exv10w13








Exhibit 10.13




COMPOSITE
VERSION reflects all amendments through August 20, 2008




 





CUMULATIVE CONFORMED VERSION




SALE AND SERVICING AGREEMENT




by and among




CS FUNDING VII DEPOSITOR LLC,

as the Seller




CAPITALSOURCE FINANCE LLC,

as the Originator and as the Servicer




EACH OF THE ISSUERS

FROM TIME TO TIME PARTY HERETO,




EACH OF THE LIQUIDITY BANKS

FROM TIME TO TIME PARTY HERETO




CITICORP NORTH AMERICA, INC.,

as the Administrative Agent




and


WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Backup Servicer and as the Collateral Custodian




Dated as of May 8, 2008

as amended by

FIRST AMENDMENT

dated as of July 31, 2008

SECOND AMENDMENT

dated as of August 20, 2008




COMMERCIAL LOAN-BACKED VARIABLE FUNDING CERTIFICATES




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITION
	 	 	2	 
	 
	Section 1.1 Certain Defined Terms
	 	 	2	 
	Section 1.2 Other Terms
	 	 	54	 
	Section 1.3 Computation of Time Periods
	 	 	54	 
	Section 1.4 Interpretation
	 	 	54	 
	 
	ARTICLE II PURCHASE OF THE VARIABLE FUNDING CERTIFICATES
	 	 	55	 
	 
	Section 2.1 The Variable Funding Certificates
	 	 	55	 
	Section 2.2 [Intentionally Omitted]
	 	 	56	 
	Section 2.3 Procedures for Advances
	 	 	56	 
	Section 2.4 Reduction of the Facility Amount; Mandatory and Optional
Repayments; Increase of Commitment
	 	 	57	 
	Section 2.5 Determination of Interest
	 	 	58	 
	Section 2.6 Percentage Evidenced by each Variable Funding Certificate
	 	 	58	 
	Section 2.7 [Reserved]
	 	 	59	 
	Section 2.8 Notations on Variable Funding Certificates
	 	 	59	 
	Section 2.9 Settlement Procedures During the Revolving Period
	 	 	59	 
	Section 2.10 Settlement Procedures During the Amortization Period
	 	 	61	 
	Section 2.11 Collections and Allocations
	 	 	62	 
	Section 2.12 Payments, Computations, Etc
	 	 	62	 
	Section 2.13 Mandatory Repurchase
	 	 	63	 
	Section 2.14 Fees
	 	 	63	 
	Section 2.15 Increased Costs; Capital Adequacy; Illegality
	 	 	64	 
	Section 2.16 Taxes
	 	 	65	 
	Section 2.17 Assignment of the Sale Agreement
	 	 	67	 
	Section 2.18 Substitution of Assets
	 	 	67	 
	Section 2.19 Optional Sales
	 	 	68	 
	Section 2.20 Discretionary Sales
	 	 	70	 
	Section 2.21 FDIC Sales
	 	 	72	 
	 
	ARTICLE III CONDITIONS TO ADVANCES
	 	 	73	 
	 
	Section 3.1 Conditions to Closing and Initial Advance
	 	 	73	 
	Section 3.2 Conditions Precedent to All Advances
	 	 	74	 
	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	77	 
	 
	Section 4.1 Representations and Warranties of the Seller
	 	 	77	 
	Section 4.2 Representations and Warranties of the Seller Relating to the
Agreement and the Collateral
	 	 	86	 
	Section 4.3 Representations and Warranties of the Servicer
	 	 	87	 
	Section 4.4 Representations and Warranties of the Backup Servicer
	 	 	90	 






ii










 








TABLE OF CONTENTS


(continued)






	 	 	 	 	 
	 	 	Page
	Section 4.5 Representations and Warranties of the Collateral Custodian
	 	 	91	 
	Section 4.6 Breach of Certain Representations and Warranties
	 	 	92	 
	 
	ARTICLE V GENERAL COVENANTS
	 	 	93	 
	 
	Section 5.1 Affirmative Covenants of the Seller
	 	 	93	 
	Section 5.2 Negative Covenants of the Seller
	 	 	96	 
	Section 5.3 Covenants of the Seller Relating to the Hedging of Assets
	 	 	99	 
	Section 5.4 Affirmative Covenants of the Servicer
	 	 	100	 
	Section 5.5 Negative Covenants of the Servicer
	 	 	102	 
	Section 5.6 Affirmative Covenants of the Backup Servicer
	 	 	103	 
	Section 5.7 Negative Covenants of the Backup Servicer
	 	 	104	 
	Section 5.8 Affirmative Covenants of the Collateral Custodian
	 	 	104	 
	Section 5.9 Negative Covenants of the Collateral Custodian
	 	 	104	 
	Section 5.10 Covenant of the Seller, the Servicer and the Originator
	 	 	104	 
	 
	ARTICLE VI ADMINISTRATION AND SERVICING OF ASSETS
	 	 	105	 
	 
	Section 6.1 Designation of the Servicer
	 	 	105	 
	Section 6.2 Duties of the Servicer
	 	 	105	 
	Section 6.3 Authorization of the Servicer
	 	 	107	 
	Section 6.4 Collection of Payments
	 	 	108	 
	Section 6.5 Servicer Advances
	 	 	110	 
	Section 6.6 Realization Upon Charged-Off Assets
	 	 	110	 
	Section 6.7 Maintenance of Insurance Policies
	 	 	111	 
	Section 6.8 Servicing Compensation
	 	 	111	 
	Section 6.9 Payment of Certain Expenses by Servicer
	 	 	111	 
	Section 6.10 Reports
	 	 	112	 
	Section 6.11 Annual Statement as to Compliance
	 	 	112	 
	Section 6.12 Annual Independent Public Accountant’s Servicing Reports
	 	 	113	 
	Section 6.13 Limitation on Liability of the Servicer and Others
	 	 	113	 
	Section 6.14 The Servicer Not to Resign
	 	 	113	 
	Section 6.15 Servicer Defaults
	 	 	114	 
	Section 6.16 Appointment of Successor Servicer
	 	 	115	 
	 
	ARTICLE VII THE BACKUP SERVICER
	 	 	117	 
	 
	Section 7.1 Designation of the Backup Servicer
	 	 	117	 
	Section 7.2 Duties of the Backup Servicer
	 	 	118	 
	Section 7.3 Merger or Consolidation
	 	 	119	 
	Section 7.4 Backup Servicing Compensation
	 	 	119	 
	Section 7.5 Backup Servicer Removal
	 	 	120	 
	Section 7.6 Limitation on Liability
	 	 	120	 
	Section 7.7 The Backup Servicer Not to Resign
	 	 	121	 






iii









 




TABLE OF CONTENTS


(continued)





	 	 	 	 	 
	 	 	Page
	ARTICLE VIII THE COLLATERAL CUSTODIAN
	 	 	121	 
	 
	Section 8.1 Designation of Collateral Custodian
	 	 	121	 
	Section 8.2 Duties of Collateral Custodian
	 	 	121	 
	Section 8.3 Merger or Consolidation
	 	 	123	 
	Section 8.4 Collateral Custodian Compensation
	 	 	123	 
	Section 8.5 Collateral Custodian Removal
	 	 	123	 
	Section 8.6 Limitation on Liability
	 	 	124	 
	Section 8.7 The Collateral Custodian Not to Resign
	 	 	124	 
	Section 8.8 Release of Documents
	 	 	125	 
	Section 8.9 Return of Required Asset Documents
	 	 	125	 
	Section 8.10 Access to Certain Documentation and Information Regarding
the Collateral; Audits
	 	 	126	 
	Section 8.11 Securities Intermediary
	 	 	126	 
	 
	ARTICLE IX SECURITY INTEREST
	 	 	128	 
	 
	Section 9.1 Grant of Security Interest
	 	 	128	 
	Section 9.2 Release of Lien on Collateral
	 	 	128	 
	Section 9.3 Further Assurances
	 	 	129	 
	Section 9.4 Remedies
	 	 	129	 
	Section 9.5 Waiver of Certain Laws
	 	 	129	 
	Section 9.6 Power of Attorney
	 	 	129	 
	 
	ARTICLE X TERMINATION EVENTS
	 	 	130	 
	 
	Section 10.1 Termination Events
	 	 	130	 
	Section 10.2 Remedies
	 	 	133	 
	 
	ARTICLE XI INDEMNIFICATION
	 	 	133	 
	 
	Section 11.1 Indemnities by the Seller
	 	 	133	 
	Section 11.2 Indemnities by the Servicer
	 	 	136	 
	Section 11.3 After-Tax Basis
	 	 	137	 
	 
	ARTICLE XII THE ADMINISTRATIVE AGENT
	 	 	137	 
	 
	Section 12.1 The Administrative Agent
	 	 	137	 
	 
	ARTICLE XIII MISCELLANEOUS
	 	 	141	 
	 
	Section 13.1 Amendments and Waivers
	 	 	141	 
	Section 13.2 Notices, Etc.
	 	 	141	 
	Section 13.3 Ratable Payments
	 	 	141	 
	Section 13.4 No Waiver; Remedies
	 	 	142	 
	Section 13.5 Binding Effect; Benefit of Agreement
	 	 	142	 
	Section 13.6 Term of this Agreement
	 	 	142	 
	Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of Objection
to Venue
	 	 	142	 
	Section 13.8 Waiver of Jury Trial
	 	 	143	 
	Section 13.9 Costs, Expenses and Taxes
	 	 	143	 






iv









 




TABLE OF CONTENTS


(continued)





	 	 	 	 	 
	 	 	Page
	Section 13.10 No Proceedings
	 	 	144	 
	Section 13.11 Recourse Against Certain Parties
	 	 	144	 
	Section 13.12 Protection of Right, Title and Interest in the
Collateral; Further Action Evidencing Advances
	 	 	145	 
	Section 13.13 Confidentiality
	 	 	146	 
	Section 13.14 Execution in Counterparts; Severability; Integration
	 	 	147	 
	Section 13.15 Waiver of Set-off
	 	 	148	 
	Section 13.16 Assignments
	 	 	148	 
	Section 13.17 Heading and Exhibits
	 	 	151	 
	Section 13.18 Loans Subject to Retained Interest Provisions
	 	 	151	 
	Section 13.19 Tax Treatment of Advances
	 	 	152	 
	Section 13.20 Appointment of Successor Agent
	 	 	152	 
	Section 13.21 Payment Direction
	 	 	153	 







v









 








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”) dated as of May 8, 2008, as amended by the
First Amendment, dated as of July 31, 2008, and the Second Amendment, dated as of August 20, 2008,
by and among:



     (1) CS FUNDING VII DEPOSITOR LLC, a Delaware limited liability company, as the seller
hereunder (together with its successors and assigns in such capacity, the “Seller”);



     (2) CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (“CSF”), as the loan
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 ISSUERS FROM TIME TO TIME PARTY HERETO (together with their respective
successors and assigns in such capacities, each an “Issuer”);



     (4) EACH OF THE LIQUIDITY BANKS FROM TIME TO TIME PARTY HERETO (together with their respective
successors and assigns in such capacities, each a “Liquidity Bank”);



     (5) CITICORP NORTH AMERICA, INC., a Delaware corporation (“CNAI”), as the administrative agent
for the Issuers and Liquidity Banks hereunder (together with its successors and assigns in such
capacity, including any successor appointed pursuant to ARTICLE XII, the “Administrative
Agent”); and



     (6) 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 (as defined below) from the Originator pursuant to the Sale Agreement (as defined below);



     WHEREAS, the Seller has previously financed the Existing Assets (as defined below) through the
CS VII Issuer Financing (as defined below) and now wishes to repay the CS VII Issuer Financing in
full, receive a distribution and reconveyance of the Existing Assets previously held under the CS
VII Issuer Financing from the Issuer (as defined in the Indenture defined below), its wholly-owned
subsidiary, and finance hereunder the Existing Assets together with Additional Assets it may
acquire from time to time;



1









 





     WHEREAS, in order to accomplish such financing, the Seller is prepared to transfer and assign,
and grant security interests in, the Existing Assets and Additional Assets and other proceeds with
respect thereto to the Purchasers (as defined below) from time to time;



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



     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:


“1940 Act”: The Investment Company Act of 1940, as amended.



“Accrual Period”: (a) with respect to each Advance (or portion thereof) funded at an Interest Rate
other than the CP Rate, (i) with respect to the first Payment Date, the period from and including
the Closing Date to but excluding such first Payment Date and (ii) with respect to any subsequent
Payment Date, the period from and including the previous Payment Date to but excluding such
subsequent Payment Date, and (b) with respect to each Advance (or portion thereof) funded at an
Interest Rate equal to the CP Rate, (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 day of such immediately preceding calendar month.



“Acquired Loan”: A Loan (other than an Excluded Loan) that is either (a) originated by a Person
other than the Originator, CapitalSource Inc. or any of their respective Subsidiaries and is
acquired by the Originator, CapitalSource Inc. or any of their respective Subsidiaries in an arm’s
length transaction from an unaffiliated third party; or (b) extended by the Originator,
CapitalSource Inc. or any of their respective Subsidiaries directly to the Obligor as part of a
multi-lender Loan in which neither CapitalSource Inc. nor any of its Subsidiaries is the
administrative (or other analogous) agent; provided that the calculation of the principal amount of
any Acquired Loan hereunder shall exclude any Retained Interest with respect to such Acquired Loan.




2









 







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



“Additional Amount”: Defined in Section 2.16(a).



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



“Adjusted Eurodollar Rate”: For any Accrual Period, an interest rate per annum equal to a
fraction, expressed as a percentage and rounded upwards (if necessary) to the nearest 1/100 of 1%,
(i) the numerator of which is equal to the offered quotation to first-class banks in the New York
interbank Eurodollar market by the Administrative Agent for Dollar deposits of amounts in same day
funds comparable to the outstanding principal amount of the Advance for which an interest rate is
then being determined with maturities comparable to the Accrual Period to be applicable to such
Advance, determined as of 10:00 a.m. (New York City, New York time) on the date which is two
Business Days prior to the commencement of such Accrual Period (and rounded upward to the next
whole multiple of 1/16 of 1%) to a fraction, expressed as a percentage and rounded upwards (if
necessary) to the nearest 1/100 of 1%, and (ii) the denominator of which is equal to 100%
minus the Eurodollar Reserve Percentage for such Accrual Period.



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



“Advance”: Defined in Section 2.1(b).



“Advance Rate”: On any Business Day, with respect to each Loan, a percentage determined as
follows:





	 	(a)	 	with respect to all Senior Secured Loans
assigned Loan Rating 1, Loan Rating 2, Loan Rating 3 or Loan Rating 4,
85%;
	 
	 	(b)	 	with respect to all Subordinated Loans assigned
Loan Rating 1, Loan Rating 2, Loan Rating 3 or Loan Rating 4, 65%;
	 
	 	(c)	 	with respect to all Senior Secured Loans
assigned Loan Rating 5, 50%;
	 
	 	(d)	 	with respect to all Subordinated Loans assigned
Loan Rating 5, 25%;
	 
	 	(e)	 	with respect to all Loans assigned Loan
Rating 6, 0%; and
	 
	 	(f)	 	with respect to any Rated Retained Security
that is an Eligible Loan, 75%.




For purposes of calculating the Advance Rate with respect to any Acquired Loans, Agented Loans and
Participation Loans, the applicable Advance Rate will be determined by reference to


3









 






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 Purchasers, each Liquidity Bank, all assignees,
participants and Affiliates of the Purchasers and each Liquidity Bank, any successor to CNAI as
Administrative Agent and any sub-agent of the Administrative 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”: A special account (account number 40517805) in the name of the Administrative
Agent maintained at Citibank, N.A.



“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 original note related thereto will be endorsed to the
Administrative Agent and held by the Collateral Custodian, on behalf of the Secured Parties,
(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, (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 loan of equal priority and (e) the Originator
(or a wholly owned subsidiary of the Originator) is the administrative (or other analogous) agent
for loans to such Obligor.



“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.



“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 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


4









 






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, the Backup Servicer
and Collateral Custodian Fee Letter) delivered in connection with the transactions contemplated by
this Agreement (whether due or accrued).



“Alarm Service Loan”: An Eligible Loan to a Dealer (or any other Person agreed to by the
Administrative Agent) that has secured its repayment obligations with the payments from one or more
individuals, businesses or other entities that have entered into security alarm monitoring or
security alarm monitoring and maintenance contracts to receive the security alarm monitoring or
security alarm monitoring and maintenance services provided thereby.



“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” or (iii) an “Accelerated
Amortization Event”.



“Alternative Rate”: An interest rate per annum equal to the Adjusted Eurodollar Rate calculated on
a daily basis; provided that the Alternative Rate shall be the Base Rate (i) for all Advances of
any Liquidity Bank which has provided a notice pursuant to clause (a), (b), (c) or (d) of the
definition of Eurodollar Disruption Event and (ii) for the relevant Advances of any Liquidity Bank
which has provided a notice pursuant to clause (e) of the definition of Eurodollar Disruption
Event.



“Amortization Period”: The period beginning on the occurrence of 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.



“Appraisal”: With respect to any Mortgaged Property as to which an appraisal is required or
permitted to be performed pursuant to the terms of this Agreement, an appraisal performed in
conformance with the guidelines of the Appraisal Institute.



“Appraisal Institute”: The international membership association of professional real estate
appraisers.



“Approved Dealers”: With respect to any Acquired Loan, (A) the nationally recognized dealers set
forth on Schedule VIII hereto and (B) any other nationally recognized dealers that either
are (x) designated by the Administrative Agent, acting in its reasonable discretion or (y) proposed
by the Servicer by notice to the Administrative Agent and approved by the Administrative Agent in


5









 






its sole discretion, and that (in case of both clauses (x) and (y)) are (1) Independent of each
other, (2) Independent of the Originator and the Servicer and (3) regularly deal in assets in the
nature of such Acquired Loan; provided, however, that, the Administrative Agent may designate
dealers to be added to, or removed from, the aforementioned Schedule VIII from time to time
(and, upon any such designation, such Schedule VIII shall be deemed to have been amended to
reflect such designation without further action by any Person).



“Approved Pricing Service”: (A) the pricing services set forth on Schedule VIII hereto and
(B) any other pricing services that either are (x) designated by the Administrative Agent in its
sole discretion or (y) proposed by the Servicer by notice to the Administrative Agent and approved
by the Administrative Agent in its sole discretion; provided, however, that, in the case of both
clauses (A) and (B), unless otherwise agreed by the Administrative Agent, an Acquired Loan will be
considered to be “priced” or “quoted” by an Approved Pricing Service only if, in the reasonable
judgment of the Administrative Agent, such Approved Pricing Service will continue to provide
quotations with respect to such Acquired Loan on an on-going basis in the ordinary course of its
business as a pricing service.



“Approved Valuation Agent”: Any Independent third-party appraisal firm designated by the Servicer
in writing to the Administrative Agent and approved by the Administrative Agent in its reasonable
discretion.



“Asset Checklist”: The 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.



“Asset Files”: With respect to any Asset, as applicable, 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 or on behalf of 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.



“Asset Valuation Date”: With respect to any Acquired Loan:





     (1) the Market Value of which is determined with reference to clause (i)(B)(1) of the
definition of Market Value, (x) the last day of each calendar month and (y) each date that
a Borrowing Base Certificate is delivered;




     (2) the Market Value of which is determined with reference to clauses (i)(B)(2) and
(i)(B)(3) of the definition of Market Value, (x) the last day of each calendar month and
(y) each other date requested by the Administrative Agent; provided that on any date that
the Aggregate Outstanding Asset Balance of all Assets whose Market Value is determined in
accordance with clauses (i)(B)(2) or (i)(B)(3) of the definition of Market Value, is less
than $50,000,000, clauses (x) and (y) of the preceding sentence shall be replaced with the
following: (x) each Quarterly Determination Date and (y) each other date requested by the
Administrative Agent.



6









 




“Assets”: Loans and Rated Retained Securities, individually or collectively, as the context
requires.



“Assignment and Acceptance”: An assignment and acceptance agreement entered into by a Purchaser,
an Eligible Assignee and the Agent, pursuant to which such Eligible Assignee may become a party to
this Agreement, in substantially the form of Exhibit M hereto.



“Assignment of Leases and Rents”: With respect to any Mortgaged Property, any assignment of
leases, rents and profits or similar instrument executed by the Obligor, assigning to the mortgagee
all of the income, rents and profits derived from the ownership, operation, leasing or disposition
of all or a portion of such Mortgaged Property, whether contained in the Mortgage or in a document
separate from the Mortgage, in the form that was duly executed, acknowledged and delivered, as
amended, modified, renewed or extended through the date hereof and from time to time hereafter in
accordance with the Credit and Collection Policy.



“Assignment of Mortgage”: As to each Loan (other than Agented Loans or Acquired Loans that have
been syndicated and with respect to which neither the Originator nor any of its Affiliates is
acting in the capacity of administrative agent, and other Loans for which an Assignment of Mortgage
has been delivered to Wells Fargo in its capacity as trustee or custodian pursuant to a prior term
transaction or warehouse facility involving the Originator or one of its Affiliates) secured by an
Interest in Real Property, one or more assignments, notices of transfer or equivalent instruments,
each in recordable form and sufficient under the laws of the relevant jurisdiction to reflect the
transfer of the related Mortgage or similar security instrument and all other documents related to
such Loan 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.



“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 over (ii) the Advances Outstanding on such day;
provided that (x) during the Amortization Period, or (y) at any time that the Combined Advances
Outstanding exceeds the Combined Commitment Amount, 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 the Assets included in the Collateral
and earnings from Permitted Investments in the Collection Account) during the Collection Period
immediately preceding such Payment Date.



“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) and the denominator of which is 12




7









 







(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 12 (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 and Collateral Custodian Fee Letter”: The Backup Servicer Fee Letter and
Collateral Custodian Fee Letter, dated as of May 8, 2008, by and among the Servicer, the
Administrative Agent, the Backup Servicer and the Collateral Custodian, 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 and Collateral
Custodian 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 and Collateral Custodian Fee Letter.



“Banded Floating Rate Loan”: A Loan where the interest rate payable by the Obligor thereof
fluctuates between a minimum interest rate and a maximum interest rate allowable under its
Underlying Instruments.



