Document:

exv10w35w3

 

Exhibit 10.35.3

Execution Counterpart

	 	 	 
	 

GUARANTEE AND SECURITY AGREEMENT

dated as of June 30, 2005

between

CAPITALSOURCE FUNDING V TRUST,

as Borrower

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Custodian

	 	 	 
	 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 1.
	 	Definitions, Etc.	 	 	2	 
	1.01
	 	Certain Uniform Commercial Code Terms	 	 	2	 
	1.02
	 	Additional Definitions	 	 	2	 
	1.03
	 	Terms Generally	 	 	9	 
	 	 	 	 	 	 	 
	Section 2.
	 	Representations and Warranties	 	 	9	 
	2.01
	 	Organization	 	 	9	 
	2.02
	 	Authorization; Enforceability	 	 	9	 
	2.03
	 	Governmental Approvals; No Conflicts	 	 	10	 
	2.04
	 	Title	 	 	10	 
	2.05
	 	Names, Etc.	 	 	10	 
	2.06
	 	Changes in Circumstances	 	 	10	 
	2.07
	 	Deposit Accounts and Securities Accounts	 	 	10	 
	 	 	 	 	 	 	 
	Section 3.
	 	Guarantee	 	 	11	 
	3.01
	 	The Guarantee	 	 	11	 
	3.02
	 	Obligations Unconditional	 	 	11	 
	3.03
	 	Reinstatement	 	 	12	 
	3.04
	 	Subrogation	 	 	12	 
	3.05
	 	Remedies	 	 	13	 
	3.06
	 	Continuing Guarantee	 	 	13	 
	3.07
	 	Instrument for the Payment of Money	 	 	13	 
	3.08
	 	Rights of Contribution	 	 	13	 
	3.09
	 	General Limitation on Guarantee Obligations	 	 	14	 
	3.10
	 	Indemnity by Borrower	 	 	14	 
	 	 	 	 	 	 	 
	Section 4.
	 	Collateral	 	 	14	 
	 	 	 	 	 	 	 
	Section 5.
	 	Covenants of the Credit Parties	 	 	15	 
	5.01
	 	Delivery and Other Perfection	 	 	15	 
	5.02
	 	Other Financing Statements or Control	 	 	16	 
	5.03
	 	Additional Subsidiary Guarantors	 	 	16	 
	 	 	 	 	 	 	 
	Section 6.
	 	Acceleration Notice; Remedies; Distribution of Collateral	 	 	17	 
	6.01
	 	Preservation of Rights	 	 	17	 
	6.02
	 	Events of Default, Etc.	 	 	17	 
	6.03
	 	Deficiency	 	 	18	 
	6.04
	 	Private Sale	 	 	18	 
	6.05
	 	Application of Proceeds	 	 	19	 
	6.06
	 	Attorney-in-Fact	 	 	19	 

 

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	 	 	 	 	Page	 
	Section 7.
	 	The Collateral Custodian	 	 	20	 
	7.01
	 	Powers and Immunities	 	 	20	 
	7.02
	 	Reliance by Collateral Custodian	 	 	20	 
	7.03
	 	Indemnification	 	 	21	 
	7.04
	 	Non-Reliance on Collateral Custodian and Other Secured Parties	 	 	21	 
	7.05
	 	Failure to Act	 	 	21	 
	7.06
	 	Agents and Attorneys-in-Fact	 	 	22	 
	 	 	 	 	 	 	 
	Section 8.
	 	Miscellaneous	 	 	22	 
	8.01
	 	Notices	 	 	22	 
	8.03
	 	Amendments, Etc.	 	 	22	 
	8.04
	 	Expenses; Indemnity; Damage Waiver	 	 	23	 
	8.05
	 	Successors and Assigns	 	 	24	 
	8.06
	 	Counterparts; Integration; Effectiveness; Electronic Execution	 	 	24	 
	8.07
	 	Severability	 	 	25	 
	8.08
	 	Governing Law; Submission to Jurisdiction	 	 	25	 
	8.09
	 	Waiver of Jury Trial	 	 	25	 
	8.10
	 	Headings	 	 	26	 

 

 

GUARANTEE AND SECURITY AGREEMENT

          GUARANTEE AND SECURITY AGREEMENT dated as of June 30, 2005, between CAPITALSOURCE FUNDING
V TRUST, a statutory trust duly organized and validly existing under the laws of the State of
Delaware (the “Borrower”); each entity that becomes a “SUBSIDIARY GUARANTOR” after the date
hereof pursuant to Section 5.03 hereof (collectively, the “Subsidiary Guarantors” and,
together with the Borrower, the “Credit Parties”); JPMORGAN CHASE BANK, N.A., as
administrative agent for the parties defined as “Lenders” under the Credit Agreement referred to
below (in such capacity, together with its successors in such capacity, the “Administrative
Agent”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral custodian for the
Administrative Agent (in such capacity, together with its successors in such capacity, the
“Collateral Custodian”).

W I T N E S S E T H:

          WHEREAS, concurrently with the execution and delivery of this Agreement the Borrower, certain
lenders (the “Lenders”) and the Administrative Agent are entering into a Credit Agreement
dated as of June 30, 2005 (the “Credit Agreement”) pursuant to which the Lenders have
agreed to extend credit (by means of loans and letters of credit) to the Borrower from time to
time;

          WHEREAS, to induce the Lenders to extend credit to the Borrower under the Credit Agreement,
the Borrower wishes to provide (a) for certain of its Subsidiaries from time to time to become
parties hereto and to guarantee the payment of the Guaranteed Obligations (as hereinafter defined),
and (b) for the Borrower and the Subsidiary Guarantors (other than Equity Subsidiaries as
hereinafter defined) to provide collateral security for the Secured Obligations (as hereinafter
defined);

          WHEREAS, the Borrower, CS Funding V Depositor Inc., a Delaware corporation, as Depositor (in
such capacity, the “Depositor”), CapitalSource Finance LLC, a Delaware limited liability
company, as Originator (in such capacity, the “Originator”) and as Servicer (in such
capacity, the “Servicer”), the Administrative Agent, the Collateral Custodian and Wells
Fargo Bank, National Association, as Paying Agent, Collateral Custodian and Backup Servicer (in
such capacity, together with its successors in such capacity, the “Backup Servicer”) are
parties to a Sale and Servicing Agreement dated as of June 30, 2005 (as modified and supplemented
and in effect from time to time, the “Sale and Servicing Agreement”), providing, subject to
the terms and conditions thereof, for the transfer from the Originator to the Depositor, and
assignment by the Depositor to the Borrower, of certain assets of the Originator, and the servicing
of such assets by the Servicer;

          WHEREAS, the Administrative Agent (on behalf of itself and the Lenders) is entering into this
Agreement for the purpose of setting forth its rights to the Collateral (as hereinafter defined);
and

 

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          WHEREAS, the Credit Parties and the Secured Parties agree that the Collateral Custodian shall
administer the Collateral, and the Collateral Custodian is willing to so administer the Collateral
pursuant to the terms and conditions set forth herein;

          NOW THEREFORE, the parties hereto agree as follows:

          Section 1. Definitions, Etc.

          1.01 Certain Uniform Commercial Code Terms. As used herein, the terms “Account”,
“Chattel Paper”, “Commodity Account”, “Commodity Contract”, “Deposit
Account”, “Document”, “Electronic Chattel Paper”, “General Intangible”,
“Indorsement”, “Instrument”, “Investment Property”, “Letter-of-Credit
Right”, “Proceeds”, “Promissory Note” and “Tangible Chattel Paper” have
the respective meanings set forth in Article 9 of the NYUCC, and the terms “Certificated
Security”, “Clearing Corporation”, “Entitlement Holder”, “Financial
Asset”, “Securities Account”, “Security”, “Security Entitlement” and
“Uncertificated Security” have the respective meanings set forth in Article 8 of the NYUCC.

          1.02 Additional Definitions. In addition, as used herein:

          “Acceleration” means the Secured Obligations of any Secured Party having been declared
(or become) due and payable following a default by the Borrower and expiration of any applicable
grace period with respect thereto.

          “Affiliate” means, with respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, controls or is controlled by or is under common
Control with the Person specified (for purposes of this definition, “control” means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ability to exercise voting power, by contract or
otherwise; “controlled” has the meaning correlative thereto).

          “Agent Members” means members of, or participants in, a depositary, including the
Depositary, Euroclear or Clearstream.

          “Basic Documents” has the meaning assigned to such term in Section 1.01 of the Credit
Agreement.

          “Clearing Corporation Security” means a security that is registered in the name of, or
Indorsed to, a Clearing Corporation or its nominee or is in the possession of the Clearing
Corporation in bearer form or Indorsed in blank by an appropriate Person.

          “Clearstream” means Clearstream Banking, société anonyme, a corporation organized
under the laws of the Grand Duchy of Luxembourg.

          “Clearstream Security” means a Security that (a) is a debt or equity security and (b)
is capable of being transferred to an Agent Member’s account at Clearstream pursuant to the
definition of “Delivery”, whether or not such transfer has occurred.

 

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          “Collateral” has the meaning assigned to such term in Section 4.

          “Collateral Schedule” has the meaning assigned to such term in Section 1.01 of the
Sale and Servicing Agreement.

          “Control” means “control” as defined in Section 9-104, 9-105, 9-106 or 9-107 of the
NYUCC.

          “Credit Agreement Obligations” means, collectively, all obligations of the Borrower to
the Lenders and the Administrative Agent under the Credit Agreement, including in each case in
respect of the principal of and interest on the loans made, or letters of credit issued,
thereunder, and all fees, indemnification payments and other amounts whatsoever, whether direct or
indirect, absolute or contingent, now or hereafter from time to time owing to the Administrative
Agent or the Lenders or any of them under or in respect of the Credit Agreement, and including all
interest and expenses accrued or incurred subsequent to the commencement of any bankruptcy or
insolvency proceeding with respect to the Borrower, whether or not such interest or expenses are
allowed as a claim in such proceeding.

          “Custodial Loan File” has the meaning assigned to such term in Section 1.01 of the
Sale and Servicing Agreement.

          “Default” means any event that with notice or lapse of time or both would become an
Event of Default.

          “Deleted Collateral” has the meaning assigned to such term in Section 1.01 of the Sale
and Servicing Agreement.

