EXHIBIT 10.15
EXECUTION COPY
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SALE AND SERVICING AGREEMENT
by and among
CAPITALSOURCE COMMERCIAL LOAN TRUST 2003-1,
as the Issuer,
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CAPITALSOURCE COMMERCIAL LOAN LLC, 2003-1,
as the Trust Depositor,
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CAPITALSOURCE FINANCE LLC,
as the Originator and as the Servicer,
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and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as the Indenture Trustee and as the Backup Servicer.
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Dated as of April 17, 2003
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CapitalSource Commercial Loan Trust 2003-1 Asset Backed Notes, Series 2003-1
Class A, Class B, Class C, Class D and Class E Notes
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS............................................................................ 2
Section 1.01 Definitions...................................................................... 2
Section 1.02 Usage of Terms................................................................... 42
Section 1.03 Section References............................................................... 42
Section 1.04 Calculations..................................................................... 43
Section 1.05 Accounting Terms................................................................. 43
ARTICLE 2. ESTABLISHMENT OF ISSUER; TRANSFER OF LOAN ASSETS....................................... 43
Section 2.01 Creation and Funding of Issuer; Transfer of Loan Assets.......................... 43
Section 2.02 Conditions to Transfer of Loan Assets to Issuer.................................. 45
Section 2.03 Acceptance by Owner Trustee...................................................... 46
Section 2.04 Conveyance of Substitute Loans................................................... 47
Section 2.05 Release of Released Amounts...................................................... 49
Section 2.06 Delivery of Documents in the Loan File; Recording of
Assignments of Mortgage.......................................................... 49
Section 2.07 Optional Purchase or Substitution by the Servicer for Prepaid
or Charged-Off Loans............................................................. 50
Section 2.08 Certification by Indenture Trustee; Possession of Loan Files..................... 51
ARTICLE 3. REPRESENTATIONS AND WARRANTIES......................................................... 52
Section 3.01 Representations and Warranties Regarding the Trust Depositor..................... 53
Section 3.02 Representations and Warranties Regarding Each Loan and as to
Certain Loans in the Aggregate................................................... 56
Section 3.03 Representations and Warranties Regarding the Initial Loans in the Aggregate...... 57
Section 3.04 Representations and Warranties Regarding the Loan Files.......................... 57
Section 3.05 Representations and Warranties Regarding Concentrations of Initial Loans......... 57
Section 3.06 Representations and Warranties Regarding the Servicer............................ 58
Section 3.07 Representations and Warranties of the Backup Servicer............................ 59
ARTICLE 4. PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS............................ 60
Section 4.01 Custody of Loans................................................................. 60
Section 4.02 Filing........................................................................... 60
Section 4.03 Changes in Name, Corporate Structure or Location................................. 61
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TABLE OF CONTENTS
(continued)
PAGE
Section 4.04 Costs and Expenses............................................................... 61
Section 4.05 Sale Treatment................................................................... 61
Section 4.06 Separateness from Trust Depositor................................................ 61
ARTICLE 5. SERVICING OF LOANS..................................................................... 61
Section 5.01 Appointment and Acceptance....................................................... 62
Section 5.02 Duties of the Servicer........................................................... 62
Section 5.03 Liquidation of Loans............................................................. 67
Section 5.04 Fidelity Bond.................................................................... 68
Section 5.05 Maintenance of Hazard Insurance.................................................. 68
Section 5.06 Collection of Certain Loan Payments.............................................. 69
Section 5.07 Access to Certain Documentation and Information Regarding the Loans.............. 70
Section 5.08 Satisfaction of Mortgages and Collateral and Release of Loan Files............... 70
Section 5.09 Scheduled Payment Advances....................................................... 71
Section 5.10 Title, Management and Disposition of Foreclosed Property......................... 72
Section 5.11 Servicing Compensation........................................................... 72
Section 5.12 Assignment; Resignation.......................................................... 73
Section 5.13 Merger or Consolidation of Servicer.............................................. 73
Section 5.14 Limitation on Liability of the Servicer and Others............................... 74
Section 5.15 The Backup Servicer.............................................................. 74
Section 5.16 Covenants of the Backup Servicer................................................. 77
ARTICLE 6. COVENANTS OF THE TRUST DEPOSITOR....................................................... 77
Section 6.01 Legal Existence.................................................................. 77
Section 6.02 Loans Not to Be Evidenced by Promissory Notes.................................... 77
Section 6.03 Security Interests............................................................... 77
Section 6.04 Delivery of Principal Collections and Interest Collections....................... 78
Section 6.05 Regulatory Filings............................................................... 78
Section 6.06 Compliance with Law.............................................................. 78
Section 6.07 Activities....................................................................... 78
Section 6.08 Indebtedness..................................................................... 78
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TABLE OF CONTENTS
(continued)
PAGE
Section 6.09 Guarantees....................................................................... 79
Section 6.10 Investments...................................................................... 79
Section 6.11 Merger; Sales.................................................................... 79
Section 6.12 Distributions.................................................................... 79
Section 6.13 Other Agreements................................................................. 79
Section 6.14 Separate Legal Existence......................................................... 80
Section 6.15 Location; Records................................................................ 80
Section 6.16 Liability of Trust Depositor..................................................... 81
Section 6.17 Bankruptcy Limitations........................................................... 81
Section 6.18 Limitation on Liability of Trust Depositor and Others............................ 81
Section 6.19 Insurance Policies............................................................... 81
Section 6.20 Payments from Obligor Lock-Boxes and Obligor Lock-Box Accounts................... 82
ARTICLE 7. ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND................................. 82
Section 7.01 Note Distribution Account, Reserve Fund and Lock-Boxes........................... 82
Section 7.02 Reserve Fund Deposit............................................................. 83
Section 7.03 Principal and Interest Account................................................... 83
Section 7.04 Securityholder Distributions..................................................... 86
Section 7.05 Allocations and Distributions.................................................... 87
Section 7.06 Determination of LIBOR........................................................... 90
Section 7.07 Monthly Reconciliation........................................................... 90
ARTICLE 8. SERVICER DEFAULT; SERVICE TRANSFER..................................................... 91
Section 8.01 Servicer Default................................................................. 91
Section 8.02 Servicer Transfer................................................................ 92
Section 8.03 Appointment of Successor Servicer; Reconveyance; Successor Servicer to Act....... 93
Section 8.04 Notification to Securityholders and Hedge Counterparties......................... 94
Section 8.05 Effect of Transfer............................................................... 95
Section 8.06 Database File.................................................................... 95
Section 8.07 Waiver of Defaults............................................................... 95
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TABLE OF CONTENTS
(continued)
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Section 8.08 Responsibilities of the Successor Servicer....................................... 96
Section 8.09 Rating Agency Condition for Servicer Transfer.................................... 96
Section 8.10 Appointment of Successor Backup Servicer; Successor Backup Servicer to Act....... 96
ARTICLE 9. REPORTS................................................................................ 97
Section 9.01 Monthly Reports.................................................................. 97
Section 9.02 Officer's Certificate............................................................ 97
Section 9.03 Other Data....................................................................... 98
Section 9.04 Annual Report of Accountants..................................................... 98
Section 9.05 Annual Statement of Compliance from Servicer..................................... 99
Section 9.06 Reports of Foreclosure and Abandonment of Mortgaged Property..................... 99
Section 9.07 Notices.......................................................................... 99
Section 9.08 Indenture Trustee's Right to Examine Servicer Records and Audit Operations....... 100
ARTICLE 10. TERMINATION............................................................................ 100
Section 10.01 Sale of Loan Assets.............................................................. 100
Section 10.02 Termination...................................................................... 100
ARTICLE 11. REMEDIES UPON MISREPRESENTATION; REPURCHASE OPTION..................................... 101
Section 11.01 Repurchases of, or Substitution for, Loans for Breach of Representations and
Warranties....................................................................... 101
Section 11.02 Reassignment of Repurchased or Substituted Loans................................. 102
ARTICLE 12. INDEMNITIES............................................................................ 102
Section 12.01 Indemnification by Servicer...................................................... 102
Section 12.02 Indemnification by Trust Depositor............................................... 102
ARTICLE 13. MISCELLANEOUS.......................................................................... 103
Section 13.01 Amendment........................................................................ 103
Section 13.02 Protection of Title to Issuer.................................................... 104
Section 13.03 Governing Law.................................................................... 104
Section 13.04 Notices.......................................................................... 104
Section 13.05 Severability of Provisions....................................................... 107
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TABLE OF CONTENTS
(continued)
PAGE
Section 13.06 Third Party Beneficiaries........................................................ 107
Section 13.07 Counterparts..................................................................... 107
Section 13.08 Headings......................................................................... 107
Section 13.09 No Bankruptcy Petition; Disclaimer............................................... 107
Section 13.10 Jurisdiction..................................................................... 109
Section 13.11 Tax Characterization............................................................. 109
Section 13.12 Prohibited Transactions with Respect to the Issuer............................... 109
Section 13.13 Limitation of Liability of Owner Trustee......................................... 109
Section 13.14 Allocation of Payments with Respect to Loans..................................... 110
Section 13.15 No Partnership................................................................... 111
Section 13.16 Successors and Assigns........................................................... 111
Section 13.17 Acts of Holders.................................................................. 111
Section 13.18 Duration of Agreement............................................................ 111
Section 13.19 Limited Recourse................................................................. 111
EXHIBITS, SCHEDULES AND APPENDIX
Exhibit A Form of Assignment A-1
Exhibit B Form of Closing Certificate of Trust Depositor B-1
Exhibit C Form of Closing Certificate of Servicer/Originator C-1
Exhibit D Form of Liquidation Report D-1
Exhibit E Form of Principal and Interest Account Letter Agreement E-1
Exhibit F Form of Certificate Regarding Repurchased Loans F-1
Exhibit G List of Loans G-1
Exhibit H Form of Monthly Servicer Report H-1
Exhibit I Form of Subsequent Transfer Agreement I-1
Exhibit J Form of Subsequent Purchase Agreement J-1
Exhibit K Credit and Collection Policy K-1
Exhibit L-1 Form of Initial Certification X-0
Xxxxxxx X-0 Form of Final Certification L-2
Exhibit M Form of Request For Release Of Documents M-1
Exhibit N Form of Addition Notice N-1
Schedule I Lock-Box Banks and Lock-Box Accounts Schedule-I
Schedule II Obligor Lock-Box Banks and Obligor Lock-Box Accounts Schedule-II
Appendix A Material Mortgage Loan Criteria Appendix A-1
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SALE AND SERVICING AGREEMENT
THIS SALE AND SERVICING AGREEMENT, dated as of April 17, 2003, is by
and among:
(1) CAPITALSOURCE COMMERCIAL LOAN TRUST 2003-1, a statutory trust
created and existing under the laws of the State of Delaware
(together with its successors and assigns, the "Issuer");
(2) CAPITALSOURCE COMMERCIAL LOAN LLC, 2003-1, a Delaware limited
liability company, as the trust depositor (together with its
successor and assigns, in such capacity, the "Trust
Depositor");
(3) CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company (together with its successors and assigns,
"CapitalSource"), as the servicer (together with its successor
and assigns, in such capacity, the "Servicer"), and as the
originator (together with its successor and assigns, in such
capacity, the "Originator"); and
(4) XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (together
with its successors and assigns, "Xxxxx Fargo"), not in its
individual capacity but as the indenture trustee (together
with its successors and assigns, in such capacity, the
"Indenture Trustee"), and not in its individual capacity but
as the backup servicer (together with its successors and
assigns, in such capacity, the "Backup Servicer").
R E C I T A L S
WHEREAS, in the regular course of its business, the Originator
originates and/or otherwise acquires Loans (as defined herein);
WHEREAS, the Trust Depositor acquired the Initial Loans from the
Originator and may acquire from time to time thereafter certain Substitute Loans
(such Initial Loans and Substitute Loans, together with certain related property
as more fully described herein, being the Loan Assets as defined herein);
WHEREAS, it was a condition to the Trust Depositor's acquisition of the
Initial Loans from the Originator that the Originator make certain
representations and warranties regarding the Loan Assets for the benefit of the
Trust Depositor as well as the Issuer;
WHEREAS, on the Closing Date (as defined herein), the Trust Depositor
will fund the Issuer by selling, conveying and assigning all its right, title
and interest in such Loan Assets and certain other assets to the Issuer;
WHEREAS, the Issuer is willing to purchase and accept assignment of the
Loan Assets (as defined herein) from the Trust Depositor pursuant to the terms
hereof; and
WHEREAS, the Servicer is willing to service the Loan Assets for the
benefit and account of the Issuer pursuant to the terms hereof.
NOW, THEREFORE, based upon the above recitals, the mutual premises and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.01 DEFINITIONS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"40 Act" means the Investment Company Act of 1940, as amended.
"Accelerated Amortization Event" means the Aggregate Outstanding Loan Balance is
less than the Aggregate Outstanding Principal Balance of the Notes for a period
greater than sixty (60) calendar days.
"Acquired Loan" means a Loan that is originated by a Person other than the
Originator and acquired by the Originator in a "true sale" transaction pursuant
to a standard loan acquisition agreement.
"Accreted Interest" means accrued interest on a Deferred Interest Loan that is
added to the principal amount of such Deferred Interest Loan instead of being
paid as it accrues.
"Addition Notice" means, with respect to any transfer of Substitute Loans to the
Issuer in accordance with Section 2.04 (and the Trust Depositor's corresponding
prior purchase of such Loans from the Originator), a notice in the form of
Exhibit N, which shall be given at least ten (10) Business Days prior to the
related Subsequent Transfer Date, identifying the Substitute Loans to be
transferred, the Outstanding Loan Balance of such Substitute Loans and the
related Substitution Event (with respect to an identified Loan or Loans then in
the Loan Pool) to which such Substitute Loan relates, with such notice to be
signed both by the Trust Depositor and the Originator.
"Additional Principal Amount" means, with respect to any Remittance Date, an
amount equal to, but in no event less than zero, the excess of the Aggregate
Outstanding Principal Balance prior to any distribution on such day over the sum
of (a) the Aggregate Outstanding Loan Balance as of the last Business Day of the
immediately preceding Due Period and (b) all Principal Collections on deposit in
the Principal and Interest Account as of the last day of the immediately
preceding Due Period.
2
"Additional Servicing Fee" means an amount, in addition to the
Servicing Fee, necessary to induce a Successor Servicer to serve as Servicer
hereunder, which amount shall not exceed $100,000 in the aggregate per Successor
Servicer.
"Affiliate" of any specified Person means any other Person controlling or
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "control" (including the terms "controlling",
"controlled by" and "under common control with") when used with respect to any
specified Person means the possession, direct or indirect, of the power to vote
20% or more of the voting securities of such Person or to direct or cause the
direction of the management and policies of such Person whether through the
ownership of voting securities, by contract or otherwise. Each of the Indenture
Trustee and the Owner Trustee may conclusively presume that a Person is not an
Affiliate of another Person unless a Responsible Officer of such trustee has
actual knowledge to the contrary.
"Agented Notes" means, with respect to any Loan, one or more Underlying Notes of
an Obligor wherein (a) the Underlying Note(s) are originated by the Originator
in accordance with the Credit and Collection Policy as a part of a syndicated
loan transaction that has been fully consummated prior to such Underlying Notes
becoming part of the Loan Pool, (b) upon the sale of the Underlying Notes under
the Transfer and Servicing Agreements to the Issuer, such Underlying Notes will
be endorsed to and held by the Indenture Trustee on behalf of the
Securityholders and the Hedge Counterparties, (c) the Issuer, as assignee of the
Underlying Notes, will have all of the rights (but none of the obligations) of
the Originator with respect to such Underlying Notes and the Originator's right,
title and interest in and to the Collateral, (d) the Underlying Notes are
secured by an undivided interest in the Collateral that also secures and is
shared by, on a pro rata basis, all other holders of such Obligor's notes of
equal priority and (e) the Originator (or a wholly owned subsidiary of the
Originator) is the collateral agent and payment agent for all noteholders of
such Obligor.
"Aggregate Notional Amount" shall have the meaning given to such term in the
Indenture.
"Aggregate Outstanding Loan Balance" means, as of any date, the sum of the
Outstanding Loan Balance for each Loan owned by the Issuer.
"Aggregate Outstanding Principal Balance" means, as of any date of
determination, the sum of the Outstanding Principal Balances of each Class
outstanding on such date.
"Agreement" means this Sale and Servicing Agreement, as amended, modified,
waived, supplemented or restated from time to time in accordance with the terms
hereof.
"Amortizing Loan" means a Loan that, by its terms, provides for (or after a
period of time will provide for) a series of Scheduled Payment installments
calculated to amortize the principal balance of the Loan over its term so that,
at the Loan's maturity, no more than 25% of the maximum outstanding loan balance
remains unpaid, with the remaining balance due at maturity.
"Asset Based Revolver" means any Revolving Loan (other than a Loan to an SPE
Obligor) secured by accounts receivable and/or inventory.
3
"Assigned Loan" means a Loan originated by a Person other than the Originator in
which a constant percentage interest has been assigned to the Originator by such
Person in accordance with the Credit and Collection Policy and (a) such
transaction has been fully consummated prior to such Loan becoming part of the
Loan Pool, (b) the Originator is a party to the underlying loan documents, (c)
upon the sale of the Underlying Notes under the Transfer and Servicing
Agreements to the Issuer, such Underlying Notes will be endorsed to and held by
the Indenture Trustee, (d) the Issuer, as assignee of the Underlying Notes, will
have all of the rights (but none of the obligations) of the Originator with
respect to such Underlying Notes and the Originator's right, title and interest
in and to the Collateral, (e) the Underlying Notes are secured by an undivided
interest in the Collateral that also secures and is shared by, on a pro rata
basis, all other holders of such Obligor's notes of equal priority, and (f) the
agent bank receives payment directly from the Obligor thereof on behalf of each
lender that has been assigned a percentage interest in such Loan.
"Assigned Parties" means the Noteholders and Hedge Counterparties as well as any
other holder of a loan to or debt obligation of such Obligor arising out of the
same underlying loan agreement, including, without limitation, the Originator,
CapitalSource Commercial Loan Trust 2002-1, CapitalSource Commercial Loan Trust
2002-2 and CapitalSource Funding LLC.
"Assignment" means each Assignment, substantially in the form of Exhibit A,
relating to an assignment, transfer and conveyance of Loans and the related
Collateral by the Trust Depositor to the Issuer.
"Assignment of Mortgage" means, with respect to each Loan that is a Material
Mortgage Loan or that is to an SPE Obligor that is secured by real property and
improvements thereon, an assignment of the related Mortgage, notice of transfer
or equivalent instrument sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect or record the transfer of
the Mortgage of the related Loan to the Indenture Trustee.
"Backup Servicer" means the Person acting as Backup Servicer hereunder, its
successors in interest and any Successor Backup Servicer hereunder.
"Backup Servicer Termination Notice" shall have the meaning given to such term
in Section 8.10(a).
"Backup Servicer Transfer" shall have the meaning given to such term in Section
8.10(b).
"Backup Servicing Fee" shall have the meaning given to such term in the fee
letter, dated as of the date hereof, among the Originator, the Trust Depositor,
the Issuer and the Backup Servicer.
"Balloon Loan" means a Loan that, by its terms, provides for (or after a period
of time will provide for) a series of Scheduled Payment installments calculated
to partially amortize the principal balance of the Loan over its term so that,
at the Loan's maturity, more than 25% (but less than 100%) of the maximum
outstanding loan balance remains unpaid, with such remaining balance due at
maturity.
"BIF" means the Bank Insurance Fund, or any successor thereto.
4
"Bullet Loan" means a Loan that, by its terms, provides for no Scheduled
Payments of principal prior to the Loan's maturity, and, at maturity, the entire
unpaid principal balance of the Loan is due.
"Business Day" means any day other than (a) a Saturday or Sunday, or (b) a day
on which banking institutions in the cities of New York, New York and
Minneapolis, Minnesota are authorized or obligated, by law or executive order,
to be closed; provided, that, if any action is required of the Ireland Paying
Agent, then, for purposes of determining when such Ireland Paying Agent action
is required Dublin, Ireland will be considered in determining "Business Day".
"CapitalSource" shall have the meaning given to such term in the Preamble.
"CapitalSource LIBOR Rate" means the posted rate for thirty (30), sixty (60) or
ninety (90) day, as applicable, deposits in U.S. dollars appearing on Telerate
Page 3750, as and when determined in accordance with the applicable Required
Loan Documents.
"CapitalSource Prime Rate" means the rate designated by CapitalSource from time
to time as its prime rate in the United States, such rate to change as and when
such designated rate changes; provided, however, the CapitalSource Prime Rate is
not intended to be the lowest rate of interest charged by CapitalSource in
connection with extensions of credit to debtors.
"Certificate" means the CapitalSource Commercial Loan Trust 2003-1 Certificates
representing a beneficial equity interest in the Issuer and issued pursuant to
the Trust Agreement.
"Certificate Distribution Account" shall have the meaning given to such term in
the Trust Agreement.
"Certificate Register" shall have the meaning given to such term in the Trust
Agreement.
"Certificateholder" means the registered holder of a Certificate.
"Charged-Off Loan" means a Loan in the Loan Pool with respect to which there has
occurred one or more of the following: (a) the occurrence of both (i) any
portion of a payment of interest on or principal of such Loan is not paid when
due (without giving effect to any grace period) or would be so delinquent but
for any amendment or modification made to such Loan resulting from the Obligor's
inability to pay such Loan in accordance with its terms and (ii) within one
hundred twenty (120) days of when such delinquent payment was first due, all
delinquencies have not been cured, (b) an Insolvency Event has occurred with
respect to the related Obligor, (c) the related Obligor has suffered any
material adverse change that materially affects its viability as a going
concern, (d) the Servicer has determined, in its sole discretion, in accordance
with the Credit and Collection Policy, that all or a portion such Loan is not
collectible or (e) any portion of the proceeds used to make payments of
principal of or interest on such Loan have come from a new Loan or a new loan by
the Originator or an entity controlled by the Originator to the Obligor or any
of its Affiliates.
"Class" means any of the group of Notes identified herein as, as applicable, the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, or the
Class E Notes.
5
"Class A Interest Amount" means, for each Interest Accrual Period, an amount
equal to the product of (i) the Class A Note Interest Rate as of the first (1st)
day of such Interest Accrual Period, (ii) the Outstanding Principal Balance of
the Class A Notes as of the first (1st) day of such Interest Accrual Period
(after giving effect to all distributions made on such day), and (iii) a
fraction, the numerator of which is the number of days in such Interest Accrual
Period and the denominator of which is 360.
"Class A Note Interest Rate" means the annual rate of interest payable with
respect to the Class A Notes, which shall be equal to 1.79% for the first
Remittance Date and thereafter shall be equal to LIBOR plus 0.48%.
"Class A Noteholder" means each Person in whose name a Class A Note is
registered in the Note Register.
"Class A Notes" means CapitalSource Commercial Loan Trust 2003-1 Asset-Backed
Notes, Series 2003-1, Class A Notes, issued pursuant to the Indenture.
"Class A Trigger" means any Remittance Date on or after November 20, 2005, on
which any of the Class A Notes shall be outstanding.
"Class B Accrued Payable" means, for any Remittance Date with respect to which
the Class B Interest Amount is calculated using clause (b)(ii) of the definition
thereof, an amount equal to the excess, if any, of (a) the amount that would
have been calculated as the Class B Interest Amount on such Remittance Date if
the calculation was made using clause (b)(i) of the definition of Class B
Interest Amount and not clause (b)(ii) of such definition over (b) the amount
calculated as the Class B Interest Amount on such Remittance Date, together with
the unpaid portion of any such excess from prior Remittance Dates (and interest
accrued thereon at the then applicable Class B Note Interest Rate).
"Class B Interest Amount" means, for each Interest Accrual Period, an amount
equal to the product of (a) the Class B Note Interest Rate as of the first (1st)
day of such Interest Accrual Period, (b) the lesser of (i) the Outstanding
Principal Balance of the Class B Notes as of the first (1st) day of such
Interest Accrual Period (after giving effect to all distributions made on such
day) and (ii) the greater of (A) the excess, if any, of (x) the Aggregate
Outstanding Loan Balance as of the last day of the Due Period immediately
preceding the start of such Interest Accrual Period over the (y) Outstanding
Principal Balance of the Class A Notes as of the first (1st) day of such
Interest Accrual Period (after giving effect to all distributions made on such
day) or (B) zero, and (c) a fraction, the numerator of which is the number of
days in such Interest Accrual Period and the denominator of which is 360.
"Class B Note Interest Rate" means the annual rate of interest payable with
respect to the Class B Notes, which shall be equal to 2.46% for the first
Remittance Date and thereafter shall be equal to LIBOR plus 1.15% per annum.
"Class B Noteholder" means each Person in whose name a Class B Note is
registered in the Note Register.
6
"Class B Notes" means CapitalSource Commercial Loan Trust 2003-1 Asset-Backed
Notes, Series 2003-1, Class B Notes, issued pursuant to the Indenture.
"Class B Trigger" means any Remittance Date on or after July 20, 2006, on which
any of the Class B Notes shall be outstanding.
"Class C Accrued Payable" means, for any Remittance Date with respect to which
the Class C Interest Amount is calculated using clause (b)(ii) of the definition
thereof, an amount equal to the excess, if any, of (a) the amount that would
have been calculated as the Class C Interest Amount on such Remittance Date if
the calculation was made using clause (b)(i) of the definition of Class C
Interest Amount and not clause (b)(ii) of such definition over (b) the amount
calculated as the Class C Interest Amount on such Remittance Date, together with
the unpaid portion of any such excess from prior Remittance Dates (and interest
accrued thereon at the then applicable Class C Note Interest Rate).
"Class C Interest Amount" means, for each Interest Accrual Period, an amount
equal to the product of (a) the Class C Note Interest Rate as of the first (1st)
day of such Interest Accrual Period, (b) the lesser of (i) the Outstanding
Principal Balance of the Class C Notes as of the first (1st) day of such
Interest Accrual Period (after giving effect to all distributions made on such
day) and (ii) the greater of (A) the excess, if any, of (x) the Aggregate
Outstanding Loan Balance as of the last day of the Due Period immediately
preceding the start of such Interest Accrual Period over the (y) Outstanding
Principal Balance of the Class A Notes and the Class B Notes as of the first
(1st) day of such Interest Accrual Period (after giving effect to all
distributions made on such day) or (B) zero, and (c) a fraction, the numerator
of which is the number of days in such Interest Accrual Period and the
denominator of which is 360.
"Class C Note Interest Rate" means the annual rate of interest payable with
respect to the Class C Notes, which shall be equal to 3.51% for the first
Remittance Date and thereafter shall be equal to LIBOR plus 2.20% per annum.
"Class C Noteholder" means each Person in whose name a Class C Note is
registered in the Note Register.
"Class C Notes" means CapitalSource Commercial Loan Trust 2003-1 Asset-Backed
Notes, Series 2003-1, Class C Notes, issued pursuant to the Indenture.
"Class C Trigger" means any Remittance Date on or after March 20, 2007, on which
any of the Class C Notes shall be outstanding.
"Class D Noteholder" means each Person in whose name a Class D Note is
registered in the Note Register.
"Class D Notes" means CapitalSource Commercial Loan Trust 2003-1 Asset-Backed
Notes, Series 2003-1, Class D Notes, issued pursuant to the Indenture.
"Class D Trigger" means any Remittance Date on or after November 20, 2007, on
which any of the Class D Notes shall be outstanding.
7
"Class E Notes" means CapitalSource Commercial Loan Trust 2003-1 Asset-Backed
Notes, Series 2003-1, Class E Notes, issued pursuant to the Indenture.
"Class E Noteholder" means each Person in whose name a Class E Note is
registered in the Note Register.
"Closing Date" means April 17, 2003.
"Code" means the Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
"Collateral" means the assets of an Obligor or others in which a security
interest has been granted by the Obligor or others to secure such Loan,
including, but not limited to, real estate, accounts receivable, inventory and
other tangible and intangible assets of the related Obligor.
"Collections" means: (a) all payments received on or after the first day of the
month of the Closing Date on account of interest on the Loans (including Finance
Charges, fees and the deferred interest component of a Deferred Interest Loan)
and all late payments, default and waiver charges, (b) all payments received on
or after the Cut-Off Date on account of principal on the Loans, including (i)
the principal portion of any Scheduled Payments and Prepayments, (ii)
Curtailments, (iii) Net Liquidation Proceeds, (iv) Insurance Proceeds (other
than amounts to be applied to the restoration or repair of the related
Collateral, or to be released to the Obligor or others) and (v) Released
Mortgaged Property Proceeds and any other proceeds from any other Collateral
securing the Loans (other than amounts released or to be released to the Obligor
or others), (c) any amounts paid in connection with the purchase or repurchase
of any Loan and the amount of any adjustment for substituted Loans, (d) any
Scheduled Payment Advances that the Servicer determines to make, (e) the amount
of any losses incurred in connection with investments in Permitted Investments
and (f) Net Trust Hedge Receipts and Hedge Breakage Receipts.
"Commission" means the United States Securities and Exchange Commission.
"Computer Records" means the computer records generated by the Servicer that
provide information relating to the Loans and that were used by the Originator
in selecting the Loans conveyed to the Trust Depositor pursuant to Section 2.01
(and any Substitute Loans conveyed to the Trust Depositor pursuant to Section
2.04).
"Contractual Obligation" means, with respect to any Person, any provision of any
securities issued by such Person or any indenture, mortgage, deed of trust,
contract, undertaking, agreement, instrument or other document to which such
Person is a party or by which it or any of its property is bound or is subject.
"Corporate Trust Office" means, with respect to the Indenture Trustee or Owner
Trustee, as applicable, the office of the Indenture Trustee or Owner Trustee at
which at any particular time its corporate trust business shall be principally
administered, which offices at the date of the execution of this Agreement are
located at the addresses set forth in Section 1304(d).
8
"CP Acquisition Transaction" means the Loan Certificate and Servicing Agreement,
dated as of February 28, 2003, by and among CapitalSource Acquisition Funding
LLC, the Originator, the Servicer, Variable Funding Capital Corporation and
Xxxxx Fargo Bank, Minnesota, National Association, as amended, modified,
restated, waived or supplemented from time to time, and all documents executed
in connection therewith and all transactions contemplated thereby.
"CP Transaction" means the transactions contemplated by the Third Amended and
Restated Loan Certificate and Servicing Agreement, dated as of February 25,
2003, among CapitalSource Funding LLC, as the seller, the Originator, as the
originator and the servicer, Variable Funding Capital Corporation, Fairway
Finance Corporation, Eiffel Funding LLC and Hannover Funding Company LLC, as the
purchasers, WSI, as the administrative agent and the VFCC agent, BMO Xxxxxxx
Xxxxx Corp., as the Fairway agent, CDC Financial Products Inc., as the Eiffel
agent, Norddeutsche Landesbank Girozentrale, as the Hannover agent, and Xxxxx
Fargo, as the backup servicer and the collateral custodian, and other documents
executed in connection therewith, as such Amended and Restated Loan Certificate
and Servicing Agreement and other documents may be amended, modified, restated,
replaced, waived, substituted, supplemented or extended from time to time.
"Credit and Collection Policy" means the written credit and collection policies
and procedures manual of the Originator and the Servicer in effect on the
Closing Date and attached hereto as Exhibit K, as amended or supplemented from
time to time in accordance with Section 5.02(m) of this Agreement; and with
respect to any Successor Servicer, the written collection policies and
procedures of such Person at the time such Person becomes Successor Servicer.
"Curtailment" means, with respect to a Loan, any payment of principal received
by the Issuer during a Due Period as part of a payment allocable to a Loan that
is in excess of the principal portion of the Scheduled Payment due for such Due
Period and which is not intended to satisfy the Loan in full, nor is intended to
cure a delinquency.
"Cut-Off Date" means either or both (as the context may require) of the Initial
Cut-Off Date and any Subsequent Cut-Off Date as applicable to the Loan or Loans
in question.
"Deferred Interest Loan" means a Loan that requires the related Obligor to pay
only a portion of the accrued and unpaid interest on a current basis, with the
remaining interest being deferred and paid later, together with any unpaid
interest thereon, in a lump sum, which amount shall be treated as Interest
Collections at the time it is received.
"Definitive Notes" shall have the meaning specified in the Indenture.
"Delinquent Loan" means a Loan (that is not a Charged-Off Loan) in the Loan Pool
as to which there has occurred one or more of the following: (a) the occurrence
of both (i) any portion of a payment of interest on or principal of such Loan is
not paid when due (without giving effect to any grace period) or would be so
delinquent but for any amendment, modification, waiver or variance made to such
Loan resulting from the Obligor's inability to pay such Loan in accordance with
its terms and (ii)(A) with respect to Asset Based Revolvers, within one (1)
calendar day of when such delinquent payment was first due and (B) with respect
to all other Loans, within sixty (60) calendar days of when such delinquent
payment was first due, all
9
delinquencies have not been cured, (b) consistent with the Credit and Collection
Policy such Loan would be classified as delinquent by the Servicer or the
Originator, or (c) the related Obligor is not paying any of the accrued and
unpaid interest on a current basis; provided, however, if any Loan to an Obligor
is a Delinquent Loan, or if any Loan from the Originator or any entity
controlled by the Originator would be a Delinquent Loan if owned by the Issuer,
then all Loans to that Obligor shall be deemed to be Delinquent Loans.
"Determination Date" means that day of each month that is the third (3rd)
Business Day prior to a Remittance Date.
"DIP Loan" means a loan to an Obligor that is a "debtor-in-possession" as
defined under the Bankruptcy Code.
"Dollar" and "$" means lawful currency of the United States.
"Due Period" means, with respect to the first (1st) Remittance Date, the period
from and including the Initial Cut-Off Date to but excluding the eleventh (11th)
day of the calendar month immediately preceding the first Remittance Date; and
thereafter, the period from and including the eleventh (11th) day of the
previous calendar month to but excluding the eleventh (11th) day of the month in
which such Remittance Date occurs.
"Eligible Deposit Account" means either (a) a segregated account with a
Qualified Institution, or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from in the case of Fitch of
at least "F-1+", in the case of Xxxxx'x a short-term credit rating of "P-1" and
in the case of S&P a commercial paper short-term debt rating of "A-1+" and a
long-term unsecured debt rating of "AA-".
