exv10w24



 










Exhibit 10.24




U.S. $700,000,000




FOURTH AMENDED AND RESTATED

LOAN CERTIFICATE AND SERVICING AGREEMENT




by and among




CAPITALSOURCE FUNDING LLC,

as the Seller




CAPITALSOURCE FINANCE LLC,

 as the Originator and as the Servicer




EACH OF THE PURCHASERS AND PURCHASER

AGENTS FROM TIME TO TIME PARTY HERETO



HARRIS NESBITT CORP.,


as the Administrative Agent




and




WELLS FARGO BANK, NATIONAL ASSOCIATION,

as the Backup Servicer and as the Collateral Custodian




Dated as of May 28, 2004











 










 








TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE I DEFINITION	 	 	2	 
	Section 1.1

	 	Certain Defined Terms
	 	 	2	 
	Section 1.2

	 	Other Terms
	 	 	51	 
	Section 1.3

	 	Computation of Time Periods
	 	 	51	 
	Section 1.4

	 	Interpretation
	 	 	51	 
	ARTICLE II PURCHASE OF THE VARIABLE FUNDING CERTIFICATES	 	 	52	 
	Section 2.1

	 	The Variable Funding Certificates
	 	 	52	 
	Section 2.2

	 	Procedures for Advances
	 	 	54	 
	Section 2.3

	 	Reduction of the Facility Amount; Mandatory and Optional Repayments
	 	 	54	 
	Section 2.4

	 	Determination of Interest
	 	 	56	 
	Section 2.5

	 	Percentage Evidenced by each Variable Funding Certificate
	 	 	56	 
	Section 2.6

	 	Notations on Variable Funding Certificates
	 	 	56	 
	Section 2.7

	 	Settlement Procedures During the Revolving Period
	 	 	56	 
	Section 2.8

	 	Settlement Procedures During the Amortization Period
	 	 	58	 
	Section 2.9

	 	Collections and Allocations
	 	 	59	 
	Section 2.10

	 	Payments, Computations, Etc.
	 	 	60	 
	Section 2.11

	 	Optional Repurchase
	 	 	61	 
	Section 2.12

	 	Fees
	 	 	61	 
	Section 2.13

	 	Increased Costs; Capital Adequacy; Illegality
	 	 	62	 
	Section 2.14

	 	Taxes
	 	 	63	 
	Section 2.15

	 	Assignment of the Sale Agreement
	 	 	64	 
	Section 2.16

	 	Substitution of Loans
	 	 	65	 
	Section 2.17

	 	Optional Sales
	 	 	66	 
	ARTICLE III CONDITIONS TO ADVANCES	 	 	68	 
	Section 3.1

	 	Conditions to Closing and Initial Advance
	 	 	68	 
	Section 3.2

	 	Conditions Precedent to All Advances
	 	 	69	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	 	 	71	 
	Section 4.1

	 	Representations and Warranties of the Seller
	 	 	71	 
	Section 4.2

	 	Representations and Warranties of the Seller Relating
to the Agreement and the Assets
	 	 	81	 
	Section 4.3

	 	Representations and Warranties of the Servicer
	 	 	82	 
	Section 4.4

	 	Representations and Warranties of the Backup Servicer
	 	 	85	 
	Section 4.5

	 	Representations and Warranties of the Collateral Custodian
	 	 	86	 
	Section 4.6

	 	Breach of Certain Representations and Warranties
	 	 	86	 
	ARTICLE V GENERAL COVENANTS	 	 	87	 







i









 


TABLE OF CONTENTS

(continued)






	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 5.1

	 	Affirmative Covenants of the Seller
	 	 	87	 
	Section 5.2

	 	Negative Covenants of the Seller
	 	 	90	 
	Section 5.4

	 	Affirmative Covenants of the Servicer
	 	 	93	 
	Section 5.5

	 	Negative Covenants of the Servicer
	 	 	96	 
	Section 5.6

	 	Affirmative Covenants of the Backup Servicer
	 	 	97	 
	Section 5.7

	 	Negative Covenants of the Backup Servicer
	 	 	97	 
	Section 5.8

	 	Affirmative Covenants of the Collateral Custodian
	 	 	98	 
	Section 5.9

	 	Negative Covenants of the Collateral Custodian
	 	 	98	 
	ARTICLE VI ADMINISTRATION AND SERVICING OF CONTRACTS	 	 	98	 
	Section 6.1

	 	Designation of the Servicer
	 	 	98	 
	Section 6.2

	 	Duties of the Servicer
	 	 	99	 
	Section 6.3

	 	Authorization of the Servicer
	 	 	101	 
	Section 6.4

	 	Collection of Payments
	 	 	101	 
	Section 6.5

	 	Servicer Advances
	 	 	104	 
	Section 6.6

	 	Realization Upon Charged-Off Loans
	 	 	104	 
	Section 6.7

	 	Maintenance of Insurance Policies
	 	 	105	 
	Section 6.8

	 	Servicing Compensation
	 	 	105	 
	Section 6.9

	 	Payment of Certain Expenses by Servicer
	 	 	105	 
	Section 6.10

	 	Reports
	 	 	106	 
	Section 6.11

	 	Annual Statement as to Compliance
	 	 	106	 
	Section 6.12

	 	Annual Independent Public Accountant’s Servicing Reports
	 	 	107	 
	Section 6.13

	 	Limitation on Liability of the Servicer and Others
	 	 	107	 
	Section 6.14

	 	The Servicer Not to Resign
	 	 	107	 
	Section 6.15

	 	Servicer Defaults
	 	 	108	 
	Section 6.16

	 	Appointment of Successor Servicer
	 	 	109	 
	ARTICLE VII THE BACKUP SERVICER	 	 	112	 
	Section 7.1

	 	Designation of the Backup Servicer
	 	 	112	 
	Section 7.2

	 	Duties of the Backup Servicer
	 	 	112	 
	Section 7.3

	 	Merger or Consolidation
	 	 	113	 
	Section 7.4

	 	Backup Servicing Compensation
	 	 	114	 
	Section 7.5

	 	Backup Servicer Removal
	 	 	114	 
	Section 7.6

	 	Limitation on Liability
	 	 	114	 
	Section 7.7

	 	The Backup Servicer Not to Resign
	 	 	115	 
	ARTICLE VIII THE COLLATERAL CUSTODIAN	 	 	115	 
	Section 8.1

	 	Designation of Collateral Custodian
	 	 	115	 







ii









 


TABLE OF CONTENTS

(continued)






	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 8.2

	 	Duties of Collateral Custodian
	 	 	115	 
	Section 8.3

	 	Merger or Consolidation
	 	 	117	 
	Section 8.4

	 	Collateral Custodian Compensation
	 	 	117	 
	Section 8.5

	 	Collateral Custodian Removal
	 	 	117	 
	Section 8.6

	 	Limitation on Liability
	 	 	118	 
	Section 8.7

	 	The Collateral Custodian Not to Resign
	 	 	118	 
	Section 8.8

	 	Release of Documents
	 	 	119	 
	Section 8.9

	 	Return of Required Loan Documents
	 	 	119	 
	Section 8.10

	 	Access to Certain Documentation and Information
Regarding the Assets; Audits
	 	 	120	 
	ARTICLE IX SECURITY INTEREST	 	 	121	 
	Section 9.1

	 	Grant of Security Interest
	 	 	121	 
	Section 9.2

	 	Release of Lien on Assets
	 	 	121	 
	Section 9.3

	 	Further Assurances
	 	 	122	 
	Section 9.4

	 	Remedies
	 	 	122	 
	Section 9.5

	 	Waiver of Certain Laws
	 	 	122	 
	Section 9.6

	 	Power of Attorney
	 	 	122	 
	ARTICLE X TERMINATION EVENTS	 	 	123	 
	Section 10.1

	 	Termination Events
	 	 	123	 
	Section 10.2

	 	Remedies
	 	 	126	 
	ARTICLE XI INDEMNIFICATION	 	 	126	 
	Section 11.1

	 	Indemnities by the Seller
	 	 	126	 
	Section 11.2

	 	Indemnities by the Servicer
	 	 	129	 
	Section 11.3

	 	After-Tax Basis
	 	 	130	 
	ARTICLE XII THE ADMINISTRATIVE AGENT AND PURCHASER AGENTS	 	 	130	 
	Section 12.1

	 	The Administrative Agent
	 	 	130	 
	Section 12.2

	 	The Purchaser Agents
	 	 	133	 
	Section 12.3

	 	[Reserved]
	 	 	135	 
	Section 12.4

	 	[Reserved]
	 	 	135	 
	Section 12.5

	 	[Reserved]
	 	 	135	 
	ARTICLE XIII MISCELLANEOUS	 	 	135	 
	Section 13.1

	 	Amendments and Waivers
	 	 	135	 
	Section 13.2

	 	Notices, Etc.
	 	 	136	 
	Section 13.3

	 	Ratable Payments
	 	 	136	 
	Section 13.4

	 	No Waiver; Remedies
	 	 	137	 
	Section 13.5

	 	Binding Effect; Benefit of Agreement
	 	 	137	 







iii









 


TABLE OF CONTENTS

(continued)






	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 13.6

	 	Term of this Agreement
	 	 	137	 
	Section 13.7

	 	Governing Law; Consent to Jurisdiction; Waiver of Objection to Venue
	 	 	137	 
	Section 13.8

	 	Waiver of Jury Trial
	 	 	137	 
	Section 13.9

	 	Costs, Expenses and Taxes
	 	 	138	 
	Section 13.10

	 	No Proceedings
	 	 	138	 
	Section 13.11

	 	Recourse Against Certain Parties
	 	 	139	 
	Section 13.12

	 	Protection of Right, Title and Interest in the
Assets; Further Action Evidencing Advances
	 	 	140	 
	Section 13.13

	 	Confidentiality
	 	 	141	 
	Section 13.14

	 	Execution in Counterparts; Severability; Integration
	 	 	143	 
	Section 13.15

	 	Waiver of Setoff
	 	 	143	 
	Section 13.16

	 	Assignments
	 	 	143	 
	Section 13.17

	 	Heading and Exhibits
	 	 	143	 
	Section 13.18

	 	Loans Subject to Retained Interest Provisions
	 	 	144	 
	Section 13.19

	 	Exiting Purchasers and Purchaser Agents
	 	 	144	 
	Section 13.20

	 	Tax Treatment
	 	 	144	 







iv









 


TABLE OF CONTENTS








Page




	 	 	 
	EXHIBITS

	 
	 	 
	EXHIBIT A-1

	 	Form of Borrowing Notice (Advances and Reduction of Facility Amount)
	 
	 	 
	EXHIBIT A-2

	 	Form of Borrowing Notice (Reinvestments of Principal Collections)
	 
	 	 
	EXHIBIT A-3

	 	Form of Borrowing Base Certificate
	 
	 	 
	EXHIBIT B

	 	Form of Variable Funding Certificate
	 
	 	 
	EXHIBIT C

	 	Form of Monthly Report
	 
	 	 
	EXHIBIT D

	 	Form of Hedging Agreement (including Schedule and Confirmation)
	 
	 	 
	EXHIBIT E-1

	 	Form of Officer’s Certificate to Solvency (CapitalSource Funding LLC)
	 
	 	 
	EXHIBIT E-2

	 	Form of Officer’s Certificate to Solvency (CapitalSource Finance LLC)
	 
	 	 
	EXHIBIT F-1

	 	Form of Officer’s Closing Certificate (CapitalSource Funding LLC)
	 
	 	 
	EXHIBIT F-2

	 	Form of Officer’s Closing Certificate (CapitalSource Finance LLC)
	 
	 	 
	EXHIBIT G-1

	 	Form of Power of Attorney (CapitalSource Funding LLC)
	 
	 	 
	EXHIBIT G-2

	 	Form of Power of Attorney (CapitalSource Finance LLC)
	 
	 	 
	EXHIBIT H

	 	Form of Release of Required Loan Documents
	 
	 	 
	EXHIBIT I

	 	Form of Assignment of Mortgage
	 
	 	 
	EXHIBIT J

	 	Form of Servicer’s Certificate
	 
	 	 
	EXHIBIT K

	 	Form of Transferee Letter







SCHEDULES




	 	 	 
	SCHEDULE I

	 	Condition Precedent Documents
	 
	 	 
	SCHEDULE II

	 	List of Lock-Box Banks and Lock-Box Accounts
	 
	 	 
	SCHEDULE III

	 	Location of Required Loan Documents and Loan Files
	 
	 	 
	SCHEDULE IV

	 	Loan List
	 
	 	 
	SCHEDULE V

	 	[Reserved]
	 
	 	 
	SCHEDULE VI

	 	Credit and Collection Policy
	 
	 	 
	SCHEDULE VII

	 	Diversity Score







APPENDICES




	 	 	 	 	 
	APPENDIX A
	 	Timeshare Mortgage Loan Criteria








v









 





FOURTH AMENDED AND RESTATED

LOAN CERTIFICATE AND SERVICING AGREEMENT




     THIS FOURTH AMENDED AND RESTATED LOAN CERTIFICATE AND SERVICING AGREEMENT
(such agreement as amended, modified, waived, supplemented, replaced or
restated from time to time, the “Agreement”) is made as of this May 28,
2004, by and among:



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



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



     (3) EACH OF THE PURCHASERS AND PURCHASER AGENTS PARTY HERETO (together
with their respective successors and assigns);



     (4) HARRIS NESBITT CORP., a Delaware corporation (together with its
successors and assigns, “Harris Nesbitt”), as the Administrative Agent
(together with its successors and assigns in such capacity, the
“Administrative Agent”); and



     (5) WELLS FARGO BANK, NATIONAL ASSOCIATION (successor-by-merger to Wells
Fargo Bank Minnesota, National Association) (“Wells Fargo”), not in its
individual capacity but as the backup servicer (together with its successors
and assigns in such capacity, the “Backup Servicer”), and not in its
individual capacity but as the collateral custodian (together with its
successors and assigns in such capacity, the “Collateral Custodian”).



R E C I T A L S




     WHEREAS, the Seller, the Originator, the Servicer, and various other
parties have heretofore executed and delivered a Third Amended and Restated
Loan Certificate and Servicing Agreement, dated as of February 25, 2003 (as
amended through the date hereof, the “Original Loan Certificate and
Servicing Agreement”);



     WHEREAS, the Seller, the Originator, the Servicer, the Purchasers,
Purchaser Agents, the Backup Servicer, the Collateral Custodian, the Hedge
Counterparty and the Administrative Agent hereby desire to amend and restate
the Third Amended and Restated Loan Certificate and Servicing Agreement to (i)
increase the Facility Amount, (ii) to replace the existing administrative agent
under the Original Loan Certificate and Servicing Agreement with Harris Nesbitt
Corp., herein, and (iii) make such other changes as are necessary or in the
interests of the parties;



     WHEREAS, each of the Seller, the Originator, the Servicer, the Purchasers,
the Purchaser Agents, the Backup Servicer, the Collateral Custodian, the Hedge
Counterparty and the Administrative Agent consents to the amendment and
restatement of the Third Amended and Restated Loan Certificate and Servicing
Agreement pursuant to this Agreement; and



 









 





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



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



ARTICLE I




DEFINITION




     Section 1.1 Certain Defined Terms.



     (a) Certain capitalized terms used throughout this Agreement are defined
above or in this Section 1.1.



     (b) As used in this Agreement and its schedules, exhibits and other
attachments, unless the context requires a different meaning, the following
terms shall have the following meanings:


40 Act: Defined in Section 10.1(i).



ABF Loan: Any Senior Secured Loan (including a Loan to an SPE Obligor)
secured by accounts receivable, notes receivable and/or inventory of the
related Obligor or SPE Obligor; provided, however, with respect
to inventory only, such inventory may serve as collateral therefor even if it
is not acquired by such Obligor with the proceeds of such Senior Secured Loan.



Accrual Period: (a) with respect to each Advance (or portion thereof)
funded at an Interest Rate other than the applicable CP Rate with respect to
any Purchaser, (i) with respect to the first Payment Date, the period from and
including the Closing Date to but excluding such first Payment Date and (ii)
with respect to any subsequent Payment Date, the period from and including the
previous Payment Date to but excluding such subsequent Payment Date, and (b)
with respect to each Advance (or portion thereof) funded at an Interest Rate
equal to the applicable CP Rate, (i) with respect to the first Payment Date,
the period from and including the Closing Date to and including the last day of
the calendar month in which the Closing Date occurs and (ii) with respect to
any subsequent Payment Date, the period ending on the last day of the calendar
month immediately preceding the month in which the Payment Date occurs and
commencing on the first (1st) day of such immediately preceding calendar month.



Acquired Loan: A Loan that is originated by a Person other than the
Originator and acquired by the Originator in a “true sale” transaction pursuant
to an acquisition agreement substantially in a form approved by the
Administrative Agent on or prior to the Closing Date, or in such other form as
shall be adopted by the Originator and approved in writing by the
Administrative Agent at least ten (10) days prior to such Loan becoming part of
the Asset Pool hereunder.



Addition Date: With respect to any Additional Loans, the date on which
such Additional Loans become part of the Asset Pool.





 









 







Additional Loans: All Loans that become part of the Asset Pool after
the Closing Date.



Adjusted Advance Rate: On any date of determination, each of the
adjusted advance rates set forth below, as applicable, depending on the
Diversity Score (rounded to the nearest integer) on such date:




	 	 	 	 	 
	 Diversity Score
	 	Adjusted Advance Rate

	 	37 or higher
	 	 	75.0%
	 	31 – 36
	 	 	73.0%
	 	28 – 30
	 	 	72.0%
	 	25 – 27
	 	 	71.0%
	 	23 - 24
	 	 	70.0%
	 	20 - 22
	 	 	64.0%
	 	16 - 19
	 	 	56.0%
	 	14 - 15
	 	 	52.5%
	 	10 - 13
	 	 	38.0%
	 	1 – 9
	 	 	0%






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



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



Administrative Agent Assignment Agreement: The Assignment and
Assumption Agreement dated as of the date hereof among the Seller, the
Servicer, Wachovia, as assignor administrative agent, and Harris Nesbitt, as
assignee administrative agent, as such agreement may be amended, supplemented
or otherwise modified from time to time.



Advance: Defined in Section 2.1(b).



Advance Amount: With respect to any Advance under a Variable Funding
Certificate and any Funding Date, subject to the terms and conditions hereof,
an amount equal to the product of (a) the applicable Weighted Average Advance
Rate and (b) the Borrowing Base.



Advances Outstanding: On any day, the aggregate principal amount of all
Advances outstanding on such day, after giving effect to all repayments of
Advances and the makings of new Advances on such day; provided,
that, the “Advances Outstanding” under and as defined in the Original
Loan Certificate and Servicing Agreement as of the close of business on the
Business Day
immediately prior to the Closing Date shall be deemed to be Advances
Outstanding on and as of the Closing Date under and for all purposes of this
Agreement.





 









 







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



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



Agent’s Account: Means, with respect to any applicable Purchaser, the
special account established in the name of such Purchaser at such Purchaser’s
Purchaser Agent, or any other agent on such Purchaser’s behalf and identified
as such to the Seller and Servicer in writing (or any other account from time
to time notified to the Seller and the Servicer in writing by such Purchaser or
its Purchaser Agent).



Agented Notes: With respect to any Revolving Loan or Term Loan, one or
more promissory notes of an Eligible Obligor wherein (a) the note(s) are
originated by the Originator in accordance with the Credit and Collection
Policy as a part of a syndicated loan transaction that has been fully
consummated prior to such Agented Notes becoming part of the Asset Pool
hereunder, (b) upon an assignment of the note under the Sale Agreement to the
Seller, such original note will be endorsed to the Administrative Agent and
held by the Collateral Custodian, on behalf of the Secured Parties, (c) the
Seller, as assignee of the note, will have all of the rights but none of the
obligations of the Originator with respect to such note and the Originator’s
right, title and interest in and to the Related Property including the right to
receive and collect payments directly in its own name and to enforce its rights
directly against the Obligor thereof, (d) the note, if secured, is secured by
an undivided interest in the Related Property that also secures and is shared
by, on a pro-rata basis, all other holders of such Obligor’s notes of equal
priority and (e) the Originator (or a wholly owned subsidiary of the
Originator) is the collateral agent and payment agent for all noteholders of
such Obligor.



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



Aggregate Unpaids: At any time, an amount equal to the sum of all
unpaid Advances Outstanding, Interest, Breakage Costs, Hedge Breakage Costs and
all other amounts owed by the Seller to the Purchasers, the Purchaser Agents,
the Administrative Agent, any applicable Hedge Counterparty, the Backup
Servicer and the Collateral Custodian hereunder (including, without limitation,
all Indemnified Amounts, other amounts payable under Article XI and amounts


 









 






required under Section 2.7, Section 2.8, Section 2.12,
Section 2.13 and Section 2.14 to the Affected Parties or
Indemnified Parties) or under any Hedging Agreement (including, without
limitation, payments in respect of the termination of any such Hedging
Agreement) or by the Seller or any other Person under any fee letter
(including, without limitation, each applicable Purchaser, the Backup Servicer
Fee Letter and the Collateral Custodian Fee Letter) delivered in connection
with the transactions contemplated by this Agreement (whether due or accrued);
provided, that, the “Aggregate Unpaids” under and as defined in
the Original Loan Certificate and Servicing Agreement as of the close of
business on the Business Day immediately prior to the Closing Date shall be
deemed to be Aggregate Unpaids on and as of the Closing Date under and for all
purposes of this Agreement.



Allocation Adjustment Event: With respect to each Loan included in the
Assets subject to the Retained Interest provisions of this Agreement, the
occurrence of any one or more of the following under and as defined in the
CapitalSource Commercial Loan Trust 2002-1 Transaction, the CapitalSource
Commercial Loan Trust 2002-2 Transaction, the CapitalSource Commercial Loan
Trust 2003-1 Transaction, the CapitalSource Commercial Loan Trust 2003-2
Transaction, and/or any other Permitted Securitization Transaction rated by the
Rating Agencies, as applicable: (i) a “Servicer Default”, (ii) an “Event of
Default” or (iii) an “Accelerated Amortization Event”.



Alternative Rate: An interest rate per annum equal to
1.5%, plus the Adjusted Eurodollar Rate; provided,
however, that the Alternative Rate shall be the Base Rate if a
Eurodollar Disruption Event occurs.



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



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



Approved Other Jurisdiction: Means Canada, the United Kingdom (or any
territory or political subdivision thereof) and/or any other jurisdiction
approved in writing by the Administrative Agent and with the satisfaction of
the Rating Agency Condition.



Asset: All right, title, and interest (whether now owned or hereafter
acquired or arising, and wherever located) of the Seller in 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 out of,
or related to any of the following: (i) the Existing Loans and Additional
Loans, and all monies due or to become due in payment under such Existing Loans
and Additional Loans on and after the related Cut-Off Date, including but not
limited to all Collections, but excluding any Excluded Amounts; (ii) all


 









 






Related Security with respect to the Loans referred to in clause (i);
and (iii) all income and Proceeds of the foregoing.



Asset Pool: At any time, all then outstanding Assets.



Assigned Loan: A Revolving Loan or Term Loan originated by a Person
other than the Originator in which a constant percentage interest has been
assigned to the Originator by such Person in accordance with the Credit and
Collection Policy and (i) such transaction has been fully consummated prior to
such Loan becoming part of the Asset Pool hereunder, (ii) the Originator is a
party to a credit agreement and/or an assignment agreement and a promissory
note with the Obligor with respect to such Loan, (iii) the agent bank receives
payment directly from the Obligor thereof on behalf of each lender that has
been assigned a percentage interest in such Revolving Loan or Term Loan, and
(iv) such Loan is substantially in a form approved by the Administrative Agent
on or prior to the Closing Date, or such other form as shall be adopted by the
Originator and approved in writing by the Administrative Agent at least ten
(10) days prior to such Loan becoming part of the Asset Pool hereunder;
provided, however, any such Loan shall exclude any Retained
Interest.



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



Availability: At any time, an amount equal to the positive excess (if
any) of (i) the amount by which the lesser of (a) the Facility Amount and (b)
the Maximum Availability, exceeds the amount necessary to cure any
Overcollateralization Shortfall and any Required Equity Shortfall minus
(ii) the Advances Outstanding on such day; provided, however,
during the Amortization Period, the Availability shall be zero.



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



Average Pool Charged-Off Ratio: As of any Determination Date, the
percentage equivalent of a fraction the numerator of which is equal to the sum
of (1) the Outstanding Loan Balance of all Loans (excluding equity and
preferred stock investments) that became Charged-Off Loans (net of Recoveries
during such Collection Period) during the Collection Period related to such
Determination Date and (2) the Outstanding Loan Balances of Loans (excluding
equity and preferred stock investments) that became Charged-Off Loans (net of
Recoveries during such Collection Periods) during the Collection Periods
related to the eleven (11) immediately preceding Determination Dates, and the
denominator of which is equal to a fraction the numerator of which is the sum
of (1) the Aggregate Outstanding Loan Balance (excluding equity


 









 






 and preferred
stock investments) as of the first (1st) day of the Collection Period related
to such Determination Date and (2) the Aggregate Outstanding Loan Balance
(excluding equity and preferred stock investments) as of the first (1st) day of
the immediately preceding eleven (11) Collection Periods and the denominator of
which is twelve (12).



Average Pool Delinquency Ratio: As of any Determination Date, the
percentage equivalent of a fraction (i) the numerator of which is equal to the
sum of (1) the Pool Delinquency Ratio on such Determination Date and (2) the
Pool Delinquency Ratio on the two (2) immediately preceding Determination Dates
and (ii) the denominator of which is equal to three (3).



Average Portfolio Charged-Off Ratio: As of any Determination Date, the
percentage equivalent of a fraction the numerator of which is equal to the sum
of (1) the Portfolio Outstanding Loan Balance of all Portfolio Loans (excluding
equity and preferred stock investments) that became Charged-Off Portfolio Loans
(net of Recoveries during such Collection Period) during the Collection Period
related to such Determination Date and (2) the Portfolio Outstanding Loan
Balances of all Portfolio Loans (excluding equity and preferred stock
investments) that became Charged-Off Portfolio Loans (net of Recoveries during
such Collection Periods) during the Collection Periods related to the eleven
(11) immediately preceding Determination Dates, and the denominator of which is
equal to a fraction the numerator of which is the sum of (1) the Portfolio
Aggregate Outstanding Loan Balance (excluding equity and preferred stock
investments) as of the first (1st) day of the Collection Period related to such
Determination Date and (2) the Portfolio Aggregate Outstanding Loan Balance
(excluding equity and preferred stock investments) as of the first (1st) day of
the immediately preceding eleven (11) Collection Periods and the denominator of
which is twelve (12).



Average Portfolio Delinquency Ratio: As of any Determination Date, the
percentage equivalent of a fraction (i) the numerator of which is equal to the
sum of (1) the Portfolio Delinquency Ratio on such Determination Date and (2)
the Portfolio Delinquency Ratio on the two (2) immediately preceding
Determination Dates and (ii) the denominator of which is equal to three (3).



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



Backup Servicer Fee Letter: The Fee Letter, dated as of September 28,
2000, among the Servicer, the Administrative Agent (as successor to Wachovia
Capital Markets, LLC), and the Backup Servicer, as such letter may be amended,
modified, supplemented, restated or replaced from time to time.



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



Backup Servicer Termination Notice: Defined in Section 7.5.



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





 









 







Banded Floating Rate Loan: An Eligible Loan where the interest rate
payable by the Obligor thereof fluctuates between a lowest interest rate and a
highest interest rate allowable under its Required Loan Documents.



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



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



Benefit Plan: Any employee benefit plan as defined in Section
3(3) of ERISA in respect of which the Seller or any ERISA Affiliate of the
Seller is, or at any time during the immediately preceding six (6) years was,
an “employer” as defined in Section 3(5) of ERISA.



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



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



Borrowing Notice: Each notice, in the form of Exhibit A-1 or
A-2 (as applicable), required to be delivered by the Seller (i) in
respect of (a) the Initial Advance and each incremental Advance, (b) any
reduction of the Facility Amount or repayment of Advances Outstanding, or (c)
any reinvestment of Principal Collections under Section 2.7(b); and (ii)
on each Determination Date.



Breakage Costs: Means, with respect to any applicable Purchaser, any
amount or amounts as shall compensate such Purchaser for any loss, cost or
expense incurred by such Purchaser (as determined by the applicable Purchaser
Agent on behalf of such Purchaser, in such Purchaser Agent’s sole discretion)
as a result of (i) a prepayment by the Seller of Advances Outstanding or
Interest or (ii) any difference between the applicable CP Rate and the Adjusted
Eurodollar Rate. All Breakage Costs relating to any Purchaser shall be due and
payable hereunder upon demand, in accordance with the terms hereof.



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



Capital Lease Obligations: With respect to any Obligor on a
Subordinated Loan, for any period, the obligations of such Person to pay rent
and other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP.




 









 







CapitalSource Commercial Loan Trust 2002-1 Transaction: That certain
private placement transaction of commercial loan-backed notes pursuant to Rule
144A and Regulation S issued by CapitalSource Commercial Loan Trust 2002-1,
which closed May 16, 2002.



CapitalSource Commercial Loan Trust 2002-2 Transaction: That certain
private placement transaction of commercial loan-backed notes pursuant to Rule
144A and Regulation S issued by CapitalSource Commercial Loan Trust 2002-2,
which closed October 30, 2002.



CapitalSource Commercial Loan Trust 2003-1 Transaction: That certain
private placement transaction of commercial loan-backed notes pursuant to Rule
144A and Regulation S issued by CapitalSource Commercial Loan Trust 2003-1,
which closed April 17, 2003.



CapitalSource Commercial Loan Trust 2003-2 Transaction: That certain
private placement transaction of commercial loan-backed notes pursuant to Rule
144A and Regulation S issued by CapitalSource Commercial Loan Trust 2003-2,
which closed November 25, 2003.



Change-in-Control: Any of the following:




     (a) The failure of all, or at least one, of the “executive officers” of
CapitalSource Inc., as listed in the most recent 10-K filed by it with the SEC
on or prior to the Closing Date to own, collectively (directly or indirectly),
free and clear of all liens, at least 7,000,000 shares of the outstanding
common stock (adjusted for stock splits, reverse stock splits or stock
dividends, respectively) of CapitalSource Inc.;



     (b) The failure of CapitalSource Inc. to own (directly or through
wholly-owned subsidiaries (including CapitalSource Holding LLC)), free and
clear of all liens, 99.9% of the outstanding voting membership interests of the
Originator;



     (c) the creation or imposition of any Lien on any limited liability
company membership interest in the Seller; or



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



     Charged-Off Loan: A Loan (or portion thereof deemed to be
“charged-off”) as to which any of the following first occurs: (i) the Servicer
has determined or should have reasonably determined in accordance with the
Credit and Collection Policy that such Loan is not collectible, (ii) (1) all or
any portion of any one or more payments remains unpaid for at least ninety (90)
days from the original due date for such payment, in which case not less than
fifty percent (50%) of the Outstanding Loan Balance of such Loan shall be
deemed to be “charged-off” for purposes of this Agreement, and (2) all or any
portion of any one or more payments remains unpaid for at least one hundred and
eighty (180) days from the original due date for such payment, in which case
not less than one hundred percent (100%) of the Outstanding Loan Balance of
such Loan shall be deemed to be “charged-off” for purposes of this Agreement,
(iii) (1) the Obligor thereof or any Person obligated thereon is subject to an
Insolvency Event, in which case not less than fifty percent (50%) of the
Outstanding Loan Balance of such Loan shall be deemed to be “charged-off” as of
the date of the occurrence of such Insolvency Event for purposes of this
Agreement, (2) the Obligor thereof or any Person thereon is generally unable to
meet its financial



 









 







obligations, (3) the Obligor thereof or any Person obligated
thereunder has suffered a material adverse change which materially affects its
viability as an ongoing concern, or (4) adequate collateral or other source of
payment does not exist to repay the principal due under the Loan as determined
by the Servicer, or (iv) the Timeshare Cumulative Default Ratio is greater than
or equal to twenty (20%) percent, in which case not less than one hundred
(100%) percent of the Outstanding Loan Balance of such Timeshare Mortgage Loan
shall be deemed to be ‘charged-off’ for purposes of this Agreement. For
purposes of this definition, a “payment” does not include a payment in respect
of default interest imposed upon and payable by the related Obligor solely as a
result of a default.


Charged-Off Portfolio Loan: A Portfolio Loan (or portion thereof deemed
to be “charged-off”) as to which any of the following first occurs: (i) the
Servicer has determined or should have reasonably determined in accordance with
the Credit and Collection Policy (or such similar policies and procedures
utilized by the Servicer in servicing such Portfolio Loan) that such Portfolio
Loan is not collectible, (ii) (1) all or any portion of any one or more
payments remains unpaid for at least ninety (90) days from the original due
date for such payment, in which case not less than fifty percent (50%) of the
Portfolio Outstanding Loan Balance of such Portfolio Loan shall be deemed to be
“charged-off” for purposes of this Agreement, and (2) all or any portion of any
one or more payments remains unpaid for at least one hundred and eighty (180)
days from the original due date for such payment, in which case not less than
one hundred percent (100%) of the Portfolio Outstanding Loan Balance of such
Portfolio Loan shall be deemed to be “charged-off” for purposes of this
Agreement, (iii) (1) the Obligor thereof or any Person obligated thereon is
subject to an Insolvency Event, in which case not less than fifty percent (50%)
of the Portfolio Outstanding Loan Balance of such Portfolio Loan shall be
deemed to be “charged-off” as of the date of the occurrence of such Insolvency
Event for purposes of this Agreement, (2) the Obligor thereof or any Person
obligated thereon is generally unable to meet its financial obligations, (3)
the Obligor or any Person obligated thereon has suffered a material adverse
change which materially affects its viability as an ongoing concern, or (4)
adequate collateral or other source of payment does not exist to repay the
principal due under the Portfolio Loan as determined by the Servicer, or (iv)
the Timeshare Cumulative Default Ratio, (1) with
respect to any Sterling Timeshare Loan (other than the Sterling Timeshare Loans
the Obligors of which are Delft Funding, LLC and Legends Funding, LLC), is
greater than or equal to twelve and one-half (12.5%) percent, or (2) with
respect to the Sterling Timeshare Loans the Obligors of which are Delft
Funding, LLC and Legends Funding, LLC, with respect to such Portfolio Loan is
greater than or equal to 20% in which case not less than one hundred percent
(100%) of the Portfolio Outstanding Loan Balance of such Portfolio Loan shall
be deemed to be “charged-off” for purposes of this Agreement. For purposes of
this definition, a “payment” does not include a payment in respect of default
interest imposed upon and payable by the related Obligor solely as a result of
a default.



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



Closing Date: May 28, 2004.



