e10vk

TRIAD FINANCIAL SM LLC

/s/ Jeffrey Butcher

Jeffrey Butcher

Vice President & Chief Financial Officer

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Cwm5Ae8ueN6EdPm86HoY6pNzmOD3DLamtwPiXbVcYB1UBdyIHtOVbSf96EbuEfOS w+Md1q5mIeThPMj4hur1lA== 0000950134-09-006514.txt : 20090331 0000950134-09-006514.hdr.sgml : 20090331 20090331074113 ACCESSION NUMBER: 0000950134-09-006514 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090331 DATE AS OF CHANGE: 20090331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIAD FINANCIAL SM LLC CENTRAL INDEX KEY: 0001071004 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 263953535 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-65107 FILM NUMBER: 09715952 BUSINESS ADDRESS: STREET 1: 5201 RUFE SNOW DRIVE CITY: NORTH RICHLAND HILLS STATE: TX ZIP: 76180 BUSINESS PHONE: 877-631-6200 MAIL ADDRESS: STREET 1: 5201 RUFE SNOW DRIVE CITY: NORTH RICHLAND HILLS STATE: TX ZIP: 76180 FORMER COMPANY: FORMER CONFORMED NAME: TRIAD FINANCIAL CORP DATE OF NAME CHANGE: 19980924 10-K 1 a51470e10vk.htm FORM 10-K e10vk

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

Commission file number: 333-65107

TRIAD FINANCIAL SM LLC

(Exact name of registrant as specified in its charter)


Delaware (State of Incorporation) 5201 Rufe Snow Drive North Richland Hills, Texas (Address of principal executive offices)		26-3953535 (IRS Employer Identification No) 76180 (Zip Code)

(817) 656-9788

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of Acts. o Yes þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


o Large accelerated filer	o Accelerated filer	þ Non-accelerated filer	o Smaller reporting company

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes þ No

As of March 20, 2009, the registrant had 1,000 common units outstanding all of which were owned by the registrant’s parent Triad Financial Holdings LLC.

Table of Contents


			Page

PART I
	ITEM 1.	BUSINESS		2
	ITEM 1A.	RISK FACTORS		8
	ITEM 1B.	UNRESOLVED STAFF COMMENTS		14
	ITEM 2.	PROPERTIES		14
	ITEM 3.	LEGAL PROCEEDINGS		15
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		15

PART II
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED MEMBER /STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		15
	ITEM 6.	SELECTED FINANCIAL DATA		16
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		20
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		46
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA		49
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		77
	ITEM 9A.	CONTROLS AND PROCEDURES		77
	ITEM 9B.	OTHER INFORMATION		77

PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		78
	ITEM 11.	EXECUTIVE COMPENSATION		80
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER / STOCKHOLDER MATTERS		88
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE		89
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES		94

PART IV
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES		95
SIGNATURES				98
EX-2.2
EX-3.3
EX-3.4
EX-3.5
EX-4.5
EX-4.6
EX-4.7
EX-10.24
EX-10.25
EX-10.26
EX-10.27
EX-10.28
EX-21.1
EX-31.1
EX-31.2
EX-32

Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on the current beliefs of the Company’s Management as well as assumptions made by and information currently available to Management. All statements other than statements of historical fact included in this annual report, including without limitation, statements under “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and plans and objectives of Management for future operations, are forward-looking statements. When used in this annual report, the words “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar meaning, as they relate to the Company or the Management, are intended to identify forward-looking statements. Although Management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from Management’s expectations (“cautionary statements”) include, but are not limited to:


	•	our ability to make payments of principal and interest on our indebtedness;

	•	our reliance on our borrowing facility and credit enhancement arrangements;

	•	our ability to generate significant amounts of cash to service our debt and fund our operations;

	•	loss of contractual servicing rights;

	•	general economic and business conditions, including wholesale auction values and interest rates;

	•	our exposure to the risk of increases in delinquencies, defaults, prepayments and losses on contracts and loans held by us or in our securitization trusts;

	•	the high degree of risk associated with non-prime borrowers;

	•	our ability to secure meaningful contracts to perform third-party servicing-related functions;

	•	our ability to retain and attract qualified personnel;

	•	our ability to maintain the material licenses and permits required for our operations; and

	•	other risks identified in this annual report under the caption “Risk Factors.”

Based upon changing conditions, if any one or more of these risks or uncertainties materialize, or if any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. We do not intend to update these forward-looking statements.

PART I


ITEM 1.	*BUSINESS*

GENERAL

On December 22, 2008, Triad Holdings Inc, the former parent of Triad Financial Corporation, formed Triad Financial Holdings LLC, a Delaware limited liability company, which was a wholly-owned subsidiary of Triad Holdings Inc. Also on December 22, 2008, Triad Financial Holdings LLC formed Triad Financial SM LLC (the “Company”), a Delaware limited liability company, which is a wholly-owned subsidiary of Triad Financial Holdings LLC.

On December 31, 2008, Triad Holdings Inc. was also liquidated and dissolved in accordance with Delaware law. Triad Financial Holdings LLC is beneficially owned by Hunter’s Glen/Ford Ltd. and affiliates of Goldman, Sachs & Co. and GTCR Golder Rauner II, L.L.C.

The Company services a $2.2 billion portfolio of automobile retail installment sales contracts and loans to consumers with limited credit histories, modest incomes or those who have experienced prior credit difficulties, generally referred to as “non-prime” borrowers. In this document, we collectively refer to these retail installment sales contracts and loans as “contracts.”

Prior to May 23, 2008, the Company was engaged in the business of purchasing and originating contracts throughout the United States through our dealer and direct originations channels. In our dealer channel, we purchased contracts from a network of franchised and select independent automobile dealerships. In our direct channel, we provided financing directly to consumers who were referred to us by internet-based consumer finance marketing and finance companies or who contacted us directly via our RoadLoans.com website.

During the period January 1, 2008 through May 23, 2008, we purchased and originated $349.5 million of contracts. Beginning on May 27, 2008 and continuing through the period preceding the completion of the sale on October 7, 2008, loans originated by RoadLoans were being sold to Santander.

We purchased and originated $1,346.5 million and $2,650.3 million of contracts during the years ended December 31, 2007 and 2006, respectively. The Company no longer purchases or originates any contracts.

From June 1999 through April 29, 2005, the Company was a wholly-owned subsidiary of Fairlane Credit, LLC, a wholly-owned subsidiary of Ford Motor Credit Company (“Ford Credit”).

On April 29, 2005, Triad Holdings Inc. and its wholly-owned subsidiary, Triad Acquisition Corp., acquired all of the outstanding capital stock of the Company from Fairlane Credit, LLC (the “Acquisition”). As part of the Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation, with Triad Financial Corporation being the surviving corporation. Triad Holdings Inc. was beneficially owned by Hunter’s Glen/Ford Ltd. and affiliates of Goldman, Sachs & Co. and GTCR Golder Rauner II, L.L.C.

In accordance with the guidelines for accounting for business combinations, the purchase price paid by Triad Holdings Inc., plus related purchase accounting adjustments, have been recorded in our financial statements for the period subsequent to April 29, 2005. This has resulted in a new basis of accounting reflecting the fair market value of our assets and liabilities for the “successor” period beginning April 30, 2005. Information for all “predecessor” periods prior to the acquisition is presented using our historical basis of accounting.

Our main office is located at 5201 Rufe Snow Drive, North Richland Hills, Texas, 76180, and we maintain administrative offices at 7711 Center Avenue, Suite 200, Huntington Beach, California 92647 and our telephone number is (817) 656-9788. Our website address is www.triadfinancial.com. All reports filed under the Securities Exchange Act of 1934 are available on our website. Our website and the information included therein are not part of this annual report. As used herein, the terms “Company”, “we”, “us” and “our” refer collectively to Triad Financial SM LLC and its predecessor by merger Triad Financial Corporation.

History of Triad

We were formed in 1989 and originally focused on prime lending and automobile leasing. In 1993, we shifted our focus entirely to non-prime lending. In 1998, we became a subsidiary of ContiFinancial Corporation, a consumer and commercial finance company. In June 1999, we were acquired by a subsidiary of Ford Motor Company. From June 1999 until the Acquisition, we operated independently as a wholly-owned subsidiary of Ford Motor Company.

We continued to purchase and originate contracts through June 23, 2008 in our dealer originations channel and October 7, 2008 in our direct originations channel. We no longer purchase or originate any contracts.

Our Competitive Strengths

Third-Party Servicing. During the latter half of 2008, we decided to focus our efforts on utilizing our existing servicing platform and offer third-party servicing-related functions to other originators and holders of loans secured by motor vehicles. We began the process of obtaining the necessary licenses to service accounts for third parties and also began to actively market our services to others. To date, we have signed contracts with eight third-party entities to remarket their repossessed cars. This generated income of $8,100 for the year ended December 31, 2008.

Maintaining an Experienced Risk Management Team. Our risk management team is responsible for monitoring the servicing process, supporting management’s initiatives, tracking collateral value trends and pricing to achieve maximum recoveries. Our risk management team also provides strategic guidance and manages projects to improve collections and contract performance.

Managing Our Portfolio Through Technology and Best Practices. Our centralized portfolio management group continuously develops and monitors collection strategies for our contracts in order to improve portfolio performance. We establish goals regarding delinquent accounts on a monthly basis, develop strategic initiatives for the collections processes and actively manage account handling to maximize account collections. All portfolio management services are conducted from our offices in North Richland Hills, Texas.

Our Business Strategy

We continue to develop and implement enhancements to our collection process and improve information reporting to management and staff with the objective of operating efficiently while continuing to improve our account performance. These enhancements include refining automatic dialer functionality to increase the effectiveness of calls to delinquent customers and call optimization capabilities to increase the probability of reaching delinquent customers when called.

Industry Overview

Prior to 2008, the non-prime automobile finance industry was very competitive. The automobile finance market was highly fragmented and was served by a variety of financial entities, including captive finance affiliates of major automotive manufacturers, banks, thrifts, credit unions and independent finance companies. The collapse of the asset-backed securitization market combined with mounting losses in all forms of non-prime lending have

caused many banks and finance companies to either scale-back loan originations dramatically, or, to exit the automobile financing business entirely.

Automobile Finance Operations

General. Prior to our decision to cease all lending operations, we had drastically scaled-back our production, due in part to our belief that the securitization markets did not appear to be supportive of another transaction collateralized by non-prime automobile finance receivables at pricing that would allow us to maintain profitability. In addition, our losses on accounts purchased and originated throughout 2006 continued to be greater than projected, both in our dealer and our direct origination platforms. Refinements to our underwriting policies in 2007 led to better performance from those vintages, but that better performance was offset by lower yields on the loans originated in our direct origination platform, RoadLoans.

Funding and Liquidity. On January 10, 2008, we entered into a $500 million warehouse lending agreement with a consortium of lenders led by Barclays Bank PLC (the “Barclays Warehouse”). However, the Company never utilized the Barclays Warehouse, and that relationship was terminated on May 30, 2008.

On May 1, 2008, we began discussions with our primary warehouse lender, Citigroup Global Markets Realty Corp., (or “CGMRC”). On May 6, 2008, we entered into an agreement with CGMRC under the terms of which CGMRC would continue to provide funding under our warehouse lending agreement at a fixed rate of interest and using revised advance rates through June 30, 2008. With respect to our residual loan agreement with CGMRC, they agreed to fund an additional sum of up to $42.6 million on or before May 12, 2008 at which time the Company would not be permitted to make any further requests for funding under that facility.

On May 23, 2008, we entered into an agreement with Santander under the terms of which Santander would fund loans originated by our direct lending platform, RoadLoans, while they conducted due diligence with respect to a possible purchase of that platform. The agreement also proposed a sale of non-pledged, performing contracts and loans to Santander. Contemporaneously with the execution of that agreement, the Company ceased all dealer lending operations, other than the funding of previously approved loans, and laid-off the bulk of the personnel involved in the purchase of dealer contracts.

On June 20, 2008, the Company and Santander entered into definitive agreements governing:


	•	the sale of $632 million of non-pledged, performing contracts and loans to Santander;

	•	the sale of our direct lending platform, RoadLoans, to Santander;

	•	the interim servicing of the purchased contracts and loans by Santander until their conversion onto Santander’s loan servicing system; and

	•	the interim funding, maintenance and operation of the direct lending platform, Roadloans, by the Company until the closing of that sale which occurred on October 7, 2008.

With the proceeds from the sale of the $632 million of non-pledged, performing contracts and loans, the Company satisfied all if its remaining obligations to CGMRC, and on June 20, 2008, executed a termination agreement of both the warehouse lending agreement and the residual lending agreement.

Servicing and Collections Procedures

General. Our servicing responsibilities consist of collecting, processing and posting customer payments, responding to customer inquiries, initiating contact with customers who are delinquent, maintaining our security interest in financed vehicles or other collateral, repossessing and liquidating collateral when necessary and generally monitoring each contract and the related collateral. We service all contracts that we purchased and originated. Additionally, beginning in the latter half of 2008, we also provide third-party servicing-related functions to other originators and holders of loans secured by motor vehicles.

Each month, we mail the customer a billing statement directing the customer to mail payments to a lockbox bank for deposit in a lockbox account. Payment receipt data is electronically transferred from our lockbox bank to us for posting to our contract accounting system. Payments may also be received directly by us from customers or

through third-party vendors, such as Western Union. We perform all of our servicing and collection functions at our North Richland Hills, Texas facility.

In our collections activities, we use a predictive dialing system to make phone calls to customers whose payments are past due. The predictive dialer is a computer-controlled telephone dialing system that simultaneously dials phone numbers of multiple customers from a file of records extracted from our database. Once a live voice responds to the automated dialer’s call, the system automatically transfers the call to a collector and the relevant account information to the collector’s computer screen. The system also tracks and notifies collections management of phone numbers that the system has been unable to reach within a specified number of days, thereby promptly identifying for management all customers who cannot be reached by telephone. By eliminating the time spent on attempting to reach customers, the system gives a single collector the ability to speak with a greater number of customers daily.

As an account becomes more seriously delinquent, it moves to one of our later-stage collection units. The objective of these collectors is to prevent the account from becoming further delinquent. After a scheduled payment on an account becomes between 60 and 90 days contractually delinquent, we typically initiate repossession of the financed vehicle. We may repossess a financed vehicle without regard to the length of payment delinquency if an account is deemed uncollectible, the financed vehicle is deemed to be in danger of being damaged, destroyed or hidden, the customer deals in bad faith or the customer voluntarily surrenders the collateral.

At times, we offer payment extensions to customers who have encountered temporary financial difficulty, hindering their ability to pay as contracted. The account representative reviews a customer’s past payment history and assesses the customer’s ability to make future payments. Exceptions to our extension policies and guidelines for extensions must be approved by designated personnel. While payment extensions are initiated and approved in the servicing department, our portfolio management group determines the total frequency of extensions per month and recommended allocation. For example, seasonal delinquency and payment trends may influence our decision to grant more (or fewer) extensions in a given month. At December 31, 2008, approximately 48.6% of our receivables had received an extension.

Repossessions. Repossessions are subject to required statutory procedures, which may include one or more customer notifications, a waiting period prior to disposition of the repossessed automobile and return of personal items to the customer. Some jurisdictions provide the customer with reinstatement rights and most provide the borrower with a right to redeem the vehicle. Legal requirements, particularly in the event of bankruptcy, may restrict our ability to repossess or to dispose of the repossessed vehicle. Repossessions must be approved by a collections officer. The repossession assignments are handled by independent repossession firms engaged directly by us or by service companies who maintain relationships with companies who perform repossession work. Upon repossession and after any waiting period, the repossessed automobile is sold at auction. We do not sell any vehicles on a retail basis. The proceeds from the sale of automobiles at auction, together with any other recoveries, are credited against the balance of the contract. Auction proceeds from sale of the repossessed vehicle and other recoveries are usually not sufficient to cover the outstanding balance of the contract, and the resulting deficiency is charged-off. We may pursue collection of deficiencies when appropriate. If the auction proceeds from the sale of the repossessed vehicle exceed the outstanding balance of the contract, a refund is sent to the customer. The amount of the refund is calculated in accordance with the applicable law of the jurisdiction where the auction sale occurred, and generally comprises the amount in excess of the contract’s outstanding balance, less any late fees, accrued interest, auction fees and amounts owed to any junior lienholders.

Charge-Off Policy. Our policy is to charge-off a contract in the month in which the borrower becomes 120 days contractually delinquent if we have not previously repossessed the related vehicle. If a vehicle has been repossessed, we charge-off the underlying receivable upon repossession, taking into account the estimated value of our collateral, with a reconciliation upon liquidation. The net charge-off represents the difference between the actual net sales proceeds and the amount of the delinquent contract, including accrued interest. Accrual of finance charge income is suspended on accounts that are more than 30 days contractually delinquent.

Risk Management

Overview. Our risk management group prepares regular credit indicator packages reviewing portfolio performance at various levels of detail including total company, region and state. Various daily reports and analytical data also are generated by our management information systems. This information is used to monitor effectiveness of the collection process. Risk management works with operational management in establishing monthly and quarterly performance targets and leads strategic initiatives prioritized to improve business effectiveness.

Behavioral Scoring. We use statistically-based behavioral assessment models to project the relative probability that an individual account will default. Default probabilities are calculated for each borrower independent of the credit score. Projected default rates from the behavioral assessment models and credit scoring systems are compared and analyzed to monitor the effectiveness of our collection strategies.

Compliance Audits. Our internal audit departments conduct regular reviews of our servicing and other functional areas. The primary objective of the reviews is to identify risks and associated controls and measure compliance with our written policies and procedures as well as regulatory matters. We distribute written reports to departmental managers and officers for response and follow-up. Our senior executive management team also reviews these results and responses.

Securitization of Receivables

Prior to 2008, we pursued a strategy of securitizing our receivables to diversify our funding, improve liquidity and obtain a cost-effective source of funds for the purchase and origination of additional automobile finance contracts and loans. Between 2002 and 2007, we securitized approximately $10.9 billion of automobile receivables.

In our securitizations, we, through wholly-owned subsidiaries, transferred automobile receivables to newly-formed securitization trusts which issued one or more classes of asset-backed securities. The asset-backed securities were, in turn, sold to investors.

We typically arranged for a financial guaranty insurance policy to achieve a high-grade credit rating on the asset-backed securities issued by the securitization trusts. Since August 2002, the financial guaranty insurance policies have been provided primarily by Ambac Assurance Corporation, or “Ambac”, and Financial Security Assurance Inc., or “FSA”, collectively referred to as “Guarantee Insurance Providers”, each of which is a monoline insurer, which insures the payment of principal and interest due on the asset-backed securities. We have limited reimbursement obligations to these Guarantee Insurance Providers; however, credit enhancement requirements, including security interests for the benefit of the insurers of certain restricted cash accounts and subordinated interests in trusts, provide a source of funds to cover shortfalls in collections and to reimburse the insurer for any claims which may be made under the policies issued with respect to our securitizations. There have been no claims under any insurance policies in our securitization transactions.

The credit enhancement requirements for our securitizations include restricted cash accounts that are generally established with an initial deposit. Funds would be withdrawn from the restricted cash accounts to cover any shortfalls in amounts payable on the asset-backed securities. Funds generated from securitization transactions insured by Guarantee Insurance Providers are also available to be withdrawn upon an event of default to reimburse the Guarantee Insurance Providers, as applicable, for draws on their respective financial guaranty insurance policies. We are entitled to receive amounts from the restricted cash accounts to the extent the amounts deposited exceed predetermined required minimum levels.

Each Guarantee Insurance Provider has a security interest in the restricted cash accounts and investments in trust receivables with respect to securitization transactions it has insured. If the security interest is foreclosed upon in the event of a payment by the Guarantee Insurance Provider under one of its insurance policies, or the occurrence of certain material adverse changes in our business, the Guarantee Insurance Provider would control all of the restricted cash accounts, and investments in trust receivables with respect to securitization transactions it has insured. The terms of each insured securitization also provide that, under certain tests relating to delinquencies and losses, cash may be retained in the restricted cash account and not released to us until increased minimum levels of credit enhancement requirements have been reached and maintained.

Regulation

Our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.

In most states in which we operate, a consumer credit regulatory agency regulates and enforces laws relating to consumer lenders and sales finance agencies such as us. Such rules and regulations generally provide for licensing of sales finance agencies and/or direct lenders, limitations on the amount, duration and charges, including interest rates, for various categories of contracts, requirements as to the form and content of finance contracts and other documentation, and restrictions on collection practices and creditors’ rights. In certain states, we are subject to periodic examination by state regulatory authorities. Some states in which we operate do not require special licensing or provide extensive regulation of our business.

We are also subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each contract. The Equal Credit Opportunity Act prohibits creditors from discriminating against contract applicants on the basis of, among other factors, race, color, sex, age or marital status. Pursuant to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. In addition, the credit scoring system we use must comply with the requirements for such a system as set forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. Additionally, we are subject to the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters. We are also subject to the Servicemembers Civil Relief Act and similar state legislation, which require us to reduce the interest rate charged on each contract to customers who have subsequently joined, enlisted, been inducted or called to active military duty and may restrict the exercise of remedies against such customers.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. There can be no assurance, however, that we will be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could have a material adverse effect on our operations. Further, the adoption of additional, or the revision of existing, rules and regulations could have a material adverse effect on our business.

Competition

Competition in the field of non-prime automobile finance had been intense, though the liquidity crisis has seen a number of lenders either significantly curtail or abandon automobile financing altogether. There is significant competition in the arena of third-party servicing. Many companies have a long history of servicing loans for others, and they have the advantage of servicing significantly larger portfolios. There can be no assurance that we will be able to compete successfully in this market or against these competitors.

Employees

As of December 31, 2008, we employed approximately 700 people in Texas and California. None of our employees are a part of a collective bargaining agreement, and we believe our relationships with our employees are satisfactory.


ITEM 1A.	*RISK FACTORS*

A loss of contractual servicing rights could have a material adverse effect on our business.

As servicer of all our securitized automobile contracts, we are entitled to receive contractual servicing fees. Our base servicing fees are earned at 2.25% per annum on the outstanding balance of contracts securitized and our

supplemental servicing fees include fees and charges paid by obligors, such as late fees and extension fees. Each Guarantee Insurance Provider, as guarantor, can terminate our right to act as servicer for the securitizations it has guaranteed upon the occurrence of events defined in the sale and servicing agreements for securitized contracts, such as our bankruptcy or material breach of warranties or covenants, including covenants to maintain a specified level of delinquency, default or loss rate with respect to the receivables included in the applicable securitization trust. At December 31, 2008, no such termination events had occurred with respect to any of the trusts formed by us. The termination of any or all of our servicing rights under our securitizations would have a material adverse effect on our liquidity. For the year ended December 31, 2008, we received $64.4 million in base servicing fees and $24.0 million in supplemental servicing fees from our securitization trusts.

We may not be able to generate sufficient operating cash flows to meet our operating expenses.

Even with our decision to cease lending, our operations require substantial operating cash flows. Operating cash requirements include debt service, ongoing operating costs and capital expenditures. Our primary sources of operating cash are the excess cash flows received from securitizations, principal and interest payments on non-pledged receivables and federal and state tax refunds. The timing and amount of excess cash flows from securitizations and non-pledged receivables varies based on a number of factors, including:


	•	the rates and amounts of contract delinquencies, defaults and net credit losses;

	•	how quickly and at what price repossessed vehicles can be resold;

	•	the ages of the contracts in the portfolio;

	•	levels of voluntary prepayments; and

	•	the terms of our securitizations, which include performance-based triggers requiring higher levels of credit enhancements to the extent credit losses or delinquencies exceed certain thresholds.

Any adverse change in these factors could reduce or eliminate excess cash flows to us. Although we currently have positive operating cash flows, we may not continue to generate positive cash flows in the future. Our inability to do so could have a material adverse effect on our financial position, liquidity and results of operations.

Defaults and prepayments on contracts purchased or originated by us could adversely affect our results of operations and cash flows.

Our results of operations, financial condition and liquidity depend, to a material extent, on the performance of non-pledged receivables held by us as well as the performance of receivables in our securitization trusts. Obligors under contracts acquired or originated by us may default or prepay on the contracts at any time. We bear the full risk of losses resulting from defaults that occur while we own the contracts.

In the event of a default under the contracts we hold, the collateral value of the financed vehicle usually does not cover the outstanding contract balance and costs of recovery. We maintain an allowance for credit losses on contracts held for investment by us, which reflects management’s estimates of inherent losses for these contracts. If the allowance is inadequate, we would recognize as an expense the losses in excess of that allowance, and our results of operations could be adversely affected.

Generally, the form of credit enhancement agreement we enter into with Guarantee Insurance Providers in connection with securitization transactions contains specified limits on the delinquency and loss rates on the receivables included in each securitization trust. If, at any measurement date, the delinquency, default or loss rate with respect to any trust were to exceed the specified limits, provisions of the credit enhancement agreement would automatically increase the level of credit enhancement required for that trust, if a waiver were not obtained. During the period in which the specified delinquency and loss rates were exceeded, excess cash flow, if any, from the trust would be used to fund the increased credit enhancement levels instead of being distributed to us, which would have an adverse effect on our cash flow.

At December 31, 2008, the cumulative net loss ratio for the Company’s 2006-C securitization trust exceeded one of its target ratios, a condition which has existed since the fourth quarter of 2007. As a result, the credit

enhancement requirement to maintain cash reserves as a percentage of the portfolio immediately increased from 2% to 3%, which initially resulted in a delay in cash distributions to the Company. The Company reached this increased 3% enhancement requirement during the third quarter of 2008 and therefore has begun receiving cash distributions once again. This requirement will remain at 3% until the trust is back in compliance with its target for three consecutive months. The cumulative net loss ratio for the Company’s 2006-B securitization trust had exceeded one of its target ratios, but that situation was cured during the third quarter of 2008, which allowed the credit enhancement requirement to be reduced to 2%. It is possible that the net loss ratios on these and other securitization trusts may exceed targeted levels in the future, which would result in increased credit enhancement levels on those trusts as well.

Our declining portfolio balance will result in lower servicing fees.

In response to higher than expected losses on receivables originated during 2006, we modified our contract origination strategy to better manage our credit risk, which resulted in lower volume levels during the last quarter of 2006 and throughout 2007. Additionally, in response to problems being experienced in the asset-backed securitization market for non-prime loan originations, the Company further tightened its underwriting criteria and increased pricing during the first quarter of 2008, which further decreased loan volume during the first quarter of 2008. Our decision to cease lending altogether in 2008 meant that the portfolio began to decline at an even more rapid rate, since there would be no new loans to replace those that were being amortized. This decline was accelerated when we completed the sale of $632 million of non-pledged, performing loans to Santander in June 2008.

While we believe there is the possibility that we can replace some of the lost servicing fees through our third-party servicing efforts, there can be no assurance that we will be successful in obtaining sufficient commitments to service portfolios for others in 2009 and thereafter.

Failure to implement our business strategy could adversely affect our operations.

Our financial position and results of operations depend on our management’s ability to execute our business strategy. Key factors involved in the execution of our business strategy include:


	•	effective collection strategies to maximize account collections;

	•	the use of sophisticated risk management techniques;

	•	continued investment in technology to support operating efficiency; and

	•	achieving targeted goals with respect to third-party servicing contracts.

Our failure or inability to execute any element of our business strategy could materially adversely affect our financial position, liquidity and results of operations.

There is a high degree of risk associated with non-prime borrowers.

We specialize in servicing non-prime automobile receivables. Non-prime borrowers are associated with higher-than-average delinquency and default rates. While we believe that we effectively manage these risks with our policies and collection methods, these criteria or methods may be ineffective in the future in reducing default risk. In the event that we underestimate the default risk, our financial position, liquidity and results of operations may be adversely affected, possibly to a material degree. While we employed a credit scoring system in the credit approval process prior to our cessation of lending activity, credit scoring does not eliminate credit risk.

We are subject to general economic conditions beyond our control. Adverse general economic events, including periods of economic weakness, could have a material adverse impact on our business.

During periods of economic slowdown or recession, delinquencies, defaults, repossessions and losses generally increase. These periods also may be accompanied by decreased consumer demand for automobiles and declining values of automobiles securing outstanding contracts, which weakens collateral coverage and increases the amount of a loss in the event of default. Significant increases in the inventory of used automobiles

during periods of economic recession may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales. Because we focus on non-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on these contracts are higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. In addition, during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our servicing fee income. While we seek to manage the higher risk inherent among non-prime borrowers through the collection methods we employ, these criteria or methods may not afford adequate protection against these risks. Any sustained period of increased delinquencies, defaults, repossessions or losses or increased servicing costs could also adversely affect our financial position, liquidity and results of operations.

Geographic concentrations of our contracts may adversely affect payments on the contracts.

Adverse economic conditions, natural disasters or other factors affecting any state or region where a high concentration of obligors resides could adversely affect collections on the contracts and increase the delinquency or credit loss rates of our contracts. At December 31, 2008, obligors with respect to approximately 21.0%, 12.3%, 7.7%, 5.6% and 4.9% of our total managed receivables based on the contracts’ remaining principal balances were located in Texas, California, Florida, Georgia, and Illinois respectively. If adverse economic conditions, natural disasters or other factors occur that affect these regions, or if obligors in these regions experience financial difficulties, a significant number of obligors may not be able to pay, may not make timely payments or may be more prone to filing for bankruptcy protection.

Our business is highly seasonal, which may cause our results of operations and cash flows to fluctuate from quarter to quarter.

We historically have experienced and expect to continue to experience quarterly fluctuations in our net income and cash flows. We generally experience a decrease in collections in the last two to three months of each year due to consumers’ spending in anticipation of the holiday months and in the first month of the following year due to consumer spending in the previous holiday period. Collections generally tend to increase after income tax refunds are received by our customers. We expect this trend to continue for the foreseeable future. Any decrease in our collections, whether because of general economic conditions, a slowdown in the economy, increased unemployment or other factors, could have a material adverse effect on our business, financial condition and results of operations for the entire year.

Wholesale auction values may impact our profitability.

We sell repossessed automobiles at wholesale auction markets located throughout the United States. Auction proceeds from the sale of repossessed vehicles and other recoveries are usually not sufficient to cover the outstanding balance of the contract, and the resulting deficiency is charged-off. Decreased auction proceeds resulting from the depressed prices at which used automobiles may be sold during periods of economic slowdown or recession will result in higher credit losses for us. Furthermore, depressed wholesale prices for used automobiles may result from significant liquidations of rental or fleet inventories or from increased volume of trade-ins due to promotional financing programs offered by new vehicle manufacturers. Our recoveries as a percentage of net charge-offs were 42.5%, 43.2% and 46.7% in 2008, 2007 and 2006, respectively. Our recovery rates may be lower in the future, which could result in higher charge-offs and losses for us.

Our customers may not maintain adequate insurance on our collateral, which could lead to greater losses.

All of our borrowers are required to maintain insurance on their vehicles, either as a matter of state law or pursuant to their contracts, or both. Some borrowers will allow their insurance to lapse from time to time. We have not historically obtained collateral protection insurance on these vehicles, even though most states allow creditors to do so. We have not done this because the cost of such coverage is difficult to recoup from the customers, and the litigation risks involved in maintaining such a program can be significant. Our losses attributable to lapses in insurance coverage have not been material in nature, but there can be no assurance that such losses will remain immaterial.

Our profitability may be directly affected by the level of and fluctuations in interest rates.

Our earnings are affected by changes in interest rates as a result of our issuance of variable rate debt in certain of our securitization transactions. Fluctuations in market interest rates impact the amount of interest payments by the applicable securitization trusts on this variable rate debt, which, in turn, impact the amount of excess cash flows received from those securitization trusts. We have utilized several strategies to minimize the impact of interest rate fluctuations on our net interest income, including the use of derivative financial instruments.

Our inability to recruit or retain senior management or other qualified personnel could have an adverse impact on our operations.

We depend on the continued services of our senior executive officers. The loss of any key officer could have a material adverse effect on our business, financial condition and results of operations. We do not carry key man insurance for any of our management executives.

Competition to hire personnel possessing the skills and experience we require could contribute to an increase in our employee turnover rate. High turnover or an inability to attract and retain qualified replacement personnel could have an adverse effect on our delinquency, default and net loss rates and, ultimately, our financial condition, results of operations and liquidity.

Regulatory requirements may have a material adverse effect on our business, financial condition or operating results.

Our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.

In most states in which we operate, a consumer credit regulatory agency regulates and enforces laws relating to consumer lenders and sales finance agencies such as us. These rules and regulations generally provide for licensing of sales finance agencies and direct lenders, limitations on the amount, duration and charges, including interest rates, for various categories of contracts, requirements as to the form and content of finance contracts and other documentation, and restrictions on collection practices and creditors’ rights. In certain states, we are subject to periodic examination by state regulatory authorities.

We are also subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each contract. The Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, sex, age or marital status. Pursuant to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. In addition, the credit scoring system we use must comply with the requirements for such a system as set forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. Additionally, we are subject to the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters. We are also subject to the Servicemembers Civil Relief Act, and similar state legislation, which require us to reduce the interest rate charged on contracts to customers who have subsequently enlisted, been inducted or called to active military duty and may restrict the exercise of remedies against such customers.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. There can be no assurance; however, that we will be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could have a material adverse effect on our operations. Further, the adoption of additional, or the revision of existing, rules and regulations could have a material adverse effect on our business.

Various laws and other factors may limit the collection of payments on our contracts and repossession of the vehicles.

State and federal laws, including consumer bankruptcy laws, may prohibit, limit or delay repossession and sale of the vehicles to recover on defaulted automobile contracts. As a result, we may experience delays in receiving payments and suffer losses. Additional factors that may affect our ability to recoup the full amount due on an automobile contract include:


	•	our failure to file amendments to or receive certificates of title relating to the vehicles;

	•	depreciation of the financed vehicles;

	•	damage or loss of any financed vehicle; and

	•	the application of federal and state bankruptcy and insolvency laws.

We are parties to litigation matters that could adversely affect our financial condition, results of operations and cash flows.

As a consumer finance company, although we have ceased lending operations, we remain subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, wrongful collection practices, violations of bankruptcy stay provisions, certificate of title disputes, fraud and breach of contract. Some litigation against us could take the form of class action lawsuits by consumers. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies, but includes requests for compensatory, statutory and punitive damages.

Any adverse resolution of the litigation pending or threatened against us could have a material adverse effect on our financial condition, results of operations or cash flows.

We may pursue strategic acquisitions and expansion opportunities, which could have an adverse impact on our business.

We may, from time to time, consider acquiring complementary companies or businesses. To do so, we would need to identify suitable acquisition candidates, negotiate acceptable acquisition terms and obtain appropriate financing. Any acquisition that we pursue, whether or not successfully completed, may involve risks, including:


	•	the diversion of our capital and our management’s attention from other business issues and opportunities;

	•	difficulties in successfully integrating companies that we acquire, including personnel, financial systems and operations;

	•	material adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition as it is integrated into our operations; and

	•	the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other intangible assets, any of which could harm our business and financial condition.

Further, we will need to continue to effectively manage the expansion of our existing operations in order to execute our growth strategy of entering into new markets and expanding in existing markets. Growth may strain our existing resources. It is possible that our management, employees, systems and facilities currently in place may not be adequate to accommodate future growth. In this situation, we will have to improve our operational, financial and management controls, reporting systems and procedures. If we are unable to effectively manage our growth, our operations and financial results may be adversely affected.

Our financial products and services are complex, depend on a myriad of complex networks and technologies and may be subject to software or hardware errors or failures that could lead to an increase in our costs, reduction of our revenues or damage to our reputation.

Our products and services, and the networks and third-party services upon which our financial products and services are based, are complex and may contain undetected errors or may suffer unexpected failures. We are exposed to the risk of failure of our proprietary computer systems, some of which are deployed, operated, monitored and supported by third parties, whom we do not control. We rely on third parties to detect and respond to errors and failures in our proprietary computer systems. We also rely on third parties for software development and system support. We are exposed to the risk of failure of the computer systems that are owned, operated and managed by third parties, whom we do not control.

If we are unable to protect our intellectual property adequately, we may lose a valuable competitive advantage or be forced to incur costly litigation to protect our rights.

Our success depends on developing and protecting our intellectual property. We rely on the terms of license agreements, as well as copyright, patent, trademark and trade secret laws to protect our intellectual property. We also rely on other confidentiality and contractual agreements and arrangements with our employees, affiliates, business partners and customers to establish and protect our intellectual property and similar proprietary rights. If we are unable to protect our intellectual property, our operations and financial results may be adversely affected.

Our substantial indebtedness could adversely affect our business and results of operations.

We have a significant amount of indebtedness. At December 31, 2008, we had on a consolidated basis outstanding indebtedness of $2,071.2 million. This level of indebtedness could:


	•	make it more difficult for us to meet all our obligations to creditors, who could then require us to, among other things, restructure our indebtedness, sell assets or raise additional debt or equity capital;

	•	require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for operations and future business opportunities;

	•	limit our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements or general corporate purposes;

	•	limit our flexibility in planning for, and reacting to, changes in our business and in our industry, which could make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

	•	place us at a disadvantage compared to our competitors that have less debt; and

	•	make it more difficult for us to satisfy the obligations of our senior notes.

Any of the above listed factors could materially adversely affect our business and results of operations.

We will continue to require significant amounts of cash to fund our operations.

We require substantial amounts of cash to fund our operations which include:


	•	credit enhancement requirements in connection with the securitization of the receivables;

	•	interest and principal payments under our senior notes and other indebtedness;

	•	fees and expenses incurred in connection with the servicing of securitized receivables;

	•	capital expenditures for technology and facilities; and

	•	on-going operating expenses.

Our primary sources of liquidity in the future are expected to be:


	•	borrowings under the facility extended by two of our equity sponsors;

	•	cash flow received from securitization trusts;

	•	cash flow from operating activities other than securitizations of receivables;


	•	servicing fees from securitization trusts;

	•	further issuances of debt or equity securities, depending on capital market conditions; and

	•	federal and state income tax refunds.

We may be required to borrow in the future under the borrowing facility provided by our equity sponsors in order to fund our future liquidity needs. If these sources of funding are unavailable to us on a regular basis or are only available on terms unacceptable to us, we will be required to implement other expense reductions, all of which may have a material adverse affect on our ability to achieve our business and financial objectives.


ITEM 1B.	*UNRESOLVED STAFF COMMENTS*

Not applicable.


ITEM 2.	*PROPERTIES*

Our executive offices are located at 5201 Rufe Snow Drive, North Richland Hills, Texas, 76180, in 164,812 square feet of office space under a lease that expires in 2012. We currently sublease 26,663 square feet of office space under a sublease agreement that expires in October 2009.

We also have administrative offices at 7711 Center Ave., Suite 200, Huntington Beach, California 92647 in 28,186 square feet of office space under a lease that expires in 2011.


ITEM 3.	*LEGAL PROCEEDINGS*

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, wrongful collection practices, violations of bankruptcy stay provisions, certificate of title disputes, fraud and breach of contract. Some litigation against us may take the form of class action lawsuits by consumers. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies, but includes requests for compensatory, statutory and punitive damages.

We believe that we have taken prudent steps to address the litigation risks associated with our business activities. We are vigorously defending the litigation against us and, while we are unable to estimate a range of possible losses with respect to our pending litigation due to the preliminary stages of most of our proceedings, we do not believe that the outcome of these proceedings, individually or in the aggregate, will have a material effect on our financial condition, results of operations or cash flows.


ITEM 4.	*SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS*

Not applicable.

PART II


ITEM 5.	*MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED MEMBER/STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES*

There is no trading market for our common units. All of the outstanding shares of our common units are held by Triad Financial Holdings LLC.


ITEM 6.	*SELECTED FINANCIAL DATA*

Set forth below is selected historical consolidated financial data. We derived the historical statement of operations and balance sheet data for the periods indicated from our consolidated financial statements. We have derived the selected historical consolidated financial data at December 31, 2008, 2007, 2006 and 2005, for the years ended December 31, 2008, 2007 and 2006 and for the period April 30, 2005 through December 31, 2005 from our audited financial statements. We have derived the selected historical financial data at December 31, 2004, for the period January 1, 2005 through April 29, 2005 and for the year ended December 31, 2004 from the predecessor’s audited financial statements. The information presented below should be read in conjunction with, and qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited historical consolidated financial statements and related notes and other financial information appearing elsewhere in this document.



	Successor												Predecessor
	Year			Year			Year			April 30,			January 1,			Year
	Ended			Ended			Ended			2005 to			2005 to			Ended
	December 31,			December 31,			December 31,			December 31,			April 29,			December 31,
	2008			2007			2006			2005			2005			2004
	(Dollars in thousands)
Statement of Operations Data:
Financing and other interest income	$	461,092		$	629,898		$	577,340		$	215,114		$	127,243		$	302,715
Interest expense		168,984			218,668			202,929			85,958			21,440			38,793

Net interest margin		292,108			411,230			374,411			129,156			105,803			263,922
Provision for credit losses on owned finance receivables		228,380			284,457			256,762			58,909			—			1,135

Net interest margin after provision for credit losses		63,728			126,773			117,649			70,247			105,803			262,787
Securitization and servicing income		3,193			7,824			21,966			19,275			16,597			82,579
Gain on partial redemption of senior notes		14,558			—			—			—			—			—
Other income (expense)		911			(3,942	)		21,602			12,803			9,512			8,825

Total other revenues		18,662			3,882			43,568			32,078			26,109			91,404

Operating expenses		129,743			146,753			138,605			85,889			39,857			123,894
Other expenses		—			—			—			—			30,505			73,713
Impairment of goodwill(1)		30,446			—			—			—			—			61,192

Total expenses		160,189			146,753			138,605			85,889			70,362			258,799

(Loss) income before income taxes		(77,801	)		(16,098	)		22,612			16,436			61,550			95,392
(Provision) benefit for income taxes		(34,067	)		5,520			(8,945	)		(6,453	)		(23,208	)		(43,503	)

Net (loss) income	$	(111,868	)	$	(10,578	)	$	13,667		$	9,983		$	38,342		$	51,889

Cash Flow Data:
Cash flows provided by (used in) operating activities		221,437			285,399			252,389			170,541			(383,565	)		(1,048,224	)
Cash flows provided by (used in) investing activities		1,347,778			(1,083	)		(1,485,481	)		(1,295,832	)		117,879			419,272
Cash flows (used in) provided by financing activities		(1,575,226	)		(292,178	)		1,248,164			1,146,942			263,546			640,082

Net (decrease) increase in cash	$	(6,011	)	$	(7,862	)	$	15,072		$	21,651		$	(2,140	)	$	11,130


	Successor									Predecessor
	At and for the Year Ended December 31,
	2008		2007		2006		2005			2004
	(Dollars in thousands)
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	46,494	$	52,505	$	60,367	$	45,295		$	25,784
Cash-restricted		252,300		295,786		274,059		153,231			—
Finance receivables, net		1,988,339		3,514,979		3,781,469		2,596,809			1,721,334
Retained interest in securitized assets		—		10,916		102,531		216,952			355,081
Total assets		2,390,663		4,107,552		4,418,535		3,138,156			2,162,314
Total debt		2,071,239		3,679,135		3,936,513		2,709,518			1,603,510
Total member’s/stockholder’s equity		260,610		356,591		406,159		356,832			458,713

								(Unaudited	)
Other Data(2):
Contract originations		349,486		1,346,490		2,650,257		1,880,230			2,056,195
Contracts securitized		—		1,517,520		3,052,914		2,184,026			736,545
Average Receivables(2):
Held for sale		N/A		N/A		N/A		N/A			912,497
Held for investment		2,903,839		3,844,915		3,498,717		2,221,927			284,536

Average owned receivables, carrying value		2,903,839		3,844,915		3,498,717		2,221,927			1,197,033
Sold receivables		30,133		274,668		765,416		1,573,103			2,532,340

Average total managed receivables(3)	$	2,933,972	$	4,119,583	$	4,264,133	$	3,795,030		$	3,729,373


	Successor(2)												Predecessor
	At and for the Year Ended December 31,
	2008			2007			2006			2005			2004
	(Dollars in thousands)
	(Unaudited)
Owned Data:
Net margin(4)	$	292,108		$	411,230		$	374,411		$	234,959		$	263,922
Net charge-offs(5)		303,037			309,492			192,513			95,617			99,966
Owned receivables, unpaid principal balance (at end of period)		2,172,559			3,774,481			4,032,551			2,736,183			1,762,669
Owned receivables greater than 60 days delinquent (at end of period)		98,600			156,036			97,332			44,079			30,432
Owned Ratios:
Ratio of earnings to fixed charges(6)		—			—			1.1	x		1.7	x		3.4	x
Annualized net margin as a percentage of average owned receivables(4)		10.1	%		10.7	%		10.7	%		8.2	%		13.4	%
Annualized net charge-offs as a percentage of average owned receivables(5)		10.4	%		8.0	%		5.5	%		4.3	%		8.4	%
Owned receivables greater than 60 days delinquent as a percentage of owned receivables (at end of period)		4.5	%		4.1	%		2.4	%		1.6	%		1.7	%
Total Managed Data:
Net margin(4)(7)	$	308,477		$	441,940		$	519,978		$	504,720		$	522,232
Net charge-offs(5)		305,888			327,674			246,392			231,653			280,333
Total managed receivables (at end of period)		2,172,559			3,868,578			4,517,369			3,866,535			3,844,771
Average principal amount per total managed contracts outstanding (in dollars)		11,851			13,657			14,101			13,382			13,316
Total managed receivables greater than 60 days delinquent (at end of period)		98,600			161,203			115,302			81,319			90,416
Total Managed Ratios:
Annualized net margin as a percentage of average total managed receivables		10.5	%		11.0	%		12.2	%		13.3	%		14.0	%
Annualized net charge-offs as a percentage of average total managed receivables(5)		10.4	%		8.0	%		5.8	%		6.1	%		7.5	%
Annualized operating expenses as percentage of average total managed receivables		5.5	%		3.6	%		3.3	%		3.3	%		3.3	%
Receivables greater than 60 days delinquent as a percentage of total managed receivables (at end of period)		4.5	%		4.2	%		2.6	%		2.1	%		2.4	%


(1)		As a result of the terms of the Acquisition, we determined that there was an impairment of goodwill and recorded a $61.2 million pre-tax charge to earnings in 2004. As a result of Company’s decision to cease lending operations in 2008, we determined that there was an impairment of goodwill and recorded a $30.4 million pre-tax charge to operations in 2008.

(2)		To assist in the evaluation of our financial results and to make it easier to understand our results of operations, the “predecessor” period (January 1 through April 29, 2005) and the “successor” period (April 30 through December 31, 2005) have been combined for the year ended December 31, 2005. These combined results should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this document for information on items impacting the comparability of predecessor and successor periods.

(3)		Total managed receivables consist of our total owned receivables and our total sold receivables in securitization transactions accounted for as off-balance sheet securitizations.

(4)		Net margin as reflected on the consolidated statements of operations for the successor period (years ended December 31, 2008, 2007 and 2006 and the period April 30, 2005 through December 31, 2005) includes $12.8 million, $29.4 million, $56.4 million and $83.6 million, respectively, of premium amortization related to our predecessor finance receivables held for investment and our receivables repurchased from gain on sale trusts. Excluding the $12.8 million, $29.4 million, $56.4 million and $83.6 million of premium amortization,


		owned net margin as a percentage of average owned receivables would have been 10.5%, 11.5%, 12.3% and 14.3%, respectively.

(5)		In April 2004, we changed our charge-off policy such that all owned contracts which are more than 120 days delinquent are charged off, regardless of whether an obligor under the owned contract has filed for bankruptcy. Previously, we charged-off owned contracts with bankrupt obligors upon resolution of their bankruptcy cases. As a result of this change, net charge-offs for the year ended December 31, 2004 included a one-time charge-off of $32.6 million for contracts over 120 days delinquent with obligors who had filed for bankruptcy but whose bankruptcy cases had not yet been resolved. Excluding this one-time charge-off, our net charge-offs as a percentage of average owned and average total managed receivables would have been 5.6% and 6.6%, respectively, for the year ended December 31, 2004.

(6)		For purposes of calculating the ratio of earnings to fixed charges, earnings represent (loss) income before income taxes plus fixed charges. Fixed charges consist of total interest expense and one-third of rental expenses, which management believes are representative of the interest component of all operating leases. Earnings, as defined, were insufficient to cover our fixed charges for 2008 and 2007 by $77.8 million and $16.1 million, respectively.

(7)		Total managed net interest margin is the difference between (a) financing revenue, fee and other income earned on our total managed receivables and (b) the cost to fund the receivables and the cost of debt incurred for general corporate purposes. Total managed net interest margin is a calculation that assumes that securitized receivables have not been sold and are still on our consolidated balance sheet. Total managed net interest margin is not a measurement of financial performance determined under generally accepted accounting principles and should not be considered as an alternative to any other measures of performance determined under generally accepted accounting principles. We evaluate the profitability of our financing activities based partly upon the net margin related to our total managed receivables, including owned receivables and sold receivables. We use this information to help us determine the profitability of our finance products and if sufficient spreads exist between our revenues and cost of funds to cover operating expenses and achieve corporate profitability objectives. Additionally, net interest margin on a total managed basis facilitates comparisons of our results with other finance companies that do not securitize their receivables or other finance companies that securitize their receivables in securitization transactions that do not meet the criteria for sales of receivables.

The following is a reconciliation of net interest margin as reflected on our consolidated statements of income to our total managed net interest margin:


	For the Years Ended December 31,
	2008			2007			2006			2005			2004
	(Dollars in thousands)

Net interest margin as reflected on the consolidated statements of income	$	292,108		$	411,230		$	374,411		$	234,959		$	263,922
Less: other interest income		(12,476	)		(35,847	)		(34,875	)		(53,784	)		(103,959	)
Financing revenue on sold receivables		4,538			43,322			128,039			262,691			422,866
Interest expense on sold receivables		(653	)		(7,507	)		(24,627	)		(43,462	)		(67,961	)
Gain (losses) on forward-starting swap agreements		(1,755	)		(7,808	)		691			7,432			24
Premium amortization(4)		12,785			29,379			56,378			83,562			—
Customer fees		13,930			18,856			19,961			13,322			7,340

Total managed net interest margin	$	308,477		$	451,625		$	519,978		$	504,720		$	522,232


ITEM 7.	*MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS*

On December 29, 2008, pursuant to an Agreement and Plan of Merger by and between Triad Financial Corporation and the Company, Triad Financial Corporation merged with and into the Company, with the Company being the entity surviving from that merger. In accordance with Statement of Financial Accounting Standards, or “SFAS”, No. 141, “Business Combinations”, the assets and liabilities of Triad Financial Corporation were transferred to the Company at their historical carrying values on the date of transfer. References to the Company in this document shall mean Triad Financial SM LLC and its predecessor by merger, Triad Financial Corporation.

On December 31, 2008, Triad Holdings Inc. was liquidated and dissolved in accordance with Delaware law.

The statements in the discussion and analysis regarding our expectations of the performance of our business, our liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors.” Our actual results may differ materially from those contained in or implied by any of these forward-looking statements.

General

Historically, we have generated earnings and cash flow primarily from the purchase, origination, retention, subsequent securitization and servicing of retail installment contracts and loans secured by automobiles. We purchased retail installment contracts from franchised and select independent automobile dealerships and originated auto loans directly to consumers. As used in this document, “contracts” include retail installment contracts originated by dealers and purchased by us and note and security agreements evidencing loans made directly by us to consumers.

The Company services a $2.2 billion portfolio of contracts to consumers with limited credit histories, modest incomes or those who have experienced prior credit difficulties, generally referred to as “non-prime” borrowers.

On May 23, 2008, due to economic conditions, the Company ceased accepting credit applications in its dealer originations channel. Approvals previously issued continued to be processed, and qualifying contracts continued to be funded through the close of business on June 23, 2008. The Company incurred $9.6 million of expense during the year ended December 31, 2008 related to the shutdown of the dealer channel comprised primarily of severance, the write-down of certain fixed and other assets and an accrual for future excess facility capacity.

On June 20, 2008, the Company agreed to sell its direct lending business, RoadLoans, to Santander Consumer USA Inc. (“Santander”). The sale was consummated on October 7, 2008. The Company incurred $3.7 million of expense during the year ended December 31, 2008 related to the sale of the direct channel comprised primarily of severance and the write-down of certain fixed assets.

Beginning on May 27, 2008 and continuing through the period preceding the completion of the sale, loans originated by the Company’s RoadLoans division were being sold to Santander. The Company no longer purchases or originates any contracts.

On June 20, 2008, the Company completed a whole loan sale of approximately $632 million of contracts to Santander, effective June 1, 2008. This portfolio was comprised of receivables financed through our warehouse lending facility that met criteria similar to our securitization eligibility criteria, including no receivables more than 30 days past due. The Company continued to service these receivables through August 2, 2008 in return for a servicing fee paid by Santander. The Company recognized a $0.8 million loss on the sale of these receivables during the year ended December 31, 2008.

In October 2008, the Company announced plans to actively market its servicing capabilities to third parties. With the infrastructure for a servicing platform already in place, and the expectation that entities that own or acquire loan portfolios containing obligations secured by motor vehicles may be interested in outsourcing some or all of their servicing activities, we decided to proceed with efforts to market these services to others. The Company had previously embarked on a program to obtain licenses to service loans for others in those states where licensing is necessary in order to service loans for others. During the year ended December 31, 2008, the Company entered into an agreement to remarket repossessed vehicles for eight third-party clients. While it is believed that there is a significant market for the types of services the Company can offer to the holders of such obligations, there are a number of established third-party portfolio servicers already in the market, and there is no assurance that the Company’s efforts in connection with this new venture will be successful.

In November 2008, the Company launched a tender offer to purchase for cash up to $90 million aggregate principal amount of its outstanding senior notes. On December 16, 2008, the Company successfully completed its tender offer and purchased $89.4 million of the senior notes outstanding at a purchase price of $71.5 million plus accrued and unpaid interest of $1.2 million. The Company recognized a $14.6 million gain on the tender offer during the year ended December 31, 2008.

We have periodically sold receivables to securitization trusts, or “Trusts,” that, in turn, sold asset-backed securities to investors. Prior to our May 2005 securitization transaction, all of our securitizations were accounted for as sales in accordance with accounting principles generally accepted in the United States of America, or “GAAP”. Beginning with our May 2005 securitization, we made a decision to alter the structure of our securitization transactions to no longer meet the criteria for sales of auto receivables, but instead to meet the criteria for on-balance sheet reporting. Accordingly, following a securitization accounted for as a secured financing, the receivables and the related securitization indebtedness remained on our balance sheet. We recognize finance revenue and fee income on the receivables and interest expense on the securities issued in the securitization and record a provision for credit losses over the life of the securitization. The principal changes to our securitization structures that resulted in the differing accounting treatment included the right of the trust to enter into interest rate derivative contracts with respect to retained interests and also allowed the servicer to sell charged-off finance receivable contracts. Provisions such as these precluded the use of sale treatment in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.

For all securitizations accounted for as sales, the Company retained certain interests in the sold receivables representing the present value of the estimated future excess cash flows to be received by us over the life of the securitization. Excess cash flows resulted from the difference between the interest received from the obligors on the receivables and the interest paid to investors in the asset-backed securities, net of credit losses and expenses. Excess cash flows from the Trusts were initially utilized to fund credit enhancement requirements in order to attain specific credit ratings for the asset-backed securities issued by the Trusts. Once predetermined credit enhancement requirements were reached and maintained, excess cash flows were distributed to us. In addition to excess cash flows, we earned monthly base servicing fee income of 2.25% per annum on the outstanding principal balance of receivables securitized, or “sold receivables,” and collected other fees such as late charges and extension fees as servicer for those Trusts. The Company called the last of its off-balance sheet securitizations in May 2008.

Critical Accounting Policies and Use of Estimates

We prepare our financial statements in conformity with GAAP, which require management to make certain estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in determining these estimates, actual results reported in future periods may differ from these estimates and could therefore affect the value of our assets and liabilities.

Critical estimates inherent within our financial statements include the allowance for credit losses.

Allowance for Credit Losses

The allowance for credit losses is maintained at a level adequate to cover probable incurred credit losses related to impaired receivables originated subsequent to April 29, 2005 and classified as held for investment as of the date of the financial statements, taking into account the credit quality of the portfolio, historical credit loss trends, trends in projected used car values and general economic factors. We continuously evaluate actual portfolio performance

of our finance receivables as compared to our assumptions. Should we determine that the portfolio performance, including delinquencies, defaults and net charge-offs, is worse than expected, we may be required to increase our allowance for credit losses. This increase in our allowance for credit losses would reduce the carrying value of our finance receivables held for investment and would also result in a higher provision for credit losses in the consolidated statements of operations.

Components of Revenues and Expenses

Most of our revenues are generated from our portfolio of finance receivables and the ancillary fees earned in connection with our servicing activities. Our revenues include financing revenue, other interest income, servicing income and other income. We earn financing revenue from contracts and loans we purchased and originated. Other interest income includes: (1) residual interest income on the retained interest in securitized assets we retain from securitization transactions; and (2) income on our restricted cash accounts. Our servicing income includes: (1) the base servicing fee income we receive from servicing receivables; and (2) the supplemental servicing fee income we receive from servicing receivables. Our other income includes fees we collect on receivables, such as late charges, extension fees, proceeds from sales of gap insurance and extended service contracts, referral fees received from other lenders, payment convenience fees and fees received from Santander pursuant to an administrative services agreement. Our other income also includes gains and losses on our derivative financial instruments, gains and losses related to the repurchase of receivables from gain on sale trusts, our loss on the sale of finance receivables and our gain on the partial redemption of our Senior Notes. Certain of these items comprising other income, including the proceeds from the sales of gap insurance and extended service contracts and referral fees received from other lenders, will no longer be available as a result of our decision to cease lending operations during 2008.

Our costs and expenses consist of interest expense, operating expenses, provision for credit losses and provision for income taxes. Our interest expense is the amount of interest and fees we pay on borrowings used to finance our receivables and working capital needs. Our operating expenses represent costs associated with operating our dealer and direct channels and servicing our receivables, including rent and occupancy expense, compensation expense and servicing costs. Our provision for credit losses represents the charge necessary to maintain our allowance for credit losses at a level considered adequate to cover probable credit losses on receivables that are held for investment and originated subsequent to April 29, 2005. Certain of these interest and operating expenses will no longer be incurred as a result of our decision to cease lending operations during 2008.

Results of Operations

Year Ended December 31, 2008 as Compared to Year Ended December 31, 2007

Our net loss was $111.9 million for the year ended December 31, 2008 as compared to a net loss of $10.6 million for 2007. The higher net loss was primarily due to lower net interest margin combined with higher operating expenses and provision for income taxes, partially offset by a lower provision for credit losses and lower other revenues.

Our results for the year ended December 31, 2008 included the following:


	•	$74.0 million charge to establish a valuation allowance against our tax assets;

	•	$30.4 million goodwill impairment charge;

	•	$15.8 million in losses on our derivative financial instruments;

	•	$13.3 million of expenses related to shutdown of the dealer originations channel and sale of the direct originations channel; and

	•	$14.6 million gain on the partial redemption of our senior notes.

Net Interest Margin

Our revenues are primarily generated from our portfolio of finance receivables and the ancillary fees earned in connection with our servicing activities. Our average owned finance receivables outstanding are summarized as follows:


	For the Years Ended December 31,
	2008		2007
	(Dollars in thousands)

Average owned finance receivables, carrying value	$	2,903,839	$	3,844,915

Average owned finance receivables decreased by 24.5% for the year ended December 31, 2008 as compared to 2007. This decrease was primarily attributable to the decrease in our level of loan originations during 2007 and 2008, culminating in our decision during the second quarter of 2008 to cease all lending activities, combined with the $632 million sale of receivables in June 2008. We purchased and originated $349.5 million of contracts and loans during the year ended December 31, 2008 as compared to $1,346.5 million during 2007.

Net interest margin on our owned finance receivables is summarized as follows:


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Financing income	$	448,616		$	594,051
Other interest income		12,476			35,847
Interest expense		(168,984	)		(218,668	)

Net interest margin	$	292,108		$	411,230

Financing income as a percentage of average owned finance receivables		15.4	%		15.5	%

The 29.0% decrease in net interest margin for the year ended December 31, 2008 as compared to 2007 was due to a decrease in financing income and other interest income, partially offset by a decrease in interest expense. The decrease in financing income was primarily due to a lower average owned receivables balance.

Effective April 30, 2005 in connection with the Acquisition, we adjusted predecessor finance receivables held for investment to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk in connection with the purchase transaction. Financing income was reduced by $12.8 million and $29.4 million of premium amortization for the years ended December 31, 2008 and 2007, respectively, related to these receivables and receivables repurchased from gain on sale trusts. Excluding the premium amortization, the average yield on receivables for the years ended December 31, 2008 and 2007 would have been 15.9% and 16.2%, respectively.

During 2008 and 2007, expected cash flows from predecessor finance receivables held for investment and receivables repurchases from gain on sale trusts were reevaluated and determined to be greater than originally expected. This resulted in a reclassification of cash flows from non-accretable discount to accretable discount. This also resulted in a higher net yield being recognized on these receivables which is expected to continue in future periods.

Other interest income decreased to $12.5 million for the year ended December 31, 2008 as compared to $35.8 million for 2007. This decrease was mainly due to a decrease in residual interest income caused by lower retained interest in securitized asset balances combined with a decrease in interest income received on restricted cash accounts, resulting from declining interest rates.

The decrease in interest expense was primarily due to lower average debt levels. Our effective cost of funds was 5.8% for both the years ended December 31, 2008 and 2007. Average debt outstanding was $2,921.4 million and $3,777.3 million for 2008 and 2007, respectively.

Provision for Credit Losses

Our provision for credit losses was $228.4 million for the year ended December 31, 2008 as compared to $284.5 million for 2007. While our provision for credit losses decreased, it did not decrease as much as expected given the significant decrease in the corresponding receivables balance. This is a result of the current economic conditions, including higher unemployment levels and higher energy prices during the year, and the corresponding affect this is having on our borrowers’ ability to service their debt. Additionally, our provision for credit losses was impacted by an increase in the average age of the portfolio and a decline in the net proceeds from the sale of recovered vehicles sold at auctions, as well as continued higher than expected net charge-offs on our receivables originated during 2006.

Servicing Income

Servicing income decreased to $3.2 million for the year ended December 31, 2008 as compared to $7.8 million for 2007. Servicing income represents servicing fees and late fees collected on sold receivables. The decrease in servicing income for the year ended December 31, 2008 as compared to 2007 was primarily attributable to the declining balance of our sold receivables.

Gain on Partial Redemption of Senior Notes

On December 16, 2008, the Company completed a tender offer and purchased $89.4 million of its senior notes outstanding. The Company recognized a $14.6 million gain on the tender offer during the year ended December 31, 2008.

Other Income (Expense)

Other income (expense) is summarized as follows:


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Customer fees	$	13,930		$	18,856
Losses on derivative financial instruments		(15,799	)		(17,493	)
Other		2,780			(5,305	)

Other income (expense)	$	911		$	(3,942	)

Our other income (expense) includes customer fees we collect on owned finance receivables, such as late charges and extension fees, proceeds from sales of gap insurance and extended service contracts, referral fees received from other lenders, payment convenience fees, and fees received from Santander pursuant to an administrative services agreement. Our other income (expense) also includes gains and losses on our derivative financial instruments, losses related to the repurchase of receivables from gain on sale trusts and our loss on the sale finance receivables. As a result of our decision to cease lending operations, several of these sources of income ceased during the 2008.

Customer fees decreased to $13.9 million for year ended December 31, 2008 as compared to $18.9 million for 2007 primarily due to a decrease in our average owned receivables combined with a decrease in late charges collected attributable to rising delinquencies.

Our derivative financial instruments are recognized on our consolidated balance sheet at fair value with changes in the value recorded in operations as a component of other income (expense). During the year, our derivative financial instruments included forward-starting swap agreements utilized to lock in the cost of funds on outstanding notional amounts of receivables prior to their securitization. Our derivative financial instruments also included interest rate swap agreements utilized to convert variable rate exposure on our 2007 securitization transactions to fixed rates. For the year ended December 31, 2008, our $15.8 million in losses on derivative financial instruments was comprised of $14.0 million in losses on our interest rate swap agreements and $1.8 million in losses on our forward-starting swap agreements. For the year ended December 31, 2007, our $17.5 million in losses on derivative financial instruments was comprised of $9.7 million in losses on our interest rate swap agreements and $7.8 million in losses on our forward-starting swap agreements.

Other is comprised of $2.8 million of income for the year ended December 31, 2008 as compared to $5.3 million of expense for 2007. For the year ended December 31, 2008, other included $5.4 million of administrative fees received from Santander pursuant to an administrative services agreement which was in effect from June 20, 2008 until the sale of Roadloans was completed on October 7, 2008. This other income was partially offset by $3.0 million in losses recorded on the repurchase of receivables from gain on sale trusts during the year ended December 31, 2008 and an $0.8 million loss on sale of finance receivables. For the year ended December 31, 2007, other included $7.0 million in losses recorded on the repurchase of receivables from gain on sale trusts.

Expenses

Operating expenses were $160.2 million for the year ended December 31, 2008 as compared to $146.8 million for 2007. Operating expenses as a percentage of average total managed receivables were 5.5% for the year ended December 31, 2008 as compared to 3.6% for 2007. This increase in operating expenses as a percentage of average total managed receivables for the year ended December 31, 2008 as compared to 2007 was due to an increase in operating expenses combined with a decrease in our average total managed receivables. Our operating expenses for the year ended December 31, 2008 included the following:


	•	$6.1 million charge to compensation and employee benefits representing severance payments to employees impacted by the shutdown of the dealer origination channel and sale of the direct originations channel;

	•	$3.4 million charge to occupancy and equipment representing the write-off of certain fixed assets as a result of the shutdown of the dealer originations channel and sale of direct originations channel;

	•	$2.6 million charge to occupancy and equipment representing an accrual for future excess facility capacity resulting from the shutdown of the dealer originations channel and the sale of $632 million of receivables;

	•	$2.1 million charge to professional services representing legal and professional fees incurred in the termination of existing warehouse and residual lending facilities and the establishment of alternative funding sources;

	•	$30.4 million goodwill impairment charge; and

	•	$1.2 million charge to other expenses representing the write-off of certain other assets as a result of the shutdown of the dealer originations channel and sale of the direct originations channel.

