exv10w51



 






Exhibit 10.51




EXECUTION COPY



 

SALE AND CONTRIBUTION AGREEMENT




by and between




CSE QRS FUNDING I LLC,

as the Buyer




and




CSE MORTGAGE LLC,

as the Seller




Dated as of December 28, 2005


 



 









 








TABLE OF CONTENTS




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






 









 




TABLE OF CONTENTS (con’t)




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






ii









 






TABLE OF CONTENTS (con’t)




	 	 	 	 	 
	 	 	 	 	Page
	SCHEDULES

	 	 	 	 
	SCHEDULE I

	 	Purchased Collateral List	 	 
	SCHEDULE II

	 	[Reserved]	 	 
	SCHEDULE III

	 	Lock-Box Banks and Lock-Box Accounts	 	 
	EXHIBITS
	 	 	 	 
	EXHIBIT A

	 	Form of Sale Assignment	 	 
	EXHIBIT B

	 	Form of Officer’s Certificate	 	 
	APPENDICES
	 	 	 	 
	APPENDIX A

	 	Condition Precedent Documents	 	 







iii









 








SALE AND CONTRIBUTION AGREEMENT




     THIS SALE AND CONTRIBUTION AGREEMENT (such agreement as amended, modified, supplemented or
restated from time to time, the “Agreement”) is dated as of December 28, 2005, by and
between CSE MORTGAGE LLC, a Delaware limited liability company, as the seller (in such capacity,
the “Seller”) and CSE QRS FUNDING I LLC, a Delaware limited liability company, as the buyer
(in such capacity, the “Buyer”).



W I T N E S S E T H:




     WHEREAS, the Buyer desires to purchase from the Seller and the Seller desires to sell to the
Buyer certain loans originated by the Seller in its normal course of business, together with, among
other things, certain related security and rights of payment thereunder.



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:



ARTICLE I.




GENERAL




     Section 1.1. Defined Terms.



     Capitalized terms used but not defined herein have the meanings provided in the Sale and
Servicing Agreement (as defined below).


Applicable Insolvency Laws: Defined in Section 8.1.



Agreement: Defined in the Preamble.



Assets: The Assets listed on Schedule I hereto, as such Schedule I may be
amended, supplemented, restated or replaced from time to time.



Buyer: Defined in the Preamble.



Early Termination: Defined in Section 8.1.



Faxed Documents: Defined in Section 2.1(f).



Purchase: A purchase by the Buyer of Purchased Collateral from the Seller pursuant to
Section 2.1.



Purchase Date: The Business Day immediately following the Closing Date and any subsequent
day on which any Purchased Collateral is acquired by the Buyer pursuant to the terms of this
Agreement including any Substitution Date, as set forth in the related Sale Assignment.



Purchase Price: Defined in Section 2.2.




 









 







Purchase Termination Events: Defined in Section 8.1.



Purchased Collateral: Defined in Section 2.1(a).



Sale Assignment: Defined in Section 2.1(b).



Sale and Servicing Agreement: The Sale and Servicing Agreement, dated as of December 28,
2005, among CSE QRS Funding I LLC, as the seller, CSE Mortgage LLC, as the originator and as the
servicer, Variable Funding Capital Company LLC, as a conduit purchaser, each other commercial paper
conduit from time to time party thereto, as a conduit purchaser, Wachovia Bank, National
Association, as the swingline purchaser, Wachovia Capital Markets, LLC, as the VFCC agent and as
the administrative agent, each other purchaser agent from time to time party thereto, as an
additional agent, and Wells Fargo Bank, National Association, as the backup servicer and as the
collateral custodian, as the same may be amended, supplemented, restated or replaced from time to
time.



Schedule I: The schedule of all Purchased Collateral that is sold, transferred and
assigned by the Seller to the Buyer on a Purchase Date, which schedule as to the Purchased
Collateral identified as of the initial Purchase Date is attached hereto and as to any Purchased
Collateral identified on any subsequent Purchase Date is supplemented by the “Schedule I” attached
to the applicable Sale Assignment, and incorporated herein by reference, as such schedule may be
supplemented and amended from time to time pursuant to the terms hereof.



Seller: Defined in the Preamble.



Substitution Date: Any date on which the Seller transfers a Substitute Asset to the Buyer.




     Section 1.2. Other Terms.



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



     Section 1.3. Computation of Time Periods.



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



     Section 1.4. Interpretation.



     In each Transaction Document, unless a contrary intention appears:




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




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



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




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




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




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



ARTICLE II.




SALE, TRANSFER AND ASSIGNMENT




     Section 2.1. Sale, Transfer and Assignment.



     (a) On the terms and subject to the conditions set forth in this Agreement (including the
conditions to Purchase set forth in Article III), on each Purchase Date, the Seller hereby
sells, transfers, assigns, sets over and otherwise conveys to the Buyer, and the Buyer hereby
Purchases and takes from the Seller all right, title and interest (whether now owned or hereafter
acquired or arising and wherever located) of the Seller in, to and under all accounts, general
intangibles, instruments, chattel paper, documents, money, letters of credit, advices of credit,
deposit accounts, certificates of deposit, investment property, goods and other property consisting
of, arising from or related to any of the following property (collectively, the “Purchased
Collateral”):




     (i) the Assets identified by the Seller as of the initial Cut–Off Date which are listed
on Schedule I hereto, and the Assets identified by the Seller as of any additional Cut–Off
Date which are listed on Schedule I to the Sale Assignment, together with all monies due in
payment of such Assets on and after the related Cut–Off Date, but excluding any Excluded
Amounts and any Retained Interest;




     (ii) all Related Security with respect to the Loans referred to in clause (i) above;
and




     (iii) all income and Proceeds of the foregoing.



     (b) The Seller shall on or prior to any Purchase Date after the Closing Date execute and
deliver to the Buyer a certificate of assignment (the “Sale Assignment”) from the Seller to



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the Buyer in the form of Exhibit A hereto. From and after such Purchase Date, the Purchased
Collateral listed on such assignment shall be deemed to be Purchased Collateral hereunder.



     (c) On or before any Purchase Date with respect to the Purchased Collateral to be acquired by
the Buyer on that date, the Seller shall provide the Buyer with an Officer’s Certificate, in the
form of Exhibit B hereto, signed by a duly authorized Responsible Officer certifying, as of such
Purchase Date, to each of the items in Section 4.2, in the form of Exhibit B
hereto.



     (d) Except as specifically provided in this Agreement, the sale and purchase of Purchased
Collateral under this Agreement shall be without recourse to the Seller; it being
understood that Seller shall be liable to the Buyer for all representations, warranties,
covenants and indemnities made by Seller pursuant to the terms of this Agreement, all of which
obligations are limited so as not to constitute recourse to the Seller for the credit risk of the
Obligors.



     (e) The Buyer, the VFCC Agent and Administrative Agent, each Purchaser Agent, each Purchaser,
the other Secured Parties, the Backup Servicer and the Collateral Custodian shall not have any
obligation or liability to any Obligor or client of Seller (including any obligation to perform any
of the obligations of Seller (including any obligation with respect to any other related
agreements)). No such obligation or liability is intended to be assumed by the Buyer, the
Administrative Agent, any Purchaser Agent, the Purchasers, the Secured Parties, the Backup
Servicer, or the Collateral Custodian, and any such assumption is expressly disclaimed.



     (f) In connection with each Purchase of Purchased Collateral hereunder, the Seller shall
deliver to the Collateral Custodian (A) the Required Asset Documents with respect thereto on or
prior to the Closing Date (except for any UCCs, which shall be in the possession of the Collateral
Custodian within two Business Days of the Closing Date) as to any Existing Assets, and (B) the duly
executed original promissory note and the duly executed faxed copies of the other documents
included in the Required Asset Documents (the “Faxed Documents”) on or prior to the related
Purchase Date (and if prior to the related Purchase Date, such promissory note and Faxed Documents
shall be held by the Collateral Custodian on behalf of the Purchasers in escrow until such Purchase
shall occur on the related Purchase Date), and the duly executed original copies of the Faxed
Documents (including any UCCs) within two Business Days of the related Purchase Date as to any
Additional Assets. In connection with such transfer, the Seller hereby grants to each of the
Buyer, the Administrative Agent, each Purchaser Agent and the Servicer an irrevocable,
non–exclusive license to use, without royalty or payment of any kind, all software used by the
Seller to account for the Purchased Collateral, to the extent necessary to administer the Purchased
Collateral, whether such software is owned by the Seller or is owned by others and used by the
Seller under license agreements with respect thereto; provided that should the consent of any
licensor of such software be required for the grant of the license described herein, to be
effective, the Seller hereby agrees that upon the request of the Buyer or the Administrative Agent
and each Purchaser Agent, the Seller will use its reasonable efforts to obtain the consent of such
third–party licensor. The license granted hereby shall be irrevocable until the Collection Date
and shall terminate on the date this Agreement terminates in accordance with its terms. The Seller
(i) shall take such action requested by the Buyer, the Administrative Agent and each Purchaser
Agent, from time to time hereafter, that may be necessary or appropriate to ensure that the Buyer
and its assigns under the Sale and Servicing Agreement have



-4-









 







an enforceable ownership interest in the Asset Files purchased from the Seller hereunder, and
(ii) shall use its reasonable efforts to ensure that each of the Buyer, the Administrative Agent,
the Purchaser Agents, and the Servicer has an enforceable right (whether by license or sublicense
or otherwise) to use all of the computer software used to account for the Purchased Collateral
and/or to recreate such Asset Files.



     (g) In connection with the sale of the Purchased Collateral, the Seller further agrees that it
will, at its own expense, indicate clearly and unambiguously in its computer files and its
financial statements, on or prior to each Purchase Date, that such Purchased Collateral has been
sold to the Buyer pursuant to this Agreement.



     (h) The Seller further agrees to deliver to the Buyer on or before each Purchase Date a
computer file containing a true, complete and correct list of all Assets, identified by account
number and Outstanding Asset Balance as of the related Cut–Off Date. Such file or list shall be
marked as Schedule I to this Agreement, shall be delivered to the Buyer as confidential and
proprietary, and is hereby incorporated into and made a part of this Agreement as such Schedule
I may be supplemented and amended from time to time.



     (i) IT IS THE INTENTION OF THE PARTIES HERETO THAT THE CONVEYANCE OF THE SELLER’S RIGHT, TITLE
AND INTEREST IN AND TO THE PURCHASED COLLATERAL BY THE SELLER TO THE BUYER AS PROVIDED IN
Section 2.1 shall constitute an absolute transfer conveying good title, free and clear of
any Lien (other than Permitted Liens) and that the Purchased Collateral shall not be part of the
Seller’s bankruptcy estate in the event of an Insolvency Event with respect to the Seller.
Furthermore, it is not intended that such conveyance be deemed a pledge of the Assets and the other
Purchased Collateral by the Seller to the Buyer to secure a debt or other obligation of the Seller.
If, however, notwithstanding the intention of the parties, the conveyance provided for in this
Section 2.1 is determined to be a transfer for security, then this Agreement shall also be
deemed to be, and hereby is, a “security agreement” within the meaning of Article 9 of the UCC and
the Seller hereby grants to the Buyer a duly perfected, first priority “security interest” within
the meaning of Article 9 of the UCC in all of the Seller’s right, title and interest in and to the
Purchased Collateral, now existing and hereafter created, to secure the prompt and complete payment
of a loan deemed to have been made in an amount equal to the aggregate Purchase Price of the
Purchased Collateral together with all of the other obligations of the Seller hereunder. The Buyer
shall have, in addition to the rights and remedies which it may have under this Agreement, all
other rights and remedies provided to a secured creditor under the UCC and other Applicable Law,
which rights and remedies shall be cumulative.