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



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




8









 







“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 (with respect to clause (xvi) of the definition of “Pool Concentration
Criteria”, Eligible Assets with the longest weighted average life shall be excluded first and, with
respect to clause (xvii) of the definition of “Pool Concentration Criteria”, Eligible Assets with
the lowest Loan Margin shall be excluded first).



“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 and
each incremental Advance (as applicable), (b) any reduction of the Facility Amount or repayment of
the 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 the Administrative Agent in its sole
discretion) as a result of a prepayment by the Seller of Advances Outstanding or Interest. 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 or New York City, New York, and (b) if the term
“Business Day” is used in connection with the determination of the LIBOR Rate, dealings in United
States dollar deposits are carried on in the London interbank market.



“Capital Stock”: Any capital stock or membership interests (in the case of a limited liability
company) or equivalent equity interests of CapitalSource Inc. or any Consolidated Subsidiary (to
the extent issued to a Person other than CapitalSource Inc.), whether common or preferred.



“CD Rate”: A fluctuating interest rate per annum equal to 1/2 of one percent above the latest
three-week moving average of secondary market morning offering rates in the United States for
three-month certificates of deposit of major United States money market banks, such three-week
moving average being determined weekly on each Monday (or, if such day is not a Business Day, on
the next succeeding Business Day) for the three-week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on
the basis of quotations for such rates received by Citibank from three New York certificate of
deposit dealers of recognized standing selected by Citibank, in either case adjusted to the nearest
1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one
percent.




9









 







“Change-in-Control”: Any of the following:




     (a) Any “Person” or “group"(as such terms are used in Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934, as amended), other than the Investors, shall become the
“beneficial owner” (as defined in Section 13(d)-3 and 13(d)-5 under such Act), directly or
indirectly, of shares representing more than the greater of (i) 20% of the shares outstanding of
CapitalSource Inc. and (ii) the percentage of the aggregate then outstanding voting stock of
CapitalSource Inc. owned beneficially, directly or indirectly, by the Investors;



     (b) the board of directors of CapitalSource Inc. shall not consist of at least a majority of
Continuing Directors;



     (c) the failure of CapitalSource Inc. to own (directly or through wholly owned subsidiaries),
free and clear of all Liens, the greater of (x) 51% of the outstanding Voting Stock of the
Originator and (y) the aggregate amount of the outstanding Voting Stock of the Originator necessary
to require the consolidation of the Originator’s financial statements with those of CapitalSource
Inc. in accordance with GAAP; or



     (d) the failure by the Originator to own all of the limited liability company membership
interests in the Seller.


“Charged-Off Asset”: An Asset with respect to which either of the following occurs: (a) the
Servicer has deemed such Asset to be “charged-off” pursuant to the criteria set forth in the Credit
and Collection Policy or (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 120 days from the
original due date for such payment (without giving effect to any Servicer Advance thereon).



“Charged-Off Portfolio Asset”: A Portfolio Asset the Servicer has deemed to be “charged-off”
pursuant to the criteria set forth in the Credit and Collection Policy.



“CHARTA”: CHARTA, LLC, together with its successors and assigns, each as permitted pursuant to
this Agreement.



“Citibank”: Citibank, N.A.



“Citibank Facilities”: The securitization/warehouse facilities provided under (i) this Agreement
and (ii) the Second Amended and Restated Sale and Servicing Agreement, dated as of May 8, 2008 (the
“CREL 2007-A Facility”), by and among CapitalSource Real Estate Loan LLC, 2007-A, CSE Mortgage LLC,
each of the Issuers and Liquidity Banks from time to time party thereto, Citicorp North America,
Inc., as the Administrative Agent and Wells Fargo Bank, National Association, as the Backup
Servicer and as the Collateral Custodian, and the related documentation with respect thereto, in
each case, as now or hereafter amended, modified, supplemented, restated or replaced or substituted
from time to time in accordance with their respective terms.



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




10









 







“Closing Date”: Either (i) for the purposes of all provisions herein and in the Transaction
Documents relating to and referencing the delivery of closing documents hereunder and which are not
relating to or referencing the effectiveness of this Agreement, the commitment hereunder or the
funding of or accrual of the Initial Advance (including, without limitation, Section 2.1(a)), May
8, 2008, or (ii) for the purposes of all provisions herein and in the Transaction Documents
relating to or referencing the effectiveness of this Agreement, the Commitment of any Purchaser, or
the funding of or accrual of the Initial Advance hereunder (including, without limitation, Sections
2.1(b), 2.1(d) and 4.2), May 9, 2008.



“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, securities 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 the Additional Assets, and all monies due or to become due in payment under such Existing
Assets and the Additional Assets on and after the related Cut-Off Date, including but not limited
to all Collections, but excluding any Excluded Amounts; and (ii) all Related Security with respect
to the Existing Assets and the Additional Assets, 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 Backup Servicer and Collateral Custodian Fee Letter.



“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.



“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, 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.




11









 







“Combined Advances Outstanding”: As of any day, the aggregate amount of Advances Outstanding
hereunder plus all “Advances Outstanding” under the other Citibank Facilities (excluding the “Class
B Advances Outstanding” under the CREL 2007-A Facility).



“Combined Commitment Amount”: As of any day, the lesser of (x) the aggregate Commitments
outstanding hereunder plus the “Class A Commitment” outstanding under the CREL 2007-A Facility, and
(y) $750,000,000.



“Commercial Paper Notes”: On any day, any short-term promissory notes of any Issuer issued by such
Issuer in the commercial paper market.



“Commitment”: With respect to each Liquidity Bank the commitment of such Liquidity Bank to make
Advances in accordance herewith in an amount not to exceed (a) with respect to Citibank, prior to
the Termination Date, an amount equal to $285,000,000 or such amount as reduced or increased by any
Assignment and Acceptance Agreement or (b) on or after the Termination Date, such Liquidity Bank’s
pro rata share of the aggregate Advances Outstanding. Any reduction (or termination) of the
Facility Amount pursuant to the terms of this Agreement shall reduce ratably (or terminate) each
Liquidity Bank’s Commitment.



“Commitment Fee”: With respect to any Purchaser, as defined in such Purchaser’s Purchaser Fee
Letter.



“Confirmation and Undertaking Letter”: The Intercreditor and Lockbox Confirmation and Undertaking
Letter, dated the date hereof, among the Administrative Agent, the Seller, the Servicer and
Originator, CapitalSource Inc., CapitalSource Funding Inc. and CapitalSource Finance LLC, regarding
certain agreements between the parties with respect to the Lock-Box Agreement and the Intercreditor
Agreement, as the Confirmation and Undertaking Letter may be amended, restated, modified or
supplemented from time to time.



“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”: At any date any Subsidiary the accounts of which, in accordance with
GAAP, would be consolidated with those of CapitalSource Inc. in its consolidated and consolidating
financial statements as of such date.



“Consolidated Tangible Net Worth”: As of any date of determination, the assets less the
liabilities of any Person and its Subsidiaries on a consolidated basis, less intangible assets
(including goodwill), all determined in accordance with GAAP for the most recent monthly period for
which monthly financial statements of such Person should be available in the ordinary course of
business of such Person.



“Continuing Directors”: The directors of CapitalSource Inc. on the Closing Date, and each other
director if, in each case, such other director’s nomination for election to the board of directors
is recommended by majority of the then Continuing Directors or such other director receives the
vote of the Investors in his or her election by the stockholders of CapitalSource Inc.




12









 







“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.



“Corporate Trust Office”: With respect to Wells Fargo, the office at which any particular time its
corporate trust business shall be principally administered, which office at the date of the
execution of this Agreement is located at the address set forth under the signature of Wells Fargo
on the applicable signature page hereto.



“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 an Issuer from time to time as interest on or
otherwise (by means of interest rate hedges or otherwise) in respect of the promissory notes issued
by such Issuer that are allocated, in whole or in part, by the Administrative Agent on behalf of
such Issuer to fund or maintain the Advances Outstanding funded by such Issuer during such period,
as determined by the Administrative Agent (on such Issuer’s 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 the Administrative Agent (on such Issuer’s behalf)
and (ii) other borrowings by such Issuer, 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, the
Administrative 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 amended or
supplemented from time to time in accordance with Section 5.1(h) and
Section 5.4(f).



“CREL 2007-A Facility”: The meaning set forth in the defined term “Citibank Facilities”.



“CSF LIBOR Rate”: The Eurodollar or LIBO rate for 30, 60, 90 or 180 day, as applicable, deposits
in Dollars, as and when determined in accordance with the applicable Required Asset Documents.



“CSF Prime Rate”: The rate designated by CSF (or the originator of an Acquired Loan) from time to
time and/or pursuant to the related Underlying Instruments as its prime rate in the United States,
such rate to change as and when the designated rate changes; provided that the CSF Prime Rate is
not intended to be the lowest rate of interest charged by CSF (or such originator) in connection
with extensions of credit to debtors.



“CS VII Issuer Financing”: The transactions evidenced and contemplated by (i) the Indenture dated
as of April 19, 2007 (the “Indenture”) between CapitalSource Funding VII Trust and Wells


13









 






Fargo Bank, National Association as Indenture Trustee, and (ii) the Notes issued thereunder (as
defined therein).



“CS VII Issuer Financing SSA”: the Sale and Servicing Agreement, dated April 19, 2007 among
CapitalSource Funding VII Trust, as issuer, CS Funding VII Depositor LLC, as depositor,
CapitalSource Finance LLC, as loan originator and servicer and Wells Fargo Bank, National
Association, as indenture trustee, collateral custodian and backup servicer, as amended,
supplemented, and otherwise modified from time to time.



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



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



“Dealer”: The security alarm dealer who sells one or more security alarm monitoring or security
alarm monitoring and maintenance contracts to one or more Persons obligated to pay for the
service(s) provided under such contract(s).



“Delayed-Draw Term Loan”: A Loan that is fully committed on the closing date thereof and is
required by its terms to be fully funded in one or more installments on draw dates to occur within
three years after the closing date thereof but which, once fully funded, has the characteristics of
a Term Loan.



“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 at least 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 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 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.




14









 







“DIP Loan”: A loan to an Obligor that is a “debtor-in-possession” as defined under the Bankruptcy
Code.



“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(a).



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



“Eligible Asset”: With respect to Existing Assets and the factual and legal status of such
Existing Assets prior to the Closing Date, the meaning assigned to the term “Eligible Loans” in the
CS VII Issuer Financing SSA. With respect to (x) Existing Assets and any changes in factual and
legal status since the Closing Date or changes based on newly available information, in each case,
that would affect the eligibility of such Existing Assets, and (y) all other Assets, as follows:
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. (New York City,
New York 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, as applicable, 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 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;



     (b) the Asset, (i) (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, and (ii) with respect to which,
at the time of the sale of such Asset to the Seller, the Originator had a first priority (other
than in the case of Senior B-Note Loans or Subordinated Loans) perfected security interest in the
Related



15









 







Property (other than Liens expressly permitted by the Underlying Instruments) relating to such
Loan;



     (c) at the time such Asset is included in the Collateral, the Asset (i) is not (and since its
origination by the Originator or, in the case of Acquired Loans, acquisition by the Originator has
never been) a Charged-Off Asset (either in whole or in part), (ii) is not past due in the case of a
Loan, with respect to payments of principal or interest (provided that if such Asset is past due at
the time it is included in the Collateral but not more than ten days past due, the Originator and
the Servicer must reasonably believe that such Asset will promptly and in no event later than the
date of the next Scheduled Payment due on such Asset, be brought current with respect to all
payments due thereunder), and (iii) has never been more than 60 days past due, with respect to
payments of principal or interest, or, in the case of Acquired Loans, to the best of the
Originator’s knowledge after due inquiry, has never been more than 60 days past due in the 12
months prior to acquisition;



     (d) the Asset is an “eligible asset” as defined in Rule 3a-7 under the 1940 Act;



     (e) 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; provided, however, if the
Asset constitutes “tangible chattel paper”, there is not more than one (1) “secured party’s
original” counterpart of such chattel paper and the sole manually executed counterpart thereof is
in the possession of and has been properly endorsed to the Collateral Custodian;



     (f) the Obligor with respect to such Asset is an Eligible Obligor and such Asset is payable
only in Dollars and does not permit the currency in which or the country in which such Asset is
payable to be changed;



     (g) the Asset is evidenced by a promissory note, an entry on the Loan Register, security
agreement, credit, 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;



     (h) 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;



     (i) neither the assignment of the Asset under the Sale Agreement by the Originator, the sale
of the Asset hereunder or 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;



16









 





     (j) on or before the applicable Cut-Off Date, the Obligor of such Asset (or, in the case of
Acquired Loans, the applicable agent) shall have been directed to make all payments to the Lock-Box
or directly to the Lock-Box Account;



     (k) 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;



     (l) 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;



     (m) 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;



     (n) 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;



     (o) 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;



     (p) 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;



     (q) 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;



     (r) 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;



     (s) 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









 





     (t) the Asset and the Related Security have not been sold, transferred, assigned or pledged by
the Seller to any Person other than as contemplated in the Transaction Documents;



     (u) no selection procedure adverse to the interests of the Administrative Agent or the Secured
Parties was utilized by the Seller or Originator in the selection of Assets for inclusion in the
Collateral;



     (v) 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 as otherwise permitted under Section 6.4(a) of this
Agreement and in accordance with the Credit and Collection Policy;



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



     (x) except with respect to DIP Loans, the Obligor of such Asset is not the subject of an
Insolvency Event or Insolvency Proceedings and, in the case of a DIP Loan, the Loan Originator or
its assignee the Loan 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;



     (y) the Asset is secured by a valid, perfected, first priority (other than with respect to
Senior B-Note Loans and Subordinated Loans) security interest in all assets that constitute the
collateral for the Asset (subject to Liens expressly permitted by the Underlying Instruments);



     (z) 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;



     (aa) 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);



     (bb) the Asset was originated or acquired in the ordinary course of the Originator’s business;



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



     (dd) the Asset is not Margin Stock;



     (ee) 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 1940 Act;



18









 





     (ff) the Asset is not subject to a guaranty by the Originator or any Affiliate thereof; and



     (gg) the proceeds of the Asset have not and will not be used to finance “ground-up”
construction activities.



(2) With respect to any Asset consisting of a 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 Acquired Loans
or Agented Loans, that the agent or a majority of the related lenders) may accelerate all payments
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) the Loan constitutes, and was underwritten as, a Senior Secured Loan or a Subordinated
Loan, in each case pursuant to and in accordance with the Credit and Collection Policy;



     (c) each Senior Loan has an original term to maturity of not more than 7 years and each
Subordinated Loan has an original term to maturity of not more than 10 years ;



     (d) 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;



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



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



     (g) [Intentionally Omitted];



     (h) except with respect to Subordinated Loans, if the Obligor of such Loan is the Obligor of
more than one Loan, all such Loans are cross-collateralized and cross-defaulted;



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



     (j) the Loan is not a Loan or extension of credit by the Originator to the Obligor for the
purpose of making any past due principal, interest or other payments due on such Loan;



     (k) 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 or the Secured Parties



19









 







with respect to the Loan, the Related Security, the Scheduled Payments or any income or
Proceeds therefrom;



     (l) except with respect to Subordinated Loans and Senior B-Note Loans, and to the extent set
forth in the definition of those terms, 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 Subordinated Loans, the Originator has entered into an intercreditor
agreement or subordination agreement (or such provisions are contained in the principal Underlying
Instruments) 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 no standstill of
remedies may be imposed unless (x) a default with respect to the senior obligation has occurred and
is continuing and (y) in the case of such a default, other than a payment default, 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 (B) to no longer than 180 days in duration in the aggregate in any given year;



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



     (q) with respect to any Loan transferred from an Affiliate of the Originator to the
Originator, such transfer to the Originator constituted an absolute sale or conveyance (and not a
secured loan) and with respect to any such transfer occurring on or after the Closing Date, the
Administrative Agent has received a satisfactory legal opinion concerning the acquisition of such
Loan by the Originator in a true sale transaction;



     (r) with respect to any Acquired Loan that was acquired in a pool by the Originator along with
one or more other Acquired Loans, the Administrative Agent has approved in writing such Loan for
inclusion in the Collateral and has completed its own due diligence with respect to such Loan;



     (s) with respect to Agented Loans, the related Underlying Instruments (a) shall include a
credit or note purchase or similar agreement containing provisions relating to the appointment and
duties of an administrative (or other analogous) agent and intercreditor and (if applicable)
subordination provisions, and (b) are duly authorized, fully and properly executed and are the
valid, binding and unconditional payment obligation of the Obligor thereof;



     (t) with respect to Agented Loans, CSF or CSE Mortgage LLC (or a wholly owned Subsidiary of
CapitalSource Inc.) has been appointed the administrative (or other analogous) agent for all such
Loans prior to such Agented Loan becoming a part of the Collateral;



20









 





     (u) with respect to Agented Loans, 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 lenders have been or will be executed and filed or recorded
as appropriate prior to such Agented Loan becoming a part of the Collateral or if such entity has
or will change after such Agented Loan becomes part of the Collateral, then prior to such entity
becoming the collateral agent;



     (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 and (b) share in the proceeds of the sale
or other disposition of such collateral on a pro rata basis;



     (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;



     (z) the Loan or related Underlying Instruments do 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;



     (aa) the Loan is not a consumer loan;



     (bb) [reserved];



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



     (dd) with respect to any Acquired Loan for which the value of such Acquired Loan has been
determined in accordance with clause (i)(B)(1) or (i)(B)(2) of the definition of “Market Value” set
forth in Section 1.1 of this Agreement, on the later of May 9, 2008 and the date such Loan is
included in the Collateral, the Market Value of such Acquired Loan is not less than 90% of the
outstanding principal balance of such Acquired Loan;



21









 





     (ee) at origination or acquisition by the Originator, such Loan was assigned Loan Rating 1,
Loan Rating 2 or Loan Rating 3 and, as of any date thereafter, such Loan is assigned Loan Rating 1,
Loan Rating 2, Loan Rating 3, Loan Rating 4 or Loan Rating 5;



     (ff) if a Subordinated Loan, such Loan must either (i) have an interest coverage ratio that is
not less than 1.25:1, or (ii) be made in respect of construction or development of unimproved land;



     (gg) if a Participation Loan, the Loan meets the criteria set forth in clauses (i) – (iii) of
the definition of Participation Loan;



     (hh) the Loan was not a Loan made in connection with (i) the construction or development of
unimproved land unless (A) the Outstanding Asset Balance of such Loan together with all other Loans
made in respect of construction or development of unimproved land does not exceed ten percent (10%)
of the aggregate Outstanding Asset Balance of all Loans and (B) the aggregate Outstanding Asset
Balance of such Loan does not exceed Seven Million Five Hundred Thousand Dollars ($7,500,000), or
(ii) facilitating the trade-in or exchange of the related Mortgaged Property;



     (ii) no provision of the Loan (other than an Alarm Service Loan) has been waived, modified or
altered in any respect, except in accordance with the Credit and Collection Policy and by
instruments duly authorized and executed and contained in the Required Loan Documents;



     (jj) after giving effect to the transfer of any Loan hereunder, the weighted average life of
the Assets in the aggregate shall not exceed 4.0 years; and



     (kk) after giving effect to such transfer of any Loan hereunder, the Loan Margin shall not be
less than 3.00%.


(3) In addition to the criteria set forth in clauses (1) and (2) above, with
respect to any Loan that is an Alarm Service Loan, the following additional criteria:





	 	(i)	 	the Dealer is a Person with a place of business
in the United States or, with respect to two (2) of the Alarm Service
Loans, Canada;
	 
	 	(ii)	 	the Dealer has all necessary licenses, permits
and other authorizations to conduct security alarm sales, installation,
monitoring and maintenance services in the jurisdiction in which it
conducts business;
	 
	 	(iii)	 	the Loan Originator has disclosed on or prior
to the Closing Date (for such Loans constituting Existing Assets) or on
or prior to the related Addition Date (for such Loans constituting
Additional Assets) a calculation of the notional minimum amount of
recurring monthly revenue to be received from each security alarm
monitoring or security alarm monitoring and maintenance contract;




22









 






	 	(iv)	 	the criteria set forth in clauses (a) through
(pp) in Section 3.04 of the CS VII Issuer Financing SSA are met with
respect to (x) the accounts receivable or accounts (as defined in the
UCC) payable pursuant to a security alarm monitoring or a security
alarm monitoring and maintenance contract, (y) each security alarm
monitoring or security alarm monitoring and maintenance contract and
(z) each Dealer; and
	 
	 	(v)	 	the scheduled payments under each security
alarm monitoring or security alarm monitoring and maintenance contract
as set forth in the related Alarm Service Loan are true and correct and
accurately represent the recurring monthly revenue to be received from
each security alarm monitoring or security alarm monitoring and
maintenance contract;




(4) In addition to the criteria set forth in clause (1) above, with respect to any Asset
constituting a Rated Retained Security, such Rated Retained Security shall have been approved by
the Administrative Agent for inclusion as an Asset.



“Eligible Assignee”: Means (i) CNAI or any of its Affiliates, (ii) any Person managed by Citibank,
CNAI or any of their Affiliates, or (iii) any financial or other institution acceptable to the
Administrative Agent and approved by the Seller (which approval by the Seller shall not be
unreasonably withheld, delayed or conditioned and shall not be required if a Termination, Event or
an Unmatured Termination Event has occurred and is continuing).



“Eligible Obligor”: With respect to Existing Assets and the factual and legal status of the
Obligors of such Existing Assets prior to the Closing Date, the meaning assigned to the term
“Eligible Obligor” in the CS VII Issuer Financing SSA. With respect to (x) Existing Assets and any
changes in factual and legal status since the Closing Date or changes based on newly available
information, in each case, that would affect the eligibility of such Eligible Obligor of Existing
Assets, and (y) with respect to all other Assets, 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,




     (ii) is a legal operating entity, holding company, or special purpose entity;




     (iii) has not entered into the Loan primarily for personal, family or household
purposes,




     (iv) is not a Governmental Authority,




     (v) is not an Affiliate of the Originator or Seller,




     (vi) is not in the gaming (other than Obligors in the business of providing services to
the gaming industry), nuclear waste, biotechnology or natural resource
exploration/production and oil field service industries,



23









 






     (vii) is not engaged in the business of conducting proprietary research on new drug
development,




     (viii) except for an Obligor with respect to a DIP Loan, is not the subject of an
Insolvency Proceeding, 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.



“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 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.