"Eligible Loan" means, on and as of the related Transfer Date, a Loan as to
which each of the following is true:
(a) the information with respect to each Loan set forth on the
List of Loans delivered to the Indenture Trustee is true and complete;
(b) the Loan, together with the Collateral, has been originated or
acquired by the Originator, and immediately prior to the transfer and assignment
contemplated by the Loan Sale Agreement, the Originator held, and immediately
prior to the transfer and assignment contemplated by the Sale and Servicing
Agreement, the Trust Depositor held, good and indefeasible title to, and was the
sole owner of, the Loans being transferred to the Trust Depositor and Issuer,
respectively, subject to no Liens except Liens which will be released
simultaneously with such transfer and assignment and Permitted Liens; and
immediately upon the transfer and assignment contemplated by this Agreement, the
Issuer will hold good and indefeasible title to, and be the sole owner of, each
Loan, subject to no Liens except Liens in favor of the Indenture Trustee;
10
(c) (i) the Loan, together with the Collections and Collateral
related thereto, are free and clear of any Liens except Permitted Liens, and
(ii) all filings and other actions required to grant to (A) the Indenture
Trustee a first priority perfected security interest in the Originator's, the
Trust Depositor's and the Issuer's interest in the Loan, the Collections and
related Collateral have been made or taken, and (B) in the case of Agented Notes
and Assigned Loans, the collateral agent, as agent for all noteholders of the
related Obligor, a first priority perfected security interest in the Collateral
(except for Permitted Liens);
(d) at the time such Loan is included in the Loan Pool, the Loan
is not and has never been) a Charged-Off Loan and the Loan is not past due and,
since the origination of the loan by Originator or, in the case of Acquired
Loans, since the twelve (12) months prior to the acquisition of the loan by
Originator, has not been more than thirty (30) days past due (after giving
effect to any grace period set forth in the Credit and Collection Policy in
determining the number of days past due), with respect to payments of principal
or interest;
(e) the Loan is an "eligible asset" as defined in Rule 3a-7 under
the 40 Act;
(f) the Loan is a contract the purchase of which with the proceeds
of the Offered Notes would constitute a "current transaction" within the meaning
of Section 3(a)(3) of the Securities Act;
(g) the Loan, along with the related Loan File, constitutes an
"account", "chattel paper", "instrument", "investment property" or a "general
intangible" within the meaning of Article 9 of the UCC of all applicable
jurisdictions;
(h) the Loan is to an Eligible Obligor that (other than with
respect to SPE Obligors) is not an Affiliate of the Originator, the Servicer,
the Trust Depositor or the Issuer;
(i) the Loan is denominated and payable only in United States
dollars and does not permit the currency in which or country in which such Loan
is payable to be changed;
(j) the Loan is evidenced by an Underlying Note, security
agreement or instrument and related loan documents that have been duly
authorized and properly executed, are in full force and effect and constitute
the legal, valid, binding and absolute and unconditional payment obligation of
the related Obligor, enforceable against such Obligor in accordance with their
terms (subject to applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and to general principles of
equity, whether considered in a suit at law or in equity), and there are no
conditions precedent to the enforceability or validity of the Loan that have not
been satisfied or validly waived;
(k) the Loan or any portion thereof does not contravene in any
material respect any Requirements of Law (including, without limitation,
Requirements of Law relating to usury, truth in lending, fair credit billing,
fair credit reporting, equal credit opportunity, fair debt collection practices,
licensing and privacy);
(l) the Loan, (i) satisfies all applicable requirements of and was
originated or acquired, underwritten, closed and serviced in all material
respects in accordance with the Credit and Collection Policy (including without
limitation the execution by the Obligor of all
11
documentation required by the Credit and Collection Policy); (ii) does not
contain a confidentiality provision that restricts or purports to restrict the
ability of the Indenture Trustee to exercise its rights under the Transaction
Documents, including, without limitation, its rights to review the Loan, the
Required Loan Documents and Loan File; (iii) was generated in the ordinary
course of the Originator's business; (iv) arises pursuant to loan documentation
with respect to which the Originator has performed all obligations required to
be performed by it thereunder; (v) has an original term to maturity (A) in the
case of Senior Loans and Senior B-Note Loans (other than the Senior Loan to New
Vision Television Group) of not greater than six (6) years, or (B) in the case
of the Senior Loan to New Vision Television Group and Subordinated Loans of not
greater than seven (7) years; (vi) is not subject to a guaranty by the
Originator or any Affiliate thereof; and (vii) is not a loan primarily for
personal, family or household use;
(m) the Loan is eligible to be sold, assigned or transferred to
the Trust Depositor and Issuer, respectively, and neither the sale, transfer or
assignment of the Loan under the Transfer and Servicing Agreements to the Trust
Depositor and Issuer, respectively, nor the granting of a security interest
under the Indenture to the Indenture Trustee, violates, conflicts with or
contravenes any Requirements of Law or any contractual or other restriction,
limitation or encumbrance;
(n) the Loan requires the Obligor thereof to maintain adequate
property damage and liability insurance with respect to the real or personal
property constituting the Collateral and the same has been at all times covered
by adequate physical damage and liability insurance policies issued by generally
acceptable carriers;
(o) the Collateral, if any, (i) is located in the United States
(except for the Loans to Vestcom, SCIREX and HealthStar Communications, Inc., as
to which the primary Collateral is located in the United States), (ii) has not
been foreclosed on, or repossessed from the current Obligor, by the Servicer,
and (iii) has not suffered any material loss or damage that has not been
repaired or restored;
(p) (i) the Loan contains a provision substantially to the effect
that the Obligor's payment obligations are absolute and unconditional without
any right of rescission, setoff, counterclaim or defense for any reason against
the Originator or any assignee, (ii) the Loan contains a clause that has the
effect of unconditionally and irrevocably obligating the Obligor to make
periodic payments (including taxes) notwithstanding any rights the Obligor may
have against the assignor and notwithstanding any damage to, defects in or
destruction of the Collateral or any other event, including obsolescence of any
property or improvements, (iii) the Obligor has no right of deduction, offset,
netting, recoupment, counterclaim, defense or reservation of rights, and (iv)
the Issuer has no future funding obligation with respect to such Loan;
(q) the Loan is not subject to any litigation, dispute, refund,
claims of rescission, setoff, netting, counterclaim or defense whatsoever,
including but not limited to, claims by or against the Obligor thereof or a
payor to or account debtor of such Obligor, nor will the operation of any of the
terms of the Required Loan Documents, or the exercise of any right thereunder,
render any of the Required Loan Documents unenforceable in whole or in part;
12
(r) the Loan requires the Obligor to maintain the Collateral in
good condition and to bear all the costs of operating and maintaining same,
including taxes and insurance relating thereto;
(s) the Loan provides (i) for periodic payments of interest and/or
principal in cash, which are due and payable on a monthly or quarterly basis,
and (ii) that the Servicer (or, with respect to Assigned Loans, Agented Notes
and Senior B-Note Loans, an agent appointed pursuant to the Required Loan
Documents or a majority of the lenders) may accelerate all payments on the Loan
if the Obligor is in default under the Loan and any applicable cure period has
expired;
(t) the Loan provides for cash payments that fully amortize the
Outstanding Loan Balance of such Loan on or by its maturity and does not provide
for such Outstanding Loan Balance to be discounted pursuant to a prepayment in
full;
(u) the Loan Rate for each Loan adjusts periodically to equal the
then applicable index plus the margin set forth in the related Underlying Note
or the related credit agreement;
(v) the Loan shall not have been originated in, nor shall it be
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Loan under the Transfer and Servicing Agreements would be
unlawful, void or voidable;
(w) the Loan does not permit the Obligor to defer all or any
portion of the current cash interest due thereunder;
(x) the Loan does not permit the payment obligation of the Obligor
thereunder to be converted or exchanged for equity capital of such Obligor;
(y) neither the Loan nor any portion of the related Collateral
constitutes Margin Stock;
(z) the Loan is not a DIP Loan;
(aa) the Loan, together with the Required Loan Documents and Loan
File related thereto, is fully assignable and does not require the consent of or
notice to the Obligor or contain any other restriction on the transfer or the
assignment of the Loan other than a consent or waiver of such restriction that
has been obtained prior to the date on which the Loan was sold to the Trust
Depositor provided, however, that with respect to loans that are secured by an
interest in commercial real estate, the Required Loan Documents may restrict the
transfer or assignment of the related Loan so long as such Loan is freely
transferable to a qualified transferee;
(bb) the Obligor of such Loan is legally responsible for all taxes
relating to the Collateral, and all payments in respect of the Loan will be made
free and clear of, and without deduction or withholding for or on account of,
any taxes, unless such withholding or deduction is required by Requirements of
Law in which case the Obligor thereof is required to make "gross-up" payments
that cover the full amount of any such withholding taxes on an after-tax basis;
13
(cc) the Loan and the Collateral have not been sold, transferred,
assigned or pledged by the Originator, the Trust Depositor or the Issuer to any
Person other than as contemplated by the Transaction Documents;
(dd) other than Participation Loans, Agented Notes and Assigned
Loans, with respect to the Originator's obligation to fund and the actual
funding of the Loan by the Originator, the Originator has not assigned or
granted participations to, in whole or in part, any Person other than to the
Issuer or to a special purpose entity created in connection with the CP
Transaction, the CP Acquisition Transaction, a Prior Term Transaction or and any
future or similar commercial paper conduit facility;
(ee) no selection procedure adverse to the interests of the
Noteholders or Hedge Counterparties was utilized by the Originator or Trust
Depositor in the selection of the Loan for inclusion in the Loan Pool;
(ff) the Loan has not been compromised, adjusted, extended,
satisfied, rescinded or set-off by the Trust Depositor, the Originator or the
Obligor with respect thereto, and no Loan is subject to compromise, adjustment,
extension, satisfaction, rescission, set-off, counterclaim, defense, abatement,
suspension, deferment, deductible, reduction or termination, whether arising out
of transactions concerning the Loan, or otherwise, by the Trust Depositor, the
Originator or the Obligor with respect thereto;
(gg) the particular Loan is not one as to which the Originator or
Trust Depositor has knowledge that the Loan will not be paid in full;
(hh) except with respect to Subordinated Loans and Senior B-Note
Loans to the same Obligor, multiple Loans originated to the same Obligor
(excluding any guarantor) contain standard cross-collateralization and
cross-default provisions;
(ii) the Obligor of such Loan is not the subject of an Insolvency
Event or Insolvency Proceedings;
(jj) the Loan does not represent capitalized interest or payment
obligations relating to "put" rights;
(kk) the Loan is not a Loan or extension of credit by the
Originator or an entity controlled by the Originator to the Obligor or any of
its Affiliates for the purpose of making any past due principal, interest or
other payments due on such Loan;
(ll) other than Subordinated Loans and unsecured Loans representing
not more than 4.0% of the Aggregate Outstanding Loan Balance, the Loan is
secured by a valid, perfected, first priority security interest in all assets
that constitute the Collateral for the Loan, subject to Permitted Liens;
(mm) all material consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority required
to be obtained, effected or given in connection with the making or performance
of the Loan have been duly obtained, effected or given and are in full force and
effect;
14
(nn) the Originator (i) has completed to its satisfaction, in
accordance with the Credit and Collection Policy, a due diligence audit and
collateral assessment with respect to such Loan and (ii) has done nothing to
impair the rights of the Indenture Trustee, the Noteholders or the Hedge
Counterparties with respect to the Loan, the Collateral, the Scheduled Payments
or any income or proceeds therefrom;
(oo) the Loan is a Senior Loan, Senior B-Note Loan, Subordinated
Loan or unsecured Loan;
(pp) no provision of the Required Loan Documents has been waived,
modified, or altered in any respect, except in accordance with the Credit and
Collection Policy and by instruments duly authorized and executed and contained
in the Required Loan Documents and recorded, if necessary, to protect the
interests of the Noteholders and the Hedge Counterparties and which has been
delivered to the Indenture Trustee;
(qq) the first priority Lien related to any Senior Loan and Senior
B-Note Loan is not subordinated to any other loan or financing to the related
Obligor;
(rr) other than with respect to Fully Funded Term Loans, either the
Loan provides by its terms that any funding thereunder is in the Originator's
sole and absolute discretion or any funding obligation under such Loan is
subject to the Retained Interest;
(ss) the face amount of the Loan is the dollar amount thereof shown
on the books and records of the Originator;
(tt) with respect to Subordinated Loans, the Originator has entered
into an intercreditor agreement or subordination agreement with, or provisions
for the benefit of, the senior lender, which agreement or provisions are
assignable to and have been assigned to the Trust Depositor and Issuer, and
which provide that any standstill of remedies by the Originator or its assignee
is limited (i) such that there shall be no standstill of remedies (x) until
after the Originator's or assignee's receipt from the senior lender of a notice
of default by the Obligor under the senior debt and (y) unless a covenant
default is also in effect, and (ii) provided the Subordinated Loan has not been
accelerated and, that in the case of Loans to ACLP Attila Construction Company,
L.P. and Tempus Palms International, Ltd., that any Rating Agency approvals or
confirmations related to the other senior loan to such Obligors have been
obtained, to no longer than 180 days in duration in the aggregate in any given
year;
(uu) with respect to any Acquired Loan or Assigned Loan, such Loan
has been re-underwritten by the Originator and satisfies all of the Originator's
underwriting criteria;
(vv) with respect to Agented Notes and Assigned Loans, the related
Required Loan Documents (i) shall include a note purchase or similar agreement
containing standard provisions relating to the appointment and duties of a
payment agent and a collateral agent and intercreditor and (if applicable)
subordination provisions, and (ii) are duly authorized, fully and properly
executed and are the valid, binding and unconditional payment obligation of the
Obligor thereof;
15
(ww) with respect to Agented Notes, the Originator (or a wholly
owned subsidiary of the Originator) has been appointed the collateral agent of
the security and the paying agent for all such notes prior to such Agented Note
or Loan becoming a part of the Loan Pool;
(xx) with respect to Agented Notes and Assigned Loans, if the
entity serving as the collateral agent of the security for all syndicated notes
of the Obligor has or will change from the time of the origination of the notes,
which in the case of Agented Notes shall be to the Originator (or a wholly owned
subsidiary of the Originator), all appropriate assignments of the collateral
agent's rights in and to the collateral on behalf of the noteholders have been
executed and filed or recorded as appropriate prior to such Agented Note
becoming a part of the Loan Pool;
(yy) with respect to Agented Notes and Assigned Loans, all required
notifications, if any, have been given to the collateral agent, the paying agent
and any other parties required by the Required Loan Documents of, and all
required consents, if any, have been obtained with respect to, the Originator's
assignment of the Agented Notes or Loans and the Originator's right, title and
interest in the Collateral to the Trust Depositor and the Issuer and the
Indenture Trustee's security interest therein on behalf of the Noteholders and
the Hedge Counterparties;
(zz) with respect to Agented Notes and Assigned Loans, the right to
control the actions of and replace the collateral agent and/or the paying agent
of the syndicated Underlying Notes is to be exercised by at least a majority in
interest of all holders of such Underlying Notes;
(aaa) with respect to Agented Notes, Assigned Loans and any Loans
which have more than one (1) holder of their Underlying Notes, all syndicated
Underlying Notes of the Obligor of the same priority are cross-defaulted, and
all holders of such Underlying Notes (i) have an undivided interest in the
collateral securing such Underlying Notes, (ii) share in the proceeds of the
sale or other disposition of such collateral on a pro rata basis and (iii) may
transfer or assign their right, title and interest in the collateral;
(bbb) no portion of the proceeds used to make payments of principal
of or interest on such Loan have come from a new Loan or a new loan by the
Originator or an entity controlled by the Originator;
(ccc) all of the original or certified Required Loan Documents
required to be delivered to the Indenture Trustee (including all material
documents related thereto) with respect to such Loan have been or will be
delivered to the Indenture Trustee on the Transfer Date or as otherwise provided
in this Agreement;
(ddd) if such Loan is a Material Mortgage Loan, it satisfies the
Material Mortgage Loan Criteria set forth in Appendix A;
(eee) there is one or more originally signed Underlying Notes in
effect for each Loan, which in the aggregate evidence the portion of the Loan
being assigned to the Issuer and which Underlying Notes have been delivered to
the Indenture Trustee; provided, however, if the Originator funds a Loan in
multiple installments, there may be one originally signed Underlying Note for
each installment;
16
(fff) there is no obligation on the part of the Originator or the
Trust Depositor, as the case may be, or any other party (except for any
guarantor of a Loan), to make Scheduled Payments in addition to those made by
the Obligor;
(ggg) the documents constituting a part of the Loan File as of the
date hereof do not (taken as a whole together with the other components of the
Loan File) contain any untrue statement of a material fact or omit to state a
material fact necessary to make the factual statements contained therein not
misleading in light of the circumstances under which they were made; and
(hhh) as of the related Transfer Date, there is no default, breach,
violation or event of acceleration existing under the Underlying Notes and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event of
acceleration (except for such defaults, breaches and violations that would not
have a Material Adverse Effect on the ability of the Servicer to collect the
entire principal and interest thereunder and would not have a material adverse
effect on the ability of the Servicer to realize the value of the Collateral
securing the related Loan); and
(iii) with respect to each Pooled Obligor Loan, as of the related
Transfer Date, (i) the collateral (including, but not limited to, the notes of
the Underlying Debtors and assignments of mortgage in each case where real
property secures the Underlying Debtors' notes) of the related Underlying
Debtors securing such Loan is held by a custodian under a custodial agreement,
(ii) the custodial agreement for such Loan provides that (A) the related
custodian holds the collateral of the Underlying Debtors pro rata on behalf of
the Indenture Trustee, for the benefit of the Noteholders and the Hedge
Counterparties, and any other assignee and (B) the custodian will record and
file the assignments of mortgage in its name on behalf of the Indenture Trustee
and any other assignee upon the request of noteholders of such Obligor or SPE
Obligor holding a controlling interest and (iii) the Originator's rights under
the custodial agreement are fully assignable and have been assigned to the
Indenture Trustee.
"Eligible Loan Rating" means, with respect to a designated Obligor, a "Loan
Rating 1," a "Loan Rating 2," or a "Loan Rating 3" in accordance with the Credit
and Collection Policy.
"Eligible Obligor" means on any date of determination, any Obligor that (a) is
an entity duly organized and validly existing under the laws of, and has its
chief executive offices in, the United States or any political subdivision
thereof, and has a billing address within the United States, (b) except with
respect to an SPE Obligor, is a legal operating entity or holding company, (c)
has not entered into the Loan primarily for personal, family or household
purposes, (d) is not a Governmental Authority, (e) is not in the gaming, nuclear
waste, biotechnology, natural resources or real estate development industry, (f)
is not the subject of an Insolvency Proceeding or in financial distress, (g) as
of the applicable Cut-Off Date, has an Eligible Loan Rating, and (h) is not an
Obligor of a Charged-Off Loan or Delinquent Loan; provided, however, the
foregoing clause (e) shall not be deemed to prohibit an Obligor in the
biotechnology industry, except for where such Obligor's business consists of
conducting proprietary research on new drug development, or an Obligor in the
real estate development business, except where real estate development is the
primary business of such Obligor, from being Eligible Obligors if they otherwise
satisfy each of the foregoing criteria for eligibility.
17
"Eligible Repurchase Obligations" means repurchase obligations with respect to
any security that is a direct obligation of, or fully guaranteed by, the United
States or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States, in either case entered
into with a depository institution or trust company (acting as principal)
described in clauses (c)(ii) and (c)(iv) of the definition of Permitted
Investments.
"Event of Default" shall have the meaning specified in Section 5.01 of the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.
"Excluded Amounts" means (a) any amount received by, on or with respect to any
Loan in the Loan Pool, which amount is attributable to the payment of any tax,
fee or other charge imposed by any Governmental Authority on such Loan, (b) any
amount representing a reimbursement of insurance premiums and (c) any amount
with respect to any Loan retransferred or replaced with a Substitute Loan under
Section 11.01, to the extent such amount is attributable to a time after the
effective date of such replacement.
"FDIC" shall mean the Federal Deposit Insurance Corporation and any successor
thereto.
"Fidelity Bond" shall have the meaning given to such term in Section 5.04.
"Finance Charges" means, with respect to any Loan, any interest or finance
charges owing by an Obligor pursuant to or with respect to such Loan.
"Fitch" means Fitch, Inc. or any successor thereto.
"Fixed Rate Loan" means a Loan that is other than a Floating Rate Loan.
"Floating Prime Rate Loan" means a Loan where the Loan Rate payable by the
Obligor thereof is based on the CapitalSource Prime Rate plus some specified
percentage in addition thereto, and the Loan provides that such Loan Rate will
reset immediately upon any change in the related CapitalSource Prime Rate;
provided, however, notwithstanding the foregoing, (i) the Loan to Wicks shall
not be deemed to be a Floating Prime Rate Loan and (ii) the Loan to SCIF Bedhill
LLC and the Loan to SCIF PCH LLC, SCIF Torrance I, LLC, Sebring Senior Care, LLC
and Sebring Healthcare Investors, LLC shall be deemed to be Floating Prime Rate
Loans.
"Floating Rate Loan" means a Loan where the Loan Rate payable by the Obligor
thereof is based on the CapitalSource Prime Rate or CapitalSource LIBOR Rate
plus some specified interest percentage in addition thereto, and the Loan
provides that such Loan Rate will reset immediately upon any change in the
related CapitalSource Prime Rate or CapitalSource LIBOR Rate.
"Foreclosed Property" means Collateral acquired by the Issuer for the benefit of
the Securityholders and the Hedge Counterparties in foreclosure or by deed in
lieu of foreclosure or by other legal process.
18
"Foreclosed Property Disposition" means the final sale of a Foreclosed Property
or of Repossessed Collateral. The proceeds of any "Foreclosed Property
Disposition" constitute part of the definition of Liquidation Proceeds.
"Fully Funded Term Loan" means a Loan that is a closed-end, fully funded Loan as
of the Cut-Off Date.
"Governmental Authority" means, with respect to any Person, any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any court or arbitrator having jurisdiction over
such Person.
"Healthcare Accounts Receivable Loan" means a Revolving Loan to an Obligor in
the healthcare industry (determined by the NAICS Code) secured primarily by the
healthcare accounts receivable of such Obligor.
"Hedge Agreement" shall have the meaning given to such term in the Indenture.
"Hedge Breakage Costs" means, for any Hedge Transaction, any amount (other than
Net Trust Hedge Payments) payable by the Issuer for the early termination of
that Hedge Transaction or any portion thereof.
"Hedge Breakage Receipts" means, for any Hedge Transaction, any amount (other
than Net Trust Hedge Receipts) payable to the Issuer for the early termination
of that Hedge Transaction or any portion thereof.
"Hedge Counterparty Collateral Account" shall have the meaning given to such
term in the Indenture.
"Hedge Prime Rate" means a rate equal to "USD-PRIME-H.15" (as defined in the
definitions published by the International Swaps and Derivatives Association,
Inc.), such rate to change as and when such designated rate changes.
"Hedge Transaction" means each interest rate swap transaction or interest rate
cap transaction between the Issuer and a Hedge Counterparty that is governed by
a Hedge Agreement.
"Highest Required Investment Category" means (a) with respect to ratings
assigned by Fitch (if such investment is rated by Fitch), "F-1+" for short-term
instruments and "AAA" for long-term instruments, (b) with respect to ratings
assigned by Xxxxx'x, "Aa2" or "P-1" for one (1) month instruments, "Aa2" and
"P-1" for three (3) month instruments, "Aa2" and "P-1" for six (6) month
instruments and "Aaa" and "P-1" for instruments with a term in excess of six (6)
months, and (c) with respect to rating assigned by S&P, "A-1+" for short-term
instruments and "AAA" for long-term instruments.
"Holder" means (a) with respect to a Certificate, the Person in whose name such
Certificate is registered in the Certificate Register, and (b) with respect to a
Note, the Person in whose name such Note is registered in the Note Register.
19
"Indebtedness" means, with respect to any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof.
"Indenture" means the Indenture, dated as of April 17, 2003, between the Issuer
and the Indenture Trustee.
"Indenture Collateral" shall have the meaning given to such term in the
"granting clause" of the Indenture.
"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Indenture Trustee Fee" shall have the meaning given to such term in the fee
letter, dated as of the date hereof, among the Originator, the Trust Depositor,
the Issuer and the Indenture Trustee.
"Independent" means, when used with respect to any specified Person, the Person
(a) is in fact independent of the Issuer, any other obligor on the Notes, the
Trust Depositor and any Affiliate of any of the foregoing Persons, (b) does not
have any direct financial interest or any material indirect financial interest
in the Issuer, any such other obligor, the Trust Depositor or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Trust Depositor or any Affiliate of any of the foregoing
Persons as an officer, employee, trustee, partner, director or person performing
similar functions.
"Independent Accountants" shall have the meaning given to such term in Section
9.04.
"Ineligible Loan" shall have the meaning given to such term in Section 11.01.
"Initial Aggregate Outstanding Loan Balance" means the Aggregate Outstanding
Loan Balance as of the Initial Cut-Off Date of the Loans transferred to the
Issuer on the Closing Date.
"Initial Aggregate Outstanding Principal Balance" means, collectively, the sum
of the Initial Class A Principal Balance, the Initial Class B Principal Balance,
the Initial Class C Principal Balance, the Initial Class D Principal Balance,
and the Initial Class E Principal Balance, i.e., $450,064,318.
"Initial Class A Principal Balance" means $258,791,092.
"Initial Class B Principal Balance" means $67,510,720.
"Initial Class C Principal Balance" means $45,007,146.
"Initial Class D Principal Balance" means $33,755,360.
20
"Initial Class E Principal Balance" means $45,007,146.
"Initial Cut-Off Date" means February 24, 2003.
"Initial Loans" means those Loans conveyed to the Issuer on the Closing Date and
identified on the initial List of Loans required to be delivered pursuant to
Section 2.02(d).
"Insolvency Event" means, with respect to a specified Person, (a) the filing of
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Insolvency Law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed or undismissed and in effect for a period of
sixty (60) consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable Insolvency Law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insolvency Laws" means the Bankruptcy Code of the United States and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.
"Insolvency Proceeds" shall have the meaning given to such term in Section
10.01(a).
"Insurance Policy" means, with respect to any Loan, an insurance policy covering
physical damage to or loss of the related Collateral, including, but not limited
to, title, hazard, life, accident and/or flood insurance policies.
"Insurance Proceeds" means, depending on the context, any amounts payable or any
payments made under any Insurance Policy covering a Loan, Collateral,
Repossessed Collateral or Foreclosed Property.
"Interest Accrual Period" means the period commencing on a Remittance Date and
ending on the day immediately preceding the next Remittance Date (or, with
respect to the first Remittance Date, the period commencing on the Closing Date
and ending on the day before the first Remittance Date).
"Interest Collection Account" means a sub-account of the Principal and Interest
Account established and maintained pursuant to Section 7.03(a).
"Interest Collections" means, with respect to amounts deposited into the
Principal and Interest Account during any Due Period, (i) all payments received
on or after the first day of the month
21
of the Closing Date on account of interest on the Loans (including the deferred
interest component of any Deferred Interest Loan) and all late payment, default
and waiver charges, (ii) (a) Net Liquidation Proceeds, (b) Insurance Proceeds
(other than amounts to be applied to the restoration or repair of the related
Collateral, or to be released to the Obligor) and (c) Released Mortgaged
Property Proceeds and any other proceeds from any other Collateral securing the
Loans (other than amounts released to the Obligor), (iii) the interest portion
of any amounts paid in connection with the purchase or repurchase of any Loan
and the interest portion of the amount of any Substitute Loans, (iv) the
interest portion of any Scheduled Payment Advances that the Servicer determines
to make, (v) the amount of any losses incurred in connection with investments in
Permitted Investments, (vi) investment earnings on funds held in the Principal
and Interest Account and (vii) Net Trust Hedge Receipts and Hedge Breakage
Receipts.
"Interest Shortfall" means, with respect to the Class A Notes, the Class B
Notes, or the Class C Notes, as applicable, if the amount by which the interest
paid to such Class on a Remittance Date is less than the amount due to such
Class, the amount of shortfall will be carried forward and paid on the
immediately following Remittance Date for which funds exist, together with
accrued interest on such amount at the then applicable Note Interest Rate for
such Class.
"Investment Earnings" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Principal and Interest
Account, the Note Distribution Account and the Reserve Fund, to be credited to
the Principal and Interest Account on the applicable Remittance Date pursuant to
Section 7.01 and Section 7.03.
"Issuer" means the trust created by the Trust Agreement and funded pursuant to
this Agreement, consisting of the Loan Assets.
"Legal Final Maturity Date" means October 20, 2012.
"LIBOR" shall have the meaning given to such term in Section 7.06.
"LIBOR Determination Date" shall have the meaning given to such term in Section
7.06.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever, including, without limitation, any conditional sale or other
title retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing (including any UCC financing statement
or any similar instrument filed against a Person's assets or properties).
"Liquidation Expenses" means, with respect to any Loan, the aggregate amount of
all out-of-pocket expenses reasonably incurred by the Servicer (including
amounts paid to any Subservicer) and any reasonably allocated costs of counsel
(if any), in each case in accordance with the Servicer's customary procedures in
connection with the repossession, refurbishing and disposition of any Collateral
securing such Loan upon or after the expiration or earlier termination of such
Loan and other out-of-pocket costs related to the liquidation of any such
Collateral, including the attempted collection of any amount owing pursuant to
such Loan if it is a Charged-Off Loan, and, if requested by the Indenture
Trustee, the Servicer and Originator must provide to the Indenture Trustee a
breakdown of the Liquidation Expenses for any Loan
22
along with any supporting documentation therefor; provided, however, to the
extent any such "Liquidation Expenses" relate to any Loan with a Retained
Interest, such expenses shall be allocated pro rata to such Loan based on the
Outstanding Loan Balance included in the Loan Pool and the outstanding loan
balance of the Retained Interest.
"Liquidation Proceeds" means, cash, including Insurance Proceeds, proceeds of
any Foreclosed Property Disposition, revenues received by the Servicer or the
Issuer with respect to the conservation and disposition of a Foreclosed
Property, and any other amounts received by the Servicer or Issuer in connection
with the liquidation of Charged-Off Loans, whether through trustee's sale,
foreclosure sale or otherwise.
"Liquidation Report" shall have the meaning given to such term in Section
5.03(c).
"List of Loans" means the list identifying each Loan constituting part of the
Loan Assets, which list shall consist of the initial List of Loans reflecting
the Initial Loans transferred to the Issuer on the Closing Date, together with
any Subsequent List of Loans amending the most current List of Loans reflecting
the Substitute Loans transferred to the Issuer on the related Subsequent
Transfer Date (together with a deletion from such list of the related Loan or
Loans identified on the corresponding Addition Notice with respect to which a
Substitution Event has occurred), and which list in each case (a) identifies by
account number and Obligor name each Loan included in the Loan Pool, and (b)
sets forth as to each such Loan (i) the Outstanding Loan Balance as of the
Cut-Off Date, and (ii) the maturity date, and which list (as in effect on the
Closing Date) is attached to this Agreement as Exhibit G.
"Loan" means, to the extent transferred by the Trust Depositor to the Issuer, an
individual loan or portion thereof made or purchased by the Originator to an
Obligor, including, as applicable, Assigned Loans and Agented Notes.
"Loan Assets" shall have the meaning given to such term in Section 2.01(b) (or
Section 2.04(a), in the case of Substitute Loans).
"Loan Checklist" means the list delivered by the Trust Depositor to the
Indenture Trustee pursuant Section 2.06 of this Agreement that identifies the
items contained in the related Loan File.
"Loan Files" means, with respect to any Loan and Collateral, each of the
Required Loan Documents and duly executed originals (to the extent required by
the Credit and Collection Policy) and copies of any other Records relating to
such Loan and Collateral.
"Loan Pool" means, as of any date, the Initial Loans and the Substitute Loans
(if any), other than any such Loans that (a) have been reconveyed by the Issuer
to the Trust Depositor, and concurrently by the Trust Depositor to the
Originator, pursuant to Section 11.02 hereof or (b) have been paid (or prepaid)
in full.
"Loan Rate" means, for each Loan in a Due Period, the current cash pay interest
rate for such Loan in such period, as specified in the related Required Loan
Documents.
23
"Loan Rating 1" means that, under the Originator's loan risk rating system,
which ranks loans based on the Originator's analysis of the credit quality of
the loan and the underlying assets, the loan is considered investment grade.
"Loan Rating 2" means that, under the Originator's loan risk rating system,
which ranks loans based on the Originator's analysis of the credit quality of
the loan and the underlying assets, the loan is considered very high quality
commercial credit in all respects, supported by a contribution of strong
collateral and cash flow.
"Loan Rating 3" means that, under the Originator's loan risk rating system,
which ranks loans based on the Originator's analysis of the credit quality of
the loan and the underlying assets, the loan is considered a strong credit and
maintains strong collateral.
"Loan Sale Agreement" means the Commercial Loan Sale Agreement, dated as of the
date hereof, between the Originator and the Trust Depositor, as such agreement
may be amended, modified, waived, supplemented or restated from time to time.
"Loan-to-Value or LTV" means, with respect to any Loan, as of any date of
determination, the percentage equivalent of a fraction (i) the numerator of
which is equal to the maximum availability (as provided in the applicable loan
documentation) of such Loan as of the date of its origination and (ii) the
denominator of which is equal to the total discounted collateral value of the
Collateral securing such Loan.
"Lock-Box" means the post office box to which Collections are remitted for
retrieval by the Lock-Box Bank and deposited by such Lock-Box Bank into the
Lock-Box Account, the details of which are contained in Schedule I, as such
schedule may be amended from time to time.
"Lock-Box Account" means the account maintained at Bank of America, N.A. in the
name of CapitalSource Funding LLC for the purpose of receiving Collections,
including but not limited to Collections from the Obligor Lock-Boxes, the
details of which are contained in Schedule I, as such schedule may be amended
from time to time.
"Lock-Box Agreement" means the Second Amended and Restated Three Party Agreement
Relating to Lockbox Services, dated as of April 17, 2003 by and among the
Lock-Box Bank, the Originator, CapitalSource Funding LLC, the Indenture Trustee
and WSI, as such agreement may be amended, modified, waived, supplemented or
restated from time to time.
"Lock-Box Bank" means Bank of America, N.A.
"London Banking Day" means any day on which dealings in deposits in Dollars are
transacted in the London interbank market.
"Majority Noteholders" means (a) prior to the payment in full of the Class A
Notes, the Class B Notes and the Class C Notes, the Class A Noteholders
evidencing more than 50% of the aggregate Outstanding Principal Balance of all
Class A Notes, the Class B Noteholders evidencing more than 50% of the aggregate
Outstanding Principal Balance of all Class B Notes and the Class C Noteholders
evidencing more than 50% of the aggregate Outstanding Principal Balance of all
Class C Notes and (b) from and after the payment in full of the Class A Notes,
the
24
Class B Notes and the Class C Notes, the Class D Noteholders evidencing more
than 50% of the aggregate Outstanding Principal Balance of all Class D Notes and
the Class E Noteholder evidencing more than 50% of the aggregate Outstanding
Principal Balance of all Class E Notes.
"Margin Stock" means "Margin Stock" as defined under Regulation U issued by the
Board of Governors of the Federal Reserve System.
"Material Adverse Effect" means, with respect to any event or circumstance, a
material adverse effect on (a) the business, financial condition, operations,
performance or properties of the Originator, the Trust Depositor, the Issuer or
the Servicer, (b) the validity, enforceability or collectibility of this
Agreement or any other Transaction Document, or the validity, enforceability or
collectibility of the Loans generally or any material portion of the Loans, (c)
the rights and remedies of the Indenture Trustee on behalf of the
Securityholders and the Hedge Counterparties, (d) the ability of the Originator,
the Trust Depositor, the Issuer, the Servicer, the Backup Servicer or the
Indenture Trustee to perform in all material respects their respective
obligations under this Agreement or any Transaction Document, or (e) the status,
existence, perfection, priority or enforceability of the Indenture Trustee's
security interest on behalf of the Securityholders and the Hedge Counterparties.
"Material Modification" means a termination or release (including pursuant to
prepayment), or an amendment, modification or waiver, or equivalent similar
undertaking or agreement, by the Servicer with respect to a Loan which would not
otherwise be permitted under the standards and criteria set forth in Section
5.02(e) hereof, as applicable.
