of the foregoing conditions precedent in respect of
any Advance shall give rise to a right of the Administrative Agent and the applicable Purchaser
Agent, which right may be exercised at any time on the demand of the applicable Purchaser Agent, to
rescind the related Advance and direct the Seller to pay to the Administrative Agent for the
benefit of the applicable Purchaser an amount equal to the Advances made during any such time that
any of the foregoing conditions precedent were not satisfied.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




     Section 4.1 Representations and Warranties of the Seller.



     The Seller represents and warrants as follows:



     (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



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conduct its business as such business is presently conducted, and had at all relevant times,
and now has all necessary power, authority and legal right to acquire, own, pledge and sell the
Collateral.



     (b) Due Qualification. The Seller is duly qualified to do business and is in good
standing as a limited liability company, and has obtained all necessary licenses and approvals, in
all jurisdictions in which the ownership or lease of property or the conduct of its business
requires such qualification, licenses or approvals.



     (c) Power and Authority; Due Authorization; Execution and Delivery. The Seller (i)
has all necessary power, authority and legal right to (a) execute and deliver this Agreement and
the other Transaction Documents to which it is a party, (b) carry out the terms of the Transaction
Documents to which it is a party, (c) grant a security interest in the Collateral, and (d) receive
Advances and grant a security interest in the Collateral on the terms and conditions provided
herein and (ii) has duly authorized by all necessary company action the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is a party and the
grant and assignment of a security interest in the Collateral on the terms and conditions herein
provided. This Agreement and each other Transaction Document to which the Seller is a party have
been duly executed and delivered by the Seller.



     (d) Binding Obligation. This Agreement and each other Transaction Document to which
the Seller is a party constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its respective terms, except as such enforceability may be
limited by Insolvency Laws and by general principles of equity (whether considered in a suit at law
or in equity).



     (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the other Transaction Documents to which it is a party and the fulfillment of the terms hereof
and thereof will not (i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under, the Seller’s
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.



     (f) No Proceedings. There is no litigation, proceeding or investigation pending or,
to the best knowledge of the Seller, threatened against the Seller, before any Governmental
Authority (i) asserting the invalidity of this Agreement or any other Transaction Document to which
the Seller is a party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Document to which the Seller is a party or
(iii) seeking any determination or ruling that could reasonably be expected to have Material
Adverse Effect.



     (g) All Consents Required. All approvals, authorizations, consents, orders or other
actions of any Person or of any Governmental Authority (if any) required for the due execution,
delivery and performance by the Seller of this Agreement and any other Transaction Document to
which the Seller is a party have been obtained.



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     (h) Bulk Sales. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby do not require compliance with any “bulk sales” act or similar law
by Seller.



     (i) Solvency. The Seller is not the subject of any Insolvency Proceedings or
Insolvency Event. The transactions under this Agreement and any other Transaction Document to
which the Seller is a party do not and will not render the Seller not Solvent and the Seller shall
deliver to the Administrative Agent and each Purchaser Agent on the Closing Date a certification in
the form of Exhibit E-1.



     (j) Selection Procedures. No procedures believed by the Seller to be adverse to the
interests of the Purchaser were utilized by the Seller in identifying and/or selecting the Assets
in the 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
or the Originator and is then in effect.



     (k) Taxes. The Seller has filed or caused to be filed all tax returns that are
required to be filed by it. The Seller has paid or made adequate provisions for the payment of all
Taxes and all assessments made against it or any of its property (other than any amount of Tax the
validity of which is currently being contested in good faith by appropriate proceedings and with
respect to which reserves in accordance with GAAP have been provided on the books of the Seller),
and no tax lien has been filed and, to the Seller’s knowledge, no claim is being asserted, with
respect to any such Tax, fee or other charge.



     (l) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein will violate or result in a violation of Section 7 of the Securities Exchange
Act, or any regulations issued pursuant thereto, including, without limitation, Regulations T, U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Seller
does not own or intend to carry or purchase, and no proceeds from the Advances will be used to
carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose
credit” within the meaning of Regulation U.



     (m) Security Interest.




     (i) This Agreement creates a valid and continuing security interest (as defined in the
applicable UCC) in the Collateral in favor of the Administrative Agent, on behalf of the
Secured Parties, which security interest is prior to all other Liens (except for Permitted
Liens), and is enforceable as such against creditors of and purchasers from the Seller;




     (ii) the Asset, along with the related Asset Files, constitute a “general intangible,”
an “instrument,” an “account,” or “chattel paper” within the meaning of the applicable UCC;




     (iii) the Seller owns and has good and marketable title to the Collateral free and
clear of any Lien (other than Permitted Liens), claim or encumbrance of any Person;



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     (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
Administrative Agent, on behalf of the Secured Parties;




     (v) the Seller has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under Applicable Law in order to
perfect the security interest in the Collateral granted to the Administrative Agent, on
behalf of the Secured Parties, under this Agreement;




     (vi) other than the security interest granted to the Administrative Agent, on behalf of
the Secured Parties, pursuant to this Agreement, the Seller has not pledged, assigned, sold,
granted a security interest in or otherwise conveyed any of the Collateral. The Seller has
not authorized the filing of and is not aware of any financing statements against the Seller
that include a description of collateral covering the Collateral other than any financing
statement (A) relating to the security interest granted to the Seller under the Sale
Agreement, or (B) that has been terminated. The Seller is not aware of the filing of any
judgment or tax lien filings against the Seller;




     (vii) all original executed copies of each underlying promissory note or copies of each
Loan Register, as applicable, that constitute or evidence each Loan has been, or subject to
the delivery requirements contained herein, will be delivered to the Collateral Custodian;




     (viii) the Seller has received a written acknowledgment from the Collateral Custodian
that the Collateral Custodian or its bailee is holding the underlying promissory notes (if
any), the copies of the Loan Registers that constitute or evidence the Assets solely on
behalf of and for the benefit of the Secured Parties provided, however, notwithstanding the
foregoing, with respect to any Asset to be funded with the proceeds of an Advance funded on
a same-day basis pursuant to Section 2.3(a), 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 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



     (n) Reports Accurate. All Monthly Reports (if prepared by the Seller, or to the
extent that information contained therein is supplied by the Seller), information, exhibits,
financial statements, documents, books, records or reports furnished or to be furnished by the
Seller to the Administrative Agent, each Purchaser Agent or any Purchaser in connection with this
Agreement are true, complete and correct.



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     (o) Location of Offices. The Seller’s location (within the meaning of Article 9 of
the UCC) is Delaware. The office where the Seller keeps all the Records is at the address of the
Seller referred to in Section 13.2 hereof (or at such other locations as to which the
notice and other requirements specified in Section 5.2(g) shall have been satisfied). The
Seller’s Federal Employee Identification Number is 20-0878666. The Seller has not changed its
name, whether by amendment of its certificate of formation, by reorganization or otherwise, and has
not changed its location within the four months preceding the Closing Date.



     (p) Lock-Boxes. The names and addresses of all the Lock-Box Banks, together with the
account numbers of the Lock-Box Accounts of the Seller at such Lock-Box Banks and the names,
addresses and account numbers of all accounts to which Collections of the Collateral outstanding
before the Initial Advance hereunder have been sent, are specified in Schedule II (which
shall be deemed to be amended in respect of terminating or adding any Lock-Box Account or Lock-Box
Bank upon satisfaction of the notice and other requirements specified in Section 5.2(k)).
The Seller has not granted any Person other than the Administrative Agent and Collateral Custodian
an interest in any Lock-Box Account at a future time or upon the occurrence of a future event.



     (q) Tradenames. The Seller has no trade names, fictitious names, assumed names or
“doing business as” names or other names under which it has done or is doing business.



     (r) Sale Agreement. The Sale Agreement is the only agreement pursuant to which the
Seller purchases Collateral.



     (s) Value Given. The Seller shall have given reasonably equivalent value to the
Originator in consideration for the transfer to the Seller of the Collateral under the Sale
Agreement, no such transfer shall have been made for or on account of an antecedent debt owed by
the Originator to the Seller, and no such transfer is or may be voidable or subject to avoidance
under any section of the Bankruptcy Code.



     (t) Accounting. The Seller accounts for the transfers to it from the Originator of
interests in Collateral under the Sale Agreement as financings of such Collateral for tax and
consolidated accounting purposes (with a notation that it is treating the transfers as a sale for
legal and all other purposes on its books, records and financial statements, in each case
consistent with GAAP and with the requirements set forth herein).



     (u) Special Purpose Entity. The Seller has not and shall not:




     (i) engage in any business or activity other than the purchase and receipt of
Collateral and related assets from the Originator under the Sale Agreement, the sale of
Collateral under the Transaction Documents, and such other activities as are incidental
thereto;




     (ii) acquire or own any material assets other than (a) the Collateral and related
assets from the Originator under the Sale Agreement and (b) incidental property as may be
necessary for the operation of the Seller;



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     (iii) merge into or consolidate with any Person or dissolve, terminate or liquidate in
whole or in part, transfer or otherwise dispose of all or substantially all of its assets or
change its legal structure, without in each case first obtaining the consent of the
Administrative Agent and each Purchaser Agent;




     (iv) fail to preserve its existence as an entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization or formation, or
without the prior written consent of the Administrative Agent and each Purchaser Agent,
amend, modify, terminate or fail to comply with the provisions of its operating agreement,
or fail to observe limited liability company formalities;




     (v) own any Subsidiary or make any investment in any Person without the consent of the
Administrative Agent and each Purchaser Agent;




     (vi) except as permitted by this Agreement and the Lock-Box Agreement, commingle its
assets with the assets of any of its Affiliates, or of any other Person;




     (vii) incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than indebtedness to the Secured Parties hereunder or in
conjunction with a repayment of all Advances owed to the Purchasers, except for trade
payables in the ordinary course of its business; provided, that such debt is not evidenced
by a note and is paid when due;




     (viii) become insolvent or fail to pay its debts and liabilities from its assets as the
same shall become due;




     (ix) fail to maintain its records, books of account and bank accounts separate and
apart from those of any other Person;




     (x) enter into any contract or agreement with any Person, except upon terms and
conditions that are commercially reasonable and intrinsically fair and substantially similar
to those that would be available on an arms-length basis with third parties other than such
Person;




     (xi) seek its dissolution or winding up in whole or in part;




     (xii) fail to correct any known misunderstandings regarding the separate identity of
Seller and the Originator or any principal or Affiliate thereof or any other Person;




     (xiii) guarantee, become obligated for, or hold itself out to be responsible for the
debt of another Person;




     (xiv) make any loan or advances to any third party, including any principal or
Affiliate, or hold evidence of indebtedness issued by any other Person (other than cash and
investment-grade securities);



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     (xv) fail to file its own separate tax return, or file a consolidated federal income
tax return with any other Person, except as may be required by the Internal Revenue Code and
regulations;




     (xvi) fail either to hold itself out to the public as a legal entity separate and
distinct from any other Person or to conduct its business solely in its own name in order
not (a) to mislead others as to the identity with which such other party is transacting
business, or (b) to suggest that it is responsible for the debts of any third party
(including any of its principals or Affiliates);




     (xvii) fail to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its contemplated
business operations;




     (xviii) file or consent to the filing of any petition, either voluntary or involuntary,
to take advantage of any applicable insolvency, bankruptcy, liquidation or reorganization
statute, or make an assignment for the benefit of creditors;




     (xix) except as may be required by the Internal Revenue Code and regulations, share any
common logo with or hold itself out as or be considered as a department or division of (a)
any of its principals or affiliates, (b) any Affiliate of a principal or (c) any other
Person;




     (xx) permit any transfer (whether in one or more transactions) of any direct or
indirect ownership interest in the Seller to the extent it has the ability to control the
same, unless the Seller delivers to the Administrative Agent and each Purchaser Agent an
acceptable non-consolidation opinion and the Administrative Agent consents to such transfer;




     (xxi) fail to maintain separate financial statements, showing its assets and
liabilities separate and apart from those of any other Person;




     (xxii) fail to pay its own liabilities and expenses only out of its own funds;




     (xxiii) fail to pay the salaries of its own employees in light of its contemplated
business operations;




     (xxiv) acquire the obligations or securities of its Affiliates or stockholders;




     (xxv) fail to allocate fairly and reasonably any overhead expenses that are shared with
an Affiliate, including paying for office space and services performed by any employee of an
Affiliate;




     (xxvi) fail to use separate invoices and bank accounts;




     (xxvii) pledge its assets for the benefit of any other Person, other than with respect
to payment of the indebtedness to the Secured Parties hereunder;



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     (xxviii) fail at any time to have at least one independent director (an
“Independent Director”) who is not and has not been for at least five years a
director, officer, employee, trade credit or shareholder (or spouse, parent, sibling or
child of the foregoing) of (a) the Servicer, (b) the Seller, (c) any principal of the
Servicer, (d) any Affiliate of the Servicer, or (e) any Affiliate of any principal of the
Servicer; provided, however, such Independent Director may be an independent director of
another special purpose entity affiliated with the Servicer or fail to ensure that all
limited liability company action relating to the selection, maintenance or replacement of
the Independent Director are duly authorized by the unanimous vote of the board of directors
(including the Independent Director);




     (xxix) to provide that the unanimous consent of all directors (including the consent of
the Independent Director) is required for the Seller to (a) dissolve or liquidate, in whole
or part, or institute proceedings to be adjudicated bankrupt or insolvent, (b) institute or
consent to the institution of bankruptcy or insolvency proceedings against it, (c) file a
petition seeking or consent to reorganization or relief under any applicable federal or
state law relating to bankruptcy or insolvency, (d) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for
the Seller, (e) make any assignment for the benefit of the Seller’s creditors, (f) admit in
writing its inability to pay its debts generally as they become due, or (g) take any action
in furtherance of any of the foregoing; and




     (xxx) take or refrain from taking, as applicable, each of the activities specified in
the non-consolidation opinion of Patton Boggs LLP, dated as of the date hereof, upon which
the conclusions expressed therein are based.



     (v) Confirmation from the Originator. The Seller has received in writing from the
Originator confirmation that the Originator will not cause the Seller to file a voluntary petition
under the Bankruptcy Code or Insolvency Laws. Each of the Seller and the Originator 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 Collateral
or any other assets of the Seller available to satisfy claims of the creditors of the Originator
would not result in making such assets available to satisfy such creditors under the Bankruptcy
Code.



     (w) Investment Company Act. The Seller is not, and is not controlled by, an
“investment company” within the meaning of the 40 Act, as amended, or is exempt from the provisions
of the 40 Act.



     (x) ERISA. The present value of all benefits vested under all “employee pension
benefit plans,” as such term is defined in Section 3 of ERISA, maintained by the Seller, or in
which employees of the Seller are entitled to participate, as from time to time in effect (herein
called the “Pension Plans”), does not exceed the value of the assets of the Pension Plan
allocable to such vested benefits (based on the value of such assets as of the last annual
valuation date). 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



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the Pension Benefit Guaranty Corporation instituted proceedings to terminate, or appoint a
trustee to administer a Pension Plan and no event has occurred or condition exists that might
constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan.



     (y) [Reserved].



     (z) Compliance with Law. The Seller has complied in all respects with all Applicable
Laws to which it may be subject, and no item of Collateral contravenes any Applicable Laws
(including, without limitation, all applicable predatory and abusive lending laws and all laws,
rules and regulations relating to licensing, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices, and privacy).



     (aa) Credit and Collection Policy. The Seller has complied in all material respects
with the Credit and Collection Policy with respect to all of the Collateral.



     (bb) Collections. The Seller acknowledges that all Collections received by it or its
Affiliates with respect to the Collateral are held and shall be held in trust for the benefit of
the Secured Parties until deposited into the Collection Account within two Business Days from
receipt as required herein.



     (cc) Set-Off, etc. No Collateral has been compromised, adjusted, extended, satisfied,
subordinated (other than Subordinated Loans), rescinded, set-off or modified by the Seller, the
Originator or the Obligor thereof, and no Collateral is subject to compromise, adjustment,
extension, satisfaction, subordination (other than Subordinated Loans), rescission, set-off,
counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or
modification, whether arising out of transactions concerning the Collateral or otherwise, by the
Seller, the Originator or the Obligor with respect thereto, except for amendments to such
Collateral otherwise permitted under Section 6.4(a) of this Agreement and in accordance
with the Credit and Collection Policy.



     (dd) Full Payment. The Seller has no knowledge of any fact which should lead it to
expect that any Collateral will not be paid in full.



     (ee) Accuracy of Representations and Warranties. Each representation or warranty by
the Seller contained herein or in any certificate or other document furnished by the Seller
pursuant hereto or in connection herewith is true and correct in all material respects.



     (ff) Representations and Warranties in Sale Agreement. The representations and
warranties made by the Originator to the Seller in the Sale Agreement are hereby remade by the
Seller on each date to which they speak in the Sale Agreement as if such representations and
warranties were set forth herein. For purposes of this Section 4.1(ff), such
representations and warranties are incorporated herein by reference as if made by the Seller to the
Administrative Agent, each Purchaser Agent and each of the Secured Parties under the terms hereof
mutatis mutandis.



     (gg) Reaffirmation of Representations and Warranties by the Seller. On each day that
any Advance is made hereunder, the Seller shall be deemed to have certified that all



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representations and warranties described in Section 4.1 hereof are correct on and as
of such day as though made on and as of such day.



     (hh) Participation, Acquired and Assigned Loans. The participations created with
respect to the Participation Loans and the sale to the Originator with respect to the 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.



     (ii) Environmental.




     (i) Each item of the Related Property is in compliance with all applicable
Environmental Laws, and there is no violation of any Environmental Law with respect to such
Related Property and there are no conditions relating to such Related Property that could
give rise to liability under any applicable Environmental Laws.




     (ii) None of the Related Property contains, or has previously contained, any Materials
of Environmental Concern at, on or under the Related Property in amounts or concentrations
that constitute or constituted a violation of, or could give rise to liability under,
Environmental Laws.




     (iii) None of the Seller, the Originator nor the Servicer has received any written or
verbal notice of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability regarding environmental
matters or compliance with Environmental Laws with regard to any of the Related Property,
nor does any such Person have knowledge or reason to believe that any such notice will be
received or is being threatened.




     (iv) Materials of Environmental Concern have not been transported or disposed of from
the Related Property, or generated, treated, stored or disposed of at, on or under any of
the Related Property or any other location, in each case by or on behalf of the Seller, the
Originator and/or the Servicer in violation of, or in a manner that would be reasonably
likely to give rise to liability under, any applicable Environmental Law.




     (v) No judicial proceeding or governmental or administrative action is pending or, to
the best knowledge of the Seller, the Originator and/or the Servicer, threatened, under any
Environmental Law to which any of the Seller, the Originator and/or the Servicer is or will
be named as a party, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial requirements,
outstanding under any Environmental Law with respect to any of the Seller, the Originator,
the Servicer or the Related Property.




     (vi) There has been no release or threat of release of Materials of Environmental
Concern at or from any of the Related Property, or arising from or related to the operations
(including, without limitation, disposal) of any of the Seller, the Originator and/or the
Servicer in connection with the Related Property in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.



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     (jj) USA PATRIOT Act. Neither the Seller nor any Affiliate of the Seller is (i) a
country, territory, organization, person or entity named on an Office of Foreign Asset Control
(OFAC) list, (ii) a Person that resides or has a place of business in a country or territory named
on such lists or which is designated as a “Non-Cooperative Jurisdiction” by the Financial Action
Task Force on Money Laundering, or whose subscription funds are transferred from or through such a
jurisdiction; (iii) a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a
foreign bank that does not have a physical presence in any country and that is not affiliated with
a bank that has a physical presence and an acceptable level of regulation and supervision; or (iv)
a person or entity that resides in or is organized under the laws of a jurisdiction designated by
the United States Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as
warranting special measures due to money laundering concerns.



     The representations and warranties in Section 4.1(m) shall survive the termination of
this Agreement and such representations and warranties may not be waived by any party hereto.



     Section 4.2 Representations and Warranties of the Seller Relating to the Agreement and the
Collateral.



     The Seller hereby represents and warrants, as of the Closing Date and as of each Addition
Date:



     (a) Binding Obligation, Valid Security Interest.




     (i) This Agreement and each other Transaction Document to which the Seller is a party
each constitute a legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its respective terms, except as such enforceability may be limited
by Insolvency Laws and except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity).




     (ii) This Agreement constitutes a grant of a security interest in all of the Collateral
to the Administrative Agent, as agent for the Secured Parties, which upon the delivery of
the Required Asset Documents to the Collateral Custodian and the filing of the financing
statements described in Section 4.1(m) and, in the case of Additional Assets on the
applicable Addition Date, shall be a first priority perfected security interest in all
Collateral, subject only to Permitted Liens. Neither the Seller nor any Person claiming
through or under Seller shall have any claim to or interest in the Collection Account,
except for the interest of Seller in such property as a debtor for purposes of the UCC.



     (b) Eligibility of Collateral. As of the Closing Date and each Addition Date, (i) the
Asset List and the information contained in the Borrowing Notice delivered pursuant to Section
2.3 is an accurate and complete listing in all material respects of all Collateral as of the
Cut-Off Date and the information contained therein with respect to the identity of such Collateral
and the amounts owing thereunder is true and correct in all material respects as of the related
Cut-Off Date, (ii) each such Asset that is part of the Borrowing Base is an Eligible Asset as of
such date, (iii) each such item of Collateral is free and clear of any Lien of any Person (other
than Permitted Liens) and in compliance with all Applicable Laws, (iv) with respect to each such
item of Collateral, all consents, licenses, approvals or authorizations of or registrations or
declarations of



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any Governmental Authority required to be obtained, effected or given by the Seller in
connection with the grant of a security interest in such Collateral to the Administrative Agent as
agent for the Secured Parties have been duly obtained, effected or given and are in full force and
effect, and (v) the representations and warranties set forth in Section 4.2(a) are true and
correct with respect to each item of Collateral.



     (c) No Fraud. Each Asset was originated without any fraud or material
misrepresentation by the Originator or, to the best of the Seller’s knowledge, on the part of the
Obligor.



     (d) Loans Secured by Real Property. Less than 45% of the Aggregate Outstanding Asset
Balance of the Collateral as of the Closing Date consists of Loans principally secured by real
property, and less than 45% of the Aggregate Outstanding Asset Balance of the Collateral as of each
Addition Date shall consist of Loans principally secured by real property.



     Section 4.3 Representations and Warranties of the Servicer.



     The Servicer represents and warrants as follows:



     (a) Organization and Good Standing. The Servicer has been duly organized and is
validly existing as a limited liability company in good standing under the laws of the State of
Delaware, with all requisite company power and authority to own or lease its properties and to
conduct its business as such business is presently conducted and to enter into and perform its
obligations pursuant to this Agreement.