“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
shall have notified the Administrative Agent of a determination by such Liquidity Bank or any of
its assignees or participants 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 shall have notified


24









 






the Administrative Agent of the inability, for any reason, of such Liquidity Bank or any of its
assignees or participants to determine the Adjusted Eurodollar Rate, (c) any Liquidity Bank shall
have notified the Administrative Agent of a determination by such Liquidity Bank or any of its
assignees or participants that the rate at which deposits of Dollars are being offered to such
Liquidity Bank or any of its assignees or participants in the London interbank market does not
accurately reflect the cost to such Liquidity Bank, such assignee or such participant of making,
funding or maintaining any Advance, (d) any Liquidity Bank shall have notified the Administrative
Agent of the inability of such Liquidity Bank or any of its assignees or participants to obtain
Dollars in the London interbank market to make, fund or maintain any Advance or (e) any Liquidity
Bank shall have notified the Administrative Agent that the principal amount of Advances to be
funded by it is less than $500,000.



“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.



“Excepted Person”: Defined in Section 13.13(a).



“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.



“Excluded Loan”: A Loan listed on Schedule IX (i) that was originated, acquired or
extended by the Originator, CapitalSource Inc. or any of their respective Subsidiaries prior to May
1, 2007, (ii) under which the Originator, CapitalSource Inc. or any of their respective
Subsidiaries is acting as administrative (or other analogous) agent and a lender thereunder, or
(iii) for which the documentation governing such Loan has been amended and restated based upon the
form documentation utilized by the Originator and CapitalSource Inc. The Seller and the Servicer
shall update Schedule IX, when necessary, on each Funding Date.



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




25









 







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



“Facility Amount”: The aggregate Commitments then in effect; provided that such amount may not at
any time exceed $285,000,000 without the written agreement of the parties hereto; 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.



“FDIC Sale”: Defined in Section 2.21.



“FDIC Sale Date”: The Business Day (which may be the Fremont Closing Date or any Business Day
thereafter) identified by the Seller to the Administrative Agent as the proposed date of the FDIC
Sale in accordance with the terms of Section 2.21.



“FDIC Sale Notice”: Defined in Section 2.21(a).



“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. (New York City, New York time).



“Final Maturity Date”: March 31, 2010.



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



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





26











 




“Floating Rate Asset”: A Loan that is an Eligible Asset where the interest rate payable by the
Obligor thereof is based on the CSF Prime Rate or CSF 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 CSF Prime Rate or CSF LIBOR Rate.



“Fremont Bank Adjustment”: The amount of goodwill to be recorded on the balance sheet of
CapitalSource Inc. directly as a result of the consummation of the Fremont Transaction, as
certified to the Administrative Agent by the chief financial officer, chief accounting officer or
treasurer of CapitalSource Inc. on or about the Fremont Closing Date (but in no event later than
the second Business Day of the immediately following calendar month), as such amount may be
adjusted, upward or downward, by any adjustment to such figure in CapitalSource Inc.’s financial
statements required by its independent public accountants.



“Fremont Closing Date”: The closing date for the Fremont Transaction, including the receipt of all
necessary governmental approvals in connection therewith.



“Fremont Failed Transaction Date”: The earliest to occur of (i) the date that notice is received
by CapitalSource Inc. (or its representatives) from a Governmental Authority having jurisdiction
over the Fremont Transaction that it does not intend to approve the Fremont Transaction, (ii) the
date that CapitalSource Inc. determines that it does not intend to consummate the Fremont
Transaction, (iii) the termination of the Fremont Purchase Agreement without consummation of the
Fremont Transaction, and (iv) unless the Fremont Closing Date has occurred on or prior to such
date, July 31, 2008 (subject to extensions requested by CapitalSource Inc. and consented to by the
Administrative Agent relating to obtaining all necessary approvals of Governmental Authorities in
connection with the Fremont Transaction).



“Fremont Purchase Agreement”: That certain Purchase and Assumption Agreement dated as of April 13,
2008, by and among CapitalSource Inc., CapitalSource TRS Inc., Fremont General Corporation, Fremont
General Credit Corporation and Fremont Investment & Loan.



“Fremont Transaction”: The acquisition by CapitalSource Inc. of the assets of Fremont Investment &
Loan (to the extent and as contemplated under the Fremont Purchase Agreement, without material
waiver or amendment, except as consented to by the Administrative Agent), including the receipt of
all necessary governmental approvals in connection therewith.



“Fremont Transfer Date”: The earlier to occur of (i) the first Business Day following the Fremont
Closing Date on which the sale and assignment of any loans or financial assets by CapitalSource
Inc. or any of its Subsidiaries in connection with the Fremont Transaction is permitted under
Applicable Law, without regard to eligibility and qualifications that may be imposed with respect
thereto, and (ii) the first Business Day 30 days following the Fremont Closing Date (subject to
extensions requested by CapitalSource Inc. and consented to by the Administrative Agent relating to
obtaining all necessary approvals of Governmental Authorities in connection with the Fremont
Transaction).



“Funding Date”: With respect to the initial Funding Date, the Closing Date, and as to any
incremental Advance, any Business Day that is one Business Day immediately following the


27









 






receipt by the Administrative 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.



“Hedge Amount”: On any day, an amount equal to the product of (a) the Borrowing Base and (b) the
Fixed Rate Asset 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”: At any date of determination, a Permitted Hedge Counterparty which has
entered into a Hedging Agreement that remains in effect and has not been terminated on such date of
determination.



“Hedge Guaranty”: Any guaranty agreement supporting the obligations of a Hedge Counterparty under
its Hedge Agreement, as the same may be in effect 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 is, 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 exceeds $50,000,000, (ii) the Aggregate Outstanding Asset Balance exceeds $150,000,000,
an amount equal to 0% if the sum of the Outstanding Asset Balances of all Fixed Rate Assets is less
than or equal to $50,000,000, (iii) 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 exceeds $20,000,000 or (iv) the Aggregate Outstanding Asset Balance is less than or
equal to $150,000,000, an amount equal to 0% if the sum of the Outstanding Asset Balances of all
Fixed Rate Assets is less than or equal to $20,000,000;



     (b) Floating Rate Assets is 0%;



28









 





     (c) Banded Floating Rate Loans that are within 0.50% of the maximum interest rate allowable
under their Required Asset Documents, on any day, is an amount equal to 100%.


“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 such form as the
Administrative Agent shall approve in writing, detailing 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, and (f) 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 (e) above.



“Indemnified Amounts”: Defined in Section 11.1.



“Indemnified Parties”: Defined in Section 11.1.




29









 




“Indenture”: Defined in the definition of CS VII Issuer Financing.



“Independent”: As to any Person, any other Person (including, in the case of an accountant, a firm
of accountants and any member thereof and in the case of an investment banker, an investment bank
and any officer thereof) who (i) does not have and is not committed to acquire any material direct
or any material indirect financial interest in such Person or in any Affiliate of such Person and
(ii) is not connected with such Person as an officer, employee, promoter, underwriter, voting
trustee, partner, director or Person performing similar. “Independent” when used with respect to
any accountant may include an accountant who audits the books of such Person if in addition to
satisfying the criteria set forth above the accountant is independent with respect to such Person
within the meaning of Rule 101 of the Code of Professional Conduct of the American Institute of
Certified Public Accountants.



“Independent Director”: Defined in Section 4.1(u).



“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 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.



“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
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.



“Interest”: For each Accrual Period and each Advance outstanding, the sum of the products of:




	 	 	 	 	 	 	 
	 
	 	IR x P x
	 	1	 	 
	 
	 	 	 	 

	 	 
	 
	 	 	 	360	 	 





where:




	 	 	 	 	 	 	 
	 

	 	IR
	 	=
	 	the Interest Rate applicable on such day; and
	 
	 	 	 	 	 	 
	 

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





provided 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) 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).



“Interests in Real Property”: A fee simple interest, a financeable estate for years or a leasehold
interest, in each case in real property.



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





     (i) to the extent the applicable Purchaser is an Issuer that has funded the applicable
Advance through the issuance of commercial paper or other senior notes, a rate equal to the
applicable CP Rate; or




     (ii) to the extent the applicable Purchaser is (x) an Issuer that did not fund the
applicable Advance through the issuance of commercial paper or other senior notes, or (y) is
a Liquidity Bank, a rate equal to the Alternative Rate;



31









 




provided that the Interest Rate shall be the Base Rate for any Accrual Period for any Advance as to
which a Purchaser has funded the making or maintenance thereof without having received at least two
Business Days’ prior written notice thereof (including, without limitation, by reason of a sale of
an interest therein to any Liquidity Bank under the applicable Liquidity Agreement).



“Investors”: The Persons listed on Schedule VI attached hereto.



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



“Issuer”: CHARTA and any other any Person that becomes an owner of Advances, by assignment or
otherwise, and 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.



“Issuer Purchase Limit”: With respect to each Issuer, the lesser of $285,000,000 and the Facility
Amount in effect from time to time.



“LIBOR Rate”: For any day during any Accrual Period and any Advance or portion thereof, an
interest rate per annum equal to the rate per annum at which deposits in Dollars are offered by the
principal office of Citibank in London, England to prime banks in the London interbank market at
11:00 A.M. (London time) two (2) Business Days preceding the applicable Funding Date (with respect
to the initial Accrual Period for such Advance) and as of the second Business Day immediately
preceding the first day of the applicable Accrual Period (with respect to all subsequent Accrual
Periods for such Advance).



“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).



“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 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


32









 






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”: With respect to each Purchaser that is an Issuer, the asset purchase
agreement, secondary market agreement or other liquidity agreement, by and among such Purchaser,
the Liquidity Banks named therein, and the Administrative Agent, as such agreement may be amended,
modified, waived, supplemented, restated or replaced from time to time.



“Liquidity Bank”: Citibank and each other Person or Persons who provide liquidity support to any
Purchaser which is an Issuer pursuant to a Liquidity Agreement in connection with the issuance by
such Issuer 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 Acquired 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 Interest Rate”: With respect to each Eligible Asset, the annual rate of interest borne by
the related Underlying Instrument, as shown on the Asset List, and, in the case of an adjustable
rate Loan, as the same may be periodically adjusted in accordance with the terms thereof.



“Loan Margin”: With respect to all Eligible Assets and for any date of determination, the positive
difference between (x) the weighted average Loan Interest Rate of such Eligible Assets based on the
unpaid principal balance of such Eligible Assets and (y) the then-current value of the LIBOR Rate.



“Loan Rating”: Shall mean either Loan Rating 1, Loan Rating 2, Loan Rating 3, Loan Rating 4, Loan
Rating 5 or Loan Rating 6, as applicable.



“Loan Rating 1”: Shall mean a rating of 1 pursuant to the Credit and Collection Policy of the
Originator.



“Loan Rating 2”: Shall mean a rating of 2 pursuant to the Credit and Collection Policy of the
Originator.



“Loan Rating 3”: Shall mean a rating of 3 pursuant to the Credit and Collection Policy of the
Originator.



“Loan Rating 4”: Shall mean a rating of 4 pursuant to the Credit and Collection Policy of the
Originator.




33









 







“Loan Rating 5”: Shall mean a rating of 5 pursuant to the Credit and Collection Policy of the
Originator.



“Loan Rating 6”: Shall mean a rating of 6 pursuant to the Credit and Collection Policy of the
Originator.



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



“Loan-to-Liquidation Value” or “LLV”: With respect to any Loan, as of the date of its origination,
the percentage equivalent of a fraction (i) the numerator of which is equal to the maximum
availability (as provided in the applicable Underlying Instruments) 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 the date of its origination, 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 Underlying
Instruments) (or the Outstanding Asset Balance with respect to Delayed-Draw Term Loans as
determined on the last day of each calendar month) 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 that is senior to or pari passu with such Loan in the “capital structure” of
the related Obligor (as defined in, and as 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 lower of the Obligor’s cost to acquire the Related Property or the current
value (determined by means of an Appraisal) of the Related Property.



“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 certain
financing agents 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 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.




34









 







“Market Value”: With respect to any Acquired Loan or Excluded Loan and any Asset Valuation Date an
amount determined by the Servicer (or, at any time that the Backup Servicer is acting as Servicer,
by the Administrative Agent or its designee), in the exercise of its reasonable discretion, equal
to:



(i) with respect to an Acquired Loan, the lesser of: (A) the outstanding principal balance of such
Acquired Loan and (B) the value determined in accordance with the following, in the following order
of priority:





     (1) the price quoted for such Acquired Loan by an Approved Pricing Service as of such
Asset Valuation Date;




     (2) if the Servicer reasonably determines that it is unable to obtain a quote from an
Approved Pricing Service (or the Servicer otherwise reasonably determines that clause (1)
of this definition is inapplicable), the arithmetic mean of three bona fide firm bid-side
quotations (or, if the Servicer reasonably determines that it is unable to obtain three
such bids, then two bids) from Approved Dealers (as of the Asset Valuation Date or as of
such other proximate date as may be approved by the Administrative Agent in its sole
discretion) for an aggregate principal amount of such Acquired Loan in an amount not less
than (i) the outstanding principal balance of the applicable Acquired Loan or (ii) such
lesser amount as the Servicer may determine in its sole discretion; provided, that if the
Servicer is unable to obtain at least two such bids, it shall promptly so inform the
Administrative Agent, and the Administrative Agent may either (x) itself obtain two such
bids from Approved Dealers (in which case the arithmetic mean of such bids shall be used
for determining the value pursuant to this clause (2)) or (y) require that the
determination of the value be made pursuant to clause (3) below; and




     (3) the lesser of (i) the purchase price paid by the Originator, CapitalSource Inc.
or their respective Subsidiaries to an unaffiliated third party for such Acquired Loan or
(ii) the value of such Acquired Loan on the books of the Seller as such may have been
reduced in accordance with the Credit and Collection Policy, which value shall be further
subject to adjustment in the Administrative Agent’s discretion; provided that the Servicer
shall determine and report the amount of any such reduction on each Asset Valuation Date.


and (ii) with respect to an Excluded Loan, the lesser of: (A) the outstanding principal balance of
such Excluded Loan and (B) the lesser of (x) the purchase price paid by the Originator,
CapitalSource Inc. or their respective Subsidiaries to an unaffiliated third party for such
Excluded Loan or the par value at origination or extension, as applicable, or (y) the value of such
Excluded Loan on the books of the Seller as such may have been reduced in accordance with the
Credit and Collection Policy.



“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 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


35









 






the Assets generally or any material portion of the Assets, (c) the rights and remedies of the
Administrative Agent, the Purchasers and the Secured Parties under the Transaction Documents, (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 or the Secured Parties’
interest in the Collateral.



“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 Advance Rate” as of any Determination Date, equals 70%.



“Maximum Availability”: On any date of determination an amount equal to the least of:




     (a) the Facility Amount;



     (b) an amount equal to (i) the product of the Borrowing Base and the Weighted Average Advance
Rate on such date plus (ii) the amount on deposit in the Principal Collections Account;



     (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; and



     (d) an amount equal to (i) the Aggregate Outstanding Asset Balance, minus (ii) the Minimum
Equity Amount, plus (iii) the amount on deposit in the Principal Collections Account.


“Minimum Equity Amount”: As of any date of determination, an amount equal to the product of (i)
the Aggregate Outstanding Asset Balance multiplied by (ii) a percentage equal to 100% minus the
Maximum Advance Rate.



“Minimum Overcollateralization Amount”: As of any date of determination, an amount equal to the
product of 1.5 and the sum of the Outstanding Asset Balances of all Eligible Assets attributable to
the Obligor 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
Eligible Assets exceed any applicable Pool Concentration Criteria).



“Minimum Pool Yield”: A Pool Yield equal to 2.20%.



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



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



“Mortgage”: The mortgage, deed of trust or other instrument creating a first or second Lien on an
Interest in Real Property securing a Loan subject to this Agreement, including the Assignment of
Leases and Rents related thereto.




36









 







“Mortgaged Property”: The underlying Interests in Real Property which are subject to the Lien of a
Mortgage that secures a Loan, consisting of Interests in Real Property in a parcel or parcels of
land, at least one of which parcels is improved by a commercial building or facility, together with
Interests in Real Property in such commercial building or facility and any personal property,
fixtures, leases and other property or rights pertaining to such land, commercial building or
facility which are subject to the related Mortgage.



“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”: the North American Industry Classification System Codes by at least four 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. and its Consolidated Subsidiaries,
on a consolidated basis, in respect of the issuance of Capital Stock (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.



“Noteless Loan”: A Loan with respect to which the Underlying Instruments 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, as applicable, 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 so as to become part of 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.



“Omnibus Payoff and Restructuring Agreement”: That certain Omnibus Payoff and Restructuring
Agreement dated as of the date hereof among CapitalSource Finance LLC, CS Funding VII Depositor
LLC, CapitalSource Funding VII Trust, Wells Fargo Bank, National Association,


37









 






Citicorp North America, Inc, Citigroup Global Markets Realty Corp, and each other party thereto.



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



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



“Optional Sale Date”: Any Business Day, provided the required written notice is given in
accordance with Section 2.19(a).



“Originator”: Defined in the Preamble of this Agreement but it being understood that all
Loans originated by CapitalSource CF LLC and acquired by CSF (or its permitted successors and
assigns) from CapitalSource CF LLC shall be deemed to have been originated by CSF (or its permitted
successors and assigns) provided such acquisition is reflected on the Borrowing Base Certificate.



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



“Outstanding Asset Balance”: With respect to any Asset at any time, the sum of (a) 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 Outstanding Asset Balance, if any
Asset is a Charged-Off Asset or 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 calculating the
Average Pool Charged-Off Ratio; provided further that notwithstanding anything to the contrary
contained herein, the Outstanding Asset Balance of any Asset that is a Delinquent Asset shall be
deemed to be zero and the Outstanding Asset Balance at any time of any Asset that is an Acquired
Loan (other than an Excluded Loan) shall be the Market Value of such Acquired Loan on its most
recent Asset Valuation Date.



“Overcollateralization Amount”: As of any date of determination, an amount equal to the product of
(i) the Overcollateralization Percentage on such date and (ii) the Borrowing Base on such date.



“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.



“Overcollateralization Shortfall”: As of any date of determination, the positive difference, if
any, of (a) the Minimum Overcollateralization Amount on such date minus (b) the
Overcollateralization Amount on such date.



“Parent Undertaking — Originator”: The Parent Undertaking Agreement, in substantially the form of
Exhibit N hereto, dated as of the date hereof, relating to the obligations of the Originator,


38









 






made by CapitalSource Inc. in favor of the Seller, and assigned to the Administrative Agent, as
such Parent Undertaking Agreement may be amended, modified, supplemented, restated or replaced from
time to time.



“Parent Undertaking — Servicer”: The Parent Undertaking Agreement, in substantially the form of
Exhibit O hereto, dated as of the date hereof, relating to the obligations of the Servicer, made by
CapitalSource Inc. in favor of the Administrative Agent, as such Parent Undertaking Agreement may
be amended, modified, supplemented, restated or replaced from time to time.



“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, (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 proceed against collateral; provided
that any such Loan shall exclude any Retained Interest.



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



“Permitted Hedge Counterparty”: Means (a) Citibank, N.A. 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 clause (i) and (ii) hereof and has entered into a Hedging
Agreement with the Seller on or prior to the date of such transfer.



“Payment Duties”: Defined in Section 8.2(b).



“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


39









 






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:





     (4) 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);




     (5) 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 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 each Rating Agency in the Highest
Required Investment Category;




     (6) 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;




     (7) 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+”;




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




     (9) 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);




     (10) time deposits (having maturities of not more than 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 each Rating Agency; or




     (11) Eligible Repurchase Obligations with a rating acceptable to the Administrative
Agent, which rating, 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.




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“Permitted Liens”: With respect to the Collateral (i) Liens for state, municipal or other local
taxes (other than payroll taxes) if such taxes shall not at the time be due and payable or are
being contested in good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in accordance with GAAP so long as
there exists no material risk of sale, forfeiture, loss, or loss of or interference with use or
possession of, or diminution of value, utility or useful life of, the related Collateral, (ii)
Liens imposed by operation of 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 or are being contested
in good faith by appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP so long as there exists no
material risk of sale, forfeiture, loss, or loss of or interference with use or possession of, or
diminution of value, utility or useful life of, the related Collateral, (iii) Liens (other than any
Lien imposed by ERISA) on or in respect of deposits or pledges of cash or letters of credit posted
in the ordinary course of business (including, without limitation, surety bonds and appeal bonds)
in connection with workers’ compensation, unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar obligations, provided that any
such Lien attaches only to the cash collateral or letter of credit posted to secure such
obligation, and (iv) Liens pursuant to indebtedness incurred by an Obligor that is subordinated,
pursuant to a customary and appropriate subordination agreement, to all present and future
obligations, indebtedness and liabilities of Obligor or any related guarantor under or in respect
of the related Asset at any time and from time to time of every kind, nature and description,
direct or indirect, secured or unsecured, joint and several, absolute or contingent, due or to
become due, matured or unmatured, now existing or hereafter arising, contractual or tortious,
liquidated or unliquidated, such that the Lien in favor of the Originator is senior in priority and
the subordinated lien holder is subject to restrictions for a customary and reasonable period of
time with respect to its right to take foreclosure actions or exercise other remedies with respect
to the related collateral (other than the subordinated lien holder’s customary purchase option of
the senior indebtedness at par) in accordance with its credit and collection policies. With respect
to the Assets, Liens in favor of the Administrative Agent.



“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) 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
day of the Collection Period related to such Determination Date.