"Material Mortgage Loan" means any Loan for which the underlying Collateral
consisting of real property owned by the Obligor (a) represents 25% or more
(measured by the book value of the three most valuable parcels of real property
as of the date of such Loan) of (i) the original commitment for such Loan and
(ii) the fair value of the underlying Obligor and Collateral as a whole and (b)
is material to the operations of the related business; provided, however, that a
Material Mortgage Loan shall not include certain parcels of real property which
the Obligor is in the process of disposing.
"Monthly Reconciliation Date" means the last day of each Due Period.
"Monthly Report" shall have the meaning given to such term in Section 9.01.
"Moody's" means Xxxxx'x Investors Service or any successor thereto.
"Xxxxx'x Rating Condition" means, with respect to any action or series of
related actions or proposed transaction or series of proposed transactions, that
Moody's shall have notified the Trust Depositor, the Owner Trustee and the
Indenture Trustee in writing that such action or series of related actions or
the consummation of such proposed transaction or series of related transactions
will not result in a reduction or withdrawal of the rating issued by Moody's on
the Closing Date with respect to any outstanding class of Notes as a result of
such action or series of related actions or the consummation of such proposed
transaction or series of related transactions.
25
"Mortgage" means the mortgage, deed of trust or other instrument creating a Lien
on a Mortgaged Property.
"Mortgaged Property" means the underlying real property, if any, secured under a
Material Mortgage Loan, and any improvements thereon, which property satisfies
either test in the definition of Material Mortgage Loan.
"NAICS Code" means the North American Industry Classification System Codes by at
least four (4) digits.
"Net Liquidation Proceeds" means Liquidation Proceeds relating to a Loan net of
(a) any Liquidation Expenses relating to such Loan reimbursed to the Servicer
therefrom pursuant to terms of this Agreement and (b) amounts required to be
released to other creditors, including any other costs, expenses and taxes, or
the related Obligor or grantor pursuant to applicable law or the governing
Required Loan Documents.
"Net Trust Hedge Payments" means, with respect to each Remittance Date, the
excess, if any, of (a) the monthly payments by the Issuer to the Hedge
Counterparties and any interest accrued thereon over (b) the monthly payments by
the Hedge Counterparties to the Issuer and any interest accrued thereon.
"Net Trust Hedge Receipts" means, with respect to each Remittance Date, the
excess, if any, of (a) the monthly payments by the Hedge Counterparties to the
Issuer and any interest accrued thereon over (b) the monthly payments by the
Issuer to the Hedge Counterparties and any interest accrued thereon.
"New Vision Television Group" means the following Obligors: New Vision
Broadcasting, LLC, NVG-Santa Xxxxxxx, LLC, NVG-Amarillo, LLC, NVG-Amarillo, LP,
NVG-Santa Xxxxxxx XX, LLC, NVG-Fort Xxxxx, LLC, NVG-Fort Xxxxx XX, LLC, and New
Vision Media, LLC.
"New York Business Day" means any Business Day in the city of New York, New
York.
"Note" means any one of the notes of the Issuer of any Class executed and
authenticated in accordance with the Indenture.
"Note Distribution Account" means the interest bearing trust account so
designated and established and maintained pursuant to Section 7.01.
"Note Register" shall have the meaning given to such term in Section 2.04 of the
Indenture.
"Noteholders" means each Person in whose name a Note is registered in the Note
Register.
"Obligor" means, with respect to any Loan, any Person or Persons obligated to
make payments pursuant to or with respect to such Loan, including any guarantor
thereof.
"Obligor Lock-Box" means the post office box to which Collections are remitted
with respect to certain Revolving Loans for retrieval by an Obligor Lock-Box
Bank and deposited by such
26
Obligor Lock-Box Bank into an Obligor Lock-Box Account, the details of which are
contained in Schedule II, as such schedule may be amended from time to time.
"Obligor Lock-Box Accounts" means the accounts maintained for the purpose of
receiving Collections on certain Revolving Loans and transferring such
Collections to the Lock-Box, the details of which are contained in Schedule II,
as such schedule may be amended from time to time.
"Obligor Lock-Box Bank" means any of the banks or other financial institutions
holding one or more Obligor Lock-Box Accounts.
"OCC" means the Office of the Comptroller of the Currency.
"Offered Notes" means the Class A Notes, the Class B Notes, the Class C Notes
and the Class D Notes.
"Offering Memorandum" means the Offering Memorandum, dated April 14, 2003
prepared in connection with the offer and sale of the Class A Notes, the Class B
Notes, the Class C Notes and the Class D Notes.
"Officer's Certificate" means a certificate delivered to the Indenture Trustee
signed by the Chief Executive Officer, the President, an Executive Vice
President, a Senior Vice President, the Treasurer, the Secretary, or one of the
Assistant Treasurers or Assistant Secretaries of the Trust Depositor, the
Servicer, or the Owner Trustee (or another Person) on behalf of the Issuer, as
required by this Agreement or any other Transaction Document.
"One-Month Index Maturity" shall have the meaning given to such term in Section
7.06.
"Opinion of Counsel" means a written opinion of counsel, who may be outside
counsel, or internal counsel (except with respect to federal securities law, tax
law, bankruptcy law or UCC matters), for the Trust Depositor or the Servicer,
from Xxxxxx Xxxxx LLP or other counsel reasonably acceptable to the Owner
Trustee or the Indenture Trustee, as the case may be; provided, however, if the
opinion of counsel concerns or relates to any Hedge Counterparty, such counsel
shall be (i) outside counsel and (ii) acceptable to each Hedge Counterparty.
"Originator" shall have the meaning given to such term in the Preamble.
"Outstanding" shall have the meaning given to such term in the Indenture.
"Outstanding Loan Balance" of a Loan means the excess of (a) the principal
amount of such Loan, or portion thereof transferred to the Issuer, outstanding
as of the Cut-Off Date over (b) all Principal Collections received on such Loan,
or portion thereof transferred to the Issuer, since the Cut-Off Date; provided,
that, (i) any Loan charged-off pursuant to clauses (a) through (c) and (e) of
the definition of Charged-Off Loan will be deemed to have an Outstanding Loan
Balance equal to zero and (ii) all or the portion of any Loan charged-off
pursuant to clause (d) of the definition of Charged-Off Loan will have an
Outstanding Loan Balance equal to zero; provided, further, that, for any
Deferred Interest Loan, the Outstanding Loan Balance of such Deferred Interest
Loan shall not include any Accreted Interest with respect thereto.
27
"Outstanding Principal Balance" means, as of date of determination and with
respect to any class of Notes, the original principal amount of such class of
Notes on the Closing Date, plus in the case of the Class B Notes and the Class C
Notes only, the capitalized interest from the Class B Accrued Payable and the
Class C Accrued Payable, as reduced by all amounts paid by the Issuer with
respect to such principal amount up to such date.
"Owner Trustee" means the Person acting, not in its individual capacity, but
solely as Owner Trustee, under the Trust Agreement, its successors in interest
and any successor owner trustee under the Trust Agreement.
"Partially Funded Term Loan" means a Loan that is a closed-end multiple advance
Loan that has not been fully funded as of the Cut-Off Date.
"Participation Loan" means a Loan to an Obligor, originated by the Originator
and serviced by the Servicer in the ordinary course of its business, in which a
participation interest has been granted to another Person in accordance with the
Credit and Collection Policy and such transaction has been fully consummated,
pursuant to a standard participation agreement.
"Paying Agent" shall have the meaning given to such term in Section 3.03 of the
Indenture and Section 3.09 of the Trust Agreement.
"Permitted Investments" with respect to any Remittance Date means negotiable
instruments or securities or other investments maturing on or before such
Remittance Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) that,
as of any date of determination, mature by their terms on or prior to the
Remittance Date immediately following such date of determination, and (c) that
evidence:
(i) direct obligations of, and obligations fully
guaranteed as to full and timely payment by, the United States (or by
any agency thereof to the extent such obligations are backed by the
full faith and credit of the United States);
(ii) demand deposits, time deposits or certificates of
deposit of depository institutions or trust companies incorporated
under the laws of the United States or any state thereof and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided, however, that at the time of the
Issuer's investment or contractual commitment to invest therein, the
commercial paper, if any, and short-term unsecured debt obligations
(other than such obligation whose rating is based on the credit of a
Person other than such institution or trust company) of such depository
institution or trust company shall have a credit rating from each
Rating Agency in the Highest Required Investment Category granted by
such Rating Agency, which, in the case of Fitch, shall be "F-1+";
(iii) commercial paper, or other short term obligations,
having, at the time of the Issuer's investment or contractual
commitment to invest therein, a rating in the
28
Highest Required Investment Category granted by each Rating Agency,
which, in the case of Fitch, shall be "F-1+";
(iv) demand deposits, time deposits or certificates of
deposit that are fully insured by the FDIC and either have a rating on
their certificates of deposit or short-term deposits from Moody's and
S&P of "P-1" and "A-1+", respectively, and, if rated by Fitch, from
Fitch of "F-1+";
(v) notes that are payable on demand or bankers'
acceptances issued by any depository institution or trust company
referred to in clause (ii) above;
(vi) investments in taxable money market funds or other
regulated investment companies having, at the time of the Issuer's
investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category from Xxxxx'x, S&P and Fitch (if
rated by Fitch) or otherwise subject to satisfaction of the Rating
Agency Condition;
(vii) time deposits (having maturities of not more than
ninety (90) days) by an entity the commercial paper of which has, at
the time of the Issuer's investment or contractual commitment to invest
therein, a rating of the Highest Required Investment Category granted
by each Rating Agency;
(viii) Eligible Repurchase Obligations with a rating
acceptable to the Rating Agencies, which, in the case of Fitch, shall
be "F-1+" and in the case of S&P shall be "A-1+"; or
(ix) any negotiable instruments or securities or other
investments subject to satisfaction of the Rating Agency Condition.
The Indenture Trustee may purchase or sell to itself or an Affiliate, as
principal or agent, the Permitted Investments described above.
"Permitted Liens" means
(a) with respect to Loans in the Loan Pool: (i) Liens in favor of
the Trust Depositor created pursuant to the Loan Sale Agreement and transferred
to the Issuer pursuant hereto, (ii) Liens in favor of the Issuer created
pursuant to this Agreement, and (iii) Liens in favor of the Indenture Trustee
created pursuant to the Indenture and/or this Agreement; and
(b) with respect to the interest of the Originator, the Trust
Depositor and the Issuer in the related Collateral: (i) materialmen's,
warehousemen's, mechanics' and other Liens arising by operation of law in the
ordinary course of business for sums not due or sums that are being contested in
good faith, (ii) purchase money security interests in certain items of
equipment, (iii) Liens for state, municipal and other local taxes if such taxes
shall not at the time be due and payable or if the Trust Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings, (iv) Liens in favor of the Trust Depositor created by the
Originator and transferred by the Trust Depositor to the Issuer pursuant to this
Agreement, (v) Liens in favor of the Issuer created pursuant to this Agreement,
(vi) Liens in favor of the Indenture
29
Trustee created pursuant to the Indenture and/or this Agreement, (vii) Liens
held by senior lenders with respect to any Subordinated Loans and (viii) with
respect to Agented Notes and Acquired Loans, Liens in favor of the collateral
agent on behalf of all noteholders of such Obligor.
"Person" means any individual, corporation, estate, partnership, business or
statutory trust, limited liability company, sole proprietorship, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof or other entity.
"Placement Agent" means WSI.
"Pooled Obligor Loans" means Loans to Obligors that are in turn collateralized
by loans to multiple Underlying Debtors, including, without limitation,
Underlying Debtors that are individuals, consumers and small businesses.
"Prepaid Loan" means any Loan (other than a Charged-Off Loan) that was
terminated or has been prepaid in full prior to its scheduled expiration date.
"Prepaid Loan Amount" means, with respect to each Substitute Loan being
transferred in place of a Prepaid Loan, an amount equal to the lesser of (i) the
amount deposited into the Principal Collection Account with respect to such
Prepaid Loan and (ii) the Outstanding Loan Balance of the Prepaid Loan
immediately prior to the date it was prepaid.
"Prepayments" means any and all (a) full prepayments, including prepayment
premiums, on or with respect to a Loan (including, with respect to any Loan and
any Due Period, any Scheduled Payment, Finance Charge or portion thereof that is
due in a subsequent Due Period that the Servicer has received and expressly
permitted the related Obligor to make in advance of its scheduled due date, and
that will be applied to such Scheduled Payment on such due date), (b)
Liquidation Proceeds, and (c) Insurance Proceeds.
"Principal and Interest Account" means the interest bearing trust account so
designated and established and maintained pursuant to Section 7.03.
"Principal Collection Account" means a sub-account of the Principal and Interest
Account established and maintained pursuant to Section 7.03(a).
"Principal Collections" means, with respect to amounts deposited into the
Principal and Interest Account during any Due Period, (i) all payments received
on or after the Cut-Off Date on account of principal on the Loans, including (a)
the principal portion of any Scheduled Payments and Prepayments and (b)
Curtailments, (ii) the principal portion of any amounts paid in connection with
the purchase or repurchase of any Loan and the amount of any Transfer Deposit
Amounts, (iii) the principal portion of any Scheduled Payment Advances that the
Servicer determines to make and (iv) on and after an Event of Default, a
Servicer Default, an Accelerated Amortization Event or the occurrence and
continuance of a Class A Trigger, a Class B Trigger, a Class C Trigger or a
Class D Trigger, all amounts remaining after clause Seventh of Section 7.05(a).
30
"Prior Term Transactions" means the Rule 144A/Regulation S private placements of
Notes issued by (i) CapitalSource Commercial Loan Trust 2002-1 on or about May
16, 2002, and (ii) CapitalSource Commercial Loan Trust 2002-2 on or about
October 30, 2002.
"Priority of Payments" means, collectively, the payments made on each Remittance
Date in accordance with Section 7.05(a) and Section 7.05(b).
"Purchase Agreement" means the Purchase Agreement, dated April 14, 2003, among
the Placement Agent, the Issuer and CapitalSource, as such agreement may be
amended, modified, waived, supplemented or restated from time to time.
"Qualified Hedge Counterparty" shall have the meaning given to such term in the
Indenture.
"Qualified Institution" means (a) the corporate trust department of the
Indenture Trustee or the corporate trust department of Wachovia Bank, National
Association, or (b) a depository institution organized under the laws of the
United States or any one of the states thereof or the District of Columbia (or
any domestic branch of a foreign bank), (i)(A) that has either (1) a long-term
unsecured debt rating acceptable to the Rating Agencies, which, in the case of
S&P, shall be "AA-", in the case of Fitch, shall be "AAA" and in the case of
Moody's, shall be "Aa3," or (2) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating Agencies, which, in the
case of S&P, shall be "A-1+", in the case of Fitch, shall be "F-1+", and in the
case of Moody's, shall be "A-1," (B) the parent corporation, if such parent
corporation guarantees the obligations of the depository institution, of which
has either (1) a long-term unsecured debt rating acceptable to the Rating
Agencies, which, in the case of S&P, shall be "AA-", in the case of Fitch, shall
be "AAA" and in the case of Moody's, shall be "Aa3" or (2) a short-term
unsecured debt rating or certificate of deposit rating acceptable to the Rating
Agencies, which, in the case of S&P, shall be "A-1+", in the case of Fitch,
shall be "F-1+" and in the case of Moody's, shall be "A-1," or (C) otherwise
satisfies the Rating Agency Condition, and (ii) whose deposits are insured by
the FDIC and satisfies the Rating Agency Condition.
"Qualified Transferee" means:
(a) the Trust Depositor, the Trust, the Indenture Trustee and any
Affiliate thereof; or
(b) any other Person which:
(i) has at least $50,000,000 in capital/statutory surplus
or shareholders' equity (except with respect to a pension advisory firm
or similar fiduciary);
(ii) is regularly engaged in the business of making or
owning commercial real estate loans or operating commercial real estate
properties; and
(iii) is one of the following:
(A) an insurance company, bank, savings and loan
association, investment bank, trust company, commercial credit
corporation, pension plan, pension fund, pension fund advisory
firm, mutual fund, real estate investment trust, governmental
entity or plan, or
31
(B) an investment company, money management firm
or a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act, or an "institutional
accredited investor" within the meaning of Regulation D; or
(C) the trustee, collateral agent or
administrative agent in connection with (x) a securitization
of the subject Loan through the creation of collateralized
debt or loan obligations or (y) an asset-backed commercial
paper funded transaction funded by a commercial paper conduit
whose commercial paper notes are rated at least "A-1" by S&P
or at least "P-1" by Moody's, or (z) a repurchase transaction
funded by a an entity which would otherwise be a Qualified
Transferee so long as the "equity interest" (other than any
nominal or de minimis equity interest) in the special purpose
entity that issues notes or certificates in connection with
any such collateralized debt or loan obligation, asset-backed
commercial paper funded transaction or repurchase transaction
is owned by one or more entities that are Qualified
Transferees under subclauses (A) or (B) above; or
(D) any entity Controlled (as defined below) by
any of the entities described in subclauses (i), (ii) or (iii)
above.
For purposes of this definition only, "Control" means the ownership, directly or
indirectly, in the aggregate of more than fifty percent (50%) of the beneficial
ownership interests of an entity and the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of an
entity, whether through the ability to exercise voting power, by contract or
otherwise, and "Controlled" has the meaning correlative thereto.
"Rating Agency" means each of S&P, Xxxxx'x and Fitch, so long as such Persons
maintain a rating on the Class A Notes, the Class B Notes, the Class C Notes
and, if applicable, the Class D Notes; and if any of S&P, Moody's or Fitch no
longer maintains a rating on the Class A Notes, the Class B Notes, the Class C
Notes and, if applicable, the Class D Notes, such other nationally recognized
statistical rating organization selected by the Trust Depositor.
"Rating Agency Condition" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, that
each Rating Agency shall have notified the Trust Depositor, the Owner Trustee
and the Indenture Trustee in writing that such action or series of related
actions or the consummation of such proposed transaction or series of related
transactions will not result in a Ratings Effect.
"Ratings Effect" means, with respect to any action or series of related actions
or proposed transaction or series of related proposed transactions, a reduction
or withdrawal of the rating issued by a Rating Agency on the Closing Date with
respect to any outstanding Class of Notes as a result of such action or series
of related actions or the consummation of such proposed transaction or series of
related transactions.
"Record Date" means, for book-entry Notes, the calendar day immediately
preceding the Remittance Date, and for the definitive Notes, the last Business
Day of the immediately preceding calendar month.
32
"Records" means all Loan and other documents, books, records and other
information (including without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights) executed
in connection with the origination or acquisition of the Loans or maintained
with respect to the Loans and the related Obligors that the Originator or the
Servicer have generated, in which the Originator, the Trust Depositor, the
Issuer, the Indenture Trustee or the Servicer have acquired an interest pursuant
to the Transfer and Servicing Agreements or in which the Originator, the Trust
Depositor, the Issuer, the Indenture Trustee or the Servicer have otherwise
obtained an interest.
"Reducing Revolving Loans" means a Loan that is a revolving line of credit with
a commitment that reduces over the life of the Loan.
"Reference Banks" means leading banks selected by the Indenture Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.
"Released Amounts" means, with respect to any payment or collection received
with respect to any Loan on any Business Day (whether such payment or collection
is received by the Servicer, the Owner Trustee or the Trust Depositor), an
amount equal to that portion of such payment or collection on any Retained
Interest released from the Loan Assets pursuant to Section 2.05.
"Released Mortgage Property Proceeds" means, as to any Loan secured by a
Mortgaged Property, the proceeds received by the Servicer in connection with (a)
a taking of an entire Mortgaged Property by exercise of the power of eminent
domain or condemnation or (b) any release of part of the Mortgaged Property from
the Lien of the related Mortgage, whether by partial condemnation, sale or
otherwise, which is not released to the Obligor, the grantor or another creditor
in accordance with the Requirements of Law, the governing documents, the Credit
and Collection Policy and this Agreement.
"Remittance Date" means the 20th day of each month, commencing May 20, 2003 or,
if such 20th day is not a Business Day, on the next succeeding Business Day.
"Repossessed Collateral" means items of Collateral taken in the name of the
Issuer as a result of legal action enforcing the Lien on the Collateral
resulting from a default on the related Loan.
"Representative Amount" means an amount that is representative for a single
transaction in the relevant market at the relevant time.
"Required Loan Documents" means, with respect to:
(a) all Loans in the aggregate:
(i) a blanket assignment of all of the Originator's and
Trust Depositor's right, title and interest in and to all Collateral
securing the Loans at any time transferred to the Issuer including
without limitation, all rights under applicable guarantees and
Insurance Policies, such assignment shall be in the name of "Xxxxx
Fargo Bank Minnesota, National Association, its successors and assigns,
as Indenture Trustee under the Indenture, dated as of April 17, 2003
relating to CapitalSource Commercial Loan Trust 2003-1";
33
(ii) irrevocable powers of attorney of the Originator, the
Trust Depositor and the Issuer to the Indenture Trustee to execute,
deliver, file or record and otherwise deal with the Collateral for the
Loans at any time transferred to the Issuer. The powers of attorney
will be delegable by the Indenture Trustee to the Servicer and any
Successor Servicer and will permit the Indenture Trustee or its
delegate to prepare, execute and file or record UCC financing
statements and notices to insurers;
(iii) blanket UCC-1 financing statements identifying by
type all Collateral for the Loans to be transferred to the Issuer as
Collateral under the Indenture and naming the Issuer and the Indenture
Trustee, as assignee of the Issuer, as "Secured Party" and the Trust
Depositor as the "Debtor";
(b) for each Loan:
(i) the original Underlying Note, endorsed by means of an
allonge as follows: "Pay to the order of Xxxxx Fargo Bank Minnesota,
National Association, and its successors and assigns, not in its
individual capacity but solely as Indenture Trustee under that certain
Indenture, dated as of April 17, 2003 relating to CapitalSource
Commercial Loan Trust 2003-1, without recourse" and signed, by
facsimile or manual signature, in the name of the Trust Depositor by a
Responsible Officer, with all prior and intervening endorsements
showing a complete chain of endorsement from the Originator to the
Trust Depositor and from the Trust Depositor to the Issuer;
(ii) a copy of the related loan agreement (which may be
included in the Underlying Note if so indicated in the Loan Checklist),
together with all amendments and modifications thereto;
(iii) a copy of the related security agreement signed by
the primary Obligor;
(iv) a copy of the Loan Checklist;
(v) a copy of any related guarantees then executed in
connection with such Loan;
(vi) a copy of all UCC financing statements filed securing
the related Collateral naming the Originator or, with respect to
Assigned Loans or Agented Notes, the collateral agent named thereunder,
as "Secured Party";
(vii) for Assigned Loans and Participation Loans, a copy of
the assignment agreement or participation agreement (as applicable);
(viii) if the Originator is the only lender under the credit
facility, if the Originator is the collateral agent for a syndicate of
lenders under the credit facility, or if the Originator has not
previously delivered such stock certificate to Xxxxx Fargo in
connection with the CP Transaction or the CP Acquisition Transaction,
and the Loan Checklist indicates that the Collateral includes a pledge
of stock, the original stock certificate serving as Collateral for such
Loan, along with an executed stock power executed in blank;
34
(ix) if the Originator is the only lender under the credit
facility, if the Originator is the collateral agent for a syndicate of
lenders under the credit facility, or if the Originator has not
previously delivered such items to Xxxxx Fargo in connection with the
CP Transaction or the CP Acquisition Transaction, all other items
listed in the related Loan Checklist that have not previously been
delivered, or a certificate from a Responsible Officer of the Trust
Depositor that such delivery has been waived consistent with the
prudent lending practices and the Credit and Collection Policy of the
Originator and such waiver shall not have a material adverse effect on
the Noteholders or Hedge Counterparties; and
(c) for each Loan identified by the Trust Depositor as a Material
Mortgage Loan, each of the following documents (except for Material Mortgaged
Loans where the Originator or one of its Affiliates is a co-lender but not the
agent):
(i) either (A) the original Mortgage, with evidence of
recording thereon, (B) a copy of the Mortgage certified as a true copy
by a Responsible Officer of the Originator where the original has been
transmitted for recording until such time as the original is returned
by the public recording office or duly licensed title or escrow officer
or (C) a copy of the Mortgage certified by the public recording office
in those instances where the original recorded Mortgage has been lost;
(ii) the original Assignment of Mortgage from the
Originator endorsed as follows: "Xxxxx Fargo Bank Minnesota, National
Association, its successors and assigns, as Indenture Trustee under the
Indenture, dated as of April 17, 2003, as for the pro rata benefit of
the Assigned Parties";
(iii) either (A) originals of all intervening assignments,
if any, showing a complete chain of title from the originator of the
Loan (where such originator was not the Originator or one of its
Affiliates) to the Originator or one of its Affiliates, including
warehousing assignments, with evidence of recording thereon if such
assignments were recorded, (B) copies of any assignments certified as
true copies by a Responsible Officer of the Originator where the
originals have been submitted for recording until such time as the
originals are returned by the public recording officer, or (C) copies
of any assignments certified by the public recording office in any
instances where the original recorded assignments have been lost; and
(iv) either (A) a copy of all title insurance policies or
a marked title commitment relating to the title insurance policies for
the Mortgaged Property to the extent the Originator obtained such
policies or (B) copies of any title insurance policies or other
evidence of Lien position, including but not limited to policy
insurance record of title policies, limited liability reports and lot
book reports, to the extent the Originator obtains such policies or
other evidence of Lien position, certified as true by the Originator.
"Required Reserve Amount" means, with respect to each Remittance Date, an amount
equal to the sum of (a) three (3) times the sum of the Class A Interest Amount,
the Class B Interest
35
Amount and the Class C Interest Amount due on the next Remittance Date and (b)
the Outstanding Loan Balance of each Delinquent Loan.
"Requirements of Law" for any Person means the certificate of incorporation or
articles of association and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or order or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"Reserve Fund" means the interest bearing trust account so designated and
established and maintained pursuant to Section 7.01.
"Reserve Fund Initial Balance" means an amount equal to $1,969,379.14 (i.e., the
product of (a) the sum of the Outstanding Principal Balance of the Class A
Notes, the Class B Notes, and the Class C Notes as of the Closing Date, (b) the
weighted average Note Interest Rate applicable to the Class A Notes, the Class B
Notes, and the Class C Notes as of the first (1st) day of the initial Interest
Accrual Period (weighted by the Outstanding Principal Balance of each of the
Class A Notes, the Class B Notes, and the Class C Notes) and (c) the quotient of
90 divided by 360).
"Responsible Officer" means, when used with respect to the Owner Trustee or the
Indenture Trustee, any officer assigned to the Corporate Trust Office, including
any Chief Executive Officer, President, Executive Vice President, Vice
President, Assistant Vice President, Secretary, any Assistant Secretary, any
trust officer or any other officer of the Owner Trustee or the Indenture Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject. When used with respect to the Trust
Depositor, the Issuer, the Originator or the Servicer, any Chief Executive
Officer, the President, an Executive Vice President, a Senior Vice President,
the Treasurer, the Secretary or any Assistant Secretary or Assistant Treasurer.
"Retained Interest" means, for each Loan, the following interests, rights and
obligations in such Loan and under the related loan documents, which are being
retained by the Originator: (a) all of the obligations, if any, to provide
additional funding with respect to such Loan, (b) all of the rights and
obligations, if any, of the agent(s) under the documentation evidencing such
Loan, (c) the applicable portion of the interests, rights and obligations under
the documentation evidencing such Loan that relate to such portion(s) of the
indebtedness that is owned by another lender or is being retained by the
Originator, (d) any unused commitment fees associated with the additional
funding obligations that are not being transferred in accordance with clause (a)
above, (e) any agency or similar fees associated with the rights and obligations
of the agent that are not being transferred in accordance with clause (b) above,
(f) any advisory, consulting, audit, in-house legal expenses or similar fees
and/or expenses due from the Obligor associated with services provided by the
agent that are not being transferred in accordance with clause (b) above, and
(g) any and all warrants and equity instruments issued in the name of the
Originator or its affiliates in connection with or relating to any Loan.
36
"Revolving Loan" means a Loan that is a line of credit arising from an extension
of credit by the Originator to an Obligor.
"S&P" means Standard and Poor's Rating Services, a division of The McGraw Hill
Companies or any successor thereto.
"SAIF" means the Savings Association Insurance Fund, or any successor thereto.
"Scheduled Payment" means, with respect to any Loan, the payment of principal
and/or interest scheduled to be made by the related Obligor under the terms of
such Loan after the related Cut-Off Date, as adjusted pursuant to the terms of
the related Underlying Note and Required Loan Documents, and any such payment
received after the related Cut-Off Date.
"Scheduled Payment Advance" means, with respect to any Remittance Date, the
amounts, if any, deposited by the Servicer in the Principal and Interest Account
for such Remittance Date in respect of Scheduled Payments (or portions thereof)
pursuant to Section 5.09.
"SCIREX" means the following Obligors: Scirex Corporation, Scirex
Corporation-CT, Scirex Limited, and Scirex/Belgium.
"Securities" means the Notes and the Certificate, or any of them.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Securityholders" means the Holders of the Notes or the Certificate.
"Senior B-Note Loan" means any multilender Loan that (a) is secured by a first
priority Lien on all the Obligor's assets constituting Collateral for the Loan,
(b) has a Loan-to-Value of less than or equal to 90%, and (c) that contains
provisions which, upon the occurrence of an event of default under the
Underlying Loan Documents or in the case of any liquidation or foreclosure on
the related Collateral, the Issuer's portion of such Loan would be paid only
after the other lender party to such Loan (whose right to payment is
contractually senior to the Issuer) is paid in full.
"Senior Loan" means any Loan that (a) is secured by a first priority Lien on all
of the Obligor's assets constituting Collateral for the Loan, (b) has a
Loan-to-Value of less than or equal to 90%, and (c) provides that the Payment
Obligation of the related Obligor on such Loan is either senior to, or pari
passu with, all other loans or financings to such Obligor.
"Servicer" means initially CapitalSource, or its successor, until any Servicer
Transfer hereunder or the resignation or permitted assignment by the Servicer
and, thereafter, means the Successor Servicer appointed pursuant to ARTICLE 8
with respect to the duties and obligations required of the Servicer under this
Agreement.
"Servicer Default" shall have the meaning specified in Section 8.01.
"Servicer Employees" shall have the meaning specified in Section 5.04.
"Servicer Transfer" shall have the meaning specified in Section 8.02(b).
37
"Servicing Advances" means, all reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Collateral, (b) any enforcement or judicial
proceedings, including foreclosures, (c) the management and liquidation of the
Foreclosed Property or Repossessed Collateral, (d) compliance with the
obligations under this Agreement, which "Servicing Advances" are reimbursable to
the Servicer to the extent provided in Section 5.10(d) of this Agreement, and
(e) in connection with the liquidation of a Loan, for all of which costs and
expenses the Servicer is entitled to reimbursement thereon up to a maximum rate
per annum equal to the related Loan Rate.
"Servicing Fee" shall have the meaning given to such term in Section 5.11.
"Servicing Fee Percentage" means 1.25% per annum for Asset Based Revolvers and
1.0% per annum for all other Loans.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Indenture Trustee by the Servicer, as the same may be amended from time to
time.
"Solvent" means, as to any Person at any time, that (a) the fair value of the
property of such Person is greater than the amount of such Person's liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section 101(32) of the
Bankruptcy Code; (b) such Person is able to realize upon its property and pay
its debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in business or a transaction, and is
not about to engage in a business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"SPE Obligor" means an Obligor that (a) is organized as a special purpose entity
and is not an operating company and (b) has as its primary assets loans to, and
a security interest in the assets of, Underlying Debtors.
"Statutory Trust Statute" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. Sections 3801 et seq., as the same may be amended from time to time.
"Subordinated Loan" means any Loan other than a Senior Loan or a Senior B-Note
Loan.
"Subsequent Cut-Off Date" means the date specified as such for Substitute Loans
in the related Subsequent Transfer Agreement.
"Subsequent List of Loans" means a list, in the form of the initial List of
Loans delivered on the Closing Date, but listing each Substitute Loan
transferred to the Issuer pursuant to the related Subsequent Transfer Agreement.
38
"Subsequent Purchase Agreement" means, with respect to any Substitute Loans, the
agreement between the Originator and the Trust Depositor pursuant to which the
Originator will transfer the Substitute Loans to the Trust Depositor, the form
of which is attached to hereto as Exhibit J.
"Subsequent Transfer Agreement" means the agreement described in Section
2.04(c)(v) hereof, the form of which is attached hereto as Exhibit I.
"Subsequent Transfer Date" means any date on which Substitute Loans are
transferred to the Issuer.
"Subservicer" means any direct or indirect wholly owned subsidiary of
CapitalSource that CapitalSource has identified as a subservicer or additional
collateral agent or any other Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
5.02(a) of this Agreement in respect of the qualification of a Subservicer.
"Subservicing Agreement" means any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Loans as
provided in this Agreement, a copy of which shall be delivered, along with any
modifications thereto, to the Indenture Trustee.
"Substitute Loan" means an Eligible Loan that (a) is transferred to the Issuer
under and in accordance with Section 2.04 and/or Section 2.07 and identified in
the related Addition Notice, and (b) becomes part of the Loan Pool.
"Substitute Loan Qualification Conditions" means, with respect to any Substitute
Loan being transferred to the Issuer pursuant to Section 2.04 and/or Section
2.07, the accuracy of each of the following statements as of the related Cut-Off
Date for such Loan:
(a) the current weighted average Loan Rate (i.e., the current pay
interest rate) on such Substitute Loan is equal to or greater than the current
weighted average Loan Rate on the Loan identified on the related Addition Notice
as the Loan to be released by the Issuer to the Trust Depositor and reconveyed
to the Originator in exchange for such Substitute Loan;
(b) the then current weighted average gross interest rate (i.e.,
the sum of Loan Rate and any deferred interest that will be deferred) of the
Substitute Loan shall be not less than ninety percent (90%) (or, if the Loan to
be replaced was not an Initial Loan, one hundred percent (100%)) of the then
current weighted average Loan Rate of the Loan identified on the related
Addition Notice as the Loan to be released by the Issuer to the Trust Depositor
and reconveyed to the Originator in exchange for such Substitute Loan;
(c) the Outstanding Loan Balance of such Substitute Loan is equal
to or greater than that of the Loan identified on the related Addition Notice as
the Loan to be released by the Issuer to the Trust Depositor and reconveyed to
the Originator in exchange for such Substitute Loan;
(d) after giving effect to such substitution, the Legal Final
Maturity Date will not be extended;
39
(e) the Eligible Loan Rating of the Substitute Loan is equal to or
better than the original Eligible Loan Rating of the Loan being replaced;
(f) the Xxxxx'x estimated rating and S&P estimated rating of the
Substitute Loan is equal to or better than the original Xxxxx'x estimated rating
and original S&P estimated rating, as applicable, of the Loan being replaced;
(g) after giving effect to such substitution, there will be no
material change in the Loan Pool;
(h) the weighted average life of the Substitute Loan is no greater
than 110% of the Loan being replaced;
(i) the frequency of payment of the Substitute Loan is less than
or equal to the Loan being replaced;
(j) the Collateral securing the Substitute Loan is similar to the
Collateral securing the Loan being replaced; and
(k) the Substitute Loan was originated under credit criteria and
policies that are the same in all material respects as the credit criteria and
policies under which the Loan being replaced was originated.