     (b) Due Qualification. The Servicer is duly qualified to do business as a limited
liability company and is in good standing as a limited liability company, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or lease of its
property and or the conduct of its business requires such qualification, licenses or approvals.



     (c) Power and Authority; Due Authorization; Execution and Delivery. The Servicer (i)
has all necessary power, authority and legal right to (a) execute and deliver this Agreement and
the other Transaction Documents to which it is a party, (b) carry out the terms of the Transaction
Documents to which it is a party, and (ii) has duly authorized by all necessary company action the
execution, delivery and performance of this Agreement and the other Transaction Documents to which
it is a party. This Agreement and each other Transaction Document to which the Servicer is a party
have been duly executed and delivered by the Servicer.



     (d) Binding Obligation. This Agreement and each other Transaction Document to which
the Servicer is a party constitutes a legal, valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with its respective terms, except as such
enforceability may be limited by Insolvency Laws and general principles of equity (whether
considered in a suit at law or in equity).



     (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the other Transaction Documents to which it is a party and the fulfillment of the terms hereof
and thereof will not (i) conflict with, result in any breach of any of the terms and




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provisions of, or constitute (with or without notice or lapse of time or both) a default
under, the Servicer’s operating agreement or any Contractual Obligation of the Servicer, (ii)
result in the creation or imposition of any Lien upon any of the Servicer’s properties pursuant to
the terms of any such Contractual Obligation, other than this Agreement, or (iii) violate any
Applicable Law.




     (f) No Proceedings. There is no litigation, proceedings or investigations pending or,
to the best knowledge of the Servicer, threatened against the Servicer, before any Governmental
Authority (i) asserting the invalidity of this Agreement or any other Transaction Document to which
the Servicer is a party, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or any other Transaction Document to which the Servicer is a party
or (iii) seeking any determination or ruling that could reasonably be expected to have Material
Adverse Effect.



     (g) All Consents Required. All approvals, authorizations, consents, orders, licenses
or other actions of any Person or of any Governmental Authority (if any) required for the due
execution, delivery and performance by the Servicer of this Agreement and any other Transaction
Document to which the Servicer is a party have been obtained.



     (h) Reports Accurate. All Servicer Certificates and other written and electronic
information, exhibits, financial statements, documents, books, records or reports furnished by the
Servicer to the Administrative Agent, each Purchaser Agent or any Purchaser in connection with this
Agreement are accurate, true and correct.



     (i) Credit and Collection Policy. The Servicer has complied in all material respects
with the Credit and Collection Policy with regard to the origination, underwriting and servicing of
the Assets.



     (j) Collections. The Servicer acknowledges that all Collections received by it or its
Affiliates with respect to the Collateral are held and shall be held in trust for the benefit of
the Secured Parties until deposited into the Collection Account within two Business Days from
receipt as required herein.



     (k) Bulk Sales. The execution, delivery and performance of this Agreement do not
require compliance with any “bulk sales” act or similar law by the Servicer.



     (l) Solvency. The Servicer is not the subject of any Insolvency Proceedings or
Insolvency Event. The transactions under this Agreement and any other Transaction Document to
which the Servicer is a party do not and will not render the Servicer not Solvent and the Servicer
shall deliver to the Administrative Agent and each Purchaser Agent on the Closing Date a
certification in the form of Exhibit E-2.



     (m) Taxes. The Servicer has filed or caused to be filed all tax returns that are
required to be filed by it. The Servicer has paid or made adequate provisions for the payment of
all Taxes and all assessments made against it or any of its property (other than any amount of Tax
the validity of which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in accordance with GAAP have been provided on the books of the
Servicer), and no tax lien has been filed and, to the Servicer’s knowledge, no claim is being
asserted, with respect to any such Tax, fee or other charge.



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     (n) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein will violate or result in a violation of Section 7 of the Securities Exchange
Act, or any regulations issued pursuant thereto, including, without limitation, Regulations T, U
and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Servicer
does not own or intend to carry or purchase, and no proceeds from the Advances will be used to
carry or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose
credit” within the meaning of Regulation U.



     (o) Security Interest. The Servicer will take all steps necessary to ensure that the
Seller has granted a security interest (as defined in the UCC) to the Administrative Agent, as
agent for the Secured Parties, in the Collateral, which is enforceable in accordance with
Applicable Law upon execution and delivery of this Agreement. Upon the filing of UCC-1 financing
statements naming the Administrative Agent as secured party and the Seller as debtor, the
Administrative Agent, as agent for the Secured Parties, shall have a first priority perfected
security interest in the Collateral (except for any Permitted Liens). All filings (including,
without limitation, such UCC filings) as are necessary for the perfection of the Secured Parties’
security interest in the Collateral have been (or prior to the date of the applicable Advance will
be) made.



     (p) ERISA. The present value of all benefits vested under all “employee pension
benefit plans,” as such term is defined in Section 3 of ERISA, maintained by the Servicer, or in
which employees of the Servicer are entitled to participate, as from time to time in effect (herein
called the “Pension Plans”), does not exceed the value of the assets of the Pension Plan
allocable to such vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies, withdrawals or
reportable events have occurred with respect to any Pension Plans that, in the aggregate, could
subject the Servicer to any material tax, penalty or other liability. No notice of intent to
terminate a Pension Plan has been billed, nor has any Pension Plan been terminated under Section
4041(f) of ERISA, nor has the Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no event has occurred or
condition exists that might constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan.



     (q) Investment Company Act. The Servicer is not, and is not controlled by, an
“investment company” within the meaning of the 40 Act, as amended, or is exempt from the provisions
of the 40 Act.



     (r) USA PATRIOT Act. Neither the Servicer nor any Affiliate of the Servicer is:
(i) a country, territory, organization, person or entity named on an OFAC list; (ii) a Person that
resides or has a place of business in a country or territory named on such lists or which is
designated as a “Non-Cooperative Jurisdiction” by the Financial Action Task Force on Money
Laundering, or whose subscription funds are transferred from or through such a jurisdiction;
(iii) a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act, i.e., a foreign bank 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



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States Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as
warranting special measures due to money laundering concerns.



     Section 4.4 Representations and Warranties of the Backup Servicer.



     The Backup Servicer in its individual capacity and as Backup Servicer represents and warrants
as follows:



     (a) Organization and Corporate Power. It is a duly organized and validly existing
national banking association in good standing under the laws of the United States. It has full
corporate power, authority and legal right to execute, deliver and perform its obligations as
Backup Servicer under this Agreement.



     (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized by all necessary
association action on its part, either in its individual capacity or as Backup Servicer, as the
case may be.



     (c) No Conflict. The execution and delivery of this Agreement, the performance of the
transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with,
result in any breach of any of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under any indenture, contract, agreement, mortgage, deed
of trust, or other instrument to which the Backup Servicer is a party or by which it or any of its
property is bound.



     (d) No Violation. The execution and delivery of this Agreement, the performance of
the transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with
or violate, in any material respect, any Applicable Law.



     (e) All Consents Required. All approvals, authorizations, consents, orders or other
actions of any Person or Governmental Authority applicable to the Backup Servicer, required in
connection with the execution and delivery of this Agreement, the performance by the Backup
Servicer of the transactions contemplated hereby and the fulfillment by the Backup Servicer of the
terms hereof have been obtained.



     (f) Validity, Etc. This Agreement constitutes the legal, valid and binding obligation
of the Backup Servicer, enforceable against the Backup Servicer in accordance with its terms,
except as such enforceability may be limited by applicable Insolvency Laws or general principles of
equity (whether considered in a suit at law or in equity).



     Section 4.5 Representations and Warranties of the Collateral Custodian.



     The Collateral Custodian in its individual capacity and as Collateral Custodian represents and
warrants as follows:



     (a) Organization and Corporate Power. It is a duly organized and validly existing
national banking association in good standing under the laws of the United States. It has full



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corporate power, authority and legal right to execute, deliver and perform its obligations as
Collateral Custodian under this Agreement.



     (b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for herein have been duly authorized by all necessary
association action on its part, either in its individual capacity or as Collateral Custodian, as
the case may be.



     (c) No Conflict. The execution and delivery of this Agreement, the performance of the
transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with,
result in any breach of any of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under any indenture, contract, agreement, mortgage, deed
of trust, or other instrument to which the Collateral Custodian is a party or by which it or any of
its property is bound.



     (d) No Violation. The execution and delivery of this Agreement, the performance of
the Transactions contemplated hereby and the fulfillment of the terms hereof will not conflict with
or violate, in any material respect, any Applicable Law.



     (e) All Consents Required. All approvals, authorizations, consents, orders or other
actions of any Person or Governmental Authority applicable to the Collateral Custodian, required in
connection with the execution and delivery of this Agreement, the performance by the Collateral
Custodian of the transactions contemplated hereby and the fulfillment by the Collateral Custodian
of the terms hereof have been obtained.



     (f) Validity, Etc. The Agreement constitutes the legal, valid and binding obligation
of the Collateral Custodian, enforceable against the Collateral Custodian in accordance with its
terms, except as such enforceability may be limited by applicable Insolvency Laws and general
principles of equity (whether considered in a suit at law or in equity).



     Section 4.6 Breach of Certain Representations and Warranties.



     If on any day an Asset is (or becomes) a Warranty Asset, no later than two Business Days
following the earlier of knowledge by the Seller of such Asset becoming a Warranty Asset or receipt
by the Seller from the Administrative Agent or the Servicer of written notice thereof, the Seller
shall either: (a) make a deposit to the Collection Account (for allocation pursuant to Section
2.9 or Section 2.10, as applicable) 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
violation by such Loan of any predatory- or abusive-lending law; or (b) subject to the satisfaction
of the conditions in Section 2.18, substitute for such Warranty Asset a Substitute Asset.
In either of the foregoing instances, each such Warranty Asset and any Related Security may be
released from the Collateral (in the Seller’s discretion) and the Borrowing Base



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shall be reduced by the Outstanding Asset Balance of each such Warranty Asset and, if
applicable, increased by the Outstanding Asset Balance of each Substitute Asset. Upon confirmation
of the deposit of such Retransfer Price into the Collection Account or the delivery by the Seller
of a Substitute Asset for each Warranty Asset (the “Retransfer Date”), such Warranty Asset
shall not be included in the Borrowing Base (and, if and when the Seller elects to accept the
retransfer of such Warranty Asset, the Collateral) and, as applicable, the Substitute Asset shall
be included in the Collateral. Upon the Retransfer Date of each Warranty Asset, the Administrative
Agent, as agent for the Secured Parties, shall (if and when the Seller elects to accept the
retransfer of such Warranty Asset) automatically and without further action be deemed to release to
the Seller, without recourse, representation or warranty, the security interest of the
Administrative Agent, as agent for the Secured Parties in, to and under such Warranty Asset and all
future monies due or to become due with respect thereto, the Related Security, all Proceeds of such
Warranty Asset, Recoveries and Insurance Proceeds relating thereto, all rights to security for any
such Warranty Asset, and all Proceeds and products of the foregoing. The Administrative Agent, as
agent for the Secured Parties, shall (if and when the Seller elects to accept the release of such
Warranty Asset), at the sole expense of the Servicer, execute such documents and instruments as may
be prepared by the Servicer on behalf of the Seller and take other such actions as shall reasonably
be requested by the Seller to effect the release of such Warranty Asset pursuant to this
Section 4.6.



ARTICLE V




GENERAL 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 Collateral or any part thereof.



     (b) Preservation of Company Existence. The Seller will preserve and maintain its
company existence, rights, franchises and privileges in the jurisdiction of its formation, and
qualify and remain qualified in good standing as a limited liability company in each jurisdiction
where the failure to preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material Adverse Effect.



     (c) Performance and Compliance with Collateral. The Seller will, at its expense,
timely and fully perform and comply (or cause the Originator to perform and comply pursuant to the
Sale Agreement) with all provisions, covenants and other promises required to be observed by it
under the Collateral and all other agreements related to such Collateral.



     (d) Keeping of Records and Books of Account. The Seller will maintain and implement
administrative and operating procedures (including, without limitation, an ability to recreate
records evidencing the Collateral in the event of the destruction of the originals thereof), and
keep and maintain all documents, books, records and other information reasonably necessary or
advisable for the collection of all or any portion of the Collateral.



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     (e) Originator’s Collateral. With respect to the Collateral acquired by the Seller,
the Seller will (i) acquire such Collateral pursuant to and in accordance with the terms of the
Sale Agreement, (ii) (at the Servicer’s expense) take all action necessary to perfect, protect and
more fully evidence the Seller’s ownership of such Collateral free and clear of any Lien other than
the Lien created hereunder and Permitted Liens, including, without limitation, (a) filing and
maintaining (at the Servicer’s expense), effective financing statements against the Originator in
all necessary or appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, and (b) executing or causing to be
executed such other instruments or notices as may be necessary or appropriate, (iii) permit the
Administrative Agent, each Purchaser Agent or their respective agents or representatives to visit
the offices of the Seller during normal office hours and upon reasonable notice examine and make
copies of all documents, books, records and other information concerning the Collateral and discuss
matters related thereto with any of the officers or employees of the Seller having knowledge of
such matters, and (iv) take all additional action that the Administrative Agent or any Purchaser
Agent may reasonably request to perfect, protect and more fully evidence the respective interests
of the parties to this Agreement in the Collateral.



     (f) Delivery of Collections. The Seller will pay to the Servicer promptly (but in no
event later than two Business Days after receipt) all Collections received by Seller in respect of
the Collateral and cause the same to be promptly deposited into the Collection Account by the
Servicer in accordance with Section 5.4(k).



     (g) Separate Limited Liability Company Existence. The Seller shall be in compliance
with the Special Purpose Entity requirements set forth in Section 4.1(u).



     (h) Credit and Collection Policy. The Seller will (a) comply in all material respects
with the Credit and Collection Policy in regard to the Collateral, and (b) furnish to the
Administrative Agent and each Purchaser Agent, prior to its effective date, prompt notice of any
material changes in the Credit and Collection Policy. The Seller may agree to or otherwise permit
to occur changes in the Credit and Collection Policy which would not impair the collectibility of
any of the Collateral or otherwise adversely affect the interests or remedies of the Administrative
Agent or the Secured Parties under this Agreement or any other Transaction Document. The Seller
may not agree to or otherwise permit to occur changes in the Credit and Collection Policy which
would impair the collectibility of any of the Collateral or otherwise adversely affect the
interests or remedies of the Administrative Agent or the Secured Parties under this Agreement or
any other Transaction Document, without the prior written consent of the Administrative Agent and
each Purchaser Agent; provided that the prior written consent will not be required if any
amendment, modification or change was mandated by any regulatory authority having jurisdiction over
either of the Originator and the Servicer.



     (i) Termination Events. The Seller will provide 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 Business Days following the Seller’s knowledge or notice of the occurrence of any
Termination Event or Unmatured Termination Event, the Seller will provide to the Administrative
Agent and each Purchaser Agent a written statement of the chief financial



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officer or chief accounting officer of Seller setting forth the details of such event and the
action that the Seller proposes to take with respect thereto.



     (j) Taxes. The Seller will file and pay any and all Taxes required to meet the
obligations of the Transaction Documents.



     (k) Use of Proceeds. The Seller will use the proceeds of the Advances only to acquire
Collateral or to make distributions to its members in accordance with the terms hereof.



     (l) Obligor Notification Forms. The Seller shall furnish the Administrative Agent
with an appropriate power of attorney to send (at the Administrative Agent’s discretion after the
occurrence of a Termination Event or an Unmatured Termination Event) Obligor notification forms to
give notice to the Obligors of the Secured Parties’ interest in the Collateral and the obligation
to make payments as directed by the Administrative Agent.



     (m) Adverse Claims. The Seller will not create, or participate in the creation of, or
permit to exist, any Liens in relation to each Lock-Box Account other than as disclosed to the
Administrative Agent and each Purchaser Agent.



     (n) Seller’s Collateral. With respect to each item of Collateral, the Seller will (i)
take all action necessary to perfect, protect and more fully evidence the Secured Parties’ security
interest in such Collateral, including, without limitation, (a) filing and maintaining (at the
Servicer’s expense), effective financing statements against the Seller in all necessary or
appropriate filing offices, and filing continuation statements, amendments or assignments with
respect thereto in such filing offices, and (b) executing or causing to be executed such other
instruments or notices as may be necessary or appropriate and (ii) take all additional action that
the Administrative Agent may reasonably request to perfect, protect and more fully evidence the
respective interests of the parties to this Agreement in such Collateral.



     (o) Notices. The Seller will furnish to the Administrative Agent and each Purchaser
Agent:




     (i) Income Tax Liability. Within ten Business Days after the receipt of
revenue agent reports or other written proposals, determinations or assessments of the
Internal Revenue Service or any other taxing authority which propose, determine or otherwise
set forth positive adjustments to the Tax liability of any Affiliated group (within the
meaning of Section 1504(a)(l) of the Internal Revenue Code of 1986 (as amended from time to
time)) which equal or exceed $1,000,000 in the aggregate, telephonic, telex or telecopy
notice (confirmed in writing within five Business Days) specifying the nature of the items
giving rise to such adjustments and the amounts thereof;




     (ii) Auditors’ Management Letters. Promptly after the receipt thereof, any
auditors’ management letters are received by the Seller or by its accountants;




     (iii) Representations. Forthwith upon receiving knowledge of same, the Seller
shall notify the Administrative Agent and each Purchaser Agent if any representation or
warranty set forth in Section 4.1 was incorrect at the time it was given or deemed
to have



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been given and at the same time deliver to the Administrative Agent and each Purchaser
Agent a written notice setting forth in reasonable detail the nature of such facts and
circumstances. In particular, but without limiting the foregoing, the Seller shall notify
the Administrative Agent and each Purchaser Agent in the manner set forth in the preceding
sentence before any Funding 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 ERISA Affiliate thereof), a
copy of such notice;




     (v) Proceedings. As soon as possible and in any event within three Business
Days after any executive officer of the Seller receives notice or obtains knowledge thereof,
of any settlement of, material judgment (including a material judgment with respect to the
liability phase of a bifurcated trial) in or commencement of any material labor controversy,
material litigation, material action, material suit or material proceeding before any court
or governmental department, commission, board, bureau, agency or instrumentality, domestic
or foreign, affecting the Collateral, the Transaction Documents, the Secured Parties’
interest in the Collateral, or the Seller, the Servicer or the Originator or any of their
Affiliates; provided, however, notwithstanding the foregoing, any settlement, judgment,
labor controversy, litigation, action, suit or proceeding affecting the Collateral, the
Transaction Documents, the Secured Parties’ interest in the Collateral, or the Seller, the
Servicer or the Originator or any of their Affiliates in excess of $2,500,000 or more shall
be deemed to be material for purposes of this Section 5.1(o); and




     (vi) Notice of Material Events. Promptly upon becoming aware thereof, notice
of any other event or circumstances that, in the reasonable judgment of the Seller, is
likely to have a Material Adverse Effect.



     (p) Other. The Seller will furnish to the Administrative Agent and each Purchaser
Agent promptly, from time to time, such other information, documents, records or reports respecting
the Collateral or the condition or operations, financial or otherwise, of Seller or Originator as
the Administrative Agent and each Purchaser Agent may from time to time reasonably request in order
to protect the interests of the Administrative Agent, each Purchaser Agent or the Secured Parties
under or as contemplated by this Agreement.



     Section 5.2 Negative Covenants of the Seller.



     From the date hereof until the Collection Date:



     (a) Other Business. Seller will not (i) engage in any business other than the
transactions contemplated by the Transaction Documents, (ii) incur any Indebtedness, obligation,
liability or contingent obligation of any kind other than pursuant to this Agreement or under any
Hedging Agreement required by Section 5.3(a), or (iii) form any Subsidiary or make any
Investments in any other Person.



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     (b) Collateral Not to be Evidenced by Instruments. The Seller will take no action to
cause any Collateral that is not, as of the Closing Date 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 Collateral.



     (c) Security Interests. Except as otherwise permitted herein and in respect of any
Optional Sale and Permitted Securitization, the Seller will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Collateral,
whether now existing or hereafter transferred hereunder, or any interest therein, and the Seller
will not sell, pledge, assign or suffer to exist any Lien on its interest, if any, hereunder. The
Seller will promptly notify the Administrative Agent and each Purchaser Agent of the existence of
any Lien on any Collateral and the Seller shall defend the right, title and interest of the
Administrative Agent as agent for the Secured Parties in, to and under the Collateral against all
claims of third parties; provided, however, that nothing in this Section 5.2(c) shall
prevent or be deemed to prohibit the Seller from suffering to exist Permitted Liens upon any of the
Collateral.



     (d) Mergers, Acquisitions, Sales, etc. The Seller will not be a party to any merger
or consolidation, or purchase or otherwise acquire any of the assets or any stock of any class of,
or any partnership or joint venture interest in, any other Person, or sell, transfer, convey or
lease any of its assets, or sell or assign with or without recourse any Collateral or any interest
therein (other than pursuant hereto or to the Sale Agreement).



     (e) Deposits to Special Accounts. Except as otherwise provided in the Lock-Box
Agreement, the Seller will not deposit or otherwise credit, or cause or permit to be so deposited
or credited, to any Lock-Box Account cash or cash proceeds other than Collections in respect of the
Collateral.



     (f) Restricted Payments. The Seller shall not make any Restricted Junior Payment,
except that, so long as no Termination Event or Unmatured Termination Event has occurred and is
continuing or would result therefrom, the Seller may declare and make distributions to its members
on their membership interests.



     (g) Change of Name or Location of Loan Files. The Seller shall not (x) change its
name, move the location of its principal place of business and chief executive office, change the
offices where it keeps the records from the location referred to in Section 13.2, or change
the jurisdiction of its formation, or (y) move, or consent to the Collateral Custodian or Servicer
moving, the Required Asset Documents and the Asset Files from the location thereof on the Closing
Date, unless the Seller has given at least thirty (30) days’ written notice to the Administrative
Agent and has taken all actions required under the UCC of each relevant jurisdiction in order to
continue the first priority perfected security interest of the Administrative Agent, as agent for
the Secured Parties, in the Collateral.



     (h) Accounting of Purchases. Other than for tax and consolidated accounting purposes,
the Seller will not account for or treat (whether in financial statements or otherwise) the
transactions contemplated by the Sale Agreement in any manner other than as a sale of the
Collateral by the Originator to the Seller.