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“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:





     (i) the sum of the Outstanding Asset Balance representing exposure to a single Obligor
shall not exceed the greater of (i) 3% of the Aggregate Outstanding Asset Balance, or (ii)
$30,000,000; provided however that in no event shall the aggregate Outstanding Asset Balance
representing exposure to a single Obligor exceed $50,000,000;




     (ii) no more than 25% of the Aggregate Outstanding Asset Balance shall have an
Outstanding Asset Balance in excess of $25,000,000;




     (iii) (A) the aggregate Outstanding Asset Balance of all Eligible Assets the Obligors
of which are domiciled within a single state (other than Florida and California) shall not
exceed the greater of (x) $20,000,000 and (y) 20% of the Aggregate Outstanding Asset Balance
and (B) the aggregate Outstanding Asset Balance of all Eligible Assets the Obligors of which
are domiciled in either the state of Florida or the state of California shall not exceed the
greater of (x) $20,000,000 and (y) 30% of the Aggregate Outstanding Asset Balance;




     (iv) the aggregate Outstanding Asset Balance of Eligible Assets the Obligors of which
are domiciled outside of the United States or Canada shall not exceed the greater of (x)
$20,000,000 and (y) 10% of the Aggregate Outstanding Asset Balance of all Eligible Assets;




     (v) the aggregate Outstanding Asset Balance of Eligible Assets within a single industry
(which shall be determined by the Originator based on the four digit NAIC code and included
on the Asset List) shall not exceed the greater of (x) $20,000,000 and (y) 30% of the
Aggregate Outstanding Asset Balance of all Eligible Assets;




     (vi) the aggregate Outstanding Asset Balance of Assets consisting of Subordinated Loans
shall not exceed the greater of (x) $20,000,000 and (y) 20% of the Aggregate Outstanding
Asset Balance of all Eligible Assets;




     (vii) the aggregate Outstanding Asset Balance of Eligible Assets assigned Loan Rating 4
shall not exceed 20% of the Aggregate Outstanding Asset Balance of all Eligible Assets, and
the aggregate Outstanding Asset Balance of Eligible Assets assigned Loan Rating 5 shall not
exceed 10% of the Aggregate Outstanding Asset Balance of all Eligible Assets;




     (viii) the aggregate Outstanding Asset Balance of DIP Loans shall not exceed the
greater of (x) $20,000,000 or (y) 20% of the Aggregate Outstanding Asset Balance of all
Eligible Assets;




     (ix) the aggregate Outstanding Asset Balance of Eligible Assets subject to Scheduled
Payments of interest on a basis other than monthly shall not exceed the greater



42









 







of (x) $20,000,000 and (y) 25% of the Aggregate Outstanding Asset Balance of all Eligible
Assets;




     (x) the aggregate Outstanding Asset Balance of all Senior B-Note Loans shall not exceed
the greater of (x) $20,000,000 and (y) 20% of the Aggregate Outstanding Asset Balance of all
Eligible Assets; provided, however that any Senior B-Note Loan or portion thereof in excess
of this limitation shall be considered a Subordinated Loan for purposes of determining
eligibility;




     (xi) the aggregate Outstanding Asset Balance of Eligible Assets the Obligors of which
are principally engaged in the origination of mortgage loans to borrowers who have less than
perfect (i.e., less than “A”) credit histories, higher debt to income ratios or whose loans
otherwise were underwritten with exceptions to customary “A” quality underwriting guidelines
or who present other risks shall not exceed $0;




     (xii) the aggregate Outstanding Asset Balance of Acquired Loans shall not exceed 50% of
the Aggregate Outstanding Asset Balance of all Eligible Assets;




     (xiii) the aggregate Outstanding Asset Balance of any single bulk purchase of Acquired
Loans shall not exceed the greater of (x) $20,000,000 and (y) 20% of the Aggregate
Outstanding Asset Balance of all Eligible Assets without the approval of the Administrative
Agent;




     (xiv) the sum of (a) the aggregate Outstanding Asset Balance of Senior Loans and Senior
B-Note Loans with an original term to maturity of 7 years or greater and (b) the aggregate
Outstanding Asset Balance of Subordinated Loans with an original term to maturity of 10
years or greater shall not exceed $100,000,000;




     (xv) the aggregate Outstanding Asset Balance of the Rated Retained Securities shall not
exceed 2.5% of the Aggregate Outstanding Asset Balance of all Eligible Assets;




     (xvi) the weighted average life of the Eligible Assets shall not exceed 4.0 years; and




     (xvii) the Loan Margin shall not be less than 3.00%.


“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 day of the Collection Period related to such
Determination Date that are deposited into the Collection Account during such Collection Period,
and (b) the denominator of which is equal to the Aggregate Outstanding Asset Balance as of the
first day of such Collection Period.



“Pool Yield”: On any day, the excess, if any, of (a) the Pool Rate on such day over (b)
the sum of (i) the weighted average Interest Rate applicable to the Advances multiplied by the Pool
Yield Applicable Advance Rate, (ii) the weighted average Program Fee Rate applicable to the
Advances multiplied by the Pool Yield Applicable Advance Rate and (iii) the Servicing Fee Rate, in
each case as of such day.




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“Pool Yield Applicable Advance Rate”: On any date of determination, if (i) the Maximum Availability
is determined hereunder in accordance with clause (d) of the definition thereof, the Maximum
Advance Rate then in effect, or (ii) if the Maximum Availability is determined hereunder in
accordance with clauses (a), (b) or (c) of the definition thereof, the Weighted Average Advance
Rate.



“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 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 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.



“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”: The rate announced publicly by Citibank from time to time as its base rate in the
United States, such rate to change as and when such designated rate changes. The Prime Rate is not
intended to be the lowest rate of interest charged by Citibank or any other specified financial
institution in connection with extensions of credit to debtors.



“Prime Rate Asset”: A Floating Rate Asset where the interest rate payable by the Obligor thereof
is based on the CSF Prime Rate.




44









 







“Principal Collections”: Any and all amounts received in respect of any principal due and payable
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”: With respect to any Purchaser, as defined in the Purchaser Fee Letter.



“Program Fee Rate”: With respect to any Purchaser, the rate set forth in the Purchaser Fee Letter,
but without consideration of clause (y) in subsection (c) thereof.



“Purchaser”: (i) any Issuer and (ii) any Liquidity Bank, as the context requires; and “Purchasers”
means collectively (a) the Issuers and (b) the Liquidity Banks.



“Purchaser Affiliate”: With respect to a Purchaser, means any other Person that, directly or
indirectly, controls, is controlled by or under common control with 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 50% 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



“Purchaser Fee Letter”: The Omnibus Purchaser Fee Letter, dated as of the date hereof, by and
among the Seller, the Servicer, the Administrative Agent, CapitalSource Real Estate Loan LLC,
2007-A, CSE Mortgage LLC and CSE QRS Funding II LLC, 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, the Administrative Agent or any of their Affiliates; 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



45









 






     (iii) is one of the following: (I) 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; (II) 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 (III) 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 transaction or repurchase
transaction is owned by one or more entities that are Qualified Transferees under subclauses
(A) or (B) above; or (IV) 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 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.



“Rated Retained Securities”: Each of (i) the CapitalSource Commercial Loan Trust Class E Floating
Rate Deferrable Asset Backed Notes, Series 2006-1; and (ii) such other securities as agreed upon by
the Administrative Agent.



“Rating Agency”: Each of S&P, Moody’s and Fitch.



“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


46









 






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.



“Register”: Defined in Section 13.16(c).



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



“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, all Lock Box Accounts and the Securities Account,
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.




47









 







“Required Advance Reduction Amount”: On any day, an amount equal to the larger positive
difference, if any, of either (i) Advances Outstanding on such day minus the Maximum
Availability on such day, or (ii) Combined Advances Outstanding on such day minus the
Combined Commitment Amount on such day (recognizing that Combined Advances Outstanding may be
lowered by reductions in Advances Outstanding hereunder as well as by reductions in “Advances
Outstanding” under the other Citibank Facilities).



“Required Asset Documents”: With respect to Existing Assets, the meaning assigned to the term
“Required Loan Documents” in the CS VII Issuer Financing SSA. With respect to all other Assets, as
follows: 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 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) for each Loan, other
than Agented Loans or Acquired Loans (or other Loans for which an Assignment of Mortgage has been
delivered to Wells Fargo in its capacity as trustee or custodian pursuant to a prior term
transaction or warehouse facility involving the Originator or one of its Affiliates), secured by
real property, an Assignment of Mortgage, (v) for any Loan identified as an Acquired Loan on the
Asset Checklist, the duly executed original assignment agreement; provided that with respect to any
Acquired Loan, any of the foregoing documents, other than any related promissory notes in the case
of Acquired Loans only, may be copies, and (vi) for any Loan identified as an Alarm Service Loan on
the Asset Checklist, the duly executed version of each of the following: the original (and to the
extent it exists, the sole chattel paper counterpart) master purchase agreement and, if any,
security agreement and a copy of the purchase statement related to each Alarm Service Loan, signed
by an officer of the originator of such Alarm Service Loan together with copies of any related
assignment agreements, subordination agreement (if set forth on the Asset Checklist), intercreditor
agreement (if set forth on the Asset Checklist), security agreements or instruments (to the extent
any security interest in collateral has been granted and as set forth in the Asset Checklist or the
Asset List), UCC financing statements (to the extent any security interest in collateral has been
granted and as set forth in the Asset Checklist or the Asset List) and guarantee (if set forth on
the Asset Checklist).



“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.



“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.




48









 







“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 and/or by the Seller to the Purchasers, all of the obligations, if any, to provide
additional funding with respect to such Revolving Loan, and (B) with respect to any Acquired Loan,
any Participation Loan or any Agented Loan that is transferred by the Originator to the Seller
and/or by the Seller to the Purchasers, (i) all of the obligations, if any, of the agent(s) under
the documentation evidencing such Acquired Loan, Participation Loan, or Agented Loan and (ii) the
applicable portion of the interests, rights and obligations under the documentation evidencing such
Acquired 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.



“Retransfer Date”: Defined in Section 4.6.



“Retransfer Price”: Defined in Section 4.6.



“Review Criteria”: Defined in Section 8.2(b)(i).



“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 that 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 Amended and Restated Loan Sale 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 Asset, each monthly, quarterly, or annual payment of
principal required to be made by the Obligor thereof under the terms of such Asset; in all cases,
excluding any payment in the nature of, or constituting, interest.




49









 







“Secured Party”: (i) each Purchaser, (ii) the Administrative Agent and (iii) each Hedge
Counterparty that is either a Purchaser or an Affiliate of the Administrative 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.



“Securities Account”: Defined in Section 6.4(h).



“Securities Intermediary”: Defined in Section 8.11(a).



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



“Senior Loan”: A Loan that (i) is secured by a first priority lien on all of the Obligor’s assets
constituting Collateral for such Loan (subject to Permitted Liens), (ii) has a Loan-to-Value Ratio
less than or equal to 90% and (iii) provides that the payment obligation of the related Obligor on
such Loan is either senior to, or pari passu with, all other loans or financings to such Obligor.



“Senior B-Note Loan”: Any multilender Loan that (i) is secured by a first priority lien on all the
Obligor’s assets constituting Collateral for such Loan (subject to Permitted Liens), (ii) has a
Loan-to-Value Ratio less than or equal to 90%, and (iii) that contains provisions which, upon the
occurrence of an event of default under the underlying loan documents or in the case of any
liquidation or foreclosure on the related Collateral, the Originator’s (or its assignee’s) portion
of such Loan would be paid only after the other lender party to such Loan (whose right to payment
is contractually senior to the Originator or such assignee) is paid in full.



“Senior Secured Loan”: Either a Senior Loan or a Senior B-Note Loan.



“Servicer”: CSF, 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); provided, that solely with respect to Servicing Fee
payable to the Backup Servicer acting as successor Servicer hereunder, “Servicing Fee” instead
means as set forth in the following language (with capitalized terms used in such language but not
defined herein to have the meaning given such terms in the CS VII Issuer Financing SSA, and with
the definition of Servicing Fee and references to Servicing Fee Rate set forth in Section 2.14(b)
deemed to be replaced by the substantive meaning of the following language, but applied in the
context of this Agreement): with respect to each Eligible Asset (including any Eligible Asset that
has been foreclosed and for which the related Mortgaged Property has become a Foreclosure Property,
but excluding any Liquidated Loan), for each Remittance Period, a per annum fee equal to the sum of
(i) 1.00% of the Principal Balance of each Loan (other than


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Revolving Loans) and (ii) 1.25% of the Principal Balance of each Revolving Loan, in each case at
the beginning of such Remittance Period payable to the Servicer for the servicing of such Eligible
Loan out of Scheduled Payments made by the Obligor thereunder in an amount determined in the manner
in effect on the related Transfer Date (or, in the case of Additional Assets, the related Funding
Date).



“Servicing Fee Rate”: 0.50% per annum for Eligible Assets which are not Workout Assets and 0.75%
per annum for Workout Assets, without duplication.



“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.



“Subordinated Loan”: Any Loan other than a Senior Loan or a Senior B-Note Loan.



“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 that any joint
ventures in which each party to the joint venture possesses 50% of the voting stock of such entity
shall be expressly excluded from this definition.



“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).



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



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



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




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“Termination Date”: 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 as the Termination Date at any time following two Business Days’ prior written
notice thereof to the Administrative Agent, (c) March 31, 2009, (d) with respect to any Purchaser
who is an Issuer the date any Liquidity Agreement shall cease to be in full force and effect, or
(e) the date of the declaration or automatic occurrence of the Termination Date pursuant to
Section 10.2.



“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.



“TNW Test Level”: The greater of (A) the sum of (i) $1,925,000,000, minus (ii) the Fremont Bank
Adjustment, plus (iii) 70% of the cumulative Net Proceeds of Capital Stock/Conversion of Debt
received at any time after December 31, 2006 and prior to the Closing Date, and (B) the Unsecured
Covenant Floor.



“Transaction”: Defined in Section 3.2.



“Transaction Documents”: This Agreement, the Sale Agreement, each Hedging Agreement, the Hedge
Guaranty, the Lock-Box Agreement, the Intercreditor Agreement, the Confirmation and Undertaking
Letter, the Parent Undertaking-Originator, the Parent Undertaking-Servicer, each Variable Funding
Certificate, the Purchaser Fee Letter, the Backup Servicer and 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.



“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.



“Underlying Instruments”: The indenture, loan agreement, credit agreement or other agreement
pursuant to which a Loan has been issued or created and each other agreement that governs the terms
of or secures the obligations represented by such Loan or of which the holders of such Loan are the
beneficiaries related thereto.



“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.



“Unsecured Covenant Floor”: The sum of (a) the higher of (i) the covenant level for “Minimum
Consolidated Tangible Net Worth” set forth under Section 5.32(c) of the Unsecured Credit


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Facility (or any replacement provision thereunder), and (ii) the covenant level for minimum
consolidated tangible net worth found under any securitization or other credit facility that is
subject of the “Debt Acceleration” provision found in Section 7.1(e) of the Unsecured Credit
Facility (or any replacement provision thereunder), plus (b) $50,000,000.



“Unsecured Credit Facility”: (i) The Credit Agreement, dated as of March 14, 2006, among
CapitalSource Inc., as the Borrower, the guarantors listed therein, the lenders listed therein,
Wachovia Bank, National Association, as the Administrative Agent, Swingline Lender, and Issuing
Lender, Bank of America, N.A., as Issuing Lender, Wachovia Capital Markets, LLC, as Sole Bookrunner
and as Lead Arranger, Bank of Montreal, Barclays Bank PLC, and SunTrust Bank, as Co-Documentation
Agents, as now or hereafter amended, modified, supplemented, restated or replaced or substituted
from time to time in accordance with its terms, and (ii) any other unsecured credit facility
entered into by CapitalSource Inc. from time to time following the Closing Date that expressly
permits the use of proceeds of advances thereunder to pay obligations outstanding under the
Citibank Facilities.



“Unsecured TNW Threshold”: The sum of (a) the higher of (i) the covenant level for “Minimum
Consolidated Tangible Net Worth” set forth under Section 5.32(c) of the Unsecured Credit Facility
(or any replacement provision thereunder), and (ii) the covenant level for minimum consolidated
tangible net worth found under any securitization or other credit facility that is subject of the
“Debt Acceleration” provision found in Section 7.1(e) of the Unsecured Credit Facility (or any
replacement provision thereunder), plus (b) $75,000,000.



“Variable Funding Certificate” or “VFC”: Defined in Section 2.1(a).



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



“Warranty Asset”: Any Asset that fails to satisfy any criteria of the definition of Eligible
Asset; provided that (a) notwithstanding the foregoing, for purposes of determining what is a
Warranty Asset, the criteria set forth in clauses (1)(c), (1)(d), 1(l)(i),
1(s) (but solely to the extent the criteria in such clause 1(s) relates to any
express representation and warranty that an Asset is an Eligible Asset), 1(w),
1(x), (1)(y) and clauses (2)(e) and 2(f) (but solely to the extent
that the criteria in such clauses 2(e) and 2(f) would not be satisfied as a result
of the operation of law or an effective court order in connection with an Insolvency Event) and
clause (3)(i) of the definition of Eligible Asset and clauses (viii) and
(x) in the definition of Eligible Obligor shall apply only as of the applicable Cut-Off
Date of such Asset, and the criteria set forth in clause 2(ee) shall apply only to Acquired
Loans first included in the Collateral on or after the Closing Date and (b) with respect to
Existing Assets, to the extent that corresponding eligibility criteria to those mentioned in clause
(a) above exist in the CS VII Issuer Financing SSA, the limitations referred to in clause (a) shall
also apply to those criteria in determining whether such an Asset is a Warranty Asset.




53









 







“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.



“Weighted Average Advance Rate”: For any day on which Advances are outstanding, the weighted
average of the Advance Rates applicable to the Eligible Assets included in the Collateral on such
day, weighted according to the proportion of the Aggregate Outstanding Asset Balance each type of
Asset represents; provided that the Weighted Average Advance Rate shall in no event exceed 80%.



“Workout Asset”: A Delinquent Asset or a Charged-Off Asset.



“Zero-Coupon Bond”: A bond that, at the time of determination, does not make periodic payments of
interest.




     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 New York, New York 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



54









 







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.



ARTICLE II




PURCHASE OF THE VARIABLE FUNDING CERTIFICATES




     Section 2.1 The Variable Funding Certificates.



     (a) On the terms and conditions hereinafter set forth, Seller shall deliver to the
Administrative Agent at its address set forth on the signature pages of this Agreement (for the
benefit of the applicable Purchasers) on the Closing Date, a duly executed variable funding
certificate (each such certificate, a “Variable Funding Certificate” or “VFC”), in substantially
the form of Exhibit B. Each Variable Funding Certificate shall evidence an undivided
ownership interest (and the Seller does hereby sell, transfer, assign and convey such undivided
ownership interest to the Administrative Agent for the benefit of the Purchasers) in the Collateral
purchased by a Purchaser in an amount equal, at any time, to the percentage equivalent of a
fraction (i) the numerator of which is the Advances outstanding under the applicable VFC on such
day, and (ii) the denominator of which is the total aggregate Advances Outstanding on such day.
Interest shall accrue, and each VFC shall be payable, as described herein; provided that the
aggregate amount outstanding under all VFCs 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 advances of funds under the VFCs
(each, an “Advance”) and the Issuers may, in their sole discretion, fund such Advance ratably in
accordance with their Issuer Purchase Limits (or in such other proportion as the Issuers may
mutually agree), and if the Issuers do not fund the entire amount of such Advance, the Liquidity
Banks shall fund, ratably in accordance with their Commitments, any portion of such Advance not
funded by the Issuers; provided that in no event shall the Purchasers make any Advance if, after
giving effect to such Advance, either (i) the aggregate Advances Outstanding hereunder would exceed
the lesser of (x) the Facility Amount or (y) the Maximum Availability, or (ii) the Combined
Advances Outstanding would exceed the Combined Commitment Amount. Notwithstanding anything
contained in this Section 2.1 or elsewhere in this Agreement to the contrary, (i) no Issuer
shall fund any Advance at any time if, after giving effect thereto, the outstanding principal
amount of Advances funded by such Issuer would exceed such Issuer’s Issuer Purchase Limit, and (ii)
no Liquidity Bank shall be obligated to provide the Administrative Agent or the Seller with
aggregate funds in connection with an Advance that would exceed such Liquidity Bank’s Commitment
then in effect. Each Advance made by the



55









 







Purchasers hereunder is subject to the interests of the Hedge Counterparties under Section
2.9(a)(1) and Section 2.10(a)(1) of this Agreement.



     (c) Notwithstanding the foregoing or anything in this Agreement or any other Transaction
Document to the contrary, (i) nothing contained in this Agreement or any other Transaction Document
shall constitute a commitment by any Issuer to fund any Advance and (ii) the Issuers shall not be
liable to make any payments under this Agreement or any other Transaction Document (all liability
with respect to which shall be an obligation of the Liquidity Banks or the Administrative Agent).



     (d) The initial Advances hereunder shall be funded on the Closing Date, and shall be funded
against (i) the Seller’s acquisition from the Issuer (as defined in the Indenture) and assignment
hereunder of the Existing Assets, free and clear of the Lien of the Indenture, and (ii) any
Additional Assets necessary or desirable for the Seller to include as Assets to be financed
hereunder in connection with procuring the release of the Existing Assets from the Indenture by
repayment of the CS VII Issuer Financing Obligations secured under the Indenture in full.



     (e) Notwithstanding anything to the contrary contained herein, this Agreement and the VFCs to
be issued thereunder shall constitute a single revolving debt facility with a single maturity and
Seller shall not take any action under the Agreement that would cause Seller to have outstanding
one or more debt obligations with two or more maturities hereunder. For purposes of this section,
debt obligations have “two or more maturities” if they have different stated maturities or if the
holders of the debt obligations possess different rights concerning the acceleration of or delay in
the maturities of the obligations.



     Section 2.2  [Intentionally Omitted].



     Section 2.3 Procedures for Advances.



     (a) Each Advance from a Purchaser hereunder shall be effected by the Seller (or the Servicer
on its behalf) delivering to the Administrative 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. (New York City, New York time) at least one Business Day prior to the proposed
Funding Date; provided that no more than two Advances shall be made in any one calendar week
without the Administrative Agent’s prior consent. 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, (ii) specify the date of such Advance, (iii) specify the Assets to be
financed on such Funding Date (including the appropriate file number and Outstanding Asset Balance
for each Asset, and identifying each Rated Retained Security or Loan by type and whether such Loan
is a Senior Loan, Senior B-Note Loan, Subordinated Loan, Acquired 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.



     Each Issuer shall promptly thereafter notify the Administrative Agent whether such Issuer has
determined to make the requested Advance on the terms specified by the Seller, and the Issuers
shall notify the Administrative Agent of the funding allocation as between them (if




56











 




other than proportional to their Issuer Purchase Limits). The Administrative Agent shall promptly
thereafter notify the Seller whether the Issuers have determined to make the requested purchase
and, if so, whether all of the terms specified by the Seller are acceptable to the Issuers. If the
Issuers have determined not to make the entire amount of an Advance requested to be made, the
Administrative Agent shall promptly send notice of the proposed Advance to all of the Liquidity
Banks concurrently specifying the date of such Advance, the aggregate amount of such Advance to be
funded by the Liquidity Banks (which amount shall be equal to the portion of the Advance not funded
by the Issuers), and each such Liquidity Bank’s portion thereof (determined ratably in accordance
with its respective Commitment).