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





 









 







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



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



Collateral Custodian Fee Letter: The Fee Letter, dated as of September
28, 2000, between the Originator, the Administrative Agent (as successor to
Wachovia Capital Markets, LLC) and the Collateral Custodian, as such letter may
be amended, modified, supplemented, restated or replaced from time to time.



Collateral Custodian Termination Notice: Defined in Section 8.5.



Collection Account: Defined in Section 6.4(f).



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



Collection Period: Each calendar month.



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



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



Commitment: With respect to each Purchaser, the commitment of such
Purchaser to make Advances in accordance herewith in an amount not to exceed
(i) (a) prior to the Termination Date, the dollar amount set forth opposite
such Purchaser’s signature on the signature pages hereto under the heading
“Commitment” and (b) on or after the Termination Date, the aggregate Advances
Outstanding, (ii) with respect to each Advance, the Pro-Rata Share or (iii) the
then aggregate Liquidity Commitments of all existing Liquidity Banks under the
related Liquidity Agreement divided by 1.02 (or, if applicable with respect to
any related Liquidity Bank, multiplied by 0.98). Notwithstanding the
foregoing, if the rating of such Purchaser’s commercial paper notes falls below
A-1 by Standard & Poor’s or P-1 by Moody’s, such Purchaser’s “Commitment”
shall, if requested by the Seller at such time, thereafter, be deemed to be
zero (0).



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



Consolidated Free Cash Flow: With respect to any Obligor on a
Subordinated Loan, for any period, EBITDA less capital expenditures.





 









 







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



Consolidated Subsidiary: With respect to any Obligor on a Subordinated
Loan, as of any date of determination, any Subsidiary or other Person the
accounts of which would be consolidated with those of the Obligor in its
consolidated financial statements if such statements were prepared as of such
date.



Consolidated Tangible Net Worth: As of any date of determination, the
assets less the liabilities of the Originator and its Subsidiaries on a
consolidated basis, less intangible assets (including goodwill), all determined
in accordance with GAAP.



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



CP Rate: With respect to any Purchaser for any day during any Accrual
Period, the per annum rate equivalent to (a) the rate (expressed
as a percentage and an interest yield equivalent and calculated on the basis of
a 360-day year) or, if more than one rate, the weighted average thereof, paid
or payable by such Purchaser from time to time as interest on or otherwise in
respect of the Commercial Paper Notes issued by such Purchaser that are
allocated, in whole or in part, by such Purchaser’s Purchaser Agent to fund the
purchase or maintenance of such Advances Outstanding (and which may also, in
the case of a pool-funded conduit purchaser, be allocated in part to the
funding of other assets of such Purchaser and which Commercial Paper Notes need
not mature on the last day of any Accrual Period) during such Accrual Period as
determined by such Purchaser’s Purchaser Agent, which rates shall reflect and
give effect to (i) certain documentation and transaction costs (including,
without limitation, dealer and placement agent commissions, and incremental
carrying costs incurred with respect to Commercial Paper Notes maturing on
dates other than those on which corresponding funds are received by such
Purchaser) associated with the issuance of such Purchaser’s Commercial Paper
Notes, and (ii) other borrowings by such Purchaser, including borrowings to
fund small or odd dollar amounts that are not easily accommodated in the
commercial paper market, to the extent such amounts are allocated, in whole or
in part, by the such Purchaser’s Purchaser Agent to fund such Purchaser’s
purchase or maintenance of such Advances Outstanding during such Accrual
Period; provided, that if any component of such rate is a discount rate,
in calculating the applicable “CP Rate” for such day, such Purchaser’s
Purchaser Agent shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent rate per
annum or (b) such other rate as may be set forth as such with respect to
such Purchaser in such Purchaser’s Purchaser Fee Letter.



Credit and Collection Policy: The written credit policies and
procedures manual of the Originator and the Servicer (which policies shall
include without limitation policies on a risk rating system, Loan Loss Reserve,
due diligence format, underwriting parameters and credit approval procedures)
set forth on Schedule VI, as may be as amended or supplemented from time
to time in accordance with Section 5.1(h) and Section 5.4(f).





 









 







Cut-Off Date: With respect to each Loan, the date on and after which
Collections on an Existing Loan are to be transferred to the Asset Pool, and
with respect to each Additional Loan, the date on and after which Collections
on an Additional Loan are to be transferred to the Asset Pool.



Deemed Collection: Defined in Section 2.3(c).



Delinquent Loan: A Loan (that is not a Charged-Off Loan) as to which
either of the following first occurs: (a) all or any portion of any one or more
payments thereunder remains unpaid for at least sixty (60) days from the
original due date for such payment, (b) the Timeshare Delinquency Ratio with
respect to such Loan is greater than or equal to (i) 7.5% in the case of
Timeshare Loans to Obligors that are special purpose entities (other than
special purpose entities with assets that relate to the properties at Tahoe
Beach and Ski Club, Nevada, Bethel Beach Club Resort and Spa, Florida, Surrey
Vacation Resort, Missouri, MMG/Berkeley Resorts, Florida, Sedona Springs Resort
Properties, Arizona), and (ii) 10.0% in the case of Timeshare Loans to Obligors
that are special purpose entities with assets that relate to the properties at
Tahoe Beach and Ski Club, Nevada, Bethel Beach Club Resort and Spa, Florida,
Surrey Vacation Resort, Missouri, MMG/Berkeley Resorts, Florida, Sedona Springs
Resort Properties, Arizona, (c) consistent with the Credit and Collection
Policy such Loan would be classified as delinquent by the Servicer or the
Originator. For purposes of this definition, a “payment” does not include a
payment in respect of default interest imposed upon and payable by the related
Obligor solely as a result of a default.



Delinquent Portfolio Loan: A Portfolio Loan (that is not a Charged-Off
Portfolio Loan) as to which either of the following first occurs: (a) all or
any portion of any one or more payments thereunder remains unpaid for at least
sixty (60) days from the original due date for such payment, (b) the Timeshare
Delinquency Ratio with respect to such Portfolio Loan is greater than or equal
to (i) 7.5% in the case of Timeshare Loans to Obligors that are special purpose
entities (other than special purpose entities with assets that relate to the
properties at Tahoe Beach and Ski Club, Nevada, Bethel Beach Club Resort and
Spa, Florida, Surrey Vacation Resort, Missouri, MMG/Berkeley Resorts, Florida,
Sedona Springs Resort Properties, Arizona), and (ii) 10.0% in the case of
Timeshare Loans to Obligors that are special purpose entities with assets that
relate to the properties at Tahoe Beach and Ski Club, Nevada, Bethel Beach Club
Resort and Spa, Florida, Surrey Vacation Resort, Missouri, MMG/Berkeley
Resorts, Florida, Sedona Springs Resort Properties, Arizona, or (c) consistent
with the Credit and Collection Policy (or such similar policies and procedures
utilized by the Servicer in servicing such Portfolio Loan) such Portfolio Loan
would be classified as delinquent by the Servicer or the Originator. For the
purpose of determining the Portfolio Delinquency Ratio, with respect to any
Timeshare Loan (which is not otherwise deemed to be a Charged-Off Portfolio
Loan) as to which all or any portion of any one or more scheduled payments
thereunder remains unpaid for at least sixty (60) days from the original due
date for such payment, the entire unpaid balance of such Timeshare Loan will be
deemed to be “delinquent”; provided, however, the foregoing shall
not affect the status of any other Timeshare Loans securing a Loan. For
purposes of this definition, a “payment” does not include a payment in respect
of default interest imposed upon and payable by the related Obligor solely as a
result of a default.



Derivatives: Any exchange-traded or over-the-counter (i) forward,
future, option, swap, cap, collar, floor or foreign exchange contract or any
combination thereof, whether for physical


 









 






 delivery or cash settlement, relating
to any interest rate, interest rate index, currency, currency exchange rate,
currency exchange rate index, debt instrument, debt price, debt index,
depository instrument, depository price, depository index, equity instrument,
equity price, equity index, commodity, commodity price or commodity index, (ii)
any similar transaction, contract, instrument, undertaking or security, or
(iii) any transaction, contract, instrument, undertaking or security containing
any of the foregoing.



Determination Date: The last day of each Collection Period.



DIP Loan: Any Revolving Loan or Term Loan to an Obligor that is a
Chapter 11 debtor under the Bankruptcy Code which is permitted by the Credit
and Collection Policy and also satisfies the following criteria: (a) the DIP
Loan is duly authorized by a final order of the applicable bankruptcy or
federal district court under the provisions of subsection (b),
(c) or (d) of 11 U.S.C. § 364, (b) the Obligor’s bankruptcy case
is still pending as a case under the provisions of Chapter 11 of Title 11 of
the Bankruptcy Code and has not been dismissed or converted to a case under the
provisions of Chapter 7 of Title 11 of the Bankruptcy Code, (c) the Obligor’s
obligations under such Loan have not been (i) disallowed, in whole or in part,
or (ii) subordinated, in whole or in part, to the claims or interests of any
other Person under the provisions of 11 U.S.C. § 510, (d) the DIP Loan is
secured and the liens and security interests granted by the applicable federal
bankruptcy or district court in relation to the Loan have not been
subordinated, in whole or in
part, to the liens or interests of any other lender under the provisions of 11
U.S.C. § 364(d) or otherwise, (e) the Obligor is not in default on its
obligations under the Loan, (f) neither the Obligor nor any party in interest
has filed a Chapter 11 plan with the applicable federal bankruptcy or district
court that, upon confirmation, would (i) disallow or subordinate the Loan, in
whole or in part, (ii) subordinate, in whole or in part, any lien or security
interest granted in connection with such Loan, (iii) fail to provide for the
repayment, in full and in cash, of the Loan upon the effective date of such
plan or (iv) otherwise impair, in any manner, the claim evidenced by the Loan
and (g) the DIP Loan is in the form of a “DIP Loan Agreement” (or similar
agreement) as approved by the Administrative Agent on or prior to the Closing
Date, or in such other form as shall be adopted by the Originator and approved
in writing by the Administrative Agent at least ten (10) days prior to such
Loan becoming part of the Asset Pool hereunder. For the purposes of this
definition, an order is a “final order” if the applicable period for filing a
motion to reconsider or notice of appeal in respect of a permanent order
authorizing the Obligor to obtain credit has lapsed and no such motion or
notice has been filed with the applicable federal bankruptcy or district court
or the clerk thereof.



Diversity Score: A single number that indicates the collateral
concentration in terms of both the Obligor and industry classification, which
number is calculated as described in Schedule VII hereto.



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



EBITDA: With respect to any Obligor on a Subordinated Loan, for any
period, the consolidated net income of such Obligor and its Consolidated
Subsidiaries for such period, plus, to the extent deducted in determining
consolidated net income for such period, depreciation, interest, amortization
and income taxes, determined in accordance with GAAP, excluding,
however, (i) all intercompany items, (ii) all earnings attributable to
equity interests in Persons that are not


 









 






 Consolidated Subsidiaries unless
actually received by the Obligor or a Consolidated Subsidiary, (iii) all income
arising from the forgiveness, adjustment, or negotiated settlement of any
Indebtedness, (iv) any extraordinary items of income or expense (including
gains and losses from asset sales), and (v) any increase or decrease in income
arising from any change in the Obligor’s method of accounting.



Eligible Loan: On any date of determination, each Loan (A) for which
the Administrative Agent, Collateral Custodian and Backup Servicer have
received the following no later than 2:00 p.m. (New York time) on the day prior
to the related Funding Date: (i) a faxed copy of the duly executed original
promissory note or Loan Register, as applicable, and Loan Checklist in a form
and substance satisfactory to the Administrative Agent and, if any Loans are
closed in escrow, a certificate (in the form of Exhibits F-1 or
F-2, as applicable) from the closing attorneys of such Loans certifying
the possession of the Required Loan Documents; provided, however,
notwithstanding the foregoing, the Required Loan Documents (including any UCCs
included in the Required Loan Documents) shall be in the possession of the
Collateral Custodian within two (2) Business Days of any related Funding Date
as to any Additional Loans, (ii) a Borrowing Notice and such Loan is accurately
identified on the Loan List delivered by the Seller to the Collateral Custodian
and the Administrative Agent as part of the Borrowing Notice or Monthly
Report delivered by the Servicer, (iii) a Borrowing Base Certificate, and (iv)
a Certificate of Assignment (Exhibit A to the Sale Agreement, including
Schedule I thereto); provided, however, that if such Loan
is part of a capital contribution or Required Equity Contribution to the Seller
the Collateral Custodian shall have received the Required Loan Documents within
three (3) Business Days of receipt of the Certificate of Assignment, and (B)
that satisfies each of the following eligibility requirements:




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



     (b) the Loan, (i) (together with the Collections and Related Security
related thereto) has been the subject of a grant by the Seller in favor of the
Administrative Agent, on behalf of the Secured Parties, of a first priority
perfected security interest, and (ii) with respect to which, at the time of the
sale of such Loan to the Seller, the Originator had a first priority (other
than Subordinated Loans) perfected security interest in the Related Property
(other than collateral that is in addition to the primary collateral with
respect to which the Asset is principally underwritten) relating to such Loan;



     (c) at the time such Loan is included in the Asset Pool, the Loan (i) is
not (and since its origination by the Originator or, in the case of Acquired
Loans, acquisition by the Originator has never been) a Charged-Off Loan, (ii)
is not past due with respect to payments of principal or interest
(provided, that, if such Loan is past due at the time it is
included in the Asset Pool but not more than ten (10) days past due, the
Originator and the Servicer must reasonably believe that such Loan will
promptly and in no event later than the date of the next Scheduled Payment due
on such Loan, be brought current with respect to all payments due thereunder),
(iii) is not (and since its origination by the Originator or, in the case of
Acquired Loans, the date of its acquisition by the Originator, has never been)
more than thirty (30) days past due (after giving



 









 







effect to a five (5) day
grace period in determining the number of days past due), with respect to
payments of principal or interest and (iv) to the knowledge of the Seller and
the Originator, in the case of Acquired Loans, has never been a Charged-Off
Loan or more than thirty (30) days past due with respect to payments of
principal or interest;



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



     (e) [Reserved];



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



     (g) the Loan is to an Eligible Obligor and is denominated and payable only
in United States dollars in the United States and does not permit the currency
in which or country in which such Loan is payable to be changed;



     (h) the Loan is evidenced by a promissory note, security agreement, Loan
Register or instrument and related loan documents that have been duly
authorized and executed, are in full force and effect and constitute the legal,
valid, binding and absolute and unconditional payment obligation of the related
Obligor, enforceable against such Obligor in accordance with their terms
(subject to applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and to general principles of
equity, whether considered in a suit at law or in equity), and there are no
conditions precedent to the enforceability or validity of the Loan that have
not been satisfied or validly waived;



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



     (j) the Loan, (i) satisfies all applicable requirements of and was
originated or acquired, underwritten and closed in accordance with the Credit
and Collection Policy (including without limitation the execution by the
Obligor of all documentation required by the Credit and Collection Policy);
(ii) does not contain a confidentiality provision that restricts or purports to
restrict the ability of the Administrative Agent or any Secured Party to
exercise their rights under this Agreement, including, without limitation,
their rights to review the Loan, the Required Loan Documents and Loan File;
(iii) was generated in the ordinary course of the Originator’s business; (iv)
arises pursuant to loan documentation with respect to which the Originator has
performed all obligations required to be performed by it thereunder (for
avoidance of doubt, Acquired Loans, including to the extent that they are so
acquired in connection with a “portfolio purchase” permitted pursuant to
paragraph (uu) of this definition below, and otherwise herein, are
deemed to be generated in the ordinary course of the Originator’s business);
(v) has an original term to maturity (A) in the case of Senior Secured Loans of
not greater than seven (7) years, or (B) in the case of Subordinated Loans of
not greater than ten (10) years; (vi) is not subject to a guaranty by the
Originator or any Affiliate thereof; (vii) is not a consumer loan; and (viii)
is executed on forms substantially in the form of those currently in use as of
the Closing Date and provided to



 









 







and approved by the Administrative Agent, or
in such other form as shall be adopted by the Originator and approved in
writing by the Administrative Agent at least ten (10) days prior to such Loan
becoming part of the Asset Pool hereunder;



     (k) neither the assignment of the Loan under the Sale Agreement by the
Originator, the sale of the Loan hereunder or the granting of a security
interest hereunder by the Seller violates, conflicts with or contravenes any
Applicable Laws or any contractual or other restriction, limitation or
encumbrance;



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



     (m) the Loan requires the Obligor thereof to maintain adequate property
damage and liability insurance with respect to the real or personal property,
if any, constituting the Related
Property if such Related Property is of a type customarily so insured and
the same has been at all times covered by adequate physical damage and
liability insurance policies satisfactory to the Administrative Agent (it
being understood that such property damage and liability insurance is not
required with respect to Loans that are not secured by and do not otherwise
evidence or create an interest or right of the Originator in or to any real
property or goods (or any interest therein) of the related Obligor or any
Person on its behalf);



     (n) the Related Property (i) is located in the United States (or, subject
to clause 23 of the definition of Pool Concentration Criteria herein, in
an Approved Other Jurisdiction), (ii) has not been foreclosed on, or
repossessed from the current Obligor, by the Servicer, and (iii) has not
suffered any material loss or damage that has not been repaired or restored;



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



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



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



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



 









 





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



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



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



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



     (w) the Loan, together with the Required Loan Documents and Loan File
related thereto, is fully assignable and does not require the consent of or
notice to the Obligor or contain any other restriction on the transfer or the
assignment of the Loan other than a consent or waiver of such restriction that
has been obtained prior to the date on which the Loan was sold to the Seller;
provided, however, that the Required Loan Documents may restrict
the transfer or the assignment of the related Loan so long as such Loan is
freely assignable or transferable to a Qualified Transferee;



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



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



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



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



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



 









 





     (cc) the Loan has not been compromised, adjusted, extended, satisfied,
rescinded, set-off or modified by the Seller, the Originator or the Obligor
with respect thereto, and no Loan is subject to compromise, adjustment,
extension, satisfaction, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deductible, reduction, termination or modification,
whether arising out of transactions concerning the Loan, or otherwise, by the
Seller, the Originator or the Obligor with respect thereto except for
amendments to such Loan otherwise
permitted under Section 6.4(a) of this Agreement and in accordance
with the Credit and Collection Policy;



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



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



     (ff) except with respect to an SPE Obligor, if the Obligor of such Loan is
the Obligor of more than one (1) Loan, all such Loans are cross-collateralized
(to the assets of such Obligor or its subsidiaries that are securing or
otherwise guaranteeing each such other Loan) and cross-defaulted;



     (gg) except with respect to DIP Loans, the Obligor of such Loan is not the
subject of an Insolvency Event or Insolvency Proceedings;



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



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



     (jj) the Loan is secured by a valid, perfected, first priority (other than
with respect to Subordinated Loans, and solely to the extent described and
provided for in the definition thereof, with respect to other lenders on the
same Loan, a Senior B Loan) security interest in all assets that constitute the
collateral for the Loan subject to Permitted Liens, and such collateral shall
include but not be limited to the material intellectual property of the Obligor
(if any);



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



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



     (mm) the Loan is a Senior Secured Loan, a Senior B Loan or Subordinated
Loan;



 









 





     (nn) no provision of the Loan has been waived, modified, or altered in any
respect, except in accordance with the Credit and Collection Policy and by
instruments duly authorized and executed and contained in the Required Loan
Documents; provided, however, no such
waiver, modification or alteration shall (i) alter the status of such Loan
as a Delinquent Loan or Charged-Off Loan, (ii) in the reasonable judgment of
the Administrative Agent, prevent or delay such Loan from becoming a Delinquent
Loan or Charged-Off Loan, or (iii) limit and/or impair the rights of the
Administrative Agent or the Secured Parties under this Agreement;



     (oo) except with respect to Subordinated Loans, and solely to the extent
described and provided for in the definition thereof, with respect to other
lenders on the same Loan, a Senior B Loan, the Loan is not subordinated to any
other loan or financing to the related Obligor;



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



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



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



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



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



     (uu) with respect to any Acquired Loan portfolio purchases that have an
aggregate principal balance which exceeds 15% of the then current Aggregate
Outstanding Loan Balance (as determined prior to the inclusion of any such
Acquired Loans in the Asset Pool), the Administrative Agent has approved in
writing such Loan for inclusion in the Asset Pool and has completed its own due
diligence with respect to such Loans;



     (vv) with respect to Agented Notes, the related Loan Documents (a) shall
include a note purchase agreement or similar agreement containing provisions
relating to the appointment and duties of a payment agent and a collateral
agent and intercreditor and (if applicable) subordination provisions
substantially in a form approved by the Administrative Agent on or



 









 







prior to the Closing Date, and (b) are duly authorized, fully and properly
executed and are the valid, binding and unconditional payment obligation of the
Obligor thereof;



     (ww) with respect to Agented Notes, the Originator (or a wholly owned
subsidiary of the Originator) has been appointed the collateral agent of the
security and the payment agent for all such notes prior to such Agented Note
becoming a part of the Collateral;



     (xx) with respect to Agented Notes, if the entity serving as the
collateral agent of the security for all syndicated notes of the Obligor has or
will change from the time of the origination of the notes, all appropriate
assignments of the collateral agent’s rights in and to the collateral on behalf
of the noteholders have been executed and filed or recorded as appropriate
prior to such Agented Note becoming a part of the Collateral;



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



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



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



     (bbb) if such Loan is past due with respect to any interest and/or
principal payments, no portion of the proceeds used to make payments of
principal or interest on such Loan have come from a new loan by the Originator;
and



     (ccc) with respect to each Loan that is secured by Timeshare Mortgage
Loans and related collateral, unless the Administrative Agent otherwise
approves in writing, such Timeshare Mortgage Loans satisfy each of the criteria
set forth on Appendix A.


Eligible Obligor: On any date of determination, any Obligor that (i) is
a business organization (and not a natural person) duly organized and validly
existing under the laws of, and has its chief executive offices in, the United
States or any political subdivision thereof or any applicable Approved Other
Jurisdiction, and has a billing address within the United States or any
applicable Approved Other Jurisdiction, (ii) is a legal operating entity or
holding company (except with respect to a Loan to an SPE Obligor), (iii) has
not entered into the Loan primarily for personal,
family or household purposes, (iv) is not a Governmental Authority, (v) is not
an Affiliate of any party hereto, (vi) is not in the gaming, nuclear waste,
biotechnology, natural resources (other than Obligors in the business of
wholesale purchasing and reselling of natural gas or electricity,


 









 






 the Loans to
which have been appropriately hedged) or real estate development industry,
(vii) is not the subject of an Insolvency Proceeding (except with respect to a
DIP Loan), (viii) as of the applicable Cut-Off Date, has an Eligible Risk
Rating, and (ix) is not an Obligor of a Charged-Off Loan or Delinquent Loan;
provided, however, the foregoing clause (vi) shall not be
deemed to prohibit an Obligor in the biotechnology industry except for where
such Obligor’s business consists of conducting proprietary research on new drug
development or an Obligor in the real estate development business except where
real estate development is the primary business of such Obligor from being
Eligible Obligors if they otherwise satisfy each of the foregoing criteria for
eligibility.



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



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



Environmental Laws: Any and all foreign, federal, state and local laws,
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of hazardous materials. Environmental
Laws include, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. § 331 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control
Act (15 U.S.C. § 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. §
300, et seq.), the Environmental Protection Agency’s regulations
relating to underground storage tanks (40 C.F.R. Parts 280 and 281), and the
Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the
rules and regulations thereunder, each as amended or supplemented from time to
time.



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



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



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


 









 






 (within the meaning of Section 414(m) of the Code) as the Seller,
any corporation described in clause (a) above or any trade or business
described in clause (b) above.



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



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



Eurodollar Reserve Percentage: For any period means the percentage, if
any, applicable during such period (or, if more than one such percentage shall
be so applicable, the daily average of such percentages for those days in such
period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any basic, emergency, supplemental,
marginal or other reserve requirements) with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term of one (1)
month.



Excess Spread Account: Defined in Section 6.4(g).



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



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



Existing Liquidity Bank: Defined in Section 2.1(d).



Existing Loans: Each Loan purchased by the Seller under the Sale
Agreement and owned by the Seller on the Closing Date.





 









 







Extended Timeshare Loan: A Timeshare Loan that has been amended,
rewritten, extended or otherwise modified in any manner to permit the related
Obligor or Mortgagor additional time to make any payment due thereunder.



Extension Request Date: With respect to the Seller’s right to request
an extension of the Facility Termination Date occurring in 2007 pursuant to
Section 2.1(c), shall mean February 24, 2007.



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



Facility Amount: $700,000,000, as such amount may vary from time to
time upon the written agreement of the parties hereto; provided,
that, such amount may not at any time exceed the aggregate Commitments
then in effect; provided, further, that, on or after the
Termination Date, the Facility Amount shall mean the Advances Outstanding.



Facility Termination Date: May 24, 2007.



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



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



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



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



Fitch: Fitch, Inc. or any successor thereto.



Fixed Rate Loan: An Eligible Loan that is other than a Floating Rate
Loan.



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






 









 







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



Funding Date: The third (3rd) Business Day following the Closing Date,
and as to any incremental Advance, any Business Day that is one (1) Business
Day immediately following the receipt by the Administrative Agent and each
Purchaser Agent of a Borrowing Notice (along with a Borrowing Base Certificate)
in accordance with Section 2.2.



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



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



Guaranty: The Guaranty, dated as of May 28, 2004, by CapitalSource
Finance in favor of Bank of Montreal, as Hedge Counterparty, as amended,
modified, waived, supplemented or restated from time to time.



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



Harris Nesbitt: Defined in the Preamble of this Agreement.



Hedge Amount: On any day, amount equal to the product of (a) the
product of (i) the Borrowing Base and (ii) the Fixed Rate Loan Percentage and
(b) one (1) minus the Overcollateralization Percentage.



Hedge Assets: Defined in Section 5.3(b).



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



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


 









 






 requirements of clause (a) and (b) hereof
and has entered into a Hedging Agreement with the Seller on or prior to the
date of such transfer.



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



Hedge Percentage: On any day, an amount equal to (i) 100% for Fixed
Rate Loans if the sum of the Outstanding Loan Balances of all Fixed Rate Loans
exceeds $100,000,000 and the Aggregate Outstanding Loan Balance is equal to or
greater than $500,000,000, (ii) 100% for Fixed Rate Loans if the sum of the
Outstanding Loan Balances of all Fixed Rate Loans exceeds $50,000,000 and the
Aggregate Outstanding Loan Balance is greater than $150,000,000 but less than
$500,000,000, or (iii) 100% for Fixed Rate Loans if the sum of the Outstanding
Loan Balances of all Fixed Rate Loans exceeds $20,000,000 if the Aggregate
Outstanding Loan Balance is equal to or less than $150,000,000. The “Hedge
Percentage” for Floating Rate Loans is 0%. The “Hedge Percentage” for Banded
Floating Rate Loans, on any day, is an amount equal to 100% if the interest
rate on any such Loan is within 0.50% of the maximum interest rate allowable
under its Required Loan Documents.



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



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



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



Highest Required Investment Category: (i) With respect to ratings
assigned by Moody’s, “Aa2” or “P-1” for one (1) month instruments, “Aa2” and
“P-1” for three (3) month instruments, “Aa3” and “P-1” for six (6) month
instruments and “Aa2” and “P-1” for instruments with a term in excess of six
(6) months, (ii) with respect to rating assigned by S&P, “A-1” for short-term
instruments and “A” for long-term instruments, and (iii) with respect to rating
assigned by Fitch (if such investment is rated by Fitch), “F-1+” for short-term
instruments and “AAA” for long-term instruments.



Increased Costs: Any amounts required to be paid by the Seller to an
Affected Party pursuant to Section 2.13.



Indebtedness: With respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary


 









 






 trade
practices) or that is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under leases that shall have
been or should be, in accordance with generally accepted accounting principles,
recorded as capital leases, (c) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (d) all
liabilities secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof, (e) all indebtedness, obligations or liabilities of that Person in
respect of Derivatives, and (f) obligations under direct or indirect guaranties
in respect of obligations (contingent or otherwise) to purchase or otherwise
acquire, or to otherwise assure a creditor against loss in respect of,
indebtedness or obligations of others of the kind referred to in clauses
(a) through (e) above.



Indemnified Amounts: Defined in Section 11.1.



Indemnified Parties: Defined in Section 11.1.



Industry: The industry of an Obligor as determined by reference to the
two (2) digit standard industry classification or North American Industry
Classification System codes.



Industry Diversity Score: Defined in Schedule VII.



Industry Classification Group: Any of the Moody’s industry
classification groups for Obligors listed on Annex I to Schedule
VII under the heading “Obligors’ Industry Group Classification”.



Initial Advance: The first Advance.



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



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




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



 









 









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



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



Insurance Proceeds: Any amounts payable or any payments made on or with
respect to a Loan under any Insurance Policy.



Intercreditor Agreement: The Third Amended and Restated Intercreditor
and Lockbox Administration Agreement, dated as of November 25, 2003, among
Wells Fargo, as the indenture trustee, Bank of America, N.A., as the lockbox
bank, Wachovia Capital Markets, LLC, as the administrative agent, each of the
parties that from time to time executes a joinder thereto, CapitalSource
Finance, as the originator, as the original servicer and as the lockbox
servicer, and CapitalSource Funding LLC, as the owner of the account and as the
owner of the lockbox, as amended, modified, waived, supplemented or restated
from time to time.



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




	 	 	 	 	 	 	 
	IR x P x

	 	 	1	 	 	 
	

	 	 	
 	 	 	 
	

	 	 	D	 	 	 







where:




	 	 	 	 	 	 	 
	

	 	IR
	 	=
	 	the Interest Rate applicable on such day;
	 
	 	 	 	 	 	 
	

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

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






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



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



Interest Coverage Ratio: With respect to any Obligor, the percentage
equivalent of a fraction the numerator of which is equal to (a) the related
Obligor’s Consolidated Free Cash Flow during such period and (b) the
denominator of which is equal to the Interest Expense of such Obligor during
such period.





 









 







Interest Coverage Requirement: With respect to any Obligor, as of any
Determination Date, an Interest Coverage Ratio of greater than or equal to 1:1.



Interest Expense: With respect to any Obligor, for any period, the
total interest expense for all obligations of such Obligor (including, without
limitation Capital Lease Obligations and hedging agreements) determined on a
consolidated basis, without duplication, for such Obligor and its Consolidated
Subsidiaries in accordance with GAAP.



Interest Rate: For any Accrual Period and for each Advance outstanding
by a Purchaser for each day during such Accrual Period:





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




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


provided, however, the Interest Rate shall be the Base Rate for
any Accrual Period for any Advance as to which the related Purchaser has funded
the making or maintenance thereof by a sale of an interest therein to any
Liquidity Bank under the applicable Liquidity Agreement on any day other than
the first day of such Accrual Period and without giving such Liquidity Bank(s)
at least two (2) Business Days’ prior notice of such assignment;
provided, further, that from and after the occurrence and
continuation of any Termination Event that has not been waived, the Interest
Rate shall be a per annum rate equal to the Base Rate,
plus 2.0%.



ISDA Definitions: The 1991 ISDA Definitions, and any supplements
thereto including the 1998 Supplement to the 1991 ISDA Definitions, prepared by
the International Swaps and Derivatives Association, Inc.



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



Junior Subordinated Loan: Any Type of Loan other than a Senior Secured
Loan or a Senior Subordinated Loan.



LIBOR Rate: For any day during any Accrual Period and any Advance or
portion thereof, an interest rate per annum equal to:





     (1) the posted rate for thirty (30) day deposits in United States
Dollars appearing on Telerate page 3750 as of 11:00 a.m. (London time) on
the Business Day which is the second (2nd) Business Day immediately
preceding the applicable Funding Date (with respect to the initial
Accrual Period for such Advance) and as of the second (2nd) Business Day
immediately preceding the first (1st) day of the applicable Accrual
Period (with respect to all subsequent Accrual Periods for such Advance);
or




     (2) if no such rate appears on Telerate page 3750 at such time and
day, then the LIBOR Rate shall be determined by Harris Nesbitt at its
principal office in Chicago,



 









 






Illinois as the rate (each such
determination, absent manifest error, to be conclusive and binding on all
parties hereto and their assignees) at which thirty (30) day deposits in
United States Dollars are being, have been, or would be offered or quoted
by Bank of Montreal to major banks in the applicable interbank market for
Eurodollar deposits at or about 11:00 a.m. (Chicago time) on such day.


LIBOR Spread: As of any date of determination, the number obtained by
adding (a) the amount obtained by (i) multiplying the Outstanding Loan Balance
of each Loan included in the Borrowing Base as of such date by an amount equal
to the Loan Rate on such Loan (taking into account any Hedge Transactions on
such Loan) minus the LIBOR Rate as of such date, (ii) summing the amounts
determined pursuant to clause (a)(i) for all Loans included in the
Borrowing Base as of such date and (iii) dividing such sum by the sum of the
Outstanding Loan Balances of all Loans included in the Borrowing Base as of
such date, and (b) the amount obtained by (i) multiplying the Outstanding Loan
Balance of each Loan not included in the Borrowing Base as of such date by an
amount equal to the Loan Rate on such Loan minus the LIBOR Rate as of such date
(taking into account any Hedge Transactions on such Loan), (ii) summing the
amounts determined pursuant to clause (b)(i) for all Loans not included
in the Borrowing Base as of such date and (iii) dividing such sum by the sum of
the Outstanding Loan Balances of all Loans included in the Borrowing Base as of
such date, and rounding the sum of clauses (a) and (b) up to the
next 0.001%.



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



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





 









 







Liquidity Agreement: Means any agreement entered into in connection
with this Agreement pursuant to which a Liquidity Bank agrees to make purchases
or advances to, or purchase assets from, any Purchaser in order to provide
liquidity for such Purchaser’s Advances hereunder.



Liquidity Bank: The Person or Persons who provide liquidity support to
each Purchaser, respectively, pursuant to a Liquidity Agreement in connection
with the issuance by such Purchaser of Commercial Paper Notes. No Liquidity
Bank shall be or become a party to any Liquidity Agreement related to this
Agreement unless it (or the Purchaser Agent for the Purchaser to which such
Liquidity Agreement relates) shall have first provided the Administrative Agent
with written evidence that such Liquidity Bank has a rating of at least A-1 by
Standard & Poor’s and P-1 by Moody’s, or is otherwise acceptable to the
Administrative Agent.



Liquidity Commitment: Means, with respect to any Liquidity Bank, the
maximum commitment amount of such Liquidity Bank under the terms of the related
Liquidity Agreement.



Liquidity Factor Reduction Event: With respect to each Loan included in
the Assets subject to the Retained Interest provisions of this Agreement, a
“Liquidity Factor Reduction Event” under and as defined in the CapitalSource
Commercial Loan Trust 2002-1 Transaction, the CapitalSource Commercial Loan
Trust 2002-2 Transaction, the CapitalSource Commercial Loan
Trust 2003-1 Transaction, the CapitalSource Commercial Loan Trust 2003-2
Transaction and/or any Permitted Securitization Transaction rated by the Rating
Agencies, as applicable.