"Substitution Event" shall have occurred if a Loan then held by the Issuer and
identified in the related Addition Notice is one of (a) a Prepaid Loan, (b) a
Charged-Off Loan, (c) a Loan that has a covenant default, (d) a Delinquent Loan,
(e) a Loan that becomes subject to a Material Modification, or (f) the subject
of a breach of a representation or warranty under this Agreement or other
provision, which breach or other provision, in the absence of a substitution of
a Substitute Loan for such Loan pursuant to Section 2.04, would require the
payment of a Transfer Deposit Amount to the Issuer in respect of such Loan
pursuant to Section 11.01; provided, that, the occurrence of a Substitution
Event under clauses (a)-(d) above shall be subject to the limits set forth in
Section 2.07.
"Successor Backup Servicer" shall have the meaning given to such term in
subsection 8.10(a).
"Successor Servicer" shall have the meaning given to such term in Section
8.02(b).
"Tape" shall have the meaning given to such term in Section 5.15(b)(ii).
"Telerate Page 3750" means the display page currently so designated on the Dow
Xxxxx Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Termination Notice" shall have the meaning given to such term in Section
8.02(a).
"Traditional Revolving Loans" means a Loan that is a revolving line of credit
with a commitment that does not vary over the life of the Loan.
40
"Transaction Documents" means this Agreement, the Indenture, the Trust
Agreement, the Loan Sale Agreement, the Purchase Agreement, any Subsequent
Transfer Agreement, any Subsequent Purchase Agreement, any Hedge Agreement, and
any documents or agreements executed in connection with the forgoing, as the
forgoing documents and agreements are amended, modified, restated, replaced,
substituted, waived, supplemented or extended from time to time.
"Transfer and Servicing Agreements" means collectively this Agreement and the
Loan Sale Agreement.
"Transfer Date" means each date on which the Trust Depositor transfers Loans, or
portions thereof, to the Issuer.
"Transfer Deposit Amount" means, with respect to each Ineligible Loan or
Substitute Loan, on any date of determination, the sum of the Outstanding Loan
Balance of such Loan, together with accrued interest thereon through such date
of determination at the Loan Rate provided for thereunder, and any outstanding
Scheduled Payment Advances thereon that have not been waived by the Servicer
entitled thereto.
"Trust Account Property" means the Trust Accounts, all amounts and investments
held from time to time in any Trust Account (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities or
otherwise) including, without limitation, the Reserve Fund Initial Balance, and
all proceeds of the foregoing.
"Trust Accounts" means, collectively, the Principal and Interest Account
(including the Principal Collection Account and Interest Collection Account),
the Reserve Fund, the Note Distribution Account and the Certificate Distribution
Account, the Hedge Counterparty Collateral Account (if applicable), or any of
them.
"Trust Agreement" means the Trust Agreement, dated on or about April 11, 2003
and amended and restated on April 17, 2003, between the Trust Depositor and the
Owner Trustee, as such agreement may be amended, modified, waived, supplemented
or restated from time to time.
"Trust Depositor" shall have the meaning given to such term in the Preamble.
"Trust Estate" shall have the meaning given to such term in the Trust Agreement.
"Trustees" means the Owner Trustee and the Indenture Trustee, or any of them
individually as the context may require.
"UCC" means the Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
"Underlying Custodial Agreement" means, with respect to each Loan to an SPE
Obligor, that certain custodial agreement entered into among the Originator and
a collateral custodian under which such collateral custodian agrees to hold
certain underlying loan documents or other collateral of the Pooled Debtors with
respect to such Loan for the benefit of the Originator and its assignees.
41
"Underlying Custodian" means the party acting as collateral custodian under a
Custodial Agreement.
"Underlying Debtors" means each of the underlying obligors who are obligated as
debtors on a Loan from an SPE Obligor.
"Underlying Note" means the one or more promissory notes executed by an Obligor
evidencing a Loan.
"United States" means the United States of America.
"Unreimbursed Scheduled Payment Advances" means, at any time, the amount of all
previous Scheduled Payment Advances (or portions thereof) as to which the
Servicer has not been reimbursed as of such time pursuant to Section 7.03 or
Section 7.05, the Servicer has determined in its sole discretion that the same
are Uncollectible Scheduled Payment Advances, and with respect to which the
Servicer has given a written certification to such effect to each Trustee.
"USD-LIBOR-Reference Banks" shall have the meaning given to such term in Section
7.06(a).
"Vestcom" means the following Obligors: Vestcom International, Inc., Vector
Investment Holdings, Inc., Vestcom Mid-Atlantic, Inc., Vestcom Internet
Solutions Group, Inc., Electronic Imaging Services, Inc. d/b/a Vestcom Retail
Solutions Group, Vestcom Investments, Inc., Vestcom Retail Solutions Group,
Inc., Vestcom Northwest, Inc., d/b/a/ Xxxxx Direct, Vestcom New England, Inc.,
Vestcom Massachusetts, Inc. d/b/a Vestcom New England, Vestcom Connecticut, Inc.
d/b/a Vestcom New England, Vestcom Wisconsin, Inc. d/b/a Vestcom Midwest,
Vestcom St. Louis, Inc. part d/b/a Vestcom Midwest part d/b/a VRSG part d/b/a
Creative Data Services and Business Mail Express, 3013439 Nova Scotia
Incorporated, 405087 N.B. Inc., Vestcom Ontario Inc. d/b/a Vestcom Canada
(Ontario), Lirpaco Inc. d/b/a Vestcom Canada, and COS Information Inc. d/b/a
Vestcom Canada (Quebec, Canada).
"Wicks" means the following Obligors: Wicks Broadcast Solutions, LLC, WBS
Australia, Inc., Wicks Broadcast Solutions Holdings, LLC and c/o The Xxxxx Group
of Companies, L.L.C.
"WSI" means Wachovia Securities, Inc. and its successors and assigns.
SECTION 1.02 USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means "including
without limitation."
SECTION 1.03 SECTION REFERENCES.
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All Section references (including references to the Preamble), unless
otherwise indicated, shall be to Sections (and the Preamble) in this Agreement.
SECTION 1.04 CALCULATIONS.
Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360 day year and the
actual days elapsed in the relevant period and will be carried out to at least
three decimal places.
SECTION 1.05 ACCOUNTING TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States.
ARTICLE 2.
ESTABLISHMENT OF ISSUER; TRANSFER OF LOAN ASSETS
SECTION 2.01 CREATION AND FUNDING OF ISSUER; TRANSFER OF LOAN ASSETS.
(a) The Issuer shall be created pursuant to the terms and
conditions of the Trust Agreement, upon the execution and delivery of the Trust
Agreement and the filing by the Owner Trustee of an appropriately completed
Certificate of Trust (as defined in the Trust Agreement) under the Statutory
Trust Statute. The Trust Depositor, as settlor of the Issuer, shall fund and
convey assets to the Issuer pursuant to the terms and provisions hereof. The
Issuer shall be administered pursuant to the provisions of this Agreement and
the Trust Agreement for the benefit of the Securityholders and the Hedge
Counterparties. The Owner Trustee is hereby specifically recognized by the
parties hereto as empowered to conduct business dealings on behalf of the Issuer
in accordance with the terms hereof and of the Trust Agreement. The Servicer is
hereby specifically recognized by the parties hereto as empowered to act on
behalf of the Issuer and the Owner Trustee in accordance with Section 5.02(e)
and Section 5.02(h).
(b) Subject to and upon the terms and conditions set forth herein,
the Trust Depositor hereby sells, transfers, assigns, sets over and otherwise
conveys to the Issuer, for a purchase price consisting of $366,808,285.36 in
cash (less placement expenses and certain other expenses associated with the
initial offer and sale of the Notes the proceeds of which represent the
consideration paid by the Issuer herein), the Class D Notes and the Class E Note
and the Certificate, all the right, title and interest of the Trust Depositor in
and to the following, including but not limited to, all accounts, cash and
currency, chattel paper, electronic chattel paper, tangible chattel paper,
copyrights, copyright licenses, equipment, fixtures, general intangibles,
instruments, commercial tort claims, deposit accounts, inventory, investment
property, letter of credit rights, software, supporting obligations, accessions,
and other property consisting of, arising out of, or related to the following
(the Trust Depositor's interest in items (i)-(vi) below, being collectively
referred to herein as the "Loan Assets"):
(i) the Initial Loans, all payments paid in respect
thereof and all monies due, to become due or paid in respect thereof
accruing on and after the Initial Cut-Off Date and all Liquidation
Proceeds and recoveries thereon, in each case as they arise after the
43
Initial Cut-Off Date, but not including the Retained Interest or
Interest Collections received prior to the Initial Cut-Off Date;
(ii) all security interests and Liens and Collateral
subject thereto from time to time purporting to secure payment by
Obligors under such Loans;
(iii) all guaranties, indemnities and warranties, and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Loans;
(iv) the Trust Accounts, each Obligor Lock-Box, each
Obligor Lock-Box Account, the Lock-Box, the Lock-Box Account, and
together with all cash and investments in each of the foregoing;
(v) all collections and records (including computer
records) with respect to the foregoing;
(vi) all documents relating to the Loan Files; and
(vii) all income, payments, proceeds and other benefits of
any and all of the foregoing.
(c) The Originator and the Trust Depositor acknowledge that the
representations and warranties of the Trust Depositor in Section 3.01(a) through
Section 3.01(e) will run to and be for the benefit of the Issuer, the Trustees
and the Hedge Counterparties, and the Issuer and the Trustees may enforce,
directly without joinder of Trust Depositor, the repurchase obligations of the
Originator with respect to breaches of such representations and warranties as
set forth herein and in Section 11.01.
(d) The sale, transfer, assignment, set-over and conveyance of the
Loan Assets by the Trust Depositor to the Issuer pursuant to this Agreement does
not constitute and is not intended to result in a creation or an assumption by
the Trust Depositor or the Issuer of any obligation of the Originator in
connection with the Loan Assets, or any agreement or instrument relating
thereto, including, without limitation, any obligation to any Obligor, if any,
not financed by the Originator, or (i) any taxes, fees, or other charges imposed
by any Governmental Authority and (ii) any insurance premiums that remain owing
with respect to any Loan at the time such Loan is sold hereunder. The Trust
Depositor also hereby assigns to the Issuer all of the Trust Depositor's right,
title and interest (but none of its obligations) under the Loan Sale Agreement,
including but not limited to the Trust Depositor's right to exercise the
remedies created by the Loan Sale Agreement.
(e) The Originator, Trust Depositor and Issuer intend and agree
that (i) the transfer of the Loan Assets to the Trust Depositor and the transfer
of the Loan Assets to the Issuer are intended to be a sale, conveyance and
transfer of ownership of the Loan Assets, as the case may be, rather than the
mere granting of a security interest to secure a borrowing and (ii) such Loan
Assets shall not be part of the Originator's or the Trust Depositor's estate in
the event of a filing of a bankruptcy petition or other action by or against
such Person under any Insolvency Law. In the event, however, that
notwithstanding such intent and agreement, such transfers are deemed to
44
be of a mere security interest to secure indebtedness, the Originator shall be
deemed to have granted the Trust Depositor and the Trust Depositor shall be
deemed to have granted the Issuer, as the case may be, a perfected first
priority security interest in such Loan Assets respectively and this Agreement
shall constitute a security agreement under Requirements of Law, securing the
repayment of the purchase price paid hereunder, the obligations and/or interests
represented by the Securities and the obligations of the Issuer under the Hedge
Transactions and the Hedge Agreements, in the order and priorities, and subject
to the other terms and conditions of, this Agreement, the Indenture, the Trust
Agreement and the Hedge Agreements, together with such other obligations or
interests as may arise hereunder and thereunder in favor of the parties hereto
and thereto.
(f) If any such transfer of the Loan Assets is deemed to be the
mere granting of a security interest to secure a borrowing, the Trust Depositor
may, to secure the Trust Depositor's own borrowing under this Agreement (to the
extent that the transfer of the Loan Assets thereunder is deemed to be a mere
granting of a security interest to secure a borrowing) repledge and reassign (1)
all or a portion of the Loan Assets pledged to Trust Depositor by the Originator
and with respect to which the Trust Depositor has not released its security
interest at the time of such pledge and assignment, and (2) all proceeds
thereof. Such repledge and reassignment may be made by Trust Depositor with or
without a repledge and reassignment by Trust Depositor of its rights under any
agreement with the Originator, and without further notice to or acknowledgment
from the Originator. The Originator waives, to the extent permitted by
applicable law, all claims, causes of action and remedies, whether legal or
equitable (including any right of setoff), against Trust Depositor or any
assignee of Trust Depositor relating to such action by Trust Depositor in
connection with the transactions contemplated by this Agreement.
SECTION 2.02 CONDITIONS TO TRANSFER OF LOAN ASSETS TO ISSUER.
On or before the Closing Date, the Originator or the Trust Depositor,
as applicable, shall deliver or cause to be delivered to the Owner Trustee and
Indenture Trustee each of the documents, certificates and other items as
follows:
(a) a certificate of an officer of the Originator substantially in
the form of Exhibit C hereto;
(b) copies of resolutions of the Manager of the Originator, the
Servicer and the member of the Trust Depositor or of the Executive Committee of
the Board of Directors of the Originator, the Servicer and the member of the
Trust Depositor approving the execution, delivery and performance of this
Agreement and the transactions contemplated hereunder, certified in each case by
the Secretary or an Assistant Secretary of the Originator, the Servicer and
member of the Trust Depositor;
(c) officially certified evidence dated within thirty (30) days of
the Closing Date of due formation and good standing of the Originator under the
laws of the State of Delaware;
(d) the initial List of Loans, certified by an officer of the
Trust Depositor, together with an Assignment substantially in the form of
Exhibit A (along with the delivery of any instruments and Loan Files as required
under Section 2.06);
45
(e) a certificate of an officer of the Trust Depositor
substantially in the form of Exhibit B hereto;
(f) a letter from Ernst & Young LLP or another nationally
recognized accounting firm, addressed to the Originator and the Trust Depositor
(with a copy to Xxxxx'x), stating that such firm has reviewed a sample of the
Initial Loans and performed specific procedures for such sample with respect to
certain loan terms and that identifies those Initial Loans that do not conform;
(g) copies of resolutions of the member of the Trust Depositor or
of the Executive Committee of the Board of Directors of the Trust Depositor
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereunder, certified in each case by the Secretary or
an Assistant Secretary of the Trust Depositor;
(h) officially certified, evidence dated within thirty (30) days
of the Closing Date of due organization and good standing of the Trust Depositor
under the laws of the State of Delaware;
(i) evidence of proper filing with appropriate offices in the
State of Delaware of UCC financing statements listing the Originator, as debtor,
naming the Trust Depositor as secured party (and the Owner Trustee as assignee)
and identifying the Loan Assets as collateral; and evidence of proper filing
with appropriate officer in the State of Delaware of UCC financing statements
executed by the Trust Depositor, as debtor, naming the Issuer as secured party
(and the Indenture Trustee as assignee) and identifying the Loan Assets as
collateral; and evidence of proper filing with appropriate officers in the State
of Delaware of UCC financing statements executed by the Issuer and naming the
Indenture Trustee as secured party and identifying the Indenture Collateral, as
collateral;
(j) an Officer's Certificate listing the Servicer's Servicing
Officers;
(k) evidence of deposit in the Principal and Interest Account of
all funds received with respect to the Initial Loans on and after the Initial
Cut-Off Date to the date two (2) days preceding the Closing Date, together with
an Officer's Certificate from the Servicer to the effect that such amount is
correct;
(l) evidence of deposit in the Reserve Fund of the Reserve Fund
Initial Balance by the Issuer; and
(m) a fully executed copy of the Transaction Documents.
SECTION 2.03 ACCEPTANCE BY OWNER TRUSTEE.
On the Closing Date, if the conditions set forth in Section 2.02 have
been satisfied, the Issuer shall issue to, or upon the order of, the Trust
Depositor the Certificate representing ownership of a beneficial interest in
100% of the Issuer and the Issuer shall issue, and the Indenture Trustee shall
authenticate, to, or upon the order of, the Trust Depositor the Notes secured by
the Indenture Collateral. The Owner Trustee hereby acknowledges its acceptance,
on behalf of the Issuer, of the Loan Assets, and declares that it shall maintain
such right, title and
46
interest in accordance with the terms of this Agreement and the Trust Agreement
upon the trust herein and therein set forth.
SECTION 2.04 CONVEYANCE OF SUBSTITUTE LOANS.
(a) Subject to subsections 2.01(d) and (e) and the satisfaction of
the conditions set forth in subsection 2.04(c), at the option of the Trust
Depositor, the Originator may at its option (but shall not be obligated to)
sell, transfer, assign, set over and otherwise convey to the Trust Depositor (by
delivery of an executed Subsequent Purchase Agreement substantially in the form
attached as Exhibit J hereto), without recourse other than as expressly provided
herein and therein (and the Trust Depositor shall be required to purchase
through cash payment or by exchange of one or more related Loans released by the
Issuer to the Trust Depositor on the Subsequent Transfer Date), all the right,
title and interest of the Originator in and to the following, including but not
limited to, all accounts, cash and currency, chattel paper, electronic chattel
paper, tangible chattel paper, copyrights, copyright licenses, equipment,
fixtures, general intangibles, instruments, commercial tort claims, deposit
accounts, inventory, investment property, letter of credit rights, software,
supporting obligations, accessions, and other property consisting of, arising
out of, or related to the following (the Originator's interest in property in
clauses (i)-(vii) below, upon such transfer, becoming part of the "Loan
Assets"):
(i) the Substitute Loans listed in the related Addition
Notice, all payments paid in respect thereof and all monies due, to
become due or paid in respect thereof accruing on and after the related
Subsequent Cut-Off Dates and all Liquidation Proceeds and recoveries
thereon, in each case as they arise after the related Subsequent
Cut-Off Dates, but not including the Retained Interest or Interest
Collections received prior to the Subsequent Cut-Off Date;
(ii) all security interests and Liens and Collateral
subject thereto from time to time purporting to secure payment by
Obligors under such Loans;
(iii) all guaranties, indemnities and warranties, and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of such Loans;
(iv) the Trust Accounts, each Obligor Lock-Box, each
Obligor Lock-Box Account, the Lock-Box, the Lock-Box Account, and
together with all cash and investments in each of the foregoing;
(v) all collections and records (including computer
records) with respect to the foregoing;
(vi) all documents relating to the Loan Files; and
(vii) all income, payments, proceeds and other benefits of
any and all of the foregoing.
(b) Subject to Section 2.01(d) and Section 2.01(e) and the
conditions set forth in Section 2.04(c), the Trust Depositor shall sell,
transfer, assign, set over and otherwise convey to
47
the Issuer, without recourse other than as expressly provided herein and
therein, (i) all the right, title and interest of the Trust Depositor in and to
the Substitute Loans purchased pursuant to Section 2.04(a), and (ii) all other
rights and property interests consisting of Loan Assets related to such
Substitute Loans (the property in clauses (i) and (ii) above, upon such
transfer, becoming part of the "Loan Assets").
(c) The Originator shall transfer to the Trust Depositor and the
Trust Depositor shall transfer to the Issuer the Substitute Loans and the other
property and rights related thereto described in Section 2.04(a) only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date (and the delivery of a related Addition Notice by the
Trust Depositor shall be deemed a representation and warranty by the Trust
Depositor and of the Originator that such conditions have been or will be, as of
the related Subsequent Transfer Date, satisfied):
(i) the Trust Depositor shall have provided the Owner
Trustee and the Indenture Trustee with a timely Addition Notice
complying with the definition thereof contained herein, which Addition
Notice shall in any event be no later than ten (10) Business Days prior
to the date of addition;
(ii) there shall have occurred, with respect to each such
Substitute Loan, a corresponding Substitution Event with respect to one
or more Loans then in the Loan Pool;
(iii) the Substitute Loan(s) being conveyed to the Issuer
satisfy the Substitute Loan Qualification Conditions;
(iv) the Originator shall have delivered to the Trust
Depositor a duly executed written assignment in substantially the form
of Exhibit J hereto (the "Subsequent Purchase Agreement"), which shall
include a Subsequent List of Loans listing the Substitute Loans;
(v) the Trust Depositor shall have delivered to the
Issuer a duly executed written assignment (including an acceptance by
the Owner Trustee) in substantially the form of Exhibit I hereto (the
"Subsequent Transfer Agreement"), which shall include a Subsequent List
of Loans listing the Substitute Loans;
(vi) the Trust Depositor shall have deposited or caused to
be deposited in the Principal and Interest Account all Principal
Collections and Interest Collections received with respect to the
Substitute Loans on and after the related Subsequent Cut-Off Date;
(vii) each of the representations and warranties made by
the Trust Depositor pursuant to Sections 3.02, 3.03(i), (ii) and (iv),
3.04, and 3.05 applicable to the Substitute Loans (including without
limitation that each such Substitute Loan is an Eligible Loan) shall be
true and correct as of the related Subsequent Transfer Date; provided,
however, that, (A) with respect to the representation and warranty made
by the Trust Depositor in subsection 3.05(a), such representation and
warranty shall only apply to a Loan that is being substituted for a
Loan that is not an Eligible Loan and (B) with respect to the
representations and warranties made by the Trust Depositor in
subsections 3.03(iv) and
48
3.05, such representations and warranties shall be determined based
upon the Outstanding Loan Balances of the Substitute Loans as of the
applicable Subsequent Transfer Date over the Initial Aggregate
Outstanding Loan Balance;
(viii) the Originator shall, at its own expense, on or prior
to the Subsequent Transfer Date, indicate in its Computer Records that
ownership of the Substitute Loans identified on the Subsequent List of
Loans in the Subsequent Transfer Agreement has been sold to the Issuer
through the Trust Depositor pursuant to this Agreement; and
(ix) prior to such substitution the Originator has
received written confirmation from the Rating Agencies (which shall
respond to the Originator within fifteen (15) Business Days after
receiving written notice from the Originator of its intention to
substitute a Loan and, in the case of Fitch, only after it has received
from the Originator financial statements, credit committee papers and
such other information relating to such Substitute Loan as is
reasonably requested by Fitch) that the proposed substitution will not
result in a reduction or withdrawal of the rating on the Class A Notes,
Class B Notes, the Class C Notes or, if applicable, the Class D Notes;
provided, however, that any failure by each of the Rating Agencies to
respond to the Originator shall be deemed a non-approval by the Rating
Agencies; provided, further, however, with respect to the substitution
of a Prepaid Loan, only notice to, not confirmation from, Fitch shall
be required.
SECTION 2.05 RELEASE OF RELEASED AMOUNTS.
(a) The parties hereto acknowledge and agree that the Issuer has
no interest in the Retained Interest and Released Amounts. The Indenture Trustee
hereby agrees to release to the Issuer from the Loan Assets, and the Issuer
hereby agrees to release to the Trust Depositor, an amount equal to the Released
Amounts immediately upon identification thereof and upon receipt of an Officer's
Certificate of the Servicer, which release shall be automatic and shall require
no further act by the Indenture Trustee or the Issuer; provided, that, the
Indenture Trustee and Owner Trustee shall execute and deliver such instruments
of release and assignment or other documents, or otherwise confirm the foregoing
release, as may reasonably be requested by the Trust Depositor in writing. Such
Released Amounts shall not constitute and shall not be included in the Loan
Assets.
(b) Immediately upon the release to the Trust Depositor by the
Indenture Trustee of the Released Amounts, the Trust Depositor hereby
irrevocably agrees to release to the Originator such Released Amounts, which
release shall be automatic and shall require no further act by the Trust
Depositor; provided, that, the Trust Depositor shall execute and deliver such
instruments of release and assignment, or otherwise confirming the foregoing
release of any Released Amounts, as may be reasonably requested by the
Originator.
SECTION 2.06 DELIVERY OF DOCUMENTS IN THE LOAN FILE; RECORDING OF
ASSIGNMENTS OF MORTGAGE.
(a) Subject to the delivery requirements set forth in Section
2.06(b), the Issuer hereby authorizes and directs the Originator and the Trust
Depositor to deliver possession of all the
49
Loan Files to the Indenture Trustee (with copies to be held by the Servicer) on
behalf of and for the account of the Securityholders and the Hedge
Counterparties. The Originator and the Trust Depositor shall also identify on
the List of Loans (including any deemed amendment thereof associated with any
Substitute Loans), whether by attached schedule or marking or other effective
identifying designation, all Loans that are or are evidenced by such
instruments.
(b) With respect to each Loan in the Loan Pool on or before the
related Transfer Date, the Trust Depositor will deliver or cause to be delivered
to the Indenture Trustee, to the extent not previously delivered, each of the
documents in the Loan File with respect to such Loan, except that (i) the
original recorded Mortgage, in those instances where a copy thereof certified by
the Originator was delivered to the Indenture Trustee, will be delivered or
caused to be delivered within ten (10) Business Days after receipt thereof, and
in any event within one (1) year after the related Transfer Date, and (ii) any
intervening Assignments of Mortgage, in those instances where copies thereof
certified by the Originator were delivered to the Indenture Trustee, will be
delivered or caused to be delivered within ten (10) Business Days after the
receipt thereof, and in any event, within one (1) year of the related Transfer
Date. Notwithstanding the foregoing in clauses (i) and (ii) of this Section
2.06(b), in those instances where the public recording office retains the
original Mortgage or the intervening Assignments of the Mortgage after it has
been recorded, the Trust Depositor shall be deemed to have satisfied its
obligations hereunder upon delivery to the Indenture Trustee of a copy of such
Mortgage or Assignments of Mortgage certified by the public recording office to
be a true copy of the recorded original thereof.
(c) Prior to the occurrence of an Event of Default or a Servicer
Default, the Indenture Trustee shall not record the Assignments of Mortgage
delivered pursuant to Section 2.06(b). Upon the occurrence of an Event of
Default or a Servicer Default, the Indenture Trustee shall cause to be recorded
in the appropriate offices each Assignment of Mortgage delivered to it. Each
such recording shall be at the expense of the Servicer; provided, however, to
the extent the Servicer does not pay such expense then the Indenture Trustee
shall be reimbursed pursuant to the provisions of Section 7.05.
SECTION 2.07 OPTIONAL PURCHASE OR SUBSTITUTION BY THE SERVICER FOR
PREPAID OR CHARGED-OFF LOANS.
The Servicer shall have the right, but not the obligation, to purchase,
or substitute for, any Prepaid Loan, Charged-Off Loan, Delinquent Loan or a Loan
that has a material covenant default, subject to the limitations set forth in
this Section 2.07. In the case of a purchase, the Servicer shall deposit in the
Principal and Interest Account, on the next succeeding Determination Date, an
amount equal to the Transfer Deposit Amount for such Loan (or applicable portion
thereof) as of the date of such purchase. In the case of a substitution, the
Servicer shall deliver to the Issuer one or more Substitute Loans satisfying the
Substitute Loan Qualification Conditions. Any such substitution shall be made in
accordance with the provisions of Section 2.04. On the date of such
substitution, the Servicer shall deliver to the Indenture Trustee a certificate
stating that such Loan satisfies each of the Substitute Loan Qualification
Conditions. The Servicer, the Issuer and the Indenture Trustee shall execute and
deliver such instruments, consents or other documents and perform all acts
reasonably requested by the Servicer in order to effect the transfer and release
of any of the Issuer's interests in the Loans that
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are being purchased or substituted. In no event, however, may the initial
aggregate Outstanding Loan Balance of (a) Prepaid Loans, Charged-Off Loans,
Delinquent Loans and Loans that have a material covenant default purchased or
substituted for pursuant to this Section 2.07, and (b) Prepaid Loans,
Charged-Off Loans, Delinquent Loans and Loans that have a material covenant
default substituted pursuant to Section 2.04 exceed 20% of the Initial Aggregate
Outstanding Loan Balance.
SECTION 2.08 CERTIFICATION BY INDENTURE TRUSTEE; POSSESSION OF LOAN
FILES.
(a) On or prior to the applicable Transfer Date, the Indenture
Trustee shall review the portion of the Loan File required to be delivered
pursuant to Section 2.06(b) on the applicable Transfer Date and shall deliver to
the Originator, the Trust Depositor, each Hedge Counterparty and the Servicer a
certification in the form attached hereto as Exhibit L-1 on or prior to such
Transfer Date. Within two (2) Business Days after the Indenture Trustee receives
the portion of the Loan File permitted to be delivered after the applicable
Transfer Date pursuant to Section 2.06(b), the Indenture Trustee shall deliver
to the Originator, the Trust Depositor, each Hedge Counterparty and the Servicer
a certification in the form attached hereto as Exhibit L-1. Within 360 days
after each Transfer Date (or, with respect to any Substitute Loan, within 360
days after the assignment thereof), the Indenture Trustee shall deliver to the
Originator, the Servicer, the Trust Depositor, each Hedge Counterparty and any
Noteholder who requests a copy from the Indenture Trustee a final certification
in the form attached hereto as Exhibit L-2 evidencing the completeness of the
Loan Files with respect to the Loans being transferred on such Transfer Date.
(b) If the Indenture Trustee during the process of reviewing the
Loan Files finds any document constituting a part of a Loan File which is not
properly executed, has not been received, is unrelated to a Loan identified in
the List of Loans, or does not conform in a material respect to the requirements
of the definition of Loan File, or the description thereof as set forth in the
List of Loans, the Indenture Trustee shall promptly so notify the Originator,
the Trust Depositor and the Servicer. In performing any such review, the
Indenture Trustee may conclusively rely on the Originator as to the purported
genuineness of any such document and any signature thereon. It is understood
that the scope of the Indenture Trustee's review of the Loan Files is limited
solely to confirming that the documents listed in the definition of Loan File
have been executed and received and relate to the Loans identified in the List
of Loans; provided, however, with respect to the UCC financing statements
referenced in clause (a)(iii) of the definition of Required Loan Documents, the
Indenture Trustee's sole responsibility will be to confirm that the Loan File
contains UCC financing statements and not to make determinations about the
materiality of such UCC financing statements. The Originator agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a Loan File of which it is so notified by the Indenture Trustee. If, however,
within thirty (30) days after the Indenture Trustee's notice to it respecting
such material defect the Originator has not remedied the defect and such defect
materially and adversely affects the value of the related Loan, such Loan will
be treated as an "Ineligible Loan" and the Originator will (i) substitute in
lieu of such Loan a Substitute Loan in the manner and subject to the conditions
set forth in Section 11.01 or (ii) repurchase such Loan at a purchase price
equal to the Transfer Deposit Amount, which purchase price shall be deposited in
the Principal and Interest Account within such thirty (30) day period.
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(c) Release of Entire Loan File Upon Substitution. Subject to
Section 5.08(a), upon receipt by the Indenture Trustee of a certification of a
Servicing Officer of the Servicer of such substitution or of such purchase and
the deposit of the amounts described in Section 2.08(b) in the Principal and
Interest Account (which certification shall be in the form of Exhibit M hereto),
the Indenture Trustee shall release to the Servicer for release to the
Originator the related Loan File and the Indenture Trustee and the Issuer shall
execute, without recourse, and deliver such instruments of transfer necessary to
transfer all right, title and interest in such Loan to the Originator free and
clear of any Liens created by the Transaction Documents. All costs of any such
transfer shall be borne by the Servicer.
(d) Partial Release of Loan File and/or Collateral. Subject to
Section 5.08(b), if in connection with taking any action in connection with a
Loan (including, without limitation, the amendment to documents in the Loan File
and/or a revision to Collateral) the Servicer requires any item constituting
part of the Loan File, or the release from the Lien of the related Loan of all
or part of any Collateral, the Servicer shall deliver to the Indenture Trustee a
certificate to such effect in the form attached as Exhibit M hereto. Subject to
Section 5.08(d), upon receipt of such certification, the Indenture Trustee shall
deliver to the Servicer within two (2) Business Days of such request (if such
request was received by 2:00 p.m., central time), the requested documentation,
and the Indenture Trustee shall execute, without recourse, and deliver such
instruments of transfer necessary to release all or the requested part of the
Collateral from the Lien of the related Loan and/or the Lien under the
Transaction Documents.
(e) Annual Certification. On the Remittance Date in April of each
year, commencing April 2004, the Indenture Trustee shall deliver to the
Originator, the Trust Depositor, each Hedge Counterparty and the Servicer a
certification detailing all transactions with respect to the Loans for which the
Indenture Trustee holds the Loan Files pursuant to this Agreement during the
prior calendar year. Such certification shall list all Loan Files which were
released by or returned to the Indenture Trustee during the prior calendar year,
the date of such release or return and the reason for such release or return.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
The Trust Depositor makes, and upon execution of each Subsequent
Purchase Agreement is deemed to make, the following representations and
warranties in Section 3.01 through Section 3.05, on which the Issuer will rely
in purchasing the Loan Assets on the Closing Date (and on any Subsequent
Transfer Date), and on which the Securityholders and the Hedge Counterparties
will rely.
Such representations and warranties are given as of the execution and
delivery of this Agreement and as of the Closing Date (or Subsequent Transfer
Date, as applicable), but shall survive the sale, transfer and assignment of the
Loan Assets to the Issuer. The repurchase obligation or substitution obligation
of the Trust Depositor set forth in Section 11.01 constitutes the sole remedy
available for a breach of a representation or warranty of the Trust Depositor
set forth in Section 3.01 through Section 3.05 of this Agreement. Except as
otherwise provided in Section 2.04(c)(vii), the Trust Depositor shall not be
deemed to be remaking any of the
52
representations set forth in Section 3.03 on a Subsequent Transfer Date with
respect to the Substitute Loans, as such representations relate solely to the
composition of the Initial Loans conveyed on the Closing Date.
SECTION 3.01 REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR.
By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Issuer, the
Indenture Trustee, the Securityholders and the Hedge Counterparties that:
(a) Organization and Good Standing. The Trust Depositor is a
limited liability company duly organized, validly existing and in good standing
under the laws of Delaware and has the power to own its assets and to transact
the business in which it is currently engaged. The Trust Depositor is duly
qualified to do business as a foreign entity and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or otherwise) of the Trust Depositor
or the Issuer.
(b) Authorization; Valid Sale; Binding Obligations. The Trust
Depositor has the power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which it is a party and all of
the transactions contemplated under this Agreement and the other Transaction
Documents to which it is a party, and to create the Issuer and cause it to make,
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and to
cause the Issuer to be created. This Agreement and each Subsequent Transfer
Agreement, if any, shall effect a valid sale, transfer and assignment of or
grant a security interest in the Loan Assets from the Trust Depositor to the
Issuer, enforceable against the Trust Depositor and creditors of and purchasers
from the Trust Depositor. This Agreement and the other Transaction Documents to
which the Trust Depositor is a party constitute the legal, valid and binding
obligation of the Trust Depositor enforceable in accordance with their terms,
except as enforcement of such terms may be limited by applicable Insolvency Laws
and general principles of equity, whether considered in a suit at law or in
equity.
(c) No Consent Required. The Trust Depositor is not required to
obtain the consent of any other party (other than those that it has already
obtained) or any consent, license, approval or authorization from, or
registration or declaration with, any Governmental Authority (other than those
that it has already obtained) in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or the other
Transaction Documents to which it is a party.
(d) No Violations. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated hereby
and thereby, will not violate any Requirement of Law applicable to the Trust
Depositor, or conflict with, result in a default under
53
or constitute a breach of the Trust Depositor's organizational documents or
Contractual Obligations to which the Trust Depositor is a party or by which the
Trust Depositor or any of the Trust Depositor's properties may be bound, or
result in the creation or imposition of any Lien of any kind upon any of its
properties pursuant to the terms of any such Contractual Obligations, other than
as contemplated by the Transaction Documents.