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     (i) ERISA Matters. The Seller will not (a) engage or permit any ERISA Affiliate to
engage in any prohibited transaction for which an exemption is not available or has not previously
been obtained from the United States Department of Labor, (b) permit to exist any accumulated
funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the Code, or
funding deficiency with respect to any Benefit Plan other than a Multiemployer Plan, (c) fail to
make any payments to a Multiemployer Plan that the Seller or any ERISA Affiliate may be required to
make under the agreement relating to such Multiemployer Plan or any law pertaining thereto, (d)
terminate any Benefit Plan so as to result in any liability, or (e) permit to exist any occurrence
of any reportable event described in Title IV of ERISA.



     (j) Operating Agreement; Sale Agreement. The Seller will not amend, modify, waive or
terminate any provision of its operating agreement or the Sale Agreement without the prior written
consent of the Administrative Agent and each Purchaser Agent.



     (k) Changes in Payment Instructions to Obligors. The Seller will not add or terminate
any bank as a Lock-Box Bank or any Lock-Box Account from those listed in Schedule II or
make any change, or permit Servicer to make any change, in its instructions to Obligors regarding
payments representing Collections to be made to Seller or Servicer or payments representing
Collections to be made to any Lock-Box Bank, unless the Administrative Agent has consented to such
addition, termination or change (which consent shall not be unreasonably withheld) and has received
duly executed copies of Lock-Box Agreements with each new Lock-Box Bank or with respect to each new
Lock-Box Account, as the case may be.



     (l) Extension or Amendment of Collateral. The Seller will not, except as otherwise
permitted in Section 6.4(a), waive, extend, amend or otherwise modify, or permit the
Servicer to extend, amend or otherwise modify, the terms of any Collateral (including the Related
Security) provided, however, that no waiver, extension, modification or alteration otherwise
permitted under Section 6.4(a) shall (i) alter the status of any Asset as a Delinquent
Asset or Charged-Off Asset, (ii) in the reasonable judgment of the Administrative Agent, prevent or
delay any Asset from becoming a Delinquent Asset or Charged-Off Asset, or (iii) limit and/or impair
the rights of the Administrative Agent or the Secured Parties under this Agreement.



     (m) Credit and Collection Policy. The Seller will not agree to or otherwise permit to
occur changes in the Credit and Collection Policy which would impair the collectibility of any of
the Collateral or otherwise adversely affect the interests or remedies of the Administrative Agent
or the Secured Parties under this Agreement or any other Transaction Document, without the prior
written consent of the Administrative Agent and each Purchaser Agent; provided that the prior
written consent will not be required if any amendment, modification or change was mandated by any
regulatory authority having jurisdiction over either of the Originator and the Servicer.



     Section 5.3 Covenants of the Seller Relating to the Hedging of Assets.



     (a) On or prior to each Funding Date, the Seller shall enter into one or more Hedge
Transactions for that Advance; provided, that each such Hedge Transaction shall:



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     (i) be entered into with a Hedge Counterparty and governed by a Hedging Agreement;




     (ii) have a schedule of monthly calculation periods the first of which commences on the
Funding Date of that Advance and the last of which ends on the last Scheduled Payment due to
occur under or with respect to the Assets included in the Aggregate Outstanding Asset
Balance to which that Advance relates;




     (iii) have an amortizing notional amount such that the Hedge Notional Amount shall be
at least equal to the product of the Hedge Percentage and the portion of the Hedge Amount
represented by such Advance; and




     (iv) provide for two series of monthly payments to be netted against each other, one
such series being payments to be made by the Seller to a Hedge Counterparty (solely on a net
basis) by reference to a fixed rate for that Advance, and the other such series being
payments to be made by such Hedge Counterparty to the Administrative Agent (solely on a net
basis) at a floating rate equal to “USD-LIBOR-BBA” (as defined in the ISDA Definitions), the
net amount of which shall be paid into the Collection Account (if payable by such Hedge
Counterparty) or from the Collection Account to the extent funds are available under
Section 2.9(a)(i) and Section 2.10(a)(i) of this Agreement (if payable by
the Seller).



     (b) As additional security hereunder, Seller hereby assigns to the Administrative Agent, as
agent for the Secured Parties, all right, title and interest but none of the obligations of the
Seller in each Hedging Agreement, each Hedge Transaction, and all present and future amounts
payable by a Hedge Counterparty to Seller under or in connection with the respective Hedging
Agreement and Hedge Transaction(s) with that Hedge Counterparty (“Hedge Collateral”), and
grants a security interest to the Administrative Agent, as agent for the Secured Parties, in the
Hedge Collateral. Seller acknowledges that, as a result of that assignment, Seller may not,
without the prior written consent of the Administrative Agent, exercise any rights under any
Hedging Agreement or Hedge Transaction, except for Seller’s right under any Hedging Agreement to
enter into Hedge Transactions in order to meet the Seller’s obligations under Section
5.3(a) hereof. Nothing herein shall have the effect of releasing the Seller from any of its
obligations under any Hedging Agreement or any Hedge Transaction, nor be construed as requiring the
consent of the Administrative Agent or any Secured Party for the performance by Seller of any such
obligations.



     Section 5.4 Affirmative Covenants of the Servicer.



     From the date hereof until the Collection Date:



     (a) Compliance with Law. The Servicer will comply in all material respects with all
Applicable Laws, including those with respect to the Collateral or any part thereof.



     (b) Preservation of Company Existence. The Servicer will preserve and maintain its
company existence, rights, franchises and privileges in the jurisdiction of its formation, and
qualify and remain qualified in good standing as a limited liability company in each jurisdiction



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where the failure to preserve and maintain such existence, rights, franchises, privileges and
qualification has had, or could reasonably be expected to have, a Material Adverse Effect.



     (c) Obligations and Compliance with Collateral. The Servicer will duly fulfill and
comply with all obligations on the part of the Seller to be fulfilled or complied with under or in
connection with each Collateral and will do nothing to impair the rights of the Administrative
Agent, as agent for the Secured Parties, or of the Secured Parties in, to and under the Collateral.



     (d) Keeping of Records and Books of Account.




     (i) The Servicer will maintain and implement administrative and operating procedures
(including without limitation, an ability to recreate records evidencing Collateral in the
event of the destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the collection of
all Collateral and the identification of the Collateral.




     (ii) The Servicer shall permit the Administrative Agent, each Purchaser Agent or their
respective agents or representatives, to visit the offices of the Servicer during normal
office hours and upon reasonable notice and examine and make copies of all documents, books,
records and other information concerning the Collateral and discuss matters related thereto
with any of the officers or employees of the Servicer having knowledge of such matters.




     (iii) The Servicer will on or prior to the date hereof, mark its master data processing
records and other books and records relating to the Collateral with a legend, acceptable to
the Administrative Agent and each Purchaser Agent, describing the sale of the Collateral
from the Originator to the Seller.



     (e) Preservation of Security Interest. The Servicer (at its own expense) will execute
and file such financing and continuation statements and any other documents that may be required by
any law or regulation of any Governmental Authority to preserve and protect fully the security
interest of the Administrative Agent as agent for the Secured Parties in, to and under the
Collateral.



     (f) Credit and Collection Policy. The Servicer will (a) comply in all material
respects with the Credit and Collection Policy in regard to the Collateral, and (b) furnish to the
Administrative Agent and each Purchaser Agent, prior to its effective date, prompt notice of any
material changes in the Credit and Collection Policy. The Servicer may agree to or otherwise
permit to occur changes in the Credit and Collection Policy which would not impair the
collectibility of any of the Collateral or otherwise adversely affect the interests or remedies of
the Administrative Agent or the Secured Parties under this Agreement or any other Transaction
Document. The Servicer may not agree to or otherwise permit to occur changes in the Credit and
Collection Policy which would impair the collectibility of any of the Collateral or otherwise
adversely affect the interests or remedies of the Administrative Agent or the Secured Parties under
this Agreement or any other Transaction Document, without the prior written consent of the
Administrative Agent and each Purchaser Agent; provided that the prior written consent will



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not be required if any amendment, modification or change was mandated by any regulatory
authority having jurisdiction over either of the Originator and the Servicer.



     (g) Termination Events. The Servicer will provide 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 Servicer has knowledge or has received notice. In
addition, no later than two Business Days following the Servicer’s knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Servicer will provide to
the Administrative Agent and each Purchaser Agent a written statement of the chief financial
officer or chief accounting officer of the Servicer setting forth the details of such event and the
action that the Servicer proposes to take with respect thereto.



     (h) Taxes. The Servicer will file and pay any and all Taxes required to meet the
obligations of the Seller and the Servicer under the Transaction Documents.



     (i) Other. The Servicer will promptly furnish to the Administrative Agent and each
Purchaser Agent such other information, documents, records or reports respecting the Collateral or
the condition or operations, financial or otherwise, of the Seller or the Servicer as the
Administrative Agent and each Purchaser Agent may from time to time reasonably request in order to
protect the interests of the Administrative Agent, each Purchaser Agent or Secured Parties under or
as contemplated by this Agreement.



     (j) Proceedings. As soon as possible and in any event within three Business Days
after any executive officer of the Servicer receives notice or obtains knowledge thereof, of any
settlement of, material judgment (including a material judgment with respect to the liability phase
of a bifurcated trial) in or commencement of any material labor controversy material litigation,
material action, material suit or material proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the
Collateral, the Transaction Documents, the Secured Parties’ interest in the Collateral, or the
Seller, the Servicer or the Originator or any of their Affiliates; provided, however,
notwithstanding the foregoing, any settlement, judgment, labor controversy, litigation, action,
suit or proceeding affecting the Collateral, the Transaction Documents, the Secured Parties’
interest in the Collateral, or the Seller, the Servicer or the Originator or any of their
Affiliates in excess of $2,500,000 or more shall be deemed to be material for purposes of this
Section 5.4(j).



     (k) Deposit of Collections. The Servicer shall promptly (but in no event later than
two Business Days after receipt) deposit into the Collection Account any and all Collections
received by the Seller, the Servicer or any of their Affiliates.



     (l) Servicing of Participation, Acquired and Assigned Loans. With respect to
Participation Loans and Assigned Loans, the Servicer shall: (i) segregate all Loan Files with
respect to such Loans; (ii) keep separate records with respect to such Loans; and (iii) identify
each such Type of Loan on the Servicing Reports required hereunder with respect to such Loans.



     (m) Change-in-Control. Upon the occurrence of a Change-in-Control (including any
merger or consolidation of the Originator or transfer of substantially all of its assets and its
business), the Servicer shall provide the Administrative Agent, each Purchaser Agent and the



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Hedge Counterparties with notice of such Change-in-Control within thirty (30) days after
completion of the same.



     (n) Loan Register.




     (i) The Servicer shall maintain with respect to each Noteless Loan a register (each, a
“Loan Register”) in which it will record (v) the amount of such Loan, (w) the amount
of any principal or interest due and payable or to become due and payable from the Obligor
thereunder, (x) the amount of any sum in respect of such Loan received from the Obligor and
each Purchaser’s share thereof, (y) the date of origination of such Loan and (z) the
maturity date of such Loan. The entries made in each Loan Register maintained pursuant to
this Section 5.04(n) shall be prima facie evidence of the existence and amounts of
the obligations therein recorded; provided, however, that the failure of the Servicer to
maintain any such Loan Register or any error therein shall not in any manner affect the
obligations of the Obligor to repay the related Loans in accordance with their terms or any
Purchaser’s interest therein.




     (ii) At any time a Noteless Loan is included as part of the Collateral pursuant to this
Agreement, the Servicer shall deliver to the Collateral Custodian a copy of the related Loan
Register, together with a certificate of a Responsible Officer of the Servicer certifying to
the accuracy of such Loan Register as of the date such Loan is included as part of the
Collateral.



     Section 5.5 Negative Covenants of the Servicer.



     From the date hereof until the Collection Date.



     (a) Deposits to Special Accounts. Except as otherwise provided in the Lock-Box
Agreement, the Servicer will not deposit or otherwise credit, or cause or permit to be so deposited
or credited, to any Lock-Box Account cash or cash proceeds other than Collections in respect of the
Collateral.



     (b) Mergers, Acquisition, Sales, etc. The Servicer will not consolidate with or merge
into any other Person or convey or transfer its properties and assets substantially as an entirety
to any Person, unless the Servicer is the surviving entity and unless:




     (i) the Servicer has delivered to the Administrative Agent and each Purchaser Agent an
Officer’s Certificate and an Opinion of Counsel each stating that any consolidation, merger,
conveyance or transfer and such supplemental agreement comply with this Section 5.5
and that all conditions precedent herein provided for relating to such transaction have been
complied with and, in the case of the Opinion of Counsel, that such supplemental agreement
is legal, valid and binding with respect to the Servicer and such other matters as the
Administrative Agent may reasonably request;




     (ii) the Servicer shall have delivered notice of such consolidation, merger, conveyance
or transfer to the Administrative Agent and each Purchaser Agent;



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     (iii) after giving effect thereto, no Termination Event or Servicer Default or event
that with notice or lapse of time would constitute either a Termination Event or a Servicer
Default shall have occurred; and




     (iv) the Administrative Agent and each Purchaser Agent have consented in writing to
such consolidation, merger, conveyance or transfer.



     (c) Change of Name or Location of Loan Files. The Servicer shall not (x) change its
name, move the location of its principal place of business and chief executive office, change the
offices where it keeps records concerning the Collateral from the location referred to in
Section 13.2, or change the jurisdiction of its formation, or (y) move, or consent to the
Collateral Custodian moving, the Required Asset Documents and Asset Files from the location thereof
on the Closing Date, unless the Servicer has given at least thirty (30) days’ written notice to the
Administrative Agent and has taken all actions required under the UCC of each relevant jurisdiction
in order to continue the first priority perfected security interest of the Administrative Agent as
agent for the Secured Parties in the Collateral.



     (d) Change in Payment Instructions to Obligors. The Servicer will not add or
terminate any bank as a Lock-Box Bank or any Lock-Box Account from those listed in Schedule
II or make any change in its instructions to Obligors regarding payments to be made to the
Seller or the Servicer or payments to be made to any Lock-Box Bank, unless the Administrative Agent
has consented to such addition, termination or change (which consent shall not be unreasonably
withheld) and has received duly executed copies of Lock-Box Agreements with each new Lock-Box Bank
or with respect to each new Lock-Box Account, as the case may be.



     (e) Extension or Amendment of Assets. The Servicer will not, except as otherwise
permitted in Section 6.4(a), extend, amend or otherwise modify the terms of any Assets;
provided, however, that no waiver, extension, modification or alteration otherwise permitted under
Section 6.4(a) shall (i) alter the status of any Asset as a Delinquent Asset or Charged-Off
Asset, (ii) in the reasonable judgment of the Administrative Agent, prevent or delay any Asset from
becoming a Delinquent Asset or Charged-Off Asset, or (iii) limit and/or impair the rights of the
Administrative Agent or the Secured Parties under this Agreement.



     Section 5.6 Affirmative Covenants of the Backup Servicer.



     From the date hereof until the Collection Date:



     (a) Compliance with Law. The Backup Servicer will comply in all material respects
with all Applicable Laws.



     (b) Preservation of Existence. The Backup Servicer will preserve and maintain its
existence, rights, franchises and privileges in the jurisdiction of its formation, and qualify and
remain qualified in good standing in each jurisdiction where the failure to preserve and maintain
such existence, rights, franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.



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     Section 5.7 Negative Covenants of the Backup Servicer.



     From the date hereof until the Collection Date:



     (a) No Changes in Backup Servicer Fee. The Backup Servicer will not make any changes
to the Backup Servicer Fee set forth in the Backup Servicer Fee Letter without the prior written
approval of the Administrative Agent and each Purchaser Agent.



     Section 5.8 Affirmative Covenants of the Collateral Custodian.



     From the date hereof until the Collection Date:



     (a) Compliance with Law. The Collateral Custodian will comply in all material
respects with all Applicable Laws.



     (b) Preservation of Existence. The Collateral Custodian will preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its formation and qualify
and remain qualified in good standing in each jurisdiction where failure to preserve and maintain
such existence, rights, franchises, privileges and qualification has had, or could reasonably be
expected to have, a Material Adverse Effect.



     (c) Location of Required Asset Documents. The Required Asset Documents shall remain
at all times in the possession of the Collateral Custodian at the address set forth herein unless
notice of a different address is given in accordance with the terms hereof or unless the
Administrative Agent agrees to allow certain Required Asset Documents to be released to the
Servicer on a temporary basis in accordance with the terms hereof.



     Section 5.9 Negative Covenants of the Collateral Custodian.



     From the date hereof until the Collection Date:



     (a) Required Asset Documents. The Collateral Custodian will not dispose of any
documents constituting the Required Asset Documents in any manner that is inconsistent with the
performance of its obligations as the Collateral Custodian pursuant to this Agreement and will not
dispose of any Collateral except as contemplated by this Agreement.



     (b) No Changes in Collateral Custodian Fee. The Collateral Custodian will not make
any changes to the Collateral Custodian Fee set forth in the Collateral Custodian Fee Letter
without the prior written approval of the Administrative Agent and each Purchaser Agent.



ARTICLE VI




ADMINISTRATION AND SERVICING OF CONTRACTS




     Section 6.1 Designation of the Servicer.



     (a) Initial Servicer. The servicing, administering and collection of the Collateral
shall be conducted by the Person designated as the Servicer hereunder from time to time in
accordance



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with this Section 6.1. Until the Administrative Agent gives to the Originator a
Servicer Termination Notice, the Originator is hereby designated as, and hereby agrees to perform
the duties and responsibilities of, the Servicer pursuant to the terms hereof.



     (b) Successor Servicer. Upon the Servicer’s receipt of a Servicer Termination Notice
(with a copy to the Backup Servicer) from the Administrative Agent pursuant to the terms of
Section 6.15, the Servicer agrees that it will terminate its activities as Servicer
hereunder in a manner that the Administrative Agent reasonably believes will facilitate the
transition of the performance of such activities to a successor Servicer, and the successor
Servicer shall assume each and all of the Servicer’s obligations to service and administer the
Collateral, on the terms and subject to the conditions herein set forth, and the Servicer shall use
its best reasonable efforts to assist the successor Servicer in assuming such obligations.



     (c) Subcontracts. The Servicer may, with the prior consent of the Administrative
Agent, subcontract with any other Person for servicing, administering or collecting the Collateral;
provided, however, that the Servicer shall remain liable for the performance of the duties and
obligations of the Servicer pursuant to the terms hereof and that any such subcontract may be
terminated upon the occurrence of a Servicer Default.



     (d) Servicing Programs. In the event that the Servicer uses any software program in
servicing the Collateral that it licenses from a third party, the Servicer shall use its best
reasonable efforts to obtain, either before the Closing Date or as soon as possible thereafter,
whatever licenses or approvals are necessary to allow the Administrative Agent or the Servicer to
use such program.



     Section 6.2 Duties of the Servicer.



     (a) Appointment. The Seller hereby appoints the Servicer as its agent, as from time
to time designated pursuant to Section 6.1, to service the Collateral and enforce its
respective rights in and under such Collateral. The Servicer hereby accepts such appointment and
agrees to perform the duties and obligations with respect thereto as set forth herein. The
Servicer and the Seller hereby acknowledge that the Administrative Agent, each Purchaser Agent and
the Secured Parties are third party beneficiaries of the obligations undertaken by the Servicer
hereunder.



     (b) Duties. The Servicer shall take or cause to be taken all such actions as may be
necessary or advisable to collect on the Collateral from time to time, all in accordance with
Applicable Laws, with reasonable care and diligence, and in accordance with the Credit and
Collection Policy. Without limiting the foregoing, the duties of the Servicer shall include the
following:




     (i) preparing and submitting of claims to, and post-billing liaison with, Obligors on
each Asset;




     (ii) maintaining all necessary servicing records with respect to the Collateral and
providing such reports to the Administrative Agent and each Purchaser Agent in respect of
the servicing of the Collateral (including information relating to its performance under
this Agreement) as may be required hereunder or as the Administrative Agent and each
Purchaser Agent may reasonably request;



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     (iii) maintaining and implementing administrative and operating procedures (including,
without limitation, an ability to recreate servicing records evidencing the Collateral in
the event of the destruction of the originals thereof) and keeping and maintaining all
documents, books, records and other information reasonably necessary or advisable for the
collection of the Collateral;




     (iv) promptly delivering to the Administrative Agent, each Purchaser Agent or the
Collateral Custodian, from time to time, such information and servicing records (including
information relating to its performance under this Agreement) as the Administrative Agent,
each Purchaser Agent or the Collateral Custodian may from time to time reasonably request;




     (v) identifying each Asset clearly and unambiguously in its servicing records to
reflect that such Asset is owned by the Seller and pledged to the Secured Parties pursuant
to this Agreement;




     (vi) notifying the Administrative Agent and each Purchaser Agent of any material
action, suit, proceeding, dispute, offset, deduction, defense or counterclaim (1) that is or
is threatened to be asserted by an Obligor with respect to any Asset (or portion thereof) of
which it has knowledge or has received notice; or (2) that is reasonably expected to have a
Material Adverse Effect;




     (vii) notifying the Administrative Agent and each Purchaser Agent of any proposed
change in the Credit and Collection Policy that could have an adverse effect on the
collectibility of the Collateral, on the Seller or on the interests of the Administrative
Agent, each Purchaser Agent or any Secured Party;




     (viii) using its reasonable best efforts to maintain the perfected security interest of
the Administrative Agent, as agent for the Secured Parties, in the Collateral;




     (ix) maintaining in the same manner as the Collateral Custodian holds the Required
Asset Documents, the Asset File (other than Required Asset Documents) with respect to each
Asset included as part of the Collateral; and




     (x) the Servicer shall make payments pursuant to the terms of the Monthly Report in
accordance with Section 2.9 and Section 2.10.



     (c) Notwithstanding anything to the contrary contained herein, the exercise by the
Administrative Agent, each Purchaser Agent and the Secured Parties of their rights hereunder shall
not release the Servicer, the Originator or the Seller from any of their duties or responsibilities
with respect to the Collateral. The Secured Parties, the Administrative Agent, each Purchaser
Agent and the Collateral Custodian (except in the role of Backup Servicer) shall not have any
obligation or liability with respect to any Collateral, nor shall any of them be obligated to
perform any of the obligations of the Servicer hereunder.



     (d) Any payment by an Obligor in respect of any Indebtedness owed by it to the Originator or
the Seller shall, except as otherwise specified by such Obligor or otherwise required by contract
or law and unless otherwise instructed by the Administrative Agent, be




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applied as a Collection of an item of Collateral of such Obligor (starting with the oldest
such Collateral) to the extent of any amounts then due and payable thereunder before being applied
to any other receivable or other obligation of such Obligor.




     Section 6.3 Authorization of the Servicer.