Loan: Any Senior Secured Loan or Subordinated Loan identified on a Loan
List or contributed to the Seller and included as part of the Asset Pool.



Loan Checklist: The list delivered by or on behalf of the Seller to the
Collateral Custodian that identifies the items contained in the related Loan
File.



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



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



Loan Loss Reserve: With respect to each Watchlist Loan, an amount
available to cover any losses with respect to such Watchlist Loan equal to the
amounts set forth in the Credit and Collection Policy.



Loan Rate: With respect to each Loan in an Accrual Period, the current
cash pay interest rate, taking into account any collateral management and
unused line fees, for such Loan in such period as specified in the underlying
note or related Required Loan Documents.



Loan Register: Defined in Section 5.4(n).





 









 







Loan-to-Value Ratio or LTV: With respect to any Loan, as of any date of
determination, the percentage equivalent of a fraction (i) the numerator of
which is equal to the total commitment amount of such Loan as of the date of
its origination and (ii) the denominator of which is equal to the total
discounted collateral value of the collateral securing such Loan that is
subject to a first priority lien in favor of the Originator.



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



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



Lock-Box Agreement: The Fourth Amended and Restated Three Party
Agreement Relating to Lockbox Services and Control (with Activation Upon
Notice), dated as of November 25, 2003, among Wells Fargo, as the indenture
trustee, Bank of America, N.A., as the lockbox bank, Wachovia Capital Markets,
LLC, as the administrative agent thereof, CapitalSource Finance, as the
originator, as the original servicer and as the lockbox servicer, and
CapitalSource Funding
LLC, as the owner of the account and as the owner of the lockbox, as amended,
modified, waived, supplemented or restated from time to time.




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



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



Material Mortgage Loan: Any Loan for which the underlying Related
Property consisting of real property owned by the Obligor (i) represents 25% or
more (measured by the book value of the three most valuable parcels of real
property as of the date of such Loan) of (a) the original commitment for such
Loan and (b) the fair value of the underlying Related Property and (ii) is
material to the operations of the related business; provided,
however, that a Material Mortgage Loan shall not include certain parcels
of real property of which the Obligor is in the process of disposing.



Materials of Environmental Concern: Any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes,


 









 






 defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.



Maximum Availability: At any time, subject to the Minimum
Overcollateralization Amount, an amount equal to the product of the Borrowing
Base and the Weighted Average Advance Rate, plus the amount on deposit in the
Principal Collections Account received in reduction of the Outstanding Loan
Balance of any Eligible Loan; provided, however, during the
Amortization Period, the Maximum Availability shall be equal to the Advances
Outstanding.



Minimum Overcollateralization Amount: As of any date of determination,
an amount equal to the greater of (a) the Required Equity Contribution or (b)
the product of (i) the Minimum Overcollateralization Percentage on such date
and (ii) the Borrowing Base on such date.



Minimum Overcollateralization Percentage: On any date of determination,
the greater of (a) one (1) minus the percentage equivalent of a fraction
the numerator of which is equal to the Maximum Availability on such date and
the denominator of which is equal to the Aggregate Outstanding Loan Balance on
such date or (b) 100% minus the applicable Adjusted Advance Rate on such
date.



Minimum Pool Yield: A Pool Yield equal to 2.25%.



Monthly Report: Defined in Section 6.10(b).



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



Moody’s Rating Condition: With respect to any action or series of
related actions or proposed transaction or series of proposed transactions,
that Moody’s shall have notified the Seller, the Administrative Agent and the
Purchaser Agents in writing that such action or series of related actions or
the consummation of such proposed transaction or series of related transactions
will not result in a reduction or withdrawal of the rating issued by Moody’s on
the Closing Date with respect to any outstanding Variable Funding Certificate
as a result of such action or series of related actions or the consummation of
such proposed transaction or series of related transactions.



Mortgage: With respect to any Timeshare Mortgage Loan, the mortgage,
deed of trust, lease, trust certificate or other security document creating a
Lien on the related Mortgage Property securing such Timeshare Mortgage Loan.



Mortgage Instruments: With respect to any Timeshare Mortgage Loan, (i)
the original related Mortgage Note; (ii) the original related Mortgage, lease
or trust certificate, as applicable; (iii) the original related lender’s title
insurance policy, if any; (iv) the original of any assumption or other
agreement(s) modifying such Mortgage Note, Mortgage or title insurance policy
(including, without limitation, any extension agreement(s)); (v) all original
related intermediate Assignments of Mortgage made by holders prior to the
Originator; (vi) the original related Assignment of Mortgage made by the
Originator; and (vii) a copy of any related warranty or grant deed or similar
transfer document containing an assumption of such Timeshare Mortgage Loan.





 









 







Mortgage Loan Documents: With respect to any Timeshare Mortgage Loan,
(i) the related Timeshare Mortgage Instruments; (ii) in connection with
Mortgaged Property involving a fee interest in real property, a copy of the
related warranty deed with evidence of recording thereon; (iii) the original
related truth-in-lending disclosure statement executed by the related
Mortgagor; and (iv) the original related declaration of understanding and
representations by such Mortgagor.



Mortgage Note: With respect to any Timeshare Mortgage Loan, the
promissory note or other instrument of indebtedness evidencing such Timeshare
Mortgage Loan (including, without limitation, any agreement to assume the
obligations of the Mortgagor under the Timeshare Mortgage Loan).



Mortgaged Property: With respect to any Timeshare Mortgage Loan, the
timeshare estate representing (i) a fee interest in the real property at one of
the projects securing such Timeshare Mortgage Loan or (ii) a leasehold,
fractional ownership interest in or right to use a vacation club and its
resorts.



Mortgagor: With respect to any Timeshare Mortgage Loan, the obligor or
obligors, collectively, on the related Mortgage Note.



Multiemployer Plan: A “multiemployer plan” as defined in Section
4001(a)(3) of ERISA that is or was at any time during the current year or
the immediately preceding five (5) years contributed to by the Seller or any
ERISA Affiliate on behalf of its employees.



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



Obligor: With respect to any Loan, any Person or Persons obligated to
make payments pursuant to or with respect to such Loan, including any guarantor
thereof. For purposes of calculating any of the Pool Concentration Criteria
only, all Loans in the Asset Pool or to be transferred to the Asset Pool the
Obligor of which is an Affiliate of another Obligor (excluding any Financial
Sponsor or Obligors that are Affiliates solely because of common ownership or
control by a Financial Sponsor) shall be aggregated with all Loans of such
other Obligor; for example, if Corporation A is an Affiliate
(other than because of a common Financial Sponsor) of Corporation B, and the
aggregate Outstanding Loan Balance of all of Corporation A’s Loans in the Asset
Pool constitutes 10% of the Aggregate Outstanding Loan Balance and the
aggregate Outstanding Loan Balance all of Corporation B’s Loans in the Asset
Pool constitutes 10% of the Aggregate Outstanding Loan Pool Balance, the
combined Obligor concentration for Corporation A and Corporation B would be
20%. For purposes of the Pool Concentration Criteria, with respect to Loans
secured by Timeshare Loans only, all such Loans in the Asset Pool or to be
transferred to the Asset Pool the Obligor of which has assets (including,
without limitation, timeshare inventory assets, Mortgage Notes, Mortgages or
Mortgaged Properties) securing its Loan all or any portion of which relate to
the same timeshare project or relate to a timeshare project developed by the
same developer as another Obligor, shall be aggregated with all Loans of such
other Obligor; for example, if Corporation A has assets
(including, without limitation, timeshare inventory assets, Mortgage Notes,
Mortgages or Mortgaged Properties) securing its Loan all or any portion of
which relate to the same timeshare project or relate to a timeshare


 









 






 project
developed by the same developer as those of Corporation B, and the aggregate
Outstanding Loan Balance of all of Corporation A’s Loans in the Asset Pool
constitutes 10% of the Aggregate Outstanding Loan Balance and the aggregate
Outstanding Loan Balance all of Corporation B’s Loans in the Asset Pool
constitutes 10% of the Aggregate Outstanding Loan Pool Balance, the combined
Obligor concentration for Corporation A and Corporation B would be 20%.



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



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



Optional Sale: Defined in Section 2.17(a).



Optional Sale Date: Any Business Day, provided forty-five (45) days
written notice is given in accordance with Section 2.17(a).



Original Loan Certificate and Servicing Agreement: Defined in the
Recitals of this Agreement.



Originator: Defined in the Preamble of this Agreement.



Outstanding Loan Balance: With respect to any Eligible Loan included as
part of the Asset Pool, the sum of (i) the portion of all future Scheduled
Payments becoming due under or with respect to such Eligible Loan plus (ii) any
past due Scheduled Payments with respect to such Eligible Loan (other than with
respect to those payments to the extent a Servicer Advance is outstanding with
respect thereto).



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



Overcollateralization Percentage: As of any date of determination, the
percentage equivalent of (a) one (1) minus (b) a fraction (i) the
numerator of which is equal to the Advances Outstanding on such date and (ii)
the denominator of which is equal to the Aggregate Outstanding Loan Balance as
of such date.



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



Participation Loan: A Revolving Loan or Term Loan to an Obligor,
originated by the Originator and serviced by the Servicer in the ordinary
course of its business, in which a participation interest has been granted to
another Person in accordance with the Credit and Collection Policy and (i) such
transaction has been fully consummated, pursuant to a participation agreement
in a form approved by the Administrative Agent on or prior to the Closing Date,
or in such other form as shall be adopted by the Originator and approved in
writing by the Administrative Agent at least ten (10) days prior to such Loan
becoming part of the Asset Pool hereunder, (ii) such Loan (other than in the
case of a Noteless Loan) is represented by a separate promissory note,


 









 






 and
(iii) the Originator has the right to receive and collect payments directly in
its own name, and to enforce its rights directly against the Obligor thereof
including the right to proceed against collateral; provided,
however, any such Loan shall exclude any Retained Interest.



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



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





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




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




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




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




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




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



 









 






and Fitch (if rated by
Fitch) or otherwise subject to satisfaction of the Rating Agency
Condition;




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




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




(9) any negotiable instruments or securities or other investments
subject to satisfaction of the Rating Agency Condition.


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



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



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



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



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



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




 









 









     (1) the sum of the Outstanding Loan Balances of all Loans to a
single Obligor (including Affiliates thereof) shall not exceed (i)
$20,000,000 if the Aggregate Outstanding Loan Balance at such time
(determined prior to the inclusion of any such Loan in the Asset Pool) is
less than or equal to $500,000,000 or (ii) $30,000,000 if the Aggregate
Outstanding Loan Balance at such time (determined prior to the inclusion
of any such Loan in the Asset Pool) is greater than $500,000,000;




     (2) the sum of the Outstanding Loan Balances of all Loans the
Obligors of which are resident of the same State shall not exceed 20%,
with the exception of the State of Florida, which shall not exceed 30%;
(3) the sum of the Outstanding Loan Balances of all Loans the
Obligors of which are in the same Industry (except the nursing care
facility industry, North American Industry Classification System code
6231 and the non-depository credit and intermediation industry, North
American Industry Classification System code 5222) shall not exceed 20%;




     (4) the sum of the Outstanding Loan Balances of all Loans the
Obligors of which are in the nursing care facility industry (North
American Industry Classification System code 6231) shall not exceed 30%,
and the sum of the Outstanding Loan Balance of all Loans the Obligors of
which are in the non-depository credit and intermediation industry (North
American Industry Classification System code 5222), shall not exceed 30%;




     (5) the sum of the Outstanding Loan Balances of all Subordinated
Loans shall not exceed 20%, the sum of the Outstanding Loan Balances of
all Senior B Loans shall not exceed 20% and the sum of the Outstanding
Loan Balances of all Junior Subordinated Loans shall not exceed 5.0%;




     (6) the sum of the Outstanding Loan Balances of all Revolving Loans
shall not be more than 65%;




     (7) the sum of the Outstanding Loan Balances of all DIP Loans shall
not exceed 10%;




     (8) the sum of the Outstanding Loan Balances of Loans paying
interest other than on a monthly basis shall not exceed 15%;




     (9) the average Outstanding Loan Balance to a single Obligor shall
not exceed (i) $6,000,000 if the Aggregate Outstanding Loan Balance at
such time (determined prior to the inclusion of any such Loan in the
Asset Pool) is less than or equal to $500,000,000 or (ii) $10,000,000 if
the Aggregate Outstanding Loan Balance at such time (determined prior to
the inclusion of any such Loan in the Asset Pool) is greater than
$500,000,000;




     (10) the sum of the Outstanding Loan Balances of the six (6)
Eligible Loans with the largest Outstanding Loan Balances shall not
exceed the greater of (i) $50,000,000, or (ii) 25%;



 









 






     (11) the sum of the Outstanding Loan Balances of Loans the Obligors
of which (a) have been assigned a “Loan Rating” (in accordance with the
Credit and Collection Policy) of 4 shall not exceed 20%, (b) have been
assigned a “Loan Rating” (in accordance with the Credit and Collection
Policy) of 5 shall not exceed 10% and (c) have been assigned a “Loan
Rating” (in accordance with the Credit and Collection Policy) of 6 shall
not exceed 0%.




     (12) Subordinated Loans shall be underwritten to have an Interest
Coverage Ratio of not less than 1:25 to 1;




     (13) the sum of the Outstanding Loan Balances of Assigned Loans
shall not exceed 40%;




     (14) the sum of the Outstanding Loan Balances of Acquired Loans
shall not exceed 25% (for avoidance of doubt, this provision only applies
to Loans originated by a Person other than the Originator);




     (15) the sum of the Outstanding Loan Balances of all Extended
Timeshare Loans shall not exceed 5% (measured based on the sum of the
Outstanding Loan Balances of all Timeshare Loans);




     (16) the Pool Weighted Average Life shall not be greater than three
(3) years;




     (17) the sum of the Outstanding Loan Balances of all Timeshare Loans
shall not exceed 20%;




     (18) the sum of the Outstanding Loan Balances of all Material
Mortgage Loans shall not exceed 35%;




     (19) the LIBOR Spread shall not be less than 4.00%;




     (20) the sum of the Outstanding Loan Balances of all Timeshare Loans
secured by a Lien on unsold timeshare intervals shall not exceed 10%;




     (21) the sum of the Outstanding Loan Balances of Timeshare Loans
secured by Mortgaged Property of the type described in clause (ii)
of the definition of Mortgaged Property where the leasehold, fractional
ownership interest in or right to use a vacation club and its resorts is
for an interval of between one (1) to (3) three months in duration, shall
not exceed 10%;




     (22) the sum of (i) the aggregate Outstanding Loan Balances of all
Senior Secured Loans that have an original term to maturity of greater
than five (5) years, plus (ii) the aggregate Outstanding Loan Balances of
all Subordinated Loans that have an original term to maturity of greater
than seven (7) years shall not exceed 20%; and




     (23) the sum of the Outstanding Loan Balances of all Loans, the
Related Property and/or Obligor with respect to which is located in an
Approved Other Jurisdiction shall not exceed 7.5%.



 









 




Pool Delinquency Ratio: As of any Determination Date, the percentage
equivalent of a fraction, (i) the numerator of which is equal to the sum of the
Outstanding Loan Balances of all Delinquent Loans on such date and (ii) the
denominator of which is equal to the Pool Aggregate Outstanding Loan Balance on
such date.



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



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



Pool Yield: On any day, the positive difference, if any, of (a) the
Pool Rate on such day and (b) the sum of (i) the Interest Rate, (ii) the
Program Fee Rate, (iii) the Servicing Fee Rate on such day, (iv) the rate used
to calculate the Backup Servicer Fee Rate, (v) the rate used to calculate the
Collateral Custodian Fees and (vi) the weighted average of the rates used to
calculate the Commitment Fees on such day.



Pooled Debtor: With respect to any Loan to an SPE Obligor, any Person
or Persons obligated to make payments to such SPE Obligor with respect to the
loans made by and/or owned by such SPE Obligor.



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



Portfolio Charged-Off Ratio: As of any Determination Date, the product
of (i) twelve (12) and (ii) the percentage equivalent of a fraction, (a) the
numerator of which is equal to the sum of the Portfolio Outstanding Loan
Balances of all Portfolio Loans (excluding equity and preferred stock
investments) that became Charged-Off Portfolio Loans (net of Recoveries during
such Collection Period) during the Collection Period related to such
Determination Date and (b) the denominator of which is equal to the Portfolio
Aggregate Outstanding Loan Balance (excluding equity and preferred stock
investments) as of the first (1st) day of the Collection Period related to such
Determination Date.




 









 







Portfolio Delinquency Ratio: As of any Determination Date, the
percentage equivalent of a fraction, (i) the numerator of which is equal to the
sum of the Portfolio Outstanding Loan Balances of all Delinquent Portfolio
Loans on such date and (ii) the denominator of which is equal to the Portfolio
Aggregate Outstanding Loan Balance on such date.



Portfolio Loan: Any loan owned or serviced by the Originator (including
each Loan).



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



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



Prepayment Amount: Defined in Section 6.4(b).



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



Prime Rate: The rate announced by Bank of Montreal from time to time as
its prime rate in the United States, such rate to change as and when such
designated rate changes. The Prime Rate is not intended to be the lowest rate
of interest charged by Bank of Montreal in connection with extensions of credit
to debtors.



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



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



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



Program Fee: With respect to any applicable Purchaser, the fee set
forth as such in such Purchaser’s Purchaser Fee Letter.



Program Fee Rate: With respect to any Purchaser, on any day, the rate
set forth as such in such Purchaser’s Purchaser Fee Letter.





 









 







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



Purchaser: Each Person from time to time party hereto as a Purchaser
and “Purchasers” means all such Persons collectively.



Purchaser Agent: Means, with respect to any Purchaser, the person
listed as the “Purchaser Agent” for such Purchaser on the signature pages to
this Agreement or any document pursuant to which a Purchaser may, following the
date of this Agreement, become a party hereto.



Purchaser Fee Letter: Means, with respect to any Purchaser, the fee
letter among such Purchaser, the Seller and any other parties thereto relating
to the fees payable to such Purchaser in connection with the transactions
contemplated hereby, as any such letter may be amended, modified, supplemented,
restated or replaced from time to time.



Qualified Institution: Defined in Section 6.4(f).



Qualified Transferee:




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



     (b) any other Person which:




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




     (ii) [Reserved]; and




     (iii) is one of the following:




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




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




     (C) the trustee, collateral agent or administrative agent in
connection with (x) a securitization of the subject Loan through
the creation of collateralized debt or loan obligations or (y) an
asset-backed commercial paper funded transaction funded by a
commercial paper conduit whose commercial paper notes are rated at
least “A-1” by S&P or at least “P-1” by Moody’s, or (z) a
repurchase



 









 






transaction funded by a an entity which would otherwise
be a Qualified Transferee so long as the “equity interest” (other
than any nominal or de minimis equity interest) in the special
purpose entity that issues notes or certificates in
connection with any such collateralized debt or loan
obligation, asset-backed commercial paper funded transaction or
repurchase transaction is owned by one or more entities that are
Qualified Transferees under subclauses (A) or (B) above; or




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




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


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



Rating Agency: Each of S&P, Moody’s and any other rating agency that
has been requested to issue a rating with respect to the commercial paper notes
issued by the Issuers.



Rating Agency Condition: With respect to any action or series of related
actions or proposed transaction or series of related proposed transactions,
that each of S&P and Moody’s shall have notified the Seller, the Administrative
Agent and the Purchaser Agents in writing that such action or series of related
actions or the consummation of such proposed transaction or series of related
transactions will not result in a Ratings Effect.



Rating Confirmation: With respect to any Purchaser, a confirmation by
each of the Rating Agencies that a proposed amendment, waiver or other
modification shall not result in a downgrade or withdrawal of such Rating
Agency’s then current rating of the Commercial Paper Notes.



Ratings Effect: With respect to any action or series of related actions
or proposed transaction or series of related proposed transactions, a reduction
or withdrawal of the rating issued by a Rating Agency on the Closing Date with
respect to any outstanding Variable Funding Certificate as a result of such
action or series of related actions or the consummation of such proposed
transaction or series of related transactions.



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




 









 







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



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



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




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



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



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



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



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



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



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



     (h) the “Assets” under and as defined in the Original Loan Certificate and
Servicing Agreement; and



     (i) the proceeds of each of the foregoing.



 









 




Replaced Loan: Defined in Section 2.16(a).



Reporting Date: The date that is three (3) Business Days prior to each
Payment Date.



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



Required Equity Contribution: An Equity Contribution, at all times
prior to the Termination Date, of at least $75,000,000.



Required Equity Shortfall: On any day, the positive difference, if any,
of (a) the Required Equity Contribution on such day minus (b) the actual
amount of the Equity Contribution as of such day.



Required Loan Documents: With respect to (i) any Noteless Loan
identified as a Noteless Loan on the Loan Checklist, a copy of the related Loan
Register (together with a certificate of a Responsible Officer of the Servicer
certifying to the accuracy of such Loan Register as of the date such Loan is
included as a part of the Asset Pool), (ii) all Loans other than Noteless
Loans, the duly executed original of the promissory note and an assignment
(which may be by endorsement or allonge) of each such promissory note to the
Seller and then the Administrative Agent, signed by an officer of the
Originator and the Seller, respectively, (iii) any Loan, copies of any related
loan agreement and the Loan Checklist together with, to the extent set forth on
the Loan Checklist, duly executed (if applicable) originals or copies of each
of any related participation agreement, acquisition agreement, subordination
agreement, intercreditor agreement, security agreements or similar instruments,
UCC financing statements, guarantee, or Insurance Policy, (iv) for each Loan
identified as being secured by real property on the Loan Checklist, an
Assignment of Mortgage and (v) for any Loan identified as an Assigned Loan on
the Loan Checklist, the duly executed original assignment agreement;
provided, that, with respect to any Assigned Loan, any of the
foregoing documents, other than any related promissory notes in the case of
Assigned Loans only, may be copies.



Required Purchaser Reduction Amount: Means, at any time, with respect
to any Purchaser, the amount, if any, by which (a) the aggregate outstanding
Advances of such Purchaser at such time exceeds (b) the lesser of: (x) the
aggregate Liquidity Commitments of all then existing Liquidity Banks related to
such Purchaser (after giving effect to any Exiting Liquidity Banks relating to
such Purchaser), divided by 102%, or (y) the Commitment of such
Purchaser at such time.



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



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



Restricted Junior Payment: (i) any dividend or other distribution,
direct or indirect, on account of any class of membership interests of the
Seller now or hereafter outstanding, except a dividend payment solely in
interests of that class of membership interests or in any junior class


 









 






 of
membership interests of the Seller; (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any class of membership interest of the Seller now or hereafter
outstanding, (iii) any payment made to redeem, purchase, repurchase or retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire membership interests of Seller now or hereafter outstanding,
and (iv) any payment of management fees by the Seller (except for reasonable
management fees to the Originator or its Affiliates in reimbursement of actual
management services performed).



Retained Interest: (A) With respect to any Revolving Loan or any Loan
with an unfunded commitment on the part of the Originator that does not provide
by its terms that funding thereunder is in Originator’s sole and absolute
discretion and the right to receive payment (but not the obligation of the
Originator to provide additional fundings) with respect to which Loan is
transferred by the Originator to the Seller and/or by the Seller to the
Purchaser, all of the obligations, if any, of the Originator to provide
additional funding with respect to such Revolving Loan, and (B) with respect to
any Assigned Loan, any Participation Loan or any Agented Note that is
transferred by the Originator to the Seller and/or by the Seller to the
Purchasers, (i) all of the obligations, if any, of the agent(s) under the
documentation evidencing such Assigned Loan, Participation Loan, or Agented
Note and (ii) the applicable portion of the interests, rights and obligations
under the documentation evidencing such Assigned Loan, Participation Loan, or
Agented Note that relate to such portion(s) of the indebtedness that is owned
by another lender or is being retained by the Originator pursuant to clause
(A) of this definition.



Revolving Loan: A Loan that is a line of credit arising from an
extension of credit by the Originator to an Obligor in a form approved by the
Administrative Agent on or prior to the Closing Date, or such other form as
shall be adopted by the Originator and approved in writing by the
Administrative Agent at least ten (10) days prior to such Loan becoming part of
the Asset Pool hereunder; provided, however, any such Loan shall
exclude any Retained Interest.



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



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



Sale Agreement: The Second Amended and Restated Sale and Contribution
Agreement, dated as of May 28, 2004, between the Originator and the Seller, as
amended through the date hereof, and as the same may be further amended,
modified, supplemented, replaced or restated from time to time.



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



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


 









 






 that Affiliate is a Hedge
Counterparty that executes a counterpart of this Agreement agreeing to be bound
by the terms of this Agreement applicable to a Secured Party.



Seller: Defined in the Preamble of this Agreement.



Senior B Loan: Any Loan that (i) is secured by a first priority
perfected Lien on assets of the related Obligor and which has (a) a “first
dollar” at risk Loan-to-Value Ratio of less than 60% and (b) a “last dollar” at
risk Loan-to-Value Ratio of less than 80%, and (ii) contains terms which, upon
the occurrence of any default or event of default by the related Obligor
thereunder, or in the case of any liquidation of or foreclosure or the related
collateral, provide that the principal of the Originator’s portion of such Loan
would be paid only after the other lenders party to such Loan are paid in full.



Senior Secured Loan: (i) Any Type of Loan secured by a first priority
lien on the related Obligor’s assets and which has a Loan-to-Value Ratio of
less than 90% (it being understood, that the Loan-to-Value
Ratio, above, does not apply to certain Loans originated and underwritten by
the Originator based on the Obligor’s cash flows as opposed to the value of
assets) and (ii) any Senior B Loan.



Senior Subordinated Loan: Any Type of Loan other than a Senior Secured
Loan and that is subordinated to only a Senior Secured Loan.



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



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



Servicer Default: Defined in Section 6.15.



Servicer Termination Notice: Defined in Section 6.15.



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



Servicing Fee: Defined in Section 2.12(b).



Servicing Fee Rate: 1.25% per annum.



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


 









 






 to pay as such debts and liabilities mature; and (e) such
Person is not engaged in a business or a transaction, and is not about to
engage in a business or a transaction, for which such Person’s property would
constitute unreasonably small capital.



SPE Obligor: With respect to any Loan, an Obligor that (a) is organized
as a special purpose entity and is not an operating entity and (b) has as its
primary assets loans to, and a security interest in the assets of, Pooled
Debtors.



Sterling Timeshare Loans. The Timeshare Mortgage Loans acquired from
Sterling Bank & Trust, FSB and Higginbottom Investment, LLC pursuant to a
Facility Sale Agreement, dated as of April 12, 2002, by the following SPE
Obligors: Delft Funding, LLC, Leeward Funding, LLC, Mauna Loa Funding, LLC, VI
Funding, LLC, Alexander Funding, LLC, South Peters Funding, LLC, Paradise
Canyon Funding, LLC, Legends Funding, LLC and VO Receivables Funding, LLC.



Subordinated Loan: A Senior Subordinated Loan or a Junior Subordinated
Loan.



Subsidiary: As to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly, through one or more intermediaries, or
both, by such Person.



Substitute Loan: On any day, an Eligible Loan that meets each of the
conditions for substitution set forth in Section 2.16.



Successor Servicer: Defined in Section 6.16(a).



Supplemental Interest: With respect to any Loan, any warrants, equity
or other equity interests or interests convertible into or exchangeable for any
such interests received by the Originator or its Affiliates from the Obligor in
connection with such Loan.



Tape: Defined in Section 7.2(b)(2).



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



Termination Date: The earliest of (a) the date of the termination of
the Facility Amount pursuant to Section 2.3, (b) the Business Day
designated by the Seller to the Administrative Agent and each Purchaser Agent
as the Termination Date at any time following two (2) Business Days’ prior
written notice thereof to the Administrative Agent and each Purchaser Agent,
(c) the date all Liquidity Banks notify the Seller pursuant to Section
2.1(c) that their respective Liquidity Commitments in connection with their
Liquidity Agreements related to this Agreement will not be renewed or extended
on the then current expiration date thereof, (d) the date of the declaration of
the Termination Date pursuant to Section 10.2(a) or the date of the
automatic occurrence of


 









 






 the Termination Date pursuant to Section
10.2(b), and (e) the second (2nd) Business Day prior to the Facility
Termination Date.



Termination Event: Defined in Section 10.1.




Term Loan: A Loan that is a term loan that has been fully funded and
does not contain any unfunded commitment on the part of the Originator arising
from an extension of credit by the Originator to an Obligor in a form approved
by the Administrative Agent on or prior to the Closing Date, or such other form
as shall be adopted by the Originator and approved in writing by the
Administrative Agent at least ten (10) days prior to such Loan becoming part of
the Asset Pool hereunder.



Timeshare Cumulative Default Ratio: With respect to any Timeshare Loan
to an Obligor that is a special purpose entity, as of any Determination Date,
(a) the percentage equivalent of a fraction, the numerator of which is the sum
of the outstanding loan balances of the Timeshare Mortgage Loans at any time
included in the assets of such special purpose entity as to which at any time
all or any portion of any one or more payments remained unpaid for at least
ninety (90) days from the original due date for such payment as of such
Determination Date, and (b) the denominator of which is equal to the aggregate
outstanding loan balance of the Timeshare Mortgage Loans (determined as of the
date such Timeshare Mortgage Loans were first originated) included in the
assets of such special purpose entity.



Timeshare Delinquency Ratio: With respect to any Timeshare Loan to an
Obligor that is a special purpose entity, as of any Determination Date, (a) the
percentage equivalent of a fraction, the numerator of which is the sum of the
outstanding loan balances of the Timeshare Mortgage Loans included in the
assets of such special purpose entity as to which all or any portion of any one
or more payments remains unpaid for at least sixty (60) days from the original
due date for such payment during the Collection Period related to such
Determination Date, and (b) the denominator of which is equal to the aggregate
outstanding loan balance of the Timeshare Mortgage Loans included in the assets
of such special purpose entity.



Timeshare Developer: With respect to any timeshare resort or vacation
club (including any accompanying recreational facilities) relating to any
Timeshare Loan, the Person or Persons, including any Affiliate or guarantor
thereof, responsible for the construction, development, maintenance or
operation thereof.



Timeshare Loan: A Material Mortgage Loan secured by Mortgage Notes and
Mortgages or a purchase facility under which a SPE Obligor purchases Mortgage
Notes.



Timeshare Mortgage Loan: A loan evidenced by a promissory note secured
by a Mortgage creating a Lien on a Mortgaged Property.



Transaction: Defined in Section 3.2.



Transaction Documents: The Agreement, the Sale Agreement, the
Administrative Agent Assignment Agreement, the Hedging Agreement, the Guaranty,
the Lock-Box Agreement, the Intercreditor Agreement, each Variable Funding
Certificate, each Purchaser Fee Letter, the Backup Servicer Fee Letter, the
Collateral Custodian Fee Letter, any UCC financing statements


 









 






 filed pursuant to
the terms of this Agreement, and any additional document the execution of which
is necessary or incidental to carrying out the terms of the foregoing
documents.



Transition Expenses: The reasonable costs (including reasonable
attorneys’ fees) of the Backup Servicer incurred in connection with the
transferring of servicing obligations under this Agreement and amending this
Agreement to reflect such transfer in an amount not to exceed $50,000.



Type of Loan: With respect to any Loan, shall mean a reference to
whether such loan is a Revolving Loan, Term Loan, DIP Loan, Participation Loan,
Assigned Loan, Acquired Loan, Agented Notes, Banded Floating Rate Loan or
Timeshare Loan.



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



United States: The United States of America.



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



Variable Funding Certificate: Defined in Section 2.1.



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



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



Warranty Loan: Means: (a) as used in Sale Agreement with respect to the
obligations of the Originator thereunder (including Section 6.1
thereof), any Loan that fails to satisfy any criteria of the definition of
Eligible Loan; provided, however, that notwithstanding the
foregoing, for purposes of determining what is a Warranty Loan pursuant to this
paragraph (a), the criteria set
forth in clauses (c), (d), (n)(ii), (t) and
(u) (but solely to the extent that the criteria in such clauses
(t) and (u) would not be satisfied as a result of the operation of
law or an effective court order in connection with an Insolvency Event),
(y) (but solely to the extent the criteria in such clause (y)
relates to any express representation and warranty that a Loan is an Eligible
Loan), (dd), and (gg) of the definition of Eligible Loan, and
clauses (vi), (viii) and (ix) in the definition of
Eligible Obligor, shall apply only as of the applicable Cut-Off Date of such
Loan; and (b) as used herein or in any other Transaction Document with respect
to any obligation of the Seller in connection therewith (including Section
4.6 of this Agreement), any Loan that fails, on any date, to satisfy any
criteria of the definition of Eligible Loan; provided, however,
that notwithstanding the foregoing, for purposes of determining what is a
Warranty Loan pursuant to this paragraph (b), the criteria set forth in
clauses (c), (g) and (dd) of the definition of Eligible
Loan and clauses (vi), (viii) and (ix) in the definition
of Eligible Obligor shall apply only as of the applicable Cut-Off Date of such
Loan.




 









 







Watchlist Loan: Any Loan (that is not a Charged-Off Loan or Delinquent
Loan) as to which the Servicer has discovered circumstances which lead the
Servicer to reasonably expect loss or non-payment by the Obligor thereof.



Weighted Average Advance Rate: At any time means a fraction, expressed
as a percentage, (i) the numerator of which is equal to the sum of: (w) 75% of
the sum of the Outstanding Loan Balances of all Senior Secured Loans in the
Asset Pool and included in the Borrowing Base that (1) satisfy the Interest
Coverage Requirement, (2) are Timeshare Loans or (3) are Material Mortgage
Loans that have a Loan-to-Value Ratio of 75% or less, (x) 65% of the sum of the
Outstanding Loan Balances of all other Senior Secured Loans in the Asset Pool
and included in the Borrowing Base, (y) 40% of the sum of the Outstanding Loan
Balances of all Senior Subordinated Loans in the Asset Pool and included in the
Borrowing Base and (z) 30% of the sum of the Outstanding Loan Balances of all
Junior Subordinated Loans in the Asset Pool and included in the Borrowing Base
and (ii) the denominator of which is equal to the Aggregate Outstanding Loan
Balance at such time.




     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:




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




     (2) 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;




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




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




     (5) reference to any time means, unless otherwise specified, New
York time;




     (6) 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




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



ARTICLE II




PURCHASE OF THE VARIABLE FUNDING CERTIFICATES




     Section 2.1 The Variable Funding Certificates.