(e) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Trust Depositor threatened, against the Trust Depositor or any
of its properties or with respect to this Agreement, the other Transaction
Documents to which it is a party or the Securities (i) that, if adversely
determined, would in the reasonable judgment of the Trust Depositor be expected
to have a material adverse effect on the business, properties, assets or
condition (financial or otherwise) of the Trust Depositor or the Issuer or the
transactions contemplated by this Agreement or the other Transaction Documents
to which the Trust Depositor is a party or (ii) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the
Certificate or Notes.
(f) Solvency. The Trust Depositor, at the time of and after giving
effect to each conveyance of Loan Assets hereunder, is Solvent on and as of the
date thereof.
(g) Taxes. The Trust Depositor has filed or caused to be filed all
tax returns which, to its knowledge, are required to be filed and has put all
taxes shown to be due and payable on such returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any amount of tax due, the validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
accordance with generally accepted accounting principles have been provided on
the books of the Trust Depositor); no tax Lien has been filed and, to the Trust
Depositor's knowledge, no claim is being asserted, with respect to any such tax,
fee or other charge.
(h) Place of Business; No Changes. The Trust Depositor's location
(within the meaning of Article 9 of the UCC) is as set forth in Section 13.04.
The Trust Depositor has not changed its name, whether by amendment of its
certificate of formation, by reorganization or otherwise, and has not changed
its location within the four (4) months preceding the Closing Date.
(i) Not an Investment Company. The Trust Depositor is not required
to register as an "investment company" under the 40 Act.
(j) Sale Treatment. Other than for tax and accounting purposes,
the Trust Depositor has treated the transfer of Loan Assets to the Trust
Depositor for all purposes as a sale and purchase on all of its relevant books
and records and other applicable documents.
(k) Security Interest.
(i) This Agreement creates a valid and continuing
security interest (as defined in the applicable UCC) in the Loan Assets
in favor of the Issuer, which security interest is prior to all other
Liens (except for Permitted Liens), and is enforceable as such against
creditors of and purchasers from the Trust Depositor;
54
(ii) such Loans, along with the related Loan Files,
constitute either a "general intangible," an "instrument," an
"account," "investment property," or "chattel paper," within the
meaning of the applicable UCC;
(iii) the Issuer owns and has good and marketable title to
such Loan Assets free and clear of any Lien (other than Permitted
Liens), claim or encumbrance of any Person;
(iv) the Trust Depositor has received all consents and
approvals required by the terms of the Loan Assets to the sale of the
Loan Assets hereunder to the Issuer;
(v) the Trust Depositor has caused the filing of all
appropriate financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to perfect the
security interest in such Loan Assets granted to the Issuer under this
Agreement;
(vi) other than the security interest granted to the
Issuer pursuant to this Agreement, the Trust Depositor has not pledged,
assigned, sold, granted a security interest in or otherwise conveyed
any of such Loan Assets. The Trust Depositor has not authorized the
filing of and is not aware of any financing statements against the
Trust Depositor that include a description of collateral covering such
Loan Assets other than any financing statement (A) relating to the
security interest granted to the Trust Depositor under the Loan Sale
Agreement, or (B) that has been terminated. The Trust Depositor is not
aware of the filing of any judgment or tax Lien filings against the
Trust Depositor;
(vii) all original executed copies of each Underlying Note
that constitute or evidence the Loan Assets have been delivered to the
Indenture Trustee;
(viii) the Trust Depositor has received a written
acknowledgment from the Indenture Trustee that the Indenture Trustee or
its bailee is holding the Underlying Notes that constitute or evidence
the Loan Assets solely on behalf of and for the benefit of the
Securityholders and the Hedge Counterparties; and
(ix) none of the Underlying Notes that constitute or
evidence the Loan Assets has any marks or notations indicating that
they have been pledged, assigned or otherwise conveyed to any Person
other than the Issuer.
(l) Value Given. The cash payments received by the Trust Depositor
in respect of the purchase price of each Loan sold hereunder constitutes the
face value of such Loan and the reasonably equivalent value in consideration for
the transfer to the Issuer of such Loan under this Agreement, such transfer was
not made for or on account of an antecedent debt owed by the Originator to the
Trust Depositor, and such transfer was not and is not voidable or subject to
avoidance under any Insolvency Law.
(m) Investment Company. The Issuer is not required to be
registered as an "investment company" within the meaning of the 40 Act.
55
(n) No Defaults. The Trust Depositor is in not default with
respect to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the condition
(financial or otherwise) or operations of the Trust Depositor or its respective
properties or might have consequences that would materially and adversely affect
its performance hereunder.
(o) Bulk Transfer Laws. The transfer, assignment and conveyance of
the Loans by the Trust Depositor pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
(p) Origination and Collection Practices. The origination and
collection practices used with respect to each Loan have been in all material
respects legal, proper and prudent and comply with the Credit and Collection
Policy.
(q) Adequacy of Consideration. The Trust Depositor will receive
fair consideration and reasonably equivalent value in exchange for the sale of
the Loans.
(r) Lack of Intent to Hinder, Delay or Defraud. Neither the Trust
Depositor nor any of its Affiliates sold, or will sell, any interest in any Loan
with any intent to hinder, delay or defraud any of their respective creditors.
(s) Nonconsolidation. The Trust Depositor conducts its affairs
such that the Issuer would not be substantively consolidated in the estate of
the Trust Depositor and their respective separate existences would not be
disregarded in the event of the Trust Depositor's bankruptcy.
(t) Accuracy of Information. All written factual information
heretofore furnished by the Trust Depositor for purposes of or in connection
with this Agreement or the other Transaction Documents to which Trust Depositor
is a party, or any transaction contemplated hereby or thereby is, and all such
written factual information hereafter furnished by the Trust Depositor to any
such party will be, true and accurate in every material respect, on the date
such information is stated or certified.
The representations and warranties set forth in Section 3.01(k) may not be
waived by any Person and shall survive the termination of this Agreement.
SECTION 3.02 REPRESENTATIONS AND WARRANTIES REGARDING EACH LOAN AND AS
TO CERTAIN LOANS IN THE AGGREGATE.
The Trust Depositor represents and warrants (x) with respect to Section
3.02(a), Section 3.02(b), Section 3.02(d) and Section 3.02(e) as to each Loan as
of the execution and delivery of this Agreement and on the Closing Date, and as
of each Subsequent Transfer Date with respect to each Substitute Loan, and (y)
with respect to Section 3.02(c), as to the Loan Pool in the aggregate as of the
Initial Cut-Off Date, and as of each Subsequent Transfer Date with respect to
Substitute Loans (after giving effect to the addition of such Substitute Loans
to the Loan Pool), that:
56
(a) List of Loans. The information set forth in the List of Loans
attached hereto as Exhibit G (as the same may be amended or deemed amended in
respect of a conveyance of Substitute Loans on a Subsequent Transfer Date) is
true, complete and correct as of the applicable Cut-Off Date.
(b) Eligible Loan. Such Loan satisfies the criteria for the
definition of Eligible Loan set forth in this Agreement as of the date of its
conveyance hereunder.
(c) Loans Secured by Real Property. Less than 45% of the Aggregate
Outstanding Loan Balance of the Loan Pool as of the Initial Cut-Off Date
consists of Loans principally secured by real property, and less than 45% of the
Aggregate Outstanding Loan Balance of the Loan Pool as of each Subsequent
Transfer Date shall consist of Loans principally secured by real property.
(d) Intercreditor Provisions. With respect to each Agented Note
and Assigned Loan, such Loan contains provisions substantially to the effect of
Section 13.15.
(e) Underlying Custodial Agreements. With respect to each Pooled
Obligor Loan, the underlying loan documents and other collateral pledged by the
Underlying Debtors is held by an Underlying Custodian for the benefit of the
Originator and its assignees. The Originator's rights under each such Underlying
Custodial Agreement are fully assignable and have been assigned by it to the
Trust Depositor, and assigned by the Trust Depositor to the Issuer in connection
with the transfer of the Loan Assets.
SECTION 3.03 REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
LOANS IN THE AGGREGATE.
The Trust Depositor represents and warrants, on the Closing Date, that
as of the Initial Cut-Off Date, the Initial Loans have the following additional
characteristics: (i) no Loan has a remaining maturity of more than 81 months;
(ii) the date of the final Scheduled Payment on the Loan with the latest
maturity is not later than September 30, 2009; (iii) no Loan was originated
after the Initial Cut-Off Date; and (iv) none of the Initial Loans provide for
Scheduled Payments due on a basis other than monthly or quarterly.
SECTION 3.04 REPRESENTATIONS AND WARRANTIES REGARDING THE LOAN FILES.
The Trust Depositor represents and warrants on the Closing Date with
respect to the Initial Loans (or as of the Subsequent Transfer Date, with
respect to Substitute Loans), that (i) to the extent any such Loans were pledged
under the CP Transaction or the CP Acquisition Transaction, immediately prior to
such date (as applicable), the Originator and/or a collateral custodian under
the CP Transaction or the CP Acquisition Transaction had possession of each
original Underlying Note and the related complete Loan File, and there were no
other custodial agreements relating to the same in effect and (ii) except as
otherwise provided in Section 2.06, the complete Loan File for each Loan is in
the possession of the Indenture Trustee.
SECTION 3.05 REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS OF
INITIAL LOANS.
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The Trust Depositor represents and warrants on the Closing Date, as to
the composition of the Initial Loans in the Loan Pool as of the Initial Cut-Off
Date, that:
(a) the sum of the Outstanding Loan Balances of Obligors that are
in the same industry (by NAICS Code) shall not exceed 27.9% of the Initial
Aggregate Outstanding Loan Balance;
(b) the sum of the Outstanding Loan Balances of the ten (10)
largest Obligors shall not exceed 40% of the Initial Aggregate Outstanding Loan
Balance; and
(c) the sum of the Outstanding Loan Balances of Obligors that have
their primary business in the same State of the United States shall not exceed
12.9% of the Initial Aggregate Outstanding Loan Balance.
SECTION 3.06 REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Owner Trustee, the
Indenture Trustee, the Securityholders and the Hedge Counterparties that:
(a) Organization and Good Standing. The Servicer is a limited
liability company duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the limited liability
company power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a foreign
limited liability company and is in good standing in each jurisdiction in which
the character of the business transacted by it or properties owned or leased by
it requires such qualification and in which the failure so to qualify would have
a material adverse effect on the business, properties, assets, or condition
(financial or otherwise) of the Servicer or the Issuer. The Servicer is properly
licensed in each jurisdiction to the extent required by the laws of such
jurisdiction to service the Loans in accordance with the terms hereof and in
which the failure to so qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of the
Servicer or Issuer.
(b) Authorization; Binding Obligations. The Servicer has the power
and authority to make, execute, deliver and perform this Agreement and the other
Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party.
This Agreement and the other Transaction Documents to which the Servicer is a
party constitute the legal, valid and binding obligation of the Servicer
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by Insolvency Laws and general principles of equity, whether
considered in a suit at law or in equity.
(c) No Consent Required. The Servicer is not required to obtain
the consent of any other party (other than those that it has already obtained)
or any consent, license, approval or authorization from, or registration or
declaration with, any Governmental Authority (other than those that it has
already obtained) in connection with the execution, delivery, performance,
58
validity or enforceability of this Agreement and the other Transaction Documents
to which the Servicer is a party.
(d) No Violations. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a party
by the Servicer will not violate any Requirements of Law applicable to the
Servicer, or conflict with, result in a default under or constitute a breach of
the Servicer's organizational documents or any Contractual Obligations to which
the Servicer is a party or by which the Servicer or any of the Servicer's
properties may be bound, or result in the creation of or imposition of any Lien
of any kind upon any of its properties pursuant to the terms of any such
Contractual Obligations, other than as contemplated by the Transaction
Documents.
(e) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement, or any other Transaction Document
to which the Servicer is a party that, if adversely determined, would in the
reasonable judgment of the Servicer be expected to have a material adverse
effect on the business, properties, assets or condition (financial or otherwise)
of the Servicer or the Issuer or the transactions contemplated by this Agreement
or any other Transaction Document to which the Servicer is a party.
(f) Reports. All reports, certificates and other written
information furnished by the Servicer with respect to the Loans are correct in
all material respects.
SECTION 3.07 REPRESENTATIONS AND WARRANTIES OF THE BACKUP SERVICER.
The Backup Servicer hereby represents and warrants to the Owner
Trustee, the Indenture Trustee, the Securityholders and the Hedge
Counterparties, as follows:
(a) Organization. It is a national banking association duly
organized, validly existing and in good standing under the federal laws of the
United States with all requisite power and authority to own its properties and
to conduct its business as presently conducted and to enter into and perform its
obligations pursuant to this Agreement.
(b) Good Standing. The Backup Servicer is duly qualified to do
business as a national banking association and is in good standing, and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property and the conduct of its business requires such
qualification, licenses or approvals, except where the failure to so qualify or
have such licenses or approvals has not had, and would not be reasonably
expected to have, a material adverse effect on the interests of the
Securityholders or the Hedge Counterparties.
(c) Authorization. It has the power and authority to execute and
deliver this Agreement and to carry out its terms. It has duly authorized the
execution, delivery and performance of this Agreement by all requisite action.
(d) No Violations. The consummation of the transactions
contemplated by, and the fulfillment of the terms of, this Agreement by it will
not violate any Requirements of Law or
59
conflict with, result in any breach of any of the terms or provisions of, or
constitute a default under, its organizational documents or any Contractual
Obligations by which it or any of its property is bound or result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any Contractual Obligations.
(e) No Consent Required. No consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
Governmental Authority having jurisdiction over it or any of its respective
properties is required to be obtained in order for it to enter into this
Agreement or perform its obligations hereunder.
(f) Binding Obligation. This Agreement constitutes its legal,
valid and binding obligation, enforceable in accordance with its terms, except
as such enforceability may be limited by applicable Insolvency Laws and general
principles of equity (whether considered in a suit at law or in equity).
(g) Litigation. There are no proceedings or investigations pending
or, to the best of its knowledge, threatened, against it before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) seeking any determination or ruling that might (in its
reasonable judgment) have a material adverse effect on the interests of the
Securityholders or the Hedge Counterparties.
ARTICLE 4.
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01 CUSTODY OF LOANS.
The contents of each Loan File shall be held in the custody of the
Indenture Trustee under the Indenture for the benefit of, and as agent for, the
Securityholders and the Hedge Counterparties.
SECTION 4.02 FILING.
On or prior to the Closing Date, the Originator, Trust Depositor and
Servicer shall cause the UCC financing statement(s) referred to in Section
2.02(i) hereof to be filed, and from time to time the Servicer shall take and
cause to be taken such actions and execute such documents as are necessary or
desirable or as the Owner Trustee or Indenture Trustee (acting at the direction
of the Majority Noteholders or any Hedge Counterparty) may reasonably request to
perfect and protect the Indenture Trustee's first priority perfected security
interest in the Loan Assets against all other Persons, including, without
limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title.
Notwithstanding the obligations of the Originator, Trust Depositor and Servicer
set forth in the preceding sentence, the Originator, Trust Depositor and
Servicer hereby authorize the Owner Trustee to prepare and file, at the expense
of the Servicer, UCC financing statements (including but not limited to renewal,
continuation or in lieu statements) and amendments or supplements thereto or
other
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instruments as the Owner Trustee may from time to time deem necessary or
appropriate in order to perfect and maintain the security interest granted
hereunder in accordance with the UCC.
SECTION 4.03 CHANGES IN NAME, CORPORATE STRUCTURE OR LOCATION.
(a) During the term of this Agreement, none of the Originator, the
Servicer, the Trust Depositor or the Issuer shall change its name, identity,
structure, existence, state of formation or location without first giving at
least thirty (30) days' prior written notice to the Owner Trustee, the Indenture
Trustee and each Hedge Counterparty.
(b) If any change in either the Servicer's, the Originator's or
the Trust Depositor's name, identity, structure, existence, state of formation,
location or other action would make any financing or continuation statement or
notice of ownership interest or Lien relating to any Loan Asset seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute, the Servicer, no later than five (5) Business Days after the effective
date of such change, shall file such amendments as may be required to preserve
and protect the Indenture Trustee's security interest in the Loan Assets and the
proceeds thereof. Promptly after taking any of the foregoing actions, the
Servicer shall deliver to the Owner Trustee and the Indenture Trustee an Opinion
of Counsel reasonably acceptable to the Owner Trustee and the Indenture Trustee
stating that, in the opinion of such counsel, all financing statements or
amendments necessary to preserve and protect the Indenture Trustee's security
interest in the Loan Assets have been filed, and reciting the details of such
filing.
SECTION 4.04 COSTS AND EXPENSES.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Trustees' and Issuer's right, title and interest in and to
the Loan Assets (including, without limitation, the security interest in the
Collateral related thereto and the security interests provided for in the
Indenture); provided, however, to the extent permitted by the Required Loan
Documents, the Servicer may seek reimbursement for such costs and disbursements
from the related Obligors.
SECTION 4.05 SALE TREATMENT.
Other than for tax and accounting purposes, the Trust Depositor shall
treat the transfer of Loan Assets made hereunder for all purposes as a sale and
purchase on all of its relevant books and records.
SECTION 4.06 SEPARATENESS FROM TRUST DEPOSITOR.
The Originator agrees to take or refrain from taking or engaging in
with respect to the Trust Depositor each of the actions or activities specified
in the "substantive consolidation" opinion of Xxxxxx Xxxxx LLP (including any
certificates of the Originator attached thereto) delivered on the Closing Date,
upon which the conclusions therein are based.
ARTICLE 5.
SERVICING OF LOANS
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SECTION 5.01 APPOINTMENT AND ACCEPTANCE.
CapitalSource is hereby appointed as Servicer pursuant to this
Agreement. CapitalSource accepts the appointment and agrees to act as the
Servicer pursuant to this Agreement.
SECTION 5.02 DUTIES OF THE SERVICER.
(a) The Servicer, as an independent contract servicer, shall
service and administer the Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement and the Credit and Collection Policy. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Loans with any entity provided the Rating Agency Condition is
satisfied. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and to either itself directly service the related Loans or enter into
a Subservicing Agreement with a successor Subservicer which qualifies hereunder.
(b) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, so long as this Agreement shall remain effective, the Servicer
shall remain obligated and primarily liable to the Indenture Trustee, for itself
and on behalf of the Securityholders and the Hedge Counterparties, for the
servicing and administering of the Loans in accordance with the provisions of
this Agreement and the Credit and Collection Policy, without diminution of such
obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Loans. For purposes of this Agreement, the
Servicer shall be deemed to have received payments on Loans when any Subservicer
has received such payments. The Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of the Servicer by such
Subservicer, and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
(c) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Loans involving a Subservicer in its
capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone, and the Indenture Trustee, the
Securityholders and the Hedge Counterparties shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Subservicer except as set forth in Section 5.02(d).
Notwithstanding the foregoing, the Servicer shall (i) at its expense and without
reimbursement, deliver to the Indenture Trustee a copy of each Subservicing
Agreement and (ii) provide notice of the termination of any Subservicer within a
reasonable time after such Subservicer's termination to the Indenture Trustee.
(d) In the event the Servicer shall for any reason no longer be
the Servicer, the Servicer at its expense and without right of reimbursement
therefor, shall, upon request of the Indenture Trustee, deliver to the Successor
Servicer all documents and records (including computer tapes and diskettes)
relating to each Subservicing Agreement and the Loans then being serviced
hereunder and an accounting of amounts collected and held by it hereunder and
62
otherwise use its best efforts to effect the orderly and efficient transfer of
the Subservicing Agreements to the assuming party.
(e) Modifications and Waivers Relating to Loans. So long as it is
consistent with the Credit and Collection Policy, the Servicer may waive, modify
or vary any term of any Loan if in the Servicer's determination such waiver,
modification or variance will not be materially adverse to the interests of the
Noteholders or the Hedge Counterparties; provided, however, the Servicer may not
waive, modify or vary any Loan in any manner that would extend the amortization
of such Loan beyond the Legal Final Maturity Date; provided, further, however,
if any such Loan is amended, modified, waived or varied due to an Obligor's
inability to pay principal or interest, then the Loan shall be treated as a
Delinquent Loan as of the date that is one (1) day in case of Asset Based
Revolvers or sixty (60) days in the case of all other Loans after such
delinquent payment was first due if all delinquencies have not been cured within
that one (1) day or sixty (60) day period, as applicable. The Servicer may
execute any waivers, modifications or variances on behalf of the Issuer. The
Servicer will provide Xxxxx'x with a copy of any waiver, modification or
variance promptly after its execution. No costs incurred by the Servicer or any
Subservicer in respect of Servicing Advances shall for the purposes of
distributions to Noteholders or Hedge Counterparties be added to the amount
owing under the related Loan. Any fees and costs imposed in connection therewith
may be retained by the Servicer. Without limiting the generality of the
foregoing, so long as it is consistent with the Credit and Collection Policy,
the Servicer shall continue, and is hereby authorized and empowered to execute
and deliver on behalf of the Indenture Trustee, the Owner Trustee, each
Securityholder and each Hedge Counterparty, all instruments of amendment,
waiver, satisfaction or cancellation, or of partial or full release, discharge
and all other comparable instruments, with respect to the Loans and with respect
to any Collateral. Such authority shall include, but not be limited to, the
authority to substitute or release items of Collateral consistent with the
Credit and Collection Policy and sell participations or assignments in Loans
previously transferred to the Issuer. In connection with any such sale, the
Servicer shall deposit in the Principal and Interest Account, pursuant to
Section 7.03(b), all proceeds received upon such sale. If reasonably required by
the Servicer, the Indenture Trustee, on behalf of the Issuer, shall furnish the
Servicer, within five (5) Business Days of receipt of the Servicer's request,
with any powers of attorney and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties under
this Agreement. Any such request to the Indenture Trustee, on behalf of the
Issuer, shall be accompanied by a certification in the form of Exhibit L
attached hereto signed by a Servicing Officer. In connection with any
substitution of Collateral, the Servicer shall deliver to the Indenture Trustee
the items, and within the time frame, set forth in Section 2.06, assuming that
the date of substitution is the relevant "Transfer Date."
(f) The Servicer, in servicing and administering the Loans, shall
act in good faith, exercise commercially reasonable judgment and reasonable
care, consistent with the Credit and Collection Policy, employ or cause to be
employed procedures (including collection, foreclosure, Foreclosed Property and
Repossessed Collateral management procedures), prudent lending standards and
exercise a degree of skill and attention not less than that which it customarily
employs and exercises in servicing and administering loans for its own account
and in a manner consistent with those policies and procedures as are customarily
used by reasonable and prudent servicers of national repute in connection with
servicing of assets of the nature and of the
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character of the Loans, giving due consideration to the Noteholders' and Hedge
Counterparties' reliance on the Servicer.
(g) Hedge Covenants.
(i) So long as any of the Notes are outstanding, if on
any date either:
(A) the then current Aggregate Notional Amount
of all Hedge Transactions (excluding any interest rate cap
transactions) hedging the Fixed Rate Loans exceeds the then
Outstanding Loan Balance of the Fixed Rate Loans for the
corresponding Due Period by more than the Fixed Rate Permitted
Excess Amount; or
(B) the Aggregate Notional Amount for any future
calculation period of all Hedge Transactions (excluding any
interest rate cap transactions) hedging the Fixed Rate Loans
exceeds the projected Outstanding Loan Balance of the Fixed
Rate Loans for the corresponding Due Period by more than the
Fixed Rate Permitted Excess Amount;
then, not later than 1:00 p.m. (New York City time) on the Determination Date
preceding the next Remittance Date, the Servicer will notify the Indenture
Trustee, the Hedge Counterparties and the Rating Agencies of such event and with
effect on such next Remittance Date one or more of the Hedge Transactions
(excluding any interest rate cap transactions) hedging the Fixed Rate Loans will
be reduced or amended in accordance with the terms of the applicable Hedge
Agreements so that the Aggregate Notional Amount for each calculation period of
the Hedge Transactions hedging the Fixed Rate Loans will not exceed the
Outstanding Loan Balance of the Fixed Rate Loans at the end of the corresponding
Due Period or as projected to be outstanding at the end of the corresponding Due
Period.
(ii) So long as any of the Notes are outstanding, if on
any date either:
(A) the then current Aggregate Notional Amount
of all Hedge Transactions (excluding any interest rate cap
transactions) hedging the Floating Prime Rate Loans exceeds
the then Outstanding Loan Balance of the Floating Prime Rate
Loans for the corresponding Due Period by more than the
Floating Prime Rate Permitted Excess Amount; or
(B) the Aggregate Notional Amount for any future
calculation period of all Hedge Transactions (excluding any
interest rate cap transactions) hedging the Floating Prime
Rate Loans exceeds the projected Outstanding Loan Balance of
the Floating Prime Rate Loans for the corresponding Due Period
by more than the Floating Prime Rate Permitted Excess Amount;
then, not later than 1:00 p.m. (New York City time) on the Determination Date
preceding the next Remittance Date, the Servicer will notify the Indenture
Trustee, the Hedge Counterparties and the Rating Agencies of such event and with
effect on such next Remittance Date one or more of the Hedge Transactions
hedging the Floating Prime Rate Loans will be reduced or amended in accordance
with the terms of the applicable Hedge Agreements so that the Aggregate Notional
64
Amount of the Hedge Transactions (excluding any interest rate cap transactions)
hedging the Floating Prime Rate Loans will not exceed the Outstanding Loan
Balance of the Floating Prime Rate Loans at the end of the corresponding Due
Period or as projected to be outstanding at the end of the corresponding Due
Period.
(iii) So long as any of the Notes are outstanding, if on
any date either:
(A) the then current Aggregate Notional Amount
of all Hedge Transactions (excluding any interest rate cap
transactions) under all Hedge Agreements then in effect
exceeds the then Aggregate Outstanding Principal Balance; or
(B) the Aggregate Notional Amount of all Hedge
Transactions (excluding any interest rate cap transactions)
for any future calculation period under all Hedge Agreements
then in effect exceeds the projected Aggregate Outstanding
Principal Balance for the corresponding Interest Accrual
Period;
then, not later than 1:00 p.m. (New York City time) on the Determination Date
preceding the next Remittance Date, the Servicer will notify the Indenture
Trustee, the Hedge Counterparties and the Rating Agencies of such event and with
effect on such next Remittance Date one or more of the Hedge Transactions
(excluding any interest rate cap transactions) will be reduced or amended in
accordance with the terms of the applicable Hedge Agreements so that the
Aggregate Notional Amount of the Hedge Transactions for any future calculation
period will not exceed the Aggregate Outstanding Principal Balance of the Notes
for the corresponding Interest Accrual Period.
(h) In accordance with the power set forth in Section 2.01(a), the
Servicer shall perform the duties of the Issuer and the Owner Trustee under the
Transaction Documents. In furtherance of the foregoing, the Servicer shall
consult with the Owner Trustee as the Servicer deems appropriate regarding the
duties of the Issuer and the Owner Trustee under the Transaction Documents. The
Servicer shall monitor the performance of the Issuer and the Owner Trustee and
shall advise the Owner Trustee when action is necessary to comply with the
Issuer's or the Owner Trustee's duties under the Transaction Documents. The
Servicer shall prepare for execution by the Owner Trustee or the Issuer or shall
cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the
Transaction Documents.
(i) In addition to the duties of the Servicer set forth in this
Agreement or any of the Transaction Documents, the Servicer shall perform such
calculations and shall prepare for execution by the Issuer or the Owner Trustee
or shall cause the preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Issuer to prepare, file or deliver pursuant to state and
federal tax and securities laws. In accordance with the directions of the Issuer
or the Owner Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Issuer as are not
covered by any of the foregoing provisions and as are expressly requested by the
Issuer or the Owner Trustee and are reasonably within the capability of the
Servicer.
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(j) Notwithstanding anything in this Agreement or any of the
Transaction Documents to the contrary, the Servicer shall be responsible for
promptly (upon knowledge thereof) notifying the Owner Trustee and the Paying
Agent in the event that any withholding tax is imposed on the Issuer's payments
(or allocations of income) to a Securityholder. Any such notice shall be in
writing and specify the amount of any withholding tax required to be withheld by
the Owner Trustee or the Paying Agent pursuant to such provision.
(k) All tax returns will be signed by the Servicer on behalf of
the Issuer.
(l) The Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be reasonably accessible for inspection by the Owner
Trustee and each Hedge Counterparty at any time during normal business hours.
(m) Without the prior written consent of the Majority Noteholders
and the Hedge Counterparties, the Servicer shall not agree or consent to, or
otherwise permit to occur, any amendment, modification, change, supplement or
rescission of or to the Credit and Collection Policy, in whole or in part, in
any manner that could have a material adverse effect on the Loans.
(n) For so long as any of the Notes are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) of the Securities
Act, (i) the Servicer will provide or cause to be provided to any holder of such
Notes and any prospective purchaser thereof designated by such holder, upon the
request of such a holder or prospective purchaser, the information required to
be provided to such holder or prospective purchaser by Rule 144A(d)(4) under the
Securities Act; and (ii) the Servicer shall update such information from time to
time in order to prevent such information from becoming false and misleading and
will take such other actions as are necessary to ensure that the safe harbor
exemption from the registration requirements of the Securities Act under Rule
144A is and will be available for resales of such Notes conducted in accordance
with Rule 144A.
(o) The Servicer will keep in full force and effect its existence,
rights and franchise as a Delaware limited liability company, and the Servicer
shall obtain and preserve its qualification to do business as a foreign limited
liability company in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Agreement and of
any of the Loans and to perform its duties under this Agreement.
(p) The Servicer shall be obligated to make the Servicing Advances
(but not Scheduled Payment Advances) incurred in the performance of its
servicing duties hereunder. The Servicer shall be entitled to reimbursement for
such Servicing Advances from the Collections received from the Loan to which
such Servicing Advances relate pursuant to Section 5.10(d) and Section 7.03(h).
Notwithstanding anything contained herein to the contrary, in no event shall the
application of Servicing Advances or Scheduled Payment Advances prevent a Loan
from being or becoming a Delinquent Loan or Charged-Off Loan, as applicable.
(q) The Servicer is not responsible for any taxes on the Issuer or
any Servicing Fees to any Successor Servicer.
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(r) All payments (other than Prepayments) received on Loans will
be applied by the Servicer to amounts due by the Obligor starting with the most
recent Scheduled Payment.
(s) The Servicer shall be responsible for any tax reporting,
disclosure, record keeping or list maintenance requirements of the Issuer under
Internal Revenue Code Sections 6011(a), 6111(d) or 6112, including, but not
limited to, the preparation of IRS Form 8886 pursuant to Federal Income Tax
Regulations Section 1.6011-4(d) or any successor provision and any required list
maintenance under Federal Income Tax Regulations Section 301.6112-1 or any
successor provision.
SECTION 5.03 LIQUIDATION OF LOANS.
(a) In the event that any payment due under any Loan and not
postponed pursuant to Section 5.02 is not paid when the same becomes due and
payable, or in the event the Obligor fails to perform any other covenant or
obligation under the Loan, the Servicer in accordance with the Credit and
Collection Policy shall take such action as shall maximize the amount of
recovery thereon and it shall deem to be in the best interests of the
Noteholders and the Hedge Counterparties. The Servicer, consistent with its
Credit and Collection Policy, may accelerate all payments due thereunder to the
extent permitted by the Required Loan Documents and foreclose upon at a public
or private sale or otherwise comparably effect the ownership of Collateral
relating to defaulted Loans for which the related Loan is still outstanding and
as to which no satisfactory arrangements can be made for collection of
delinquent payments in accordance with the provisions of Section 5.10 and shall
act as sales and processing agent for the Collateral that is repossessed. In
connection with such foreclosure or other conversion and any other liquidation
action or enforcement of remedies, the Servicer shall exercise collection and
foreclosure procedures with the same degree of care and skill in its exercise or
use as it would exercise with respect to its own affairs, in accordance with
prudent servicing standards, and in accordance with the Credit and Collection
Policy. Without limiting the generality of the foregoing, the Servicer may not
sell any such Collateral without first using commercially reasonable efforts to
obtain bids to purchase such Collateral from at least three (3) Persons (other
than the Servicer or any of its Affiliates). The Servicer may sell the
Collateral to the highest bidder (if any bids are received) or the Servicer or
an Affiliate may purchase the Collateral for a price equal to the highest bid,
but in no event may the Servicer sell any Collateral for less than the then fair
market value of the Collateral. If no bids are received and the Servicer has
used commercially reasonable efforts to obtain such bids, the Servicer or an
Affiliate may purchase the Collateral for a price equal to the then fair market
value of such Collateral. Any such sale of the Collateral is to be evidenced by
a certificate of a Responsible Officer of the Servicer delivered to the
Indenture Trustee setting forth the Loan, the Collateral, the sale price of the
Collateral and certifying that such sale price is the fair market value of such
Collateral. In any case in which any such Collateral has suffered damage, the
Servicer will not expend funds in connection with any repair or toward the
repossession of such Collateral unless it reasonably determines that such repair
and/or repossession will increase the Liquidation Proceeds by an amount greater
than the amount of such expenses.
(b) Prior to undertaking foreclosure of any Loan secured by real
property and any improvements thereon including any Mortgaged Property of a
Material Mortgage Loan, the Servicer must investigate environmental conditions,
including, in accordance with the Credit and
67
Collection Policy, the performance of a Phase I and/or Phase II environmental
site assessment, to ascertain the actual or potential presence of any hazardous
material on or under such property. For purposes of this Agreement, the term
hazardous material includes (1) any hazardous substance, as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
9601-9675, and (2) petroleum (as that term is defined at 42 U.S.C. Section 6991)
including any derivative, fraction, by-product, constituent or breakdown product
thereof, or additive thereto. In the event that the environmental investigation
determines the existence of any hazardous material on or under the real property
in excess of minimum action levels established by relevant regulatory agencies,
title to such property shall not be taken without satisfaction of the Rating
Agency Condition.
(c) After a Loan has been liquidated, the Servicer shall promptly
prepare and forward to the Indenture Trustee and upon request, any
Securityholder or Hedge Counterparty, a report (the "Liquidation Report"), in
the form attached hereto as Exhibit D, detailing the Liquidation Proceeds
received from such Loan, the Liquidation Expenses incurred with respect thereto,
and any loss incurred in connection therewith.
SECTION 5.04 FIDELITY BOND.
The Servicer shall at all times maintain with a responsible company,
and at its own expense, a blanket fidelity bond (the "Fidelity Bond") in a
minimum aggregate amount equal to $2,000,000, and a maximum deductible of
$50,000, with coverage on all employees acting in any capacity requiring such
persons to handle funds, money, documents or papers relating to the Loans or the
Collateral ("Servicer Employees"). The Fidelity Bond shall provide coverage to
the Indenture Trustee, the Owner Trustee, the Hedge Counterparties and the
Securityholders, their respective officers and employees, against losses
resulting from forgery, theft, embezzlement or fraud by such Servicer Employees.
The Fidelity Bond shall not relieve the Servicer from its duties or indemnity
obligations as set forth in this Sale and Servicing Agreement. Upon the request
of the Indenture Trustee, the Owner Trustee, any Securityholder or any Hedge
Counterparty, the Servicer shall cause to be delivered to the Indenture Trustee,
the Owner Trustee, such Securityholder or such Hedge Counterparty a certified
true copy of such Fidelity Bond.
SECTION 5.05 MAINTENANCE OF HAZARD INSURANCE.