     (a) Each of the Seller, the Administrative Agent, each Purchaser Agent, each Purchaser and
each Hedge Counterparty hereby authorizes the Servicer (including any successor thereto) to take
any and all reasonable steps in its name and on its behalf necessary or desirable, in the
determination of the Servicer, to collect all amounts due under any and all Collateral, including,
without limitation, endorsing any of their names on checks and other instruments representing
Collections, executing and delivering any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments, with respect to the
Collateral and, after the delinquency of any Collateral and to the extent permitted under and in
compliance with Applicable Law, to commence proceedings with respect to enforcing payment thereof,
to the same extent as the Originator could have done if it had continued to own such Collateral.
The Originator, the Seller and the Administrative Agent on behalf of the Secured Parties and each
Hedge Counterparty shall furnish the Servicer (and any successors thereto) with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder, and shall cooperate with the Servicer to the fullest
extent in order to ensure the collectibility of the Collateral. In no event shall the Servicer be
entitled to make the Secured Parties, any Hedge Counterparty, the Collateral Custodian, the
Administrative Agent or the Purchaser Agents a party to any litigation without such party’s express
prior written consent, or to make the Seller a party to any litigation (other than any routine
foreclosure or similar collection procedure) without the Administrative Agent’s and each Purchaser
Agent’s consent.



     (b) After a Termination Event has occurred and is continuing, at the direction the
Administrative Agent, the Servicer shall take such action as the Administrative Agent may deem
necessary or advisable to enforce collection of the Collateral; provided, however, that the
Administrative Agent may, at any time that a Termination Event or Unmatured Termination Event has
occurred and is continuing, notify any Obligor with respect to any Collateral of the assignment of
such Collateral to the Administrative Agent and direct that payments of all amounts due or to
become due be made directly to the Administrative Agent and each Purchaser Agent or any servicer,
collection agent or lock-box or other account designated by the Administrative Agent and each
Purchaser Agent and, upon such notification and at the expense of the Seller, the Administrative
Agent may enforce collection of any such Collateral, and adjust, settle or compromise the amount or
payment thereof.



     Section 6.4 Collection of Payments.



     (a) Collection Efforts, Modification of Collateral. The Servicer will use its
reasonable best efforts to collect all payments called for under the terms and provisions of the
Assets included in the Collateral as and when the same become due in accordance with the Credit and
Collection Policy, and will follow those collection procedures that it follows with respect to all
comparable Collateral that it services for itself or others. The Servicer may not waive, modify or
otherwise vary any provision of an item of Collateral in a manner that, in its



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reasonable judgment, would impair the collectibility of the Collateral or in any manner
contrary to the Credit and Collection Policy.




     (b) Prepaid Asset. Prior to a Termination Event, upon any Asset becoming a Prepaid
Asset, the Servicer shall either (x) provide a Substitute Asset in accordance with Section
2.18 or (y) deposit to the Collection Account (in addition to all amounts received from the
related Obligor upon the prepayment of such Asset) an amount equal to the excess, if any, of the
sum of (a) the Outstanding Asset Balance on the date of such payment, (b) any outstanding Servicer
Advances thereon, (c) any accrued and unpaid interest, and (d) all Hedge Breakage Costs owing 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 as the result of any such Asset becoming
a Prepaid Asset, over the amount received from the related Obligor upon such prepayment (such
excess, the “Prepayment Amount”), in each case, only to the extent necessary to cause the
Availability as of such date (after giving effect to such substitution or deposit, as applicable)
to be greater than or equal to zero. After a Termination Event has occurred, upon any Asset
becoming a Prepaid Asset, the Servicer shall deposit to the Collection Account all amounts received
from the related Obligor upon the prepayment of such Asset plus the Prepayment Amount, if any.



     (c) Acceleration. If required by the Credit and Collection Policy, the Servicer shall
accelerate the maturity of all or any Scheduled Payments and other amounts due under any Asset in
which a default under the terms thereof has occurred and is continuing (after the lapse of any
applicable grace period) promptly after such Asset becomes a Charged-Off Asset.



     (d) Taxes and other Amounts. To the extent provided for in any Asset, the Servicer
will use its reasonable best efforts to collect all payments with respect to amounts due for taxes,
assessments and insurance premiums relating to such Asset and remit such amounts to the appropriate
Governmental Authority or insurer on or prior to the date such payments are due.



     (e) Payments to Lock-Box Account. Subject to Section 5.1(p), on or before the
applicable Cut-Off Date, the Servicer shall have instructed all Obligors (or, with respect to
Assigned Loans, the applicable agent) to make all payments in respect of the Collateral to the
Lock-Box or directly to the Lock-Box Account.



     (f) Establishment of the Collection Account. The Servicer shall cause to be
established, on or before the Closing Date, with the Collateral Custodian, and maintained in the
name of the Administrative Agent as agent for the Secured Parties, with an office or branch of a
depository institution or trust company a segregated corporate trust account entitled Collection
Account for Wachovia Capital Markets, LLC, as Administrative Agent for the Secured Parties (the
“Collection Account”), and the Servicer shall further maintain a subaccount within the
Collection Account for the purpose of segregating, within two Business Days of the receipt of any
Collections, Principal Collections (the “Principal Collections Account”), over which the
Collateral Custodian as agent for the Secured Parties shall have control and from which neither the
Originator, Servicer nor the Seller shall have any right of withdrawal except in accordance with
Section 2.9(b); provided, however, that at all times such depository institution or trust
company shall be acceptable to the Administrative Agent and a depository institution organized
under the laws of the United States of America or any one of the States thereof or the District of



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Columbia (or any domestic branch of a foreign bank), (i) (a) that has either (1) a long-term
unsecured debt rating of “A” or better by S&P and “A2” or better by Moody’s or (2) a short-term
unsecured debt rating or certificate of deposit rating of “A-1” or better by S&P or “P-1” or better
by Moody’s, (b) the parent corporation of which has either (1) a long-term unsecured debt rating of
“A” or better by S&P and “A2” or better by Moody’s or (2) a short-term unsecured debt rating or
certificate of deposit rating of “A-1” or better by S&P and “P-1” or better by Moody’s or (c) is
otherwise acceptable to the Administrative Agent and (ii) whose deposits are insured by the Federal
Deposit Insurance Corporation (any such depository institution or trust company, a “Qualified
Institution”).




     (g) Adjustments. If (i) the Servicer makes a deposit into the Collection Account in
respect of a Collection of an item of Collateral and such Collection was received by the Servicer
in the form of a check that is not honored for any reason or (ii) the Servicer makes a mistake with
respect to the amount of any Collection and deposits an amount that is less than or more than the
actual amount of such Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not to have been paid.



     Section 6.5 Servicer Advances.



     For each Collection Period, if the Servicer determines that any Scheduled Payment (or portion
thereof) that was due and payable pursuant to an Asset during such Collection Period was not
received prior to the last day of such Collection Period, the Servicer may (in its sole and
absolute discretion) make an advance in an amount up to the amount of such delinquent Scheduled
Payment (or portion thereof). The Servicer will deposit any Servicer Advances into the Collection
Account on or prior to 9:00 a.m. (Charlotte, North Carolina time) on the Business Day prior to the
related Payment Date, in immediately available funds. Notwithstanding anything to the contrary
contained herein, no Successor Servicer shall have any responsibility to make Servicer Advances.



     Section 6.6 Realization Upon Charged-Off Assets.



     The Servicer will use reasonable efforts to repossess or otherwise comparably convert the
ownership of any Related Property relating to a Charged-Off Asset and will act as sales and
processing agent for Related Property that it repossesses. The Servicer will follow such other
practices and procedures as it deems necessary or advisable and as are customary and usual in its
servicing of contracts and other actions by the Servicer in order to realize upon such Related
Property, which practices and procedures may include reasonable efforts to enforce all obligations
of Obligors and repossessing and selling such Related Property at public or private sale in
circumstances other than those described in the preceding sentence. Without limiting the
generality of the foregoing, unless the Administrative Agent has specifically given instruction to
the contrary, the Servicer may sell any such Related Property to the Servicer or its Affiliates for
a purchase price equal to the then fair market value thereof, any such sale to be evidenced by a
certificate of a Responsible Officer of the Servicer delivered to the Administrative Agent setting
forth the Asset, the Related Property, the sale price of the Related Property and certifying that
such sale price is the fair market value of such Related Property. In any case in which any such



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Related Property has suffered damage, the Servicer will not expend funds in connection with
any repair or toward the repossession of such Related Property unless it reasonably determines that
such repair and/or repossession will increase the Recoveries by an amount greater than the amount
of such expenses. The Servicer will remit to the Collection Account the Recoveries received in
connection with the sale or disposition of Related Property relating to a Charged-Off Asset.




     Section 6.7 Maintenance of Insurance Policies.



     The Servicer will use its reasonable best efforts to ensure that each Obligor maintains an
Insurance Policy with respect to any Related Property (other than accounts receivable) in an amount
at least equal to the Servicer’s good faith and commercially reasonable estimate of the value of
the real property, inventory, and/or equipment constituting such Related Property and shall ensure
that each such Insurance Policy names the Servicer as loss payee and as an insured thereunder and
all of the Seller’s right, title and interest therein is fully assigned to the Administrative
Agent, as agent for the Secured Parties. Additionally, the Servicer will require that each Obligor
maintain property damage liability insurance during the term of each Asset in amounts and against
risks customarily insured against by the Obligor on property owned by it. If an Obligor fails to
maintain property damage insurance, the Servicer may in its discretion purchase and maintain such
insurance on behalf of, and at the expense of, the Obligor. In connection with its activities as
Servicer, the Servicer agrees to present, on behalf of the Administrative Agent, claims to the
insurer under each Insurance Policy and any such liability policy, and to settle, adjust and
compromise such claims, in each case, consistent with the terms of each Asset. The Servicer’s
Insurance Policies with respect to the Related Property will insure against liability for physical
damage relating to such Related Property in accordance with the requirements of the Credit and
Collection Policy. The Servicer hereby disclaims any and all right, title and interest in and to
any Insurance Policy and Insurance Proceeds with respect to any Related Property, including any
Insurance Policy with respect to which it is named as loss payee and as an insured, and agrees that
it has no equitable, beneficial or other interest in the Insurance Polices and Insurance Proceeds
other than being named as loss payee and as an insured. The Servicer acknowledges that with
respect to the Insurance Policies and Insurance Proceeds thereof that it is acting solely in the
capacity as agent for the Administrative Agent, as agent for the Secured Parties.



     Section 6.8 Servicing Compensation.



     As compensation for its servicing activities hereunder and reimbursement for its expenses, the
Servicer shall be entitled to receive the Servicing Fee and the Subordinated Servicing Fee to the
extent of funds available therefor pursuant to the provisions of Section 2.9(a)(iii),
Section 2.10(a)(iii), Section 2.9(a)(vii) or Section 2.10(a)(viii), as
applicable.



     Section 6.9 Payment of Certain Expenses by Servicer.



     The Servicer will be required to pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of independent accountants, Taxes
imposed on the Servicer, expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this



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Agreement for the account of the Seller, but excluding Liquidation Expenses incurred as a
result of activities contemplated by Section 6.6; provided, however, for avoidance of
doubt, to the extent Liquidation Expenses relate to a Loan and a Retained Interest such Liquidation
Expenses shall be allocated pro rata. The Servicer will be required to pay all reasonable fees and
expenses owing to any bank or trust company in connection with the maintenance of the Collection
Account and the Lock-Box Account. The Servicer shall be required to pay such expenses for its own
account and shall not be entitled to any payment therefor other than the Servicing Fee and the
Subordinated Servicing Fee.




     Section 6.10 Reports.



     (a) Borrowing Notice. On each Funding Date, on each reduction of Advances Outstanding
pursuant to Section 2.4(b) and on each reinvestment of Principal Collections pursuant to
Section 2.9(b), the Seller (and the Servicer on its behalf) will provide a Borrowing
Notice, updated as of such date, to the Administrative Agent and each Purchaser Agent (with a copy
to the Collateral Custodian).



     (b) Monthly Report. On each Reporting Date, the Servicer will provide to the Seller,
the Administrative Agent, each Purchaser Agent, the Backup Servicer and any Liquidity Bank, a
monthly statement including a Borrowing Base calculated as of the most recent Determination Date (a
“Monthly Report”), with respect to the related Collection Period, signed by a Responsible
Officer of the Servicer and the Seller and substantially in the form of Exhibit C.



     (c) Servicer’s Certificate. Together with each Monthly Report, the Servicer shall
submit to the Administrative Agent, each Purchaser Agent and any Liquidity Bank a certificate (a
“Servicer’s Certificate”), signed by a Responsible Officer of the Servicer and
substantially in the form of Exhibit J.



     (d) Financial Statements. The Servicer will submit to the Administrative Agent, each
Purchaser Agent, each Purchaser, the Backup Servicer and any Liquidity Bank, (i) within forty-five
(45) days after the end of each of its first three fiscal quarters, commencing with the fiscal
quarter ending March 31, 2004, a copy of the quarterly report on Form 10-Q of CapitalSource Inc.
for the most recent fiscal quarter, and (ii) on or before March 31 following the end of each fiscal
year, commencing with the fiscal year ended December 31, 2003, a copy of the annual report on Form
10-K of CapitalSource Inc., in each case in the form as filed with the Securities and Exchange
Commission.



     (e) Tax Returns. Upon demand by the Administrative Agent, each Purchaser Agent and
any Liquidity Bank, copies of all federal, state and local Tax returns and reports filed by the
Seller and Servicer, or in which the Seller or Servicer was included on a consolidated or combined
basis (excluding sales, use and like taxes).



     Section 6.11 Annual Statement as to Compliance.



     The Servicer will provide to the Administrative Agent and each Purchaser Agent, within ninety
(90) days following the end of each fiscal year of the Servicer, commencing with the fiscal year
ending on December 31, 2004, a fiscal report signed by a Responsible Officer of the Servicer
certifying that (a) a review of the activities of the Servicer, and the Servicer’s



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performance pursuant to this Agreement, for the fiscal period ending on the last day of such
fiscal year has been made under such Person’s supervision and (b) the Servicer has performed or has
caused to be performed in all material respects all of its obligations under this Agreement
throughout such year and no Servicer Default has occurred and is continuing.




     Section 6.12 Annual Independent Public Accountant’s Servicing Reports.



     The Servicer will cause a firm of nationally recognized independent public accountants (who
may also render other services to the Servicer) to furnish to the Administrative Agent, each
Purchaser Agent, the Collateral Custodian and the Backup Servicer, within ninety (90) days
following the end of each fiscal year of the Servicer, commencing with the fiscal year ending on
December 31, 2004: (i) a report relating to such fiscal year to the effect that (a) such firm has
reviewed certain documents and records relating to the servicing of the Collateral, and (b) based
on such examination, such firm is of the opinion that the Monthly Reports for such year were
prepared in compliance with this Agreement, except for such exceptions as it believes to be
immaterial and such other exceptions as will be set forth in such firm’s report and (ii) a report
covering such fiscal year to the effect that such accountants have applied certain agreed-upon
procedures (which procedures shall have been approved by the Administrative Agent and each
Purchaser Agent) to certain documents and records relating to the Collateral under any Transaction
Document, compared the information contained in the Monthly Reports and the Servicer’s Certificates
delivered during the period covered by such report with such documents and records and that no
matters came to the attention of such accountants that caused them to believe that such servicing
was not conducted in compliance with this Article VI of this Agreement, except for such
exceptions as such accountants shall believe to be immaterial and such other exception as shall be
set forth in such statement.



     Section 6.13 Limitation on Liability of the Servicer and Others



     Except as provided herein, the Servicer shall not be under any liability to the Administrative
Agent, each Purchaser Agent, the Secured Parties or any other Person for any action taken or for
refraining from the taking of any action pursuant to this Agreement whether arising from express or
implied duties under this Agreement; provided, however, notwithstanding anything to the contrary
contained herein nothing shall protect the Servicer against any liability that would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the performance of duties
or by reason of its willful misconduct hereunder.



     Section 6.14 The Servicer Not to Resign.



     The Servicer shall not resign from the obligations and duties hereby imposed on it except upon
the Servicer’s determination that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action that the Servicer could
take to make the performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Servicer shall be evidenced as to clause
(i) above by an Opinion of Counsel to such effect delivered to the Administrative Agent, each
Purchaser Agent and the Backup Servicer. No such resignation shall become effective until a
Successor Servicer shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 6.2.



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     Section 6.15 Servicer Defaults.



     If any one of the following events (a “Servicer Default”) shall occur and be
continuing:



     (a) any failure by the Servicer to make any payment, transfer or deposit (including without
limitation with respect to Collections) as required by this Agreement which continues unremedied
for a period of one Business Day;



     (b) any failure by the Servicer to give instructions or notice to the Administrative Agent and
each Purchaser Agent as required by this Agreement, or to deliver any required Monthly Report or
other Required Reports hereunder on or before the date occurring two Business Days after the date
such instruction, notice or report is required to be made or given, as the case may be, under the
terms of this Agreement;



     (c) any failure on the part of the Servicer duly to observe or perform in any material respect
any other covenants or agreements of the Servicer set forth in this Agreement or the other
Transaction Documents to which the Servicer is a party and the same continues unremedied for a
period of thirty (30) days after the earlier to occur of (i) the date on which written notice of
such failure requiring the same to be remedied shall have been given to the Servicer by the
Administrative Agent and each Purchaser Agent and (ii) the date on which the Servicer becomes aware
thereof;



     (d) any representation, warranty or certification made by the Servicer in any Transaction
Document or in any certificate delivered pursuant to any Transaction Document shall prove to have
been incorrect when made, which has a Material Adverse Effect on the Administrative Agent, any
Purchaser Agent or the Secured Parties and which continues to be unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the Servicer by the Administrative Agent
or any Purchaser Agent and (ii) the date on which the Servicer becomes aware thereof;



     (e) an Insolvency Event shall occur with respect to the Servicer;



     (f) any material delegation of the Servicer’s duties that is not permitted by
Section 6.1;



     (g) any financial or other information reasonably requested by the Administrative Agent, any
Purchaser Agent or any Purchaser is not provided as requested within a reasonable amount of time
following such request;



     (h) the rendering against the Servicer of one or more final judgments, decrees or orders for
the payment of money in excess of $10,000,000, individually or in the aggregate, and the
continuance of such judgment, decree or order unsatisfied and in effect for any period of more than
sixty (60) consecutive days without a stay of execution;



     (i) the failure of the Servicer to make any payment due with respect to any recourse debt or
other obligations, which debt or other obligations are in excess of $10,000,000,



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individually or in the aggregate, or the occurrence of any event or condition that would at
such time permit acceleration of such recourse debt or other obligations;




     (j) CapitalSource Inc.’s Consolidated Tangible Net Worth is less than (i) $1,015,000,000, plus
(ii) 70% of the cumulative Net Proceeds of Capital Stock/Conversion of Debt received at any time
since December 31, 2005 (other than the period commencing on January 1, 2008 and ending on
September 30, 2008), plus (iii) 30% of the cumulative Net Proceeds of Capital Stock/Conversion of
Debt received at any time during the period commencing on January 1, 2008 and ending on September
30, 2008;



     (k) [Reserved];



     (l) the Servicer fails in any material respect to comply with the Credit and Collection Policy
regarding the servicing of the Collateral;



     (m) the Servicer consents or agrees to, or otherwise permits to occur, any amendment,
modification, change, supplement or rescission of or to the Credit and Collection Policy (after the
adoption of same) in whole or in part that could be reasonably expected to have a Material Adverse
Effect upon the Collateral, the Administrative Agent, any Purchaser Agent or the Secured Parties,
without the prior written consent of the Administrative Agent and each Purchaser Agent; or



     (n) CapitalSource Finance ceases to be the Servicer;



then notwithstanding anything herein to the contrary, so long as any such Servicer Default shall
not have been remedied within any applicable cure period prior to the date of the Servicer
Termination Notice (defined below), the Administrative Agent, by written notice to the Servicer
(with a copy to the Backup Servicer) (a “Servicer Termination Notice”), may terminate all
of the rights and obligations of the Servicer as Servicer under this Agreement.



     Section 6.16 Appointment of Successor Servicer.



     (a) On and after the receipt by the Servicer of a Servicer Termination Notice pursuant to
Section 6.15, the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Servicer Termination Notice or otherwise specified by the
Administrative Agent in writing or, if no such date is specified in such Servicer Termination
Notice or otherwise specified by the Administrative Agent, until a date mutually agreed upon by the
Servicer and the Administrative Agent. The Administrative Agent may at the time described in the
immediately preceding sentence in its sole discretion, appoint the Backup Servicer as the Servicer
hereunder, and the Backup Servicer shall on such date assume all obligations of the Servicer
hereunder, and all authority and power of the Servicer under this Agreement shall pass to and be
vested in the Backup Servicer. As compensation therefor, the Backup Servicer shall be entitled to
the Servicing Fee and the Subordinated Servicing Fee, together with other servicing compensation in
the form of assumption fees, late payment charges or otherwise as provided herein; including,
without limitation, Transition Expenses. In the event that the Administrative Agent does not so
appoint the Backup Servicer, there is no Backup Servicer or the Backup Servicer is unable to assume
such obligations on such date, the Administrative Agent shall as promptly as possible appoint a
successor servicer (the “Successor Servicer”), and such Successor



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Servicer shall accept its appointment by a written assumption in a form acceptable to the
Administrative Agent and each Purchaser Agent. In the event that a Successor Servicer has not
accepted its appointment at the time when the Servicer ceases to act as Servicer, the
Administrative Agent shall petition a court of competent jurisdiction to appoint any established
financial institution, having a net worth of not less than $50,000,000 and whose regular business
includes the servicing of Collateral, as the Successor Servicer hereunder.




     (b) Upon its appointment, the Backup Servicer (subject to Section 6.16(a)) or the
Successor Servicer, as applicable, shall be the successor in all respects to the Servicer with
respect to servicing functions under this Agreement and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be deemed to refer to
the Backup Servicer or the Successor Servicer, as applicable; provided, however, that the Backup
Servicer or Successor Servicer, as applicable, shall have (i) no liability with respect to any
action performed by the terminated Servicer prior to the date that the Backup Servicer or Successor
Servicer, as applicable, becomes the successor to the Servicer or any claim of a third party based
on any alleged action or inaction of the terminated Servicer, (ii) no obligation to perform any
advancing obligations, if any, of the Servicer unless it elects to in its sole discretion, (iii) no
obligation to pay any taxes required to be paid by the Servicer (provided, that the Backup Servicer
or Successor Servicer, as applicable, shall pay any income taxes for which it is liable), (iv) no
obligation to pay any of the fees and expenses of any other party to the transactions contemplated
hereby, and (v) no liability or obligation with respect to any Servicer indemnification obligations
of any prior Servicer, including the original Servicer. The indemnification obligations of the
Backup Servicer or the Successor Servicer, as applicable, upon becoming a Successor Servicer, are
expressly limited to those arising on account of its failure to act in good faith and with
reasonable care under the circumstances. In addition, the Backup Servicer or Successor Servicer,
as applicable, shall have no liability relating to the representations and warranties of the
Servicer contained in Article IV. Further, for so long as the Backup Servicer shall be the
Successor Servicer, the provisions of Section 2.15, Section 2.16(b) and Section
2.16(e) of this Agreement shall not apply to it in its capacity as Servicer.