     (a) The Seller has heretofore delivered or shall, on the date hereof (and
on the terms and subject to the conditions hereinafter set forth), deliver, to
each of the Purchaser Agents, at the applicable address set forth on the
signature pages of this Agreement, duly executed variable funding certificates
(each a “Variable Funding Certificate” or “VFC”), in
substantially the form of Exhibit B, in an aggregate face amount equal
to the Facility Amount, and otherwise duly completed. Each Variable Funding
Certificate evidences, and at all times on and after the date hereof shall
continue to evidence, an undivided ownership interest in the Assets purchased
by each applicable Purchaser in an amount equal, at any time, to the percentage
equivalent of a fraction (i) the numerator of which is the Advances outstanding
under the applicable VFC on such day, and (ii) the denominator of which is the
total aggregate Advances Outstanding on such day. Interest shall accrue, and
each VFC shall be payable, as described herein.



     (b) On the terms and conditions hereinafter set forth, from the Closing
Date to, but not including, the Termination Date, the Seller may, at its
option, request the Purchasers to make advances of funds under the VFCs in an
amount up to the Advance Amount (each, an “Advance”) and each such
Purchaser shall make such Advance in an amount equal to their Pro-Rata Share of
such requested Advance; provided, that, in no event shall the
Purchasers make any Advance if, after giving effect to such Advance the
aggregate Advances Outstanding hereunder would exceed the lesser of (i) the
Facility Amount or (ii) the Maximum Availability. Notwithstanding anything
contained in this Section 2.1or elsewhere in this Agreement to the
contrary, no Purchaser shall be obligated to provide its Purchaser Agent or the
Seller with aggregate funds in connection with an Advance that would exceed
such Purchaser’s unused Commitment then in effect. Each Advance made by the
Purchasers hereunder is subject to the interests of the Hedge Counterparties
under Section 2.7(a)(i) and Section 2.8(1) of this Agreement.



     (c) The Seller may, within one hundred and twenty (120) days but not less
than ninety (90) days prior to the expiration of any Liquidity Agreement in the
case of an extension of any Liquidity Agreement or on the applicable Extension
Request Date in the case of an extension of the Facility Termination Date, by
written notice to each Purchaser Agent, make a request for



 









 







each applicable
Liquidity Bank to extend the term of such Liquidity Agreement for an additional
period of 364 days. Each Purchaser Agent will give prompt notice to the
applicable Purchaser and each applicable Liquidity Bank of its receipt of such
request, and each Purchaser and each Liquidity Bank shall make a determination,
in their sole discretion, not more than forty-five (45) days following the date
it actually receives such written request by the Seller as to whether or not it
will agree to the extension requested. Each Liquidity Bank will give written
notice to the Administrative Agent of evidence of such extension or decision
not to extend. The failure of a Purchaser Agent or a Liquidity Bank to provide
timely notice of its decision to the Seller shall be deemed to constitute a
refusal by such Purchaser or such Liquidity Bank (as applicable) to extend the
Facility Termination Date or the term of the Liquidity Agreement, respectively.
The Seller confirms that each Liquidity Bank and each Purchaser, in their sole
and absolute discretion, without regard to the value or performance of the
Assets or any other factor, may elect not to extend any Liquidity Agreement or
Facility Termination Date (as applicable).



     (d) The Seller may, with the written consent of the Administrative Agent,
add additional Persons as Purchasers or cause an existing Purchaser to increase
its Commitment in connection with a corresponding increase in the Facility
Amount; provided, however, that the Commitment of any Purchaser
may only be increased with the prior written consent of such Purchaser. Each
new Purchaser shall become a party hereto, by executing and delivering to the
Administrative Agent and the Seller, an assumption agreement or other form of
joinder or commitment agreement evidencing its assumed Commitment hereunder
(which agreement or agreements shall be in form and substance acceptable to the
Administrative Agent).



     (e) Notwithstanding anything to the contrary herein, each of the parties
hereto hereby understands and agrees that: (i) any outstanding Advances (under
and as defined in the Original Loan Certificate and Servicing Agreement) of any
Purchaser that exist as of the Closing Date hereof shall, subject to the
remainder of this paragraph, be and remain Advances outstanding for
all purposes of this Agreement and the other Transaction Documents, (ii)
until the date following the Closing Date when the outstanding Advances of each
Purchaser (including any new Purchasers that become a party hereto on the
Closing Date) equal such Purchaser’s Pro-Rata Share of all Advances
Outstanding, the Seller may request Advances, on a non-pro rata basis, from the
Purchasers whose outstanding Advances do not yet equal their respective
Pro-Rata Shares of all Advances Outstanding on the date so requested (it being
understood that such requests shall, in any event, be made ratably among such
Purchasers based on their respective Commitments) and (iii) prior to the
Amortization Period, and so long as (x) no Termination Event has occurred and
is continuing at such time and (y) the aggregate of all Advances Outstanding at
such time, after giving effect thereto, does not exceed the lesser of the
Facility Amount or the Maximum Availability, the Seller may, solely with
respect to any Purchaser whose Commitment hereunder has either been reduced
from the “Commitment” of such Purchaser under and as defined in the Original
Loan Certificate and Servicing Agreement (including any such Purchaser under
the Original Loan Certificate and Servicing Agreement whose Commitment has
expired and/or been reduced to zero) or, following the date hereof, amended
downward, but whose Advances outstanding have not yet been repaid to an amount
that is not greater than such reduced Commitment, use the proceeds of Advances
made on or after the Closing Date to reduce such outstanding Advances of such
Purchasers until, their respective outstanding Advances are equal to their
respective Commitments (as so reduced)



 









 







hereunder (it being understood that any
such non-pro rata payments shall be made ratably among such Purchasers based on
their respective outstanding Advances).



     Section 2.2 Procedures for Advances.



     (a) Each Advance hereunder shall be effected by the Seller (or the
Servicer on its behalf) delivering to the Administrative Agent and each
Purchaser Agent (with a copy to the Collateral Custodian and the Backup
Servicer) a duly completed Borrowing Notice (along with a Borrowing Base
Certificate) no later than 3:00 p.m. (New York time) at least one (1) Business
Day prior to the proposed Funding Date. Each Borrowing Notice (along with a
Borrowing Base Certificate) shall (i) specify the desired amount of such
Advance, which amount must be at least equal to $250,000 per Purchaser, (ii)
specify the date of such Advance, (iii) specify the Loans to be financed on
such Funding Date (including the appropriate file number; Outstanding Loan
Balance for each Loan and identifying each Loan by Type of Loan and whether
such Loan is a Senior Secured Loan, a Senior B Loan or Subordinated Loan) and
(iv) include a representation that all conditions precedent for an Advance
described in Article III hereof have been met. Each Borrowing Notice
shall be irrevocable.



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



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



     (d) If any Liquidity Bank (an “Exiting Liquidity Bank”) exercises
its right not to extend or renew the term of its Liquidity Commitment in
connection with the Liquidity Agreement related to this Agreement, as described
in Section 2.1(c), above, the Commitment of the Purchaser related to
such Liquidity Bank shall be automatically reduced by an amount equal to the
amount of such Exiting Liquidity Bank’s Liquidity Commitment under the related
Liquidity Agreement, and such Purchaser shall, on each Payment Date thereafter
during the Revolving Period be entitled to receive payments in accordance
clause tenth of Section 2.7 in respect of its Required
Purchaser Reduction Amount, if any, at such time.



     Section 2.3 Reduction of the Facility Amount; Mandatory and Optional
Repayments.



     (a) The Seller may, upon at least twenty (20) Business Days’ prior written
notice (such notice to be received by the Administrative Agent and each
Purchaser Agent no later than 5:00 p.m. (New York time) on such day) to the
Administrative Agent and each Purchaser Agent, terminate in whole or reduce in
part the portion of the Facility Amount that exceeds the sum of the Advances
Outstanding, accrued Interest, Breakage Costs and Hedge Breakage Costs;



 









 




provided, however, that (subject to the next succeeding
proviso) each partial reduction of the Facility Amount shall be in an
aggregate amount equal to at least $1,000,000 and shall reduce the applicable
Commitments of the Purchasers ratably based on their respective Pro-Rata
Shares; provided, further, however, that notwithstanding
anything in the immediately preceding provisoto the contrary, so long
as no Termination Event has occurred and is continuing at such time, the Seller
may, in connection with any such reduction of the Facility Amount pursuant to
this paragraph reduce the Commitment of Fairway Finance Company, LLC
(“Fairway”) (in its capacity as a Purchaser hereunder), on a non-pro
rata basis; it being understood that any such non-pro rata
reductions for the account of Fairway may only occur while Fairway’s aggregate
Commitment after giving effect thereto is equal to or greater than $200,000,000
(thereafter, reductions, if any, shall be made for the account of each
Purchaser ratably, as described in the first provisoabove). Each
notice of reduction or termination pursuant to this Section 2.3(a) shall
be irrevocable.




     (b) The Seller may, upon one (1) Business Days’ prior written notice (such
notice to be received by the Administrative Agent, the Hedge Counterparty and
each Purchaser Agent no later than 5:00 p.m. (New York time) on such day) to
the Administrative Agent and each Purchaser Agent, reduce the Advances
Outstanding by remitting, in accordance with their Pro-Rata Share, to each
Purchaser Agent, for payment to the respective Purchasers, (i) cash and (ii)
instructions to reduce such Advances Outstanding, related accrued Interest,
Breakage Costs and Hedge Breakage Costs; provided, that, no such
reduction shall be given effect (1) unless the Seller has complied with the
terms of any Hedging Agreement requiring that one or more Hedge Transactions be
terminated in whole or in part as the result of any such reduction of the
Advances Outstanding, and Seller has paid all Hedge Breakage Costs owing
to the relevant Hedge Counterparty for any such termination (2) if a
Termination Event or Unmatured Termination Event has occurred, is continuing or
would result from such reduction. Any reduction of the Advances Outstanding
shall be in a minimum amount of $500,000. Any such reduction will occur only if
sufficient funds have been remitted to pay all such amounts in the succeeding
sentence in full. Upon receipt of such amounts, the Purchaser Agents shall
apply such amounts first to the pro-rata reduction of the Advances Outstanding,
second to the payment of related accrued Interest on the amount of the Advances
Outstanding to be repaid by paying such amounts to the respective Purchasers,
and third to the payment of any Breakage Costs and Hedge Breakage Costs.
Any notice relating to any prepayment pursuant to this Section 2.3(b)
shall be irrevocable.



     (c) If on any day (i) the Administrative Agent, as agent for the Secured
Parties, does not own or have a valid and perfected first priority security
interest in each of the Assets or (ii) any Loan which has been represented by
the Seller to be an Eligible Loan is later determined not to have been an
Eligible Loan at the time such representation was made by Seller, upon the
earlier of the Seller’s receipt of notice from the Administrative Agent or the
Seller becoming aware thereof and the Seller’s failure to cure such breach
within thirty (30) days, the Seller shall be deemed to have received on such
day a collection (a “Deemed Collection”) of such Loan in full and shall
on such day pay to the Administrative Agent, on behalf of the Purchasers, an
amount equal to the Outstanding Loan Balance of such Loan to be applied to the
pro-rata reduction of the principal of each VFC. In connection with any such
Deemed Collection, the Administrative Agent, as agent for the Secured Parties,
shall automatically and without further action, be deemed to transfer to the
Seller, free and clear of any Lien created by the



 









 







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



     Section 2.4 Determination of Interest.



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



     Section 2.5 Percentage Evidenced by each Variable Funding
Certificate.



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



     Section 2.6 Notations on Variable Funding Certificates.



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



     Section 2.7 Settlement Procedures During the Revolving Period.



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




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



 









 






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




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




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




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




     (vi) SIXTH, to each Purchaser Agent, if the Required Advance
Reduction Amount is greater than zero or an Overcollateralization
Shortfall exists, an amount necessary to reduce the Required Advance
Reduction Amount to zero and an amount
necessary to cure such Overcollateralization Shortfall, pro rata in
accordance with the amount of Advances Outstanding hereunder for the
account of the applicable Purchaser, for the payment thereof;




     (vii) SEVENTH, if any Required Equity Shortfall exists, an
amount necessary to cure such Required Equity Shortfall, to the Excess
Spread Account, for the payment thereof;




     (viii) EIGHTH, pro-rata to each Hedge Counterparty, any Hedge
Breakage Costs and payments due in termination of any Hedge Transaction,
owing to that Hedge Counterparty under its respective Hedging Agreement,
for the payment thereof;




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




     (x) TENTH, to each Purchaser Agent with respect to which a Required
Purchaser Reduction Amount exists at such time, ratably based on all
Required Purchaser Reduction Amounts, if any, outstanding at such time,
an amount necessary to reduce any such Required Purchaser Reduction
Amount to zero; and




     (xi) ELEVENTH, any remaining amount shall be distributed to
the Seller.



     (b) On the terms and conditions hereinafter set forth, from time to time
during the Revolving Period, the Servicer may, to the extent of any Principal
Collections on deposit in the Principal Collections Account:



 









 





     (i) withdraw such funds for the purpose of reinvesting in additional
Eligible Loans, provided the following conditions are satisfied:




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




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




     (3) the notice required in clause (ii) above shall be accompanied by
a Borrowing Notice in the form of Exhibit A-2 and a Borrowing Base
Certificate and the same are executed by the Seller and at least one (1)
Responsible Officer of the Servicer;




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




     (5) upon the satisfaction of the conditions set forth in clauses
(1) through (4) above, and the Administrative Agent’s
confirmation of available funds, the Administrative Agent will instruct
the Collateral Custodian by facsimile on such day to release funds from
the Principal Collections Account to the Servicer in an amount not to
exceed the lesser of (A) the amount requested by the Servicer and (B) the
amount on deposit in the Principal Collections Account on such day; or



     (ii) withdraw such funds for the purpose of making payments in respect of
the Advances Outstanding at such time in accordance with and subject to the
terms of Section 2.3(b).



     Section 2.8 Settlement Procedures During the Amortization Period.



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




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




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




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



 









 






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




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




     (6) SIXTH, to each Purchaser Agent, pro rata in accordance
with the amount of Advances Outstanding hereunder for the account of the
applicable Purchaser, in an
amount necessary to reduce the Advances Outstanding and Aggregate
Unpaids to zero, for the payment thereof;




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




     (8) EIGHTH, if any Required Equity Shortfall exists, an
amount necessary to cure such Required Equity Shortfall, to the Excess
Spread Account, for the payment thereof;




     (9) NINTH, pro-rata to each Hedge Counterparty, any Hedge
Breakage Costs and payments due in termination of any Hedge Transaction,
owing to that Hedge Counterparty under its respective Hedging Agreement
to the extent not reimbursed pursuant to clause FIRST above, for
the payment thereof;




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




     (11) ELEVENTH, any remaining amount shall be distributed to
the Seller.



     Section 2.9 Collections and Allocations.



     (a) Collections. The Servicer shall promptly identify any
collections received as being on account of Interest Collections, Principal
Collections or other Collections and shall transfer, or cause to be
transferred, all Collections received directly by it or on deposit in the form
of available funds in the Lock-Box Accounts to the Collection Account by the
close of business on the second (2nd) Business Day after such Collections are
received. In transferring Collections to the Collection Account, the Servicer
shall segregate Principal Collections and



 









 







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



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



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



     (d) Investment of Funds. Until the occurrence of a Termination
Event, to the extent there are uninvested amounts deposited in the Collection
Account, and the Excess Spread Account, all amounts shall be invested in
Permitted Investments selected by the Servicer that mature no later than the
Business Day immediately preceding the next Payment Date; from and after the
occurrence of a Termination Event, to the extent there are uninvested amounts
in the Collection Account, and the Excess Spread Account (net of losses and
investment expenses), all amounts may be invested in Permitted Investments
selected by the Administrative Agent that mature no later than the Business Day
immediately preceding the next Payment Date. All earnings (net of losses and
investment expenses) thereon shall be retained or deposited into the Collection
Account and shall be applied pursuant to the provisions of Section 2.7
and Section 2.8.



     Section 2.10 Payments, Computations, Etc.



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



 









 







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



     (b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of the payment of Interest or any fee payable hereunder, as the
case may be. For avoidance of doubt, to the extent that Available Funds are
insufficient on any Payment Date to satisfy the full amount of any Increased
Costs pursuant to clause NINTH of Section 2.7(a) or clause TENTH of
Section 2.8, such unpaid amounts shall remain due and owing and shall
accrue Interest until repaid in full.



     (c) If any Advance requested by the Seller and approved by the applicable
Purchaser and the Purchaser Agents, pursuant to Section 2.2, is not, for
any reason made or effectuated, as the case may be, on the date specified
therefor, the Seller shall indemnify the applicable Purchaser against any
reasonable loss, cost or expense incurred by the applicable Purchaser
including, without limitation, any loss (including loss of anticipated profits,
net of anticipated profits in the reemployment of such funds in the manner
determined by each Purchaser), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by the
applicable Purchaser to fund or maintain such Advance.



     Section 2.11 Optional Repurchase.



     At any time following the Termination Date when the Borrowing Base is less
than fifteen (15%) percent of the Borrowing Base as of the Termination Date,
the Seller may notify the Administrative Agent and each Purchaser Agent in
writing of its intention to purchase all remaining Assets; provided,
that, all Hedge Transactions have been terminated in accordance with
their terms. On the Payment Date next succeeding any such notice, the Seller
shall purchase all such Assets for a price equal to the Aggregate Unpaids and
the proceeds of such purchase will be deposited into the Collection Account and
paid in accordance with Section 2.8.



     Section 2.12 Fees.



     (a) The Servicer on behalf of the Seller shall pay in accordance with
Section 2.7(a)(v) and Section 2.8(5), as applicable, to each
applicable Purchaser Agent from the Collection Account to the extent funds are
available on each Payment Date, monthly in arrears, the applicable Program Fee
and the applicable Commitment Fee agreed to between the Seller and such
Purchaser Agent in the related Purchaser Fee Letter, as applicable.



     (b) The Servicer shall be entitled to receive a fee (the “Servicing
Fee”), monthly in arrears in accordance with Section 2.7(a)(iii) and
Section 2.8(3), as applicable, which fee shall be equal to the product
of (i) the Servicing Fee Rate, (ii) Aggregate Outstanding Loan Balance, as of
the first (1st) day of the immediately preceding Collection Period and (iii)
the actual number of days in such Collection Period divided by 360.



     (c) The Backup Servicer shall be entitled to receive the Backup Servicing
Fee in accordance with Section 2.7(a)(iv) and Section 2.8(4), as
applicable.



 









 





     (d) The Collateral Custodian shall be entitled to receive the Collateral
Custodian Fee in accordance with Section 2.7(a)(iv) and Section
2.8(4), as applicable.



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



     Section 2.13 Increased Costs; Capital Adequacy; Illegality.



     (a) If either (i) the introduction of or any change (including, without
limitation, any change by way of imposition or increase of reserve
requirements) in or in the interpretation of any law or regulation or (ii) the
compliance by an Affected Party with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
shall (a) subject an Affected Party to any Tax (except for Taxes on the overall
net income of such Affected Party), duty or other charge with respect to any
ownership interest in the Assets, or any right to make Advances hereunder, or
on any payment made hereunder, (b) impose, modify or deem applicable any
reserve requirement (including, without limitation, any reserve requirement
imposed by the Board of Governors of the Federal Reserve System, but excluding
any reserve requirement, if any, included in the determination of Interest),
special deposit or similar requirement against assets of, deposits with or for
the amount of, or credit extended by, any Affected Party or (c) impose any
other condition affecting the ownership interest in the Assets conveyed to the
Purchasers hereunder or the Purchasers’ rights hereunder, the result of which
is to increase the cost to any Affected Party or to reduce the amount of any
sum received or receivable by an Affected Party under this Agreement, then
within ten (10) days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth the basis for such demand), the
Servicer shall pay (and to the extent the Servicer does not make such payment
the Seller shall pay) directly to such Affected Party such additional amount or
amounts as will compensate such Affected Party for such additional or increased
cost incurred or such reduction suffered.



     (b) If either (i) the introduction of or any change in or in the
interpretation of any law, guideline, rule, regulation, directive or request or
(ii) compliance by any Affected Party with any law, guideline, rule,
regulation, directive or request from any central bank or other governmental
authority or agency (whether or not having the force of law), including,
without limitation, compliance by an Affected Party with any request or
directive regarding capital adequacy, has or would have the effect of reducing
the rate of return on the capital of any Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a level below that
which any such Affected Party could have achieved but for such introduction,
change or compliance (taking into consideration the policies of such Affected
Party with respect to capital adequacy) by an amount deemed by such Affected
Party to be material, then from time to time, within ten (10) days after demand
by such Affected Party (which demand shall be accompanied by a statement
setting forth the basis for such demand), the Servicer shall pay (and to the
extent the Servicer does not make such payment the Seller shall pay) directly
to such Affected Party such additional amount or amounts as will compensate
such Affected Party for such reduction. For the avoidance of doubt, if the
issuance of Interpretation No. 46 (and/or any amendment or



 









 







supplement thereto
or to Statement of Financial Accounting Standards No. 140) by the Financial
Accounting Standards Board or any other change in accounting standards or the
issuance of any other pronouncement, release or interpretation, causes or
requires the consolidation of all or a portion of the assets and liabilities of
the Originator, Seller or any Purchaser with the assets and
liabilities of the Administrative Agent, any Purchaser Agent, any
Purchaser or any Liquidity Bank, such event shall constitute a circumstance on
which such Affected Party may base a claim for reimbursement under this
Section 2.13.



     (c) If as a result of any event or circumstance similar to those described
in clause (a) or (b) of this Section 2.13, any Affected Party is
required to compensate a bank or other financial institution providing
liquidity support, credit enhancement or other similar support to such Affected
Party in connection with this Agreement or the funding or maintenance of
Advances hereunder, then within ten (10) days after demand by such Affected
Party, the Servicer shall pay (or to the extent the Servicer does not make such
payment the Seller shall pay) to such Affected Party such additional amount or
amounts as may be necessary to reimburse such Affected Party for any amounts
payable or paid by it.



     (d) In determining any amount provided for in this Section 2.13,
the Affected Party may use any reasonable averaging and attribution methods.
Any Affected Party making a claim under this Section 2.13 shall submit
to the Servicer a written description as to such additional or increased cost
or reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.



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



     Section 2.14 Taxes.



     (a) All payments made by an Obligor in respect of a Loan and all payments
made by the Seller or the Servicer under this Agreement will be made free and
clear of and without deduction or withholding for or on account of any Taxes.
If any Taxes are required to be withheld from any amounts payable to the
Administrative Agent, the Purchaser Agents, any Affected Party or any Secured
Party, then the amount payable to such Person will be increased (such increase,
the “Additional Amount”) such that every net payment made under this
Agreement after withholding for or on account of any Taxes (including, without
limitation, any Taxes on such increase) is not less than the amount that would
have been paid had no such deduction or withholding been deducted or withheld.
The foregoing obligation to pay Additional Amounts, however, will not apply
with respect to net income or franchise taxes imposed on the Purchasers, any
Affected Party, the Administrative Agent or the Purchaser Agents, respectively,
with respect to payments required to be made by the Seller or Servicer under
this Agreement, by a taxing jurisdiction in which the Purchasers, any Affected
Party, the Administrative Agent or the Purchaser Agents, are organized,
conducts business or is paying taxes (as the case may be).



 









 





     (b) The Servicer will indemnify (and to the extent the indemnification
provided by the Servicer is insufficient the Seller will indemnify) each
Affected Party for the full amount of
Taxes payable by such Person in respect of Additional Amounts and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto. All payments in respect of this indemnification shall be
made within ten (10) days from the date a written invoice therefor is delivered
to the Seller.



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



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



     (e) If, in connection with an agreement or other document providing
liquidity support, credit enhancement or other similar support to the
Purchasers in connection with this Agreement or the funding or maintenance of
Advances hereunder, the Purchasers are required to compensate a bank or other
financial institution in respect of Taxes under circumstances similar to those
described in this Section 2.14, then, within ten (10) days after demand
by the Purchasers, the Servicer shall pay (or to the extent the Servicer does
not make such payment the Seller shall pay) to the Purchasers such additional
amount or amounts as may be necessary to reimburse the Purchasers for any
amounts paid by them.



     (f) Without prejudice to the survival of any other agreement of the Seller
and the Servicer hereunder, the agreements and obligations of the Seller and
the Servicer contained in this Section 2.14 shall survive the
termination of this Agreement.



     Section 2.15 Assignment of the Sale Agreement.



     The Seller hereby assigns to the Administrative Agent, for the ratable
benefit of the Secured Parties hereunder, all of the Seller’s right, title and
interest in and to, but none of its obligations under, the Sale Agreement and
any UCC financing statements filed under or in connection therewith. In
furtherance and not in limitation of the foregoing, the Seller hereby



 









 







assigns to the Administrative Agent for the benefit of the Secured Parties
its right to indemnification under Article VIII of the Sale Agreement.
The Seller confirms that the Administrative Agent on behalf of the Secured
Parties shall have the sole right to enforce the Seller’s rights and remedies
under the Sale Agreement and any UCC financing statements filed under or in
connection therewith for the benefit of the Secured Parties.



     Section 2.16 Substitution of Loans.



     On any day prior to the occurrence of a Termination Event (and after the
Termination Date at the discretion of the Administrative Agent with the consent
of the Purchaser Agents), the Seller may, subject to the conditions set forth
in this Section 2.16 and subject to the other restrictions contained
herein, replace any Loan with one or more Eligible Loans (each, a
“Substitute Loan”); provided, that, no such replacement
shall occur unless each of the following conditions is satisfied as of the date
of such replacement and substitution:



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



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



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



     (d) for purposes only of substitutions pursuant to Section 4.6
undertaken because a Loan has become a Warranty Loan, the aggregate Outstanding
Loan Balance of such Substitute Loans shall be equal to or greater than the
aggregate Outstanding Loan Balances of the Replaced Loans;



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



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



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



     (h) the sum of the Outstanding Loan Balance of all Substitute Loans does
not exceed 20% of the highest Aggregate Outstanding Loan Balance over the
twelve-month period ending on the last day of the most recently ended calendar
month prior to such date;



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



 









 





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



     In addition, the Seller shall in connection with such substitution deliver
to the Collateral Custodian the related Required Loan Documents. In connection
with any such substitution, the Administrative Agent, as agent for the Secured
Parties, shall, automatically and without further action, be deemed to transfer
to the Seller, free and clear of any Lien created pursuant to this Agreement,
all of the right, title and interest of the Administrative Agent, as agent for
the Secured Parties, in, to and under such Replaced Loan, but without any
representation and warranty of any kind, express or implied.



     Section 2.17 Optional Sales.



     (a) On any Optional Sale Date, the Seller shall have the right to prepay
all or a portion of the Advances Outstanding in connection with the sale and
assignment to the Seller by the Administrative Agent, on behalf of the Secured
Parties, of the Assets (each, an “Optional Sale”), subject to the
following terms and conditions:




     (1) The Seller shall have given the Administrative Agent at least
forty-five (45) Business Days’ prior written notice of its intent to
effect an Optional Sale, unless such notice is waived or reduced by the
Administrative Agent;




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




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




     (4) After giving effect to the Optional Sale and the assignment to
the Seller of the Assets on any Optional Sale Date, (x) the remaining
Advances Outstanding shall not exceed the lesser of the Facility Amount
and the Maximum Availability, (y) the representations and warranties
contained in Section 4.1 hereof shall continue to be correct in
all material respects, except to the extent relating to an earlier date,
(z) the eligibility of any Loan remaining as part of the Assets after the
Optional Sale will be redetermined as of the Optional Sale Date, (aa) the
Pool Concentration Criteria will be redetermined as of the Optional Sale
Date, and (bb) neither an Unmatured Termination Event nor a Termination
Event shall have resulted;




     (5) On the related Optional Sale Date, the Administrative Agent,
each Purchaser Agent, on behalf of the applicable Purchaser and the Hedge
Counterparties, shall have received, as applicable, in immediately
available funds, an amount equal to the



 









 






sum of (i) the portion of the
Advances Outstanding to be prepaid plus (ii) an amount equal to
all unpaid Interest to the extent reasonably determined by the Purchaser
Agents to be attributable to that portion of the Advances Outstanding to
be paid in connection with the Optional Sale plus (iii) an aggregate
amount equal to the sum of all other amounts due and owing to the
Administrative Agent, the Collateral Custodian, the Backup Servicer, the
Purchaser Agents, the applicable Purchaser, the Affected Parties and the
Hedge Counterparties, as applicable, under this Agreement and the other
Transaction Documents, to the extent accrued to such date and to accrue
thereafter (including, without limitation, Breakage Costs and Hedge
Breakage Costs); provided, that, the Administrative Agent
and each Purchaser Agent shall have the right to determine whether the
amount paid (or proposed to be paid) by the Seller on the Optional Sale
Date is sufficient to satisfy the requirements of clauses (3), (4)
and (5) and is sufficient to reduce the Advances Outstanding to
the extent requested by the Seller in connection with the Optional Sale;
and




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



     (b) In connection with any Optional Sale, following receipt by the
Purchaser Agents of the amounts referred to in clause (5) above, there
shall be sold and assigned to the Seller without recourse, representation or
warranty all of the right, title and interest of the Administrative Agent, the
Purchaser Agents, the Purchasers and the Secured Parties in, to and under the
portion of the Assets so retransferred and such portion of the Assets so
retransferred shall be released from the Lien of this Agreement (subject to the
requirements of clause (4) above).



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



     (d) In connection with any Optional Sale, on the related Optional Sale
Date, the Administrative Agent, on behalf of the Secured Parties, shall, at the
expense of the Seller (i) execute such instruments of release with respect to
the portion of the Assets to be retransferred to the Seller, in recordable form
if necessary, in favor of the Seller as the Seller may reasonably request, (ii)
deliver any portion of the Assets to be retransferred to the Seller in its
possession to the Seller and (iii) otherwise take such actions, and cause or
permit the Collateral Custodian to take such actions, as are necessary and
appropriate to release the Lien of the Administrative Agent and the Secured
Parties on the portion of the Assets to be retransferred to the Seller and
release and deliver to the Seller such portion of the Assets to be
retransferred to the Seller.




 









 





ARTICLE III




CONDITIONS TO ADVANCES




     Section 3.1 Conditions to Closing and Initial Advance.



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



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



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



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



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



     (e) On or prior to the date of the Initial Advance, each applicable
Purchaser Agent shall have received a duly executed copy of its Purchaser’s
Variable Funding Certificate with a stated amount equal to the Commitment of
such Purchaser hereunder and, to the extent applicable, shall have (a) received
payments, if any, payable to it by any other Purchaser or Purchasers (hereunder
or under the Original Loan Certificate and Servicing Agreement) in
connection with any assignment by it of all or any portion of the
“Commitment” funded by it



 









 




under the Original Loan Certificate and Servicing
Agreement or (b) paid any amounts payable by it to any Purchaser or Purchasers
(hereunder or under the Original Loan Certificate and Servicing Agreement) for
all or any portion of the “Commitment” funded by any such other Purchaser under
the Original Loan Certificate and Servicing Agreement and assigned to it on the
date hereof.




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



     (g) The Administrative Agent shall have received satisfactory evidence
that (i) the Administrative Agent Assignment Agreement shall have been duly and
validly executed by each of the parties thereto and (ii) all financing
statements (or assignments of or amendments thereto) necessary or desirable to
effect the assignment to Harris Nesbitt of the security interest originally
granted to Wachovia, as administrative agent under the Original Loan
Certificate and Servicing Agreement, have been duly and validly filed in all
applicable jurisdictions.



     (h) To the extent applicable for any Purchaser, such Purchaser (or its
related Purchaser Agent) shall have received a “private rating assessment” on
such Purchaser’s Variable Funding Certificate as required by such Purchaser,
and shall have received a “shadow rating” of not lower than “A” by S&P, and as
of the Closing Date, such rating or ratings shall not have been rescinded and
there shall not have been any downgrading, or public notification of a possible
downgrading, or public notification of a possible change without indication of
direction. In connection therewith, each Purchaser Agent shall have received a
copy of the “private rating assessment” from Moody’s dated as of the Closing
Date, stating the current ratings by Moody’s of the Variable Funding
Certificates are as set forth above.



     (i) Notwithstanding the date set forth herein as the Closing Date, each of
the parties hereto hereby understands and agrees that the terms and provisions
of this Agreement (including with respect to any change in the Commitment of
any Purchaser hereunder from the “Commitment”, if any, of such Purchaser under
and as defined in the Original Loan Certificate and Servicing Agreement) shall
not become effective until immediately upon the date and time of the first
Advance hereunder.



     Section 3.2 Conditions Precedent to All Advances.



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



     (a) (1) With respect to any Advance (including the Initial Advance), the
Servicer shall have delivered to the Administrative Agent and each Purchaser
Agent (with a copy to the Collateral Custodian and the Backup Servicer), no
later than 3:00 p.m. (New York time), one (1) Business Day prior to the related
Funding Date in a form and substance satisfactory to the Administrative Agent
and each Purchaser Agent, (i) a Borrowing Notice (Exhibit A-1),
Borrowing Base Certificate (Exhibit A-3), Loan List and Monthly Report,
if applicable, and (ii) a Certificate of Assignment (Exhibit A to the
Sale Agreement including
Schedule I, thereto) and containing such additional information as
may be reasonably requested by the Administrative



 









 




Agent and each Purchaser
Agent, and (2) with respect to any reduction in Advances Outstanding pursuant
to Section 2.3(b) or any reinvestment of Principal Collections permitted
by Section 2.7(b), the Servicer shall have delivered to the
Administrative Agent and each Purchaser Agent (with a copy to the Backup
Servicer) at least one (1) Business Day prior to any reduction of Advances
Outstanding or same day notice no later than 2:00 p.m. (New York time) on such
day for any reinvestment of Principal Collections a Borrowing Notice
(Exhibit A-2) and a Borrowing Base Certificate (Exhibit A-3)
executed by the Servicer and the Seller;




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




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




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




     (3) On and as of such day, after giving effect to such Transaction,
the Advances Outstanding shall not exceed the lesser of (x) the Facility
Amount and (y) the Maximum Availability;




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




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




     (6) No law or regulation shall prohibit, and no order, judgment or
decree of any federal, state or local court or governmental body, agency
or instrumentality shall prohibit or enjoin, the making of such Advance
or incremental Advance by the Purchaser in accordance with the provisions
hereof, the reduction of Advances Outstanding, the reinvestment of
Principal Collections or any other transaction contemplated herein;



     (c) The Seller shall have delivered to the Collateral Custodian (with a
copy to the Backup Servicer and the Administrative Agent) no later than 3:00
p.m. (New York time) one (1) Business Day prior to any Funding Date, a faxed
copy of the duly executed original promissory notes or the Loan Register, as
applicable, of the Loans and, if any Loans are closed in escrow, a certificate
(in the form of Exhibit J) from the closing attorneys of such Loans
certifying the possession of the Required Loan Documents;
provided, however, notwithstanding the foregoing, the
Required Loan Documents (including any UCCs included in the Required Loan
Documents) shall be in the possession of the Collateral Custodian within two
(2) Business Days of any related Funding Date as to any Additional Loans;



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



 









 





     (e) The Facility Termination Date shall not have occurred;



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



     (g) The Required Equity Contribution shall have been made to the Seller;



     (h) The Administrative Agent shall have received from the Seller all
hedging confirms;



     (i) The Seller and Servicer shall have delivered to the Administrative
Agent and each Purchaser Agent all reports required to be delivered as of the
date of such Transaction;



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



     (k) If requested, with respect to any Acquired Loan intended to be
included as a part of the Asset Pool and acquired from an Affiliate of the
Seller, the Administrative Agent and each Purchaser Agent shall have received
an opinion of counsel in form and substance satisfactory to the Administrative
Agent as to such bankruptcy matters as the Administrative Agent may reasonably
request; and



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



     (m) On each annual anniversary of the Closing Date, each Purchaser Agent
shall receive evidence, in form and substance reasonably satisfactory to it, of
the reconfirmation of the ratings of the Variable Funding Certificates
described in Section 3.1(h) above.