     Section 2.2. Purchase Price.



     The purchase price for each item of Purchased Collateral sold to the Buyer by the Seller under
this Agreement (the “Purchase Price”) shall be a dollar amount equal to the Outstanding
Asset Balance thereof determined as of the related Cut–Off Date.




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     Section 2.3. Payment of Purchase Price.



     (a) The Purchase Price for any Purchased Collateral sold by the Seller to the Buyer on any
Purchase Date shall be paid in a combination of (i) immediately available funds and (ii) if the
Buyer does not have sufficient funds to pay the full amount of the Purchase Price, by means of a
capital contribution by the Seller to the Buyer.



     (b) Notwithstanding any provision herein to the contrary, the Seller may on any Purchase Date
elect to designate all or a portion of the Purchased Collateral proposed to be transferred to the
Buyer on such date as a capital contribution to the Buyer. In such event, the Purchase Price
payable with respect to such transfer shall be reduced by the Outstanding Asset Balance of the
Purchased Collateral or portions thereof that were so contributed; provided that Purchased
Collateral contributed to the Buyer as capital shall constitute Purchased Collateral for all
purposes of this Agreement.



     (c) Seller, by accepting the Purchase Price paid for each purchase of Purchased Collateral,
shall be deemed to have certified, with respect to the Purchased Collateral to be sold by it on
such day, that its representations and warranties contained in Article IV are true and
correct on and as of such day, with the same effect as though made on and as of such day and that
no Termination Event or Unmatured Termination Event has occurred.



     (d) Upon the payment of the Purchase Price for any Purchase, title to the Purchased Collateral
included in such Purchase shall rest in Buyer, whether or not the conditions precedent to such
Purchase and the other covenants and agreements contained herein were in fact satisfied; provided
that Buyer shall not be deemed to have waived any claim it may have under this Agreement for the
failure by the Seller in fact to satisfy any such condition precedent, covenant or agreement.



ARTICLE III.




CONDITIONS PRECEDENT




     Section 3.1. Conditions Precedent to Closing and Initial Purchase.



     The closing and initial Purchase hereunder are subject to the conditions precedent that (i)
each of the conditions precedent to the execution, delivery and effectiveness of each other
Transaction Document (other than a condition precedent in any such other Transaction Document
relating to the effectiveness of this Agreement) shall have been fulfilled, and (ii) on or prior to
the Closing Date, the Seller shall have delivered to the Buyer each of the items specified on
Appendix A hereto in form and substance satisfactory to the Buyer.



     Section 3.2. Conditions Precedent to all Purchases.



     The obligations of the Buyer to Purchase the Purchased Collateral from the Seller on any
Purchase Date (including the initial Purchase Date) shall be subject to the satisfaction of the
following conditions precedent that:



     (a) all representations and warranties of the Seller contained in Sections 4.1 and
4.2 shall be true and correct on and as of such date as though made on and as of such date
and shall be deemed to have been made on and as of such day;



-6-









 





     (b) (i) in the case of the initial Purchase Date, the Seller shall have delivered to the
Buyer, prior to the Closing Date, a Schedule I that is true, accurate and complete in all
respects as of the initial Cut–Off Date, and (ii) in the case of any subsequent Purchase Date, the
Seller shall have delivered to the Buyer, prior to the applicable subsequent Purchase Date, a duly
executed and completed Sale Assignment along with a Schedule I that is true, accurate and
complete in all respects as of the related Cut–Off Date;



     (c) on and as of such Purchase Date, the Seller shall have performed all of the covenants and
agreements required to be performed by it on or prior to such date pursuant to the provisions of
this Agreement;



     (d) no event has occurred and is continuing, or would result from such Purchase, that
constitutes a Termination Event or Unmatured Termination Event;



     (e) the Termination Date shall not have occurred;



     (f) the Facility Termination Date shall not have occurred;



     (g) no Applicable Law shall prohibit or enjoin, and no order, judgment or decree of any
federal, state or local court or governmental body, agency or instrumentality shall prohibit or
enjoin, the making of any such Purchase by the Buyer in accordance with the provisions hereof;



     (h) the Buyer, the Administrative Agent and the Purchaser Agents shall be in receipt of UCC,
tax and judgment lien searches of Seller;



     (i) the Buyer, the Administrative Agent and the Purchaser Agents shall be in receipt of UCC
financing statements per paragraph (iv) of Appendix A;



     (j) the Buyer, the Administrative Agent and the Purchaser Agents shall be in receipt of
opinions of counsel satisfactory to such Persons;



     (k) all corporate and legal proceedings and all instruments in connection with the
transactions contemplated by this Agreement shall be satisfactory in form and substance to the
Buyer, and the Buyer shall have received from the Seller copies of all documents (including,
without limitation, records of corporate proceedings, approvals and opinions) relevant to the
transactions herein contemplated as the Buyer may reasonably have requested;



     (l) the Seller shall have paid all fees required to be paid by it on the Closing Date, and
shall have reimbursed the Buyer and its assignees for all fees, costs and expenses of closing the
transactions contemplated hereunder and under the other Transaction Documents;



     (m) prior to the Closing Date, the Buyer, the Administrative Agent and each Purchaser Agent
shall have received satisfactory evidence that the Seller’s total initial capital commitment is in
place; and



     (n) with respect to an Acquired Asset intended to be included as a part of the Purchased
Collateral, the Buyer, the Administrative Agent and each Purchaser Agent shall have received a
satisfactory opinion of counsel.



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ARTICLE IV.




REPRESENTATIONS AND WARRANTIES




     Section 4.1. Seller’s Representations and Warranties.



     As of each Purchase Date, the Seller represents and warrants to the Buyer for the benefit of
the Buyer and each of its successors and assigns that:



     (a) Organization and Good Standing. The Seller has been duly organized, and is
validly existing as a limited liability company in good standing, under the laws of the State of
Delaware, with all requisite company power and authority to own or lease its properties and conduct
its business as such business is presently conducted, and had at all relevant times, and now has,
all necessary power, authority and legal right to acquire, own and sell the Purchased Collateral.



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



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



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



     (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the other Transaction Documents to which it is a party and the fulfillment of the terms hereof
and thereof will not (i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under, the Seller’s
certificate of formation, operating agreement or any Contractual Obligation of the Seller, (ii)
result in the creation or imposition of any Lien (other than Permitted Liens) upon any of the
Seller’s properties pursuant to the terms of any such Contractual Obligation, other than this
Agreement, or (iii) violate any Applicable Law.



-8-









 





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



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



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



     (i) Solvency. The Seller is not the subject of any Insolvency Proceedings or
Insolvency Event. The transactions under this Agreement and any other Transaction Document to
which the Seller is a party do not and will not render the Seller not Solvent.



     (j) Selection Procedures. No procedures believed by the Seller to be adverse to the
interests of the Buyers were utilized by the Seller in identifying and/or selecting the Assets
included in the Purchased Collateral. In addition, each Asset shall have been underwritten in
accordance with and satisfy the standards of any Credit and Collection Policy that has been
established by the Seller and is then in effect.



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



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



     (m) [Reserved].



     (n) Security Interest.



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




     (ii) the Assets, along with the related Asset Files, constitute a “general intangible,”
an “instrument,” an “account,” or “chattel paper,” within the meaning of Article 9 of the
UCC of all applicable jurisdictions;




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




     (iv) the Seller has received all consents and approvals required by the terms of any
Asset to the sale and granting of a security interest in the Assets hereunder to the Buyer
and the Administrative Agent as assignee on behalf of the Secured Parties;




     (v) the Seller has caused the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under Applicable Law in order to
perfect the security interest in the Purchased Collateral granted hereunder to the Buyer and
the Administrative Agent as assignee on behalf of the Secured Parties;




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




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




     (viii) the Seller has received a written acknowledgment from the Collateral Custodian
that the Collateral Custodian or its bailee is holding the underlying promissory notes (if
any) and the copies of the Loan Registers that constitute or evidence the Assets solely on
behalf of and for the benefit of the Secured Parties provided that notwithstanding the
foregoing, with respect to any Asset to be funded with the proceeds of a Swingline Advance,
the Seller shall have received a written acknowledgment from the Collateral Custodian (A)
that the Collateral Custodian has received a faxed copy of the applicable underlying
promissory note or Loan Register, as applicable, and (B) within two Business Days after such
Funding Date, that the Collateral Custodian or its bailee is holding the applicable
underlying promissory note or Loan Register, as applicable, that



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constitute or evidence the Assets included in the Collateral solely on behalf of, and
for the benefit of, the Secured Parties;




     (ix) none of the underlying promissory notes or Loan Registers, as applicable, that
constitute or evidence the Assets has any marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the Administrative Agent,
on behalf of the Secured Parties; and




     (x) the Collateral has not been pledged or otherwise made subject to a lien in favor of
Bear, Stearns & Co. Inc., Bear, Stearns Securities Corp. or any of their now or hereafter
existing affiliates, except for such pledge or lien as shall have been previously released
or terminated



     (o) Reports Accurate. All Monthly Reports (if prepared by the Seller in its capacity
as Servicer or otherwise, or to the extent that information contained therein is supplied by the
Seller), information, exhibits, schedules, financial statements, documents, books, records or
reports furnished or to be furnished by the Seller to the Buyer in connection with this Agreement
are true, complete and correct.



     (p) Location of Offices. The principal place of business and chief executive office
of the Seller and the office where the Seller keeps all the Records are located at the address of
the Seller referred to in Section 9.2 hereof (or at such other locations as to which the
notice and other requirements specified in Section 5.2(f) shall have been satisfied).



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



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



     (s) Sale Agreement. This Agreement is the only agreement or arrangement pursuant to
which the Seller sells the Purchased Collateral that is the subject of this Agreement.



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



     (u) Accounting. The Seller accounts for the transfers from it to the Buyer of
interests in Purchased Collateral as financings of such Purchased Collateral for tax and
consolidated



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accounting purposes (with a notation that it is treating the transfers as a sale for legal and
all other purposes on its books, records and financial statements, in each case consistent with
GAAP and with the requirements set forth herein).



