FIFTH AMENDMENT TO AMENDED AND RESTATED SALE AND SERVICING AGREEMENT
Exhibit 10.53
Execution Version
FIFTH AMENDMENT TO AMENDED AND RESTATED SALE AND SERVICING AGREEMENT
This Fifth Amendment (this “Amendment”) to the Amended and Restated Sale and Servicing
Agreement referenced below is entered into as of December 29, 2005, among CapitalSource Funding II
Trust, a Delaware statutory trust, as Issuer (the “Issuer”), CS Funding II Depositor LLC, a
Delaware limited liability company and successor by merger to CS Funding II Depositor Inc., a
Delaware corporation, (as successor-in-interest to CS Funding II Depositor LLC, a Delaware limited
liability company), as Depositor (in such capacity, the “Depositor”), CapitalSource Finance
LLC, a Delaware limited liability company (“CapitalSource”), as Loan Originator (in such
capacity, the “Loan Originator”) and as Servicer (in such capacity, the “Servicer”)
and ▇▇▇▇▇ Fargo Bank, National Association, a national banking association, as Indenture Trustee on
behalf of the Noteholders (in such capacity, the “Indenture Trustee”), as Paying Agent (in
such capacity, the “Paying Agent”), as Collateral Custodian (in such capacity, the
“Collateral Custodian”) and as Backup Servicer (in such capacity, the “Backup
Servicer”).
R E C I T A L S:
WHEREAS, the Issuer, the Depositor, CapitalSource, the Loan Originator, the Servicer, the
Indenture Trustee, the Paying Agent, the Collateral Custodian and the Backup Servicer are parties
to the Amended and Restated Sale and Servicing Agreement, dated as of September 17, 2003 and
amended and restated as of October 7, 2004 (as amended, supplemented and otherwise modified from
time to time including by this Amendment, the “Sale and Servicing Agreement”);
WHEREAS, the parties hereto desire to amend the Sale and Servicing Agreement pursuant to
Section 13.02(b) thereof as more specifically set forth below;
NOW, THEREFORE, in consideration of the mutual covenants and undertakings herein contained,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments to the Sale and Servicing Agreement. Upon the execution and
delivery of this Amendment by all parties hereto and satisfaction of the conditions precedent set
forth herein, the Sale and Servicing Agreement is hereby amended as follows:
(a) Section 1.01 of the Sale and Servicing Agreement is hereby amended by amending and
restating the following definitions contained therein in their entirety:
Borrowing Base:
On any date of determination prior to the Noteholder SS Advance Ineligible Date, the sum of:
| (i) | the product of (A) the outstanding unpaid principal balance of all Eligible Loans included in the Loan Pool (other than the CIG Loan) prior to such date of determination minus the amount (calculated without duplication) by which such Eligible Loans exceed any applicable Concentration Limitations and minus, with |
| respect to Charged-Off Loans, (x) 50% of the outstanding unpaid principal balance of all Charged-Off Loans for which any Scheduled Payment is at least ninety (90) days but less than one hundred eighty (180) days delinquent as of such date of determination and (y) the outstanding unpaid principal balance of all Charged-Off Loans that are Charged-Off Loans for any reason other than the Scheduled Payment delinquency referenced in clause (x) above and (B) the applicable Purchase Price Percentage, and | |||
| (ii) | the amount on deposit in the Principal Collections Account on such date of determination, but only to the extent such amount has been applied to reduce the outstanding principal balance of the related Loans (without duplication), and | ||
| (iii) | until the CIG Loan Ineligible Date, an amount equal to the lesser of (A) Sixty Million Dollars ($60,000,000), and (B) the product of (x) the then unpaid principal balance of all CIG Underlying Loans, and (y) sixty percent (60%) |
and, on any date of determination on or after the Noteholder SS Advance Ineligible Date, the sum
of:
(i) the product of (A) the outstanding unpaid principal balance of all
Eligible Loans included in the Loan Pool (other than the CIG Loan) prior to
such date of determination minus the amount (calculated without duplication)
by which such Eligible Loans exceed any applicable Concentration Limitations
and minus, with respect to Charged-Off Loans, (x) 50% of the outstanding
unpaid principal balance of all Charged-Off Loans for which any Scheduled
Payment is at least ninety (90) days but less than one hundred eighty (180)
days delinquent as of such date of determination and (y) the outstanding
unpaid principal balance of all Charged-Off Loans that are Charged-Off Loans
for any reason other than the Scheduled Payment delinquency referenced in
clause (x) above and (B) the applicable Purchase Price Percentages
(determined on such date), and
(ii) the amount on deposit in the Principal Collections Account on such date
of determination, but only to the extent such amount has been applied to
reduce the outstanding principal balance of the related Loans (without
duplication), and
(iii) until the CIG Loan Ineligible Date, an amount equal to the lesser of
(A) Sixty Million Dollars ($60,000,000), and (B) the product of (x) the then
unpaid principal balance of all CIG Underlying Loans, and (y) sixty percent
(60%).