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



 









 





ARTICLE IV




REPRESENTATIONS AND WARRANTIES




     Section 4.1 Representations and Warranties of the Seller.



     The Seller represents and warrants as follows:



     (a) Organization and Good Standing. The Seller has been duly
organized, and is validly existing as a limited liability company in good
standing, under the laws of the State of Delaware, with all requisite company
power and authority to own or lease its properties and 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
Assets in the Asset Pool.



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



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



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



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



     (f) No Proceedings. There is no litigation, proceeding or
investigation pending or, to the best knowledge of the Seller, threatened
against the Seller, before any
Governmental



 









 




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




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



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



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



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



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



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



     (m) Security Interest.




     (1) This Agreement creates a valid and continuing security interest
(as defined in the applicable UCC) in the Assets in favor of the
Administrative Agent, on behalf of



 









 





the Secured Parties, which security interest is prior to all other
Liens (except for Permitted Liens), and is enforceable as such against
creditors of and purchasers from the Seller;




     (2) the Loans, along with the related Loan Files, constitute either
a “general intangible,” an “instrument,” an “account,” “investment
property,” or “chattel paper,” within the meaning of the applicable UCC;




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




     (4) the Seller has received all consents and approvals required by
the terms of any Loan to the sale and granting of a security interest in
the Loans hereunder to the Administrative Agent, on behalf of the Secured
Parties;




     (5) 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
Assets granted to the Administrative Agent, on behalf of the Secured
Parties, under this Agreement (including, without limitation, any
filings, amendments or assignments of financing statements necessary or
desirable to transfer to Harris Nesbitt the security interest originally
granted to Wachovia as administrative agent under the Original Loan
Certificate and Servicing Agreement);




     (6) other than the security interest granted to the Administrative
Agent, on behalf of the Secured Parties, pursuant to this Agreement, the
Seller has not pledged, assigned, sold, granted a security interest in or
otherwise conveyed any of the Assets. 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 Assets other than
any financing statement (A) relating to the security interest granted to
the Seller under the Sale Agreement, or (B) that has been terminated
and/or fully and validly assigned to the Administrative Agent on or prior
to the date hereof. The Seller is not aware of the filing of any
judgment or tax lien filings against the Seller;




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




     (8) 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/or the copies of the
Loan Registers that constitute or evidence the Loans solely on behalf of
and for the benefit of the Secured Parties; and




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



 









 





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



     (o) Location of Offices. The Seller’s location (within the meaning
of Article 9 of the UCC) is Delaware. The office where the Seller keeps
all the Records is at the address of the Seller referred to in Section
13.2 hereof (or at such other locations as to which the notice and other
requirements specified in Section 5.2(g) shall have been satisfied).
The Seller’s Federal Employee Identification Number is correctly set forth on
Exhibit I. The Seller has not changed its name, whether by amendment of
its certificate of formation, by reorganization or otherwise, and has not
changed its location within the four (4) months preceding the Closing Date.



     (p) Lock-Boxes. The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts of the Seller at
such Lock-Box Banks and the names, addresses and account numbers of all
accounts to which Collections of the Assets outstanding before the Initial
Advance hereunder have been sent, are specified in Schedule II (which
shall be deemed to be amended in respect of terminating or adding any Lock-Box
Account or Lock-Box Bank upon satisfaction of the notice and other requirements
specified in Section 5.2(k)). The Seller has not granted and shall not grant
any Person other than the Administrative Agent and Collateral Custodian an
interest in any Lock-Box Account, other than any such interest that has been
terminated or fully and validly assigned to the Administrative Agent and the
Collateral Custodian on or prior to the date hereof; provided,
however, that so long as the Intercreditor Agreement is in full force
and effect and is not being contested, defended against or otherwise the
subject of any dispute as to its validity or enforceability, any such Lock-Box
Agreement (and the Seller’s interests therein) may be granted to or in the name
of the “agent” or other secured party described in such Intercreditor Agreement
and subject to the terms thereof.



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



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



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



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



 









 





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




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




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




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




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




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




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




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




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




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




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




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



 









 






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




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




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




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




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




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




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




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




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




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




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




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



 









 






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




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




     (26) fail to use separate invoices and checks bearing its own name;




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




     (28) fail at any time to have at least one (1) independent director
(an “Independent Director”) who is not and has not been for at
least five (5) years a director, officer, employee, trade credit or
shareholder (or spouse, parent, sibling or child of the foregoing) of (a)
the Servicer, (b) the Seller, (c) any principal of the Servicer, (d) any
Affiliate of the Servicer, or (e) any Affiliate of any principal of the
Servicer; provided, however, such Independent
Director may be an independent director of another special purpose entity
affiliated with the Servicer or fail to ensure that all limited liability
company action relating to the selection, maintenance or replacement of
the Independent Director are duly authorized by the unanimous vote of the
board of directors (including the Independent Director);




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




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



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



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



 









 





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



     (y) 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.



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



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



     (bb) Collections. The Seller acknowledges that all Collections
received by it or its Affiliates with respect to the Assets sold hereunder are
held and shall be held in trust for the benefit of the Secured Parties until
deposited into the Collection Account within two (2) Business Days from receipt
as required herein.



     (cc) Set-Off, etc. Other than Subordinated Loans, and solely to
the extent described and provided for in the definition thereof, with respect
to other lenders on the same Loan, a Senior B Loan, no Asset has been
compromised, adjusted, extended, satisfied, subordinated, rescinded, set-off or
modified by the Seller, the Originator or the Obligor thereof, and no Asset 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 Asset or otherwise, by the Seller, the Originator
or the Obligor with respect thereto, except for amendments to such Asset
otherwise permitted under Section 6.4(a) of this Agreement and in
accordance with the Credit and Collection Policy.



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



 









 





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



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



     (gg) Reaffirmation of Representations and Warranties by the Seller.
On each day that any Advance is made hereunder, the Seller shall be deemed to
have certified that all representations and warranties described in Section
4.1 hereof are correct on and as of such day as though made on and as of
such day.



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



     (ii) Environmental.




     (1) 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.




     (2) 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.




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




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



 









 






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




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



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



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



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



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



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




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




     (2) This Agreement constitutes a valid transfer to the
Administrative Agent, as agent for the Secured Parties, of all right,
title and interest of the Seller in, to and under all Assets in the Asset
Pool, 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 transfer
for security, then this



 









 





Agreement constitutes a grant of a security
interest in all Assets in the Asset Pool to the Administrative Agent, as
agent for the Secured Parties, which upon the delivery of the Required
Loan Documents to the Collateral Custodian and the filing of the
financing statements described in Section 4.1(m) and, in the case
of Additional Loans on the applicable Addition Date, shall be a first
priority perfected security interest in all Assets in the Asset Pool,
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 or the Excess Spread Account and, if this
Agreement constitutes the grant of a security interest in such property,
except for the interest of Seller in such property as a debtor for
purposes of the UCC.



     (b) Eligibility of Assets. As of the Closing Date and each
Addition Date, (i) the Loan List and the information contained in the Borrowing
Notice delivered pursuant to Section 2.2 is an accurate and complete
listing in all material respects of all Assets in the Asset Pool as of the
Cut-Off Date and the information contained therein with respect to the identity
of such Assets and the amounts owing thereunder is true and correct in all
material respects as of the related Cut-Off Date, (ii) each such Loan that is
part of the Borrowing Base is an Eligible Loan as of such date, (iii) each such
Asset is free and clear of any Lien of any Person (other than Permitted Liens)
and in compliance with all Applicable Laws, (iv) with respect to each such
Asset, all consents, licenses, approvals or authorizations of or registrations
or declarations of any Governmental Authority required to be obtained, effected
or given by the Seller in connection with the transfer of an ownership interest
in such Assets to the Administrative Agent as agent for the Secured Parties
have been duly obtained, effected or given and are in full force and effect,
and (v) the representations and warranties set forth in Section 4.2(a)
are true and correct with respect to each Asset.



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



     Section 4.3 Representations and Warranties of the Servicer.



     The Servicer represents and warrants as follows:



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



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



     (c) Power and Authority; Due Authorization; Execution and Delivery.
The Servicer (i) has all necessary power, authority and legal right to (a)
execute and deliver this Agreement



 









 




and the other Transaction Documents to which
it is a party, (b) carry out the terms of the Transaction Documents to which it
is a party, and (ii) has duly authorized by all necessary company action the
execution, delivery and performance of this Agreement and the other Transaction
Documents to which it is a party. This Agreement and each other Transaction
Document to which the Servicer is a party have been duly executed and delivered
by the Servicer.




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



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



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



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



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



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



     (j) Collections. The Servicer acknowledges that all Collections
received by it or its Affiliates with respect to the Assets sold hereunder are
held and shall be held in trust for the benefit of the Secured Parties until
deposited into the Collection Account within two (2) Business Days from receipt
as required herein.



 









 





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



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



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



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



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



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



 









 




constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Pension Plan.




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



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



     (iii) a “Foreign Shell Bank” within the meaning of the USA PATRIOT Act,
i.e., a foreign bank that does not have a physical presence in any country and
that is not affiliated with a bank that has a physical presence and an
acceptable level of regulation and supervision; or (iv) a person or entity that
resides in or is organized under the laws of a jurisdiction designated by the
United States Secretary of the Treasury under Sections 311 or 312 of the USA
PATRIOT Act as warranting special measures due to money laundering concerns.



     Section 4.4 Representations and Warranties of the Backup Servicer.



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



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



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



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



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



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



 









 




Servicer of the
transactions contemplated hereby and the fulfillment by the Backup Servicer of
the terms hereof have been obtained.




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



     Section 4.5 Representations and Warranties of the Collateral Custodian.



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



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



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



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



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



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



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



 









 





     Section 4.6 Breach of Certain Representations and Warranties.



     If on any day a Loan is (or becomes) a Warranty Loan, no later than two
(2) Business Days following the earlier of knowledge by the Seller of such Loan
becoming a Warranty Loan or receipt by the Seller from the Administrative Agent
or the Servicer of written notice thereof, the Seller shall either: (a) make a
deposit to the Collection Account (for allocation pursuant to Section
2.7 or Section 2.8, as applicable) in immediately available funds in
an amount equal to the sum of (i) the Outstanding Loan Balance of each such
Warranty Loan on such date, (ii) any outstanding Servicer Advances thereon,
(iii) any accrued and unpaid interest, and (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 (collectively, the “Retransfer Price”); or (b) subject to the
satisfaction of the conditions in Section 2.16, substitute for such
Warranty Loan a Substitute Loan. In either of the foregoing instances, the
Seller may (in its discretion) accept retransfer of each such Warranty Loan and
any Related Security and the Borrowing Base shall be reduced by the Outstanding
Loan Balance of each such Warranty Loan and, if applicable, increased by the
Outstanding Loan Balance of each Substitute Loan. Upon confirmation of the
deposit of such Retransfer Price into the Collection Account or the delivery by
the Seller of a Substitute Loan for each Warranty Loan (the “Retransfer
Date”), such Warranty Loan shall not be included in the Borrowing Base
(and, if and when the Seller elects to accept the retransfer of such Warranty
Loan, the Asset Pool) and, as applicable, the Substitute Loan shall be included
in the Asset Pool. Upon the Retransfer Date of each Warranty Loan, the
Administrative Agent, as agent for the Secured Parties, shall (if and when the
Seller elects to accept the retransfer of such Warranty Loan) automatically and
without further action be deemed to transfer, assign and set-over to the
Seller, without recourse, representation or warranty, all the right, title and
interest of the Administrative Agent, as agent for the Secured Parties in, to
and under such Warranty Loan and all future monies due or to become due with
respect thereto, the Related Security, all Proceeds of such Warranty Loan,
Recoveries and Insurance Proceeds relating thereto, all rights to security for
any such Warranty Loan, and all Proceeds and products of the foregoing. The
Administrative Agent, as agent for the Secured Parties, shall (if and when the
Seller elects to accept the retransfer of such Warranty Loan), at the sole
expense of the Servicer, execute such documents and instruments of transfer as
may be prepared by the Servicer on behalf of the Seller and take other such
actions as shall reasonably be requested by the Seller to effect the transfer
of such Warranty Loan pursuant to this Section 4.6.



ARTICLE V




GENERAL COVENANTS




     Section 5.1 Affirmative Covenants of the Seller.



     From the date hereof until the Collection Date:



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



 









 





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



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



     (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 Assets 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 Assets in the Asset
Pool.



     (e) Originator’s Assets. With respect to the Assets acquired by
the Seller, the Seller will (i) acquire such Assets pursuant to and in
accordance with the terms of the Sale Agreement, (ii) (at the Servicer’s
expense) take all action necessary to perfect, protect and more fully evidence
the Seller’s ownership of such Assets free and clear of any Lien other than the
Lien created hereunder and Permitted Liens, including, without limitation, (a)
filing and maintaining (at the Servicer’s expense), effective financing
statements against the Originator in all necessary or appropriate filing
offices, and filing continuation statements, amendments or assignments with
respect thereto in such filing offices (including any amendments thereto or
assignments thereof of the type described in Section 3.1(g)(ii)), and
(b) executing or causing to be executed such other instruments or notices as
may be necessary or appropriate, (iii) permit the Administrative Agent, each
Purchaser Agent or their respective agents or representatives to visit the
offices of the Seller during normal office hours and upon reasonable notice
examine and make copies of all documents, books, records and other information
concerning the Assets and discuss matters related thereto with any of the
officers or employees of the Seller having knowledge of such matters, and (iv)
take all additional action that the Administrative Agent or any Purchaser Agent
may reasonably request to perfect, protect and more fully evidence the
respective interests of the parties to this Agreement in the Assets.



     (f) Delivery of Collections. The Seller will pay to the Servicer
promptly (but in no event later than two (2) Business Days after receipt) all
Collections received by Seller in respect of the Assets included in the Asset
Pool and cause the same to be promptly deposited into the Collection Account by
the Servicer in accordance with Section 5.4(l).



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



     (h) Credit and Collection Policy. The Seller will (a) comply in
all material respects with the Credit and Collection Policy in regard to the
Assets, and (b) furnish to the Administrative Agent and each Purchaser Agent,
prior to its effective date, prompt notice of any material changes in the
Credit and Collection Policy.



 









 





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



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



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



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



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



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



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




     (1) 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 otherwise set forth positive adjustments to the Tax
liability of any Affiliated group (within the meaning of Section
1504(a)(l) of the Internal Revenue Code of 1986 (as amended from time
to time)) which equal or exceed $1,000,000 in the aggregate, telephonic,
telex or telecopy notice (confirmed in writing within five (5) Business
Days)



 









 





specifying the nature of the items giving rise to such adjustments
and the amounts thereof;




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




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




     (4) 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;




     (5) 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 material
labor controversy, material litigation, material action, material suit or
material proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Assets, the Transaction Documents, the Secured
Parties’ interest in the Assets, or the Seller, the Servicer or the
Originator or any of their Affiliates; provided,
however, notwithstanding the foregoing, any settlement,
judgment, labor controversy, litigation, action, suit or proceeding
affecting the Assets, the Transaction Documents, the Secured Parties’
interest in the Assets, or the Seller, the Servicer or the Originator or
any of their Affiliates in excess of $1,000,000 or more shall be deemed
to be material for purposes of this Section 5.1(o); and




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



     (p) Notice to S&P. The Seller will furnish to S&P prompt written
notice of any material amendment to any DIP Loan.



     (q) Other. The Seller will furnish to the Administrative Agent and
each Purchaser Agent promptly, from time to time, such other information,
documents, records or reports respecting the Assets or the condition or
operations, financial or otherwise, of Seller or Originator as the
Administrative Agent and each Purchaser Agent may from time to time



 









 




reasonably
request in order to protect the interests of the Administrative Agent, each
Purchaser Agent or the Secured Parties under or as contemplated by this
Agreement.




     Section 5.2 Negative Covenants of the Seller.



     From the date hereof until the Collection Date:



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



     (b) Assets Not to be Evidenced by Instruments. The Seller will
take no action to cause any Asset 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
Asset.



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



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



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



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



     (g) Change of Name or Location of Loan Files. The Seller shall not
(x) change its name, move the location of its principal place of business and
chief executive office, change the



 









 




offices where it keeps the records from the
location referred to in Section 13.2, or change the jurisdiction of its
formation, or (y) move, or consent to the Collateral Custodian or Servicer
moving, the Required Loan Documents and Loan Files from the location thereof on
the Closing Date, unless the Seller has given at least thirty (30) days’
written notice to the Administrative Agent and has taken all actions required
under the UCC of each relevant jurisdiction in order to continue the first
priority perfected security interest of the Administrative Agent, as agent for
the Secured Parties, in the Assets.




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



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



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



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



     (l) Extension or Amendment of Assets. The Seller will not, except
as otherwise permitted in Section 6.4(a), extend, amend or otherwise
modify, or permit the Servicer to extend, amend or otherwise modify, the terms
of any Asset (including the Related Security).



     (m) Credit and Collection Policy. Without the prior written
consent of the Administrative Agent and each Purchaser Agent (which consent
will not be unreasonably withheld), the Servicer will not agree to or otherwise
permit to occur any material change in the Credit and Collection Policy, which
change would impair the collectibility or credit quality of



 









 




any of the Assets
or otherwise adversely affect the interests or remedies of the Administrative
Agent, each Purchaser Agent or the Secured Parties under this Agreement or any
other Transaction Document.




     (n) Taxable Mortgage Pool Matters. The sum of the Outstanding Loan
Balances of all Loans owned by the Seller and that are principally secured by
an interest in real property (within the meaning of Treasury Regulation Section
301.7701(i)-1(d)(3)) shall not at any time exceed 35% of the Aggregate
Outstanding Loan Balance.



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



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




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




     (2) have a schedule of monthly calculation periods the first of
which commences on the Funding Date of that Advance and the last of which
ends on the last Scheduled Payment due to occur under or with respect to
the Loans to which that Advance relates;




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




     (4) provide for two series of monthly payments to be netted against
each other, one such series being payments to be made by the Seller to a
Hedge Counterparty (solely on a net basis) by reference to a fixed rate
for that Advance, and the other such series being payments to be made by
the Hedge Counterparty to the Administrative Agent (solely on a net
basis) at a floating rate equal to “USD-LIBOR-BBA” (as defined in the
ISDA Definitions), the net amount of which shall be paid into the
Collection Account (if payable by the Hedge Counterparty) or from the
Collection Account to the extent funds are available under Section
2.7(a)(i) and Section 2.8(1) of this Agreement (if payable by
the Seller).



     (b) As additional security hereunder, Seller hereby assigns to the
Administrative Agent, as agent for the Secured Parties, all right, title and
interest of the Seller in each Hedging Agreement, each Hedge Transaction, and all present and future amounts
payable by a Hedge Counterparty to Seller under or in connection with the
respective Hedging Agreement and Hedge Transaction(s) with that Hedge
Counterparty (“Hedge Assets”), and grants a security interest to the
Administrative Agent, as agent for the Secured Parties, in the Hedge Assets.
Seller acknowledges that, as a result of that assignment, Seller may not,
without the prior written consent of the Administrative Agent, exercise any
rights under any Hedging Agreement or Hedge Transaction, except for Seller’s
right under any Hedging Agreement to enter into Hedge Transactions in order to
meet the Seller’s obligations under Section 5.3(a) hereof. Nothing
herein shall have the effect of releasing the Seller from any of its
obligations under any Hedging Agreement or any Hedge Transaction, nor be
construed as requiring the consent of the



 









 




Administrative Agent or any Secured
Party for the performance by Seller of any such obligations.




     Section 5.4 Affirmative Covenants of the Servicer.



     From the date hereof until the Collection Date:



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



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



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



     (d) Keeping of Records and Books of Account. The Servicer will
maintain and implement administrative and operating procedures (including
without limitation, an ability to recreate records evidencing Assets 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 Assets and the identification of the Assets
in the Asset Pool. The Servicer shall permit the Administrative Agent, each
Purchaser Agent or their respective agents or representatives, to visit the
offices of the Servicer during normal office hours and upon reasonable notice
and examine and make copies of all documents, books, records and other
information concerning the Assets and discuss matters related thereto with any
of the officers or employees of the Servicer having knowledge of such matters.




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



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



     (f) Credit and Collection Policy. The Servicer will (i) comply in
all material respects with the Credit and Collection Policy in regard to the
Assets, and (ii) furnish to the Administrative Agent and each Purchaser Agent,
prior to its effective date, prompt notice of any proposed material change in
the Credit and Collection Policy. Without the prior written consent of the
Administrative Agent and each Purchaser Agent (which consent will not be
unreasonably



 









 




withheld), the Servicer will not agree to or otherwise permit to
occur any material change in the Credit and Collection Policy, which change
would impair the collectibility or credit quality of any of the Assets or
otherwise adversely affect the interests or remedies of the Administrative
Agent, each Purchaser Agent or the Secured Parties under this Agreement or any
other Transaction Document.




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



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



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



     (j) Proceedings. As soon as possible and in any event within three
(3) Business Days after any executive officer of the Servicer receives notice
or obtains knowledge thereof, of any settlement of, material judgment
(including a material judgment with respect to the liability phase of a
bifurcated trial) in or commencement of any material labor controversy material
litigation, material action, material suit or material proceeding before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Assets, the Transaction
Documents, the Secured Parties’ interest in the Assets, or the Seller, the
Servicer or the Originator or any of their Affiliates; provided,
however, notwithstanding the foregoing, any settlement, judgment, labor
controversy, litigation, action, suit or proceeding affecting the Assets, the
Transaction Documents, the Secured Parties’ interest in the Assets, or the
Seller, the Servicer or the Originator or any of their Affiliates in excess
of $1,000,000 or more shall be deemed to be material
for purposes of this Section 5.4(j).



     (k) Deposit of Collections. The Servicer shall promptly (but in no
event later than two (2) Business Days after receipt) deposit into the
Collection Account any and all Collections received by the Seller, the Servicer
or any of their Affiliates.



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



 









 





     (m) Change-in-Control. Upon the occurrence of a Change-in-Control
(including any merger or consolidation of the Originator or transfer of
substantially all of its assets and its business), the Servicer shall (i)
provide the Administrative Agent, each Purchaser Agent, the Hedge
Counterparties and the Rating Agencies with notice of such Change-in-Control
within thirty (30) days after completion of the same, and (ii) satisfy the
Rating Agency Condition after completion of the same.



     (n) Loan Register.




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




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



     Section 5.5 Negative Covenants of the Servicer.



     From the date hereof until the Collection Date.



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



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




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



 









 






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




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




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




     (5) the Rating Agency Condition is satisfied with respect thereto.



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



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



     (e) Extension or Amendment of Assets. The Servicer will not,
except as otherwise permitted in Section 6.4(a), extend, amend or
otherwise modify the terms of any Asset.



     (f) Taxable Mortgage Pool Matters. The Servicer will manage the
portfolio and advise the Seller with respect to purchases from the Originator
so as to not at any time allow the sum of the Outstanding Loan Balances of all
Loans owned by the Seller and that are principally secured by an interest in
real property (within the meaning of Treasury Regulation Section
301.7701(i)-1(d)(3)) to exceed 35% of the Aggregate Outstanding Loan Balance.



     Section 5.6 Affirmative Covenants of the Backup Servicer.



     From the date hereof until the Collection Date:



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



 









 





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



     Section 5.7 Negative Covenants of the Backup Servicer.



     From the date hereof until the Collection Date:



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



     Section 5.8 Affirmative Covenants of the Collateral Custodian.



     From the date hereof until the Collection Date:



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



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



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



     Section 5.9 Negative Covenants of the Collateral Custodian.



     From the date hereof until the Collection Date:



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



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



 









 





ARTICLE VI




ADMINISTRATION AND SERVICING OF CONTRACTS




     Section 6.1 Designation of the Servicer.



     (a) Initial Servicer. The servicing, administering and collection
of the Assets in the Asset Pool shall be conducted by the Person designated as
the Servicer hereunder from time to time in accordance with this Section
6.1. Until the Administrative Agent gives to the Originator a Servicer
Termination Notice, the Originator is hereby designated as, and hereby agrees
to perform the duties and responsibilities of, the Servicer pursuant to the
terms hereof.



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



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



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



     Section 6.2 Duties of the Servicer.



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



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



 









 






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




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




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




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




     (5) identifying each Asset clearly and unambiguously in its
servicing records to reflect that such Asset is owned by the Seller and
that the Seller is selling an undivided ownership interest therein to the
Secured Parties pursuant to this Agreement;




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




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




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




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




     (10) the Servicer shall make payments pursuant to the terms of the
Monthly Report in accordance with Section 2.7 and Section
2.8.



     (c) Notwithstanding anything to the contrary contained herein, the
exercise by the Administrative Agent, each Purchaser Agent and the Secured
Parties of their rights hereunder



 









 






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





     (d) Any payment by an Obligor in respect of any Indebtedness owed by it to
the Originator or the Seller shall, except as otherwise specified by such
Obligor or otherwise required by contract or law and unless otherwise
instructed by the Administrative Agent, be applied as a Collection of an Asset
of such Obligor (starting with the oldest such Asset) to the extent of any
amounts then due and payable thereunder before being applied to any other
receivable or other obligation of such Obligor.



     Section 6.3 Authorization of the Servicer.



     (a) Each of the Seller, the Administrative Agent, each Purchaser Agent,
each Purchaser and each Hedge Counterparty hereby authorizes the Servicer
(including any successor thereto) to take any and all reasonable steps in its
name and on its behalf necessary or desirable and not inconsistent with the
sale of the Assets in the Asset Pool to the Seller under the Sale Agreement
and, thereafter, to the Purchasers hereunder, in the determination of the
Servicer, to collect all amounts due under any and all Assets, including,
without limitation, endorsing any of their names on checks and other
instruments representing Collections, executing and delivering any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Assets
and, after the delinquency of any Assets and to the extent permitted under and
in compliance with Applicable Law, to commence proceedings with respect to
enforcing payment thereof, to the same extent as the Originator could have done
if it had continued to own such Assets. The Originator, the Seller and the
Administrative Agent on behalf of the Secured Parties and each Hedge
Counterparty shall furnish the Servicer (and any successors thereto) with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder, and shall cooperate with the Servicer to
the fullest extent in order to ensure the collectibility of the Assets. In no
event shall the Servicer be entitled to make the Secured Parties, any Hedge
Counterparty, the Collateral Custodian, the Administrative Agent or the
Purchaser Agents a party to any litigation without such party’s express prior
written consent, or to make the Seller a party to any litigation (other than
any routine foreclosure or similar collection procedure) without the
Administrative Agent’s and each Purchaser Agent’s consent.



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



 









 




Administrative Agent may enforce collection of any such Assets, and adjust,
settle or compromise the amount or payment thereof.




     Section 6.4 Collection of Payments.



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



     (b) Prepaid Loan. Prior to a Termination Event, the Servicer may
not voluntarily permit an Asset to become a Prepaid Loan, unless (x) the
Servicer provides a Substitute Loan in accordance with Section 2.16 or
(y) such prepayment will not result in the Collection Account receiving an
amount (the “Prepayment Amount”) less than the sum of (a) the
Outstanding Loan Balance on the date of such payment, (b) any outstanding
Servicer Advances thereon, (c) any accrued and unpaid interest, and (d) all
Hedge Breakage Costs owing to the relevant Hedge Counterparty for any
termination of one or more Hedge Transactions, in whole or in part, as required
by the terms of any Hedging Agreement as the result of any such Asset becoming
a Prepaid Loan. After a Termination Event has occurred, the Servicer may not
voluntarily permit an Asset to become a Prepaid Loan unless the Servicer
collects an amount equal to the sum of (a) the Outstanding Loan Balance on the
date of such prepayment, (b) any outstanding Servicer Advances thereon, (c) any
accrued and unpaid interest, and (d) all Hedge Breakage Costs owing to the
relevant Hedge Counterparty for any termination of one or more Hedge
Transactions, in whole or in part, as required by the terms of any Hedging
Agreement as the result of any such Asset becoming a Prepaid Loan.



     (c) Acceleration. If required by the Credit and Collection Policy,
the Servicer shall accelerate the maturity of all or any Scheduled Payments and
other amounts due under any Asset in which a default under the terms thereof
has occurred and is continuing (after the lapse of any applicable grace period)
promptly after such Asset becomes a Charged-Off Loan.



     (d) Taxes and other Amounts. To the extent provided for in any
Asset, the Servicer will use its best efforts to collect all payments with
respect to amounts due for taxes, assessments and insurance premiums relating
to such Asset and remit such amounts to the appropriate Governmental Authority
or insurer on or prior to the date such payments are due.



     (e) Payments to Lock-Box Account. On or before the applicable
Cut-Off Date, the Servicer shall have instructed all Obligors to make all
payments in respect of the Assets to the Lock-Box or directly to the Lock-Box
Account.



     (f) Establishment of the Collection Account. The Servicer shall
cause to be established (including by taking all steps necessary or reasonably
requested by the Administrative Agent to transfer and assign to, and rename in
the name of, the Administrative Agent, the account or accounts defined as such
and which were originally created in the name of



 









 




or assigned to, Wachovia, as
administrative agent, pursuant to the Original Loan Certificate and Servicing
Agreement) on or before the Closing Date, with the Collateral Custodian, and
maintained in the name of the Administrative Agent as agent for the Secured
Parties, a segregated corporate trust account entitled Collection Account for
Harris Nesbitt Corp., as Administrative Agent for the Secured Parties (the
“Collection Account”), and the Servicer shall further maintain a
subaccount within the Collection Account for the purpose of segregating, within
two (2) Business Days of the receipt of any Collections, Principal Collections
(the “Principal Collections Account”), over which the Collateral
Custodian as agent for the Secured Parties shall have control and from which
neither the Originator, Servicer nor the Seller shall have any right of
withdrawal except in accordance with Section 2.7(b); provided,
however, that at all times such depository institution or trust
company shall be acceptable to the Administrative Agent and a depository
institution organized under the laws of the United States of America or any one
of the States thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) (a) that has either (1) a long-term unsecured debt rating of
“A” or better by S&P and “A2” or better by Moody’s or (2) a short-term
unsecured debt rating or certificate of deposit rating of “A-1” or better by
S&P or “P-1” or better by Moody’s, (b) the parent corporation of which has
either (1) a long-term unsecured debt rating of “A” or better by S&P and “A2”
or better by Moody’s or (2) a short-term unsecured debt rating or certificate
of deposit rating of “A-1” or better by S&P and “P-1” or better by Moody’s or
(c) is otherwise acceptable to the Administrative Agent and (ii) whose deposits
are insured by the Federal Deposit Insurance Corporation (any such depository
institution or trust company, a “Qualified Institution”).
Notwithstanding anything herein to the contrary (including Section 2.7(b)), on
and after the occurrence and continuation of any Termination Event or Unmatured
Termination Event, each of the parties hereto (including the Collateral
Custodian in its capacity as the bank at which the Collection Account is
maintained), hereby agrees that the Administrative Agent shall have the right
and may provide the Collateral Custodian (or any successor institution at which
the Collection Account may be maintained) with notice that it is exercising its
right to have exclusive dominion and control over such account. Following the
delivery of any such notice of control, the Administrative Agent shall
have the exclusive right to direct and provide instructions to the Collateral
Custodian (or any successor institution at which such account is maintained) as
to the disposition of all amounts then or thereafter deposited in the
Collection Account, without further notice to or consent of the Servicer or the
Seller, and the Collateral Custodian (or any successor institution at which
such account is maintained) shall thereafter only comply with instruction from
the Administrative Agent in connection with such account.




     (g) Establishment of the Excess Spread Account. The Seller or the
Servicer on its behalf shall establish (including by taking all steps necessary
or reasonably requested by the Administrative Agent to transfer and assign to
and rename in the name of, the Administrative Agent, the account defined as
such and which was originally created in the name of or assigned to, Wachovia,
as administrative agent, pursuant to the Original Loan Certificate and
Servicing Agreement), on or before the Closing Date, with the Collateral
Custodian, and maintained in the name of the Seller and assigned to the
Administrative Agent, an account into which Collections shall be deposited for
the purpose of funding the Required Equity Shortfall (the “Excess Spread
Account”). If the Seller fails at any time to maintain the Required Equity
Contribution, Collections shall be deposited into the Excess Spread Account
pursuant to Sections 2.7(a)(vii) and 2.8(viii), as applicable,
until such time as the Required Equity Contribution on any day equals or
exceeds $75,000,000. To the extent that, on any Payment Date, there are funds
on



 









 




deposit in the Excess Spread Account in excess of those required to fund the
Required Equity Shortfall, an amount equal to such excess shall be deposited,
on such Payment Date, to the Collection Account for application in accordance
with Section 2.7 and Section 2.8, as applicable. Notwithstanding
anything herein to the contrary (including Section 2.7(b)), on and after the
occurrence and continuation of any Termination Event or Unmatured Termination
Event, each of the parties hereto (including the Collateral Custodian in its
capacity as the bank at which the Excess Spread Account is maintained), hereby
agrees that the Administrative Agent shall have the right and may provide the
Collateral Custodian (or any successor institution at which the Excess Spread
Account may be maintained) with notice that it is exercising its right to have
exclusive dominion and control over such account. Following the delivery of
any such notice of control, the Administrative Agent shall have the exclusive
right to direct and provide instructions to the Collateral Custodian (or any
successor institution at which such account is maintained) as to the
disposition of all amounts then or thereafter deposited in the Excess Spread
Account, without further notice to or consent of the Servicer or the Seller,
and the Collateral Custodian (or any successor institution at which such
account is maintained) shall thereafter only comply with instruction from the
Administrative Agent in connection with such account.




     (h) Adjustments. If (i) the Servicer makes a deposit into the
Collection Account in respect of a Collection of an Asset and such Collection
was received by the Servicer in the form of a check that is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Collection Account to reflect such dishonored
check or mistake. Any Scheduled Payment in respect of which a dishonored check
is received shall be deemed not to have been paid.