     (v) Special Purpose Entity. The Buyer is an entity with assets and liabilities
separate and distinct from those of the Seller and any Affiliates thereof, and the Seller hereby
acknowledges that the Administrative Agent, each Purchaser Agent, the Purchasers and the other
Secured Parties are entering into the transactions contemplated by the Sale and Servicing Agreement
in reliance upon the Buyer’s identity as a separate legal entity separate from the Seller and from
each Affiliate of the Seller. Therefore, from and after the date of execution and delivery of this
Agreement, the Seller shall take all reasonable steps, including, without limitation, all steps
that the Administrative Agent, each Purchaser Agent, any Purchaser, or any other Secured Party may
from time to time reasonably request, to maintain the Buyer’s identity as a separate legal entity
and to make it manifest to third parties that the Buyer is an entity with assets and liabilities
distinct from those of the Seller and any Affiliate thereof and not just a division of the Seller
or any such Affiliate. Without limiting the generality of the foregoing and in addition to the
other covenants set forth herein, Seller shall take all reasonable steps to ensure that the Buyer
has not and will not take, refrain from taking, or fail to take (as applicable) any action
described in Section 4.1(u) of the Sale and Servicing Agreement.



     (w) Confirmation from the Seller. The Seller has provided written confirmation to the
Buyer that the Seller will not cause the Buyer to file a voluntary petition under the Bankruptcy
Code or Insolvency Laws. Each of the Buyer and the Seller is aware that in light of the
circumstances described in the preceding sentence and other relevant facts, the filing of a
voluntary petition under the Bankruptcy Code for the purpose of making any Purchased Collateral or
any other assets of the Buyer available to satisfy claims of the creditors of the Seller would not
result in making such assets available to satisfy such creditors under the Bankruptcy Code.



     (x) Investment Company Act. The Seller is not, and is not controlled by, an
“investment company” within the meaning of, or is exempt from the provisions of, the Investment
Company Act of 1940, as amended.



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



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     (z) PUHCA. The Seller is not a “holding company” or a “subsidiary holding company” of
a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as
amended, or any successor statute.



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



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



     (cc) Collections. The Seller acknowledges that all Collections received by it or its
Affiliates with respect to the Purchased Collateral sold hereunder are held and shall be held in
trust for the benefit of the Buyer (or its assignees) until deposited into the Lock–Box Account as
required by the Sale and Servicing Agreement.



     (dd) Covenants. All covenants, agreements and undertakings of the Seller hereunder
have been fully performed.



     (ee) Set–Off, etc. Other than Senior Subordinated Loans and Junior Subordinated
Loans, no Purchased Collateral has been compromised, adjusted, extended, satisfied, subordinated,
rescinded, set–off or modified by the Seller or the Obligor thereof, and no Purchased Collateral is
subject to compromise, adjustment, extension, satisfaction, subordination, rescission, set–off,
counterclaim, defense, abatement, suspension, deferment, deduction, reduction, termination or
modification, whether arising out of transactions concerning the Purchased Collateral or otherwise,
by the Seller or the Obligor with respect thereto, except for amendments to such Purchased
Collateral otherwise permitted under the Transaction Documents and in accordance with the Credit
and Collection Policy.



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



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



     (hh) Representations and Warranties for Benefit of Buyer’s Assignees: Each of the
representations and warranties of the Seller contained in this Agreement and the other Transaction
Documents to which it is a party and that have been executed and delivered on or prior to such
Purchase Date is true and correct in all material respects on the date it was made, and the Seller
hereby makes each such representation and warranty to, and for the benefit of the Administrative
Agent, each Purchaser Agent, the Purchasers and the other Secured Parties as if the same were set
forth in full herein.



     (ii) Ownership of Buyer. The Seller owns, directly or indirectly, 100% of the
membership interests of the Buyer, free and clear of any Lien. Such membership interests are



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validly issued, fully paid and non–assessable, and there are no options, warrants or other
rights to acquire membership interests of the Buyer.



     (jj) Participation, Acquired and Assigned Loans. The participations created with
respect to the Participation Loans and the sale to the Buyer with respect to the Acquired and
Assigned Loans do not violate any provisions of the underlying Required Asset Documents and such
documents do not contain any express or implied prohibitions on participations or sales of such
Loans.



     (kk) Environmental.




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




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




     (iii) The Seller has not received any written or verbal notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Related Property, nor does Seller have
knowledge or reason to believe that any such notice will be received or is being threatened.




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




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




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



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



     It is understood and agreed that the representations and warranties provided in this Section
4.1 shall survive (x) the sale and assignment or contribution of the Purchased Collateral to the
Buyer and (y) any subsequent transfer of the Purchased Collateral by the Buyer (including its grant
of a first priority perfected security interest in, to and under the Purchased Collateral pursuant
to the Sale and Servicing Agreement). Upon discovery by the Seller or the Buyer of a breach of any
of the foregoing representations and warranties, the party discovering such breach shall give
prompt written notice thereof to the other and to the Administrative Agent and each Purchaser Agent
immediately upon obtaining knowledge of such breach.



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



     The Seller hereby represents and warrants to the Buyer, as of the Closing Date and as of each
Purchase Date:



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




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




     (ii) This Agreement constitutes a valid transfer to the Buyer of all right, title and
interest of the Seller in, to and under all Purchased Collateral, free and clear of any Lien
of any Person claiming through or under the Seller or its Affiliates, except for Permitted
Liens. If the conveyances contemplated by this Agreement are determined to be a transfer
for security, then this Agreement constitutes a grant of a security interest in all
Purchased Collateral to the Buyer which upon the delivery of the Required Asset Documents to
the Collateral Custodian and the filing of the financing statements described in Section
4.1(n) and, in the case of Additional Assets on the applicable Purchase Date, shall be a
first priority perfected security interest in all Purchased Collateral, subject only to
Permitted Liens. Neither the Seller nor any Person claiming through or under Seller shall
have any claim to or interest in the Collection Account and,



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if this Agreement constitutes the grant of a security interest in such property, except
for the interest of Seller in such property as a debtor for purposes of the UCC.



     (b) Eligibility of Purchased Collateral. As of the Closing Date and each Purchase
Date, (i) the Schedule I (the Purchased Collateral List) is an accurate and complete
listing in all material respects of all the Purchased Collateral as of the Cut–Off Date and the
information contained therein with respect to the identity of such Purchased Collateral and the
amounts owing thereunder is true and correct in all material respects as of the related Cut–Off
Date, (ii) each item of Purchased Collateral included in the Borrowing Base is an Eligible Asset as
of such date, (iii) each item of Purchased Collateral is free and clear of any Lien of any Person
(other than Permitted Liens) and in compliance with all Applicable Laws, (iv) with respect to each
item of Purchased Collateral, all consents, licenses, approvals or authorizations of or
registrations or declarations of any Governmental Authority required to be obtained, effected or
given by the Seller in connection with the transfer of an ownership interest in item of Purchased
Collateral to the Buyer have been duly obtained, effected or given and are in full force and
effect, and (v) the representations and warranties set forth in Section 4.2(a) are true and
correct with respect to each item of Purchased Collateral.



     It is understood and agreed that the representations and warranties provided in this
Section 4.2 shall survive (x) the sale and assignment or contribution of the Purchased
Collateral to the Buyer, (y) any subsequent transfer of the Purchased Collateral by the Buyer
(including its grant of a perfected security interest in, to and under the Purchased Collateral
pursuant to the Sale and Servicing Agreement which, shall be of first priority security interest)
and (z) the termination of this Agreement and the Sale and Servicing Agreement. Upon discovery by
the Seller or the Buyer of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice thereof to the other and to the
Administrative Agent and each Purchaser Agent immediately upon obtaining knowledge of such breach.



     Section 4.3. Representations and Warranties of the Buyer.



     The Buyer hereby represents and warrants to the Seller, as of the Closing Date and each
Purchase Date, that:



     (a) Organization and Good Standing. The Buyer has been duly organized, and is validly
existing as a limited liability company in good standing under the laws of the State of Delaware,
with all requisite company power and authority to own or lease its properties and conduct its
business as such business is presently conducted, and had at all relevant times, and now has, all
necessary power, authority and legal right to acquire and own the Purchased Collateral.



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



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



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



     (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the other Transaction Documents to which it is a party and the fulfillment of the terms hereof
and thereof will not (i) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under, the Buyer’s
certificate of formation, operating agreement or any Contractual Obligation of the Buyer, (ii)
result in the creation or imposition of any Lien (other than Permitted Liens) upon any of the
Buyer’s properties pursuant to the terms of any such Contractual Obligation, other than this
Agreement, or (iii) violate any Applicable Law.



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



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



ARTICLE V.




COVENANTS




     Section 5.1. Affirmative Covenants of the Seller.



     From the date hereof until the Collection Date:



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



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



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



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



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



     (f) Delivery of Collections. The Seller will cause (1) all proceeds from all
Lock–Boxes to be directly deposited by a Lock–Box Bank into a Lock–Box Account and (2) each
Lock–Box and Lock–Box Account to be subject at all times to a Lock–Box Agreement that is in full
force and effect. In the event any payments relating to any Purchased Collateral are remitted
directly to the Seller or any Affiliate of the Seller, the Seller will remit (or will cause all
such payments to be remitted) directly to a Lock–Box Bank and deposited into a Lock–Box Account
within two (2) Business Days following receipt thereof, and, at all times prior to such remittance,
the Seller will itself hold or, if applicable, will cause such payments to be held in trust for the
exclusive benefit of the Buyer, the Administrative Agent, each Purchaser Agent and the Purchasers.
The Seller will maintain exclusive ownership, dominion and control (subject to the



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terms of this Agreement) of each Lock–Box and Lock–Box Account and shall not grant the right
to take dominion and control of any Lock–Box or Lock–Box Account at a future time or upon the
occurrence of a future event to any Person, except to the Administrative Agent and each Purchaser
Agent as contemplated by the Sale and Servicing Agreement. Until so deposited, all such
Collections shall be held in trust for the Buyer or its assignees by the Seller.



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



     (h) Termination Events. The Seller will provide the Buyer, the Administrative Agent
and each Purchaser Agent with immediate written notice of the occurrence of each Termination Event
and each Unmatured Termination Event of which the Seller has knowledge or has received notice. In
addition, no later than two (2) Business Days following the Seller’s knowledge or notice of the
occurrence of any Termination Event or Unmatured Termination Event, the Seller will provide to the
Buyer, the Administrative Agent and each Purchaser Agent a written statement of the chief financial
officer or chief accounting officer of Seller setting forth the details of such event and the
action that the Seller proposes to take with respect thereto.



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



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



     (k) Adverse Claims. The Seller will not create, or participate in the creation of, or
permit to exist, any Liens in relation to each Lock–Box Account other than as disclosed to the
Buyer, the Administrative Agent and each Purchaser Agent and existing as of the date of this
Agreement.