     (b) On the date of each Advance, the applicable Purchasers 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 aggregate amount equal to the least 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) Effective on the date of each Advance pursuant to this Section 2.3, the Seller hereby
sells and assigns to the Administrative Agent, for the benefit of the Purchasers making such
Advance, all Assets listed on the attachment to the Borrowing Notice delivered in connection with
such Advance, and the Related Security and Collections with respect thereto.



     (d) On each Funding Date, the obligation of each Liquidity Bank to remit its pro rata share of
each Advance shall be several from that of each other Liquidity Bank and the failure of any
Liquidity Bank to so make such amount available to the Seller shall not relieve any other Liquidity
Bank of its obligation hereunder. No Liquidity Bank shall be responsible for the failure of any
other Liquidity Bank to make funds available in connection with any Advance.




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





     (a) The Seller may, upon at least 10 days’ prior written notice (such notice to be received by
the Administrative Agent no later than 5:00 p.m. (New York City, New York time) on such day) to the
Administrative 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 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.



     (b) The Seller may, upon one Business Day’s prior written notice (such notice to be received
by the Administrative Agent and each Hedge Counterparty no later than 2:00 p.m. (New York City, New
York time) on such day) to the Administrative Agent, reduce the Advances Outstanding by remitting,
to the Administrative Agent, for payment to the applicable 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 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



57









 







the Advances Outstanding, and Seller has paid all Hedge Breakage Costs and any payments owing
to the relevant Hedge Counterparty for any such termination. Any reduction of the Advances
Outstanding shall be in a minimum amount of $250,000. 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 Administrative Agent shall apply such amounts first to
the pro rata reduction of the Advances Outstanding by paying such amounts to the applicable
Purchasers, second to the payment of related accrued Interest on the amount of the Advances
Outstanding to be repaid by paying such amounts to the applicable 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; provided,
however, if such amounts are received during the Amortization Period, such amounts shall be applied
in the order of priority set forth in Section 2.10. 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 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 (calculated without regard to either of the
provisos contained in the definition of “Outstanding Asset Balance”) to be applied to the pro rata
reduction of the principal of each VFC 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 retransfer 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 transfer to the Seller, free and clear of any Lien created by the
Administrative Agent, all of the right, title and interest of the Administrative Agent, as agent
for the Secured Parties, in, to, and under the 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.



     To the extent any Purchaser’s Interest Rate is determined by reference to the CP Rate, the
Administrative Agent shall determine such Purchaser’s CP 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, as applicable, on each Payment Date for the related Accrual Period and shall advise
the Servicer thereof on or before the third Business Day prior to such Payment Date.



     Section 2.6 Percentage Evidenced by each Variable Funding Certificate.



     The variable percentage ownership interest in the Collateral represented by each VFC shall be
initially computed on its date of purchase as set forth in Section 2.1(a). Thereafter,
until



58









 







the Termination Date, each VFC shall be automatically recomputed (or deemed to be recomputed)
on each day prior to the Termination Date as set forth in Section 2.1(a). The variable
percentage ownership interest in the Collateral represented by each VFC as computed (or deemed to
be recomputed) as of the close of business on the day immediately preceding the Termination Date
shall remain constant at all times on and after the Termination Date. The variable percentage
ownership interest in the Collateral represented by each VFC shall become zero when its Advances
and Interest have been indefeasibly paid in full.



     Section 2.7 [Reserved].



     Section 2.8 Notations on Variable Funding Certificates.



     The Administrative Agent is hereby authorized to enter on a schedule attached to the VFC a
notation (which may be computer generated) with respect to each Advance under a VFC made by the
applicable 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 the Administrative Agent to make any such notation
on the schedule attached to the VFC 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, the following amounts in the following order of priority:




     (1) 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;




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




     (3) to the Servicer, in an amount equal to any accrued and unpaid Servicing Fees to
the end of the preceding Collection Period, for the payment thereof;




     (4) 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
Fees, Collateral Custodian Fees and Transition Expenses, for the payment thereof;




     (5) to the Administrative Agent, for the account of the applicable Purchasers pro
rata in accordance with the amount of Advances Outstanding hereunder (or portions thereof)
held by each Purchaser, in an amount equal to any accrued and unpaid



59









 







Interest (including Interest payable on any prior Payment Date and related interest
thereon), Program Fee, Commitment Fee and Breakage Costs, for the payment thereof;




     (6) to the Administrative Agent, for the account of the applicable Purchasers pro
rata in accordance with the amount of Advances Outstanding hereunder (or portions thereof)
held by each Purchaser, if the Required Advance Reduction Amount is greater than zero, an
amount necessary to reduce the Required Advance Reduction Amount to zero;




     (7) 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, for the payment thereof;




     (8) to the Administrative Agent, the applicable Purchasers, 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 clause
(8), all other amounts, including Increased Costs but other than Advances Outstanding,
then due under this Agreement, for the payment thereof; and




     (9) any remaining amount shall be distributed to the Seller.



     (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. (New York City,
New York 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. (New York City, New York 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.



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     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, (i) from the
Collection Account, to the extent of Available Funds, and (ii) from Servicer Advances received with
respect to the immediately preceding Collection Period, the following amounts in the following
order of priority:




     (1) 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;




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




     (3) to the Servicer, in an amount equal to any accrued and unpaid Servicing Fees to
the end of the preceding Collection Period, for the payment thereof;




     (4) 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
Fees, Collateral Custodian Fees and Transition Expenses, for the payment thereof;




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




     (6) to the Administrative Agent, for the account of the applicable Purchasers pro
rata in accordance with the amount of Advances Outstanding hereunder (or portions thereof)
held by each Purchaser, in an amount necessary to reduce the Advances Outstanding and all
other Aggregate Unpaids to zero, for the payment thereof;




     (7) 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 (1)
above, for the payment thereof;




     (8) to the Administrative Agent, the applicable Purchasers, 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 clause
(8), all other amounts, including Increased Costs but other than Advances Outstanding,
then due under this Agreement, for the payment thereof; and




     (9) any remaining amount shall be distributed to the Seller.



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     Section 2.11 Collections and Allocations.



     (a) Collections. The Servicer shall promptly identify any collections received as
being on account of Interest Collections, Principal Collections or other Collections and shall
transfer, or cause to be transferred, all Collections received directly by it or on deposit in the
form of available funds in the Lock-Box Accounts to the Collection Account by the close of business
on the second 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 (or, at any time that the Collection
Account is held at Citibank, N.A., the Administrative Agent at the direction of 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,
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 a report setting forth the calculation of such Excluded Amounts in a
format satisfactory to the Administrative Agent in its 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 11:00 a.m. (New York City, New York time) on the day when due in lawful money of the
United States in immediately available funds to the 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



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deposited when due hereunder at 2.0% per annum above the Base Rate, payable on demand;
provided 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 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
Section 2.9(a)(8) or Section 2.10(a)(8), 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 Purchasers and the
Administrative Agent, 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
Purchasers against any reasonable loss, cost or expense incurred by the applicable Purchasers
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 applicable 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 Mandatory Repurchase.



     On the first Payment Date following the Termination Date when the Borrowing Base is less than
15% of the Borrowing Base as of the Termination Date, the Seller shall notify the Administrative
Agent in writing of its intention to purchase all remaining Collateral. On the Payment Date next
succeeding any such notice, the Seller shall (i) terminate all Hedge Transactions in accordance
with their terms and (ii) purchase all remaining Collateral for a price equal to the Aggregate
Unpaids and the proceeds of such purchase 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)(5) and Section 2.10(a)(5), as applicable, to the Administrative 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 the
Administrative Agent in the Purchaser Fee Letter.



     (b) The Servicer shall be entitled to receive a fee (the “Servicing Fee”), monthly in arrears
in accordance with Section 2.9(a)(3) and Section 2.10(a)(3), as applicable, which
fee shall be equal to the sum of (a) the product of (i) the Servicing Fee Rate applicable to
Eligible Assets which are not Workout Assets, (ii) the Aggregate Outstanding Asset Balance
(excluding Workout Assets), as of the first day of the immediately preceding Collection Period and
(iii) the



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actual number of days in such Collection Period divided by 360, and (b) the product of (i) the
Servicing Fee Rate applicable to Workout Assets, (ii) the sum of the Outstanding Asset Balances of
all Workout Assets, 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 Backup Servicer shall be entitled to receive the Backup Servicing Fee in accordance
with Section 2.9(a)(4) and Section 2.10(a)(4), as applicable.



     (d) The Collateral Custodian shall be entitled to receive the Collateral Custodian Fee in
accordance with Section 2.9(a)(4) and Section 2.10(a)(4), as applicable.



     (e) The Seller shall pay to Kaye Scholer LLP as counsel to the Administrative Agent, on the
Closing Date, its reasonable estimated fees and out-of-pocket expenses in immediately available
funds and shall pay all additional reasonable fees and out-of-pocket expenses of Kaye Scholer LLP
within 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 any ownership 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 ownership interest in the Collateral conveyed to the Purchasers
hereunder or the Purchasers’ rights or obligations hereunder (including, without limitation,
conditions relating to agreeing to make or making, funding or maintaining Advances at the Adjusted
Eurodollar Rate), 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



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consequence of its obligations hereunder or arising in connection herewith to a level below
that which any such Affected Party could have achieved but for such introduction, change or
compliance (taking into consideration the policies of such Affected Party with respect to capital
adequacy) by an amount deemed by such Affected Party to be material, then from time to time, within
ten days after demand by such Affected Party (which demand shall be accompanied by a statement
setting forth the basis for such demand), the Servicer shall pay (and to the extent the Servicer
does not make such payment the Seller shall pay) directly to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such reduction.



     (c) If as a result of any event or circumstance similar to those described in clause
(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 any Purchaser shall notify the Administrative Agent that a Eurodollar Disruption Event
as described in clause (a) of the definition of “Eurodollar Disruption Event” has occurred,
the Administrative Agent shall in turn so notify the Seller, whereupon all Advances Outstanding of
the affected Purchaser in respect of which Interest accrues at the Adjusted Eurodollar Rate shall
immediately be converted into Advances Outstanding in respect of which Interest accrues at the Base
Rate.



     (f) For 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 or any Liquidity Bank (a “Consolidation Event”), such event
shall constitute a circumstance on which such Affected Party may base a claim for reimbursement
under this Section 2.15. In addition, if a Consolidation Event shall occur, each of the
Administrative Agent, Purchasers, Originator, Servicer and Seller agrees to work in good faith to
(i) obtain a rating for the Advances acceptable to the Administrative Agent or (ii) seek an
alternative term financing and facilitate the transfer or assignment by the Purchasers of the
Advances and Assets in connection with such alternative term financing.



     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



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deduction or withholding for or on account of any Taxes. If any Taxes are required to be
withheld from any amounts payable to the Administrative Agent, any Affected Party or any Secured
Party, then the amount payable to such Person will be increased (such increase, the “Additional
Amount”) such that every net payment made under this Agreement after withholding for or on account
of any Taxes (including, without limitation, any Taxes on such increase) is not less than the
amount that would have been paid had no such deduction or withholding been deducted or withheld.
The foregoing obligation to pay Additional Amounts, however, will not apply with respect to net
income or franchise taxes imposed on the Purchasers, any Affected Party or the Administrative
Agent, 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 or the
Administrative Agent, 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 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 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 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)



66









 







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.



     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 or the commencement of the
Amortization Period (and after the occurrence of a Termination Event or during the Amortization
Period at the discretion of the Administrative Agent), 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, (I) the Advances Outstanding do not exceed
the lesser of (i) the Facility Amount and (ii) the Maximum Availability, and (II) the Combined
Advances Outstanding do not exceed the Combined Commitment Amount;



     (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) for purposes only of substitutions pursuant to Section 4.6 undertaken because an
Asset has become a Warranty Asset, such Substitute Assets, at the time of substitution by the
Seller, shall have no greater weighted average life than the Replaced Asset;



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     (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 the Outstanding Asset Balance of all Assets that are Substitute Assets (other
than in the case of substitutions pursuant to Section 4.6 undertaken because an Asset has become a
Warranty Asset) does not exceed 20% of the Facility Amount;



     (i) the sum of (a) the Outstanding Asset Balance of all Substitute Assets (other than in the
case of substitutions pursuant to Section 4.6 undertaken because an Asset has become a Warranty
Asset) substituted for Delinquent Assets and Charged-Off Assets plus (b) the Outstanding Asset
Balance of all Delinquent Assets and Charged-Off Assets (determined without regard to either of the
provisos in the definition of Outstanding Asset Balance) that have been sold pursuant to an
Optional Sale shall not exceed 10% of the Facility Amount; and



     (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.



     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 prepay all or a portion of
the Advances Outstanding in connection with the sale and assignment to the Seller by the
Administrative Agent, on behalf of the Secured Parties, 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 Business Days’
prior written notice (in the case of a Permitted Securitization) or five Business Days’
prior written notice (in the case of a Charged-Off Asset or Delinquent Asset) 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 (x) a Permitted Securitization
Transaction or (y) the sale of a Charged-Off Asset or a Delinquent Asset;




     (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



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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 and the assignment to the Seller of the
Collateral 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 remaining
Combined Advances Outstanding shall not exceed the Combined Commitment Amount, (c) 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, (d) the
eligibility of any Asset remaining as part of the Collateral after the Optional Sale will be
redetermined as of the Optional Sale Date, (e) the Pool Concentration Criteria will be
redetermined as of the Optional Sale Date, and (f) neither an Unmatured Termination Event
nor a Termination Event shall have resulted;




     (v) On the related Optional Sale Date, the Administrative Agent, on behalf of the
Purchasers and 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 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 Purchasers, 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 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) and is
sufficient to reduce the Advances Outstanding, to the extent requested by the Seller in
connection with the Optional Sale;




     (vi) the sum of (a) the Outstanding Asset Balance of all Substitute Assets (other than
in the case of substitutions pursuant to Section 4.6 undertaken because an Asset has become
a Warranty Asset) substituted for Delinquent Assets and Charged-Off Assets plus (b) the
Outstanding Asset Balance of all Delinquent Assets and Charged-Off Assets (determined
without regard to either of the provisos in the definition of Outstanding Asset Balance)
that have been sold pursuant to an Optional Sale shall not exceed 10% of the Facility
Amount; and




     (vii) 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.



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     (b) In connection with any Optional Sale, following receipt by the Administrative Agent of the
amounts referred to in clause (v) above, there shall be sold and assigned to the Seller
without recourse, representation or warranty all of the right, title and interest of the
Administrative Agent, the Purchasers and the Secured Parties in, to and under the portion of the
Collateral so retransferred and such portion of the Collateral so retransferred shall be released
from the Lien of this Agreement (subject to the requirements of clause (iv) above).



     (c) The Seller hereby agrees to pay the reasonable legal fees and expenses of the
Administrative 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 to be
retransferred to the Seller, in recordable form if necessary, in favor of the Seller as the Seller
may reasonably request, (ii) deliver any portion of the Collateral to be retransferred to the
Seller in its 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 to be
retransferred to the Seller and release and deliver to the Seller such portion of the Collateral to
be retransferred to the Seller.



     Section 2.20 Discretionary Sales.



     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 to the Seller by the Administrative
Agent, on behalf of the Secured Parties, of the Collateral (each, a “Discretionary Sale”), subject
to the following terms and conditions:



     (a) 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;



     (b) 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 for the benefit of any
other party to the Discretionary Sale and provides no indemnification for the benefit of any other
party to the Discretionary Sale;



     (c) After giving effect to the Discretionary Sale and the assignment to the Seller of the
Collateral 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



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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;



     (d) On the related Discretionary Sale Date, the Administrative Agent, on behalf of the
Purchasers, 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 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 Purchasers, the Affected Parties, the Indemnified Parties and the Hedge
Counterparties, as applicable, under this Agreement and the other Transaction Documents, to the
extent accrued to such date; provided that the Administrative 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) and is
sufficient to reduce the Advances Outstanding to the extent requested by the Seller in connection
with the Discretionary Sale;



     (e) 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;



     (f) On the related Discretionary Sale Date, the proceeds from such Discretionary Sale have
been sent directly into the Collection Account for distribution in accordance with the provisions
of Section 2.9 or 2.10, as applicable;



     (g) The Seller hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent and the Secured Parties in connection with any Discretionary 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 Discretionary Sale); and



     (h) In connection with any Discretionary Sale, on the related Discretionary 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 to be
retransferred to the Seller, in recordable form if necessary, in favor of the Seller as the Seller
may reasonably request, (ii) deliver any portion of the Collateral to be retransferred to the
Seller in its 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 to be
retransferred to the Seller and release and deliver to the Seller such portion of the Collateral to
be retransferred to the Seller.



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     Section 2.21 FDIC Sales.



     Prior to the occurrence of an Unmatured Termination Event or a Termination Event, on any FDIC
Sale Date and in connection with the Fremont Transaction, the Seller may, subject to the Seller’s
receipt of prior written consent from the Administrative Agent, which consent shall not be
unreasonably withheld, make a sale and assignment of a specified portion of the Collateral in any
one or a series of related transactions, and prepay all or a portion of the Advances Outstanding
(each such transaction or series of transactions, a “FDIC Sale”). In addition to the consent of
the Administrative Agent as set forth above, a FDIC Sale shall be subject to the following
additional terms and conditions:



     (a) At least ten Business Days prior to the related FDIC Sale Date, the Servicer, on behalf of
the Seller, shall have given the Administrative Agent, the Collateral Custodian and each Hedge
Counterparty written notice of its intent to effect a FDIC Sale (each such notice a “FDIC Sale
Notice”), specifying the FDIC Sale Date and including a list of all Assets to be sold and assigned
pursuant to such FDIC Sale, together with a certificate and evidence to the reasonable satisfaction
of the Administrative Agent that the Seller shall have sufficient funds on the FDIC Sale Date to
effectuate the contemplated FDIC Sale in accordance with the terms of this Section 2.21;



     (b) The Servicer, on behalf of the Seller, shall have given the Administrative Agent (i) at
least three Business Days prior to each FDIC Sale Date, a preliminary Borrowing Base Certificate,
and (ii) at least one Business Day prior to each FDIC Sale Date, a final borrowing Base
Certificate, in each case, that demonstrates pro forma compliance with the provisions of clauses
(d) and (e) below;



     (c) Each FDIC Sale shall be made by the Servicer, on behalf of the Seller, in a transaction
(i) reflecting arms-length market terms and (ii) in which the Seller makes no representations,
warranties or covenants for the benefit of any other party to the FDIC Sale (other than as may be
required under applicable law) and provides no indemnification for the benefit of any other party
to the FDIC Sale;



     (d) After giving effect to each FDIC Sale and the assignment to the Seller of the Collateral
on the related FDIC Sale Date, (i) the Availability is greater than or equal to zero and the
Advances Outstanding shall not exceed the lesser of the Facility Amount and the Maximum
Availability, (ii) the Combined Advances Outstanding shall not exceed the Combined Commitment
Amount, (iii) 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 (iv) neither an Unmatured Termination Event nor a Termination Event shall have resulted;



     (e) On the related FDIC Sale Date, the Administrative Agent, on behalf of the Purchasers and
Hedge Counterparties, shall have received, as applicable, in immediately available funds, an amount
equal to the sum of (a) (x) the portion of the Advances Outstanding to be prepaid, plus (y) an
amount equal to all unpaid Interest to the extent reasonably determined by the Administrative Agent
to be attributable to that portion of the Advances Outstanding, to be paid in connection with the
FDIC Sale, plus (b) an aggregate amount equal to the sum of all other amounts due and owing to the
Administrative Agent, the Collateral Custodian, the Backup



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Servicer, the Purchasers, 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 shall have the right to determine
whether the amount paid (or proposed to be paid) by the Seller on the FDIC Sale Date is sufficient
to satisfy the requirements set forth herein and is sufficient to reduce the Advances Outstanding,
to the extent requested by the Seller in connection with the FDIC Sale;



     (f) The Seller hereby agrees to pay the reasonable legal fees and expenses of the
Administrative Agent and the Secured Parties in connection with any FDIC 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 FDIC Sale).



     In connection with any FDIC Sale, on the related FDIC 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 to be retransferred to the Seller, in
recordable form if necessary, in favor of the Seller as the Seller may reasonably request, (ii)
deliver any portion of the Collateral to be retransferred to the Seller in its 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 to be retransferred to the Seller and release
and deliver to the Seller such portion of the Collateral to be retransferred to the Seller.



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 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:



     (a) Each Transaction Document (excluding any Hedge Agreement) shall have been duly executed
by, and delivered to, the parties thereto, and the Administrative Agent shall have received such
other documents, instruments, agreements and legal opinions as the Administrative Agent shall
reasonably request in connection with the transactions contemplated by this Agreement, including,
without limitation, all those specified in the schedule of documents attached hereto as
Schedule I, each in form and substance satisfactory to the Administrative Agent;



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     (b) The Administrative 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
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 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 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 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 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.



     (f) In respect of the Initial Advance, the proceeds thereof, together with such additional
funds as the Seller may obtain by capital contribution, if any, will be paid to or at the direction
of the Issuer (as defined in the Indenture) so that all the Issuer’s obligations (including all
obligations secured by the Indenture) will be concurrently repaid in full, in consideration of the
Issuer’s distribution and conveyance of the Existing Assets to the Seller, free and clear of the
Lien of the Indenture.



     (g) This Agreement shall have been deemed to be effective pursuant to the terms of the Omnibus
Payoff and Restructuring Agreement.