Income Taxes

We recognized an income tax expense of $34.1 million for the year ended December 31, 2008 as compared to tax benefit of $5.5 million for the year ended December 31, 2007. Our effective income tax rate was (43.8)% and 34.3% for the year ended December 31, 2008 and 2007, respectively. Income tax expense for the year ended December 31, 2008 included a $74.0 million valuation allowance established to reduce our tax assets to an amount which is more likely than not to be realized.

Credit Quality

Prior to our decision to cease lending operations, we provided financing in relatively high-risk markets, and, therefore, anticipated a correspondingly higher level of delinquencies and charge-offs.

Provisions for credit losses are charged to operations in amounts sufficient to maintain the allowance for credit losses on the balance sheet at a level considered adequate to cover our estimate of incurred credit losses related to held for investment receivables as of the date of the balance sheet. Receivables held for investment are charged-off to the allowance for credit losses at the earlier of repossession of the collateral or when the account is otherwise deemed uncollectible. Predecessor finance receivables held for investment were adjusted to fair market value in connection with the purchase transaction taking into account future expected credit losses and a required rate of return commensurate with the associated risk.

The following table presents certain data related to our owned finance receivables:


	At December 31,
	2008			2007
	(Dollars in thousands)

Finance receivables held for investment	$	1,865,449		$	3,124,036
Allowance for credit losses		(171,462	)		(230,500	)

Finance receivables held for investment, net of allowance		1,693,987			2,893,536

Allowance for credit losses as a percentage of receivables		9.2	%		7.4	%
Predecessor finance receivables held for investment, net		248,409			475,296
Finance receivables repurchased from gain on sale trusts, net		32,922			123,972

Total owned finance receivables held for investment, net	$	1,975,318		$	3,492,804

The increase in the allowance for credit losses as a percentage of receivables at December 31, 2008 as compared to 2007 was due to the current economic conditions, including higher unemployment levels, and the corresponding affects this is having on our borrowers’ ability to service their debt combined with the continued aging of our owned finance receivables held for investment and higher than expected net charge-offs on our receivables originated during 2006. As of December 31, 2008 and 2007, the finance receivables held for investment are aged, on a weighted average basis, 26.3 months and 14.2 months, respectively.

Finance receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:


	At December 31,
	2008					2007
	Amount		Percent			Amount		Percent
	(Dollars in thousands)

Delinquent contracts:
31 to 60 days	$	287,032		13.2	%	$	377,862		10.0	%
Greater than 60 days		98,600		4.5			156,036		4.1

		385,632		17.7			533,898		14.1
In repossession		14,083		0.6			29,383		0.8

	$	399,715		18.3	%	$	563,281		14.9	%

Delinquencies in our receivables portfolio may vary from period to period based upon credit quality, the average age of the portfolio, seasonality within the calendar year and economic factors. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of a contract and there is a fairly high rate of account movement between current and delinquent status in the portfolio. Total delinquencies were higher at December 31, 2008 as compared to 2007 due to the current economic conditions affecting our borrowers and the $632 million sale of receivables, effective June 1, 2008, none of which were more than 30 days delinquent at the time of sale.

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted, resulting in lower delinquencies. Thereafter, such account’s delinquency status is determined in the same manner as any other account.

We evaluate the results of our extension strategies based upon the portfolio performance on accounts that have been extended versus accounts that have not been extended over the same period of time and as a result of that evaluation, we make periodic adjustments to our extension strategy. We believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Payment extensions as a percentage of owned finance receivables outstanding are summarized as follows:


	At December 31,
	2008			2007
	Percent			Percent

Never extended		51.4	%		73.2	%
Extended:
1-2 times		46.5	%		26.1	%
3-4 times		2.1	%		0.7	%

Total extended		48.6	%		26.8	%

Total		100.0	%		100.0	%

As the finance receivables portfolio ages, more accounts become eligible for extensions. Payment extensions as a percentage of total owned finance receivables increased to 48.6% at December 31, 2008 as compared with 26.8% at December 31, 2007, mainly driven by an increase in 1-2 times payment extensions, which increased to 46.5% December 31, 2008 as compared to 26.1% at December 31, 2007. The increase payment extensions was due to the current economic conditions affecting our borrowers combined with the continued aging of our portfolio and the $632 million sale of receivables, effective June 1, 2008, many of which would not have been eligible for an extension at the time of sale.

We have guidelines concerning when accounts become eligible for extensions, including a requirement that the borrower has made a minimum of six installment payments. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Payment extensions do not have a direct impact on the amount of our finance receivables charged-off and the corresponding credit quality ratios. Payment extensions may, however, impact the timing of these charge-offs in the event a previously extended account is ultimately charged-off. Additionally, the impact of payment extensions is considered in determining the allowance for credit losses and the resulting provision for credit losses.

Charge-off data with respect to our average owned finance receivables is summarized as follows:


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Repossession charge-offs	$	414,165		$	392,026
Less: Sale Proceeds and recoveries		(223,175	)		(229,206	)
Mandatory charge-offs(1)		112,047			146,672

Net charge-offs(2)	$	303,037		$	309,492

Net charge-offs as a percentage of average total owned receivables outstanding		10.4	%		8.0	%
Sales proceeds and recoveries as a percentage of charge-offs		42.4	%		42.5	%


(1)		Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.

(2)		Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Net charge-offs as a percentage of our average owned finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age of the portfolio and economic factors. The increase in annualized net charge-offs as a percentage of average owned finance receivables for the year ended December 31, 2008, as compared with 2007, was due to higher repossession charge-offs, net of sales proceeds and recoveries, combined with the impact of a declining receivables portfolio, partially offset by a decrease in mandatory charge-offs. The increase in repossession charge-offs, net of sales proceeds and recoveries, was due to various factors,

including the current economic conditions affecting our borrowers, increases in the average age of our portfolio, historically high levels of receivables more than 30 days delinquent at December 31, 2007 and continuing throughout 2008 and higher than expected credit losses on receivables originated in 2006. The decrease in mandatory charge-offs was due to the Company assigning accounts for repossession earlier in their delinquency stage and therefore, reducing the number of receivables going to mandatory charge-off.

Total Managed Information

We evaluate the profitability of our financing activities based partly upon our total managed auto finance receivables portfolio, including both owned finance receivables and sold finance receivables. We have historically securitized our receivables in transactions that met the criteria for a sale of such receivables. The net margin and credit quality information presented below on a total managed basis assumes that securitized and sold receivables had not been sold and are still on our consolidated balance sheet. Accordingly, no gain on sale or servicing fee income would have been recognized. Instead, finance charge and fee income would be recognized over the life of the securitized receivables as accrued, and interest expense and other costs related to the asset-backed securities would be recognized as incurred.

We use this information to help us determine the profitability of our finance products and if sufficient spreads exist between our revenues and cost of funds to cover operating expenses and achieve corporate profitability objectives. Additionally, total managed information facilitates comparisons of our results with other finance companies that do not securitize their receivables or other finance companies that securitize their receivables in securitization transactions that do not meet the criteria for sales of receivables. Total managed information is not a measurement of financial performance under GAAP and should not be considered as an alternative to any other measures of performance determined under GAAP.

Our average total managed finance receivables outstanding are summarized as follows:


	For the Years Ended December 31,
	2008		2007
	(Dollars in thousands)

Average owned finance receivables, carrying value	$	2,903,839	$	3,844,915
Average sold finance receivables		30,133		274,668

Average total managed finance receivables	$	2,933,972	$	4,119,583

Total Managed Net Interest Margin

Net interest margin for our total managed receivables portfolio are summarized as follows:


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Financing income and customer fees	$	479,869		$	685,608
Interest expense		(171,392	)		(233,983	)

Net interest margin	$	308,477		$	451,625

Reconciliation of net interest margin as reflected in our consolidated statements of income to total managed net interest margin is summarized as follows:


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Net margin as reflected on the consolidated statements of income	$	292,108		$	411,230
Other interest income		(12,476	)		(35,847	)
Financing revenue on sold receivables		4,538			43,322
Interest expense on sold receivables		(653	)		(7,507	)
Losses on forward-starting swap agreements		(1,755	)		(7,808	)
Premium amortization		12,785			29,379
Customer fees		13,930			18,856

Total managed net interest margin	$	308,477		$	451,625

Net interest margin as a percentage of average total managed receivables is summarized as follows:


	For the Years Ended December 31,
	2008			2007

Financing income and customer fees		16.3	%		16.7	%
Interest expense		(5.8	)		(5.7	)

Net interest margin as a percentage of average total managed receivables		10.5	%		11.0	%

Net interest margin as a percentage of average total managed receivables decreased to 10.5% for the year ended December 31, 2008 as compared to 11.0% for 2007. This decrease in net interest margin was primarily due to lower levels of premium amortization and customer fees, partially offset by lower losses on our forward-starting swap agreements.

Total Managed Credit Quality

Certain data related to our total managed receivables finance receivable portfolio are summarized as follows:


	At December 31, 2008
	Owned		Sold		Total Managed
	(Dollars in thousands)

Owned finance receivables, unpaid principal balance	$	2,172,559	$	—	$	2,172,559
Sold finance receivables		—		—		—

Total managed finance receivables	$	2,172,559	$	—	$	2,172,559

Number of outstanding contracts		183,321		—		183,321

Average principal amount of outstanding contracts (in dollars)	$	11,851	$	—	$	11,851


	At December 31, 2007
	Owned		Sold		Total Managed
	(Dollars in thousands)

Owned finance receivables, unpaid principal balance	$	3,774,481	$	—	$	3,774,481
Sold finance receivables		—		94,097		94,097

Total managed finance receivables	$	3,774,481	$	94,097	$	3,868,578

Number of outstanding contracts		271,384		11,886		283,270

Average principal amount of outstanding contracts (in dollars)	$	13,908	$	7,917	$	13,657

Receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:


	At December 31, 2008
	Owned					Sold				Total Managed
	Amount		Percent			Amount		Percent		Amount		Percent
	(Dollars in thousands)

Delinquent contracts:
31 to 60 days	$	287,032		13.2	%	$	—		—	$	287,032		13.2	%
Greater than 60 days		98,600		4.5			—		—		98,600		4.5

		385,632		17.7			—		—		385,632		17.7
In repossession		14,083		0.6			—		—		14,083		0.6

	$	399,715		18.3	%	$	—		—	$	399,715		18.3	%


	At December 31, 2007
	Owned					Sold					Total Managed
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)

Delinquent contracts:
31 to 60 days	$	377,862		10.0	%	$	12,599		13.4	%	$	390,461		10.1	%
Greater than 60 days		156,036		4.1			5,168		5.5			161,204		4.2

		533,898		14.1			17,767		18.9			551,665		14.3
In repossession		29,383		0.8			1,768		1.9			31,151		0.8

	$	563,281		14.9	%	$	19,535		20.8	%	$	582,816		15.1	%

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted. Thereafter, such account is aged based on the timely payment of future installments in the same manner as any other account, resulting in lower delinquencies.

The following is a summary of payment extensions as a percentage of owned, sold and total managed receivables outstanding:


	At December 31, 2008
	Owned			Sold			Total Managed

Never extended		51.4	%		—	%		51.4	%
Extended:
1-2 times		46.5	%		—	%		46.5	%
3-4 times		2.1	%		—	%		2.1	%

Total extended		48.6	%		—	%		48.6	%

Total		100.0	%		—	%		100.0	%


	At December 31, 2007
	Owned			Sold			Total Managed

Never extended		73.2	%		46.1	%		72.6	%
Extended:
1-2 times		26.1	%		47.3	%		26.6	%
3-4 times		0.7	%		6.6	%		0.8	%

Total extended		26.8	%		53.9	%		27.4	%

Total		100.0	%		100.0	%		100.0	%

As the finance receivables portfolio ages, more accounts become eligible for extensions. Payment extensions as a percentage of total managed finance receivables increased to 48.6% at December 31, 2008 as compared with 26.8% at December 31, 2007, mainly driven by an increase in 1-2 times payment extensions, which increased to 46.5% December 31, 2008 as compared to 26.1% at December 31, 2007. The increase payment extensions was due to the current economic conditions affecting our borrowers combined with the continued aging of our portfolio and the $632 million sale of receivables, effective June 1, 2008, many of which would not have been eligible for an extension at the time of sale.

Charge-off data with respect to our finance receivables portfolio is summarized as follows:


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Owned:
Repossession charge-offs	$	414,165		$	392,026
Less: Sale Proceeds and recoveries		(223,175	)		(229,206	)
Mandatory charge-offs(1)		112,047			146,672

Net charge-offs(2)	$	303,037		$	309,492


	For the Years Ended December 31,
	2008			2007
	(Dollars in thousands)

Sold:
Charge-offs	$	5,537		$	38,471
Less: Sale Proceeds and recoveries		(2,686	)		(20,289	)
Mandatory charge-offs(1)		—			—

Net charge-offs	$	2,851		$	18,182

Total Managed:
Repossession charge-offs	$	419,702		$	430,497
Less: Sale Proceeds and recoveries		(225,861	)		(249,495	)
Mandatory charge-offs(1)		112,047			146,672

Net charge-offs	$	305,888		$	327,674

Net charge-offs as a percentage of average total managed receivables outstanding		10.4	%		8.0	%
Sale proceeds and recoveries as a percentage of charge-offs		42.5	%		43.2	%


(1)		Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.

(2)		Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Net charge-offs as a percentage of our average total managed finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age of the portfolio and economic factors. The increase in net charge-offs as a percentage of average total managed finance receivables for the year ended December 31, 2008, as compared with 2007, was due to higher repossession charge-offs, net of sales proceeds and recoveries, combined with the impact of a declining receivables portfolio, partially offset by a decrease in mandatory charge-offs. The increase in repossession charge-offs, net of sales proceeds and recoveries, was due to various factors, including the current economic conditions affecting our borrowers, increases in the average age of our portfolio, historically high levels of receivables more than 30 days delinquent at December 31, 2007 and continuing throughout 2008 and higher than expected credit losses on receivables originated in 2006. The decrease in mandatory charge-offs was due to the Company assigning accounts for repossession earlier in their delinquency stage and therefore, reducing the number of receivables going to mandatory charge-off.

Year Ended December 31, 2007 as Compared to Year Ended December 31, 2006

Our net loss was $10.6 million for the year ended December 31, 2007 as compared to net income of $13.7 million for 2006. The decrease in net income was primarily due to a higher provision for credit losses, a decline in revenue from other sources and higher operating expenses partially offset by higher net interest margin. Our 2007 results included $17.5 million in losses on our derivative financial instruments and $5.3 million in expenses related to the transition of certain functions to our North Richland Hills, Texas facility.

Net Interest Margin

Our revenues are primarily generated from the purchase, origination, retention, subsequent securitization and servicing of auto receivables. Our average owned finance receivables outstanding are summarized as follows:


	For the Years Ended December 31,
	2007		2006
	(Dollars in thousands)

Average owned finance receivables, carrying value	$	3,844,915	$	3,498,717

Average owned finance receivables increased by 9.9% for the year ended December 31, 2007 as compared to 2006. This increase was primarily attributable to an increased level of loan originations during 2006. We purchased and originated $1,346.5 million of contracts during the year ended December 31, 2007 as compared to $2,650.3 million during 2006. This decrease in originations was primarily due to lower levels of originations in our dealer channel. In response to higher than expected losses on receivables originated during 2006, we modified our contract origination strategy to better manage our credit risk, which resulted in lower volume levels during the last quarter of 2006 and 2007.

The average new contract size was $18,793 for the year ended December 31, 2007 as compared to $18,619 for the year ended December 31, 2006. The average annual percentage rate on contracts purchased and originated was 14.7% and 17.2% during the years ended December 31, 2007 and 2006, respectively. This decrease was due to an increased concentration of contracts from our direct channel during 2007, which had a lower weighted-average coupon. Our yields were also impacted by the implementation of new proprietary scorecards for the direct channel during the first quarter of 2007, combined with new pricing strategies within the direct channel designed to attract customers with higher expected credit quality.

Net interest margin on our owned finance receivables is summarized as follows:


	For the Years Ended December 31,
	2007			2006
	(Dollars in thousands)

Financing income	$	594,051		$	542,465
Other interest income		35,847			34,875
Interest expense		(218,668	)		(202,929	)

Net interest margin	$	411,230		$	374,411

Financing income as a percentage of average owned finance receivables		15.5	%		15.5	%

The 9.8% increase in net interest margin for the year ended December 31, 2007 as compared to 2006 was due to an increase in financing income and other interest income, partially offset by an increase in interest expense.

The increase in financing income was due to increase in our average owned receivables and a lower level of premium amortization, partially offset by a decrease in yields on new contract originations. Effective April 30, 2005, we adjusted predecessor finance receivables held for investment to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk in connection with the purchase transaction. Financing income was reduced by $29.4 million and $56.4 million of premium amortization for the year ended December 31, 2007 and 2006, respectively, related to these receivables and receivables repurchased from gain on sale trusts. Excluding the premium amortization, the average yield on receivables for the years ended December 31, 2007 and 2006 would have been 16.2% and 17.1%, respectively.

During 2007 and 2006, expected cash flows from predecessor finance receivables held for investment and receivables repurchases from gain on sale trusts were reevaluated and determined to be greater than originally expected. This resulted in a reclassification of cash flows from nonaccretable discount to accretable discount. This also resulted in a higher net yield being recognized on these receivables which is expected to continue in future periods.

Other interest income increased to $35.8 million for the year ended December 31, 2007 as compared to $34.9 million for 2006. This increase was mainly due to the realization of $14.2 million in previously unrealized gains on our retained interest in securitized assets, combined with an increase in interest income received on restricted cash accounts, partially offset by a decrease in residual interest income caused by lower retained interest in securitized asset balances.

The increase in interest expense was due to both a higher cost of funds and higher average debt levels. Our effective cost of funds was 5.8% for the year ended December 31, 2007 as compared to 5.7% for the year ended December 31, 2006. This increase in our effective cost of funds was primarily due to higher interest rates on our 2006 and 2007 securitization transactions. Average debt outstanding was $3,777.3 million and $3,559.2 million for 2007 and 2006, respectively.

Provision for Credit Losses

Our provision for credit losses was $284.5 million for the year ended December 31, 2007 as compared to $256.8 million for 2006. Our provision for credit losses increased as a result of the increase in size of the portfolio of finance receivables originated subsequent to the Acquisition, an increase in the average age of the portfolio and higher net charge-offs, partially offset by lower net charge-offs on our recent direct channel originations with higher expected credit quality. The increase in net charge-offs is attributable to a number of factors including higher than expected losses on receivables originated during 2006, the impact of a larger percentage of those 2006 receivables reaching the age at which higher delinquencies and losses are more likely to occur and higher mandatory charge-offs.

Servicing Income

Servicing income decreased to $7.8 million for the year ended December 31, 2007 as compared to $22.0 million for the year ended December 31, 2006. Servicing income represents servicing fees and late fees collected on sold receivables. The decrease in servicing income for the year ended December 31, 2007 as compared to the year ended December 31, 2006 was primarily attributable to the declining balance of our sold receivables.

Other Income (Expense)

Other income (expense) is summarized as follows:


	For the Years Ended December 31,
	2007			2006
	(Dollars in thousands)

Customer fees	$	18,856		$	19,961
Gains (losses) on derivative financial instruments		(17,493	)		691
Other		(5,305	)		950

Other income (expense)	$	(3,942	)	$	21,602

Customer fees decreased to $18.9 million for year ended December 31, 2007 as compared to $20.0 million for the year ended December 31, 2006 primarily due to a decrease in late charges collected attributable to rising delinquencies.

Our derivative financial instruments are recognized on our consolidated balance sheet at fair value with changes in the value recorded in earnings as a component of other income (expense). Our derivative financial instruments include forward-starting swap agreements utilized to lock in the cost of funds on outstanding notional amounts of receivables prior to their securitization. During 2007, our derivative financial instruments also included interest rate swap agreements utilized to convert variable rate exposure on our 2007 securitization transactions to fixed rates. For the year ended December 31, 2007, our $17.5 million in losses on derivative financial instruments

was comprised of $9.7 million in losses on our interest rate swap agreements and $7.8 million in losses on our forward-starting swap agreements. These losses were a result of a declining interest rate environment throughout the latter half of the year. For the year ended December 31, 2006, our $0.7 million in gains on derivative financial instruments were comprised entirely of gains on our forward-starting swap agreements.

Other decreased to an expense of $5.3 million for the year ended December 31, 2007 as compared to income of $1.0 million for the year ended December 31 2006 primarily due to a $7.0 million loss recorded on the repurchase of receivables from gain on sale trusts during 2007.

Expenses

Operating expenses were $146.8 million for the year ended December 31, 2007 as compared to $138.6 million for the year ended December 31, 2006. The $8.2 million increase in operating expenses for the year ended December 31, 2007 as compared to 2006 was due to higher levels of compensation and employee benefits and advertising expenses, partially offset by a decrease in system and data processing expenses. Additionally, operating expenses for the year ended December 31, 2007 included $5.3 million in expenses related to the transition of certain functions to our North Richland Hills, Texas facility and a $1.6 million payment to a former chief executive officer for the repurchase of his option shares vested as of his July 2005 termination date. Operating expenses for the year ended December 31, 2006 included a $2.0 million charge associated with sale of extended service contracts. Annualized operating expenses as a percentage of average total managed receivables were 3.6% for the year ended December 31, 2007 as compared to 3.3% for the year ended December 31, 2006.

Income Taxes

We recognized an income tax benefit of $5.5 million for the year ended December 31, 2007 as compared to tax expense of $8.9 million for the year ended December 31, 2006. Our effective income tax rate was 34.3% and 39.6% for the year ended December 31, 2007 and 2006, respectively. Our income tax benefit for the year ended December 31, 2007 was partially offset by $0.7 million recognized for the potential payment of interest.

Credit Quality

We provide financing in relatively high-risk markets, and, therefore, anticipate a corresponding higher level of delinquencies and charge-offs.

The following table presents certain data related to our owned finance receivables:


	At December 31,
	2007			2006
	(Dollars in thousands)

Finance receivables held for investment	$	3,124,036		$	3,045,938
Allowance for credit losses		(230,500	)		(195,000	)

Finance receivables held for investment, net of allowance		2,893,536			2,850,938

Allowance for credit losses as a percentage of receivables		7.4	%		6.4	%
Predecessor finance receivables held for investment, net		475,296			849,246
Finance receivables repurchased from gain on sale trusts, net		123,972			62,659

Total owned finance receivables held for investment, net	$	3,492,804		$	3,762,843

The increase in the allowance for credit losses as a percentage of receivables at December 31, 2007 as compared to December 31, 2006 was due to the continued aging of our owned finance receivables held for investment. As of December 31, 2007 and 2006, the finance receivables held for investment are aged, on a weighted average basis, 14.2 months and 8.0 months, respectively.

Finance receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:


	At December 31,
	2007					2006
	Amount		Percent			Amount		Percent
	(Dollars in thousands)

Delinquent contracts:
31 to 60 days	$	377,862		10.0	%	$	269,861		6.7	%
Greater than 60 days		156,036		4.1			97,332		2.4

		533,898		14.1			367,193		9.1
In repossession		29,383		0.8			17,072		0.4

	$	563,281		14.9	%	$	384,265		9.5	%

Delinquencies in our receivables portfolio may vary from period to period based upon credit quality, the average age of the portfolio, seasonality within the calendar year and economic factors. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of a contract and there is a fairly high rate of account movement between current and delinquent status in the portfolio. Total delinquencies were higher at December 31, 2007 as compared to December 31, 2006 due, in part, to an increase in the average age of our portfolio. Specifically, as the receivables originated in 2006 increase in age, a larger percentage of that vintage is reaching the stage at which higher delinquencies and losses are more likely to occur. Additional reasons for the rising delinquencies include macroeconomic factors, servicing practices and credit characteristics of the portfolio.

Payment extensions as a percentage of owned finance receivables outstanding are summarized as follows:


	At December 31,
	2007			2006
	Percent			Percent

Never extended		73.2	%		83.3	%
Extended:
1-2 times		26.1	%		16.4	%
3-4 times		0.7	%		0.3	%

Total extended		26.8	%		16.7	%

Total		100.0	%		100.0	%

As the finance receivables portfolio ages, more accounts become eligible for extensions. Payment extensions as a percentage of total owned finance receivables increased to 26.8% at December 31, 2007 as compared with 16.7% at December 31, 2006, mainly driven by an increase in 1-2 times payment extensions, which increased to 26.1% at December 31, 2007 as compared to 16.4% at December 31, 2006. We have guidelines concerning when accounts become eligible for extensions, including a requirement that the borrower has made a minimum of six installment payments. At December 31, 2007, nearly all of the finance receivable accounts originated during 2006 were extension-eligible. As a result, a greater proportion of extensions were granted on accounts originated in 2006 than to those accounts originated in other years. This factor, as well as the increase in the average age of the overall portfolio, contributed to the increase in the number of extensions granted. In addition, we adopted a strategy to increase the number of extensions granted as our historical data indicated that contracts extended are more likely than not to result in additional collections over the life of the contract. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Charge-off data with respect to our average owned finance receivables is summarized as follows:


	For the Years Ended December 31,
	2007			2006
	(Dollars in thousands)

Repossession charge-offs	$	392,026		$	269,935
Less: Sale Proceeds and recoveries		(229,206	)		(160,422	)
Mandatory charge-offs(1)		146,672			83,000

Net charge-offs(2)	$	309,492		$	192,513

Net charge-offs as a percentage of average total owned receivables outstanding		8.0	%		5.5	%
Sales proceeds and recoveries as a percentage of charge-offs		42.5	%		45.5	%


(1)		Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.

(2)		Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Annualized net charge-offs as a percentage of our average owned finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age of the portfolio and economic factors. The increase in annualized net charge-offs as a percentage of average owned finance receivables to 8.0% for the year ended December 31, 2007 as compared to 5.5% for the year ended December 31, 2006 was due to higher charge-offs and a decrease in recoveries as a percentage of charge-offs. The increase in charge-offs was due to an increase in the average age of our portfolio, higher than expected credit losses on receivables originated in 2006 and higher mandatory charge-offs. The increase in mandatory charge-offs was due to, among other things, an increase in the average days to repossess, which resulted in a greater percentage of accounts reaching 120 days’ delinquency prior to the recovery of the collateral. The decrease in recoveries as a percentage of charge-offs was primarily due to a higher level of mandatory charge-offs.

Total Managed Information

credit quality information presented below on a total managed basis assumes that securitized and sold receivables had not been sold and are still on our consolidated balance sheet. Accordingly, no gain on sale or servicing fee income would have been recognized. Instead, finance charge and fee income would be recognized over the life of the securitized receivables as accrued, and interest expense and other costs related to the asset-backed securities would be recognized as incurred.

We use this information to help us to determine the profitability of our finance products and if sufficient spreads exist between our revenues and cost of funds to cover operating expenses and achieve corporate profitability objectives. Additionally, total managed information facilitates comparisons of our results with other finance companies that do not securitize their receivables or other finance companies that securitize their receivables in securitization transactions that do not meet the criteria for sales of receivables. Total managed information is not a measurement of financial performance under GAAP and should not be considered as an alternative to any other measures of performance determined under GAAP.

Beginning with our May 2005 securitization transaction, we altered the structure of our securitization transactions to no longer meet the criteria for sales of auto receivables, but instead to meet the criteria for on-balance sheet reporting. Accordingly, following a securitization accounted for as a secured financing, the receivables and the related securitization indebtedness will remain on our balance sheet. Additionally, we will recognize finance revenue and fee income on the receivables and interest expense on the securities issued in the securitization and record a provision for credit losses over the life of the securitization. As a result of this change, our provision for credit losses and our net margin increased significantly, with our provision for credit losses increasing initially at a greater rate than our net margin because we began recording a provision for credit losses upon the purchase of each contract. In addition, our securitization income decreased and net income initially decreased, with no change to our cash flows, as a result of this accounting change.

Our average total managed finance receivables outstanding are summarized as follows:


	For the Years Ended December 31,
	2007		2006
	(Dollars in thousands)

Average owned finance receivables, carrying value	$	3,844,915	$	3,498,717
Average sold finance receivables		274,668		765,416

Average total managed finance receivables	$	4,119,583	$	4,264,133

Total Managed Net Interest Margin

Net interest margin for our total managed receivables portfolio are summarized as follows:


	For the Years Ended December 31,
	2007			2006
	(Dollars in thousands)

Financing income and customer fees	$	685,608		$	746,843
Interest expense		(233,983	)		(226,865	)

Net interest margin	$	451,625		$	519,978

Reconciliation of net interest margin as reflected in our consolidated statements of income to total managed net interest margin is summarized as follows:


	For the Years Ended December 31,
	2007			2006
	(Dollars in thousands)

Net margin as reflected on the consolidated statements of income	$	411,230		$	374,411
Other interest income		(35,847	)		(34,875	)
Financing revenue on sold receivables		43,322			128,039
Interest expense on sold receivables		(7,507	)		(24,627	)
Gain (losses) on forward-starting swap agreements		(7,808	)		691
Premium amortization		29,379			56,378
Customer fees		18,856			19,961

Total managed net interest margin	$	451,625		$	519,978

Net interest margin as a percentage of average total managed receivables is summarized as follows:


	For the Years Ended December 31,
	2007			2006

Financing income and customer fees		16.6	%		17.5	%
Interest expense		(5.7	)		(5.3	)

Net interest margin as a percentage of average total managed receivables		11.0	%		12.2	%

Net interest margin as a percentage of average total managed receivables decreased to 11.0% for the year ended December 31, 2007 as compared to 12.2% for the year ended December 31, 2006. This decrease in net interest margin was due to a decrease in yield on receivables combined with an increase in average cost of funds. The decrease in yield was mainly due to a greater volume of loans in our direct channel to customers with higher expected credit quality. The increase in our cost of funds was primarily due to higher interest rates on our 2006 and 2007 securitization transactions and higher losses on our interest rate swaps. Excluding gain (losses) on our forward- starting swap agreements, annualized net interest margin as a percentage of average total managed receivables would have been 11.2% for the year ended December 31, 2007 as compared to 12.2% for the year ended December 31, 2006.

Total Managed Credit Quality

We have periodically sold receivables in securitization transactions to Trusts and retained an interest in the receivables sold in the form of retained interest in securitized assets. Retained interests in securitized assets are reflected on our balance sheet at fair value, calculated based upon the present value of estimated excess future cash flows from the Trusts using, among other assumptions, probable future cumulative credit losses on the receivables sold. Charge-offs of receivables that have been sold to Trusts decrease the amount of excess future cash flows from the Trusts. If such charge-offs are expected to exceed our original probable cumulative credit losses, the fair value of retained interest in securitized assets could be written down through an impairment charge to earnings.

Certain data related to our total managed receivables finance receivable portfolio are summarized as follows:


	At December 31, 2007
	Owned		Sold		Total Managed
	(Dollars in thousands)

Owned finance receivables, unpaid principal balance	$	3,774,481	$	—	$	3,774,481
Sold finance receivables		—		94,097		94,097

Total managed finance receivables	$	3,774,481	$	94,097	$	3,868,578

Number of outstanding contracts		271,384		11,886		283,270

Average principal amount of outstanding contracts (in dollars)	$	13,908	$	7,917	$	13,657


	At December 31, 2006
	Owned		Sold		Total Managed
	(Dollars in thousands)

Owned finance receivables, unpaid principal balance	$	4,032,551	$	—	$	4,032,551
Sold finance receivables		—		484,818		484,818

Total managed finance receivables	$	4,032,551	$	484,818	$	4,517,369

Number of outstanding contracts		264,559		55,802		320,361

Average principal amount of outstanding contracts (in dollars)	$	15,243	$	8,688	$	14,101

Receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:


	At December 31, 2007
	Owned					Sold					Total Managed
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)

Delinquent contracts:
31 to 60 days	$	377,862		10.0	%	$	12,599		13.4	%	$	390,461		10.1	%
Greater than 60 days		156,036		4.1			5,168		5.5			161,204		4.2

		533,898		14.1			17,767		18.9			551,665		14.3
In repossession		29,383		0.8			1,768		1.9			31,151		0.8

	$	563,281		14.9	%	$	19,535		20.8	%	$	582,816		15.1	%


	At December 31, 2006
	Owned					Sold					Total Managed
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)

Delinquent contracts:
31 to 60 days	$	269,861		6.7	%	$	51,827		10.7	%	$	321,688		7.1	%
Greater than 60 days		97,332		2.4			17,970		3.7			115,302		2.6

		367,193		9.1			69,797		14.4			436,990		9.7
In repossession		17,072		0.4			4,819		1.0			21,891		0.5

	$	384,265		9.5	%	$	74,616		15.4	%	$	458,881		10.2	%

Delinquencies in our total managed receivables portfolio may vary from period to period based upon credit quality, the average age of the portfolio, seasonality within the calendar year and economic factors. Delinquencies for our total managed portfolio were higher at December 31, 2007 as compared to December 31, 2006 due, in part,

to an increase in the average age of our portfolio. Specifically, as the receivables originated in 2006 increase in age, a larger percentage of that vintage is reaching the stage at which higher delinquencies and losses are more likely to occur. Additional reasons for the rising delinquencies include macroeconomic factors, servicing practices and credit characteristics of the portfolio.

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted. Thereafter, such account is aged based on the timely payment of future installments in the same manner as any other account, resulting in lower delinquencies.

The following is a summary of payment extensions as a percentage of owned, sold and total managed receivables outstanding:


	At December 31, 2007
	Owned			Sold			Total Managed

Never extended		73.2	%		46.1	%		72.6	%
Extended:
1-2 times		26.1	%		47.3	%		26.6	%
3-4 times		0.7	%		6.6	%		0.8	%

Total extended		26.8	%		53.9	%		27.4	%

Total		100.0	%		100.0	%		100.0	%


	At December 31, 2006
	Owned			Sold			Total Managed

Never extended		83.3	%		53.1	%		80.1	%
Extended:
1-2 times		16.4	%		43.8	%		19.3	%
3-4 times		0.3	%		3.1	%		0.6	%

Total extended		16.7	%		46.9	%		19.9	%

Total		100.0	%		100.0	%		100.0	%

As of December 31, 2007 and 2006, the total managed finance receivables are aged, on a weighted average basis, 19.4 months and 15.6 months, respectively. As the total managed finance receivables portfolio ages, more accounts become eligible for extensions. We have guidelines concerning when accounts become eligible for extensions, including a requirement that the borrower has made a minimum of six installment payments. At December 31, 2007, nearly all of the finance receivable accounts originated during 2006 were extension-eligible. As a result, a greater proportion of extensions were granted on accounts originated in 2006 than to those accounts originated in other years. This factor, as well as the increase in the average age of the overall portfolio, contributed to the increase in the number of extensions granted. In addition, we adopted a strategy to increase the number of extensions granted as our historical data indicated that contracts extended are more likely than not to result in additional collections over the life of the contract. At December 31, 2007 and December 31, 2006, our sold receivables portfolio was more seasoned than our owned receivables and therefore, had a higher level of extensions. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Charge-off data with respect to our finance receivables portfolio is summarized as follows:


	For the Years Ended December 31,
	2007			2006
	(Dollars in thousands)

Owned:
Repossession charge-offs	$	392,026		$	269,935
Less: Sale Proceeds and recoveries		(229,206	)		(160,422	)
Mandatory charge-offs(1)		146,672			83,000

Net charge-offs(2)	$	309,492		$	192,513

Sold:
Charge-offs	$	38,471		$	109,092
Less: Sale Proceeds and recoveries		(20,289	)		(55,213	)
Mandatory charge-offs(1)		—			—

Net charge-offs	$	18,182		$	53,879

Total Managed:
Repossession charge-offs	$	430,497		$	379,027
Less: Sale Proceeds and recoveries		(249,495	)		(215,635	)
Mandatory charge-offs(1)		146,672			83,000

Net charge-offs	$	327,674		$	246,392

Net charge-offs as a percentage of average total managed receivables outstanding		8.0	%		5.8	%
Sale proceeds and recoveries as a percentage of charge-offs		43.2	%		46.7	%


(1)		Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.

(2)		Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Net charge-offs as a percentage of our average total managed finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age of the portfolio and economic factors. The increase in annualized net charge-offs as a percentage of average total managed finance receivables to 8.0% for the year ended December 31, 2007 as compared to 5.8% for the year ended December 31, 2006 was due to higher charge-offs and a decrease in recoveries as a percentage of charge-offs. The increase in charge-offs was due to an increase in the average age of our portfolio, higher than expected credit losses on receivables originated in 2006 and higher mandatory charge-offs. The increase in mandatory charge-offs was due to, among other things, an increase in the average days to repossess which resulted in a greater percentage of accounts reaching 120 days’ delinquency prior to the recovery of the collateral. The decrease in recoveries as a percentage of charge-offs was primarily due to a higher level of mandatory charge-offs.

Liquidity and Capital Resources

General

Our primary sources of cash are cash flows from operations, collections on our finance receivables, borrowings under our promissory note, and prior to June 2008, our warehouse and residual credit facilities. Our primary uses of cash are operating costs and expenses, funding credit enhancement requirements for securitization transactions, debt service requirements and prior to June 2008, purchases and originations of receivables.

On December 31, 2008, the Company’s parent, Triad Financial Holdings LLC, purchased 17.0 million of Series 1 preferred units of the Company for $17.0 million. The preferred units carry a coupon of 15% per annum, payable quarterly. The preferred units are pledged as collateral for notes issued by Triad Financial Holdings LLC and payable to Hunter’s Glen Ford, Ltd. and certain entities controlled by GTCR Golder Rauner II, L.L.C. The notes have a demand feature which is triggered when the principal value of the assets serviced by the Company, as defined, falls below $2 billion. On February 27, 2009, 10.0 million units of the Series 1 Preferred Units were redeemed at par; the remaining units were redeemed at par on March 17, 2009.

Net cash provided by operating activities was $221.4 million, $285.4 million, and $252.4 million in 2008, 2007 and 2006, respectively. Cash flows from operating activities are affected by net (loss) income as adjusted for non-cash items, including depreciation and amortization, provisions for credit losses, deferred income taxes, accretion of present value discount, amortization of purchase premiums, impairment charges and gains and losses. The $221.4 million of cash flows provided by operating activities for the year ended December 31, 2008 was primarily due to a net loss of $111.9 million as adjusted by $228.4 million of provision for credit losses, $90.3 million deferred tax expense and $30.4 million goodwill impairment. The $285.4 million of cash flows provided by operating activities for the year ended December 31, 2007 was primarily due to a net loss of $10.6 million as adjusted by $284.5 million of provision for credit losses. The $252.4 million of cash flows provided by operating activities for the year ended December 31, 2006 was primarily due to $13.7 million of net income as adjusted by $256.8 million of provision for credit losses.

Net cash provided by (used in) investing activities was $1,347.8 million, $(1.1) million, and $(1,485.5) million in 2008, 2007 and 2006, respectively. Cash flows from investing activities are highly dependent upon purchases of and collections on finance receivables held for investment. During the year ended December 31, 2008, net cash provided by investing activities included $1,101.4 million in collections on finance receivables held for investment and $615.3 million in sales of finance receivables, partially offset by $352.0 million related to purchases of finance receivables held for investment. During the year ended December 31, 2007, net cash used in investing activities included $1,479.1 million in collections on finance receivables held for investment, offset by $1,359.9 million related to purchases of finance receivables held for investment. During the year ended December 31, 2006, net cash used in investing activities included $1,289.1 million in collections on finance receivables held for investment, offset by $2,662.2 million related to purchases of finance receivables held for investment.

Net cash (used in) provided by financing activities was $(1,575.2) million, $(292.2) million, and $1,248.2 million in 2008, 2007 and 2006, respectively. Cash flows from financing activities reflect the net change in amounts required to be borrowed under our various revolving and term borrowing facilities. The $1,575.2 million of cash used in financing activities for the year ended December 31, 2008 was due to $1,184.6 million in payments on securitization notes, $334.4 million in net change in warehouse and residual credit facilities and $72.5 million in redemption of senior notes, partially offset by $17.0 million in proceeds from issuance of preferred units. The $292.2 million of cash used in financing activities for the year ended December 31, 2007 was due to $1,436.1 million in payments on securitization notes, $194.7 million in net change in warehouse and residual credit facilities and $30.0 million in redemption of preferred stock, partially offset by $1,373.4 million in proceeds from issuance of securitization notes. The $1,248.2 million of cash provided by financing activities for the year ended December 31, 2006 was due to $2,830.0 million in proceeds from issuance of securitization notes and $30.0 million in proceeds from issuance of preferred stock, partially offset by $1,144.0 million in payments on securitization notes and $406.7 million in net change in warehouse and residual credit facilities.

Borrowing Facilities

Prior to our decision to cease lending operations, we had two warehouse lending facilities and one residual facility. We used borrowings under our warehouse facility with Citigroup Global Markets Realty Corp., (or “CGMRC”) to fund our ongoing purchase and origination of contracts and loans. The residual facility, also extended by CGMRC, provided us with working capital. Special purpose subsidiaries were the borrowers under these facilities.

On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provided up to $500.0 million of funding for automobile retail installment sales contract receivables originated or purchased by us. The facility had a two year commitment. The Company never utilized this warehouse facility, and it was terminated by mutual agreement in May 2008.

Following the sale of receivables to Santander on June 20, 2008, the Company satisfied its obligations under our warehouse and residual loan facilities with CGMRC. As a result of this, along with the termination of the warehouse facility with Barclays Bank PLC in May 2008, the Company has no remaining obligations to its warehouse lenders.

On June 17, 2008, the Company entered into a $40.0 million unsecured promissory note with Hunter’s Glen/Ford Ltd. and an additional $40.0 million unsecured promissory note with GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P. These promissory notes accrue interest at 15% and the interest shall be payable quarterly, on the last day of each March, June, September and December while the notes are outstanding. Each promissory note is due and payable the earlier of (1) three years of the date of its issuance, and (2) fourteen days after receipt of demand for payment and the entering into of comparable facilities with the lenders. There have been no draws on this facility subsequent to June 20, 2008 and there were no amounts outstanding as of December 31, 2008.

It is anticipated that in early 2009, the $80.0 million unsecured promissory notes will be replaced by a secured credit facility between Hunter’s Glen/Ford Ltd. and certain entities controlled by GTCR Golder Rauner II, L.L.C., as lenders, and Triad Financial Residual Special Purpose LLC, as borrower. The credit facility will be secured by the residual interests in our securitization trusts.

We believe that our cash flows from operations combined with collections on our finance receivables and borrowings under our promissory notes and residual credit facility will be sufficient to fund our future liquidity needs.

Contractual and Long-Term Debt Obligations

The following table summarizes the scheduled payments under our contractual long-term debt obligations at December 31, 2008:


	Payments Due by Period
	Less than		1 to		3 to		More than
	1 Year		3 Years		5 Years		5 Years		Total
	(Dollars in thousands)

Operating leases	$	2,846	$	5,697	$	2,112	$	—	$	10,655
Securitization notes payable		779,344		925,797		305,748		—		2,010,889
Senior notes		—		—		60,350		—		60,350
Estimated interest payments on debt		87,384		87,492		20,105		—		194,981

Total	$	869,574	$	1,018,986	$	388,315	$	—	$	2,276,875

Securitizations

We completed seven auto receivables securitization transactions from May 2005 through December 31, 2008. In these transactions, we securitized approximately $10.9 billion of automobile receivables, issuing $9.9 billion of class A notes. The proceeds from the transactions were primarily used to repay borrowings outstanding under our warehouse facilities.

All of the Company’s securitization transactions are covered by financial guaranty insurance policies, which agreements provide that if certain portfolio performance ratios (delinquency or cumulative net loss triggers) in a Trust’s pool of receivables exceed certain targets, the specified credit enhancement levels will increase by increasing the required spread account level and the premiums paid to the guarantee insurance providers will increase as defined in the agreements. At December 31, 2008, the cumulative net loss ratio for the Company’s 2006-C securitization trust was in excess of one of its target ratios, a condition which has existed since the fourth quarter of 2007. As a result, the credit enhancement requirement to maintain cash reserves as a percentage of the portfolio has increased from 2% to 3%, which initially resulted in a delay in cash distributions to the Company. The Company reached this increased 3% enhancement requirement during the third quarter of 2008 and therefore, has begun receiving cash distributions once again. This requirement will remain at 3% until the trust is back in compliance with its target for three consecutive months. The cumulative net loss ratio for the Company’s 2006-B securitization trust had exceeded one of its target ratios, but that situation was cured during the third quarter of 2008, which allowed the credit enhancement requirement to be reduced to 2%.

Deterioration in the economy could cause one or more of the ratios to exceed the targeted levels, resulting in stress on our liquidity position. If that occurred, we could be required to implement other significant expense reductions, if securitization distributions to us are materially decreased for a prolonged period of time.

The past 18 months have seen sustained uncertainty in the global credit markets in general, and the asset-backed securitization markets in particular. The Company executed an insured securitization in November 2007, and was unable to complete another securitization prior to the cessation of all lending activity.

Off-Balance Sheet Arrangements

Prior to our May 2005 securitization transaction, we structured our securitization transactions to meet the criteria for sales of finance receivables. Under this structure, notes issued by our unconsolidated qualified special purpose finance subsidiaries are not recorded as a liability on our consolidated balance sheets. Beginning with the securitization completed in May 2005, our securitization transactions were being structured to meet the criteria for on-balance sheet reporting. Our last off-balance sheet securitizations transaction, the 2004-A trust, was closed in May 2008.

Recent Accounting Pronouncements

In the first quarter of 2008, we adopted SFAS No. 157, Fair Value Measurements, (“SFAS 157”) for all financial assets and financial liabilities and for all non-financial assets and non-financial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS 157 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. The adoption of SFAS 157 did not have a significant impact on our consolidated financial statements, and the resulting fair values calculated under SFAS 157 after adoption were not significantly different than the fair values that would have been calculated under previous guidance. See Note 14 — “Fair Value of Financial Instruments” for further details on our fair value measurements.

In October 2008, the Financial Accounting Standards Board (“FASB”) issued Financial Staff Position (“FSP”) 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active, (“FSP 157-3”). FSP 157-3 clarifies the application of SFAS 157 in a market that is not active, and addresses application issues such as the use of internal assumptions when relevant observable data does not exist, the use of observable market information when the market is not active, and the use of market quotes when assessing the relevance of observable and unobservable data. FSP 157-3 is effective for all periods presented in accordance with SFAS 157. The adoption

of FSP 157-3 did not have a significant impact on our consolidated financial statements or the fair values of our financial assets and liabilities.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (SFAS 161), an amendment of FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133), to expand disclosure requirements for an entity’s derivative and hedging activities. Under SFAS 161, entities are required to provide enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. In order to meet these requirements, entities shall include qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008 with early adoption encouraged. The Company plans to adopt SFAS 161 on January 1, 2009, and there should be no impact on the consolidated financial statements as it only addresses disclosures.


ITEM 7A.	*QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK*

Interest Rate Risk

General

Following the termination of the Barclays warehouse facility and the satisfaction of our warehouse and residual facility with CGMRC, our sole remaining borrowing facility is the $80.0 million unsecured promissory note with our equity sponsors. The Company owed nothing with respect to this facility at December 31, 2008.

Securitizations

In our securitization transactions, we sold fixed rate contracts to Trusts that then issued either fixed rate or floating rate securities to investors. The fixed rates on securities issued by the Trusts were indexed to market interest rate swap spreads for transactions of similar duration and do not fluctuate during the term of the securitization. The floating rates on securities issued by the Trusts are indexed to LIBOR and fluctuate periodically based on movements in LIBOR. We have utilized derivative financial instruments, such as interest rate swap agreements, to convert variable rate exposures of the Trusts on these floating rate securities to fixed rates, thereby locking in the gross interest rate spread to be earned by the Trusts over the life of each securitization. Derivative financial instruments purchased by us do not impact the amount of cash flows to be received by holders of the asset-backed securities issued by the Trusts. These instruments serve to offset the impact of increased or decreased interest paid by the Trusts on floating rate asset-backed securities and, therefore, the cash flows to be received by us from the Trusts.

Interest Rate Swap Agreements

We periodically enter into interest rate swap agreements whereby we pay a fixed interest rate and receive a variable interest rate. For the forward-starting swap agreements, if interest rates increased above the starting-swap rate on the settlement date, the market value of the forward-starting swap was positive, and we received an amount from the counterparty equal to such market value. Likewise, if the market value was negative on the settlement date, we paid an amount to the counterparty equal to such market value. These agreements were intended to ensure the economics of future securitization transactions and minimize the risk of interest rate fluctuations on our gross interest rate margin prior to the execution of securitization transactions.

Interest Rate Sensitivity

The following tables provide information about our financial assets and liabilities, as well as our existing derivative financial instruments that are sensitive to changes in interest rates at December 31, 2008 and 2007. For contracts and liabilities with contractual maturities secured by contracts, the table presents principal cash flows and related weighted average interest rates by contractual maturities, as well as our historical experience of the impact of interest rate fluctuations on the credit loss and prepayment of contracts. For the forward-starting and the interest rate swap agreements, the table presents the notional amount and weighted average interest rate by contractual maturity date. The notional amount is used to calculate the contractual payment to be exchanged under the contract.

The following table provides information about our interest rate-sensitive financial instruments by expected maturity as of December 31, 2008.


	For the Year Ending December 31,
	2009			2010			2011			2012			2013			Thereafter			Total
	(Dollars in thousands)

Rate Sensitive Assets:
Finance receivables held for investment	$	674,974		$	498,509		$	375,027		$	238,229		$	78,391		$	319		$	1,865,449
Average interest rate		16.57	%		15.96	%		15.31	%		14.37	%		12.82	%		12.82	%		14.64	%
Predecessor finance receivables held for investment, net		137,179			96,964			14,266			—			—			—			248,409
Average interest rate		16.95	%		16.66	%		16.58	%		—			—			—			16.73	%
Finance receivables repurchased from gain on sale trusts, net		32,395			526			—			—			—			—			32,922
Average interest rate		16.49	%		16.93	%		—			—			—			—			16.71	%
Rate Sensitive Liabilities:
Securitization notes payable		779,330			556,199			369,611			227,029			78,719			—			2,010,889
Average interest rate		5.25	%		5.34	%		5.45	%		5.55	%		5.60	%		—			5.44	%
Senior notes		—			—			—			—			60,350			—			60,350
Average interest rate		—			—			—			—			11.25	%		—			11.25	%
Interest Rate Derivatives:
Interest rate swap agreements Notional amount		348,399			455,015			665,545			—			—			—			1,468,959
Average pay rate		4.58	%		4.84	%		4.95	%		—			—			—			4.82	%
Average receive rate		1.31	%		0.96	%		0.91	%		—			—			—			1.02	%

The following table provides information about our interest rate-sensitive financial instruments by expected maturity as of December 31, 2007.


	For the Year Ending December 31,
	2008			2009			2010			2011			2012			Thereafter			Total
	(Dollars in thousands)

Rate Sensitive Assets:
Finance receivables held for investment	$	1,199,677		$	882,239		$	561,094		$	327,851		$	127,206		$	25,969		$	3,124,036
Average interest rate		16.19	%		15.91	%		15.60	%		14.81	%		12.20	%		12.20	%		15.90	%
Predecessor finance receivables held for investment, net		280,319			165,537			29,440			—			—		$	—			475,296
Average interest rate		12.91	%		12.91	%		12.91	%		—			—			—			12.91	%
Finance receivables repurchased from gain on sale trusts, net		110,995			12,977			—			—			—			—			123,972
Average interest rate		12.50	%		12.50	%		—			—			—			—			12.50	%
Retained interest in securitized assets		10,916			—			—			—			—			—			10,916
Average interest rate		16.00	%		—			—			—			—			—			16.00	%
Rate Sensitive Liabilities:
Warehouse payable		280,390			—			—			—			—			—			280,390
Average interest rate		5.05	%		—			—			—			—			—			5.05	%
Residual financing		54,000			—			—			—			—			—			54,000
Average interest rate		7.10	%		—			—			—			—			—			7.10	%
Securitization notes payable		1,417,483			1,013,272			764,734			—			—			—			3,195,489
Average interest rate		5.11	%		5.33	%		5.49	%		—			—			—			5.27	%
Senior notes		—			—			—			—			—			149,256			149,256
Average interest rate		—			—			—			—			—			11.25	%		11.25	%
Interest Rate Derivatives:
Forward-starting swap agreements Notional amount		75,908			—			—			—			—			—			75,908
Average pay rate		4.38	%		—			—			—			—			—			4.38	%
Average receive rate		4.78	%		—			—			—			—			—			4.78	%
Interest rate swap agreements Notional amount		—			—			—			1,125,310			216,000			300,000			1,641,310
Average pay rate		—			—			—			4.65	%		4.65	%		4.65	%		4.65	%
Average receive rate		—			—			—			4.60	%		4.60	%		4.60	%		4.60	%


ITEM 8.	*FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA*

The following financial statements and report of independent registered public accounting firm are included herein:


Audited Consolidated Financial Statements:	Page

Report of Management on Internal Control Over Financial Reporting		50
Report of Independent Registered Public Accounting Firm		51
Consolidated Balance Sheets		52
Consolidated Statements of Operations		53
Consolidated Statements of Member’s/Stockholder’s Equity		54
Consolidated Statements of Cash Flows		55
Notes to Consolidated Financial Statements		56

Report of Management on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of the Company’s internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making its assessment of the effectiveness of the Company’s internal control over financial reporting, management of the Company has utilized the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on management’s assessment, we concluded that, as of December 31, 2008, the Company’s internal control over financial reporting is effective based on those criteria.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

/s/ Daniel D. Leonard

Daniel D. Leonard

President & Chief Executive Officer

Date: March 30, 2009

/s/ Jeffrey O. Butcher

Jeffrey O. Butcher

Vice President & Chief Financial Officer

Date: March 30, 2009

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Member

of Triad Financial SM LLC:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, member’s/stockholder’s equity and cash flows present fairly, in all material respects, the financial position of Triad Financial SM LLC (formerly Triad Financial Corporation) and its subsidiaries at December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Dallas, Texas

March 30, 2009

TRIAD FINANCIAL SM LLC

Consolidated Balance Sheets


	December 31,			December 31,
	2008			2007
	(Dollars in thousands)

ASSETS
Cash and cash equivalents	$	46,494		$	52,505
Cash — restricted		252,300			295,786
Finance receivables held for investment, net		1,988,339			3,514,979
Retained interest in securitized assets		—			10,916
Accounts receivable, net		28,332			46,965
Fixed assets, net of accumulated depreciation of $28,858 in 2008 and $23,235 in 2007		8,087			15,222
Collateral held for resale		14,083			29,383
Capitalized financing costs, net of accumulated amortization of $16,364 in 2008 and $13,369 in 2007		4,691			11,532
Deferred tax asset, net		—			89,028
Goodwill		—			30,446
Taxes receivable		46,240			8,054
Other assets		2,097			2,736

Total assets	$	2,390,663		$	4,107,552


LIABILITIES AND MEMBER’S/STOCKHOLDER’S EQUITY

LIABILITIES
Revolving credit facilities	$	—		$	334,390
Securitization notes payable		2,010,889			3,195,489
Senior notes payable		60,350			149,256
Taxes payable		—			—
Other liabilities		58,814			71,826

Total liabilities		2,130,053			3,750,961

Commitments and contingencies (Note 12)
Member’s/Stockholder’s Equity
Preferred units, no par value; authorized 20,000,000 units; issued and outstanding 17,000,000 units at December 31, 2008		17,000			—
Common units, authorized 1,000 units; issued and outstanding 1,000 units at December 31, 2008		—			—
Common stock, no par value; authorized 9,069 shares; issued and outstanding 9,069 shares at December 31, 2007		—			—
Additional paid in capital		345,788			345,000
(Accumulated deficit) retained earnings		(102,178	)		9,690
Accumulated other comprehensive income		—			1,901

Total member’s/stockholder’s equity		260,610			356,591

Total liabilities and member’s/stockholder’s equity	$	2,390,663		$	4,107,552

TRIAD FINANCIAL SM LLC

Consolidated Statements of Operations


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	(Dollars in thousands)

Financing and other interest income	$	461,092		$	629,898		$	577,340
Interest expense		168,984			218,668			202,929

Net interest margin		292,108			411,230			374,411
Provision for credit losses		228,380			284,457			256,762

Net interest margin after provision for credit losses		63,728			126,773			117,649
Servicing income		3,193			7,824			21,966
Gain on partial redemption of senior notes		14,558			—			—
Other income (expense)		911			(3,942	)		21,602

Total other revenues		18,662			3,882			43,568

Operating expenses
Compensation and employee benefits		75,567			87,318			78,685
Occupancy and equipment		18,637			16,231			15,501
System and data processing		9,938			13,235			14,570
Professional services		8,929			6,887			7,632
Advertising		3,743			3,997			1,627
Telecommunications		2,881			3,649			3,315
Impairment of goodwill		30,446			—			—
Other		10,050			15,436			17,275

Total operating expenses		160,191			146,753			138,605

(Loss) income before income taxes		(77,801	)		(16,098	)		22,612
(Provision) benefit for income taxes		(34,067	)		5,520			(8,945	)

Net (loss) income	$	(111,868	)	$	(10,578	)	$	13,667

TRIAD FINANCIAL SM LLC

Consolidated Statements of Member’s/Stockholder’s Equity


								Retained			Accumulated
						Additional		Earnings			Other
	Preferred			Common		Paid-In		(Accumulated			Comprehensive
	Stock			Stock/Units		Capital		Deficit)			Income			Total
	(Dollars in thousands)

Balance, December 31, 2005	$	—		$	—	$	345,000	$	9,983		$	1,849		$	356,832
Issuance of preferred stock		30,000			—		—		—			—			30,000
Preferred stock dividends declared		—			—		—		(1,575	)		—			(1,575	)
Comprehensive income
Net income		—			—		—		13,667			—			13,667
Net unrealized gain on retained interest in securitized assets (net of tax of $4,724)		—			—		—		—			7,235			7,235

Total comprehensive income, net of tax		—			—		—		13,667			7,235			20,902

Balance, December 31, 2006	$	30,000		$	—	$	345,000	$	22,075		$	9,084		$	406,159
Redemption of preferred stock		(30,000	)		—		—		—			—			(30,000	)
Preferred stock dividends declared		—			—		—		(788	)		—			(788	)
Common stock dividends declared		—			—		—		(1,019	)		—			(1,019	)
Comprehensive income (loss)
Net loss		—			—		—		(10,578	)		—			(10,578	)
Net unrealized loss on retained interest in securitized assets (net of tax of $4,691)		—			—		—		—			(7,183	)		(7,183	)

Total comprehensive loss, net of tax		—			—		—		(10,578	)		(7,183	)		(17,761	)

Balance, December 31, 2007	$	—		$	—	$	345,000	$	9,690		$	1,901		$	356,591

Issuance of preferred units		17,000			—		—		—			—			17,000
Capital contributed by parent		—			—		788		—			—			788
Comprehensive income (loss)
Net loss		—			—		—		(111,868	)		—			(111,868	)
Net unrealized loss on retained interest in securitized assets (net of tax of $1,240)		—			—		—		—			(1,901	)		(1,901	)

Total comprehensive loss, net of tax		—			—		—		(111,868	)		(1,901	)		(113,769	)

Balance, December 31, 2008	$	17,000		$	—	$	345,788	$	(102,178	)	$	—		$	260,610

TRIAD FINANCIAL SM LLC

Consolidated Statements of Cash Flows


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	(Dollars in thousands)

Cash flows from operating activities
Net (loss) income	$	(111,868	)	$	(10,578	)	$	13,667
Adjustments to reconcile net (loss) income to net cash provided by activities:
Depreciation and amortization		19,646			27,425			20,624
Provision for credit losses		228,380			284,457			256,762
Deferred income tax expense (benefit)		90,268			(20,606	)		(55,379	)
Impairment of goodwill		30,446			—			—
Accretion of present value discount		(4,410	)		(22,593	)		(24,803	)
Amortization of purchase premium		12,785			29,379			56,378
Loss on repurchase of receivables from gain on sale trusts		3,040			7,016			—
Loss on write-down of fixed assets		3,375			1,014			—
Gain on partial redemption of senior notes payable		(14,558	)		—			—
Loss on sale of receivables		762			—			—
Changes in operating assets and liabilities
Accounts receivable		13,372			3,953			(19,480	)
Other assets		639			(926	)		563
Other liabilities		(12,254	)		(1,589	)		7,481
Current tax receivable/payable		(38,186	)		(11,553	)		(3,424	)

Net cash provided by operating activities		221,437			285,399			252,389

Cash flows from investing activities
Distributions from gain on sale trusts		28,031			111,972			150,331
Payments to Ford Motor Credit		(15,665	)		(9,801	)		—
Repurchases from gain on sale trusts		(69,746	)		(195,569	)		(131,005	)
Purchases of finance receivables held for investment		(352,017	)		(1,359,842	)		(2,662,201	)
Collections on finance receivables held for investment		1,101,395			1,479,097			1,289,143
Sale of finance receivables		615,263			—			—
Change in restricted cash		43,486			(21,727	)		(120,828	)
Purchases of fixed assets		(2,969	)		(5,213	)		(10,921	)

Net cash provided by (used in) investing activities		1,347,778			(1,083	)		(1,485,481	)

Cash flows from financing activities
Net change in warehouse credit facilities		(280,390	)		(153,741	)		(396,717	)
Net change in residual credit facilities		(54,000	)		(41,000	)		(10,000	)
Net change in due to Ford Motor Credit Company		—			—			(52,323	)
Issuance of securitization notes		—			1,373,410			2,829,995
Payment on securitization notes		(1,184,600	)		(1,436,136	)		(1,144,048	)
Partial redemption of senior notes payable		(72,472	)		—			—
Capitalized finance costs		(764	)		(4,711	)		(8,743	)
Issuance of preferred units/stock		17,000			—			30,000
Redemption of preferred stock		—			(30,000	)		—

Net cash (used in) provided by financing activities		(1,575,226	)		(292,178	)		1,248,164

Net (decrease) increase in cash		(6,011	)		(7,862	)		15,072

Cash
Beginning of period		52,505			60,367			45,295

End of period	$	46,494		$	52,505		$	60,367

Non-cash activity
Preferred stock dividends declared	$	—		$	788		$	1,575

Common stock dividends declared	$	—		$	1,019		$	—

Supplemental Disclosure
Interest paid	$	174,713		$	219,482		$	199,217

Income taxes (received) paid	$	(19,267	)	$	26,855		$	69,078

Triad Financial SM LLC

Notes to Consolidated Financial Statements


1.	Organization and Nature of Business

On December 29, 2008, pursuant to an Agreement and Plan of Merger by and between Triad Financial Corporation and the Company, Triad Financial Corporation merged with and into the Company, with the Company being the entity surviving from that merger. In accordance with Statement of Financial Accounting Standards, or “SFAS”, No. 141, “Business Combinations”, the assets and liabilities of Triad Financial Corporation were transferred to the Company at their historical carrying values on the date of transfer. In connection with the merger, Triad Financial SM Inc., a newly formed Delaware corporation and wholly-owned subsidiary of Triad Financial SM LLC, became a co-issuer under the indenture for our 11.125% Senior Notes, due May 1, 2013. References to the Company in this document shall mean Triad Financial SM LLC and its predecessor by merger, Triad Financial Corporation.

On June 20, 2008, the Company agreed to sell its direct lending business, RoadLoans, to Santander Consumer USA Inc. (“Santander”). The sale was consummated on October 7, 2008. Also on June 20, 2008, the Company completed a whole loan sale of approximately $632 million of contracts and loans to Santander, effective June 1, 2008. The Company incurred $3.7 million of expense during the year ended December 31, 2008 related to the sale of the direct channel comprised primarily of severance and the write-down of certain fixed assets.

From June 1999 through April 29, 2005, the Company was a wholly-owned subsidiary of Fairlane Credit, LLC, a wholly-owned subsidiary of Ford Motor Credit Company (“Ford Credit”).

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation, with Triad Financial Corporation being the surviving corporation.

As of the acquisition date, we recorded our assets and liabilities at their estimated fair values. The purchase price paid by Triad Holdings Inc. plus acquisition and closing costs, exceeded the fair value of net assets acquired, resulting in approximately $30.4 million of goodwill. This goodwill was deemed to be impaired and written off in the second quarter of 2008.


2.	Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, all of which are Delaware companies, Triad Financial SM Inc., Triad Financial Special Purpose LLC, Triad Financial Residual Special Purpose LLC, and Triad Financial Warehouse Special Purpose LLC (the “Subsidiaries”). Triad Financial Warehouse Special Purpose LLC includes its wholly-owned subsidiary, Triad Automobile Receivables Warehouse Trust, a Delaware trust.

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Cash Equivalents

Investments in highly liquid securities with original maturities of 90 days or less are included in cash and cash equivalents.

Restricted Cash

Cash pledged to support securitization transactions is deposited into restricted accounts and recorded on the Company’s consolidated balance sheets as restricted cash.

Finance Receivables

Finance receivables are classified as held for investment and carried at amortized cost, net of an allowance for credit losses, as the Company has the ability and intent to hold these receivables until maturity. Financing income for finance receivables originated and purchased subsequent to the Acquisition is recognized using the interest method based on contractual cash flows. Premiums and discounts and origination costs are deferred and amortized as adjustments to financing income over the estimated life of the related receivables.

In connection with the Acquisition, the carrying value of our predecessor finance receivables held for investment owned as of the Acquisition was adjusted to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk. The carrying value of our finance receivables repurchased from gain on sale trusts was recorded at fair market value upon repurchase, taking into account future expected credit losses and a required rate of return commensurate with the associated risk. Financing income on these receivables includes interest income recognized using the interest method based on contractual cash flows and taking into account expected prepayments and is net of premium amortization.

The accrual of financing income is suspended on accounts when they are deemed impaired. Accounts are generally deemed impaired when they are 30 days past due. We generally recognize interest income on impaired contracts on a cash basis when received.