(a) The Servicer will use its reasonable best efforts to ensure
that each Obligor maintains an Insurance Policy with respect to any tangible,
personal property Collateral (other than accounts receivable) in an amount at
least equal to the sum of the Outstanding Loan Balance of the related Eligible
Loan and shall ensure that each such Insurance Policy names the Servicer as loss
payee and as an insured thereunder and all of the Originator's right, title and
interest therein is fully assigned to the Indenture Trustee. Additionally, the
Servicer will require that each Obligor maintain property damage liability
insurance during the term of each Loan in amounts and against risks customarily
insured against by the Obligor on property owned by it. If an Obligor fails to
maintain property damage insurance, the Servicer may in its discretion purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor. In
connection with its activities as Servicer, the Servicer agrees to present, on
behalf of the
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Indenture Trustee, the Securityholders and the Hedge Counterparties, claims to
the insurer under each Insurance Policy and any such liability policy, and to
settle, adjust and compromise such claims, in each case, consistent with the
terms of each Loan. The Servicer's Insurance Policies with respect to the
Collateral will insure against liability for physical damage relating to such
Collateral in accordance with the requirements of the Credit and Collection
Policy. The Servicer hereby disclaims any and all right, title and interest in
and to any Insurance Policy and Insurance Proceeds with respect to any
Collateral, including any Insurance Policy with respect to which it is named as
loss payee and as an insured, and agrees that it has no equitable, beneficial or
other interest in the Insurance Polices and Insurance Proceeds other than being
named as loss payee and as an insured. The Servicer acknowledges that with
respect to the Insurance Policies and Insurance Proceeds thereof that it is
acting solely in the capacity as agent for the Indenture Trustee.
(b) Notwithstanding Section 5.05(a), in the case of each Material
Mortgage Loan, the Servicer shall comply with the Credit and Collection Policy
concerning the issuance and maintenance of fire and hazard insurance with
extended coverage customary in the area where the Mortgaged Property is located.
If at origination of a Loan, to the best of the Servicer's knowledge after
reasonable investigation, the related Mortgaged Property is in an area
identified in the Federal Register by the Flood Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available)
consistent with the Credit and Collection Policy, the Servicer will require the
related Obligor or other creditors to purchase a flood insurance policy covering
each piece of property that is material with a generally acceptable insurance
carrier, in an amount representing coverage not less than the least of (i) the
full insurable value of the Mortgaged Property that is material, or (ii) the
maximum amount of insurance available under the National Flood Insurance Act of
1968, as amended. The Servicer shall also maintain, to the extent such insurance
is available, and required by the Credit and Collection Policy, on Foreclosed
Property constituting real property that is material, fire and hazard insurance
in the amounts described above and liability insurance.
(c) Any amounts collected by the Servicer under any such Insurance
Policies (other than amounts to be applied to the restoration or repair of the
Collateral, or to be released to the Obligor or other creditors in accordance
with Requirements of Law or the governing documents) shall be deposited in the
Principal and Interest Account, subject to withdrawal pursuant to Section
7.03(h). It is understood and agreed that no earthquake or other additional
insurance need be required by the Servicer of any Obligor or other creditors or
maintained on Foreclosed Property, other than pursuant to such Requirements of
Law and regulations as shall at any time be in force and as shall require such
additional insurance. All policies required hereunder (unless the Seller is a
non-agent co-lender with respect to such Loan) shall be endorsed with standard
mortgagee clauses with losses payable to the Servicer or its affiliates.
SECTION 5.06 COLLECTION OF CERTAIN LOAN PAYMENTS.
(a) The Servicer shall make reasonable efforts, consistent with
the Credit and Collection Policy, to collect all payments required under the
terms and provisions of the Loans. Consistent with the foregoing and the Credit
and Collection Policy, the Servicer may in its discretion waive or permit to be
waived any fee or charge which the Servicer would be entitled
69
to retain hereunder as servicing compensation and extend the due date for
payments due on an Underlying Note as provided in Section 5.02(e).
(b) The Servicer agrees not to make, or permit to be made, any
change, in the direction of, or instructions with respect to, any payments to be
made by an Obligor Lock-Box Bank from any Obligor Lock-Box or any Obligor
Lock-Box Account in any manner that would diminish, impair, delay or otherwise
adversely effect the timing or receipt of such payments by the Lock-Box Bank
without the prior written consent of the Indenture Trustee and with the consent
of the Majority Noteholders and the Hedge Counterparties. The Servicer further
agrees to provide the Indenture Trustee promptly, but in no case later than one
(1) Business Day after the Servicer's receipt, any notice it receives that an
Obligor is changing the direction of or instructions with respect to any
payments from any Obligor Lock-Box or any Obligor Lock-Box Account.
SECTION 5.07 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE LOANS.
The Servicer shall provide to the Owner Trustee, the Indenture Trustee,
the FDIC, the OCC, the Federal Reserve, the Office of Thrift Supervision and the
supervisory agents and examiners of the foregoing, access to the documentation
regarding the Loans required by applicable local, state and federal regulations,
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer designated by it and
in a manner that does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations. The Indenture Trustee and the
Owner Trustee shall and shall cause their representatives to hold in confidence
all such information except to the extent disclosure may be required by law (and
all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Indenture Trustee and the Owner Trustee may
reasonably determine that such disclosure is consistent with their obligations
hereunder.
SECTION 5.08 SATISFACTION OF MORTGAGES AND COLLATERAL AND RELEASE OF
LOAN FILES.
(a) Upon the payment in full of any Loan, the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes or the deposit into the Principal and Interest
Account of the purchase price of any Loan acquired by the Trust Depositor, the
Servicer or another Person pursuant to this Agreement, or any other Transaction
Document, the Servicer will immediately notify the Indenture Trustee by a
certification in the form of Exhibit M attached hereto (which certification
shall include a statement to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Principal and Interest Account pursuant to Section 7.03(b) have been or will
be so deposited) of a Servicing Officer and shall request delivery to it of the
Loan File. Upon receipt of such certification and request, the Indenture Trustee
shall in accordance with Section 2.08(c) release, within two (2) Business Days
(if such request was received by 2:00 p.m. central time), the related Loan File
to the Servicer. Expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be payable by the Servicer and shall
not be chargeable to the Principal and Interest Account or the Note Distribution
Account.
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(b) From time to time and as appropriate for the servicing or
foreclosure of any Loan, the Indenture Trustee shall, upon request of the
Servicer and delivery to the Indenture Trustee of a certification in the form of
Exhibit M attached hereto signed by a Servicing Officer, release the related
Loan File to the Servicer within two (2) Business Days (if such request was
received by 2:00 p.m. central time), and the Indenture Trustee shall execute
such documents as shall be necessary to the prosecution of any such proceedings.
The Servicer shall return the Loan File to the Indenture Trustee when the need
therefor by the Servicer no longer exists, unless the Loan has been liquidated
and the Net Liquidation Proceeds relating to the Loan have been deposited in the
Principal and Interest Account and remitted to the Indenture Trustee for deposit
in the Note Distribution Account or the Loan File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure or repossession of Collateral either judicially
or non-judicially, and the Servicer has delivered to the Indenture Trustee a
certificate of a Servicing Officer certifying as to the name and address of the
Person to whom such Loan File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Loan was liquidated, the servicing receipt relating to such
Loan shall be released by the Indenture Trustee to the Servicer.
(c) The Indenture Trustee shall execute and deliver to the
Servicer any court pleadings, requests for trustee's sale or other documents
provided to it necessary to the foreclosure or trustee's sale in respect of
Collateral or to any legal action brought to obtain judgment against any Obligor
on the Underlying Note or other agreement securing Collateral or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Underlying Note or other agreement securing Collateral or otherwise available at
law or in equity. Together with such documents or pleadings, the Servicer shall
deliver to the Indenture Trustee a certificate of a Servicing Officer requesting
that such pleadings or documents be executed by the Indenture Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Indenture Trustee will not invalidate
or otherwise adversely affect the Lien of the agreement securing Collateral,
except for the termination of such a Lien upon completion of the foreclosure or
trustee's sale. The Indenture Trustee shall, upon receipt of a written request
from a Servicing Officer, execute any document provided to the Indenture Trustee
by the Servicer or take any other action requested in such request, that is, in
the opinion of the Servicer as evidenced by such request, required or
appropriate by any state or other jurisdiction to discharge the Lien securing
Collateral upon the satisfaction thereof and the Indenture Trustee will sign and
post, but will not guarantee receipt of, any such documents to the Servicer, or
such other party as the Servicer may direct, within five (5) Business Days of
the Indenture Trustee's receipt of such certificate or documents. Such
certificate or documents shall establish to the Indenture Trustee's satisfaction
that the related Loan has been paid in full by or on behalf of the Obligor (or
subject to a deficiency claim against such Obligor) and that such payment has
been deposited in the Principal and Interest Account.
(d) Notwithstanding anything contained in this Section 5.08 to the
contrary, in no event may the Servicer possess in excess of fifteen (15) Loan
Files (excluding Loan Files for Loans which have been paid in full or
repurchased) at any given time.
SECTION 5.09 SCHEDULED PAYMENT ADVANCES.
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For each Due Period, if the Servicer determines that any Scheduled
Payment (or portion thereof) that was due and payable pursuant to a Loan in the
Loan Pool during such Due Period was not received prior to the end of such Due
Period or has been received in an Obligor Lock-Box Account but has not yet been
transferred to the Lock-Box Account, the Servicer has the right to elect, but is
not obligated, to make a Scheduled Payment Advance in an amount up to the amount
of such delinquent Scheduled Payment (or portion thereof) if the Servicer
believes in good faith that the advance will be reimbursed or subsequently paid
by the related Obligor. The Servicer will deposit any Scheduled Payment Advances
into the Principal and Interest Account on or prior to 11:00 a.m. (New York City
time) on the related Determination Date, in immediately available funds. The
Servicer will be entitled to be reimbursed for Scheduled Payment Advances
pursuant to Section 7.05(a) and Section 7.05(b).
SECTION 5.10 TITLE, MANAGEMENT AND DISPOSITION OF FORECLOSED PROPERTY.
(a) In the event that title to Collateral is acquired in
foreclosure or by deed in lieu of foreclosure or by other legal process, the
deed or certificate of sale, or the Repossessed Collateral, shall be taken in
the name of the Issuer for the benefit of the Securityholders and the Hedge
Counterparties.
(b) The Servicer, subject to the provisions of this ARTICLE 5,
shall manage, conserve, protect and operate each Foreclosed Property or other
Repossessed Collateral for the Securityholders and the Hedge Counterparties
solely for the purpose of its prudent and prompt disposition and sale. The
Servicer shall, either itself or through an agent selected by the Servicer,
manage, conserve, protect and operate the Foreclosed Property or other
Repossessed Collateral in the same manner that it manages, conserves, protects
and operates other foreclosed or repossessed property for its own account, and
in a similar manner to that of similar property in the same locality as the
Foreclosed Property or other Repossessed Collateral is managed. The Servicer
shall attempt to sell the same (and may temporarily rent the same) on such terms
and conditions as the Servicer deems to be in the best interest of the
Securityholders and the Hedge Counterparties.
(c) The Servicer shall cause to be deposited in the Principal and
Interest Account, no later than two (2) Business Days after the receipt thereof,
all revenues received with respect to the conservation and disposition of the
related Foreclosed Property or other Repossessed Collateral net of Servicing
Advances.
(d) The Servicer shall, subject to Section 5.02(p) and Section
7.03, reimburse itself for any related unreimbursed Servicing Advances and
unpaid Servicing Fees, and the Servicer shall deposit in the Principal and
Interest Account the net cash proceeds of the sale of any Foreclosed Property or
other Repossessed Collateral to be distributed to the Securityholders and the
Hedge Counterparties in accordance with Section 7.05 hereof.
SECTION 5.11 SERVICING COMPENSATION.
(a) As compensation for its servicing activities hereunder and
reimbursement for its expenses, the Servicer shall be entitled to receive a
servicing fee for each month (or portion thereof), calculated and payable
monthly in arrears on each Remittance Date prior to the
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termination of the Issuer (with respect to each Due Period, the "Servicing Fee")
equal to the sum of the product of: (i) the applicable Servicing Fee Percentage,
(ii) the Outstanding Loan Balance of the Asset Based Revolvers and the
Outstanding Loan Balance of all other Loans, as applicable, as of the first
(1st) day of the applicable Due Period (or, with respect to the first (1st) Due
Period, as of the Closing Date) and (iii) a fraction, the numerator of which is
equal to the number of days in the applicable Due Period (or, with respect to
the first (1st) Due Period, the number of days from the Closing Date to the end
of the first (1st) Due Period) and the denominator of which is 360. The
Servicing Fee is payable out of Interest Collections pursuant to Section 7.05(a)
and Section 7.05(b). If the Servicer is replaced, the Originator shall be
responsible for the payment of any fee payable to a Successor Servicer in excess
of the Servicer Fee to the extent such fee is not paid pursuant to Section
7.05(a) and Section 7.05(b).
(b) In addition to the Servicing Fee, the Servicer shall be
entitled to retain for itself as additional servicing compensation assumption
and other administrative fees paid or payable in connection with any Loan.
SECTION 5.12 ASSIGNMENT; RESIGNATION.
The Servicer shall not assign its rights and duties under this
Agreement (other than in connection with a subservicing arrangement) nor resign
from the obligations and duties hereby imposed on it as Servicer except (a) by
mutual consent of the Servicer, the Indenture Trustee, the Majority Noteholders
and the Hedge Counterparties, (b) in connection with a merger, conversion or
consolidation permitted pursuant to Section 5.13 (in which case the Person
resulting from the merger, conversion or consolidation shall be the successor of
the Servicer), (c) in connection with an assignment permitted pursuant to
Section 5.13 (in which case the Assignee shall be the successor of the
Servicer), or (d) upon the Servicer's determination that its duties hereunder
are no longer permissible under Requirements of Law or administrative
determination and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by a
written Opinion of Counsel (who may be counsel for the Servicer) to such effect
delivered to the Indenture Trustee, which Opinion of Counsel shall be in form
and substance reasonably acceptable to the Indenture Trustee. No such
resignation shall become effective until a successor has assumed the Servicer's
responsibilities and obligations hereunder in accordance with Section 8.03.
SECTION 5.13 MERGER OR CONSOLIDATION OF SERVICER.
(a) Any Person into which the Servicer may be merged or
consolidated, or any Person resulting from such merger, conversion or
consolidation to which the Servicer is a party, or any Person succeeding to
substantially all of the business of the Servicer, and who shall be an
established commercial loan servicing institution that on a consolidated basis
has a net worth of at least $50,000,000, shall be the Successor Servicer
hereunder without execution or filing of any paper or any further act on the
part of any of the parties hereto, notwithstanding anything herein to the
contrary; provided, however, no such merger, conversion or consolidation of the
Servicer or transfer of all or substantially all or the Servicer assets or
business shall be permitted hereunder unless the Rating Agency Condition is
satisfied with respect thereto.
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(b) Upon the occurrence of a change-in-control (including any
merger or consolidation of the Originator or transfer of substantially all of
its assets and its business), the Servicer shall (i) provide the Trust
Depositor, the Indenture Trustee, the Hedge Counterparties and the Rating
Agencies with notice of such change-in-control within thirty (30) days after
completion of the same, and (ii) satisfy the Rating Agency Condition after
completion of the same.
SECTION 5.14 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and any director, officer, employee or agent of the
Servicer may rely on any document of any kind which it in good faith reasonably
believes to be genuine and to have been adopted or signed by the proper
authorities or persons respecting any matters arising hereunder. Subject to the
terms of Section 12.01 herein, the Servicer shall have no obligation to appear
with respect to, prosecute or defend any legal action which is not incidental to
the Servicer's duty to service the Loans in accordance with this Agreement. The
Servicer shall not be responsible for the payment of any taxes imposed on or
with respect to the Issuer or for the fees of any Successor Servicer
SECTION 5.15 THE BACKUP SERVICER.
(a) The Issuer, the Indenture Trustee and the Trust Depositor
hereby appoint Xxxxx Fargo Bank Minnesota, National Association to act as Backup
Servicer in accordance with the terms of this Agreement. Xxxxx Fargo Bank
Minnesota, National Association hereby accepts such appointment and agrees to
perform the duties and responsibilities with respect thereto set forth herein.
(b) The Backup Servicer shall perform the following duties and
obligations:
(i) On or before the Closing Date, the Backup Servicer
shall accept from the Servicer delivery of the information required to
be set forth in the Monthly Reports in hard copy and in an agreed upon
electronic format.
(ii) Not later than 12:00 noon New York time four (4)
Business Days after the end of the related Due Period, the Servicer
shall provide to the Backup Servicer and the Backup Servicer shall
accept delivery of tape in an agreed upon electronic format (the
"Tape") from the Servicer, which shall include but not be limited to
the following information: (A) for each Loan, ---- (1) Loan number, (2)
Loan category (i.e., asset based financed, healthcare secured, senior
cash flow, subordinate cash flow or real estate) (3) legal name of the
related Obligor, (4) state of Obligor's primary business, (5) NAICS
Code, (6) type of Loan (i.e., Partially Funded Term Loan, Fully Funded
Term Loan, Reducing Revolving Loan or Traditional Revolving Loan), (7)
type of security interest (i.e., senior or subordinated), (8) term
payment type (i.e., Amortizing Loans, Balloon Loans or Bullet Loans),
(9) origination date, (10) maturity date, (11) benchmark for Loan Rate,
(12) margin, (13) frequency of Scheduled Payments, (14) controlling
interest (i.e., whether the Loan is syndicated and whether the Issuer
holds a majority of the outstanding indebtedness under such syndicated
Loan), (15) the collection status, (16) the Loan status, and (17) the
Outstanding Loan Balance and (B) the Aggregate Outstanding Loan
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Balance. With respect to its duties pursuant to this Section
5.15(b)(ii), the Backup Servicer shall have no duty to confirm that the
Tape contains the foregoing information.
(iii) Prior to the Remittance Date, the Backup Servicer
shall review the Monthly Report to ensure that it is complete on its
face and that the following items in such Monthly Report have been
accurately calculated, if applicable, and reported: (A) the Aggregate
Outstanding Loan Balance, (B) the Backup Servicing Fee, (C) the Loans
that are more than one (1) day delinquent in the case of Asset Based
Revolvers and more than sixty (60) days delinquent in the case of all
other Loans (other than Charged-Off Loans), (D) the Charged-Off Loans,
and (E) the Priority of Payments. The Backup Servicer shall notify the
Indenture Trustee, each Hedge Counterparty, the Placement Agent and the
Servicer of any discrepancies with the Monthly Report based on such
review not later than the Business Day preceding such Remittance Date.
(iv) If the Servicer disagrees with the report provided
under paragraph (iii) above by the Backup Servicer or if the Servicer
or any subservicer has not reconciled such discrepancy, the Backup
Servicer agrees to confer with the Servicer to resolve such
disagreement on or prior to the next succeeding Determination Date and
shall settle such discrepancy with the Servicer if possible, and notify
the Indenture Trustee, each Hedge Counterparty, the Placement Agent and
the Rating Agencies of the resolution thereof. The Servicer hereby
agrees to cooperate at its own expense with the Backup Servicer in
reconciling any discrepancies herein. If within twenty (20) days after
the delivery of the report provided under paragraph (iii) above by the
Backup Servicer, such discrepancy is not resolved, the Backup Servicer
shall promptly notify the Servicer, Indenture Trustee, each Hedge
Counterparty, the Placement Agent and the Rating Agencies of the
continued existence of such discrepancy. Following receipt of such
notice by the Indenture Trustee, each Hedge Counterparty, the Placement
Agent and the Rating Agencies, the Servicer shall deliver to the
Indenture Trustee, each Hedge Counterparty, the Placement Agent, the
Backup Servicer and the Rating Agencies no later than the related
Remittance Date a certificate describing the nature and amount of such
discrepancies and the actions the Servicer proposes to take with
respect thereto.
With respect to the foregoing, the Backup Servicer, in the performance
of its duties and obligations hereunder, is entitled to rely conclusively, and
shall be fully protected in so relying, on the contents of each Tape, including,
but not limited to, the completeness and accuracy thereof, provided by the
Servicer.
(c) After the termination or resignation by the Servicer in
accordance with this Agreement, all authority, power, rights and
responsibilities of the Servicer, under this Agreement, whether with respect to
the Loans or otherwise, shall pass to and be vested in the Successor Servicer or
the Backup Servicer, as applicable in accordance with Section 8.03 and such
applicable party shall be deemed the Successor Servicer, subject to and in
accordance with the provisions of Section 8.03, as long as such named Successor
Servicer is not prohibited by any Requirements of Law from fulfilling the same,
as evidenced by an Opinion of Counsel; provided, however, if Xxxxx Fargo as
Backup Servicer becomes the Successor Servicer, it will not make any Scheduled
Payment Advances.
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(d) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) that may result from any merger or consolidation to which the
Backup Servicer shall be a party, or (iii) that may succeed to the properties
and assets of the Backup Servicer substantially as a whole, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Backup Servicer hereunder, shall be the successor to the
Backup Servicer under this Agreement without further act on the part of any of
the parties to this Agreement.
(e) As compensation for its backup servicing activities hereunder,
the Backup Servicer shall be entitled to receive the Backup Servicing Fee from
the Servicer. The Backup Servicing Fee shall be calculated and payable monthly
in arrears on each Remittance Date. The Backup Servicer's entitlement to receive
the Backup Servicing Fee (other than due and unpaid Backup Servicer Fees owed
through such date) shall cease on the earliest to occur of: (i) it becoming the
Successor Servicer, (ii) its removal as Backup Servicer, or (iii) the
termination of this Agreement.
(f) The Backup Servicer may be removed with or without cause by
the Majority Noteholders by notice given in writing to the Backup Servicer. In
the event of any such removal, a replacement Backup Servicer may be appointed by
Majority Noteholders.
(g) The Backup Servicer undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being expressly
understood by all parties hereto that there are no implied duties or obligations
of the Backup Servicer hereunder. Without limiting the generality of the
foregoing, the Backup Servicer, except as expressly set forth herein, shall have
no obligation to supervise, verify, monitor or administer the performance of the
Servicer. The Backup Servicer may act through its agents, attorneys and
custodians in performing any of its duties and obligations under this Agreement,
it being understood by the parties hereto that the Backup Servicer will be
responsible for any misconduct or negligence on the part of such agents,
attorneys or custodians acting for and on behalf of the Backup Servicer. Neither
the Backup Servicer nor any of its officers, directors, employees or agents
shall be liable, directly or indirectly, for any damages or expenses arising out
of the services performed under this Agreement other than damages or expenses
that result from the negligence or willful misconduct of it or them or the
failure to perform materially in accordance with this Agreement.
(h) Limitation on Liability. The Backup Servicer shall not be
liable for any obligation of the Servicer contained in this Agreement or for any
errors of the Servicer contained in any Tape, certificate or other data or
document delivered to the Backup Servicer hereunder or on which the Backup
Servicer must rely in order to perform its obligations hereunder, and the
parties hereto each agree to look only to the Servicer to perform such
obligations. The Backup Servicer shall have no responsibility and shall not be
in default hereunder or incur any liability for any failure, error, malfunction
or any delay in carrying out any of its respective duties under this Agreement
if such failure or delay results from the Backup Servicer acting in accordance
with information prepared or supplied by a Person other than the Backup Servicer
or the failure of any such other Person to prepare or provide such information.
The Backup Servicer shall have no responsibility, shall not be in default and
shall incur no liability for (i) any act or failure to act of any third party,
including the Servicer (other than any agent, attorney or custodian acting on
behalf of the Backup Servicer), (ii) any inaccuracy or omission in a notice or
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communication received by the Backup Servicer from any third party (other than
any agent, attorney or custodian acting on behalf of the Backup Servicer), (iii)
the invalidity or unenforceability of any Loan under Requirements of Law, (iv)
the breach or inaccuracy of any representation or warranty made with respect to
any Loan, or (v) the acts or omissions of any Successor Backup Servicer.
SECTION 5.16 COVENANTS OF THE BACKUP SERVICER.
The Backup Servicer hereby covenants that:
(a) The Backup Servicer will comply in all material respects with
all Requirements of Law.
(b) The Backup Servicer will preserve and maintain its existence,
rights, franchises and privileges as a national banking association in good
standing under the federal laws of the United States.
(c) The Backup Servicer shall perform in all material respects all
of its obligations and duties under this Agreement.
ARTICLE 6.
COVENANTS OF THE TRUST DEPOSITOR
SECTION 6.01 LEGAL EXISTENCE.
During the term of this Agreement, the Trust Depositor will keep in
full force and effect its existence, rights and franchises as a limited
liability company under the laws of the jurisdiction of its organization and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Transaction Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Trust Depositor and its Affiliates will be
conducted on an arm's-length basis.
SECTION 6.02 LOANS NOT TO BE EVIDENCED BY PROMISSORY NOTES.
The Trust Depositor will take no action to cause any Loan not
originally evidenced by an Underlying Note to be evidenced by an instrument (as
defined in the UCC), except in connection with the enforcement or collection of
such Loan.
SECTION 6.03 SECURITY INTERESTS.
The Trust Depositor will not sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer to exist any Lien on any
Loan in the Loan Pool or its interest in any related Collateral, whether now
existing or hereafter transferred to the Issuer, or any interest therein. The
Trust Depositor will immediately notify the Owner Trustee, each Hedge
Counterparty and the Indenture Trustee of the existence of any Lien on any Loan
in the Loan
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Pool or its interest in any related Collateral; and the Trust Depositor shall
defend the right, title and interest of the Issuer in, to and under the Loans in
the Loan Pool and its interest in any related Collateral, against all claims of
third parties; provided, however, that nothing in this Section 6.03 shall
prevent or be deemed to prohibit the Trust Depositor from suffering to exist
Permitted Liens upon any of the Loans in the Loan Pool or its interest in any
related Collateral.
SECTION 6.04 DELIVERY OF PRINCIPAL COLLECTIONS AND INTEREST
COLLECTIONS.
The Trust Depositor agrees to pay to the Servicer promptly (but in no
event later than two (2) Business Days after receipt) all Principal Collections
and Interest Collections received by the Trust Depositor in respect of the
Loans, for application in accordance with Section 7.05 hereof.
SECTION 6.05 REGULATORY FILINGS.
The Trust Depositor shall make any filings, reports, notices,
applications and registrations with, and seek any consents or authorizations
from, the Commission and any state securities authority on behalf of the Issuer
as may be necessary or that the Trust Depositor deems advisable to comply with
any federal or state securities or reporting requirements laws.
SECTION 6.06 COMPLIANCE WITH LAW.
The Trust Depositor hereby agrees to comply in all material respects
with all Requirements of Law applicable to the Trust Depositor except where the
failure to do so would not have a material adverse effect on the Securityholders
or the Hedge Counterparties.
SECTION 6.07 ACTIVITIES.
Except as contemplated by this Agreement or the other Transaction
Documents, the Trust Depositor shall not engage in any business or activity of
any kind, or enter into any transaction or indenture, mortgage, instrument,
agreement, contract, lease or other undertaking, which is not directly related
to the transactions contemplated and authorized by this Agreement or the other
Transaction Documents; provided, however, that the Trust Depositor may purchase
and sell (or grant Liens in respect of) assets similar to the Loan Assets to
other Persons in securitization or other non-recourse financing transactions
involving the Originator or any of its Affiliates on terms and conditions (with
respect to liabilities and restrictions on its activities, as well as
restrictions on its interactions with the Originator or its Affiliates, relevant
to the "bankruptcy remoteness" or "substantive consolidation" analysis relating
to the Trust Depositor) substantially similar to the terms and conditions
applicable to the Trust Depositor under the Transaction Documents so long as the
Securityholders and the Hedge Counterparties are not materially adversely
affected thereby and the Rating Agency Condition is satisfied.
SECTION 6.08 INDEBTEDNESS.
The Trust Depositor shall not create, incur, assume or suffer to exist
any Indebtedness or other liability whatsoever, except (a) obligations incurred
under this Agreement or to the Originator, (b) liabilities incident to the
maintenance of its limited liability company existence in good standing or (c)
liabilities necessarily incurred to facilitate securitizations referred to in
the proviso in Section 6.07.
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SECTION 6.09 GUARANTEES.
The Trust Depositor shall not become or remain liable, directly or
contingently, in connection with any Indebtedness or other liability of any
other Person, whether by guarantee, endorsement (other than endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise except in connection with the transactions described in
Section 6.07.
SECTION 6.10 INVESTMENTS.
The Trust Depositor shall not make or suffer to exist any loans or
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or securities
or evidences of indebtedness, acquisition of the business or assets, or
otherwise) in, any Person except for (a) purchases of Loans from the Originator,
(b) for investments in Permitted Investments in accordance with the terms of
this Agreement, (c) as may be necessary to facilitate securitizations referred
to in the proviso in Section 6.07 or (d) the receipt of the Class D Notes, the
Class E Note and the Certificate as consideration for the transfer of the Loan
Assets to the Issuer. Without limiting the generality of the foregoing, the
Trust Depositor shall not: (i) provide credit to any Securityholder for the
purpose of enabling such Securityholder to purchase any Securities or (ii) lend
any money to the Issuer.
SECTION 6.11 MERGER; SALES.
The Trust Depositor shall not enter into any transaction of merger or
consolidation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution) or acquire or be acquired by any Person, or convey, sell, lease or
otherwise dispose of all or substantially all of its property or business,
except as provided for in this Agreement.
SECTION 6.12 DISTRIBUTIONS.
The Trust Depositor shall not declare or pay, directly or indirectly,
any dividend or make any other distribution (whether in cash or other property)
with respect to the profits, assets or capital of the Trust Depositor or any
Person's interest therein, or purchase, redeem or otherwise acquire for value
any of its members' interests now or hereafter outstanding, except that, so long
as no Event of Default has occurred and is continuing and no Event of Default
would occur as a result thereof or after giving effect thereto and the Trust
Depositor would continue to be Solvent as a result thereof and after giving
effect thereto, the Trust Depositor may declare and pay distributions to its
shareholders.
SECTION 6.13 OTHER AGREEMENTS.
Except as provided in this Agreement or the other Transaction
Documents, the Trust Depositor shall not become a party to, or permit any of its
properties to be bound by, any indenture, mortgage, instrument, contract,
agreement, lease or other undertaking, except this Agreement and the other
Transaction Documents to which it is a party and any agreement relating to
another securitization transaction permitted by Section 6.07; nor shall it amend
or modify the provisions of its organizational documents or issue any power of
attorney except to
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the Owner Trustee, the Indenture Trustee or the Servicer in accordance with the
Transaction Documents or in connection with another securitization transaction
permitted by Section 6.07.
SECTION 6.14 SEPARATE LEGAL EXISTENCE.
The Trust Depositor shall:
(a) Maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions. The funds of the
Trust Depositor will not be diverted to any other Person or for other than
authorized uses of the Trust Depositor.
(b) Ensure that, to the extent that it shares the same officers or
other employees as any of its members or Affiliates, the salaries of and the
expenses related to providing benefits to such officers and other employees
shall be fairly allocated among such entities, and each such entity shall bear
its fair share of the salary and benefit costs associated with all such common
officers and employees.
(c) Ensure that, to the extent that it jointly contracts with any
of its members or Affiliates to do business with vendors or service providers or
to share overhead expenses, the costs incurred in so doing shall be allocated
fairly among such entities, and each such entity shall bear its fair share of
such costs. To the extent that the Trust Depositor contracts or does business
with vendors or service providers when the goods and services provided are
partially for the benefit of any other Person, the costs incurred in so doing
shall be fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair share of
such costs. All material transactions between Trust Depositor and any of its
Affiliates shall be only on an arm's length basis.
(d) To the extent that the Trust Depositor and any of its members
or Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.
(e) Conduct its affairs strictly in accordance with its
organizational documents and observe all necessary, appropriate and customary
limited liability company formalities, including, but not limited to, holding
all regular and special board of director meetings appropriate to authorize all
limited liability company action, keeping separate and accurate minutes of its
meetings, passing all resolutions or consents necessary to authorize actions
taken or to be taken, and maintaining accurate and separate books, records and
accounts, including, but not limited to, payroll and intercompany transaction
accounts.
(f) Take or refrain from taking, as applicable, each of the
activities specified in the "substantive consolidation" opinion of Xxxxxx Xxxxx
LLP, delivered on the Closing Date, upon which the conclusions expressed therein
are based.
SECTION 6.15 LOCATION; RECORDS.
The Trust Depositor shall (a) not move its location outside the State
of Maryland or its jurisdiction of formation outside of the State of Delaware
without thirty (30) days' prior written notice to the Owner Trustee and the
Indenture Trustee and (b) will promptly take all actions (if
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any) required (including, but not limited to, all filings and other acts
necessary or advisable under the UCC of each relevant jurisdiction) in order to
continue the first priority perfected security interest of the Indenture Trustee
in all Loans.
SECTION 6.16 LIABILITY OF TRUST DEPOSITOR.
The Trust Depositor shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Trust Depositor under
this Agreement.
SECTION 6.17 BANKRUPTCY LIMITATIONS.
The Trust Depositor shall not, without the affirmative vote of a
majority of the managers of the Trust Depositor (which must include the
affirmative vote of at least two (2) duly appointed Independent managers) (a)
dissolve or liquidate, in whole or in part, or institute proceedings to be
adjudicated bankrupt or insolvent, (b) consent to the institution of bankruptcy
or insolvency proceedings against it, (c) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, (d) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the limited liability
company or a substantial part of its property, (e) make a general assignment for
the benefit of creditors, (f) admit in writing its inability to pay its debts
generally as they become due, or (g) take any limited liability company action
in furtherance of the actions set forth in clauses (a) through (f) above;
provided, however, that no manager may be required by any member of the Trust
Depositor to consent to the institution of bankruptcy or insolvency proceedings
against the Trust Depositor so long as it is Solvent.
SECTION 6.18 LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS.
The Trust Depositor and any director or officer or employee or agent of
the Trust Depositor may rely in good faith on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Trust Depositor and any director or officer or employee
or agent of the Trust Depositor shall be reimbursed by the Indenture Trustee for
any liability or expense incurred by reason of the Indenture Trustee's willful
misfeasance, bad faith or gross negligence (except errors in judgment) in the
performance of its duties hereunder, or by reason of the Indenture Trustee's
material breach of the obligations and duties under this Agreement or the
Transaction Documents. The Trust Depositor shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 6.19 INSURANCE POLICIES.
Upon and after an Event of Default or Servicer Default, at the request
of the Indenture Trustee, the Trust Depositor will cause to be performed any and
all acts reasonably required to be performed to preserve the rights and remedies
of the Indenture Trustee and the Owner Trustee in any insurance policies
applicable to the Loans including, without limitation, in each case, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Indenture Trustee or the Trust Depositor, respectively.
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SECTION 6.20 PAYMENTS FROM OBLIGOR LOCK-BOXES AND OBLIGOR LOCK-BOX
ACCOUNTS.
The Trust Depositor agrees not to make, or permit to be made, any
change in the direction of, or instructions with respect to, any payments to be
made by an Obligor Lock-Box Bank from any Obligor Lock-Box or any Obligor
Lock-Box Account in any manner that would diminish, impair, delay or otherwise
adversely effect the timing or receipt of such payments by the Lock-Box Bank or
to change the name in which an Obligor Lock-Box or Obligor Lock-Box Account is
maintained without the prior written consent of the Indenture Trustee and with
the consent of the Majority Noteholders and the Hedge Counterparties. The Trust
Depositor further agrees to provide the Indenture Trustee promptly, but in no
case later than one (1) Business Day after the Trust Depositor's receipt, any
notice it receives that an Obligor is changing the direction of or instructions
with respect to any payments from any Obligor Lock-Box or any Obligor Lock-Box
Account or the name in which any Obligor Lock-Box or Obligor Lock-Box Account is
maintained.