     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 (with a copy to the Collateral Custodian and the Backup
Servicer), in the case of an Advance, no later than 2:00 p.m. (New York City, New York time), one
Business Day prior to the related Funding Date in a form and substance satisfactory to the
Administrative 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 (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



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Administrative Agent (with a copy to the Backup Servicer) at least one Business Day prior to
any reduction of Advances Outstanding 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, (I) the Advances
Outstanding shall not exceed the lesser of (x) the Facility Amount and (y) the Maximum
Availability, and (II) the Combined Advances Outstanding shall not exceed the Combined
Commitment Amount;




     (iv) 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




     (v) 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 Purchasers 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) in the case of an Advance, no later than 2:00 p.m. (New York
City, New York 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 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;



     (d) The Seller shall have delivered such information as is required by the Collateral
Custodian to facilitate a trade of any Rated Retained Securities in book-entry form no later than
5:00 p.m. (New York City, New York time) on the Business Day prior to the applicable Funding Date;



     (e) The Seller shall have delivered to the Collateral Custodian, no later than 5:00 p.m. (New
York City, New York time) the Business Day following the applicable Funding Date, any



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Rated Retained Securities constituting certificated securities indorsed in blank; provided
that the Seller shall deliver to the Collateral Custodian no later than 5:00 p.m. the Business Day
prior to the applicable Funding Date a faxed copy of such certificated security, to the extent
available;



     (f) The Seller shall not have requested the Termination Date to occur;



     (g) The Termination Date shall not have occurred;



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



     (i) [Intentionally Omitted];



     (j) The Administrative Agent shall have received from the Seller any required Hedging
Agreement and related hedging confirms required in connection with the Transaction;



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



     (l) With respect to any Acquired Loan acquired from an Affiliate of the Originator, the
Administrative Agent has received a satisfactory legal opinion concerning the acquisition of such
Loan by the Originator in a true sale transaction;



     (m) The Seller shall have paid all fees required to be paid, including all fees required
hereunder and under the Purchaser Fee Letter and shall have reimbursed the Purchasers and the
Administrative 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 and the Administrative Agent;
and



     (n) The Seller shall have delivered to the Administrative Agent an Officer’s Certificate
(which may be part of the Borrowing Notice) in form and substance reasonably satisfactory to the
Administrative 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, which right may be exercised at
any time by the Administrative Agent, to refuse to fund the requested Advance or Advances or if any
Advances were funded during any such time that any of the foregoing conditions precedent were not
satisfied, the Administrative Agent may direct the Seller to pay to the Administrative Agent for
the benefit of the applicable Purchasers an amount equal to all such Advances.



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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 conduct
its business as such business is presently conducted, and had at all relevant times, and now has
all necessary power, authority and legal right to acquire, own and sell the 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) sell and assign an ownership interest in the Collateral, and
(d) receive Advances and sell 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 sale and assignment of
an ownership 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 legality, invalidity or enforceability of this Agreement or any other



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Transaction Document to which the Seller is a party, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any other Transaction Document to
which the Seller is a party or (iii) seeking any determination or ruling that could reasonably be
expected to have Material Adverse Effect.



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



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



     (i) Solvency. The Seller is not the subject of any Insolvency Proceedings or
Insolvency Event. The transactions under this Agreement and any other Transaction Document to
which the Seller is a party do not and will not render the Seller not Solvent and the Seller shall
deliver to the Administrative Agent 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 any 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 (including, without limitation, the use of the proceeds from the sale of the
Collateral) will violate or result in a violation of Section 7 of the Securities Exchange Act, or
any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Seller does not
own or intend to carry or purchase, and no proceeds from the 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



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Permitted Liens), and is enforceable as such against creditors of and purchasers from
the Seller;




     (ii) each of the Assets, along with the related Asset Files, constitutes a “general
intangible,” an “instrument,” an “account,” or “chattel paper,” within the meaning of the
applicable UCC (and if constituting “tangible chattel paper”, the sole “secured party’s
original” marked as such shall have been delivered to the Collateral Custodian);




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




     (iv) the Seller has received all consents and approvals required by the terms of any
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 have 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 and any
tangible chattel paper, if applicable, in each case solely on behalf of and for the benefit
of the Secured Parties;




     (ix) none of the underlying promissory notes or Loan Registers or tangible chattel
paper, 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;




     (x) none of the Collateral has been pledged or otherwise made subject to a Lien; and



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     (xi) with respect to (1) any Asset comprising “financial assets” within the meaning of
the UCC, such Assets have been delivered to and are being held in a “securities account”
within the meaning of the UCC that is maintained in the name of, and under the control and
direction of the Collateral Custodian or another institution that for the purposes of the
UCC is a “securities intermediary” whose “jurisdiction” with respect to the Collateral is
the State of New York, the terms of which account treat the Collateral Custodian as entitled
to exercise the rights that comprise any financial assets credited to such account solely on
behalf of and for the benefit of the Secured Parties and (2) any Asset comprising
certificated securities within the meaning of the UCC, such Assets have been delivered to
the Collateral Custodian and indorsed in blank to the Collateral Custodian solely on behalf
of and for the benefit of the Secured Parties.



     (n) Reports Accurate. All Monthly Reports (if prepared by the Seller, or to the
extent that information contained therein is supplied by the Seller), information, exhibits,
financial statements, documents, books, records or reports furnished or to be furnished by the
Seller to the Administrative Agent or any Purchaser in connection with this Agreement are true,
complete and correct, and no Monthly Report contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements contained therein not
misleading.



     (o) Location of Offices. The Seller’s location (within the meaning of Article 9 of
the UCC) is Delaware. The office where the Seller keeps all the Records is at the address of the
Seller referred to in Section 13.2 hereof (or at such other locations as to which the
notice and other requirements specified in Section 5.2(g) shall have been satisfied). The
Seller’s Federal Employee Identification Number is 20-8768331. 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 or agreed to grant to any Person other than the Administrative Agent and
Collateral Custodian an interest in any Lock-Box Account except as disclosed to the Administrative
Agent and in a manner consistent with the Intercreditor Agreement.



     (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



80









 







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 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;




     (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;




     (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, 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 except with respect to the “Issuer” (as defined in the Indenture);




     (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;



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     (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
indebtedness 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);




     (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 indebtedness 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 an acceptable non-consolidation
opinion and the Administrative Agent consents to such transfer;



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     (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 checks bearing its own name;




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




     (xxviii) fail at any time to have at least one independent director 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 (an “Independent Director”); provided that such Independent
Director may be an independent director of another special purpose entity affiliated with
the Servicer or its Affiliates 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) take any of the following actions without obtaining the prior unanimous consent
of all directors (including the consent of the Independent Director): (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 Closing Date.



     (v) [Intentionally Omitted.]



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     (w) Investment Company Act. The Seller is not, and is not controlled by, an
“investment company” within the meaning of, or is exempt from the registration requirement of, the
1940 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 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) 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).



     (z) 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.



     (aa) Collections. The Seller acknowledges that all Collections received by it or its
Affiliates with respect to the Collateral sold hereunder 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.



     (bb) Set-Off, etc. Other than Senior B-Note Loans or Subordinated Loans, no
Collateral has been compromised, adjusted, extended, satisfied, subordinated, 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, 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 as otherwise permitted under Section
6.4(a) of this Agreement and in accordance with the Credit and Collection Policy.



     (cc) 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.



     (dd) 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.



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     (ee) 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(ee), such
representations and warranties are incorporated herein by reference as if made by the Seller to the
Administrative Agent and each of the Secured Parties under the terms hereof mutatis
mutandis.



     (ff) 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
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.



     (gg) Participation and Acquired Loans. The participations created with respect to the
Participation Loans and the sale to the Originator with respect to the Acquired 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 other than those that
have been complied with.



     (hh) 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



85









 







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.



     (ii) 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.



     (jj) Material Adverse Effect. The Seller represents and warrants that (i) since
December 31, 2007 and (ii) as of the most recent Addition Date there has been no Material Adverse
Effect.



     The representations and warranties in Section 4.1(m) shall survive the termination of
this Agreement.




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





     The Seller hereby represents and warrants, (i) with respect to clauses (a) through
(c) below, as of the Closing Date and as of each Addition Date and (ii) with respect to
clause (d) below, since December 31, 2007 and as of the most recent Addition Date:



     (a) Binding Obligation, Valid Transfer and Security Interest.




     (i) This Agreement and each other Transaction Document to which the Seller is a party
each 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 valid transfer to the Administrative Agent, as agent
for the Secured Parties, of all right, title and interest of the Seller in, to and under all
of the Collateral, free and clear of any Lien of any Person claiming through or under the
Seller or its Affiliates, except for Permitted Liens. If the conveyances contemplated




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by this Agreement are determined to be transfer for security, then 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 and, if this Agreement
constitutes the grant of a security interest in such property, except for the interest of
Seller in such property as a debtor for purposes of the UCC.



     (b) Eligibility of 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 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 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 any
Governmental Authority required to be obtained, effected or given by the Seller in connection with
the transfer of an ownership 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) Material Adverse Effect. There has been no Material Adverse Effect.



     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.



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     (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 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 legality, invalidity or enforceability 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’s Certificates and other written and electronic
information, exhibits, financial statements, documents, books, records or reports furnished by the
Servicer to the Administrative Agent or any Purchaser in connection with this Agreement are
accurate, true and correct, and no Servicer’s Certificate contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the statements contained
therein not misleading.



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



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     (j) Collections. The Servicer acknowledges that all Collections received by it or its
Affiliates with respect to the Collateral sold hereunder 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 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.



     (n) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein (including, without limitation, the use of the Proceeds from the sale of the
Collateral) will violate or result in a violation of Section 7 of the Securities Exchange Act, or
any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of
the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The 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 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



89









 







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, or is exempt from the registration requirement of, the
1940 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
States Secretary of the Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting
special measures due to money laundering concerns.



     (s) Material Adverse Effect. The Servicer represents and warrants that since December
31, 2007 there has been no Material Adverse Effect.



     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.



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     (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
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.



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     (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 (the “Retransfer Price”) of (i) if such deposit is made during the Revolving Period, 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 ceasing to be an Eligible Asset) to be
greater than or equal to zero, (ii) if such deposit is made during the Amortization Period, an
amount equal to the product of the Outstanding Asset Balance of such Warranty Asset (without giving
effect to either of the provisos in the definition of Outstanding Asset Balance) multiplied by the
Advance Rate applicable to such Warranty Asset on the Funding Date thereof, (iii) any outstanding
Servicer Advances thereon, (iv) any accrued and unpaid interest on such Warranty Asset, (v) 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 (vi
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, the Seller may (in its discretion) accept retransfer of each such Warranty
Asset and any Related Security and the Borrowing Base 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 transfer, assign and set-over to the Seller, without recourse,
representation or warranty, all the right, title and 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 retransfer of such Warranty Asset), at
the sole expense of the Servicer, execute such documents and instruments of transfer 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 transfer of such Warranty Asset pursuant to this Section
4.6.



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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 direct 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.



     (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 or its 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 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



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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, 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.



     (i) Termination Events. The Seller will provide the Administrative 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 a written
statement of the chief financial officer or chief accounting officer of Seller setting forth the
details of such event and the action that the Seller proposes to take with respect thereto.



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



     (k) Use of Proceeds. The Seller will use the proceeds of the 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 in a manner consistent with the Intercreditor Agreement.



     (n) Seller’s Collateral. With respect to each item of Collateral acquired by the
Secured Parties, the Seller will (i) take all action necessary to perfect, protect and more fully
evidence the Secured Parties’ ownership of 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,



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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. The Seller authorizes the Administrative Agent to file financing or continuation
statements, and amendments thereto and assignments thereof, relating to the Collateral, which
financing statements may (x) describe the collateral covered thereby as “all assets of the Seller,”
“all personal property of the Seller” or words of similar effect and (y) be filed by the
Administrative Agent if the Seller fails to file such financing statements in a timely manner and
in any event promptly after the Administrative Agent’s request.



     (o) Notices. The Seller will furnish to the Administrative 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 that are received by the Seller or by its accountants;




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



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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 other Subsidiary of CapitalSource Inc.; provided that 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 other
Subsidiary of CapitalSource Inc. 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) Reporting Requirements. The Seller will provide to the Administrative Agent and
each Liquidity Bank the following:




     (i) as soon as available and in any event within 45 days after the end of each of the
first three quarters and within 90 days after the end of the fourth fiscal quarter of each
fiscal year of CapitalSource Inc., consolidated and consolidating balance sheets of
CapitalSource Inc. and its Subsidiaries as of the end of such quarter and consolidated and
consolidating statements of income and retained earnings of CapitalSource Inc. and its
Subsidiaries for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by the chief financial officer of CapitalSource Inc.
(which consolidating financial statements shall separately break out the financial
information of the Originator as a Subsidiary of CapitalSource Inc.); and




     (ii) as soon as available and in any event within 45 days after the end of each of the
first three quarters and within 90 days after the end of the fourth fiscal quarter of each
fiscal year of the Seller, an unaudited balance sheet of the Seller as of the end of such
quarter and an unaudited statement of income and retained earnings of the Seller for the
period commencing at the end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the Seller.



     (q) Other. The Seller will furnish to the Administrative 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 may from time to time reasonably request in order to protect the interests of the
Administrative 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, Discretionary Sale and Permitted Securitization Transaction, 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 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 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 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 hereby in any manner other than as a sale of the Collateral by the Seller
to the Secured Parties. Other than for consolidated tax and accounting purposes, the Seller will
not account for or treat (whether in financial statements or otherwise) the transactions



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contemplated by the Sale Agreement in any manner other than as a sale of the Collateral by the
Originator to the Seller.



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



     (j) Operating Agreement; Sale Agreement. The Seller will not amend, modify, waive or
terminate any provision of its operating agreement or the Sale Agreement without the prior written
consent of the Administrative 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 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 may amend, modify, restate or replace,
in whole or in part, the Credit and Collection Policy, if such amendment, modification, restatement
or replacement 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 amend, modify, restate or replace,
in whole or in part, the Credit and Collection Policy, if such amendment, modification, restatement
or replacement 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.



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     (n) Other Indebtedness. The Seller will not issue or extend any class or type of
Indebtedness whether senior, pari passu or subordinated to the Indebtedness arising under this
Agreement, unless an opinion of special tax counsel is first rendered to the effect that such
issuance of additional Indebtedness will not cause the Seller to be treated as a taxable mortgage
pool.



     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:




     (i) be entered into with a Permitted 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)(1) and Section 2.10(a)(1) (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.



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     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
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 or its 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, describing the sale of the Collateral (A) from the Originator to
the Seller, and (B) from the Seller to the Purchasers.



     (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 (i) comply in all material
respects with the Credit and Collection Policy in regard to the Collateral, and (ii) furnish to the
Administrative Agent, prior to its effective date, prompt notice of any proposed material change 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



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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.



     (g) Termination Events. The Servicer will provide the Administrative 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 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 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 may
from time to time reasonably request in order to protect the interests of the Administrative 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 other Subsidiary of CapitalSource Inc.; provided that
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 other Subsidiary
of CapitalSource Inc. 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 and Acquired Loans. With respect to Participation
Loans and Acquired Loans, the Servicer shall: (i) [intentionally omitted]; (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.



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     (m) Change-in-Control. Upon the occurrence of a Change-in-Control, the Servicer shall
provide the Administrative Agent and the Hedge Counterparties with notice of such Change-in-Control
within 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 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 an Officer’s Certificate and
an Opinion of Counsel each stating that any consolidation, merger, conveyance or transfer
complies 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, 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;



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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 has 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 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 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:



     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 and Collateral Custodian Fee Letter
without the prior written approval of the Administrative 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 Backup Servicer and Collateral
Custodian Fee Letter without the prior written approval of the Administrative Agent.



     Section 5.10 Covenant of the Seller, the Servicer and the Originator.



     Until the Collection Date, each of the Seller, the Servicer and the Originator will, at their
respective expense, during regular business hours upon reasonable prior notice as requested by the
Administrative Agent, permit the Administrative Agent or its agents or representatives (such as
independent audit and consulting firms specializing in securitization transactions) two times per
year (provided that if a Termination Event shall have occurred there shall be no such limitation),
(i) to conduct periodic audits of the Assets and the related books and records and



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collections systems of the Seller, the Servicer or the Originator, as the case may be, (ii) to
examine and make copies of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the control of the Seller, the
Servicer or the Originator, as the case may be, relating to Assets, and (iii) to visit the offices
and properties of the Seller, the Servicer or the Originator, as the case may be, for the purpose
of examining such materials described in clause (ii) above, and to discuss matters relating to
Assets or the Seller’s, the Servicer’s or the Originator’s performance under the Transaction
Documents with any of the officers or employees of the Seller, the Servicer or the Originator, as
the case may be, having knowledge of such matters.



ARTICLE VI




ADMINISTRATION AND SERVICING OF ASSETS




     Section 6.1 Designation of the Servicer.



     (a) Initial Servicer. The servicing, administering and collection of the Collateral
shall be conducted by the Person designated as the Servicer hereunder from time to time in
accordance with this Section 6.1. Until the Administrative Agent gives to 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 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 Backup
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



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perform the duties and obligations with respect thereto as set forth herein. The Servicer and
the Seller hereby acknowledge that the Administrative 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 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 may reasonably request;




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




     (iv) promptly delivering to the Administrative Agent 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 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 that the Seller is selling an undivided
ownership interest therein to the Secured Parties pursuant to this Agreement;




     (vi) notifying the Administrative 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 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 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;



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     (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 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 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 Applicable Law and unless otherwise instructed by the Administrative Agent, be applied as a
Collection of an item of Collateral of such Obligor (starting with the oldest such Collateral) to
the extent of any amounts then due and payable thereunder before being applied to any other
receivable or other obligation of such Obligor.



     Section 6.3 Authorization of the Servicer.



     (a) Each of the Seller, the Administrative 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 and not inconsistent with the sale of
the Collateral to the Purchasers and each Hedge Counterparty, 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 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 consent.



     (b) After a Termination Event has occurred and is continuing, at the direction of the
Administrative Agent, the Servicer shall take such action as the Administrative Agent may deem



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necessary or advisable to enforce collection of the Collateral; provided 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 or any servicer, collection agent or
lock-box or other account designated by the Administrative 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 reasonable judgment,
would impair the collectibility of the Collateral or in any manner contrary to the Credit and
Collection Policy. The Servicer may otherwise amend or modify the underlying documents related to
any item of Collateral in compliance with 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.



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     (e) Payments to Lock-Box Account. On or before the applicable Cut-Off Date, the
Servicer shall have instructed all Obligors (or with respect to Acquired 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 (from and
after the Closing Date) Collection Account for Citicorp North America, Inc., 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
with respect to the rights of the Servicer set forth in Section 2.9(b)); provided 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 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) [Intentionally Omitted.]



     (h) Establishment of the Securities Account. The Seller or the Servicer on its behalf
shall establish, on or before the date any Rated Retained Security becomes a part of the
Collateral, an account with the Securities Intermediary to which financial assets may be credited
(the “Securities Account”) pursuant to Section 8.11. Upon receipt of any Collections to
the Securities Account the Servicer shall cause the transfer of such Collections to the Collection
Account by the close of business on the Business Day after such Collections are so received into
the Securities Account.



     (i) 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.



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     (j) Transfer of Collection Account to Citibank. If at any time CapitalSource Inc.’s
Consolidated Tangible Net Worth is less than the Unsecured TNW Threshold or if a Servicer Default
occurs pursuant to Section 6.15(j), then the Servicer shall, within ten Business Days following
notice from the Administrative Agent, establish, or cause to be established, a new account with an
office or branch of Citibank, maintained in the name of the Administrative Agent as agent for the
Secured Parties pursuant to documentation in form and substance satisfactory to the Administrative
Agent and Citibank, which new account shall thereafter constitute the “Collection Account”
hereunder for all purposes, and the Collateral Custodian shall thereafter not be responsible for
the maintenance of, deposits to or withdrawals from such account. All of the parties hereto hereby
consent to any such transfer of the Collection Account.



     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. The Servicer will deposit any Servicer Advances into the Collection Account on or prior
to 9:00 a.m. (New York City, New York 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
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.



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     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 to the extent of funds available therefor
pursuant to the provisions of Section 2.9(a)(3) or Section 2.10(a)(3), as
applicable.



     Section 6.9 Payment of Certain Expenses by Servicer.



     The Servicer will be required to pay all expenses incurred by it in connection with its
activities under this Agreement, including fees and disbursements of independent accountants, Taxes
imposed on the Servicer, expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this Agreement for the
account of the Seller, but excluding Liquidation Expenses incurred as a result of activities
contemplated by Section 6.6; provided that 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.



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     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 (with a copy to the Collateral
Custodian).



     (b) Monthly Report. On each Reporting Date, the Servicer will provide to the Seller,
the Administrative Agent, the Backup Servicer and the Liquidity Banks, a monthly statement
including a Borrowing Base calculated as of the most recent Determination Date, 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 (a “Monthly Report”).



     (c) Servicer’s Certificate. Together with each Monthly Report, the Servicer shall
submit to the Administrative Agent and the Liquidity Banks 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, the Backup Servicer and each Liquidity Bank, (i) within 45 days after the end of each of
its first three fiscal quarters, commencing with the fiscal quarter ending March 31, 2008, a copy
of the quarterly report on Form 10-Q of CapitalSource Inc. for the most recent fiscal quarter and
unaudited consolidating statements, and (ii) within 90 days after the end of each fiscal year,
commencing with the fiscal year ending December 31, 2008, 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 and unaudited consolidating statements.



     (e) Tax Returns. Upon demand by the Administrative Agent or 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).



     (f) Financial Statements of Obligors. Upon demand by the Administrative Agent or any
Liquidity Bank, the Servicer will provide to such party the financial statements of any Obligor.



     (g) Other Reports. The Servicer will provide any other reports requested by the
Administrative Agent and reasonably acceptable to the Originator.



     Section 6.11 Annual Statement as to Compliance.