Sale of Receivables

All securitization transactions executed by the Company subsequent to April 29, 2005 have been accounted for as secured financings in accordance with accounting principles generally accepted in the United States of America

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

(“GAAP”). These transaction structures allow the trust to enter into interest rate derivative contracts with respect to retained interests and also allow the servicer the discretion to sell charged-off finance receivable contracts. No charged-off receivables were sold subsequent to April 29, 2005.

Prior to April 30, 2005, finance receivables were sold in securitization transactions that were accounted for as sales of finance receivables in accordance with GAAP. These transaction structures involved the Company surrendering control over these assets by selling finance receivables to off-balance sheet securitization entities. The securitization entities issued interest-bearing securities collateralized by future collections on the sold receivables. The Company exercised the clean-up call on the last of its off-balance sheet securitizations in May 2008.

The Company retained certain interests in the sold receivables. These retained interests were classified as securities available for sale and were reported at fair value. If there was a decline in fair value and it was judged to be other than temporary, the individual security was written down to fair value and the amount of the write-down was included in earnings. If there was a change in fair value and it was judged to be temporary, the securities were recorded at fair value with unrealized gains and losses recorded, net of tax, as a separate component of accumulated other comprehensive income in member’s / stockholder’s equity. In securitization transactions accounted for as a sale of receivables, the Company retained the servicing rights and received a servicing fee.

On June 20, 2008, the Company completed a whole loan sale of approximately $632 million of contracts and loans to Santander, effective June 1, 2008. The sale was made subject to customary representations and warranties, concerning, among other things, the enforceability of the finance receivables included in the sale. The Company continued to service these finance receivables through August 2, 2008 in return for a servicing fee paid by Santander. Since the servicing fee adequately compensated us for retaining the servicing rights, no servicing asset or liability was recorded and the fee was recognized as collected over the remaining term of the related sold finance receivables.

Allowance for Credit Losses

The allowance for credit losses is determined based on projected losses for the next twelve months and represents our estimate of incurred credit losses related to held for investment receivables as of the date of the financial statements. This allowance is based on such factors as the credit quality of the portfolio, historical credit loss trends, trends in projected used car values and general economic factors. Finance receivables are charged off to the allowance for credit losses when an account is deemed to be uncollectible. This charge takes into account the estimated value of any collateral. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses.

Charge-offs on predecessor finance receivables held for investment and finance receivables repurchased from gain on sale trusts are charged against the Company’s probable future expected credit losses established as a component of the asset’s net carrying value.

Charge-Off Policy

Our policy is to charge-off receivables in the month in which the borrowers become 120 days contractually delinquent if we have not previously repossessed the related vehicle. If a vehicle has been repossessed, and the underlying contract is an owned receivable, we charge off the underlying receivable upon repossession, taking into account the estimated value of our collateral, with a reconciliation upon liquidation. The net charge-off represents the difference between the actual net sales proceeds and the amount of the delinquent contract, including accrued interest. Accrual of finance charge income is suspended on accounts that are more than 30 days contractually delinquent.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

Derivative Financial Instruments

In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, our interest rate swap agreements outstanding are recognized on our consolidated balance sheet at fair value with changes in the value recorded in earnings as a component of other income (expense). Fair value is calculated using observable inputs including interest rate and notional amounts. These calculations are compared to current market values for similar instruments with the same remaining maturities.

Fair Value Disclosures

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) which provides enhanced guidance for using fair value to measure assets and liabilities. The adoption of SFAS 157 for financial assets and liabilities did not have a material impact on the consolidated financial statements.

SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

SFAS 157 requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, SFAS 157 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:


	•	Level 1 Inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

	•	Level 2 Inputs — Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

	•	Level 3 Inputs — Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The Company’s derivative financial instruments are reported at fair value based on Level 2 Inputs. In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2008, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:


	Fair Value Measurement at December 31, 2008
	Level 1		Level 2			Level 3		Total Fair
	Inputs		Inputs			Inputs		Value
	(Dollars in thousands)

Assets (Liabilities):
Derivative financial instruments	$	—	$	(23,745	)	$	—	$	(23,745	)

In February 2007, FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115” (“SFAS 159”) which provides companies with an option to report selected financial assets and liabilities at fair value. The standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company has elected not to report any assets or liabilities at fair value in accordance with SFAS 159.

Fixed Assets

Fixed assets are carried at cost less accumulated depreciation. Depreciation is calculated principally on the straight-line method over their remaining useful lives of the assets as follows:


Equipment			3-5 years
Software			3-5 years
Furniture and fixtures			5 years

Depreciation expense totaled $6.7 million, $9.3 million and $8.4 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Leasehold improvements are stated at cost and depreciated over the useful lives of the improvements or term of the lease, whichever is less. Upon sale or retirement, the cost of assets and related accumulated depreciation is eliminated from the respective accounts, and the resulting gain or loss is included in operations. Repairs and maintenance expenses are charged to operations as incurred.

In connection with the shutdown of its dealer originations channel and the sale of its direct originations channel discussed in Note 1, the Company wrote down certain fixed assets with a net book value of approximately $3.4 million during the year ended December 31, 2008.

Goodwill

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, the Company reviews its goodwill for impairment annually and when events or changes in circumstances indicate the carrying amount may not be recoverable. Management evaluates the recoverability of goodwill by comparing the carrying value of the Company’s only reporting unit to its fair value.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

As a result of the shutdown of its dealer originations channel and the sale of its direct originations channel discussed in Note 1, the Company determined that there was an impairment of goodwill and recorded a $30.4 million pre-tax charge to operations during the year ended December 31, 2008.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”, resulting in two components of income tax expense; current and deferred. Current income tax expense approximates taxes to be paid or refunded for the current period. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled.

Effective January 1, 2007, the Company accounts for uncertainty in income taxes recognized in the financial statements in accordance with FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 requires that a more likely than not threshold be met before the benefit of a tax position may be recognized in the financial statements and prescribes how such benefit should be measured. It also provides guidance on de-recognition, measurement, classification, interest and penalties, interim accounting periods, disclosure and transition. FIN 48 required that the standard be applied to the balances of the assets and liabilities as of the beginning of the period of adoption and that any corresponding adjustment be made to the opening balance of retained earnings. Upon adoption of FIN 48, the Company identified certain tax positions for which deductibility is highly certain, but for which there is uncertainty as to the timing of such deductibility. As a result, the Company reclassified approximately $3.4 million of tax benefit from its deferred tax liability to its FIN 48 current tax liability as of January 1, 2007.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with SFAS No. 123(R), “Share-Based Payment”, revised 2004, (“SFAS 123R”) for all awards granted, modified or settled after June 30, 2005. SFAS 123R requires that the cost resulting from all share-based payment transactions be measured at fair value and recognized in the financial statements.

Use of Estimates

The preparation of the financial statements, in conformity with generally accepted accounting principles, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from those estimates.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)


3.	Finance Receivables

Finance receivables at December 31, 2008 and 2007 are summarized as follows:


	2008			2007
	(Dollars in thousands)

Finance receivables held for investment	$	1,865,449		$	3,124,036
Premiums and discounts, net		(2,271	)		(3,592	)
Deferred costs, net		15,292			25,767

Finance receivables held for investment, gross		1,878,470			3,146,211
Allowance for credit losses		(171,462	)		(230,500	)

Finance receivables held for investment, net		1,707,008			2,915,711

Predecessor finance receivables held for investment, net		248,409			475,296
Finance receivables repurchased from gain on sale trusts, net		32,922			123,972

Finance receivables, net	$	1,988,339		$	3,514,979

On June 20, 2008, the Company completed a whole loan sale of approximately $632 million of contracts and loans to Santander, effective June 1, 2008. The Company continued to service these finance receivables through August 2, 2008 in return for a servicing fee paid by Santander. The Company recognized a $0.8 million loss on the sale of these finance receivables during the year ended December 31, 2008.

The aggregate unpaid principal balances of finance receivables more than 60 days past due were $98.6 million at December 31, 2008 and $156.0 million at December 31, 2007.

The activity in the predecessor finance receivables held for investment for the years ended December 31, 2008, 2007 and 2006 is summarized as follows:


	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
	(Dollars in thousands)

Balance, December 31, 2007	$	639,854		$	(105,391	)	$	534,463		$	(59,167	)	$	475,296
Interest income		(60,893	)		—			(60,893	)		45,703			(15,190	)
Sale of finance receivables		(375	)		48			(327	)		(16	)		(343	)
Principal collections		(211,354	)		—			(211,354	)		—			(211,354	)
Charge-offs, net of sales proceeds and recoveries		(35,511	)		35,511			—			—			—
Reclassifications		—			21,693			21,693			(21,693	)		—
Change in cash flows		(17,409	)		17,409			—			—			—

Balance, December 31, 2008	$	314,312		$	(30,730	)	$	283,582		$	(35,173	)	$	248,409


	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
	(Dollars in thousands)

Balance, December 31, 2006	$	1,246,836		$	(253,238	)	$	993,598		$	(144,352	)	$	849,246
Interest income		(111,258	)		—			(111,258	)		85,202			(26,056	)
Principal collections		(347,894	)		—			(347,894	)		—			(347,894	)
Charge-offs, net of sales proceeds and recoveries		(55,292	)		55,292			—			—			—
Reclassifications		—			17			17			(17	)		—
Change in cash flows		(92,538	)		92,538			—			—			—

Balance, December 31, 2007	$	639,854		$	(105,391	)	$	534,463		$	(59,167	)	$	475,296

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)


	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
	(Dollars in thousands)

Balance, December 31, 2005	$	2,220,192		$	(524,710	)	$	1,695,482		$	(227,072	)	$	1,468,410
Interest income		(193,929	)		—			(193,929	)		140,836			(53,093	)
Principal collections		(566,071	)		—			(566,071	)		—			(566,071	)
Charge-offs, net of sales proceeds and recoveries		(74,005	)		74,005			—			—			—
Reclassifications		—			58,116			58,116			(58,116	)		—
Change in cash flows		(139,351	)		139,351			—			—			—

Balance, December 31, 2006	$	1,246,836		$	(253,238	)	$	993,598		$	(144,352	)	$	849,246

The activity in the finance receivables repurchased from gain on sale trusts for the years ended December 31, 2008, 2007 and 2006 is summarized as follows:


	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
	(Dollars in thousands)

Balance, December 31, 2007	$	145,125		$	(12,852	)	$	132,273		$	(8,301	)	$	123,972
Finance receivables repurchased		80,191			(7,471	)		72,720			(5,564	)		67,156
Interest income		(13,106	)		—			(13,106	)		15,511			2,405
Sale of finance receivables		(66,005	)		6,578			(59,427	)		4,525			(54,902	)
Principal collections		(105,709	)		—			(105,709	)		—			(105,709	)
Charge-offs		(2,600	)		2,600			—			—			—
Reclassifications		—			9,305			9,305			(9,305	)		—
Change in cash flows		54			(54	)		—			—			—

Balance, December 31, 2008	$	37,950		$	(1,894	)	$	36,056		$	(3,134	)	$	32,922


	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
	(Dollars in thousands)

Balance, December 31, 2006	$	70,453		$	(4,137	)	$	66,316		$	(3,657	)	$	62,659
Finance receivables repurchased		216,159			(17,862	)		198,297			(12,631	)		185,666
Interest income		(17,563	)		—			(17,563	)		14,239			(3,324	)
Principal collections		(121,029	)		—			(121,029	)		—			(121,029	)
Charge-offs		(5,243	)		5,243			—			—			—
Reclassifications		—			6,252			6,252			(6,252	)		—
Change in cash flows		2,348			(2,348	)		—			—			—

Balance, December 31, 2007	$	145,125		$	(12,852	)	$	132,273		$	(8,301	)	$	123,972

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)


	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
	(Dollars in thousands)

Balance, December 31, 2005	$	—		$	—		$	—		$	—		$	—
Finance receivables repurchased		145,203			(12,018	)		133,185			(7,662	)		125,523
Interest income		(9,810	)		—			(9,810	)		6,525			(3,285	)
Principal collections		(59,579	)		—			(59,579	)		—			(59,579	)
Charge-offs		(5,486	)		5,486			—			—			—
Reclassifications		—			2,520			2,520			(2,520	)		—
Change in cash flows		125			(125	)		—			—			—

Balance, December 31, 2006	$	70,453		$	(4,137	)	$	66,316		$	(3,657	)	$	62,659

During 2008, 2007 and 2006 expected cash flows from predecessor finance receivables held for investment and receivables repurchased from gain on sale trusts were reevaluated and determined to be greater than originally expected. This resulted in a reclassification of cash flows from non-accretable discount to accretable discount. This also resulted in a higher net yield being recognized on these receivables.


4.	Allowance for Credit Losses

The changes in the allowance for credit losses for the years indicated are summarized as follows:


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	(Dollars in thousands)

Balance, beginning of year	$	230,500		$	195,000		$	51,259
Provision for credit losses		228,380			284,457			256,762
Sold receivables		(22,504	)		—			—
Charge-offs		(300,176	)		(274,553	)		(118,089	)
Recoveries		35,262			25,596			5,068

Balance, end of year	$	171,462		$	230,500		$	195,000

The allowance for credit losses is maintained at a level adequate to cover incurred credit losses related to receivables originated subsequent to April 29, 2005 and classified as held for investment as of the date of the financial statements, taking into account the credit quality of the portfolio, historical credit loss trends, trends in projected used car values and general economic factors.


5.	Sales of Receivables

Servicing Portfolio

The Company retains servicing rights for receivables sold in securitization transactions meeting the criteria for sales of receivables. The activity in the servicing portfolio for the years indicated is summarized as follows:


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	(Dollars in thousands)

Balance, beginning of year	$	94,097		$	484,818		$	1,130,352
Called receivables		(69,746	)		(195,569	)		(131,005	)
Collections and charge-offs		(24,351	)		(195,152	)		(514,529	)

Balance, end of year	$	—		$	94,097		$	484,818

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The aggregate unpaid principal balances of sold finance receivables more than 60 days past due were $5.2 million at December 31, 2007. Credit losses, net of recoveries, totaled $2.9 million, $18.2 million and $53.9 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Accrued servicing fees due from the securitization trusts are included in accounts receivable in our consolidated balance sheets. The amount of accounts receivable representing receivables from securitization trusts totaled $5.8 million at December 31, 2008 and $8.6 million at December 31, 2007.

Retained Interest in Securitized Assets

The components of the retained interest in securitized assets, carried at fair value, at December 31, 2008 and 2007 are summarized as follows:


	2008		2007
	(Dollars in thousands)

Restricted cash held for the benefit of securitizations	$	—	$	14,731
Over-collaterization receivable		—		12,233
Interest-only		—		(447	)

Retained interest in securitized assets, gross		—		26,517
Payable to Ford Credit		—		(15,601	)

Retained interest in securitized assets, net	$	—	$	10,916

The Company exercised the clean-up call on the last of its off-balance sheet securitizations in May 2008. The Company’s retained interests in securitization transactions included the value associated with future cash flows generated from over-collateralization and any excess spread amounts. Over-collateralization receivable represented the difference between securitized receivables outstanding and notes outstanding. Retained interests in securitized assets were recorded at fair value. The fair value of retained interests was determined based on calculating the present value of the projected cash flows to be received using management’s best estimates of key assumptions, including discount rate, prepayment rate and credit losses.

Retained interests in securitized assets were net of an estimated amount owed to Ford Credit pursuant to a contractual agreement entered into with Ford Credit at the closing of the Acquisition. We made payments to Ford Credit totaling $14.5 million during the year ended December 31, 2008 pursuant to the agreement. The Company transferred a remaining $1.2 million payable to Ford Credit, representing potential additional payments to Ford Credit, to other liabilities during the year ended December 31, 2008.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The activity in the retained interest in securitized assets for the years ended December 31, 2008, 2007 and 2006 is summarized as follows:


																Retained
										Retained Interest						Interest in
	Restricted			Over-			Interest-			in Securitized			Payable to			Securitized
	Cash			Collateralization			Only			Assets, Gross			Ford Credit			Assets, Net
	(Dollars in thousands)

Balance, December 31, 2005	$	80,298		$	150,283		$	(7,555	)	$	223,026		$	(6,074	)	$	216,952
Distributions		(22,547	)		(87,257	)		(41,456	)		(151,260	)		—			(151,260	)
Residual interest income		—			—			26,696			26,696			(1,893	)		24,803
Realized losses		—			—			152			152			(76	)		76
Unrealized gains (losses)		—			—			24,420			24,420			(12,460	)		11,960

Balance, December 31, 2006	$	57,751		$	63,026		$	2,257		$	123,034		$	(20,503	)	$	102,531

Distributions		(43,020	)		(50,793	)		(18,159	)		(111,972	)		—			(111,972	)
Residual interest income		—			—			25,374			25,374			(2,781	)		22,593
Realized gain (losses)		—			—			(325	)		(325	)		164			(161	)
Unrealized gains (losses)		—			—			(9,594	)		(9,594	)		(2,282	)		(11,876	)
Payments to Ford Credit		—			—			—			—			9,801			9,801

Balance, December 31, 2007	$	14,731		$	12,233		$	(447	)	$	26,517		$	(15,601	)	$	10,916

Distributions		(14,731	)		(12,233	)		(1,068	)		(28,032	)		—			(28,032	)
Residual interest income		—			—			4,410			4,410			—			4,410
Realized gain (losses)		—			—			363			363			(182	)		181
Unrealized gains (losses)		—			—			(3,258	)		(3,258	)		118			(3,140	)
Transfer to other liabilities														1,154			1,154
Payments to Ford Credit		—			—			—			—			14,511			14,511

Balance, December 31, 2008	$	—		$	—		$	—		$	—		$	—		$	—


6.	Revolving Credit Facilities

Amounts outstanding under our warehouse and residual loan facilities at December 31, 2008 and 2007 are summarized as follows:


	2008		2007
	(Dollars in thousands)

Warehouse loan facilities	$	—	$	280,390
Residual loan facilities		—		54,000

Total revolving credit facilities	$	—	$	334,390

There were no advances outstanding under our warehouse and residual loan facilities at December 31, 2008. Our warehouse facility with Citigroup Global Markets Realty Corp. (“CGMRC”) previously provided up to $750 million of funding for automobile retail installment sales contract receivables originated or purchased by the Company that met certain eligibility requirements. Our residual facility previously provided up to $125 million of funding for general corporate purposes.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The facility had a two year commitment but would expire after 364 days if the liquidity facility was not renewed. On May 30, 2008, the Company and certain of its subsidiaries terminated its warehouse facility with Barclays Bank PLC. In connection with the termination of this facility, the Company wrote-off $0.4 million of unamortized capitalized finance costs during the year ended December 31, 2008.

Following the sale of receivables to Santander on June 20, 2008, the Company satisfied its obligations under our warehouse and residual loan facilities with CGMRC and terminated the facilities. As a result of this, along with the termination of the warehouse facility with Barclays Bank PLC in May 2008, the Company has no remaining obligations to its warehouse lenders.

Interest expense for the years ended December 31, 2007 and 2006 includes $14.4 million and $17.7 million, respectively, of expense incurred to Goldman Sachs Mortgage Company.

On May 11, 2008, the Company entered into a $49.5 million unsecured promissory note with Hunter’s Glen/Ford Ltd. to provide interim funding while the negotiations with CGMRC were continuing. This promissory note accrued interest at 20% and was payable quarterly, on the last day of each March, June, September and December while the note was outstanding. The promissory note was due and payable the earlier of one year of its issuance and fourteen days after receipt of demand for payment. On May 28, 2008, GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P., entities controlled by GTCR Golder Rauner II, L.L.C., agreed to assume 50% of the funding obligation under the $49.5 million unsecured promissory note. Hunter’s Glen/Ford Ltd. and these entities controlled by GTCR Golder Rauner II, L.L.C. are indirect equity owners of the Company.

On June 17, 2008, the Company entered into a $40.0 million unsecured promissory note with Hunter’s Glen/Ford Ltd. and an additional $40.0 million unsecured promissory note with GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P., to provide funding. These promissory notes will accrue interest at 15% and the interest shall be payable quarterly, on the last day of each March, June, September and December while the notes are outstanding. Each promissory note is due and payable the earlier of (1) three years of the date of its issuance, and (2) fourteen days after receipt of demand for payment and the entering into of comparable facilities with the lenders. These combined $80.0 million notes replaced the previous $49.5 million unsecured demand promissory note. The amounts outstanding under the $49.5 million promissory note were paid in full and there have been no additional draws on this facility subsequent to June 20, 2008.

The lenders under the new $80.0 million promissory notes were also issued Class B Preferred Units in Triad Holdings, LLC (“Triad LLC”), the prior indirect parent of the Company and predecessor to Triad Financial Holdings LLC. Triad LLC’s limited liability company agreement was amended to allow for the issuance of these units and also for an increase in the number of board of manager members at Triad LLC. Upon any liquidation or other distribution by Triad LLC and its successor, Triad Financial Holdings LLC, the holders of the Class B Preferred Units will be entitled to a first priority liquidation preference equal to $130 million, less the aggregate amount of either cash or payment in kind interest paid to the lenders. In addition, the Stockholders Agreement, dated April 29, 2005, among Triad Holdings Inc., Triad LLC and other parties thereto also was amended to reflect an increase in the number of board of director members at Triad Holdings Inc. and the Company.

It is anticipated that in early 2009, the $80.0 million unsecured promissory notes will be replaced by a secured credit facility between Hunter’s Glen/Ford Ltd. and GTCR Golder Rauner II, L.L.C., as lenders, and Triad Financial Residual Special Purpose LLC, as borrower. The credit facility will be secured by the residual interests in our securitization trusts.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)


7.	Securitization Notes Payable

Securitization notes payable represent debt issued by the Company in securitization transactions accounted for as secured financings. Securitization notes payable outstanding at December 31, 2008 are summarized as follows:


			Original
			Weighted			Collateral		Note
	Original		Average			Pledged at		Balance at
	Note		Interest			December 31,		December 31,
Transaction	Amount		Rate			2008		2008
	(Dollars in thousands)

2005-A, due June 12, 2012(a)	$	1,104,000		4.09	%	$	167,836	$	158,799
2005-B, due April 12, 2013(a)	$	905,303		4.32	%	$	160,890	$	151,991
2006-A, due April 12, 2013(a)	$	822,500		4.88	%	$	228,721	$	213,888
2006-B, due November 12, 2012(a)	$	915,500		5.50	%	$	308,076	$	293,277
2006-C, due May 13, 2013(a)	$	1,092,200		5.37	%	$	443,039	$	406,362
2007-A, due February 12, 2014(a)	$	775,110		5.34	%	$	429,722	$	388,430
2007-B, due July 14, 2014(a)	$	598,330		5.70	%	$	446,276	$	398,142

						$	2,184,560	$	2,010,889


(a)		Maturity date represents final legal maturity of securitization notes payable. Securitization notes payable are expected to be paid based on amortization of the finance receivables pledged to the Trusts.

Under the terms of our securitization transactions, the Company transfers finance receivables to special purpose finance subsidiaries of the Company. While these subsidiaries are included in the Company’s consolidated financial statements, these subsidiaries are separate legal entities and the collateral and other assets held by these subsidiaries are legally owned by these subsidiaries and are not available to creditors of the Company or its other subsidiaries.

Capitalized financing costs with an unamortized balance of $3.3 million at December 31, 2008 are being amortized over the expected term of the securitization transactions. Capitalized financing costs include $0.6 million in remaining unamortized underwriting fees paid to Goldman, Sachs & Co., an affiliate of one of our equity investors.

Agreements with the Company’s guarantee insurance providers contain additional specified targeted portfolio performance ratios. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured Trust were to exceed these additional levels, provisions of the agreements permit the Company’s guaranty insurance providers to terminate the Company’s servicing rights to the receivables sold to that Trust. These financial

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

guaranty insurance policies also contain minimum financial ratio requirements. Except as discussed above, the Company was in compliance with its agreements with its guarantee insurance providers at December 31, 2008.


8.	Senior Notes Payable

On April 29, 2005, Triad Acquisition Corp. issued $150.0 million of senior notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 (the “Securities Act”), to certain accredited investors pursuant to Rule 501 under the Securities Act, and to non-U.S. persons in reliance on Regulation S under the Securities Act. The senior notes also included a registration rights agreement requiring the Company to file a registration statement under the Securities Act and to consummate an exchange offer after the effective date of the registration statement. The exchange offer was consummated on January 9, 2006. In connection with the Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation.

The senior notes have a stated coupon of 11.125% and were issued at a discount to yield 11.25%. The senior notes mature on May 1, 2013 but can be redeemed, in whole or in part, on or after May 1, 2010, at specified redemption prices, and on or after May 1, 2012, at par value.

Capitalized financing costs with an unamortized balance of $1.3 million at December 31, 2008 are being amortized over the contractual term of the notes. Capitalized financing costs include $0.9 million in remaining unamortized fees paid to Goldman, Sachs & Co., an affiliate of one of our equity investors.


9.	Preferred Stock

On June 30, 2006, the Company sold 1,500,000 shares of Non-Voting Preferred Stock to Triad Holdings Inc. for an aggregate purchase price of $30.0 million in cash. No underwriting discounts or commissions were paid. The Non-Voting Preferred Stock was issued without registration under the Securities Act in reliance on Section 4(2) of the Securities Act based on Triad Holdings Inc. investment intent, financial and business matters sophistication and other typical investment representations. To the extent declared by the board of directors of the Company, quarterly dividends were payable at an annual rate of 10.5%. Triad Holdings pledged its Non-Voting Preferred Stock of Triad Financial Corporation to secure its loan with Citigroup Global Markets Realty Corp. The Non-Voting Preferred Stock was redeemed at par on April 27, 2007.

On December 31, 2008, the Company sold 17.0 million units of Series 1 Preferred Units to Triad Financial Holdings LLC for an aggregate purchase price of $17.0 million in cash. No underwriting discounts or commissions were paid. The Series 1 Preferred Units were issued without registration under the Securities Act in reliance on Section 4(2) of the Securities Act based on Triad Financial Holdings LLC’s investment intent, financial and business matters sophistication and other typical investment representations.

These units are restricted securities and may not be resold unless registered under the Securities Act or exempt from the registration requirements thereof. The Series 1 Preferred Units are not convertible or exchangeable into the Company’s common units. The Series 1 Preferred Units are not redeemable at the option of any holder of the Series 1 Preferred Units. To the extent declared by the board of managers of the Company, quarterly dividends are payable at an annual rate of 15.0%.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

Triad Financial Holdings LLC pledged its Series 1 Preferred Units to secure a loan with Hunters Glen/Ford Ltd. and certain partnerships controlled by GTCR Golder Rauner II, L.L.C. On February 27, 2009, 10.0 million units of the Series 1 Preferred Units were redeemed at par; the remaining units were redeemed at par on March 17, 2009.


10.	Income Taxes

The provision (benefit) for income taxes and the reconciliation between the federal statutory income tax rate and the effective income tax rate for the years indicated are summarized as follows:


	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2008			2007			2006
	(Dollars in thousands)

Current:
Federal	$	(53,943	)	$	12,436		$	54,208
State		(2,258	)		2,650			10,116

Total current (benefit) expense		(56,201	)		15,086			64,324
Deferred:
Federal		75,945			(16,997	)		(46,704	)
State		14,323			(3,609	)		(8,675	)

Total deferred expense (benefit)		90,268			(20,606	)		(55,379	)

Total:
Federal		22,002			(4,561	)		7,504
State		12,065			(959	)		1,441

Provision (benefit) for income taxes	$	34,067		$	(5,520	)	$	8,945

Expected federal income tax at 35%	$	(27,230	)	$	(5,634	)	$	7,914
State taxes, net of federal tax		(3,328	)		(689	)		926
Accrued interest		(160	)		679			—
Deferred tax asset allowance		74,015			—			—
Permanent differences		(8,674	)		116			105
Other		(556	)		8			—

Provision (benefit) for income taxes	$	34,067		$	(5,520	)	$	8,945

Effective income tax rate		(43.8	)%		(34.3	)%		39.6	%

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2008 and 2007 are summarized as follows:


	2008		2007
	(Dollars in thousands)

Deferred tax assets:
Allowance for credit losses	$	—	$	56,715
Goodwill		—		45,545
Securitizations		—		2,934
Other		—		6,549

Gross deferred tax assets		—		111,743

Deferred tax liabilities:
Discount on predecessor finance receivables held for investment		—		(11,354	)
Deferred loan origination costs		—		(10,121	)
Other comprehensive income		—		(1,240	)

Gross deferred tax liabilities		—		(22,715	)

Net deferred tax asset	$	—	$	89,028

A valuation allowance on tax assets is recorded if it is more likely than not that some portion or all of the tax assets will not be realized through recovery of taxes previously paid and/or future taxable income. The allowance is subject to ongoing adjustments based on changes in circumstances that affect our assessment of the realizability of the tax assets. We reviewed our tax assets and based upon this review, we established a valuation allowance of $74.0 million during the year ended December 31, 2008 to reduce our tax assets to an amount which is more likely than not to be realized. There was no valuation allowance at December 31, 2007.

As a result of the corporate reorganization discussed in Note 1, the Company became a pass-through entity for tax purposes and any taxable income or loss generated after December 31, 2008 will be passed through and reported by the respective owners of Triad Financial Holdings LLC. This corporate reorganization also resulted in the reversal of the previously recorded deferred tax assets and liabilities, therefore, the Company had a $46.2 million federal and state taxes receivable at December 31, 2008.

The Company accounts for uncertainty in income taxes recognized in the financial statements in accordance with FIN 48. The Company has identified certain tax positions for which deductibility is highly certain, but for which there is uncertainty as to the timing of such deductibility. As of December 31, 2007, the Company had reclassified approximately $4.6 million of tax benefit from its deferred tax liability to its FIN 48 current tax liability.

The changes in the Company’s gross unrecognized tax benefits for the years indicated are summarized as follows:


	Year Ended			Year Ended
	December 31,			December 31,
	2008			2007
	(Dollars in thousands)

Balance, beginning of year	$	3,825		$	3,407
Additions (reductions) for tax positions of prior periods		(3,825	)		418
Additions (reductions) for tax positions relating to the current period		—			—
Settlements		—			—
Lapses in statutes of limitations		—			—

Balance, end of year	$	—		$	3,825

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The Company’s policy is to recognize interest and/or penalties related to income tax matters as a component of income tax expense. At December 31, 2008 and 2007, the Company had accrued, net of tax, $0.2 million and $0.7 million, respectively, for the potential payment of interest and/or penalties.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. All tax periods subsequent to the Acquisition are open to examination by the Internal Revenue Service and the states to which we are subject to tax.


11.	Derivative Financial Instruments

At December 31, 2008, the Company had interest rate swap agreements with external third parties with underlying notional amounts of $1.5 billion. These agreements were valued at a loss of $23.7 million at December 31, 2008. Other income (expense) for the years ended December 31, 2008 and 2007 included $15.8 million and $17.5 million in losses on our interest rate swap agreements, respectively. Other income (expense) for the year ended December 31, 2006 included $0.7 million in gains on our interest rate swap agreements. At December 31, 2008 and 2007, the Company had $11.9 million and $2.9 million, respectively, in collateral on deposit with the counterparties to the derivative financial instruments. These amounts are included in restricted cash on our balance sheets.


12.	Commitments and Contingencies

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against the Company and its subsidiaries. As a consumer finance company, the Company is subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against the Company could take the form of class action complaints by consumers. As the assignee of finance contracts originated by dealers, the Company may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages.

Litigation is subject to many uncertainties, the outcome of individual litigated matters is not predictable with assurance and it is reasonably possible that some of the foregoing matters could be decided unfavorably to the Company or the subsidiary involved. Although the amount of liability at December 31, 2008 with respect to these matters cannot be ascertained, the Company believes that any resulting liability would not materially affect the consolidated financial position, results of operations or cash flows of the Company and its subsidiaries.

Under the management agreement among the Company, Triad Financial Holdings LLC and Hunter’s Glen/Ford Ltd., the parties engaged Hunter’s Glen/Ford as a financial and management consultant. During the term of the engagement, Hunter’s Glen/Ford will provide Gerald J. Ford to serve as the chief executive officer of Triad Financial Holdings LLC and executive chairman of the Company as specified in the agreement and will provide Carl B. Webb and J. Randy Staff, or similarly qualified individuals, to furnish a portion of the services required by the management agreement. The Company agreed to pay Hunter’s Glen/Ford Ltd a management fee of $1.5 million per annum for the services described above.

During the third quarter of 2007, the Company entered into a consulting agreement with Carl B. Webb. Under the terms of the agreement, Mr. Webb will provide consulting services to the Company in return for a fee of $250,000 per annum. This consulting agreement was amended in the first quarter of 2008 to change the annual fee to $500,000.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

In July 2007, the Company announced that it would be transitioning certain functions from its Huntington Beach, California facility to its North Richland Hills, Texas facility. These functions include loss recovery, remarketing, risk management, human resources and corporate legal. The Company also announced that it would be designating North Richland Hills, Texas as its corporate headquarters. This transition was substantially completed by the end of 2007. During 2007, the Company recorded charges totaling $5.3 million related to the transition, of which $1.5 million was accrued at December 31, 2007.

The Company’s operations are conducted from leased facilities under non-cancellable lease agreements accounted for as operating leases. The Company also leases certain equipment. Rental expense charged to operations amounted to $5.8 million, $4.2 million and $4.1 million for the years ended December 31, 2008, 2007 and 2006, respectively. Rental expense for the year ended December 31, 2008 included a $2.6 million accrual related to future excess facility capacity resulting from the shutdown of the dealer originations channel discussed in Note 1.

Effective October 8, 2008, Santander agreed to sublease approximately 27,000 square feet of space in the Company’s North Richland Hills facility. The space had historically been occupied by the RoadLoans division of Triad. The sublease has a term of one year, subject to a 60-day termination clause held by Triad as Sublandlord, upon the occurrence of certain conditions. The sublease also contains a one-year renewal option on the same terms and conditions as the primary term. For the year ended December 31, 2008, Santander made sublease payments totaling $0.1 million.

Future minimum rental commitments under all non-cancellable leases at December 31, 2008 are summarized as follows. For the year ended December 31, 2009, future minimum rental commitments are net of the sublease commitments from Santander amounting to $0.3 million.


	(Dollars in thousands)

Year ending December 31,
2009	$	2,846
2010	$	3,238
2011	$	2,459
2012	$	2,112


13.	Stock-Based Compensation

Following the closing of the Acquisition, Triad Holdings Inc. adopted a stock plan under which employees, officers, directors and consultants of the Company could be granted options to purchase common stock of Triad Holdings Inc. The maximum number of shares available for grant was equal to approximately 8% of the fully diluted shares of Triad Holdings Inc. The stock options vested annually, generally at the rate of 20% per year, provided the grantees continued to provide services to the Company. All options not exercised expired ten years after the date of grant.

Because the Company is considered to be nonpublic under SFAS 123R, the Company elected to use the formula value (book value) method to calculate compensation expense, in which the Company re-measured its liability each period. The awards were liability-classified based on a repurchase feature of the option agreements. The Company had elected to use a straight-line vesting attribution method for awards granted upon its adoption of SFAS 123R.

The Company recorded a (credit) charge to compensation expense of $(1.2) million, $2.1 million and $0.9 million for stock-based employee compensation for the years ended December 31, 2008, 2007 and 2006, respectively. Compensation expense for the year ended December 31, 2007 included a $1.6 million payment to a former chief executive officer for the repurchase of his option shares vested as of his July 2005 termination date. No options were granted during the year ended December 31, 2008. The Company granted 366,000 and 1.0 million options during the years ended December 31, 2007 and 2006, respectively. Since the inception of the plan, no options have been exercised.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

In connection with the corporate reorganization discussed in Note 1, Triad Holdings Inc. was liquidated and dissolved and approximately 1.1 million in remaining outstanding stock options were canceled as of December 31, 2008. A summary of stock option activity under the Company’s stock option plan is summarized as follows:


				Weighted Average
	Shares			Exercise Price
	(Amounts in thousands except weighted-average exercise price )

Outstanding at December 31, 2005		2,000		$	7.50
Granted		1,000		$	7.73
Canceled		(2	)	$	7.73
Forfeited		(10	)	$	7.73

Outstanding at December 31, 2006		2,988		$	7.58

Granted		366		$	8.37
Canceled		(220	)	$	7.54
Forfeited		(267	)	$	7.58

Outstanding at December 31, 2007		2,867		$	7.68

Canceled		(1,439	)	$	7.71
Forfeited		(1,428	)	$	7.64

Outstanding at December 31, 2008		—		$	—


14.	Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of SFAS No. 107, “Disclosure about Fair Value of Financial Instruments” (“SFAS 107”). Fair value estimates methods and assumptions, set forth below for our financial instruments, are made solely to comply with requirements of SFAS 107 and should be read in conjunction with our consolidated financial statement and related notes.

The estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies available to management at December 31, 2008 and 2007. However, considerable judgment is required to interpret market data in order to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Furthermore, fair values disclosed hereinafter do not reflect any premium or discount that could result from offering the instruments for sale. Potential taxes and other expenses that would be incurred in an actual sale or settlement are not reflected in amounts disclosed.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)

The estimated fair values and related carrying amounts of the Company’s financial instruments are as follows:


	December 31, 2008						December 31, 2007
	Carrying or						Carrying or
	Contract			Estimated			Contract			Estimated
	Amount			Fair Value			Amount			Fair Value
	(Dollars in thousands)

Assets:
Cash and cash equivalents	$	46,494		$	46,494		$	52,505		$	52,505
Cash — restricted		252,300			252,300			295,786			295,786
Finance receivables held for investment, net		1,988,339			1,879,969			3,514,979			3,520,556
Retained interest in securitized assets		—			—			10,916			10,916
Interest rate swap agreements		(23,745	)		(23,745	)		(10,548	)		(10,548	)
Liabilities:
Revolving credit facilities	$	—		$	—		$	334,390		$	334,390
Securitization notes payable		2,010,889			1,875,209			3,195,489			2,884,285
Senior notes payable		60,350			48,498			149,256			149,256

The methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value are explained below:

Cash and Cash Equivalents — The carrying amounts are considered to be a reasonable estimate of fair value since these investments bear interest at market rates and have maturities of less than 90 days.

Cash Restricted — The carrying amounts are considered to be a reasonable estimate of fair value.

Finance Receivables Held For Investment — The fair value of finance receivables is estimated by discounting future net cash flows expected to be collected using a current risk-adjusted rate.

Retained Interest in Securitized Assets — The fair value of retained interest in securitized assets is estimated by discounting the associated future net cash flows using discount rate, prepayment and credit loss assumptions similar to the Company’s experience.

Interest Rate Swap Agreements — Fair value is calculated using observable inputs including interest rate and notional amounts. These calculations are compared to current market values for similar instruments with the same remaining maturities.

Revolving Credit Facilities — Revolving credit facilities have variable rates of interest and maturities of three years or less. Therefore, the carrying value is considered to be a reasonable estimate of fair value.

Securitization Notes Payable — The fair value is based on quoted market prices, when available. If quoted market prices are not available, the market value is estimated by discounting future net cash flows expected to be settled using a current risk-adjusted rate.

Senior Notes Payable — The fair value at December 31, 2008 is based on the recently completed tender offer purchase price. The fair value at December 31, 2007 was based on rates available at that time for debt with similar terms and remaining maturities.

Triad Financial SM LLC

Notes to Consolidated Financial Statements — (Continued)


15.	Quarterly Financial Data (unaudited)

The following table summarizes the quarterly financial results:


	First		Second			Third			Fourth
	Quarter		Quarter			Quarter			Quarter
	(Dollars in thousands)

Year ended December 31, 2008:
Total revenues	$	132,410	$	141,597		$	111,548		$	94,199
Income (loss) before income taxes		1,099		(27,234	)		(40,602	)		(11,064	)
Net income (loss)		929		(48,599	)		(50,214	)		(13,984	)


	First		Second		Third			Fourth
	Quarter		Quarter		Quarter			Quarter
	(Dollars in thousands)

Year ended December 31, 2007:
Total revenues	$	167,166	$	167,138	$	153,973		$	145,503
Income (loss) before income taxes		14,703		14,966		(7,625	)		(38,142	)
Net income (loss)		8,934		8,695		(4,673	)		(23,534	)


ITEM 9.	*CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE*

Not applicable.


ITEM 9A.	*CONTROLS AND PROCEDURES*

Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2008 (“Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective (i) to ensure that information required to be disclosed in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.


ITEM 9B.	*OTHER INFORMATION*

On March 27, 2009, the Company and Triad Financial SM Inc. entered into the Third Supplemental Indenture to the Indenture governing its 11.125% Senior Notes due 2013. The Third Supplemental Indenture eliminated substantially all of the covenants and certain events of default in the Indenture, including, among others, the covenant that requires the Company to file reports under the Exchange Act. Accordingly, the Company will no longer file reports with the Securities and Exchange Commission following the filing of this report on Form 10-K, unless it becomes subject to provisions of the Exchange Act at a later date.

PART III


ITEM 10.	*DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE*

The principal officers and directors of the Company, and their positions and ages at February 28, 2009, are as follows:


Name	Age		Position

Daniel D. Leonard		60	President, CEO and Director
Jeffrey O. Butcher		44	Vice President and Chief Financial Officer
Scott A. France		46	Senior Vice President — Portfolio Management
Mark A. Kelly		40	Senior Vice President — Director of Risk Management
Gerald J. Ford		64	Co-Chairman of the Board of Directors
Carl B. Webb		59	Co-Chairman of the Board of Directors
Philip A. Canfield		41	Director
Aaron D. Cohen		32	Director
David A. Donnini		43	Director
Donald J. Edwards		43	Director
J. Randy Staff		61	Director

The present principal occupations and recent employment history of each of our executive officers and directors listed above is as follows:

Daniel D. Leonard currently serves as our President and Chief Executive Officer, which positions he assumed in June 2007. He became a member of the Board of Directors in May, 2008. Prior to his appointment as President and CEO, Mr. Leonard served as our Senior Vice President — Portfolio Management, a position he held since May 2003. He has over 30 years experience in the finance industry. Prior to joining Triad, Mr. Leonard served from 1991 in several positions with California Federal Bank, including as its Senior Vice President — Consumer and Business Banking, Senior Vice President — Retail Distribution, and most recently as President of its subsidiary, Auto One Acceptance Corp., an auto loan financing company. Prior to joining California Federal Bank, Mr. Leonard served in several senior management positions with BankAmerica Corp.

Jeffrey O. Butcher currently serves as our Vice President and Chief Financial Officer, a position he assumed in October 2008. Mr. Butcher has been with the Company since July 2003 and previously served as Corporate Controller. From 1987 through 2003, he was Senior Vice President and Controller for Bay View Capital Corporation, a San Francisco Bay Area community bank. Prior to that, he was with KPMG, where he was a Senior Manager in the financial services practice.

Scott A. France currently serves as our SVP — Portfolio Management and joined Triad in August 2007. Prior to joining Triad, Mr. France served for 11 years as Senior Vice President Call Center Operations and Executive Vice President Portfolio Services at AmeriCredit where he was responsible for Collections, Loss Recovery, Asset Remarketing and Bankruptcy Management. Prior to AmeriCredit, Mr. France worked for World Omni Financial Corp. for 12 years in Credit, Collections and Portfolio Servicing.

Mark A. Kelly currently serves as our Senior Vice President — Director of Risk Management and joined Triad in June 2007 as Senior Vice President. Prior to joining Triad, Mr. Kelly was with Hunter’s Glen Ford, Ltd. in the acquisition group. Previously, Mr. Kelly served as an executive vice president and chief financial officer of Auto One Acceptance Corporation, where he was responsible for financial accounting, risk management, and regulatory compliance.

Gerald J. Ford is currently Chairman of the Board of Directors of First Acceptance Corporation and has been since 1996. Mr. Ford was Chairman of the Board of Directors and Chief Executive Officer of Golden State Bancorp and its predecessors from 1994 to 2002. During that period, Mr. Ford also served as Chairman of the Board of Directors and Chief Executive Officer of Golden State Bancorp’s wholly-owned subsidiary, California Federal Bank, FSB. Additionally, Mr. Ford served as a Director of Auto One Acceptance Corporation, a wholly-owned auto

finance subsidiary of California Federal Bank, FSB. Mr. Ford was Chairman of the Board of Directors and Chief Executive Officer of First Gibraltar Bank, FSB from 1988 to 1993. Mr. Ford was the principal shareholder, Chairman of the Board of Directors and Chief Executive Officer of First United Bank Group, Inc. and its predecessors from 1975 to 1994. Mr. Ford is currently a Director of Hilltop Holdings, Inc., Scientific Games Corporation, Freeport-McMoRan Copper & Gold Co. and McMoRan Exploration Co. Mr. Ford also served as a Director of AmeriCredit Corp. from June 2003 until he resigned in August 2004. Mr. Ford currently is on the Board of Trustees of Southern Methodist University and was formerly the Chairman of the Board.

Carl B. Webb resigned as President and Chief Executive Officer in June 2007, and now serves as Co-Chairman of the Board of Directors of the Company. Mr. Webb has served as a director since April 29, 2005. He was President and Chief Operating Officer of Golden State Bancorp and its predecessors from 1994 to 2002. During that period, Mr. Webb also served as President and Chief Operating Officer of Golden State Bancorp’s wholly-owned subsidiary, California Federal Bank, FSB. Additionally, Mr. Webb served as a Director of Auto One Acceptance Corporation, a wholly-owned auto finance subsidiary of California Federal Bank, FSB. Prior to Golden State Bancorp, Mr. Webb was the President and Chief Operating Officer of First Gibraltar Bank, FSB from 1988 to 1993. Mr. Webb was the President of the First National Bank of Lubbock, Texas from 1983 to 1989. Mr. Webb is currently a Director of Hilltop Holdings, Inc., MacAndrews & Forbes Worldwide Corp., and AMB Property Corporation.

Philip A. Canfield is a Principal of GTCR Golder Rauner, L.L.C. and has worked at GTCR since 1992. His primary area of focus is information technology investments. In addition, Mr. Canfield is experienced in general business services investments. Mr. Canfield serves on the board of directors of TNS, Inc. and several private companies in GTCR’s portfolio. Prior to joining GTCR, Mr. Canfield was employed in the corporate finance department of Kidder, Peabody & Co. Incorporated where he focused on public offerings and merger and acquisitions.

Aaron D. Cohen is a Vice President with GTCR Golder Rauner, L.L.C. and has been with GTCR since April 2003. Prior to joining GTCR, Mr. Cohen worked as an analyst at the private equity firm of Hicks, Muse, Tate & Furst from 2000. He worked as an analyst in the Mergers & Acquisitions Group of Salomon Smith Barney from 1998 to 2000. Mr. Cohen is currently a director of Wilton Products, Inc., a GTCR private portfolio company.

David A. Donnini is a Principal of GTCR Golder Rauner, L.L.C., which he joined in 1991. Prior to joining GTCR, he worked as a management consultant at Bain & Company. He received a BA in Economics from Yale University. He also holds an MBA from Stanford University. In addition to his service on the board of Triad, Mr. Donnini serves on the boards of Coinmach Service Corp., Prestige Brands Holdings, Inc., Syniverse Technologies, Inc. and several private GTCR portfolio companies.

Donald J. Edwards is Managing Principal of Flexpoint Partners, LLC, an equity investment firm. From July 2002 to April 2004, Mr. Edwards served as President and Chief Executive Officer of First Acceptance Corporation, formerly known as Liberté Investors Inc. From 1994 to 2002, Mr. Edwards was a Principal at GTCR Golder Rauner, L.L.C., where he headed the firm’s healthcare investment effort. Prior to joining GTCR, Mr. Edwards was an Associate at Lazard Frères & Co. LLC. Mr. Edwards is a Director of First Acceptance Corporation.

J. Randy Staff was Executive Vice President and Chief Financial Advisor of Golden State Bancorp and its predecessors from 1994 to 2002, where Mr. Staff was primarily responsible for mergers and acquisitions. During that period, Mr. Staff also served as Executive Vice President and Chief Financial Advisor of Golden State Bancorp’s wholly-owned subsidiary, California Federal Bank, FSB. Additionally, Mr. Staff served as a Director and an interim President of Auto One Acceptance Corporation, a wholly-owned auto finance subsidiary of California Federal Bank, FSB. From 1973 to 1994, Mr. Staff was a Partner specializing in financial services at KPMG. Mr. Staff currently serves as a director of Hilltop Holdings, Inc., and is Chairman of the Board of Directors and the majority shareholder of the American Bank, N.A., Dallas, Texas and the Citizens State Bank, Jackson County, Texas and has been since 1987 and 1985, respectively.

Family Relationships

There are no family relationships between any of our executive officers or directors.

Code of Ethics

Our Corporate Governance Committee reviewed and approved the Company’s Business Conduct Manual and Ethics Code, or the “Ethics Code”, which provides, among other things, an employee hotline to report suspected violations of our policies in this regard. The program is monitored by the Office of General Counsel. There have been no reports received either through this hotline number of by any other medium since the Ethics Code was introduced. Those who wish to review a copy of the Ethics Code can do so by contacting the Office of General Counsel at Triad Financial SM LLC, 5201 Rufe Snow Drive, North Richland Hills, Texas, 76180.

Board Meetings

The Board of Directors convenes quarterly and will conduct other meetings from time to time in order to address issues that arise which require board approval. In addition to full board meetings, the following committees made up board members meet as needed to address the items delegated to them by the full board:

Audit Committee

The Audit Committee of the company meets no less frequently than quarterly to discuss, among other things, audit results presented by the Company’s independent registered public accounting firm and filings required to be made by the company from time to time. In addition to the members of the committee, members of the independent registered public accounting firm, the Senior Manager of Internal Audit, the Chief Financial Officer and others may be asked to join and make presentations at such meetings. Mr. J. Randy Staff, who serves as Chairman of the Audit Committee, has been designated as the financial expert. He is joined on the Committee by Mr. David A. Donnini, Mr. Donald J. Edwards and Mr. Aaron D. Cohen. Mr. Staff is not independent as defined in Rule 4200(a)(15) of the Nasdaq Marketplace Rules.

Nominating and Corporate Governance Committee

The Nominating and Governance Committee of the company meets periodically to, among other things, approve the slate of officers for the Company and, if applicable, establish approval and contracting authority for such officers. Mr. Gerald J. Ford, Mr. Philip A. Canfield and Mr. Carl B. Webb serve on the committee.

All committees are authorized to meet telephonically in order to conduct the tasks required of them.


ITEM 11.	*EXECUTIVE COMPENSATION*

COMPENSATION DISCUSSION AND ANALYSIS

In this Compensation Discussion and Analysis, we address the compensation paid to our executive officers listed in the Summary Compensation Table that immediately follows this discussion. We refer to these executives as the “Senior Executive Officers.”

The Compensation Committee has, upon consideration of the recommendations of the Co-Chairmen of the Board and/or the CEO, determined the salary component for Senior Executive Officer compensation. The Compensation Committee, also based on the recommendations of the Co-Chairmen of the Board and the CEO, sets the performance criteria and target levels for Senior Executive Officers (other than the CEO) with respect to potential annual incentive payments for the upcoming year. Our process begins with establishing corporate performance objectives for the year. The Compensation Committee and our Co-Chairmen of the Board discuss strategic objectives and performance targets. We review the appropriateness of the financial measures used in our incentive plan and the degree of difficulty in achieving specific performance targets.

The recommendations to the Compensation Committee for Senior Executive Officer’s compensation, and the Compensation Committee’s review of those recommendations, are based primarily upon an assessment of corporate performance and potential to enhance long-term stockholder value in determining the amount and mix of compensation elements, and whether each particular payment or award provides an appropriate incentive and reward for performance that sustains and enhances long-term shareholder value. Key factors affecting our judgment include: (1) performance compared to the financial, operational and strategic goals established at the beginning of

the year; (2) nature, scope and level of responsibilities; (3) achievement of our financial results, particularly with respect to key metrics such as credit quality, revenue, earnings and return on equity; (4) effectiveness in leading our initiatives to increase productivity and stockholder value; and (5) contribution to our commitment to corporate responsibility, including success in creating a culture of compliance with both applicable laws and our ethics policies.

We may also consider each Senior Executive Officer’s current salary and the appropriate balance between incentives for long-term and short-term performance.

Since April 2005, we have used three categories of eligible compensation for the Senior Executive Officers: base salary, annual incentive payments and stock option grants. As a privately held corporation, the Board of Directors sought to align the interests of the Senior Executive Officers with those of the investors. In that regard, the board, in 2005, adopted the 2005 Long Term Incentive Plan for Triad Holdings Inc., or the “2005 Plan” for the Senior Executive Officers of the Company. Grants were made to the Senior Executive Officers under the 2005 Plan shortly after its adoption. Additional grants were made in 2006 to certain Senior Executive Officers, and the Compensation Committee also approved the award of grants to other key employees, to be based upon recommendations from their supervisors, subject to the approval of the President and CEO. No grants were made to the existing Senior Executive Officers in 2008.

Compensation Consultant

Neither the Company nor the Compensation Committee retained any compensation consultants during 2008. In 2005, we established compensation levels using a limited benchmarking survey, relying on data provided to us by our independent compensation consultant, Towers Perrin. During 2008, the Compensation Committee reviewed the compensation packages of the Senior Executive Officers, and approved changes to the base salary of a number of those individuals. We will continue to monitor the compensation practices of our competitors and similarly situated financial institutions to ensure that our salary structure and benefits offered to our Senior Executive Officers remains competitive, so that we may attract and retain talented and experienced leaders.

Overview of Compensation Philosophy and Program

The Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company, and which aligns the executives’ interests with those of the shareholders by rewarding performance above established goals, with the ultimate objective of improving shareholder value. The Compensation Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to the Senior Executive Officers remains competitive relative to the compensation paid to similarly situated executives in our industry. To that end, the Compensation Committee believes executive compensation packages provided by the Company to its Senior Executive Officers should include both cash and stock-based compensation that reward performance as measured against established goals.

The following compensation objectives are considered in setting the compensation programs for our Senior Executive Officers:


	•	drive and reward performance which supports our core values;

	•	provide a significant percentage of total compensation that is “at-risk,” or variable, based on predetermined performance criteria;

	•	design competitive total compensation and rewards programs to enhance our ability to attract and retain knowledgeable and experienced Senior Executive Officers; and

	•	set compensation and incentive levels that reward significant achievement.

We believe the adjustments made to the salaries of our Senior Executive Officers in 2008 achieved the goal of providing competitive salaries, but we will continue to informally monitor the compensation practices in the financial services industry.

Role of Senior Executives in Compensation Decisions

The Co-Chairmen of the Board, or the “Co-Chairmen”, annually review the performance of the Senior Executive Officers, including the Chief Executive Officer. The conclusions resulting from their recommendations, including proposed salary adjustments and annual award amounts, are then presented to the Compensation Committee for consideration and approval. The Compensation Committee can exercise its discretion in modifying those recommendations.

Compensation Elements and Rationale for Pay Mix Decisions

To reward both short and long-term performance in the compensation program and in furtherance of our compensation objectives noted above, the compensation philosophy for our Senior Executive Officers includes the following four principles:


(1)	Compensation should be related to the Company’s performance

We believe that a significant portion of a Senior Executive Officer’s compensation should be tied to the overall Company performance measured against our financial goals and objectives. During periods when performance meets or exceeds the established objectives, Senior Executive Officers should be paid at or more than expected levels, respectively. When our performance does not meet key objectives, incentive award payments, if any, should be less than such levels.


(2)	Incentive compensation should represent a large portion of a Senior Executive’s total compensation

We intend to minimize the amount of fixed compensation paid to Senior Executive Officers in order to minimize costs when our performance is not optimal. A significant portion of compensation should be paid in the form of short-term and long-term incentives, which are calculated and paid based primarily on financial measures of profitability and shareholder value creation. Senior Executive Officers are incented to increase our profitability and shareholder return in order to earn the major portion of their compensation.


(3)	Compensation levels should be competitive

The Compensation Committee believes that a competitive compensation program enhances our ability to attract and retain Senior Executive Officers. They have been empowered by the board with the flexibility to ensure that the compensation program is competitive with that provided by comparable firms.


(4)	Incentive compensation should balance short-term and long-term performance

The Compensation Committee seeks to achieve a balance between encouraging strong short-term annual results and ensuring our long-term viability and success. To reinforce the importance of balancing these perspectives, Senior Executive Officers will be provided both short and long term incentives. Short term incentives are embodied in our annual incentive plans, while, for the longer term, we provided Senior Executive Officers and a number of key employees with the opportunity to become indirect shareholders of Triad.

Metrics Used in Compensation Programs

The Compensation Committee, working with the CEO in the first quarter of 2008, adopted a general outline of performance-based metrics for defining Senior Executive Officer incentive compensation during 2008. These metrics (the “Performance Metrics”) are defined, and their use in Senior Executive Officer’s annual compensation is described below:

Credit Quality: While there is a loss expectation inherent in the loans we originate and the contracts we purchase, we seek to manage the credit quality of the overall portfolio through prudent servicing practices with respect to the loans and contracts already booked, and through sound underwriting practices across all channels.

Profit Before Taxes: This measurement takes into account overall earnings, whether they came from the pool of receivables acquired at the closing of the Acquisition, or from the contracts originated since that time.

Operating Costs: This final financial metric is based on a targeted percentage set at the beginning of the fiscal year. The Senior Executive Officers are encouraged to control expenditures in order to meet or exceed the established goals.

The compensation program also includes a discretionary aspect to the Incentive Compensation for Senior Executive Officers.

Review of Senior Executive Officer Performance

In addition to considering the recommendations made by the Co-Chairmen, the Compensation Committee has the opportunity to meet with the Senior Executive Officers at various times during the year, which allows them to consider and independently assess each individual’s performance and contribution.

Components of the Executive Compensation Program

We believe the total compensation and benefits program for the Senior Executive Officers should consist of the following:


	•	base salaries;

	•	annual incentive payment;

	•	long-term incentive compensation, through stock option grants; and

	•	other customary health and welfare benefits.

Base Salaries

Senior Executive Officers’ base salaries remained virtually unchanged during 2008. Base salaries are determined by evaluating the level of responsibility and experience of the Senior Executive Officers, together with the Company’s performance.

When considering the base salary of the Senior Executive Officers for fiscal year 2008, the Co-Chairmen and the Compensation Committee took into account our 2007 performance, the changes to the composition of the Senior Executive team, as well as long and short-term goals, such as:


	•	meeting pre-tax income goals;

	•	successful management of portfolio and institutional risk;

	•	maintenance of overall credit quality with respect to both existing and newly originated loans; and

	•	the adherence to the cost structure.

The Compensation Committee, together with the Co-Chairmen, may adjust base salaries when, among other factors:


	•	the current compensation demonstrates a significant deviation from the market data;

	•	it wishes to recognize outstanding individual performance; and

	•	it wishes to recognize an increase in responsibility.

Annual Incentive Compensation

The incentive compensation awarded annually provides Senior Executive Officers with the opportunity to earn cash bonuses based on the achievement of specific Company goals. The CEO, together with the Compensation Committee, designs the annual incentive component of our compensation program to align Senior Executive Officers’ pay with our annual (short term) performance.

The Compensation Committee approves a target incentive payout as a percentage of the base salary earned during the incentive period for each Senior Executive Officer. The incentive target percentage represents the Senior Executive Officer’s annual bonus opportunity if the annual performance goals of the incentive plan are achieved.

For 2008, the Compensation Committee approved the Performance Metrics. Each Performance Metric has a weight within the plan.

Performance targets are established at levels that are achievable, but require better than expected planned performance. The amount to be paid to each Senior Executive Officer as an annual incentive for 2008 is determined by analyzing our results with respect to the Performance Metrics previously discussed. The Compensation Committee analyzes the Senior Executive Officers’ performance for the year and then determines the incentive level based upon the analysis with target awards that are based upon a percentage of base salary. The Compensation Committee, on the recommendation of the Co-Chairmen, sets minimum, target and maximum levels for each component of the Performance Metrics for the annual cash incentive compensation. Payments of annual incentive compensation are based upon the achievement of such objectives for the current year. Certain Senior Executive Officers received a discretionary bonus in December 2008 as indicated in the Summary Compensation Table.

Stock Options

Grants of stock options to Senior Executive Officers, employees and others who provide services to the Company were made under the 2005 Plan.

Each stock option permitted the Grantee, generally for a period of ten years, to purchase one share of stock of Triad Holdings Inc., or Holdings, at the exercise price, which was the book value per share of the stock as of the most recently reported quarter on the date of grant. Since the stock of Holdings was not publicly traded, we believed this method of valuation was an appropriate reflection of the true value of the unexercised vested option shares as a particular date. Stock options granted initially to the Senior Executives in 2005 were based on the value per share of Holdings as of the closing of the Acquisition. Stock options had value only to the extent the value of Holdings stock on the date of exercise exceeded the exercise price. Options were generally exercisable in five equal installments beginning the date of the grant date and continued annually thereafter on the anniversary of the grant date, or the month ending immediately prior to the anniversary of the grant date.

Option holders generally forfeited any unvested options if their employment with us terminated. In such event, their right to exercise vested option shares terminated on the date of termination. To the extent that the book value of the most recently completed quarter exceeded the strike price, they were paid the difference for each vested option share. All granted options vested upon a change in control of the Company.

In connection with the corporate reorganization discussed in Note 1 to the Consolidated Financial Statements, Triad Holdings Inc. was liquidated and dissolved and all remaining outstanding stock options were canceled as of December 31, 2008. No stock options were granted or exercised during 2008.

Options Exercised — 2008

None of the Senior Executive Officers exercised any of the Vested Option Shares available for exercise during 2008.

Other Equity Incentive Plans

The 2005 Plan only authorizes the grant of stock options in Holdings. Neither the Company nor Holdings offers any stock appreciation rights, Employee Stock Purchase Plans, restricted stock plans, or other plans providing for equity or equity-based compensation.

Retirement, Health and Welfare Benefits

We offer a variety of health and welfare programs to all eligible employees. The Senior Executive Officers generally are eligible for the same benefit programs on the same basis as the rest of the Company’s employees. The health and welfare programs are intended to protect employees against catastrophic loss and encourage a healthy

lifestyle. Our health and welfare programs include medical, prescription drug, dental, vision, life insurance and accidental death and disability. We provide short-term disability, long-term disability and basic life insurance at no cost to the employees who qualify for such benefits. We offer a qualified 401(k) savings plan. All Company employees, including Senior Executive Officers, are generally eligible to participate in the 401(k) plan. We do not offer any pension plans or similar benefits to our employees.

Employment Agreements and Arrangements

We entered into an employment agreement, or the “Goodman Agreement” with Mr. Chris Goodman in 2005. The Agreement provided for a minimum annual salary of $255,000. The Goodman Agreement provides that he will serve as Director of the RoadLoans Division of the Company for a three-year period or until the earlier to occur (if at all) of his termination or resignation. The Agreement provides that Mr. Goodman is eligible for our employee benefit plans and other benefits provided in the same manner and to the same extent as our other employees. The Goodman Agreement also contains confidentiality provisions and a covenant not to solicit employees or clients during his employment term and for three years following the termination of his employment. In August 2007, the Company and Mr. Goodman entered into an amended and Restated Employment Agreement, under the terms of which Mr. Goodman’s salary was increased to $270,000. The amended agreement has an initial term of three years, and contains an annual renewal provision unless either party seeks to terminate it. When Santander purchased the RoadLoans lending division in June 2008, they extended an offer of employment to Mr. Goodman, but they declined to assume the Goodman Agreement. The Company declined to renew the Goodman Agreement in July 2008, but agreed to pay the remaining 22 months under Mr. Goodman’s agreement. Those payments commenced in the fourth quarter of 2008.

In February 2007, we hired Mr. David Satterfield as Senior Vice President and Director of Dealer Channel Originations. In connection with his joining the Company, we entered into an employment agreement, or the “Satterfield Agreement” with Mr. Satterfield. The Satterfield Agreement provided for a minimum annual salary of $270,000. It also provided that he would serve in that capacity for an initial term of three years, and contains an automatic renewal provision on the anniversary of his hire date. Mr. Satterfield remained with the Company through December 31, 2008. The Company will begin paying him the remaining benefits under the Satterfield Agreement in January 2009.

No other senior executives of the Company had contracts of employment as of December 31, 2008. During the third quarter of 2007, the Company entered into a consulting agreement with Carl B. Webb. Under the terms of the agreement, Mr. Webb will provide consulting services to the Company in return for a fee of $250,000 per annum. In the first quarter of 2008, the consulting agreement was amended to change the annual fee to $500,000.

Both Mr. Butcher and Mr. France were signed to retention agreements during 2007 and 2008, respectively. Mr. Butcher’s agreement provided for a payment of $73,500 in December 2008 and for an additional payment of $171,500 in December 2009 so long as he remains in the employ of the Company on that date. Mr. France’s agreement calls for a payment of $600,000 in December 2010 so long as he remains in the employ of the company on that date.

Non-Qualified Deferred Compensation Plans

We do not have any Non-Qualified Deferred Compensation Plans.

Change in Control Agreements

We have no Change in Control Agreements with any of the Senior Executive Officers of the Company or with any other employee as of the end of 2008. Under the 2005 Plan, all options granted will vest upon a change in control.

Indemnification of Officers and Directors of Triad

We have no indemnification agreements with any of our Senior Executive Officers or with any other employee. However, our limited liability company agreement and certificate of formation provide that all our officers and

directors will be indemnified by us to the fullest extent permissible under the Delaware law from and against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such person’s status as our agent. We have purchased and maintain insurance on behalf of our agents, including our officers and directors, against any liability asserted against them in such capacity or arising out of such agents’ status as officers or directors.

Stock Ownership Guidelines

We have not adopted at this time any guidelines that address the ownership of our stock or that of Holdings.

Tax Implications of Executive Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) places a limit of $1,000,000 on the amount of compensation that may be deducted by the Company in any year with respect to the CEO or any other Senior Executive unless the compensation is performance-based compensation as described in Section 162(m) and the related regulations. At the present time, we do not pay any compensation to our Senior Executives that may not be deductible, including discretionary bonuses or other types of compensation.