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




     (i) Income Tax Liability. Within ten (10) Business Days after the receipt of
revenue agent reports or other written proposals, determinations or assessments of the
Internal Revenue Service or any other taxing authority which propose, determine or



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otherwise set forth positive adjustments to the Tax liability of any Affiliated group
(within the meaning of Section 1504(a)(l) of the Internal Revenue Code of 1986 (as amended
from time to time)) which equal or exceed $1,000,000 in the aggregate, telephonic or
facsimile notice (confirmed in writing within five (5) Business Days) specifying the nature
of the items giving rise to such adjustments and the amounts thereof;




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




     (iii) Representations. Forthwith upon receiving knowledge of same, the Seller
shall notify the Buyer, the Administrative Agent and each Purchaser Agent if any
representation or warranty set forth in Section 4.1 was incorrect at the time it was
given or deemed to have been given and at the same time deliver to the Buyer, the
Administrative Agent and each Purchaser Agent a written notice setting forth in reasonable
detail the nature of such facts and circumstances. In particular, but without limiting the
foregoing, the Seller shall notify the Buyer, the Administrative Agent and each Purchaser
Agent in the manner set forth in the preceding sentence before any Purchase Date of any
facts or circumstances within the knowledge of the Seller which would render any of the said
representations and warranties untrue at the date when such representations and warranties
were made or deemed to have been made;




     (iv) ERISA. Promptly after receiving notice of any “reportable event” (as
defined in Title IV of ERISA) with respect to the Seller (or any Affiliate thereof), a copy
of such notice;




     (v) Proceedings. As soon as possible and in any event within three (3)
Business Days after any executive officer of the Seller receives notice or obtains knowledge
thereof, of any settlement of, material judgment (including a material judgment with respect
to the liability phase of a bifurcated trial) in or commencement of any labor controversy
(of a material nature), litigation, action, suit or proceeding before any court or
governmental department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Purchased Collateral, the Transaction Documents, the Buyer’s or the
Secured Parties’ interest in the Purchased Collateral, or the Seller, or any of its
Affiliates; and




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



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



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     (n) Separate Identity. The Seller acknowledges that the Administrative Agent, each
Purchaser Agent, the Purchasers and the other Secured Parties are entering into the transactions
contemplated by the Sale and Servicing Agreement in reliance upon the Buyer’s identity as a legal
entity that is separate from the Seller and any Affiliates thereof. Therefore, from and after the
date of execution and delivery of this Agreement, the Seller will take all reasonable steps
including, without limitation, all steps that the Administrative Agent, each Purchaser Agent, the
Purchasers and the other Secured Parties may from time to time reasonably request to maintain the
Buyer’s identity as a separate legal entity and to make it manifest to third parties that the Buyer
is an entity with assets and liabilities distinct from those of the Seller and any Affiliates
thereof and not just a division of the Seller or any such Affiliate. Without limiting the
generality of the foregoing and in addition to the other covenants set forth herein, the Seller
agrees that:




     (i) the Seller will take all other actions necessary on its part to ensure that the
Buyer is at all times in compliance with Section 4.1(u) of the Sale and Servicing
Agreement;




     (ii) the Seller shall maintain corporate records and books of account separate from
those of the Buyer;




     (iii) the annual financial statements of the Seller shall disclose the effects of the
Seller’s transactions in accordance with GAAP and the annual financial statements of the
Seller shall not reflect in any way that the assets of the Buyer, including, without
limitation, the Purchased Collateral, could be available to pay creditors of the Seller or
any other Affiliate of the Seller;




     (iv) the resolutions, agreements and other instruments underlying the transactions
described in this Agreement shall be continuously maintained by the Seller as official
records;




     (v) the Seller shall maintain an arm’s–length relationship with the Buyer and will not
hold itself out as being liable for the debts of the Buyer;




     (vi) the Seller shall keep its assets and its liabilities wholly separate from those of
the Buyer;




     (vii) the Seller will avoid the appearance, and promptly correct any known
misperception of any of the Seller’s creditors, that the assets of the Buyer are available
to pay the obligations and debts of the Seller; and




     (viii) to the extent that the Seller services the Assets and performs other services on
the Buyer’s behalf, the Seller will clearly identify itself as an agent for the Buyer in the
performance of such duties; provided that the Seller will not be required to so identify
itself when communicating with the Obligors.



     (o) Cooperation with Requests for Information or Documents. The Seller will cooperate
fully with all reasonable requests of the Buyer regarding the provision of any information or
documents, necessary or desirable, including the provision of such information or



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documents in electronic or machine–readable format, to allow each of the Buyer and its
assignees to carry out their responsibilities under the Transaction Documents.



     (p) Payment Performance and Discharge of Obligations. The Seller will pay, perform
and discharge all of its obligations and liabilities, including, without limitation, all taxes,
assessments and governmental charges upon its income and properties, when due, the non–payment,
performance or discharge of which would reasonably be expected to have a Material Adverse Effect,
unless and only to the extent that such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate proceedings and that, to
the extent required by GAAP, proper and adequate book reserves relating thereto are established by
the Seller and then only to the extent that a bond is filed in cases where the filing of a bond is
necessary to avoid the creation of a Lien against any of its properties.



     (q) Copies of Other Information. The Seller will deliver to the Buyer, the
Administrative Agent and each Purchaser Agent:




     (i) promptly, but in any event within ten (10) Business Days after the filing thereof,
a copy of (a) each report or other filing made by the Seller or any of its Affiliates with
the Securities and Exchange Commission (the “SEC”) and required by the SEC to be
delivered to the shareholders of the Seller or any such Affiliate, and (b) each report and
final registration statement of the Seller or any Affiliate filed with the SEC; and




     (ii) promptly, from time to time, such other information, documents, records or reports
respecting the Purchased Collateral or the conditions or operations, financial or otherwise,
of the Seller (including, without limitation, reports and notices relating to the Seller’s
actions under and compliance with ERISA and the Investment Company Act of 1940, as amended)
as the Buyer, the Administrative Agent or any Purchaser Agent may from time to time request
in order to perform their obligations hereunder or under any other Transaction Document or
to protect the interests of the Buyer under or as contemplated by this Agreement and the
other Transaction Documents.



     (r) Required Equity Contribution. The Seller shall maintain in the Buyer the Required
Equity Contribution.



     Section 5.2. Negative Covenants of Seller.



     From the date hereof until the Collection Date:



     (a) Purchased Collateral Not to be Evidenced by Instruments. The Seller will take no
action to cause any Purchased Collateral that is not, as of the Closing Date or the related
Addition Date, as the case may be, evidenced by an instrument, to be so evidenced except in
connection with the enforcement or collection of such Purchased Collateral.



     (b) Security Interests. Except as otherwise permitted herein and in respect of any
Optional Sale and Permitted Securitization, the Seller will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien on any Purchased
Collateral, whether now existing or hereafter transferred hereunder, or any interest, therein, and
the Seller will not sell, pledge, assign or suffer to exist any Lien on its interest, if any,
hereunder.



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The Seller will promptly notify the Buyer, the Administrative Agent and each Purchaser Agent
of the existence of any Lien on any Purchased Collateral and the Seller shall defend the right,
title and interest of the Buyer, the Administrative Agent and each Purchaser Agent in, to and under
the Purchased Collateral against all claims of third parties; provided that nothing in this
Section 5.2(b) shall prevent or be deemed to prohibit the Seller from suffering to exist
Permitted Liens upon any of the Purchased Collateral.




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



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



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



     (f) Change of Name or Location of Loan Files. The Seller shall not (x) change its
name, move the location of its principal place of business and chief executive office, or change
the offices where it keeps the records from the location referred to in Section 10.2 or (y)
move, or consent to the Collateral Custodian or Servicer moving, the Required Asset Documents and
Asset Files from the location thereof on the Closing Date, unless the Seller has given at least
thirty (30) days’ written notice to the Buyer, the Administrative Agent and each Purchaser Agent
and has taken all actions required under the UCC of each relevant jurisdiction in order to continue
the first priority perfected security interest of the Buyer, the Administrative Agent and each
Purchaser Agent in the Purchased Collateral.



     (g) Accounting of Purchases. Other than for federal, state and local income tax
purposes, the Seller will not account for or treat (whether in financial statements or otherwise)
the transactions contemplated hereby in any manner other than as a sale of the Purchased Collateral
by the Seller to the Buyer. Other than for tax and consolidated accounting purposes, the Seller
will not account for or treat (whether in financial statements or otherwise) the transactions
contemplated by this Agreement in any manner other than as a sale of the Purchased Collateral by
the Seller to the Buyer.



     (h) ERISA Matters. The Seller will not (a) engage or permit any ERISA Affiliate to
engage in any prohibited transaction for which an exemption is not available or has not previously
been obtained from the United States Department of Labor, (b) permit to exist any accumulated
funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the Code, or
funding deficiency with respect to any Benefit Plan other than a Multiemployer Plan, (c) fail to
make any payments to a Multiemployer Plan that the Seller or any ERISA



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Affiliate may be required to make under the agreement relating to such Multiemployer Plan or
any law pertaining thereto, (d) terminate any Benefit Plan so as to result in any liability, or (e)
permit to exist any occurrence of any reportable event described in Title IV of ERISA.



     (i) Organizational Documents. The Seller will not amend, modify, waive or terminate
any provision of its certificate of formation or operating agreement without the prior written
consent of the Buyer, the Administrative Agent and each Purchaser Agent.



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



     (k) Extension or Amendment of Assets. The Seller will not, except as otherwise
permitted herein or in the other Transaction Documents, extend, amend or otherwise modify, or
permit the Servicer to extend, amend or otherwise modify, the terms of any Purchased Collateral
(including the Related Security).



     (l) Credit and Collection Policy. The Seller will not materially amend, modify,
restate or replace, in whole or in part, the Credit and Collection Policy which amendment,
modification, restatement or replacement would impair the collectibility of any of the Purchased
Collateral or otherwise adversely affect the interests or remedies of the Buyer, the Administrative
Agent, each Purchaser Agent or the Secured Parties under this Agreement or any Transaction Document
without the prior written consent of the Buyer, the Administrative Agent and each Purchaser Agent
(which consent will not be unreasonably withheld).



ARTICLE VI.




REPURCHASE OBLIGATION




     Section 6.1. Retransfer of Purchased Collateral.



     If on any day an Asset is a Warranty Asset, no later than the earlier of knowledge by the
Seller that such Loan is a Warranty Asset or receipt by the Seller from the Buyer of written notice
thereof, the Seller shall within two (2) Business Days either: (a) make a deposit to the
Collection Account (for application pursuant to Section 2.9 or 2.10, as applicable,
of the Sale and Servicing Agreement) in immediately available funds in an amount equal to the sum
of (i) the amount which, if deposited to the Collection Account on such date, would cause the
Availability as of such date (after giving effect to such Warranty Asset) to be greater than or
equal to zero, (ii) any outstanding Servicer Advances thereon, (iii) any accrued and unpaid
interest, (iv) all Hedge Breakage Costs owed to the relevant Hedge Counterparty for any termination
of one or more Hedge Transactions, in whole or in part, as required by the terms of any Hedging
Agreement and (v) in the case of a Loan, any costs and damages incurred in connection with any



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violation by such Loan of any predatory- or abusive-lending law; or (b) subject to the
satisfaction of the conditions in Section 6.2, substitute for such Warranty Asset, a
Substitute Asset. In either of the foregoing instances, the Seller may (in its discretion) accept
retransfer of each such Warranty Asset and any Related Security. Upon confirmation of the deposit
of such Retransfer Price into the Collection Account or the delivery by the Seller of a Substitute
Asset (the “Retransfer Date”) for each Warranty Asset the Buyer shall (if and when the
Seller elects to accept the retransfer of such Warranty Asset) automatically and without further
action be deemed to transfer, assign and set–over to the Seller, without recourse, representation
or warranty, all the right, title and interest of the Buyer in, to and under such Warranty Asset
and all future monies due or to become due with respect thereto, the Related Security, all Proceeds
of such Warranty Asset and Recoveries and Insurance Proceeds relating thereto, all rights to
security for any such Warranty Asset and all Proceeds and products of the foregoing. The Buyer
shall (if and when the Seller elects to accept the retransfer of such Warranty Asset), at the sole
expense of the Seller, execute such documents and instruments of transfer as may be prepared by the
Seller and take other such actions as shall reasonably be requested by the Seller to effect the
transfer of such Warranty Asset pursuant to this Section 6.1.