     Section 6.5 Servicer Advances.



     For each Collection Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) that was due and payable pursuant to an Asset
during such Collection Period was not received prior to the last day of such
Collection Period, the Servicer may (in its sole and absolute discretion) make
an advance in an amount up to the amount of such delinquent Scheduled Payment
(or portion thereof). The Servicer will deposit any Servicer Advances into the
Collection Account on or prior to 9:00 a.m. (New York time) on the Business Day
prior to the related Payment Date, in immediately available funds.
Notwithstanding anything to the contrary contained herein, no Successor
Servicer shall have any responsibility to make Servicer Advances.



     Section 6.6 Realization Upon Charged-Off Loans.



     The Servicer will use reasonable efforts to repossess or otherwise
comparably convert the ownership of any Related Property relating to a
Charged-Off Loan and will act as sales and processing agent for Related
Property that it repossesses. The Servicer will follow such other practices
and procedures as it deems necessary or advisable and as are customary and
usual in its servicing of contracts and other actions by the Servicer in order
to realize upon such Related Property, which practices and procedures may
include reasonable efforts to enforce all obligations of Obligors and
repossessing and selling such Related Property at public or private



 









 




sale in circumstances other than those described in the preceding sentence. Without
limiting the generality of the foregoing, unless the Administrative Agent has
specifically given instruction to the contrary, the Servicer may sell any such
Related Property to the Servicer or its Affiliates for a purchase price equal
to the then fair market value thereof, any such sale to be evidenced by a
certificate of a Responsible Officer of the Servicer delivered to the
Administrative Agent setting forth the Loan, the Related Property, the sale
price of the Related Property and certifying that such sale price is the fair
market value of such Related Property. In any case in which any such Related
Property has suffered damage, the Servicer will not expend funds in connection
with any repair or toward the repossession of such Related Property unless it
reasonably determines that such repair and/or repossession will increase the
Recoveries by an amount greater than the amount of such expenses. The Servicer
will remit to the Collection Account the Recoveries received in connection with
the sale or disposition of Related Property relating to a Charged-Off Loan.




     Section 6.7 Maintenance of Insurance Policies.



     The Servicer will use its best efforts to ensure that each Obligor
maintains an Insurance Policy with respect to any Related Property (other than
accounts receivable) in an amount at least equal to the sum of the Outstanding
Loan Balance of the related Eligible Loan and shall ensure that each such
Insurance Policy names the Servicer as loss payee and as an insured thereunder
and all of the Seller’s right, title and interest therein is fully assigned to
the Administrative Agent, as agent for the Secured Parties. Additionally, the
Servicer will require that each Obligor maintain property damage liability
insurance during the term of each Asset in amounts and against risks
customarily insured against by the Obligor on property owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may in its
discretion purchase and maintain such insurance on behalf of, and at the
expense of, the Obligor. In connection with its activities as Servicer,
the Servicer agrees to present, on behalf of the
Administrative Agent, claims to the insurer under each Insurance Policy and any
such liability policy, and to settle, adjust and compromise such claims, in
each case, consistent with the terms of each Asset. The Servicer’s Insurance
Policies with respect to the Related Property will insure against liability for
physical damage relating to such Related Property in accordance with the
requirements of the Credit and Collection Policy. The Servicer hereby
disclaims any and all right, title and interest in and to any Insurance Policy
and Insurance Proceeds with respect to any Related Property, including any
Insurance Policy with respect to which it is named as loss payee and as an
insured, and agrees that it has no equitable, beneficial or other interest in
the Insurance Polices and Insurance Proceeds other than being named as loss
payee and as an insured. The Servicer acknowledges that with respect to the
Insurance Policies and Insurance Proceeds thereof that it is acting solely in
the capacity as agent for the Administrative Agent, as agent for the Secured
Parties.



     Section 6.8 Servicing Compensation.



     As compensation for its servicing activities hereunder and reimbursement
for its expenses, the Servicer shall be entitled to receive the Servicing Fee
to the extent of funds available therefor pursuant to the provisions of
Section 2.7(a)(iii) or Section 2.8(3), as applicable.



 









 





     Section 6.9 Payment of Certain Expenses by Servicer.



     The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, Taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Seller, but excluding Liquidation Expenses
incurred as a result of activities contemplated by Section 6.6;
provided, however, for avoidance of doubt, to the extent
Liquidation Expenses relate to a Loan and a Retained Interest such Liquidation
Expenses shall be allocated pro rata. The Servicer will be required to pay all
reasonable fees and expenses owing to any bank or trust company in connection
with the maintenance of the Collection Account, the Excess Spread Account and
the Lock-Box Account. The Servicer shall be required to pay such expenses for
its own account and shall not be entitled to any payment therefor other than
the Servicing Fee.



     Section 6.10 Reports.



     (a) Borrowing Notice. On each Funding Date, on each reduction of
Advances Outstanding pursuant to Section 2.3(b) and on each reinvestment
of Principal Collections pursuant to Section 2.7(b), the Seller (or the
Servicer on its behalf) will provide a Borrowing Notice, updated as of such
date, to the Administrative Agent and each Purchaser Agent (with a copy to the
Collateral Custodian).



     (b) Monthly Report. On each Reporting Date, the Servicer will
provide to the Seller, the Administrative Agent, each Purchaser Agent, the
Backup Servicer, each Liquidity Bank and each Rating Agency, a monthly
statement including a Borrowing Base calculated as of the most recent
Determination Date (a “Monthly Report”), with
respect to the related Collection Period, signed by a Responsible Officer of
the Servicer and the Seller and substantially in the form of Exhibit C.



     (c) On each Reporting Date, the Servicer will report as part of the
Monthly Report to the Administrative Agent, each Purchaser Agent, each
Liquidity Bank and each Rating Agency its Diversity Score calculation as of the
most recent Determination Date with respect to the related Collection Period.



     (d) Servicer’s Certificate. Together with each Monthly Report, the
Servicer shall submit to the Administrative Agent, each Purchaser Agent, each
Liquidity Bank and each Rating Agency a certificate (a “Servicer’s
Certificate”), signed by a Responsible Officer of the Servicer and
substantially in the form of Exhibit J.



     (e) Financial Statements. The Servicer will submit to the
Administrative Agent, each Purchaser Agent, each Purchaser, the Backup
Servicer, each Liquidity Bank and each Rating Agency, within forty-five (45)
days of the end of each of its fiscal quarters, commencing June 30, 2004,
unaudited consolidated financial statements for the Servicer, as of the end of
each such fiscal quarter. The Servicer will submit to the Administrative
Agent, each Purchaser Agent, each Purchaser and the Backup Servicer, within
ninety (90) days of the end of each of its fiscal years, commencing December
31, 2004, consolidated audited financial statements for the Servicer,



 









 




audited
by a “big four” auditing firm as of the end of each such fiscal year. For the
purposes of this Section 6.10(d), the term “financial statements” shall
include a balance sheet, income statement and a cash flow statement.




     (f) Tax Returns. Upon demand by the Administrative Agent, any
Purchaser Agent, any Liquidity Bank or any Rating Agency, copies of all
federal, state and local Tax returns and reports filed by the Seller and
Servicer, or in which the Seller or Servicer was included on a consolidated or
combined basis (excluding sales, use and like taxes).



     Section 6.11 Annual Statement as to Compliance.



     The Servicer will provide to the Administrative Agent and each Purchaser
Agent, within ninety (90) days following the end of each fiscal year of the
Servicer, commencing with the fiscal year ending on December 31, 2004, a fiscal
report signed by a Responsible Officer of the Servicer certifying that (a) a
review of the activities of the Servicer, and the Servicer’s performance
pursuant to this Agreement, for the fiscal period ending on the last day of
such fiscal year has been made under such Person’s supervision and (b) the
Servicer has performed or has caused to be performed in all material respects
all of its obligations under this Agreement throughout such year and no
Servicer Default has occurred and is continuing.



     Section 6.12 Annual Independent Public Accountant’s Servicing
Reports.



     The Servicer will cause a firm of nationally recognized independent public
accountants (who may also render other services to the Servicer) to furnish to
the Administrative Agent, each Purchaser Agent, the Collateral Custodian and
the Backup Servicer, within ninety (90) days following the end of each fiscal
year of the Servicer, commencing with the fiscal year ending on December 31,
2004: (i) a report relating to such fiscal year to the effect that (a) such
firm has
reviewed certain documents and records relating to the servicing of the
Assets, and (b) based on such examination, such firm is of the opinion that the
Monthly Reports for such year were prepared in compliance with this Agreement,
except for such exceptions as it believes to be immaterial and such other
exceptions as will be set forth in such firm’s report and (ii) a report
covering such fiscal year to the effect that such accountants have applied
certain agreed-upon procedures (which procedures shall have been approved by
the Administrative Agent) to certain documents and records relating to the
Assets under any Transaction Document, compared the information contained in
the Monthly Reports and the Servicer’s Certificates delivered during the period
covered by such report with such documents and records and that no matters came
to the attention of such accountants that caused them to believe that such
servicing was not conducted in compliance with this Article VI of this
Agreement, except for such exceptions as such accountants shall believe to be
immaterial and such other exception as shall be set forth in such statement.
In the event such independent public accountants require the Collateral
Custodian or the Backup Servicer to agree to the procedures to be performed by
such firm in any of the reports required to be prepared pursuant to this
Section 6.12, the Servicer shall direct the Collateral Custodian and the
Backup Servicer in writing to so agree; it being understood and agreed
that the Collateral Custodian and the Backup Servicer will deliver such letter
of agreement in conclusive reliance upon the direction of the Servicer, and the
Collateral Custodian and the Backup Servicer have not made any independent
inquiry or investigation as to, and shall



 









 




have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.




     Section 6.13 Limitation on Liability of the Servicer and Others



     Except as provided herein, the Servicer shall not be under any liability
to the Administrative Agent, each Purchaser Agent, the Secured Parties or any
other Person for any action taken or for refraining from the taking of any
action pursuant to this Agreement whether arising from express or implied
duties under this Agreement; provided, however,
notwithstanding anything to the contrary contained herein nothing shall protect
the Servicer against any liability that would otherwise be imposed by reason of
its willful misfeasance, bad faith or negligence in the performance of duties
or by reason of its willful misconduct hereunder.



     Section 6.14 The Servicer Not to Resign.



     The Servicer shall not resign from the obligations and duties hereby
imposed on it except upon the Servicer’s determination that (i) the performance
of its duties hereunder is or becomes impermissible under Applicable Law and
(ii) there is no reasonable action that the Servicer could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel to such effect delivered to
the Administrative Agent, each Purchaser Agent and the Backup Servicer. No
such resignation shall become effective until a Successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 6.2.



     Section 6.15 Servicer Defaults.



     If any one of the following events (a “Servicer Default”) shall
occur and be continuing:



     (a) any failure by the Servicer to make any payment, transfer or deposit
(including without limitation with respect to Collections) as required by this
Agreement which continues unremedied for a period of one (1) Business Day;



     (b) any failure by the Servicer to give instructions or notice to the
Administrative Agent and each Purchaser Agent as required by this Agreement, or
to deliver any required Monthly Report or other Required Reports hereunder on
or before the date occurring two (2) Business Days after the date such
instruction, notice or report is required to be made or given, as the case may
be, under the terms of this Agreement;



     (c) any failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in this Agreement or the other Transaction Documents to which the
Servicer is a party and the same continues unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of
such failure requiring the same to be remedied shall have been given to the
Servicer by the Administrative Agent or any Purchaser Agent and (ii) the date
on which the Servicer becomes aware thereof;



 









 





     (d) any representation, warranty or certification made by the Servicer in
any Transaction Document or in any certificate delivered pursuant to any
Transaction Document shall prove to have been incorrect when made, which has a
Material Adverse Effect on the Administrative Agent, any Purchaser Agent or the
Secured Parties and which continues to be unremedied for a period of thirty
(30) days after the earlier to occur of (i) the date on which written notice of
such incorrectness requiring the same to be remedied shall have been given to
the Servicer by the Administrative Agent or any Purchaser Agent and (ii) the
date on which the Servicer becomes aware thereof;



     (e) an Insolvency Event shall occur with respect to the Servicer;



     (f) any material delegation of the Servicer’s duties that is not permitted
by Section 6.1;



     (g) any financial or other information reasonably requested by the
Administrative Agent is not provided as requested within a reasonable amount of
time following such request;



     (h) the rendering against the Servicer of one or more final judgments,
decrees or orders for the payment of money in excess of United States
$10,000,000, individually or in the aggregate, and the continuance of such
judgment, decree or order unsatisfied and in effect for any period of more than
sixty (60) consecutive days without a stay of execution;



     (i) the failure of the Servicer to make any payment due with respect to
any recourse debt or other obligations having a principal amount of $25,000,000
or greater, or the occurrence of any event or condition that would permit
acceleration of such recourse debt or other
obligations, if not waived in accordance with, and within the requisite
time periods, if any, for waivers specified in, the related underlying debt
agreements;



     (j) the Servicer fails to maintain a GAAP balance sheet minimum net worth
of at least $650,000,000 plus 75% of any new equity issued after March 31, 2004
and 75% of cumulative positive net income after March 31, 2004;



     (k) [Reserved];



     (l) the date on which (a) any person or group acquires any “beneficial
ownership” (either directly or indirectly) of capital stock or other equity
interests in CapitalSource Inc. having more than 50% of the voting power for
the election of directors of CapitalSource Inc., or (b) (except in connection
with “term” asset-backed securities transactions) CapitalSource Inc. sells
substantially all of the assets of CapitalSource Inc.;



     (m) the Servicer fails in any respect to comply with the Credit and
Collection Policy regarding the servicing of the Assets and such failure has a
material adverse effect on the collectibility, enforcement or otherwise with
respect to the Assets;



     (n) the Servicer consents or agrees to, or otherwise permits to occur, any
amendment, modification, change, supplement or rescission of or to the Credit
and Collection Policy (after the adoption of same) in whole or in part that
could be reasonably expected to have a Material



 









 




Adverse Effect upon the Assets,
the Administrative Agent, any Purchaser Agent or the Secured Parties, without
the prior written consent of the Administrative Agent and each Purchaser Agent;




     (o) CapitalSource Finance ceases to be the Servicer; or



     (p) the Servicer fails to maintain the Loan Loss Reserve for any Watchlist
Loans;


then notwithstanding anything herein to the contrary, so long as any such
Servicer Default shall not have been remedied within any applicable cure period
prior to the date of the Servicer Termination Notice (defined below), the
Administrative Agent, by written notice to the Servicer (with a copy to the
Backup Servicer and each Rating Agency) (a “Servicer Termination
Notice”), may terminate all of the rights and obligations of the Servicer
as Servicer under this Agreement.




     Section 6.16 Appointment of Successor Servicer.



     (a) On and after the receipt by the Servicer of a Servicer Termination
Notice pursuant to Section 6.15, the Servicer shall continue to perform
all servicing functions under this Agreement until the date specified in the
Servicer Termination Notice or otherwise specified by the Administrative Agent
in writing or, if no such date is specified in such Servicer Termination Notice
or otherwise specified by the Administrative Agent, until a date mutually
agreed upon by the Servicer and the Administrative Agent. The Administrative
Agent may at the time described in the immediately preceding sentence in its
sole discretion, appoint the Backup Servicer as the Servicer hereunder, and the
Backup Servicer shall on such date assume all obligations of the Servicer
hereunder, and all authority and power of the Servicer under this Agreement
shall pass to and be vested in the Backup Servicer. As compensation therefor,
the Backup Servicer shall be
entitled to the Servicing Fee, together with other servicing compensation
in the form of assumption fees, late payment charges or otherwise as provided
herein; including, without limitation, Transition Expenses. In the event that
the Administrative Agent does not so appoint the Backup Servicer, there is no
Backup Servicer or the Backup Servicer is unable to assume such obligations on
such date, the Administrative Agent shall as promptly as possible appoint a
successor servicer (the “Successor Servicer”), and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Administrative Agent and each Purchaser Agent. In the event
that a Successor Servicer has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Administrative Agent shall petition a
court of competent jurisdiction to appoint any established financial
institution, having a net worth of not less than United States $50,000,000 and
whose regular business includes the servicing of Assets, as the Successor
Servicer hereunder.



     (b) Upon its appointment, the Backup Servicer (subject to Section
6.16(a)) or the Successor Servicer, as applicable, shall be the successor
in all respects to the Servicer with respect to servicing functions under this
Agreement and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and all references in this Agreement to the Servicer shall be deemed to
refer to the Backup Servicer or the Successor Servicer, as applicable;
provided, however, that the Backup Servicer or Successor
Servicer, as applicable, shall have (i) no liability with respect to any action
performed by the terminated Servicer prior to the date that the Backup Servicer
or Successor Servicer, as applicable, becomes the successor to the Servicer or
any claim of a third party based



 









 




on any alleged action or inaction of the
terminated Servicer, (ii) no obligation to perform any advancing obligations,
if any, of the Servicer unless it elects to in its sole discretion, (iii) no
obligation to pay any taxes required to be paid by the Servicer (provided that
the Backup Servicer or Successor Servicer, as applicable, shall pay any income
taxes for which it is liable), (iv) no obligation to pay any of the fees and
expenses of any other party to the transactions contemplated hereby, and (v) no
liability or obligation with respect to any Servicer indemnification
obligations of any prior Servicer, including the original Servicer. The
indemnification obligations of the Backup Servicer or the Successor Servicer,
as applicable, upon becoming a Successor Servicer, are expressly limited to
those arising on account of its failure to act in good faith and with
reasonable care under the circumstances. In addition, the Backup Servicer or
Successor Servicer, as applicable, shall have no liability relating to the
representations and warranties of the Servicer contained in Article IV.
Further, for so long as the Backup Servicer shall be the Successor Servicer,
the provisions of Section 2.13, Section 2.14(b) and Section
2.14(e) of this Agreement shall not apply to it in its capacity as
Servicer.




     (c) All authority and power granted to the Servicer under this Agreement
shall automatically cease and terminate upon termination of this Agreement and
shall pass to and be vested in the Seller and, without limitation, the Seller
is hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, all documents and other
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of such transfer of servicing rights. The
Servicer agrees to cooperate with the Seller in effecting the termination of
the responsibilities and rights of the Servicer to conduct servicing of the
Assets.



     (d) Upon the Backup Servicer receiving notice that it is required to serve
as the Servicer hereunder pursuant to the foregoing provisions of this
Section 6.16, the Backup Servicer will promptly begin the transition to
its role as Servicer. Notwithstanding the foregoing, the Backup Servicer may,
in its discretion, appoint, or petition a court of competent jurisdiction to
appoint, any established servicing institution as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. As compensation, any Successor
Servicer (including, without limitation, the Administrative Agent) so appointed
shall be entitled to receive the Servicing Fee, together with any other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided herein that accrued prior thereto, including, without
limitation, Transition Expenses. In the event the Backup Servicer is required
to solicit bids as provided herein, the Backup Servicer shall solicit, by
public announcement, bids from banks and mortgage servicing institutions
meeting the qualifications set forth in Section 6.16(a) above. Such
public announcement shall specify that the Successor Servicer shall be entitled
to the full amount of the Servicing Fee as servicing compensation, together
with the other servicing compensation in the form of assumption fees, late
payment charges or otherwise that accrued prior thereto. Within thirty (30)
days after any such public announcement, the Backup Servicer shall negotiate
and effect the sale, transfer and assignment of the servicing rights and
responsibilities hereunder to the qualified party submitting the highest
qualifying bid. The Backup Servicer shall deduct from any sum received by the
Backup Servicer from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and
of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder and the amount of any unreimbursed Servicing
Advances. After such deductions, the remainder of such sum shall



 









 




be paid by
the Backup Servicer to the Servicer at the time of such sale, transfer and
assignment to the Servicer’s successor. The Backup Servicer and such successor
shall take such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession. No appointment of a successor to the
Servicer hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Backup Servicer to the
Administrative Agent and each Purchaser Agent and the Backup Servicer shall
have consented thereto. The Backup Servicer shall not resign as servicer until
a Successor Servicer has been appointed and accepted such appointment.
Notwithstanding anything to the contrary contained herein, in no event shall
Wells Fargo, in any capacity, be liable for any Servicing Fee or for any
differential in the amount of the Servicing Fee paid hereunder and the amount
necessary to induce any Successor Servicer under this Agreement and the
transactions set forth or provided for by this Agreement.




ARTICLE VII




THE BACKUP SERVICER




     Section 7.1 Designation of the Backup Servicer.



     (a) Initial Backup Servicer. The backup servicing role with
respect to the Assets in the Asset Pool shall be conducted by the Person
designated as Backup Servicer hereunder from time to time in accordance with
this Section 7.1. Until the Administrative Agent shall give to Wells
Fargo a Backup Servicer Termination Notice, Wells
Fargo is hereby designated as, and hereby agrees to perform the duties and
obligations of, a Backup Servicer pursuant to the terms hereof.



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



     Section 7.2 Duties of the Backup Servicer.



     (a) Appointment. The Seller and the Administrative Agent, as agent
for the Secured Parties, each hereby appoints Wells Fargo to act as Backup
Servicer, for the benefit of the Administrative Agent, each Purchaser Agent and
the Secured Parties, as from time to time designated pursuant to Section
7.1. The Backup Servicer hereby accepts such appointment and agrees to
perform the duties and obligations with respect thereto set forth herein.



     (b) Duties. On or before the initial Funding Date, and until its
removal pursuant to Section 7.5, the Backup Servicer shall perform, on
behalf of the Administrative Agent and the Secured Parties, the following
duties and obligations:




     (1) On or before the Closing Date, the Backup Servicer shall accept
from the Servicer delivery of the information required to be set forth in
the Monthly Reports (if any) in hard copy and on computer tape;
provided, however, the computer tape is in an MS DOS,
PC readable ASCII format or other format to be agreed upon by the Backup
Servicer and the Servicer on or prior to closing.



 









 






     (2) Not later than 12:00 noon New York City time on each Reporting
Date, the Servicer shall deliver to the Backup Servicer, Fitch and the
Rating Agencies the loan tape, which shall include but not be limited to
the following information: (x) for each Asset in the Asset Pool, the
name and number of the related Obligor, the collection status, the loan
status, the date of each Scheduled Payment and the Outstanding Loan
Balance, (y) the Borrowing Base and (z) the Aggregate Outstanding Loan
Balance (the “Tape”). The Backup Servicer shall accept delivery
of the Tape.




     (3) Prior to the related Payment Date, the Backup Servicer shall
review the Monthly Report to ensure that it is complete on its face and
that the following items in such Monthly Report have been accurately
calculated, if applicable, and reported: (A) the Borrowing Base, (B) the
Backup Servicing Fee, (C) the Assets that are current and not past due,
(D) the Assets that are 1 — 30 days past due, (E) the Assets that are 31
 — 60 days past due, (F) the Assets that are 61 — 90 days past due, (G)
the Assets that are 90+ days past due, (H) the Pool Charged-Off Ratio,
and (I) the Aggregate Outstanding Loan Balance. The Backup Servicer by a
separate written report shall notify the Administrative Agent and the
Servicer of any disagreements with the Monthly Report based on such
review not later than the Business Day preceding such Payment Date to
such Persons.




     (4) If the Servicer disagrees with the report provided under
paragraph (3) above by the Backup Servicer or if the Servicer or
any subservicer has not reconciled such discrepancy, the Backup Servicer
agrees to confer with the Servicer to resolve such disagreement on or
prior to the next succeeding Determination Date and shall settle such
discrepancy with the Servicer if possible, and notify the Administrative
Agent of the resolution thereof. The Servicer hereby agrees to cooperate
at its own expense with the Backup Servicer in reconciling any
discrepancies herein. If within twenty (20) days after the delivery of
the report provided under paragraph (3) above by the Backup
Servicer, such discrepancy is not resolved, the Backup Servicer shall
promptly notify the Administrative Agent of the continued existence of
such discrepancy. Following receipt of such notice by the Administrative
Agent, the Servicer shall deliver to the Administrative Agent, the
Secured Parties and the Backup Servicer no later than the related Payment
Date a certificate describing the nature and amount of such discrepancies
and the actions the Servicer proposes to take with respect thereto.



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



     Section 7.3 Merger or Consolidation.



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



 









 




Servicer under this Agreement without further act on
the part of any of the parties to this Agreement provided such Person is
organized under the laws of the United States of America or any one of the
States thereof or the District of Columbia (or any domestic branch of a foreign
bank), (i) (a) that has either (1) a long-term unsecured debt rating of “A” or
better by S&P and “A2” or better by Moody’s or (2) a short-term unsecured debt
rating or certificate of deposit rating of “A-1” or better by S&P or “P-1” or
better by Moody’s, (b) the parent corporation which has either (1) a long-term
unsecured debt rating of “A” or better by S&P and “A2” or better by Moody’s or
(2) a short-term unsecured debt rating or certificate of deposit rating of
“A-1” or better by S&P and “P-1” or better by Moody’s or (c) is otherwise
acceptable to the Administrative Agent.




     Section 7.4 Backup Servicing Compensation.



     As compensation for its back-up servicing activities hereunder, the Backup
Servicer shall be entitled to receive the Backup Servicing Fee from the
Servicer. To the extent that such Backup Servicing Fee is not paid by the
Servicer, the Backup Servicer shall be entitled to receive the unpaid balance
of its Backup Servicing Fee to the extent of funds available therefor pursuant
to Section 2.7(a)(iv) and Section 2.8(4), as applicable. The
Backup Servicer’s entitlement to receive the Backup Servicing Fee shall cease
(excluding any unpaid outstanding amounts as of that date) on the earliest to
occur of: (i) it becoming the Successor Servicer, (ii) its
removal as Backup Servicer pursuant to Section 7.5, or (iii) the
termination of this Agreement. Upon becoming Successor Servicer pursuant to
Section 6.16, the Backup Servicer shall be entitled to the Servicing
Fee.



     Section 7.5 Backup Servicer Removal.



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



     Section 7.6 Limitation on Liability.



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



 









 





     (b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document delivered
to the Backup Servicer hereunder or on which the Backup Servicer must rely in
order to perform its obligations hereunder, and the Secured Parties, the
Administrative Agent and the Collateral Custodian each agree to look only to
the Servicer to perform such obligations. The Backup Servicer shall have no
responsibility and shall not be in default hereunder or incur any liability for
any failure, error, malfunction or any delay in carrying out any of its duties
under this Agreement if such failure or delay results from the Backup Servicer
acting in accordance with information prepared or supplied by a Person other
than the Backup Servicer or the failure of any such other Person to prepare or
provide such information. The Backup Servicer shall have no responsibility,
shall not be in default and shall incur no liability for (i) any act or failure
to act of any third party, including the Servicer, (ii) any inaccuracy or
omission in a notice or communication received by the Backup Servicer from any
third party, (iii) the invalidity or unenforceability of any Asset under
Applicable Law, (iv) the breach or inaccuracy of any representation or warranty
made with respect to any Asset, or (v) the acts or omissions of any successor
Backup Servicer.



     Section 7.7 The Backup Servicer Not to Resign.



     The Backup Servicer shall not resign (except with prior consent of the
Administrative Agent which consent shall not be unreasonably withheld) from the
obligations and duties hereby imposed on it except upon the Backup Servicer’s
determination that (i) the performance of its duties hereunder is or becomes
impermissible under Applicable Law and (ii) there is no reasonable action that
the Backup Servicer could take to make the performance of its duties hereunder
permissible under Applicable Law. Any such determination permitting the
resignation of the Backup Servicer shall be evidenced as to clause (i) above by
an Opinion of Counsel to such effect delivered to the Administrative Agent and
each Purchaser Agent. No such resignation shall become effective until a
successor Backup Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder.



ARTICLE VIII




THE COLLATERAL CUSTODIAN




     Section 8.1 Designation of Collateral Custodian.



     (a) Initial Collateral Custodian. The role of collateral custodian
with respect to the Required Loan Documents shall be conducted by the Person
designated as Collateral Custodian hereunder from time to time in accordance
with this Section 8.1. Until the Administrative Agent shall give to
Wells Fargo a Collateral Custodian Termination Notice, Wells Fargo is hereby
designated as, and hereby agrees to perform the duties and obligations of,
Collateral Custodian pursuant to the terms hereof.



     (b) Successor Collateral Custodian. Upon the Collateral
Custodian’s receipt of a Collateral Custodian Termination Notice from the
Administrative Agent of the designation of a successor Collateral Custodian
pursuant to the provisions of Section 8.5, the Collateral Custodian
agrees that it will terminate its activities as Collateral Custodian hereunder.



 









 





     Section 8.2 Duties of Collateral Custodian.



     (a) Appointment. The Seller and the Administrative Agent each
hereby appoints Wells Fargo to act as Collateral Custodian, for the benefit of
the Administrative Agent, as agent for the Secured Parties. The Collateral
Custodian hereby accepts such appointment and agrees to perform the duties and
obligation with respect thereto set forth herein.



     (b) Duties. On or before the initial Funding Date, and until its
removal pursuant to Section 8.5, the Collateral Custodian shall perform
on behalf of the Administrative Agent and the Secured Parties, the following
duties and obligations:




     (1) The Collateral Custodian shall take and retain custody of the
Required Loan Documents delivered by the Seller pursuant to Section
3.2 hereof in accordance with the terms and conditions of this
Agreement, all for the benefit of the Secured Parties and subject to the
Lien thereon in favor of the Administrative Agent as agent for the
Secured Parties. Within five (5) Business Days of its receipt of any
Required Loan Documents, the Collateral Custodian shall review the
related Asset and
Required Loan Documents to confirm that (A) such Asset has been
properly executed and has no missing or mutilated pages, (B) UCC and
other filings (required by the Required Loan Documents) have been made,
(C) an Insurance Policy exists with respect to any real or personal
property constituting the Related Property, and (D) confirming the
related Outstanding Loan Balance, Loan number and Obligor name with
respect to such Asset is referenced on the related Loan List and is not a
duplicate Asset (collectively, the “Review Criteria”). In order
to facilitate the foregoing review by the Collateral Custodian, in
connection with each delivery of Required Loan Documents hereunder to the
Collateral Custodian, the Servicer shall provide to the Collateral
Custodian an electronic file (in EXCEL or a comparable format) that
contains the related Loan List or that otherwise contains the Loan number
and the name of the Obligor with respect to each related Asset. If, at
the conclusion of such review, the Collateral Custodian shall determine
that (i) the Outstanding Loan Balances of the Assets it has received
Required Loan Documents with respect to is less than as set forth on the
electronic file, the Collateral Custodian shall immediately notify the
Administrative Agent of such discrepancy, and (ii) any Review Criteria is
not satisfied, the Collateral Custodian shall within one (1) Business Day
notify the Servicer of such determination and provide the Servicer with a
list of the non-complying Assets and the applicable Review Criteria that
they fail to satisfy. The Servicer shall have five (5) Business Days to
correct any non-compliance with a Review Criteria. If after the
conclusion of such time period the Servicer has still not cured any
non-compliance by an Asset with a Review Criteria, the Collateral
Custodian shall promptly notify the Seller and the Administrative Agent
of such determination by providing a written report to such persons
identifying, with particularity, each Asset and each of the applicable
Review Criteria that such Asset fails to satisfy. In addition, if
requested in writing by the Servicer and approved by the Administrative
Agent within ten (10) Business Days of the Collateral Custodian’s
delivery of such report, the Collateral Custodian shall return any Asset
which fails to satisfy a Review Criteria to the Seller. Other than the
foregoing, the Collateral Custodian shall not have any responsibility for
reviewing any Required Loan Documents.



 









 






     (2) In taking and retaining custody of the Required Loan Documents,
the Collateral Custodian shall be deemed to be acting as the agent of the
Administrative Agent and the Secured Parties; provided,
however, that the Collateral Custodian makes no
representations as to the existence, perfection or priority of any Lien
on the Required Loan Documents or the instruments therein; and
provided, further, that, the Collateral
Custodian’s duties as agent shall be limited to those expressly
contemplated herein.




     (3) All Required Loan Documents shall be kept in fire resistant
vaults, rooms or cabinets at the locations specified on Schedule
III attached hereto, or at such other office as shall be specified to
the Administrative Agent by the Collateral Custodian in a written notice
delivered at least forty-five (45) days prior to such change. All
Required Loan Documents shall be placed together with an appropriate
identifying label and maintained in such a manner so as to permit
retrieval and access. All Required Loan Documents shall be clearly
segregated from any other documents or instruments maintained by the
Collateral Custodian.




     (4) The Collateral Custodian shall make payments pursuant to the
terms of the Monthly Report in accordance with Section 2.7 and
Section 2.8 (the “Payment Duties”).




     (5) On each Reporting Date, the Collateral Custodian shall provide a
written report to the Administrative Agent and the Servicer (in a form
acceptable to the Administrative Agent) identifying each Asset for which
it holds Required Loan Documents, the non-complying Assets and the
applicable Review Criteria that any non-complying Asset fails to satisfy.




     (6) In performing its duties, the Collateral Custodian shall use the
same degree of care and attention as it employs with respect to similar
Assets that it holds as Collateral Custodian.



     Section 8.3 Merger or Consolidation.



     Any Person (i) into which the Collateral Custodian may be merged or
consolidated, (ii) that may result from any merger or consolidation to which
the Collateral Custodian shall be a party, or (iii) that may succeed to the
properties and assets of the Collateral Custodian substantially as a whole,
which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Collateral Custodian hereunder, shall be the
successor to the Collateral Custodian under this Agreement without further act
of any of the parties to this Agreement.



     Section 8.4 Collateral Custodian Compensation.



     As compensation for its collateral custodian activities hereunder, the
Collateral Custodian shall be entitled to a Collateral Custodian Fee (the
“Collateral Custodian Fee”) from the Servicer. To the extent that such
Collateral Custodian Fee is not paid by the Servicer, the Collateral Custodian
shall be entitled to receive the unpaid balance of its Collateral Custodian Fee
to the extent of funds available therefor pursuant to the provision of
Section 2.7(a)(iv) or Section 2.8(4), as applicable. The
Collateral Custodian’s entitlement to receive the Collateral Custodian



 









 




Fee
shall cease on the earlier to occur of: (i) its removal as Collateral
Custodian pursuant to Section 8.5 or (ii) the termination of this
Agreement.




     Section 8.5 Collateral Custodian Removal.



     The Collateral Custodian may be removed, with or without cause, by the
Administrative Agent by notice given in writing to the Collateral Custodian
(the “Collateral Custodian Termination Notice”); provided,
however, notwithstanding its receipt of a Collateral Custodian
Termination Notice, the Collateral Custodian shall continue to act in such
capacity until a successor Collateral Custodian has been appointed, has agreed
to act as Collateral Custodian hereunder, and has received all Required Loan
Documents held by the previous Collateral Custodian.



     Section 8.6 Limitation on Liability.