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Eligible Loan: With respect to any date of determination, each of the following: (i) any Loan
(other than the CIG Loan) which complies with the representations and warranties set forth in
Section 3.04 with respect to such Loan and (ii) until the CIG Loan Ineligible Date, the CIG Loan
and (iii) until the Noteholder SS Advance Ineligible Date, each SS Underlying Loan.
LIBOR Margin: For each day prior to the Noteholder SS Advance Ineligible Date, 0.50% and, for
each day on or after the Noteholder SS Advance Ineligible Date, 0.75% in each case with respect to
all Notes other than the Incremental Note; provided that an additional 3.00% shall be added to the
applicable LIBOR Margin upon the occurrence of an Event of Default or a Trigger Event.
Purchase Price Percentage: On any Business Day prior to the Noteholder SS Advance Ineligible
Date, 90% with respect to all Eligible Loans, and on any Business Day on or after the Noteholder SS
Advance Ineligible Date, with respect to each Loan, a percentage determined as follows:
(a) with respect to all Senior Secured Loans assigned Loan Rating 1, Loan
Rating 2, Loan Rating 3 or Loan Rating 4, 80%;
(b) with respect to all Subordinated Loans assigned Loan Rating 1, Loan Rating
2, Loan Rating 3 or Loan Rating 4, 50%;
(c) with respect to all Senior Secured Loans assigned Loan Rating 5, 50%;
(d) with respect to all Subordinated Loans assigned Loan Rating 5, 25%; and
(e) with respect to all Loans assigned Loan Rating
6, 0%.
Required Overcollateralization Amount: With respect to any Business Day prior to the
Noteholder SS Advance Ineligible Date, an amount equal to the positive difference between (i) the
Pool Principal Balance on such Business Day and (ii) the Pool Purchase Price (reduced by the
amount, without duplication, of any Loan in excess of the Concentration Limitations) and, with
respect to any Business Day on or after the Noteholder SS Advance Ineligible Date, an amount equal
to the greatest of (a) the positive difference between (i) the Pool Principal Balance on such
Business Day and (ii) the Pool Purchase Price (reduced by the amount, without duplication, of any
Loan in excess of the Concentration Limitations); (b) an amount equal to 25% of the aggregate
Principal Balance of the Eligible Loans; and (c) the Required Equity Contribution).
(b) Section 1.01 of the Sale and Servicing Agreement is hereby amended by adding the following
new definitions in the appropriate alphabetical order:
Fifth Amendment Effective Date: December 29, 2005.
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Noteholder SS Advance: Each advance of funds made by the Noteholders to the Issuer pursuant
to the terms of the Basic Documents that allow the Issuer to fund or maintain its investment in any
SS Underlying Loan.
Noteholder SS Advance Ineligible Date: The earlier to occur of (i) the consummation of a term
loan securitization involving some or all of the SS Underlying Loans or (ii) March 31, 2006.
SS Underlying Loan: Each of the loans sold and transferred to the Issuer in connection with
the payment of a Noteholder SS Advance. A listing of such loans as of the Fifth Amendment
Effective Date is set forth on Exhibit M hereto.
(c) Section 1.01 of the Sale and Servicing Agreement is hereby amended to add the following
new clause at the end of the definition of “Concentration Limitations” set forth therein:
“Notwithstanding the foregoing or anything to the contrary contained herein, at any
time prior to the Noteholder SS Advance Ineligible Date the only Concentration Limitation
shall be that the aggregate Principal Balance of all Loans made to a single Obligor shall
not exceed 2.75% of the outstanding unpaid principal balance of all Eligible Loans included
in the Loan Pool and none of the limitations, baskets or criteria otherwise listed in this
definition of “Concentration Limitations” shall be applicable for any purpose.”
(d) Section 2.04(d) of the Sale and Servicing Agreement is hereby amended by deleting the
phrase “five (5) Business Days” contained therein and replacing such phrase with “fifteen (15) days
(if prior to the Noteholder SS Advance Ineligible Date) and five (5) Business Days (if on or after
the Noteholder SS Advance Ineligible Date)”.
(e) Section 3.04 of the Sale and Servicing Agreement is hereby amended to add the following
new clause “(tt)” at the end thereof:
“(tt) with respect to each SS Underlying Loan, except as set forth in Exhibit N hereto,
the Loan Originator makes, mutatis mutandis, the applicable representations and warranties
set forth in clauses (a) through (qq) of this Section 3.04 with respect to each SS
Underlying Loan.”