     The Servicer will provide to the Administrative Agent, within 90 days following the end of
each fiscal year of the Servicer, commencing with the fiscal year ending on December 31, 2008, a
fiscal report signed by a Responsible Officer of the Servicer certifying that (a) a review of the
activities of the Servicer, and the Servicer’s performance pursuant to this Agreement, for the
fiscal period ending on the last day of such fiscal year has been made under such Person’s
supervision and (b) the Servicer has performed or has caused to be performed in all material



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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, the
Collateral Custodian and the Backup Servicer, within 90 days following the end of each fiscal year
of the Servicer, commencing with the fiscal year ending on December 31, 2008: (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) 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, 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, 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 that 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 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 on the date such payment,
transfer or deposit is required to be made;



     (b) any failure by the Servicer 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;



     (c) any failure on the part of the Servicer (A) 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 10 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 (ii) the date on which the Servicer becomes aware thereof, or (B) duly to
observe or perform its obligations under Section 6.4(j);



     (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 in any material respect when made, and which (if capable of being cured without any
adverse impact on the Purchasers or the collectibility of the Assets) continues to be unremedied
for a period of 10 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 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 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
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 at any time is less than the TNW Test
Level;



     (k) a payment default or other default, termination event or other similar event has occurred
and is continuing (beyond any applicable grace period) under any Citibank Facility or under or with
respect to any repurchase agreement, securitization or any other facility providing indebtedness
for borrowed money, in each case, in an amount greater than $10,000,000 to or for the benefit of
CapitalSource Inc. or any of its Subsidiaries (except for those securitizations or other facilities
listed on Schedule VII, as the same may be updated from time to time as mutually agreed by the
Seller and the Administrative Agent), and at such time such event permits the lender or holder of
rights thereunder to terminate commitments, accelerate the obligations owing thereunder or
otherwise exercise remedies thereunder; provided that a Servicer Default arising as a result of a
default, termination event, margin call or other similar event with respect to a repurchase
agreement or series of repurchase agreements shall be deemed to be cured with the effect of being
considered not to have occurred, to the extent that either (i) the surrender of the related
collateral in whole to (or liquidation of the related collateral in whole by) the repo counterparty
under such repurchase agreement (by itself or together with any payments made, or additional
collateral provided to, the repo counterparty) constitutes satisfaction in full of the obligations
of CapitalSource Inc. and its Subsidiaries thereunder, or (ii) the deficiency amount under such
repurchase agreement or series of repurchase agreements after application of collateral proceeds
with respect to the sale or liquidation of the related collateral is less than $10,000,000;



     (l) the Servicer fails in any material respect to comply with the Credit and Collection Policy
regarding the servicing of the Collateral; or



     (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 or the Secured Parties, without the prior
written consent of the Administrative Agent.



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



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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, appoint the Backup Servicer as the Servicer hereunder, and
the Backup Servicer shall on such date assume all obligations of the Servicer hereunder, and all
authority and power of the Servicer under this Agreement shall pass to and be vested in the Backup
Servicer. As compensation therefor, the Backup Servicer shall be entitled to the Servicing Fee,
together with other servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided herein; including, without limitation, Transition Expenses. In the event
that the Administrative Agent does not so appoint the Backup Servicer, there is no Backup Servicer
or the Backup Servicer is unable to assume such obligations on such date, the Administrative Agent
shall as promptly as possible appoint a successor servicer (the “Successor Servicer”), and such
Successor Servicer shall accept its appointment by a written assumption in a form acceptable to the
Administrative Agent. 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 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




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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 Agent) so appointed shall be entitled to receive the Servicing Fee, together with
any other servicing compensation in the form of assumption fees, late payment charges or otherwise
as provided herein that accrued prior thereto, including, without limitation, Transition Expenses.
In the event the Backup Servicer is required to solicit bids as provided herein, the Backup
Servicer shall solicit, by public announcement, bids from banks and mortgage servicing institutions
meeting the qualifications set forth in Section 6.16(a). Such public announcement shall
specify that the Successor Servicer shall be entitled to the full amount of the Servicing Fee as
servicing compensation, together with the other servicing compensation in the form of assumption
fees, late payment charges or otherwise that accrued prior thereto. Within 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 the Backup Servicer shall have
consented thereto. The Backup Servicer shall not resign as servicer until a Successor Servicer has
been appointed and accepted such appointment. Notwithstanding anything to the contrary contained
herein, in no event shall Wells Fargo, in any capacity, be liable for any Servicing Fee or for any
differential in the amount of the Servicing Fee paid hereunder and the amount necessary to induce
any Successor Servicer under this Agreement and the transactions set forth or provided for by this
Agreement.



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



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accordance with this Section 7.1. Until the Administrative Agent shall give to Wells
Fargo a Backup Servicer Termination Notice, Wells Fargo is hereby designated as, and hereby agrees
to perform the duties and obligations of, a Backup Servicer pursuant to the terms hereof.



     (b) Successor Backup Servicer. Upon the Backup Servicer’s receipt of Backup Servicer
Termination Notice from the Administrative Agent of the designation of a replacement Backup
Servicer pursuant to the provisions of Section 7.5, the Backup Servicer agrees that it will
terminate its activities as Backup Servicer hereunder.



     Section 7.2 Duties of the Backup Servicer.



     (a) Appointment. The 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 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 that 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 (New York City, New York 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 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.



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     (iv) If the Servicer disagrees with the report provided under paragraph (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 20 days after the
delivery of the report provided under paragraph iii) above by the Backup Servicer, such
discrepancy is not resolved, the Backup Servicer shall promptly notify the Administrative
Agent of the continued existence of such discrepancy. Following receipt of such notice by
the Administrative Agent, the Servicer shall deliver to the Administrative Agent, the
Secured Parties and the Backup Servicer no later than the related Payment Date a certificate
describing the nature and amount of such discrepancies and the actions the Servicer proposes
to take with respect thereto.



     (c) Reliance on Tape. With respect to the duties described in Section 7.2(b),
the Backup Servicer, is entitled to rely conclusively, and shall be fully protected in so relying,
on the contents of each Tape, including, but not limited to, the completeness and accuracy thereof,
provided by the Servicer.



     Section 7.3 Merger or Consolidation.



     Any Person (i) into which the Backup Servicer may be merged or consolidated, (ii) that may
result from any merger or consolidation to which the Backup Servicer shall be a party, or
(iii) that may succeed to the properties and assets of the Backup Servicer substantially as a
whole, which Person in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Backup Servicer hereunder, shall be the successor to the Backup 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)(4) and Section 2.10(a)(4), 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



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Backup Servicer pursuant to Section 7.5, or (iii) the termination of this Agreement.
Upon becoming Successor Servicer pursuant to Section 6.16, the Backup Servicer shall be
entitled to the Servicing Fee.



     Section 7.5 Backup Servicer Removal.



     The Backup Servicer may be removed, with or without cause, by the Administrative Agent by
notice given in writing to the Backup Servicer (the “Backup Servicer Termination Notice”). In the
event of any such removal, a replacement Backup Servicer may be appointed by the Administrative
Agent.



     Section 7.6 Limitation on Liability.



     (a) The Backup Servicer undertakes to perform only such duties and obligations as are
specifically set forth in this Agreement, it being expressly understood by all parties hereto that
there are no implied duties or obligations of the Backup Servicer hereunder. Without limiting the
generality of the foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the Servicer. The
Backup Servicer may act through its agents, nominees, attorneys and custodians in performing any of
its duties and obligations under this Agreement, it being understood by the parties hereto that the
Backup Servicer will be responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting on the routine and ordinary day-to-day operations for and on behalf
of the Backup Servicer. Neither the Backup Servicer nor any of its officers, directors, employees
or agents shall be liable, directly or indirectly, for any damages or expenses arising out of the
services performed under this Agreement other than damages or expenses that result from the gross
negligence or willful misconduct of it or them or the failure to perform materially in accordance
with this Agreement.



     (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.



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     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. No such resignation shall become effective until a successor Backup Servicer
shall have assumed the responsibilities and obligations of the Backup Servicer hereunder.



ARTICLE VIII




THE COLLATERAL CUSTODIAN




     Section 8.1 Designation of Collateral Custodian.



     (a) Initial Collateral Custodian. The role of collateral custodian with respect to
the Required 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 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



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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 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 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 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.



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     (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.




     (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)(4) or
Section 2.10(a)(4), 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 that 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.



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     Section 8.6 Limitation on Liability.




     (i) 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 (a) the written instructions of any
designated officer of the Administrative Agent or (b) the verbal instructions of the
Administrative Agent.




     (ii) 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.




     (iii) 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.




     (iv) 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.




     (v) 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.




     (vi) The Collateral Custodian shall not be required to expend or risk its own funds in
the performance of its duties hereunder.




     (vii) 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



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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. No such resignation shall become effective
until a successor Collateral Custodian shall have assumed the responsibilities and obligations of
the Collateral Custodian hereunder.



     Section 8.8 Release of Documents.



     (a) Release for Servicing. From time to time and as appropriate for the enforcement
or servicing any of the Collateral, the Collateral Custodian is hereby authorized (unless and until
such authorization is revoked by the Administrative Agent), upon written receipt from the Servicer
of a request for release of documents and receipt in the form annexed hereto as Exhibit H
to release to the Servicer the related Required 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 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 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 H (which
certification shall include a statement to the effect that all amounts received in connection with
such payment or repurchase have been credited to the Collection Account as provided in this
Agreement), the Collateral Custodian shall promptly release the related Required 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



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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.



     Section 8.10 Access to Certain Documentation and Information Regarding the Collateral;
Audits.



     The Collateral Custodian shall provide to the Administrative Agent access to the Required
Asset Documents and all other documentation regarding the Collateral including in such cases where
the Administrative 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, the Administrative 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.



     Section 8.11 Securities Intermediary.



     (a) There shall at all times be one or more “securities intermediaries” (as defined in the
UCC) appointed by the Collateral Custodian for purposes of this Agreement (the “Securities
Intermediary”). The Collateral Custodian hereby appoints Wells Fargo Bank, National Association at
its Corporate Trust Office as the initial Securities Intermediary hereunder and Wells Fargo Bank,
National Association hereby accepts such appointment.



     (b) The Securities Intermediary shall be, and the initial Securities Intermediary hereunder
hereby represents and warrants that it is as of the date hereof and shall be for so long as it is
the Securities Intermediary hereunder, a corporation or national bank that in the ordinary course
of its business maintains securities accounts for others and is acting in that capacity hereunder.
The Securities Intermediary shall, and the initial Securities Intermediary does, agree



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with the parties hereto that the Securities Account shall be an account to which financial
assets may be credited and undertake to treat the Collateral Custodian as entitled to exercise the
rights that comprise such financial assets. The Securities Intermediary shall, and the initial
Securities Intermediary does, agree with the parties hereto that each item of property credited to
the Securities Account shall be treated as a “financial asset” as defined in the UCC. The
Securities Intermediary shall, and the initial Securities Intermediary does, agree and acknowledge
that the “securities intermediary’s jurisdiction” for purpose of the UCC of the Securities
Intermediary with respect to the Collateral shall be the State of New York. The Securities
Intermediary shall, and the initial Securities Intermediary does, represent and covenant that it is
not and will not be (as long as it is the Securities Intermediary hereunder) a party to any
agreement that is inconsistent with the provisions of this Agreement. The Securities Intermediary
shall, and the initial Securities Intermediary does, covenant that it will not take any action
inconsistent with the provisions of this Agreement applicable to it. The Securities Intermediary
shall, and the initial Securities Intermediary does, agree that any item of property credited to
the Securities Account shall not be subject to any security interest, lien, encumbrance, or right
of setoff in favor of the Securities Intermediary or anyone claiming through the Securities
Intermediary (other than the Collateral Custodian).



     (c) It is the intent of the Collateral Custodian and the Seller that the Securities Account
shall be a securities account of the Collateral Custodian and not an account of the Seller.
Nonetheless, (i) the Securities Intermediary shall agree to comply with entitlement orders
originated by the Collateral Custodian without further consent by the Seller or any other person or
entity, and (ii) the initial Securities Intermediary agrees that for so long as it is the
Securities Intermediary hereunder, it will comply with entitlement orders originated by the
Collateral Custodian without further consent by the Seller or any other person or entity. The
Securities Intermediary shall covenant that it will not agree with any person or entity other than
the Collateral Custodian that it will comply with entitlement orders originated by any person or
entity other than the Collateral Custodian, and the initial Securities Intermediary hereby
covenants that, for so long as it is the Securities Intermediary hereunder, it will not agree with
any person or entity other than the Collateral Custodian that it will comply with entitlement
orders originated by any person or entity other than the Collateral Custodian.



     (d) Nothing herein shall imply or impose upon the Securities Intermediary any duties or
obligations other than those expressly set forth herein and those applicable to a securities
intermediary under the UCC (and the Securities Intermediary shall be entitled to all of the
protections available to a securities intermediary under the UCC). Without limiting the foregoing,
nothing herein shall imply or impose upon the Securities Intermediary any duties of a fiduciary
nature (such as, without limitation, the fiduciary duties of the Collateral Custodian hereunder).



     (e) The Securities Intermediary may at any time resign by notice to the Collateral Custodian
and may at any time be removed by notice from the Collateral Custodian; provided however that it
shall be the responsibility of the Collateral Custodian to appoint a successor Securities
Intermediary and to cause the Securities Account to be established and maintained with such
successor Securities Intermediary in accordance with the terms hereof; and the responsibilities and
duties of the retiring Securities Intermediary hereunder shall remain in effect until all of the
Collateral credited to the Securities Account held by such retiring Securities



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Intermediary have been transferred to such successor. Any corporation into which the
Securities Intermediary may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, consolidation or conversion to which the Securities
Intermediary shall be a party, shall be the successor of the Securities Intermediary hereunder,
without the execution or filing of any further act on the part of the parties hereto or such
Securities Intermediary or such successor corporation.



ARTICLE IX




SECURITY INTEREST




     Section 9.1 Grant of Security Interest.



     The parties to this Agreement intend that the conveyance of the Collateral by the Seller to
the applicable Purchasers be treated as sales for all purposes (other than for the purposes
described in Section 13.19 and for accounting purposes). If, despite such intention, a
determination is made that such transactions not be treated as sales, then 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, any Hedge Counterparty, the Purchasers 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, 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, any Hedge Counterparty, the Purchasers or any Secured Party shall have any obligations or
liability under the Collateral by reason of this Agreement, nor shall the Administrative Agent, any
Hedge Counterparty, the Purchasers 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,



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(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, or (iv) this agreement terminates in accordance with
Section 13.6, the Administrative Agent as agent for the Secured Parties will, to the extent
requested by the Servicer, release its interest in such Collateral. In connection with any sale of
such Related Property, the Administrative Agent as agent for the Secured Parties will after the
deposit by the Servicer of the Proceeds of such sale into the Collection Account, at the sole
expense of the Servicer, execute and deliver to the Servicer any assignments, bills of sale,
termination statements and any other releases and instruments as the Servicer may reasonably
request in order to effect the release and transfer of such Related Property; provided that the
Administrative Agent as agent for the Secured Parties will make no representation or warranty,
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
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



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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, 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) either (I) the Advances Outstanding on any day exceeds the lesser of the Facility Amount
and Maximum Availability, or (II) the Combined Advances Outstanding on any day exceeds the Combined
Commitment Amount (recognizing that Combined Advances Outstanding may be lowered by reductions in
Advances Outstanding hereunder as well as by reductions in “Advances Outstanding” under the other
Citibank Facilities), and the same continues unremedied for two Business Days; provided that during
the period of time that such event remains unremedied, no additional 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) failure on the part of the Seller or Originator to make any payment or deposit (including
without limitation with respect to Collections) of principal by the terms of any Transaction
Document on the day such payment or deposit is required to be made; or



     (g) failure on the part of the Seller or Originator to make any payment or deposit (including
without limitation with respect to Collections) other than principal required by the



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terms of any Transaction Document on the day such payment or deposit is required to be made
and such failure continues unremedied for a period of 2 Business Days; or



     (h) the occurrence of an Insolvency Event relating to the Seller or the Originator; or



     (i) the Seller shall become required to register as an “investment company” within the meaning
of the 1940 Act or the arrangements contemplated by the Transaction Documents shall require
registration as an “investment company” within the meaning of the 1940 Act; or



     (j) a regulatory, tax or accounting body has ordered that the activities of the Seller or any
other Subsidiary of CapitalSource Inc. 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 other Subsidiary of CapitalSource Inc. to suffer materially
adverse regulatory, accounting or tax consequences; or



     (k) there shall exist any 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, or




     (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




     (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 (i) any
covenants or agreements of the Seller or the Originator set forth in this Agreement (other than as
referred to in Section 10.1(f), 10.1(g), 10.1(o) or 10.1(r) or
clause (ii) of this Section 10.1(p)) or the other Transaction Documents to which the Seller
or the Originator is a party and the same continues unremedied for a period of 10 days after the
earlier to occur of



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(x) 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 (y) the date on
which the Seller or the Originator becomes aware thereof or (ii) any covenant applicable to it
contained in Section 5.2; 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 in any material respect when made, and which (if capable of being
cured without any adverse impact on the Purchasers or the collectibility of the Assets) continues
to be unremedied for a period of 10 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 failure of the Originator or the Seller
to make any payments due 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



     (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) on any day an Overcollateralization Shortfall exists and continues unremedied for two
Business Days; or



     (w) 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; or



     (x) the occurrence of a “Purchase Termination Event” under the Sale Agreement; or



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     (y) as of the Final Maturity Date, the Collection Date has not yet occurred.



     Section 10.2 Remedies.



          Upon the occurrence of any Termination Event, no Advances will thereafter be made, and the
Administrative Agent may, and at the request of Liquidity Banks holding at least 66 2/3% of the
Commitments then in effect shall, by notice to the Seller, declare the Termination Date to have
occurred and the Amortization Period to have commenced (provided, that, upon the occurrence of any
event described in Section 10.1(h), the Termination Date shall occur and the Amortization
Period shall commence automatically without request from, or notice to, any Person) and the
Administrative Agent and the Secured Parties shall have, in addition to all other rights and
remedies under this Agreement or otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other Applicable Laws, which rights shall be cumulative, and also
may require the Seller and Servicer to, and the Seller and Servicer hereby agree that they will at
the Servicer’s expense and upon request of the Administrative Agent forthwith, (i) 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 (ii) 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 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 Backup
Servicer, the Collateral Custodian, the Secured Parties, the Affected Parties and each of their
respective assigns, Affiliates, officers, directors, employees, advisors and agents thereof
(collectively, the “Indemnified Parties”), forthwith on demand, from and against any and all
damages, losses, claims, liabilities and related reasonable out of pocket costs and expenses,
including reasonable attorneys’ fees and disbursements (all of the foregoing being collectively
referred to as the “Indemnified Amounts”) awarded against or incurred by such Indemnified Party



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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 the ownership of 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
relating to the eligibility or qualification of any Asset, which shall have been false or
incorrect in any respect when made or deemed made or delivered;




     (ii) any other 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;




     (iii) 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;




     (iv) the failure to vest and maintain vested in the Administrative Agent, as agent for
the Secured Parties, an undivided ownership interest in the Collateral, together 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;




     (v) the failure to maintain, as of the close of business on each Business Day prior to
the Termination Date (I) 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, or
(II) Combined Advances Outstanding that is less than or equal to the Combined Commitment
Amount;




     (vi) 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;



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     (vii) 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;




     (viii) 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;




     (ix) 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;




     (x) 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;




     (xi) any action taken by the Seller or the Servicer in the enforcement or collection of
any Collateral;




     (xii) 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;




     (xiii) any claim, suit or action of any kind arising out of or in connection with
Environmental Laws including any vicarious liability;




     (xiv) 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;




     (xv) any repayment by the Administrative Agent 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 or a Secured Party believes in good faith is required to be repaid;




     (xvi) the commingling of Collections on the Collateral at any time with other funds,
unless permitted hereunder;



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     (xvii) any investigation, litigation or proceeding related to this Agreement or the use
of proceeds of Advances or the security interest in the Collateral;




     (xviii) 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;




     (xix) the use of the proceeds of any Advance in a manner other than as provided in this
Agreement and the Sale Agreement;




     (xx) the failure of the Seller, the Originator or any of their respective agents or
representatives to remit to the Servicer or the Administrative Agent, Collections on the
Collateral remitted to the Seller, the Originator, the Servicer or any such agent or
representative; or




     (xxi) 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 Servicer, the Backup Servicer or the
Collateral Custodian and the termination of this Agreement.



     Section 11.2 Indemnities by the Servicer.



     (a) Without limiting any other rights that any such Person may have hereunder or under
Applicable Law, the Servicer hereby agrees to indemnify each Indemnified Party, forthwith on
demand, from and against any and all Indemnified Amounts awarded against or incurred by any such
Indemnified Party by reason of any acts, omissions or alleged acts or omissions of 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



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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. 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 Backup Servicer or the Collateral Custodian
and the termination of this Agreement.



     (e) Any indemnification pursuant to this Section 11.2 shall not be payable from the
Collateral.



     Section 11.3 After-Tax Basis.



     Indemnification under Section 11.1 and Section 11.2 shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the receipt of the indemnity provided hereunder, including the effect of such
tax or refund on the amount of tax measured by net income or profits that is or was payable by the
Indemnified Party.



ARTICLE XII




THE ADMINISTRATIVE AGENT




     Section 12.1 The Administrative Agent.



     (a) 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 Secured Party. 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



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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 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 Liquidity Banks; provided 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 or a Liquidity Bank 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 or Liquidity Bank shall be deemed to have declined to consent to the
relevant actions.



     (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. The Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with the Purchasers or
Liquidity Banks, and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Administrative Agent shall be read into this Agreement or any other
Transaction Document or otherwise exist for the Administrative Agent. In performing its functions
and duties hereunder and under the other Transaction Documents, the Administrative Agent shall act
solely as agent for the Purchasers and Liquidity Banks 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.



     (c) Administrative Agent’s Reliance, Etc. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable for any action taken or omitted to be
taken by it or them as Administrative Agent under or in connection with this Agreement or any of
the other Transaction Documents, except for its or their own gross negligence or willful
misconduct. Without limiting the foregoing, the Administrative Agent: (i) may consult with legal
counsel (including counsel for the 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



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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 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 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 Liquidity Bank agrees to
indemnify the Administrative Agent (to the extent not reimbursed by the Seller or the Servicer),
ratably in accordance with its Commitment (or, if the Commitments have been terminated, then
ratably according to the respective amounts of the sum of (x) the aggregate Advances Outstanding
funded by it plus (y) the additional Advances it may be required to fund under the applicable
Liquidity Agreement) 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 Liquidity Banks 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 Liquidity Bank agrees to reimburse the Administrative Agent, ratably in accordance with its
Commitment (or, if the Commitments have been terminated, then ratably according to the respective
amounts of the sum of (x) the aggregate Advances Outstanding funded by it plus (y) the additional
Advances it may be required to fund under the applicable Liquidity Agreement) 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 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 and the Seller and
may be removed at any time with cause by the Purchasers acting jointly. Upon any such resignation
or removal, the Purchasers and (unless a Termination Event then exists) the Seller acting jointly
shall appoint a successor Administrative Agent. Each of the Purchasers and the Seller 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 30 days after the retiring



139









 







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. All amounts received by the Administrative
Agent on behalf of the Purchasers shall be paid by the Administrative Agent to the applicable
Purchasers in accordance with the terms of this Agreement, 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 the
applicable Purchasers on such Business Day, but, in any event, shall pay such amounts to such
Purchasers not later than the following Business Day.