     Section 6.2. Substitution of Assets.



     On any day prior to the occurrence of a Termination Event (and after the Termination Date at
the discretion of the Buyer), the Seller may, subject to the conditions set forth in this
Section 6.2 and subject to the other restrictions contained herein, replace any Loan with
one or more Eligible Assets (each, a “Substitute Asset”); provided that no such replacement
shall occur unless each of the following conditions is satisfied as of the date of such replacement
and substitution:



     (a) the Seller has recommended to the Buyer (with a copy to the Collateral Custodian) in
writing that the Asset to be replaced should be replaced (each a “Replaced Asset”);



     (b) each Substitute Asset is an Eligible Asset on the date of substitution;



     (c) after giving effect to any such substitution, the Advances Outstanding do not exceed the
lesser of (i) the Facility Amount and (ii) the Maximum Availability;



     (d) for purposes only of substitutions pursuant to Section 4.7 undertaken because an
Asset has become a Warranty Asset, the aggregate Outstanding Asset Balance of such Substitute
Assets shall be equal to or greater than the aggregate Outstanding Asset Balance of the Replaced
Asset;



     (e) for purposes only of substitutions pursuant to Section 4.7 undertaken because an
Asset has become a Warranty Asset, such Substitute Assets, at the time of substitution by the
Seller, shall have no greater weighted average life than the Replaced Assets;



     (f) all representations and warranties of the Seller contained in Sections 4.1 and
4.2 shall be true and correct as of the date of substitution of any such Substitute Asset;



     (g) the substitution of any Substitute Asset does not cause a Termination Event or Unmatured
Termination Event to occur;



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



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



     (j) the Seller shall deliver to the Buyer on the date of such substitution a certificate of a
Responsible Officer certifying that each of the foregoing is true and correct as of such date; and



     (k) each Asset that is replaced pursuant to the terms of this Section 6.2 shall be
substituted only with another Asset that meets the foregoing conditions.



     In addition, the Seller shall in connection with such substitution deliver to the Collateral
Custodian the related Required Asset Documents. In connection with any such substitution, the
Buyer shall, automatically and without further action, be deemed to transfer to the Seller, free
and clear of any Lien created pursuant to this Agreement, all of the right, title and interest of
the Buyer in, to and under such Replaced Asset, and the Buyer shall be deemed to represent and
warrant that it has the company authority and has taken all necessary company action to accomplish
such transfer, but without any other representation and warranty, express or implied.



     Section 6.3. Deemed Collections.



     If on any day (i) the Buyer does not own or alternatively have a valid and perfected first
priority security interest in each item of Purchased Collateral or (ii) any Loan which has been
represented by the Seller to be an Eligible Asset is later determined not to have been an Eligible
Asset as of the related Cut-Off Date, upon the earlier of the Seller’s receipt of notice from the
Buyer or the Seller becoming aware thereof and the Seller’s failure to cure such breach within
thirty (30) days, the Seller shall be deemed to have received on such day a collection (a
“Deemed Collection”) of such Asset in full and shall on such day pay to the Buyer an amount
equal to the Outstanding Asset Balance of such Asset. In connection with any such Deemed
Collection, the Buyer shall automatically and without further action, be deemed to transfer to the
Seller, free and clear of any Lien created pursuant to this Agreement, all of the right, title and
interest of the Buyer in, to, and under the Asset with respect to which the Buyer has received such
Deemed Collection, but without any representation and warranty of any kind, express or implied.



ARTICLE VII.




ADDITIONAL RIGHTS AND OBLIGATIONS IN

RESPECT OF THE PURCHASED COLLATERAL




     Section 7.1. Rights of the Buyer.



     (a) Seller hereby authorizes the Buyer, the Administrative Agent and each Purchaser Agent
and/or their respective designees or assignees to take any and all steps in Seller’s name and on
behalf of Seller that the Buyer, the Administrative Agent and each Purchaser Agent and/or their
respective designees or assignees determine are reasonably necessary or appropriate to collect all
amounts due under any and all Purchased Collateral and enforcing or protecting



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their rights under this Agreement, including endorsing the name of Seller on checks and other
instruments representing Collections and enforcing such Purchased Collateral.




     (b) Except as set forth in Sections 6.1, 6.2 and 6.3 with respect the
retransfer, substitution or the deemed collection of certain Assets, the Buyer shall have no
obligation to account for, replace, substitute or return any Purchased Collateral to Seller. The
Buyer shall have no obligation to account for or to return Collections, or any interest or other
finance charge collected pursuant thereto, to Seller, irrespective of whether such Collections and
charges are in excess of the Purchase Price for such Purchased Collateral.



     (c) The Buyer shall have the unrestricted right to further assign, transfer, deliver,
hypothecate, subdivide or otherwise deal with the Purchased Collateral and all of the Buyer’s
right, title and interest in, to and under this Agreement, on whatever terms the Buyer shall
determine, pursuant to Sale and Servicing Agreement or otherwise.



     (d) The Buyer shall have the sole right to retain any gains or profits created by buying,
selling or holding the Purchased Collateral and shall have the sole risk of and responsibility for
losses or damages created by such buying, selling or holding.



     Section 7.2. Responsibilities of Seller.



     Notwithstanding anything to the contrary contained herein:



     (a) Seller agrees to deliver directly to the Administrative Agent and each Purchaser Agent
(for the Buyer’s account), within two (2) Business Days after receipt thereof, any Collections that
it receives, in the form so received, and agrees that all such Collections shall be deemed to be
received in trust for the Buyer and shall be maintained and segregated separate and apart from all
other funds and moneys of Seller until delivery of such Collections to the Collection Account.



     (b) Seller shall perform all of its obligations hereunder and under the Purchased Collateral
to the same extent as if such Purchased Collateral had not been sold hereunder, and the exercise by
the Buyer or its designee or assignee of the Buyer’s rights hereunder or in connection herewith
shall not relieve Seller from any of its obligations under the Purchased Collateral.



     Section 7.3. Rights With Respect to Loan Files.



     At any time when a Servicer other than CSE Mortgage LLC has been designated pursuant to
Section 6.16 of the Sale and Servicing Agreement, the Seller shall, at the Buyer’s, the
Administrative Agent’s or any Purchaser Agent’s request, assemble all of the Asset Files which
evidence the Purchased Collateral originated by the Seller, or which are otherwise necessary or
desirable to collect such Purchased Collateral, and make the same available to the Buyer, the
Administrative Agent or any Purchaser Agent at a place selected by the Administrative Agent or any
Purchaser Agent or their designee.




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     Section 7.4. Notice to Administrative Agent and each Purchaser Agent.



     Seller agrees that, concurrently with its delivery to the Buyer, copies of all notices,
reports, documents and other information shall be delivered by the Seller to the Administrative
Agent and each Purchaser Agent.



ARTICLE VIII.




TERM AND TERMINATION




     Section 8.1. Purchase Termination Events.



     (a) If any of the following events (each a “Purchase Termination Event”) shall have occurred
and be continuing:




     (i) the Seller shall fail (i) to pay any amount due pursuant to Section 6.1 or
6.3 in accordance with the provisions thereof and such failure shall continue
unremedied for a period of five (5) Business Days from the earlier of (A) the date any
Responsible Officer of the Seller obtains knowledge of such failure and (B) the date the
Seller receives notice of such failure from the Buyer, the Servicer, the Administrative
Agent or any Purchaser Agent or (ii) to pay any other amount required to be paid by the
Seller hereunder within two (2) Business Days of the date when due; or




     (ii) the Seller shall fail to observe or perform any covenant or agreement applicable
to it contained herein (other than as specified in paragraph (i) of this Section
8.1); provided that no such failure shall constitute a Purchase Termination Event under
this paragraph (ii) unless such failure shall continue unremedied for a period of thirty
(30) consecutive days from the date the Seller receives notice of such failure from the
Buyer, the Servicer, the Administrative Agent or any Purchaser Agent; or




     (iii) any representation, warranty, certification or statement made or deemed made by
the Seller in this Agreement or in any statement, record, certificate, financial statement
or other document delivered pursuant to this Agreement shall prove to have been incorrect
when made or deemed made, provided that a Purchase Termination Event shall not be deemed to
have occurred under this paragraph (iii) based upon a breach of any representation
or warranty set forth in Section 6.1 or 6.3 if the Seller shall have
complied with the provisions of Section 6.1 or 6.3, as applicable, in
respect thereof; or




     (iv) (A) a court having jurisdiction in the premises shall enter a decree or order for
relief in respect of the Seller in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect (the
Bankruptcy Code and all other such applicable laws being collectively, “Applicable
Insolvency Laws”), which decree or order is not stayed or any other similar relief shall
be granted under any applicable federal or state law no now or hereafter in effect and shall
not be stayed; (B) (I) any involuntary case is commenced against the Seller under any
Applicable Insolvency Law now or hereafter in effect, a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over the Seller, or over all or a
substantial part of the property of the Seller, shall have been entered, an interim
receiver,



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trustee or other custodian of the Seller for all or a substantial part of the property
of the Seller is involuntarily appointed, a warrant of attachment, execution or similar
process is issued against any substantial part of the property of the Seller, and (II) any
event referred to in clause (B)(I) above continues for sixty (60) days unless
dismissed, bonded or disclosed; (C) the Seller shall at its request have a decree or an
order for relief entered with respect to it or commence a voluntary case under any
Applicable Insolvency Law now or hereafter in effect, or shall consent to the entry of a
decree or an order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such Applicable Insolvency Law, consent to the
appointment of or taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; (D) the making by the Seller of any general assignment for
the benefit of creditors; (E) the inability or failure of the Seller generally to pay its
debts as such debts become due; or (F) the Board of Directors of the Seller authorizes
action to approve any of the foregoing; or




     (v) there shall have occurred (A) a Termination Event set forth in Section 10.1 of the
Sale and Servicing Agreement or (B) the Amortization Period shall have commenced and be
continuing; or




     (vi) the Seller has been terminated as Servicer following a Servicer Termination Event
with respect to such Seller under the Sale and Servicing Agreement; or




     (vii) a notice of Lien shall have been filed by the Pension Benefit Guaranty
Corporation against the Seller under Section 412(n) of the Code or Section 302(f) of ERISA
for a failure to make a required installment or other payment to a plan to which Section
412(n) of the Code or Section 302(f) of ERISA applies unless there shall have been delivered
to the Administrative Agent and each Purchaser Agent proof of release of such Lien; or