Compensation Committee

The Compensation Committee of the company meets from time to time to discuss matters pertaining to the salaries, wages and benefits to be paid to employees. While there is no fixed schedule for these meetings, there will generally be a meeting in the first quarter of each year to ratify bonus pools for the previous year, and to approve the compensation plan proposed by management for the new year. This Committee is chaired by Mr. David A. Donnini, and the other members are Mr. Gerald J. Ford and Mr. Donald J. Edwards.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis for the 2008 fiscal year with the Company’s management. Based on the review and discussions, the Compensation Committee recommended to the Company’s Board of Directors that the Compensation Discussion and Analysis be included in this annual report on Form 10-K.

David A. Donnini (Chairman)

Gerald J. Ford

Donald J. Edwards

Compensation Committee Interlocks and Insider Participation

For a description of the transactions between us and our directors and entities affiliated with such directors, see “Certain Relationships and Related Transactions and Director Independence.” None of our executive officers has served as a member of the board of directors or compensation committee of another entity that had one or more of its executive officer that had one or more of its executive officers servicing as a member of our board of directors.

Compensation of Directors

We do not compensate the directors currently serving on our board of directors, although we entered into a consulting agreement with Mr. Webb at the time he resigned as President and CEO and became the Co-Chairman of the Board. To the extent any future directors are neither our employees nor our principal equity sponsors, such directors may receive fees. We expect the amount of such fees will be commensurate with amounts offered to directors of companies similar to ours.

Summary Compensation Table

The following table sets forth services rendered in all capacities to us for the year ended December 31, 2008 for our President and Chief Executive Officer, our Chief Financial Officer, and the three most highly compensated executive officers as of December 31, 2008:


													Change in
													Pension
											Non-		Value and
											Equity		Nonqualified
											Incentive		Deferred
							Stock		Option		Plan		Compensation		All Other
Name and Principal			Salary		Bonus		Awards		Awards		Compensation		Earnings		Compensation			Total
Position	Year		($)		($)		($)		($)(1)		($)		($)		($)			($)

Daniel D. Leonard		2008	$	354,038	$	60,000		—	$	—		—		—	$	24,200	(2)	$	438,238
President and Chief		2007	$	304,423	$	64,844		—	$	67,500		—		—	$	24,000	(2)	$	460,767
Executive Officer		2006	$	225,000	$	35,550		—	$	90,000		—		—	$	23,800	(2)	$	374,350
Jeffrey O. Butcher		2008	$	195,279	$	—		—	$	—		—		—	$	82,700	(3)	$	277,979
Vice President and
Chief Financial Officer
Mike L. Wilhelms		2008	$	265,846	$	—		—	$	—		—		—	$	156,700	(4)	$	422,546
Former Senior Vice		2007	$	262,500	$	30,375		—	$	94,500		—		—	$	24,000	(4)	$	411,375
President and Chief		2006	$	255,000	$	40,290		—	$	126,000		—		—	$	22,936	(4)	$	444,226
Financial Officer
Timothy O’Connor		2008	$	291,346	$	25,000		—	$	—		—		—	$	170,033	(4)	$	486,379
Senior Vice President —
General Counsel
Scott A. France		2008	$	275,961	$	60,000		—	$	—		—		—	$	90,000	(5)	$	425,961
Senior Vice President —
Portfolio Management
Mark A. Kelly		2008	$	270,000	$	125,000		—	$	—		—		—	$	24,200	(6)	$	419,200
Senior Vice President —
Risk Management


(1)		For each of the stock option grants, the value shown is what is also included in the Company’s financial statements per FAS 123(R). See footnote 14 to the Company’s consolidated financial statements included in this annual report for a complete description of the FAS 123(R) valuation.

(2)		Includes $9,200, $9,000 and $8,800 in 2008, 2007 and 2006, respectively, Company contribution to 401(k) Plan and $15,000 car allowance in 2008, 2007 and 2006.

(3)		Mr. Butcher received a retention bonus of $73,500 in 2008. Includes $9,200 Company contribution to 401(k) Plan.

(4)		Mr. Wilhelms stepped down as Senior Vice President and Chief Financial Officer in October, 2008 and received a severance payment of $135,000. Includes $9,200, $9,000 and $7,936 in 2008, 2007 and 2006, respectively, Company contribution to 401(k) plan. Includes $12,500, $15,000 and $15,000, respectively, car allowance in 2008, 2007 and 2006.

(5)		Mr. O’Connor stepped down as Senior Vice President and General Counsel in January 2009 and received a severance payment of $145,833 in 2008. Includes $9,200 Company contribution to 401(k) Plan and $15,000 car allowance.

(5)		Mr. France joined the Company in August 2007 and received a signing bonus of $75,000 in 2008. Includes $15,000 car allowance.

(6)		Includes $9,200 Company contribution to 401(k) and $15,000 car allowance.

Grants of Plan-Based Awards Table

No stock options were granted during 2008 to our Senior Executive Officers.

Outstanding Equity Awards at Fiscal Year-End

Options Exercised and Stock Vested in Fiscal 2008

No stock options were exercised in fiscal 2008.


ITEM 12.	*SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER / STOCKHOLDER MATTERS*

PRINCIPAL SECURITYHOLDERS

The Company is a wholly-owned subsidiary of Triad Financial Holdings LLC, which we refer to as “Triad Holdings.” The following table sets forth certain information as of March 20, 2009, regarding the beneficial ownership of its common units, Class A preferred units or its Class B preferred units of Triad Financial Holdings LLC by (i) each person we know to be the beneficial owner of more than 5% of its outstanding common units, Class A preferred units or Class B preferred units, (ii) each member of the board of directors of Triad Holdings (which is identical to the board of directors of Triad) and our Named Executive Officers, and (iii) each of our directors and executive officers as a group. To our knowledge, each such security holder has sole voting and investment power as to the units shown unless otherwise noted. Beneficial ownership of the units listed in the table has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act.


											Number of
	Number of					Number of					Class B
	Common					Class A					Preferred
	Units					Preferred Units					Units
	Beneficially		Percent of			Beneficially		Percent			Beneficially		Percent
Name and Address of Beneficial Owner	Owned		Class			Owned		of Class			Owned		of Class

Principal Securityholders:
GS Entities(1),(2)		311,531		31.2	%		114,333		33.3	%		—		*
GTCR Funds(1),(3)		311,531		31.2	%		114,333		33.3	%		176,627		50.0	%
Hunter’s Glen/Ford Ltd.(1),(4)		306,094		30.6	%		112,338		32.8	%		173,544		49.1	%
Directors and Named Executive Officers:
Gerald J. Ford(4)		322,446		32.2	%		112,338		32.8	%		173,544		49.1	%
Carl B. Webb		19,070		1.9	%		998		*			1,542		*
Philip A. Canfield(3)		311,531		31.2	%		114,333		33.3	%		176,627		50.0	%
Aaron D. Cohen		—		*			—		*			—		*
David A. Donnini(3)		311,531		31.2	%		114,333		33.3	%		176,627		50.0	%
Donald J. Edwards		16,352		1.6	%		—		*			—		*
J. Randy Staff		19,070		1.9	%		998		*			1,542		*
Daniel D. Leonard		—		*			—		*			—		*
Jeffrey O. Butcher		—		*			—		*			—		*
Scott A. France		—		*			—		*			—		*
Mark A. Kelly		—		*			—		*			—		*
All directors and executive officers as a group (11 persons)(1),(2),(3),(4)		1,000,000		100.0	%		343,000		100.0	%		353,255		100.0	%


*		Represents less than 1%

(1)		Amounts shown reflect the beneficial ownership of the principal securityholders in Triad Financial Holdings LLC. The ownership interests in Triad Financial Holdings LLC consist of preferred units and common units. See “Certain Relationships and Related Transactions and Director Independence — Limited Liability Company Agreement of Triad Financial Holdings LLC” for more information.


(2)		Amounts shown reflect the aggregate interest held by MTGLQ Investors, L.P., which is a wholly-owned subsidiary of The Goldman Sachs Group, Inc. (“GS Group”), and investment partnerships, of which affiliates of GS Group are the general partner or managing general partner. These investment partnerships, which we refer to as the “GS Funds” (together with MTGLQ Investors, L.P., the “GS Entities”), are GSCP 2000 Triad Holding, L.P., GS Capital Partners 2000, L.P., GSCP 2000 Offshore Triad Holding, L.P., GSCP 2000 GmbH Triad Holding, L.P., GS Capital Partners 2000 Employee Fund, L.P. and Goldman Sachs Direct Investment Fund 2000, L.P. The address for each of these beneficial owners is c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 1004.

(3)		Amounts shown reflect the aggregate interest held by GTCR Fund VIII, L.P., Fund VIII/B Triad Splitter, L.P. and GTCR Co-Invest II, L.P., which we collectively refer to as the “GTCR Funds.” Messrs. Donnini and Canfield are each principals and/or members of GTCR Golder Rauner II, L.L.C. (“GTCR II”). GTCR II is the general partner of GTCR Co-Invest II, L.P. and GTCR Partners VIII, L.P., which is the general partner of GTCR Fund VIII, L.P. and Fund VIII/B Triad Splitter, L.P. Accordingly, Messrs. Donnini and Canfield may be deemed to beneficially own the units owned by the GTCR Funds. Each such person disclaims beneficial ownership of any such units in which he does not have a pecuniary interest. The address of each such person and the GTCR Funds is c/o GTCR Golder Rauner, L.L.C., 6100 Sears Tower, Chicago, IL 60606. The units are included four times in the table under the beneficial ownership of each of Mr. Canfield, Mr. Donnini, the GTCR Funds and all directors and executive officers as a group.

(4)		Amounts shown include units owned through Hunter’s Glen/Ford and Turtle Creek Revocable Trust, of which Gerald J. Ford is the Trustee. Because Gerald J. Ford is one of two general partners of Hunter’s Glen/Ford, and the sole stockholder of Ford Diamond Corporation, a Texas corporation, and the other general partner of Hunter’s Glen/Ford, Gerald J. Ford is considered the beneficial owner of the units of Triad Financial Holdings LLC owned by Hunter’s Glen/Ford. The address of each such person is c/o Hunter’s Glen/Ford Ltd., 200 Crescent Court, Suite 1350, Dallas, TX 75201.


ITEM 13.	*CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE*

In connection with our acquisition in April 2005, we entered into a unit purchase agreement, stockholders agreement, registration rights agreement, management agreement and stock purchase agreement and our principal stockholders entered into a limited liability company agreement, all as further described below.

In connection with the corporate reorganization transactions in December 2008, we entered into a new registration rights agreement, a joinder agreement to the management agreement, a new limited liability company agreement and our principal securityholders entered into a limited liability company agreement, each as further described below.

Relationship with Ford Credit

Prior to April 29, 2005, Triad Financial Corporation was a wholly-owned subsidiary of Fairlane Credit LLC. Fairlane Credit was a wholly-owned subsidiary of Ford Credit. When we were a subsidiary of Ford Credit, we received financing support and technical and administrative advice and services from Ford Credit.

Unit Purchase Agreement

In connection with the closing of the acquisition in April 2005, Triad Holdings, LLC entered into a unit purchase agreement with the GTCR Funds, the GS Entities and Hunter’s Glen/Ford pursuant to which the GTCR Funds, the GS Entities and Hunter’s Glen/Ford acquired a strip of preferred units and common units of Triad Holdings, LLC for an aggregate purchase price of $114.8 million. On December 30, 2008, Triad Holdings, LLC was liquidated and dissolved in accordance with Delaware law.

Limited Liability Company Agreement of Triad Holdings, LLC

Capitalization. Triad Financial Corporation was indirectly controlled by Triad Holdings LLC. Triad Holdings LLC had authorized preferred units and common units under the terms of its limited liability company

agreement. Each class of units represented a fractional part of the membership interests of Triad Holdings LLC. On December 30, 2008, Triad Holdings, LLC was liquidated and dissolved in accordance with Delaware law.

The preferred units of Triad Holdings LLC accrued dividends at a rate of 6% per annum, compounded annually. Upon any liquidation or other distribution by Triad Holdings LLC, holders of preferred units were entitled to an amount equal to the original investment in such preferred units, plus any accrued and unpaid preferred yield, before any payments may be made to holders of common units. The common units represented the common equity of Triad Holdings LLC. After payment of (1) the accrued and unpaid preferred yield on the preferred units and (2) the return of the invested capital by the preferred unitholders, the holders of common units were entitled to any remaining proceeds of any liquidation or other distribution by Triad Holdings LLC pro rata according to the number of common units held by such holder.

The indenture governing the senior notes generally limits the ability of Triad to pay cash distributions to its equityholders, other than distributions in amounts approximately equal to the tax liability of members of Triad Holdings LLC, unless certain conditions are satisfied. Because Triad Holdings LLC’s only significant assets were the equity securities of its subsidiaries, it likely would not have sufficient funds to make distributions to its members, other than quarterly tax distributions.

Board of Managers. The board of managers generally had the exclusive authority to manage and control the business and affairs of Triad LLC. Under the terms of the limited liability company agreement, the board was initially composed of the following ten members:


	•	three representatives designated by the GS Entities, who initially were Peter C. Aberg, Stuart A. Katz and Lance West. Mr. West resigned in April 2006 and was replaced by Daniel J. Pillemer, who in turn was replaced by Jonathon D. Fiorello in February 2007, who in turn was replaced by Gaurav Seth in November 2007. Each of Messrs. Aberg, Katz and Seth resigned their positions effective May 12, 2008;

	•	three representatives designated by the GTCR Funds, who initially were Philip A. Canfield, David A. Donnini and David I. Trujillo. Mr. Trujillo resigned in March 2006, and was replaced by Aaron D. Cohen;

	•	three representatives designated by Hunter’s Glen/Ford, who initially were Donald J. Edwards, J. Randy Staff and Carl B. Webb; and

	•	the LLC’s chief executive officer, who initially was Gerald J. Ford.

With respect to each of the foregoing equity sponsors (that is, the GS Entities, the GTCR Funds and Hunter’s Glen/Ford), so long as it and its respective affiliates continued to hold at least 50%, 25% and one of the common units purchased by it and its affiliates under the unit purchase agreement, it had the right to designate three, two and one representative(s) to the board of Triad Holdings LLC, respectively. However, if the GS Entities and their affiliates continued to hold at least 50% of the common units purchased by them and their affiliates under the unit purchase agreement, which we refer to as the “Goldman Common Units,” and the GTCR Funds and their affiliates no longer held any of the common units purchased by them and their affiliates under the unit purchase agreement, which we refer to as the “GTCR Common Units,” then the GS Entities would have had the right to designate one additional representative (for a total of four representatives) so long as the GS Entities and their affiliates continued to hold at least 50% of the Goldman Common Units. Similarly, if the GTCR Funds and their affiliates continued to hold at least 50% of the GTCR Common Units and the GS Entities and their affiliates no longer held any Goldman Common Units, then GTCR would have had the right to designate one additional representative (for a total of four representatives) so long as GTCR and its affiliates continued to hold at least 50% of the GTCR Common Units.

In June 2008, the limited liability company agreement was amended in connection with the issuance of certain preferred units to Hunter’s Glen/Ford, Ltd., and the partnerships controlled by GTCR Golder Rauner II, L.L.C. The preferred units were issued in connection with the execution of the demand notes by the Company, and the total amount of the preferred units of Triad Holdings, LLC that can be allocated to the two participating equity sponsors is dependent upon the amount borrowed by the Company under the demand notes.

Restrictions on Transfer. The limited liability company agreement provided for customary rights of first offer, tag-along rights, drag-along rights and other restrictions on transfer similar to those set forth in the stockholders agreement (described below under the caption “— Stockholders Agreement”).

Buy/Sell Right. Upon a triggering event (defined below), Hunter’s Glen/Ford had the right to make a fully financed offer to purchase all of the units and other interests in Triad Holdings, LLC from the other equity sponsors and their respective affiliates at a price specified by Hunter’s Glen/Ford, which we refer to as “Buy/Sell Right.” Upon exercise of the Buy/Sell Right by Hunter’s Glen/Ford, the other equity sponsors would each have had the right to either accept Hunter’s Glen/Ford’s offer and sell its units or elect to purchase the units and other interests of Triad Holdings, LLC held by Hunter’s Glen/Ford at the same price and on the same other customary terms as offered by Hunter’s Glen/Ford. If both of the other equity sponsors elected to sell, then Hunter’s Glen/Ford must have purchased the units of the other equity sponsors and their respective affiliates. If both of the other equity sponsors elected to purchase the units of Hunter’s Glen/Ford, then Hunter’s Glen/Ford must have sold its units to the other equity sponsors and their respective affiliates. If either of the other equity sponsors elected to sell and the other elected to purchase, then the other equity sponsor electing to purchase would have had the right to decide whether to purchase both Hunter’s Glen/Ford’s and the other equity sponsor’s entire interest in the Triad Holdings, LLC or change its election and sell its interests to Hunter’s Glen/Ford. A “triggering event” may occur if, without the prior written consent of Hunter’s Glen/Ford, either the board of managers of Triad Holdings, LLC or the other equity sponsors cause the management agreement (described below under the caption “— Management Agreement”) to be terminated other than for cause, fail to pay any amount owed to Hunter’s Glen/Ford under the management agreement when due, remove Gerald J. Ford as chief executive officer of Triad Holdings, LLC or as executive chairman of Triad Holdings Inc. other than for cause, or eliminate or materially reduce Hunter’s Glen/Ford’s or Mr. Ford’s responsibilities with respect to Triad Holdings, LLC or Triad Holdings Inc. other than for cause.

Limited Liability Company Agreement of Triad Financial Holdings LLC

On December 30, 2008, Triad Holdings Inc., as sole initial member, entered into the limited liability company agreement of Triad Financial Holdings LLC. The limited liability company agreement of Triad Financial Holdings LLC is on substantially similar terms to the amended and restated limited liability company agreement of Triad Holdings, LLC described above, including terms related to capitalization, the board of managers, transfer restrictions and buy/sell rights. Following the liquidation of Triad Holdings Inc. on December 31, 2008, each former member of Triad Holdings, LLC became party to the Triad Financial Holdings LLC limited liability company agreement.

Under the terms of the limited liability company agreement of Triad Financial Holdings LLC, the board of managers is initially comprised of the following eight members: Philip A. Canfield, David A. Donnini, Aaron D. Cohen, Donald J. Edwards, J. Randy Staff, Carl B. Webb, Daniel D. Leonard and Gerald J. Ford.

Stockholders Agreement

Concurrently with the closing of the acquisition on April 29, 2005, Triad Holdings Inc. entered into a stockholders agreement with Triad Holdings, LLC and James M. Landy. The stockholders agreement provided that:


	•	the board of directors of Triad Holdings Inc. would have the same composition as the board of managers of Triad Holdings, LLC described above plus one additional director who would be the chief executive officer of Triad Holdings Inc.;

	•	the stockholders of Triad Holdings Inc. would have customary rights of first offer with respect to specified transfers of shares of Triad Holdings Inc. by other stockholders, which would allow the other stockholders to purchase a pro rata portion of the shares proposed to be transferred in proportion to the number of shares held by such other stockholders participating in such purchase on a fully diluted basis;

	•	the stockholders of Triad Holdings Inc., other than Triad Holdings, LLC, would have customary tag-along rights with respect to specified transfers by Triad Holdings, LLC of shares of Triad Holdings Inc., which would enable them to transfer their shares on the same terms and conditions as Triad Holdings LLC;

	•	Triad Holdings, LLC would have drag-along rights with respect to Triad Holdings Inc. shares owned by the other stockholders of Triad Holdings Inc., which would require the other stockholders to sell their units in connection with a sale of Triad Holdings Inc. that is approved by the board of directors of Triad Holdings Inc. and the board of managers of Triad Holdings, LLC;


	•	the stockholders of Triad Holdings Inc. would not transfer their shares of Triad Holdings Inc. without the prior written consent of Triad Holdings, LLC, except as specified in the stockholders agreement; and

	•	Triad Holdings Inc. must obtain the prior written consent of Triad Holdings, LLC before taking specified actions.

Mr. Landy no longer owns any of the stock of Triad Holdings Inc. as his interest was repurchased by the company in the fourth quarter of 2007.

On December 31, 2008, Triad Holdings Inc. was liquidated and dissolved in accordance with Delaware law.

Registration Rights Agreements

Under the registration rights agreement entered into in connection with the closing of the acquisition in April 2005, the holders of a majority of the Goldman registrable securities, the holders of a majority of the GTCR registrable securities and the holders of a majority of the Hunter’s Glen/Ford registrable securities, each as defined in the registration rights agreement, each had the right at any time after an underwritten initial public offering of the common stock of Triad Holdings Inc. with gross proceeds of at least $50.0 million, subject to specified conditions, to request Triad Holdings Inc. or any subsidiary to register any or all of their securities under the Securities Act on Form S-1, which we refer to as a “long-form registration,” at the expense of Triad Holdings Inc., or on Form S-2 or Form S-3, which we refer to as a “short-form registration,” at the expense of Triad Holdings Inc. provided that the aggregate offering value of registrable securities to be registered in a short-form registration must equal at least $10.0 million. Triad Holdings Inc. was not required, however, to effect any long-form registration within 90 days after the effective date of a previous long-form registration or a previous registration in which the holders of registrable securities were given the piggyback rights in the following sentence (without any reduction). At the expense of Triad Holdings Inc., all holders of registrable securities were entitled to the inclusion of such securities in any registration statement used by Triad Holdings Inc. to register any offering of its equity securities (other than pursuant to a demand registration or in connection with an initial public offering of the common stock of Triad Holdings Inc. or a registration on Form S-4 or Form S-8). Each securityholder of Triad Holdings Inc. was a party to the registration rights agreement.

In connection with the corporate reorganization, we entered into a new registration rights agreement on substantially similar terms to the agreement executed in April 2005.

Management Agreement

Under the management agreement among Triad Financial Corporation, Triad Holdings, LLC, Triad Holdings Inc. and Hunter’s Glen/Ford, Triad Holdings, LLC and Triad Financial Corporation engaged Hunter’s Glen/Ford as a financial and management consultant. During the term of the engagement, Hunter’s Glen/Ford agreed to provide Gerald J. Ford to serve as the chief executive officer of Triad Holdings, LLC and executive chairman of Triad as specified in the agreement and agreed to provide Carl B. Webb and J. Randy Staff or similarly qualified individuals to furnish a portion of the services required by the management agreement. Mr. Ford’s responsibilities include setting corporate strategy, overseeing the performance of the chief executive officer of Triad and Triad Holdings Inc., naming senior executives of Triad and Triad Holdings Inc. (other than the chief executive officer and chief financial officer, who would be named and approved by the boards of directors of Triad and Triad Holdings Inc.), and recommending compensation of such executives to the boards. The management agreement also contains standard indemnification provisions whereby Triad and Triad Holdings Inc. would indemnify Hunter’s Glen/Ford against specified claims relating to specified actions taken by Hunter’s Glen/Ford under the management agreement.

We agreed to pay Hunter’s Glen/Ford a management fee of $1.5 million per annum for the services described above. This management fee is payable monthly in arrears on the last day of each month. The management fee is payable starting on April 29, 2005, continuing during the service period of the management agreement and, upon termination of the service period for specified reasons (other than for cause), through the fifth anniversary of April 29, 2005 or through the first anniversary of the termination of the service period, if later. If the service period is terminated by Triad Holdings, LLC for cause, we will continue to pay the management fee through the first

anniversary of the termination of the service period. Our obligation to pay the management fee will also cease upon a sale of Triad or Triad Holdings Inc. or upon the consummation of an underwritten initial public offering of the common stock of Triad Holdings Inc. with gross proceeds of at least $50.0 million. The service period will end on the earlier of (1) termination by Hunter’s Glen/Ford or Triad Holdings, LLC upon at least 90 days prior notice and (2) upon a closing of the Buy/Sell Right in which Hunter’s Glen/Ford sells all of its units in Triad Holdings, LLC.

The management agreement also provided for the purchase by Hunter’s Glen/Ford and its co-investors of common units of Triad Holdings, LLC for a nominal purchase price, which we refer to as the “carried common units.” The carried common units will be subject to quarterly vesting over a five-year period. Upon the occurrence of a sale of Triad or Triad Holdings Inc., the consummation of an underwritten initial public offering of the common stock of Triad Holdings Inc. with gross proceeds of at least $50.0 million or a termination of the service period for any reason (other than voluntary termination by Hunter’s Glen/Ford or a termination by Triad Holdings, LLC for cause), all unvested carried common units will become vested. Upon a voluntary termination of the service period by Hunter’s Glen/Ford, all further vesting of unvested carried common units will cease and such units will be subject to repurchase by Triad Holdings, LLC at their original cost. Upon termination of the service period by Triad Holdings, LLC for cause, vesting will be accelerated by one year and all remaining unvested carried common units will cease vesting and will be subject to repurchase by Triad Holdings, LLC at their original cost.

The management agreement was subsequently assigned from Hunter’s Glen/Ford Ltd. to one of its affiliates Diamond A Administration Company, LLC. On December 31, 2008, we entered into a joinder to the management agreement. Pursuant to the joinder agreement, each of Triad Financial SM LLC and Triad Financial Holdings LLC agreed to become a party to, and be bound by the management agreement.

Stock Purchase Agreement

On December 23, 2004, Triad Holdings Inc. and its wholly-owned subsidiary, Triad Acquisition Corp., entered into a stock purchase agreement pursuant to which Triad Acquisition Corp. agreed to acquire all of the outstanding capital stock of Triad Financial Corporation from Fairlane Credit LLC, a wholly-owned subsidiary of Ford Motor Credit Company. We refer to this transaction as the “Acquisition.” Triad Holdings Inc. and Triad Acquisition were newly formed holding companies beneficially owned by affiliates of Goldman, Sachs & Co., GTCR Golder Rauner II, L.L.C. and Hunter’s Glen/Ford.

The stock purchase agreement also contains customary indemnification provisions. As provided in the stock purchase agreement, you are not entitled to rely on any of the provisions of the stock purchase agreement, including the representations and warranties contained in the stock purchase agreement.

Our Warehouse and Residual Facilities

Each of our two initial warehouse facilities initially provided a maximum of $975.0 million of committed funding. Each warehouse facility maximum commitment was reduced to $750.0 million upon completion of our first term securitization on May 26, 2005. The available amount of the commitment under each warehouse facility at any time was reduced by the amount drawn on the related residual facility at such time.

The Company’s warehouse and residual loan facilities with Goldman Sachs Mortgage Company were paid-off on October 26, 2007. The Company’s warehouse and residual loan facilities with Citigroup Global Markets Realty Corp. were paid-off and terminated on June 20, 2008.

On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provided up to $500 million of funding for automobile retail installment sales contract receivables originated or purchased by us. The facility had a two-year commitment but would have expired after 364 days if the liquidity facility was not renewed. This facility was terminated by mutual agreement on May 30, 2008.

Interest expense for the warehouse and residual loan facilities for the years ended December 31, 2007 and 2006 includes $12.7 million and $17.7 million, respectively, of expense incurred to Goldman Sachs Mortgage Company.

Following the termination of our residual facility with Citigroup Global Markets Realty Corp. in June 2008, we have no remaining residual loan facilities.

To provide additional funding, on June 17, 2008, the Company entered into a $40.0 million unsecured promissory note with Hunter’s Glen/ Ford Ltd. and an additional $40.0 million unsecured promissory note with the GTCR related equityholders. These promissory notes accrue interest at 15% and the interest shall be payable quarterly, on the last day of each March, June, September and December while the notes are outstanding. Each promissory note is due and payable the earlier of (1) three years of the date of its issuance, and (2) fourteen days after receipt of demand for payment and the entering into of comparable facilities with the lenders. There have been no draws on this facility subsequent to June 20, 2008 and there were no amounts outstanding as of December 31, 2008.

It is anticipated that in early 2009, the $80.0 million unsecured promissory notes will be replaced by a secured credit facility between Hunter’s Glen/Ford Ltd. and certain entities controlled by GTCR Golder Rauner II, L.L.C., as lenders, and Residual LLC, as borrower. The credit facility will be secured by the residual interests in our securitization trusts.

Secured Promissory Note and Series 1 Preferred Units

On December 31, 2008, Triad Financial Holdings LLC entered into a $17.0 million secured promissory note (or the Secured Promissory Note) with one of its direct equity holders, Hunter’s Glen/Ford Ltd. The Secured Promissory Note accrued interest at 15% per annum and the interest was payable quarterly, on the last day of each March, June, September and December while the Secured Promissory Note was outstanding. The Secured Promissory Note was due and payable the earlier of (x) April 30, 2009, (y) five business days following the date upon which the aggregate amount of managed assets (as defined in the Secured Promissory Note) of the Company is less than $2,000,000,000 and (z) any earlier date upon which the Secured Promissory Note becomes due and payable pursuant to the terms thereof. Specified portions of the Secured Promissory Note were assigned by Hunter’s Glen/Ford Ltd., collectively, to GTCR Fund VIII, L.P., Fund VIII/B Triad Splitter, L.P. and GTCR Co-Invest II, L.P. The Secured Promissory Note was secured by the Series 1 Preferred Units of the Company held by Triad Financial Holdings LLC, including all distributions and proceeds thereof (these units are described below). The Secured Promissory Note was repaid in part on February 27, 2009 and the remainder was paid in full on March 17, 2009, in connection with the redemption by the Company of the Series 1 Preferred Units described below.

On December 31, 2008, the Company sold 17,000,000 Series 1 Preferred Units to Triad Financial Holdings LLC for an aggregate purchase price of $17,000,000 in cash. No underwriting discounts or commissions were paid. The Series 1 Preferred Units were not convertible or exchangeable into the Company’s common units. The Series 1 Preferred Units were not redeemable at the option of any holder of the Series 1 Preferred Units. To the extent declared by the board of managers of the Company, quarterly dividends were payable at an annual rate of 15.0%. On February 27, 2009, 10.0 million units of the Series 1 Preferred Units were redeemed at par, and the remaining units were redeemed at par on March 17, 2009.

Board of Directors

The board is currently comprised of eight directors, one of whom qualifies as an independent director set forth in Rule 4200(a)(15) of the Nasdaq Marketplace rules. Because affiliates of our equity sponsors directly own approximately 100% of the voting common and class B preferred units of Triad Financial Holdings LLC, we would be a “controlled company” within the meaning of Rule 4350(c)(5) of the Nasdaq Marketplace rules, which would qualify for exemptions from certain corporate governance rules of The Nasdaq Stock Market LLC, including that the board of directors be composed of a majority of independent directors.

Policies and Procedures for Related Party Transactions

As a private company, our board of directors generally reviews our related party transactions, although we have not historically had formal policies and procedures regarding the review and approval of related party transactions.


ITEM 14.	*PRINCIPAL ACCOUNTING FEES AND SERVICES.*

The following table presents fees for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s annual financial statements for fiscal 2008 and 2007 and fees billed for audit-related

services, tax services and all other services rendered to the Company by PricewaterhouseCoopers LLP for fiscal 2008 and 2007.


	2008		2007

Audit Fees	$	525,000	$	515,000
Audit-Related Fees	$	—	$	—
Tax Fees	$	—	$	—
All Other Fees	$	132,000	$	236,719

The Audit Committee has established a policy to pre-approve all audit and non-audit services performed by the independent registered public accounting firm (“independent auditor”) in order to assure that the provision of such services does not impair the auditor’s independence. Based on the information presented to the Audit Committee by PricewaterhouseCoopers LLP and the Company’s management, the Audit Committee has pre-approved defined audit, audit-related, tax and other services for fiscal year 2008 up to specific cost levels. Any proposed services exceeding pre-approved cost levels require specific pre-approval by the Audit Committee. The policy provides that the Audit Committee review, at each regularly scheduled meeting, a report summarizing the services provided by the independent auditor and all fees relating thereto. The policy also prohibits the independent auditor from providing services that are prohibited under the Sarbanes-Oxley Act of 2002.

All fees reported under the headings Audit-Related Fees, Tax Fees, and All Other Fees for 2008 were pre-approved by the Audit Committee, which concluded that the provision of such services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. Accordingly, none of these fees reported under the headings were approved by the Audit Committee pursuant to federal regulations that permit the Audit Committee to waive its pre-approval requirement under certain circumstances. For the year ended December 31, 2008, All Other Fees represented fees related to Regulation AB and Uniform Single Attestation Program.

PART IV


ITEM 15.	*EXHIBITS, FINANCIAL STATEMENT SCHEDULES*

EXHIBIT INDEX


Exhibit
No.			Description

	2	.1	Stock Purchase Agreement, dated as of December 23, 2004, among Triad Holdings Inc., Triad Acquisition Corp. and Fairlane Credit LLC (incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4/A of Triad Financial Corporation, filed on November 15, 2005 (File No. 333-126538)).
	2	.2	Agreement and Plan of Merger, dated as of December 29, 2008, between Triad Financial Corporation and Triad Financial SM LLC. +
	3	.1	Third Amended and Restated Articles of Incorporation of Triad Financial Corporation. (incorporated herein by reference to Exhibit 3.1 on Form 10-Q of Triad Financial Corporation, filed on August 11, 2006 (File No. 333-65107)).
	3	.2	Third Amended and Restated Bylaws of Triad Financial Corporation (incorporated herein by reference to Exhibit 3.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	3	.3	Amended & Restated Limited Liability Company Agreement of Triad Financial SM LLC, dated as of December 31, 2008. +
	3	.4	Articles of Incorporation of Triad Financial SM Inc. +
	3	.5	By-Laws of Triad Financial SM Inc.+
	4	.1	Indenture, dated as of April 29, 2005, among Triad Acquisition Corp. and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.2	Supplemental Indenture, dated as of April 29, 2005, among Triad Financial Corporation and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.3	Exchange and Registration Rights Agreement, dated as of April 29, 2005, among Triad Acquisition Corp. and Goldman, Sachs & Co., and Citigroup Global Markets Inc., as representatives of the several Purchasers (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.4	Form of Senior Note (attached as exhibit to Exhibit 4.1).
	4	.5	Second Supplemental Indenture, dated as of December 29, 2008, among Triad Financial SM LLC, Triad Financial SM Inc., and The Bank of New York Mellon, a New York banking corporation, as successor to JP Morgan Chase Bank, N.A., as trustee. +
	4	.6	Joinder to Exchange and Registration Rights Agreement, dated as of December 29, 2008, by Triad Financial SM LLC and Triad Financial SM Inc.
	4	.7	Third Supplemental Indenture, dated as of March 27, 2009, among Triad Financial SM LLC, Triad Financial SM Inc., and The Bank of New York Mellon, a New York banking corporation, as successor to JP Morgan Chase Bank, N.A., as trustee.+
	10	.1	Employment Agreement, dated as of April 29, 2005, between the Company and James M. Landy (incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.2	Employment Agreement, dated as of November 11, 2005, between the Company and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad Financial Corporation, filed on March 31, 2006 (File No. 333-126538)) and Amended and Restated Employment Agreement, dated as of August 1, 2007, between the Company and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).*
	10	.3	Employment Agreement, dated as of February 15, 2007, between the Company and David A. Satterfield (incorporated herein by reference to Exhibit 10.3 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).*


Exhibit
No.			Description

	10	.4	Consulting Agreement dated as of July 31, 2007, between the Company and Carl B. Webb (incorporated herein by reference to Exhibit 10.15 on Form 10-Q of Triad Financial Corporation, filed on November 9, 2007 (File No. 333-65107)) and the First Amendment to the Consulting Agreement, dated as of February 12, 2008, between the Company and Carl B. Webb (incorporated herein by reference to Exhibit 10.4 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).*
	10	.5	Management Agreement, dated as of April 29, 2005, among the Company, Triad Holdings, LLC, Triad Holdings Inc. and Hunter’s Glen/Ford Ltd (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.6	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.7	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Goldman Sachs Mortgage Company, as lender (incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.8	Warehouse Lending Agreement, dated as of January 10, 2008, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York, as Collection Account Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays Bank PLC, as Class B Lender and Agent (incorporated herein by reference to Exhibit 10.8 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).
	10	.9	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.10	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Goldman Sachs Mortgage Company (incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.11	Registration Rights Agreement dated as of April 29, 2005 among Triad Holdings Inc. and certain holders of common stock (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.12	Stockholders Agreement, dated as of April 29, 2005, among Triad Holdings Inc., Triad Holdings, LLC and James M. Landy (incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.13	Limited Liability Company Agreement of Triad Holdings, LLC (incorporated herein by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.14	HFI Loan and Security Agreement, dated as of April 29, 2005, between the Company and Ford Motor Credit Company (incorporated herein by reference to Exhibit 10.10 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.15	Carl B. Webb Compensation Arrangement (incorporated herein by reference to Exhibit 10.11 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*


Exhibit
No.			Description

	10	.16	Amendment No. 2, dated as of March 15, 2007, to the Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.1 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	10	.17	Amendment No. 1, dated as of March 15, 2007, to the Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.2 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	10	.18	Senior Unsecured Demand Promissory Note dated as of May 11, 2008, by the Company in favor of Hunter’s Glen/Ford Ltd. (incorporated herein by reference to Exhibit 10.17 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.19	Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by the Company in favor of Hunter’s Glen/Ford Ltd. (incorporated herein by reference to Exhibit 10.18 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.21	Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by the Company in favor of GTCR Fund VIII, L.P. , GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P. (incorporated herein by reference to Exhibit 10.19 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.21	Termination Agreement, dated as of May 30, 2008, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York, as Collection Account Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays Bank PLC, as Class B Lender and Agent. (incorporated herein by reference to Exhibit 10.9 on Form 10-Q of Triad Financial SM LLC (formerly Triad Financial Corporation), filed on August 14, 2008 (File No. 333-65107)).
	10	.22	Termination Agreement, dated as of June 20, 2008, among the Company, Triad Financial Residual Special Purpose LLC, as residual facility borrower, Triad Automobile Receivables Warehouse Trust, as warehouse facility borrower, Triad Financial Warehouse Special Purpose LLC, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, National Association), as Collection Account Bank, Systems and Services Technologies, Inc., as a Backup Servicer, and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.10 on Form 10-Q of Triad Financial SM LLC (formerly Triad Financial Corporation), filed on August 14, 2008 (File No. 333-65107)).
	10	.23	Amended and Restated Limited Liability Company Agreement of Triad Holdings, LLC dated June 17, 2008. (incorporated herein by reference to Exhibit 10.16 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.24	Limited Liability Company Agreement of Triad Financial Holdings LLC, dated as of December 30, 2008. +
	10	.25	Joinder to Management Agreement, dated as of December 31, 2008, among Triad Financial SM LLC, Triad Financial Holdings LLC and Diamond A Administration LLC. +
	10	.26	Registration Rights Agreement dated as of December 31, 2008 among Triad Financial Holdings LLC and certain holders of securities of Triad Financial Holdings LLC. +
	10	.27	Secured Promissory Note, dated as of December 31, 2008 by Triad Financial Holdings LLC in favor of Hunter’s Glen/Ford Ltd. +
	10	.28	Assignment of Secured Promissory Note, dated as of January 2, 2009 among Hunter’s Glen/Ford Ltd., GTCR Fund VIII, L.P., Fund VIII/B Triad Splitter, L.P. and GTCR Co-Invest II, L.P. +
	21	.1	Subsidiaries of the Company. +
	31	.1	Certification of Chief Executive Officer (Section 302 Certification)+
	31	.2	Certification of Principal Financial Officer (Section 302 Certification)+
	32		Certification of Periodic Financial Report (Section 906 Certification)+


*		Management contract or compensatory plan or arrangement.

+		Filed herewith

SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

/s/ Daniel D. Leonard

Daniel D. Leonard

President & Chief Executive Officer

Date: March 30, 2009

/s/ Jeffrey O. Butcher

Jeffrey O. Butcher

Vice President & Chief Financial Officer

Date: March 30, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated below.


Signature	Capacity	Date


/s/ Daniel D. Leonard Daniel D. Leonard	President, Chief Executive Officer & Director (principal executive officer)	March 30, 2009

/s/ Jeffrey O. Butcher Jeffrey O. Butcher	Vice President & Chief Financial Officer (principal accounting and financial officer)	March 30, 2009

/s/ Philip A. Canfield Philip A. Canfield	Director	March 30, 2009

/s/ Aaron D. Cohen Aaron D. Cohen	Director	March 30, 2009

/s/ David A. Donnini David A. Donnini	Director	March 30, 2009

/s/ Donald J. Edwards Donald J. Edwards	Director	March 30, 2009

/s/ Gerald J. Ford Gerald J. Ford	Director	March 30, 2009

/s/ J. Randy Staff J. Randy Staff	Director	March 30, 2009

/s/ Carl B. Webb Carl B. Webb	Director	March 30, 2009

EXHIBIT INDEX


Exhibit
No.			Description

	2	.1	Stock Purchase Agreement, dated as of December 23, 2004, among Triad Holdings Inc., Triad Acquisition Corp. and Fairlane Credit LLC (incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4/A of Triad Financial Corporation, filed on November 15, 2005 (File No. 333-126538)).
	2	.2	Agreement and Plan of Merger, dated as of December 29, 2008, between Triad Financial Corporation and Triad Financial SM LLC. +
	3	.1	Third Amended and Restated Articles of Incorporation of Triad Financial Corporation. (incorporated herein by reference to Exhibit 3.1 on Form 10-Q of Triad Financial Corporation, filed on August 11, 2006 (File No. 333-65107)).
	3	.2	Third Amended and Restated Bylaws of Triad Financial Corporation (incorporated herein by reference to Exhibit 3.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	3	.3	Amended & Restated Limited Liability Company Agreement of Triad Financial SM LLC, dated as of December 31, 2008. +
	3	.4	Articles of Incorporation of Triad Financial SM Inc. +
	3	.5	By-Laws of Triad Financial SM Inc.+
	4	.1	Indenture, dated as of April 29, 2005, among Triad Acquisition Corp. and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.2	Supplemental Indenture, dated as of April 29, 2005, among Triad Financial Corporation and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.3	Exchange and Registration Rights Agreement, dated as of April 29, 2005, among Triad Acquisition Corp. and Goldman, Sachs & Co., and Citigroup Global Markets Inc., as representatives of the several Purchasers (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.4	Form of Senior Note (attached as exhibit to Exhibit 4.1).
	4	.5	Second Supplemental Indenture, dated as of December 29, 2008, among Triad Financial SM LLC, Triad Financial SM Inc., and The Bank of New York Mellon, a New York banking corporation, as successor to JP Morgan Chase Bank, N.A., as trustee. +
	4	.6	Joinder to Exchange and Registration Rights Agreement, dated as of December 29, 2008, by Triad Financial SM LLC and Triad Financial SM Inc. +
	4	.7	Third Supplemental Indenture, dated as of March 27, 2009, among Triad Financial SM LLC, Triad Financial SM Inc., and The Bank of New York Mellon, a New York banking corporation, as successor to JP Morgan Chase Bank, N.A., as trustee. +
	10	.1	Employment Agreement, dated as of April 29, 2005, between the Company and James M. Landy (incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.2	Employment Agreement, dated as of November 11, 2005, between the Company and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad Financial Corporation, filed on March 31, 2006 (File No. 333-126538)) and Amended and Restated Employment Agreement, dated as of August 1, 2007, between the Company and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).*
	10	.3	Employment Agreement, dated as of February 15, 2007, between the Company and David A. Satterfield (incorporated herein by reference to Exhibit 10.3 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).*


Exhibit
No.			Description

	10	.4	Consulting Agreement dated as of July 31, 2007, between the Company and Carl B. Webb (incorporated herein by reference to Exhibit 10.15 on Form 10-Q of Triad Financial Corporation, filed on November 9, 2007 (File No. 333-65107)) and the First Amendment to the Consulting Agreement, dated as of February 12, 2008, between the Company and Carl B. Webb (incorporated herein by reference to Exhibit 10.4 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).*
	10	.5	Management Agreement, dated as of April 29, 2005, among the Company, Triad Holdings, LLC, Triad Holdings Inc. and Hunter’s Glen/Ford Ltd (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.6	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.7	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Goldman Sachs Mortgage Company, as lender (incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.8	Warehouse Lending Agreement, dated as of January 10, 2008, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York, as Collection Account Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays Bank PLC, as Class B Lender and Agent (incorporated herein by reference to Exhibit 10.8 on Form 10-K of Triad Financial Corporation, filed on March 28, 2008 (File No. 333-65107)).
	10	.9	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.10	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Goldman Sachs Mortgage Company (incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.11	Registration Rights Agreement dated as of April 29, 2005 among Triad Holdings Inc. and certain holders of common stock (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.12	Stockholders Agreement, dated as of April 29, 2005, among Triad Holdings Inc., Triad Holdings, LLC and James M. Landy (incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.13	Limited Liability Company Agreement of Triad Holdings, LLC (incorporated herein by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.14	HFI Loan and Security Agreement, dated as of April 29, 2005, between the Company and Ford Motor Credit Company (incorporated herein by reference to Exhibit 10.10 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.15	Carl B. Webb Compensation Arrangement (incorporated herein by reference to Exhibit 10.11 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.16	Amendment No. 2, dated as of March 15, 2007, to the Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.1 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).

100


Exhibit
No.			Description

	10	.17	Amendment No. 1, dated as of March 15, 2007, to the Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.2 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	10	.18	Senior Unsecured Demand Promissory Note dated as of May 11, 2008, by the Company in favor of Hunter’s Glen/Ford Ltd. (incorporated herein by reference to Exhibit 10.17 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.19	Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by the Company in favor of Hunter’s Glen/Ford Ltd. (incorporated herein by reference to Exhibit 10.18 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.21	Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by the Company in favor of GTCR Fund VIII, L.P. , GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P. (incorporated herein by reference to Exhibit 10.19 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.21	Termination Agreement, dated as of May 30, 2008, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York, as Collection Account Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays Bank PLC, as Class B Lender and Agent. (incorporated herein by reference to Exhibit 10.9 on Form 10-Q of Triad Financial SM LLC (formerly Triad Financial Corporation), filed on August 14, 2008 (File No. 333-65107)).
	10	.22	Termination Agreement, dated as of June 20, 2008, among the Company, Triad Financial Residual Special Purpose LLC, as residual facility borrower, Triad Automobile Receivables Warehouse Trust, as warehouse facility borrower, Triad Financial Warehouse Special Purpose LLC, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, National Association), as Collection Account Bank, Systems and Services Technologies, Inc., as a Backup Servicer, and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.10 on Form 10-Q of Triad Financial SM LLC (formerly Triad Financial Corporation), filed on August 14, 2008 (File No. 333-65107)).
	10	.23	Amended and Restated Limited Liability Company Agreement of Triad Holdings, LLC dated June 17, 2008. (incorporated herein by reference to Exhibit 10.16 on Form 10-Q of Triad Financial Corporation, filed on August 14, 2008 (File No. 333-65107)).
	10	.24	Limited Liability Company Agreement of Triad Financial Holdings LLC, dated as of December 30, 2008. +
	10	.25	Joinder to Management Agreement, dated as of December 31, 2008, among Triad Financial SM LLC, Triad Financial Holdings LLC and Diamond A Administration LLC. +
	10	.26	Registration Rights Agreement dated as of December 31, 2008 among Triad Financial Holdings LLC and certain holders of securities of Triad Financial Holdings LLC. +
	10	.27	Secured Promissory Note, dated as of December 31, 2008 by Triad Financial Holdings LLC in favor of Hunter’s Glen/Ford Ltd. + ]
	10	.28	Assignment of Secured Promissory Note, dated as of January 2, 2009 among Hunter’s Glen/Ford Ltd., GTCR Fund VIII, L.P., Fund VIII/B Triad Splitter, L.P. and GTCR Co-Invest II, L.P. +
	21	.1	Subsidiaries of the Company. +
	31	.1	Certification of Chief Executive Officer (Section 302 Certification)+
	31	.2	Certification of Principal Financial Officer (Section 302 Certification)+
	32		Certification of Periodic Financial Report (Section 906 Certification)+


*		Management contract or compensatory plan or arrangement.

+		Filed herewith

101

EX-2.2 2 a51470exv2w2.htm EX-2.2 exv2w2

EXHIBIT 2.2

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER dated as of December 29, 2008 (this “Merger Agreement”), is made by and between Triad Financial Corporation, a California corporation (“TFC”), and Triad Financial SM LLC, a Delaware limited liability company (the “Company”). TFC and the Company are sometimes collectively referred to herein as the “Constituent Companies.”

WITNESSETH:

WHEREAS, the authorized capital stock of TFC consists of (i) 100,000 shares of Common Stock, no par value (the “Common”), and (ii) 3,000,000 shares of Preferred Stock, no par value (the “Preferred” and, together with the Common, the “TFC Capital Stock”) of which (i) 9,067 shares of Common are issued and outstanding, fully paid and nonassessable, and (ii) no shares of Preferred are issued and outstanding;

WHEREAS, TFC desires to merge with and into the Company;

WHEREAS, the Company desires to merge with TFC, with the Company being the surviving entity;

WHEREAS, the Board of Directors of TFC and the Board of Managers of the Company deem it advisable that TFC merge with and into the Company and that the Company continue as the surviving business entity, upon the terms set forth herein and in accordance with the laws of the State of Delaware (the “Merger”), and that the shares of TFC Capital Stock be canceled upon consummation of the Merger as set forth herein;

WHEREAS, the Board of Directors of TFC have, by resolutions duly adopted, approved the provisions of this Merger Agreement, as required by the California Corporations Code (“California Law”), including Chapters 11 and 12 thereof; and

WHEREAS, the Board of Managers of the Company have, by resolutions duly adopted, approved the provisions of this Merger Agreement, as required by Section 18-209 of the Limited Liability Company Act of the State of Delaware (“Delaware Law”).

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

Effect of the Merger; Manner and
Basis of Converting and Canceling Shares

Section 1.1. At the Effective Time (as hereinafter defined), TFC shall be merged with and into the Company, the separate corporate existence of TFC (except as may be continued by operation of law) shall cease, and the Company shall continue as the surviving business entity, all with the effects provided by applicable law. The Company in its capacity as the surviving

business entity of the Merger, is hereinafter sometimes referred to as the “Surviving Business Entity.”

Section 1.2. At the Effective Time, each share of Common issued and outstanding and any share of Preferred, whether held in the treasury of TFC or otherwise, immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of TFC, the Company, the holder thereof or any other person, be canceled and no cash or securities or other property shall be payable in respect thereof.

Section 1.3. At the Effective Time, all equity securities of the Company, whether held in the treasury of the Company or otherwise, immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of TFC, the Company, the holder thereof or any other person, remain equity securities of the Surviving Business Entity.

Section 1.4. At and after the Effective Time, the Surviving Business Entity shall possess all the rights, privileges, immunities and franchises, of both a public and private nature, and be subject to all the duties and liabilities of TFC; and all rights, privileges, immunities and franchises of TFC and all property, real, personal and mixed, and all debts due on whatever accounts, including subscriptions to shares, and all other choses in action, and all and every other interest, of or belonging to TFC shall be taken and deemed to be transferred to and vested in the Surviving Business Entity without further act or deed; and title to any real estate, or any interest therein, vested in TFC shall not revert or be in any way impaired by reason of the Merger; and the Surviving Business Entity shall thenceforth be responsible and liable for all liabilities and obligations of TFC and any claim existing or action or proceeding pending by or against TFC may be prosecuted to judgment as if the Merger had not taken place or the Surviving Business Entity may be substituted in its place; all with the effect set forth in the Delaware Law. The authority of the officers of TFC shall continue with respect to the due execution in the name of each respective business entity of tax returns, instruments of transfer or conveyance and other documents where the execution thereof is required or convenient to comply with any provision of the laws of the state of Delaware, the laws of the state of California, and any contract to which TFC was a party or this Merger Agreement.

Section 1.5. The name of the Surviving Business Entity shall be “Triad Financial SM LLC”.

ARTICLE 2

Effective Time

Section 2.1. (a) TFC shall cause a California Certificate of Merger, Merger Agreement and Officers’ Certificate to be executed and delivered for filing with the Secretary of State of the State of California, all as provided in and in accordance with California Law, and (b) the Company shall cause a Certificate of Merger (the “Certificate of Merger”) to be executed and delivered for filing with the Secretary of State of the State of Delaware, all as provided in and in accordance with Delaware Law.

Section 2.2. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware (the “Effective Time”).

ARTICLE 3

Certificate of Formation and
Limited Liability Company Agreement; Board of Managers

Section 3.1. The Certificate of Formation of the Company as in effect at the Effective Time shall govern the Surviving Business Entity, until it shall be amended as provided by law.

Section 3.2. The Limited Liability Company Agreement of the Company as in effect at the Effective Time, subject to alteration, amendment or repeal from time to time by the Board of Managers or the Members of the Surviving Business Entity, shall govern the Surviving Business Entity.

Section 3.3. The members of the Board of Managers and the officers of the Company holding office immediately prior to the Effective Time shall be the members of the Board of Managers and the officers (holding the same positions as they held with the Company immediately prior to the Effective Time) of the Surviving Business Entity and shall hold such offices until the expiration of their current terms, or their prior resignation, removal or death, or as otherwise provided in the Limited Liability Company Agreement of the Surviving Business Entity.

ARTICLE 4

Miscellaneous

Section 4.1. This Merger Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument.

Section 4.2. The internal law, not the law of conflicts, of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Merger Agreement.

Section 4.3. This Merger Agreement is not intended to confer upon any person (other than the parties hereto and their respective successors and assigns) any rights or remedies hereunder or by reason hereof.

* * * * *

IN WITNESS WHEREOF, the parties hereto have caused this Merger Agreement to be signed by their respective officers thereunto duly authorized, all as of the day and year first written above.


Triad Financial Corporation, a California corporation
By:	/s/ Daniel D. Leonard
	Name:	Daniel D. Leonard
	Title:	President and Chief Executive Officer

Triad Financial SM LLC, a Delaware limited liability company
By:	/s/ Daniel D. Leonard
	Name:	Daniel D. Leonard
	Title:	President and Chief Executive Officer

EX-3.3 3 a51470exv3w3.htm EX-3.3 exv3w3

EXHIBIT 3.3

AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
TRIAD FINANCIAL SM LLC

THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of Triad Financial SM LLC (the “Company”), dated as of December 31, 2008, by Triad Financial Holdings LLC, as the sole member of the Company (the “Member”). Capitalized terms used but not otherwise defined herein are defined in Article X hereof.

WITNESSETH :

WHEREAS, the Member is a party to that certain Limited Liability Company Agreement of Triad Financial SM LLC, dated as of December 29, 2008 (the “Original LLC Agreement”). The Member desires to amend and restate the Original LLC Agreement effective as of the date hereof for purposes of changing the terms of the Original LLC Agreement as set forth herein. Upon execution and delivery of this Agreement by the Member, this Agreement shall be binding on the Member and the Original LLC Agreement shall be superseded by this Agreement and cease to be of any further force or effect, subject to Section 11.14 below.

NOW, THEREFORE, in consideration of the promises and the covenants and provisions hereinafter contained, the Member hereby adopts the following:

ARTICLE I
ORGANIZATIONAL AND OTHER MATTERS

Section 1.1 Formation. The Company has been organized as a Delaware limited liability company by the filing with the Secretary of State of the State of Delaware of the certificate of formation of the Company (the “Certificate”) under and pursuant to the Delaware Limited Liability Company Act, as it may be amended from time to time, and any successor thereto (the “DLLCA”) and shall be continued in accordance with this Agreement.

Section 1.2 The Certificate, Etc. The Certificate was filed with the Secretary of State of the State of Delaware on December 22, 2008. The Member hereby agrees to execute, file and record all such other certificates and documents, including amendments to the Certificate, and to do such other acts as may be appropriate to comply with all requirements for the formation, continuation and operation of a limited liability company, the ownership of property, and the conduct of business under the laws of the State of Delaware and any other jurisdiction in which the Company may own property or conduct business.

Section 1.3 Name. The name of the Company is Triad Financial SM LLC. The Company’s business may be conducted under its name and/or any other name or names deemed advisable by the Board (as defined in Section 5.1(a)). The Board may, in its sole discretion, change the name of the Company from time to time. In any such event, the Board shall promptly

file or caused to be filed in the office of the Secretary of State of Delaware an amendment to the Certificate reflecting such change of name.

Section 1.4 Limited Liability. Except as otherwise provided by the DLLCA, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and neither the Member nor any Manager shall be obligated personally for any of such debts, obligations or liabilities solely by reason of being a member or manager of the Company.

Section 1.5 Registered Office and Agent. The registered office of the Company required by the DLLCA to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by law. The registered agent of the Company in the State of Delaware shall be the initial registered agent named in the Certificate or such other Person or persons as the Board may designate from time to time in the manner provided by law. The Company’s principal place of business shall be 5201 Rufe Snow Drive, North Richland Hills, Texas 76180. The Board may change such registered office, registered agent, or principal place of business from time to time. The Company may from time to time have such other place or places of business within or without the State of Delaware as may be determined by the Board.

Section 1.6 Foreign Qualifications. The Board shall cause the Company to comply, to the extent procedures are available and those matters are reasonably within the control of the Board, with all requirements necessary to qualify the Company as a foreign limited liability company in any jurisdiction. At the request of the Board or any Officer, the Member shall execute, acknowledge, swear to and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue and terminate the Company as a foreign limited liability company in all such jurisdictions in which the Company may conduct business.

Section 1.7 Fiscal Year. The fiscal year of the Company shall end on December 31 of each calendar year, or such other annual accounting period as may be established by the Board.

Section 1.8 Books and Records. The Company shall keep, or cause to be kept, appropriate books and records with respect to the Company’s business. The books of the Company shall at all times be maintained by the Board. All matters concerning accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Board.

Section 1.9 Term. The term of the Company commenced upon the filing of the Certificate in accordance with the DLLCA and shall continue in existence until termination and dissolution thereof in accordance with the provisions of Article VIII.

Section 1.10 No State-Law Partnership. The Company intends that it shall not be a partnership or a joint venture for any reason other than for United States federal income and, if applicable, state or local income tax purposes, and no provision of this Agreement shall be construed otherwise.

Section 1.11 Certification of Units. The Company may in its discretion issue certificates to the Member representing the Units held by the Member.

ARTICLE II
PURPOSE AND POWERS

Section 2.1 Purpose of the Company. The purpose and business of the Company shall be to engage in any lawful act or activity which may be conducted by a limited liability company formed pursuant to the DLLCA and engaging in all activities necessary or incidental to the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the Company to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Delaware.

Section 2.2 Powers of the Company. Subject to the provisions of this Agreement, the Company shall have the power to do any and all acts necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose and business described herein and for the protection and benefit of the Company.

ARTICLE III
CAPITAL ACCOUNTS

Section 3.1 Establishment and Determination of Capital Accounts. The Company shall maintain a separate capital account (“Capital Account”) for each Member. The name, residence, business or mailing address of the Member, the Capital Contributions of such Member and the number and type of Units owned by such Member are set forth on Schedule A attached hereto, as amended from time to time in accordance with the terms of this Agreement. The Member has made its aggregate initial Capital Contribution to the Company. The Member on the date hereof shall make an additional Capital Contribution to the Company in respect of the Series 1 Preferred Units held by the Member. The Capital Account of each Member shall consist of such Member’s initial Capital Contribution and shall be (a) increased by any additional Capital Contributions made by such Member pursuant to the terms of this Agreement and such Member’s share of items of income and gain allocated to such Member pursuant to Article IV hereof, (b) decreased by such Member’s share of items of loss, deduction and expense allocated to such Member pursuant to Article IV hereof and any distributions to such Member of cash or the fair market value of any other property (net of liabilities assumed by such Member and liabilities to which such property is subject) distributed to such Member and (c) adjusted as otherwise required by the Code and regulations thereunder, including but not limited to, the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Any references in this Agreement to the Capital Account of a Member shall be deemed to refer to such Capital Account as the same may be increased or decreased or otherwise from time to time as set forth above.

Section 3.2 Computation of Amounts. For purposes of computing the amount of any item of Company income, gain, loss, or deduction to be allocated pursuant to Article IV and to be reflected in the Capital Accounts, the determination, recognition, and classification of any such item shall be the same as its determination, recognition, and classification for federal

income tax purposes (including any method of depreciation, cost recovery, or amortization used for this purpose).

Section 3.3 Negative Capital Accounts. No Member shall be required to pay to the Company or any other Member any deficit or negative balance which may exist from time to time in such Member’s Capital Account (including upon and after dissolution of the Company).

Section 3.4 No Withdrawals. No Person shall be entitled to withdraw any part of such Person’s Capital Contributions or Capital Account or to receive any Distribution from the Company, except as expressly provided herein or in the other agreements referred to herein.

Section 3.5 Loans from the Member. Loans by the Member to the Company shall not be considered Capital Contributions. If the Member shall loan funds to the Company, the making of such loans shall not result in any increase in the amount of the Capital Account of such Member. The amount of any such loans shall be a debt of the Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made.

ARTICLE IV
DISTRIBUTIONS AND ALLOCATIONS

Section 4.1 Distributions.

(a) Distributions Generally. Except as otherwise set forth in this Section 4.1 and Section 18-607 of the DLLCA, the Board may in its sole discretion make Distributions at any time or from time to time. All Distributions shall be made only in the following order and priority:

(i) first, to the holders of Series 1 Preferred Units (in the proportion that each holder’s share of Series 1 Unpaid Yield bears to the aggregate Series 1 Unpaid Yield), an amount equal to the aggregate Series 1 Unpaid Yield until the aggregate Series 1 Unpaid Yield with respect to such holder’s Series 1 Preferred Units has been reduced to zero;

(ii) second, to the holders of Series 1 Preferred Units (in the proportion that each holder’s share of Series 1 Unreturned Capital bears to the aggregate Series 1 Unreturned Capital), an amount equal to the aggregate Series 1 Unreturned Capital until the aggregate Series 1 Unreturned Capital with respect to such holder’s Series 1 Preferred Units has been reduced to zero; and

(iii) third, to the holders of Common Units (pro-rata according to such holder’s ownership of Common Units immediately prior to such Distribution), all remaining amounts.

Section 4.2 Series 1 Preferred Units. The Series 1 Preferred Units shall not be redeemable at the option of any holder of Series 1 Preferred Units; the Company may only redeem the Series 1 Preferred Units at its option. The Series 1 Preferred Units shall not be convertible or exchangeable. The Series 1 Preferred Units are not entitled to any preemptive rights to acquire any unissued Units of the Company, now or hereafter authorized, or any other

securities of the Company, whether ore not convertible into Units of the Company or carrying a right to subscribe to or acquire any such Units. The Company shall not issue any additional Series 1 Preferred Units without the prior written consent of a majority of the holders thereof, which consent may be withheld in their reasonable discretion.

Section 4.3 Allocations Generally. Profits and Losses for any Fiscal Year shall be allocated among the Members in such a manner that, as of the end of such Fiscal Year, the sum of (i) the Capital Account of each Member, (ii) such Member’s share of Minimum Gain (as determined according to Treasury Regulation Section 1.704-2(g)), and (iii) such Member’s partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)) shall be equal to the respective net amounts that would be distributed to them, determined as if the Company were to (i) liquidate the assets of the Company for an amount equal to their Book Value, and (ii) distribute the proceeds of liquidation pursuant to Section 8.3.

Section 4.4 Transfer of Capital Accounts.

If a Member transfers an interest in the Company to a new or existing Member, the transferee Member shall succeed to that portion of the transferor’s Capital Account that is attributable to the transferred interest. Any reference in this Agreement to a Capital Contribution of, or Distribution to, a Member that has succeeded any other Member shall include any Capital Contributions or Distributions previously made by or to the former Member on account of the interest of such former Member transferred to such Member. In the event that Triad Financial Holdings LLC is no longer the sole Member, the Company will promptly prepare amendments to this Agreement to the extent necessary to reflect that there are several Members and such other matters as may be agreed among the Company and the Members. The expense of the foregoing amendments will be paid by the Company.

ARTICLE V
MANAGEMENT OF THE COMPANY

Section 5.1 Manager-Managed.

(a) Except for situations in which the approval of the Member is required by this Agreement or by non-waivable provisions of applicable law, (x) the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, one or more Managers appointed as provided in Section 5.2(a) (each, a “Manager” and collectively, the “Board”) and (y) the Board may make all decisions and take all actions for the Company not otherwise provided for in this Agreement.

(b) The Board may act (A) by resolutions adopted at a meeting and by written consents pursuant to Section 5.3, (B) by delegating power and authority to committees pursuant to Section 5.4, and (C) by delegating power and authority to any officer appointed pursuant to Section 5.5 (each, an “Officer”).

(c) The Member acknowledges and agrees that no Manager shall, as a result of being a Manager (as such), be bound to devote all of his business time to the affairs of the Company, and that he and his Affiliates do and will continue to engage for their own account and for the accounts of others in other business ventures.

(d) The management of the business and affairs of the Company by the Officers and the exercising of their powers shall be conducted under the supervision of and subject to the approval of the Board.

(e) Except as otherwise required by this Agreement or by law, the holders of Series 1 Preferred Units shall not be entitled to a vote on matters submitted to the holders of Units for a vote.

Section 5.2 Appointment.

(a) Number. The number of Managers shall be fixed from time to time by the Member. The Member shall have the right to remove and replace any Manager at any time and for any reason. Any vacancy in any Manager position may be filled by the Member; and any Manager so chosen shall hold office until (i) removed with or without cause by the Member, (ii) such Manager’s successor shall be duly elected and appointed by the Member or (iii) such Manager’s death, disability or resignation. The number of initial Managers shall be eight (8)). The initial Managers were Philip A. Canfield, David A. Donnini, Aaron D. Cohen, Donald J. Edwards, J. Randy Staff, Carl B. Webb, Daniel D. Leonard and Gerald J. Ford.

(b) Resignation. The Managers shall serve from their designation in accordance with the terms hereof until their resignation, death or removal in accordance with the terms hereof. Managers need not be Members and need not be residents of the State of Delaware. A Person shall become a Manager effective upon receipt by the Company at its principal place of business of a written notice addressed to the Managers (or at such later time or upon the happening of some other event specified in such notice) of such Person’s designation. A Manager may resign as such by delivering his, her or its written resignation to the Company at the Company’s principal office addressed to the Managers. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

(c) Removal. The removal of any Manager from the Board or any of its committees (with or without cause) shall become effective upon the written request of the Member.