     (1) The Collateral Custodian may conclusively rely on and shall be
fully protected in acting upon any certificate, instrument, opinion,
notice, letter, telegram or other document delivered to it and that in
good faith it reasonably believes to be genuine and that has been signed
by the proper party or parties. The Collateral Custodian may rely
conclusively on and shall be fully protected in acting upon (a) the
written instructions of any designated officer of the Administrative
Agent or (b) the verbal instructions of the Administrative Agent.




     (2) The Collateral Custodian may consult counsel satisfactory to it
and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the advice
or opinion of such counsel.




     (3) The Collateral Custodian shall not be liable for any error of
judgment, or for any act done or step taken or omitted by it, in good
faith, or for any mistakes of fact or law, or for anything that it may do
or refrain from doing in connection herewith except in the case of its
willful misconduct or grossly negligent performance or omission of its
duties and in the case of the negligent performance of its Payment Duties
and in the case of its negligent performance of its duties in taking and
retaining custody of the Required Loan Documents.




     (4) The Collateral Custodian makes no warranty or representation and
shall have no responsibility (except as expressly set forth in this
Agreement) as to the content, enforceability, completeness, validity,
sufficiency, value, genuineness, ownership or transferability of the
Assets, and will not be required to and will not make any representations
as to the validity or value (except as expressly set forth in this
Agreement) of any of the Assets. The Collateral Custodian shall not be
obligated to take any legal action hereunder that might in its judgment
involve any expense or liability unless it has been furnished with an
indemnity reasonably satisfactory to it.




     (5) The Collateral Custodian shall have no duties or
responsibilities except such duties and responsibilities as are
specifically set forth in this Agreement and no



 









 





covenants or obligations
shall be implied in this Agreement against the Collateral Custodian.




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




     (7) It is expressly agreed and acknowledged that the Collateral
Custodian is not guaranteeing performance of or assuming any liability
for the obligations of the other parties hereto or any parties to the
Assets.



     Section 8.7 The Collateral Custodian Not to Resign.



     The Collateral Custodian shall not resign from the obligations and duties
hereby imposed on it except upon the Collateral Custodian’s determination that
(i) the performance of its duties
hereunder is or becomes impermissible under Applicable Law and (ii) there
is no reasonable action that the Collateral Custodian could take to make the
performance of its duties hereunder permissible under Applicable Law. Any such
determination permitting the resignation of the Collateral Custodian shall be
evidenced as to clause (i) above by an Opinion of Counsel to such effect
delivered to the Administrative Agent and each Purchaser Agent. No such
resignation shall become effective until a successor Collateral Custodian shall
have assumed the responsibilities and obligations of the Collateral Custodian
hereunder.



     Section 8.8 Release of Documents.



     (a) Release for Servicing. From time to time and as appropriate
for the enforcement or servicing any of the Assets, the Collateral Custodian is
hereby authorized (unless and until such authorization is revoked by the
Administrative Agent), upon written receipt from the Servicer of a request for
release of documents and receipt in the form annexed hereto as Exhibit
H, to release to the Servicer the related Required Loan Document or the
documents set forth in such request and receipt to the Servicer. All documents
so released to the Servicer shall be held by the Servicer in trust for the
benefit of the Administrative Agent in accordance with the terms of this
Agreement. The Servicer shall return to the Collateral Custodian the Required
Loan Document or other such documents (i) immediately upon the request of the
Administrative Agent, or (ii) when the Servicer’s need therefor in connection
with such foreclosure or servicing no longer exists unless the Asset shall be
liquidated, in which case, upon receipt of an additional request for release of
documents and receipt certifying such liquidation from the Servicer to the
Collateral Custodian in the form annexed hereto as Exhibit H, the
Servicer’s request and receipt submitted pursuant to the first sentence of this
subsection shall be released by the Collateral Custodian to the Servicer.



     (b) Limitation on Release. The foregoing provision respecting
release to the Servicer of the Required Loan Documents and documents by the
Collateral Custodian upon request by the Servicer shall be operative only to
the extent that at any time the Collateral Custodian shall not have released to
the Servicer active Required Loan Documents (including those requested)
pertaining to more than fifteen (15) Assets at the time being serviced by the
Servicer under this Agreement. Any additional Required Loan Documents or
documents requested to be released by the Servicer may be released only upon
written authorization of the Administrative Agent. The



 









 




limitations of this
paragraph shall not apply to the release of Required Loan Documents to the
Servicer pursuant to the immediately succeeding subsection.




     (c) Release for Payment. Upon receipt by the Collateral Custodian
of the Servicer’s request for release of documents and receipt in the form
annexed hereto as Exhibit H (which certification shall include a
statement to the effect that all amounts received in connection with such
payment or repurchase have been credited to the Collection Account as provided
in this Agreement), the Collateral Custodian shall promptly release the related
Required Loan Document to the Servicer.



     Section 8.9 Return of Required Loan Documents.



     The Seller may, with the prior written consent of the Administrative Agent
(such consent not to be unreasonably withheld), require that the Collateral
Custodian return each Required
Loan Document (a) delivered to the Collateral Custodian in error, (b) for
which a Substitute Loan has been substituted in accordance with Section
2.16, (c) as to which the lien on the Related Property has been so released
pursuant to Section 9.2, (d) that has been repaid by the Seller pursuant
to Section 4.6 or (e) that is required to be redelivered to the Seller
in connection with the termination of this Agreement, in each case by
submitting to the Collateral Custodian and the Administrative Agent a written
request in the form of Exhibit H hereto (signed by both the Seller and
the Administrative Agent) specifying the Assets to be so returned and reciting
that the conditions to such release have been met (and specifying the Section
or Sections of this Agreement being relied upon for such release). The
Collateral Custodian shall upon its receipt of each such request for return
executed by the Seller and the Administrative Agent promptly, but in any event
within five (5) Business Days, return the Required Loan Documents so requested
to the Seller.



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



     The Collateral Custodian shall provide to the Administrative Agent and
each Purchaser Agent access to the Required Loan Documents and all other
documentation regarding the Assets in the Asset Pool including in such cases
where the Administrative Agent and each Purchaser Agent is required in
connection with the enforcement of the rights or interests of the Secured
Parties, or by applicable statutes or regulations, to review such
documentation, such access being afforded without charge but only (i) upon two
(2) Business Days prior written request, (ii) during normal business hours and
(iii) subject to the Servicer’s and Collateral Custodian’s normal security and
confidentiality procedures. Prior to the Closing Date and periodically
thereafter at the discretion of the Administrative Agent and each Purchaser
Agent (provided, however, that unless a Termination Event shall
have occurred and be continuing, the Servicer shall only be responsible for the
costs and expenses associated with one such audit per year), the Administrative
Agent and each Purchaser Agent may review the Servicer’s collection and
administration of the Assets in order to assess compliance by the Servicer with
the Credit and Collection Policy, as well as with this Agreement and may
conduct an audit of the Assets and Required Loan Documents in conjunction with
such a review. Such review shall be reasonable in scope and shall be completed
in a reasonable period of time. Without limiting the foregoing provisions of
this Section 8.10, from time to time on request of the Administrative
Agent, the



 









 




Collateral Custodian shall permit certified public accountants or
other auditors acceptable to the Administrative Agent to conduct, at the
Servicer’s expense, a review of the Required Loan Documents and all other
documentation regarding the Assets (provided, however, that,
unless a Termination Event shall have occurred and be continuing (i) the
Servicer shall only be responsible for the costs and expenses associated with
one such audit per year and (ii) only one such audit shall be conducted per
year).




ARTICLE IX




SECURITY INTEREST




     Section 9.1 Grant of Security Interest.



     The parties to this Agreement intend that the conveyance of the Assets in
the Asset Pool by the Seller to the applicable Purchasers be treated as sales
for all purposes. If, despite such intention, a determination is made that
such transactions not be treated as sales, then the parties hereto intend that
this Agreement constitute a security agreement and the transactions effected
hereby constitute secured loans by the applicable Purchasers to the Seller
under Applicable Law. For such purpose, the Seller hereby transfers, conveys,
assigns and grants as of the Closing Date to the Administrative Agent, as agent
for the Secured Parties, a lien and continuing security interest in all of the
Seller’s right, title and interest in, to and under (but none of the
obligations under) all Assets (including any Hedging Agreements), whether now
existing or hereafter arising or acquired by the Seller, and wherever the same
may be located, to secure the prompt, complete and indefeasible payment and
performance in full when due, whether by lapse of time, acceleration or
otherwise, of the Aggregate Unpaids of the Seller arising in connection with
this Agreement and each other Transaction Document, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, all Aggregate Unpaids. The assignment under
this Section 9.1 does not constitute and is not intended to result in a
creation or an assumption by the Administrative Agent, the Purchaser Agents,
the Hedge Counterparty, the Liquidity Banks or any of the Secured Parties of
any obligation of the Seller or any other Person in connection with any or all
of the Assets or under any agreement or instrument relating thereto. Anything
herein to the contrary notwithstanding, (a) the Seller shall remain liable
under the Assets to the extent set forth therein to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Administrative Agent, as agent for the
Secured Parties, of any of its rights in the Assets shall not release the
Seller from any of its duties or obligations under the Assets, and (c) none of
the Administrative Agent, the Purchaser Agents, the Hedge Counterparty, the
Liquidity Banks or any Secured Party shall have any obligations or liability
under the Assets by reason of this Agreement, nor shall the Administrative
Agent, the Purchaser Agents, the Hedge Counterparty, the Liquidity Banks or any
Secured Party be obligated to perform any of the obligations or duties of the
Seller thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.



     Section 9.2 Release of Lien on Assets.



     At the same time as (i) any Asset in the Asset Pool expires by its terms
and all amounts in respect thereof have been paid in full by the related
Obligor and deposited in the Collection



 









 




Account, (ii) any Asset becomes a
Prepaid Loan and all amounts in respect thereof have been paid in full by the
related Obligor and deposited in the Collection Account, (iii) such Asset is
replaced in accordance with Section 2.16, or (iv) this agreement
terminates in accordance with Section 13.6, the Administrative Agent as
agent for the Secured Parties will, to the extent requested by the Servicer,
release its interest in such Asset. In connection with any sale of such
Related Property, the Administrative Agent as agent for the Secured Parties
will after the deposit by the Servicer of the Proceeds of such sale into the
Collection Account, at the
sole expense of the Servicer, execute and deliver to the Servicer any
assignments, bills of sale, termination statements and any other releases and
instruments as the Servicer may reasonably request in order to effect the
release and transfer of such Related Property; provided,
that, the Administrative Agent as agent for the Secured Parties
will make no representation or warranty, express or implied, with respect to
any such Related Property in connection with such sale or transfer and
assignment. Nothing in this Section shall diminish the Servicer’s obligations
pursuant to Section 6.6 with respect to the Proceeds of any such sale.




     Section 9.3 Further Assurances.



     The provisions of Section 13.12 shall apply to the security
interest granted under Section 9.1 as well as to the Advances hereunder.



     Section 9.4 Remedies.



     Upon the occurrence of a Termination Event, the Administrative Agent and
Secured Parties shall have, with respect to the Assets granted pursuant to
Section 9.1, and in addition to all other rights and remedies available
to the Administrative Agent and Secured Parties under this Agreement or other
Applicable Law, all rights and remedies of a secured party upon default under
the UCC.



     Section 9.5 Waiver of Certain Laws.



     Each of the Seller and the Servicer agrees, to the full extent that it may
lawfully so agree, that neither it nor anyone claiming through or under it will
set up, claim or seek to take advantage of any appraisement, valuation, stay,
extension or redemption law now or hereafter in force in any locality where any
Assets may be situated in order to prevent, hinder or delay the enforcement or
foreclosure of this Agreement, or the absolute sale of any of the Assets or any
part thereof, or the final and absolute putting into possession thereof,
immediately after such sale, of the purchasers thereof, and each of the Seller
and the Servicer, for itself and all who may at any time claim through or under
it, hereby waives, to the full extent that it may be lawful so to do, the
benefit of all such laws, and any and all right to have any of the properties
or assets constituting the Assets marshaled upon any such sale, and agrees that
the Administrative Agent or any court having jurisdiction to foreclose the
security interests granted in this Agreement may sell the Assets as an entirety
or in such parcels as the Administrative Agent or such court may determine.



     Section 9.6 Power of Attorney.



     Each of the Seller and the Servicer hereby irrevocably appoints the
Administrative Agent its true and lawful attorney (with full power of
substitution) in its name, place and stead and at is



 









 




expense, in connection
with the enforcement of the rights and remedies provided for in this Agreement,
including without limitation the following powers: (a) to give any necessary
receipts or acquittance for amounts collected or received hereunder, (b) to
make all necessary transfers of the Assets in connection with any such sale or
other disposition made pursuant hereto, (c) to execute and deliver for value
all necessary or appropriate bills of sale, assignments and other instruments
in connection with any such sale or other disposition, the Seller and the
Servicer
hereby ratifying and confirming all that such attorney (or any substitute)
shall lawfully do hereunder and pursuant hereto, and (d) to sign any
agreements, orders or other documents in connection with or pursuant to any
Transaction Document or Hedging Agreement. Nevertheless, if so requested by
the Administrative Agent or a Purchaser Agent, the Seller shall ratify and
confirm any such sale or other disposition by executing and delivering to the
Administrative Agent or such purchaser all proper bills of sale, assignments,
releases and other instruments as may be designated in any such request.




ARTICLE X




TERMINATION EVENTS




     Section 10.1 Termination Events.



     The following events shall be Termination Events (“Termination
Events”) hereunder:



     (a) as of any Determination Date, the Average Pool Delinquency Ratio
exceeds 6.0%, or the Average Portfolio Delinquency Ratio exceeds 5.0%; or



     (b) as of any Determination Date, the Average Pool Charged-Off Ratio
exceeds 4.0%; or



     (c) as of any Determination Date, the Average Portfolio Charged-Off Ratio
exceeds 3.0%; or



     (d) the Advances Outstanding on any day exceeds the lesser of the Facility
Amount and Maximum Availability and the same continues unremedied for two (2)
Business Days; provided, however, during the period of time
that such event remains unremedied, no additional Advances will be made under
this Agreement and any payments required to be made by the Servicer on a
Payment Date shall be made under Section 2.8; or



     (e) a Servicer Default occurs and is continuing; or



     (f) the Facility Termination Date shall have occurred; or



     (g) failure on the part of the Seller or Originator to make any payment or
deposit (including without limitation with respect to Collections) required by
the terms of any Transaction Document on the day such payment or deposit is
required to be made and the same continues unremedied for two (2) Business
Days; or



     (h) the occurrence of an Insolvency Event relating to the Originator, the
Seller, the Servicer or any Affiliate of the Originator; or




 










 





     (i) the Seller shall become required to register as an “investment
company” within the meaning of the Investment Company Act of 1940, as amended
(the “40 Act”) or the
arrangements contemplated by the Transaction Documents shall require
registration as an “investment company” within the meaning of the 40 Act; or



     (j) a regulatory, tax or accounting body has ordered that the activities
of the Seller or any Affiliate of the Seller contemplated hereby be terminated
or, as a result of any other event or circumstance, the activities of the
Seller contemplated hereby may reasonably be expected to cause the Seller or
any of its respective Affiliates to suffer materially adverse regulatory,
accounting or tax consequences; or



     (k) there shall exist any event or occurrence that has caused a Material
Adverse Effect; or



     (l) there shall have occurred any materially adverse change in the
business, operations, condition or otherwise of the Seller, the Servicer or the
Originator that impairs the ability of the Originator (individually or in its
capacity as Servicer) to service, collect or otherwise enforce the Assets (or
otherwise perform any of its material obligations with respect thereto); or



     (m) the Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Code with regard to any assets of the Seller or the
Originator and such lien shall not have been released within five (5) Business
Days, or the Pension Benefit Guaranty Corporation shall file notice of a lien
pursuant to Section 4068 of ERISA with regard to any of the assets of
the Seller or the Originator and such lien shall not have been released within
five (5) Business Days; or



     (n) any Change-in-Control shall occur; or



     (o) [Reserved]; or



     (p) (1) any Transaction Document, or any lien or security interest granted
thereunder, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of the Seller, the Originator, or the Servicer,




     (1) the Seller, the Originator, the Servicer or any other party
shall, directly or indirectly, contest in any manner the effectiveness,
validity, binding nature or enforceability of any Transaction Document or
any lien or security interest thereunder, or




     (2) any security interest securing any obligation under any
Transaction Document shall, in whole or in part, cease to be a perfected
first priority security interest; or



     (q) on any date of determination, the aggregate Hedge Notional Amount in
effect for that day under all Hedge Transactions is less than the product of
the Hedge Percentage on such day and the Hedge Amount on that day, and the same
continues unremedied for a period of two (2) Business Days; or



 









 





     (r) any failure on the part of the Seller or the Originator duly to
observe or perform in any material respect any other covenants or agreements of
the Seller or the Originator set forth in this Agreement or the other
Transaction Documents to which the Seller or the Originator is a party and the
same continues unremedied for a period of thirty (30) days after the earlier to
occur of (i) the date on which written notice of such failure requiring the
same to be remedied shall have been given to the Seller or the Originator by
the Administrative Agent and (ii) the date on which the Seller or the
Originator becomes aware thereof; or



     (s) any representation, warranty or certification made by the Seller or
the Originator in any Transaction Document or in any certificate delivered
pursuant to any Transaction Document shall prove to have been incorrect when
made, which has a Material Adverse Effect on the Secured Parties and which
continues to be unremedied for a period of thirty (30) days after the earlier
to occur of (i) the date on which written notice of such incorrectness
requiring the same to be remedied shall have been given to the Seller or the
Originator by the Administrative Agent and (ii) the date on which the Seller or
the Originator becomes aware thereof; or



     (t) any failure by the Seller to give instructions or notice to the
Administrative Agent as required by this Agreement, or to deliver any required
Monthly Report or other Required Reports hereunder on or before the date
occurring two (2) Business Days after the date such instruction, notice or
report is required to be made or given, as the case may be, under the terms of
this Agreement; or



     (u) the failure of the Seller, the Servicer or the Originator to make any
payment due with respect to recourse debt or other obligations having (solely
in the case of the Servicer or the Originator) a principal amount of
$25,000,000 or greater, or the occurrence of any event or condition that would
permit acceleration of such recourse debt or other obligations, if not waived
in accordance with, and within the requisite time periods, if any, for waivers
specified in, the related underlying debt agreements; or



     (v) the rendering of one or more final judgments, decrees or orders by a
court or arbitrator of competent jurisdiction for the payment of money in
excess of United States $10,000,000, individually or in the aggregate, against
the Originator, or United Sates $2,000,000 against the Seller, individually or
in the aggregate, and the Originator shall not have either (i) discharged or
provided for the discharge of any such judgment, decree or order in accordance
with its terms or (ii) perfected a timely appeal of such judgment, decree or
order and caused the execution of same to be stayed during the pendency of the
appeal; or



     (w) as of any Determination Date, the Pool Yield does not equal or exceed
the Minimum Pool Yield and the same continues unremedied by the following
Determination Date; or



     (x) any deficiency exists in the Minimum Overcollateralization Amount on
any day and the same continues unremedied for two (2) Business Days; or



     (y) [Reserved]



 









 





     (z) the Seller, the Originator or the Servicer agrees or consents to, or
otherwise permits to occur, any amendment, modification, change, supplement or
rescission of or to the Credit and Collection Policy in whole or in part that
could be reasonably be expected to have a material adverse effect upon the
Assets or interest of the Administrative Agent or any Secured Parties, without
the prior written consent of the Administrative Agent and the Purchaser Agents.



     (aa) as of any Quarterly Determination Date, the Originator’s ratio of
Consolidated Funded Indebtedness to Consolidated Tangible Net Worth is more
than 5 to 1.



     Section 10.2 Remedies.



     (a) Upon the occurrence of a Termination Event (other than a Termination
Event described in Section 10.1(h)), the Administrative Agent shall, at
the request of, or may, with the consent of the Purchasers with aggregate
Commitments of more than 66.67% of the aggregate of all Commitments at such
time, by notice to the Seller, declare the Termination Date to have occurred
and the Amortization Period to have commenced.



     (b) Upon the occurrence of a Termination Event described in Section
10.1(h), the Termination Date shall occur immediately and the Amortization
Period shall commence automatically.



     (c) Upon the occurrence of any Termination Event described in Section
10.1, no Advances will thereafter be made, and the Administrative Agent and
the Secured Parties shall have, in addition to all other rights and remedies
under this Agreement or otherwise, all other rights and remedies provided under
the UCC of each applicable jurisdiction and other Applicable Laws, which rights
shall be cumulative, and also may require the Seller and Servicer to, and the
Seller and Servicer hereby agrees that they will at the Servicer’s expense and
upon request of the Administrative Agent forthwith, (i) assemble all or any
part of the Assets as directed by the Administrative Agent and make the same
available to the Administrative Agent at a place to be designated by the
Administrative Agent and (ii) without notice except as specified below, sell
the Assets or any part thereof in one or more parcels at a public or private
sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on
credit or for future delivery, and upon such other terms as the Administrative
Agent may deem commercially reasonable. The Seller agrees that, to the extent
notice of sale shall be required by law, at least ten (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
Administrative Agent shall not be obligated to make any sale of Assets
regardless of notice of sale having been given. The Administrative Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. All cash Proceeds
received by the Administrative Agent in respect of any sale of, collection
from, or other realization upon, all or any part of the Assets (after payment
of any amounts incurred in connection with such sale) shall be deposited into
the Collection Account and to be applied against all or any part of the
Aggregate Unpaids pursuant to Section 2.8 or otherwise in such order as
the Administrative Agent shall elect in its discretion.



 









 





ARTICLE XI




INDEMNIFICATION




     Section 11.1 Indemnities by the Seller.



     (a) Without limiting any other rights that any such Person may have
hereunder or under Applicable Law, the Seller hereby agrees to indemnify the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian, the Secured Parties, the Affected Parties and each of their
respective assigns and officers, directors, employees and agents thereof
(collectively, the “Indemnified Parties”), forthwith on demand, from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including attorneys’ fees and disbursements (all of the foregoing
being collectively referred to as the “Indemnified Amounts”) awarded
against or incurred by such Indemnified Party and other non-monetary damages of
any such Indemnified Party or any of them arising out of or as a result of this
Agreement or the ownership of an interest in the Assets or in respect of any
Asset, excluding, however, (a) Indemnified Amounts to the extent resulting from
gross negligence or willful misconduct on the part of such Indemnified Party or
(b) Indemnified Amounts that have the effect of recourse for non-payment of the
Assets in the Asset Pool due to credit problems of the Obligors (except as
otherwise specifically provided in this Agreement). If the Seller has made any
indemnity payment pursuant to this Section 11.1 and such payment fully
indemnified the recipient thereof and the recipient thereafter collects any
payments from others in respect of such Indemnified Amounts then, the recipient
shall repay to the Seller an amount equal to the amount it has collected from
others in respect of such indemnified amounts. Without limiting the foregoing,
the Seller shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from:




     (1) any representation or warranty made or deemed made by the
Seller, the Servicer (if the Originator or one of its Affiliates is the
Servicer) or any of their respective officers under or in connection with
this Agreement or any other Transaction Document, which shall have been
false or incorrect in any material respect when made or deemed made or
delivered;




     (2) the failure by the Seller or the Servicer (if the Originator or
one of its Affiliates is the Servicer) to comply with any term, provision
or covenant contained in this Agreement or any agreement executed in
connection with this Agreement, or with any Applicable Law, with respect
to any Assets or the nonconformity of any Assets with any such Applicable
Law;




     (3) the failure to vest and maintain vested in the Administrative
Agent, as agent for the Secured Parties, an undivided ownership interest
in the Assets, together with all Collections, free and clear of any Lien
(other than Permitted Liens) whether existing at the time of any Advance
or at any time thereafter;




     (4) the failure to maintain, as of the close of business on each
Business Day prior to the Termination Date, an amount of Advances
Outstanding that is less than or



 









 






equal to the lesser of (x) the Facility Amount and (y) the Maximum
Availability on such Business Day;




     (5) 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 Assets, whether at the time of any
Advance or at any subsequent time;




     (6) 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 Asset in the Asset Pool (including, without limitation, a defense
based on the Asset 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 Asset or the furnishing or failure to furnish such
merchandise or services;




     (7) any failure of the Seller or the Servicer (if the Originator or
one of its Affiliates is the Servicer) to perform its duties or
obligations in accordance with the provisions of this Agreement or any of
the other Transaction Documents to which it is a party or any failure by
the Originator, the Seller or any Affiliate thereof to perform its
respective duties under any Asset;




     (8) the failure of any Lock-Box Bank to remit any amounts held in a
Lock-Box Account pursuant to the instructions of the Servicer or the
Administrative Agent (to the extent such Person is entitled to give such
instructions in accordance with the terms hereof and of any applicable
Lock-Box Agreement) whether by reason of the exercise of set-off rights
or otherwise;




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




     (10) any action taken by the Seller or the Originator (in its
capacity as Servicer) in the enforcement or collection of any Asset;




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




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




     (13) 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 Assets;




     (14) any repayment by the Administrative Agent, the Purchaser Agents
or a Secured Party of any amount previously distributed in reduction of
Advances



 









 






Outstanding or payment of Interest or any other amount due hereunder
or under any Hedging Agreement, in each case which amount the
Administrative Agent, the Purchaser Agents or a Secured Party believes in
good faith is required to be repaid;




     (15) the commingling of Collections on the Assets at any time with
other funds;




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




     (17) any failure by the Seller to give reasonably equivalent value
to the Originator in consideration for the transfer by the Originator to
the Seller of any item of Assets 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;




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




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




     (20) the failure by the Seller to comply with any of the covenants
relating to the Hedging Agreement in accordance with the Transaction
Documents.



     (b) Any amounts subject to the indemnification provisions of this
Section 11.1 shall be paid by the Seller to the Indemnified Party within
five (5) Business Days following such Person’s demand therefor.



     (c) If for any reason the indemnification provided above in this
Section 11.1 is unavailable to the Indemnified Party or is insufficient
to hold an Indemnified Party harmless, then the Seller or the Servicer, as the
case may be, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, claim, damage or liability in such proportion
as is appropriate to reflect not only the relative benefits received by such
Indemnified Party on the one hand and the Seller or the Servicer, as the case
may be, on the other hand but also the relative fault of such Indemnified Party
as well as any other relevant equitable considerations.



     (d) The obligations of the Seller under this Section 11.1 shall
survive the resignation or removal of the Administrative Agent, the Purchaser
Agents, the Servicer, the Backup Servicer or the Collateral Custodian and the
termination of this Agreement.



     Section 11.2 Indemnities by the Servicer.



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



 









 





incurred by any such Indemnified Party by reason of any acts, omissions or
alleged acts or omissions of the Servicer, including, but not limited to (i)
any representation or warranty made by the Servicer under or in connection with
any Transaction Document, any Monthly Report, Servicer’s Certificate or any
other information or report delivered by or on behalf of the Servicer pursuant
hereto, which shall have been false, incorrect or misleading in any material
respect when made or deemed made, (ii) the failure by the Servicer to comply
with any Applicable Law, (iii) the failure of the Servicer to comply with its
duties or obligations in accordance with the Agreement, (iv) the failure by the
Servicer to comply with any of the covenants relating to the Hedging Agreement
in accordance with the Transaction Documents, or (v) any litigation,
proceedings or investigation against the Servicer. The provisions of this
indemnity shall run directly to and be enforceable by an injured party subject
to the limitations hereof.




     (b) Any amounts subject to the indemnification provisions of this
Section 11.2 shall be paid by the Servicer to the Indemnified Party
within five (5) Business Days following such Person’s demand therefor.



     (c) The Servicer shall have no liability for making indemnification
hereunder to the extent any such indemnification constitutes recourse for
uncollectible or uncollected Assets.



     (d) The obligations of the Servicer under this Section 11.2 shall
survive the resignation or removal of the Administrative Agent, the Purchaser
Agents, the Backup Servicer or the Collateral Custodian and the termination of
this Agreement.



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



     Section 11.3 After-Tax Basis.



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



ARTICLE XII




THE ADMINISTRATIVE AGENT

AND PURCHASER AGENTS




     Section 12.1 The Administrative Agent.



     (a) Each Purchaser Agent and each Secured Party hereby appoints and
authorizes the Administrative Agent as its agent and bailee for purposes of
perfection pursuant to the applicable UCC and hereby further authorizes the
Administrative Agent to appoint additional agents and bailees to act on its
behalf and for the benefit of each of the Purchaser Agents and each Secured
Party. Each of the Purchaser Agents and each Secured Party further authorizes
the Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Transaction Documents
as are delegated to the



 









 





Administrative Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. In furtherance, and without
limiting the generality, of the foregoing, each Secured Party hereby appoints
the Administrative Agent as its agent to execute and deliver all further
instruments and documents, and take all further action that the Administrative
Agent may deem necessary or appropriate or that a Secured Party may reasonably
request in order to perfect, protect or more fully evidence the security
interests granted by the Seller hereunder, or to enable any of them to exercise
or enforce any of their respective rights hereunder, including, without
limitation, the execution by the Administrative Agent as secured party/assignee
of such financing or continuation statements, or amendments thereto or
assignments thereof, relative to all or any of the Assets now existing or
hereafter arising, and such other instruments or notices, as may be necessary
or appropriate for the purposes stated hereinabove. The Purchaser Agents may
direct the Administrative Agent to take any such incidental action hereunder.
With respect to other actions which are incidental to the actions specifically
delegated to the Administrative Agent hereunder, the Administrative Agent shall
not be required to take any such incidental action hereunder, but shall be
required to act or to refrain from acting (and shall be fully protected in
acting or refraining from acting) upon the direction of the Purchaser Agents;
provided, however, that the Administrative Agent shall not be
required to take any action hereunder if the taking of such action, in the
reasonable determination of the Administrative Agent, shall be in violation of
any Applicable Law or contrary to any provision of this Agreement or shall
expose the Administrative Agent to liability hereunder or otherwise. In the
event the Administrative Agent requests the consent of a Purchaser Agent or a
Purchaser pursuant to the foregoing provisions and the Administrative Agent
does not receive a consent (either positive or negative) from such Person
within ten (10) Business Days of such Person’s receipt of such request, then
such Purchaser Agent or Purchaser shall be deemed to have declined to consent
to the relevant amendments.




     (b) The Administrative Agent shall exercise such rights and powers vested
in it by this Agreement and the other Transaction Documents, and use the same
degree of care and skill in their exercise as a prudent person would exercise
or use under the circumstances in the conduct of such person’s own affairs.



     (c) Administrative Agent’s Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them as
Administrative Agent under or in connection with this Agreement or any of the
other Transaction Documents, except for its or their own gross negligence or
willful misconduct. Without limiting the foregoing, the Administrative Agent:
(i) may consult with legal counsel (including counsel for the Seller or the
Originator), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation and shall not be responsible
for any statements, warranties or representations made in or in connection with
this Agreement; (iii) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement or any of the other Transaction Documents on the part of the
Seller, the Originator, or the Servicer or to inspect the property (including
the books and records) of the Seller, the Originator, or the Servicer; (iv)
shall not be responsible for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any of the
other Transaction Documents or any other instrument or document furnished pursuant hereto or



 









 





thereto; and (v) shall incur no liability
under or in respect of this Agreement or any of the other Transaction Documents
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by telex) believed by it to be
genuine and signed or sent by the proper party or parties.




     (d) Credit Decision with Respect to the Administrative Agent. Each
Purchaser Agent and Secured Party acknowledges that it has, independently and
without reliance upon the Administrative Agent, or any of the Administrative
Agent’s Affiliates, and based upon such documents and information as it has
deemed appropriate, made its own evaluation and decision to enter into this
Agreement and the other Transaction Documents to which it is a party. Each
Purchaser Agent and Secured Party also acknowledges that it will, independently
and without reliance upon the Administrative Agent, or any of the
Administrative Agent’s Affiliates, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement and the other Transaction
Documents to which it is a party.



     (e) Indemnification of the Administrative Agent. Each Purchaser
Agent and Purchaser agrees to indemnify the Administrative Agent (to the extent
not reimbursed by the Seller or the Servicer), ratably in accordance with its
Pro-Rata Share from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of this Agreement or any of the other Transaction Documents, or any action
taken or omitted by the Administrative Agent hereunder or thereunder;
provided, that, the Purchaser Agents shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent’s gross negligence or willful misconduct. Without
limitation of the foregoing, each Purchaser Agent and Purchaser agrees to
reimburse the Administrative Agent, ratably in accordance with its Pro-Rata
Share promptly upon demand for any out-of-pocket expenses (including counsel
fees) incurred by the Administrative Agent in connection with the
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Transaction
Documents, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Purchaser Agents, or the Purchasers hereunder
and/or thereunder and to the extent that the Administrative Agent is not
reimbursed for such expenses by the Seller or the Servicer.



     (f) Successor Administrative Agent. The Administrative Agent may
resign at any time, effective upon the appointment and acceptance of a
successor Administrative Agent as provided below, by giving at least five (5)
days’ written notice thereof to each Purchaser Agent and the Seller and may be
removed at any time with cause by the Purchaser Agents acting jointly. Upon
any such resignation or removal, the Purchaser Agents acting jointly shall
appoint a successor Administrative Agent. Each Purchaser Agent agrees that it
shall not unreasonably withhold or delay its approval of the appointment of a
successor Administrative Agent. If no such successor Administrative Agent
shall have been so appointed, and shall have accepted such appointment, within
thirty (30) days after the retiring Administrative Agent’s giving of notice of
resignation or the removal of the retiring Administrative Agent, then the
retiring Administrative
Agent may, on behalf of the Secured Parties, appoint a successor
Administrative Agent which



 









 





successor Administrative Agent shall be either (i) a
commercial bank organized under the laws of the United States or of any state
thereof and have a combined capital and surplus of at least $50,000,000 or (ii)
an Affiliate of such a bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent’s resignation or removal hereunder as Administrative
Agent, the provisions of this Article XII shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.




     (g) Payments by the Administrative Agent. Unless specifically
allocated to a specific Purchaser Agent pursuant to the terms of this
Agreement, all amounts received by the Administrative Agent on behalf of the
Purchaser Agents shall be paid by the Administrative Agent to the Purchaser
Agents pro rata in accordance with their respective Advances
Outstanding, or if there are no Advances Outstanding in accordance with their
most recent applicable Commitments, on the Business Day received by the
Administrative Agent, unless such amounts are received after 12:00 noon on such
Business Day, in which case the Administrative Agent shall use its reasonable
efforts to pay such amounts to each Purchaser Agent on such Business Day, but,
in any event, shall pay such amounts to such Purchaser Agent not later than the
following Business Day.