     (viii) any Lien in an amount equal to or greater than $1,000,000 has been asserted
against or imposed on, any real or personal property of the Seller pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9607(1),
or any equivalent or comparable state law, relating to or arising from the costs of,
response to, or investigation, remediation or monitoring of, any environmental contamination
resulting from the current or past operations of the Seller; or




     (ix) a Federal tax notice of Lien, in an amount equal to or greater than $1,000,000,
shall have been filed against the Seller unless there shall have been delivered to the
Administrative Agent and each Purchaser Agent proof of release of such Lien


then, (A) in the case of any Purchase Termination Event described in paragraph (iv),
(v)(A), (vii), (viii) or (ix) above the obligation of the Buyer to
purchase Purchased Collateral from the Seller shall thereupon automatically terminate without
further notice of any kind, which is hereby waived by such Seller, (B) in the case of any Purchase
Termination Event described in paragraph (v)(B) above, the obligation of the Buyer to
purchase Purchased Collateral from the Seller shall thereupon terminate without notice of any kind,
which is hereby waived by the Seller




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unless both the Buyer and the Seller agree in writing that such event shall not trigger an Early
Termination hereunder and (C) in the case of any other Purchase Termination Event, so long as such
Purchase Termination Event shall be continuing, the Buyer, the Administrative Agent or any
Purchaser Agent may terminate its obligation to purchase Purchased Collateral from the Seller by
written notice to the Seller (any termination pursuant to clause (A), (B) or
(C) of this Article VIII is herein called an “Early Termination”); provided that in
the event of any involuntary petition or proceeding as described in paragraphs (iv)(A) and
(iv)(B) above, the Buyer shall not purchase Purchased Collateral from the Seller unless
such involuntary petition or proceeding is dismissed, bonded or discharged within sixty (60) days
of the filing of such petition or the commencement of such proceeding.




     Section 8.2. Remedies.



     (a) If a Purchase Termination Event has occurred and is continuing, the Buyer (and its
assignee) shall have all of the rights and remedies provided to a secured creditor under the UCC of
each applicable jurisdiction and other Applicable Laws in respect thereto, which rights shall be
cumulative.



     (b) The Seller agrees that, upon the occurrence and during the continuation of a Purchased
Termination Event under Section 8.1(a)(iv) or Section 8.1(a)(v)(A) the Buyer, the
Administrative Agent or any Purchaser Agent shall have the right to:




     (i) require the Seller to, and the Seller hereby agrees that it will at the Seller’s
expense and upon request of the Buyer, the Administrative Agent or any Purchaser Agent
forthwith, assemble all or any part of the Purchased Collateral as directed by the Buyer,
the Administrative Agent or any Purchaser Agent and make the same available at a place to be
designated by the Buyer, the Administrative Agent or any Purchaser Agent; and




     (ii) without notice except as specified below, sell the Purchased Collateral or any
part thereof in one or more parcels at a public or private sale, at any of the Buyer’s, the
Administrative Agent’s or any Purchaser Agent’s offices or elsewhere, for cash, or credit or
for future delivery, and upon such other terms as the Buyer, the Administrative Agent or any
Purchaser Agent may deem commercially reasonable. The Seller agrees that, to the extent
notice of sale shall be required by law, at least ten (10) days’ notice to the Seller of the
time and place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Buyer, the Administrative Agent or any
Purchaser Agent shall not be obligated to make any sale of Purchased Collateral regardless
of notice of sale having been given. The Buyer, the Administrative Agent or any Purchaser
Agent may adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.



     Section 8.3. Survival of Certain Provisions.



     Notwithstanding any provision contained herein to the contrary, the Seller’s representations,
covenants and obligations set forth in Articles IV, V, VI, and VII
create and constitute the continuing obligation of the parties hereto in accordance with its terms,
and shall



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remain in full force and effect until the Collection Date; provided that the rights and
remedies with respect to any breach of any representation and warranty made or deemed made by the
Seller pursuant to Articles III and IV and the provisions of Sections 6.1,
6.2 and 6.3, the rights and obligations under Article VII, the
indemnification provisions of Article IX and the provisions of Sections 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10,
10.12, 10.15 and 10.17 shall be continuing and shall survive any
termination of this Agreement.



ARTICLE IX.




INDEMNIFICATION




     Section 9.1. Indemnification by the Seller.



     Without limiting any other rights that the Buyer, any assignee of the Buyer or any of such
Persons’ respective shareholders, officers, employees, agents, or Affiliates (each an
“Indemnified Party”) may have hereunder or under Applicable Law, the Seller hereby agrees
to indemnify each Indemnified Party from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including attorneys’ fees and disbursements (all of the
foregoing being collectively referred to as “Indemnified Amounts”), awarded against or
incurred by such Indemnified Party or other non–monetary damages of any such Indemnified Party or
any of them arising out of or as a result of this Agreement or the ownership of an interest in the
Purchased Collateral or in respect of any Purchased Collateral excluding, however, (a) Indemnified
Amounts to the extent resulting from the gross negligence or willful misconduct on the part of the
applicable Indemnified Party, and (b) Indemnified Amounts that have the effect of recourse for
non–payment of the Purchased Collateral due to credit problems of the Obligors. Without limiting
the foregoing, the Seller shall indemnify each Indemnified Party for Indemnified Amounts relating
to or resulting from:




     (i) any representation or warranty made or deemed made by the Seller, or any of its
officers under or in connection with this Agreement or any other Transaction Document, which
shall have been false or incorrect in any material respect when made or deemed made or
delivered;




     (ii) the failure by the Seller to comply with any term, provision or covenant contained
in this Agreement or any agreement executed in connection with this Agreement, or with any
Applicable Law, with respect to any Purchased Collateral or the nonconformity of any
Purchased Collateral with any such Applicable Law;




     (iii) the failure to vest and maintain vested in the Buyer, an undivided ownership
interest in the Purchased Collateral, together with all Collections, free and clear of any
Lien (other than Permitted Liens) whether existing at the time of any Purchase or at any
time thereafter;




     (iv) the failure to file, or any delay in filing, financing statements, continuation
statements or other similar instruments or documents under the UCC of any applicable
jurisdiction or other Applicable Laws with respect to any Purchased Collateral, whether at
the time of any Purchase or at any subsequent time;



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     (v) any dispute, claim, offset or defense (other than the discharge in bankruptcy of
the Obligor) of the Obligor to the payment with respect to any Purchased Collateral
(including, without limitation, a defense based on the Purchased Collateral not being a
legal, valid and binding obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the merchandise or services
related to such Purchased Collateral or the furnishing or failure to furnish such
merchandise or services;




     (vi) any failure of the Seller to perform its duties or obligations in accordance with
the provisions of this Agreement or any of the other Transaction Documents to which it is a
party or any failure by the Seller or any Affiliate thereof to perform its respective duties
under any Purchased Collateral;




     (vii) the failure of any Lock–Box Bank to remit any amounts held in a Lock–Box Account
pursuant to the instructions of the Collateral Custodian, the Administrative Agent or any
Purchaser Agent (to the extent such Person is entitled to give such instructions in
accordance with the terms hereof, the Sale and Servicing Agreement and of any applicable
Lock–Box Agreement) whether by reason of the exercise of set–off rights or otherwise;




     (viii) any inability to obtain any judgment in, or utilize the court or other
adjudication system of, any state in which an Obligor may be located as a result of the
failure of the Seller to qualify to do business or file any notice or business activity
report or any similar report;




     (ix) any action taken by the Seller in the enforcement or collection of any Purchased
Collateral;




     (x) any products liability claim or personal injury or property damage suit or other
similar or related claim or action of whatever sort arising out of or in connection with any
Related Property or services that are the subject of any Purchased Collateral;




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




     (xii) the failure by Seller to pay when due any Taxes for which the Seller is liable,
including without limitation, sales, excise or personal property taxes payable in connection
with the Purchased Collateral;




     (xiii) any repayment by the Indemnified Party of any amount previously distributed
hereunder or under any Transaction Document to the Seller, in each case which amount the
Indemnified Party believes in good faith is required to be repaid;




     (xiv) the commingling of Collections on the Purchased Collateral at any time with other
funds of the Seller;



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     (xv) any investigation, litigation or proceeding related to this Agreement or the use
of proceeds of Purchases by the Seller or the security interest in the Purchased Collateral;




     (xvi) any failure by the Buyer to give reasonably equivalent value to the Seller in
consideration for the transfer by the Seller to the Buyer of any item of the Purchased
Collateral or any attempt by any Person to void or otherwise avoid any such transfer under
any statutory provision or common law or equitable action, including, without limitation,
any provision of the Bankruptcy Code;




     (xvii) the failure of the Seller or any of its agents or representatives to remit to
the Buyer Collections on the Purchased Collateral remitted to the Seller or any such agent
or representative; or




     (xviii) the failure of any of the hedge requirements to be properly performed in
connection with the Transaction Documents.



     (a) Any amounts subject to the indemnification provisions of this Section 9.1 shall be paid by
the Seller to the Indemnified Party within five (5) Business Days following such Person’s demand
therefor.



     (b) If for any reason the indemnification provided above in this Section 9.1 is unavailable to
the Indemnified Party or is insufficient to hold an Indemnified Party harmless, then the Seller
shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party on the one hand and the Seller, on the other hand, but
also the relative fault of such Indemnified Party as well as any other relevant equitable
considerations.



     (c) The obligations of the Seller under this Section 9.1 shall survive the termination
of this Agreement.



     (d) Indemnification under Section 9.1 shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the Indemnified Party of
the receipt of the indemnity provided hereunder, including the effect of such tax or refund on the
amount of tax measured by net income or profits that is or was payable by the Indemnified Party.



     Section 9.2. Assignment of Indemnities.



     The Seller acknowledges that, pursuant to the Sale and Servicing Agreement, the Buyer shall
assign its rights of indemnity granted hereunder to the Administrative Agent, each Purchaser Agent,
the Purchasers, the other Secured Parties, the Backup Servicer and the Collateral Custodian. Upon
such assignment, (i) the Administrative Agent, each Purchaser Agent, the Purchasers, the other
Secured Parties, the Backup Servicer and the Collateral Custodian as applicable, shall have all
rights of the Buyer hereunder and may in turn assign such rights, and (ii) the obligations of the
Seller under this Article IX shall inure to the Administrative Agent, each Purchaser Agent, the
Backup Servicer or the Collateral Custodian. The Seller



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agrees that, upon such assignment, the Administrative Agent, each Purchaser Agent, the
Purchasers, the other Secured Parties, the Backup Servicer and the Collateral Custodian or the
assignee of any such Person, as applicable, may enforce directly, without joinder of the Buyer, the
indemnities set forth in this Article IX.



ARTICLE X.




MISCELLANEOUS




     Section 10.1. Amendments and Waivers.



     Except as provided in this Section 10.1, no amendment, waiver or other modification of
any provision of this Agreement shall be effective unless signed by the Buyer and Seller and
consented to in writing by the Administrative Agent and each Purchaser Agent. The Buyer shall
provide not less than ten (10) Business Days’ prior written notice of any such amendment to the
Administrative Agent and each Purchaser Agent.



     Section 10.2. Notices, Etc.