          “Deliver”, “Delivered” or “Delivery” (whether to the Collateral
Custodian or otherwise) means, with respect to any Collateral, that such Collateral is held,
registered or covered by a recorded UCC-1 financing statement as described below, in each case in a
manner satisfactory to the Administrative Agent (it being understood that, until the Administrative
Agent advises the Borrower that it is not satisfied, the conditions set forth below shall be deemed
to have been met):

     (a) subject to clause (m) below, in the case of each Certificated Security (other than
a U.S. Government Security, Clearing Corporation Security, Euroclear Security or a
Clearstream Security), that such Certificated Security is in the possession of the
Collateral Custodian and registered in the name of the Collateral Custodian (or its nominee)
or Indorsed to the Collateral Custodian or in blank;

     (b) subject to clause (m) below, in the case of each Instrument, that such Instrument
is in the possession of the Collateral Custodian Indorsed to the Collateral Custodian or in
blank;

     (c) subject to clause (m) below, in the case of each Uncertificated Security (other
than a U.S. Government Security, Clearing Corporation Security, Euroclear

 

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Security or
Clearstream Security), that such Uncertificated Security is registered on the books of the
issuer thereof to the Collateral Custodian (or its nominee);

     (d) subject to clause (m) below, in the case of each Clearing Corporation Security,
that such Clearing Corporation Security is credited to a Securities Account of the
Collateral Custodian at such Clearing Corporation (and, if such Clearing Corporation
Security is a Certificated Security, that the same is in the possession of such Clearing
Corporation);

     (e) in the case of each Euroclear Security and Clearstream Security, that the actions
described in clause (d) above have been taken with respect to such Security as if such
Security were a Clearing Corporation Security and Euroclear and Clearstream were Clearing
Corporations, provided that such additional actions shall have been taken as shall
be necessary under the law of Belgium (in the case of Euroclear) and Luxembourg (in the case
of Clearstream) to accord the Collateral Custodian rights substantially equivalent to
Control over such Security under the NYUCC;

     (f) in the case of each U.S. Government Security, that such U.S. Government Security is
credited to a securities account of the Collateral Custodian at a Federal Reserve Bank;

     (g) in the case of any Tangible Chattel Paper, that the original of such Tangible
Chattel Paper is in the possession of the Collateral Custodian in the United States and any
agreements that constitute or evidence such Tangible Chattel Paper is free of any marks or
notations indicating that it is then pledged, assigned or otherwise conveyed to any Person
other than the Collateral Custodian;

     (h) in the case of each General Intangible (including any participation in a debt
obligations) of a Grantor organized in the United States, that such General Intangible falls
within the collateral description of a UCC-1 financing statement, naming the relevant
Grantor as debtor and the Collateral Custodian as secured party and filed in the
jurisdiction of organization of such relevant Grantor, provided that in the case of
a participation in a debt obligation that is evidenced by an Instrument, either (i) such
Instrument is in the possession of the applicable participating institution in the United
States, and such participating institution has agreed that it holds possession of such
Instrument for the benefit of the Collateral Custodian or (ii) such Instrument is in the
possession of the applicable participating institution outside of the United States and such
participating institution (and, if applicable, the obligor that issued such Instrument) has
taken such actions as shall be necessary under the law of the jurisdiction where such
Instrument is physically located to accord the Collateral Custodian rights equivalent
to Control over such Instrument under the NYUCC;

     (i) in the case of each General Intangible (including any participation in a debt
obligations) of a Grantor not organized in the United States, that such Grantor shall have
taken such action as shall be necessary to accord the Collateral Custodian rights

 

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substantially equivalent to a perfected first-priority security interest in such General
Intangible under the NYUCC;

     (j) in the case of any Deposit Account or Securities Account, that the bank or
Securities Intermediary at which such Deposit Account or Securities Account, as applicable,
is located has agreed that the Collateral Custodian has Control over such Deposit Account or
Securities Account;

     (k) in the case of any money (regardless of currency), that such money has been
credited to a Deposit Account over which the Collateral Custodian has Control as described
in clause (k) above;

     (l) in the case of any Certificated Security, Uncertificated Security or Instrument
either physically located outside of the United States or issued by a Person organized
outside of the United States, that such additional actions shall have been taken as shall be
necessary under applicable law to accord the Collateral Custodian rights substantially
equivalent to those accorded to a secured party under the NYUCC that has possession or
control of such Certificated Security, Uncertificated Security or Instrument; and

     (m) in the case of any Collateral not of a type covered by the foregoing clauses (a)
through (m) that such Collateral has been transferred to the Collateral Custodian in
accordance with applicable law and regulation.

          “Depositary” means The Depository Trust Company, its nominees and their respective
successors.

          “Distribution Account” has the meaning assigned to such term in Section 5.01(a) of the
Sale and Servicing Agreement.

          “Eligible Loans” has the meaning assigned to such term in Section 1.01 of the Sale and
Servicing Agreement.

          “Equity Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the holder thereof to
purchase or acquire any such equity interest.

          “Equity Subsidiary” has the meaning assigned to such term in Section 1.01 of the Sale
and Servicing Agreement.

          “Euroclear” means Euroclear Bank, S.A., as operator of the Euroclear system.

          “Euroclear Security” means a Security that (a) is a debt or equity Security and (b) is
capable of being transferred to an Agent Member’s account at Euroclear, whether or not such
transfer has occurred.

 

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          “Event of Default” means any Event of Default under and as defined in the Credit
Agreement.

          “Excluded Amounts” has the meaning assigned to such term in Section 1.01 of the Sale
and Servicing Agreement.

          “Governmental Authority” means the government of the United States of America, or of
any other nation, or any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

          “Grantor” means, collectively, the Borrower and each Subsidiary Guarantor that has
granted a security interest in property pursuant to a Guarantee Assumption Agreement.

          “Guarantee Assumption Agreement” means a Guarantee Assumption Agreement substantially
in the form of Exhibit A between the Collateral Custodian and an entity that, pursuant to Section
5.03, is required to become a “Subsidiary Guarantor” hereunder (with such changes as the Collateral
Custodian shall reasonably request, consistent with the requirements of Section 5.03).

          “Guaranteed Obligations” means the Credit Agreement Obligations.

          “Indemnitee” has the meaning assigned to such term in Section 7.03.

          “Insurance Proceeds” has the meaning assigned to such term in Section 1.01 of the Sale
and Servicing Agreement.

          “Intercreditor Agreement” means the Fourth Amended and Restated Intercreditor and
Lockbox Administration Agreement, dated as of June 30, 2005, by and among Bank of America, N.A., as
the lockbox bank, each Financing Agent (as defined therein), 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 from time to time.

          “Investment” means, for any Person: (a) Equity Interests, bonds, notes, debentures or
other securities of any other Person or any agreement to acquire any Equity Interests, bonds,
notes, debentures or other securities of any other Person (including any “short sale” or any sale
of any securities at a time when such securities are not owned by the Person entering into such
sale); (b) deposits, advances, loans or other extensions of credit made to any
other Person (including purchases of property from another Person subject to an understanding
or agreement, contingent or otherwise, to resell such property to such Person); or (c) Hedging
Agreements.

          “Issuers” means, collectively, (a) the respective Persons identified from time to time
on Annex 3 under the caption “Issuer”, (b) any other Person that shall at any time be a

 

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Subsidiary of the Borrower, and (c) the issuer of any equity securities hereafter owned by any
Grantor.

          “JPMCB” means JPMorgan Chase Bank, N.A.

          “Lenders” means any Lender, or any Issuing Bank or Swingline Lender (as defined in the
Credit Agreement), that are from time to time party to the Credit Agreement.

          “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien,
pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities, except in favor of the issuer
thereof.

          “Loans” has the meaning assigned to such term in Section 1.01 of the Sale and
Servicing Agreement.

          “Mortgage” has the meaning assigned to such term in Section 1.01 of the Sale and
Servicing Agreement.

          “Mortgaged Property” has the meaning assigned to such term in Section 1.01 of the Sale
and Servicing Agreement.

          “Net Proceeds” has the meaning assigned to such term in Section 1.01 of the Sale and
Servicing Agreement.

          “NYUCC” means the Uniform Commercial Code as in effect from time to time in the State
of New York.

          “Permitted Investments” has the meaning assigned to such term in Section 1.01 of the
Sale and Servicing Agreement.

          “Person” means any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.

          “Pledged Shares” means, collectively, (i) the Initial Pledged Shares and (ii) all
other Shares of any Issuer now or hereafter owned by any Grantor, together in each case with (a)
all certificates representing the same, (b) all shares, securities, moneys or other property
representing a dividend on or a distribution or return of capital on or in respect of the
Pledged Shares, or resulting from a split-up, revision, reclassification or other like change of
the Pledged Shares or otherwise received in exchange therefor, and any warrants, rights or options
issued to the holders of, or otherwise in respect of, the Pledged Shares, and (c) without prejudice
to any provision of any of the Loan Documents prohibiting any merger or consolidation by an Issuer,
all Shares of any successor entity of any such merger or consolidation.

 

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          “Principal Collection Account” has the meaning assigned to such term in Section
5.01(a) of the Sale and Servicing Agreement.

          “Qualified Substitute Collateral” has the meaning assigned to such term in Section
1.01 of the Sale and Servicing Agreement.

          “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.

          “Required Secured Parties” means Lenders holding more than 50% of the Credit Agreement
Obligations at such time.

          “Secured Obligations” means, collectively, (a) in the case of the Borrower, the Credit
Agreement Obligations, (b) in the case of any other Grantor, the obligations of such Grantor in
respect of the Guaranteed Obligations pursuant to Section 3.01 and (c) in the case of all Grantors,
all present and future obligations of the Grantors to the Secured Parties, or any of them,
hereunder or under any other Security Document.

          “Secured Party” means, collectively, the Lenders, the Administrative Agent and the
Collateral Custodian.

          “Security Documents” means, collectively, this Agreement, all Uniform Commercial Code
financing statements filed with respect to the security interests in the Collateral created
pursuant hereto and all other assignments, pledge agreements, security agreements, control
agreements and other instruments executed and delivered on or after the date hereof by any of the
Grantors pursuant hereto or otherwise providing or relating to any collateral security for any of
the Secured Obligations.

          “Servicer’s Loan Files” has the meaning assigned to such term in Section 1.01 of the
Sale and Servicing Agreement.