     (c) All authority and power granted to the Servicer under this Agreement shall automatically
cease and terminate upon termination of this Agreement and shall pass to and be vested in the
Seller and, without limitation, the Seller is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights. The Servicer agrees to cooperate with the
Seller in effecting the termination of the responsibilities and rights of the Servicer to conduct
servicing of the Collateral.



     (d) Upon the Backup Servicer receiving notice that it is required to serve as the Servicer
hereunder pursuant to the foregoing provisions of this Section 6.16, the Backup Servicer
will promptly begin the transition to its role as Servicer. Notwithstanding the foregoing, the
Backup Servicer may, in its discretion, appoint, or petition a court of competent jurisdiction to
appoint, any established servicing institution as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of the Servicer
hereunder. As compensation, any Successor Servicer (including, without limitation, the
Administrative



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Agent) so appointed shall be entitled to receive the Servicing Fee and the Subordinated
Servicing Fee, together with any other servicing compensation in the form of assumption fees, late
payment charges or otherwise as provided herein that accrued prior thereto, including, without
limitation, Transition Expenses. In the event the Backup Servicer is required to solicit bids as
provided herein, the Backup Servicer shall solicit, by public announcement, bids from banks and
mortgage servicing institutions meeting the qualifications set forth in Section 6.16(a)
above. Such public announcement shall specify that the Successor Servicer shall be entitled to the
full amount of the Servicing Fee and the Subordinated Servicing Fee as servicing compensation,
together with the other servicing compensation in the form of assumption fees, late payment charges
or otherwise that accrued prior thereto. Within thirty (30) days after any such public
announcement, the Backup Servicer shall negotiate and effect the sale, transfer and assignment of
the servicing rights and responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Backup Servicer shall deduct from any sum received by the Backup Servicer from
the successor to the Servicer in respect of such sale, transfer and assignment all costs and
expenses of any public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed Servicing Advances. After
such deductions, the remainder of such sum shall be paid by the Backup Servicer to the Servicer at
the time of such sale, transfer and assignment to the Servicer’s successor. The Backup Servicer
and such successor shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. No appointment of a successor to the Servicer hereunder shall be
effective until written notice of such proposed appointment shall have been provided by the Backup
Servicer to the Administrative Agent and each Purchaser Agent and the Backup Servicer shall have
consented thereto. The Backup Servicer shall not resign as servicer until a Successor Servicer has
been appointed and accepted such appointment. Notwithstanding anything to the contrary contained
herein, in no event shall Wells Fargo, in any capacity, be liable for any Servicing Fee,
Subordinated Servicing Fee or for any differential in the amount of the Servicing Fee or
Subordinated Servicing Fee paid hereunder and the amount necessary to induce any Successor Servicer
under this Agreement and the transactions set forth or provided for by this Agreement.




ARTICLE VII




THE BACKUP SERVICER




     Section 7.1 Designation of the Backup Servicer.



     (a) Initial Backup Servicer. The backup servicing role with respect to the Collateral
shall be conducted by the Person designated as Backup Servicer hereunder from time to time in
accordance with this Section 7.1. Until the Administrative Agent shall give to Wells Fargo
a Backup Servicer Termination Notice, Wells Fargo is hereby designated as, and hereby agrees to
perform the duties and obligations of, a Backup Servicer pursuant to the terms hereof.



     (b) Successor Backup Servicer. Upon the Backup Servicer’s receipt of Backup Servicer
Termination Notice from the Administrative Agent of the designation of a replacement Backup
Servicer pursuant to the provisions of Section 7.5, the Backup Servicer agrees that it will
terminate its activities as Backup Servicer hereunder.



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     Section 7.2 Duties of the Backup Servicer.



     (a) Appointment. The Seller and the Administrative Agent, as agent for the Secured
Parties, each hereby appoints Wells Fargo to act as Backup Servicer, for the benefit of the
Administrative Agent, each Purchaser Agent and the Secured Parties, as from time to time designated
pursuant to Section 7.1. The Backup Servicer hereby accepts such appointment and agrees to
perform the duties and obligations with respect thereto set forth herein.



     (b) Duties. On or before the initial Funding Date, and until its removal pursuant to
Section 7.5, the Backup Servicer shall perform, on behalf of the Administrative Agent and
the Secured Parties, the following duties and obligations:




     (i) On or before the Closing Date, the Backup Servicer shall accept from the Servicer
delivery of the information required to be set forth in the Monthly Reports (if any) in hard
copy and on computer tape; provided, however, the computer tape is in an MS DOS, PC readable
ASCII format or other format to be agreed upon by the Backup Servicer and the Servicer on or
prior to closing.




     (ii) Not later than 12:00 noon Charlotte, North Carolina time on each Reporting Date,
the Servicer shall deliver to the Backup Servicer the asset tape, which shall include but
not be limited to the following information: (x) for each Asset, the name and number of the
related Obligor, the collection status, the loan or lease status, the date of each Scheduled
Payment and the Outstanding Asset Balance, (y) the Borrowing Base and (z) the Aggregate
Outstanding Asset Balance (the “Tape”). The Backup Servicer shall accept delivery
of the Tape.




     (iii) Prior to the related Payment Date, the Backup Servicer shall review the Monthly
Report to ensure that it is complete on its face and that the following items in such
Monthly Report have been accurately calculated, if applicable, and reported: (A) the
Borrowing Base, (B) the Backup Servicing Fee, (C) the Assets that are current and not past
due, (D) the Assets that are 1 — 30 days past due, (E) the Assets that are 31 — 60 days past
due, (F) the Assets that are 61 — 90 days past due, (G) the Assets that are 90+ days past
due, (H) the Pool Charged-Off Ratio, and (I) the Aggregate Outstanding Asset Balance. The
Backup Servicer by a separate written report shall notify the Administrative Agent and the
Servicer of any disagreements with the Monthly Report based on such review not later than
the Business Day preceding such Payment Date to such Persons.




     (iv) If the Servicer disagrees with the report provided under clause (iii)
above by the Backup Servicer or if the Servicer or any subservicer has not reconciled such
discrepancy, the Backup Servicer agrees to confer with the Servicer to resolve such
disagreement on or prior to the next succeeding Determination Date and shall settle such
discrepancy with the Servicer if possible, and notify the Administrative Agent of the
resolution thereof. The Servicer hereby agrees to cooperate at its own expense with the
Backup Servicer in reconciling any discrepancies herein. If within twenty (20) days after
the delivery of the report provided under clause (iii) above by the Backup Servicer,
such discrepancy is not resolved, the Backup Servicer shall promptly notify the
Administrative



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Agent of the continued existence of such discrepancy. Following receipt of such notice
by the Administrative Agent, the Servicer shall deliver to the Administrative Agent, the
Secured Parties and the Backup Servicer no later than the related Payment Date a certificate
describing the nature and amount of such discrepancies and the actions the Servicer proposes
to take with respect thereto.



     (c) Reliance on Tape. With respect to the duties described in Section 7.2(b),
the Backup Servicer, is entitled to rely conclusively, and shall be fully protected in so relying,
on the contents of each Tape, including, but not limited to, the completeness and accuracy thereof,
provided by the Servicer.



     Section 7.3 Merger or Consolidation.



     Any Person (i) into which the Backup Servicer may be merged or consolidated, (ii) that may
result from any merger or consolidation to which the Backup Servicer shall be a party, or (iii)
that may succeed to the properties and assets of the Backup Servicer substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the Backup Servicer under
this Agreement without further act on the part of any of the parties to this Agreement provided
such Person is organized under the laws of the United States of America or any one of the States
thereof or the District of Columbia (or any domestic branch of a foreign bank), (i) (a) that has
either (1) a long-term unsecured debt rating of “A” or better by S&P and “A2” or better by Moody’s
or (2) a short-term unsecured debt rating or certificate of deposit rating of “A-1” or better by
S&P or “P-1” or better by Moody’s, (b) the parent corporation which has either (1) a long-term
unsecured debt rating of “A” or better by S&P and “A2” or better by Moody’s or (2) a short-term
unsecured debt rating or certificate of deposit rating of “A-1” or better by S&P and “P-1” or
better by Moody’s or (c) is otherwise acceptable to the Administrative Agent.



     Section 7.4 Backup Servicing Compensation.



     As compensation for its back-up servicing activities hereunder, the Backup Servicer shall be
entitled to receive the Backup Servicing Fee from the Servicer. To the extent that such Backup
Servicing Fee is not paid by the Servicer, the Backup Servicer shall be entitled to receive the
unpaid balance of its Backup Servicing Fee to the extent of funds available therefor pursuant to
Section 2.9(a)(iv) and Section 2.10(a)(iv), as applicable. The Backup Servicer’s
entitlement to receive the Backup Servicing Fee shall cease (excluding any unpaid outstanding
amounts as of that date) on the earliest to occur of: (i) it becoming the Successor Servicer, (ii)
its removal as Backup Servicer pursuant to Section 7.5, or (iii) the termination of this
Agreement. Upon becoming Successor Servicer pursuant to Section 6.16, the Backup Servicer
shall be entitled to the Servicing Fee and the Subordinated Servicing Fee.



     Section 7.5 Backup Servicer Removal.



     The Backup Servicer may be removed, with or without cause, by the Administrative Agent by
notice given in writing to the Backup Servicer (the “Backup Servicer Termination 



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Notice”). In the event of any such removal, a replacement Backup Servicer may be
appointed by the Administrative Agent.




     Section 7.6 Limitation on Liability.



     (a) The Backup Servicer undertakes to perform only such duties and obligations as are
specifically set forth in this Agreement, it being expressly understood by all parties hereto that
there are no implied duties or obligations of the Backup Servicer hereunder. Without limiting the
generality of the foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the Servicer. The
Backup Servicer may act through its agents, nominees, attorneys and custodians in performing any of
its duties and obligations under this Agreement, it being understood by the parties hereto that the
Backup Servicer will be responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations for and on behalf
of the Backup Servicer. Neither the Backup Servicer nor any of its officers, directors, employees
or agents shall be liable, directly or indirectly, for any damages or expenses arising out of the
services performed under this Agreement other than damages or expenses that result from the gross
negligence or willful misconduct of it or them or the failure to perform materially in accordance
with this Agreement.



     (b) The Backup Servicer shall not be liable for any obligation of the Servicer contained in
this Agreement or for any errors of the Servicer contained in any computer tape, certificate or
other data or document delivered to the Backup Servicer hereunder or on which the Backup Servicer
must rely in order to perform its obligations hereunder, and the Secured Parties, the
Administrative Agent and the Collateral Custodian each agree to look only to the Servicer to
perform such obligations. The Backup Servicer shall have no responsibility and shall not be in
default hereunder or incur any liability for any failure, error, malfunction or any delay in
carrying out any of its duties under this Agreement if such failure or delay results from the
Backup Servicer acting in accordance with information prepared or supplied by a Person other than
the Backup Servicer or the failure of any such other Person to prepare or provide such information.
The Backup Servicer shall have no responsibility, shall not be in default and shall incur no
liability for (i) any act or failure to act of any third party, including the Servicer, (ii) any
inaccuracy or omission in a notice or communication received by the Backup Servicer from any third
party, (iii) the invalidity or unenforceability of any Collateral under Applicable Law, (iv) the
breach or inaccuracy of any representation or warranty made with respect to any Collateral, or (v)
the acts or omissions of any successor Backup Servicer.



     Section 7.7 The Backup Servicer Not to Resign.



     The Backup Servicer shall not resign (except with prior consent of the Administrative Agent
which consent shall not be unreasonably withheld) from the obligations and duties hereby imposed on
it except upon the Backup Servicer’s determination that (i) the performance of its duties hereunder
is or becomes impermissible under Applicable Law and (ii) there is no reasonable action that the
Backup Servicer could take to make the performance of its duties hereunder permissible under
Applicable Law. Any such determination permitting the resignation of the Backup Servicer shall be
evidenced as to clause (i) above by an Opinion of Counsel to such effect delivered to the
Administrative Agent and each Purchaser Agent. No such



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resignation shall become effective until a successor Backup Servicer shall have assumed the
responsibilities and obligations of the Backup Servicer hereunder.




ARTICLE VIII




THE COLLATERAL CUSTODIAN




     Section 8.1 Designation of Collateral Custodian.



     (a) Initial Collateral Custodian. The role of collateral custodian with respect to
the Required Asset Documents shall be conducted by the Person designated as Collateral Custodian
hereunder from time to time in accordance with this Section 8.1. Until the Administrative
Agent shall give to Wells Fargo a Collateral Custodian Termination Notice, Wells Fargo is hereby
designated as, and hereby agrees to perform the duties and obligations of, Collateral Custodian
pursuant to the terms hereof.



     (b) Successor Collateral Custodian. Upon the Collateral Custodian’s receipt of a
Collateral Custodian Termination Notice from the Administrative Agent of the designation of a
successor Collateral Custodian pursuant to the provisions of Section 8.5, the Collateral
Custodian agrees that it will terminate its activities as Collateral Custodian hereunder.



     Section 8.2 Duties of Collateral Custodian.



     (a) Appointment. The Seller and the Administrative Agent each hereby appoints Wells
Fargo to act as Collateral Custodian, for the benefit of the Administrative Agent, as agent for the
Secured Parties. The Collateral Custodian hereby accepts such appointment and agrees to perform
the duties and obligation with respect thereto set forth herein.



     (b) Duties. On or before the initial Funding Date, and until its removal pursuant to
Section 8.5, the Collateral Custodian shall perform on behalf of the Administrative Agent
and the Secured Parties, the following duties and obligations:




     (i) The Collateral Custodian shall take and retain custody of the Required Asset
Documents delivered by the Seller pursuant to Section 3.2 hereof in accordance with
the terms and conditions of this Agreement, all for the benefit of the Secured Parties and
subject to the Lien thereon in favor of the Administrative Agent as agent for the Secured
Parties. Within five Business Days of its receipt of any Required Asset Documents, the
Collateral Custodian shall review the related Collateral and Required Asset Documents to
confirm that (A) such Collateral has been properly executed and has no missing or mutilated
pages, (B) any UCC and other filings (as set forth on the Asset Checklists) have been made,
(C) an Insurance Policy exists with respect to any real or personal property constituting
the Related Property, and (D) confirming the related Outstanding Asset Balance, Asset number
and Obligor name with respect to such Asset is referenced on the related Asset List and is
not a duplicate Asset (collectively, the “Review Criteria”). In order to facilitate
the foregoing review by the Collateral Custodian, in connection with each delivery of
Required Asset Documents hereunder to the Collateral Custodian, the Servicer shall provide
to the Collateral Custodian an electronic file (in EXCEL or a comparable format) that
contains the related Asset List or



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that otherwise contains the Asset identification number and the name of the Obligor
with respect to each related Asset. If, at the conclusion of such review, the Collateral
Custodian shall determine that (i) the Outstanding Asset Balances of the Collateral it has
received Required Asset Documents with respect to is less than as set forth on the
electronic file, the Collateral Custodian shall immediately notify the Administrative Agent
of such discrepancy, and (ii) any Review Criteria is not satisfied, the Collateral Custodian
shall within one Business Day notify the Servicer of such determination and provide the
Servicer with a list of the non-complying Assets and the applicable Review Criteria that
they fail to satisfy. The Servicer shall have five Business Days to correct any
non-compliance with a Review Criteria. If after the conclusion of such time period the
Servicer has still not cured any non-compliance by an Asset with a Review Criteria, the
Collateral Custodian shall promptly notify the Seller and the Administrative Agent of such
determination by providing a written report to such persons identifying, with particularity,
each Asset and each of the applicable Review Criteria that such Asset fails to satisfy. In
addition, if requested in writing by the Servicer and approved by the Administrative Agent
within ten Business Days of the Collateral Custodian’s delivery of such report, the
Collateral Custodian shall return any Asset which fails to satisfy a Review Criteria to the
Seller. Other than the foregoing, the Collateral Custodian shall not have any
responsibility for reviewing any Required Asset Documents.




     (ii) In taking and retaining custody of the Required Asset Documents, the Collateral
Custodian shall be deemed to be acting as the agent of the Administrative Agent and the
Secured Parties; provided, however that the Collateral Custodian makes no representations as
to the existence, perfection or priority of any Lien on the Required Asset Documents or the
instruments therein; and provided, further, that the Collateral Custodian’s duties as agent
shall be limited to those expressly contemplated herein.




     (iii) All Required Asset Document shall be kept in fire resistant vaults, rooms or
cabinets at the locations specified on Schedule III attached hereto, or at such
other office as shall be specified to the Administrative Agent by the Collateral Custodian
in a written notice delivered at least forty-five (45) days prior to such change. All
Required Asset Documents shall be placed together with an appropriate identifying label and
maintained in such a manner so as to permit retrieval and access. All Required Asset
Documents shall be clearly segregated from any other documents or instruments maintained by
the Collateral Custodian.




     (iv) The Collateral Custodian shall make payments pursuant to the terms of the Monthly
Report in accordance with Section 2.9 and Section 2.10 (the “Payment
Duties”).




     (v) On each Reporting Date, the Collateral Custodian shall provide a written report to
the Administrative Agent and the Servicer (in a form acceptable to the Administrative Agent)
identifying each Asset for which it holds Required Asset Documents, the non-complying Assets
and the applicable Review Criteria that any non-complying Asset fails to satisfy.



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     (vi) In performing its duties, the Collateral Custodian shall use the same degree of
care and attention as it employs with respect to similar Collateral that it holds as
Collateral Custodian.



     Section 8.3 Merger or Consolidation.



     Any Person (i) into which the Collateral Custodian may be merged or consolidated, (ii) that
may result from any merger or consolidation to which the Collateral Custodian shall be a party, or
(iii) that may succeed to the properties and assets of the Collateral Custodian substantially as a
whole, which Person in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Collateral Custodian hereunder, shall be the successor to the Collateral
Custodian under this Agreement without further act of any of the parties to this Agreement.



     Section 8.4 Collateral Custodian Compensation.



     As compensation for its collateral custodian activities hereunder, the Collateral Custodian
shall be entitled to a Collateral Custodian Fee (the “Collateral Custodian Fee”) from the
Servicer. To the extent that such Collateral Custodian Fee is not paid by the Servicer, the
Collateral Custodian shall be entitled to receive the unpaid balance of its Collateral Custodian
Fee to the extent of funds available therefor pursuant to the provision of Section
2.9(a)(iv) or Section 2.10(a)(iv), as applicable. The Collateral Custodian’s
entitlement to receive the Collateral Custodian Fee shall cease on the earlier to occur of: (i)
its removal as Collateral Custodian pursuant to Section 8.5 or (ii) the termination of this
Agreement.



     Section 8.5 Collateral Custodian Removal.



     The Collateral Custodian may be removed, with or without cause, by the Administrative Agent by
notice given in writing to the Collateral Custodian (the “Collateral Custodian Termination
Notice”); provided, however, notwithstanding its receipt of a Collateral Custodian Termination
Notice, the Collateral Custodian shall continue to act in such capacity until a successor
Collateral Custodian has been appointed, has agreed to act as Collateral Custodian hereunder, and
has received all Required Asset Documents held by the previous Collateral Custodian.



     Section 8.6 Limitation on Liability.



     (a) The Collateral Custodian may conclusively rely on and shall be fully protected in acting
upon any certificate, instrument, opinion, notice, letter, telegram or other document delivered to
it and that in good faith it reasonably believes to be genuine and that has been signed by the
proper party or parties. The Collateral Custodian may rely conclusively on and shall be fully
protected in acting upon (1) the written instructions of any designated officer of the
Administrative Agent or (2) the verbal instructions of the Administrative Agent.



     (b) The Collateral Custodian may consult counsel satisfactory to it and the advice or opinion
of such counsel shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.



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     (c) The Collateral Custodian shall not be liable for any error of judgment, or for any act
done or step taken or omitted by it, in good faith, or for any mistakes of fact or law, or for
anything that it may do or refrain from doing in connection herewith except in the case of its
willful misconduct or grossly negligent performance or omission of its duties and in the case of
the negligent performance of its Payment Duties and in the case of its negligent performance of its
duties in taking and retaining custody of the Required Asset Documents.



     (d) The Collateral Custodian makes no warranty or representation and shall have no
responsibility (except as expressly set forth in this Agreement) as to the content, enforceability,
completeness, validity, sufficiency, value, genuineness, ownership or transferability of the
Collateral, and will not be required to and will not make any representations as to the validity or
value (except as expressly set forth in this Agreement) of any of the Collateral. The Collateral
Custodian shall not be obligated to take any legal action hereunder that might in its judgment
involve any expense or liability unless it has been furnished with an indemnity reasonably
satisfactory to it.



     (e) The Collateral Custodian shall have no duties or responsibilities except such duties and
responsibilities as are specifically set forth in this Agreement and no covenants or obligations
shall be implied in this Agreement against the Collateral Custodian.



     (f) The Collateral Custodian shall not be required to expend or risk its own funds in the
performance of its duties hereunder.



     (g) It is expressly agreed and acknowledged that the Collateral Custodian is not guaranteeing
performance of or assuming any liability for the obligations of the other parties hereto or any
parties to the Collateral.



     Section 8.7 The Collateral Custodian Not to Resign.



     The Collateral Custodian shall not resign from the obligations and duties hereby imposed on it
except upon the Collateral Custodian’s determination that (i) the performance of its duties
hereunder is or becomes impermissible under Applicable Law and (ii) there is no reasonable action
that the Collateral Custodian could take to make the performance of its duties hereunder
permissible under Applicable Law. Any such determination permitting the resignation of the
Collateral Custodian shall be evidenced as to clause (i) above by an Opinion of Counsel to
such effect delivered to the Administrative Agent and each Purchaser Agent. No such resignation
shall become effective until a successor Collateral Custodian shall have assumed the
responsibilities and obligations of the Collateral Custodian hereunder.



     Section 8.8 Release of Documents.