ARTICLE 7.
ESTABLISHMENT OF ACCOUNTS;
DISTRIBUTIONS; RESERVE FUND
SECTION 7.01 NOTE DISTRIBUTION ACCOUNT, RESERVE FUND AND LOCK-BOXES.
(a) On or before the Closing Date, the Servicer shall establish
the Note Distribution Account and the Reserve Fund with and in the name of the
Indenture Trustee for the benefit of the Securityholders and the Hedge
Counterparties. The Servicer and Indenture Trustee are hereby required to ensure
that each of the Note Distribution Account and Reserve Fund is established and
maintained as an Eligible Deposit Account with a Qualified Institution. If any
institution with which any of the accounts established pursuant to this Section
7.01(a) are established ceases to be a Qualified Institution, the Servicer, or
if the Servicer fails to do so, the Indenture Trustee (as the case may be) shall
within ten (10) Business Days establish a replacement account at a Qualified
Institution after notice of such event. In no event shall the Indenture Trustee
be responsible for monitoring whether such Eligible Institution shall remain a
Qualified Institution. Each Qualified Institution maintaining an Eligible
Deposit Account shall agree in writing to comply with all instructions
originated by the Indenture Trustee or, with respect to the Principal and
Interest Account only, the Servicer directing disposition of the funds in the
Eligible Deposit Account without the further consent of the Trust Depositor.
(b) If the Servicer so directs (or, if the Servicer does not so
direct, the Trust Depositor has the right to direct), in writing, the Indenture
Trustee shall accept such directions as directions of the Issuer and shall
invest the amounts in the Note Distribution Account and the Reserve Fund in
Permitted Investments of the type specified in such written direction that
mature or are withdrawable not later than the next succeeding Determination
Date, except for investments in subsection (vi) of the definition of Permitted
Investments. Once such funds are invested, the Indenture Trustee shall not
change the investment of such funds other than in connection with the withdrawal
or liquidation of such investments and the transfer of such funds as provided
herein on or prior to the next succeeding Determination Date. Funds in the Note
Distribution
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Account and Reserve Fund not so invested must be insured to the extent and the
amount permitted by law by BIF or SAIF of the FDIC. Subject to the restrictions
herein, the Servicer or Indenture Trustee may purchase a Permitted Investment
from itself or an Affiliate with respect to investment of funds in the Trust
Accounts. Subject to the other provisions hereof, the Servicer in the case of
the Principal and Interest Account and the Indenture Trustee in the case of all
other Trust Accounts shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Servicer or its agent or
the Indenture Trustee or its agent, as applicable, together with each document
of transfer, if any, necessary to transfer title to such investment to the
Servicer or Indenture Trustee, as applicable, in a manner which complies with
this Section 7.01. All Investment Earnings on investments of funds in the Trust
Accounts shall be deposited in the Interest Collection Account pursuant to
Section 7.01 and distributed on the next Remittance Date pursuant to Section
7.05. The Trust Depositor and the Issuer agree and acknowledge that the Servicer
and Indenture Trustee are to have "control" (within the meaning of the UCC) of
collateral comprised of "Investment Property" (within the meaning of the UCC)
for all purposes of this Agreement. In the absence of timely written direction
from the Servicer or the Trust Depositor, the Indenture Trustee shall invest
amounts in the Note Distribution Account and Reserve Fund Account in Permitted
Investments of the type specified in clause (vi) of the definition of Permitted
Investments herein.
(c) The Servicer and the Originator have established, or caused to
be established, and will maintain, or caused to be maintained, various Obligor
Lock-Boxes and Obligor Lock-Box Accounts, for the deposit of the amounts
representing payments sent by Obligors with respect to certain Revolving Loans.
The Servicer and the Originator have established, or caused to be established,
and will maintain, or caused to be maintained, the Lock-Box and the Lock-Box
Account, for the deposit of the amounts representing payments sent by Obligors
and Obligor Lock-Box Banks, as applicable, with respect to Loans pledged to the
Indenture Trustee as well as with respect to loans not pledged to the Indenture
Trustee. The Servicer, as agent for the Issuer, and the Originator will cause
each Obligor Lock-Box Bank to deposit within two (2) Business Days of receipt
all Collections that have been sent to such Obligor Lock-Box Bank into the Lock
Box Account, and within two (2) Business Days of the deposit into the Lock-Box
or the Lock Box Account, the Servicer and the Originator will cause the Lock-Box
Bank to cause the amounts in the Lock Box Account to be deposited into the
Principal and Interest Account.
SECTION 7.02 RESERVE FUND DEPOSIT.
On the Closing Date, the Owner Trustee, on behalf of the Issuer, shall
deposit the Reserve Fund Initial Balance into the Reserve Fund from the net
proceeds of the sale of the Securities.
SECTION 7.03 PRINCIPAL AND INTEREST ACCOUNT.
(a) The Servicer shall cause to be established and maintained one
or more Principal and Interest Accounts (including for each such account two (2)
subaccounts, one designated as the Interest Collection Account and the other
designated as the Principal Collection Account), in one or more Eligible Deposit
Accounts, in the form of time deposit or demand accounts, which may be
interest-bearing or such accounts may be trust accounts wherein the moneys
therein are
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invested in Permitted Investments, titled "CapitalSource Finance LLC, as
Servicer, in trust for the Hedge Counterparties and the registered holders of
CapitalSource Commercial Loan Trust Notes, Series 2003-1 Class A, Class B, Class
C, Class D and Class E Notes." All funds in such Principal and Interest Accounts
not so invested shall be insured to the extent and the amount permitted by the
BIF or SAIF of the FDIC to the maximum extent provided by law. The creation of
any Principal and Interest Account shall be evidenced by a letter agreement in
the form of Exhibit E hereto. A copy of such letter agreement shall be furnished
to the Indenture Trustee, the Owner Trustee and, upon request, any
Securityholder or Hedge Counterparty. The Servicer may, upon written notice to
the Indenture Trustee, transfer any Principal and Interest Account to a
different Eligible Deposit Account.
(b) The Servicer and each Subservicer shall deposit without
duplication (within two (2) Business Days of receipt thereof) in the applicable
Principal and Interest Account and retain therein the following amounts received
by the Servicer (and shall segregate and deposit Interest Collections into the
Interest Collections Account and Principal Collections into the Principal
Collection Account):
(i) all Principal Collections accruing and received on or
after the applicable Cut-Off Date;
(ii) all Interest Collections accruing and received on or
after the first day of the month of the Closing Date (net of the
Servicing Fee with respect to each Loan and other servicing
compensation payable to the Servicer as permitted herein) and all
origination and commitment fees;
(iii) all Net Liquidation Proceeds (other than Insurance
Proceeds covered under clause (iv) below);
(iv) all Insurance Proceeds (other than amounts to be
applied to restoration or repair of any related Collateral or amounts
in excess of the Outstanding Loan Balance of the related Loan to be
released to the Obligor in accordance with the Credit and Collection
Policy);
(v) all Released Mortgaged Property Proceeds and any
other proceeds from any other Collateral securing the Loans (other than
amounts released to the Obligor in accordance with the Credit and
Collection Policy);
(vi) any amounts paid in connection with the purchase or
repurchase of any Loan;
(vii) any amount required to be deposited in the Principal
and Interest Account pursuant to Section 5.10 or Section 7.03; and
(viii) the amount of any gains and interest incurred in
connection with investments in Permitted Investments.
(c) The Servicer shall have no obligation to deposit into the
Principal and Interest Account any Retained Interest or Released Amounts.
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(d) Not later than the close of business on each Determination
Date immediately preceding a Remittance Date, the Servicer will remit to the
Principal and Interest Account any Scheduled Payment Advance that the Servicer
determines to make.
(e) Notwithstanding Section 7.03(b), if (i) the Servicer makes a
deposit into the Principal and Interest Account in respect of a Collection of a
Loan in the Loan Pool and such Collection was received by the Servicer in the
form of a check that is not honored for any reason, or (ii) the Servicer makes a
mistake with respect to the amount of any Collection and deposits an amount that
is less than or more than the actual amount of such Collection, the Servicer
shall appropriately adjust the amount subsequently deposited into the Principal
and Interest Account to reflect such dishonored check or mistake. Any Scheduled
Payment in respect of which a dishonored check is received shall be deemed not
to have been paid.
(f) The foregoing requirements for deposit in the Principal and
Interest Accounts shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments with respect to the
Servicing Fee, together with the Liquidation Expenses, may not be deposited by
the Servicer in the Principal and Interest Account.
(g) So long as no Servicer Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Accounts shall either be maintained with an Eligible Deposit Account as
an interest-bearing account meeting the requirements set forth in Section
7.03(a), or the funds held therein may be invested by the Servicer (to the
extent practicable) in Permitted Investments, as directed in writing by the
Servicer, and, in each case, with a stated maturity (giving effect to any
applicable grace period) no later than the fourth (4th) Business Day immediately
preceding the Remittance Date next following the Due Period in which the date of
investment occurs; provided, however, that Permitted Investments shall not
include any interest-only security, any security purchased at a price in excess
of 100% of par or any security whose repayment is subject to substantial
non-credit related risk as determined by the Servicer. All Permitted Investments
must be held by or registered in the name of "CapitalSource, as Servicer, in
trust for the Hedge Counterparties and the registered holders of CapitalSource
Commercial Loan Trust Notes, Series 2003-1." Any Investment Interest Earnings on
funds held in the Principal and Interest Account shall be deemed part of the
Interest Collection Account and shall be deposited therein pursuant to Section
7.03 and distributed on the next Remittance Date pursuant to Section 7.05. The
amount of any losses incurred in connection with the investment of funds in the
Principal and Interest Account in Permitted Investments shall be deposited in
the Principal and Interest Account by the Servicer from its own funds
immediately as realized without reimbursement therefor.
(h) The Servicer may (and, for the purposes of clause (ii) below,
shall), at any time upon one (1) Business Day's notice to the Indenture Trustee,
make withdrawals from the Principal and Interest Account for the following
purposes:
(i) to remit to the Trust Depositor, in connection with
the transfer of a Substitute Loan to the Issuer in place of a Prepaid
Loan, an amount equal to the Prepaid Loan Amount;
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(ii) to remit to the Indenture Trustee on each
Determination Date immediately preceding a Remittance Date, for deposit
in the Note Distribution Account, the Interest Collections and
Principal Collections received during the immediately preceding Due
Period less any amounts remitted to the Trust Depositor pursuant to
clause (i) above prior to such Determination Date;
(iii) prior to a Servicer Default, and subject to Section
5.02(p), to reimburse itself for any unreimbursed Servicing Advances to
the extent deposited in the Principal and Interest Account (and not
netted from Scheduled Payments received from the related Loans);
(iv) to withdraw any amount received from an Obligor that
is recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
(v) to make investments in Permitted Investments;
(vi) to withdraw any funds deposited in the Principal and
Interest Account that were not required or permitted to be deposited
therein or were deposited therein in error;
(vii) prior to a Servicer Default, to pay itself certain
additional servicing compensation as permitted under Section 5.11(b) of
the Agreement;
(viii) prior to (A) a payment default on the related Loan
(and in the case of Asset Based Revolvers, a payment default shall mean
any failure to make a payment on the date such payment is due and such
failure continues for more than one (1) calendar day), (B) a Servicer
Default, (C) an Event of Default, or (D) an Accelerated Amortization
Event, with respect to Revolving Loans secured by Collateral only, to
advance to an Obligor in a given Due Period prior to the Monthly
Reconciliation Date an amount not to exceed the Principal Collections
received from such Obligor during that Due Period; and
(ix) to clear and terminate the Principal and Interest
Account upon the termination of the Agreement
SECTION 7.04 SECURITYHOLDER DISTRIBUTIONS.
(a) Each Securityholder as of the related Record Date shall be
paid on the next succeeding Remittance Date by check mailed to such
Securityholder at the address for such Securityholder appearing on the Note
Register or Certificate Register or by wire transfer if such Securityholder
provides written instructions to the Indenture Trustee, or Owner Trustee,
respectively, at least (10) ten days prior to such Remittance Date, which
instructions may be in the form of a standing order.
(b) The Indenture Trustee shall serve as the Paying Agent
hereunder and shall make the payments to the Securityholder required hereunder.
The Indenture Trustee hereby agrees that all amounts held by it for payment
hereunder will be held in trust for the benefit of the Securityholder.
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SECTION 7.05 ALLOCATIONS AND DISTRIBUTIONS.
(a) On each Determination Date prior to the occurrence of an Event
of Default, a Servicer Default, an Accelerated Amortization Event or the
occurrence and continuance of a Class A Trigger, a Class B Trigger, a Class C
Trigger or a Class D Trigger, (i) the Indenture Trustee shall deposit into the
Note Distribution Account all funds on deposit in the Reserve Fund and (ii) the
Servicer shall instruct the Indenture Trustee in writing to withdraw, and on the
related Remittance Date the Indenture Trustee shall withdraw from the Note
Distribution Account (A) the Interest Collections and (B) all amounts deposited
therein from the Reserve Fund to make the following payments. The payments
listed below will be made only to the extent there are sufficient amounts
available on the Remittance Date. Payments will be made, in the following order
of priority:
First, pro rata, based on the amounts owed to such Persons under this
clause First, to the Hedge Counterparties, any Net Trust Hedge Payments for the
current and any prior Remittance Dates, owing to the Hedge Counterparties under
Hedge Agreements (other than Hedge Breakage Costs), together with interest
accrued thereon;
Second, to the Indenture Trustee, the Backup Servicer and the Owner
Trustee, any amounts owed to such parties under the Transaction Documents for
fees and expenses, other than for fees, expenses and other amounts related to
indemnification; provided, however, that in no event shall the amounts payable
pursuant to this clause Second (i) to the Indenture Trustee and the Backup
Servicer, in the aggregate, exceed $5,000 for any twelve (12) month period
(excluding amounts paid as part of the Indenture Trustee Fee and the Backup
Servicer Fee), (ii) to the Owner Trustee, exceed $5,000 for any twelve (12)
month period (excluding amounts paid as part of the Owner Trustee Fee) and (iii)
if a Successor Servicer is being appointed, to the Indenture Trustee for costs
and expenses associated with that appointment, exceed $100,000 in the aggregate
for any given servicer transfer;
Third, to the Servicer, from Interest Collections received from the
specific Loan for which Scheduled Payment Advances were made, reimbursement for
the amount of any such Scheduled Payment Advances, relating to interest on such
Loans;
Fourth, to the Servicer, its Servicing Fee for the preceding Due
Period, together with any amounts in respect of the Servicing Fee that were due
in respect of prior Due Periods that remain unpaid;
Fifth, to the Holders of the Class A Notes, the Class A Interest Amount
for the related Interest Accrual Period and any related unpaid Class A Interest
Shortfall with respect to prior Remittance Dates, together with interest on the
unpaid Class A Interest Shortfall at the then applicable Class A Note Interest
Rate;
Sixth, to the Holders of the Class B Notes, the Class B Interest Amount
for the related Interest Accrual Period and any related unpaid Class B Interest
Shortfall with respect to prior Remittance Dates, together with interest on the
unpaid Class B Interest Shortfall at the then applicable Class B Note Interest
Rate;
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Seventh, to the Holders of the Class C Notes, the Class C Interest
Amount for the related Interest Accrual Period and any related unpaid Class C
Interest Shortfall with respect to prior Remittance Dates, together with
interest on the Class C Interest Shortfall at the then applicable Class C Note
Interest Rate;
Eighth, to the Reserve Fund an amount, if any, which, when so
deposited, causes the balance of the Reserve Fund to equal three (3) times the
sum of the Class A Interest Amount, the Class B Interest Amount and the Class C
Interest Amount due on the next Remittance Date;
Ninth, to the Holders of the Class A Notes, the Class B Notes, the
Class C Notes and the Class D Notes, sequentially and in reduction of their
respective Outstanding Principal Balance, until reduced to zero, an amount equal
to the Additional Principal Amount;
Tenth, to the Reserve Fund an amount, if any, which, when so deposited,
causes the balance of the Reserve Fund to equal the Outstanding Loan Balance of
each Delinquent Loan;
Eleventh, to the Holders of the Class B Notes, the Class B Accrued
Payable, if any;
Twelfth, to the Holders of the Class C Notes, the Class C Accrued
Payable, if any;
Thirteenth, to the extent not paid by the Originator, any amounts due
in respect of listing the Class A Notes, the Class B Notes and the Class C Notes
on the Irish Stock Exchange;
Fourteenth, to the Servicer to the extent not reimbursed pursuant to
clause Third above, reimbursement for the amount of any Scheduled Payment
Advance, relating to interest on Loans;
Fifteenth, pro rata, based on the amounts owed to such Persons under
this clause Fifteenth, to the Hedge Counterparties, any unpaid Hedge Breakage
Costs, together with interest accrued thereon;
Sixteenth, pro rata, based on the amounts owed to such Persons under
this clause Sixteenth, to the Indenture Trustee, the Backup Servicer and the
Owner Trustee, to the extent not paid pursuant to clause Second due to the
limitations set forth therein, amounts owed to such parties for fees and
expenses and other amounts, including such amounts related to indemnification
and, to a Successor Servicer, any Additional Servicing Fee; and
Seventeenth, to the Owner Trustee for payment to the Holders of the
Certificates, any remaining Interest Collections.
(b) On each Remittance Date on and after the occurrence of an
Event of Default, Hedge Breakage Costs in an aggregate amount not to exceed
$250,000 shall be payable under clause First of Section 7.05(a), and on each
Remittance Date on and after the occurrence of an Event of Default, a Servicer
Default, an Accelerated Amortization Event or the occurrence and continuance of
a Class A Trigger, a Class B Trigger, a Class C Trigger or a Class D Trigger,
all amounts remaining after clause Seventh of Section 7.05(a) shall be treated
as Principal Collections and distributed in accordance with Section 7.05(c).
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(c) On each Determination Date, the Servicer shall instruct the
Indenture Trustee in writing to withdraw, and on the Remittance Date the
Indenture Trustee will follow the instructions to withdraw, the Principal
Collections and all other funds available for principal distributions on deposit
in the Note Distribution Account, to the extent there are sufficient funds, to
make the following payments. The payments listed below will be made in the
following order of priority:
First, to the Servicer, from Principal Collections received from the
specific Loans for which Scheduled Payment Advances were made, reimbursement for
the amount of any such Scheduled Payment Advances, relating to principal on such
Loans;
Second, to the Holders of the Class A Notes until the Outstanding
Principal Balance of the Class A Notes is reduced to zero;
Third, to the Holders of the Class B Notes, the Class B Accrued
Payable, if any;
Fourth, to the Holders of the Class B Notes, until the Outstanding
Principal Balance of the Class B Notes is reduced to zero;
Fifth, to the Holders of the Class C Notes, the Class C Accrued
Payable, if any;
Sixth, to the Holders of the Class C Notes until the Outstanding
Principal Balance of the Class C Notes is reduced to zero;
Seventh, on and after the date on which all of the Class D Notes are
held by someone other than the Trust Depositor or any of its Affiliates, to the
Holders of the Class D Notes, until the Outstanding Principal Balance of the
Class D Notes is reduced to zero;
Eighth, to the Servicer, to the extent not reimbursed pursuant to
clause First above, reimbursement for the amount of any Scheduled Payment
Advance, relating to the principal on the Loans;
Ninth, pro rata, based upon the amounts owed to such Persons under this
clause Ninth, any unpaid Hedge Breakage Costs, together with interest accrued
thereon;
Tenth, to the Holders of the Class D Notes, until the Outstanding
Principal Balance of the Class D Note is reduced to zero;
Eleventh, pro rata, based upon the amounts owed to such Persons under
this clause Eleventh, to the Indenture Trustee, the Backup Servicer and the
Owner Trustee, to the extent not previously paid, amounts owed to such parties
for fees and expenses and other amounts, including such amounts related to
indemnification and, to a Successor Servicer, any Additional Servicing Fee;
Twelfth, to the extent not paid by the Originator, any amounts due in
respect of listing the Class A Notes, the Class B Notes and the Class C Notes on
the Irish Stock Exchange;
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Thirteenth, to the Holders of the Class E Notes until the Outstanding
Principal Balance of the Class E Notes is reduced to zero; and
Fourteenth, to the Owner Trustee for payment to the Holders of the
Certificates, any remaining Principal Collections.
SECTION 7.06 DETERMINATION OF LIBOR.
(a) The Indenture Trustee will determine the interest rate for
each Interest Accrual Period by determining the London interbank offered rate
("LIBOR") for deposits in U.S. Dollars for a period of one (1) month (the
"One-Month Index Maturity") which appears on Telerate Page 3750 as of 11:00
a.m., London time, on the day that is two (2) London Banking Days preceding that
Interest Accrual Period ("LIBOR Determination Date"). If such rate does not
appear on Telerate Page 3750 on the related LIBOR Determination Date, the rate
for that Interest Accrual Period will be determined as if the parties had
specified "USD-LIBOR-Reference Banks" as the applicable rate.
"USD-LIBOR-Reference Banks" means that the interest rate for an Interest Accrual
Period will be determined on the basis of the rates at which deposits in U.S.
Dollars are offered by the Reference Banks at approximately 11:00 a.m., London
time, on the related LIBOR Determination Date to prime banks in the London
interbank market for the One-Month Index Maturity commencing on the beginning of
that Interest Accrual Period and in a Representative Amount. The Indenture
Trustee will request the principal London office of each of the Reference Banks
to provide a quotation of its rate. If at least two (2) such quotations are
provided, the rate for that Interest Accrual Period will be the arithmetic mean
of the quotations. If fewer than two (2) quotations are provided as requested,
the rate for that Interest Accrual Period will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the Indenture Trustee,
at 11:00 a.m. New York City time, on the beginning of that Interest Accrual
Period for loans in U.S. Dollars to leading European banks for the One-Month
Index Maturity commencing at the beginning of that Interest Accrual Period and
in a Representative Amount.
(b) The establishment of LIBOR on the applicable London Banking
Day by the Indenture Trustee and the Indenture Trustee's subsequent calculation
of the rates of interest applicable to the Notes for the related Remittance Date
shall, in the absence of manifest error, be final and binding. Each such rate of
interest may be obtained by telephoning the Indenture Trustee at (000) 000-0000.
SECTION 7.07 MONTHLY RECONCILIATION.
(a) Except as set forth in Section 7.07(b), on each Business Day
during each Due Period that Principal Collections are received in the Principal
Collection Account with respect to any Loan in the Loan Pool, the Servicer will
determine the Outstanding Loan Balance and the principal amount of the portion
of such Loan not owed by the Issuer (if any) with respect to such Loan.
(b) Prior to (i) a payment default on the related Loan (and in the
case of Asset Based Revolvers, a payment default shall mean any failure to make
a payment on the date such payment is due and such failure continues for more
than one (1) calendar day), (ii) a Servicer
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Default, (iii) an Event of Default or (iv) an Accelerated Amortization Event, on
each Monthly Reconciliation Date, the Servicer will determine the Outstanding
Loan Balance and principal amount of the portion of such Loan not owned by the
Issuer (if any) with respect to each Revolving Loan secured by Collateral (but
specifically excluding any Revolving Loan that is not secured by any Collateral)
in the Loan Pool, and on and as of such date will determine the net effect of
the Principal Collections received from, and payments from the Principal
Collection Account representing new advances made to, the related Obligor during
such Due Period. Notwithstanding the foregoing, the Servicer will maintain the
underlying data of all Principal Collections received and payments or advances
made with respect to any Revolving Loan secured by Collateral from the Principal
Collection Account on each day during each Due Period, and shall make such
underlying data available pursuant to and in accordance with the provisions of
Section 9.03.
ARTICLE 8.
SERVICER DEFAULT; SERVICE TRANSFER
SECTION 8.01 SERVICER DEFAULT.
"Servicer Default" means the occurrence of any of the following:
(a) any failure by the Servicer to remit when due any payment
required to be made under the terms of this Agreement or the other Transaction
Documents, it being understood that the Servicer shall not be responsible for
the failure of either the Owner Trustee or the Indenture Trustee to remit funds
that were received by the Owner Trustee or the Indenture Trustee from the
Servicer in accordance with this Agreement or the other Transaction Documents;
or
(b) failure by the Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the Servicer
set forth in this Agreement or the other Transaction Documents, or any
representation or warranty of the Servicer made in this Agreement or the other
Transaction Documents or in any certificate or other writing delivered thereto
or in connection therewith proves to have been incorrect when made, which
failure or breach has a material adverse effect on the rights of the Noteholders
or the Hedge Counterparties and continues unremedied for a period of thirty (30)
days (if such failure or breach can be cured) after the first to occur of (i)
the date on which written notice of such failure requiring the same to be
remedied shall have been given to a Responsible Officer of the Servicer by the
Indenture Trustee, or a Responsible Officer of the Servicer and the Indenture
Trustee by any Securityholder or Hedge Counterparty, and (ii) the date on which
a Responsible Officer of the Servicer receives actual knowledge of such failure
or breach; or
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any Insolvency Proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force, undischarged or unstayed for
a period of thirty (30) days; or
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(d) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any Insolvency Proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property; or
(e) the Servicer shall admit in writing its inability to pay its
debts as they become due, file a petition to take advantage of any applicable
Insolvency Laws, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(f) without the consent of the Majority Noteholders or the Hedge
Counterparties, the Servicer agrees or consents to, or otherwise permits to
occur, any amendment, modification, change, supplement or rescission of or to
the Servicer or the Credit and Collection Policy, in whole or in part, in any
manner that would have a material adverse effect on the Loans; or
(g) failure by the Servicer to observe or perform the Credit and
Collection Policy regarding the servicing of the Loans in any manner that would
have a material adverse effect on the Loans.
SECTION 8.02 SERVICER TRANSFER.
(a) If a Servicer Default has occurred and is continuing, the
Majority Noteholders may, by written notice (a "Termination Notice") delivered
to the parties hereto and each of the Hedge Counterparties, terminate all (but
not less than all) of the Servicer's management, administrative, servicing,
custodial and collection functions; provided, however, no Termination Notice
shall be required with respect to any Servicer Default described under Section
8.01(c), Section 8.01(d) and Section 8.01(e).
(b) Upon delivery of the notice required by Section 8.02(a) (or,
if later, on a date designated therein), and on the date that a Successor
Servicer shall have been appointed pursuant to Section 8.03 (such appointment
being herein called a "Servicer Transfer"), all rights, benefits, fees,
indemnities, authority and power of the Servicer under this Agreement, whether
with respect to the Loans, the Loan Files or otherwise, shall pass to and be
vested in such successor (the "Successor Servicer") pursuant to and under this
Section 8.02; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Principal and Interest Account, or for its own account in connection with its
services hereafter or thereafter received with respect to the Loans. The
Servicer shall transfer to the Successor Servicer (i) all records held by the
Servicer relating to the Loans in such electronic form as the Successor Servicer
may reasonably request and (ii) any Loan Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Servicer Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer.
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Any indemnities provided in this Agreement or the other Transaction Documents in
favor of the Servicer and any fees, costs, expenses, Servicing Advances or
Scheduled Payment Advances which have accrued and/or are unpaid to the Servicer
shall survive the resignation or termination of the Servicer.
SECTION 8.03 APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE; SUCCESSOR
SERVICER TO ACT.
(a) Upon delivery of the notice required by Section 8.02(a) (or,
if later, on a date designated therein), the Servicer shall continue to perform
all servicing functions under this Agreement until the date specified in the
Termination Notice or, if no such date is specified, until a date mutually
agreed by the Servicer and the Indenture Trustee. The Indenture Trustee shall as
promptly as possible after the giving of or receipt of a Termination Notice,
appoint a Successor Servicer, which shall be the Backup Servicer, in accordance
with Section 5.15(c), and named Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Indenture Trustee and Owner
Trustee. If within sixty (60) days of delivery of a Termination Notice a
Successor Servicer is not appointed and the Servicer shall have yet to cure the
Servicer Default, then the Indenture Trustee shall offer the Trust Depositor,
and the Trust Depositor shall offer the Originator, the right to accept
retransfer of all the Loan Assets, and such parties may accept retransfer of
such Loan Assets in consideration of the Trust Depositor's delivery to the
Principal and Interest Account on or prior to the next upcoming Remittance Date
of a sum equal to the Aggregate Outstanding Principal Balance of all Securities
(other than the Certificates) then outstanding, together with accrued and unpaid
interest thereon through such date of deposit and all other amounts due and
owing to any Person under the Transaction Documents, including amounts owing to
each Hedge Counterparty, including Hedge Breakage Costs, it being a condition
precedent to such retransfer that all Hedge Transactions then outstanding under
any Hedge Agreements then in effect shall be terminated and all amounts payable
to the Hedge Counterparties, including Hedge Breakage Costs, upon such
termination shall be paid in full; provided, that, the Indenture Trustee, if so
directed by the Majority Noteholders in writing, need not accept and effect such
reconveyance in the absence of evidence (which may include valuations of an
investment bank or similar entity) reasonably acceptable to such Indenture
Trustee or Majority Noteholders that such retransfer would not constitute a
fraudulent conveyance of the Trust Depositor or the Originator.
(b) The Backup Servicer may, in its discretion, or shall, if it is
unable to so act or if the Majority Noteholders request in writing to the Backup
Servicer, appoint, or petition a court of competent jurisdiction to appoint, any
established servicing institution having a net worth of not less than
$50,000,000 as the Successor Servicer in the assumption of all or any part of
the responsibilities, duties or liabilities of the Servicer.
(c) As compensation, any Successor Servicer (including, without
limitation, the Backup Servicer) so appointed shall be entitled to receive the
Servicing Fee, together with any other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided herein that
accrued prior thereto; including, without limitation, all reasonable costs
(including reasonable attorneys' fees) incurred in connection with transferring
the servicing obligations under the Agreement and amending the Agreement to
reflect such transfer.
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(d) In the event the Backup Servicer is required to solicit bids,
the Backup Servicer shall solicit, by public announcement, bids from banks and
mortgage servicing institutions meeting the qualifications set forth above. Such
public announcement shall specify that the Successor Servicer shall be entitled
to the full amount of the Servicing Fee as servicing compensation, together with
the other servicing compensation in the form of assumption fees, late payment
charges or otherwise that accrued prior thereto. Within thirty (30) days after
any such public announcement, the Backup Servicer shall negotiate and effect the
sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Backup Servicer shall deduct from any sum received by the Backup Servicer from
the successor to the Servicer in respect of such sale, transfer and assignment
all costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder and the amount
of any unreimbursed Servicing Advances. After such deductions, the remainder of
such sum shall be paid by the Backup Servicer to the Servicer at the time of
such sale, transfer and assignment to the Servicer's successor. The Backup
Servicer and such successor shall take such action, consistent with the
Agreement, as shall be necessary to effectuate any such succession. Neither the
Backup Servicer nor any other Successor Servicer shall be held liable by reason
of any failure to make, or any delay in making, any distribution hereunder or
any portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer
hereunder. No appointment of a successor to the Servicer shall be effective
until written notice of such proposed appointment shall have been provided by
the Indenture Trustee to each Securityholder and each Hedge Counterparty and the
Backup Servicer shall have consented thereto. The Backup Servicer shall not
resign as Servicer until a Successor Servicer has been appointed and accepted
such appointment.
(e) On or after a Servicer Transfer, the Successor Servicer shall
be the successor in all respects to the Servicer in its capacity as servicer
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Servicer by the terms and provisions hereof, and the
terminated Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Servicer Transfer; provided, however, that (i)
the Successor Servicer will not assume any obligations of the Servicer described
in Section 8.02 and (ii) the Successor Servicer shall not be liable for any acts
or omissions of the Servicer occurring prior to such Servicer Transfer or for
any breach by the Servicer of any of its representations and warranties
contained herein or in any related document or agreement. Notwithstanding
anything else herein to the contrary, in no event shall the Indenture Trustee or
the Backup Servicer be liable for any Servicing Fee or for any differential in
the amount of the servicing fee paid hereunder and the amount necessary to
induce any Successor Servicer to act as Successor Servicer under this Agreement
and the transactions set forth or provided for herein, including any Additional
Servicing Fee. The Owner Trustee, Securityholders and the Indenture Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. To the extent the terminated
Servicer has made Servicing Advances, it shall be entitled to reimbursement of
the same notwithstanding its termination hereunder, to the same extent as if it
had continued to service the Loans hereunder.
SECTION 8.04 NOTIFICATION TO SECURITYHOLDERS AND HEDGE COUNTERPARTIES.
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(a) Promptly following the occurrence of any Servicer Default, the
Servicer shall give written notice thereof to the Trustees, the Trust Depositor
and each Rating Agency at the addresses described in Section 13.04 hereof, to
the Noteholders and Certificateholder at their respective addresses appearing on
the Note Register and the Certificate Register, respectively, and to each Hedge
Counterparty at the address set forth in the register kept by the Issuer, as
provided under the Indenture.
(b) Within ten (10) days following any termination of the Servicer
or appointment of a Successor Servicer pursuant to this ARTICLE 8, the Indenture
Trustee shall give written notice thereof to each Rating Agency and the Trust
Depositor at the addresses described in Section 13.04 hereof, to the Noteholders
and Certificateholder at their respective addresses appearing on the Note
Register and the Certificate Register, respectively, and to each Hedge
Counterparty at the address set forth for such party in the register kept by the
Issuer, as provided under the Indenture.
SECTION 8.05 EFFECT OF TRANSFER.
(a) After a Servicer Transfer, the terminated Servicer shall have
no further obligations with respect to the management, administration,
servicing, custody or collection of the Loans and the Successor Servicer
appointed pursuant to Section 8.03 shall have all of such obligations, except
that the terminated Servicer will transmit or cause to be transmitted directly
to the Successor Servicer for its own account, promptly on receipt and in the
same form in which received, any amounts (properly endorsed where required for
the Successor Servicer to collect them) received as payments upon or otherwise
in connection with the Loans.
(b) A Servicer Transfer shall not affect the rights and duties of
the parties hereunder (including but not limited to the indemnities of the
Servicer) other than those relating to the management, administration,
servicing, custody or collection of the Loans.
SECTION 8.06 DATABASE FILE.
Upon reasonable request by the Indenture Trustee or the Backup
Servicer, the Servicer will provide the Successor Servicer with a magnetic tape
containing the database file for each Loan (a) as of the Cut-Off Date, (b) the
Subsequent Cut-Off Dates, (c) thereafter, as of the last day of the preceding
Due Period on the Determination Date prior to a Servicer Default and (d) on and
as of the Business Day before the actual commencement of servicing functions by
the Successor Servicer following the occurrence of a Servicer Default.
SECTION 8.07 WAIVER OF DEFAULTS.
The Majority Noteholders may, on behalf of all the Securityholders, and
subject to satisfying the Rating Agency Condition, waive any events permitting
removal of the Servicer pursuant to this ARTICLE 8; provided, however, that the
Majority Noteholders may not waive a default in making a required distribution
to the Hedge Counterparties without the consent of the Hedge Counterparties or
on a Note without the consent of each holder of such Note. Upon any waiver or
cure of a past default, such default shall cease to exist, and any Servicer
Default or Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver or cure shall
extend to any subsequent or other default or
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impair any right consequent thereto except to the extent expressly so waived. No
such waivers shall affect any Hedge Transaction that has been terminated in
accordance with its terms.