          “Shares” means shares of capital stock of a corporation, limited liability company
interests, partnership interests and other ownership or equity interests of any class in any Person
together with any options, warrants or other rights to acquire any such interests.

          “Subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with generally accepted
accounting principles as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are, as of such date,
owned, controlled or held, or (b) that is, as of such date, otherwise controlled, by the parent or

 

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one or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent.
Anything herein to the contrary notwithstanding, the term “Subsidiary” shall not include any
Person that constitutes an investment held by any Credit Party in the ordinary course of business
and that is not, under generally accepted accounting principles, consolidated on the financial
statements of the Borrower and its Subsidiaries. Unless otherwise specified, “Subsidiary” means a
Subsidiary of the Borrower.

          “Transfer Date” has the meaning assigned to such term in Section 1.01 of the Sale and
Servicing Agreement.

          “Trust Accounts” has the meaning assigned to such term in Section 1.01 of the Sale and
Servicing Agreement.

          “Unqualified Collateral” has the meaning assigned to such term in Section 1.01 of the
Sale and Servicing Agreement.

          1.03 Terms Generally. The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns, (c) the words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Sections, Exhibits and Annexes shall be construed to refer to Sections of, and Exhibits and Annexes
to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same
meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.

          Section 2. Representations and Warranties. Each Credit Party (or, as applicable, each
Grantor) represents and warrants to the Secured Parties that:

          2.01 Organization
.. Such Credit Party is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.

          2.02 Authorization; Enforceability. The execution, delivery and performance of this
Agreement, and the granting of the Liens contemplated hereunder, are within such Credit Party’s
corporate or other powers and have been duly authorized by all necessary corporate or other action,
including by all necessary shareholder action. This Agreement has been duly executed and delivered
by such Credit Party and constitutes a legal, valid and binding obligation of such Credit Party,
enforceable in accordance with its terms, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general

 

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applicability
affecting the enforcement of creditors’ rights and (b) the application of general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law).

          2.03 Governmental Approvals; No Conflicts. The execution, delivery and performance of this
Agreement, and the granting of the Liens contemplated hereunder, (a) do not require any consent or
approval of, registration or filing with, or any other action by, any Governmental Authority,
except for (i) such as have been or will be obtained or made and are in full force and effect and
(ii) filings and recordings in respect of the Liens created pursuant hereto, (b) will not violate
any applicable law or regulation or the charter, by-laws or other organizational documents of any
Credit Party or any order of any Governmental Authority, (c) will not violate or result in a
default in any material respect under any indenture, agreement or other instrument binding upon any
Credit Party or any of its assets, or give rise to a right thereunder to require any payment to be
made by any such Person, and (d) except for the Liens created pursuant hereto, will not result in
the creation or imposition of any Lien on any asset of any Credit Party.

          2.04 Title. Such Grantor is the sole beneficial owner of the Collateral in which a
security interest is granted by such Grantor hereunder and no Lien exists upon such Collateral
other than (a) the security interest created or provided for herein, which security interest
constitutes a valid first and prior perfected Lien on the Collateral and (b) other Liens not
prohibited by the provisions of any Basic Document.

          2.05 Names, Etc. The full and correct legal name, type of organization, jurisdiction of
organization, organizational ID number (if applicable) and mailing address of the Borrower as of
the date hereof are correctly set forth in Annex 1 (and of each Credit Party as of the date of the
Guarantee Assumption Agreement referred to below are set forth in the supplement to Annex 1 in
Appendix A to the Guarantee Assumption Agreement executed and delivered by such Credit Party
pursuant to Section 5.03).

          2.06 Changes in Circumstances. No Grantor has (a) within the period of four months prior
to the date hereof (or, in the case of any Subsidiary Guarantor that is a Grantor, within the
period of four months prior to the date it becomes a party hereto pursuant to a Guarantee
Assumption Agreement), changed its location
(as determined pursuant to Section 9-307 of the NYUCC), (b) as of the date hereof (or, with respect
to any Subsidiary Guarantor that is a Grantor, as of the date it becomes a party hereto pursuant to
a Guarantee Assumption Agreement), changed its name or (c) as of the date hereof (or, with respect
to any Subsidiary Guarantor that is a Grantor, as of the date it becomes a party hereto pursuant to
a Guarantee Assumption Agreement), become a “new debtor” (as defined in Section 9-102(a)(56) of the
NYUCC) with respect to a currently effective security agreement previously entered into by any
other Person and binding upon such Grantor, in each case except as notified in writing to the
Collateral Custodian prior to the date hereof (or, in the case of any Subsidiary Guarantor that is
a Grantor, prior to the date it becomes a party hereto pursuant to a Guarantee Assumption
Agreement).

          2.07 Deposit Accounts and Securities Accounts. Annex 2 sets forth a complete and correct
list of all Deposit Accounts and Securities Accounts of the Borrower and any

 

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Lockbox Accounts under
and as defined in the Intercreditor Agreement, in each case on the date hereof (and of any
Subsidiary Guarantor on the date it becomes a party hereto pursuant to a Guarantee Assumption
Agreement), except for any Deposit Account specially and exclusively used for payroll, payroll
taxes and other employee wage and benefit payments.

          2.08 Pledged Shares. The Pledged Shares from time to time pledged hereunder pursuant
to Section 4 will constitute 100% of the issued and outstanding Shares of each Issuer that are
beneficially owned by any Grantor as of the date such Pledged Shares are pledged hereunder (other
than any Shares held in a Securities Account referred to in Annex 2), whether or not registered in
the name of such Grantor. Annex 3 will correctly identify, as at the date of such pledge, the
respective Issuers of the Pledged Shares and (in the case of any corporate Issuer) the respective
class and par value of such Shares and the respective number of such Shares (and registered owner
thereof) represented by each such certificate.

          All Pledged Shares in which the Borrower shall hereafter grant a security interest pursuant to
Section 4 will be, (i) duly authorized, validly existing, fully paid and non-assessable (in the
case of any Shares issued by a corporation) and (ii) duly issued and outstanding (in the case of
any equity interest in any other entity), and none of such Pledged Shares are or will be subject to
any contractual restriction, or any restriction under the charter, by-laws, partnership agreement
or other organizational instrument of the respective Issuer thereof, upon the transfer of such
Pledged Shares (except for any such restriction contained herein or in the Basic Documents, or
under such organizational instruments or in such documents to which the applicable Issuer is
subject that have been provided to the Administrative Agent).

          Section 3. Guarantee.

          3.01 The Guarantee. The Subsidiary Guarantors hereby jointly and severally guarantee to
each of the Secured Parties and their respective successors and assigns the prompt payment in full
when due (whether
at stated maturity, by acceleration or otherwise) of the Guaranteed Obligations. The Subsidiary
Guarantors hereby further jointly and severally agree that if the Borrower shall fail to pay in
full when due (whether at stated or extended maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Subsidiary Guarantors will jointly and severally pay the same without
any demand or notice whatsoever, and that in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due
(whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such
extension or renewal.

          3.02 Obligations Unconditional. The obligations of the Subsidiary Guarantors under Section
3.01 are irrevocable, absolute and unconditional, joint and several, irrespective of the value,
genuineness, validity, regularity or enforceability of the obligations of the Borrower under this
Agreement, the other Basic Documents or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other guarantee of or security for any of
the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of
any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, it being the intent of this Section 3 that the obligations of the
Subsidiary Guarantors hereunder shall be absolute and unconditional under

 

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any and all
circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence
of any one or more of the following shall not alter or impair the liability of the Subsidiary
Guarantors hereunder, which shall remain absolute and unconditional as described above:

     (a) at any time or from time to time, without notice to the Subsidiary Guarantors, the
time for any performance of or compliance with any of the Guaranteed Obligations shall be
extended, or such performance or compliance shall be waived;

     (b) any of the acts mentioned in any of the provisions of this Agreement, the other
Basic Documents or any other agreement or instrument referred to herein or therein shall be
done or omitted;

     (c) the maturity of any of the Guaranteed Obligations shall be accelerated, or any of
the Guaranteed Obligations shall be modified, supplemented or amended in any respect, or any
right under this Agreement, the other Basic Documents or any other agreement or instrument
referred to herein or therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be released or exchanged in whole or
in part or otherwise dealt with; or

     (d) any lien or security interest granted to, or in favor of, any Secured Party as
security for any of the Guaranteed Obligations shall fail to be perfected.

The Subsidiary Guarantors hereby expressly waive diligence, presentment, demand of payment, protest
and all notices whatsoever, and any requirement that any Secured Party exhaust any right, power or
remedy or proceed against the Borrower under this Agreement, the other Basic Documents or any other
agreement or instrument referred to herein or therein, or against any other Person under any other
guarantee of, or security for, any of the Guaranteed Obligations.

          3.03 Reinstatement. The obligations of the Subsidiary Guarantors under this Section 3
shall be automatically reinstated if and to the extent that for any reason any payment by or on
behalf of the Borrower in respect of the Guaranteed Obligations is rescinded or must be otherwise
restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings
in bankruptcy or reorganization or otherwise, and the Subsidiary Guarantors jointly and severally
agree that they will indemnify the Secured Parties on demand for all reasonable costs and expenses
(including reasonable fees and other charges of counsel) incurred by the Secured Parties in
connection with such rescission or restoration, including any such costs and expenses incurred in
defending against any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.

          3.04 Subrogation. The Subsidiary Guarantors hereby jointly and severally agree that until
the payment and satisfaction in full of all Guaranteed Obligations, and the expiration and
termination of all letters of credit or commitments to extend credit under the Credit Agreement,
they shall not exercise any right or remedy arising by reason of any performance by them of their
guarantee in Section 3.01, whether by subrogation or otherwise,

 

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against the Borrower or any other
guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed
Obligations.

          3.05 Remedies. The Subsidiary Guarantors jointly and severally agree that, as between the
Subsidiary Guarantors and the Secured Parties, a Guaranteed Obligation may be declared to be
forthwith due and payable as provided in the Credit Agreement including Article VII thereof (and
shall be deemed to have become automatically due and payable in the circumstances provided therein
including such Article VII) for purposes of Section 3.01 notwithstanding any stay, injunction or
other prohibition preventing such declaration (or such obligations from becoming automatically due
and payable) as against the Borrower or any Subsidiary Guarantors and that, in the event of such
declaration (or such obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith become due and payable
by the Subsidiary Guarantors for purposes of Section 3.01.