     (a) Release for Servicing. From time to time and as appropriate for the enforcement
or servicing any of the Collateral, the Collateral Custodian is hereby authorized (unless and until
such authorization is revoked by the Administrative Agent), upon written receipt from the Servicer
of a request for release of documents and receipt in the form annexed hereto as Exhibit L,
to release to the Servicer the related Required Asset Documents or the documents set forth in such
request and receipt to the Servicer. All documents so released to the Servicer shall be held by
the Servicer in trust for the benefit of the Administrative Agent in accordance with the



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terms of this Agreement. The Servicer shall return to the Collateral Custodian the Required
Asset Documents or other such documents (i) immediately upon the request of the Administrative
Agent, or (ii) when the Servicer’s need therefor in connection with such foreclosure or servicing
no longer exists, unless the Asset shall be liquidated, in which case, upon receipt of an
additional request for release of documents and receipt certifying such liquidation from the
Servicer to the Collateral Custodian in the form annexed hereto as Exhibit H, the
Servicer’s request and receipt submitted pursuant to the first sentence of this subsection shall be
released by the Collateral Custodian to the Servicer.




     (b) Limitation on Release. The foregoing provision respecting release to the Servicer
of the Required Asset Documents and documents by the Collateral Custodian upon request by the
Servicer shall be operative only to the extent that at any time the Collateral Custodian shall not
have released to the Servicer active Required Asset Documents (including those requested)
pertaining to more than fifteen (15) Assets at the time being serviced by the Servicer under this
Agreement. Any additional Required Asset Documents or documents requested to be released by the
Servicer may be released only upon written authorization of the Administrative Agent. The
limitations of this paragraph shall not apply to the release of Required Asset Documents to the
Servicer pursuant to the immediately succeeding subsection.



     (c) Release for Payment. Upon receipt by the Collateral Custodian of the Servicer’s
request for release of documents and receipt in the form annexed hereto as Exhibit L (which
certification shall include a statement to the effect that all amounts received in connection with
such payment or repurchase have been credited to the Collection Account as provided in this
Agreement), the Collateral Custodian shall promptly release the related Required Asset Documents to
the Servicer.



     Section 8.9 Return of Required Asset Documents.



     The Seller may, with the prior written consent of the Administrative Agent (such consent not
to be unreasonably withheld), require that the Collateral Custodian return each Required Asset
Document (a) delivered to the Collateral Custodian in error, (b) for which a Substitute Asset has
been substituted in accordance with Section 2.18, (c) as to which the lien on the Related
Property has been so released pursuant to Section 9.2, (d) that has been repaid by the
Seller pursuant to Section 4.6 or (e) that is required to be redelivered to the Seller in
connection with the termination of this Agreement, in each case by submitting to the Collateral
Custodian and the Administrative Agent a written request in the form of Exhibit H hereto
(signed by both the Seller and the Administrative Agent) specifying the Collateral to be so
returned and reciting that the conditions to such release have been met (and specifying the Section
or Sections of this Agreement being relied upon for such release). The Collateral Custodian shall
upon its receipt of each such request for return executed by the Seller and the Administrative
Agent promptly, but in any event within five Business Days, return the Required Asset Documents so
requested to the Seller.



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     Section 8.10 Access to Certain Documentation and Information Regarding the Collateral;
Audits.



     The Collateral Custodian shall provide to the Administrative Agent and each Purchaser Agent
access to the Required Asset Documents and all other documentation regarding the Collateral
including in such cases where the Administrative Agent and each Purchaser Agent is required in
connection with the enforcement of the rights or interests of the Secured Parties, or by applicable
statutes or regulations, to review such documentation, such access being afforded without charge
but only (i) upon two Business Days prior written request, (ii) during normal business hours and
(iii) subject to the Servicer’s and Collateral Custodian’s normal security and confidentiality
procedures. Prior to the Closing Date and periodically thereafter at the discretion of the
Administrative Agent and each Purchaser Agent, the Administrative Agent and each Purchaser Agent
may review the Servicer’s collection and administration of the Collateral in order to assess
compliance by the Servicer with the Credit and Collection Policy, as well as with this Agreement
and may conduct an audit of the Collateral, Required Asset Documents in conjunction with such a
review. Such review shall be reasonable in scope and shall be completed in a reasonable period of
time. Without limiting the foregoing provisions of this Section 8.10, from time to time on
request of the Administrative Agent, the Collateral Custodian shall permit certified public
accountants or other auditors acceptable to the Administrative Agent to conduct, at the Servicer’s
expense, a review of the Required Asset Documents and all other documentation regarding the
Collateral.



ARTICLE IX




SECURITY INTEREST




     Section 9.1 Grant of Security Interest.



     The parties hereto intend that this Agreement constitute a security agreement and the
transactions effected hereby constitute secured loans by the applicable Purchasers to the Seller
under Applicable Law. For such purpose, the Seller hereby transfers, conveys, assigns and grants
as of the Closing Date to the Administrative Agent, as agent for the Secured Parties, a lien and
continuing security interest in all of the Seller’s right, title and interest in, to and under (but
none of the obligations under) all Collateral (including any Hedging Agreements), whether now
existing or hereafter arising or acquired by the Seller, and wherever the same may be located, to
secure the prompt, complete and indefeasible payment and performance in full when due, whether by
lapse of time, acceleration or otherwise, of the Aggregate Unpaids of the Seller arising in
connection with this Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent, including, without
limitation, all Aggregate Unpaids. The assignment under this Section 9.1 does not
constitute and is not intended to result in a creation or an assumption by the Administrative
Agent, the Purchaser Agents, any Hedge Counterparty, the Liquidity Banks or any of the Secured
Parties of any obligation of the Seller or any other Person in connection with any or all of the
Collateral or under any agreement or instrument relating thereto. Anything herein to the contrary
notwithstanding, (a) the Seller shall remain liable under the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Administrative Agent,



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as agent for the Secured Parties, of any of its rights in the Collateral shall not release the
Seller from any of its duties or obligations under the Collateral, and (c) none of the
Administrative Agent, the Purchaser Agents, any Hedge Counterparty, the Liquidity Banks or any
Secured Party shall have any obligations or liability under the Collateral by reason of this
Agreement, nor shall the Administrative Agent, the Purchaser Agents, any Hedge Counterparty, the
Liquidity Banks or any Secured Party be obligated to perform any of the obligations or duties of
the Seller thereunder or to take any action to collect or enforce any claim for payment assigned
hereunder.




     Section 9.2 Release of Lien on Collateral.



     At the same time as (i) any Collateral expires by its terms and all amounts in respect thereof
have been paid in full by the related Obligor and deposited in the Collection Account, (ii) any
Asset becomes a Prepaid Asset and all amounts in respect thereof have been paid in full by the
related Obligor and deposited in the Collection Account, (iii) such Asset is replaced in accordance
with Section 2.18, (iv) this agreement terminates in accordance with Section 13.6
or (v) such Asset is removed in accordance with Section 2.19 or Section 2.20, the
Administrative Agent as agent for the Secured Parties will, to the extent requested by the
Servicer, release its interest in such Collateral. In connection with any sale of such Related
Property, the Administrative Agent as agent for the Secured Parties will after the deposit by the
Servicer of the Proceeds of such sale into the Collection Account, at the sole expense of the
Servicer, execute and deliver to the Servicer any assignments, bills of sale, termination
statements and any other releases and instruments as the Servicer may reasonably request in order
to effect the release and transfer of such Related Property; provided, that the Administrative
Agent as agent for the Secured Parties will make no representation or warranty, express or implied,
with respect to any such Related Property in connection with such sale or transfer and assignment.
Nothing in this section shall diminish the Servicer’s obligations pursuant to Section 6.6
with respect to the Proceeds of any such sale.



     Section 9.3 Further Assurances.



     The provisions of Section 13.12 shall apply to the security interest granted under
Section 9.1 as well as to the Advances hereunder.



     Section 9.4 Remedies.



     Upon the occurrence of a Termination Event, the Administrative Agent and Secured Parties shall
have, with respect to the Collateral granted pursuant to Section 9.1, and in addition to
all other rights and remedies available to the Administrative Agent and Secured Parties under this
Agreement or other Applicable Law, all rights and remedies of a secured party upon default under
the UCC.



     Section 9.5 Waiver of Certain Laws.



     Each of the Seller and the Servicer agrees, to the full extent that it may lawfully so agree,
that neither it nor anyone claiming through or under it will set up, claim or seek to take
advantage of any appraisement, valuation, stay, extension or redemption law now or hereafter in
force in any locality where any Collateral may be situated in order to prevent, hinder or delay the
enforcement or foreclosure of this Agreement, or the absolute sale of any of the Collateral or any



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part thereof, or the final and absolute putting into possession thereof, immediately after
such sale, of the purchasers thereof, and each of the Seller and the Servicer, for itself and all
who may at any time claim through or under it, hereby waives, to the full extent that it may be
lawful so to do, the benefit of all such laws, and any and all right to have any of the properties
or assets constituting the Collateral marshaled upon any such sale, and agrees that the
Administrative Agent or any court having jurisdiction to foreclose the security interests granted
in this Agreement may sell the Collateral as an entirety or in such parcels as the Administrative
Agent or such court may determine.




     Section 9.6 Power of Attorney.



     Each of the Seller and the Servicer hereby irrevocably appoints the Administrative Agent its
true and lawful attorney (with full power of substitution) in its name, place and stead and at is
expense, in connection with the enforcement of the rights and remedies provided for in this
Agreement, including without limitation the following powers: (a) to give any necessary receipts
or acquittance for amounts collected or received hereunder, (b) to make all necessary transfers of
the Collateral in connection with any such sale or other disposition made pursuant hereto, (c) to
execute and deliver for value all necessary or appropriate bills of sale, assignments and other
instruments in connection with any such sale or other disposition, the Seller and the Servicer
hereby ratifying and confirming all that such attorney (or any substitute) shall lawfully do
hereunder and pursuant hereto, and (d) to sign any agreements, orders or other documents in
connection with or pursuant to any Transaction Document or Hedging Agreement. Nevertheless, if so
requested by the Administrative Agent or a Purchaser Agent, the Seller shall ratify and confirm any
such sale or other disposition by executing and delivering to the Administrative Agent or such
purchaser all proper bills of sale, assignments, releases and other instruments as may be
designated in any such request.



ARTICLE X




TERMINATION EVENTS




     Section 10.1 Termination Events.



     The following events shall be Termination Events (“Termination Events”) hereunder:



     (a) as of any Determination Date, the Average Portfolio Delinquency Ratio exceeds 6.5%; or



     (b) as of any Determination Date, the Average Pool Charged-Off Ratio exceeds 3.0%; or



     (c) as of any Determination Date, the Average Portfolio Charged-Off Ratio exceeds 4.0%; or



     (d) the Advances Outstanding on any day exceeds the lesser of the Facility Amount and Maximum
Availability and the same continues unremedied for two Business Days; provided, however, during the
period of time that such event remains unremedied, no additional



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Advances will be made under this Agreement and any payments required to be made by the
Servicer on a Payment Date shall be made under Section 2.10; or




     (e) a Servicer Default occurs and is continuing; or



     (f) [Reserved]; or



     (g) failure on the part of the Seller or Originator to make any payment or deposit (including
without limitation with respect to Collections) required by the terms of any Transaction Document
on the day such payment or deposit is required to be made and the same continues unremedied for two
Business Days; or



     (h) the occurrence of an Insolvency Event relating to the Originator, the Seller, the Servicer
or any Affiliate of the Originator which is a party to a Permitted Securitization Transaction; or



     (i) the Seller shall become required to register as an “investment company” within the meaning
of the Investment Company Act of 1940, as amended (the “40 Act”) or the arrangements contemplated
by the Transaction Documents shall require registration as an “investment company” within the
meaning of the 40 Act; or



     (j) a regulatory, tax or accounting body has ordered that the activities of the Seller or any
Affiliate of the Seller contemplated hereby be terminated or, as a result of any other event or
circumstance, the activities of the Seller contemplated hereby may reasonably be expected to cause
the Seller or any of its respective Affiliates to suffer materially adverse regulatory, accounting
or tax consequences; or



     (k) there shall exist any event or occurrence that has caused a Material Adverse Effect; or



     (l) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the
Code with regard to any assets of the Seller or the Originator and such lien shall not have been
released within five Business Days, or the Pension Benefit Guaranty Corporation shall file notice
of a lien pursuant to Section 4068 of ERISA with regard to any of the assets of the Seller or the
Originator and such lien shall not have been released within five Business Days; or



     (m) any Change-in-Control shall occur; or



     (n) (i) any Transaction Document, or any lien or security interest granted thereunder, shall
(except in accordance with its terms), in whole or in part, terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of the Seller, the Originator, or
the Servicer,




     (ii) the Seller, the Originator, the Servicer or any other party shall, directly or
indirectly, contest in any manner the effectiveness, validity, binding nature or
enforceability of any Transaction Document or any lien or security interest thereunder, or



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     (iii) any security interest securing any obligation under any Transaction Document
shall, in whole or in part, cease to be a perfected first priority security interest; or



     (o) on any date of determination, the aggregate Hedge Notional Amount in effect for that day
under all Hedge Transactions is less than the product of the Hedge Percentage on such day and the
Hedge Amount on that day, and the same continues unremedied for a period of two Business Days; or



     (p) any failure on the part of the Seller or the Originator duly to observe or perform in any
material respect any other covenants or agreements of the Seller or the Originator set forth in
this Agreement or the other Transaction Documents to which the Seller or the Originator is a party
and the same continues unremedied for a period of thirty (30) days after the earlier to occur of
(i) the date on which written notice of such failure requiring the same to be remedied shall have
been given to the Seller or the Originator by the Administrative Agent and (ii) the date on which
the Seller or the Originator becomes aware thereof; or



     (q) any representation, warranty or certification made by the Seller or the Originator in any
Transaction Document or in any certificate delivered pursuant to any Transaction Document shall
prove to have been incorrect when made, which has a Material Adverse Effect on the Secured Parties
and which continues to be unremedied for a period of thirty (30) days after the earlier to occur of
(i) the date on which written notice of such incorrectness requiring the same to be remedied shall
have been given to the Seller or the Originator by the Administrative Agent and (ii) the date on
which the Seller or the Originator becomes aware thereof; or



     (r) any failure by the Seller to give instructions or notice to the Administrative Agent as
required by this Agreement, or to deliver any required Monthly Report or other Required Reports
hereunder on or before the date occurring two Business Days after the date such instruction, notice
or report is required to be made or given, as the case may be, under the terms of this Agreement;
or



     (s) the failure of the Seller, the Servicer or the Originator to make any payment due with
respect to recourse debt or other obligations, in the case of the Servicer or the Originator, in
excess of $10,000,000, or the occurrence of any event or condition that would at such time permit
acceleration of such recourse debt or other obligations; or



     (t) (1) the rendering of one or more final judgments, decrees or orders by a court or
arbitrator of competent jurisdiction for the payment of money in excess of $10,000,000,
individually or in the aggregate, against the Originator, or $2,000,000 against the Seller,
individually or in the aggregate, and the Originator shall not have either (i) discharged or
provided for the discharge of any such judgment, decree or order in accordance with its terms or
(ii) perfected a timely appeal of such judgment, decree or order and caused the execution of same
to be stayed during the pendency of the appeal or (2) the Originator or the Seller shall have made
payments of amounts in excess of $7,500,000 by the Originator, or $2,000,000 by the Seller, in the
settlement of any litigation, claim or dispute (excluding payments made from insurance proceeds);
or



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     (u) as of any Determination Date, the Pool Yield does not equal or exceed the Minimum Pool
Yield and the same continues unremedied by the following Determination Date; or



     (v) any deficiency exists in the Minimum Overcollateralization Amount on any day and the same
continues unremedied for two Business Days; or



     (w) [Reserved]; or



     (x) as of any Quarterly Determination Date, the Originator’s ratio of Consolidated Funded
Indebtedness to Consolidated Tangible Net Worth is more than 6 to 1; provided that such calculation
shall exclude the effects of any Liquid Real Estate Assets that are acquired and levered by the
Originator solely to satisfy REIT asset and income tests.



     Section 10.2 Remedies.



     (a) Upon the occurrence of a Termination Event (other than a Termination Event described in
Section 10.1(i)), the Administrative Agent shall, at the request of, or may, with the
consent of, any of the Purchasers, by notice to the Seller, declare the Termination Date to have
occurred and the Amortization Period to have commenced.



     (b) Upon the occurrence of a Termination Event described in Section 10.1(i), the
Termination Date shall occur immediately and the Amortization Period shall commence automatically.



     (c) Upon the occurrence of any Termination Event described in Section 10.1 or the
Termination Date (including, without limitation, due to a non-renewal by a Purchaser), (i) no
Advances will thereafter be made, and (ii) all Aggregate Unpaids shall become immediately due and
payable without presentment, demand, protest or further notice of any kind, all of which are
expressly waived by the Seller, and (iii) the Administrative Agent and the Secured Parties shall
have the right to exercise any and all of its other rights and remedies under the UCC of each
applicable jurisdiction and other Applicable Laws, hereunder and under the other Transaction
Documents, which rights and remedies shall be cumulative, and include the right to require the
Seller and Servicer (and the Seller and Servicer hereby agree that they will at the Servicer’s
expense and upon request of the Administrative Agent forthwith) to (1) assemble all or any part of
the Collateral as directed by the Administrative Agent and make the same available to the
Administrative Agent at a place to be designated by the Administrative Agent and (2) without notice
except as specified below, sell the Collateral or any part thereof in one or more parcels at a
public or private sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable. The Seller agrees that, to the extent notice of sale shall be required by
law, at least ten 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
Administrative Agent shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. All cash Proceeds



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received by the Administrative Agent in respect of any sale of, collection from, or other
realization upon, all or any part of the Collateral (after payment of any amounts incurred in
connection with such sale) shall be deposited into the Collection Account and to be applied against
all or any part of the Aggregate Unpaids pursuant to Section 2.10 or otherwise in such
order as the Administrative Agent shall elect in its discretion.




ARTICLE XI




INDEMNIFICATION




     Section 11.1 Indemnities by the Seller.



     (a) Without limiting any other rights that any such Person may have hereunder or under
Applicable Law, the Seller hereby agrees to indemnify the Administrative Agent, the Purchaser
Agents, the Backup Servicer, the Collateral Custodian, the Secured Parties, the Affected Parties
and each of their respective assigns and officers, directors, employees and agents thereof
(collectively, the “Indemnified Parties”), forthwith on demand, from and against any and
all damages, losses, claims, liabilities and related costs and expenses, including attorneys’ fees
and disbursements (all of the foregoing being collectively referred to as the “Indemnified
Amounts”) awarded against or incurred by such Indemnified Party and other non-monetary damages
of any such Indemnified Party or any of them arising out of or as a result of this Agreement or
having an interest in the Collateral or in respect of any Asset included in the Collateral,
excluding, however, (a) Indemnified Amounts to the extent resulting from gross negligence or
willful misconduct on the part of such Indemnified Party or (b) Indemnified Amounts that have the
effect of recourse for non-payment of the Assets included in the Collateral due to credit problems
of the Obligors (except as otherwise specifically provided in this Agreement). If the Seller has
made any indemnity payment pursuant to this Section 11.1 and such payment fully indemnified
the recipient thereof and the recipient thereafter collects any payments from others in respect of
such Indemnified Amounts then, the recipient shall repay to the Seller an amount equal to the
amount it has collected from others in respect of such indemnified amounts. 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, the Servicer (if
the Originator or one of its Affiliates is the Servicer) or any of their respective officers
under or in connection with this Agreement or any other Transaction Document, which shall
have been false or incorrect in any material respect when made or deemed made or delivered;




     (ii) the failure by the Seller or the Servicer (if the Originator or one of its
Affiliates is the Servicer) to comply with any term, provision or covenant contained in this
Agreement or any agreement executed in connection with this Agreement, or with any
Applicable Law, with respect to any Collateral or the nonconformity of any Collateral with
any such Applicable Law;




     (iii) the failure to vest and maintain vested in the Administrative Agent, as agent for
the Secured Parties, a first priority security interest in the Collateral, together



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with all Collections, free and clear of any Lien (other than Permitted Liens) whether
existing at the time of any Advance or at any time thereafter;




     (iv) the failure to maintain, as of the close of business on each Business Day prior to
the Termination Date, an amount of Advances Outstanding that is less than or equal to the
lesser of (x) the Facility Amount and (y) the Maximum Availability on such Business Day;




     (v) the failure to file, or any delay in filing, financing statements, continuation
statements or other similar instruments or documents under the UCC of any applicable
jurisdiction or other Applicable Laws with respect to any Collateral, whether at the time of
any Advance or at any subsequent time;




     (vi) any dispute, claim, offset or defense (other than the discharge in bankruptcy of
the Obligor) of the Obligor to the payment with respect to any Collateral (including,
without limitation, a defense based on the Collateral not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with its terms), or any
other claim resulting from the sale of the merchandise or services related to such
Collateral or the furnishing or failure to furnish such merchandise or services;




     (vii) any failure of the Seller or the Servicer (if the Originator or one of its
Affiliates is the Servicer) to perform its duties or obligations in accordance with the
provisions of this Agreement or any of the other Transaction Documents to which it is a
party or any failure by the Originator, the Seller or any Affiliate thereof to perform its
respective duties under any Collateral;




     (viii) the failure of any Lock-Box Bank to remit any amounts held in a Lock-Box Account
pursuant to the instructions of the Servicer or the Administrative Agent (to the extent such
Person is entitled to give such instructions in accordance with the terms hereof and of any
applicable Lock-Box Agreement) whether by reason of the exercise of set-off rights or
otherwise;




     (ix) any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a result of the
failure of the Seller or the Originator to qualify to do business or file any notice or
business activity report or any similar report;




     (x) any action taken by the Seller or the Originator (in its capacity as Servicer) in
the enforcement or collection of any Collateral;




     (xi) any products liability claim or personal injury or property damage suit or other
similar or related claim or action of whatever sort arising out of or in connection with the
Related Property or services that are the subject of any Collateral;




     (xii) any claim, suit or action of any kind arising out of or in connection with
Environmental Laws including any vicarious liability;



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     (xiii) 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 Collateral;




     (xiv) any repayment by the Administrative Agent, the Purchaser Agents or a Secured
Party of any amount previously distributed in reduction of Advances Outstanding or payment
of Interest or any other amount due hereunder or under any Hedging Agreement, in each case
which amount the Administrative Agent, the Purchaser Agents or a Secured Party believes in
good faith is required to be repaid;




     (xv) the commingling of Collections on the Collateral at any time with other funds;




     (xvi) any investigation, litigation or proceeding related to this Agreement or the use
of proceeds of Advances or the security interest in the Collateral;




     (xvii) any failure by the Seller to give reasonably equivalent value to the Originator
in consideration for the transfer by the Originator to the Seller of any item of Collateral
or any attempt by any Person to void or otherwise avoid any such transfer under any
statutory provision or common law or equitable action, including, without limitation, any
provision of the Bankruptcy Code;




     (xviii) the use of the proceeds of any Advance in a manner other than as provided in
this Agreement and the Sale Agreement;




     (xix) the failure of the Seller, the Originator or any of their respective agents or
representatives to remit to the Servicer or the Administrative Agent or the Purchaser
Agents, Collections on the Collateral remitted to the Seller, the Originator, the Servicer
or any such agent or representative; or




     (xx) the failure by the Seller to comply with any of the covenants relating to any
Hedging Agreement in accordance with the Transaction Documents.