(d) Vacancies. A vacancy in the Board because of resignation, death or removal of a Manager shall be filled by the Member. If the Member fails to appoint a Manager pursuant to the terms of this Section 5.2, such position in the Board shall remain vacant until the Member exercises its right to appoint a Manager as provided hereunder.

(e) Reimbursement. The Company shall pay all reimbursable out-of-pocket costs and expenses incurred by each Manager incurred in the course of their service hereunder, including in connection with attending regular and special meetings of the Board and/or any of their respective committees.

(f) Compensation of Managers. Except as approved by the Member, Managers shall receive no compensation for serving in such capacity.

(g) Reliance by Third Parties. Any Person dealing with the Company, other than the Member, may rely on the authority of the Board (or any Officer authorized by the Board) in

taking any action in the name of the Company without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement. Every agreement, instrument or document executed by the Board (or any Officer authorized by the Board) in the name of the Company with respect to any business or property of the Company shall be conclusive evidence in favor of any Person relying thereon or claiming thereunder that (i) at the time of the execution or delivery thereof, this Agreement was in full force and effect, (ii) such agreement, instrument or document was duly executed according to this Agreement and is binding upon the Company and (iii) the Board or such Officer was duly authorized and empowered to execute and deliver such agreement, instrument or document for and on behalf of the Company.

Section 5.3 Board Meetings and Actions by Written Consent

(a) Quorum; Voting. A majority of the total number of Managers then serving on the Board (i.e., excluding any vacancies on the Board) must be present (including pursuant to Section 5.3(h)) in order to constitute a quorum for the transaction of business of the Board, and except as otherwise provided in this Agreement, the act of a majority of the total number of Managers then serving on the Board (i.e., excluding any vacancies on the Board) at a meeting of the Board at which a quorum is present shall be the act of the Board. A Manager who is present at a meeting of the Board at which action on any matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the Person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the Company immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Manager who voted in favor of such action.

(b) Place; Attendance. Meetings of the Board may be held at such place or places as shall be determined from time to time by resolution of the Board. At all meetings of the Board, business shall be transacted in such order as shall from time to time be determined by resolution of the Board. Attendance of a Manager at a meeting shall constitute a waiver of notice of such meeting, except where a Manager attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

(c) Meeting In Connection With Member Meeting. In connection with any meeting of the Member, the Managers may, if a quorum is present, hold a meeting for the transaction of business immediately after and at the same place as such meeting of the Member. Notice of such meeting at such time and place shall not be required.

(d) Time, Place and Notice. Regular meetings of the Board shall be held at such times and places as shall be designated from time to time by resolution of the Board. Notice of such meetings shall not be required.

(e) Special Meetings. Special meetings of the Board may be called by any Manager on at least 24 hours’ notice to each other Manager. Such notice need not state the purpose or purposes of, nor the business to be transacted at, such meeting, except as may otherwise be required by law or provided for in this Agreement.

(f) Chairman and Vice Chairman. The Board shall designate one of the Managers to serve as chairman (the “Chairman”) and a different Manager to serve as vice chairman (the “Vice Chairman”). The Chairman shall preside at all meetings of the Board. If the Chairman is absent at any meeting of the Board, the Vice Chairman shall preside over such Board meeting. If the Chairman and Vice Chairman are absent, the Managers present shall designate a member to serve as interim chairman for that meeting. Neither the Chairman nor Vice Chairman, except in their capacity as an Officer, shall have the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditure or incur any obligation on behalf of the Company or authorize any of the foregoing.

(g) Board Meetings. There shall be meetings of the Board from time to time as requested by the Member.

(h) Action by Unanimous Written Consent or Telephone Conference. Any action permitted or required by the DLLCA, the Certificate or this Agreement to be taken at a meeting of the Board or any committee designated by the Board may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by all of the Managers or members of that committee, as the case may be. Such consent shall have the same force and effect as a vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State of Delaware, and the execution of such consent shall constitute attendance or presence in Person at a meeting of the Board or any such committee, as the case may be. A consent transmitted by electronic transmission by a Member or Manager shall be deemed to be written and signed for purposes of this Agreement. Subject to the requirements of the DLLCA, the Certificate or this Agreement for notice of meetings, unless otherwise restricted by the Certificate, the Managers or members of any committee designated by the Board may participate in and hold a meeting of the Board or any committee, as the case may be, by means of a conference telephone or similar communications equipment by means of which all Persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in Person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Section 5.4 Committees; Delegation of Authority and Duties.

(a) Committees; Generally. The Board may, from time to time, designate one or more committees. Any such committee, to the extent provided in the enabling resolution or in the Certificate or this Agreement, shall have and may exercise all of the authority of the Board. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum, and the affirmative vote of a majority of the members present shall be necessary for the adoption of any resolution. The Board may dissolve any committee at any time, unless otherwise provided in the Certificate or this Agreement.

(b) Audit Committee. The Board may establish an audit committee to select the Company’s independent accountants and to review the Company’s interim financial statements and the annual audit of the Company’s financial statements conducted by such accountants.

(c) Delegation; Generally. The Board may, from time to time, delegate to one or more Persons (including any Manager or Officer) such authority and duties as the Board may deem advisable. The Board also may assign titles (including chairman, chief executive officer, president, vice president, secretary, assistant secretary, treasurer and assistant treasurer) to any Manager, Member or other individual and may delegate to such Manager, Member or other individual certain authority and duties. Any number of titles may be held by the same Manager, Member or other individual. Any delegation pursuant to this Section 5.4(c) may be revoked at any time by the Board.

(d) Third-party Reliance. Any Person dealing with the Company, other than a Member, may rely on the authority of any Officer in taking any action in the name of the Company without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement.

Section 5.5 Officers.

(a) Designation and Appointment. The Board may (but need not), from time to time, designate and appoint one or more Persons as an Officer of the Company. No Officer need be a resident of the State of Delaware, a Member or a Manager. Any Officers so designated shall have such authority and perform such duties as the Board may, from time to time, delegate to them. The Board may assign titles to particular Officers. Unless the Board otherwise decides, if the title is one commonly used for officers of a business corporation formed, the assignment of such title shall constitute the delegation to such Officer of the authority and duties that are normally associated with that office, subject to (i) any specific delegation of authority and duties made to such Officer by the Board pursuant to the third sentence of this Section 5.5(a) or (ii) any delegation of authority and duties made to one or more Officers pursuant to the terms of Section 5.4(c) and 5.5(c). Each Officer shall hold office until such Officer’s successor shall be duly designated and shall qualify or until such Officer’s death or until such Officer shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same individual. The salaries or other compensation, if any, of the Officers and agents of the Company shall be fixed from time to time by the Board.

(b) Resignation. Any Officer (subject to any contract rights available to the Company, if applicable) may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Board. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause, by the Board in its discretion at any time; provided, however, that such removal shall be without prejudice to the contract rights, if any, of the individual so removed. Designation of an Officer shall not of itself create contract rights. Any vacancy occurring in any office of the Company may be filled by the Board.

(c) Duties of Officers; Generally. The following Officers, to the extent such Officers have been appointed by the Board, shall have the following duties:

(i) Chief Executive Officer. The initial chief executive officer of the Company shall be Daniel D. Leonard. Subject to the powers of the Board, the chief executive

officer of the Company shall be in the general and active charge of the entire business and affairs of the Company, and shall be its chief policy-making Officer. The president, chief financial officer and each other senior Officer of the Company shall report directly to the chief executive officer. The chief executive officer shall see that all orders and resolutions of the Board are carried into effect. The Company’s chief executive officer’s responsibilities will also include setting corporate strategy. The chief executive officer shall have such other powers and perform such other duties as may be prescribed by the Board.

(ii) President. The president shall, subject to the powers of the Board and the chief executive officer, be the chief administrative officer of the Company and shall have general charge of the business, affairs and property of the Company, and control over its Officers (other than the chief executive officer), agents and employees. The president shall see that all orders and resolutions of the Board and the chief executive officer are carried into effect. He or she shall be responsible for the employment of employees, agents and Officers (other than the chief executive officer) as may be required for the conduct of the business and the attainment of the objectives of the Company. He or she shall have authority to suspend or to remove any employee, agent or Officer (other than the chief executive officer) of the Company and, in the case of the suspension for cause of any such Officer, to recommend to the Board what further action should be taken. In the absence of the president, his or duties shall be performed and his or her authority may be exercised by the chief executive officer. In the absence of the president and the chief executive officer, the duties of the president shall be performed and his or her authority may be exercised by such Officer as may have been designated as the most senior Officer of the Company. The president shall have such other powers and perform such other duties as may be prescribed by the chief executive officer or the Board.

(iii) Chief Financial Officer. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Company, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital and units of the Company. The chief financial officer shall have the custody of the funds and securities of the Company, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Company, and shall deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by the Board. The chief financial officer shall have such other powers and perform such other duties as may be prescribed by the chief executive officer or the Board.

(iv) Vice President(s). The vice president(s) shall perform such duties and have such other powers as the chief executive officer, the president, the chief operating officer or the Board may from time to time prescribe, and may have such further denominations as “Executive Vice President,” “Senior Vice President,” “Assistant Vice President,” and the like.

(v) Secretary.

(A) The secretary shall attend all meetings of the Board and shall record all the proceedings of the meetings in a book to be kept for that purpose, and shall perform like duties for the standing committees of the Board when required.

(B) The secretary shall keep all documents as may be required under the DLLCA or this Agreement. The secretary shall perform such other duties and have such other authority as may be prescribed elsewhere in this Agreement or from time to time by the Board. The secretary shall have the general duties, powers and responsibilities of a secretary of a corporation.

(C) If the Board chooses to appoint an assistant secretary or assistant secretaries, the assistant secretaries, in the order of their seniority, in the absence, disability or inability to act of the secretary, shall perform the duties and exercise the powers of the secretary, and shall perform such other duties as the Board may from time to time prescribe.

Section 5.6 Approval Rights.

(a) Negative Covenants. The Company shall not, without the prior written consent of the Member:

(i) directly or indirectly make any distributions upon any of its equity securities;

(ii) enter into, or permit any Subsidiary to enter into, any joint venture or similar transaction;

(iii) enter into any agreement or arrangement that materially limits or otherwise restricts the Company or any of its Subsidiaries from engaging or competing in any material line of business or in any material geographic area;

(iv) enter into, or permit any Subsidiary to enter into, any transaction with any of its or any Subsidiary’s Officers, directors, managers, members, employees or Affiliates or any individual related by blood, marriage or adoption to any such Person or any entity in which any such Person or individual owns a beneficial interest, except for normal employment arrangements and benefit programs on reasonable terms and except as otherwise expressly contemplated by this Agreement and the agreements contemplated hereby;

(v) directly or indirectly redeem, purchase or otherwise acquire, or permit any Subsidiary to redeem, purchase or otherwise acquire, any equity securities of the Company or any Subsidiaries (including, without limitation, warrants, options and other rights to acquire such equity securities), other than repurchases of equity securities from employees of the Company or any Subsidiary upon termination of employment pursuant to contractual arrangements approved by the Board;

(vi) except as expressly contemplated by this Agreement, authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise), or permit any Subsidiary to authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise) of, (A) any notes or debt securities containing equity features (including, without limitation, any notes or debt securities convertible into or exchangeable for equity securities, issued in connection with the issuance of equity securities or containing profit participation features) or (B) any class, series, shares or units of equity securities (or any securities convertible into or exchangeable for any equity securities) of the Company or any

Subsidiaries or rights, warrants or options to acquire or any security convertible into any equity securities of the Company or any Subsidiaries, other than the issuance of equity securities by a Subsidiary to the Company or another Subsidiary and other than the issuance of equity securities pursuant to the Company’s long-term incentive plan as approved by the Board;

(vii) create, incur, assume, refinance or suffer to exist, or permit any Subsidiary to create, incur, assume, refinance or suffer to exist, third party Indebtedness exceeding an aggregate principal amount of $50,000,000 outstanding at any time on a consolidated basis (whether by way of authorizing, issuing or entering into any agreement providing for the issuance (contingent or otherwise) of, any notes or debt securities or entering into any contract or agreement regarding third party debt financing or otherwise), except for Indebtedness secured by receivables or financial assets (including, without limitation, Indebtedness incurred pursuant to the New Facility, the Senior Unsecured Demand Notes, and the High Yield Debt (each as defined in the Member LLC Agreement)); provided that entry into any agreement for the refinancing of more than $200,000,000 of such Indebtedness secured by receivables or financial assets shall require the prior written consent of the holders of the Required Interest;

(viii) merge or consolidate with any Person or permit any Subsidiary to merge or consolidate with any Person (other than a wholly-owned Subsidiary);

(ix) sell, lease or otherwise dispose of, or permit any Subsidiary to sell, lease or otherwise dispose of, more than 10% of the consolidated assets of the Company and its Subsidiaries (computed on the basis of book value, determined in accordance with United States generally accepted accounting principles consistently applied, or fair market value, determined by the Board in its reasonable good faith judgment) in any transaction or series of related transactions (other than sales of motor vehicle installment sales contracts and installment loans in the ordinary course of business);

(x) voluntarily initiate a liquidation, dissolution or winding up of the Company or any Subsidiary, or a recapitalization or reorganization of the Company or any Subsidiary in any form of transaction (including, without limitation, any reorganization into a corporation or a partnership), or permit the commencement of a proceeding for bankruptcy, insolvency, receivership or similar action with respect to the Company or any of its Subsidiaries;

(xi) change the corporate or organizational structure of the Company or any of its Subsidiaries;

(xii) acquire, or permit any Subsidiary to acquire, any interest in any business (whether by a purchase of assets, purchase of securities, merger or otherwise) involving aggregate consideration (including, without limitation, the assumption of liabilities) exceeding $35,000,000;

(xiii) acquire portfolios of securities (including auto loan portfolios) for aggregate consideration of more than $100,000,000 in any transaction or series of related transactions;

(xiv) enter into the ownership, active management or operation of any business other than the ownership of the securities of its Subsidiaries or permit any Subsidiary to enter into the ownership, active management or operation of any business other than a business in the automobile loan industry;

(xv) become subject to, or permit any of its Subsidiaries to become subject to, any agreement or instrument that by its terms would (under any circumstances) restrict (A) the right of any Subsidiary to make loans or advances or pay dividends to, transfer property to, or repay any Indebtedness owed to, the Company or any Subsidiary or (B) the Company’s right to perform the provisions of this Agreement and the agreements contemplated hereby;

(xvi) amend, alter or repeal, or permit the Company or any Subsidiary to amend, alter or repeal, by merger, consolidation, combination, reclassification or otherwise, the certificate of incorporation, bylaws, certificate of formation or limited liability company agreement, as applicable, of the Company or any of its Subsidiaries;

(xvii) except as expressly contemplated by this Agreement, make any amendment to the Company’s certificate of formation;

(xviii) terminate the employment of, appoint or hire, or enter into, amend or modify any employment agreement or arrangement with, the Chief Executive Officer of the Company, other than a termination of employment and/or modification to such agreement or arrangement that does not materially change the severance or other terms of such agreement or arrangement;

(xix) settle or compromise any pending or threatened suit, action or claim of the Company or any of its Subsidiaries in excess of $5,000,000;

(xx) appoint or remove the independent auditor of the Company or any of its Subsidiaries;

(xxi) approve the annual budget (and significant variances from the budget) of the Company and its Subsidiaries;

(xxii) make, or permit any Subsidiary to make, any capital expenditures (including, without limitation, payments with respect to capitalized leases, as determined in accordance with generally accepted accounting principles consistently applied) exceeding an amount that is $1.0 million greater than the amount set forth in the then current annual budget approved pursuant to paragraph (xxi) above in the aggregate on a consolidated basis during any twelve-month period; or

(xxiii) make any material changes in the accounting policies of the Company or any of its Subsidiaries.

(b) Other Covenants.

(i) The Company shall not, nor shall it permit any Subsidiary to, disclose any Person’s name or identity as a direct or indirect investor in the Company in any press release or other public announcement or in any document or material filed with any governmental entity, without the prior written consent of the Member, unless such disclosure is required by applicable law or governmental regulations or by order of a court of competent jurisdiction, in which case prior to making such disclosure the Company shall give written notice to the Member describing in reasonable detail the proposed content of such disclosure and shall permit the Member to review and comment upon the form and substance of such disclosure.

(ii) In connection with any transaction in which the Company is involved that is required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time (the “HSR Act”), the Company shall prepare and file all documents with the Federal Trade Commission and the United States Department of Justice which may be required to comply with the HSR Act, and shall promptly furnish all materials thereafter requested by any of the regulatory agencies having jurisdiction over such filings, in connection with such transaction. The Company shall take all reasonable actions and shall file and use reasonable best efforts to have declared effective or approved all documents and notifications with any governmental or regulatory bodies, as may be necessary or may reasonably be requested under federal antitrust laws for the consummation of such transaction. Notwithstanding the foregoing, if any direct or indirect investor in the Company, rather than the Company, is required to make a filing under the HSR Act in connection with such a transaction, the Company will provide to such investor all necessary information for such filing, will facilitate such filing and will pay all fees and expenses associated with such filing.

(c) Special Board Approval. The Company shall not, without specific Board approval, enter into, or permit any Subsidiary to enter into, any agreement or arrangement that provide for payments to or from the Company or any Subsidiary in excess of $35,000,000 (other than securitization transactions in the ordinary course of business).

Section 5.7 Other Activities. Neither this Agreement nor any principle of law or equity shall preclude or limit, in any respect, the right of the Member, any Manager or their respective Affiliates to engage in or derive profit or compensation from any other activities or investments, including, without limitation, those that may be deemed competitive with the Company.

ARTICLE VI
EXCULPATION AND INDEMNIFICATION

Section 6.1 Exculpation. No Officer, other employee of the Company or Manager shall be liable to any other Officer, other employee of the Company, Manager, the Company or to the Member for any loss suffered by the Company unless such loss is caused by such Person’s bad faith, gross negligence or willful misconduct. The Officers, other employees of the Company and Managers shall not be liable for errors in judgment or for any acts or omissions that do not constitute bad faith, gross negligence or willful misconduct. Any Officer, other employee of the Company or Manager may consult with counsel and accountants in respect of Company affairs, and provided such Person acts in good faith reliance upon the advice or

opinion of such counsel or accountants, such Person shall not be liable for any loss suffered by the Company in reliance thereon.

Section 6.2 Right to Indemnification. Subject to the limitations and conditions as provided in this Article VI, each Person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative (hereinafter a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a Person of whom he or she is the legal representative, is or was a Member, Manager, Officer or other employee of the Company, or while a Member, Manager, Officer or employee of the Company is or was serving at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise shall be indemnified by the Company to the fullest extent permitted by the DLLCA, as the same exist or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than said law permitted the Company to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including attorneys’ fees) actually incurred by such Person in connection with such Proceeding, and indemnification under this Article VI shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted pursuant to this Article VI shall be deemed contract rights, and no amendment, modification or repeal of this Article VI shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Article VI could involve indemnification for negligence or under theories of strict liability.

Section 6.3 Advance Payment. Reasonable expenses incurred by a Person of the type entitled to be indemnified under Section 6.2 who was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the Company in advance of the final disposition of the Proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined by a court of competent jurisdiction in a final and non-appealable judgment that he or she is not entitled to be indemnified by the Company.

Section 6.4 Indemnification of Employees and Agents. The Company, by adoption of a resolution of the Board, may indemnify and advance expenses to an agent of the Company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to Persons who are not or were not Managers, Officers or employees of the Company but who are or were serving at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a Person to the same extent that it may indemnify and advance expenses to Managers, Officers and employees of the Company under this Article VI.

Section 6.5 Appearance as a Witness. Notwithstanding any other provision of this Article VI, the Company shall pay or reimburse reasonable out-of-pocket expenses incurred by a Manager, Officer or employee of the Company in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not a named defendant or respondent in the Proceeding.

Section 6.6 Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article VI shall not be exclusive of any other right which a Manager, Officer, employee or other Person indemnified pursuant to Section 6.2 may have or hereafter acquire under any law (common or statutory), provision of the Certificate or this Agreement, agreement, vote of Members or disinterested Managers or otherwise.

Section 6.7 Insurance. The Company shall purchase and maintain insurance, at its expense, to protect itself and any Person who is or was serving as a Manager, Officer, employee or agent of the Company or is or was serving at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited ability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under this Article VI.

Section 6.8 Savings Clause. If this Article VI or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Manager, Officer, employee or any other Person indemnified pursuant to this Article VI as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article VI that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VII
TRANSFER OF MEMBERSHIP INTERESTS

Subject to the consent of the Required Interest, the Member may assign all or any portion of such Member’s limited liability company interest in the Company at any time. Upon any such assignment, the assignee shall succeed to the rights and obligations of the Member in respect of its interests in the Company so transferred and (i) upon the assignment of 100% of the outstanding interest in the Company held by a single member to one or more assignees, each such assignee shall become a member of the Company; (ii) upon any other assignment of an interest in the Company, such assignee shall become a member in the Company upon the consent of all members other than the assigning member or, if the assigning member shall be the sole member immediately prior to such assignment, upon the consent of such assigning member. Notwithstanding anything to the contrary contained herein, no such transfer of a member’s interest in the Company shall operate to dissolve the Company.

ARTICLE VIII
DISSOLUTION AND LIQUIDATION

Section 8.1 Dissolution. The Company shall be dissolved and its affairs wound up and terminated upon the first to occur of the following (i) the written consent of the Member and (ii) the entry of a decree of judicial dissolution under Section 18-802 of the DLLCA; provided, that notwithstanding the foregoing, the Company shall not dissolve upon the occurrence of any of the events described in Section 18-801(a)(4) of the DLLCA (including, without limitation, the death or bankruptcy of the Member).

Section 8.2 Effect of Dissolution. Upon dissolution, the Company shall cease carrying on its business but shall not terminate until the winding up of the affairs of the Company is completed, the assets of the Company shall have been distributed as provided below and the Certificate of the Company shall have been cancelled in the manner required by the DLLCA.

Section 8.3 Liquidation Upon Dissolution. Upon the dissolution of the Company, sole and plenary authority to effectuate the liquidation of the assets of the Company shall be vested in the Member, which shall have full power and authority to sell, assign and encumber any and all of the Company’s assets and to wind up and liquidate the affairs of the Company in an orderly and business-like manner. The proceeds of liquidation of the assets of the Company distributable upon a dissolution and winding up of the Company shall be applied in the following order of priority:

(a) first, to the creditors of the Company, including creditors who are members, in the order of priority provided by law, in satisfaction of all liabilities and obligations of the Company (of any nature whatsoever, including, without limitation, fixed or contingent, matured or unmatured, legal or equitable, secured or unsecured), whether by payment or the making of reasonable provision for payment thereof; and

(b) thereafter, to the holders of the Units in accordance with Section 4.1(a).

Any non-cash assets will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), which shall be allocated in accordance with Section 4.3. In making such distributions, the liquidators shall allocate each type of asset (i.e., cash, cash equivalents, securities, etc.) among the Members ratably based upon the aggregate amounts to be distributed with respect to the Units held by each such holder. Any such distributions in kind shall be subject to (x) such conditions relating to the disposition and management of such assets as the liquidators deem reasonable and equitable and (y) the terms and conditions of any agreement governing such assets (or the operation thereof or the holders thereof) at such time.

The distribution of cash and/or property to a Member in accordance with the provisions of this Section 8.3 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its interest in the Company and all the Company’s property and constitutes a compromise to which all Members have consented within the meaning of the DLLCA. To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds.

Section 8.4 Winding Up and Certificate of Cancellation. The winding up of the Company shall be completed when all of its debts, liabilities, and obligations have been paid and discharged or reasonably adequate provision therefor has been made, and all of the remaining property and assets of the Company have been distributed to the Member. Upon the completion of the winding up of the Company, the Certificate of the Company shall be cancelled in the manner required by the DLLCA.

ARTICLE IX
VALUATION

Section 9.1 Determination. Subject to Section 9.2, the Fair Market Value of the assets of the Company or of a Unit will be determined by the Board (or, if pursuant to Section 8.3, the liquidators) in its good faith judgment in such manner as its deems reasonable and using all factors, information and data deemed to be pertinent.

Section 9.2 Fair Market Value. “Fair Market Value” of (i) a specific Company asset will mean the amount which the Company would receive in an all-cash sale of such asset (free and clear of all Liens and after payment of all liabilities secured only by such asset) in an arms-length transaction with an unaffiliated third party consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (and after giving effect to any transfer taxes payable in connection with such sale); and (ii) the Company will mean the amount which the Company would receive in an all-cash sale of all of its assets and businesses as a going concern (free and clear of all Liens and after payment of indebtedness for borrowed money) in an arms-length transaction with an unaffiliated third party consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (assuming that all of the proceeds from such sale were paid directly to the Company other than an amount of such proceeds necessary to pay transfer taxes payable in connection with such sale, which amount will not be received or deemed received by the Company). After a determination of the Fair Market Value of the Company is made as provided above, the Fair Market Value of a Unit will be determined by making a calculation reflecting the cash distributions which would be made to the Members in accordance with this Agreement in respect of such Unit if the Company were deemed to have received such Fair Market Value in cash and then distributed the same to the Members in accordance with the terms of this Agreement incident to the liquidation of the Company after payment to all of the Company’s creditors from such cash receipts other than payments to creditors who hold evidence of indebtedness for borrowed money, the payment of which is already reflected in the calculation of the Fair Market Value of the Company and assuming that all of the convertible debt and other convertible securities were repaid or converted (whichever yields more cash to the holders of such convertible securities) and all options to acquire Units (whether or not currently exercisable) that have an exercise price below the Fair Market Value of such Units were exercised and the exercise price therefor paid. Except as otherwise provided herein or in any agreement, document or instrument contemplated hereby, any amount to be paid under this Agreement by reference to the Fair Market Value shall be paid in full in cash, and any Unit being transferred in exchange therefor will be transferred free and clear of all Liens.

ARTICLE X
DEFINITIONS

Capitalized terms used but not otherwise defined herein shall have the following meanings:

“Affiliate” means, with respect to any Person, any Person that controls, is controlled by or is under common control with such Person or an Affiliate of such Person.

“Book Value” means, with respect to any Company property, the Company’s adjusted basis for federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g); provided that the Book Value of any asset contributed to the Company shall be equal to the Fair Market Value of the contributed asset on the date of contribution.

“Capital Contributions” means any cash, cash equivalents, promissory obligations, or the Fair Market Value of other property that a Member contributes or is deemed to have contributed to the Company with respect to any Unit pursuant to Section 3.1.

“Code” means the United States Internal Revenue Code of 1986 and any successor statute, as amended from time to time.

“Common Unit” means a Unit representing a fractional part of the interest of a Member in Profits, Losses and Distributions and having the rights and obligations specified with respect to Common Units in this Agreement.

“Distribution” means each distribution made by the Company to a Member, whether in cash, property or securities of the Company and whether by liquidating distribution, redemption, repurchase, or otherwise; provided that any recapitalization or exchange or conversion of securities of the Company, any redemption or repurchase of Units by the Company and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units shall not be deemed a Distribution.

“Fair Market Value” means, with respect to any asset or equity interest, its fair market value determined according to Sections 9.1 and 9.2.

“Indebtedness” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business, and (iv) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit).

Subsidiary or any Affiliate thereof, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to the Company, any Subsidiary or any Affiliate under a lease which is not in the nature of a conditional sale or title retention agreement, or any subordination arrangement in favor of another Person (other than any subordination arising in the ordinary course of business).

“Losses” means items of the Company loss and deduction determined according to Section 3.2.

“Member LLC Agreement” means the limited liability company agreement of the Member, dated on or about December 30, 2008, as amended from time to time.

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, an investment fund, any other business entity and a governmental entity or any department, agency or political subdivision thereof.

“Preferred Yield” means, with respect to each Series 1 Preferred Unit, for any period, the amount accruing on such Series 1 Preferred Unit on a daily basis, at the rate of 15.0% per annum, compounded on the 20th day of each March, June, September and December, commencing on March 20, 2009, on (a) the Series 1 Unreturned Capital of such Series 1 Preferred Unit plus (b) as the case may be, the Series 1 Unpaid Yield thereon from all prior quarterly periods. In calculating the amount of any Distribution to be made during a period, the portion of the Series 1 Preferred Unit’s Preferred Yield for the portion of such period elapsing before such Distribution is made shall be taken in account in determining the amount Distribution.

“Profits” means items of the Company income and gain determined according to Section 3.2.

“Required Interest” has the meaning specified in the Member LLC Agreement.

“Series 1 Preferred Unit” means a Unit representing a fractional part of the interest of a Member in Profits, Losses and Distributions and having the rights and obligations specified with respect to Series 1 Preferred Units in this Agreement.

“Series 1 Unpaid Yield” of any Series 1 Preferred Unit, means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Preferred Yield accrued on such Series 1 Preferred Unit for all periods prior to such date (including partial periods) over (b) the aggregate amount of prior Distributions made by the Company that constitute payment of Preferred Yield on such Series 1 Preferred Unit.

“Series 1 Unreturned Capital” means, with respect to any Series 1 Preferred Unit, as of any date, the aggregate Capital Contributions made or deemed to be made in exchange for such Series 1 Preferred Unit reduced by all Distributions made by the Company that constitute a return of Series 1 Unreturned Capital under Section 4.1(a)(ii).

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association, or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

“Treasury Regulations” means the income tax regulations promulgated under the Code and in effect from time to time.

“Units” means the Series 1 Preferred Units and Common Units.

“Voting Units” means the Common Units.

ARTICLE XI
MISCELLANEOUS

Section 11.1 Amendment. This Agreement may be amended or modified only by a written instrument executed by the members holding a majority of the outstanding interest in the Company. In addition, the terms or conditions hereof may be waived by a written instrument executed by the party waiving compliance. Notwithstanding anything to the contrary in this Agreement, this Agreement shall not be amended or modified in any way or matter that would adversely affect the holders of the Series 1 Preferred Units without the prior written consent of all holders of the Series 1 Preferred Units.

Section 11.2 Remedies. Each Member and the Company shall have all rights and remedies set forth in this Agreement and all rights and remedies which such Person has been granted at any time under any other agreement or contract and all of the rights which such Person has under any law. Any Person having any rights under any provision of this Agreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.

Section 11.3 Successors and Assigns. All covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs,

executors, administrators, successors, legal representatives, and permitted assigns, whether so expressed or not.

Section 11.4 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.

Section 11.5 Counterparts. This Agreement may be executed in multiple counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and shall constitute the same instrument.

Section 11.6 Consent to Jurisdiction. The Member irrevocably submits to the nonexclusive jurisdiction of the United States District Court for the State of Delaware and the state courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. The Member further agrees that service of any process, summons, notice or document by United States certified or registered mail to the Member’s address set forth in the Company’s books and records or such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party shall be effective service of process in any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. The Member irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the United States District Court for the State of Delaware or the state courts of the State of Delaware and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.

Section 11.7 Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be by way of example rather than by limitation. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and, if applicable, hereof. Without limiting the generality of the immediately preceding sentence, no amendment or other modification to any agreement, document, or instrument that requires the consent of any Person pursuant to the terms of this Agreement or any other agreement will be given effect hereunder unless such Person has consented in writing to such amendment or modification. Wherever required by the context, references to a year shall refer to a portion thereof. The use of the words “or,” “either,” and “any” shall not be exclusive. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an

ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Wherever a conflict exists between this Agreement and any other agreement, this Agreement shall control but solely to the extent of such conflict.

Section 11.8 Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Any dispute relating hereto shall be heard in the state or federal courts of Delaware, and the parties agree to jurisdiction and venue therein.

Section 11.9 Mutual Waiver of Jury Trial. Because disputes arising in connection with complex transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. Therefore, to achieve the best combination of the benefits of the judicial system and of arbitration, each party to this agreement (including the Company) hereby waives all rights to trial by jury in any action, suit, or proceeding brought to resolve any dispute between or among any of the parties hereto, whether arising in contract, tort, or otherwise, arising out of, connected with, related or incidental to this agreement, the transactions contemplated hereby and/or the relationships established among the parties hereunder.

Section 11.10 Addresses and Notices. All notices, demands, or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or made when (a) delivered Personally to the recipient, (b) telecopied to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a business day, and otherwise on the next business day, or (c) one business day after being sent to the recipient by reputable overnight courier service (charges prepaid). Such notices, demands, and other communications shall be sent to the address for such recipient set forth in the Company’s books and records, or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Any notice to the Board or the Company shall be deemed given if received by the Board at the principal office of the Company designated pursuant to Section 1.5.

Section 11.11 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company or any of its Affiliates, and no creditor who makes a loan to the Company or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the Company in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in profits, losses, distributions, capital, or property other than as a secured creditor.

Section 11.12 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other

covenant, duty, agreement, or condition. Notwithstanding the other provisions of this Agreement, Section 18-305(a) of the DLLCA shall not apply to the Company and no Member shall have any rights thereunder.

Section 11.13 Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 11.14 Entire Agreement. This Agreement, those documents expressly referred to herein, and the other documents of even date herewith, and as of the date of the Original LLC Agreement, embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, including, without limitation the Original LLC Agreement (which this Agreement amends, restates and supersedes in its entirety); provided, that neither the Member nor any other party shall be relieved of any liability for any breach of the Original LLC Agreement occurring prior to the date hereof.

Section 11.15 Delivery by Facsimile. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in Person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall reexecute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

Section 11.16 No Petition. Any holder of Series 1 Preferred Units, in that capacity, shall not petition or otherwise invoke, or cause the Company to invoke, the process of any court or government authority for the purpose of commencing or sustaining a case against the Company under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Company or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Company.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the undersigned has entered into this Agreement as of the date first written above.


TRIAD FINANCIAL HOLDINGS LLC
By:	/s/ Gerald J. Ford
	Name:	Gerald J. Ford
	Title:	Chief Executive Officer

Signature Page

Schedule A

Number of Units

Series 1

Name and Address of

Capital

Preferred

Common

Member

Contribution

Units

Triad Financial
Holdings LLC
200 Crescent Court,
Suite 1350, Dallas,
Texas 75201

17,001,000¹

17,000,000

1,000

TOTAL

17,001,000

17,000,000

1,000


¹		Triad Financial SM LLC was the survivor by merger from the merger between Triad Financial SM LLC and Triad Financial Corporation.

EX-3.4 4 a51470exv3w4.htm EX-3.4 exv3w4

EXHIBIT 3.4

CERTIFICATE OF INCORPORATION
OF
TRIAD FINANCIAL SM INC.

ARTICLE ONE

The name of the corporation is Triad Financial SM Inc.

ARTICLE TWO

The address of the corporation’s registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE THREE

The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE FOUR

The total number of shares of stock which the corporation has authority to issue is one thousand (1,000) shares of Common Stock, par value one cent ($0.01) per share.

ARTICLE FIVE

The name and mailing address of the sole incorporator are as follows:

NAME AND MAILING ADDRESS

Barbara Beach
200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601

ARTICLE SIX

The corporation is to have perpetual existence.

ARTICLE SEVEN

In furtherance and not in limitation of the powers conferred by statute, the board of directors of the corporation is expressly authorized to make, alter or repeal the by-laws of the corporation.

ARTICLE EIGHT

Meetings of stockholders may be held within or without the State of Delaware, as the by-laws of the corporation may provide. The books of the corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the corporation. Election of directors need not be by written ballot unless the by-laws of the corporation so provide.

ARTICLE NINE

To the fullest extent permitted by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended, a director of this corporation shall not be liable to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director. Any repeal or modification of this ARTICLE NINE shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.

ARTICLE TEN

The corporation expressly elects not to be governed by §203 of the General Corporation Law of the State of Delaware.

ARTICLE ELEVEN

The corporation reserves the right to amend, alter, change or repeal any provision contained in this certificate of incorporation in the manner now or hereafter prescribed herein and by the laws of the State of Delaware, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE TWELVE

To the maximum extent permitted from time to time under the laws of the State of Delaware, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to its officers, directors or stockholders, other than those officers, directors or stockholders who are employees of the Corporation. No amendment or repeal of this Article Twelve shall apply to or have any effect on the liability or alleged liability of any officer, director or stockholder of the Corporation for or with respect to any opportunities or which such officer, director, or stockholder becomes aware prior to such amendment or repeal.

Signature page to follow.

I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, do make this certificate, hereby declaring and certifying that this is my act and deed and the facts stated herein are true, and accordingly have hereunto set my hand on the 22nd day of December, 2008.



	/s/ Barbara A. Beach
	Barbara A. Beach
	Sole Incorporator

EX-3.5 5 a51470exv3w5.htm EX-3.5 exv3w5

EXHIBIT 3.5

BY-LAWS

TRIAD FINANCIAL SM INC.
A Delaware corporation
Adopted as of December 23, 2008

ARTICLE I
OFFICES

Section 1. Registered Office. The registered office of the corporation in the State of Delaware shall be located at 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801. The name of its registered agent at such address is The Corporation Trust Company. The registered office and/or registered agent of the corporation may be changed from time to time by action of the board of directors.

Section 2. Other Offices. The corporation may also have offices at such other places, both within and without the State of Delaware, as the board of directors may from time to time determine or the business of the corporation may require.

ARTICLE II
MEETINGS OF STOCKHOLDERS

Section 1. Place and Time of Meetings. An annual meeting of the stockholders shall be held each year within one hundred twenty (120) days after the close of the immediately preceding fiscal year of the corporation for the purpose of electing directors and conducting such other proper business as may come before the meeting. The date, time and place of the annual meeting shall be determined by the president of the corporation; provided, that if the president does not act, the board of directors shall determine the date, time and place of such meeting.

Section 2. Special Meetings. Special meetings of stockholders may be called for any purpose and may be held at such time and place, within or without the State of Delaware, as shall be stated in a notice of meeting or in a duly executed waiver of notice thereof. Such meetings may be called at any time by the board of directors or the president and shall be called by the president upon the written request of holders of shares entitled to cast not less than a majority of the votes at the meeting, such written request shall state the purpose or purposes of the meeting and shall be delivered to the president.

Section 3. Place of Meetings. The board of directors may designate any place, either within or without the State of Delaware, as the place of meeting for any annual meeting or for any special meeting called by the board of directors. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal executive office of the corporation.

Section 4. Notice. Whenever stockholders are required or permitted to take action at a meeting, written or printed notice stating the place, date, time, and, in the case of special meetings, the purpose or purposes, of such meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting. All such notices shall be delivered, either personally or by mail, by or at the direction of the board of directors, the president or the secretary, and if mailed, such notice shall be deemed to be delivered when deposited in the United States mail, postage prepaid, addressed to the stockholder at his, her or its address as the same appears on the records of the corporation. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened.

Section 5. Stockholders List. The officer having charge of the stock ledger of the corporation shall make, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 6. Quorum. The holders of a majority of the outstanding shares of capital stock, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders, except as otherwise provided by statute or by the certificate of incorporation. If a quorum is not present, the holders of a majority of the shares present in person or represented by proxy at the meeting, and entitled to vote at the meeting, may adjourn the meeting to another time and/or place.

Section 7. Adjourned Meetings. When a meeting is adjourned to another time and place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 8. Vote Required. When a quorum is present, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless the question is one upon which by express provisions of an applicable law or of the certificate of incorporation a different vote is required, in which case such express provision shall govern and control the decision of such question.

Section 9. Voting Rights. Except as otherwise provided by the General Corporation Law of the State of Delaware or by the certificate of incorporation of the corporation or any

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amendments thereto and subject to Section 3 of Article VI hereof, every stockholder shall at every meeting of the stockholders be entitled to one (1) vote in person or by proxy for each share of common stock held by such stockholder.

Section 10. Proxies. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him or her by proxy, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an interest in the stock itself or an interest in the corporation generally. Any proxy is suspended when the person executing the proxy is present at a meeting of stockholders and elects to vote, except that when such proxy is coupled with an interest and the fact of the interest appears on the face of the proxy, the agent named in the proxy shall have all voting and other rights referred to in the proxy, notwithstanding the presence of the person executing the proxy. At each meeting of the stockholders, and before any voting commences, all proxies filed at or before the meeting shall be submitted to and examined by the secretary or a person designated by the secretary, and no shares may be represented or voted under a proxy that has been found to be invalid or irregular.

Section 11. Action by Written Consent. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken and bearing the dates of signature of the stockholders who signed the consent or consents, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the corporation by delivery to its registered office in the state of Delaware, or the corporation’s principal place of business, or an officer or agent of the corporation having custody of the book or books in which proceedings of meetings of the stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested provided, however, that no consent or consents delivered by certified or registered mail shall be deemed delivered until such consent or consents are actually received at the registered office. All consents properly delivered in accordance with this section shall be deemed to be recorded when so delivered. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered to the corporation as required by this section, written consents signed by the holders of a sufficient number of shares to take such corporate action are so recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Any action taken pursuant to such written consent or consents of the stockholders shall have the same force and effect as if taken by the stockholders at a meeting thereof.

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ARTICLE III
DIRECTORS

Section 1. General Powers. The business and affairs of the corporation shall be managed by or under the direction of the board of directors.

Section 2. Number, Election and Term of Office. The number of directors which shall constitute the first board shall be two (2). Thereafter, the number of directors shall be established from time to time by resolution of the board. The directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors. The directors shall be elected in this manner at the annual meeting of the stockholders, except as provided in Section 4 of this Article III. Each director elected shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

Section 3. Removal and Resignation. Any director or the entire board of directors may be removed at any time, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of any class or series are entitled to elect one or more directors by the provisions of the corporation’s certificate of incorporation, the provisions of this section shall apply, in respect to the removal without cause of a director or directors so elected, to the vote of the holders of the outstanding shares of that class or series and not to the vote of the outstanding shares as a whole. Any director may resign at any time upon written notice to the corporation.

Section 4. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. Each director so chosen shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as herein provided.

Section 5. Annual Meetings. The annual meeting of each newly elected board of directors shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of stockholders.

Section 6. Other Meetings and Notice. Regular meetings, other than the annual meeting, of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by resolution of the board. Special meetings of the board of directors may be called by or at the request of the president on at least twenty-four (24) hours notice to each director, either personally, by telephone, by mail, or by telegraph.

Section 7. Quorum, Required Vote and Adjournment. A majority of the total number of directors shall constitute a quorum for the transaction of business. The vote of a majority of directors present at a meeting at which a quorum is present shall be the act of the board of directors. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

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Section 8. Committees. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation, which to the extent provided in such resolution or these by-laws shall have and may exercise the powers of the board of directors in the management and affairs of the corporation except as otherwise limited by law. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.

Section 9. Committee Rules. Each committee of the board of directors may fix its own rules of procedure and shall hold its meetings as provided by such rules, except as may otherwise be provided by a resolution of the board of directors designating such committee. Unless otherwise provided in such a resolution, the presence of at least a majority of the members of the committee shall be necessary to constitute a quorum. In the event that a member and that member’s alternate, if alternates are designated by the board of directors as provided in Section 8 of this Article III, of such committee is or are absent or disqualified, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in place of any such absent or disqualified member.

Section 10. Communications Equipment. Members of the board of directors or any committee thereof may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in the meeting pursuant to this section shall constitute presence in person at the meeting.

Section 11. Waiver of Notice and Presumption of Assent. Any member of the board of directors or any committee thereof who is present at a meeting shall be conclusively presumed to have waived notice of such meeting except when such member attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Such member shall be conclusively presumed to have assented to any action taken unless his or her dissent shall be entered in the minutes of the meeting or unless his or her written dissent to such action shall be filed with the person acting as the secretary of the meeting before the adjournment thereof or shall be forwarded by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to any member who voted in favor of such action.

Section 12. Action by Written Consent. Unless otherwise restricted by the certificate of incorporation, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

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ARTICLE IV
OFFICERS

Section 1. Number. The officers of the corporation shall be elected by the board of directors and may consist of a president, one or more vice-presidents, secretary, a treasurer, and such other officers and assistant officers as may be deemed necessary or desirable by the board of directors. Any number of offices may be held by the same person. In its discretion, the board of directors may choose not to fill any office for any period as it may deem advisable, except that the offices of president and secretary shall be filled as expeditiously as possible.

Section 2. Election and Term of Office. The officers of the corporation shall be elected annually by the board of directors at its first meeting held after each annual meeting of stockholders or as soon thereafter as conveniently may be. The president shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of stockholders or as soon thereafter as conveniently may be. The president shall appoint other officers to serve for such terms as he or she deems desirable. Vacancies may be filled or new offices created and filled at any meeting of the board of directors. Each officer shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal as hereinafter provided.

Section 3. Removal. Any officer or agent elected by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section 4. Vacancies. Any vacancy occurring in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term by the board of directors then in office.

Section 5. Compensation. Compensation of all officers shall be fixed by the board of directors, and no officer shall be prevented from receiving such compensation by virtue of his or her also being a director of the corporation.

Section 6. The President. The president shall be the chief executive officer of the corporation; shall preside at all meetings of the stockholders and board of directors at which he is present; subject to the powers of the board of directors, shall have general charge of the business, affairs and property of the corporation, and control over its officers, agents and employees; and shall see that all orders and resolutions of the board of directors are carried into effect. The president shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. The president shall have such other powers and perform such other duties as may be prescribed by the board of directors or as may be provided in these by-laws.

Section 7. Vice-presidents. The vice-president, or if there shall be more than one, the vice-presidents in the order determined by the board of directors or by the president, shall, in the

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absence or disability of the president, act with all of the powers and be subject to all the restrictions of the president. The vice-presidents shall also perform such other duties and have such other powers as the board of directors, the president or these by-laws may, from time to time, prescribe.

Section 8. The Secretary and Assistant Secretaries. The secretary shall attend all meetings of the board of directors, all meetings of the committees thereof and all meetings of the stockholders and record all the proceedings of the meetings in a book or books to be kept for that purpose. Under the president’s supervision, the secretary shall give, or cause to be given, all notices required to be given by these by-laws or by law; shall have such powers and perform such duties as the board of directors, the president or these by-laws may, from time to time, prescribe; and shall have custody of the corporate seal of the corporation. The secretary, or an assistant secretary, shall have authority to affix the corporate seal to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the president, or secretary may, from time to time, prescribe.

Section 9. The Treasurer and Assistant Treasurer. The treasurer shall have the custody of the corporate funds and securities; shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation; shall deposit all monies and other valuable effects in the name and to the credit of the corporation as may be ordered by the board of directors; shall cause the funds of the corporation to be disbursed when such disbursements have been duly authorized, taking proper vouchers for such disbursements; and shall render to the president and the board of directors, at its regular meeting or when the board of directors so requires, an account of the corporation; shall have such powers and perform such duties as the board of directors, the president or these by-laws may, from time to time, prescribe. If required by the board of directors, the treasurer shall give the corporation a bond (which shall be rendered every six (6) years) in such sums and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of the office of treasurer and for the restoration to the corporation, in case of death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in the possession or under the control of the treasurer belonging to the corporation. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer. The assistant treasurers shall perform such other duties and have such other powers as the board of directors, the president or treasurer may, from time to time, prescribe.

Section 10. Other Officers, Assistant Officers and Agents. Officers, assistant officers and agents, if any, other than those whose duties are provided for in these by-laws, shall have such authority and perform such duties as may from time to time be prescribed by resolution of the board of directors.

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Section 11. Absence or Disability of Officers. In the case of the absence or disability of any officer of the corporation and of any person hereby authorized to act in such officer’s place during such officer’s absence or disability, the board of directors may by resolution delegate the powers and duties of such officer to any other officer or to any director, or to any other person whom it may select.

ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS

Section 1. Nature of Indemnity. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the corporation to the fullest extent which it is empowered to do so unless prohibited from doing so by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment) against all expense, liability and loss (including attorneys’ fees actually and reasonably incurred by such person in connection with such proceeding) and such indemnification shall inure to the benefit of his heirs, executors and administrators; provided, however, that, except as provided in Section 2 hereof, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the corporation. The right to indemnification conferred in this Article V shall be a contract right and, subject to Sections 2 and 5 hereof, shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition. The corporation may, by action of its board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers.

Section 2. Procedure for Indemnification of Directors and Officers. Any indemnification of a director or officer of the corporation under Section 1 of this Article V or advance of expenses under Section 5 of this Article V shall be made promptly, and in any event within thirty (30) days, upon the written request of the director or officer; provided, however, that no payment of any indemnification claim shall be made prior to the approval of such payment by the board of directors. If a determination by the corporation that the director or officer is entitled to indemnification pursuant to this Article V is required, and the corporation fails to respond within sixty (60) days to a written request for indemnity, the corporation shall be deemed to have approved the request. If the corporation denies a written request for indemnification or advancing of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty (30) days, the right to indemnification or advances as granted by this Article V shall be enforceable by the director or officer in any court of competent jurisdiction. Such person’s costs and expenses incurred in connection with successfully establishing his right to indemnification, in whole or in part, in any such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action

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brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the corporation to indemnify the claimant for the amount claimed, but the burden of such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the corporation (including its board of directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

Section 3. Article Not Exclusive. The rights to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article V shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the certificate of incorporation, by-law, agreement, vote of stockholders or disinterested directors or otherwise.

Section 4. Insurance. The corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee, fiduciary, or agent of the corporation or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, whether or not the corporation would have the power to indemnify such person against such liability under this Article V.

Section 5. Expenses. Unless otherwise determined by the board of directors in a specific case, expenses incurred by any person described in Section 1 of this Article V in defending a proceeding shall be paid by the corporation in advance of such proceeding’s final disposition upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.

Section 6. Employees and Agents. Persons who are not covered by the foregoing provisions of this Article V and who are or were employees or agents of the corporation, or who are or were serving at the request of the corporation as employees or agents of another corporation, partnership, joint venture, trust or other enterprise, may be indemnified to the extent authorized at any time or from time to time by the board of directors.

Section 7. Contract Rights. The provisions of this Article V shall be deemed to be a contract right between the corporation and each director or officer who serves in any such capacity at any time while this Article V and the relevant provisions of the General Corporation Law of the State of Delaware or other applicable law are in effect, and any repeal or modification

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of this Article V or any such law shall not affect any rights or obligations then existing with respect to any state of facts or proceeding then existing.

Section 8. Merger or Consolidation. For purposes of this Article V, references to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this Article V with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

ARTICLE VI
CERTIFICATES OF STOCK

Section 1. Form. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by the president or a vice-president and the secretary or an assistant secretary of the corporation, certifying the number of shares of a specific class or series owned by such holder in the corporation. If such a certificate is countersigned (1) by a transfer agent or an assistant transfer agent other than the corporation or its employee or (2) by a registrar, other than the corporation or its employee, the signature of any such president, vice-president, secretary, or assistant secretary may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on, any such certificate or certificates shall cease to be such officer or officers of the corporation whether because of death, resignation or otherwise before such certificate or certificates have been delivered by the corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation. All certificates for shares shall be consecutively numbered or otherwise identified. The name of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the books of the corporation. Shares of stock of the corporation shall only be transferred on the books of the corporation by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the corporation of the certificate or certificates for such shares endorsed by the appropriate person or persons, with such evidence of the authenticity of such endorsement, transfer, authorization, and other matters as the corporation may reasonably require, and accompanied by all necessary stock transfer stamps. In that event, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate or certificates, and record the transaction on its books. The board of directors may appoint a bank or trust company organized under the laws of the United States or any state thereof to act as its transfer agent or registrar, or both in connection with the transfer of any class or series of securities of the corporation.

Section 2. Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates previously issued by the

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corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his or her legal representative, to give the corporation a bond sufficient to indemnify the corporation against any claim that may be made against the corporation on account of the loss, theft or destruction of any such certificate or the issuance of such new certificate.

Section 3. Fixing a Record Date for Stockholder Meetings. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the board of directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the next day preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.

Section 4. Fixing a Record Date for Action by Written Consent. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date has been fixed by the board of directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the board of directors and prior action by the board of directors is required by statute, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the board of directors adopts the resolution taking such prior action.

Section 5. Fixing a Record Date for Other Purposes. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment or any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purposes of any other lawful action, the board of directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than

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sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.

Section 6. Registered Stockholders. Prior to the surrender to the corporation of the certificate or certificates for a share or shares of stock with a request to record the transfer of such share or shares, the corporation may treat the registered owner as the person entitled to receive dividends, to vote, to receive notifications, and otherwise to exercise all the rights and powers of an owner. The corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof.

Section 7. Subscriptions for Stock. Unless otherwise provided for in the subscription agreement, subscriptions for shares shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series. In case of default in the payment of any installment or call when such payment is due, the corporation may proceed to collect the amount due in the same manner as any debt due the corporation.

ARTICLE VII
GENERAL PROVISIONS

Section 1. Dividends. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or any other purpose and the directors may modify or abolish any such reserve in the manner in which it was created.

Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders for the payment of money by or to the corporation and all notes and other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers, agent or agents of the corporation, and in such manner, as shall be determined by resolution of the board of directors or a duly authorized committee thereof.

Section 3. Contracts. The board of directors may authorize any officer or officers, or any agent or agents, of the corporation to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.

Section 4. Loans. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary,

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whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest, and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.

Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors.

Section 6. Corporate Seal. The board of directors shall provide a corporate seal which shall be in the form of a circle and shall have inscribed thereon the name of the corporation and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Section 7. Voting Securities Owned By Corporation. Voting securities in any other corporation held by the corporation shall be voted by the president, unless the board of directors specifically confers authority to vote with respect thereto, which authority may be general or confined to specific instances, upon some other person or officer. Any person authorized to vote securities shall have the power to appoint proxies, with general power of substitution.

Section 8. Inspection of Books and Records. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean any purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in the State of Delaware or at its principal place of business.

Section 9. Section Headings. Section headings in these by-laws are for convenience of reference only and shall not be given any substantive effect in limiting or otherwise construing any provision herein.

Section 10. Inconsistent Provisions. In the event that any provision of these by-laws is or becomes inconsistent with any provision of the certificate of incorporation, the General Corporation Law of the State of Delaware or any other applicable law, the provision of these by-laws shall not be given any effect to the extent of such inconsistency but shall otherwise be given full force and effect.

ARTICLE VIII
AMENDMENTS

These by-laws may be amended, altered, or repealed and new by-laws adopted at any meeting of the board of directors by a majority vote. The fact that the power to adopt, amend,

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alter, or repeal the by-laws has been conferred upon the board of directors shall not divest the stockholders of the same powers.

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EX-4.5 6 a51470exv4w5.htm EX-4.5 exv4w5

EXHIBIT 4.5

SECOND SUPPLEMENTAL INDENTURE

SECOND SUPPLEMENTAL INDENTURE (“Second Supplemental Indenture”), dated as of December 29, 2008, among Triad Financial SM LLC, a Delaware limited liability company (“SMLLC”), Triad Financial SM Inc., a Delaware corporation and wholly-owned subsidiary of SMLLC (“SMINC”), and The Bank of New York Mellon, a New York banking corporation, as successor to JP Morgan Chase Bank, N.A., as trustee under the Indenture referred to below (the “Trustee”).

WITNESSETH:

WHEREAS, Triad Acquisition Corp., a Delaware corporation (the “Issuer”) and the Trustee heretofore executed and delivered an Indenture, dated as of April 29, 2005 (as heretofore amended and supplemented, the “Indenture”), providing for the issuance of the 11.125% Senior Notes due 2013 (the “Notes”);

WHEREAS, pursuant to Section 5.01 of the Indenture, on April 29, 2005, Triad Financial Corporation, a California corporation (the “Company”), became the successor to the Issuer by executing and delivering a Supplemental Indenture (the “First Supplemental Indenture”), dated as of April 29, 2005, to the Trustee;

WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of December 29, 2008, by and between the Company and SMLLC, the Company will be merged with and into SMLLC (such transaction, the “Merger”);

WHEREAS, pursuant to Section 5.01(2) of the Indenture, as a condition to certain permitted consolidations or mergers of the Company, which include the Merger, the Person formed by or surviving any such consolidation or merger (if other than the Company) (the “Surviving Person”) is required to assume all the obligations of the Company under the Notes and the Indenture pursuant to agreements reasonably satisfactory to the Trustee;

WHEREAS, pursuant to Section 5.01(1) of the Indenture, as a condition to certain permitted consolidations or mergers of the Company, which include the Merger, if the Surviving Person is a partnership or limited liability company, then a corporation wholly owned by such Person organized or existing under the laws of the United States, any state of the United States or the District of Columbia that does not and will not have any material assets or operations, is required to become a co-issuer of the Notes pursuant to a supplemental indenture substantially in the form set forth in the Indenture;

WHEREAS, Section 5.02 of the Indenture provides that upon the completion of certain mergers that comply with Section 5.01 of the Indenture, the applicable Surviving Person shall succeed to, and be substituted for (so that from and after the date of such merger, the provisions of the Indenture referring to the “Company” shall refer instead to the successor Person and not to the Company), and may exercise every right and power of the Company under the Indenture with the same effect as if such successor Person had been named as the Company therein;

WHEREAS, Section 9.01(3) of the Indenture provides that the Company and the Trustee may amend the Indenture and the Notes, without notice to or consent of any Holders of the Notes, in order to comply with Article 5 of the Indenture; and

WHEREAS, this Second Supplemental Indenture has been duly authorized by all necessary entity action on the part of SMLLC and SMINC.

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, SMLLC, SMINC and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I
DEFINITIONS

Section 1.1. Definitions. For all purposes of the Indenture and this Second Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(a) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to the Indenture and this Second Supplemental Indenture as a whole and not to any particular Article, Section or subdivision; and

(b) initially capitalized terms used but not otherwise defined in this Second Supplemental Indenture shall have the meanings assigned to them in the Indenture.

ARTICLE II
ASSUMPTION BY SUCCESSOR COMPANIES

Section 2.1. Assumption of the Notes. SMLLC and SMINC, as co-issuers, hereby, jointly and severally, expressly assume and agree promptly to pay, perform and discharge when due each and every debt, obligation, covenant and agreement incurred, made or to be paid, performed or discharged by the Company under the Indenture and the Notes.

SMLLC and SMINC, as co-issuers, hereby, jointly and severally, agree to be bound by all the terms, provisions and conditions of the Indenture and the Notes and that they shall be the successors to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company, as the predecessor to SMLLC, under the Indenture and the Notes.

Section 2.2. Trustee’s Acceptance. The Trustee hereby accepts this Second Supplemental Indenture and agrees to perform the same under the terms and conditions set forth in the Indenture.

ARTICLE III
MISCELLAENOUS

Section 3.1. Effect of Supplemental Indenture. Upon the execution and delivery of this Second Supplemental Indenture by SMLLC, SMINC and the Trustee, the Indenture shall be supplemented in accordance herewith, and this Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Indenture shall be bound thereby.

Section 3.2. Indenture Remains in Full Force and Effect. Except as supplemented hereby, all provisions of the Indenture shall remain in full force and effect.

Section 3.3. Indenture and Supplemental Indentures Construed Together. This Second Supplemental Indenture is an indenture supplemental to the Indenture, and the Indenture, the First

Supplemental Indenture and this Second Supplemental Indenture shall henceforth be read and construed together.

Section 3.4. Confirmation and Preservation of Indenture. The Indenture, as supplemented by the First Supplemental Indenture and this Second Supplemental Indenture, is in all respects confirmed and preserved.

Section 3.5. Conflict with Trust Indenture Act. If any provision of this Second Supplemental Indenture limits, qualifies or conflicts with any provision of the TIA that is required under the TIA to be part of, and govern, any provision of this Second Supplemental Indenture, the provision of the TIA shall control. If any provision of this Second Supplemental Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the provision of the TIA shall be deemed to apply to the Indenture as so modified or excluded by this Second Supplemental Indenture, as the case may be.

Section 3.6. Severability. In case any provision in this Second Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 3.7. Benefits of Supplemental Indenture. Nothing in this Second Supplemental Indenture or the Notes, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the Holders of the Notes, any benefit of any legal or equitable right, remedy or claim under the Indenture, the First Supplemental Indenture, this Second Supplemental Indenture or the Notes.

Section 3.8. Successors. All agreements of SMLLC and SMINC in this Second Supplemental Indenture shall bind their respective successors. All agreements of the Trustee in this Second Supplemental Indenture shall bind its successors.

Section 3.9. Certain Duties and Responsibilities of the Trustee. In entering into this Second Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture and the Notes relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 3.10. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 3.11. Multiple Originals. The parties may sign any number of copies of this Second Supplemental Indenture, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 3.12. Headings. The Article and Section headings herein are inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

Section 3.13. The Trustee. The Trustee shall not be responsible in any manner for, or in respect of, the validity or sufficiency of this Second Supplemental Indenture or for, or in respect of, the recitals contain herein, all of which are made by SMLLC, SMINC and the Company.

SIGNATURE PAGE FOLLOWS

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be duly executed as of the date first above written.


TRIAD FINANCIAL SM LLC, a Delaware limited liability company
By:	/s/ Jeffrey Butcher
	Name:	Jeffrey Butcher
	Title:	Vice President & Chief Financial Officer

TRIAD FINANCIAL SM INC., a Delaware corporation
By:	/s/ Jeffrey Butcher
	Name:	Jeffrey Butcher
	Title:	Vice President & Chief Financial Officer

THE BANK OF NEW YORK MELLON, as Trustee
By:	/s/ Sherma Thomas
	Name:	Sherma Thomas
	Title:	Assistant Treasurer

[Signature Page to Second Supplemental Indenture]

EX-4.6 7 a51470exv4w6.htm EX-4.6 exv4w6

EXHIBIT 4.6

Joinder Agreement

with respect to

Registration Rights Agreement

for

Triad Financial Corporation

$150,000,000 11¹/8% Senior Notes due 2013

December 29, 2008

This Joinder Agreement (this “Joinder Agreement”) to that certain exchange and registration rights agreement (the “Registration Rights Agreement”), dated as of April 29, 2005 (the “Initial Closing Date”), among Triad Acquisition Corp., a Delaware corporation (the “Issuer”), and Goldman, Sachs & Co. and Citigroup Global Markets, Inc. as representatives of the several Purchasers named in Schedule I thereto (together, the “Purchasers”), is made and entered into by Triad Financial SM LLC, a Delaware limited liability company (“SM LLC”) and Triad Financial SM Inc., a Delaware corporation and wholly-owned subsidiary of SM LLC (“SM Inc.”). Unless otherwise defined herein, capitalized terms used but not defined herein shall have the respective meanings given them in the that certain purchase agreement, dated as of April 27, 2005 (the “Purchase Agreement”), among the Issuer and the Purchasers.

Pursuant to the Indenture, the Issuer issued and sold to the Purchasers on the Initial Closing Date, $150,000,000 in aggregate principal amount of the Issuer’s 11¹/8% Senior Notes due 2013 (the “Securities”). Substantially concurrent with the closing of the issuance of the Securities and the closing of the Acquisition, the Issuer was merged with and into Triad Financial Corporation (the “Company”), and the Company was the surviving corporation. As a result, on the Initial Closing Date, the Company succeeded to the Issuer under the Indenture and, in accordance with the Indenture, expressly assumed all of the obligations of the Issuer under the Securities and the Indenture pursuant to the Supplemental Indenture, and the Registration Rights Agreement pursuant to the certain Joinder Agreement with respect to Purchase Agreement and Registration Rights Agreement, dated as of the Initial Closing Date (the “Initial Joinder Agreement”) by the Company.

Pursuant to that certain Agreement and Plan of Merger, dated as of December 29, 2008, by and between the Company and SM LLC, the Company has merged with and into SM LLC, and SM LLC is the surviving entity (such transaction, the “Merger”). As a result of the Merger and upon the creation of SM Inc., SM LLC and SM Inc. have succeeded to the Company under the Indenture and in accordance with the Indenture, have expressly assumed all of the obligations of the Company under the Securities and the Indenture pursuant to the Second Supplemental Indenture, dated as of December 29, 2008, by and among SM LLC, SM Inc., and the Trustee, and by this Joinder Agreement assume all of the obligations of the Company under the Registration Rights Agreement.

SM LLC and SM Inc. hereby, jointly and severally:

	1.		represent and warrant that the statements contained in the preceding paragraph are true and correct in all material respects;

	2.		unconditionally and irrevocably assume, confirm and agree to perform and observe each and every of the covenants, agreements, terms, conditions, obligations, appointments, duties,

			promises and liabilities of the Company under the Registration Rights Agreement, as if SM LLC and SM Inc. had executed the Registration Rights Agreement simultaneously with the Company on the date thereof as an original signatories thereto; and

	3.		covenant and agree to promptly execute and deliver any and all further documents and take such further action as may reasonably be required to effect the purpose of this Joinder Agreement.

This Joinder Agreement does not cancel, extinguish, limit or otherwise adversely affect any right or obligation of the parties to the Registration Rights Agreement. The parties hereto acknowledge and agree that all of the provisions of the Registration Rights Agreement shall remain in full force and effect.

This Joinder Agreement may not be amended or modified except by a writing executed by each of the parties hereto.

This Joinder Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which taken together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Joinder Agreement by facsimile transmission shall be effective as delivery of a manually signed counterpart. This Joinder Agreement shall be governed by and construed in accordance with the laws of the State of New York.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has executed this Joinder Agreement the date first above written.


TRIAD FINANCIAL SM LLC
By:	/s/ Jeffrey Butcher
	Name:	Jeffrey Butcher
	Title:	Vice President & Chief Financial Officer


TRIAD FINANCIAL SM INC.
By:	/s/ Daniel D. Leonard
	Name:	Daniel D. Leonard
	Title:	President and Chief Executive Officer

EX-4.7 8 a51470exv4w7.htm EX-4.7 exv4w7

EXHIBIT 4.7

THIRD SUPPLEMENTAL INDENTURE
TO THE INDENTURE

TRIAD FINANCIAL SM LLC,

TRIAD FINANCIAL SM, INC.,
as Co-Issuers

AND

THE BANK OF NEW YORK MELLON
as Trustee

SUPPLEMENTAL INDENTURE

Dated as of March 27, 2009

Indenture

Dated as of April 29, 2005

11.125% SENIOR NOTES DUE 2013

THIS THIRD SUPPLEMENTAL INDENTURE, dated as of March 27, 2009 (this “Supplemental Indenture”), is by and among Triad Financial SM LLC, a Delaware limited liability company (“SM LLC”), and Triad Financial SM Inc., a Delaware corporation (“SM Inc.,” and together with SM LLC, collectively, the “Issuer”), and The Bank of New York Mellon, as trustee (the “Trustee”).