          3.06 Continuing Guarantee. The guarantee in this Section 3 is a continuing guarantee of
payment (and not of collection), and shall apply to all Guaranteed Obligations whenever arising.

          3.07 Instrument for the Payment of Money. Each Subsidiary Guarantor hereby acknowledges
that the guarantee in this Section 3 constitutes an instrument for the payment of money, and
consents and agrees that any Secured Party, at its sole option, in the event of a dispute by such
Subsidiary Guarantor in the payment of any moneys due hereunder, shall have the right to bring
motion action under New York CPLR Section 3213.

          3.08 Rights of Contribution. The Credit Parties hereby agree, as between themselves, that
if any Subsidiary Guarantor shall become an Excess Funding Guarantor (as defined below) by reason
of the payment by such
Subsidiary Guarantor of any Guaranteed Obligations, then each other Subsidiary Guarantor shall, on
demand of such Excess Funding Guarantor (but subject to the next sentence), pay to such Excess
Funding Guarantor an amount equal to such Subsidiary Guarantor’s Pro Rata Share (as defined below
and determined, for this purpose, without reference to the properties, debts and liabilities of
such Excess Funding Guarantor) of the Excess Payment (as defined below) in respect of such
Guaranteed Obligations. The payment obligation of a Subsidiary Guarantor to any Excess Funding
Guarantor under this Section 3.08 shall be subordinate and subject in right of payment to the prior
payment in full of the obligations of such Subsidiary Guarantor under the other provisions of this
Section 3 and such Excess Funding Guarantor shall not exercise any right or remedy with respect to
such excess until payment and satisfaction in full of all of such obligations.

          For purposes of this Section 3.08, (i) “Excess Funding Guarantor” means, in respect of
any Guaranteed Obligations, a Subsidiary Guarantor that has paid an amount in excess of its Pro
Rata Share of such Guaranteed Obligations, (ii) “Excess Payment” means, in respect of any
Guaranteed Obligations, the amount paid by an Excess Funding Guarantor in excess of its Pro Rata
Share of such Guaranteed Obligations and (iii) “Pro Rata Share” means, for any Subsidiary
Guarantor, the ratio (expressed as a percentage) of (x) the amount by which the aggregate fair
saleable value of all properties of such Subsidiary Guarantor (excluding any shares of stock or
other equity interest of any other Subsidiary Guarantor) exceeds the amount of all the

 

- 14 -

debts and
liabilities of such Subsidiary Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Subsidiary Guarantor hereunder and
any obligations of any other Subsidiary Guarantor that have been Guaranteed by such Subsidiary
Guarantor) to (y) the amount by which the aggregate fair saleable value of all properties of the
Borrower and all of the Subsidiary Guarantors exceeds the amount of all the debts and liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the
obligations of the Credit Parties hereunder) of the Borrower and all of the Subsidiary Guarantors,
determined (A) with respect to any Subsidiary Guarantor that is a party hereto on the date hereof,
as of the date hereof, and (B) with respect to any other Subsidiary Guarantor, as of the date such
Subsidiary Guarantor becomes a Subsidiary Guarantor hereunder.

          3.09 General Limitation on Guarantee Obligations. In any action or proceeding involving
any state corporate or other law, or any Federal or state bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of any Subsidiary
Guarantor under Section 3.01 would otherwise, taking into account the provisions of Section 3.08,
be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any
other creditors, on account of the amount of its liability under Section 3.01, then,
notwithstanding any other provision hereof to the contrary, the amount of such liability shall,
without any further action by such Subsidiary Guarantor, any Secured Party or any other Person, be
automatically limited and reduced to the highest amount that is valid and enforceable and not
subordinated to the claims of other creditors as determined in such action or proceeding.

          3.10 Indemnity by Borrower
.. In addition to all such rights of indemnity and subrogation as the Subsidiary Guarantors may
have under applicable law (but subject to Section 3.04), the Borrower agrees that (a) in the event
a payment shall be made by any Subsidiary Guarantor under this Agreement, the Borrower shall
indemnify such Subsidiary Guarantor for the full amount of such payment and such Subsidiary
Guarantor shall be subrogated to the rights of the Person to whom such payment shall have been made
to the extent of such payment and (b) in the event any assets of any Subsidiary Guarantor shall be
sold pursuant to this Agreement or any other Security Document to satisfy in whole or in part the
Guaranteed Obligations, the Borrower shall indemnify such Subsidiary Guarantor in an amount equal
to the greater of the book value or the fair market value of the assets so sold.

          Section 4. Collateral. As collateral security for the payment in full when due (whether at
stated maturity, by acceleration or otherwise) of its Secured Obligations, each Grantor hereby
pledges and grants to the Collateral Custodian for the benefit of the Secured Parties as
hereinafter provided a security interest in all of such Grantor’s right, title and interest in, to
and under the following property, in each case whether tangible or intangible, wherever located,
and whether now owned by such Grantor or hereafter acquired and whether now existing or hereafter
coming into existence (all of the property described in this Section 4 being collectively referred
to herein as “Collateral”):

     (a) all Accounts, all Chattel Paper, all Deposit Accounts, all Documents, all
General Intangibles, all Instruments (including all Promissory Notes), all
Investment Property not covered by the foregoing (including all

 

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Securities, all
Securities Accounts and all Security Entitlements with respect thereto and Financial
Assets carried therein), and all Letter-of-Credit Rights where the underlying letter
of credit supports Collateral;

     (b) without limiting the generality of the foregoing paragraph (a), all Loans
as from time to time are subject to the Sale and Servicing Agreement as listed in
the Collateral Schedule, as the same may be amended or supplemented on the date of
each Borrowing and by the removal of Deleted Collateral, Repurchased Loans and
Unqualified Collateral and by the addition of Qualified Substitute Collateral,
together with the Servicer’s Loan Files and the Custodial Loan Files relating
thereto and all Mortgages and security interests in the Mortgaged Properties;

     (c) the Pledged Shares;

     (d) all right, title and interest of the Borrower in, to and under the Basic
Documents including, without limitation, the Borrower’s right to cause the Depositor
to repurchase Loans from the Borrower under certain circumstances described in the
Sale and Servicing Agreement; and

     (e) all present and future claims, demands, causes of action and choses in action in
respect of any or all of the foregoing and all payments on or under and all Proceeds of any
of the Collateral and, to the extent related to any Collateral, all books,
correspondence, credit files, records, invoices and other papers (including all tapes,
cards, computer runs and other papers and documents in the possession or under the control
of such Grantor or any computer bureau or service company from time to time acting for such
Grantor),

IT BEING UNDERSTOOD, HOWEVER, that in no event shall the security interest granted under this
Section 4 attach to any contract, property rights, obligation, instrument or agreement to which a
Grantor is a party (or to any of its rights or interests thereunder) if the grant of such security
interest would constitute or result in either (i) the abandonment, invalidation or unenforceability
of any right, title or interest of such Grantor therein or (ii) in a breach or termination pursuant
to the terms of, or a default under, any such contract, property rights, obligation, instrument or
agreement (other than to the extent that any such term would be rendered ineffective by Section
9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code as in effect in the relevant
jurisdiction).

          Section 5. Covenants of the Grantor. In furtherance of the grant of the security interest
pursuant to Section 4, each Grantor hereby agrees with the Collateral Custodian for the benefit of
the Secured Parties as follows:

          5.01 Delivery and Other Perfection. Within 60 days after the acquisition by a Grantor of
any part of the Collateral as to which physical possession by the Collateral Custodian is required
in order for such Collateral to have been “Delivered”, such Grantor shall take such actions as
shall be necessary to effect Delivery of such Collateral. As to all other Collateral, such Grantor
shall cause the same to be Delivered within five Business Days of the acquisition

 

- 16 -

thereof to the
extent not required to be delivered earlier pursuant to the Sale and Servicing Agreement. In
addition, and without limiting the generality of the foregoing, each Grantor shall promptly from
time to time give, execute, deliver, file, record, authorize or obtain all such financing
statements, continuation statements, notices, instruments, documents, account control agreements or
any other agreements or consents or other papers as may be necessary or reasonably desirable in the
judgment of the Administrative Agent to create, preserve, perfect, maintain the perfection of or
validate the security interest granted pursuant hereto or to enable the Collateral Custodian to
exercise and enforce its rights hereunder with respect to such security interest, and without
limiting the foregoing, shall:

     (a) keep full and accurate books and records relating to the Collateral in all material
respects, and stamp or otherwise mark such books and records in such manner as the
Collateral Custodian may reasonably require in order to reflect the security interests
granted by this Agreement; and

     (b) permit representatives of the Collateral Custodian, upon reasonable notice, at any
time during normal business hours to inspect and make abstracts from its books and records
pertaining to the Collateral at the expense of such Credit Party, and permit representatives
of the Collateral Custodian to be present at such Grantor’s place of business to receive
copies of communications and remittances relating to the Collateral, and forward copies of
any notices or communications received by such Grantor with respect to the Collateral, all
in such manner as the Collateral Custodian may require,
provided that each such Grantor shall be entitled to have its representatives
and advisors present during any inspection of its books and records at such Grantor’s place
of business.

          Each Grantor hereby authorizes the filing of a UCC-1 financing statement naming such Grantor
as “debtor” and the Collateral Custodian as “secured party” and describing the collateral therein
as “all assets” or words of similar import.

          5.02 Other Financing Statements or Control. Except as otherwise permitted under Section
6(f) of the Credit Agreement, the Grantors shall not (a) file or suffer to be on file, or authorize
or permit to be filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to any of the Collateral in which the Collateral Custodian is not named as
the sole Collateral Custodian for the benefit of the Secured Parties, or (b) cause or permit any
Person other than the Collateral Custodian to have Control of any Deposit Account, Electronic
Chattel Paper, Investment Property or Letter-of-Credit Right constituting part of the Collateral.