     (b) Any amounts subject to the indemnification provisions of this Section 11.1 shall
be paid by the Seller to the Indemnified Party within five Business Days following such Person’s
demand therefor.



     (c) If for any reason the indemnification provided above in this Section 11.1 is
unavailable to the Indemnified Party or is insufficient to hold an Indemnified Party harmless, then
the Seller or the Servicer, as the case may be, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits received by such Indemnified Party on the
one hand and the Seller or the Servicer, as the case may be, on the other hand but also the
relative fault of such Indemnified Party as well as any other relevant equitable considerations.



     (d) The obligations of the Seller under this Section 11.1 shall survive the
resignation or removal of the Administrative Agent, the Purchaser Agents, the Servicer, the Backup
Servicer or the Collateral Custodian and the termination of this Agreement.



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     Section 11.2 Indemnities by the Servicer.



     (a) Without limiting any other rights that any such Person may have hereunder or under
Applicable Law, the Servicer hereby agrees to indemnify each Indemnified Party, forthwith on
demand, from and against any and all Indemnified Amounts awarded against or incurred by any such
Indemnified Party by reason of any acts, omissions or alleged acts or omissions of (1) the
Servicer, including, but not limited to (i) any representation or warranty made by the Servicer
under or in connection with any Transaction Document, any Monthly Report, Servicer’s Certificate or
any other information or report delivered by or on behalf of the Servicer pursuant hereto, which
shall have been false, incorrect or misleading in any material respect when made or deemed made,
(ii) the failure by the Servicer to comply with any Applicable Law, (iii) the failure of the
Servicer to comply with its duties or obligations in accordance with the Agreement, (iv) the
failure by the Servicer to comply with any of the covenants relating to any Hedging Agreement in
accordance with the Transaction Documents, or (v) any litigation, proceedings or investigation
against the Servicer and (2) any Affiliate of CapitalSource Inc., including but not limited to in
connection with (i) its actions as collateral agent of the security and payment agent for holders
of Agented Loans and (ii) its origination of Assets and the subsequent transfer of such Assets to
CapitalSource Finance. The provisions of this indemnity shall run directly to and be enforceable
by an injured party subject to the limitations hereof.



     (b) Any amounts subject to the indemnification provisions of this Section 11.2 shall
be paid by the Servicer to the Indemnified Party within five Business Days following such Person’s
demand therefor.



     (c) The Servicer shall have no liability for making indemnification hereunder to the extent
any such indemnification constitutes recourse for uncollectible or uncollected Assets.



     (d) The obligations of the Servicer under this Section 11.2 shall survive the
resignation or removal of the Administrative Agent, the Purchaser Agents, the Backup Servicer or
the Collateral Custodian and the termination of this Agreement.



     (e) Any indemnification pursuant to this Section 11.2 shall not be payable from the
Collateral.



     Section 11.3 After-Tax Basis.



     Indemnification under Section 11.1 and Section 11.2 shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the receipt of the indemnity provided hereunder, including the effect of such
tax or refund on the amount of tax measured by net income or profits that is or was payable by the
Indemnified Party.



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ARTICLE XII




THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS




     Section 12.1 The Administrative Agent.



     (a) Each Purchaser Agent and each Secured Party hereby appoints and authorizes the
Administrative Agent as its agent and bailee for purposes of perfection pursuant to the applicable
UCC or other Applicable Law and hereby further authorizes the Administrative Agent to appoint
additional agents and bailees to act on its behalf and for the benefit of each of the Purchaser
Agents and each Secured Party. Each of the Purchaser Agents and each Secured Party further
authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Transaction Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. In furtherance, and without limiting the generality, of the foregoing, each
Secured Party hereby appoints the Administrative Agent as its agent to execute and deliver all
further instruments and documents, and take all further action that the Administrative Agent may
deem necessary or appropriate or that a Secured Party may reasonably request in order to perfect,
protect or more fully evidence the security interests granted by the Seller hereunder, or to enable
any of them to exercise or enforce any of their respective rights hereunder, including, without
limitation, the execution by the Administrative Agent as secured party/assignee of such financing
or continuation statements, or amendments thereto or assignments thereof, relative to all or any of
the Collateral now existing or hereafter arising, and such other instruments or notices, as may be
necessary or appropriate for the purposes stated hereinabove. The Purchaser Agents and the
Purchasers may direct the Administrative Agent to take any such incidental action hereunder. With
respect to other actions which are incidental to the actions specifically delegated to the
Administrative Agent hereunder, the Administrative Agent shall not be required to take any such
incidental action hereunder, but shall be required to act or to refrain from acting (and shall be
fully protected in acting or refraining from acting) upon the direction of the Purchaser Agents and
the Purchasers; provided, however, that the Administrative Agent shall not be required to take any
action hereunder if the taking of such action, in the reasonable determination of the
Administrative Agent, shall be in violation of any Applicable Law or contrary to any provision of
this Agreement or shall expose the Administrative Agent to liability hereunder or otherwise. In
the event the Administrative Agent requests the consent of a Purchaser Agent or a Purchaser
pursuant to the foregoing provisions and the Administrative Agent does not receive a consent
(either positive or negative) from such Person within ten Business Days of such Person’s receipt of
such request, then such Purchaser Agent or Purchaser shall be deemed to have declined to consent to
the relevant amendments.



     (b) The Administrative Agent shall exercise such rights and powers vested in it by this
Agreement and the other Transaction Documents, and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in the conduct of such
person’s own affairs.



     (c) Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable for any action taken or omitted to be



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taken by it or them as Administrative Agent under or in connection with this Agreement or any
of the other Transaction Documents, except for its or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Administrative Agent: (i) may consult with legal
counsel (including counsel for the Seller or the Originator), independent public accountants and
other experts selected by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation and shall not be responsible for any statements, warranties or
representations made in or in connection with this Agreement; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Transaction Documents on the part of the Seller,
the Originator, or the Servicer or to inspect the property (including the books and records) of the
Seller, the Originator, or the Servicer; (iv) shall not be responsible for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, any of the
other Transaction Documents or any other instrument or document furnished pursuant hereto or
thereto; and (v) shall incur no liability under or in respect of this Agreement or any of the other
Transaction Documents by acting upon any notice (including notice by telephone), consent,
certificate or other instrument or writing (which may be by telex) believed by it to be genuine and
signed or sent by the proper party or parties.




     (d) Credit Decision with Respect to the Administrative Agent. Each Purchaser Agent
and Secured Party acknowledges that it has, independently and without reliance upon the
Administrative Agent, or any of the Administrative Agent’s Affiliates, and based upon such
documents and information as it has deemed appropriate, made its own evaluation and decision to
enter into this Agreement and the other Transaction Documents to which it is a party. Each
Purchaser Agent and Secured Party also acknowledges that it will, independently and without
reliance upon the Administrative Agent, or any of the Administrative Agent’s Affiliates, and based
on such documents and information as it shall deem appropriate at the time, continue to make its
own decisions in taking or not taking action under this Agreement and the other Transaction
Documents to which it is a party.



     (e) Indemnification of the Administrative Agent. Each Purchaser Agent and Purchaser
agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Seller or the
Servicer), ratably in accordance with its Pro-Rata Share from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Administrative Agent in any way relating to or arising out of this Agreement or any of
the other Transaction Documents, or any action taken or omitted by the Administrative Agent
hereunder or thereunder; provided, that none of the Purchaser Agents or Purchasers shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence
or willful misconduct. Without limitation of the foregoing, each Purchaser Agent and Purchaser
agrees to reimburse the Administrative Agent, ratably in accordance with its Pro-Rata Share
promptly upon demand for any out-of-pocket expenses (including counsel fees) incurred by the
Administrative Agent in connection with the administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction Documents, to the extent
that such expenses are incurred in the interests of or



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otherwise in respect of the Purchaser Agents, or the Purchasers hereunder and/or thereunder
and to the extent that the Administrative Agent is not reimbursed for such expenses by the Seller
or the Servicer.




     (f) Successor Administrative Agent. The Administrative Agent may resign at any time,
effective upon the appointment and acceptance of a successor Administrative Agent as provided
below, by giving at least five days’ written notice thereof to each Purchaser Agent and the Seller
and may be removed at any time with cause by the Purchaser Agents acting jointly. Upon any such
resignation or removal, the Purchaser Agents acting jointly shall appoint a successor
Administrative Agent. Each of the Purchaser Agents agrees that it shall not unreasonably withhold
or delay its approval of the appointment of a successor Administrative Agent. If no such successor
Administrative Agent shall have been so appointed, and shall have accepted such appointment, within
thirty (30) days after the retiring Administrative Agent’s giving of notice of resignation or the
removal of the retiring Administrative Agent, then the retiring Administrative Agent may, on behalf
of the Secured Parties, appoint a successor Administrative Agent which successor Administrative
Agent shall be either (i) a commercial bank organized under the laws of the United States or of any
state thereof and have a combined capital and surplus of at least $50,000,000 or (ii) an Affiliate
of such a bank. Upon the acceptance of any appointment as Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Administrative Agent’s resignation or removal hereunder
as Administrative Agent, the provisions of this Article XII shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.



     (g) Payments by the Administrative Agent. Unless specifically allocated to a specific
Purchaser Agent pursuant to the terms of this Agreement, all amounts received by the Administrative
Agent on behalf of the Purchaser Agents shall be paid by the Administrative Agent to the Purchaser
Agents in accordance with their respective Pro-Rata Shares in the applicable Advances Outstanding,
or if there are no Advances Outstanding then to the Purchaser Agents in accordance with the most
recent applicable Commitment, on the Business Day received by the Administrative Agent, unless such
amounts are received after 12:00 noon on such Business Day, in which case the Administrative Agent
shall use its reasonable efforts to pay such amounts to each Purchaser Agent on such Business Day,
but, in any event, shall pay such amounts to such Purchaser Agent not later than the following
Business Day.



     Section 12.2 The Purchaser Agents.



     (a) Authorization and Action. Each Purchaser hereby designates and appoints its
applicable Purchaser Agent to act as its agent hereunder and under each other Transaction Document,
and authorizes such Purchaser Agent to take such actions as agent on its behalf and to exercise
such powers as are delegated to such Purchaser Agent by the terms of this Agreement together and
the other Transaction Documents with such powers as are reasonably incidental thereto. Such
Purchaser Agent shall not have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with its related Purchaser, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities on the part of such



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Purchaser Agent shall be read into this Agreement or any other Transaction Document or
otherwise exist for such Purchaser Agent. In performing its functions and duties hereunder and
under the other Transaction Documents, such Purchaser Agent shall act solely as agent for its
related Purchaser and does not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the Seller or any of its successors or assigns. Such
Purchaser Agent shall not be required to take any action that exposes such Purchaser Agent to
personal liability or that is contrary to this Agreement, or any other Transaction Document or
Applicable Law. The appointment and authority of such Purchaser Agent hereunder shall terminate at
the indefeasible payment in full of the Aggregate Unpaids. Each Purchaser Agent, respectively,
hereby authorizes the Administrative Agent to execute each of the UCC Financing Statements on
behalf of such Purchaser (the terms of which shall be binding on such Purchaser).




     (b) Delegation of Duties. Each applicable Purchaser Agent may execute any of its
duties under this Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. Such Purchaser Agent shall not
be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it
with reasonable care.



     (c) Exculpatory Provisions. Neither any applicable Purchaser Agent nor any of its
directors, officers, agents or employees shall be (i) liable for any action lawfully taken or
omitted to be taken by it or them under or in connection with this Agreement or any other
Transaction Document (except for its, their or such Person’s own gross negligence or willful
misconduct or, in the case of such Purchaser Agent, the breach of its obligations expressly set
forth in this Agreement or any other Transaction Document), or (ii) responsible in any manner to
its related Purchaser for any recitals, statements, representations or warranties made by the
Seller contained in this Agreement or any other Transaction Document, for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, any other Transaction
Document or any other document furnished in connection herewith, for any failure of the Seller to
perform its obligations hereunder, or for the satisfaction of any condition specified in
Article III. Such Purchaser Agent shall not be under any obligation to its related
Purchaser to ascertain or to inquire as to the observance or performance of any of the agreements
or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or
to inspect the properties, books or records of the Seller. Such Purchaser Agent shall not be
deemed to have knowledge of any Unmatured Termination Event, Termination Event or Servicer Default
unless such Purchaser Agent has received notice from the Seller or a Secured Party.



     (d) Reliance. Such Purchaser Agent shall in all cases be entitled to rely, and shall
be fully protected in relying, upon any document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the Seller), independent
accountants and other experts selected by such Purchaser Agent. Such Purchaser Agent shall in all
cases be fully justified in failing or refusing to take any action under this Agreement, any other
Transaction Document or any other document furnished in connection herewith unless it shall first
receive such advice or concurrence of its related Purchaser, as it deems appropriate, or it shall
first be indemnified to its satisfaction by its related Purchaser; provided that unless and until
such Purchaser Agent shall have received such advice, such Purchaser Agent may take or refrain from
taking any action as such Purchaser Agent shall deem advisable and in the best



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interests of its related Purchaser. Such Purchaser Agent shall in all cases be fully
protected in acting, or in refraining from acting, in accordance with a request of its related
Purchaser, and such request and any action taken or failure to act pursuant thereto shall be
binding upon its related Purchaser.




     (e) Non-Reliance on the Purchaser Agent and Other Purchasers. Each applicable
Purchaser, respectively, expressly acknowledges that neither its related Purchaser Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by such Purchaser Agent hereafter taken,
including, without limitation, any review of the affairs of the Seller, shall be deemed to
constitute any representation or warranty by the such Purchaser Agent. Each applicable Purchaser,
respectively, represents and warrants to its related Purchaser Agent that it has and will,
independently and without reliance upon such Purchaser Agent, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, prospects, financial and other conditions and creditworthiness of
the Seller and made its own decision to enter into this Agreement, the other Transaction Documents
or any Hedging Agreement, as the case may be.



     (f) Purchaser Agents in their Respective Capacities. Each applicable Purchaser Agent,
respectively, and any of its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Seller or any Affiliate of the Seller as though such
Purchaser Agent were not a Purchaser Agent hereunder. With respect to the Advances made pursuant
to this Agreement, such Purchaser Agent and each of its Affiliates shall have the same rights and
powers under this Agreement as any Purchaser and may exercise the same as though it were not a
Purchaser Agent and the terms “Purchaser” and “Purchasers” shall include such Purchaser Agent in
its individual capacity.



     (g) Successor Purchaser Agent. Each applicable Purchaser Agent, respectively, may,
upon five days’ notice to the Seller and its related Purchaser, and such Purchaser Agent will, upon
the direction of its related Purchaser, resign as Purchaser Agent for such Purchaser. If such
Purchaser Agent shall resign, then its related Purchaser, during such five day period, shall
appoint a successor agent. If for any reason no successor Agent is appointed by such Purchaser
during such five day period, then effective upon the expiration of such five day period, the Seller
shall make all payments in respect of the Aggregate Unpaids directly to such Purchaser and for all
purposes shall deal directly with such Purchaser. After any retiring Purchaser Agent’s resignation
hereunder as Purchaser Agent, the provisions of Articles XI and XII shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was a Purchaser Agent under this
Agreement. Notwithstanding the resignation or removal of the Purchaser Agent for WBNA, WBNA, as
Hedge Counterparty, shall continue to be a Secured Party hereunder.



     Section 12.3 Additional Agent.



     (a) Authorization and Action. Each Additional Purchaser hereby designates and appoints
the relevant Additional Agent designated in the related Additional Purchaser Agreement to act as
its agent hereunder and under each other Transaction Document, and authorizes such Additional Agent
to take such actions as agent on its behalf and to exercise such powers as are delegated to the
Additional Agent by the terms of this Agreement and the other Transaction



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Documents together with such powers as are reasonably incidental thereto. No Additional Agent
shall have any duties or responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with such related Additional Purchaser, and no
implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of
such Additional Agent shall be read into this Agreement or any other Transaction Document or
otherwise exist for such Additional Agent. In performing its functions and duties hereunder and
under the other Transaction Documents, each Additional Agent shall act solely as agent for the
related Additional Purchaser and does not assume nor shall be deemed to have assumed any obligation
or relationship of trust or agency with or for the Seller or the Servicer or any of the Seller’s or
the Servicer’s successors or assigns. No Additional Agent shall be required to take any action
that exposes the Additional Agent to personal liability or that is contrary to this Agreement, any
other Transaction Document or Applicable Law. The appointment and authority of each Additional
Agent hereunder shall terminate upon the indefeasible payment in full of all Aggregate Unpaids.
Each Additional Agent hereby authorizes the Administrative Agent to execute each of the UCC
financing statements on behalf of such Additional Agent (the terms of which shall be binding on
such Additional Agent).




     (b) Delegation of Duties. Any of the Additional Agents may execute any of its duties
under this Agreement and each other Transaction Document by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to such duties. No
Additional Agent shall be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.



     (c) Exculpatory Provisions. Neither any Additional Agent nor any of its directors,
officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with this Agreement or any other Transaction Document
(except for its, their or such Person’s own gross negligence or willful misconduct), or (ii)
responsible in any manner to any Additional Purchaser for any recitals, statements, representations
or warranties made by the Seller or the Servicer contained in Article IV, any other Transaction
Document or any certificate, report, statement or other document referred to or provided for in, or
received under or in connection with, this Agreement or any other Transaction Document, or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, any
other Transaction Document or any other document furnished in connection herewith or therewith, or
for any failure of the Seller or the Servicer to perform its obligations hereunder or thereunder,
or for the satisfaction of any condition specified in this Agreement, or for the perfection,
priority, condition, value or sufficiency of any collateral pledged in connection herewith. No
Additional Agent shall be under any obligation to any Additional Purchaser to ascertain or to
inquire as to the observance or performance of any of the agreements or covenants contained in, or
conditions of, this Agreement or any other Transaction Document, or to inspect the properties,
books or records of the Seller or the Servicer. No Additional Agent shall be deemed to have
knowledge of any Termination Event or Unmatured Termination Event unless such Additional Agent has
received notice from the Seller or the related Additional Purchaser.



     (d) Reliance by Additional Agent. Each Additional Agent shall in all cases be
entitled to rely, and shall be fully protected in relying, upon any document or conversation
believed by it to be genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without



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limitation, counsel to the Seller), independent accountants and other experts selected by such
Additional Agent. Each Additional Agent shall in all cases be fully justified in failing or
refusing to take any action under this Agreement or any other Transaction Document unless it shall
first receive such advice or concurrence of the related Additional Purchaser as it deems
appropriate and it shall first be indemnified to its satisfaction by such Additional Purchaser;
provided, that unless and until such Additional Agent shall have received such advice, the
Additional Agent may take or refrain from taking any action, as the Additional Agent shall deem
advisable and in the best interests of the Related Additional Purchaser. Each Additional Agent
shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a
request of the related Additional Purchaser, and such request and any action taken or failure to
act pursuant thereto shall be binding upon such Additional Purchaser.




     (e) Non-Reliance on Additional Agent. Each Additional Purchaser expressly
acknowledges that neither any Additional Agent, nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that
no act by such Additional Agent hereafter taken, including, without limitation, any review of the
affairs of the Seller or the Servicer, shall be deemed to constitute any representation or warranty
by such Additional Agent. Each Additional Purchaser represents and warrants to the related
Additional Agent that it has and will, independently and without reliance upon such Additional
Agent, such Additional Purchaser and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Seller and made its own
decision to enter into this Agreement, the other Transaction Documents and all other documents
related hereto or thereto.



     (f) Additional Agent in its Individual Capacity. Each Additional Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any kind of business
with the Seller or any Affiliate of the Seller as though such Additional Agent were not an
Additional Agent hereunder. With respect to Advances pursuant to this Agreement, each Additional
Agent shall have the same rights and powers under this Agreement in its individual capacity as any
Purchaser and may exercise the same as though it were not an Additional Agent, and the terms
“Purchaser,” and “Purchasers,” shall include the Additional Agent in its individual capacity.



     (g) Successor Additional Agent. Each Additional Agent may, upon five days’ notice to
the Seller, and the related Additional Purchaser, and such Additional Agent will, upon the
direction of such Additional Purchaser (other than such Additional Agent, in its individual
capacity) resign as Additional Agent. If any Additional Agent shall resign, then the related
Additional Purchaser during such five day period shall appoint a successor agent. If for any
reason no successor Additional Agent is appointed by the related Additional Purchaser during such
five day period, then effective upon the termination of such five day period, and the Seller shall
make all payments in respect of the Aggregate Unpaids directly to such Additional Purchaser, and
for all purposes shall deal directly with such Additional Purchaser. After any retiring Additional
Agent’s resignation hereunder as an Additional Agent, the provisions of Articles XI and
XII shall inure to its benefit with respect to any actions taken or omitted to be taken by
it while it was an Additional Agent under this Agreement.



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ARTICLE XIII




MISCELLANEOUS




     Section 13.1 Amendments and Waivers.



     Except as provided in this Section 13.1, no amendment, waiver or other modification of
any provision of this Agreement (other than Appendix B) shall be effective without the
written agreement of the Seller, the Servicer, the Backup Servicer, the Collateral Custodian, the
Administrative Agent and the Secured Parties; provided, that no such amendment, waiver or
modification adversely affecting the rights or obligations of any Hedge Counterparty shall be
effective without the written agreement of such Person.



     Section 13.2 Notices, Etc.



     All notices, reports and other communications provided for hereunder shall, unless otherwise
stated herein, be in writing (including telex communication and communication by facsimile copy)
and mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall be designated by
such party in a written notice to the other parties hereto (provided, however, for avoidance of
doubt, Lord Securities Corp. shall not receive notices, reports and other communications provided
pursuant to Article II, and Section 6.10, Section 6.11 and Section 6.12
hereof). All such notices and communications shall be effective, upon receipt, or in the case
of (a) notice by mail, five days after being deposited in the United States mail, first class
postage prepaid, (b) notice by telex, when telexed against receipt of answer back, or (c) notice by
facsimile copy, when verbal communication of receipt is obtained.



     Section 13.3 Ratable Payments.



     If any Secured Party, whether by setoff or otherwise, has payment made to it with respect to
any portion of the Aggregate Unpaids owing to such Secured Party (other than payments received
pursuant to Section 11.1) in a greater proportion than that received by any other Secured
Party, such Secured Party agrees, promptly upon demand, to purchase for cash without recourse or
warranty a portion of the Aggregate Unpaids held by the other Secured Parties so that after such
purchase each Secured Party will hold its ratable proportion of the Aggregate Unpaids; provided,
however, that if all or any portion of such excess amount is thereafter recovered from such Secured
Party, such purchase shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.