     Section 12.2 The Purchaser Agents



     (a) Authorization and Action. Each Purchaser, respectively, hereby
designates and appoints its applicable Purchaser Agent to act as its agent
hereunder and under each other Transaction Document, and authorizes such
Purchaser Agent to take such actions as agent on its behalf and to exercise
such powers as are delegated to such Purchaser Agent by the terms of this
Agreement and the other Transaction Documents together with such powers as are
reasonably incidental thereto. Such Purchaser Agent shall not have any duties
or responsibilities, except those expressly set forth herein or in any other
Transaction Document, or any fiduciary relationship with its related Purchaser,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of such Purchaser Agent shall be read into this
Agreement or any other Transaction Document or otherwise exist for such
Purchaser Agent. In performing its functions and duties hereunder and under
the other Transaction Documents, such Purchaser Agent shall act solely as agent
for its related Purchaser and does not assume nor shall be deemed to have
assumed any obligation or relationship of trust or agency with or for the
Seller or the Servicer or any of the Seller’s or the Servicer’s successors or
assigns. Such Purchaser Agent shall not be required to take any action that
exposes such Purchaser Agent to personal liability or that is contrary to this
Agreement, any other Transaction Document or Applicable Law. The appointment
and authority of such Purchaser Agent hereunder shall terminate upon the
indefeasible payment in full of all Aggregate Unpaids. Each Purchaser,
respectively, hereby authorizes the Administrative Agent to execute each of the
UCC financing statements on behalf of such Purchaser (the terms of which shall
be binding on such Purchaser).



     (b) Delegation of Duties. Each applicable Purchaser Agent,
respectively, may execute any of its duties under this Agreement and each other
Transaction Document by or



 









 





through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Such Purchaser Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.




     (c) Exculpatory Provisions. Neither any applicable Purchaser Agent
nor any of its directors, officers, agents or employees shall be (i) liable for
any action lawfully taken or omitted to be taken by it or them under or in
connection with this Agreement or any other Transaction Document (except for
its, their or such Person’s own gross negligence or willful misconduct), or
(ii) responsible in any manner to its related Purchaser for any recitals,
statements, representations or warranties made by the Seller or the Servicer
contained in Article IV, any other Transaction Document or any
certificate, report, statement or other document referred to or provided for
in, or received under or in connection with, this Agreement or any other
Transaction Document, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any other Transaction Document
or any other document furnished in connection herewith or therewith, or for any
failure of the Seller or the Servicer to perform its obligations hereunder or
thereunder, or for the satisfaction of any condition specified in this
Agreement, or for the perfection, priority, condition, value or sufficiency of
any collateral pledged in connection herewith. Such Purchaser Agent shall not
be under any obligation to its related Purchaser to ascertain or to inquire as
to the observance or performance of any of the agreements or covenants
contained in, or conditions of, this Agreement or any other Transaction
Document, or to inspect the properties, books or records of the Seller or the
Servicer. Such Purchaser Agent shall not be deemed to have knowledge of any
Termination Event or Unmatured Termination Event unless such Purchaser Agent
has received notice from the Seller or its related Purchaser.



     (d) Reliance by Purchaser Agents. Each applicable Purchaser Agent,
respectively, shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Seller), independent accountants and other experts
selected by such Purchaser Agent. Such Purchaser Agent shall in all cases be
fully justified in failing or refusing to take any action under this Agreement
or any other Transaction Document unless it shall first receive such advice or
concurrence of its related Purchaser as it deems appropriate and it shall first
be indemnified to its satisfaction by its Purchaser; provided,
that, unless and until such Purchaser Agent shall have received such
advice, such Purchasers Agent may take or refrain from taking any action, as
such Purchaser Agent shall deem advisable and in the best interests of its
related Purchaser. Each applicable Purchaser Agent, respectively, shall in all
cases be fully protected in acting, or in refraining from acting, in accordance
with a request of its related Purchaser, and such request and any action taken
or failure to act pursuant thereto shall be binding upon its related Purchaser.



     (e) Non-Reliance on Purchaser Agent. Each applicable Purchaser,
respectively, expressly acknowledges that neither its related Purchaser Agent,
nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by
such Purchaser Agent hereafter taken, including, without
limitation, any review of the affairs of the Seller or the Servicer, shall
be deemed to constitute any representation or warranty by such Purchaser Agent.
Each applicable Purchaser, respectively, represents and warrants to its
related Purchaser Agent that it has and will, independently and



 









 





without
reliance upon such Purchaser Agent, and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, operations, property, prospects, financial and other conditions
and creditworthiness of the Seller and made its own decision to enter into this
Agreement, the other Transaction Documents and all other documents related
hereto or thereto.




     (f) Purchaser Agent is in their Respective Individual Capacities.
Each applicable Purchaser Agent, respectively and its Affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the
Seller or any Affiliate of the Seller as though such Purchaser Agent were not a
Purchaser Agent hereunder. With respect to Advances pursuant to this
Agreement, such Purchaser Agent shall have the same rights and powers under
this Agreement in its individual capacity as any Purchaser and may exercise the
same as though it were not a Purchaser Agent, and the terms “Purchaser,” and
“Purchasers,” shall include such Purchaser Agent in its individual capacity.



     (g) Successor Purchaser Agents. Each applicable Purchaser Agent,
respectively, may, upon five (5) days’ notice to the Seller and its related
Purchaser, and such Purchaser Agent will, upon the direction of its related
Purchaser (other than such Purchaser Agent, in its individual capacity) resign
as the Purchaser Agent for such Purchaser. If such Purchaser Agent shall
resign, then its related Purchaser during such five (5) day period shall
appoint a successor agent. If for any reason no successor agent is appointed
by such Purchaser during such five (5) day period, then effective upon the
termination of such five (5) day period, and the Seller shall make all payments
in respect of the Aggregate Unpaids directly to such Purchaser, and for all
purposes shall deal directly with such Purchaser. After any retiring Purchaser
Agent’s resignation hereunder as a Purchaser Agent, the provisions of
Articles XI and XII shall inure to its benefit with respect to
any actions taken or omitted to be taken by it while it was a Purchaser Agent
under this Agreement.



     Section 12.3 [Reserved]



     Section 12.4 [Reserved]



     Section 12.5 [Reserved]



ARTICLE XIII




MISCELLANEOUS




     Section 13.1 Amendments and Waivers.



     Except as provided in this Section 13.1, no amendment, waiver or
other modification of any provision of this Agreement shall be effective
without the written agreement of the Seller, the Servicer, the Backup Servicer,
the Collateral Custodian, the Administrative Agent and the Purchasers with
aggregate Commitments of more than 50% of the aggregate of all Commitments at
such time, and notice to each applicable Rating Agency; provided,
that, no such amendment, waiver or modification affecting the
rights or obligations of any Hedge Counterparty shall be effective without the
written agreement of such Person; provided, further, that,
(a) no such amendment, waiver or modification that is material shall be
effective unless (if and to the extent



 









 





required by the commercial paper program
of any Purchaser) the Rating Agencies shall have provided Ratings Confirmations
and (b) no such amendment, waiver or modification shall be made to the
definitions of Facility Amount or Hedge Counterparty or to Section 2.13
or Section 5.5(b) without satisfying the Moody’s Rating Condition;
provided, further, that, no such amendment, waiver or
modification shall, without the consent of each affected Purchaser (i) extend
the date of any payment or deposit of Collections by the Seller or the
Servicer, (ii) reduce the rate or extend the time of payment of Interest, (iii)
reduce any fees payable to such Purchaser or its related Purchaser Agent, (iv)
change the Commitment of such Purchaser, (v) consent to or permit the
assignment or transfer by the Seller of any of its rights and obligations under
this Agreement, (vi) amend this Section 13.1, or (vii) otherwise
materially and adversely affect the rights of any such Purchaser hereunder.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.




     Section 13.2 Notices, Etc.



     All notices, reports and other communications provided for hereunder
shall, unless otherwise stated herein, be in writing (including telex
communication and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto
(provided, however, for avoidance of doubt, Lord Securities Corp.
shall not receive notices, reports and other communications provided pursuant
to Article II, and Section 6.10, Section 6.11 and
Section 6.12 hereof); in the case of (i) S&P, to Standard and Poor’s
Rating Service, 55 Water Street, 41st Floor, New York, New York 10041,
Attention: ABS Surveillance Group – New Assets, Facsimile No.: (212) 438-2662,
Email: servicer_reports@sandp.com, (ii) Moody’s, to Moody’s Investors Service,
99 Church Street, 4th Floor, New York, New York 10007, Attention CDO Monitoring
Department, Facsimile No: (212) 553-0344, Email: cdomonitoring@moodys.com and
(iii) Fitch, to Fitch, Inc., One State Street Plaza, New York, New York 10004,
Attention: CDO Surveillance, Facsimile No.: (212) 514-6501. 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.



     In the event of an Insolvency Event with respect to the Servicer, each
Purchaser Agent shall be required to deliver prompt written notice of such
Insolvency Event to each Rating Agency.



     Section 13.3 Ratable Payments.



     If any Secured Party, whether by setoff or otherwise, has payment made to
it with respect to any portion of the Aggregate Unpaids owing to such Secured
Party (other than payments received pursuant to Section 11.1) in a
greater proportion than that received by any
other Secured Party, such Secured Party agrees, promptly upon demand, to
purchase for cash without recourse or warranty a portion of the Aggregate
Unpaids held by the other Secured Parties so that after such purchase each
Secured Party will hold its ratable proportion of the Aggregate Unpaids;
provided, however, that if all or any portion of such
excess amount is thereafter recovered from such Secured Party,



 









 





such purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest.




     Section 13.4 No Waiver; Remedies.



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



     Section 13.5 Binding Effect; Benefit of Agreement.



     This Agreement shall be binding upon and inure to the benefit of the
Seller, the Servicer, the Administrative Agent, the Purchaser Agents, the
Backup Servicer, the Collateral Custodian, the Secured Parties and their
respective successors and permitted assigns and, in addition, the provisions of
Section 2.7(a)(i) and Section 2.8(1) shall inure to the benefit
of each Hedge Counterparty, whether or not that Hedge Counterparty is a Secured
Party.



     Section 13.6 Term of this Agreement.



     This Agreement, including, without limitation, the Seller’s
representations and covenants set forth in Articles IV and V, and
the Servicer’s representations, covenants and duties set forth in Articles
VI, VII and VIII, create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the Collection Date; provided,
however, that the rights and remedies with respect to any breach of any
representation and warranty made or deemed made by the Seller pursuant to
Articles III and IV the indemnification and payment provisions of
Article XI and the provisions of Section 13.9, Section
13.10 and Section 13.11, shall be continuing and shall survive any
termination of this Agreement.



     Section 13.7 Governing Law; Consent to Jurisdiction; Waiver of
Objection to Venue.



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



 









 





     Section 13.8 Waiver of Jury Trial.



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



     Section 13.9 Costs, Expenses and Taxes.



     (a) In addition to the rights of indemnification granted to the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian, the Secured Parties and its or their Affiliates and officers,
directors, employees and agents thereof under Article XI hereof, the Seller and
Originator agrees to pay on demand all reasonable costs and expenses of the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian and the Secured Parties incurred in connection with the preparation,
execution, delivery, administration (including periodic auditing), renewal,
amendment or modification of, or any waiver or consent issued in connection
with, this Agreement and the other documents to be delivered hereunder or in
connection herewith (including any Hedging Agreement), including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Administrative Agent, the Purchaser Agents, the Backup Servicer, the Collateral
Custodian and the Secured Parties with respect thereto and with respect to
advising the Administrative Agent, the Purchaser Agents, the Backup Servicer,
the Collateral Custodian and the Secured Parties as to their respective rights
and remedies under this Agreement and the other documents to be delivered
hereunder or in connection herewith (including any Hedging Agreement), and all
costs and expenses, if any (including reasonable counsel fees and expenses),
incurred by the Administrative Agent, the Purchaser Agents, the Backup
Servicer, the Collateral Custodian or the Secured Parties in connection with
the enforcement of this Agreement and the other documents to be delivered
hereunder or in connection herewith (including any Hedging Agreement).



     (b) The Seller and Originator shall pay on demand any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Agreement, the other documents to be delivered hereunder or any agreement or
other document providing liquidity support, credit enhancement or other similar
support to the Purchasers in connection with this Agreement or the funding or
maintenance of Advances hereunder.



     (c) The Seller and Originator shall pay on demand all other reasonable
costs, expenses and Taxes (excluding income taxes) incurred by the
Administrative Agent, the
Purchaser Agents, the Secured Parties (“Other Costs”), including,
without limitation, all costs and expenses incurred by the Administrative Agent
and the Purchaser Agents in connection with periodic audits of the Seller’s or
the Servicer’s books and records.



 









 





     Section 13.10 No Proceedings.



     (a) Each of the parties hereto hereby agrees that it will not institute
against, or join any other Person in instituting against any Purchaser any
Insolvency Proceeding so long as any commercial paper issued by such Purchaser
shall be outstanding and there shall not have elapsed one (1) year and one (1)
day since the last day on which any such commercial paper shall have been
outstanding.



     (b) Each of the parties hereto (other than the Administrative Agent
without the consent of the Purchaser Agents) hereby agrees that it will not
institute against, or join any other Person in instituting against, the Seller
any Insolvency Proceeding so long as there shall not have elapsed one (1) year
and one (1) day since the Collection Date.



     Section 13.11 Recourse Against Certain Parties.



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



     (b) Notwithstanding anything in this Agreement to the contrary, no
Purchaser shall have any obligation to pay any amount required to be paid by it
hereunder in excess of any



 









 





amount available to such Purchaser, as applicable,
after paying or making provision for the payment of its Commercial Paper Notes.
All payment obligations of any Purchaser hereunder are contingent on the
availability of funds in excess of the amounts necessary to pay its Commercial
Paper Notes; and each of the other parties hereto agrees that it will not have
a claim under Section 101(5) of the Bankruptcy Code if and to the extent
that any such payment obligation owed to it by such Purchaser, as applicable,
exceeds the amount available to such Purchaser, as applicable, to pay such
amount after paying or making provision for the payment of its Commercial Paper
Notes.




     (c) Notwithstanding any contrary provision set forth herein, no claim may
be made by the Seller, the Originator or the Servicer or any other Person
against the Administrative Agent and the Secured Parties or their respective
Affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect to any claim
for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Seller, the
Originator and the Servicer each hereby waives, releases, and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected.



     (d) No obligation or liability to any Obligor under any of the Loans is
intended to be assumed by the Administrative Agent and the Secured Parties
under or as a result of this Agreement and the transactions contemplated
hereby.



     Section 13.12 Protection of Right, Title and Interest in the Assets;
Further Action Evidencing Advances.



     (a) The Servicer shall cause this Agreement, all amendments hereto and/or
all financing statements and continuation statements and any other necessary
documents covering the right, title and interest of the Administrative Agent as
agent for the Secured Parties and of the Secured Parties to the Assets to be
promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Administrative Agent as agent for the Secured Parties hereunder to all property
comprising the Assets. The Servicer shall deliver to the Administrative Agent
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Seller shall cooperate fully with the
Servicer in connection with the obligations set forth above and will execute
any and all documents reasonably required to fulfill the intent of this
Section 13.12(a).



     (b) The Seller agrees that from time to time, at its expense, it will
promptly authorize, execute and deliver all instruments and documents, and take
all actions, that the Administrative Agent may reasonably request in order to
perfect, protect or more fully evidence the Advances
hereunder and the security interest granted in the Assets, or to enable
the Administrative Agent or the Secured Parties to exercise and enforce their
rights and remedies hereunder or under any Transaction Document.



 









 





     (c) If the Seller or the Servicer fails to perform any of its obligations
hereunder, the Administrative Agent or any Secured Party may (but shall not be
required to) perform, or cause performance of, such obligation; and the
Administrative Agent’s or such Secured Party’s costs and expenses incurred in
connection therewith shall be payable by the Seller as provided in Article
XI. The Seller irrevocably authorizes the Administrative Agent and
appoints the Administrative Agent as its attorney-in-fact to act on behalf of
the Seller (i) to execute on behalf of the Seller as debtor and to file
financing statements necessary or desirable in the Administrative Agent’s sole
discretion to perfect and to maintain the perfection and priority of the
interest of the Secured Parties in the Assets and (ii) to file a carbon,
photographic or other reproduction of this Agreement or any financing statement
with respect to the Assets as a financing statement in such offices as the
Administrative Agent in its sole discretion deems necessary or desirable to
perfect and to maintain the perfection and priority of the interests of the
Secured Parties in the Assets. 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 any other financing statement filed pursuant to this
Agreement or in connection with any Advance hereunder, unless the Collection
Date shall have occurred:




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




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



     Section 13.13 Confidentiality



     (a) Each of the Administrative Agent, the Purchaser Agents, the Secured
Parties, the Servicer, the Collateral Custodian, the Backup Servicer and the
Seller shall maintain and shall cause each of its employees and officers to
maintain the confidentiality of the Agreement and all information with respect
to the other parties, including all information regarding the business of the
Seller and the Servicer hereto and their respective businesses obtained by it
or them in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that each such party and its officers
and employees may (i) disclose such information to its external accountants,
attorneys, investors, potential investors and the agents of such Persons
(“Excepted Persons”); provided, however, that each
Excepted Person shall, as a condition to any such disclosure, agree for
the benefit of the Administrative Agent, the Purchaser Agents, the Secured
Parties, the Servicer, the Collateral Custodian, the Backup Servicer and the
Seller that such information shall be used solely in connection with such
Excepted Person’s evaluation of, or relationship with, the Seller and its
affiliates, (ii) disclose the existence of the Agreement, but not the financial
terms thereof, (iii) disclose such information as is required by



 









 





Applicable Law
and (iv) disclose the Agreement and such information in any suit, action,
proceeding or investigation (whether in law or in equity or pursuant to
arbitration) involving any of the Transaction Documents or any Hedging
Agreement for the purpose of defending itself, reducing its liability, or
protecting or exercising any of its claims, rights, remedies, or interests
under or in connection with any of the Transaction Documents or any Hedging
Agreement. It is understood that the financial terms that may not be disclosed
except in compliance with this Section 13.13(a) include, without
limitation, all fees and other pricing terms, and all Termination Events,
Servicer Defaults, and priority of payment provisions.




     (b) Anything herein to the contrary notwithstanding, the Seller and the
Servicer each hereby consents to the disclosure of any nonpublic information
with respect to it (i) to the Administrative Agent, the Purchaser Agents, the
Collateral Custodian, the Backup Servicer or the Secured Parties by each other,
(ii) by the Administrative Agent, the Purchaser Agents, the Collateral
Custodian, the Backup Servicer and the Secured Parties to any prospective or
actual assignee or participant of any of them provided such Person agrees to
hold such information confidential, or (iii) by the Administrative Agent, the
Purchaser Agents, and the Secured Parties to any Rating Agency, commercial
paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to the Purchasers, as applicable, and to any officers, directors,
employees, outside accountants and attorneys of any of the foregoing, provided
each such Person is informed of the confidential nature of such information.
In addition, the Secured Parties, the Administrative Agent and the Purchaser
Agents, may disclose any such nonpublic information as required pursuant to any
law, rule, regulation, direction, request or order of any judicial,
administrative or regulatory authority or proceedings (whether or not having
the force or effect of law).



     (c) Notwithstanding anything herein to the contrary, the foregoing shall
not be construed to prohibit (i) disclosure of any and all information that is
or becomes publicly known; (ii) disclosure of any and all information (a) if
required to do so by any applicable statute, law, rule or regulation, (b) to
any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Administrative Agents’, the Purchaser
Agents’, the Secured Parties’, the Collateral Custodian’s or the Backup
Servicer’s business or that of their affiliates, (c) pursuant to any subpoena,
civil investigative demand or similar demand or request of any court,
regulatory authority, arbitrator or arbitration to which the Administrative
Agent, the Purchaser Agents, the Secured Parties, the Collateral Custodian or
the Backup Servicer or an officer, director, employer, shareholder or affiliate
of any of the foregoing is a party, (d) in any preliminary or final offering
circular, registration statement or contract or other document approved in
advance by the Seller, the Servicer or the Originator or (e) to any affiliate,
independent or internal auditor, agent, employee or attorney of the Collateral
Custodian or Backup Servicer having a need to know the same, provided that the
Collateral Custodian or Backup Servicer advises such recipient of the
confidential nature of the information being disclosed; or (iii) any other
disclosure authorized by the Seller, Servicer or Originator.



     (d) Anything herein to the contrary notwithstanding, each Person to whom
any such nonpublic information has been disclosed pursuant to this Section
13.13 and any successor or assign of any such Person (and each employee,
representative or other agent of any of the foregoing), may disclose to any and
all Persons, without limitation of any kind, the “tax treatment” and “tax
structure” (in each case, within the meaning of Treasury Regulation Section



 









 





1.6011-4) of the transactions contemplated herein and all materials of any kind
(including opinions or other tax analyses) that are or have been provided to
any of the foregoing relating to such tax treatment or tax structure.




     Section 13.14 Execution in Counterparts; Severability;
Integration.



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



     Section 13.15 Waiver of Setoff.



     Each of the parties hereto hereby waives any right of setoff it may have
or to which it may be entitled under this Agreement from time to time against
any Purchaser or its assets.



     Section 13.16 Assignments.



     Each Purchaser may at any time assign, or grant a security interest or
sell a participation interest in, any Advance (or portion thereof) to any
Person; provided, that, in the case of an assignment of any such
Purchaser’s Variable Funding Certificate, the assignee (other than any assignee
that is a Liquidity Bank) shall execute and deliver to the Servicer and the
Administrative Agent a Transferee Letter substantially in the form of
Exhibit K hereto. The parties to any such assignment, grant or sale of
participation interest shall execute and deliver to the applicable Purchaser’s
Purchaser Agent, for its acceptance and recording in its books and records,
such agreement or document as may be satisfactory to such parties and such
Purchaser Agent. The Seller shall not assign or delegate, or grant any
interest in, or permit any Lien to exist upon, any of the Seller’s rights,
obligations or duties under this Agreement without the prior written consent of
the Administrative Agent and the Hedge Counterparty. Each Purchaser Agent will
provide the Seller with notice of any person who, from time to time after the
Closing Date, becomes a Liquidity Bank for such Purchaser Agent’s Purchaser
under the Liquidity Agreement for such Purchaser related to the transaction
contemplated hereby.



     Section 13.17 Heading and Exhibits.



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



 









 





     Section 13.18 Loans Subject to Retained Interest Provisions.



     (a) With respect to any Loan included in the Assets subject to the
Retained Interest provisions of this Agreement, the Seller will own only the
principal portion of such Loans outstanding as of the applicable Cut-Off Date.
Principal Collections received by the Seller or the Servicer on any Revolving
Loans (other than such Loans to SPE Obligors) will be allocated first to the
portion of such Revolving Loan owned by the Seller, until the principal amount
of such portion is reduced to zero, and then to the portion not owned by the
Seller; provided, however, if (i) a payment default occurs with
respect to any of the related Loans, (ii) a Liquidity Factor Reduction Event
occurs and continues, (iii) the Originator has determined in its sole
discretion that an Obligor’s credit has deteriorated or the Originator has
determined in its sole discretion to reduce its commitment to an Obligor, or
(iv) an Allocation Adjustment Event occurs, then Principal Collections received
on (x) the applicable Loan (in the case of clause (i) or (iii)
above or during the time that a Liquidity Factor Reduction Event exists and
continues in the case of clause (ii) above) or (y) all the Revolving Loans (in
the case of clauses (iv) above) will be allocated between the portion
owned by the Seller and the portion not owned by the Seller, pro rata based
upon the outstanding principal amount of each such portion.



     (b) With respect to any Revolving Loan to SPE Obligors included in the
Assets subject to the Retained Interest provisions of this Agreement, Interest
Collections received by the Servicer on those Loans will be allocated between
the portion owned by the Seller and the portion not owned by the Seller on a
pro rata basis according to the outstanding principal amount of each such
portion.



     (c) With respect to any Term Loans included in the Assets subject to the
Retained Interest provisions of this Agreement, Principal Collections and
Interest Collections received by the Servicer will be allocated between the
portion owned by the Seller and to the portion not owned by the Seller (if any)
on a pro rata basis according to the outstanding principal amount of such
portion.



     Section 13.19 Exiting Purchasers and Purchaser Agents.



     By signing below, each of the parties hereto, hereby agrees that from and
after the Closing Date of this Agreement, each of (i) CDC Financial Products
Inc., as agent for Eiffel Funding, LLC under the Original Loan Certificate and
Servicing Agreement, and (ii) Eiffel Funding LLC, as a purchaser under the
Original Loan Certificate and Servicing Agreement, shall cease to be a party to
this Agreement in any of their respective capacities under the Original Loan
Certificate and Servicing Agreement and shall have no further rights or
obligations
hereunder or thereunder (other than any rights or obligation that
specifically survive termination of the Original Loan Certificate and Servicing
Agreement pursuant to its terms).



     Section 13.20 Tax Treatment.



     It is the intention of Seller and Purchasers that, for U.S. federal, state
and local income and franchise tax purposes only, the Advances made hereunder
will be treated as evidence of indebtedness secured by the Asset Pool. Seller,
by entering into this Agreement, and Purchasers, by making the Advances
described herein, agree to treat the Advances for U.S. federal, state and



 









 





local income and franchise tax purposes as indebtedness. The provisions of
this Agreement and all related Transaction Documents shall be construed to
further these intentions of the parties.




[Remainder of Page Intentionally Left Blank.]





 










 





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



	 	 	 	 	 	 	 
	THE SELLER:	 	CAPITALSOURCE FUNDING LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Thomas A. Fink
	 	 	 	 	
 
	 	 	Name:	 	Thomas A. Fink
	 	 	 	 	
 
	 	 	Title:	 	Chief Financial Officer
	 	 	 	 	
 
	 
	 	 	 	 	 	 
	 	 	CapitalSource Funding LLC
	 	 	4445 Willard Avenue, 12th Floor
	 	 	Chevy Chase, Maryland 20815
	 	 	Attention: James Mozingo
	 	 	Facsimile No.: (301) 841-2375
	 	 	Confirmation No.: (301) 841-2731
	 
	 	 	 	 	 	 
	THE ORIGINATOR	 	CAPITALSOURCE FINANCE LLC
	AND SERVICER:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Thomas A. Fink
	 	 	 	 	
 
	 	 	Name:	 	Thomas A. Fink
	 	 	 	 	
 
	 	 	Title:	 	Chief Financial Officer
	 	 	 	 	
 
	 
	 	 	 	 	 	 
	 	 	CapitalSource Finance LLC
	 	 	4445 Willard Avenue, 12th Floor
	 	 	Chevy Chase, Maryland 20815
	 	 	Attention: James Mozingo
	 	 	Facsimile No.: (301) 841-2375
	 	 	Confirmation No.: (301) 841-2731







[Signatures Continued on the Following Page]




S- 1









 








	 	 	 	 	 	 	 
	FAIRWAY:	 	FAIRWAY FINANCE COMPANY, LLC
	 
	 	 	 	 	 	 
	Commitment:
	 	By:	 	/s/ Lori Gebron
	$200,000,000	 	 	 	

	 	 	Name:	 	Lori Gebron
	 	 	 	 	

	 	 	Title:	 	Vice President
	 	 	 	 	

	 	 	 	 	 
	 	 	Fairway Finance Company, LLC
	 	 	c/o Lord Securities Corporation
	 	 	48 Wall Street, 27th Floor
	 	 	New York, New York 10005
	 	 	Facsimile No.: (212) 346-9012
	 	 	Confirmation No.: (212) 346-9000
	 
	 	 	 	 	 	 
	FAIRWAY AGENT:	 	HARRIS NESBITT CORP.
	 	 	 	 	 
	 	 	By:	 	/s/ David J. Kucera
	 	 	 	 	
 
	 	 	Name:	 	David J. Kucera
	 	 	 	 	

	 	 	Title:	 	Managing Director
	 	 	 	 	

	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ David J. Kucera
	 	 	 	 	
 
	 	 	Name:	 	David J. Kucera
	 	 	 	 	

	 	 	Title:	 	Managing Director
	 	 	 	 	

	 
	 	 	 	 	 	 
	 	 	Harris Nesbitt Corp.
	 	 	115 South LaSalle Street
	 	 	13th Floor West
	 	 	Chicago, Illinois 60603
	 	 	Attention: Kevin Gibbons
	 	 	Facsimile No.: (312) 293-4908
	 	 	Confirmation No.: (312) 461-5542







[Signatures Continued on the Following Page]





S- 2










 





	 	 	 	 	 
	HANNOVER:	 	HANNOVER FUNDING COMPANY LLC
	 
	 	 	 	 
	Commitment:

$75,000,000

	 	By:
	 	/s/ Andrew Yearde



Andrew Yearde

Vice-President
	 
	 	 	 	 
	 	 	Hannover Funding Company LLC

c/o Global Securitization Services, LLC

114 West 47th Street, Suite 1715

New York, New York 10036

Attention: Andrew Yearde, Vice-President

Facsimile No.: (212) 302-8767.

Confirmation No.: (212) 302-5151
	 
	 	 	 	 
	HANNOVER AGENT:	 	NORDDEUTSCHE
LANDESBANK
GIROZENTRALE
	 
	 	 	 	 
	

	 	By:
	 	/s/ Heruy Dawit



Heruy Dawit
	

	 	 	 	Assistant Vice President
	 
	 	 	 	 
	

	 	By:
	 	/s/ Edward M. Weber


Edward M. Weber
	

	 	 	 	Vice-President
	 
	 	 	 	 
	 	 	Norddeutsche Landesbank Girozentrale

1114 Avenue of the Americas, 37th Floor

New York, New York 10036

Attention:

Facsimile No.:

Confirmation No.: (212) 812-6946







[Signatures Continued on the Following Page]




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	THREE PILLARS:	 	THREE PILLARS FUNDING LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Evelyn Echevarria
	

	 	 	 	

	Commitment:

$150,000,000	 	Name: Evelyn Echevarria

Title: Vice President







	 	 	 	 	 
	 	 	c/o Amacar Group, L.L.C.

6525 Morrison Boulevard, Suite 318

Charlotte, North Carolina 28211

	

	 	Attention:
	 	Douglas Johnson
	

	 	Facsimile No.:
	 	(704) 365-1362
	

	 	Confirmation No.:
	 	(704) 365-0569







	 	 	 	 	 
	THREE PILLARS AGENT:	 	SUNTRUST CAPITAL MARKETS INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ James R. Bennison
	

	 	 	 	

	 	 	Name: James R. Bennison

Title: Managing Director







	 	 	 	 	 
	 	 	24TH floor – MC 3950

303 Peachtree Street

Atlanta, Georgia 30308

	

	 	Attention:
	 	Roberto Lumpris
	

	 	Facsimile No.:
	 	(404) 532-0715
	

	 	Confirmation No.:
	 	(404) 230-1344







[Signatures Continued on the Following Page]





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	BARTON:	 	BARTON CAPITAL CORPORATION
	 
	 	 	 	 
	Commitment:

$200,000,000

	 	By:
	 	/s/ Evelyn Echevarria



	 	 	Name: Evelyn Echevarria

	 	 	 	 	

	 	 	Title: Vice President
	 	 	 	 	

	 
	 	 	 	 
	 	 	c/o Amacar Group, L.L.C.

6525 Morrison Boulevard, Suite 318

Charlotte, North Carolina 28211

Attention: Douglas K. Johnson

Facsimile No.: (704) 365-1362

Confirmation No.: (704) 365-0569
	 
	 	 	 	 
	BARTON AGENT:	 	SOCIETE GENERALE
	 
	 	 	 	 
	

	 	By:
	 	/s/ Martin J. Finan
	

	 	 	 	
 
	 	 	Name: Martin J. Finan

	 	 	 	 	

	 	 	Title: Managing Director
	 	 	 	 	

	 
	 	 	 	 
	 	 	181 W. Madison Street

Suite 33400

Chicago, Illinois 60602

Attention: Steve Coffman

Facsimile No.: (312) 578-5199

Confirmation No.: (312) 578-5150







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	VFCC:	 	VARIABLE FUNDING CAPITAL CORPORATION
	 
	 	 	 	 
	Commitment:

$75,000,000

	 	By:
	 	Wachovia Capital Markets, LLC

as attorney-in-fact
	 
	 	 	 	 
	

	 	By:
	 	/s/ Bryan P. McGrath
	

	 	 	 	
 
	 	 	Name: Bryan P. McGrath
	 	 	 	 	

	 	 	Title: Vice President
	 	 	 	 	

	 
	 	 	 	 
	 	 	Variable Funding Capital Corporation

c/o Wachovia Capital Markets, LLC

One Wachovia Center, Mail Code: NC0610

Charlotte, North Carolina 28288

Attention: Conduit Administration

Facsimile No.: (704) 383-9579

Confirmation No.: (704) 374-2520







With respect to notices required pursuant to Section 13.2, a copy of notice to
VFCC shall be sent to:




	 	 	 	 	 
	 	 	Lord Securities Corp.

48 Wall Street, 27th Floor

New York, New York 10005

Attention: Vice President

Facsimile No.: (212) 346-9012

Confirmation No.: (212) 346-9008
	 
	 	 	 	 
	VFCC AGENT:	 	WACHOVIA CAPITAL MARKETS, LLC
	 
	 	 	 	 
	

	 	By:
	 	/s/ Paul A. Burkhart
	

	 	 	 	
 
	 	 	Name: Paul A. Burkhart
	 	 	 	 	

	 	 	Title: Vice President
	 	 	 	 	

	 
	 	 	 	 
	 	 	Wachovia Capital Markets, LLC

One Wachovia Center, Mail Code: NC0600

Charlotte, North Carolina 28288

Attention: Raj Shah

Facsimile No.: (704) 383-4012

Confirmation No.: (704) 374-6230







[Signatures Continued on the Following Page]




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	THE BACKUP SERVICER:	 	WELLS FARGO BANK, NATIONAL 
ASSOCIATION, not in its individual capacity

but solely as Backup Servicer
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joe Nardi
	

	 	 	 	
 
	 	 	Name: Joe Nardi
	 	 	 	 	

	 	 	Title: Vice President
	 	 	 	 	

	 
	 	 	 	 
	 	 	Wells Fargo Bank, National Association

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services Asset-Backed Administration

Facsimile No.: (612) 667-3539

Confirmation No.: (612) 667-8058
	 
	 	 	 	 
	THE COLLATERAL CUSTODIAN:	 	WELLS FARGO BANK, NATIONAL
ASSOCIATION, not in its individual capacity

but solely as Collateral Custodian
	 
	 	 	 	 
	

	 	By:
	 	/s/ Joe Nardi
	

	 	 	 	
 
	 	 	Name: Joe Nardi
	 	 	 	 	

	 	 	Title: Vice President
	 	 	 	 	

	 
	 	 	 	 
	 	 	Wells Fargo Bank, National Association

Sixth Street and Marquette Avenue

MAC N9311-161

Minneapolis, Minnesota 55479

Attention: Corporate Trust Services Asset-Backed Administration

Facsimile No.: (612) 667-3539

Confirmation No.: (612) 667-8058








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