          5.03 Additional Subsidiary Guarantors. As contemplated by Section 5.12 of the Credit
Agreement, new Subsidiaries of the Borrower formed or acquired by the Borrower after the date

hereof, are required to become a “Subsidiary Guarantor” under this Agreement, by executing and
delivering to the Collateral Custodian a Guarantee Assumption Agreement in the form of Exhibit A
hereto. Accordingly, upon the execution and delivery of any such Guarantee Assumption Agreement by
any such Subsidiary, such new Subsidiary shall automatically and immediately, and without any
further action on the part of any Person, become a “Subsidiary Guarantor” and a “Grantor” for all
purposes of this Agreement, and Annexes 1 through 6,

 

- 17 -

inclusive, hereto shall be deemed to be
supplemented in the manner specified in such Guarantee Assumption Agreement. In addition, upon
execution and delivery of any such Guarantee Assumption Agreement, the new Subsidiary Guarantor
makes the representations and warranties set forth in Section 2 as of the date of such Guarantee
Assumption Agreement.

          Notwithstanding the foregoing, no Equity Subsidiary shall be required to grant any collateral
security in any of its assets under the Guarantee and Security Agreement, but shall only be
required to be a Subsidiary Guarantor thereunder.

          Section 6. Acceleration Notice; Remedies; Distribution of Collateral.

          6.01 Preservation of Rights. The Collateral Custodian shall not be required to take steps
necessary to preserve any rights against prior parties to any of the Collateral.

          6.02 Events of Default, Etc. During the period during which an Event of Default or Trigger
Event shall have occurred and be continuing:

     (a) each Grantor shall, at the request of the Collateral Custodian, assemble the
Collateral owned by it at such place or places, reasonably convenient to both the Collateral
Custodian and such Grantor, designated in the Collateral Custodian’s request;

     (b) the Collateral Custodian may make any reasonable compromise or settlement deemed
desirable with respect to any of the Collateral and may extend the time of payment, arrange
for payment in installments, or otherwise modify the terms of, any of the Collateral;

     (c) the Collateral Custodian shall have all of the rights and remedies with respect to
the Collateral of a secured party under the Uniform Commercial Code (whether or not the
Uniform Commercial Code is in effect in the jurisdiction where the rights and remedies are
asserted) and such additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies hereunder may be
asserted, including the right, to the fullest extent permitted by applicable law, to
exercise all voting, consensual and other powers of ownership pertaining to the Collateral
as if the Collateral Custodian were the sole and absolute owner thereof (and each Grantor
agrees to take all such action as may be appropriate to give effect to such right);

     (d) the Collateral Custodian in its discretion may (and at the direction of the
Administrative Agent shall), in its name or in the name of any Grantor or otherwise, demand,
sue for, collect or receive any money or property at any time payable or receivable on
account of or in exchange for any of the Collateral, but shall be under no obligation to do
so; and

     (e) the Collateral Custodian may, upon ten Business Days’ prior written notice to the
Grantors of the time and place (or, if such sale is to take place on the NYSE or any other
established exchange or market, prior to the time of such sale or other disposition), with
respect to the Collateral or any part thereof which shall then be or shall

 

- 18 -

thereafter come
into the possession, custody or control of the Collateral Custodian, the other Secured
Parties or any of their respective agents, sell, assign or otherwise dispose of all or any
part of such Collateral, at such place or places as the Collateral Custodian deems best, and
for cash or for credit or for future delivery (without thereby assuming any credit risk), at
public or private sale, without demand of performance or notice of intention to effect any
such disposition or of the time or place thereof (except such notice as is required above or
by applicable statute and cannot be waived), and the Collateral Custodian or any other
Secured Party or anyone else may be the purchaser, assignee or recipient of any or all of
the Collateral so disposed of at any public sale (or, to the extent permitted by law, at any
private sale) and thereafter, to the fullest extent permitted by law, hold the same
absolutely, free from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of the Grantors, any such demand, notice and right
or equity being hereby expressly waived and released, to the fullest extent permitted by
law.

     The Collateral Custodian may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by announcement at
the time and place fixed for the sale, and such sale may be made at any time or place
to which the sale may be so adjourned.

The proceeds of each collection, sale or other disposition under this Section shall be applied in
accordance with Section 6.05.

          The Grantors recognize that, by reason of certain prohibitions contained in the Securities Act
of 1933, as amended, and applicable state securities laws, the Collateral Custodian may be
compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to
those who will agree, among other things, to acquire the Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The Grantors acknowledge
that any such private sales may be at prices and on terms less favorable to the Collateral
Custodian than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that to the extent any such private sale is conducted by
the Collateral Custodian in a commercially reasonable manner, the Collateral Custodian shall have
no obligation to engage in public sales and no obligation to delay the sale of any Collateral for
the period of time necessary to permit the Grantors, or the issuer thereof, to register it for
public sale.

          6.03 Deficiency. If the proceeds of sale, collection or other realization of or upon the
Collateral pursuant to Section 6.02 are insufficient to cover the costs and expenses of such
realization and the payment in full of the Secured Obligations, the Grantors shall remain liable
for any deficiency.

          6.04 Private Sale. The Collateral Custodian and the Secured Parties shall incur no
liability as a result of the sale of the Collateral, or any part thereof, at any private sale
pursuant to Section 6.02 conducted in a commercially reasonable manner. Each Grantor hereby waives
any claims against the Collateral Custodian or any other Secured Party arising by reason of the
fact that the price at which the Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale or was less than the aggregate

 

- 19 -

amount of
the Secured Obligations, even if the Collateral Custodian accepts the first offer received and does
not offer the Collateral to more than one offeree, so long as such private sale was conducted in a
commercially reasonable manner.

          6.05 Application of Proceeds. Except as otherwise herein expressly provided, the proceeds
of any collection, sale or other realization of all or any part of the Collateral of any Grantor
pursuant hereto, and any other cash of any Grantor at the time held by the Collateral Custodian
under this Agreement, shall be applied by the Collateral Custodian as follows:

     First, to the payment of the costs and expenses of such collection, sale or
other realization, including reasonable out-of-pocket costs and expenses of the Collateral
Custodian and the reasonable fees and expenses of its agents and counsel, and all expenses
incurred and advances made by the Collateral Custodian in connection therewith;

     Second, to the payment of any fees and other amounts then owing by such Grantor
to the Collateral Custodian in its capacity as such;

     Third, to the payment of the Secured Obligations of such Grantor then due and
payable, in each case equally and ratably in accordance with the amounts thereof that are
then due and payable (it being understood that, to the extent any cover in respect of a
letter of credit shall be due and payable under a Basic Document, that such cover shall be
deemed to be a Secured Obligation that is due and payable for purposes hereof); and

     Fourth, after application as provided in clauses “First”,
“Second” and “Third” above, to the payment to the respective Grantor, or
their respective successors or assigns, or as a court of competent jurisdiction may direct,
of any surplus then remaining.

In making the allocations required by this Section, the Collateral Custodian may rely upon its
records and information supplied to it by the Administrative Agent, and the Collateral Custodian
shall have no liability to any of the other Secured Parties for actions taken in reliance on such
information, except to the extent of its gross negligence or willful misconduct. The Collateral
Custodian may, in its sole discretion, at the time of any application under this Section, withhold
all or any portion of the proceeds otherwise to be applied to the Secured Obligations as provided
above and maintain the same in a segregated cash collateral account in the name and under the
exclusive Control of the Collateral Custodian, to the extent that it in good faith believes that
the information provided to it by the Administrative Agent is either incomplete or inaccurate and
that application of the full amount of such proceeds to the Secured Obligations would be
disadvantageous to any Secured Party. All distributions made by the Collateral Custodian pursuant
to this Section shall be final (subject to any decree of any court of competent jurisdiction), and
the Collateral Custodian shall have no duty to inquire as to the application by the other Secured
Parties of any amounts distributed to them.

          6.06 Attorney-in-Fact. Without limiting any rights or powers granted by this Agreement to
the Collateral Custodian while no Event of Default or Trigger Event has occurred and is continuing,
upon the occurrence and during the continuance of any Event of Default or Trigger Event the
Collateral Custodian is hereby appointed the attorney-in-fact of each Grantor

 

- 20 -

for the purpose of
carrying out the provisions of this Section 6 and taking any action and executing any instruments
which the Collateral Custodian may reasonably deem necessary or advisable to accomplish the
purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, so long as the Collateral Custodian shall be
entitled under this Section 6 to make collections in respect of the Collateral, the Collateral
Custodian shall have the right and power to receive, endorse and collect all checks made payable to
the order of any Grantor representing any dividend, payment or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same.

          Section 7.
The Collateral Custodian.

          7.01 Powers and Immunities. The Collateral Custodian (which term as used in this sentence and in Section 7.04 and the first
sentence of Section 7.05 shall include reference to its affiliates and its own and its affiliates’
officers, directors, employees and agents):

     (a) shall have no duties or responsibilities except those expressly set forth in this
Agreement and shall not by reason of this Agreement be a trustee for, or a fiduciary with
respect to, any Lender;

     (b) shall not be responsible to the Lenders or the Administrative Agent for any
recitals, statements, representations or warranties contained in this Agreement or in any
notice delivered hereunder, or in any other certificate or other document referred to or
provided for in, or received by it under, this Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other
document referred to or provided for herein or therein or for any failure by the Credit
Parties or any other Person to perform any of its obligations hereunder;

     (c) shall not be required to initiate or conduct any litigation or collection
proceedings hereunder except, subject to Section 7.05, for any such litigation or
proceedings relating to the enforcement of the guarantee set forth in Section 3, or the
Liens created pursuant to Section 4; and

     (d) shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith, except for its own gross negligence or
willful misconduct.

          7.02 Reliance by Collateral Custodian. The Collateral Custodian shall be entitled to rely
upon any certification, notice or other communication (including any thereof by telephone,
telecopy, telex, telegram or cable) believed by it in good faith to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected by the Collateral
Custodian. As to any matters not expressly provided for by this Agreement, the Collateral
Custodian shall in all cases be fully protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the Required Secured Parties,

 

- 21 -

and such
instructions of the Required Secured Parties and any action taken or failure to act pursuant
thereto shall be binding on all of the Secured Parties. If in one or more instances the Collateral
Custodian takes any action or assumes any responsibility not specifically delegated to it pursuant
to this Agreement, neither the taking of such action nor the assumption of such responsibility
shall be deemed to be an express or implied undertaking on the part of the Collateral Custodian
that it will take the same or similar action or assume the same or similar responsibility in any
other instance.