WHEREAS, the Issuer (as successor in interest to Triad Acquisition Corp. and Triad Financial Corporation) and the Trustee have entered into that certain Indenture dated as of April 29, 2005, (as amended by the Supplemental Indenture dated as of April 29, 2005 and Second Supplemental Indenture dated as of December 29, 2008, the “Indenture”), providing for the issuance of the 11.125% Senior Notes due 2013 (the “Notes”);

WHEREAS, the Issuer originally issued $150.0 million in aggregate principal amount of the Notes;

WHEREAS, Section 9.02 of the Indenture provides that the Indenture may be amended with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes);

WHEREAS, the Issuer desires, and has requested, the Trustee to join with it in entering into this Supplemental Indenture for the purpose of amending the Indenture in certain respects as permitted by Section 9.02 of the Indenture;

WHEREAS, the execution and delivery of this Supplemental Indenture has been authorized by the Board of Managers of SM LLC and Board of Directors of SM Inc.;

WHEREAS, (1) the Issuer has received the consent of the Holders of a majority in principal amount of the outstanding Notes and has satisfied all other conditions precedent, if any, provided under the Indenture to enable the Issuer and the Trustee to enter into this Supplemental Indenture, all as certified by an Officers’ Certificate, delivered to the Trustee simultaneously with the execution and delivery of this Supplemental Indenture as contemplated by Sections 9.02 and 7.02 of the Indenture, and (2) the Issuer has delivered to the Trustee simultaneously with the execution and delivery of this Supplemental Indenture an Opinion of Counsel relating to this Supplemental Indenture as contemplated by Sections 9.02 and 7.02 of the Indenture; and

NOW, THEREFORE, in consideration of the above premises, each party hereby agrees, for the benefit of the others and for the equal and ratable benefit of the Holders of the Notes, as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Deletion of Definitions and Related References. Section 1.01 of the Indenture is hereby amended to delete in their entirety all terms and their respective definitions for which all references are eliminated in the Indenture as a result of the amendments set forth in Article II of this Supplemental Indenture and all cross references to the provisions or definitions in the Indenture that have been deleted as a result of this Supplemental Indenture.

ARTICLE II

AMENDMENTS TO INDENTURE

Section 2.1 Amendments to the Indenture. The Indenture is hereby amended by:

(i) deleting the following sections of the Indenture and all references thereto in the Indenture in their entirety:

Section 4.02 (Maintenance of Office or Agency)
Section 4.03 (Reports)
Section 4.04 (Compliance Certificate)
Section 4.05 (Taxes)
Section 4.06 (Stay, Extension and Usury Laws)
Section 4.07 (Restricted Payments)
Section 4.08 (Dividend and Other Payment Restrictions Affecting Subsidiaries)
Section 4.09 (Incurrence of Indebtedness and Issuance of Preferred Stock)
Section 4.10 (Asset Sales)
Section 4.11 (Transactions with Affiliates)
Section 4.12 (Liens)
Section 4.13 (Business Activities)
Section 4.14 (Corporate Existence)
Section 4.15 (Offer to Repurchase Upon Change of Control)
Section 4.16 (Incurrence of Indebtedness and Issuance of Guarantees by Restricted Subsidiaries)
Section 4.17 (Payments for Consent)
Section 4.18 (Designation of Restricted and Unrestricted Subsidiaries)
Section 4.19 (Limitation on Investment Company Status)
Sections 5.01(3) and 5.01(4) (Merger, Consolidation, or Sale of Assets)
Sections 6.01(3), 6.01(4), 6.01(5) and 6.01(6) (Events of Default)

ARTICLE III

MISCELLANEOUS PROVISIONS

Section 3.1 Indenture. Except as amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered under the Indenture shall be bound by the Indenture as amended hereby. Subject to Section 12.01 of the Indenture, in the case of conflict between the Indenture and this Supplemental Indenture, the provisions of this Supplemental Indenture shall control.

Section 3.2 Severability. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 3.3 Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

Section 3.4 Effect of Headings. The Article and Section headings used herein are for convenience only and shall not affect the construction of this Supplemental Indenture.

Section 3.5 Trustee Makes No Representations. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

Section 3.6 Certain Duties and Responsibilities of the Trustee. In entering into this Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability or affording protection to the Trustee, whether or not elsewhere herein so provided.

Section 3.7 Governing Law. THIS SUPPLEMENTAL INDENTURE AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each of the parties hereto agrees to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of, or relating to, this Supplemental Indenture or the Notes.

Section 3.8 Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent one and the same agreement.

Section 3.9 Successors. All agreements of the Issuer and the Trustee in this Supplemental Indenture and the Notes shall bind their respective successors.

Section 3.10 Effectiveness. The provisions of Articles I and II of this Supplemental Indenture shall be effective at the time the Issuer receives written consents from at least a majority in aggregate principal amount of the outstanding Notes issued under the Indenture deemed to be outstanding for purposes of Sections 2.08 and 2.09 of the Indenture.

Section 3.11 Endorsement and Change of Form of Notes. Any Notes authenticated and delivered after the close of business on the date that this Supplemental Indenture becomes effective may be affixed to, stamped, imprinted or otherwise legended by the Trustee, with a notation as follows:

“Effective as of March 27, 2009, the restrictive covenants of the Issuer and certain of the Events of Default have been eliminated, as provided in the Third Supplemental Indenture, dated as of March 27, 2009. Reference is hereby made to said Third Supplemental Indenture, copies of which are on file with the Trustee, for a description of the amendments made therein.”

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed as of the day and year written above.


		TRIAD FINANCIAL SM LLC

		By:		/s/ Dan Leonard

				Name: Dan Leonard
				Title: Chief Executive Officer

		TRIAD FINANCIAL SM INC.

		By:		/s/ Dan Leonard

				Name: Dan Leonard
				Title: Chief Executive Officer

		THE BANK OF NEW YORK MELLON as Trustee

		By:		/s/ Laurence O’Brien

				Name: Laurence O’Brien
				Title: Vice President

EX-10.24 9 a51470exv10w24.htm EX-10.24 exv10w24

EXHIBIT 10.24

TRIAD FINANCIAL HOLDINGS LLC

LIMITED LIABILITY COMPANY AGREEMENT

Dated as of December 30, 2008

THE INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

THE INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT ARE SUBJECT TO RESTRICTIONS ON TRANSFER SPECIFIED IN THIS LIMITED LIABILITY COMPANY AGREEMENT, AS AMENDED OR MODIFIED FROM TIME TO TIME, AMONG THE ISSUER (THE “LLC”) AND CERTAIN INVESTORS, AND THE LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH INTERESTS UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.

TABLE OF CONTENTS


		Page

ARTICLE I CERTAIN DEFINITIONS			1

ARTICLE II ORGANIZATIONAL MATTERS			11

2.1	Formation		11
2.2	The Certificate, Etc		11
2.3	Name		11
2.4	Purpose		11
2.5	Powers of the LLC		11
2.6	Foreign Qualification		12
2.7	Principal Office; Registered Office		13
2.8	Term		13
2.9	No State-Law Partnership		13
2.10	[Intentionally Omitted]		13
2.11	Certification of Units		13

ARTICLE III UNITS; CAPITAL ACCOUNTS			13

3.1	Unitholders		13
3.2	Unitholder Meetings		15
3.3	Action of Unitholders by Written Consent or Telephone Conference		17
3.4	Issuance of Additional Units and Interests, Preemptive Rights		18
3.5	Capital Accounts		19
3.6	Negative Capital Accounts		20
3.7	No Withdrawal		20
3.8	Loans From Unitholders		20

ARTICLE IV DISTRIBUTIONS; REDEMPTIONS AND ALLOCATIONS			21

4.1	Distributions		21
4.2	Redemption		22
4.3	Allocations Generally		22
4.4	Special Allocations		23
4.5	Tax Allocations		24
4.6	Indemnification and Reimbursement for Payments on Behalf of a Unitholder		24
4.7	Transfer of Capital Accounts		24

ARTICLE V BOARD OF MANAGERS; OFFICERS			25

5.1	Management by the Board of Managers		25
5.2	Composition and Election of the Board of Managers		26
5.3	Board Meetings and Actions by Written Consent		29
5.4	Committees; Delegation of Authority and Duties		31
5.5	Officers		31

ARTICLE VI GENERAL RIGHTS AND OBLIGATIONS OF UNITHOLDERS			33

6.1	Limitation of Liability		33


		Page

6.2	Lack of Authority		34
6.3	No Right of Partition		34
6.4	Unitholders Right to Act		34
6.5	Conflicts of Interest		34
6.6	[Intentionally Omitted]		36
6.7	Approval Rights		36
6.8	Other Covenants		38
6.9	Nonsolicitation		40

ARTICLE VII EXCULPATION AND INDEMNIFICATION			40

7.1	Exculpation		40
7.2	Right to Indemnification		40
7.3	Advance Payment		41
7.4	Indemnification of Employees and Agents		41
7.5	Appearance as a Witness		41
7.6	Nonexclusivity of Rights		41
7.7	Insurance		41
7.8	Savings Clause		42

ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS			42

8.1	Records and Accounting		42
8.2	Fiscal Year		42
8.3	Tax Information		42
8.4	Transmission of Communications		42
8.5	LLC Funds		42
8.6	Information Rights		43
8.7	Confidentiality		44

ARTICLE IX TAXES			44

9.1	Tax Returns		44
9.2	Tax Elections		45
9.3	Tax Matters Partner		45

ARTICLE X TRANSFER OF UNITS			45

10.1	Transfers by Unitholders		45
10.2	Right of First Offer		46
10.3	Tag-Along Rights		47
10.4	Sale of the Company		48
10.5	Buy/Sell Arrangement		49
10.6	Change in Business Form		51
10.7	Legends		51
10.8	Effect of Assignment		52
10.9	Restriction on Transfer		52
10.10	Transfer Fees and Expenses		52
10.11	Void Transfers		52


		Page

ARTICLE XI WITHDRAWAL AND RESIGNATION OF UNITHOLDERS			53

11.1	Withdrawal and Resignation of Unitholders		53

ARTICLE XII DISSOLUTION AND LIQUIDATION			53

12.1	Dissolution		53
12.2	Liquidation and Termination		53
12.3	Cancellation of Certificate		54
12.4	Reasonable Time for Winding Up		54
12.5	Return of Capital		54
12.6	Reserves Against Distributions		54

ARTICLE XIII VALUATION			55

13.1	Determination		55
13.2	Fair Market Value		55

ARTICLE XIV GENERAL PROVISIONS			55

14.1	Amendments		55
14.2	Investor Approval		56
14.3	Title to LLC Assets		56
14.4	Remedies		56
14.5	Successors and Assigns		56
14.6	Severability		56
14.7	Opt-in to Article 8 of the Uniform Commercial Code		57
14.8	Notice to Unitholder of Provisions		57
14.9	Counterparts		57
14.10	Consent to Jurisdiction		57
14.11	Descriptive Headings; Interpretation		57
14.12	Applicable Law		58
14.13	Mutual Waiver of Jury Trial		58
14.14	Addresses and Notices		58
14.15	Creditors		58
14.16	Waiver		59
14.17	Further Action		59
14.18	Offset		59
14.19	Entire Agreement		59
14.20	Delivery by Facsimile		59
14.21	Survival		59

iii

TRIAD FINANCIAL HOLDINGS LLC

LIMITED LIABILITY COMPANY AGREEMENT

THIS LIMITED LIABILITY COMPANY AGREEMENT, dated as of December 30, 2008, is entered into by and among Triad Financial Holdings LLC (the “LLC”) and the Unitholders.

NOW, THEREFORE, in consideration of the mutual covenants 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 I

CERTAIN DEFINITIONS

Capitalized terms used but not otherwise defined herein shall have the following meanings:

“Acquisition Agreement” means the Stock Purchase Agreement, dated as of December 23, 2004, by and among Fairlane Credit LLC, a Delaware limited liability company, Ford Motor Credit Company, a Delaware corporation, the Company and Purchaser, pursuant to which the Purchaser acquired all of the outstanding stock of Triad Financial Corporation, as amended or modified from time to time in accordance with the terms thereof.

“Acquisition Closing” means the closing of the transactions contemplated by the Acquisition Agreement.

“Additional Securities” shall have the meaning set forth in Section 3.4.

“Adjusted Capital Account Deficit” means with respect to any Capital Account as of the end of any Taxable Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, such Person’s Capital Account balance shall be

(i) reduced for any items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6), and

(ii) increased for any amount such Person is obligated to contribute or is treated as being obligated to contribute to the LLC pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to Minimum Gain).

“Affiliate” of any particular Person means (i) any other Person controlling, controlled by, or under common control with such particular Person, where “control” means the possession,

directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by contract, or otherwise, and (ii) if such Person is a partnership, any partner thereof.

“Agreement” means this Limited Liability Company Agreement, as amended or modified from time to time in accordance with the terms hereof.

“Approved Sale” has the meaning set forth in Section 10.4(a).

“Authorization Date” has the meaning set forth in Section 10.2(a).

“Board” means the Board of Managers established pursuant to Section 5.2.

“Book Value” means, with respect to any LLC property, the LLC’s adjusted basis for federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g); provided that the Book Value of any asset contributed to the LLC shall be equal to the Fair Market Value of the contributed asset on the date of contribution.

“Buy/Sell Offer Notice” has the meaning set forth in Section 10.5(b).

“Capital Account” means the capital account maintained for a Unitholder pursuant to Section 3.5.

“Capital Contributions” means any cash, cash equivalents, promissory obligations, or the Fair Market Value of other property that a Unitholder contributes or is deemed to have contributed to the LLC with respect to any Unit pursuant to Sections 3.1 or 3.4.

“Cause” has the meaning ascribed to such term in the Management Agreement.

“Certificate” means the LLC’s Certificate of Formation as filed with the Secretary of State of Delaware.

“Class A Preferred Unit” means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Class A Preferred Units in this Agreement.

“Class A Unpaid Yield” of any Class A Preferred Unit means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Class A Yield accrued on such Class A Preferred Unit for all periods prior to such date (including partial periods), over (b) the aggregate amount of prior Distributions made by the LLC that constitute payment of Class A Yield on such Class A Preferred Unit.

“Class A Unreturned Capital” of any Class A Preferred Unit means, as of any date, the aggregate Capital Contributions made or deemed to be made in exchange for such Class A Preferred Unit reduced by all Distributions made by the LLC that constitute a return of Class A Unreturned Capital under Section 4.1(a)(iii).

“Class A Yield” means, with respect to each Class A Preferred Unit, the amount accruing on such Class A Preferred Unit on a daily basis, at the rate of 6% per annum, compounded on the last day of each calendar year, on (a) the Class A Unreturned Capital of such Class A Preferred Unit plus (b) as the case may be, the Class A Unpaid Yield thereon for all prior annual periods. In calculating the amount of any Distribution to be made during a period, the portion of the Class A Yield with respect to such Class A Preferred Unit for the portion of the annual period elapsing before such Distribution is made shall be taken into account in determining the amount of such Distribution.

“Class B Liquidation Preference” means, as of any date, an amount equal to (i) $129,950,056 less (ii) the aggregate amount of any interest, including any interest added to the principal amount of the New Facility in lieu of being paid in cash, theretofore paid pursuant to the New Facility.

“Class B Preferred Unit” means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Class B Preferred Units in this Agreement.

“Class B Unreturned Liquidation Preference” means, as of any date, the Class B Liquidation Preference reduced by all Distributions made by the LLC under Section 4.1(a)(i).

“Code” means the United States Internal Revenue Code of 1986 and any successor statute, as amended from time to time.

“Common Unit” means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Common Units in this Agreement.

“Company” means Triad Financial SM LLC, a Delaware limited liability company.

“Confidential Information” has the meaning set forth in Section 8.7.

“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del. L. § 18-101, et seq., as it may be amended from time to time, and any successor to the Delaware Act.

“Distribution” means each distribution made by the LLC to a Unitholder, whether in cash, property or securities of the LLC and whether by liquidating distribution, redemption, repurchase, or otherwise; provided that any recapitalization or exchange or conversion of

securities of the LLC, redemption of securities of the LLC pursuant to the Management Agreement and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units shall not be deemed a Distribution.

“electronic transmission” means any form of communication not directly involving the physical transmission of paper that creates a record that may be retained, retrieved and reviewed by a recipient thereof and that may be directly reproduced in paper form by such a recipient through an automated process.

“Equity Securities” means (i) Units or other equity interests in the LLC or a corporate successor (including other classes or groups thereof having such relative rights, powers, and duties as may from time to time be established by the Board, including rights, powers, and/or duties senior to existing classes and groups of Units and other equity interests in the LLC), (ii) obligations, evidences of indebtedness, or other securities or interests convertible or exchangeable into Units or other equity interests in the LLC or a corporate successor, and (iii) warrants, options, or other rights to purchase or otherwise acquire Units or other equity interests in the LLC or a corporate successor.

“Executive Agreement” means any Executive Agreement entered into from time to time among the LLC, the Company (or any other Subsidiaries of the LLC) and the Company’s chief executive officer, as the same may be amended from time to time pursuant to the terms thereof.

“Family Group” means a Unitholder’s spouse and descendants (whether natural or adopted), and any trust, family limited partnership, limited liability company or other entity wholly owned, directly or indirectly, by such Unitholder or such Unitholder’s spouse and/or descendants that is and remains solely for the benefit of such Unitholder and/or such Unitholder’s spouse and/or descendants and any retirement plan for such Unitholder.

“Fair Market Value” means, with respect to any asset or equity interest, its fair market value determined according to Sections 13.1 and 13.2.

“Fiscal Quarter” means each calendar quarter ending March 31, June 30, September 30, and December 31.

“Fiscal Year” means the LLC’s annual accounting period established pursuant to Section 8.2.

“Ford Transferee” means (i) the spouse or descendants of Mr. Gerald J. Ford, (ii) a trust, the primary beneficiaries of which are one or more Persons named in clause (i) of this definition, (iii) any corporation in which each class of stock is at least ninety percent (90%) owned by one or more Persons described in clause (i) or (ii) of this definition or Gerald J. Ford, (iv) a partnership in which each class of partnership interests is at least ninety percent (90%) owned by one or more Persons described in clause (i), (ii) or (iii) of this definition or Gerald J. Ford, (v) a limited liability company in which each class of membership interests is at least ninety percent

(90%) owned by one or more Persons described in clause (i), (ii) or (iii) of this definition or Gerald J. Ford, or (vi) any of Gerald J. Ford, J. Randy Staff, Carl B. Webb or Donald J. Edwards or any members of their respective Family Groups.

“Goldman” means GS Capital Partners 2000, L.P., a Delaware limited partnership, GS Capital Partners 2000 Employee Fund, L.P., a Delaware limited partnership, GSCP 2000 Offshore Triad Holding, L.P., a Delaware limited partnership, Goldman Sachs Direct Investment Fund 2000, L.P., a Delaware limited partnership, GSCP 2000 GmbH Triad Holding, L.P., a Delaware limited partnership, MTGLQ Investors, L.P., a Delaware limited partnership, and GSCP 2000 Triad Holding, L.P., a Delaware limited partnership.

“Goldman Common Units” has the meaning set forth in Section 5.2(a)(ii).

“Goldman Managers” has the meaning set forth in Section 5.2(a)(ii).

“Governmental Entity” means the United States of America or any other nation, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government or any agency or department or subdivision of any governmental authority, including the United States federal government or any state or local government.

“GTCR” means (i) GTCR LLC, and (ii) any investment fund managed by GTCR LLC or GTCR Golder Rauner II, L.L.C. that receives Units pursuant to the THI Liquidation.

“GTCR Common Units” has the meaning set forth in Section 5.2(a)(iii).

“GTCR LLC” means GTCR Golder Rauner, L.L.C., a Delaware limited liability company.

“GTCR Managers” has the meaning set forth in Section 5.2(a)(iii).

“HGF” means Hunter’s Glen/Ford Ltd., a Texas limited partnership.

“HGF Buy Option” has the meaning set forth in Section 10.5(c).

“HGF Common Units” has the meaning set forth in Section 5.2(a)(iv).

“HGF Managers” has the meaning set forth in Section 5.2(a)(iv).

“HGF Sell Option” has the meaning set forth in Section 10.5(c).

“High Yield Debt” means the $150 million aggregate principal amount of 11.125% Senior Notes due 2013 originally issued under the indenture dated as of the Initial Closing Date, among the Purchaser, as issuer, and The Bank of New York Mellon, as successor to JPMorgan Chase Bank, N.A., as trustee, as amended or modified from time to time in accordance with the terms thereof.

“HSR Act” has the meaning set forth in Section 6.8(e).

“Indebtedness” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business), and (iv) any commitment by which a Person assures a creditor against loss (including contingent reimbursement obligations with respect to letters of credit).

“Initial Closing Date” means April 29, 2005.

“Initial Managers” has the meaning set forth in Section 5.2(a)(i).

“Investments” as applied to any Person means (i) any direct or indirect purchase or other acquisition by such Person of any notes, obligations, instruments, stock, securities or ownership interest (including partnership interests and joint venture interests) of any other Person and (ii) any capital contribution by such Person to any other Person.

“Investor Members” means Goldman, GTCR, HGF and their respective Affiliates, collectively.

“Liens” means any mortgage, pledge, security interest, encumbrance, lien, or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof), any sale of receivables with recourse against the LLC, any Subsidiary or any Affiliate thereof, any filing or agreement to file a financing statement as debtor under the Uniform Commercial Code or any similar statute other than to reflect ownership by a third party of property leased to the LLC, any Subsidiary or any Affiliate under a lease which is not in the nature of a conditional sale or title retention agreement, or any subordination arrangement in favor of another Person (other than any subordination arising in the ordinary course of business).

“LLC” means Triad Financial Holdings LLC, a Delaware limited liability company.

“Losses” means items of LLC loss and deduction determined according to Section 3.5(b).

“Management Agreement” means the Management Agreement, dated as of the Initial Closing Date, as amended and restated as of the date hereof, by and among the LLC, the

Company and HGF, as the same may be amended from time to time pursuant to the terms thereof.

“Manager” means a current manager on the Board, who, for purposes of the Delaware Act, will be deemed a “manager” (as defined in the Delaware Act) but will be subject to the rights, obligations, limitations and duties set forth in this Agreement.

“Minimum Gain” means the partnership minimum gain determined pursuant to Treasury Regulation Section 1.704-2(d).

“New Facility” means a borrowing facility that is in effect from time to time that is on terms no more materially adverse to the Company and its subsidiaries than those outlined in that certain term sheet attached to a letter from Goldman dated May 15, 2008, including, without limitation, the Senior Unsecured Demand Notes.

“Non-HGF Investors” has the meaning set forth in Section 10.5(b).

“Offer Notice” has the meaning set forth in Section 10.2(a).

“Officers” means each person designated as an officer of the LLC to whom authority and duties have been delegated pursuant to Section 5.5, subject to any resolution of the Board appointing such person as an officer or relating to such appointment.

“Permitted Transferee” means (i) with respect to any Unitholder who is a natural person, a member of such Unitholder’s Family Group, (ii) with respect to any Unitholder which is an entity, any of such Unitholder’s Affiliates, and (iii) with respect to HGF only, a Ford Transferee.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a Governmental Entity.

“Proceeding” has the meaning set forth in Section 7.2.

“Profits” means items of LLC income and gain determined according to Section 3.5(b).

“Public Offering” means any sale of the common equity securities of the LLC (or a successor thereto) pursuant to an effective registration statement under the Securities Act filed with the Securities and Exchange Commission; provided that the following shall not be considered a Public Offering: (i) any issuance of common equity securities as consideration for a merger or acquisition, and (ii) any issuance of common equity securities or rights to acquire common equity securities to employees of the LLC or its Subsidiaries as part of an incentive or compensation plan.

“Public Sale” means any sale of Equity Securities (i) to the public pursuant to an offering registered under the Securities Act or (ii) to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 (or any similar provision then in effect) adopted under the Securities Act (other than Rule 144(k) prior to a Public Offering).

“Purchaser” means Triad Acquisition Corp., a Delaware corporation and wholly owned subsidiary of THI.

“Qualified IPO” means an underwritten initial Public Offering of the common stock of a corporate successor to the LLC or a Subsidiary of the LLC (including, without limitation, the Company) with gross proceeds of at least $50.0 million in a firm commitment underwriting.

“Regulatory Allocations” has the meaning set forth in Section 4.4(e).

“Required Interest” means a majority of the Voting Units, voting together as a single class.

“Restricted Securities” means (i) the Securities initially issued to the initial Unitholder and (ii) any securities issued with respect to the securities referred to in clause (i) above by way of a unit dividend or unit split or in connection with a combination of units, recapitalization, merger, consolidation or other reorganization. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) become eligible for sale pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act or (c) been otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Section 10.7(b) have been delivered by the LLC in accordance with Section 6.8(c)(ii). Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the LLC, without expense, new securities of like tenor not bearing a Securities Act legend of the character set forth in Section 10.7(b).

“Sale of the Company” means any transaction or series of transactions pursuant to which any Person or group of related Persons (other than any of the Investor Members) in the aggregate acquire(s) (i) equity securities of the LLC or the Company possessing the voting power (other than voting rights accruing only in the event of a default or breach) to elect a majority of the LLC’s board of managers or a majority of the Company’s board of directors (whether by merger, liquidation, consolidation, reorganization, combination, sale or transfer of equity securities, securityholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the LLC’s or the Company’s assets determined on a consolidated basis, but excluding sales of motor vehicle installment sales contracts and installment loans in the ordinary course of the Company’s business; provided that a Public Offering shall not constitute a Sale of the Company.

“Securities” means notes, stocks, bonds, debentures, evidences of indebtedness, certificates of interest or participation in any profit-sharing agreement, partnership interests,

beneficial interests in trusts, collateral-trust certificates, pre-organization certificates or subscriptions, transferable shares, investment contracts, voting-trust certificates, certificates of deposit for securities, certificates of equity interests, notional principal contracts and certificates of interest or participation in, temporary or interim certificates for, receipts for or warrants or rights or options to subscribe to or purchase or sell any of the foregoing, and any other items commonly referred to as securities.

“Securities Act” means the Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules, or regulations. Any reference herein to a specific section, rule, or regulation of the Securities Act shall be deemed to include any corresponding provisions of future law.

“Selling Unitholder” has the meaning set forth in Section 10.2(a).

“Senior Unsecured Demand Notes” means, collectively (i) the Senior Unsecured Demand Promissory Note between Triad Financial Corporation and HGF and (ii) the Senior Unsecured Demand Promissory Note between Triad Financial Corporation and GTCR, in each case in the forms attached hereto as Exhibit A.

“Tag-Along Notice” has the meaning set forth in Section 10.3(a).

“Tag-Along Unitholders” has the meaning set forth in Section 10.3(a).

“Tax Distribution” has the meaning set forth in Section 4.1(b).

“Tax Matters Partner” has the meaning set forth in Section 9.3.

“Taxable Year” means the LLC’s Fiscal Year unless the Board determines otherwise in compliance with applicable laws.

“THI” means Triad Holdings Inc., a Delaware corporation.

“THI Liquidation” means the liquidation and dissolution of THI, on or around the date hereof, pursuant to which, among other things, Units shall be distributed by THI to the Investor Members and certain other recipients of the Common Units. The THI Liquidation shall be deemed to occur upon the date of such distribution.

“Transaction Documents” means this Agreement, and all other agreements, instruments, certificates, and other documents to be entered into or delivered by any Unitholder in connection with the transactions contemplated to be consummated pursuant to this Agreement, and any side agreements related to the foregoing.

“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of a security interest or other direct or indirect disposition or encumbrance of an interest (including, without limitation, by operation of law) or the acts thereof, but explicitly excluding conversions or exchanges of one class of Unit to or for another class of Unit. The terms “Transferee,” “Transferred,” and other forms of the word “Transfer” shall have correlative meanings.

“Transferring Unitholders” has the meaning set forth in Section 10.3(a).

“Treasury Regulations” means the income tax regulations promulgated under the Code and in effect from time to time.

“Triad Financial SM LLC Agreement” means the limited liability agreement of the Company, dated as of December 29, 2008, by and among the LLC and the unitholders party thereto from time to time, as amended from time to time.

“Triggering Event” has the meaning set forth in Section 10.5(a).

“Units” means Class A Preferred Units, Class B Preferred Units and Common Units.

“Unitholder” means any owner of one or more Units as reflected on the LLC’s books and records.

“Voting Units” means the Common Units and the Class B Preferred Units; provided that any Unitholder may by written notice to the Company or the other Unitholders voluntarily relinquish its voting rights in respect of any Common Units or Class B Preferred Units, in which case such Units shall thereafter no longer be considered Voting Units for any purpose herein or otherwise have a right to vote on any matter.

ARTICLE II

ORGANIZATIONAL MATTERS

2.1 Formation. The LLC has been organized as a Delaware limited liability company by the filing with the Secretary of State of the State of Delaware of the Certificate under and pursuant to the Delaware Act and shall be continued in accordance with this Agreement.

2.2 The Certificate, Etc. The Certificate was filed with the Secretary of State of the State of Delaware on December 22, 2008. The Unitholders hereby agree to execute, file and record all such other certificates and documents, including amendments to the Certificate, and to do such other acts as may be appropriate to comply with all requirements for the formation, continuation and operation of a limited liability company, the ownership of property, and the conduct of business under the laws of the State of Delaware and any other jurisdiction in which the LLC may own property or conduct business.

2.3 Name. The name of the LLC shall be “Triad Financial Holdings LLC.” The Board in its sole discretion may change the name of the LLC at any time and from time to time. Notification of any such change shall be given to all Unitholders. The LLC’s business may be conducted under its name and/or any other name or names deemed advisable by the Board.

2.4 Purpose. The purpose and business of the LLC shall be to engage in any lawful act or activity which may be conducted by a limited liability company formed pursuant to the Delaware Act and engaging in all activities necessary or incidental to the foregoing. Notwithstanding anything herein to the contrary, nothing set forth herein shall be construed as authorizing the LLC to possess any purpose or power, or to do any act or thing, forbidden by law to a limited liability company organized under the laws of the State of Delaware.

2.5 Powers of the LLC. Subject to the provisions of this Agreement and the agreements contemplated hereby, the LLC shall have the power and authority to take any and all actions necessary, appropriate, proper, advisable, convenient or incidental to or for the furtherance of the purposes set forth in Section 2.4, including the power:

(a) to conduct its business, carry on its operations and have and exercise the powers granted to a limited liability company by the Delaware Act in any state, territory, district or possession of the United States, or in any foreign country that may be necessary, convenient or incidental to the accomplishment of the purpose of the LLC;

(b) to acquire by purchase, lease, contribution of property or otherwise, own, hold, operate, maintain, finance, refinance, improve, lease, sell, convey, mortgage, transfer, demolish or dispose of any real or personal property that may be necessary, convenient or incidental to the accomplishment of the purpose of the LLC;

(c) to enter into, perform and carry out contracts of any kind, including contracts with any Unitholder or any Affiliate thereof, or any agent of the LLC necessary to, in connection with, convenient to or incidental to the accomplishment of the purpose of the LLC;

(d) to purchase, take, receive, subscribe for or otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or otherwise dispose of, and otherwise use and deal in and with, shares or other interests in or obligations of domestic or foreign corporations, associations, general or limited partnerships (including the power to be admitted as a partner thereof and to exercise the rights and perform the duties created thereby), trusts, limited liability companies (including the power to be admitted as a unitholder or appointed as a manager thereof and to exercise the rights and perform the duties created thereby) or individuals or direct or indirect obligations of the United States or of any government, state, territory, governmental district or municipality or of any instrumentality of any of them;

(e) to lend money for any proper purpose, to invest and reinvest its funds and to take and hold real and personal property for the payment of funds so loaned or invested;

(f) to sue and be sued, complain and defend, and participate in administrative or other proceedings in its name;

(g) to appoint employees and agents of the LLC and define their duties and fix their compensation;

(h) to indemnify any Person in accordance with the Delaware Act and to obtain any and all types of insurance;

(i) to cease its activities and cancel its Certificate;

(j) to negotiate, enter into, renegotiate, extend, renew, terminate, modify, amend, waive, execute, acknowledge or take any other action with respect to any lease, contract or security agreement in respect of any assets of the LLC;

(k) to borrow money and issue evidences of indebtedness and guaranty indebtedness (whether of the LLC or any of its Subsidiaries), and to secure the same by a mortgage, pledge or other lien on the assets of the LLC;

(l) to pay, collect, compromise, litigate, arbitrate or otherwise adjust or settle any and all other claims or demands of or against the LLC or to hold such proceeds against the payment of contingent liabilities; and

(m) to make, execute, acknowledge and file any and all documents or instruments necessary, convenient or incidental to the accomplishment of the purpose of the LLC.

2.6 Foreign Qualification. Prior to the LLC’s conducting business in any jurisdiction other than Delaware, the Board shall cause the LLC to comply, to the extent procedures are available and those matters are reasonably within the control of the Board, with all requirements necessary to qualify the LLC as a foreign limited liability company in that jurisdiction. At the request of the Board or any Officer, each Unitholder shall execute, acknowledge, swear to and deliver all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue and terminate the LLC as a foreign limited liability company in all such jurisdictions in which the LLC may conduct business.

2.7 Principal Office; Registered Office. The principal office of the LLC shall be located at 200 Crescent Court, Suite 1350, Dallas, Texas 75201, or at such other place as the Board may from time to time designate, and all business and activities of the LLC shall be deemed to have occurred at its principal office. The LLC may maintain offices at such other place or places as the Board deems advisable. Notification of any such change shall be given to all Unitholders. The registered office of the LLC required by the Delaware Act to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate or such other office (which need not be a place of business of the LLC) as the Board may designate from time to time in the manner provided by law. The registered agent of the LLC in the State of Delaware shall be the initial registered agent named in the Certificate or such other Person or Persons as the Board may designate from time to time in the manner provided by law.

2.8 Term. The term of the LLC commenced upon the filing of the Certificate in accordance with the Delaware Act and shall continue in existence until termination and dissolution thereof in accordance with the provisions of Article XIII.

2.9 No State-Law Partnership. The Unitholders intend that the LLC not be a partnership (including, without limitation, a limited partnership) or joint venture, and that no Unitholder be a partner or joint venturer of any other Unitholder by virtue of this Agreement (except for tax purposes as set forth in the next succeeding sentence of this Section 2.9), and neither this Agreement nor any other document entered into by the LLC or any Unitholder relating to the subject matter hereof shall be construed to suggest otherwise. The Unitholders currently intend that the LLC shall be treated as a partnership for federal and, if applicable, state or local income tax purposes, and that each Unitholder and the LLC shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

2.10 [Intentionally Omitted].

2.11 Certification of Units. The LLC may in its discretion issue certificates to the Unitholders representing the Units held by each Unitholder.

ARTICLE III

UNITS; CAPITAL ACCOUNTS

3.1 Unitholders.

(a) General. Each Person named on Schedule A attached hereto has made Capital Contributions to the LLC as set forth on Schedule A in exchange for the Units specified thereon, and each Unitholder’s initial Capital Account established pursuant to such Capital Contributions is set forth on Schedule A. In connection with the THI Liquidation, Schedule A shall be amended to reflect such liquidation and the new Unitholders in connection therewith, and each new Unitholder’s Capital Account shall be stated as the fair market value of such Unit on such date. Any reference in this Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time. The LLC and each Unitholder shall file all tax returns, including any schedules thereto, in a manner consistent with such initial Capital

Accounts. Each Person listed on Schedule A upon (i) his, her or its execution of this Agreement or a counterpart thereto and (ii) receipt (or deemed receipt) by the LLC of such Person’s Capital Contribution as set forth on Schedule A, is hereby admitted to the LLC as a Unitholder of the LLC. Each Unitholder’s interest in the LLC, including such Unitholder’s interest in Profits, Losses and Distributions of the LLC and the right to vote on certain matters as provided in this Agreement, shall be represented by the Units owned by such Unitholder. The ownership of Units shall entitle each Unitholder to allocations of Profits and Losses and other items and distributions of cash and other property as set forth in Article IV hereof. The Board may in its discretion issue certificates to the Unitholders representing the Units held by each Unitholder.

(b) Representations and Warranties of Unitholders. Each Unitholder hereby represents and warrants to the LLC and acknowledges that: (i) such Unitholder has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of an investment in the LLC and making an informed investment decision with respect thereto; (ii) such Unitholder has reviewed and evaluated all information necessary to assess the merits and risks of his, her or its investment in the LLC and has had answered to such Unitholder’s satisfaction any and all questions regarding such information; (iii) such Unitholder is able to bear the economic and financial risk of an investment in the LLC for an indefinite period of time; (iv) such Unitholder is acquiring interests in the LLC for investment only and not with a view to, or for resale in connection with, any distribution to the public or public offering thereof; (v) the interests in the LLC have not been registered under the securities laws of any jurisdiction and cannot be disposed of unless they are subsequently registered and/or qualified under applicable securities laws and the provisions of this Agreement have been complied with; (vi) to the extent applicable, the execution, delivery and performance of this Agreement have been duly authorized by such Unitholder and do not require such Unitholder to obtain any consent or approval that has not been obtained and do not contravene or result in a default under any provision of any law or regulation applicable to such Unitholder or other governing documents or any agreement or instrument to which such Unitholder is a party or by which such Unitholder is bound; (vii) the determination of such Unitholder to purchase interests in the LLC has been made by such Unitholder independent of any other Unitholder and independent of any statements or opinions as to the advisability of such purchase, which may have been made or given by any other Unitholder or by any agent or employee of any other Unitholder; (viii) the interests in the LLC were not offered to such Unitholder by means of general solicitation or general advertising; and (ix) this Agreement is valid, binding and enforceable against such Unitholder in accordance with its terms.

(i) No Liability. Except as otherwise required by applicable law and as expressly set forth in this Agreement, no Unitholder shall have any personal liability whatsoever in such Unitholder’s capacity as a Unitholder, whether to the LLC, to any of the other Unitholders, to the creditors of the LLC or to any other third party, for the debts, liabilities, commitments or any other obligations of the LLC or for any losses of the LLC. Each Unitholder shall be liable only to make such Unitholder’s Capital Contribution to the LLC and the other payments provided expressly herein.

(ii) Distribution. In accordance with the Delaware Act and the laws of the State of Delaware, a Unitholder of a limited liability company may, under certain circumstances, be required to return amounts previously distributed to such Unitholder. It is the intent of the Unitholders that no distribution to any Unitholder pursuant to Article IV hereof shall be deemed a return of money or other property paid or distributed in violation of the Delaware Act. The payment of any such money or distribution of any such property to a Unitholder shall be deemed to be a compromise within the meaning of the Delaware Act, and the Unitholder receiving any such money or property shall not be required to return to any Person any such money or property. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Unitholder is obligated to make any such payment, such obligation shall be the obligation of such Unitholder and not of any other Unitholder.

3.2 Unitholder Meetings.

(a) Voting of Unitholders. A quorum shall be present at a meeting of Unitholders if the Unitholders holding the Required Interest are represented at the meeting in person or by proxy. With respect to any matter, other than a matter for which the affirmative vote of the holders of a specified portion of all Unitholders entitled to vote is required by the Delaware Act or by this Agreement, the affirmative vote of the Unitholders holding the Required Interest at a meeting of Unitholders at which a quorum is present shall be the act of the Unitholders.

(b) Place. All meetings of the Unitholders shall be held at the principal place of business of the LLC or at such other place within or without the State of Delaware as shall be specified or fixed in the notices or waivers of notice thereof; provided that any or all Unitholders may participate in any such meeting by means of conference telephone or similar communications equipment pursuant to Section 3.3(d).

(c) Adjournment. Notwithstanding the other provisions of the Certificate or this Agreement, the chairman of the meeting or the Unitholders holding the Required Interest shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting. If such meeting is adjourned by the Unitholders, such time and place shall be determined by a vote of the Unitholders holding the Required Interest. Upon the resumption of such adjourned meeting, any business may be transacted that might have been transacted at the meeting as originally called.

(d) Annual Meeting. An annual meeting of the Unitholders, for the transaction of such business as may properly come before the meeting, shall be held at such place, within or without the State of Delaware, on such date and at such time as the Board shall fix and set forth in the notice of the meeting, which date shall be within 18 months subsequent to the date of organization of the LLC or the last annual meeting of Unitholders, whichever most recently occurred.

(e) Special Meetings. Special meetings of the Unitholders for any proper purpose or purposes may be called at any time by the Board or the Unitholders holding the Required Interest. If not otherwise stated in or fixed in accordance with the remaining provisions hereof, the record date for determining Unitholders entitled to call a special meeting is the date any

Unitholder first signs the notice of that meeting. Only business within the purpose or purposes described in the notice (or waiver thereof) required by this Agreement may be conducted at a special meeting of the Unitholders.

(f) Notice. A written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than one or more than 30 days before the date of the meeting, either personally or by mail, facsimile or electronic transmission, by or at the direction of the Board or the Unitholders calling the meeting to each Unitholder. If mailed, any such notice shall be deemed to be delivered two business days after it is deposited in the United States mail, addressed to the Unitholder at its address provided for in the LLC’s books and records, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party.

(g) Record Date. The date on which notice of a meeting of Unitholders is mailed or the date on which the resolution of the Board declaring a distribution is adopted, as the case may be, shall be the record date for the determination of the Unitholders entitled to notice of or to vote at such meeting (including any adjournment thereof) or the Unitholders entitled to receive such distribution.

(h) Required Interest. Except as otherwise expressly provided for in this Agreement, all matters to be voted on pursuant to this Agreement shall require the vote of Unitholders holding the Required Interest, which vote shall only be valid and binding if a notice of the meeting at which such vote is taken is given to all Unitholders in accordance with Section 3.2(f).

(i) Proxies. A Unitholder may vote either in person or by proxy executed in writing by the Unitholder. Any such proxy may be granted in writing, by means of electronic transmission or as otherwise permitted by applicable law. A consent transmitted by electronic transmission by a Unitholder or by a person or persons authorized to act for a Unitholder shall be deemed to be written and signed for purposes of this Agreement. A photographic, photostatic, facsimile or similar reproduction of a writing executed by the Unitholder shall be treated as an execution in writing for purposes of this Section 3.2(i). Proxies for use at any meeting of Unitholders or in connection with the taking of any action by written consent pursuant to Section 3.3 shall be filed with the Secretary of the LLC, before or at the time of the meeting or execution of the written consent as the case may be. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the Secretary of the LLC, who shall decide all questions concerning the qualification of voters, the validity of the proxies and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions. No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. Should a proxy designate two or more Persons to act as proxies, unless that instrument shall provide to the contrary, a majority of such Persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a

majority do not agree on any particular issue, the LLC shall not be required to recognize such proxy with respect to such issue if such proxy does not specify how the Units that are the subject of such proxy are to be voted with respect to such issue.

(j) Conduct of Unitholder Meetings. All meetings of the Unitholders shall be presided over by the chairman of the meeting, who shall be one of the Chairman or Vice Chairman (or a representative thereof). The chairman of any meeting of Unitholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him in order.

(k) Voting Rights. The holders of the Voting Units shall be entitled to notice of all Unitholder meetings in accordance with this Agreement, and except as otherwise required by law, the holders of the Voting Units shall be entitled to vote on all matters submitted to the Unitholders for a vote with each Common Unit entitled to one vote, and each Class B Preferred Unit entitled to one vote, voting together as a single class for all purposes except as expressly provided herein. Except as otherwise required by this Agreement or by law, the holders of Class A Preferred Units shall not be entitled to a vote on matters submitted to the Unitholders for a vote.

3.3 Action of Unitholders by Written Consent or Telephone Conference.

(a) Written Consent in Lieu of Meeting. Any action required or permitted to be taken at any annual or special meeting of Unitholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the Unitholder or Unitholders holding not less than the minimum percentages of Units that would be necessary to take such action at a meeting at which all Unitholders entitled to vote on the action were present and voted. Every written consent shall bear the date of signature of each Unitholder who signs the consent. No written consent shall be effective to take the action that is the subject to the consent unless, within 60 days after the date of the earliest dated consent delivered to the LLC in the manner required by this Section 3.3(a), a consent or consents signed by the Unitholder or Unitholders holding not less than the minimum Units that would be necessary to take the action that is the subject of the consent are delivered to the LLC by delivery to its registered office, its principal place of business or the chief executive officer. Delivery shall be by hand or certified or registered mail, return receipt requested. Delivery to the LLC’s principal place of business shall be addressed to the chief executive officer. An electronic transmission by a Unitholder, or a photographic, photostatic, facsimile or similar reproduction of a writing signed by a Unitholder, shall be regarded as signed by the Unitholder for purposes of this Section 3.3(a). Prompt notice of the taking of any action by Unitholders without a meeting by less than unanimous written consent shall be given to those Unitholders who did not consent in writing to the action.

(b) Record Date for Written Consent in Lieu of Meeting. The record date for determining Unitholders entitled to consent to action in writing without a meeting shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the LLC by delivery to its registered office, its principal place of business, or the chief executive officer. Delivery shall be by hand or by certified or registered mail, return

receipt requested. Delivery to the LLC’s principal place of business shall be addressed to the chief executive officer.

(c) Filings. If any action by Unitholders is taken by written consent, any certificate or documents filed with the Secretary of State of Delaware as a result of the taking of the action shall state, in lieu of any statement required by the Delaware Act concerning any vote of Unitholders, that written consent has been given in accordance with the provisions of the Delaware Act and that any written notice required by the Delaware Act has been given.

(d) Telephone Conference. Unitholders may participate in and hold a meeting by means of conference telephone or similar communications equipment by means of which all Persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

3.4 Issuance of Additional Units and Interests, Preemptive Rights.

(a) Additional Securities. Subject to compliance with the provisions of this Agreement, the Board shall have the right to cause the LLC to issue or sell to any Person (including Unitholders and Affiliates) any of the following (which for purposes of this Agreement shall be “Additional Securities”): (i) additional Units or other interests in the LLC (including other classes or series thereof having different rights), (ii) obligations, evidences of indebtedness, or other securities or interests convertible or exchangeable into Units or other interests in the LLC, and (iii) warrants, options, or other rights to purchase or otherwise acquire Units or other interests in the LLC. Subject to the provisions of this Agreement, the Board shall determine the terms and conditions governing the issuance of such Additional Securities, including the number and designation of such Additional Securities, the preference (with respect to distributions, liquidations, or otherwise) over any other Units and any required contributions in connection therewith. Any Person who acquires Units will be admitted to the LLC as a Unitholder pursuant to the terms of this Agreement. If any Person acquires additional Units or other interests in the LLC, Schedule A shall be amended to reflect such issuance or transfer, as the case may be.

(b) Preemptive Rights.

(i) If the LLC authorizes the issuance or sale of any Units or other Equity Securities (other than as a dividend or distribution on the outstanding Units or an issuance upon consummation of a Sale of the Company or a Public Offering), the LLC shall first offer to sell to each holder of Common Units or Class B Preferred Units who is an “accredited investor” as defined in Rule 501(e) under the Securities Act, a portion of such securities equal to the quotient determined by dividing (1) the number of Voting Units held by such holder by (2) the number of Voting Units then issued and outstanding. Each holder of Voting Units shall be entitled to purchase such Units or Equity Securities at the most favorable price and on the most favorable terms as such units or securities are to be offered to any other Persons; provided that if all Persons entitled to purchase or receive such Units or Equity Securities are required to also purchase other Securities of the LLC, the holders of Voting Units exercising their rights pursuant

to this paragraph shall also be required to purchase the same strip of Securities (on the same terms and conditions) that such other Persons are required to purchase. The purchase price for all Securities offered to the holders of the Voting Units shall be payable in cash (or such other consideration as was proposed by the LLC initially).

(ii) In order to exercise its purchase rights hereunder, a holder of Voting Units must within 15 days after receipt of written notice from the LLC describing in reasonable detail the Securities being offered, the purchase price thereof, the payment terms and such holder’s ratable share deliver a written notice to the LLC describing its election as to (A) whether and to what extent such holder desires to purchase its ratable share and (B) if such holder elects to purchase its full ratable share, whether and to what extent such holder desires to purchase an additional amount of the securities being offered if all of the securities offered to the Unitholders are not fully subscribed.

(iii) Upon the expiration of the offering period described above, the LLC shall be entitled to sell such Securities which the holders of Common Units or Class B Preferred Units have not elected to purchase during the 90 days following such expiration on terms and conditions no more favorable to the purchasers thereof than those offered to such holders. Any such Securities offered or sold by the LLC after such 90-day period must be reoffered to the holders of Common Units or Class B Preferred Units pursuant to the terms of this Section 3.4(b).

(iv) The rights of the holders of Common Units or Class B Preferred Units under this Section 3.4(b) shall terminate immediately prior to the consummation of a Sale of the Company or a Qualified IPO.

3.5 Capital Accounts.

(a) The LLC shall maintain a separate Capital Account for each Unitholder according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). For this purpose, the LLC may (in the discretion of the Board), upon the occurrence of the events specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in accordance with the rules of such regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of LLC property. Without limiting the foregoing, each Unitholder’s Capital Account shall be adjusted:

(i) by adding any additional Capital Contributions made by such Unitholder in consideration for the issuance of Units;

(ii) by deducting any amounts paid to such Unitholder in connection with the redemption or other repurchase by the LLC of Units;

(iii) by adding any Profits allocated in favor of such Unitholder and subtracting any Losses allocated in favor of such Unitholder; and

(iv) by deducting any distributions paid in cash or other assets to such Unitholder by the LLC.

(b) For purposes of computing the amount of any item of LLC income, gain, loss, or deduction to be allocated pursuant to Article IV and to be reflected in the Capital Accounts, the determination, recognition, and classification of any such item shall be the same as its determination, recognition, and classification for federal income tax purposes (including any method of depreciation, cost recovery, or amortization used for this purpose); provided that:

(i) The computation of all items of income, gain, loss, and deduction shall include those items described in Code Section 705(a)(l)(B) or Code Section 705(a)(2)(B) and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includable in gross income or are not deductible for federal income tax purposes.

(ii) If the Book Value of any LLC property is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property.

(iii) Items of income, gain, loss, or deduction attributable to the disposition of LLC property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property.

(iv) Items of depreciation, amortization, and other cost recovery deductions with respect to LLC property having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the property’s Book Value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

(v) To the extent an adjustment to the adjusted tax basis of any LLC asset pursuant to Code Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis).

3.6 Negative Capital Accounts. No Unitholder shall be required to pay to any other Unitholder or the LLC any deficit or negative balance which may exist from time to time in such Unitholder’s Capital Account (including upon and after dissolution of the LLC).

3.7 No Withdrawal. No Person shall be entitled to withdraw any part of such Person’s Capital Contributions or Capital Account or to receive any Distribution from the LLC, except as expressly provided herein or in the other agreements referred to herein.

3.8 Loans From Unitholders. Loans by Unitholders to the LLC shall not be considered Capital Contributions. If any Unitholder shall loan funds to the LLC, the making of such loans shall not result in any increase in the amount of the Capital Account of such Unitholder. The amount of any such loans shall be a debt of the LLC to such Unitholder and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made.

ARTICLE IV

DISTRIBUTIONS; REDEMPTIONS
AND ALLOCATIONS

4.1 Distributions.

(a) Distributions Generally. Except as otherwise set forth in this Section 4.1, and subject to the provisions of Section 6.7 of this Agreement and Section 18-607 of the Delaware Act, the Board may in its sole discretion make Distributions at any time or from time to time. All Distributions shall be made only in the following order and priority:

(i) First, to the Unitholders holding Class B Preferred Units, an amount equal to the aggregate Class B Unreturned Liquidation Preference with respect to such Units (in the proportion that each Unitholder’s share of Class B Unreturned Liquidation Preference with respect to such Unitholder’s Class B Preferred Units bears to the aggregate amount of Class B Unreturned Liquidation Preference with respect to all Class B Preferred Units) until each such Unitholder has received Distributions in respect of such Unitholder’s Class B Preferred Units in an amount equal to the aggregate Class B Unreturned Liquidation Preference with respect to such Unitholder’s Class B Preferred Units as of the time of such Distribution, and no Distribution or any portion thereof may be made pursuant to Sections 4.1(a)(ii) - (iv) below until the entire amount of Class B Unreturned Liquidation Preference with respect to the outstanding Class B Preferred Units as of the time of such Distribution has been paid in full.

(ii) Second, to the Unitholders holding Class A Preferred Units, an amount equal to the aggregate Class A Unpaid Yield (in the proportion that each Unitholder’s share of Class A Unpaid Yield bears to the aggregate Class A Unpaid Yield) until each such Unitholder has received Distributions in respect of such Unitholder’s Class A Preferred Units in an amount equal to the aggregate Class A Unpaid Yield on such Unitholder’s outstanding Class A Preferred Units as of the time of such Distribution, and no Distribution or any portion thereof may be made pursuant to Sections 4.1(a)(iii) or (iv) below until the entire amount of the Class A Unpaid Yield on the outstanding Class A Preferred Units as of the time of such Distribution has been paid in full.

(iii) Third, to the Unitholders holding Class A Preferred Units, an amount equal to the aggregate Class A Unreturned Capital with respect to such Units (in the proportion that each Unitholder’s share of Class A Unreturned Capital with respect to such Class A Preferred Units bears to the aggregate amount of Class A Unreturned Capital with respect to all Class A Preferred Units) until each such Unitholder has received Distributions in respect of such Unitholder’s Class A Preferred Units in an amount equal to the aggregate Class A Unreturned Capital with respect to such Unitholder’s Class A Preferred Units as of the time of such Distribution, and no Distribution or any portion thereof may be made pursuant to Section 4.1(a)(iv) below until the entire amount of Class A Unreturned Capital with respect to the outstanding Class A Preferred Units as of the time of such Distribution has been paid in full.

(iv) Fourth, all remaining amounts shall be distributed to the Unitholders holding Common Units, pro-rata according to such holders’ ownership of Common Units immediately prior to such Distribution.

(b) Tax Distributions. Notwithstanding any other provision herein to the contrary, so long as the LLC is treated as a partnership for federal and state income tax purposes, the LLC shall use its best efforts to distribute within 15 days after the end of each Fiscal Quarter of the LLC, to the extent that funds are legally available therefor and would not impair the liquidity of the LLC with respect to working capital, capital expenditures, debt service, reserves, or otherwise and would not be prohibited under any credit facility to which the LLC or any Subsidiary is a party, an amount of cash (a “Tax Distribution”) which in the good faith judgment of the Board equals the excess, if any, of (i) the product of (x) the amount of taxable income allocable to the Unitholders in respect of the period beginning on the date hereof and ending at the close of such Fiscal Quarter, multiplied by (y) the combined maximum federal, state, and local income tax rate to be applied with respect to such taxable income (calculated by using the highest maximum combined marginal federal, state, and local income tax rates to which any Unitholder may be subject and taking into account the deductibility of state income tax for federal income tax purposes) for such period (making an appropriate adjustment for any rate changes that take place during such period) over (ii) all prior distributions made pursuant to this subsection (b) and subsection (a) above. All Tax Distributions shall be treated as an advance of Distributions for purposes of Section 4.1(a).

(c) Persons Receiving Distributions. Each Distribution shall be made to the Persons shown on the LLC’s books and records as Unitholders as of the date of such Distribution; provided, however, that any transferor and transferee of Units may mutually agree as to which of them should receive payment of any Distribution under Section 4.1.

4.2 Redemption. At any time on or after the tenth anniversary of the date of the Acquisition Closing, any Unitholder may request redemption of all of their Class A Preferred Units by delivering written notice of such request to the LLC. Within five days after receipt of such request, the LLC shall give written notice of such request to all other holders of Class A Preferred Units, and such other holders may request redemption of their Class A Preferred Units by delivering written notice to the LLC within ten days after receipt of the LLC’s notice. The LLC shall be required to redeem all Class A Preferred Units with respect to which such redemption requests have been made at a price per Class A Preferred Unit equal to the sum of the Class A Unpaid Yield plus the Class A Unreturned Capital with respect to such Unit within 20 days after receipt of the initial redemption request.

4.3 Allocations Generally. Except as otherwise provided in Section 4.4, Profits and Losses for any Fiscal Year shall be allocated among the Unitholders in such a manner that, as of the end of such Fiscal Year, the sum of (i) the Capital Account of each Unitholder, (ii) such Unitholder’s share of Minimum Gain (as determined according to Treasury Regulation Section 1.704-2(g)), and (iii) such Unitholder’s partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)) shall be equal to the respective net amounts that would be distributed to them, determined as if the LLC were to (i) liquidate the assets of the LLC for an amount equal to their Book Value, and (ii) distribute the proceeds of liquidation pursuant to Section 12.2.

4.4 Special Allocations.

(a) Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decrease during a Fiscal Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Fiscal year (and, if necessary, for subsequent Fiscal Years) shall be allocated to the Unitholders in the amounts and of such character as determined according to, and subject to the exceptions contained in, Treasury Regulation Section 1.704-2(i)(4). This Section 4.4(a) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted in a manner consistent therewith.

(b) Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) for any Taxable Year shall be allocated to each Unitholder ratably among such Unitholders based upon the number of outstanding Units held by each such Unitholder immediately prior to such allocation. If there is a net decrease in Minimum Gain during any Fiscal Year, each Unitholder shall be allocated Profits for such Fiscal Year (and, if necessary, for subsequent Fiscal Years) in the amounts and of such character as determined according to, and subject to the exceptions contained in, Treasury Regulation Section 1.704-2(f). This Section 4.4(b) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted in a manner consistent therewith.

(c) If any Unitholder that unexpectedly receives an adjustment, allocation, or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Taxable Year, computed after the application of Sections 4.4(a) and 4.4(b) but before the application of any other provision of this Article IV, then Profits for such Taxable Year shall be allocated to such Unitholder in proportion to, and to the extent of, such Adjusted Capital Account Deficit. This Section 4.4(c) is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.

(d) Profits and Losses shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(j), (k), and (m).

(e) The allocations set forth in Sections 4.4(a)-(d) (the “Regulatory Allocations”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations may not be consistent with the manner in which the Unitholders intend to allocate Profit and Loss of the LLC or make LLC distributions. Accordingly, notwithstanding the other provisions of this Article IV, but subject to the Regulatory Allocations, income, gain, deduction, and loss shall be reallocated among the Unitholders so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Unitholders to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction, and loss) had been allocated without reference to the Regulatory Allocations. In

general, the Unitholders anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction, and loss) among the Unitholders so that the net amount of the Regulatory Allocations and such special allocations to each such Unitholder is zero.

4.5 Tax Allocations.

(a) Except as provided in Sections 4.5(b), (c) and (d), the income, gains, losses, deductions, and credits of the LLC will be allocated, for federal, state, and local income tax purposes, among the Unitholders in accordance with the allocation of such income, gains, losses, deductions, and credits among the Unitholders for computing their Capital Accounts; except that, if any such allocation is not permitted by the Code or other applicable law, then the LLC’s subsequent income, gains, losses, deductions, and credits will be allocated among the Unitholders so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

(b) Items of LLC taxable income, gain, loss, and deduction with respect to any property contributed to the capital of the LLC shall be allocated among the Unitholders in accordance with Code Section 704(c) so as to take account of any variation between the adjusted basis of such property to the LLC for federal income tax purposes and its Book Value.

(c) If the Book Value of any LLC asset is adjusted pursuant to the requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f) subsequent allocations of items of taxable income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Book Value in the same manner as under Code Section 704(c).

(d) Allocations of tax credits, tax credit recapture, and any items related thereto shall be allocated to the Unitholders according to their interests in such items as determined by the Board taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

(e) Allocations pursuant to this Section 4.5 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Unitholder’s Capital Account or Unit of Profits, Losses, Distributions, or other LLC items pursuant to any provision of this Agreement.

4.6 Indemnification and Reimbursement for Payments on Behalf of a Unitholder. If the LLC is required by law to make any payment that is specifically attributable to a Unitholder or a Unitholder’s status as such (including federal withholding taxes, state personal property taxes, and state unincorporated business taxes), then such Unitholder shall indemnify the LLC in full for the entire amount paid (including interest, penalties and related expenses). The LLC may pursue and enforce all rights and remedies it may have against each Unitholder under this Section 4.6, including instituting a lawsuit to collect such indemnification and contribution with interest calculated at a rate equal to 10% per annum, compounded as of the last day of each year (but not in excess of the highest rate per annum permitted by law).

4.7 Transfer of Capital Accounts. If a Unitholder transfers an interest in the LLC to a new or existing Unitholder, the transferee Unitholder shall succeed to that portion of

the transferor’s Capital Account that is attributable to the transferred interest. Any reference in this Agreement to a Capital Contribution of, or Distribution to, a Unitholder that has succeeded any other Unitholder shall include any Capital Contributions or Distributions previously made by or to the former Unitholder on account of the interest of such former Unitholder transferred to such Unitholder.

ARTICLE V

BOARD OF MANAGERS; OFFICERS

5.1 Management by the Board of Managers.

(a) No Management by Unitholders. The Unitholders shall not manage and control the business and affairs of the LLC, except for situations in which the approval of Unitholders is required by this Agreement or by non-waivable provisions of applicable law.

(b) Authority of Board of Managers.

(i) Except for situations in which the approval of the Unitholders is otherwise required (including pursuant to Section 6.7), (x) the powers of the LLC shall be exercised by or under the authority of, and the business and affairs of the LLC shall be managed under the direction of, the Board and (y) the Board may make all decisions and take all actions for the LLC not otherwise provided for in this Agreement, including the following:

(A) entering into, making and performing contracts, agreements and other undertakings binding the LLC that may be necessary, appropriate or advisable in furtherance of the purposes of the LLC and making all decisions and waivers thereunder;

(B) maintaining the assets of the LLC in good order;

(D) opening and maintaining bank and investment accounts and arrangements, drawing checks and other orders for the payment of money and designating individuals with authority to sign or give instructions with respect to those accounts and arrangements;

(E) to the extent that funds of the LLC are available therefor, paying debts and obligations of the LLC;

(F) acquiring, utilizing for LLC purposes and disposing of any asset of the LLC;

(G) hiring and employing executives, Officers, supervisors and other personnel;

(H) selecting, removing and changing the authority and responsibility of lawyers, accountants and other advisers and consultants;

(I) entering into guaranties on behalf of the LLC’s Subsidiaries;

(J) obtaining insurance for the LLC;

(K) determining distributions of cash and other property of the LLC as provided in Article IV;

(L) establishing reserves for commitments and obligations (contingent or otherwise) of the LLC; and

(M) establishing a seal for the LLC.

In any event, the LLC shall not, without specific Board approval pursuant to clause (A) of Section 5.1(b)(ii), enter into, or permit any Subsidiary to enter into, any agreement or arrangement that provide for payments to or from the Company or any Subsidiary in excess of $35,000,000 (other than securitization transactions in the ordinary course of business).

(ii) The Board may act (A) by resolutions adopted at a meeting and by written consents pursuant to Section 5.3, (B) by delegating power and authority to committees pursuant to Section 5.4, and (C) by delegating power and authority to any Officer pursuant to Section 5.5(a).

(iii) Each Unitholder acknowledges and agrees that no Manager shall, as a result of being a Manager (as such), be bound to devote all of his business time to the affairs of the LLC, and that he and his Affiliates do and will continue to engage for their own account and for the accounts of others in other business ventures.

(c) Officers. The management of the business and affairs of the LLC by the Officers and the exercising of their powers shall be conducted under the supervision of and subject to the approval of the Board.

5.2 Composition and Election of the Board of Managers.

(a) Number and Designation. The number of Managers on the Board was initially established at eight (8), and shall be hereafter adjusted to conform with the aggregate number of Managers available for designation or appointed in accordance with this Section 5.2(a) below. The Board shall be comprised of the following persons:

(i) prior to the THI Liquidation and for so long as THI owns all Units of the LLC, eight (8) representatives designated by THI (such representatives, the “Initial Managers”), which representatives shall initially be Philip A. Canfield, David A. Donnini, Aaron D. Cohen, Donald J. Edwards, J. Randy Staff, Carl B. Webb, Daniel D. Leonard and Gerald J. Ford.

(ii) following the THI Liquidation, upon Goldman’s election, three (3) representatives designated by Goldman, so long as Goldman and its Affiliates continue to hold at least 50% of the Common Units distributed to Goldman and its Affiliates pursuant to the THI Liquidation (the “Goldman Common Units”), and thereafter, two (2) representatives designated

by Goldman so long as Goldman and its Affiliates continue to hold at least 25% of the Goldman Common Units, and thereafter, one (1) representative designated by Goldman so long as Goldman and its Affiliates hold at least one (1) Goldman Common Unit (collectively, the “Goldman Managers”); provided that so long as GS Capital Partners 2000, L.P. continues to hold at least one (1) Goldman Common Unit, at least one Goldman Manager shall be designated exclusively by GS Capital Partners 2000, L.P.; provided further that if Goldman and its Affiliates continue to hold at least 50% of the Goldman Common Units and GTCR and its Affiliates no longer hold any GTCR Common Units, then Goldman shall have the right to designate one (1) additional representative (for a total of four (4) representatives) so long as Goldman and its Affiliates continue to hold at least 50% of the Goldman Common Units; provided further that, unless and until otherwise specified by Goldman, the Board seats with respect to which Goldman is entitled to designate representatives shall remain vacant.