     (h) Delegation of Duties. The Administrative 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. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.



     (i) Non-Reliance on the Administrative Agent. Each Purchaser expressly acknowledges
that neither the Administrative 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
the Administrative 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 Administrative
Agent. Each Purchaser represents and warrants to the Administrative Agent that it has and will,
independently and without reliance upon the Administrative 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.



     (j) Administrative Agent and its Affiliates. The Administrative Agent and any of its
Affiliates may make loans to, accept deposits from and generally engage in any kind of business
with the Seller, Originator or Servicer or any Affiliate of the foregoing as though the
Administrative Agent was not the Administrative Agent. With respect to the Advances made pursuant
to this Agreement, the Administrative Agent and each of its Affiliates shall have the same rights
and powers under this Agreement as any Liquidity Bank and may exercise the same as though it were
not the Administrative Agent.



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ARTICLE XIII




MISCELLANEOUS




     Section 13.1 Amendments and Waivers.



     (a) Except as provided in this Section 13.1, no amendment, waiver or other
modification of any provision of this Agreement shall be effective without the written agreement of
the Seller, the Servicer, the Administrative Agent and the Secured Parties; provided that no such
amendment, waiver or modification adversely affecting the rights or obligations of the Backup
Servicer, the Collateral Custodian or any Hedge Counterparty shall be effective without the written
agreement of such Person; provided further, that the Administrative Agent shall provide copies of
all such amendments, waivers or other modifications to the Backup Servicer and the Collateral
Custodian if such Persons were not signatories thereto.



     (b) The parties hereto acknowledge and agree that after the Closing Date the Agreement may
need to be amended to correct certain ambiguities or errors as well as to correct inconsistencies
with the terms of the other Transaction Documents and each such party agrees to cooperate in good
faith to effectuate, and not to unreasonably withhold, delay or condition its consent to, any such
amendments; provided that notwithstanding the foregoing, to the extent any such amendment would
have an adverse effect on any Secured Party, such Secured Party shall have the right to consent or
withhold consent in its sole discretion.



     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. 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 or (b) notice by facsimile copy,
when communication of receipt is obtained.



     Section 13.3 Ratable Payments.



     If any Purchaser, whether by setoff or otherwise, has payment made to it with respect to any
portion of the Aggregate Unpaids owing to such Purchaser (other than payments received pursuant to
Section 11.1) in a greater proportion than that received by any other Purchaser, such
Purchaser agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion
of the Aggregate Unpaids held by the other Purchasers so that after such purchase each Purchaser
will hold its ratable proportion of the Aggregate Unpaids; provided that if all or any portion of
such excess amount is thereafter recovered from such Purchaser, such purchase shall be rescinded
and the purchase price restored to the extent of such recovery, but without interest.



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     Section 13.4 No Waiver; Remedies.



     No failure on the part of the Administrative Agent, the Collateral Custodian, the Backup
Servicer or a Secured Party to exercise, and no delay in exercising, any right or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any other right. The
rights and remedies herein provided are cumulative and not exclusive of any rights and remedies
provided by law.



     Section 13.5 Binding Effect; Benefit of Agreement.



     This Agreement shall be binding upon and inure to the benefit of the Seller, the Servicer, the
Administrative Agent, 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)(1) and Section 2.10(a)(1) 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. Upon the occurrence of the Collection Date and the
written request of the Seller, the Administrative Agent shall release its interest in the
Collateral pursuant to Section 9.2; 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 WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF (OTHER THAN
SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). EACH OF THE
PARTIES HERETO AND EACH HEDGE COUNTERPARTY HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE OR FEDERAL COURT LOCATED IN NEW YORK CITY. 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.



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     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.



     Section 13.9 Costs, Expenses and Taxes.



     (a) In addition to the rights of indemnification granted under Article XI hereof, the Seller
and Originator agrees to pay on demand all reasonable out of pocket costs and expenses of the
Administrative Agent, 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 Backup Servicer, the Collateral
Custodian and the Secured Parties with respect thereto and with respect to advising the
Administrative Agent, 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 reasonable out of
pocket costs and expenses, if any (including reasonable counsel fees and expenses), incurred by the
Administrative Agent, 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 out of pocket costs,
expenses and Taxes (excluding income taxes) incurred by the Administrative Agent and the Secured
Parties (“Other Costs”), including, without limitation, all costs and expenses incurred by the
Administrative Agent in connection with periodic audits of the Seller’s or the Servicer’s books and
records.



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     Section 13.10 No Proceedings.



     (a) Each of the parties hereto 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 Issuer, any Insolvency Proceeding so long as any commercial paper or other
senior indebtedness issued by such Issuer shall be outstanding and there shall not have elapsed one
year and one day since the last day on which any such commercial paper or other senior indebtedness
shall have been outstanding.



     (b) Each of the parties hereto (other than the Administrative Agent acting with the consent of
the Purchasers) 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 Seller, the Servicer, the Originator 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 Seller, the
Servicer, the Originator or any Secured Party, or any incorporator, affiliate, stockholder,
officer, employee or director of the Administrative Agent, the Seller, the Servicer, the Originator
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 Seller, the Servicer, the Originator 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 or limited
liability company obligations of the Administrative Agent, the Seller, the Servicer, the Originator
or any Secured Party, and that no personal liability whatsoever shall attach to or be incurred by
any administrator of the Administrative Agent, the Seller, the Servicer, the Originator or any
Secured Party or any incorporator, stockholder, affiliate, officer, employee or director of the
Administrative Agent, the Seller, the Servicer, the Originator 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 Seller, the Servicer, the Originator 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 Seller, the Servicer, the Originator or any Secured
Party and each incorporator, stockholder, affiliate, officer, employee or director of the
Administrative Agent, the Seller, the Servicer, the Originator or any Secured Party or of any such
administrator, or any of them, for breaches by the Administrative Agent, the Seller, the Servicer,
the Originator 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



144









 







Agreement. The provisions of this Section 13.11(a) shall survive the termination of
this Agreement.



     (b) [Intentionally omitted.]



     (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.



     (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



145









 







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) 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 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 CapitalSource Inc. and its
Affiliates, 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, investors,
potential investors parties that provide or may in the future provide first loss or credit
enhancement to such Person and the agents of such Persons (“Excepted Persons”); (ii) disclose the
existence of the Agreement, but not the financial terms thereof, (iii) disclose such information as
is required by Applicable Law and (iv) disclose the Agreement and such information in any suit,
action, proceeding or investigation (whether in law or in equity or pursuant to arbitration)
involving any of the Transaction Documents 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




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other pricing terms, and all Termination Events, Servicer Defaults, and priority of payment
provisions.




     (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 Collateral Custodian, the Backup Servicer or the Secured Parties by each
other, (ii) by the Administrative Agent, 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, (iii) by the Administrative Agent and the
Secured Parties to any commercial paper dealer or provider of a surety, guaranty or credit or
liquidity enhancement to any Issuer, or to any subordinated investor in any Issuer, 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 or (iv) to any Rating
Agency. In addition, the Secured Parties and the Administrative Agent, 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 Secured Parties’, the
Collateral Custodian’s, the Backup Servicer’s, the Seller, the Servicer or the Originator 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 Secured Parties, the Collateral Custodian, the Backup Servicer, the
Seller, the Servicer or the Originator 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 in writing by the Seller,
Servicer or Originator.



     (d) Notwithstanding any other provision herein or in any other Transaction Document, each
Purchaser and the Administrative Agent hereby confirms that the Seller, the Originator and the
Servicer (and each employee, representative or other agent of each such party) may disclose to any
and all Persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of
the transaction contemplated by this Agreement and the other Transaction Documents.



     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 or by electronic mail in portable



147









 







document format (pdf)), 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 the Transaction Documents 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 delivered by the
Originator to the Administrative Agent and the Secured Parties.



     Section 13.15 Waiver of Set-off.



     (a) The Seller, the Servicer and the Originator each hereby waives any right of setoff it may
have or to which it may be entitled under this Agreement from time to time against the
Administrative Agent, each Purchaser, its Affiliates or its respective assets.



     (b) Without in any way limiting the provisions of Section 13.3, the Administrative Agent and
each Purchaser is hereby authorized (in addition to any other rights it may have) at any time after
the occurrence and during the continuance of a Termination Event to set-off, appropriate and apply
(without presentment, demand, protest or other notice which are hereby expressly waived) any
deposits and any other indebtedness held or owing by the Administrative Agent or such Purchaser to,
or for the respective account of, the Seller, the Servicer or the Originator against any amount
owing by the Seller, the Servicer or the Originator, respectively, to such Person or to the
Administrative Agent on behalf of such Person (even if contingent or unmatured). For the avoidance
of doubt, the right of setoff set forth in this Section 13.15(b) does not permit setoff of deposits
and indebtedness held or owing by one Person to or for the account of a second Person against
amounts owing by any Person other than such second Person.



     Section 13.16 Assignments.



     (a) This Agreement and each Issuer’s rights and obligations herein (including ownership of
each Asset) shall be assignable by the Issuers and their successors and assigns to any Eligible
Assignee (including, without limitation, pursuant to the Liquidity Agreement). Each assigning
Issuer shall notify the Administrative Agent and the Seller of any such assignment.



     (b) Each Liquidity Bank may assign to any Eligible Assignee or to any other Liquidity Bank all
or a portion of its rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitment and any Assets or interests therein owned by it); provided, however,
that




     (i) each such assignment shall be of a constant, and not a varying, percentage of all
rights and obligations under this Agreement,




     (ii) the amount being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance Agreement with respect to such



148









 







assignment) shall in no event be less than the lesser of (x) $25,000,000 and (y) all of
the assigning Purchaser’s Commitment,




     (iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance Agreement, together with a processing and recordation fee of $2,500,




     (iv) with respect to any Liquidity Bank, concurrently with such assignment, such
assignor Liquidity Bank shall assign to such assignee Liquidity Bank or other Eligible
Assignee an equal percentage of its rights and obligations under the Liquidity Agreement
(or, if such assignor Liquidity Bank is Citibank, it shall arrange for such assignee
Liquidity Bank or other Eligible Assignee to become a party to the Liquidity Agreement for a
maximum principal amount equal to the assignee’s Commitment), and




     (v) Citibank may not assign any portion of its Commitment to the extent that it reduces
such Commitment below 50% of the Facility Amount.



     Upon such execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance Agreement, (x) the assignee thereunder shall be a party
to this Agreement and, to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance Agreement, have the rights and obligations of a
Liquidity Bank hereunder and (y) the assigning Purchaser shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance
Agreement, relinquish such rights and be released from such obligations under this Agreement (and,
in the case of an Assignment and Acceptance Agreement covering all or the remaining portion of an
assigning Purchaser’s rights and obligations under this Agreement, such Purchaser shall cease to be
a party hereto).



     (c) With respect to the Liquidity Banks, the Administrative Agent shall maintain at its
address referred to in Section 13.2 of this Agreement a copy of each Assignment and Acceptance
Agreement delivered to and accepted by it and a register for the recordation of the names and
addresses of the Liquidity Banks and the Commitment of, and aggregate outstanding principal of
Advances owned by, each Liquidity Bank from time to time (the “Register”). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest error, and the Seller,
the Originator, the Administrative Agent and the Liquidity Banks may treat each person whose name
is recorded in the Register as a Liquidity Bank under this Agreement for all purposes of this
Agreement. The Register shall be available for inspection by the Seller or any Liquidity Bank at
any reasonable time and from time to time upon reasonable prior notice. Upon its receipt of an
Assignment and Acceptance Agreement executed by an assigning Liquidity Bank and an Eligible
Assignee, the Administrative Agent shall, if such Assignment and Acceptance Agreement has been
completed, (i) accept such Assignment and Acceptance Agreement, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the Seller.



     (d) Notwithstanding any other provision of this Section 13.16, any Liquidity Bank may at any
time pledge or grant a security interest in all or any portion of its rights (including, without
limitation, rights to payment of interest and principal) under this Agreement or under



149









 







any Liquidity Agreement to secure obligations of such Liquidity Bank to a Federal Reserve
Bank, without notice to or consent of the Seller or the Administrative Agent; provided that no such
pledge or grant of a security interest shall release a Liquidity Bank from any of its obligations
hereunder or under the Liquidity Agreement, as the case may be, or substitute any such pledgee or
grantee for such Liquidity Bank as a party hereto or to the Liquidity Agreement, as the case may
be.



     (e) Each Liquidity Bank may sell participations, to one or more banks or other entities, in or
to all or a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment and the Advances owned by it); provided,
however, that




     (i) such Liquidity Bank’s obligations under this Agreement (including, without
limitation, its Commitment to the Seller hereunder) shall remain unchanged,




     (ii) such Liquidity Bank shall remain solely responsible to the other parties to this
Agreement for the performance of such obligations, and




     (iii) concurrently with such participation, the selling Liquidity Bank shall sell to
such bank or other entity a participation in an equal percentage of its rights and
obligations under the Liquidity Agreement.



     The Administrative Agent, the Purchasers, other Liquidity Banks and the Seller shall have the
right to continue to deal solely and directly with such Liquidity Bank in connection with such
Person’s rights and obligations under this Agreement.



     (f) This Agreement and the rights and obligations of the Administrative Agent herein shall be
assignable by the Administrative Agent and its successors and assigns; provided,
however, that the Administrative Agent agrees that it will not assign such rights and
obligations to any Person other than an Affiliate of Citibank unless:




     (i) in the reasonable judgment of the Administrative Agent, the Administrative Agent
determines that continued service by it (or its Affiliate) as Administrative Agent hereunder
would be inconsistent with, or otherwise disadvantageous under, applicable legal, tax or
regulatory restrictions, in which case the Administrative Agent shall notify the Seller of
such determination and consult with the Seller regarding the selection of an assignee; or




     (ii) there shall have occurred any Termination Event, which shall be continuing; or




     (iii) the Seller shall have consented to such assignment (such consent not to be
unreasonably withheld or delayed).



     (g) The Seller may not assign its rights or obligations hereunder or any interest herein, or
permit any Lien (other than any Permitted 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.



150









 





     (h) Each of the Purchasers and any Eligible Assignee that becomes a party to this Agreement
shall be deemed to have represented, acknowledged and agreed as follows:




     (1) Such Person is either (i) a “qualified institutional buyer” within the meaning of
Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), who is also
a Qualified Purchaser (as defined in the 1940 Act), acquiring the Variable Funding
Certificate for its own account or for one or more accounts, each of whom is a qualified
institutional buyer who is also a Qualified Purchaser, or (ii) an institutional
“accredited investor” within the meaning of Rule 501 under the Securities Act who is also
a Qualified Purchaser.




     (2) The Variable Funding Certificate may not be reoffered, resold, pledged or
otherwise transferred except to a Qualified Purchaser. Such Person understands that the
Variable Funding Certificate may not at any time be held by or on behalf of a Person that
is not a Qualified Purchaser. No sale, pledge or other transfer of the Variable Funding
Certificate (or any interest therein) may be made if such transfer would have the effect
of requiring the Seller to register as an investment company under the 1940 Act.



     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. Collections from the Obligor on such Revolving Loan
will be allocated first to the portion of such Revolving Loan owned by the Originator, its
Affiliate special purpose entities under any warehouse facility involving the Originator or one of
its Affiliates, any co-lenders under such facilities or a term transaction or warehouse facility
involving the Originator or one of its Affiliates; provided that if (i) a payment default occurs,
or an event of default occurs (without waiver) with respect to any of the related Loans, or an
Insolvency Event with respect to the related Obligor, (ii) the Servicer has determined that the
creditworthiness of the Obligor under such related Loan has deteriorated such that it materially
and adversely affects the value of such related Loan or has reduced in a material manner the
likelihood of repayment in full thereunder, (iii) the Originator has determined in its sole
discretion to reduce or terminate its commitment to an Obligor, (iv) a Termination Event or
Unmatured Termination Event occurs, (v) an Allocation Adjustment Event occurs, or (vi) a Liquidity
Factor Reduction Event shall have occurred and be continuing, then at such time and all times
thereafter, Collections received on (A) the applicable Loan (in the case of clause (i), (ii) or
(iii) above or during the time that a Liquidity Factor Reduction Event shall have occurred and be
continuing in the case of clause (vi) above) or (B) all the Revolving Loans (in the case of clause
(iv) or (v) above) will be allocated between the portion owned by the



151









 







Originator, its Affiliate special purpose entities under the warehouse or term facilities then
outstanding and the portion 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.



     Section 13.20 Appointment of Successor Agent.



     (a) Pursuant to the provisions of Section 12.1(f), the Original Agent resigns as
administrative agent under the Original Agreement and the other Transaction Documents, effective as
of the date on which the conditions precedent set forth in Section 3.3 are satisfied or waived.
The Purchasers and the Seller appoint CNAI as Administrative Agent under this Agreement and the
other Transaction Documents effective as of such date and agree to waive the notice period set
forth in Section 12.1(f).



     (b) In connection with the agency succession described in the foregoing Section
13.20(a), and effective as of the date set forth in Section 13.20(a) and without the
need for further action (except as expressly set forth below), (i) the Administrative Agent shall
succeed to and become vested with all of the rights, powers, privileges and duties as
administrative agent under the Transaction Documents, (ii) the Original Agent shall be discharged
from its duties and obligations as administrative agent under the Transaction Documents, (iii) all
provisions of this Agreement set forth in Article XII and Sections 11.1 and 11.2 hereof shall
continue in effect for the Original Agent while it was acting as administrative agent under the
Transaction Documents, (iv) the Administrative Agent shall bear no responsibility or liability for
any actions taken or omitted to be taken by the Original Agent while Original Agent served as
administrative agent under the Transaction Documents, (v) each of Original Agent, Seller, Servicer,
Originator and the Purchasers authorizes the Administrative Agent to file any Uniform Commercial
Code financing statements, assignments or amendments that the Administrative Agent deems necessary
or desirable to evidence the Administrative Agent’s succession as administrative agent under the
Transaction Documents, and (vi) each of Original Agent, Seller, Servicer and Originator agrees,
upon the reasonable request of Administrative Agent, to take such additional actions and to execute
and deliver such other documents and instruments as the Administrative Agent may reasonably request
to effect the



152









 







Administrative Agent’s succession as administrative agent under the Transaction Documents. Without limiting the generality of the foregoing,
Original Agent hereby assigns to the Administrative Agent, without warranty, recourse or
representation, all of the Original Agent’s right, title and interest and all liens and security
interests in and on the Collateral, all of which the Seller and Originator affirms shall remain in
full force and effect; and the Original Agent acknowledges and agrees that, after giving effect to
such assignment to the Administrative Agent, the Original Agent shall no longer have any right,
title and interest or any liens and security interest in and on the Collateral.



     Section 13.21 Payment Direction.



          The Seller hereby directs the Purchasers to pay the amount of the initial Advance to be made
by them on the Closing Date, in accordance with the terms of the Omnibus Payoff and Restructuring
Agreement, in the amount of $499,500,000 directly to the Original Purchaser in immediately
available funds at the account designated by the Original Purchaser.





153









 








     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:	 	CS FUNDING VII DEPOSITOR LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/S/ JEFFREY A. LIPSON
 

	 	     
	 

	 	Name:
	 	Jeffrey A. Lipson	 	 
	 

	 	Title:
	 	 Vice President & Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	CS Funding VII Depositor LLC
	 	 	4445 Willard Avenue, 12th Floor
	 	 	Chevy Chase, Maryland 20815
	 	 	Attention: Treasurer	 	 
	 	 	Facsimile No.: (301) 841-2375	 	     
	 	 	Confirmation No.: (301) 841-2731]	 	     
	 
	 	 	 	 	 	 
	THE LOAN ORIGINATOR
AND SERVICER:	 	CAPITALSOURCE FINANCE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/S/ JEFFREY A. LIPSON	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jeffrey A. Lipson	 	 
	 

	 	Title:
	 	 Vice President & Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	CapitalSource Finance LLC
	 	 	4445 Willard Avenue, 12th Floor
	 	 	Chevy Chase, Maryland 20815
	 	 	Attention: Treasurer	 	 
	 	 	Facsimile No.: (301) 841-2375	 	 
	 	 	Confirmation No.: (301) 841-2731	 	 






[Signatures Continued on the Following Page]




 









 








	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ISSUER:	 	CHARTA, LLC,	 	 
	 
	 	 	 	 	 	 
	 	 	in its capacity as an Issuer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Citicorp North America, Inc.,	 	 
	 

	 	 	 	as Attorney-in-Fact	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ GERALD F. KEEFE
 

Gerald F. Keefe
	 	     
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CHARTA, LLC	 	 
	 	 	450 Mamaroneck Avenue	 	 
	 	 	Harrison, N.Y. 10528	 	 
	 	 	Attention: Global Securitization	 	 
	 	 	Facsimile No.: 914-899-7890	 	 
	 	 	Confirmation No.: 914-899-7218	 	 






[Signatures Continued on the Following Page]




 









 








	 	 	 	 	 	 	 
	LIQUIDITY BANK:	 	CITIBANK, N.A.,	 	 
	 	 	in its capacity as a Liquidity Bank	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/S/ GERALD F. KEEFE	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Gerald F. Keefe	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Citibank, N.A.	 	 
	 	 	450 Mamaroneck Avenue	 	 
	 	 	Harrison, N.Y. 10528	 	 
	 	 	Attention: Global Securitization	 	 
	 	 	Facsimile No.: 914-899-7890	 	 
	 	 	Confirmation No.: 914-899-7218	 	 
	 
	 	 	 	 	 	 
	THE ADMINISTRATIVE AGENT:	 	CITICORP NORTH AMERICA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/S/ GERALD F. KEEFE	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Gerald F. Keefe	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Citicorp North America,
Inc., as Administrative Agent	 	 
	 	 	450 Mamaroneck Avenue	 	 
	 	 	Harrison, N.Y. 10528	 	 
	 	 	Attention: Global Securitization	 	 
	 	 	Facsimile No.: (914) 899-7890	 	 
	 	 	Confirmation No.: (914) 899-7218