          7.03 Indemnification. Each Lender agrees to indemnify the Collateral Custodian and each
Related Party of the Collateral Custodian (each such Person being called an “Indemnitee”)
(to the extent not reimbursed under Section 8.04, but without limiting the obligations of the
Credit Parties under
Section 8.04) ratably in accordance with the aggregate Secured Obligations held by the Lenders, for
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against any Indemnitee (including by any other Secured Party) arising out of or by reason
of any investigation in connection with or in any way relating to or arising out of this Agreement,
any other Basic Documents, or any other documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby (including the costs and expenses that the
Credit Parties are obligated to pay under Section 8.04, but excluding, unless an Event of Default
has occurred and is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, provided that no Lender shall be liable for any of
the foregoing to the extent they arise from the gross negligence or willful misconduct of the party
to be indemnified.

          7.04 Non-Reliance on Collateral Custodian and Other Secured Parties. The Administrative
Agent and each Lender agrees that it has, independently and without reliance on the Collateral
Custodian or any other Secured Party, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower, the Subsidiary Guarantors and their
Subsidiaries and decision to extend credit to the Borrower in reliance on this Agreement and that
it will, independently and without reliance upon the Collateral Custodian or any other Secured
Party, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action under this Agreement
and any Basic Document to which it is a party. Except as otherwise expressly provided herein, the
Collateral Custodian shall not be required to keep itself informed as to the performance or
observance by any Credit Party of this Agreement, any other Basic Document or any other document
referred to or provided for herein or therein or to inspect the properties or books of any Credit
Party. The Collateral Custodian shall not have any duty or responsibility to provide any other
Secured Party with any credit or other information concerning the affairs, financial condition or
business of any Credit Party or any of its Subsidiaries (or any of their affiliates) that may come
into the possession of the Collateral Custodian or any of its affiliates, except for notices,
reports and other documents and information expressly required to be furnished to the other Secured
Parties by the Collateral Custodian hereunder.

          7.05 Failure to Act. Except for action expressly required of the Collateral Custodian
hereunder, the Collateral Custodian shall in all cases be fully justified in failing or

 

- 22 -

refusing to
act hereunder unless it shall receive further assurances to its satisfaction from the other Secured
Parties of their indemnification obligations under Section 7.03 against any and all liability and
expense that may be incurred by it by reason of taking or continuing to take any such action. The
Collateral Custodian shall not be required to take any action that in the judgment of the
Collateral Custodian would violate any applicable law.

          7.06 Agents and Attorneys-in-Fact. The Collateral Custodian may employ agents and attorneys-in-fact in connection herewith and
shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it in good faith.

          Section 8. Miscellaneous.

          8.01 Notices. All notices, requests, consents and other demands hereunder and other
communications provided for herein shall be given or made in writing, (a) to any party hereto,
telecopied or delivered to the intended recipient at the “Address for Notices” specified below its
name on the signature pages hereof (provided that notices to any Subsidiary Guarantor shall
be given to such Subsidiary Guarantor care of the Borrower at the address for the Borrower
specified herein) or (b) as to any party, at such other address as shall be designated by such
party in a written notice to each other party. All notices to any Lender that is not a party
hereto shall be given to the Administrative Agent.

          8.02 No Waiver. No failure on the part of the Collateral Custodian or any other Secured
Party to exercise, and no course of dealing with respect to, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by any Secured Party of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.

          8.03 Amendments, Etc. Except as otherwise provided in any Security Document, the terms of
this Agreement and the other Security Documents may be waived, altered or amended only by an
instrument in writing duly executed by each Credit Party and the Collateral Custodian, with the
consent of the Required Secured Parties, provided that

     (a) no such amendment shall adversely affect the relative rights of any Secured Party
as against any other Secured Party without the prior written consent of such first Secured
Party,

     (b) without the prior written consent of each of the Lenders under the Credit
Agreement, the Collateral Custodian shall not release all or substantially all of the
collateral under the Security Documents or release all or substantially all of the
Subsidiary Guarantors from their guarantee obligations under Section 3 hereof,

     (c) without the consent of each of the Secured Parties, no modification, supplement or
waiver shall modify the definition of the term “Required Secured Parties” or modify in any
other manner the number of percentage of the Secured Parties required to make any
determinations or waive any rights under any Security Document;

 

- 23 -

     (d) without the consent of the Collateral Custodian, no modification, supplement or
waiver shall modify the terms of Section 7;

     (e) the Collateral Custodian is authorized to release (and shall release) any
Collateral that is either the subject of a disposition not prohibited under the Credit
Agreement or to which the Required Secured Parties shall have consented; notwithstanding the
foregoing, such Collateral shall be automatically released from the lien of this Agreement,
without any action of the Collateral Custodian, in connection with any disposition of
Collateral that (i) occurs in the ordinary course of the Borrower’s business and (ii) is not
prohibited under the Credit Agreement; and

     (f) the Collateral Custodian is authorized to release (and shall release) any
Subsidiary Guarantor from any of its guarantee obligations under Section 3 hereof to the
extent such Subsidiary is the subject of a disposition not prohibited under the Basic
Documents or to which the Required Secured Parties shall have consented and upon such
release, the Collateral Custodian is authorized to release (and shall release) any
collateral security granted by such Subsidiary Guarantor hereunder and under the other
Security Documents.

Any such amendment or waiver shall be binding upon the Collateral Custodian, each Secured Party and
each Credit Party.

          8.04 Expenses; Indemnity; Damage Waiver.

          (a) Costs and Expenses. The Credit Parties hereby jointly and severally agree to
reimburse the Collateral Custodian and each of the other Secured Parties for all reasonable
out-of-pocket costs and expenses incurred by them (including the reasonable fees, charges and
disbursements of legal counsel) in connection with (i) any Default and any enforcement or
collection proceeding resulting therefrom, including all manner of participation in or other
involvement with (w) performance by the Collateral Custodian of any obligations of the Credit
Parties in respect of the Collateral that the Credit Parties have failed or refused to perform in
the time period required under this Agreement, (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings of any Credit Party, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in respect of any of the
Collateral, and for the care of the Collateral and defending or asserting rights and claims of the
Collateral Custodian in respect thereof, by litigation or otherwise, including expenses of
insurance, (y) judicial or regulatory proceedings arising from or related to this Agreement and (z)
workout, restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the enforcement of this
Section, and all such costs and expenses shall be Secured Obligations entitled to the benefits of
the collateral security provided pursuant to Section 4.

          (b) Indemnification by the Credit Parties. The Credit Parties shall indemnify each
Indemnitee against, and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses including the fees, charges and disbursements of any counsel for
any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this Agreement or any

 

- 24 -

agreement or instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or (ii) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from (x) the willful misconduct or gross negligence of such
Indemnitee or (y) a claim brought by the Borrower or any Credit Party against such Indemnitee for
breach in bad faith of such Indemnitee’s obligations under this Agreement or the other Basic
Documents, if the Borrower or such Credit Party has obtained a final and nonappealable judgment in
its favor on such claim as determined by a court of competent jurisdiction.

          Neither the Borrower nor any Credit Party shall be liable to any Indemnitee for any special,
indirect, consequential or punitive damages arising out of, in connection with, this Agreement
asserted by an Indemnitee against the Borrower or any other Credit Party, provided that the
foregoing limitation shall not be deemed to impair or affect the Obligations of the Borrower under
the preceding provisions of this subsection.

          8.05 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the respective successors and assigns of the Credit Parties and the Secured Parties
(provided that none of the Credit Parties shall assign or transfer its rights or
obligations hereunder without the prior written consent of the Administrative Agent).

          8.06 Counterparts; Integration; Effectiveness; Electronic Execution.

          (a) Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and any separate letter agreements with respect to fees payable to the Collateral
Custodian constitute the entire contract between and among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. This Agreement shall become effective when it shall have
been executed by the Collateral Custodian and when the Collateral Custodian shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Delivery of an executed counterpart of a signature page
to this Agreement by telecopy or other electronic means shall be effective as delivery of a
manually executed counterpart of this Agreement.

          (b) Electronic Execution of Assignments. The words “execution,” “signed,” “signature”
shall be deemed to include electronic signatures or the keeping of records in electronic form, each
of which shall be of the same legal effect, validity or enforceability as a
manually executed signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

- 25 -

          8.07 Severability. If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (a) the other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally construed in favor of
the Secured Parties in order to carry out the intentions of the parties hereto as nearly as may be
possible and (b) the invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any other jurisdiction.

          8.08 Governing Law; Submission to Jurisdiction.

          (a) Governing Law. This Agreement shall be construed in accordance with and governed
by the law of the State of New York.

          (b) Submission to Jurisdiction. Each Credit Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in such New York
State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any Secured Party may otherwise have to bring
any action or proceeding relating to this Agreement against any Credit Party or its properties in
the courts of any jurisdiction.

          (c) Waiver of Venue. Each Credit Party hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.

          (d) Service of Process. Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 8.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other manner permitted by
law.

          8.09 Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY

 

- 26 -

WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

          8.10 Headings. Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

          8.11 Covenants of the Borrower
.. All covenants of the Borrower in this Agreement are covenants of the Borrower and are not
covenants of the Owner Trustee. The Owner Trustee is, and any successor Owner Trustee under the
Trust Agreement will be, executing this Agreement solely as Owner Trustee under the Trust Agreement
and not in its respective individual capacity, and in no case whatsoever shall the Owner Trustee or
any such successor Owner Trustee be personally liable on, or for any loss in respect of, any of the
statements, representations, warranties or obligations of the Borrower hereunder, as to all of
which the parties hereto agree to look solely to the property of the Borrower.

 

- 27 -

          IN WITNESS WHEREOF, the parties hereto have caused this Guarantee and Security Agreement to be
duly executed and delivered as of the day and year first above written.

	 	 	 	 	 
	 	 	CAPITALSOURCE FUNDING V TRUST
	 	 	By: Wilmington Trust Company, solely as

Owner Trustee and not in its individual capacity
	 
	 	 	 	/s/ Janel R. Havrilla
	 

	 	 	 
	 

	 	Name: Janel R. Havrilla
	 

	 	Title: Financial Services Officer

	 	 	 	 	 
	 	 	Address for Notices
	 
	 	 	 	 
	 	 	CapitalSource Funding V Trust

c/o Wilmington Trust Company, as Owner Trustee
 Rodney
Square North

1100 North Market Street

Wilmington, Delaware 19890

Telecopy number (302) 636-4140

 

- 28 -

	 	 	 	 	 
	 	 	JPMORGAN CHASE BANK, N.A.,
     
as Administrative Agent
	 
	 	 	 	 
	 

	 	By:	 	/s/ Christine Herrick 
	 

	 	 	 	 
	 

	 	 	 	Name: Christine Herrick
	 

	 	 	 	Title: Vice President
	 
	 	 	 	 
	 	 	Address for Notices
	 
	 	 	 	 
	 	 	JPMorgan Chase Bank, N.A.