(iii) following the THI Liquidation, three (3) representatives designated by GTCR (provided that at least one such representative shall be designated by GTCR Fund VIII, and at least one by Fund VIII/B Triad Splitter, L.P.), which representatives initially shall be Philip A. Canfield, David A. Donnini and Aaron D. Cohen, so long as GTCR and its Affiliates continue to hold at least 50% of the Common Units distributed to GTCR and its Affiliates pursuant to the THI Liquidation (the “GTCR Common Units”), and thereafter, two (2) representatives designated by GTCR (provided that at least one such representative shall be designated by GTCR Fund VIII, and at least one by Fund VIII/B Triad Splitter, L.P.) so long as GTCR and its Affiliates continue to hold at least 25% of the GTCR Common Units, and thereafter, one (1) representative designated by GTCR so long as GTCR and its Affiliates hold at least one (1) GTCR Common Unit (collectively, the “GTCR Managers”); provided that if GTCR and its Affiliates continue to hold at least 50% of the GTCR Common Units and Goldman and its Affiliates no longer hold any Goldman Common Units, then GTCR shall have the right to designate one (1) additional representative (for a total of four (4) representatives) so long as GTCR and its Affiliates continue to hold at least 50% of the GTCR Common Units;

(iv) following the THI Liquidation, three (3) representatives designated by HGF, who initially shall be Donald J. Edwards, J. Randy Staff and Carl B. Webb, so long as HGF and its Affiliates continue to hold at least 50% of the Common Units distributed to HGF and its Affiliates pursuant to the THI Liquidation (the “HGF Common Units”), and thereafter, two (2) representatives designated by HGF so long as HGF and its Affiliates continue to hold at least 25% of the HGF Common Units, and thereafter, one (1) representative designated by HGF so long as HGF and its Affiliates hold at least one (1) HGF Common Unit (collectively, the “HGF Managers”);

(v) the LLC’s chief executive officer, who shall initially be Gerald J. Ford;

(vi) one (1) representative designated by the holders of the Required Interest (the “Additional Manager”);

(vii) following the THI Liquidation, such number of representatives designated by the appointees of HGF and GTCR, which number shall be equal to the number of

representatives designated by Goldman pursuant to Section 5.2(a)(ii) at such time (the “HGF-GTCR Managers”); and

(viii) such number of independent Managers named by the majority of the total number of Managers then serving on the Board at a meeting of the Board at which a quorum is present (the “Independent Managers”).

If any of Investor Member becomes ineligible to designate a representative to fill a Manager position pursuant to the terms of Sections 5.2(a)(ii) through (iv) above, such Manager position shall remain vacant and such Investor Member shall promptly identify its designee(s) who, as a result, will be automatically removed from the Board.

(b) Term. Members of the Board shall serve from their designation in accordance with the terms hereof until their resignation, death or removal in accordance with the terms hereof. Members of the Board need not be Unitholders and need not be residents of the State of Delaware. A person shall become a member of the Board effective upon receipt by the LLC at its principal place of business of a written notice addressed to the Board (or at such later time or upon the happening of some other event specified in such notice) of such person’s designation from the person or persons entitled to designate such manager pursuant to Section 5.2(a) above. A member of the Board may resign as such by delivering his, her or its written resignation to the LLC at the LLC’s principal office addressed to the Board. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

(c) Removal. The removal from the Board or any of its committees (with or without cause) of any Goldman Manager, GTCR Manager or HGF Manager shall become effective upon (and only upon) the written request of the respective Investor Member entitled to designate such Manager to serve on such Board or committee. The removal from the Board or any of its committees (with or without cause) of any Additional Manager shall become effective upon (and only upon) the written request of the holders of the Required Interest. The removal from the Board or any of its committees (with or without cause) of any HGF-GTCR Manager shall become effective upon (and only upon) the written request of either HGF or GTCR. The removal from the Board or any of its committees (with or without cause) of any Independent Manager shall become effective upon (and only upon) the written request of a majority of the Board.

(d) Vacancies. In the event that any designee under clauses (ii), (iii), (iv), (v) or (vii) of Section 5.2(a) for any reason ceases to serve as a member of the Board (other than as the result of an Investor Member becoming ineligible to designate one or more representatives to the Board pursuant to the terms of Section 5.2(a)), (i) the resulting vacancy on the Board shall be filled by a Person designated by the respective Investor Member or Members originally entitled to designate such Manager pursuant to such clause of Section 5.2(a) above (provided that, if any party fails to designate a person to fill a vacancy on the Board pursuant to the terms of this Section 5.2, such vacant managership shall remain vacant until such managership is filled pursuant to this Section 5.2(d)), and (ii) such designee shall be removed promptly after such time from each committee of the Board. In the event that any designee under Section 5.2(a)(v) for any reason ceases to serve as a member of the Board, (i) the resulting vacancy on the Board shall

be filled by a Person designated by the holders of the Required Interest (provided that, if the holders of the Required Interest fail to designate a person to fill a vacancy on the Board pursuant to the terms of this Section 5.2, such vacant managership shall remain vacant until such managership is filled pursuant to this Section 5.2(d), unless the holders of the Required Interest resolve otherwise), and (ii) such designee shall be removed promptly after such time from each committee of the Board. In the event that any designee under Section 5.2(a)(viii) for any reason ceases to serve as a member of the Board, (i) the resulting vacancy on the Board may be filled by a Person designated by the Board, and (ii) such designee shall be removed promptly after such time from each committee of the Board.

(e) Reimbursement. The LLC shall pay all reimbursable out-of-pocket costs and expenses incurred by each member or former member of the Board incurred in the course of their service hereunder, including in connection with attending regular and special meetings of the Board, any board of managers or board of directors of each of the LLC’s Subsidiaries and/or any of their respective committees.

(f) Compensation of Managers. Except as approved by the Required Interest and subject to the Management Agreement, Managers shall receive no compensation for serving in such capacity.

(g) Reliance by Third Parties. Any Person dealing with the LLC, other than a Unitholder, may rely on the authority of the Board (or any Officer authorized by the Board) in taking any action in the name of the LLC without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement. Every agreement, instrument or document executed by the Board (or any Officer authorized by the Board) in the name of the LLC with respect to any business or property of the LLC shall be conclusive evidence in favor of any Person relying thereon or claiming thereunder that (i) at the time of the execution or delivery thereof, this Agreement was in full force and effect, (ii) such agreement, instrument or document was duly executed according to this Agreement and is binding upon the LLC and (iii) the Board or such Officer was duly authorized and empowered to execute and deliver such agreement, instrument or document for and on behalf of the LLC.

5.3 Board Meetings and Actions by Written Consent.

(a) Quorum; Voting. A majority of the total number of Managers then serving on the Board (i.e., excluding any vacancies on the Board) must be present (including pursuant to Section 5.3(h)) in order to constitute a quorum for the transaction of business of the Board, and except as otherwise provided in this Agreement, the act of a majority of the total number of Managers then serving on the Board (i.e., excluding any vacancies on the Board) at a meeting of the Board at which a quorum is present shall be the act of the Board. A Manager who is present at a meeting of the Board at which action on any matter is taken shall be presumed to have assented to the action unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the LLC immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Manager who voted in favor of such action.

(c) Meeting In Connection With Unitholder Meeting. In connection with any meeting of Unitholders, the Managers may, if a quorum is present, hold a meeting for the transaction of business immediately after and at the same place as such meeting of the Unitholders. Notice of such meeting at such time and place shall not be required.

(f) Chairman and Vice Chairman. The Board shall designate one of the Managers to serve as Chairman and a different Manager to serve as Vice Chairman. The Chairman shall preside at all meetings of the Board. If the Chairman is absent at any meeting of the Board, the Vice Chairman shall preside over such Board meeting. If the Chairman and Vice Chairman are absent, the Managers present shall designate a member to serve as interim chairman for that meeting. Neither the Chairman nor Vice Chairman, except in their capacity as an Officer, shall have the authority or power to act for or on behalf of the LLC, to do any act that would be binding on the LLC or to make any expenditure or incur any obligation on behalf of the LLC or authorize any of the foregoing.

(g) Board Meetings. There shall be meetings of the Board from time to time as requested by holders of the Required Interest.

(h) Action by Unanimous Written Consent or Telephone Conference. Any action permitted or required by the Delaware Act, the Certificate or this Agreement to be taken at a meeting of the Board or any committee designated by the Board may be taken without a meeting if a consent in writing, setting forth the action to be taken, is signed by all of the Managers. Such consent shall have the same force and effect as a vote at a meeting and may be stated as such in any document or instrument filed with the Secretary of State of Delaware, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Board or any such committee, as the case may be. A consent transmitted by electronic transmission by a Member shall be deemed to be written and signed for purposes of this Agreement. Subject to the requirements of the Delaware Act, the Certificate or this Agreement for notice of meetings, unless otherwise restricted by the Certificate, the Managers or members of any committee designated by the Board may participate in and hold a meeting of the Board or any committee, as

the case may be, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

5.4 Committees; Delegation of Authority and Duties.

(a) Committees; Generally. The Board may, from time to time, designate one or more committees. Following the THI Liquidation, each Investor Member that is entitled to designate at least one (1) Manager to the Board pursuant to Section 5.2(a) shall be entitled to designate at least one (1) of its designated Managers to each of the Board’s material committees. Any such committee, to the extent provided in the enabling resolution or in the Certificate or this Agreement, shall have and may exercise all of the authority of the Board. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum, and the affirmative vote of a majority of the members present shall be necessary for the adoption of any resolution. The Board may dissolve any committee at any time, unless otherwise provided in the Certificate or this Agreement.

(b) Audit Committee. The Board may establish an audit committee to select the LLC’s independent accountants and to review the annual audit of the LLC’s financial statements conducted by such accountants.

(c) Delegation; Generally. The Board may, from time to time, delegate to one or more Persons (including any Manager or Officer) such authority and duties as the Board may deem advisable in addition to those powers and duties set forth in Section 5.1(b) hereof. The Board also may assign titles (including chairman, chief executive officer, president, vice president, secretary, assistant secretary, treasurer and assistant treasurer) to any Manager, Unitholder or other individual and may delegate to such Manager, Unitholder or other individual certain authority and duties. Any number of titles may be held by the same Manager, Unitholder or other individual. Any delegation pursuant to this Section 5.4(c) may be revoked at any time by the Board.

(d) Third-party Reliance. Any Person dealing with the LLC, other than a Unitholder, may rely on the authority of any Officer in taking any action in the name of the LLC without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement.

5.5 Officers.

(a) Designation and Appointment. The Board may (but need not), from time to time, designate and appoint one or more persons as an Officer of the LLC. No Officer need be a resident of the State of Delaware, a Unitholder or a Manager. Any Officers so designated shall have such authority and perform such duties as the Board may, from time to time, delegate to them. The Board may assign titles to particular Officers. Unless the Board otherwise decides, if the title is one commonly used for officers of a business corporation formed, the assignment of such title shall constitute the delegation to such Officer of the authority and duties that are

normally associated with that office, subject to (i) any specific delegation of authority and duties made to such Officer by the Board pursuant to the third sentence of this Section 5.5(a) or (ii) any delegation of authority and duties made to one or more Officers pursuant to the terms of Section 5.4(c) and 5.5(c). Each Officer shall hold office until such Officer’s successor shall be duly designated and shall qualify or until such Officer’s death or until such Officer shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same individual. The salaries or other compensation, if any, of the Officers and agents of the LLC shall be fixed from time to time by the Board.

(b) Resignation. Any Officer (subject to any contract rights available to the LLC, if applicable) may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Board. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause, by the Board in its discretion at any time; provided, however, that such removal shall be without prejudice to the contract rights, if any, of the individual so removed. Designation of an Officer shall not of itself create contract rights. Any vacancy occurring in any office of the LLC may be filled by the Board.

(c) Duties of Officers; Generally. The following Officers, to the extent such Officers have been appointed by the Board, shall have the following duties:

(i) Chief Executive Officer. The initial chief executive officer of the LLC shall be Gerald J. Ford. Subject to the powers of the Board, the chief executive officer of the LLC shall be in the general and active charge of the entire business and affairs of the LLC, and shall be its chief policy-making Officer. The president, chief financial officer and each other senior officer of the LLC shall report directly to the chief executive officer. The chief executive officer shall see that all orders and resolutions of the Board are carried into effect. The LLC’s chief executive officer’s responsibilities will also include setting corporate strategy, overseeing the performance of the Company’s chief executive officer, naming senior executives of the Company (other than the chief executive officer and chief financial officer of the Company who shall be named and approved by the full Board), and recommending to the Board compensation of such executives. The chief executive officer shall have such other powers and perform such other duties as may be prescribed by the Board.

(ii) President. The president shall, subject to the powers of the Board and the chief executive officer, be the chief administrative officer of the LLC and shall have general charge of the business, affairs and property of the LLC, and control over its Officers (other than the chief executive officer), agents and employees. The president shall see that all orders and resolutions of the Board and the chief executive officer are carried into effect. He or she shall be responsible for the employment of employees, agents and Officers (other than the chief executive officer) as may be required for the conduct of the business and the attainment of the objectives of the LLC. He or she shall have authority to suspend or to remove any employee, agent or Officer (other than the chief executive officer) of the LLC and, in the case of the suspension for cause of any such Officer, to recommend to the Board what further action should be taken. In the absence of the president, his or duties shall be performed and his or her authority may be exercised by the chief executive officer. In the absence of the president and the

chief executive officer, the duties of the president shall be performed and his or her authority may be exercised by such Officer as may have been designated as the most senior officer of the LLC. The president shall have such other powers and perform such other duties as may be prescribed by the chief executive officer or the Board.

(iii) Chief Financial Officer. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the LLC, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital and Units. The chief financial officer shall have the custody of the funds and securities of the LLC, and shall keep full and accurate accounts of receipts and disbursements in books belonging to the LLC, and shall deposit all moneys and other valuable effects in the name and to the credit of the LLC in such depositories as may be designated by the Board. The chief financial officer shall have such other powers and perform such other duties as may be prescribed by the chief executive officer or the Board.

(v) Secretary.

(B) The secretary shall keep all documents as may be required under the Delaware Act or this Agreement. The secretary shall perform such other duties and have such other authority as may be prescribed elsewhere in this Agreement or from time to time by the Board. The secretary shall have the general duties, powers and responsibilities of a secretary of a corporation.

ARTICLE VI

GENERAL RIGHTS AND OBLIGATIONS OF UNITHOLDERS

6.1 Limitation of Liability. Except as otherwise provided by applicable law, the debts, obligations, and liabilities of the LLC, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the LLC, and no Unitholder shall be obligated personally for any such debt, obligation, or liability of the LLC solely by reason of being a Unitholder of the LLC; provided that a Unitholder shall be required to return to the LLC any Distribution made to it in clear and manifest accounting or similar error. The immediately

preceding sentence shall constitute a compromise to which all Unitholders have consented within the meaning of the Delaware Act. Notwithstanding anything contained herein to the contrary, the failure of the LLC to observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this Agreement or the Delaware Act shall not be grounds for imposing personal liability on the Unitholders for liabilities of the LLC.

6.2 Lack of Authority. No Unitholder in his, her, or its capacity as such (other than the members of the Board acting as the Board or an authorized Officer of the LLC) has the authority or power to act for or on behalf of the LLC in any manner, to do any act that would be (or could be construed as) binding on the LLC or to make any expenditures on behalf of the LLC, and the Unitholders hereby consent to the exercise by the Board of the powers conferred on it by law and this Agreement.

6.3 No Right of Partition. No Unitholder shall have the right to seek or obtain partition by court decree or operation of law of any LLC property, or the right to own or use particular or individual assets of the LLC.

6.4 Unitholders Right to Act. For situations which the approval of any Unitholders or class thereof (rather than the approval of the Board on behalf of the Unitholders) is required, the Unitholders shall act through meetings and written consents as described in Sections 3.2 and 3.3.

6.5 Conflicts of Interest.

(a) A Unitholder, a Manager, their respective Affiliates and each of their respective stockholders, directors, officers, controlling persons, partners and employees and each Officer and employee of the LLC at any time and from time to time, may engage in and possess interests in other business ventures of any and every type and description, independently or with others, including ones in competition with the LLC and its subsidiaries, with no obligation to offer to the LLC and its subsidiaries or any Investor the right to participate therein, except as any such Person may have otherwise agreed with the LLC or any of its Subsidiaries in writing. Without limiting the generality of the foregoing, each such person may (i) engage in, and shall have no duty to refrain from engaging in, separate businesses or activities from the LLC or any Subsidiary of the LLC, including businesses or activities that are the same or similar to, or compete directly or indirectly with, those of the LLC or any Subsidiary of the LLC and (ii) do business with any potential or actual customer or supplier of the LLC or any Subsidiary of the LLC.

(b) To the fullest extent permitted by applicable law, none of the Unitholders, the Managers or any of their respective Affiliates shall have any obligation to present any business opportunity to the LLC or any Subsidiary of the LLC, even if the opportunity is one that the LLC or any Subsidiary of the LLC might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so and no such person shall be liable to the LLC, any Subsidiary of the LLC or any Unitholder for breach of any fiduciary or other duty, as a Unitholder, Manager or otherwise, by reason of the fact that such person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the LLC or

any Subsidiary of the LLC unless, in the case of any such Manager, such business opportunity is expressly offered to such Manager in writing solely as a Manager of the LLC. Nothing in this Agreement will impede the LLC’s ability to enter into contractual arrangements with any Unitholder or any Manager, which arrangements restrict such Unitholder or Manager from engaging in activities otherwise allowed by this Section 6.5.

(c) Each Unitholder (for itself and on behalf of the LLC) hereby, to the fullest extent permitted by applicable law but subject to Sections 6.5(d):

(i) confirms that each Manager has no duty to the LLC or any Subsidiary of the LLC other than the limited obligation set forth in Section 6.5(b) and those imposed by applicable law;

(ii) confirms that each Manager has no duty to any Unitholder individually as a result of this Agreement (it being understood that this provision does not limit any duty such person may have to a Unitholder as a director, officer or employee of the Unitholder);

(iii) confirms that each Unitholder has no duty to any other Unitholder or to the LLC or any Subsidiary of the LLC as a result of this Agreement other than the specific covenants and agreements set forth in this Agreement;

(iv) acknowledges and agrees that (A) in the event of any conflict of interest between the LLC, the Company and the Unitholders, any Affiliate of the Unitholders or any Manager that may from time to time arise, each such person may act in its best interest (provided that, in the case of a conflict of interest between a Manager and the LLC, the existence of such conflict is disclosed to the Board) and (B) no such person shall be obligated (1) to reveal to the LLC or any Subsidiary of the LLC confidential information belonging to or relating to the business of such person or (2) to recommend or take any action in its capacity as such Unitholder or Manager, as the case may be, that prefers the interest of the LLC or any Subsidiary of the LLC over the interest of such person; and

(v) waives any claim or cause of action against any other Unitholder, any Manager and any officer, employee, agent or Affiliate of any such Unitholder or Manager that may from time to time arise in respect of a breach by any such person of any duty or obligation disclaimed under Sections 6.5(c)(i) through (iv).

(d) Each Unitholder agrees that the waivers, acknowledgments and agreements set forth in subsection (c) above shall not apply to any alleged claim or cause of action against a Manager, Unitholder or any Unitholder’s Affiliates or any of their respective stockholders, directors, officers, controlling persons, partners or employees based upon the breach or non-performance by such person of this Agreement or other agreement to which the LLC or the Company and any such other Unitholder, any of its Affiliates or any Manager designated by such other Unitholder is a party.

(e) The provisions of this Section 6.5, to the extent that they restrict the duties and liabilities of a Unitholder or Manager otherwise existing at law or in equity, are agreed by the Unitholders to replace such other duties and liabilities of such person.

6.6 [Intentionally Omitted].»

6.7 Approval Rights. Notwithstanding the provisions of Article V, the LLC shall not, without the prior written consent of the holders of the Required Interest:

(a) directly or indirectly declare or pay any dividends or make any distributions upon any of its equity securities, other than Tax Distributions, distributions of the Class B Liquidation Preference on the Class B Preferred Units pursuant to Section 4.1(a)(i) of this Agreement, and distributions of unpaid yield or unreturned capital on the Class A Preferred Units pursuant to Sections 4.1(a)(ii) and 4.1(a)(iii) of this Agreement;

(b) enter into, or permit any Subsidiary to enter into, any joint venture or similar transaction;

(c) enter into, or permit any Subsidiary to enter into, any agreement or arrangement that materially limits or otherwise restricts the LLC or any Subsidiary from engaging or competing in any material line of business or in any material geographic area;

(d) enter into or amend, or permit any Subsidiary to enter into or amend, any transaction with any of its or any Subsidiary’s officers, directors, members, employees or Affiliates or any individual related by blood, marriage or adoption to any such Person or any entity in which any such Person or individual owns a beneficial interest, except for normal employment arrangements and benefit programs on reasonable terms (it being understood and agreed that loans or advances to employees (other than travel advances and de minimus advances) shall not constitute normal employment arrangements or benefit programs) and except as otherwise expressly contemplated by this Agreement, the Executive Agreements and the Management Agreement;

(e) directly or indirectly redeem, purchase or otherwise acquire, or permit any Subsidiary to redeem, purchase or otherwise acquire, any equity securities of the LLC or any Subsidiary (including, without limitation, warrants, options and other rights to acquire such equity securities), other than the redemptions of Class A Preferred Units pursuant to Section 4.2 of this Agreement;

(f) except as expressly contemplated by this Agreement, the Executive Agreements or the Management Agreement, authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise), or permit any Subsidiary to authorize, issue, sell or enter into any agreement providing for the issuance (contingent or otherwise) of, (i) any notes or debt securities containing equity features (including, without limitation, any notes or debt securities convertible into or exchangeable for equity securities, issued in connection with the issuance of equity securities or containing profit participation features) or (ii) any class, series, shares or units of equity securities (or any securities convertible into or exchangeable for any equity securities) of the LLC or any Subsidiary or rights, warrants or options to acquire or any security convertible into any equity securities of the LLC or any Subsidiary, other than the issuance of equity securities by a Subsidiary to the LLC or another Subsidiary;

(g) create, incur, assume, refinance or suffer to exist, or permit any Subsidiary to create, incur, assume, refinance or suffer to exist, third party Indebtedness exceeding an

aggregate principal amount of $50,000,000 outstanding at any time on a consolidated basis (whether by way of authorizing, issuing or entering into any agreement providing for the issuance (contingent or otherwise) of, any notes or debt securities or entering into any contract or agreement regarding third party debt financing or otherwise), except for Indebtedness secured by receivables or financial assets (including, without limitation, Indebtedness incurred pursuant to the New Facility, the Senior Unsecured Demand Notes, and the High Yield Debt); provided that entry into any agreement for the refinancing of more than $200,000,000 of such Indebtedness secured by receivables or financial assets shall require the prior written consent of the holders of the Required Interest;

(h) merge or consolidate with any Person or permit any Subsidiary to merge or consolidate with any Person (other than a wholly-owned Subsidiary);

(i) sell, lease or otherwise dispose of, or permit any Subsidiary to sell, lease or otherwise dispose of, more than 10% of the consolidated assets of the LLC and its Subsidiaries (computed on the basis of book value, determined in accordance with United States generally accepted accounting principles consistently applied, or fair market value, determined by the Board in its reasonable good faith judgment) in any transaction or series of related transactions (other than sales of inventory in the ordinary course of business);

(j) except as contemplated by this Agreement in connection with a Public Offering, voluntarily initiate a liquidation, dissolution or winding up of the LLC or any Subsidiary, or a recapitalization or reorganization of the LLC or any Subsidiary in any form of transaction (including, without limitation, any reorganization into a corporation or a partnership), or permit the commencement of a proceeding for bankruptcy, insolvency, receivership or similar action with respect to the LLC or any Subsidiary;

(k) except as contemplated by this Agreement in connection with a Public Offering, change the corporate or organizational structure of the LLC or any Subsidiary;

(l) acquire or dispose of, or permit any Subsidiary to acquire or dispose of, any interest in any business (whether by a purchase of assets, purchase of securities, merger or otherwise) involving aggregate consideration (including, without limitation, the assumption of liabilities) exceeding $35,000,000;

(m) acquire, or permit any Subsidiary to acquire, portfolios of securities (including auto loan portfolios) for aggregate consideration of more than $100,000,000 in any transaction or series of related transactions;

(n) enter into the ownership, active management or operation of any business other than the ownership of the securities of its Subsidiaries or permit any Subsidiary to enter into the ownership, active management or operation of any business other than a business in the automobile loan industry;

(o) become subject to, or permit any Subsidiary to become subject to, any agreement or instrument that by its terms would (under any circumstances) restrict (A) the right of any Subsidiary to make loans or advances or pay dividends to, transfer property to, or repay

any Indebtedness owed to, the LLC or any Subsidiary or (B) the LLC’s right to perform the provisions of this Agreement, the Certificate, or the other Transaction Documents;

(p) amend, alter or repeal, or permit any Subsidiary to amend, alter or repeal, by merger, consolidation, combination, reclassification or otherwise, the Certificate or the certificate of incorporation or bylaws any Subsidiary;

(q) except as expressly contemplated by this Agreement, make any amendment to the Certificate or the LLC Agreement that would increase the number of authorized Units or adversely affect or otherwise impair the rights or the relative preferences and priorities of the holders of the Units under this Agreement, the Certificate, or the other Transaction Documents;

(r) terminate the employment of, appoint or hire, or enter into, amend or modify any Executive Agreement or any employment agreement or arrangement with, the chief executive officer of the LLC, other than a termination of employment and/or modification to such agreement or arrangement that does not materially change the severance or other terms of such agreement or arrangement;

(s) make, or permit any Subsidiary to make, any election to change the classification of the LLC or any of its Subsidiary for Federal income tax purposes;

(t) provide any waiver by, or consent of, the LLC under or pursuant to the Triad Financial SM LLC Agreement;

(u) settle or compromise, or permit any Subsidiary to settle or compromise, any pending or threatened suit, action or claim of the LLC or any Subsidiary in excess of $5,000,000;

(v) appoint or remove, or permit any Subsidiary to appoint or remove, the independent auditor of the LLC or any Subsidiary;

(w) approve the annual budget (and significant variances from the budget) of the LLC and its Subsidiaries;

(x) make, or permit any Subsidiary to make, any capital expenditures (including, without limitation, payments with respect to capitalized leases, as determined in accordance with generally accepted accounting principles consistently applied) exceeding an amount that is $1,000,000 greater than the amount set forth in the then current annual budget approved pursuant to paragraph (w) above in the aggregate on a consolidated basis during any twelve-month period; or

(y) make, or permit any Subsidiary to make, any material changes in the accounting policies of the LLC or any Subsidiary.

6.8 Other Covenants.

(a) Public Disclosures. The LLC shall not, nor shall it permit any Subsidiary to, disclose any Unitholder’s name or identity as an investor in the LLC in any press release or other public announcement or in any document or material filed with any governmental entity, without

the prior written consent of such Unitholder, unless such disclosure is required by applicable law or governmental regulations or by order of a court of competent jurisdiction, in which case prior to making such disclosure the LLC shall give written notice to such Unitholder describing in reasonable detail the proposed content of such disclosure and shall permit such Unitholder to review and comment upon the form and substance of such disclosure.

(b) Hart-Scott-Rodino Compliance. In connection with any transaction in which the LLC is involved that is required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to time (the “HSR Act”), the LLC shall prepare and file all documents with the Federal Trade Commission and the United States Department of Justice which may be required to comply with the HSR Act, and shall promptly furnish all materials thereafter requested by any of the regulatory agencies having jurisdiction over such filings, in connection with such transaction. The LLC shall take all reasonable actions and shall file and use reasonable best efforts to have declared effective or approved all documents and notifications with any governmental or regulatory bodies, as may be necessary or may reasonably be requested under federal antitrust laws for the consummation of such transaction. Notwithstanding the foregoing, if any Unitholder, rather than the LLC, is required to make a filing under the HSR Act in connection with such a transaction, the LLC will provide to such Unitholder all necessary information for such filing, will facilitate such filing and will pay all fees and expenses associated with such filing.

(i) In addition to the transfer restrictions contained in Article X of this Agreement, Restricted Securities are transferable only pursuant to (A) Public Offerings, (B) Rule 144 of the Securities and Exchange Commission (or any similar rule or rules then in force) if such rule or rules are available and (C) subject to the conditions specified in clause (ii) below, any other legally available means of transfer.

(ii) In connection with the transfer of any Restricted Securities (other than a transfer described in Section 6.8(c)(i)(A) and other than a distribution pursuant to the THI Liquidation), the holder thereof shall deliver written notice to the LLC describing in reasonable detail the transfer or proposed transfer, together (except in the case of a transfer described in Section 6.8(c)(i)(B)) with an opinion of counsel that (to the LLC’s reasonable satisfaction) is knowledgeable in securities law matters to the effect that such transfer of Restricted Securities may be effected without registration of such Restricted Securities under the Securities Act. In addition, if the holder of the Restricted Securities delivers to the LLC an opinion of such counsel that no subsequent transfer of such Restricted Securities shall require registration under the Securities Act, the LLC shall promptly upon such contemplated transfer deliver to the prospective transferor new certificates for such Restricted Securities that do not bear the Securities Act legend set forth in Section 10.7(b). If the LLC is not required to deliver new certificates for such Restricted Securities not bearing such legend, the holder thereof shall not transfer the same until the prospective transferee has confirmed to the LLC in writing its agreement to be bound by the conditions contained in this Section 6.8(c) and Section 10.7(b).

(iii) Upon the request of THI (in the case of a request prior to the THI Liquidation) or an Investor Member (in the case of a request following the THI Liquidation), the

LLC shall promptly supply to such Investor Member or its prospective transferees all information regarding the LLC required to be delivered in connection with a transfer pursuant to Rule 144A of the Securities and Exchange Commission.

6.9 Nonsolicitation. So long as a Unitholder holds any Units, such Unitholder shall not solicit, or direct any other person to solicit, any employee of the LLC or any Subsidiary of the LLC to leave the employ of the LLC or such Subsidiary; provided, however, that the following shall not be deemed to cause a breach of this restriction: (i) generalized advertisement of employment opportunities including in trade or industry publications or generalized employee searches by a headhunter/search firm (in either case not focused specifically on the employees of the LLC or any Subsidiary of the LLC), (ii) soliciting or hiring any former employee of the LLC or any Subsidiary of the LLC who has been terminated by the LLC or any Subsidiary of the LLC prior to commencement of employment discussions between such Unitholder and such former employee, or (iii) soliciting or hiring any such person who contacts a Unitholder on his or her own initiative without any direct or indirect solicitation from the Unitholder. The Unitholders acknowledge that breach of the provisions of this Section 6.9 may cause irreparable injury to the LLC for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Unitholders agree that the provisions of this Section 6.9 may be enforced by injunctive relief for specific performance.

ARTICLE VII

EXCULPATION AND INDEMNIFICATION

7.1 Exculpation. No Officer, other employee of the LLC or Manager shall be liable to any other Officer, other employee of the LLC, Manager, the LLC or to any Unitholder for any loss suffered by the LLC unless such loss is caused by such Person’s bad faith, gross negligence or willful misconduct. The Officers, other employees of the LLC and Managers shall not be liable for errors in judgment or for any acts or omissions that do not constitute bad faith, gross negligence or willful misconduct. Any Officer, other employee of the LLC or Manager may consult with counsel and accountants in respect of LLC affairs, and provided such Person acts in good faith reliance upon the advice or opinion of such counsel or accountants, such Person shall not be liable for any loss suffered by the LLC in reliance thereon.

7.2 Right to Indemnification. Subject to the limitations and conditions as provided in this Article VII, each Person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative (hereinafter a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a Person of whom he or she is the legal representative, is or was a Unitholder, Manager, Officer or other employee of the LLC, or while a Unitholder, Manager, Officer or employee of the LLC is or was serving at the request of the LLC as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise shall be indemnified by the LLC to the fullest extent permitted by the Delaware Act, as the same exist or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment

permits the LLC to provide broader indemnification rights than said law permitted the LLC to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including attorneys’ fees) actually incurred by such Person in connection with such Proceeding, and indemnification under this Article VII shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to indemnity hereunder. The rights granted pursuant to this Article VII shall be deemed contract rights, and no amendment, modification or repeal of this Article VII shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Article VII could involve indemnification for negligence or under theories of strict liability.

7.3 Advance Payment. Reasonable expenses incurred by a Person of the type entitled to be indemnified under Section 7.2 who was, is or is threatened to be made a named defendant or respondent in a Proceeding shall be paid by the LLC in advance of the final disposition of the Proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined by a court of competent jurisdiction in a final and non-appealable judgment that he or she is not entitled to be indemnified by the LLC.

7.4 Indemnification of Employees and Agents. The LLC, by adoption of a resolution of the Board, may indemnify and advance expenses to an agent of the LLC to the same extent and subject to the same conditions under which it may indemnify and advance expenses to Persons who are not or were not Managers, Officers or employees of the LLC but who are or were serving at the request of the LLC as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic limited liability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a Person to the same extent that it may indemnify and advance expenses to Managers, Officers and employees of the LLC under this Article VII.

7.5 Appearance as a Witness. Notwithstanding any other provision of this Article VII, the LLC shall pay or reimburse reasonable out-of-pocket expenses incurred by a Manager, Officer or employee of the LLC in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not a named defendant or respondent in the Proceeding.

7.6 Nonexclusivity of Rights. The right to indemnification and the advancement and payment of expenses conferred in this Article VII shall not be exclusive of any other right which a Manager, Officer, employee or other Person indemnified pursuant to Section 7.2 may have or hereafter acquire under any law (common or statutory), provision of the Certificate or this Agreement, agreement, vote of Unitholders or disinterested Managers or otherwise.

7.7 Insurance. The LLC shall purchase and maintain insurance, at its expense, to protect itself and any Person who is or was serving as a Manager, Officer, employee or agent of the LLC or is or was serving at the request of the LLC as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or

domestic limited ability company, corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the LLC would have the power to indemnify such Person against such expense, liability or loss under this Article VII.

7.8 Savings Clause. If this Article VII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the LLC shall nevertheless indemnify and hold harmless each Manager, Officer, employee or any other Person indemnified pursuant to this Article VII as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the full extent permitted by any applicable portion of this Article VII that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE VIII

BOOKS, RECORDS, ACCOUNTING AND REPORTS

8.1 Records and Accounting. The LLC shall keep, or cause to be kept, appropriate books and records with respect to the LLC’s business, including all books and records necessary to provide any information, lists, and copies of documents required to be provided pursuant to Section 8.3 or pursuant to applicable laws. All matters concerning (i) the determination of the relative amount of allocations and distributions among the Unitholders pursuant to Articles III and IV and (ii) accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Board, whose determination shall be final and conclusive as to all of the Unitholders absent manifest clerical error.

8.2 Fiscal Year. The fiscal year (the “Fiscal Year”) of the LLC shall constitute the 12-month period ending on December 31 of each calendar year, or such other annual accounting period as may be established by the Board.

8.3 Tax Information. The LLC shall use reasonable best efforts to deliver or cause to be delivered, within 75 days after the end of each Fiscal Year, to each Person who was a Unitholder at any time during such Fiscal Year all information necessary for the preparation of such Person’s United States federal and state income tax returns.

8.4 Transmission of Communications. Each Person that owns or controls Units on behalf of, or for the benefit of, another Person or Persons shall be responsible for conveying any report, notice, or other communication received from the Board to such other Person or Persons.

8.5 LLC Funds. The Board and Officers may not commingle the LLC’s funds with the funds of any Unitholder or Managers.

8.6 Information Rights.

(a) Financial Statements and Other Information. The LLC shall deliver to each Investor Member (if and for so long as such Investor Member holds any Units):

(i) as soon as available but in any event within 45 days after the end of each monthly accounting period in each fiscal year, unaudited consolidated statements of income and cash flows of the LLC and its Subsidiaries for such monthly period and for the period from the beginning of the fiscal year to the end of such month, and consolidated balance sheets of the LLC and its Subsidiaries as of the end of such monthly period, all prepared in accordance with United States generally accepted accounting principles, consistently applied, subject to the absence of footnote disclosures and to normal year-end adjustments;

(ii) as soon as available but in any event within 45 days after the end of each quarterly accounting period in each fiscal year, unaudited consolidated statements of income and cash flows of the LLC and its Subsidiaries for such quarterly period and for the period from the beginning of the fiscal year to the end of such quarter, and consolidated balance sheets of the LLC and its Subsidiaries as of the end of such quarterly period, all prepared in accordance with United States generally accepted accounting principles, consistently applied, subject to the absence of footnote disclosures and to normal year-end adjustments, together with a management discussion and analysis of financial conditions and results of operations in a form reasonably satisfactory to the Investor Members (an “MD&A”);

(iii) within 90 days after the end of each fiscal year, consolidating and consolidated statements of income and cash flows of the LLC and its Subsidiaries for such fiscal year, and consolidating and consolidated balance sheets of the LLC and its Subsidiaries as of the end of such fiscal year, setting forth in each case comparisons to the annual budget and to the preceding fiscal year, all prepared in accordance with United States generally accepted accounting principles, consistently applied, together with an MD&A, and accompanied by (a) with respect to the consolidated portions of such statements (except with respect to budget data), an opinion containing no exceptions or qualifications (except for qualifications regarding specified contingent liabilities) of an independent accounting firm of recognized national standing acceptable to the holders of the Required Interest, and (b) a copy of such accounting firm’s annual management letter to the Board;

(iv) promptly upon receipt thereof, any additional reports, management letters or other detailed information concerning significant aspects of the LLC’s operations or financial affairs given to the LLC by its independent accountants (and not otherwise contained in other materials provided hereunder);

(v) with reasonable promptness, such other information and financial data concerning the LLC and its Subsidiaries as any Person entitled to receive information under this Section 8.6 may reasonably request and which the LLC can provide without undue burden, including, without limitation, all securitization reporting, remittance reports and other similar reports of the LLC.

Each of the financial statements referred to in subsections (i) and (iii) shall be true and correct in all material respects as of the dates and for the periods stated therein, subject in the case of the unaudited financial statements to changes resulting from normal year-end audit adjustments (none of which would, alone or in the aggregate, be materially adverse to the financial condition, operating results, assets, operations or business prospects of the LLC and its Subsidiaries taken as a whole).

(b) Inspection of Property. The LLC shall permit any representatives designated by any Investor Member (if and for so long as such Investor Member holds any Units), upon reasonable notice and during normal business hours and such other times as any such holder may reasonably request, to (a) visit and inspect any of the properties of the LLC and its Subsidiaries, (b) examine the corporate and financial records of the LLC and its Subsidiaries and make copies thereof or extracts therefrom and (c) discuss the affairs, finances and accounts of any such entities with the directors, officers, key employees and independent accountants of the LLC and its Subsidiaries; provided that the LLC shall have the right to have its chief financial officer present at any meetings with the LLC’s independent accountants.

8.7 Confidentiality. The Unitholders acknowledge that, from time to time, they may receive information from or concerning the other Unitholders, the LLC and its Subsidiaries in the nature of trade secrets or that otherwise is confidential, the release of which is reasonably expected to damage the LLC and its Subsidiaries or Persons with which it does business (“Confidential Information”). In addition to any other obligations of any Unitholder pursuant to any agreement between the LLC and such Unitholder or otherwise, each Unitholder agrees that it shall hold in strict confidence any Confidential Information that it receives and may not disclose it to any Person other than another Unitholder, a member of the Board or an Officer, except for disclosures (i) compelled by law (but the Unitholder must notify the other Unitholders promptly of any request for that information, before disclosing it, if legal and practicable), (ii) to advisers, agents or representatives of the Unitholder or Persons to whom that Unitholder’s Units may be Transferred as permitted by this Agreement, but only if the recipients have been notified of, and have agreed to be bound by, the provisions of this Section 8.7, or (iii) of information that the Unitholder also has received from a source independent of the LLC that the Unitholder reasonably believes obtained that information without breach of any obligation of confidentiality. The Unitholders acknowledge that breach of the provisions of this Section 8.7 may cause irreparable injury to the LLC for which monetary damages are inadequate, difficult to compute, or both. Accordingly, the Unitholders agree that the provisions of this Section 8.7 may be enforced by injunctive relief for specific performance. Each Unitholder also agrees to cause the Managers designated by such Unitholder to treat any Confidential Information in the same manner as required of the Unitholder in this Section 8.7.

ARTICLE IX

TAXES

9.1 Tax Returns. The LLC shall prepare and file all necessary federal and state income tax returns, including making the elections described in Section 9.2. The LLC shall provide to each Unitholder within 75 days after the end of each Taxable Year, any applicable Form K-1 for such Taxable Year, and such other information as may be necessary for the

preparation of each such Unitholder’s federal and state income tax returns. Each Unitholder shall furnish to the LLC all pertinent information in its possession relating to LLC operations that is necessary to enable the LLC’s income tax returns to be prepared and filed.

9.2 Tax Elections. The LLC shall make any election the LLC may deem appropriate and in the best interests of the Unitholders.

9.3 Tax Matters Partner. HGF (or, to the extent allowed under applicable law, an Affiliate so designated by HGF) shall be the “tax matters partner” of the LLC pursuant to Section 6231(a)(7) of the Code (the “Tax Matters Partner”). The Tax Matters Partner shall be authorized and required to represent the LLC (at the LLC’s expense) in connection with all examinations of the LLC’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend LLC funds for professional services and other expenses reasonably incurred in connection therewith. Each Unitholder agrees to cooperate with the LLC and to do or refrain from doing any or all things reasonably requested by the LLC with respect to the conduct of such proceedings. The Tax Matters Partner shall inform each other Unitholder of all significant matters that may come to its attention in its capacity as Tax Matters Partner by giving notice thereof on or before the fifth business day after becoming aware thereof and, within that time, shall forward to each other Unitholder copies of all significant written communications he may receive in that capacity. The Tax Matters Partner may not take any action contemplated by Sections 6222 through 6232 of the Code without the consent of the Board, but this sentence does not authorize the Tax Matters Partner (or any Manager) to take any action left to the determination of an individual Unitholder under Sections 6222 through 6232 of the Code.

ARTICLE X

TRANSFER OF UNITS

10.1 Transfers by Unitholders.

(a) No Unitholder shall Transfer any interest in any Units except in compliance with this Article X.

(b) [Intentionally Omitted].

(c) Each transferee of Units or other interest in the LLC shall, as a condition precedent to such Transfer, execute a counterpart to this Agreement pursuant to which such transferee shall agree to be bound by the provisions of this Agreement; provided, however, that in connection with the THI Liquidation the new Unitholders shall only be required to execute a new signature page to this Agreement. Each transferee of Units or other interest in the LLC (other than a transferee in a Public Offering) shall, upon executing a counterpart to this Agreement, have all of the economic rights and privileges of the transferor, but shall not, notwithstanding anything herein to the contrary except the proviso in this Section 10.1(c), be entitled to any voting rights or rights to designate members of the Board, without the prior consent of the holders of at least two-thirds (2/3) of the Voting Units held by the Investor Members other than the transferor; provided that voting rights and rights to designate members of the Board shall transfer automatically to (i) a transferee of Units pursuant to the exercise of

first offer rights set forth in Section 10.2 if such transferee is an existing Unitholder with existing voting rights or rights to designate members of the Board, respectively, (ii) a Permitted Transferee, and (iii) the Investor Members, in connection with the Units distributed pursuant to the THI Liquidation.

(d) The restrictions on the Transfer of Units or other interests in the LLC set forth in this Section 10.1 shall continue with respect to each Unit or other interest in any Unit until the date on which such Unit or other interest has been transferred in a Public Sale or pursuant to a Sale of the Company that meets the conditions for Transfer set forth in this Article X.

(e) The LLC may not recognize for any purpose any purported Transfer of all or part of a Unit until the other applicable provisions of this Article X have been satisfied and the LLC has received (other than in the case of transfers described in Sections 6.8(c)(i) above and the Transfers pursuant to the THI Liquidation) a favorable opinion of legal counsel reasonably acceptable to the Board to the effect that either (i) the Transfer of the Unit or part thereof subject to the Transfer or admission has been registered under the Securities Act and any applicable state securities laws or (ii) the Transfer or admission is exempt from registration under those laws. The Board, however, may waive any or all of the requirements of this Section 10.1(e).

(f) The LLC may not recognize for any purpose any purported Transfer of all or part of a Unit until the other applicable provisions of this Article X have been satisfied and the LLC has received (other than in the case of transfers described in Sections 6.8(c)(i) above and the Transfers pursuant to the THI Liquidation) a favorable opinion of legal counsel reasonably acceptable to the Board to the effect that the Transfer will not cause the LLC to be treated as a “publicly traded partnership,” as defined in Code Section 7704, taxable as a corporation. The Board, however, may waive any or all of the requirements of this Section 10.1(f).

(g) If a Unitholder Transfers its Units or other interests in the LLC to a Permitted Transferee, then for so long as such Permitted Transferee holds such Units or other interests in the LLC, such Permitted Transferee must continue to be a Permitted Transferee (as defined in this Agreement) of the initial holder of such Units or other interests in the LLC issued by the LLC. For example, if Unitholder A transfers its Units to Unitholder B as a Permitted Transferee of Unitholder A, then Unitholder B must continue to be a Permitted Transferee of Unitholder A for so long as Unitholder B owns such Units. If Unitholder B transfers its Units to Unitholder C as a Permitted Transferee of Unitholder B, then Unitholder C must continue to be a Permitted Transferee of Unitholder A for so long as Unitholder C owns such Units.

(h) No Unitholder may, directly or indirectly, Transfer any Class B Preferred Units (including in a Sale of the Company) in exchange for consideration with a value in excess of the Class B Liquidation Preference of such Units.

10.2 Right of First Offer.

(a) Prior to making any Transfer of Units or other interests in the LLC (other than a Transfer in connection with a Public Offering, a Public Sale of the type referred to in clause (i) of the definition thereof, a Sale of the Company or the THI Liquidation), any Unitholder desiring to make such Transfer (the “Selling Unitholder”) will give written notice (the “Offer Notice”) to

the LLC and the other Unitholders (the “Other Unitholders”). The Offer Notice will disclose in reasonable detail the number of Units or other interests in the LLC to be offered for sale and the terms and conditions of the proposed sale. Such Selling Unitholder will not consummate any Transfer until 45 days after the Offer Notice has been given to the Other Unitholders, unless the parties to the Transfer have been finally determined pursuant to this Section 10.2 prior to the expiration of such 45-day period. (The date of the first to occur of such events is referred to herein as the “Authorization Date”.) The Offer Notice shall constitute a binding offer to sell the Units or other interests in the LLC on such terms and conditions contained therein.

(b) The Other Unitholders may elect to purchase all (but not less than all) of the Units or other interests to be sold upon the same terms and conditions as those set forth in the Offer Notice by giving written notice of such election to such Selling Unitholder within 25 days after the Offer Notice has been given to the Other Unitholders. If more than one Unitholder elects to purchase the Units or other interests to be transferred, the Units or other interests in the LLC to be sold shall be allocated among the electing Other Unitholders pro rata according to the number of Common Units and Class B Preferred Units that are owned by each electing Other Unitholder on a fully diluted basis. If one or more of the Other Unitholders have elected to purchase Units or other interests in the LLC from the Selling Unitholder, the transfer of such Units or other interests shall be consummated as soon as practicable after delivery of the election notices to the Selling Unitholder, but in any event within 15 days after the Authorization Date. If one or more of the Other Unitholders do not elect to purchase all of the Units or other interests specified in the Offer Notice, the Selling Unitholder may transfer the Units or other interests specified in the Offer Notice at a price and on terms no more favorable to the transferee(s) thereof than specified in the Offer Notice during the 90-day period immediately following the Authorization Date. Any Units or other interests not Transferred within such 90-day period will be subject to the provisions of this Section 10.2 upon subsequent Transfer.

(c) The restrictions of this Section 10.2 will not apply with respect to Transfers to Permitted Transferees or Transfers pursuant to the THI Liquidation.

(d) Notwithstanding anything herein to the contrary, except pursuant to clause (c) above, in no event shall any Transfer of Units pursuant to this Section 10.2 be made for any consideration other than cash payable upon consummation of such Transfer.

(e) The restrictions set forth in this Section 10.2 shall continue with respect to each Unit or other interest in the LLC until the earlier of (i) the date on which such Units or other interests have been transferred in a Public Sale, (ii) the consummation of an Approved Sale, (iii) the consummation of a Qualified IPO, and (iv) the date on which such Units or other interests have been transferred pursuant to this Section 10.2 (other than pursuant to Section 10.2(c) and other than a transfer to a Unitholder purchasing from a Selling Unitholder pursuant to Section 10.2(b)).

10.3 Tag-Along Rights.

(a) At least 30 days prior to any Transfer of any Units or other interests in the LLC (other than to a Permitted Transferee or a Transfer pursuant to the THI Liquidation) by one or more of the Unitholders (each, a “Transferring Unitholder”), such Transferring Unitholders

shall deliver a written notice (the “Tag-Along Notice”) to the LLC and the other Unitholders of the same class or classes as being included in the Transfer (the “Tag-Along Unitholders”) specifying in reasonable detail the identity of the prospective transferee(s) and the terms and conditions of the Transfer (which notice may be included in and given at the same time as the Offer Notice under Section 10.2(a)). The Tag-Along Unitholders may elect to participate in the contemplated Transfer by delivering written notice to each of the Transferring Unitholders within 30 days after delivery of the Tag-Along Notice. The Transferring Unitholder and such Tag-Along Unitholders will be entitled to sell in the contemplated Transfer, at the same price and on the same terms, a number of such class of Units proposed to be transferred equal to the product of (A) the quotient determined by dividing the number of units of such class of Units owned by such Person by the aggregate number of outstanding units of such class of Units owned by the Transferring Unitholder and each such Tag-Along Unitholder participating in such sale and (B) the number of such class of Units to be sold in the contemplated Transfer.

(b) The Transferring Unitholder will use reasonable commercially reasonable efforts to obtain the agreement of the prospective transferee(s) to the participation of the Tag-Along Unitholders in any contemplated Transfer, and the Transferring Unitholder will not transfer any of its Units to the prospective transferee(s) unless (A) the prospective transferee(s) agrees to allow the participation of the Tag-Along Unitholders or (B) the Transferring Unitholder agree to purchase the number of such class of Units from the Tag-Along Unitholders that the Tag-Along Unitholders would have been entitled to sell pursuant to this Section 10.3(b) for the consideration per unit to be paid to the Transferring Unitholder by the prospective transferee(s).

(d) The provisions of this Section 10.3 will terminate upon the first to occur of (i) the consummation of a Sale of the Company and (ii) the consummation of a Qualified IPO.

10.4 Sale of the Company.

(a) If the Board and the holders of the Required Interest approve a Sale of the Company (an “Approved Sale”), each holder of Units shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, each holder of Units shall waive any dissenters’ rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of Units, each holder of Units shall agree to sell all of his, her or its Units or rights to acquire Units on the terms and conditions approved by the Board and the holders of the Required Interest. Each holder of Units shall take all necessary or desirable actions in connection with the consummation of the Approved Sale as requested by the LLC.

(b) The obligations of the holders of Units with respect to an Approved Sale are subject to the terms of Section 10.4(e) below.

(c) If either the LLC or the holders of any class of Units enter into a negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the holders of Units will,

at the request of the LLC, appoint a purchaser representative (as such term is defined in Rule 501) reasonably acceptable to the LLC. If any holder of Units appoints a purchaser representative designated by the LLC, the LLC will pay the fees of such purchaser representative, but if any holder of Units declines to appoint the purchaser representative designated by the LLC such holder will appoint another purchaser representative, and such holder will be responsible for the fees of the purchaser representative so appointed.

(d) Holders of Units will bear their pro rata share (based upon the Common Units held) of the costs of any sale of such Units pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all holders of Units and are not otherwise paid by the LLC or the acquiring party. For purposes of this Section 10.4(d), costs incurred in exercising reasonable efforts to take all actions in connection with the consummation of an Approved Sale in accordance with Section 10.4(a) shall be deemed to be for the benefit of all holders of Units. Costs incurred by holders of Units on their own behalf will not be considered costs of the transaction hereunder. Each holder of Units transferring Units pursuant to an Approved Sale shall be obligated, severally, not jointly, to join on a pro rata basis (based on the number of Common Units to be sold) in any indemnification or other obligations that are part of the terms and conditions of the Approved Sale (other than any such obligations that relate specifically to a particular holder, such as indemnification with respect to representations and warranties given by a holder regarding such holder’s title to and ownership of Units) (the “LLC Indemnity Obligations”). Notwithstanding the foregoing, no holder shall be obligated in connection with any Approved Sale to agree to indemnify or hold harmless the transferees with respect to LLC Indemnity Obligations in an amount in excess of the net proceeds paid to such holder in connection with the Approved Sale.

(e) In the event of an Approved Sale, each Unitholder shall receive in exchange for the Units held by such Unitholder the same portion of the aggregate consideration from such sale or exchange that such Unitholder would have received if such aggregate consideration had been distributed by the LLC pursuant to the terms of Section 4.1. Each holder of Units shall take all necessary or desirable actions in connection with the distribution of the aggregate consideration from such sale or exchange as requested by the LLC.

10.5 Buy/Sell Arrangement.

(a) Triggering Event. If (i) without the prior written consent of HGF, the Board or, following the THI Liquidation, the Investor Members (A) cause the LLC or the Company to terminate the Management Agreement, (B) fail to pay any amount owed to HGF under the Management Agreement in full as and when due thereunder, (C) remove Mr. Gerald J. Ford as Chief Executive Officer of the LLC or as Executive Chairman of the Company, or (D) eliminate or materially reduce HGF’s or Mr. Ford’s responsibilities with respect to the LLC or the Company, except, with respect to each of the subclauses (A), (C) and (D) above, as a result of a termination by the LLC for Cause, and (ii) such action or actions are not cured by the Board or the Investor Members within 30 days after receipt of notice thereof by the Board and the Investor Managers (after expiration of the cure period without cure, a “Triggering Event”), then HGF shall have the right to make a fully financed offer to purchase all of the Units and other interests in the LLC from Goldman, GTCR and their respective Affiliates at a price specified by HGF.

(b) Exercise of Buy/Sell Right. Within 180 days after the occurrence of a Triggering Event, HGF may deliver a notice (a “Buy/Sell Offer Notice”) to Goldman and GTCR offering to purchase all of the Units and other interests in the LLC held by Goldman, GTCR and their respective Affiliates (collectively, the “Non-HGF Investors”) at price specified in the Buy/Sell Offer Notice payable in cash or immediately available funds, which offer may be subject to customary terms and conditions, but shall not be subject to any financing contingency. The Buy/Sell Offer Notice shall constitute a binding offer to sell the Units and other interests in the LLC on such terms and conditions contained therein.

(c) Non-HGF Investors’ Response and Closing. Within 90 days after receipt of the Buy/Sell Offer Notice (the “Response Period”), each of the Non-HGF Investors shall notify HGF and the other Non-HGF Investor as to whether such Non-HGF Investor either (i) accepts such offer and agrees to sell to HGF all of its Units and other interests in the LLC on the terms and conditions set forth in the Buy/Sell Offer Notice (the “HGF Buy Option”) or (ii) elects to purchase the Units and other interests of the LLC held by HGF and its Affiliates at the same price per Unit and on the same other customary terms and conditions set forth in the Buy/Sell Offer Notice, and such purchase shall not be subject to any financing contingency (the “HGF Sell Option”); provided that if any Non-HGF Investor fails to respond within the Response Period, such Non-HGF Investor shall be deemed to have elected the HGF Buy Option.

(i) If both of the Non-HGF Investors elect the HGF Sell Option, HGF shall be required to sell its Units and other interests in the LLC to the Non-HGF Investors in the percentages, at the price and on the same other customary terms and conditions set forth in the Buy/Sell Offer Notice, and such sale and corresponding purchase by the Non-HGF Investors shall not be subject to any financing contingency. The closing of the transactions under the HGF Sell Option shall take place no later than 60 days after the expiration of the Response Period.

(ii) If both of the Non-HGF Investors elect the HGF Buy Option, HGF shall be required to purchase all Units and other interests in the LLC held by the Non-HGF Investors at the price and on the same other customary terms and conditions set forth in the Buy/Sell Offer Notice, and such purchase and corresponding sale by the Non-HGF Investors shall not be subject to any financing contingency. The closing of the transactions under the HGF Buy Option shall take place no later than 60 days after the expiration of the Response Period.

(iii) If one Non-HGF Investor elects the HGF Sell Option and the other Non-HGF Investor elects the HGF Buy Option, then the Non-HGF Investor electing the HGF Sell Option shall, within 14 days after the expiration of the Response Period, make a second election to either (A) purchase all of the Units and other interests in the LLC held by HGF and the other Non-HGF Investor at the price and on the same other customary terms and conditions set forth in the Buy/Sell Offer Notice, in which case each of HGF and the other Non-HGF Investor shall be required to sell its Units and other interests in the LLC to such Non-HGF Investor electing to purchase such Units at the price and on the same other customary terms and conditions set forth in the Buy/Sell Offer Notice, and such sale and corresponding purchase by such Non-HGF Investor shall not be subject to any financing contingency, or (B) change its election to the HGF Buy Option, in which case Section 10.5(c)(ii) shall apply. The closing of the transactions under this Section 10.5(c)(iii) shall take place no later than 74 days after the expiration of the Response Period.

10.6 Change in Business Form. Each Unitholder hereby irrevocably delegates and cedes to the Board the sole authority and power to, in its sole discretion, (i) convert the Company into a corporation (by merger or otherwise) or another form of business entity at any time, in which event the terms and conditions contained herein (including the terms and conditions relating to the Units and Capital Accounts) shall be, as closely as possible, adopted by the new entity or (ii) notwithstanding anything else in this Agreement to the contrary, make an election to have the Company be treated as a corporation for federal income tax purposes and, if applicable, state income or franchise tax purposes, rather than as a partnership (each, a “Conversion”). Without limiting the generality of the foregoing, it is anticipated that a Conversion would occur prior to, or in connection with, an initial Public Offering. In connection with any Conversion, the Board may cause a recapitalization, reorganization, incorporation and/or exchange of the Units into securities which, to the extent possible, reflect and are consistent with the Units and Capital Accounts as in effect immediately prior to such transaction. No Unitholder shall have the right or power to veto, vote for or against, amend, modify or delay any such Conversion. Further, each Unitholder shall execute and deliver any documents and instruments and perform any additional acts that may be necessary or appropriate, as determined by the Board, to effectuate and perform any such Conversion.

10.7 Legends.

(a) Each certificate evidencing Units and each certificate issued in exchange for or upon the transfer of any Units (if such securities remain Units as defined herein after such transfer) shall be stamped or otherwise imprinted with legends in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LIMITED LIABILITY COMPANY AGREEMENT DATED AS OF ___, 2008 AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S SECURITYHOLDERS. A COPY OF SUCH LIMITED LIABILITY COMPANY AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

(b) Each certificate evidencing Restricted Securities and each certificate issued in exchange for or upon the transfer of any Restricted Securities (if such securities remain Restricted Securities as defined herein after such transfer) shall be stamped or otherwise imprinted with legends in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON , 2008 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF ___, 2008 BY AND AMONG THE ISSUER (THE “COMPANY”) AND CERTAIN INVESTORS, AND THE COMPANY

RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

The legend set forth in this Section 10.7(b) shall be removed from the certificates evidencing any securities which cease to be Restricted Securities.

10.8 Effect of Assignment.

(a) Any Unitholder who assigns any Units or other interest in the LLC shall cease to be a Unitholder of the LLC with respect to such Units or other interest and shall no longer have any rights or privileges of a Unitholder with respect to such Units or other interest.

(b) Any Person who acquires in any manner whatsoever any Units or other interest in the LLC, irrespective of whether such Person has accepted and adopted in writing the terms and provisions of this Agreement, shall be deemed by the acceptance of the benefits of the acquisition thereof to have agreed to be subject to and bound by all of the terms and conditions of this Agreement that any predecessor in such Units or other interest in the LLC of such Person was subject to or by which such predecessor was bound, except that the rights of the Investor Members to designate directors pursuant to Section 5.2(a) and any other rights expressly vested solely in the Investor Members shall not be assignable without the written consent of the holders of a majority of the Voting Units held by the non-assigning Unitholders.

10.9 Restriction on Transfer. In order to permit the LLC to qualify for the benefit of a “safe harbor” under Code Section 7704, notwithstanding anything to the contrary in this Agreement, no Transfer of any Unit or economic interest shall be permitted or recognized by the LLC or the Board (within the meaning of Treasury Regulation Section 1.7704-1(d)) if and to the extent that such Transfer would cause the LLC to have more than 100 partners (within the meaning of Treasury Regulation Section 1.7704-1(h), including the look-through rule in Treasury Regulation Section 1.7704-1(h)(3)).

10.10 Transfer Fees and Expenses. The transferor and transferee of any Units or other interest in the LLC shall be jointly and severally obligated to reimburse the LLC for all reasonable expenses (including attorneys’ fees and expenses) of any Transfer or proposed Transfer, whether or not consummated.

10.11 Void Transfers. Any Transfer by any Unitholder of any Units or other interest in the LLC in contravention of this Agreement (including, without limitation, the failure of the transferee to execute a counterpart in accordance with Section 10.1(c)) or which would cause the LLC to not be treated as a partnership for U.S. federal income tax purposes shall be void and ineffectual and shall not bind or be recognized by the LLC or any other party. No purported assignee shall have any right to any profits, losses or distributions of the LLC.

ARTICLE XI

WITHDRAWAL AND RESIGNATION OF UNITHOLDERS

11.1 Withdrawal and Resignation of Unitholders. No Unitholder shall have the power or right to withdraw or otherwise resign or be expelled from the LLC prior to the dissolution and winding up of the LLC pursuant to Article XII, except simultaneous with the Transfer of all of a Unitholder’s Units in a Transfer permitted by this Agreement and, if such Transfer is to a person or entity that is not a Unitholder, the admission of such person or entity as a Unitholder pursuant to Section 10.1. Notwithstanding that payment on account of a withdrawal may be made after the effective time of such withdrawal, any completely withdrawing Unitholder will not be considered a Unitholder for any purpose after the effective time of such complete withdrawal, and, in the case of a partial withdrawal, such Unitholder’s Capital Account (and corresponding voting and other rights) shall be reduced for all other purposes hereunder upon the effective time of such partial withdrawal.

ARTICLE XII

DISSOLUTION AND LIQUIDATION

12.1 Dissolution. The LLC shall not be dissolved by the admission of additional Unitholders or the Transfer of Units, or by the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Unitholder or the occurrence of any other event that terminates the continued membership of a Unitholder in the LLC. Subject to the rights of the Unitholders contained herein, the LLC shall dissolve, and its affairs shall be wound up upon the first to occur of the following:

(a) at any time by the Board with the prior written consent of holders of the Required Interest;

(b) the entry of a decree of judicial dissolution of the LLC under Section 35-5 of the Delaware Act or an administrative dissolution under Section 18-802 of the Delaware Act; or

Except as otherwise set forth in this Article XII, the LLC is intended to have perpetual existence.

12.2 Liquidation and Termination. On dissolution of the LLC, the Board shall act as liquidator or may appoint one or more representatives or Unitholders as liquidator. The liquidators shall proceed diligently to wind up the affairs of the LLC, sell all or any portion of the LLC assets for cash or cash equivalents as they deem appropriate, and make final distributions as provided herein and in the Delaware Act. The costs of liquidation shall be borne as an LLC expense. Until final distribution, the liquidators shall continue to operate the LLC properties with all of the power and authority of the Board. The liquidators shall pay, satisfy, or discharge from LLC funds all of the debts, liabilities, and obligations of the LLC (including all

expenses incurred in liquidation) or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash fund for contingent liabilities in such amount and for such term as the liquidators may reasonably determine) and shall promptly distribute the remaining assets to the holders of Units in accordance with Section 4.1(a). Any non-cash assets will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), which shall be allocated in accordance with Sections 4.3 and 4.4. In making such distributions, the liquidators shall allocate each type of asset (i.e., cash, cash equivalents, securities, etc.) among the Unitholders ratably based upon the aggregate amounts to be distributed with respect to the Units held by each such holder. Any such distributions in kind shall be subject to (x) such conditions relating to the disposition and management of such assets as the liquidators deem reasonable and equitable and (y) the terms and conditions of any agreement governing such assets (or the operation thereof or the holders thereof) at such time.

The distribution of cash and/or property to a Unitholder in accordance with the provisions of this Section 12.2 constitutes a complete return to the Unitholder of its Capital Contributions and a complete distribution to the Unitholder of its interest in the LLC and all the LLC’s property and constitutes a compromise to which all Unitholders have consented within the meaning of the Delaware Act. To the extent that a Unitholder returns funds to the LLC, it has no claim against any other Unitholder for those funds.

12.3 Cancellation of Certificate. On completion of the distribution of LLC assets as provided herein, the LLC shall be terminated (and the LLC shall not be terminated prior to such time), and the Board (or such other Person or Persons as the Delaware Act may require or permit) shall file a certificate of cancellation with the Secretary of State of Delaware, cancel any other filings made pursuant to this Agreement that are or should be canceled, and take such other actions as may be necessary to terminate the LLC. The LLC shall be deemed to continue in existence for all purposes of this Agreement until it is terminated pursuant to this Section 12.3.

12.4 Reasonable Time for Winding Up. A reasonable time shall be allowed for the orderly winding up of the business and affairs of the LLC and the liquidation of its assets pursuant to Section 12.2 in order to minimize any losses otherwise attendant upon such winding up.

12.5 Return of Capital. The liquidators shall not be personally liable for the return of Capital Contributions or any portion thereof to the Unitholders (it being understood that any such return shall be made solely from LLC assets).

12.6 Reserves Against Distributions. The Board shall have the right to withhold from Distributions payable to any Unitholder under this Agreement amounts sufficient to pay and discharge any reasonably anticipated contingent liabilities of the LLC. Any amounts remaining after payment and discharge of any such contingent liabilities of the LLC will be paid to the Unitholders from whom the Distributions were withheld.

ARTICLE XIII

VALUATION

13.1 Determination. Subject to Section 13.2, the Fair Market Value of the assets of the LLC or of a Unit will be determined by the Board (or, if pursuant to Section 12.2, the liquidators) in its good faith judgment in such manner as its deems reasonable and using all factors, information and data deemed to be pertinent.