SECTION 8.08 RESPONSIBILITIES OF THE SUCCESSOR SERVICER.
(a) The Successor Servicer will not be responsible for delays
attributable to the Servicer's failure to deliver information, defects in the
information supplied by the Servicer or other circumstances beyond the control
of the Successor Servicer.
(b) The Successor Servicer will make arrangements with the
Servicer for the prompt and safe transfer of, and the Servicer shall provide to
the Successor Servicer, all necessary servicing files and records, including (as
deemed necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Loan payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Loan information. The current Servicer shall be obligated to pay
the costs associated with the transfer of the servicing files and records to the
Successor Servicer.
(c) The Successor Servicer shall have no responsibility and shall
not be in default hereunder nor incur any liability for any failure, error,
malfunction or any delay in carrying out any of its duties under this Agreement
if any such failure or delay results from the Successor Servicer acting in
accordance with information prepared or supplied by a Person other than the
Successor Servicer or the failure of any such Person to prepare or provide such
information. The Successor Servicer shall have no responsibility, shall not be
in default and shall incur no liability (i) for any act or failure to act by any
third party, including the Servicer, the Trust Depositor or the Trustees or for
any inaccuracy or omission in a notice or communication received by the
Successor Servicer from any third party or (ii) which is due to or results from
the invalidity, unenforceability of any Loan with applicable law or the breach
or the inaccuracy of any representation or warranty made with respect to any
Loan.
(d) If the Indenture Trustee or any other Successor Servicer
assumes the role of Successor Servicer hereunder, such Successor Servicer shall
be entitled to the benefits of (and subject to the provisions of) Section 5.02
concerning delegation of duties to subservicers.
SECTION 8.09 RATING AGENCY CONDITION FOR SERVICER TRANSFER.
Notwithstanding the foregoing provisions relating to a Servicer
Transfer, no Servicer Transfer shall be effective hereunder unless prior written
notice thereof shall have been given to the Rating Agencies, and the Rating
Agency Condition shall have been satisfied with respect thereto.
SECTION 8.10 APPOINTMENT OF SUCCESSOR BACKUP SERVICER; SUCCESSOR BACKUP
SERVICER TO ACT.
(a) The Backup Servicer may be removed, with or without cause, by
the Majority Noteholders or the Indenture Trustee, by notice given in writing to
the Backup Servicer (the "Backup Servicer Termination Notice"). The Backup
Servicer shall continue to perform all backup servicing functions under this
Agreement until the date specified in the Backup Servicer
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Termination Notice or, if no such date is specified, until a date mutually
agreed by the Backup Servicer and the Indenture Trustee. The Indenture Trustee
shall as promptly as possible after the giving of a Backup Servicer Termination
Notice, to appoint a Successor Backup Servicer (the "Successor Backup Servicer")
and such Successor Backup Servicer shall accept its appointment by a written
assumption in a form acceptable to the Indenture Trustee and Owner Trustee.
(b) In the event that a Successor Backup Servicer has not been
appointed and has not accepted its appointment at the time when the then Backup
Servicer has ceased to act as Backup Servicer, the Indenture Trustee shall
petition a court of competent jurisdiction to appoint any established financial
institution having a net worth of at least $50,000,000 and whose regular
business includes the backup servicing of loans similar to the Loans as the
Successor Backup Servicer hereunder and the Successor Backup Servicer shall be
the successor in all respects to the Backup Servicer in its capacity as Backup
Servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Backup Servicer by the terms and provisions
hereof, and the terminated Backup Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such backup servicer
transfer (the "Backup Servicer Transfer"); provided, however, that the Successor
Backup Servicer shall not be liable for any acts or omissions of the Backup
Servicer occurring prior to such Backup Servicer Transfer or for any breach by
the Backup Servicer of any of its representations and warranties contained
herein or in any related document or agreement. As compensation therefor, the
Successor Backup Servicer shall be entitled to receive reasonable compensation
equal to the monthly Backup Servicing Fee. Notwithstanding anything else herein
to the contrary, in no event shall the Indenture Trustee or the Servicer be
liable for any Backup Servicing Fee or for any differential in the amount of the
backup servicing fee paid hereunder and the amount necessary to induce any
Successor Backup Servicer to act as Backup Servicer under this Agreement and the
transactions set forth or provided for herein. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
ARTICLE 9.
REPORTS
SECTION 9.01 MONTHLY REPORTS.
With respect to each Remittance Date and the related Due Period, the
Servicer will provide to each Trustee, the Backup Servicer, each Rating Agency,
each Hedge Counterparty and WSI, on the related Determination Date, a monthly
statement (a "Monthly Report") substantially in the form of Exhibit H hereto
with respect to the preceding Due Period.
SECTION 9.02 OFFICER'S CERTIFICATE.
Each Monthly Report delivered pursuant to Section 9.01 shall be
accompanied by a certificate of a Responsible Officer of the Servicer certifying
the accuracy of the Monthly Report and that no Servicer Default or event that
with notice or lapse of time or both would become a Servicer Default has
occurred, or if such event has occurred and is continuing, specifying the event
and its status.
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SECTION 9.03 OTHER DATA.
In addition, the Servicer shall, upon the request of any Trustees, any
Hedge Counterparty, the Backup Servicer, or any Rating Agency, furnish such
Trustee, Hedge Counterparty, Rating Agency or the Backup Servicer, as the case
may be, such underlying data used to generate a Monthly Report as may be
reasonably requested. The Servicer will also forward to the Indenture Trustee,
the Owner Trustee, each Hedge Counterparty, each Rating Agency and WSI (a)
within sixty (60) days after each calendar quarter (except the fourth calendar
quarter), commencing with the quarter ended March 31, 2003, the unaudited
quarterly financial statements of the Servicer and (b) within ninety (90) days
after each fiscal year of the Servicer, commencing with the fiscal year ending
December 31, 2003, the audited annual financial statements of the Servicer,
together with the related report of the independent accountants to the Servicer.
On the Remittance Date following the receipt of each such financial statements
and report, the Indenture Trustee will forward to each Noteholder of record a
copy of such financial statements and report.
SECTION 9.04 ANNUAL REPORT OF ACCOUNTANTS.
The Servicer shall cause a firm of nationally recognized independent
certified public accountants (the "Independent Accountants"), who may also
render other services to the Servicer or its Affiliates, to deliver to the
Indenture Trustee, the Owner Trustee, each Hedge Counterparty, the Backup
Servicer and each Rating Agency, on or before March 31 (ninety (90) days after
the end of the Servicer's fiscal year) of each year, beginning on March 31,
2004, a report addressed to the Board of Managers of the Servicer, the Indenture
Trustee and the Owner Trustee indicating that (a) with respect to the twelve
(12) months ended the immediately preceding December 31, to the effect that such
Independent Accountants have audited the financial statements of the Servicer,
that as part of that audit, nothing came to the attention of such Independent
Accountants that causes them to believe that the Servicer was not in compliance
with any of the terms, covenants, provisions or conditions of the relevant
sections of this Agreement, insofar as they relate to accounting matters, except
for such exceptions as such Independent Accountants shall believe to be
immaterial and such other exceptions as shall be set forth in such report, (b)
in connection with the Independent Accountants' audit of the Servicer, there
were no exceptions or errors in records related to Loans serviced by the
Servicer, except for such exceptions as such Independent Accountants shall
believe to be immaterial and such other exceptions as shall be set forth in such
report, (c) the payment testing for Asset Based Revolvers has been reviewed and
such testing is in compliance with the terms of the related Required Loan
Documents and (d) the Independent Accountants have performed certain procedures
as agreed by the Servicer, the Indenture Trustee and the Owner Trustee, whereby
the Independent Accountants will obtain the Monthly Report for four months with
respect to the twelve (12) months ended the immediately preceding December 31
and, for each Monthly Report, the Independent Accountants will agree all amounts
in the Monthly Report to the Servicer's computer, accounting and other reports,
which will include in such report any amounts which were not in agreement. In
the event such firm of Independent Accountants requires the Indenture Trustee to
agree to the procedures performed by such firm of Independent Accountants, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee will not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity
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or correctness of such procedures. The Independent Accountants' report shall
also indicate that the firm is independent of the Servicer within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
SECTION 9.05 ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.
The Servicer will deliver to the Trustees and each Hedge Counterparty
within ninety (90) days of the end of each fiscal year commencing with the year
ending December 31, 2003, an Officer's Certificate stating that (a) the Servicer
has fully complied in all material respects with certain provisions of the
Agreement relating to servicing of the Loans and payments on the Notes, (b) a
review of the activities of the Servicer during the prior calendar year and of
its performance under this Agreement was made under the supervision of the
officer signing such certificate and (c) to the best of such officer's
knowledge, based on such review, the Servicer has fully performed or cause to be
performed in all material respects all its obligations under this Agreement for
such year, or, if there has been a default in the fulfillment in all material
respects any of its obligations, specifying each such default known to such
officer and the nature and status thereof and the steps being taken or necessary
to be taken to remedy such event. A copy of such certificate may be obtained by
any Securityholder by a request in writing to the Indenture Trustee, with
respect to any Noteholder, or the Owner Trustee, with respect to any
Certificateholder.
SECTION 9.06 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED
PROPERTY.
Each year the Servicer shall make the reports of foreclosures and
abandonment of any Mortgaged Property as and to the extent required by ss. 6050J
of the Code. Promptly after filing any such report with the Code, the Servicer
shall provide the Indenture Trustee with an Officer's Certificate certifying
that such report has been filed.
SECTION 9.07 NOTICES.
(a) The Servicer shall furnish to the Indenture Trustee and each
Hedge Counterparty (i) promptly, copies of any material and adverse notices
(including, without limitation, notices of defaults, breaches, potential
defaults or potential breaches) given to or received from its other lenders and
(ii) immediately, notice of the occurrence of any Event of Default or Servicer
Default or of any situation which the Servicer reasonably expects to develop
into an Event of Default or Servicer Default.
(b) The Servicer also agrees to make available on a reasonable
basis to any Noteholder or Hedge Counterparty a knowledgeable financial or
accounting officer for the purpose of answering reasonable questions respecting
recent developments affecting the Servicer or the financial statements of the
Servicer and to permit any Noteholder or Hedge Counterparty upon reasonable
advance notice and subject to reasonable confidentiality restrictions to inspect
the Servicer's servicing facilities during normal business hours and in a manner
that does not unreasonably interfere with the Servicer's normal operations or
customer or employee relations for the purpose of satisfying such Noteholder or
Hedge Counterparty that the Servicer has the ability to service the Loans in
accordance with this Agreement.
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SECTION 9.08 INDENTURE TRUSTEE'S RIGHT TO EXAMINE SERVICER RECORDS AND
AUDIT OPERATIONS.
The Indenture Trustee and each Hedge Counterparty shall have the right
upon reasonable prior notice, during normal business hours, in a manner that
does not unreasonably interfere with the Servicer's normal operations or
customer or employee relations, and as often as reasonably required, to examine
and audit any and all of the books, records or other information of the
Servicer, whether held by the Servicer or by another on behalf of the Servicer,
which may be relevant to the performance or observance by the Servicer of the
terms, covenants or conditions of this Agreement. No amounts payable in respect
of the foregoing shall be paid from the Loan Assets.
ARTICLE 10.
TERMINATION
SECTION 10.01 SALE OF LOAN ASSETS.
(a) Upon any sale of the assets of the Issuer pursuant to Section
9.01 of the Trust Agreement, the Servicer shall instruct the Indenture Trustee
in writing to deposit the proceeds from such sale after all payments and
reserves therefrom have been made (the "Insolvency Proceeds") in the Principal
and Interest Account. On the Remittance Date on which the Insolvency Proceeds
are deposited in the Principal and Interest Account (or, if such proceeds are
not so deposited on a Remittance Date, on the Remittance Date immediately
following such deposit), the Servicer shall instruct the Indenture Trustee in
writing to allocate and apply (after the application on such Remittance Date of
Principal Collections and Interest Collections pursuant to Section 7.05) the
Insolvency Proceeds as if (and in the same order of priority as) the Insolvency
Proceeds were Interest Collections being allocated and distributed on such date
pursuant to Section 7.05(c).
(b) As described in Article 9 of the Trust Agreement, notice of
any termination of the Issuer shall be given by the Servicer to the Owner
Trustee, the Indenture Trustee and each Hedge Counterparty as soon as
practicable after the Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the Indenture, the
payment in full of the principal of and interest on the Notes, the termination
of all Hedge Transactions then outstanding under all Hedge Agreements then in
effect and the payment in full of all amounts, including Hedge Breakage Costs,
payable to such Hedge Counterparties upon such terminations, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee pursuant
to this Agreement.
SECTION 10.02 TERMINATION.
(a) This Agreement shall terminate upon notice to the Indenture
Trustee of the earlier of the following events: (i) the final payment on or the
disposition or other liquidation by the Issuer of the last Loan or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Loan and the remittance of all funds due thereunder, or (ii)
mutual written
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consent of the Servicer, the Trust Depositor, Indenture Trustee, the Originator,
all Securityholders and all Hedge Counterparties.
(b) Notice of any termination, specifying the Remittance Date upon
which the Issuer will terminate and that the Noteholders shall surrender their
Notes to the Indenture Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to all
Noteholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Notes will be made upon presentation and surrender of Notes
at the office of the Indenture Trustee therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Remittance Date is not applicable, payments being made only upon
presentation and surrender of the Notes at the office of the Indenture Trustee
therein specified. The Servicer shall give such notice to the Indenture Trustee
and the Hedge Counterparties at the time such notice is given to Noteholders.
ARTICLE 11.
REMEDIES UPON MISREPRESENTATION;
REPURCHASE OPTION
SECTION 11.01 REPURCHASES OF, OR SUBSTITUTION FOR, LOANS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES.
Upon a discovery by a Responsible Officer of the Servicer or any
subservicer, a Responsible Officer of the Owner Trustee or the Indenture Trustee
of a breach of Section 2.05(b) or a breach of a representation or warranty as
set forth in Section 3.01, Section 3.02, Section 3.03, Section 3.04 or Section
3.05 or as made or deemed made in any Addition Notice or any Subsequent Purchase
Agreement relating to Substitute Loans that materially and adversely affects the
value of the Loans or the interests of the Securityholders or the Hedge
Counterparties therein or which materially and adversely affects the interests
of the Securityholders or the Hedge Counterparties in the related Loan in the
case of a representation or warranty relating to a particular Loan
(notwithstanding that such representation or warranty was made to the
Originator's or the Trust Depositor's best knowledge) (an "Ineligible Loan"),
the party discovering the breach shall give prompt written notice to the other
parties and to each Hedge Counterparty; provided, that, the Indenture Trustee
shall have no duty or obligation to inquire or to investigate the breach of any
of such representations or warranties. Within thirty (30) days of the earlier of
its discovery or its receipt of notice of any breach of a representation or
warranty, the Originator or Trust Depositor shall (a) promptly cure such breach
in all material respects, (b) repurchase each such Ineligible Loan by depositing
in the Principal and Interest Account, within such thirty (30) day period, an
amount equal to the Transfer Deposit Amount, or (c) remove such Loan from the
Issuer and effect a substitution for such affected Loan with a Substitute Loan
in accordance with the substitution requirements set forth in Section 2.04, not
later than the date a repurchase of such affected Loan would be required
hereunder; provided, however, that with respect to a breach of a representation
or warranty relating to the Loans in the aggregate and not to any particular
Loan, the Originator may select Loans (without adverse selection) to repurchase
(or substitute for) such that had such Loans not been included as part of the
Loan Assets (and, in the case of a substitution, had such Substitute Loan been
included as
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part of the Loan Assets instead of the selected Loan) there would have been no
breach of such representation or warranty.
SECTION 11.02 REASSIGNMENT OF REPURCHASED OR SUBSTITUTED LOANS.
Upon receipt by the Indenture Trustee for deposit in the Principal and
Interest Account of the amounts described in Section 11.01 (or upon the
Subsequent Transfer Date related to a Substitute Loan described in Section
11.01), and upon receipt of an Officer's Certificate of the Servicer in the form
attached hereto as Exhibit F, the Indenture Trustee shall assign to the Trust
Depositor and the Trust Depositor shall assign to the Originator all of the
Issuer's (or Trust Depositor's, as applicable) right, title and interest in the
repurchased or substituted Loan and related Loan Assets without recourse,
representation or warranty. Such reassigned Loan shall no longer thereafter be
included in any calculations of Outstanding Loan Balances required to be made
hereunder or otherwise be deemed a part of the Issuer.
ARTICLE 12.
INDEMNITIES
SECTION 12.01 INDEMNIFICATION BY SERVICER.
The Servicer agrees to indemnify, defend and hold the Indenture Trustee
(as such and in its individual capacity), the Owner Trustee (as such and in its
individual capacity), the Backup Servicer, the Hedge Counterparties (as such and
in their individual capacities) and each Securityholder harmless from and
against any and all claims, losses, penalties, fines, forfeitures, reasonable
legal fees and related costs, judgments, and any other reasonable costs, fees
and expenses that such Person may sustain as a result of the Servicer's fraud or
the failure of the Servicer to perform its duties and service the Loans in
compliance in all material respects with the terms of this Agreement, except to
the extent arising from the gross negligence, willful misconduct or fraud by the
Person claiming indemnification. The Servicer shall immediately notify the
Indenture Trustee and the Owner Trustee if a claim is made by any party with
respect to this Agreement, and the Servicer shall assume (with the consent of
the indemnified party) the defense and any settlement of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the indemnified party in respect of such claim.
SECTION 12.02 INDEMNIFICATION BY TRUST DEPOSITOR.
The Trust Depositor agrees to indemnify, defend, and hold the Indenture
Trustee (as such and in its individual capacity), the Owner Trustee (as such and
in its individual capacity), the Hedge Counterparties (as such and in their
individual capacities) and each Securityholder harmless from and against any and
all claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other reasonable costs, fees and expenses that
such Person may sustain as a result of the Trust Depositor's fraud or the
failure of the Trust Depositor to perform its duties in compliance with the
terms of this Agreement and in the best interests of the Securityholders and
Hedge Counterparties, except to the extent arising from the gross negligence,
willful misconduct or fraud by the Person claiming indemnification. The Trust
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Depositor shall immediately notify the Indenture Trustee and the Owner Trustee
if a claim is made by a third party with respect to this Agreement, and the
Trust Depositor shall assume (with the consent of the indemnified party) the
defense and any settlement of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the indemnified
party in respect of such claim.
ARTICLE 13.
MISCELLANEOUS
SECTION 13.01 AMENDMENT.
(a) This Agreement may be amended from time to time by the parties
hereto by written agreement, with the prior written consent of the Indenture
Trustee but without notice to or consent of the Securityholders or Hedge
Counterparties, to cure any ambiguity, to correct or supplement any provisions
herein, to comply with any changes in the Code, or to make any other provisions
with respect to matters or questions arising under this Agreement which shall
not be inconsistent with the provisions of this Agreement; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel delivered to
the Indenture Trustee, adversely affect the interests of any Securityholders or
Hedge Counterparties; further, provided, that, no such amendment shall amend,
modify or vary any provision of Section 5.02(g) or reduce in any manner the
amount of, or delay the timing of, any amounts received on Loans which are
required to be distributed to the Hedge Counterparties without the consent of
the Hedge Counterparties or on any Note or Certificate without the consent of
the Holder of such Note or Certificate, or change the rights or obligations of
any other party hereto without the consent of such party.
(b) This Agreement may be amended from time to time by the parties
hereto by written agreement, with the prior written consent of the Indenture
Trustee and with the consent of the Majority Noteholders and each Hedge
Counterparty, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Holders of the Notes or Certificates; provided,
however, that (i) no such amendment shall reduce in any manner the amount of, or
delay the timing of, any amounts which are required to be distributed on any
Note or Certificate without the consent of the Holder of such Note or
Certificate or reduce the percentage of Holders of any Note or Certificate which
are required to consent to any such amendment without the consent of the Holders
of 100% of the Notes affected thereby, (ii) no amendment affecting only one (1)
Class shall require the approval of the Holders of any other Class and (iii) (A)
the consent of each Hedge Counterparty shall be required for any amendment,
modification or variance to Section 5.02(g) and (B) as to all other amendments,
the consent of each Hedge Counterparty shall be required unless the Issuer
obtains an Opinion of Counsel stating that such amendment does not adversely
affect in any material respect the interests of the Hedge Counterparties.
(c) Prior to the execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency. Prior
to the execution of any amendment pursuant to
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Section 13.01, the Issuer shall obtain written confirmation from Moody's that
entry into such amendment satisfies the Xxxxx'x Rating Condition.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee and the Indenture Trustee, as the case may be, shall furnish
written notification of the substance of such amendment or consent to each
Securityholder and each Hedge Counterparty. It shall not be necessary for the
consent of the Securityholders and the Hedge Counterparties pursuant to Section
13.01(b) to approve the particular form of any proposed amendment or consent,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the authorization by the
Securityholders and the Hedge Counterparties of the execution thereof shall be
subject to such reasonable requirements as the Owner Trustee or the Indenture
Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee and the Indenture Trustee shall be entitled to receive and
conclusively rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized and permitted by this Agreement. Such Trustee may, but
shall not be obligated to, enter into any such amendment that affects such
Trustee's own rights, duties, indemnities or immunities under this Agreement or
otherwise.
SECTION 13.02 PROTECTION OF TITLE TO ISSUER.
The Servicer shall execute and file such financing statements and cause
to be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain and protect
the interest of the Issuer, the Securityholders, the Hedge Counterparties, the
Indenture Trustee and the Owner Trustee in the Loans and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
SECTION 13.03 GOVERNING LAW.
(a) This Agreement shall be construed in accordance with the laws
of the State of New York and the obligations, rights, and remedies of the
parties under the Agreement shall be determined in accordance with such laws.
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT. Each party hereto (i) certifies that no representative,
agent or attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (ii) 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 13.03(b).
SECTION 13.04 NOTICES.
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All notices, demands, certificates, requests and communications
hereunder ("notices") shall be in writing and shall be effective (a) upon
receipt when sent through the U.S. mails, registered or certified mail, return
receipt requested, postage prepaid, with such receipt to be effective the date
of delivery indicated on the return receipt, or (b) one (1) Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Responsible Officer of the party to which sent, or (d) on the date transmitted
by legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) if to the Servicer or the Originator:
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Facsimile No.: (000) 000-0000
(ii) if to the Trust Depositor:
CapitalSource Commercial Loan LLC, 2003-1
0000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Treasurer
Facsimile No.: (000) 000-0000
(iii) if to the Indenture Trustee:
Xxxxx Fargo Bank Minnesota, National Association
Sixth Street and Marquette Avenue
MAC N9311-161
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Services/Asset Backed
Administration
Facsimile No.: (000) 000-0000
(iv) if to the Owner Trustee:
Wilmington Trust Company
Xxx Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Facsimile No.: (000) 000-0000
with a copy to:
the Originator and the Servicer as provided in clause
(i) above
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(v) if to the Issuer:
CapitalSource Commercial Loan Trust 2003-1
c/o Wilmington Trust Company
Xxx Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Facsimile No.: (000) 000-0000
with a copy to:
the Originator and the Servicer as provided in clause
(i) above
(vi) if to S&P:
Standard and Poor's Rating Service
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance: Asset-Backed Services
Facsimile No.: (000) 000-0000
(vii) if to Moody's:
Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Facsimile No.: (000) 000-0000
Email: xxxxxxxxxxxxx@xxxxxx.xxx
(viii) if to Fitch:
Fitch, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: CDO Surveillance
Facsimile No.: (000) 000-0000
(ix) if to Wachovia Securities, Inc., as Placement Agent:
Wachovia Securities, Inc.
One Wachovia Center, Mail Code: NC0610
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Asset Securitization Division
Facsimile No.: (000) 000-0000
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with a copy to:
Nomura Securities International, Inc.
2 World Financial Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
(x) if to the Hedge Counterparties:
At the address set forth for such party in the
applicable Hedge Agreement.
Each party hereto may, by notice given in accordance herewith to each
of the other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 13.05 SEVERABILITY OF PROVISIONS.
If one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement, the Notes or Certificates or the rights of the Securityholders or the
Hedge Counterparties, and any such prohibition, invalidity or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such covenants,
agreements, provisions or terms in any other jurisdiction.
SECTION 13.06 THIRD PARTY BENEFICIARIES.
Except as otherwise specifically provided herein, the parties hereto
hereby manifest their intent that no third party (other than the Owner Trustee
and the Hedge Counterparties) shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.
SECTION 13.07 COUNTERPARTS.
This Agreement may be executed by facsimile signature and in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
SECTION 13.08 HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 13.09 NO BANKRUPTCY PETITION; DISCLAIMER.
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(a) Each of the Originator, the Indenture Trustee, the Servicer,
the Issuer acting through the Owner Trustee and each Holder (by acceptance of
the applicable Securities) covenants and agrees that, prior to the date that is
one (1) year and one (1) day after the payment in full of all amounts owing in
respect of all outstanding Classes of Notes rated by any Rating Agency, it will
not institute against the Trust Depositor or the Issuer, or join any other
Person in instituting against the Trust Depositor or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States; provided, however, that nothing herein shall prohibit the
Indenture Trustee from filing proofs of claim or otherwise participating in any
such proceedings instituted by any other Person. This Section 13.09 will survive
the termination of this Agreement.
(b) The Issuer acknowledges and agrees that the Certificates
represent a beneficial interest in the Issuer and Loan Assets only and the
Securities do not represent an interest in any assets (other than the Loan
Assets) of the Trust Depositor (including by virtue of any deficiency claim in
respect of obligations not paid or otherwise satisfied from the Loan Assets and
proceeds thereof). In furtherance of and not in derogation of the foregoing, to
the extent that the Trust Depositor enters into other securitization
transactions as contemplated in Section 6.07, the Issuer acknowledges and agrees
that it shall have no right, title or interest in or to any assets (or interests
therein), other than the Loan Assets, conveyed or purported to be conveyed
(whether by way of a sale, capital contribution or by the granting of a Lien) by
the Trust Depositor to any Person other than the Issuer (the "Other Assets").
(c) To the extent that notwithstanding the agreements contained in
this Section 13.09, the Issuer, any Securityholder or any Hedge Counterparty,
either (i) asserts an interest in or claim to, or benefit from any Other Assets,
whether asserted against or through the Trust Depositor or any other Person
owned by the Trust Depositor, or (ii) is deemed to have any interest, claim or
benefit in or from any Other Assets, whether by operation of law, legal process,
pursuant to applicable provisions of Insolvency Laws or otherwise (including
without limitation pursuant to Section 1111(b) of the federal Bankruptcy Code,
as amended) and whether deemed asserted against or through the Trust Depositor
or any other Person owned by the Trust Depositor, then the Issuer, each
Securityholder by accepting a Note or Certificate and each Hedge Counterparty
further acknowledges and agrees that any such interest, claim or benefit in or
from the Other Assets is and shall be expressly subordinated to the indefeasible
payment in full of all obligations and liabilities of the Trust Depositor that,
under the terms of the documents relating to the securitization of the Other
Assets, are entitled to be paid from, entitled to the benefits of, or otherwise
secured by such Other Assets (whether or not any such entitlement or security
interest is legally perfected or otherwise entitled to a priority of
distribution under applicable law, including Insolvency Laws, and whether
asserted against the Trust Depositor or any other Person owned by the Trust
Depositor) including, without limitation, the payment of post-petition interest
on such other obligations and liabilities. This subordination agreement shall be
deemed a subordination agreement within the meaning of Section 510(a) of the
Bankruptcy Code. Each of the Issuer, the Hedge Counterparties and the
Securityholders is deemed to have acknowledged and agreed that no adequate
remedy at law exists for a breach of this Section 13.09 and that the terms and
provisions of this Section 13.09 may be enforced by an action for specific
performance.
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(d) The provisions of this Section 13.09 shall be for the third
party benefit of those entitled to rely thereon, including the Securityholders
and the Hedge Counterparties, and shall survive the termination of this
Agreement.
SECTION 13.10 JURISDICTION.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the United States for the Southern District of New
York, and by execution and delivery of this Agreement, each party hereto
consents, for itself and in respect of its property, to the non-exclusive
jurisdiction of those courts. Each such party irrevocably waives any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Agreement or any document
related hereto.
SECTION 13.11 TAX CHARACTERIZATION.
Notwithstanding the provisions of Section 2.01 and Section 2.04 hereof,
the Trust Depositor and Owner Trustee agree that, pursuant to Treasury
Regulations Section 301.7701-3(b)(1) and for federal income tax purposes, in the
event that the Certificates and the Class E Notes are owned by more than one
Holder, the Issuer will be treated as a partnership the partners of which are
the Certificateholders and the Holders of the Class E Notes, and in the event
that the Certificates the Class E Notes are owned by a single Holder, the Issuer
will be treated as a division of such Holder.
SECTION 13.12 PROHIBITED TRANSACTIONS WITH RESPECT TO THE ISSUER.
The Originator shall not:
(a) Provide credit to any Noteholder or Certificateholder for the
purpose of enabling such Noteholder or Certificateholder to purchase Notes or
Certificates, respectively;
(b) Purchase any Notes or Certificates in an agency or trustee
capacity; or
(c) Except in its capacity as Servicer as provided in this
Agreement, lend any money to the Issuer.
SECTION 13.13 LIMITATION OF LIABILITY OF OWNER TRUSTEE.
Wilmington Trust Company acts on behalf of the Issuer solely as Owner
Trustee hereunder and not in its individual capacity, and all Persons having any
claim against the Issuer by reason of the transactions contemplated by this
Agreement or any other Transaction Document shall look only to the Trust Estate
under the Trust Agreement for payment or satisfaction thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Agreement,
any other Transaction Document or the Notes, or of any Loan or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Loan, or the perfection and priority of any security interest created by any
Loan in any Collateral or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Estate under the
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Trust Agreement or its ability to generate the payments to be distributed to the
Certificateholder under the Trust Agreement or the Noteholders under the
Indenture, including, without limitation, the existence, condition and ownership
of any Collateral; the existence and enforceability of any insurance thereon;
the existence and contents of any Loan on any computer or other record thereof;
the validity of the assignment of any Loan to the Issuer or of any intervening
assignment; the completeness of any Loan; the performance or enforcement of any
Loan; the compliance by the Issuer, the Trust Depositor or the Servicer with any
covenant, agreement or other obligation or any warranty or representation made
under any Transaction Document or in any related document or the accuracy of any
such warranty or representation; or any action of the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee or the
Issuer.
SECTION 13.14 ALLOCATION OF PAYMENTS WITH RESPECT TO LOANS.
(a) With respect to any Partially Funded Term Loans and any
Revolving Loans, the Issuer will own only the principal portion of such Loans
outstanding as of the applicable Cut-Off Date. Principal Collections received by
the Servicer on any Revolving Loans (other than Loans to SPE Obligors) will be
allocated first to the portion of such Loan not owned by the Issuer, until the
principal amount of such portion is reduced to zero, and then to the portion
owned by the Issuer; provided, however, if (i) a payment default occurs with
respect to any of the related Loans (and in the case of Asset Based Revolvers, a
payment default shall mean any failure to make a payment on the date such
payment is due and such failure continues for more than one (1) calendar day),
(ii) the Originator has determined in its sole discretion that an Obligor's
credit has deteriorated or the Originator has determined in its sole discretion
to reduce its commitment to an Obligor, (iii) an Event of Default occurs, (iv) a
Servicer Default occurs, or (v) an Accelerated Amortization Event occurs, then
Principal Collections received on (A) the applicable Loan (in the case of clause
(i) or (ii) above) or (B) all the Revolving Loans (in the case of clauses (iii),
(iv) and (v) above) will be allocated between the portion not owned by the
Issuer and the portion owned by the Issuer, pro rata based upon the outstanding
principal amount of each such portion. So long as there is no (1) payment
default on the related Loans (and in the case of Asset Based Revolvers, a
payment default shall mean any failure to make a payment on the date such
payment is due and such failure continues for more than one (1) calendar day),
(2) Servicer Default, (3) Event of Default, or (4) Accelerated Amortization
Event, the Servicer will determine the Outstanding Loan Balance, the Retained
Interest (if any) and the Principal Collections received with respect to any
Revolving Loan secured by Collateral on each Monthly Reconciliation Date, and
all other Loans (including Revolving Loans not secured by any Collateral) and in
all other cases on each Business Day, pursuant to Section 7.07.
(b) With respect to any Revolving Loan (other than Loans to SPE
Obligors), Interest Collections received by the Servicer on those Loans will be
allocated between the portion not owned by the Issuer and the portion owned by
the Issuer on a pro rata basis according to the outstanding principal amount of
each such portion.
(c) With respect to any Fully Funded Term Loans, Partially Funded
Term Loans and Loans to SPE Obligors, Principal Collections and Interest
Collections received by the Servicer will be allocated between the portion not
owned by the Issuer (if any) and the portion owned by the Issuer on a pro rata
basis according to the outstanding principal amount of such portion.
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SECTION 13.15 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto, and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Securityholders or the Hedge Counterparties.
SECTION 13.16 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
SECTION 13.17 ACTS OF HOLDERS.
Except as otherwise specifically provided herein, whenever Holder
action, consent or approval is required under this Agreement, such action,
consent or approval shall be deemed to have been taken or given on behalf of,
and shall be binding upon, all Holders if the Majority Noteholders agree to take
such action or give such consent or approval.
SECTION 13.18 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated
as herein provided.
SECTION 13.19 LIMITED RECOURSE.
The obligations of the Trust Depositor, the Originator and the Servicer
under this Agreement are solely the obligations of the Trust Depositor, the
Originator and the Servicer. No recourse shall be had for the payment of any
amount owing by the Trust Depositor, the Originator, and the Servicer under this
Agreement or for the payment by the Trust Depositor, the Originator and the
Servicer of any fee in respect hereof or any other obligation or claim of or
against the Trust Depositor, the Originator and the Servicer arising out of or
based upon this Agreement, against any employee, officer, director, Affiliate,
shareholder, partner or member of the Trust Depositor, the Originator and the
Servicer or against the employee, officer, director, shareholder, partner or
member or any Affiliate of such Person. The provisions of this Section 13.19
shall survive termination of this Agreement.
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111
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
CAPITALSOURCE COMMERCIAL LOAN TRUST 2003-1,
as the Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Owner
Trustee on behalf of the Issuer
By: /s/ Xxxxxxxx X. Xxxxxxxx
________________________________________
Name: Xxxxxxxx X. Xxxxxxxx
______________________________________
Title: Financial Services Officer
_____________________________________
CAPITALSOURCE COMMERCIAL LOAN LLC, 2003-1,
as the Trust Depositor
By: /s/ Xxxxx X. Xxxxxxx
________________________________________
Name: Xxxxx X. Xxxxxxx
______________________________________
Title: Treasurer
_____________________________________
CAPITALSOURCE FINANCE LLC, as the Originator
and as the Servicer
By: /s/ Xxxxx X. Xxxxxxx
________________________________________
Name: Xxxxx X. Xxxxxxx
______________________________________
Title: Treasurer
_____________________________________
[SIGNATURES CONTINUED ON THE FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
XXXXX FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, not in its individual capacity
but as the Indenture Trustee and as the
Backup Servicer
By: /s/ Xxx Xxxxx
______________________________________
Name: Xxx Xxxxx
____________________________________
Title: Assistant Vice President
___________________________________