1111 Fannin Street, 10th Floor

Houston, Texas 77002-8069

Attention of Loan and Agency Services

Telecopy number (713) 750-2223
	 
	 	 	 	 
	 	 	With a copy to:

JPMorgan Chase Bank, N.A.

270 Park Avenue, 4th Floor

New York, New York 10017-2014

Attention of Collateral Management Services Group

Telecopy Number (212) 270-4628

 

- 29 -

	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
     
as Collateral Custodian
	 
	 	 	 	 
	 

	 	By:	 	/s/ Joe Nardi 
	 

	 	 	 	 
	 

	 	 	 	Name: Joe Nardi
	 

	 	 	 	Title: Vice President
	 
	 	 	Address for Notices
	 
	 	 	 	 
	 	 	Wells Fargo Bank, National Association

751 Kasota Avenue, Suite ABS, MAC N9328-011

Minneapolis, Minnesota, 55414

Attention: Corporate Trust Services/Asset-Backed

Securities Vault

Telecopy number (612) 667-1080
	 
	 	 	 	 
	 	 	With a copy to:

Wells Fargo Bank, National Association

MAC N9311-161, Sixth Street and Marquette

Minneapolis, Minnesota 55479

Attention: ABS Account Manager

Telecopy number (612) 667-3464

 

ANNEX 1

FILING DETAILS

ANNEX A

	 	 	 	 	 
	1.	 	CapitalSource Finance LLC
	 

	 	Domicile State:
	 	DE
	 

	 	Organizational ID:
	 	DE3275214
	 
	 	 	 	 
	 

	 	Executive Office:
	 	4445 Willard Ave.
	 

	 	 	 	12th Floor
	 

	 	 	 	Chevy Chase, MD 0815
	 
	2.	 	CS Funding V Depositor Inc.
	 

	 	Domicile State:
	 	DE
	 

	 	Organizational ID:
	 	DE3958940
	 
	 	 	 	 
	 

	 	Executive Office:
	 	4445 Willard Ave.
	 

	 	 	 	12th Floor
	 

	 	 	 	Chevy Chase, MD 0815
	 
	 	 	 	 
	3.	 	CapitalSource Funding V Trust
	 

	 	Domicile State:
	 	DE
	 

	 	Organizational ID:
	 	DE3958934
	 
	 	 	 	 
	 

	 	Executive Office:
	 	c/o Wilmington Trust Company

Rodney Square North, 1100 North Market Street

Wilmington, Delaware 19890

 

 

ANNEX 2

LIST OF DEPOSIT ACCOUNTS, AND SECURITIES ACCOUNTS AND LOCKBOX ACCOUNTS

Deposit Accounts

Account Number 18054000 (Collection Account), maintained at Wells Fargo Bank, National Association

Account Number 18054001 (Principal Collections Account), maintained at Wells Fargo Bank, National
Association

Account Number 18054002 (Distribution Account), maintained at Wells
Fargo Bank, National
Association

Lockbox Accounts

Account Numbers: 003930559738, 003938703751, 003939396662 and 003922575610, maintained at Bank of
America, N.A.

 

 

ANNEX 3

PLEDGED SHARES

[See definition of “Issuers” in Section 1.02 and Section 2.10]

None.

 

 

EXHIBIT A

[Form of Guarantee Assumption Agreement]

GUARANTEE ASSUMPTION AGREEMENT

          GUARANTEE
ASSUMPTION AGREEMENT dated as of ___ ___, ___by [NAME OF ADDITIONAL SUBSIDIARY
GUARANTOR], a ___(the “Additional Subsidiary Guarantor”), in favor of Wells Fargo
Bank, National Association, as Collateral Custodian for the Secured Parties under and as defined in
the Guarantee and Security Agreement referred to below (in such capacity, together with its
successors in such capacity, the “Collateral Custodian”).

          CapitalSource Funding V Trust (the “Borrower”), the Subsidiary Guarantors referred to
therein, JPMorgan Chase Bank, N.A., as administrative agent for the Lenders referred to therein,
and Wells Fargo Bank, National Association, as Collateral Custodian for the Secured Parties
referred to therein, are parties to a Guarantee and Security Agreement dated as of June 30, 2005
(the “Guarantee and Security Agreement”) pursuant to which such Subsidiary Guarantors have
guaranteed the “Guaranteed Obligations” (as defined therein), and the Borrower and such Subsidiary
Guarantors have granted liens in favor of the Collateral Custodian as collateral security for the
“Secured Obligations” (as defined therein). Capitalized terms used herein, unless otherwise
defined herein, shall have the meanings ascribed thereto in the Agreement.

          Pursuant to Section 5.03 of the Guarantee and Security Agreement, the Additional Subsidiary
Guarantor hereby agrees to become a “Subsidiary Guarantor” and a “Credit Party”, under and for all
purposes of the Guarantee and Security Agreement, and each of the Annexes to the Guarantee and
Security Agreement shall be deemed to be supplemented in the manner specified in Appendix A hereto.
Without limiting the foregoing, (a) the Additional Subsidiary Guarantor hereby, jointly and
severally with the other Subsidiary Guarantors, guarantees to each Secured Party and their
respective successors and assigns the prompt payment in full when due (whether at stated maturity,
by acceleration or otherwise) of the Guaranteed Obligations in the same manner and to the same
extent as is provided in Section 3 of the Guarantee and Security Agreement and (b) as collateral
security for the payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations of the Additional Subsidiary Guarantor, the Additional
Subsidiary Guarantor hereby pledges and grants to the Collateral Custodian for the benefit of the
Secured Parties as provided in the Guarantee and Security Agreement a security interest in all of
such Additional Subsidiary Guarantor’s right, title and interest in, to and under the
Collateral.1

          In addition, the Additional Subsidiary Guarantor hereby makes the representations and
warranties set forth in Section 2 of the Guarantee and Security Agreement with respect to itself
and its obligations under this Agreement, as if each reference in such Sections to the Guarantee
and Security Agreement included reference to this Agreement.

 

	1	 	Clause (b) not to be included in any instance
where the Additional Subsidiary Guarantor is an Equity Subsidiary.

 

- 2 -

          The Additional Subsidiary Guarantor hereby instructs its counsel to deliver any opinions to
the Secured Parties required to be delivered in connection with the execution and delivery hereof.

          IN WITNESS WHEREOF, the Additional Subsidiary Guarantor has caused this Guarantee Assumption
Agreement to be duly executed and delivered as of the day and year first above written.

	 	 	 	 	 
	 	 	[NAME OF ADDITIONAL SUBSIDIARY
GUARANTOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	CAPITALSOURCE FUNDING V TRUST
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title: Administrator

	 	 	 	 	 
	Accepted and agreed:
	 
	 	 
	WELLS FARGO BANK, NATIONAL ASSOCIATION

     as Collateral Custodian	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

 

 

Appendix A

SUPPLEMENTS TO ANNEXES TO

GUARANTEE AND SECURITY AGREEMENT

Supplement to Annex 1:

          [to be completed]

Supplement to Annex 2:

          [to be completed]

Supplement to Annex 3:

          [to be completed]

Supplement to Annex 4:

          [to be completed]

Supplement to Annex 5:

          [to be completed]

Supplement to Annex 6:

          [to be completed]exv10w1

 

Exhibit 10.1

[CONFIDENTIAL]1

PROPOSAL LETTER

June 30, 2005

Perry L. Nolen

Xybernaut Corporation

12701 Fair Lakes Circle

Fairfax, Virginia 22033

Attention: Perry L. Nolen

Re:     Proposed Senior Credit Facility

Dear Perry:

We understand that on or about June 1, 2005, Xybernaut Corporation (the “Borrower”) engaged
IP Innovations Financial Services Inc. (“IPI”) to explore various financing alternatives, including
potentially a debtor-in-possession financing facility if Borrower decides to seek bankruptcy
protection. IPI contacted [CONFIDENTIAL]2 and requested that it commence work towards
issuing a commitment letter for debtor-in-possession financing (“Proposed Financing
Facility”) in the event Borrower seeks to file bankruptcy. In this connection,
[CONFIDENTIAL]3 is pleased to advise you that [CONFIDENTIAL]4, its affiliates
and/or participants (collectively, the “Lender”) are willing to consider providing the
Borrower, as debtor-in-possession, with a secured debtor-in-possession credit facility
substantially on the terms and conditions set forth in the Outline of Proposed Terms and Conditions
attached hereto as Exhibit A (the “Term Sheet”). The Lender’s willingness to consider
providing the Proposed Financing Facility shall be subject in all respects to satisfaction of the
terms and conditions contained in this proposal letter and in the Term Sheet.

The Borrower acknowledges that (i) neither this proposal letter nor the Term Sheet is intended to
be, nor shall they be deemed to be or construed as, a commitment by the Lender to provide the
Proposed Financing Facility and (ii) the Term Sheet is intended as an outline only and does not
purport to summarize all the conditions, covenants, representations, warranties and other
provisions which would be contained in definitive legal documentation for

 

	1	 	Confidential Treatment has been request for
the redacted portion. The confidential, redacted portions have been filed
separately with the SEC.
	 
	2	 	Ibid.
	 
	3	 	Ibid.
	 
	4	 	Ibid.

 

 

Xybernaut Corporation

June 30, 2005

Page 2

the Proposed Financing Facility. The Lender has not completed its due diligence and credit
approval process; accordingly, this proposal letter and the Term Sheet are for discussion purposes
only. Any commitment by the Lender will be subject to, among other things, the issuance of a
written commitment letter by the Lender and the negotiation and execution of definitive loan
documents in form and substance satisfactory to the Lender.