     All notices and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including telex communication and communication by facsimile copy) and
mailed, telexed, transmitted or delivered, as to each party hereto, at its address set forth under
its name on the signature pages hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and communications shall
be effective, upon receipt, or in the case of (a) notice by mail, five (5) days after being
deposited in the United States mail, first class postage prepaid, (b) notice by telex, when telexed
against receipt of answer back, or (c) notice by facsimile copy, when verbal communication of
receipt is obtained.



     Section 10.3. Limitation of Liability.



     Except with respect to any claim arising out of the willful misconduct or gross negligence of
the Purchasers, the Administrative Agent, each Purchaser Agent or any other Secured Party, no claim
may be made by the Seller or any other Person against the Purchasers, the Administrative Agent,
each Purchaser Agent or any other Secured Party or their respective Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and the Seller hereby waives, releases and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not known or suspected
to exist in its favor.



     Section 10.4. Binding Effect; Benefit of Agreement.



     This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. The Administrative Agent, each Purchaser Agent, the
Purchasers, the other Secured Parties, the Collateral Custodian and the Backup Servicer shall be
third–party beneficiaries of this Agreement.



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     Section 10.5. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF OBJECTION TO VENUE.



     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY AGREES TO THE NON–EXCLUSIVE JURISDICTION OF ANY
FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO HEREBY WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.



     Section 10.6. WAIVER OF JURY TRIAL.



     TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE BETWEEN THE PARTIES HERETO ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY. INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.



     Section 10.7. Costs, Expenses and Taxes.



     (a) In addition to the rights of indemnification granted to the Buyer and its Affiliates and
officers, directors, employees and agents thereof under Article IX hereof, the Seller agrees to pay
on demand all reasonable costs and expenses of the Buyer or its assignees incurred in connection
with the preparation, execution, delivery, administration (including periodic auditing), renewal,
amendment or modification of, or any waiver or consent issued in connection with, this Agreement
and the other documents to be delivered hereunder or in connection herewith, including, without
limitation, the reasonable fees and out–of–pocket expenses of counsel with respect thereto and with
respect to advising the Buyer or its assignees as to its rights and remedies under this Agreement
and the other documents to be delivered hereunder or in connection herewith, and all costs and
expenses, if any (including reasonable counsel fees and expenses), incurred by the Buyer or its
assignees in connection with the enforcement of this Agreement and the other documents to be
delivered hereunder or in connection herewith.



     (b) The Seller shall pay on demand any and all stamp, sales, excise and other taxes and fees
payable or determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement and the other documents to be delivered hereunder.



     (c) The Seller shall pay on demand all other reasonable costs, expenses and Taxes (excluding
income taxes) incurred by the Buyer or its assignees in connection with the execution, delivery,
filing and recording of this Agreement and the other documents to be delivered



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hereunder (“Other Costs”), including, without limitation, all costs and expenses
incurred by the Buyer or its assignees in connection with periodic audits of the Seller’s books and
records.



     Section 10.8. No Proceedings.



     (a) Each of the parties hereto hereby agrees that it will not institute against, or join any
other Person in instituting against, VFCC or any other Conduit Purchaser any Insolvency Proceeding
so long as any commercial paper issued by VFCC or any other Conduit Purchaser shall be outstanding
and there shall not have elapsed one year and one day since the last day on which any such
commercial paper shall have been outstanding.



     (b) The Seller hereby agrees that it will not institute against, or join any other Person in
instituting against, the Buyer any Insolvency Proceeding so long as there shall not have elapsed
one year and one day since the Collection Date.



     Section 10.9. Recourse Against Certain Parties.



     (a) No recourse under or with respect to any obligation, covenant or agreement (including,
without limitation, the payment of any fees or any other obligations) of the Seller as contained in
this Agreement or any other agreement, instrument or document entered into by it pursuant hereto or
in connection herewith shall be had against any administrator of the Seller or any incorporator,
officer, employee or director of the Seller or of any such administrator, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise it being expressly agreed and understood
that the agreements of the Seller contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection herewith are, in each
case, solely the corporate obligations of the Seller, and that no personal liability whatsoever
shall attach to or be incurred by any administrator of the Seller or any incorporator, officer,
employee or director of the Seller or of any such administrator, as such, or any of them, under or
by reason of any of the obligations, covenants or agreements of the Seller contained in this
Agreement or in any other such instruments, documents or agreements, or which are implied
therefrom, and that any and all personal liability of every such administrator of the Seller and
each incorporator, officer, employee or director of the Seller or of any such administrator, or any
of them, for breaches by the Seller of any such obligations, covenants or agreements, which
liability may arise either at common law or at equity, by statute or constitution, or otherwise, is
hereby expressly waived as a condition of and in consideration for the execution of this Agreement.
The provisions of this Section 10.9(a) shall survive the termination of this Agreement.



     (b) No recourse under or with respect to any obligation, covenant or agreement (including,
without limitation, the payment of any fees or any other obligations) of the Buyer as contained in
this Agreement or any other agreement, instrument or document entered into by it pursuant hereto or
in connection herewith shall be had against any administrator of the Buyer or any incorporator,
officer, employee or director of the Buyer or of any such administrator, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise it being expressly agreed and understood
that the agreements of the Buyer contained in this Agreement and all of the other agreements,
instruments and documents entered into by it pursuant hereto or in connection herewith are, in each
case, solely the corporate



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obligations of the Buyer, and that no personal liability whatsoever shall attach to or be
incurred by any administrator of the Buyer or any incorporator, officer, employee or director of
the Buyer or of any such administrator, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of the Buyer contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that any and all personal
liability of every such administrator of the Buyer and each incorporator, officer, employee or
director of the Buyer or of any such administrator, or any of them, for breaches by the Buyer of
any such obligations, covenants or agreements, which liability may arise either at common law or at
equity, by statute or constitution, or otherwise, is hereby expressly waived as a condition of and
in consideration for the execution of this Agreement. The provisions of this Section 10.9 (b)
shall survive the termination of this Agreement.



     Section 10.10. Protection of Right, Title and Interest in the Purchased Collateral;
Further Action Evidencing Purchases.



     (a) The Seller shall cause this Agreement, all amendments hereto and/or all financing
statements and continuation statements and any other necessary documents covering the Buyer’s
right, title and interest to the Purchased Collateral to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve and protect the right, title and interest of the
Buyer hereunder to all property comprising the Purchased Collateral. The Seller shall deliver to
the Buyer the file–stamped copies of, or filing receipts for, any document recorded, registered or
filed as provided above, as soon as available following such recording, registration or filing.
The Seller shall cooperate fully with the Buyer in connection with the obligations set forth above
and will execute any and all documents reasonably required to fulfill the intent of this
Section 10.10(a).



     (b) The Seller agrees that from time to time, at its expense, it will promptly execute and
deliver all instruments and documents, and take all actions, that the Buyer, the Administrative
Agent or any Purchaser Agent may reasonably request in order to perfect, protect or more fully
evidence the Purchases hereunder and the security and/or interest granted in the Purchased
Collateral, or to enable the Buyer, the Administrative Agent or any Purchaser Agent to exercise and
enforce its rights and remedies hereunder or under any Transaction Document. At any time the
Buyer, the Administrative Agent or any Purchaser Agent may direct the Seller or any Servicer to
notify the Obligors, at Seller’s expense, of the Buyer’s, the Administrative Agent’s or any
Purchaser Agent’s interest in the Purchased Collateral under this Agreement and may direct that
payments of all amounts due or that become due under any or all of the Purchased Collateral be made
directly to the Buyer, the Administrative Agent or any Purchaser Agent.



     (c) If the Seller fails to perform any of its obligations hereunder, the Buyer, the
Administrative Agent or any Purchaser Agent may (but shall not be required to) perform, or cause
performance of, such obligation; and the Buyer’s, the Administrative Agent’s or any Purchaser
Agent’s costs and expenses incurred in connection therewith shall be payable by the Seller as
provided in Article IX, as applicable. The Seller irrevocably authorizes the Buyer, the
Administrative Agent or any Purchaser Agent at any time and from time to time at the Buyer’s, the
Administrative Agent or any Purchaser Agent’s sole discretion and appoints the Buyer, the



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Administrative Agent and any Purchaser Agent as its attorney–in–fact to act on behalf of the
Seller (i) to execute on behalf of the Seller as debtor and to file financing statements necessary
or desirable in the Buyer’s, the Administrative Agent’s or any Purchaser Agent’s sole discretion to
perfect and to maintain the perfection and priority of the interest of the Buyer, the
Administrative Agent or any Purchaser Agent in the Purchased Collateral and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement with respect to the
Purchased Collateral as a financing statement in such offices as the Buyer, the Administrative
Agent or any Purchaser Agent in their sole discretion deem necessary or desirable to perfect and to
maintain the perfection and priority of the interests of the Buyer, the Administrative Agent or any
Purchaser Agent in the Purchased Collateral. This appointment is coupled with an interest and is
irrevocable.



     (d) Without limiting the generality of the foregoing, Seller will, not earlier than six (6)
months and not later than three (3) months prior to the fifth anniversary of the date of filing of
the financing statement referred to in Section 3.1 or 3.2 or any other financing statement filed
pursuant to this Agreement or in connection with any Purchase hereunder, unless the Collection Date
shall have occurred:




     (i) execute and deliver and file or cause to be filed an appropriate continuation
statement with respect to such financing statement; and




     (ii) deliver or cause to be delivered to the Buyer, the Administrative Agent and each
Purchaser Agent an opinion of the counsel for Seller, in form and substance reasonably
satisfactory to the Buyer, the Administrative Agent and each Purchaser Agent, confirming and
updating the opinion delivered pursuant to Section 3.1 or 3.2 with respect to perfection and
otherwise to the effect that the security interest hereunder continues to be an enforceable
and perfected security interest, subject to no other Liens of record except as provided
herein or otherwise permitted hereunder, which opinion may contain usual and customary
assumptions, limitations and exceptions.



     Section 10.11. Execution in Counterparts; Severability; Integration.



     This Agreement may be executed in any number of counterparts and by different parties hereto
in separate counterparts (including by facsimile), each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and the same agreement.
In case any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby. This Agreement and any agreements or letters
(including fee letters) executed in connection herewith contains the final and complete integration
of all prior expressions by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.




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     Section 10.12. Waiver of Setoff.



     (a) The Seller’s obligations under this Agreement shall not be affected by any right of
setoff, counterclaim, recoupment, defense or other right the Seller might have against the Buyer,
the Administrative Agent, each Purchaser Agent, the Purchasers, the other Secured Parties, the
Backup Servicer, the Collateral Custodian or any assignee of such Persons, all of which rights are
hereby waived by the Seller.



     (b) The Buyer shall have the right to set–off against the Seller any amounts to which the
Seller may be entitled and to apply such amounts to any claims the Buyer may have against the
Seller from time to time under this Agreement. Upon any such set–off, the Buyer shall give notice
of the amount thereof and the reasons therefor to the Seller.



     Section 10.13. Heading and Exhibits.



     The headings herein are for purposes of references only and shall not otherwise affect the
meaning or interpretation of any provision hereof. The schedules and exhibits attached hereto and
referred to herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.