(f) Section 7.01(b) of the Sale and Servicing Agreement is hereby amended by amending and
restating said subsection in its entirety:
“(b) CapitalSource may not exceed a maximum leverage ratio (the ratio of total
consolidated liabilities (exclusive of non-recourse debt and holding company TRUPS
securities but including, without limitation, any convertible debt), determined in
accordance with GAAP, to its consolidated Tangible Net Worth) of 6:1 as of any date of
determination.”
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(g) The Sale and Servicing Agreement is amended to add a new Exhibit M and Exhibit
N in the form of Annex I and Annex II, respectively, attached hereto.
Section 2. Representations and Warranties. Each of the Issuer, the Depositor, the
Servicer and the Loan Originator hereby represents and warrants that (i) it has the power and is
duly authorized to execute and deliver this Amendment, (ii) this Amendment has been duly
authorized, executed and delivered, (iii) it is and will continue to be duly authorized to perform
its respective obligations under the Basic Documents and this Amendment, (iv) the execution,
delivery and performance by it of this Amendment shall not (1) result in the breach of, or
constitute (alone or with notice or with the lapse of time or both) a default under, any material
agreement or instrument to which it is a party, (2) violate (A) any provision of law, statute, rule
or regulation, or organizational documents or other constitutive documents, (B) any order of any
Governmental Authority or (C) any provision of any material indenture, agreement or other
instrument to which it is a party or by which it or any of its property is or may be bound, or (3)
result in the creation or imposition of any Lien upon or with respect to any property or assets now
owned or hereafter acquired by the Issuer other than pursuant to the Basic Documents, (v) this
Amendment and each of the Basic Documents to which it is a party or by which it or its assets may
be or is bound constitutes its legal, valid and binding obligations, enforceable against it
(subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors’ rights generally and to general principles of
equity), (vi) except as publicly disclosed, there are no actions, suits, investigations (civil or
criminal) or proceedings at law or in equity or by or before any Governmental Authority pending or,
to its knowledge, threatened against or affecting it or any of its business, property or rights (1)
which involve any Basic Document or the Loan Documents or (2) which would be materially likely to
result in a Material Adverse Effect, (vii) it is not in default or violation with respect to any
law, rule or regulation, judgment, writ, injunction or decree order of any court, governmental
authority, regulatory agency or arbitration board or tribunal and, with respect to the Loan
Originator and Depositor, the effect of which would have a material adverse effect on its business,
assets, operations or financial condition and (viii) no Termination Event, Default or Event of
Default has occurred or is continuing. Except as expressly amended by the terms of this Amendment,
all terms and conditions of the Sale and Servicing Agreement shall remain in full force and effect
and are hereby ratified in all respects. The Noteholder and the Certificateholder do not object to
the execution of this Amendment by Wilmington Trust Company or the Issuer.
Section 3. No Reliance. Each of the Loan Originator, the Depositor and the Issuer
hereby acknowledges that it has not relied on the Noteholder, the Hedge Counterparty or the
Certificateholder or any of their respective officers, directors, employees, agents and “control
persons” as such term is used under the Act and under the Securities Exchange Act of 1934, as
amended, for any tax, accounting, legal or other professional advice in connection with the
transactions contemplated by this Amendment or the Basic Documents, that each of the Loan
Originator, the Depositor and the Issuer has retained and been advised by such tax, accounting,
legal and other professionals as it has deemed necessary in connection with the transactions
contemplated by this Amendment and the Basic Documents and that each of the Noteholder, the Hedge
Counterparty and the Certificateholder makes no representation or warranty, and shall have no
liability with respect to, the tax, accounting or legal treatment or implications relating to the
transactions contemplated by this Amendment and the Basic Documents.
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Section 4. Defined Terms; Headings. All capitalized terms used herein, unless
otherwise defined herein, have the same meanings provided herein or in the Sale and Servicing
Agreement. The headings of the various Sections of this Amendment have been inserted for
convenience of reference only and shall not be deemed to be part of this Amendment.
Section 5. Limited Amendment. This Amendment is limited precisely as written and
shall not be deemed to (a) be a consent to a waiver or any other term or condition of the Sale and
Servicing Agreement, the other Basic Documents or any of the documents referred to therein or
executed in connection therewith or (b) prejudice any right or rights the Noteholders or the Hedge
Counterparties may now have or may have in the future under or in connection with the Sale and
Servicing Agreement, the other Basic Documents or any documents referred to therein or executed in
connection therewith. Whenever the Sale and Servicing Agreement is referred to in the Sale and
Servicing Agreement or any of the instruments, agreements or other documents or papers executed and
delivered in connection therewith, it shall be deemed to mean the Sale and Servicing Agreement, as
the case may be, as modified by this Amendment. Except as hereby amended, no other term, condition
or provision of the Sale and Servicing Agreement shall be deemed modified or amended, and this
Amendment shall not be considered a novation.