     Section 13.4 No Waiver; Remedies.



     No failure on the part of the Administrative Agent, the Purchaser Agents, the Collateral
Custodian, the Backup Servicer or a Secured Party to exercise, and no delay in exercising, any
right or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further exercise thereof or the
exercise of any other right. The rights and remedies herein provided are cumulative and not
exclusive of any rights and remedies provided by law.



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     Section 13.5 Binding Effect; Benefit of Agreement.



     This Agreement shall be binding upon and inure to the benefit of the Seller, the Servicer, the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral Custodian, the
Secured Parties and their respective successors and permitted assigns and, in addition, the
provisions of Section 2.9(a)(i) and Section 2.10(a)(i) shall inure to the benefit
of each Hedge Counterparty, whether or not that Hedge Counterparty is a Secured Party.



     Section 13.6 Term of this Agreement.



     This Agreement, including, without limitation, the Seller’s representations and covenants set
forth in Articles IV and V, and the Servicer’s representations, covenants and
duties set forth in Articles VI, VII and VIII, create and constitute the
continuing obligation of the parties hereto in accordance with its terms, and shall remain in full
force and effect until the Collection Date; provided, however, that the rights and remedies with
respect to any breach of any representation and warranty made or deemed made by the Seller pursuant
to Articles III and IV the indemnification and payment provisions of Article
XI and the provisions of Section 13.9, Section 13.10 and Section 13.11,
shall be continuing and shall survive any termination of this Agreement.



     Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue.



     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK. EACH OF THE PARTIES HERETO AND EACH HEDGE COUNTERPARTY HEREBY AGREES TO THE
NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE
PARTIES HERETO AND EACH SECURED PARTY HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS,
AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS
AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT.



     Section 13.8 Waiver of Jury Trial.



     TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO AND EACH HEDGE
COUNTERPARTY 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.



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     Section 13.9 Costs, Expenses and Taxes.



     (a) In addition to the rights of indemnification granted to the Administrative Agent, the
Purchaser Agents, the Backup Servicer, the Collateral Custodian, the Secured Parties and its or
their Affiliates and officers, directors, employees and agents thereof under Article XI hereof, the
Seller and Originator agrees to pay on demand all reasonable costs and expenses of the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral Custodian and the
Secured Parties incurred in connection with the preparation, execution, delivery, administration
(including periodic auditing, which shall be limited to two audits per year prior to the occurrence
of a Termination Event), renewal, amendment or modification of, or any waiver or consent issued in
connection with, this Agreement and the other documents to be delivered hereunder or in connection
herewith (including any Hedging Agreement), including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Agent, the Purchaser Agents, the Backup
Servicer, the Collateral Custodian and the Secured Parties with respect thereto and with respect to
advising the Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian and the Secured Parties as to their respective rights and remedies under this Agreement
and the other documents to be delivered hereunder or in connection herewith (including any Hedging
Agreement), and all costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian or the Secured Parties in connection with the enforcement of this Agreement and the other
documents to be delivered hereunder or in connection herewith (including any Hedging Agreement).



     (b) The Seller and Originator shall pay on demand any and all stamp, sales, excise and other
taxes and fees payable or determined to be payable in connection with the execution, delivery,
filing and recording of this Agreement, the other documents to be delivered hereunder or any
agreement or other document providing liquidity support, credit enhancement or other similar
support to the Purchasers in connection with this Agreement or the funding or maintenance of
Advances hereunder.



     (c) The Seller and Originator shall pay on demand all other reasonable costs, expenses and
Taxes (excluding income taxes) incurred by the Administrative Agent, the Purchaser Agents, the
Secured Parties (“Other Costs”), including, without limitation, all costs and expenses incurred by
the Administrative Agent and the Purchaser Agents in connection with periodic audits of the
Seller’s or the Servicer’s books and records.



     Section 13.10 No Proceedings.



     (a) Each of the parties hereto (other than a particular Conduit Purchaser) and each Hedge
Counterparty (by accepting the benefits of this Agreement) hereby agrees that it will not institute
against, or join any other Person in instituting against, any Conduit Purchaser, the Administrative
Agent, the related Purchaser Agent or any Liquidity Banks any Insolvency Proceeding so long as any
commercial paper issued by the applicable Conduit Purchaser shall be outstanding and there shall
not have elapsed one year and one day since the last day on which any such commercial paper shall
have been outstanding.



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     (b) Each of the parties hereto (other than a particular Additional Purchaser) hereby agrees
that it will not institute against, or join any other Person in instituting against such Additional
Purchaser, the related Additional Agent or any of its Liquidity Banks any Insolvency Proceeding so
long as any commercial paper issued by such Additional Purchaser shall be outstanding and there
shall not have elapsed one year and one day since the last day on which any such commercial paper
shall have been outstanding.



     (c) Each of the parties hereto (other than the Administrative Agent without the consent of the
Purchaser Agents) hereby agrees that it will not institute against, or join any other Person in
instituting against, the Seller any Insolvency Proceeding so long as there shall not have elapsed
one year and one day since the Collection Date; provided, that nothing in this Section
13.10 shall limit any party’s right to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted by any other Person.



     Section 13.11 Recourse Against Certain Parties.



     (a) No recourse under or with respect to any obligation, covenant or agreement (including,
without limitation, the payment of any fees or any other obligations) of the Administrative Agent,
the Purchaser Agents, or any Secured Party as contained in this Agreement or any other agreement,
instrument or document entered into by it pursuant hereto or in connection herewith shall be had
against any administrator of the Administrative Agent, the Purchaser Agents, or any Secured Party,
or any incorporator, affiliate, stockholder, officer, employee or director of the Administrative
Agent, the Purchaser Agents, or any Secured Party, or of any such administrator, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that the agreements of the Administrative
Agent, the Purchaser Agents, or any Secured Party contained in this Agreement and all of the other
agreements, instruments and documents entered into by it pursuant hereto or in connection herewith
are, in each case, solely the corporate obligations of the Administrative Agent, the Purchaser
Agents, or any Secured Party, and that no personal liability whatsoever shall attach to or be
incurred by any administrator of the Administrative Agent, the Purchaser Agents, or any Secured
Party or any incorporator, stockholder, affiliate, officer, employee or director of the
Administrative Agent, the Purchaser Agents, or any Secured Party or of any such administrator, as
such, or any other of them, under or by reason of any of the obligations, covenants or agreements
of the Administrative Agent, the Purchaser Agents, or any Secured Party contained in this Agreement
or in any other such instruments, documents or agreements, or that are implied therefrom, and that
any and all personal liability of every such administrator of the Administrative Agent, the
Purchaser Agents, or any Secured Party and each incorporator, stockholder, affiliate, officer,
employee or director of the Administrative Agent, the Purchaser Agents, or any Secured Party or of
any such administrator, or any of them, for breaches by the Administrative Agent, the Purchaser
Agents, or any Secured Party of any such obligations, covenants or agreements, which liability may
arise either at common law or at equity, by statute or constitution, or otherwise, is hereby
expressly waived as a condition of and in consideration for the execution of this Agreement. The
provisions of this Section 13.11 shall survive the termination of this Agreement.



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     (b) Notwithstanding anything in this Agreement to the contrary, no Conduit Purchaser shall
have any obligation to pay any amount required to be paid by it hereunder in excess of any amount
available to such Purchaser or such Additional Purchaser, as applicable, after paying or making
provision for the payment of its Commercial Paper Notes. All payment obligations of each Conduit
Purchaser hereunder are contingent on the availability of funds in excess of the amounts necessary
to pay its Commercial Paper Notes; and each of the other parties hereto agrees that it will not
have a claim under Section 101(5) of the Bankruptcy Code if and to the extent that any such payment
obligation owed to it by a Conduit Purchaser exceeds the amount available to such Conduit Purchaser
to pay such amount after paying or making provision for the payment of its Commercial Paper Notes.



     (c) Notwithstanding any contrary provision set forth herein, no claim may be made by the
Seller, the Originator or the Servicer or any other Person against the Administrative Agent and the
Secured Parties or their respective Affiliates, directors, officers, employees, attorneys or agents
for any special, indirect, consequential or punitive damages in respect to any claim for breach of
contract or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in connection therewith;
and the Seller, the Originator and the Servicer each hereby waives, releases, and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not known or suspected.



     (d) No obligation or liability to any Obligor under any of the Assets is intended to be
assumed by the Administrative Agent and the Secured Parties under or as a result of this Agreement
and the transactions contemplated hereby



     Section 13.12 Protection of Right, Title and Interest in the Collateral; Further Action
Evidencing Advances.



     (a) The Servicer shall cause this Agreement, all amendments hereto and/or all financing
statements and continuation statements and any other necessary documents covering the right, title
and interest of the Administrative Agent as agent for the Secured Parties and of the Secured
Parties to the Collateral to be promptly recorded, registered and filed, and at all times to be
kept recorded, registered and filed, all in such manner and in such places as may be required by
law fully to preserve and protect the right, title and interest of the Administrative Agent as
agent for the Secured Parties hereunder to all property comprising the Collateral. The Servicer
shall deliver to the Administrative Agent file-stamped copies of, or filing receipts for, any
document recorded, registered or filed as provided above, as soon as available following such
recording, registration or filing. The Seller shall cooperate fully with the Servicer in
connection with the obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 13.12(a).



     (b) 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 Administrative Agent may
reasonably request in order to perfect, protect or more fully evidence the Advances hereunder and
the security interest granted in the Collateral, or to enable the Administrative Agent or the
Secured Parties to exercise and enforce their rights and remedies hereunder or under any
Transaction Document.



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     (c) If the Seller or the Servicer fails to perform any of its obligations hereunder, the
Administrative Agent or any Secured Party may (but shall not be required to) perform, or cause
performance of, such obligation; and the Administrative Agent’s or such Secured Party’s costs and
expenses incurred in connection therewith shall be payable by the Seller as provided in Article
XI. The Seller irrevocably authorizes the Administrative Agent and appoints the Administrative
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 Administrative Agent’s
sole discretion to perfect and to maintain the perfection and priority of the interest of the
Secured Parties in the Collateral and (ii) to file a carbon, photographic or other reproduction of
this Agreement or any financing statement with respect to the Collateral as a financing statement
in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the Secured Parties in the
Collateral. This appointment is coupled with an interest and is irrevocable.



     (d) Without limiting the generality of the foregoing, Seller will, not earlier than six months
and not later than three months prior to the fifth anniversary of the date of filing of the
financing statement referred to in Section 3.1 or any other financing statement filed
pursuant to this Agreement or in connection with any Advance 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 Administrative Agent an opinion of the
counsel for Seller, in form and substance reasonably satisfactory to the Administrative
Agent, confirming and updating the opinion delivered pursuant to Section 3.1 with
respect to perfection and otherwise to the effect that the security interest hereunder
continues to be an enforceable and perfected security interest, subject to no other Liens of
record except as provided herein or otherwise permitted hereunder, which opinion may contain
usual and customary assumptions, limitations and exceptions.



     Section 13.13 Confidentiality



     (a) Each of the Administrative Agent, the Purchaser Agents, the Secured Parties, the Servicer,
the Collateral Custodian, the Backup Servicer and the Seller shall maintain and shall cause each of
its employees and officers to maintain the confidentiality of the Agreement and all information
with respect to the other parties, including all information regarding the business of the Seller
and the Servicer hereto and their respective businesses obtained by it or them in connection with
the structuring, negotiating and execution of the transactions contemplated herein or related to
any of the underlying Obligors, except that each such party and its officers and employees may (i)
disclose such information to its external accountants, attorneys, rating agencies, investors,
potential investors, parties that provide or may in the future provide first loss or credit
enhancement to such Person and the agents of such Persons (“Excepted Persons”), (ii)
disclose the existence of the Agreement, but not the financial terms thereof, (iii) disclose such
information as is required by Applicable Law and (iv) disclose the Agreement and such information
in any suit, action, proceeding or investigation (whether in law or in equity or



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pursuant to arbitration) involving any of the Transaction Documents or any Hedging Agreement
for the purpose of defending itself, reducing its liability, or protecting or exercising any of its
claims, rights, remedies, or interests under or in connection with any of the Transaction Documents
or any Hedging Agreement. It is understood that the financial terms that may not be disclosed
except in compliance with this Section 13.13(a) include, without limitation, all fees and
other pricing terms, and all Termination Events, Servicer Defaults, and priority of payment
provisions. Each of the Administrative Agent, the Purchaser Agents, the Secured Parties, the
Collateral Custodian and the Backup Servicer will not use any such information referenced in this
clause (a) regarding the business of the Seller and the Servicer hereto and their
respective businesses related to any of the underlying Obligors for the purpose of their own (or
their Affiliates) business development with such underlying Obligor without the prior written
consent of the Seller and the Servicer (provided that such consent shall not be unreasonably
withheld).




     (b) Anything herein to the contrary notwithstanding, the Seller and the Servicer each hereby
consents to the disclosure of any nonpublic information with respect to it (i) to the
Administrative Agent, the Purchaser Agents, the Collateral Custodian, the Backup Servicer or the
Secured Parties by each other, (ii) by the Administrative Agent, the Purchaser Agents, the
Collateral Custodian, the Backup Servicer and the Secured Parties to any prospective or actual
assignee or participant of any of them provided such Person agrees to hold such information
confidential, or (iii) by the Administrative Agent, the Purchaser Agents, and the Secured Parties
to any commercial paper dealer or provider of a surety, guaranty or credit or liquidity enhancement
to any Purchaser, as applicable, and to any officers, directors, employees, outside accountants and
attorneys of any of the foregoing, provided each such Person is informed of the confidential nature
of such information. In addition, the Secured Parties, the Administrative Agent and the Purchaser
Agents, may disclose any such nonpublic information as required pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or regulatory authority or
proceedings (whether or not having the force or effect of law).



     (c) Notwithstanding anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) disclosure of any and all information that is or becomes publicly known; (ii)
disclosure of any and all information (a) if required to do so by any applicable statute, law, rule
or regulation, (b) to any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Administrative Agents’, the Purchaser Agents’, the Secured
Parties’, the Collateral Custodian’s or the Backup Servicer’s business or that of their affiliates,
(c) pursuant to any subpoena, civil investigative demand or similar demand or request of any court,
regulatory authority, arbitrator or arbitration to which the Administrative Agent, the Purchaser
Agents, the Secured Parties, the Collateral Custodian or the Backup Servicer or an officer,
director, employer, shareholder or affiliate of any of the foregoing is a party, (d) in any
preliminary or final offering circular, registration statement or contract or other document
approved in advance by the Seller, the Servicer or the Originator or (e) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Collateral Custodian or Backup
Servicer having a need to know the same, provided, that the Collateral Custodian or
Backup Servicer advises such recipient of the confidential nature of the information being
disclosed; or (iii) any other disclosure authorized by the Seller, Servicer or Originator.



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     Section 13.14 Execution in Counterparts; Severability; Integration.



     This Agreement may be executed in any number of counterparts and by different parties hereto
in separate counterparts (including by facsimile), each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and the same agreement.
In case any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby. This Agreement and any agreements or letters
(including fee letters) executed in connection herewith contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings other than any fee letter delivered by the
Originator to the Administrative Agent, the Purchaser Agents, and the Secured Parties.



     Section 13.15 Waiver of Setoff.



     (a) Each of the parties hereto (other than any one of the Purchasers) hereby waives any right
of setoff it may have or to which it may be entitled under this Agreement from time to time against
such Purchaser or its assets.



     (b) Each of the parties hereto (other than any one of the Additional Purchasers) hereby waives
any right of setoff it may have or to which it may be entitled under this Agreement from time to
time against such Additional Purchaser or its assets.



     Section 13.16 Assignments.



     (a) Each Purchaser may at any time assign, or grant a security interest or sell a
participation interest in, any Advance (or portion thereof) to any Person; provided, that in the
case of an assignment of a Variable Funding Note or Additional Purchaser Variable Funding Note, the
assignee (other than any assignee that is a Liquidity Bank) shall execute and deliver to the
Servicer and the Administrative Agent a Transferee Letter substantially in the form of Exhibit
K hereto (the “Transferee Letter”). The parties to any such assignment, grant or sale
of participation interest shall execute and deliver to the Purchaser Agent or the related
Additional Agent, as applicable, for its acceptance and recording in its books and records, such
agreement or document as may be satisfactory to such parties and the Purchaser Agent or such
Additional Agent, as applicable. The Seller shall not assign or delegate, or grant any interest
in, or permit any Lien to exist upon, any of the Seller’s rights, obligations or duties under this
Agreement without the prior written consent of the Administrative Agent and each Hedge
Counterparty.



     (b) The Originator may, with the written consent of the Administrative Agent and each
Purchaser, add additional Persons as an Additional Purchaser or an Additional Agent or cause an
existing Purchaser to increase its Commitment; provided, however, that the Commitment of any
Purchaser may only be increased with the prior written consent of such Purchaser and the
Administrative Agent. Each new Additional Purchaser and Additional Agent shall become a party
hereto by executing and delivering to the Administrative Agent and the



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Originators an Assumption Agreement substantially in the form of Exhibit M hereto (the
“Assumption Agreement”).




     Section 13.17 Heading and Exhibits.



     The headings herein are for purposes of references only and shall not otherwise affect the
meaning or interpretation of any provision hereof. The schedules and exhibits attached hereto and
referred to herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.



     Section 13.18 Loans Subject to Retained Interest Provisions.



     (a) With respect to any Loan included in the Collateral subject to the Retained Interest
provisions of this Agreement, the Seller will own only the principal portion of such Loans
outstanding as of the applicable Cut-Off Date. Principal Collections received by the Seller or the
Servicer on any Revolving Loans will be allocated first to the portion of such Revolving Loan owned
by the Seller, until the principal amount of such portion is reduced to zero, and then to the
portion not owned by the Seller; provided, however, if (i) a payment default occurs with respect to
any of the related Loans, (ii) a Liquidity Factor Reduction Event occurs and continues, (iii) the
Originator has determined in its sole discretion that an Obligor’s credit has deteriorated or the
Originator has determined in its sole discretion to reduce its commitment to an Obligor, or (iv) an
Allocation Adjustment Event occurs, then Principal Collections received on (x) the applicable Loan
(in the case of clauses (i) or (iii) above or during the time that a Liquidity
Factor Reduction Event exists and continues in the case of clause (ii) above) or (y) all
the Revolving Loans (in the case of clause (iv) above) will be allocated between the
portion owned by the Seller and the portion not owned by the Seller, pro rata based upon the
outstanding principal amount of each such portion.



     (b) With respect to any Term Loans included in the Collateral subject to the Retained Interest
provisions of this Agreement, Principal Collections and Interest Collections received by the
Servicer will be allocated between the portion owned by the Seller and to the portion not owned by
the Seller (if any) on a pro rata basis according to the outstanding principal amount of such
portion.



     Section 13.19 Tax Treatment of Advances.



     It is the intention of the Seller and the Purchasers that, for U.S. federal, state and local
income and franchise tax purposes only, the Advances made hereunder will be treated as indebtedness
secured by the Collateral. The Seller, by entering into this Agreement, and the Purchasers, by
making the Advances described herein, agree to treat the Advances for U.S. federal, state and local
income and franchise tax purposes as indebtedness. The provisions of this Agreement and all
related Transaction Documents shall be construed to further these intentions of the parties.



[Remainder of Page Intentionally Left Blank.]




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



	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	THE SELLER:	 	CAPITALSOURCE FUNDING III LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ JEFFREY A. LIPSON
 

Jeffrey A. Lipson
	 	 
	 

	 	Title:
	 	Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	CapitalSource Funding III LLC	 	 
	 	 	4445 Willard Avenue, 12th Floor	 	 
	 	 	Chevy Chase, Maryland 20815	 	 
	 	 	Attention: Treasury	 	 
	 	 	Facsimile No.: (301) 841-2307	 	 
	 	 	Confirmation No.: (301) 841-2779	 	 
	 
	 	 	 	 	 	 
	THE ORIGINATOR 

AND SERVICER:	 	CAPITALSOURCE FINANCE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ JEFFREY A. LIPSON
 

Jeffrey A. Lipson
	 	 
	 

	 	Title:
	 	Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	CapitalSource Finance LLC	 	 
	 	 	4445 Willard Avenue, 12th Floor	 	 
	 	 	Chevy Chase, Maryland 20815	 	 
	 	 	Attention: Treasury	 	 
	 	 	Facsimile No.: (301) 841-2307	 	 
	 	 	Confirmation No.: (301) 841-2779	 	 






[Signatures Continued on the Following Page]




 









 








	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	WBNA:	 	WACHOVIA BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	Commitment:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	$90,000,000
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ RAJ SHAH
 

Raj Shah
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	Wachovia Bank, National Association	 	 
	 	 	One Wachovia Center, NC0602	 	 
	 	 	Charlotte, North Carolina 28288	 	 
	 	 	Attention: Paul Burkhart	 	 
	 	 	Facsimile No.: (704) 715-0067	 	 
	 	 	Confirmation No.: (704) 383-3766	 	 
	 
	 	 	 	 	 	 
	THE ADMINISTRATIVE AGENT 

AND THE WBNA AGENT	 	WACHOVIA CAPITAL MARKETS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ MARY KATHERINE DUBORE
 

Mary Katherine DuBore
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	Wachovia Capital Markets, LLC	 	 
	 	 	One Wachovia Center, Mail Code: NC0600	 	 
	 	 	Charlotte, North Carolina 28288	 	 
	 	 	Attention: Paul Burkhart	 	 
	 	 	Facsimile No.: (704) 715-0067	 	 
	 	 	Confirmation No.: (704) 383-3766	 	 






[Signatures Continued on the Following Page]




 









 












	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	THE BACKUP SERVICER: 

AND THE COLLATERAL 

CUSTODIAN:	 	WELLS FARGO BANK, NATIONAL

ASSOCIATION, not in its individual capacity but

solely as Backup Servicer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ JEANINE C. CASEY
 

Jeanine C. Casey
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Wells Fargo Bank, National Association	 	 
	 	 	Sixth Street and Marquette Avenue	 	 
	 	 	MAC N9311-161	 	 
	 	 	Minneapolis, Minnesota 55479	 	 
	 	 	Attention:              Corporate Trust Services	 	 
	 

	 	 	 	                Collateral-Backed Administration	 	 
	 	 	Facsimile No.:       (612) 667-3539	 	 
	 	 	Confirmation No.: (612) 667-8058	 	 






[Signatures Continued on the Following Page]