By its acceptance in writing of this proposal letter, the Borrower agrees to indemnify and hold
harmless the Lender and each of its assignees, its affiliates and its directors, officers,
employees and agents (each an “Indemnified Party”) from and against any and all losses,
claims, damages, liabilities or other expenses to which such Indemnified Party may become subject,
insofar as such losses, claims, damages, liabilities (or actions or other proceedings commenced or
threatened in respect thereof) or other expenses arise out of or in any way relate to or result
from, this letter, the proposals made herein or the due diligence contemplated hereby, or in any
way arise from any use or intended use of this letter, the proposals made herein, the due diligence
contemplated hereby or any decision by the Lender not to provide the Proposed Financing Facility,
and the Borrower agrees to reimburse each Indemnified Party for any legal or other expenses
incurred in connection with investigating, defending or participating in any such loss, claim,
damage, liability or action or other proceeding (whether or not such Indemnified Party is a party
to any action or proceeding out of which indemnified expenses arise), but excluding therefrom all
expenses, losses, claims, damages and liabilities which are finally determined in a non-appealable
decision of a court of competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of the Indemnified Party. In the event of any litigation or dispute involving
this proposal letter or the Proposed Financing Facility, the Lender shall not be responsible or
liable to the Borrower or any other person for any special, indirect, consequential, incidental or
punitive damages. In addition, the Borrower agrees to reimburse the Lender for all reasonable
fees, costs and expenses incurred by or on behalf of the Lender (collectively, the
“Expenses”) in connection with the negotiation, preparation, execution and delivery of this
proposal letter, the Term Sheet and any and all definitive documentation relating hereto and
thereto, including, without limitation, the reasonable fees, costs and expenses of counsel to the
Lender and the fees, costs and expenses incurred by the Lender in connection with any due
diligence, collateral reviews and field examinations. The obligations of the Borrower under this
paragraph shall remain effective whether or not definitive documentation is executed and
notwithstanding any termination of this proposal letter.

The Borrower hereby agrees to pay to the Lender a refundable expense deposit of $125,000 (the
“Initial Expense Deposit”) upon its acceptance in writing of this proposal letter. The
Lender may request additional expense deposits (the “Additional Expense Deposits”; together
with the Initial Expense Deposit, the “Expense Deposits”) if the amount of the Expenses
incurred or to be incurred by the Lender in connection with the Proposed Financing Facility exceeds
or will exceed the amount of the then existing Expense Deposit. The Lender agrees that the
Borrower shall not be obligated to pay any portion of the Expenses that exceeds the amount of the
Expense

 

 

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Deposits unless the Borrower has agreed in writing to pay such Expenses. The Borrower shall not be
obligated to furnish Additional Expense Deposits but Borrower acknowledges that Lender may cease
further efforts hereunder and decline to provide debtor-in-possession financing if such Additional
Expense Deposits are requested and not forthcoming. The Expense Deposits will be used to fund
Expenses incurred by the Lender (including, without limitation, Expenses incurred prior to the date
hereof in connection with the preparation, execution and delivery of this letter and the Term
Sheet). In the event that the conditions set forth herein and in the Term Sheet are not satisfied
and a commitment for the Proposed Financing Facility is not issued by the Lender, other than as a
result of the Borrower’s fault, the Expense Deposits shall be returned to the Borrower net of the
Expenses. If the Lender issues a commitment letter in accordance with this proposal letter and the
Term Sheet and with such other terms as the Lender may reasonably request (provided that such other
terms are not inconsistent with the Term Sheet), the Borrower hereby agrees to pay to the Lender a
non-refundable facility fee (the “Facility Fee”) in the amount of $200,000 (regardless of
whether such commitment letter is accepted by the Borrower). If the Borrower declines to accept
such commitment in accordance with its terms, the Lender shall retain the unused balance of the
Expense Deposits, if any, and the Facility Fee.

The Lender’s willingness to consider providing a commitment for the Proposed Financing Facility is
subject to (i) the negotiation, execution and delivery of definitive loan documentation in form and
substance satisfactory to the Lender, the Borrower and their respective counsel (including, without
limitation, the form and substance of the order(s) of the Bankruptcy Court approving the Proposed
Financing Facility in the event the Borrower seeks to file bankruptcy), (ii) the satisfaction of
the Lender that since the date hereof there has not occurred or become known to the Lender any
material adverse change with respect to the condition, financial or otherwise, business,
operations, assets, liabilities or prospects of the Borrower or any of its subsidiaries (together
with the Borrower, each a “Company” and collectively, the “Companies”), other than
the filing of the bankruptcy and the events resulting from that filing (in the event the Borrower
seeks to file bankruptcy), as determined by the Lender in its sole discretion (a “Material
Adverse Change”), (iii) the absence of any material disruption or general adverse developments
in the financial markets, as determined by the Lender in its sole discretion, and (iv) such other
customary conditions as set forth in the Term Sheet. If at any time the Lender shall determine (in
its sole and absolute discretion) that either (A) the Borrower or any other Company will be unable
to fulfill any condition set forth in this proposal letter or in the Term Sheet or (B) any Material
Adverse Change has occurred, the Lender may terminate this letter by giving notice thereof to the
Borrower (subject to the obligation of the Borrower to pay all fees, costs, expenses and other
payment obligations expressly assumed by the Borrower hereunder, which shall survive the
termination of this letter).

The Borrower represents and warrants that (i) all written information and other materials
concerning the Borrower and the other Companies furnished to the Lender by current management
(excluding (x) any information not delivered by current management and (y) all

 

 

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Page 4

information that was publicly filed prior to May 1, 2005) (collectively, the “Information”)
which has been, or is hereafter, made available by, or on behalf of the Borrower or any such other
Company is, or when delivered will be, when considered as a whole, complete and correct in all
material respects and does not, or will not when delivered, contain any untrue statement of
material fact or omit to state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such statement has been made and
(ii) to the extent that any such Information contains projections, such projections were prepared
in good faith on the basis of (A) assumptions, methods and tests stated therein which are believed
by the Borrower and the other Companies to be reasonable and (B) information believed by the
Borrower and the other Companies to have been accurate based upon the information available to the
Borrower and the other Companies at the time such projections were furnished to the Lender.

The Borrower agrees that, from the date hereof until the Borrower’s acceptance of the commitment
letter from the Lender with respect to the Proposed Financing Facility and the payment of any
facility fee specified therein, neither the existence of this proposal letter or the Term Sheet,
nor any of their contents, shall be disclosed by the Borrower, except as may be compelled to be
disclosed in a judicial or administrative proceeding or as otherwise required by law (including as
may be required under bankruptcy law or securities laws and regulations) or, on a confidential and
“need to know” basis, solely to the directors, officers, employees, advisors and agents of the
Borrower. The Borrower acknowledges and agrees that the provisions of this paragraph constitute a
material inducement to the Lender’s willingness to conduct due diligence with respect to the
Borrower and consider the issuance of a commitment letter.

The Borrower agrees that (other than as required as a result of the bankruptcy filing) it will (i)
notify and attempt in good faith to consult with the Lender prior to the making of any filing in
which reference is made to the Lender, and (ii) if required to file a disclosure of the proposal
contained herein, pursuant to securities laws and regulations, to make such a filing with a request
to keep the Lender’s name and the terms stated on Exhibit “A” (including, without limitation, the
financial terms set forth in Exhibit “A”) confidential unless prior to such filing the information
subject to such confidential treatment has become public knowledge through no fault of the Borrower
or the commitment referred to herein has been issued by the Lender. The Borrower acknowledges that
the Lender and its affiliates may now or hereafter provide financing or obtain other interests in
other companies in respect of which the Borrower or its affiliates may be business competitors, and
that the Lender and its affiliates will have no obligation to provide to the Borrower or any of its
affiliates any confidential information obtained from such other companies.

The proposal made by the Lender in this proposal letter shall expire, unless otherwise agreed by
the Lender in writing, at 4:00 p.m. (New York City time) on June 30, 2005, unless prior thereto the
Lender has received (a) a copy of this proposal letter, signed by the Borrower, accepting the

 

 

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terms and conditions of this proposal letter and the Term Sheet, and (b) the Initial Expense
Deposit, in immediately available funds. The proposal by the Lender to provide the Proposed
Financing Facility shall expire at 5:00 p.m. (New York City time) on July 22, 2005, unless at or
prior to such date, the Lender shall have issued a commitment for the Proposed Financing Facility
or the parties shall have mutually agreed in writing to extend such date.

Should the terms and conditions of the proposal contained herein meet with your approval, please
indicate your acceptance by signing and returning a copy of this letter to the Lender and wiring
the Initial Expense Deposit, in immediately available funds, to the following account:

Bank: [CONFIDENTIAL]5

ABA: [CONFIDENTIAL]6

Acct Name: [CONFIDENTIAL]7

Acct #: [CONFIDENTIAL]8

This proposal letter, including the attached Term Sheet (i) except for preexisting confidentiality
agreements, supersedes all prior discussions, agreements, commitments, arrangements, negotiations
or understandings, whether oral or written, of the parties with respect thereto, (ii) shall be
governed by the law of the State of New York, (iii) shall be binding upon the parties and their
respective successors and assigns, (iv) may not be relied upon or enforced by any other person or
entity, and (v) may be signed in multiple counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same instrument. If this proposal letter
becomes the subject of a dispute, each of the parties hereto hereby waives trial by jury. This
proposal letter may be amended, modified or waived only in a writing signed by the parties hereto.

Very truly yours,

[CONFIDENTIAL]9

	 	By:	 	[CONFIDENTIAL]10

 

	5	 	Confidential Treatment has been request for
the redacted portion. The confidential, redacted portions have been filed
separately with the SEC.
	 
	6	 	Ibid.
	 
	7	 	Ibid.
	 
	8	 	Ibid.
	 
	9	 	Ibid.
	 
	10	 	Ibid.

 

 

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Page 6

Name: [CONFIDENTIAL]11

Title: [CONFIDENTIAL]12

Agreed and accepted on this

30th day of June, 2005:

Xybernaut Corporation

	By:	 	/s/ Perry L. Nolen
	 

     Name: Perry L. Nolen

     Title: President/CEO

 

	11	 	Confidential Treatment has been request for
the redacted portion. The confidential, redacted portions have been filed
separately with the SEC.
	 
	12	 	Ibid.

 

 

Exhibit A

Xybernaut Corporation

Outline of Proposed Terms and Conditions for Proposed Financing Facility

[CONFIDENTIAL]13

 

	13	 	Confidential Treatment has been request for
the redacted portion. The confidential, redacted portions have been filed
separately with the SEC.

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