Section 6. Construction; Severability. This Amendment is a document executed pursuant
to the Sale and Servicing Agreement and shall (unless otherwise expressly indicated therein) be
construed, administered or applied in accordance with the terms and provisions thereof. If any one
or more of the covenants, agreements, provisions or terms of this Amendment shall be held invalid
in a jurisdiction for any reason whatsoever, then, in such jurisdiction, such covenants,
agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Amendment and shall in no way affect the validity or enforceability of
the other covenants, agreements, provisions or terms of this Amendment.
Section 7. Counterparts; Facsimile Signature. This Amendment may be executed by the
parties hereto in several counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same agreement. The parties may execute facsimile
copies of this Amendment and the facsimile signature of any such party shall be deemed an original
and fully binding on said party.
Section 8. Governing Law. This Amendment shall be governed and construed in
accordance with the applicable terms and provisions of Section 13.05 (Governing Law) of the Sale
and Servicing Agreement, which terms and provisions are incorporated herein by reference.
Section 9. Instructions to Owner Trustee; Limitation on Liability. The Issuer
hereby instructs the Owner Trustee, pursuant to Section 6.3 of the Trust Agreement, to execute and
deliver this Amendment. It is expressly understood and agreed by the parties hereto that (a) this
Amendment is executed and delivered by Wilmington Trust Company, not individually or personally,
but solely as Owner Trustee of CapitalSource Funding II Trust, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be
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construed as creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such liability, if any,
being expressly waived by the parties hereto and by any Person claiming by, through or under the
parties hereto and (d) under no circumstances shall Wilmington Trust Company be personally liable
for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer
under this Amendment or any other related documents.
Section 10. Recordation of Amendment. To the extent permitted by applicable law, this
Amendment, or a memorandum thereof if permitted under applicable law, is subject to recordation in
all appropriate public offices for real property records in all of the counties or other comparable
jurisdictions and in any other appropriate public recording office or elsewhere, such recordation
to be effected by the Servicer at the Securityholders’ expense on direction of the Majority
Noteholders but only when accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Securityholders or is necessary for the
administration or servicing of the Loans.
Section 11. Successor and Assigns. This Amendment shall be governed by, subject to
and construed in accordance with the applicable terms and provisions of Section 13.10 (Successor
and Assigns) of the Sale and Servicing Agreement, which terms and provisions are incorporated
herein by reference.
[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to the Amended and
Restated Sale and Servicing Agreement to be duly executed by their respective authorized officers
as of the day and year first written above.
| CAPITALSOURCE FUNDING II TRUST, | ||||
| By: | Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee | |||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Assistant Vice President | |||
| CS FUNDING II DEPOSITOR LLC (as successor by merger to CS Funding II Depositor Inc.), as Depositor | ||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Title: | Chief Financial Officer and Senior Vice President | |||
| CAPITALSOURCE FINANCE LLC, as CapitalSource, Loan Originator and Servicer |
||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Title: | Chief Financial Officer and Senior Vice President | |||
[Signature Pages to Fifth Amendment to Amended and Restated Sale and Servicing Agreement]
| ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, successor-by-merger to ▇▇▇▇▇ Fargo Bank Minnesota, National Association as Indenture Trustee, Collateral Custodian, Paying Agent and Backup Servicer | |||||
| By: | /s/ ▇▇▇ ▇▇▇▇▇ | ||||
| Name: | ▇▇▇ ▇▇▇▇▇ | ||||
| Title: | Vice President | ||||
[Signature Pages to Fifth Amendment to Amended and Restated Sale and Servicing Agreement]
| ACKNOWLEDGED AND AGREED: | |||
| CITIGROUP GLOBAL MARKETS REALTY CORP., as sole Noteholder | |||
By:
|
/s/ ▇▇▇▇ ▇▇▇ | ||
Name:
|
▇▇▇▇ ▇▇▇ | ||
Title:
|
Authorized Signer | ||
| CAPITALSOURCE FINANCE LLC, as sole Certificateholder | |||
By:
|
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | ||
Name:
|
▇▇▇▇▇▇ ▇. ▇▇▇▇ | ||
Title:
|
Chief Financial Officer and Senior Vice President | ||
[Signature Pages to Fifth Amendment to Amended and Restated Sale and Servicing Agreement]