     Section 10.14. Rights of Inspection.



     The Buyer and its representatives and assigns may conduct at any reasonable time, with
reasonable notice, and from time to time, and the Seller will fully cooperate with, a reasonable
number of field examinations and audits of the inventory, the Loans and business affairs of the
Seller each calendar year. Each such inspection shall be at the sole expense of the Seller. The
Buyer and its representatives and successors and assigns acknowledge that in exercising the rights
and privileges conferred in this Section 10.14, it or its representatives or assigns may,
from time to time, obtain knowledge of information, practices, books, correspondence and records of
a confidential nature and in which the Seller has a proprietary interest. The Buyer and its
representatives and successors and assigns agree that (i) they shall retain in strict confidence
and shall use their best efforts to ensure that their representatives retain in strict confidence
and will not disclose without the prior written consent of the Seller any or all of such
information, practices, books, correspondence and records furnished to them and (ii) that they will
not, and will use their best efforts to ensure that their representatives and assigns will not,
make any use whatsoever (other than for the purposes contemplated by this Agreement) of any of such
information, practices, books, correspondence and records without the prior written consent of the
Seller, unless such information is generally available to the public or is required by law to be
disclosed.



     Section 10.15. Assignment.



     Notwithstanding anything to the contrary contained herein, this Agreement may not be assigned
by the Buyer or the Seller except as permitted by this Section 10.15 or by the Sale and
Servicing Agreement. Simultaneously with the execution and delivery of this Agreement, the Buyer
shall assign all of its right, title and interest herein to the Administrative Agent as agent for
the Secured Parties and each Purchaser Agent as agent for the respective Purchaser under the Sale
and Servicing Agreement, to which assignment the Seller hereby expressly consents. Upon
assignment, the Seller agrees to perform its obligations hereunder for the benefit of the



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Administrative Agent as agent for the Secured Parties and each Purchaser Agent as agent for
the respective Purchaser under the Sale and Servicing Agreement and the Administrative Agent and
each Purchaser Agent, in such capacity, shall be a third party beneficiary hereof. The
Administrative Agent as agent for the Secured Parties and each Purchaser Agent as agent for the
respective Purchaser under the Sale and Servicing Agreement upon such assignment may enforce the
provisions of this Agreement, exercise the rights of the Buyer and enforce the obligations of the
Seller hereunder without joinder of the Buyer.



     Section 10.16. No Waiver; Cumulative Remedies.



     No failure to exercise and no delay in exercising, on the part of the Buyer or the Seller, any
right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law. Any waiver of this Agreement shall be
effective only in the specific instance and for the specific purpose for which given.



     Section 10.17. Subordination.



     The Seller shall have the right to receive, and the Buyer shall make, any and all payments
relating to any indebtedness, obligation or claim the Seller may from time to time hold or
otherwise have against the Buyer or any assets or properties of the Buyer, whether arising
hereunder or otherwise existing; provided, that, after giving effect to any such payment, the
Aggregate Outstanding Asset Balance of the Purchased Collateral owned by the Buyer at such time
exceeds the Aggregate Unpaids under the Sale and Servicing Agreement. The Seller hereby agrees
that at any time during which the condition set forth in the proviso of the immediately preceding
sentence shall not be satisfied, the Seller shall be subordinate in right of payment to the prior
payment of any indebtedness or obligation of the Buyer owing to the Purchasers, the Administrative
Agent, each Purchaser Agent or any other Secured Party under the Sale and Servicing Agreement.



     Section 10.18. Revolving Loan Payments.



     (a) With respect to each Revolving Loan included as part of the Purchased Collateral, as of
any date of determination prior to the occurrence of a Termination Event or Unmatured Termination
Event, Collections from the Obligor on such Revolving Loan shall be shared and applied
proportionately as between any balance outstanding in connection with the Retained Interest and the
Outstanding Asset Balance of such Revolving Loan purchased by the Buyer under and in accordance
with Section 2.1 hereof in accordance with the percentages determined as follows: (a) in
the case of the Seller, by dividing (i) the outstanding principal amount of the advances made in
connection with the Retained Interest by (ii) the sum of all advances previously made in connection
with the Revolving Loan; and (b) in the case of the Buyer, by dividing (i) the Outstanding Asset
Balance of such Revolving Loan by (ii) the sum of all advances previously made in connection with
the Revolving Loan.



-40-









 





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



[Remainder of Page Intentionally Left Blank.]




-41-









 





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



	 	 	 	 	 	 	 
	 	 	CSE QRS FUNDING I LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas A. Fink	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Thomas A. Fink

Title: Chief Financial Officer and Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CSE QRS Funding I LLC

4445 Willard Avenue

12th Floor

Chevy Chase, Maryland 20815

Attention: Treasurer

Facsimile No.: (301) 841–2375

Confirmation No.: (301) 841–2731	 	 
	 
	 	 	 	 	 	 
	 	 	CSE MORTGAGE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas A. Fink	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Thomas A. Fink

Title: Chief Financial Officer and Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CSE Mortgage LLC

4445 Willard Avenue

12th Floor

Chevy Chase, Maryland 20815

Attention: Treasurer

Facsimile No.: (301) 841–2371

Confirmation No.: (301) 841–2735	 	 






 









 








SCHEDULE I




PURCHASED COLLATERAL LIST




CSE QRS FUNDING I LLC

Purchased Collateral List




(See Attached)





 









 








SCHEDULE II




[RESERVED]





 









 








SCHEDULE III




LOCK–BOX BANKS AND LOCK–BOX ACCOUNTS




	 	 	 	 	 	 	 
	Bank Name	 	Account Name	 	Account Number
	Bank of America, NA

	 	CapitalSource Funding LLC – HFG
	 	 	003930559738	 
	Bank of America, NA

	 	CapitalSource Funding LLC — SFG
	 	 	003938703751	 
	Bank of America, NA

	 	CapitalSource Funding LLC — CFG
	 	 	003939396662	 
	Bank of America, NA

	 	CapitalSource Funding LLC
	 	 	003922575610	 
	US Bank National Association

	 	CapitalSource Acquisition Funding LLC
	 	 	4346848296	 







 









 








EXHIBIT A




FORM OF SALE ASSIGNMENT




     SALE ASSIGNMENT NO. ___, dated as of ___, from CSE MORTGAGE LLC (the “Seller”) to
CSE QRS FUNDING I LLC (the “Buyer”).



     1. We refer to the Sale and Servicing Agreement, dated as of December 28, 2005 (the
“Agreement”), by and between the Seller and the Buyer.



     2. Defined Terms. All capitalized terms used herein shall have the meanings ascribed
to them in the Agreement unless otherwise defined herein.



     “Addition Date” shall mean, with respect to the Additional Assets designated hereby,
___, ___.



     “Cut–Off Date” shall mean, with respect to the Additional Assets designated hereby,
___, ___.



     3. Designation of Additional Assets. Seller delivers herewith a computer file or microfiche
list containing a true and complete list of the Additional Assets, identified by account number,
Obligor and Outstanding Asset Balance as of the Cut–Off Date. Such computer file, microfiche list
or other documentation shall be as of the date of this Sale Assignment incorporated into and made
part of this Sale Assignment and is marked as Schedule I hereto.



     4. The Seller does hereby sell, transfer, assign, set over and otherwise convey to the Buyer,
and the Buyer hereby purchases and takes from the Seller, all right, title and interest of the
Seller in, to and under all accounts, general intangibles, instruments, chattel paper, documents,
money, letters of credit, advices of credit, deposit accounts, certificates of deposit, investment
property, goods and other property consisting of, arising from or related to any of the following
property, whether now owned or existing or hereafter created, arising or acquired and wherever
located (collectively, the “Purchased Collateral”):




     (i) the Additional Assets that are identified by the Seller as of the Cut–Off Date,
which are listed on Schedule I, together with all monies due in payment of such
Assets on and after the Cut–Off Date, but excluding any Excluded Amounts and any Retained
Interest;




     (ii) all Related Security with respect to the Additional Assets referred to in clause
(i) above; and




     (iii) all income and Proceeds of the foregoing.



     5. This Sale Assignment is made without recourse but on the terms and subject to the
conditions set forth in the Transaction Documents to which the Seller is a party. The Seller
acknowledges and agrees that the Buyer is accepting this Sale Assignment in reliance or the
representations, warranties and covenants of the Seller contained in the Transaction Documents to
which the Seller is a party.



 









 





     6. Ratification of the Agreement. The Agreement is hereby ratified, and all
references to the “Sale and Servicing Agreement,” to “this Agreement” and “herein” shall be deemed
from and after the Addition Date to be a reference to the Agreement as supplemented by this Sale
Assignment. Except as expressly amended hereby, all the representations, warranties, terms
covenants and conditions of the Agreement shall remain unamended and shall continue to be, and
shall, remain, in full force and effect in accordance with its terms and except as expressly
provided herein shall not constitute or be deemed to constitute a waiver of compliance with or
consent to non–compliance with any term or provision of the Agreement.



     7. THIS SALE ASSIGNMENT NO. ___SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO THE CHOICE OF LAW PROVISIONS.



[Remainder of Page Intentionally Left Blank]




     IN WITNESS WHEREOF, the Seller has caused this Sale Assignment to be executed by its duly
authorized officer as of the date first above written.



	 	 	 	 	 
	 	 	CSE MORTGAGE LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	CSE Mortgage LLC

4445 Willard Avenue

12th Floor

Chevy Chase, Maryland 20815

Attention: Treasurer

Facsimile No.: (301) 841–2375

Confirmation No.: (301) 841–2731






-2-









 






EXHIBIT B




FORM OF OFFICER’S PURCHASE DATE CERTIFICATE




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




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





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



	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:







 









 








APPENDIX A




CONDITION PRECEDENT DOCUMENTS





     (i) Copies of resolutions of the Board of Directors of the Seller approving the
execution, delivery and performance of the Agreement and the transactions contemplated
thereby, certified by the Secretary or an Assistant Secretary of the Seller.




     (ii) A copy of an officially certified document dated reasonably close to the Closing
Date evidencing the due organization and good standing of the Seller in each applicable
jurisdiction.




     (iii) Copies of the Certificate or Articles of Incorporation and By–Laws of the Seller
certified by the Secretary or an Assistant Secretary of the Seller.




     (iv) Filed UCC–1 financing statement executed by the Seller as debtor, naming the Buyer
as secured party and the Administrative Agent as assignee, describing the Purchased
Collateral, meeting the requirements of the laws of each jurisdiction in which it is
necessary or reasonably desirable, or in which the Seller is required by Applicable Law, and
in such manner as is necessary or reasonably desirable, to perfect the conveyance of the
Purchased Collateral and the Related Security to the Buyer.




     (v) Opinions of counsel to the Seller, dated the Closing Date, in form and substance
satisfactory to the Buyer.




     (vi) Executed counterparts of this Agreement executed on behalf of the Seller.




     (vii) A duly completed, executed and delivered initial Purchased Collateral List
(Schedule I).




     (viii) UCC, tax and judgment lien searches of the Seller.




     (ix) UCC terminations.