13.2 Fair Market Value. “Fair Market Value” of (i) a specific LLC asset will mean the amount which the LLC would receive in an all-cash sale of such asset (free and clear of all Liens and after payment of all liabilities secured only by such asset) in an arms-length transaction with an unaffiliated third party consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (and after giving effect to any transfer taxes payable in connection with such sale); and (ii) the LLC will mean the amount which the LLC would receive in an all-cash sale of all of its assets and businesses as a going concern (free and clear of all Liens and after payment of indebtedness for borrowed money) in an arms-length transaction with an unaffiliated third party consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (assuming that all of the proceeds from such sale were paid directly to the LLC other than an amount of such proceeds necessary to pay transfer taxes payable in connection with such sale, which amount will not be received or deemed received by the LLC). After a determination of the Fair Market Value of the LLC is made as provided above, the Fair Market Value of a Unit will be determined by making a calculation reflecting the cash distributions which would be made to the Unitholders in accordance with this Agreement in respect of such Unit if the LLC were deemed to have received such Fair Market Value in cash and then distributed the same to the Unitholders in accordance with the terms of this Agreement incident to the liquidation of the LLC after payment to all of the LLC’s creditors from such cash receipts other than payments to creditors who hold evidence of indebtedness for borrowed money, the payment of which is already reflected in the calculation of the Fair Market Value of the LLC and assuming that all of the convertible debt and other convertible securities were repaid or converted (whichever yields more cash to the holders of such convertible securities) and all options to acquire Units (whether or not currently exercisable) that have an exercise price below the Fair Market Value of such Units were exercised and the exercise price therefor paid. Except as otherwise provided herein or in any agreement, document or instrument contemplated hereby, any amount to be paid under this Agreement by reference to the Fair Market Value shall be paid in full in cash, and any Unit being transferred in exchange therefor will be transferred free and clear of all Liens.

ARTICLE XIV

GENERAL PROVISIONS

14.1 Amendments. This Agreement may be amended from time to time by a written instrument by the holders of the Required Interest; provided that (i) no amendment or modification pursuant to this Section 14.1 that would adversely affect any class of Units in a manner different than other Units shall be effective against the holders of such class of Units

without the prior written consent of holders of at least a majority of Units of such class so adversely affected thereby; (ii) no amendment or modification pursuant to this Section 14.1 that would affect the rights of a Unitholder or group of Unitholders specifically granted such rights by name shall be effective without that Unitholder’s (or a majority of that group of Unitholders’) consent; (iii) no amendment or modification pursuant to this Section 14.1 that would adversely affect the Class A Preferred Units or the Common Units and any other Class of Units shall be effective without the prior consent of the holders of a majority of the Class of Units so adversely affected that do not also hold such other class of Units and (iv) no amendment shall be made to Sections 4.6, 6.1, 6.3, Article VII or this Section 14.1 without the consent of all of the Unitholders.

14.2 Investor Approval. Whenever this Agreement calls for or refers to the consent or approval of any matter by an Investor Member, such consent or approval shall be deemed given by the Investor Member if each of such Investor Member’s designees on the Board has, in his capacity as a Manager of the LLC, given his consent or approval with respect to such matter at a duly convened meeting of the Board or pursuant to an effective written consent of the Board, unless, with respect to any given matter, such Investor Member notifies the LLC in writing that the consent or approval at the Board level by such Investor Member’s designees on the Board does not constitute the consent or approval by such Investor Member itself.

14.3 Title to LLC Assets. LLC assets shall be deemed to be owned by the LLC as an entity, and no Unitholder, individually or collectively, shall have any ownership interest in such LLC assets or any portion thereof. Legal title to any or all LLC assets may be held in the name of the LLC or one or more nominees, as the Board may determine. The Board hereby declares and warrants that any LLC assets for which legal title is held in its name or the name of any nominee shall be held in trust by the Board or such nominee for the use and benefit of the LLC in accordance with the provisions of this Agreement. All LLC assets shall be recorded as the property of the LLC on its books and records, irrespective of the name in which legal title to such LLC assets is held.

14.4 Remedies. Each Unitholder and the LLC shall have all rights and remedies set forth in this Agreement and all rights and remedies which such Person has been granted at any time under any other agreement or contract and all of the rights which such Person has under any law. Any Person having any rights under any provision of this Agreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.

14.5 Successors and Assigns. All covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives, and permitted assigns, whether so expressed or not.

14.6 Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will

not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.

14.7 Opt-in to Article 8 of the Uniform Commercial Code. The Unitholders hereby agree that the Units shall be securities governed by Article 8 of the Uniform Commercial Code of the State of Delaware (and the Uniform Commercial Code of any other applicable jurisdiction).

14.8 Notice to Unitholder of Provisions. By executing this Agreement, each Unitholder acknowledges that it has actual notice of (a) all of the provisions hereof (including the restrictions on the transfer set forth herein), and (b) all of the provisions of the Certificate.

14.9 Counterparts. This Agreement may be executed in multiple counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument.

14.10 Consent to Jurisdiction. Each Unitholder irrevocably submits to the nonexclusive jurisdiction of the United States District Court for the State of Delaware and the state courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Each Unitholder further agrees that service of any process, summons, notice or document by United States certified or registered mail to such Unitholder’s respective address set forth in the LLC’s books and records or such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party shall be effective service of process in any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each Unitholder irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the United States District Court for the State of Delaware or the state courts of the State of Delaware and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.

14.11 Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be by way of example rather than by limitation. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and, if applicable, hereof. Without limiting the generality of the immediately preceding sentence, no amendment or other modification to any agreement, document, or instrument that requires the consent of any Person pursuant to the terms of this Agreement or any other agreement will be given effect hereunder unless such Person has consented in writing to such amendment or modification. Wherever required by the context, references to a Fiscal Year shall refer to a

portion thereof. The use of the words “or,” “either,” and “any” shall not be exclusive. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Wherever a conflict exists between this Agreement and any other agreement, this Agreement shall control but solely to the extent of such conflict.

14.12 Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Any dispute relating hereto shall be heard in the state or federal courts of Delaware, and the parties agree to jurisdiction and venue therein.

14.13 Mutual Waiver of Jury Trial. Because disputes arising in connection with complex transactions are most quickly and economically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. Therefore, to achieve the best combination of the benefits of the judicial system and of arbitration, each party to this agreement (including the LLC) hereby waives all rights to trial by jury in any action, suit, or proceeding brought to resolve any dispute between or among any of the parties hereto, whether arising in contract, tort, or otherwise, arising out of, connected with, related or incidental to this agreement, the transactions contemplated hereby and/or the relationships established among the parties hereunder.

14.14 Addresses and Notices. All notices, demands, or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or made when (a) delivered personally to the recipient, (b) telecopied to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a business day, and otherwise on the next business day, or (c) one business day after being sent to the recipient by reputable overnight courier service (charges prepaid). Such notices, demands, and other communications shall be sent to the address for such recipient set forth in the LLC’s books and records, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Any notice to the Board or the LLC shall be deemed given if received by the Board at the principal office of the LLC designated pursuant to Section 2.5.

14.15 Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the LLC or any of its Affiliates, and no creditor who makes a loan to the LLC or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the LLC in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in LLC Profits, Losses, Distributions, capital, or property other than as a secured creditor.

14.16 Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition. Notwithstanding the other provisions of this Agreement, Section 18-305(a) of the Delaware Act shall not apply to the LLC and no Unitholder shall have any rights thereunder.

14.17 Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes of this Agreement.

14.18 Offset. Whenever the LLC is to pay any sum to any Unitholder or any Affiliate or related person thereof, any amounts that such Unitholder or such Affiliate or related person owes to the LLC may be deducted from that sum before payment.

14.19 Entire Agreement. This Agreement, those documents expressly referred to herein, the other documents of even date herewith, and the other Transaction Documents embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, including without limitation the Original Agreement.

14.20 Delivery by Facsimile. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall reexecute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

14.21 Survival. Sections 4.6, 6.1, 7.1 and 7.2 shall survive and continue in full force in accordance with its terms notwithstanding any termination of this Agreement or the dissolution of the LLC.

* * * * *

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Limited Liability Company Agreement as of the date first written above.


TRIAD FINANCIAL HOLDINGS LLC
By:	/s/ Gerald J. Ford
	Name:	Gerald J. Ford
	Its: Chief Executive Officer and Executive Chairman

TRIAD HOLDINGS INC.
By:	/s/ Jeffrey Butcher
	Name:	Jeffrey Butcher
	Its: Vice President and Chief Financial Officer


GSCP 2000 TRIAD HOLDING, L.P.¹ By: GS Capital Partners 2000, L.P. Its: General Partner By: GS Capital Advisors 2000, L.L.C. Its: General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its: General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


GSCP 2000 OFFSHORE TRIAD HOLDING, L.P. By: GS Capital Partners 2000 Offshore, L.P. Its: General Partner By: GS Capital Advisors 2000, L.L.C. Its: General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


1		The agreement was executed by Triad Financial Holdings LLC and Triad Holdings Inc. on December 30, 2008. The agreement was executed by all parties other than Triad Financial Holdings LLC and Triad Holdings Inc. on December 31, 2008, following the dissolution and liquidation of Triad Holdings Inc.


GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P. By: GS Employee Funds 2000 GP, L.L.C. Its: General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


GSCP 2000 GmbH TRIAD HOLDING, L.P. By: GSCP 2000 GmbH Triad Holding I Its: General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


MTGLQ INVESTORS, L.P. By: MLQ L.L.C. Its: General Partner
By:	/s/ Peter C. Aberg
	Name:	Peter C. Aberg
	Its: Peter C. Aberg


GS CAPITAL PARTNERS 2000, L.P. By: GS Capital Advisors 2000, L.L.C. Its: General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


GTCR FUND VIII, L.P. By: GTCR Partners VIII, L.P. Its: General Partner By: GTCR Golder Rauner II, L.L.C. Its: General Partner
By:	/s/ David A. Donnini
	Name:	David A. Donnini
	Its: Principal


FUND VIII/B TRIAD SPLITTER, L.P. By: GTCR Partners VIII, L.P. Its: General Partner By: GTCR Golder Rauner II, L.L.C. Its: General Partner
By:	/s/ David A. Donnini
	Name:	David A. Donnini
	Its: Principal


GTCR CO-INVEST II, L.P. By: GTCR Golder Rauner II, L.L.C. Its: General Partner
By:	/s/ David A. Donnini
	Name:	David A. Donnini
	Its: Principal


HUNTER’S GLEN/FORD LTD. By: Ford Diamond Corporation Its: General Partner
By:	/s/ Gerald J. Ford
	Name:	Gerald J. Ford
	Its: President


/s/ Gerald J. Ford
Gerald J. Ford




	/s/ J. Randy Staff
	J. Randy Staff


	/s/ Carl B. Webb
	Carl B. Webb


	/s/ Donald J. Edwards
	Donald J. Edwards

SCHEDULE A

[Intentionally omitted. Available upon request.]

EX-10.25 10 a51470exv10w25.htm EX-10.25 exv10w25

EXHIBIT 10.25

JOINDER TO
MANAGEMENT AGREEMENT

Joinder to Management Agreement (this “Joinder”), dated as of December 31, 2008, by and among Triad Financial Holdings LLC (“TFHLLC”), Triad Financial SM LLC (“TFSMLLC”) and Diamond A Administration LLC (“Diamond A”), as successor to Hunter’s Glen/Ford Ltd. (“HGF”) TFHLLC and TFSMLLC each hereby agree to become a party to, and be bound by that certain Management Agreement, by and among Triad Financial Corporation (“TFC”), Triad Holdings Inc. (“THI”), Triad Holdings, LLC (“THLLC”), Diamond A, as successor to HGF, and the other parties thereto, dated as of April 29, 2005 (the “Management Agreement”), as such agreement may be amended from time to time (with TFHLLC becoming the “LLC” under the Management Agreement and with TFSMLLC becoming the “Company” under the Management Agreement), and TFHLLC and TFSMLLC becoming jointly and severally liable for all obligations and liabilities of TFC, THI and THLLC under the Management Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Joinder to Management Agreement on the date first written above.


	TRIAD FINANCIAL HOLDINGS LLC
	By:	/s/ Carl B. Webb
		Carl B. Webb


		ACKNOWLEDGED AND AGREED:

		DIAMOND A ADMINISTRATION LLC

		By:		/s/ Gary Shultz Gary Shultz
		Its:		Vice President

EX-10.26 11 a51470exv10w26.htm EX-10.26 exv10w26

EXHIBIT 10.26

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of December 31, 2008, by and among (i) Triad Financial Holdings LLC, a Delaware limited liability company (the “Company”), (ii) GS Capital Partners 2000, L.P., a Delaware limited partnership, GSCP 2000 Triad Holding, L.P., GS Capital Partners 2000 Employee Fund, L.P., a Delaware limited partnership, GSCP 2000 Offshore Triad Holding, L.P., Goldman Sachs Direct Investment Fund 2000, L.P., a Delaware limited partnership, GSCP 2000 GmbH Triad Holding, L.P., and MTGLQ Investors, L.P., a Delaware limited partnership, (collectively, “Goldman”), (iii) GTCR Fund VIII, L.P., a Delaware limited partnership, Fund VIII/B Triad Splitter, L.P., a Delaware limited partnership, GTCR Co-Invest II, L.P., a Delaware limited partnership, and any investment fund managed by GTCR Golder Rauner, L.L.C., a Delaware limited liability company, or GTCR Golder Rauner II, L.L.C., a Delaware limited liability company, that at any time acquires securities of the Company and executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement (each, a “GTCR Investor” and collectively, the “GTCR Investors”), (iv) Hunter’s Glen/Ford Ltd., a Texas limited partnership (“HGF” and, together with the other purchasers pursuant to the Management Agreement (as defined below), the “HGF Investors”), (v) Gerald J. Ford, J. Randy Staff, Carl B. Webb, Donald J. Edwards, and any other executive employee of the Company or its Subsidiaries who, at any time, acquires securities of the Company in accordance with Section 8 hereof and executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement (each, an “Executive” and collectively, the “Executives”), and (vi) each of the other entities and individuals set forth from time to time on the attached “Schedule of Holders” under the heading “Other Securityholders” who, at any time, acquires securities of the Company in accordance with Section 8 hereof and executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement (the “Other Securityholders”). Goldman, the GTCR Investors and the HGF Investors are collectively referred to herein as the “Investors.” The Investors, the Executives and the Other Securityholders are collectively referred to herein as the “Securityholders.” Unless otherwise provided in this Agreement, capitalized terms used herein shall have the meanings set forth in Section 9 hereof.

WHEREAS, the Company was a Subsidiary of Triad Holdings Inc., a Delaware corporation ( “THI”).

WHEREAS, on or prior to the date hereof, THI was liquidated and dissolved (the “THI Liquidation”) and pursuant to such THI Liquidation, among other things, equity units of the Company were distributed to the shareholders of THI. In order to induce the Investors to agree to the THI Liquidation, the Company has agreed to provide the registration rights set forth in this Agreement.

WHEREAS, the reorganization or conversion of the Company into a corporation (the “New Corporation”) may occur prior to a Qualified IPO (the “Reorganization”), and following any such Reorganization, the New Corporation shall succeed to all of the rights and obligations of the Company under this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements hereinafter set forth and the mutual benefits to be derived herefrom, the parties hereto agree as follows:

1. Demand Registrations.

(a) Requests for Registration. At any time after a Qualified IPO, the holders of a majority of the Goldman Registrable Securities, the holders of a majority of the GTCR Registrable Securities and the holders of a majority of the HGF Registrable Securities may each request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration (“Long-Form Registrations”), or on Form S-2 or S-3 (including pursuant to Rule 415 under the Securities Act) or any similar short-form registration (“Short-Form Registrations”), if available. All registrations requested pursuant to this Section 1(a) are referred to herein as “Demand Registrations.” Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the anticipated per share or per unit price range for such offering. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other holders of Registrable Securities and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice.

(b) Investor Long-Form Registrations. The holders of a majority of the Goldman Registrable Securities, the holders of a majority of the GTCR Registrable Securities and the holders of a majority of the HGF Registrable Securities (each, an “Investor Majority”) shall each be entitled to request three (3) Long-Form Registrations in which the Company shall pay all Registration Expenses (as defined in Section 5). A registration shall not count as one of the permitted Long-Form Registrations until it has become effective (unless such Long-Form Registration has not become effective due solely to the fault of the holders requesting such registration). All Long-Form Registrations shall be underwritten registrations.

(c) Investor Short-Form Registrations. In addition to the Long-Form Registrations provided pursuant to Section 1(b), each Investor Majority shall be entitled to request an unlimited number of Short-Form Registrations in which the Company shall pay all Registration Expenses; provided that the aggregate offering value of the Registrable Securities requested to be registered in any Short-Form Registration must equal at least $10.0 million. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form. After the Company has become subject to the reporting requirements of the Securities Exchange Act, the Company shall use its best efforts to make Short-Form Registrations on Form S-3 available for the sale of Registrable Securities. If the Company, pursuant to the request of an Investor Majority, is qualified to and has filed with the Securities Exchange Commission a registration statement under the Securities Act on Form S-3 pursuant to Rule 415 under the Securities Act (the “Required Registration”), then the Company shall use its best efforts to cause the Required Registration to be declared effective under the Securities Act as soon as practicable after filing, and, once effective, the Company shall cause such Required Registration to remain effective for a period ending on the earlier of (i) the date on which all Goldman Registrable Securities, GTCR Registrable Securities or HGF Registrable Securities, as applicable (depending on the Investor Majority requesting such Required

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Registration), have been sold pursuant to the Required Registration, or (ii) the date as of which the holder(s) of such Investor Registrable Securities (assuming such holder(s) are affiliates of the Company) are able to sell all of the Investor Registrable Securities then held by them within a ninety-day period in compliance with Rule 144 under the Securities Act.

(d) Priority on Demand Registrations. The Company shall not include in any Demand Registration any securities that are not Registrable Securities without the prior written consent of the holders of a majority of the Investor Registrable Securities included in such registration. If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that, in their opinion, the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, that can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the Investor Registrable Securities to be included in such registration, then the Company shall include in such registration, prior to the inclusion of any securities that are not Registrable Securities, the number of Registrable Securities requested to be included that, in the opinion of such underwriters, can be sold in an orderly manner within the price range of such offering, pro rata among the respective holders thereof on the basis of the amount of Registrable Securities owned by each such holder.

(e) Restrictions on Long-Form Registrations. The Company shall not be obligated to effect any Long-Form Registration within 90 days after the effective date of a previous Long-Form Registration or a previous registration in which the holders of Registrable Securities were given piggyback rights pursuant to Section 2 and in which there was no reduction in the number of Registrable Securities requested to be included. The Company may postpone for up to 90 days the filing or the effectiveness of a registration statement for a Demand Registration if the Company and the holders of a majority of the Investor Registrable Securities agree that such Demand Registration would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its Subsidiaries to acquire financing, engage in any acquisition of assets or stock (other than in the ordinary course of business), or engage in any merger, consolidation, tender offer, reorganization, or similar transaction or require the Company to disclose any material nonpublic information which could reasonably be likely to be detrimental to the Company and its Subsidiaries; provided that, in such event, the holders of Investor Registrable Securities initially requesting such Demand Registration shall be entitled to withdraw such request and the Company shall pay all Registration Expenses in connection with such registration. The Company may delay a Demand Registration hereunder only once in any twelve-month period.

(f) Selection of Underwriters. The holders of a majority of the Investor Registrable Securities included in any Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer the offering.

(g) Other Registration Rights. Except as provided in this Agreement, the Company shall not grant to any Persons the right to request the Company to register any equity securities of the Company, or any securities, options, or rights convertible or exchangeable into or exercisable for such securities, without the prior written consent of the holders of a majority of the Investor Registrable Securities.

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(h) Obligations of Holders of Registrable Securities. Subject to the Company’s obligations under Section 4(e) hereof, each holder of Registrable Securities shall cease using any prospectus after receipt of written notice from the Company of the happening of any event as a result of which such prospectus contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made.

2. Piggyback Registrations.

(a) Right to Piggyback. Whenever the Company proposes to register any of its equity securities (including any proposed registration of the Company’s securities by any third party) under the Securities Act (other than (i) pursuant to a Demand Registration, which is addressed by Section 1, (ii) in connection with an initial public offering of the Company’s equity securities, or (iii) in connection with registrations on Form S-4, S-8 or any successor or similar forms) and the registration form to be used may be used for the registration of Registrable Securities (a “Piggyback Registration”), the Company shall give prompt written notice (and in any event within three business days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to all holders of Registrable Securities of its intention to effect such a registration and shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company’s notice.

(b) Piggyback Expenses. The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations.

(c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Company, then the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the number of shares or units owned by each such holder, and (iii) third, the other securities requested to be included in such registration.

(d) Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities other than holders of Registrable Securities (it being understood that secondary registrations on behalf of holders of Registrable Securities are addressed in Section 1 above rather than this Section 2(d)), and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in such registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the holders of a majority of the Registrable Securities to be included in such registration, then the Company shall include in such registration (i) first, the securities requested to be included therein by the holders requesting such registration, (ii) second, the Registrable Securities requested to be included in such registration, pro rata among the holders of such Registrable Securities on the basis of the

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number of shares or units owned by each such holder, and (iii) third, the other securities requested to be included in such registration.

(e) Selection of Underwriters. If any Piggyback Registration is an underwritten offering, then the selection of investment banker(s) and manager(s) for the offering must be approved by the holders of a majority of the Registrable Securities included in such Piggyback Registration. Such approval shall not be unreasonably withheld.

(f) Other Registrations. If the Company has previously filed a registration statement with respect to Registrable Securities pursuant to Section 1 or pursuant to this Section 2, and if such previous registration has not been withdrawn or abandoned, then, unless such previous registration is a Required Registration, the Company shall not file or cause to be effected any other registration of any of its equity securities or securities convertible or exchangeable into or exercisable for its equity securities under the Securities Act (except on Form S-4, Form S-8 or any successor forms), whether on its own behalf or at the request of any holder or holders of such securities, until a period of at least 180 days has elapsed from the effective date of such previous registration.

3. Holdback Agreements.

(a) Each holder of Registrable Securities agrees not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of such securities, whether any such aforementioned transaction is to be settled by delivery of such securities or other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, in each case during the seven days before and the 90-day period (but in the case of the Company’s initial public offering, the 180-day period) beginning on the effective date of any underwritten public offering of the Company’s equity securities (including Piggyback Registrations) (or such longer or shorter period as may be requested in writing by the managing underwriter and agreed to in writing by the Company (the “Market Standoff Period”)), except as part of such underwritten registration if otherwise permitted. In addition, each holder of Registrable Securities agrees to execute any further letters, agreements and/or other documents requested by the Company or its underwriters which are consistent with the terms of this Section 3(a). The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

(b) The Company (i) shall not effect any public sale or distribution of its equity securities, or any securities, options, or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Demand Registration or any underwritten Piggyback Registration (except as part of such underwritten registration or pursuant to registrations on Form S-4, Form S-8 or any successor forms), unless the underwriters managing the registered public offering otherwise agree, and (ii) to the extent not inconsistent with applicable law, shall cause each holder of its equity securities, or any securities convertible into

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or exchangeable or exercisable for equity securities, purchased from the Company at any time after the date of this Agreement (other than in a registered public offering) to agree not to effect any public sale or distribution (including sales pursuant to Rule 144) of any such securities during such period (except as part of such underwritten registration, if otherwise permitted), unless the underwriters managing the registered public offering otherwise agree.

4. Registration Procedures. Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(a) prepare and, within 60 days after the end of the period within which requests for registration may be given to the Company, file with the Securities and Exchange Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective (provided that, before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Investor Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel);

(b) notify in writing each holder of Registrable Securities of the effectiveness of each registration statement filed hereunder and prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 180 days (or, if such registration statement relates to an underwritten offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(c) furnish to each seller of Registrable Securities such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

(d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller of Registrable Securities to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller of Registrable Securities (provided that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4(d), (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction);

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(e) promptly notify in writing each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made, and, at the request of the holders of a majority of the Registrable Securities covered by such registration statement, the Company shall promptly prepare and furnish to each such seller a reasonable number of copies of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading in light of the circumstances under which they were made; provided however that the Company may postpone the preparation and delivery of such a supplement or amendment to such prospectus for up to 90 days if the Company determines that delivery of such a supplement or amendment would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any of its Subsidiaries to acquire financing, engage in any acquisition of assets or stock (other than in the ordinary course of business), or engage in any merger, consolidation, tender offer, reorganization, or similar transaction or require the Company to disclose any material nonpublic information which could reasonably be likely to be detrimental to the Company and its Subsidiaries; provided further that, in such event, the Company shall notify the holders of Registrable Securities covered by such prospectus of such delay and such holders shall cease using such prospectus and shall not make any sales thereunder during such period; provided further that the Company may postpone the preparation and delivery of such a supplement or amendment under this Section 4(e) only once in any twelve-month period;

(f) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on the NASD automated quotation system and, if listed on the NASD automated quotation system, use its best efforts to secure designation of all such Registrable Securities covered by such registration statement as a NASDAQ “national market system security” within the meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing that, to secure NASDAQ authorization for such Registrable Securities;

(g) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(h) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of Registrable Securities (including effecting a stock split or a combination of stock);

(i) make available for inspection by any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant, or other agent retained by any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such underwriter,

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attorney, accountant, or agent in connection with such registration statement and assist and, at the request of any participating underwriter, use reasonable best efforts to cause such officers or directors to participate in presentations to prospective purchasers;

(j) otherwise use its best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(k) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any equity securities included in such registration statement for sale in any jurisdiction, the Company shall use its best efforts promptly to obtain the withdrawal of such order;

(l) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(m) obtain one or more cold comfort letters, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the holders of a majority of the Registrable Securities being sold in such registered offering reasonably request (provided that such Registrable Securities constitute at least 10% of the securities covered by such registration statement); and

(n) provide a legal opinion of the Company’s outside counsel, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature.

5. Registration Expenses.

(a) Subject to Section 5(b) below, all expenses incident to the Company’s performance of or compliance with this Agreement, including all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, travel expenses, filing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company, and fees and disbursements of all independent certified public accountants, underwriters including, if necessary, a “qualified independent underwriter” within the meaning of the rules of the National Association of Securities Dealers,

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Inc. (in each case, excluding discounts and commissions), and other Persons retained by the Company or by holders of Investor Registrable Securities or their affiliates on behalf of the Company (all such expenses being herein called “Registration Expenses”), shall be borne as provided in this Agreement, except that the Company shall, in any event, pay its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance, and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system (or any successor or similar system).

(b) In connection with each Demand Registration and each Piggyback Registration, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Investor Registrable Securities included in such registration.

(c) To the extent Registration Expenses are not required to be paid by the Company, each holder of securities included in any registration hereunder shall pay those Registration Expenses allocable to the registration of such holder’s securities so included, and any Registration Expenses not so allocable shall be borne by all sellers of securities included in such registration in proportion to the aggregate selling price of the securities to be so registered.

6. Indemnification.

(a) The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each holder of Registrable Securities, its officers, directors, agents, and employees, and each Person who controls such holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities, and expenses (or actions or proceedings, whether commenced or threatened, in respect thereof), whether joint and several or several, together with reasonable costs and expenses (including reasonable attorney’s fees) to which any such indemnified party may become subject under the Securities Act or otherwise (collectively, “Losses”) caused by, resulting from, arising out of, based upon, or relating to (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 6, collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the “blue sky” or securities laws thereof or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse such holder and each such director, officer, and controlling Person for any legal or any other expenses incurred by them in connection with investigating or defending any such Losses; provided that the Company shall not be liable in any such case to the extent that any such Losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, or preliminary prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished in writing to the Company by such holder about such holder expressly for use therein or by such holder’s failure to deliver a copy of the

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registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such holder with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Securities.

(b) In connection with any registration statement in which a holder of Registrable Securities is participating, each such holder will furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the fullest extent permitted by law, shall indemnify and hold harmless the other holders of Registrable Securities and the Company, and their respective officers, directors, agents, and employees, and each other Person who controls the Company (within the meaning of the Securities Act) against any Losses caused by, resulting from, arising out of, based upon, or relating to (i) any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus, or any amendment thereof or supplement thereto or in any application, or (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is made in such registration statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or in any application in reliance upon and in conformity with written information prepared and furnished to the Company by such holder expressly for use therein, and such holder will reimburse the Company and each such other indemnified party for any legal or any other expenses incurred by them in connection with investigating or defending any such Losses; provided that the obligation to indemnify will be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such holder from the sale of Registrable Securities pursuant to such registration statement.

(c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any Person’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, then the indemnifying party will not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). The indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and disbursements of such counsel shall be at the expense of the indemnified party unless employment of such counsel has been specifically authorized by the indemnifying party in writing. The indemnifying party shall pay the fees and expenses of one separate counsel (plus local counsel if appropriate) for the indemnified party and any other indemnified persons if the named parties to any such action (including any impleaded parties) include the indemnifying party (or any of the directors of the indemnifying party) and the indemnified party and (x) in the good faith judgment of the indemnified party the use of joint counsel would present such counsel with an actual or potential conflict of interest, (y) the indemnified party shall have been advised

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by counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (or its managers or directors) or (z) the indemnifying party failed to assume the defense thereof.

(d) The indemnification provided for under this Agreement shall be in addition to any other rights to indemnification or contribution which any indemnified party may have pursuant to law or contract, and will remain in full force and effect regardless of any investigation made or omitted by or on behalf of the indemnified party or any officer, director, or controlling Person of such indemnified party and shall survive the transfer of securities.

(e) If the indemnification provided for in this Section 6 is unavailable to or is insufficient to hold harmless an indemnified party under the provisions above in respect to any Losses referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such Losses (i) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other hand or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, then in such proportion as is appropriate to reflect not only the relative fault referred to in clause (i) above but also the relative benefit of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other in connection with the statement or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the sellers of Registrable Securities and any other sellers participating in the registration statement on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) to the Company bear to the total net proceeds from the offering (before deducting expenses) to the sellers of Registrable Securities and any other sellers participating in the registration statement. The relative fault of the Company on the one hand and of the sellers of Registrable Securities and any other sellers participating in the registration statement on the other shall be determined by reference to, among other things, whether the untrue statement or alleged omission to state a material fact relates to information supplied by the Company or by the sellers of Registrable Securities or other sellers participating in the registration statement and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

(f) The Company and the sellers of Registrable Securities agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if the sellers of Registrable Securities were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in Section 6(e) above. The amount paid or payable by an indemnified party as a result of the Losses referred to in Section 6(e) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 6, no seller of Registrable Securities shall be required to contribute pursuant to this Section 6 any amount in excess of the sum of (i) any amounts paid pursuant to Section 6(b) above and (ii) the net proceeds received by such seller from the sale of Registrable Securities covered by the registration statement filed pursuant hereto. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of

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the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

7. Participation in Underwritten Registrations.

(a) No Person may participate in any underwritten registration hereunder unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including pursuant to the terms of any over-allotment or “green shoe” option requested by the managing underwriter(s), provided that no holder of Registrable Securities will be required to sell more than the number of Registrable Securities that such holder has requested the Company to include in any registration) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, and other documents reasonably required under the terms of such underwriting arrangements; provided that no holder of Registrable Securities included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such holder and such holder’s intended method of distribution) or to undertake any indemnification obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 6 hereof.

(b) Each Person that is participating in any registration hereunder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(e) above, such Person will immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by Section 4(e). In the event the Company shall give any such notice, the applicable time period mentioned in Section 4(b) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 7(b) to and including the date when each seller of a Registrable Security covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 4(e).

8. Additional Securityholders. In connection with the issuance of any additional equity securities of the Company, the Company, only with the consent of the holders of a majority of the Investor Registrable Securities, may permit such Person to become a party to this Agreement and receive all of the rights and obligations of a holder of any particular category of Registrable Securities under this Agreement by obtaining an executed counterpart signature page to this Agreement, and, upon such execution, such Person shall for all purposes be a holder of such category of Registrable Securities and party to this Agreement.

9. Definitions. Unless otherwise stated, other capitalized terms contained in this Agreement and not defined herein shall have the meanings set forth in the Company LLC Agreement.

“Common Stock” means, collectively, (i) following the organization of a corporation and reorganization or recapitalization of the Company into a corporation, the common equity securities of the Company and any other class or series of authorized capital

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stock of the Company that is not limited to a fixed sum or percentage of par or stated value in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon any liquidation, dissolution or winding up of the Company, and (ii) any common stock of a Subsidiary of the Company distributed by the Company to its unitholders or shareholders, as applicable.

“Common Unit” means a unit of the Company representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions (each as defined in the Company LLC Agreement) and having the rights and obligations specified with respect to the Common Units in the Company LLC Agreement.

“Company” has the meaning set forth in the preamble and shall include the New Corporation following the Reorganization.

“Company LLC Agreement” means the limited liability company agreement of the Company, dated as of December 29, 2008, by and among the Company and the Unitholders.

“Executive Registrable Securities” means (i) any Common Units or Common Stock, as applicable, held as of the date hereof, or acquired hereafter through the exercise of employee stock options, by the executive employees of the Company and its Subsidiaries who are or become parties to this Agreement, and (ii) any Common Stock issued or issuable with respect to the securities referred to in clause (i) above by way of a Reorganization.

“Goldman Registrable Securities” means, (i) any Common Unit issued or distributed to Goldman pursuant to the THI Liquidation, (ii) any Common Unit or Common Stock issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, and (iii) any other Common Unit or Common Stock held by Persons holding securities described in clauses (i) or (ii) above.

“GTCR Registrable Securities” means, (i) any Common Unit issued or distributed to GTCR pursuant to the THI Liquidation, (ii) any Common Unit or Common Stock issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, and (iii) any other Common Unit or Common Stock held by Persons holding securities described in clauses (i) or (ii) above.

“HGF Registrable Securities” (i) any Common Unit issued or distributed to HGF pursuant to the THI Liquidation or the Management Agreement, (ii) any Common Unit or Common Stock issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization, and (iii) any other Common Unit or Common Stock held by Persons holding securities described in clauses (i) or (ii) above.

“Investor Registrable Securities” means the Goldman Registrable Securities, the GTCR Registrable Securities and the HGF Registrable Securities, collectively.

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“Management Agreement” means the Management Agreement, dated as of April 29, 2005, as amended and modified pursuant to amendment and joinder thereto, dated as of the date hereof, by and among Triad Holdings, LLC, Triad Holdings Inc., the Company, HGF and others, from time to time in accordance with its terms.

“New Corporation” has the meaning set forth in the recitals.

“Other Registrable Securities” (i) any Common Units or Common Stock, as applicable, held as of the date hereof, or acquired hereafter by the Other Stockholders and (ii) common equity securities of the Company or a Subsidiary issued or issuable with respect to the securities referred to in clause (i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization.

“Qualified IPO” means an underwritten initial public offering of the common stock of the Company with gross proceeds of at least $50.0 million in a firm commitment underwriting.

“Registrable Securities” means the Investor Registrable Securities, the Executive Registrable Securities and the Other Registrable Securities. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they (i) have been distributed to the public pursuant to an offering registered under the Securities Act or sold to the public through a broker, dealer, or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force), (ii) unless the respective Securityholder otherwise elects, have been distributed to the partners of any of the Securityholder, (iii) have been effectively registered under a registration statement including, without limitation, a registration statement on Form S-8 (or any successor form), or (iv) have been repurchased by the Company. In addition, all Registrable Securities held by any Person shall cease to be Registrable Securities (provided that, for purposes of this provision, all Investors and all Registrable Securities held by such Investors shall be treated as Registrable Securities held by a single Person) when all such Registrable Securities become eligible to be sold to the public through a broker, dealer, or market maker pursuant to Rule 144 (or any similar provision then in force) during a single 90-day period. For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected.

“Reorganization” has the meaning set forth in the recitals to this Agreement.

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

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“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

“Unitholder” means any owner of one or more Units as reflected on the Company’s books and records.

10. Miscellaneous.

(a) No Inconsistent Agreements. Neither the Company nor any Subsidiary of the Company shall hereafter enter into any agreement with respect to its securities that is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

(b) Adjustments Affecting Registrable Securities. The Company shall not take any action, or permit any change to occur, with respect to its securities that would adversely affect the ability of the holders of Registrable Securities to include such Registrable Securities in a registration undertaken pursuant to this Agreement or that would adversely affect the marketability of such Registrable Securities in any such registration (including effecting a unit split or a combination of units).

(c) Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically, to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or other security) for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. Nothing contained in this Agreement

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shall be construed to confer upon any Person who is not a signatory hereto any rights or benefits, whether as a third-party beneficiary or otherwise.

(d) Amendments and Waivers. Except as otherwise provided herein, no modification, amendment, or waiver of any provision of this Agreement shall be effective against the Company or the holders of Registrable Securities unless such modification, amendment, or waiver is approved in writing by the holders of a majority of the Goldman Registrable Securities, the holders of a majority of the GTCR Registrable Securities, the holders of a majority of the HGF Registrable Securities and the Company; provided that no such amendment or modification that would materially and adversely affect holders of one class or group of Registrable Securities in a manner different than holders of the Investor Registrable Securities (other than amendments and modifications required to implement the provisions of Section 8) shall be effective against the holders of such class or group of Registrable Securities without the prior written consent of holders of at least a majority of Registrable Securities of such class or group materially and adversely affected thereby. No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition.

(e) Successors and Assigns. All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities. Notwithstanding the foregoing, in order to obtain the benefit of this Agreement, any subsequent holder of Registrable Securities must execute a counterpart to this Agreement, thereby agreeing to be bound by the terms hereof, and such transfer must not violate the requirements of any other agreement(s) to which the transferor or the applicable Registrable Securities are bound.

(f) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(g) Counterparts. This Agreement may be executed simultaneously in two or more counterparts (including by means of facsimile), any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same Agreement.

(h) Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns,

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pronouns, and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be, in each case, by way of example and without limitation. The use of the words “or,” “either,” and “any” shall not be exclusive. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and, if applicable, hereof.

(i) Governing Law. The Delaware Limited Liability Company Act shall govern all issues and questions concerning the relative rights of the Company and its Unitholders. In addition, if applicable, the Delaware General Corporation Law shall govern all issues and questions concerning the relative rights of the New Corporation and its stockholders. All other issues and questions concerning the construction, validity, interpretation, and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.

(j) MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(k) Notices. All notices, demands, or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally to the recipient, sent to the recipient by reputable overnight courier service (charges prepaid), mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid or telecopied to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a business day, and otherwise on the next business day. Such notices, demands, and other communications shall be sent to each Investor, each Executive, and each Other Securityholder at the addresses indicated on the Schedule of Holders and to the Company at the address of its corporate headquarters or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.

(l) No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto,

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and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

*****

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.


TRIAD FINANCIAL HOLDINGS LLC
By:	/s/ Gerald J. Ford
	Name:	Gerald J. Ford
	Its: Chief Executive Officer


GSCP 2000 TRIAD HOLDING, L.P.
By:	GS Capital Partners 2000, L.P.
Its:	General Partner
By:	GS Capital Advisors 2000, L.L.C.
Its:	General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President

GS CAPITAL PARTNERS 2000 EMPLOYEE FUND, L.P.
By:	GS Employee Funds 2000 GP, L.L.C.
Its:	General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President

GSCP 2000 OFFSHORE TRIAD HOLDING, L.P.
By:	GS Capital Partners 2000 Offshore, L.P.
Its:	General Partner
By:	GS Capital Advisors 2000, L.L.C.
Its:	General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President

GOLDMAN SACHS DIRECT INVESTMENT FUND 2000, L.P.
By:	GS Employee Funds 2000 GP, L.L.C.
Its:	General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


GSCP 2000 GmbH TRIAD HOLDING, L.P.
By:	GSCP 2000 GmbH Triad Holding I
Its:	General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President

MTGLQ INVESTORS, L.P.
By:	MLQ L.L.C.
Its:	General Partner
By:	/s/ Peter C. Aberg
	Name:	Peter C. Aberg
	Its: Peter C. Aberg

GS CAPITAL PARTNERS 2000, L.P.
By:	GS Capital Advisors 2000, L.L.C.
Its:	General Partner
By:	/s/ Christine Vollertsen
	Name:	Christine Vollertsen
	Its: Vice President


GTCR FUND VIII, L.P.
By:	GTCR Partners VIII, L.P.
Its:	General Partner
By:	GTCR Golder Rauner II, L.L.C.
Its:	General Partner
By:	/s/ David A. Donnini
	Name:	David A. Donnini
	Its: Principal


FUND VIII/B TRIAD SPLITTER, L.P.
By:	GTCR Partners VIII, L.P.
Its:	General Partner
By:	GTCR Golder Rauner II, L.L.C.
Its:	General Partner
By:	/s/ David A. Donnini
	Name:	David A. Donnini
	Its: Principal


GTCR CO-INVEST II, L.P.
By:	GTCR Golder Rauner II, L.L.C.
Its:	General Partner
By:	/s/ David A. Donnini
	Name:	David A. Donnini
	Its: Principal

HUNTER’S GLEN/FORD LTD.
By:	Ford Diamond Corporation
Its:	General Partner
By:	/s/ Gerald J. Ford
	Name:	Gerald J. Ford
	Its: President



	/s/ Gerald J. Ford
	Gerald J. Ford



	/s/ J. Randy Staff
	J. Randy Staff



	/s/ Carl B. Webb
	Carl B. Webb



	/s/ Donald J. Edwards
	Donald J. Edwards

SCHEDULE OF HOLDERS

Investors

GS Capital Partners 2000, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: John Bowman
Tel: 212-902-0353
Fax: 212-357-5505

GSCP 2000 Triad Holding, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: John Bowman
Tel: 212-902-0353
Fax: 212-357-5505

GS Capital Partners 2000 Employee Fund, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: John Bowman
Tel: 212-902-0353
Fax: 212-357-5505

GSCP 2000 Offshore Triad Holding, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: John Bowman
Tel: 212-902-0353
Fax: 212-357-5505

Goldman Sachs Direct Investment Fund 2000, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: John Bowman
Tel: 212-902-0353
Fax: 212-357-5505

GSCP 2000 GmbH Triad Holding, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: John Bowman
Tel: 212-902-0353
Fax: 212-357-5505

MTGLQ Investors, L.P.
c/o Goldman, Sachs & Co.
85 Broad Street, 10^th Floor
New York, NY 10004
Attention: Peter Aberg
Tel: 212-902-8548
Fax: 212-902-3000

GTCR Fund VIII, L.P.
c/o GTCR Golder Rauner, L.L.C.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: David Donnini

Fund VIII/B Triad Splitter, L.P.
c/o GTCR Golder Rauner, L.L.C.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: David Donnini

GTCR Co-Invest II, L.P.
c/o GTCR Golder Rauner, L.L.C.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: David Donnini

Hunter’s Glen/Ford Ltd.
200 Crescent Court
Suite 1350
Dallas, TX 75201
Attention: Gerald J. Ford

Executives

Gerald J. Ford
c/o Hunter’s Glen/Ford Ltd.
200 Crescent Court
Suite 1350
Dallas, TX 75201

J. Randy Staff
c/o Hunter’s Glen/Ford Ltd.
200 Crescent Court
Suite 1350
Dallas, TX 75201

Carl B. Webb
c/o Hunter’s Glen/Ford Ltd.
200 Crescent Court
Suite 1350
Dallas, TX 75201

Donald J. Edwards
c/o Flexpoint Partners, LLC
676 North Michigan Avenue
Chicago, IL 60611

Other Securityholders

None

EX-10.27 12 a51470exv10w27.htm EX-10.27 exv10w27

Exhibit 10.27

TRIAD FINANCIAL HOLDINGS LLC

Secured Promissory Note


U.S. $17,000,000		New York, New York
		December 31, 2008

FOR VALUE RECEIVED, the undersigned, Triad Financial Holdings LLC, a Delaware limited liability company (together with its successors and permitted assigns, the “Company”), hereby promises to pay to the order of Hunter’s Glen/Ford Ltd. (together with its successors and permitted assigns, the “Holder”), in lawful money of the United States of America, in immediately available funds on the earlier of (x) April 30, 2009, (y) five business days following the date upon which the aggregate amount of Managed Assets (hereinafter defined) of Triad Financial SM LLC, a wholly-owned subsidiary of the Company, is less than $2,000,000,000 and (z) any earlier date upon which this Note becomes due and payable pursuant to the terms hereof (such date, the “Maturity Date”), the principal sum of SEVENTEEN MILLION United States Dollars ($17,000,000) or such lesser principal amount as shall at the time be outstanding hereunder, together with interest from the date hereof on the unpaid amount owing hereunder until payment in full at a rate of interest per annum equal to the lesser of (i) the maximum lawful rate of interest in effect at such time under applicable law and (ii) fifteen percent (15%) per annum, compounded quarterly. Interest shall be calculated on the basis of a year of 360 days and shall accrue on the outstanding principal amount of this Note and, to the extent permitted by law, on any accrued but unpaid interest thereon until all payments hereunder have been irrevocably paid in full. As used herein, the term “Note” includes this Note and any Note issued, in whole or in part, in exchange herefor or in replacement hereof. As used herein, “Managed Assets” means, collectively, all receivables owned by Triad Financial SM LLC and all receivables serviced by Triad Financial SM LLC and owned by any other person.

1. Payment of Interest and Principal of Note.

(a) Payments due hereunder are to be made by wire transfer to such bank account of the Holder as the Holder may from time to time designate, in lawful money of the United States of America.

(b) The principal amount of this Note shall be due and payable on the Maturity Date. Accrued and unpaid interest shall be paid in cash on the last day of each March, June, September and December to occur while the Note is outstanding, commencing on March 31, 2009.

(c) The Company may prepay this Note, in whole or in part, at any time, without premium or penalty. Each such prepayment shall be accompanied by payment of all interest accrued to the date of payment on the amount so prepaid. Any payment made under this Note shall be applied first to interest accrued and unpaid on the outstanding principal balance as of such date.

2. Security. The obligations of the Company hereunder are secured by, and the Holders is entitled to the benefits of, that certain Pledge Agreement, dated the date hereof, by and between the Company and the Holder (“Pledge Agreement”).

3. Representations and Warranties. The Company represents and warrants to the Holder that:

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(a) the Company is duly formed and in good standing under the laws of the state of its formation and has the power to own its property and to carry on its business in each jurisdiction in which it operates;

(b) the Company has the power and authority to execute and deliver this Note, which has been duly authorized by all necessary requisite action;

(c) the execution, delivery and performance by the Company of this Note and the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof do not conflict with, result in a material breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the constituent documents of the Company or any indenture, agreement, mortgage, deed of trust, or other instrument to which the Company is a party or by which it is bound or to which any of its properties are subject; nor, except as contemplated by the Pledge Agreement, result in the creation or imposition of any Lien (as defined below) upon any of its properties pursuant to the terms of any indenture, agreement, mortgage, deed of trust or other instrument; nor violate any law, order, rule or regulation applicable to the Company of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Company or its properties;

(d) the Note is a legal, valid and binding obligation of the Company, enforceable in accordance with its terms;

(e) the Company is not required to obtain the consent of any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Note, except those which may have been obtained and are in full force and effect;

(f) there are no proceedings or investigations pending or, to the Company’s best knowledge, threatened against the Company before any court, regulatory body, administrative agency, other government instrumentality, arbitral tribunal or other tribunal having jurisdiction over the Company or its properties (i) asserting the invalidity of this Note, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Note, or (iii) seeking any determination or ruling that would be reasonably likely to have a Material Adverse Effect (hereinafter defined);

(g) the Company is not in default in the performance, observance or fulfillment of any obligation, covenant or condition in any agreement or instrument to which it is a party or by which it is bound the result of which would be reasonably likely to have a Material Adverse Effect;

(h) no proceeds from this Note will be used, directly or indirectly, by the Company for the purpose of purchasing or carrying any Margin Stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry Margin Stock or for any other purpose that might cause this Note to be a “purpose credit” within the meaning of Regulation U; and

(i) the Company is not an “investment company” or a company “controlled” by an investment company within the meaning of the Investment Company Act of 1940, as amended.

4. Restriction on Indebtedness. The Company covenants and agrees that until it has paid to the Holder in full all amounts owing in respect of this Note, the Company shall not create, incur, issue, assume or guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any indebtedness, unless such indebtedness is contractually subordinated in right of payment to the Note on terms reasonably satisfactory to the Holder.

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5. Events of Default. If any one or more of the following events, herein called “Events of Default”, shall occur, for any reason whatsoever, and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of a court of competent jurisdiction or any order, rule or regulation of any administrative or other governmental authority, and such Event of Default shall be continuing:

(a) default shall be made in the payment of the principal of this Note when and as the same shall become due and payable, whether at maturity or by acceleration or otherwise; or

(b) default shall be made in the payment of any installment of interest on this Note according to its terms when and as the same shall become due and payable; or

(c) default shall be made in the due observance or performance of any other covenant, condition or agreement on the part of the Company to be observed or performed pursuant to the terms of this Note or the Pledge Agreement, and such default shall continue for thirty (30) days after written notice thereof, specifying such default and requesting that the same be remedied, shall have been given to the Company by the Holder; or

(d) the entry of a decree or order for relief by a court having jurisdiction in the premises in respect of the Company in an involuntary case under the Bankruptcy Reform Act of 1978 of the United States of America, as amended, 11 U.S.C. Sections 101, et seq. (the “Bankruptcy Code”) or any other applicable federal or state bankruptcy, insolvency or other similar laws, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or for any substantial part of its property, or ordering the winding-up or liquidation of any of its affairs and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days;

(e) the commencement by the Company of a voluntary case under the Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or other similar laws, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the admission by the Company in writing of its inability to pay its debts generally as such debts become due, or the taking of corporate action by the Company in furtherance of any such action; or

(f) the Company or any of its subsidiaries shall (i) default in making any payment of any principal of any indebtedness for borrowed money (including, without limitation, any guarantee of any such indebtedness) on the scheduled original due date with respect thereto, (ii) default in making any payment of any interest on any such indebtedness beyond the period of grace, if any, provided in the instrument or agreement (as in effect on the date hereof and without giving effect to any amendment, modification or waiver thereto that adversely effects the Holder, unless the Holder provides prior written consent to such amendment, modification or waiver), under which such indebtedness was created, or (iii) default in the due observance or performance of any other covenant, condition or agreement relating to any such indebtedness or contained in any instrument or agreement (as in effect on the date hereof without giving effect to any amendment, modification or waiver thereto that adversely effects the Holder, unless the Holder provides prior written consent to such amendment, modification or waiver), evidencing, securing or relating thereto, or (iv) any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, without the giving of notice if required, such indebtedness to become due prior to its stated maturity or to become subject to a mandatory offer to purchase by the obligor thereunder or (in the case of any indebtedness constituting a guarantee obligation) to become payable;

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(g) The Holder, in its reasonable, good faith judgment, has cause to believe that any material adverse effect on, or the disclosure or discovery of any information not previously disclosed to the Holder, which the Holder deems material and adverse relating to, the business, operations, properties, condition (financial or otherwise) or prospects of the Company, individually, or with its affiliates, taken as a whole, shall have occurred (any such effect, disclosure or discovery, a “Material Adverse Effect”);

(h) the occurrence of any of the following, unless the Holder shall have expressly consented to such event in writing: (i) unless the Company has completed an initial public offering of its capital stock, Hunter’s Glen/Ford, Ltd. and its affiliates and GTCR Golder Rauner, LLC and its affiliates no longer collectively own (A) at least 50% of the capital stock of the Company and (B) at least 50% of the aggregate voting power of all classes of Voting Stock of the Company (defined as the capital stock or other indicia of equity rights of the Company which at the relevant time has the power to vote for the election of one or more members of the Board of Directors (or other governing body) of the Company), (ii) any other person and its affiliates collectively own a greater percentage of either the capital stock of the Company or the aggregate voting power of all classes of Voting Stock of the Company than the largest holder of such capital stock or Voting Stock among (A) Hunter’s Glen/Ford, Ltd. and its affiliates and (B) GTCR Golder Rauner, LLC and its affiliates, or (iii) the Company merges or consolidates with, or sells all or substantially all of its assets to, any other person.

(i) any Lien purported to be created under the Pledge Agreement shall cease to be, or shall be asserted by the Company or any affiliate thereof not to be, a valid and perfected Lien on the Pledged Collateral (as defined in the Pledge Agreement), with the priority required by the Pledge Agreement, except (i) as a result of the sale or other disposition of the Pledged Collateral in a transaction permitted under the Pledge Agreement or (ii) as a result of the Holder’s failure to maintain possession of any instruments delivered to it under the Pledge Agreement;

(j) a final, nonappealable judgment by any competent court in the United States of America for the payment of money in an amount in excess of $500,000 shall be rendered against the Company, and the same remains undischarged and unstayed for a period of thirty (30) days after the entry thereof; or

(k) the Company shall pay an amount in excess of $500,000 in connection with the settlement of any action filed in any competent court in the United States of America, in which action the Company is a named defendant, if such action contains undismissed allegations of (A) fraud or wrongful conduct in connection with the Company’s lending, servicing or origination practices, as applicable, or (B) other wrongdoing that could have a Material Adverse Effect;

then, in addition to all other rights and remedies available to the Holder at law or in equity or otherwise, (i) if an Event of Default set forth in clauses (d) or (e) of this Section 5 shall occur and be continuing, or shall exist, this Note automatically shall become immediately due and payable, together with interest accrued thereon, without presentment, demand, protest or notice of any kind, all of which are expressly waived to the fullest extent permitted by law and (ii) if an Event of Default other than an Event of Default set forth in clauses (d) or (e) of this Section 5 shall occur and be continuing, or shall exist, the Holder may, at its option, by notice to the Company, declare this Note to be, and this Note shall thereupon be and become, immediately due and payable, together with interest accrued thereon, without presentment, demand, protest or other notice of any kind, all of which are expressly waived to the fullest extent permitted by law.

6. Remedies on Default, etc. If an Event of Default has occurred and is continuing, the Holder may proceed to protect and enforce its rights by a suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any agreement contained in this Note or the Pledge Agreement, or for an injunction against a violation of any of the terms hereof or in aid of the exercise of any right, power or remedy granted hereby or by law, equity, statute or otherwise. No course

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of dealing and no delay on the part of the Holder in exercising any right, power or remedy will operate as a waiver thereof or otherwise prejudice the Holder’s rights, powers or remedies. No right, power or remedy conferred hereby is exclusive of any other right, power or remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. To the fullest extent permitted by applicable law, the Company hereby agrees to waive, and does hereby absolutely and irrevocably waive diligence, demand for payment, presentment, notice of dishonor and protest of this Note and notice of any kind, and the right to interpose any defense, set-off or counterclaim of any nature or description in any action or proceeding arising on, out of, under or by reason of this Note or the Pledge Agreement.

7. Lien Defined. For purposes of this Note, “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any 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).

8. Miscellaneous.

(a) Neither this Note nor any term hereof may be amended or waived orally or in writing, except that any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) with (but only with) the written consent of the Company and the Holder. This Note shall inure to the benefit of the Holder of this Note and the Company and their respective successors and assigns and be binding upon the Holder of this Note and the Company and their respective successors and assigns.

(b) Any notice or communication must be given in writing or delivered in person, or by overnight courier, or by facsimile addressed as follows:

(i) if to the Company:

Triad Financial Holdings LLC
5201 Rufe Snow Drive
North Richland Hills, TX 76180
Telecopy: (817) 605-5288
Attention: Corporate Secretary

With a copy to:

Triad Financial Holdings LLC
7711 Center Avenue, Suite 100
Huntington Beach, California 92647
Telecopy: (714) 934-6062
Attention: Corporate Secretary

(ii) if to the Holder, at the address specified in writing by the Holder,

or at such other address and to the attention of such other person as the Company or the Holder may designate by written notice to the other. Any such notice or communication is effective (x) when received, if delivered in person or by facsimile, or (y) on the next business day, if delivered by overnight courier.

(c) The Holder may sell, transfer, assign, encumber or otherwise dispose of this Note in whole or in part, other than as may be prohibited by applicable law. The Company shall maintain a

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register for the recordation of the name and address of the Holder, and the principal amount of the Note owing to the Holder pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Holder and the Company may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Holder hereunder for all purposes of this Note, notwithstanding notice to the contrary. The Register shall be available for inspection by the Holder at any time.

(d) The Company shall pay all reasonable out-of-pocket expenses incurred by the Holder, including fees and disbursements of counsel for the Holder, in connection with the enforcement of this Note.

(e) THIS NOTE IS GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS MADE AND WHOLLY PERFORMED WITHIN THAT STATE AND SHALL BE CONSTRUED AS IF DRAFTED EQUALLY BY THE COMPANY AND THE HOLDER. THE COMPANY HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES SITTING IN NEW YORK COUNTY, AND ANY APPELLATE COURT FROM ANY SUCH STATE OR FEDERAL COURT, AND HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ANY ACTION OR PROCEEDING RELATING TO THIS NOTE SHALL BE EXCLUSIVELY HEARD AND DETERMINED IN SUCH NEW YORK COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE COMPANY AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY RELATED MATTER IN ANY NEW YORK STATE OR FEDERAL COURT LOCATED IN NEW YORK COUNTY AND THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. THE COMPANY HEREBY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, AS PROVIDED HEREINABOVE. NOTHING IN THIS NOTE WILL AFFECT THE RIGHT OF THE HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

(f) The Company’s obligations under this Note are absolute and unconditional and shall not be subject to any defense, setoff or counterclaim that may at any time be available to or be asserted by the Company. The Company hereby waives, and agrees not to assert, any right to offset or interpose as a defense or counterclaim any claim against the Holder against its obligations under this Note.

(g) No failure or delay on the part of the Holder in exercising any power or right hereunder, and no course of dealing between the Company and the Holder of this Note, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.

(h) As used in this Note, the term “business day” means any day that is not a Saturday, Sunday or other day on which the commercial banks in New York, New York are authorized or required by applicable law to remain closed.

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(i) (x) Should any provision of this Note be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Note, and the parties hereto agree that the provision of this Note so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder will have the same force and effectiveness as if such provision had never been included herein (provided, however the parties hereto shall use their best efforts replace the provision so deemed to have been stricken herefrom with a provision that the parties reasonably believe to be valid and enforceable and which has a substantially identical economic and legal effect as the provision so deemed to have been stricken herefrom) or (y) should any part of the indebtedness borrowed pursuant to the Note not be permitted by applicable law or by the terms of the organizational documents of any party or any contract or constitute or result in any violation, breach or default of or under, or which would give another person or persons the right to accelerate the performance of, or the right to cancel or terminate, or which would result in the loss of any benefit or rights under, any instrument or agreement, or the creation or imposition of any Lien on any of the Company’s properties or assets, other than pursuant to the Pledge Agreement (any such contingency, a “Default”), the Company and the Holder shall use their best efforts to amend, restructure or modify the indebtedness and the Note in such a manner as to remove all legal impediments and eliminate all Defaults.

SIGNATURE PAGE FOLLOWS

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IN WITNESS WHEREOF, the Company has caused this Note to be made, executed and delivered by its duly authorized officer as of the day and year first written above.


TRIAD FINANCIAL HOLDINGS LLC
By:	/s/ Daniel D. Leonard
	Name:	Daniel D. Leonard


AGREED AND ACKNOWLEDGED: HUNTER’S GLEN/FORD LTD.
By:	Ford Diamond Corporation,
	Its general partner

By:	/s/ Gary Shultz
	Name:	Gary Shultz
	Title:	Vice President

HGF Secured Promissory Note — Signature Page

EX-10.28 13 a51470exv10w28.htm EX-10.28 exv10w28

EXHIBIT 10.28

ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of the Effective Date set forth below and is entered into by and between Hunter’s Glen/Ford Ltd. (the “Assignor”) and GTCR Fund VIII, L.P., Fund VIII/B Triad Splitter, L.P. and GTCR Co-Invest II, L.P. (collectively, the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Secured Promissory Note identified below (as may be amended from time to time, the “Promissory Note”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex I attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Acceptance as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Promissory Note, as of the Effective Date inserted by the Assignor as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as Holder under the Promissory Note and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all such outstanding rights and obligations of the Assignor under the respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as Holder) against any person, whether known or unknown, arising under or in connection with the Promissory Note, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including all claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by the Assignor.

	1.		Assignor: Hunter’s Glen/Ford Ltd.

	2.		Assignee: GTCR Fund VIII, L.P., Fund VIII/B Triad Splitter, L.P. and GTCR Co-Invest II, L.P.

	3.		Borrower: Triad Financial Holdings LLC

	4.		Promissory Note: The Secured Promissory Note, issued by Triad Financial Holdings LLC on December 31, 2008 to the Assignor.

	6.		Assigned Interest:


	Aggregate Amount of		Amount of
	Commitment/Loans for all		Commitment/Loans As-		Percentage Assigned of
Assignee	Lenders		signed		Commitment/Loans
GTCR Fund VIII, L.P.	$	17,000,000	$	7,198,310		42.343	%
Fund VIII/B Triad Splitter, L.P.	$	17,000,000	$	1,263,270		7.431	%
GTCR Co-Invest II, L.P.	$	17,000,000	$	38,420		0.226	%

Effective Date: January 2, 2009.

The terms set forth in this Assignment and Acceptance are hereby agreed to:


		ASSIGNOR: HUNTER’S GLEN/FORD LTD.

		By:		/s/ Gary Schultz

				Name: Gary Schultz
				Title: Vice President

		ASSIGNEE:

		GTCR FUND VIII, L.P.

		By:		GTCR Partners VIII, L.P.
		Its:		General Partner

		By:		GTCR Golder Rauner II, L.L.C.
		Its:		General Partner

		By:		/s/ David A. Donnini

				Name: David A. Donnini
				Its: Principal

		FUND VIII/B TRIAD SPLITTER, L.P.

		By:		GTCR Partners VIII, L.P.
		Its:		General Partner

		By:		GTCR Golder Rauner II, L.L.C.
		Its:		General Partner

		By:		/s/ David A. Donnini

				Name: David A. Donnini
				Its: Principal

		GTCR CO-INVEST II, L.P.

		By:		GTCR Golder Rauner II, L.L.C.
		Its:		General Partner

		By:		/s/ David A. Donnini

				Name: David A. Donnini
				Its: Principal

Acknowledged by:

TRIAD FINANCIAL HOLDINGS LLC


By:		/s/ Daniel D. Leonard
		Name: Daniel D. Leonard

ANNEX I

Representations and Warranties.

Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby, and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Promissory Note, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Promissory Note, (iii) the financial condition of the Company, any of its subsidiaries or affiliates or any other person obligated in respect of any Promissory Note or (iv) the performance or observance by the Company, any of its subsidiaries or affiliates or any other person of any of their respective obligations under any Promissory Note.

Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Holder under the Promissory Note, (ii) it satisfies the requirements, if any, specified in the Promissory Note that are required to be satisfied by it in order to acquire the Assigned Interest and become a Holder, (iii) from and after the Effective Date, it shall be bound by the provisions of the Promissory Note as Holder thereunder and by the provisions of the Pledge Agreement, dated as of December 31, 2008, by and between the Borrower and the Assignor (the “Pledge Agreement”), and, to the extent of the Assigned Interest, shall have the obligations of a Holder under the Promissory Note and a Beneficiary under the Pledge Agreement and (iv) it has received a copy of the Promissory Note and the Pledge Agreement, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Assignor; and (b) agrees that (i) it will, independently and without reliance on the Assignor and, based on such documentation and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Promissory Note and the Pledge Agreement, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Promissory Note and the Pledged Agreement are required to be performed by it as a Holder.

Payments. From and after the Effective Date, the Company shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be governed by, and construed in accordance with, the law of the State of New York.

EX-21.1 14 a51470exv21w1.htm EX-21.1 exv21w1

EXHIBIT 21.1

TRIAD FINANCIAL SM LLC
SUBSIDIARIES

At December 31, 2008:


Subsidiaries		State of Incorporation or Organization
Triad Financial Special Purpose LLC(1)		Delaware
Triad Financial SM Inc.		Delaware
Triad Financial Residual Special Purpose LLC		Delaware
Triad Automobile Receivables Trust 2005-A(1)		Delaware
Triad Automobile Receivables Trust 2005-B(1)		Delaware
Triad Automobile Receivables Trust 2006-A(1)		Delaware
Triad Automobile Receivables Trust 2006-B(1)		Delaware
Triad Automobile Receivables Trust 2006-C(1)		Delaware
Triad Automobile Receivables Trust 2007-A(1)		Delaware
Triad Automobile Receivables Trust 2007-B(1)		Delaware
Triad Financial Warehouse Special Purpose LLC		Delaware
Triad Automobile Receivables Warehouse Trust		Delaware

(1) Under the terms of the Company’s securitization transactions, the Company transferred finance receivables to this special purpose finance subsidiary of the Company. While this subsidiary is included in the Company’s consolidated financial statements, this subsidiary is a separate legal entity and the collateral and other assets held by this subsidiary are legally owned by this subsidiary and are not available to creditors of the Company or its other subsidiaries.

EX-31.1 15 a51470exv31w1.htm EX-31.1 exv31w1

EXHIBIT 31.1

CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel D. Leonard, President and Chief Executive Officer of Triad Financial SM LLC, certify that:

1. I have reviewed this annual report on Form 10-K of Triad Financial SM LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	/s/ Daniel D. Leonard
	Daniel D. Leonard
	President and Chief Executive Officer

Dated: March 30, 2009

EX-31.2 16 a51470exv31w2.htm EX-31.2 exv31w2

EXHIBIT 31.2

CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey O. Butcher, Vice President and Chief Financial Officer of Triad Financial SM LLC, certify that:

1. I have reviewed this annual report on Form 10-K of Triad Financial SM LLC;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



	/s/ Jeffrey O. Butcher
	Jeffrey O. Butcher
	Vice President and Chief Financial Officer

Dated: March 30, 2009

EX-32 17 a51470exv32.htm EX-32 exv32

EXHIBIT 32

Certification of Chief Executive Officer and Principal Financial Officer

Certification of Periodic Financial Report

Daniel D. Leonard and Jeffrey O. Butcher hereby certify as follows:

1. They are the Chief Executive Officer and Chief Financial Officer, respectively, of Triad Financial SM LLC.

2. The Form 10-K of Triad Financial SM LLC for the Year Ended December 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained in the report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Triad Financial SM LLC.


Dated: March 30, 2009		/s/ Daniel D. Leonard
		Daniel D. Leonard
		President and Chief Executive Officer

Dated: March 30, 2009		/s/ Jeffrey O. Butcher Jeffrey O. Butcher
		Vice President and Chief Financial Officer

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